Six Flags [FUN] Corporate Discussion Thread

[Rollercoaster Rider]

My Review of the Six Flags 2018 Announcements

 

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[thesman]

Honestly I think six flags did a good job adding rides. All look like solid additions to parks and didn't really cheap out this year. Also I completely forgot water world concord existed.

[Jason Maier]

Regarding new attractions and such . . . . do the respective SF parks bid to get them, or does the board essentially say . . . "Ok, Magic Mountain, Great Adventure, etc are getting JL:BFM"? (or something along those lines)

[thesman]

Regarding new attractions and such . . . . do the respective SF parks bid to get them, or does the board essentially say . . . "Ok, Magic Mountain, Great Adventure, etc are getting JL:BFM"? (or something along those lines)

 

Its a combination of the parks choosing it and corporate approving it.

[Superbatboy]

Regarding new attractions and such . . . . do the respective SF parks bid to get them, or does the board essentially say . . . "Ok, Magic Mountain, Great Adventure, etc are getting JL:BFM"? (or something along those lines)

I think the only ones who know the answer for sure won't be on these board

[3Mutts]

Honestly I think six flags did a good job adding rides. All look like solid additions to parks and didn't really cheap out this year. Also I completely forgot water world concord existed.

 

I can tell you people in my area are getting annoyed the TGE hasnt added a coaster since 2003....

[Canobie Coaster]

^ You guys got Frankie's Mine Train in 2005 lol. I have a feeling when the long-standing rumor that the Alpine Bobsled is removed manifests itself, the park will get a new coaster. However, I think that new coaster would be located elsewhere in the park and the Bobsled's old spot would be reserved for a water park expansion.

[bgtlover]

Regarding new attractions and such . . . . do the respective SF parks bid to get them, or does the board essentially say . . . "Ok, Magic Mountain, Great Adventure, etc are getting JL:BFM"? (or something along those lines)

I think the only ones who know the answer for sure won't be on these board

Oh you can bet they definitely are. They may just not post about such things.

[alilstronger]

Does anyone think if the season pass Flash Pass is a hit they will eventually add an option for us to be able to use it chain wide? I would buy that - especially this summer with going to California for both parks, the Great Escape and living between SFA and Great Adventure.

[Sven18]

Does anyone think if the season pass Flash Pass is a hit they will eventually add an option for us to be able to use it chain wide? I would buy that - especially this summer with going to California for both parks, the Great Escape and living between SFA and Great Adventure.

 

Season Flash pass should do okay at the parks that it makes sense to get FP b/c they are busy. The Flash sale prices were really cheap with all of them being $199 or less besides GAm and MM which were $299. I don't see there being a universal flash pass for logistic reasons. I actually inquired about an all park flash pass last year. What they should do is offer an all season Flash Pass Platinum like Cedar Fair offers all season Fast Lane Plus. Having to upgrade to platinum at the park would not be necessary and would be wise no to make people feel they are pulling their wallet out again each visit.

[boldikus]

Six Flags Stock May Have Peaked

The theme-park operator has enjoyed rising shares, big payouts, and buybacks, but it faces challenges.

 

Investors have had an incredible ride with theme-park operator Six Flags Entertainment. Its shares have climbed sixfold since it exited bankruptcy in 2010, with attendance now at more than 30 million visits a year at its 20 regional parks. Its 135 roller-coasters are steely barriers to entry that even Amazon.com can’t storm. Management of the Grand Prairie, Texas-based chain has been a friend to shareholders, too, returning billions of dollars through stock buybacks and a cash dividend yielding 4.3%, at Six Flags’ recent price of $59.

 

But every ride ends. Although repeat visits have increased, the number of individuals coming to the parks has been flat for years. For the first time since 2010, Six Flags (ticker: SIX) warns that it might fall short of a long-range growth target; specifically, to surpass $600 million in annual cash flow in 2017. It blames the weather. So the company is urging investors to look forward to another target: cash flow of $750 million in 2020. To achieve that goal, however, Six Flags is counting on growth drivers that may sputter. Among them are overseas projects, which have disappointed in the recent past. Attendance may strain the company’s industry-low levels of capital and operating expenditures. And after years of operating tax-free, thanks to loss carryforwards, the theme-park operator will become a federal taxpayer in 2019.

 

Six Flags shares trade at above-average multiples of 26 times next year’s expected earnings, and 13 times expected cash flow. But if cash flow finally tops out—making buybacks and dividends harder to fund—then a cash flow multiple closer to its peers’ 10 times would leave Six Flags shares around $50, or about 15% lower. In any case, upside looks limited.

