Six Flags Q2: Parks Made Money, the Reported Loss Doubled

0:00 From our studios this week in Los Angeles and Tampa. This is Green Tag to THEE Parker and thirty. I'm Philip from Ganta Mighty and Controls, and I'm joined as always by my delightful co host, Scott Swinson of Scott Swinson Creativelopment. Who's not sipping the spinish expresso today? No, this is it's funny. This is actually waterloo melon Medley. Oh. I don't know what the hell that means. I think what they did was they just got carbonated water and put a watermelon over the top of it and then send it out. I don't know anyway. On Green Tag, we look at the top news each week and we try and pick the stories we think matter most to industry professionals, and this week was Earning's week. I did spend the entire week waking up and listening to Earning's calls and making notes and then reading through financial documents, which was I don't want to call it fun.

0:46 We actually it was pretty fun. I'm not gonna lie. It's here for you. It's fun for you. The rest of the world. I was like, that's nice, but it's fun for you, so that's good. It was a fun week. I will say to get to hear where everyone is. We're going to try and get through as much as we can on these earnings. But I will tell you that the Disney stuff is a lot, and that I put that at the end so it might spill over into our Patreon episode for that one. But since most of our listeners are obsessed with six Flags, we're going to start with six Flags. Hopefully we'll get to United Parks. And then we'll go into Disney, because there's a lot with Disney. As all of these parks do, they try to announce stuff around the earnings call because they kind of want to maybe distract from some stuff. And the thing that Six Flags announced at the same time, which we'll try and get to, of course's expansion at one of their parks. So they announced earnings and expansion, and of course the United Parks announced the IP partnership and their stuff, and then Disney announced a TikTok partnership along with their earnings, so they kind of have these double announcements for each one. But let's just go one a time.

1:55 We'll start with six Flags. So here's the thing about six Flags. I'm going to try and summarize it and then we could maybe talk more about it. But looking at everything, this is a story of the new leadership successfully reorienting the company towards the idea of repeat visitation, which we have talked about Agnasium. That is Riley's goal, which is repea visitation. Yet they're still struggling because they have so much debt. That's it, That's what's goat. It's these two forces. It's like the leadership and they're moving the Titanic basically because the amount of parks and chains is a massive chain. They're reorienting it towards bringing guests back, so improving the park experiences, bringing accountability, doing events, or they're all the initiat all these initiatives that they are successfully implementing, and it is working. It is working because pass is up, you know, revenue is up, attendance is up. All these things are up. People are coming to the parks more often, people are going the events.

2:57 Everything is working, but are they going to be able to go fast enough because they have so much debt? And the number I think that puts it all into perspective is they're planning four hundred and forty eight Halloween experiences this year from coast to coast, one hundred and seven of which are haunted houses, which is just I think that puts them squarely as the winner in the in the amount of haunted houses that any changes operating simultaneously. So maybe thirteenth floor. Maybe maybe maybe could be maybe half that, but I don't know's that's a lot, but the numbers is what really puts it here. So basically, running the parks as a whole, they produced about eighty eight point six million in revenue, okay, So in the quarter justice one quarter okay, so eighty eight point six million in revenue.

3:51 Okay. That was actually up from seventy four point five million a year ago. So they had revenue, so eighty eight million, hold that number, okay, and interest on the debt and all that stuff. So basically the problem is they brought in eighty eight, but then interest in the company's debt cost one hundred and two million, So you bring in eighty eight, but your interest is one hundred and so you're negative twenty. That's that's the problem right in one quarter, right, because they have what almost five billion in debt, right, So this is the problem. So the real thing here is can they with Riley's leadership changes and all of the stuff that they're doing, are they going to be able to raise per caps which raises revenue and all that enough to at least get equal And then the plan is, which