 

The company and its admirers see many paths to growth. Besides expanding abroad, Six Flags believes that it can sell more season passes, raise prices, and add water parks. These initiatives will help the company expand for years, says CEO Jim Reid-Anderson in an email to Barron’s. “Six Flags is the best brand in an incredibly resilient regional theme-park industry,” he maintains.

 

SIX FLAGS was in its fifth decade when excessive ambition and debt landed it in bankruptcy court. Reid-Anderson took charge in 2010, two months after shares of the reorganized business debuted in the public markets at $9 (split-adjusted). The CEO previously had pulled off an impressive turnaround of the clinical-lab supplier Dade Behring, whose shares rose tenfold before he sold it to Siemens.

 

The theme-park company has been another terrific turnaround for Reid-Anderson. Annual attendance has grown from 24 million to 30 million, as patrons make more repeat visits. Revenue rose from $1 billion in 2011 to $1.3 billion in 2016, lifting Six Flags from a loss to earnings of $118 million, or $1.25 a share (using generally accepted accounting principles). Properly run, amusement parks are big cash machines, so Six Flags investors pay more attention to its reported cash flow, which jumped from $379 million, or $3.44 a share, in 2011, to $545 million, or $5.77, in 2016. In the past 6½ years, Six Flags has returned $1 billion of cash dividends and $1.85 billion in share repurchases.

 

Previously, Six Flags roared past the cash-flow targets it had set: $350 million in 2011 and $500 million in 2015. Still, Treasurer Stephen Purtell tells Barron’s that those targets—like this year’s “Project 600” and 2020’s “Project 750”—were aspirational “stretch goals,” meant to create an incentive for employees, not to guide investors. Because weather and seasonality can affect any quarter, Six Flags tries to keep everyone focused on the long term.

 

To generate $750 million in cash in 2020, however, the company will have to boost annual revenue by hundreds of millions of dollars and maintain its hefty cash-flow margins, which exceed 40%. Purtell says Six Flags has many opportunities to expand revenue.

 

Admissions bring in a little more than half of Six Flags revenue, with another 40% from food, merchandise, and other in-park spending. Six Flags ticket prices, net of discounts, remain below those of competitors like the 14-park chain Cedar Fair (FUN) or the 12-park SeaWorld Entertainment (SEAS). “We’ve taken prices up 3% to 5% every year,” says Purtell. “And we see no pushback on pricing.”

 

Six Flags has also been getting more of its visitors to buy a season pass or a meal plan, each of which bolsters revenue. Purtell compares a theme park to an airplane: More guests don’t add much to costs, so an operator wants to fill it up.

 

But the annual growth rate of season-pass sales has slowed from more than 25% in 2015 to the mid-teens. Growth in deferred revenue—a rough measure of how many season passes have been sold in the past 12 months—has also subsided since 2015. And as more visitors are repeat customers, average per-capita revenue from admissions has fallen.

 

At some point, the company’s aim of drawing more visitors will make it harder to limit capital spending, which, as we show in the chart below, now averages about 9% of revenue, versus around 12% at Cedar Fair and SeaWorld. Purtell says Six Flags can spend more efficiently than other operators, because it’s the world’s biggest customer for roller-coasters and other thrill rides.

 

Bigger crowds would also make it harder to maintain Six Flags’ comparatively low operating expenditures, some of which goes to upkeep of the parks. Purtell says cleanliness is a top priority and that company surveys show customers are happy. As a check, Barron’s studied the user ratings displayed at the website TripAdvisor. As we show in the chart on page 20, the top five U.S. parks of Six Flags got markedly higher proportions of “poor” and “terrible” ratings than did the top five U.S. parks run by Cedar Fair and SeaWorld; or the top two operated by Walt Disney (DIS) and the NBCUniversal unit of Comcast (CMCSA), giving larger parks more weight.

 

Six Flags’ largest park, the sprawling Great Adventure complex in New Jersey, will face a bit more competition in 2019 with the opening of the American Dream mall, which will offer indoor amusement and water parks near New York City. Other malls, with lots of vacant space, are likely to experiment with theme parks. It’s already an accepted fact that the North American market has little room for more theme parks. So Six Flags and its rivals have looked abroad for growth.

 

Six Flags has pursued a franchise-style approach to find partners in Vietnam, Dubai, and China that pay high-margin license fees amounting to $5 million to $10 million a year. When their parks open, Six Flags hopes the annual fees will rise as high as $20 million.

 

But the international ventures are off to slow starts. The Vietnam project foundered when it turned out that a partner lacked the necessary land rights. The Dubai park, scheduled to open in 2019, will be the fourth in a cluster operated by DXB Entertainments (DXBE.Dubai). But attendance and hotel occupancy at DXB’s first two parks have fallen short. On the Dubai bourse, DXB shares have lost nearly half of their value this year. And as large as China’s market promises to be, Disney and Universal are already there, and China’s Wanda Group conglomerate built a string of theme parks that it then sold off.

 

The world’s developing nations deserve higher incomes, and roller-coasters, too. But Six Flags’ piece of the action may not arrive soon enough to keep its revenue on a growth trajectory. And starting around 2019, it’ll get harder for revenue to drop to the bottom line, as Six Flags exhausts the $2.1 billion in net operating-loss tax benefits that it brought out of bankruptcy seven years ago. If the tax bite then exceeds 30% (or 25% if tax cuts pass), Six Flags will have less spare cash to cover its dividend. And then, the thrill may be gone for investors.

[coasterbill]

A few takeaways...

 

1) I've shared my concerns already about Six Flags being close to market saturation, but the Water World acquisition should help a tiny bit (especially if they use it as a way to whore out more season passes and we all know they will) and they're taking a risk with a solid potential payoff by making Magic Mountain a daily operation park so they're working on this and I think we should definitely wait and see how it plays out going forward before jumping to conclusions and taking this opinion piece too seriously. Fourth quarter attendance is basically guaranteed to be up because of Six Flags New England so they'll have something to beat their chests about on the Q4 call I'm sure.

 

2) Of course the annual growth rate of season-pass sales has slowed because they've saturated the market. In a way it's a good thing, but shareholders won't want to hear that.

 

3) I'm no economist, but I REALLY think people have been over-hyping the impact the American Dream mall will have on Six Flags Great Adventure (almost 70 miles away with a much smaller scale theme park).

 

4) For a company that doesn't like to blame weather, they sure love blaming weather.

 

One unfortunate reality of achieving your goal of growing your pass-holder base to an incredibly high level of overall attendance is that going forward it makes additional growth a challenge. They're doing fine, but obviously the shareholders aren't going to be happy with the status quo, no matter how lucrative it is. Right now, the path of least resistance when it comes to increasing revenues is to add more and more operating dates chain wide (which they're trying at Magic Mountain and Six Flags New England) and to acquire small water parks, preferably close to their existing parks that would incentivize people to buy season passes. I don't really have any complaints about their strategy right now.

[ElvisLuv]

A few takeaways...

 

1) I've shared my concerns already about Six Flags being close to market saturation, but the Water World acquisition should help a tiny bit (especially if they use it as a way to whore out more season passes and we all know they will) and they're taking a risk with a solid potential payoff by making Magic Mountain a daily operation park so they're working on this and I think we should definitely wait and see how it plays out going forward before jumping to conclusions and taking this opinion piece too seriously. Fourth quarter attendance is basically guaranteed to be up because of Six Flags New England so they'll have something to beat their chests about on the Q4 call I'm sure.

 

2) Of course the annual growth rate of season-pass sales has slowed because they've saturated the market. In a way it's a good thing, but shareholders won't want to hear that.

 

3) I'm no economist, but I REALLY think people have been over-hyping the impact the American Dream mall will have on Six Flags Great Adventure (almost 70 miles away with a much smaller scale theme park).

 

4) For a company that doesn't like to blame weather, they sure love blaming weather.

 

One unfortunate reality of achieving your goal of growing your pass-holder base to an incredibly high level of overall attendance is that going forward it makes additional growth a challenge. They're doing fine, but obviously the shareholders aren't going to be happy with the status quo, no matter how lucrative it is. Right now, the path of least resistance when it comes to increasing revenues is to add more and more operating dates chain wide (which they're trying at Magic Mountain and Six Flags New England) and to acquire small water parks, preferably close to their existing parks that would incentivize people to buy season passes. I don't really have any complaints about their strategy right now.

 

 

American Dream:

Sea Life Aquarium

 

Legoland Discovery Centery

 

Amazing all Proslide water park

 

Theme Park with interesting mash up of two Gerstlauers already known.

 

KidZania

 

New Toys r us Flagship store (maybe)

 

Ski slope with tube rums

 

Not to forget any outside wheel built

Or other attractions like imax screens, soaring type ride of the NYV skyline and bowling/FEC type facilities like D&B all in a cluster

 

Add that to,the apparent smooth ride the proposed full sized Lego Park is having outside of NYC .

 

Six Flags may need to revisit parks lie Frontier City and expand out the Water Park side of things and feed STL and the Texas parks with the season passes. Magic Springs would fall into this cat. A compltry new water park only in the Memphis area would make bank and feed the dry parks in STL and ATL along with Northwest Arkansas for the STL and Dallas dry parks.

[AmyUD06]

 

 

American Dream:

Never, ever, ever, going to open.

 

Fixed that for you.

[Manic Monte]

"At some point, the company’s aim of drawing more visitors will make it harder to limit capital spending, which, as we show in the chart below, now averages about 9% of revenue, versus around 12% at Cedar Fair and SeaWorld. Purtell says Six Flags can spend more efficiently than other operators, because it’s the world’s biggest customer for roller-coasters and other thrill rides.

 

Bigger crowds would also make it harder to maintain Six Flags’ comparatively low operating expenditures, some of which goes to upkeep of the parks. Purtell says cleanliness is a top priority and that company surveys show customers are happy. As a check, Barron’s studied the user ratings displayed at the website TripAdvisor. As we show in the chart on page 20, the top five U.S. parks of Six Flags got markedly higher proportions of “poor” and “terrible” ratings than did the top five U.S. parks run by Cedar Fair and SeaWorld; or the top two operated by Walt Disney (DIS) and the NBCUniversal unit of Comcast (CMCSA), giving larger parks more weight".

 

As I have said, being cheap and thrifty will work for awhile, because SF already had such a extensive group of large rides thanks to the former regime's over spending. But that will only take you so far as people begin to stay home and save their money until the next "BIG" ride arrives. It will be interesting to see how they handle this going forward.

[coasterbill]

American Dream:

Sea Life Aquarium

Legoland Discovery Centery

Amazing all Proslide water park

Theme Park with interesting mash up of two Gerstlauers already known.

KidZania

New Toys r us Flagship store (maybe)

Ski slope with tube rums

Not to forget any outside wheel built

Or other attractions like imax screens, soaring type ride of the NYV skyline and bowling/FEC type facilities like D&B all in a cluster

 

That's all well and good but as far as theme parks go that place won't hold a candle to Great Adventure assuming it ever actually opens and everyone knows it. It's great to have all of those things in one place but it's still a great distance from the park and really not the same level of park. Rye Playland, Coney Island and Adventureland are both much closer to New York City than Great Adventure is and Great Adventure is doing just fine. Those parks both seem to be about the same size and scale as the proposed American Dream theme park (except for Coney Island which is larger and will most likely have a much better selection of rides).

 

As for the water park, I wouldn't be surprised if that appeals to a more local market anyway. The water park market in the region is ridiculously competitive and Hurricane Harbor manages to hit capacity ALL THE TIME despite the fact that the park is objectively terrible.

 

Add that to,the apparent smooth ride the proposed full sized Lego Park is having outside of NYC .

 

Legoland and Six Flags Great Adventure are clearly not targeting the same market, and Goshen is not exactly as close to New York as they'd have people believe. It's an hour and 40 minute drive from Manhattan and almost 70 miles away. It's also 122 miles from Great Adventure. I live near Goshen, by drive time it's closer to Scranton, PA or (depending on the day) Albany than it is to New York City.

 

 

 

American Dream:

Never, ever, ever, going to open.

 

Fixed that for you.

Also this.

[PKI Jizzman]

Just got a survey asking a lot about Marvel characters - LOTS about Thor,then XMen, Cap America, The Defenders (Luke Cage, J Jones, Daredevil), and a series of questions on a dark ride idea called "Fairy World".

 

SF doesn't have the rights to Marvel, right? Guess they're seeing what people think about non DC characters? A lot of super hero movie questions as well (did you see/do you want to see/will you). I didn't know there's a Venom movie coming out. Dope!

[3Mutts]

Just got a survey asking a lot about Marvel characters - LOTS about Thor,then XMen, Cap America, The Defenders (Luke Cage, J Jones, Daredevil), and a series of questions on a dark ride idea called "Fairy World".

 

SF doesn't have the rights to Marvel, right? Guess they're seeing what people think about non DC characters? A lot of super hero movie questions as well (did you see/do you want to see/will you). I didn't know there's a Venom movie coming out. Dope!

 

IDK what SF is thinking, Disney is not going to license out Marvel considering they are going to add new Marvel lands to their parks in the near future. In fact the only reason Universal can still use Marvel is because their deal came before Disney purchased Marvel and when it expires I doubt Disney will renew it.

[CaptainUnknown]

^^I'm curious if the chain is looking into some of those characters for international parks under construction/consideration.

 

And yeah, there is a Venom movie coming out in October with Tom Hardy playing Venom! He's already done a better job than Topher Grace in Spider-Man 3.

[michaellynn4]

Six Flags includes Marvel characters in their surveys testing DC character awareness in order to have a baseline comparison to the competition. They've included them in those types of surveys for the last few years now. You not only want to avoid using DC characters people have never heard of, but also any DC characters people are going to incorrectly associate with a corresponding Marvel character instead (ex: Green Arrow vs Hawkeye).

[cal1br3tto]

What's the deal with the Fairy World concept, anyway? Seems like an odd choice, unless it involves some kind of brand/characters. Yet I'd also be interested to see what a Six Flags fairy dark ride would be like.

[PKI Jizzman]

What's the deal with the Fairy World concept, anyway? Seems like an odd choice, unless it involves some kind of brand/characters. Yet I'd also be interested to see what a Six Flags fairy dark ride would be like.

 

My comment was if you're going to install this in a park that already has a JL ride, I hope the Fairy World would match the quality of effort in themeing. There was no mention of branded content, seems like this might be something they'd venture off on by themselves. Why not re-fresh the idea of Monster Mansion or the SFOT Looney Toons boat ride? Those are great stand out dark rides that everyone loves.

[Rollercoaster Rider]

What's the deal with the Fairy World concept, anyway? Seems like an odd choice, unless it involves some kind of brand/characters. Yet I'd also be interested to see what a Six Flags fairy dark ride would be like.

 

 

Hopefully like Adventureville at Adventure Island, UK. Strobe Lights and Techno Music!

Or Silver Mine at Gulliver's that says "Get the Hell Outta Here 2x"

[jedimaster1227]

Six Flags has sent us a press release announcing the rebranding of Waterworld Concord to Six Flags Hurricane Harbor Concord!

 

Waterworld Concord will be rebranded Six Flags Hurricane Harbor Concord, when it opens this spring for the 2018 season. Northern California’s biggest and most thrilling waterpark will debut an exciting new attraction—Splashwater Island—a colossal water play area featuring more than 100 interactive sprayers, water jets and geysers. The park will also receive extensive theming and upgrades throughout the 30-acre property.

 

“Six Flags is a world-renowned leader in thrills and innovation and we are excited to add the Six Flags Hurricane Harbor name to our newest park,” said Six Flags Discovery Kingdom and Six Flags Hurricane Harbor Concord President Don McCoy. “The new Splashwater Island attraction will delight families with young children and guests of all ages will enjoy the colorful, new theming and many park enhancements.”

 

Six Flags Hurricane Harbor Concord opens for the season on May 5 and later this spring will debut Splashwater Island, the largest addition to the park in over a decade. This multi-level play structure offers dancing fountains, water curtains and a giant tipping bucket. Guests will climb up ladders, splash down seven thrilling slides, and navigate multiple platforms and climbing nets. Guests will also enjoy new luxury cabanas and comfortable lounge chairs.

 

A bold, new entrance marquee will greet guests as they first enter the park. Other upgrades will include newly renovated dining areas and retail shops. Many of the water slides and attractions will receive fresh, brightly-colored paint treatments and new signage.

 

2018 Combo Season Passes are now available for Six Flags Hurricane Harbor Concord and Six Flags Discovery Kingdom. Visit sixflags.com/hurricaneharborconcord for more information.

[RaceBoarder]

Question for DirkFunk or anyone that follows the financials of the park chains:

 

Is there any business logic that could be driving SF to switch a majority of their pass holders over to memberships? I'm referencing SF getting a smaller, yet steady sum of money monthly w/ memberships vs getting a huge influx of cash at Labor Day, then minimal amounts from pass sales over the rest of the year.

 

It seems that the memberships will probably net a higher amount of cash per pass holder per year vs the current system. I'm just curious if there is a tax break or something that would drive them to spread that cash out over all four quarters of the financial year instead of getting the current lump sum in Q3.

 

Thanks for doing a Business for Dummies session here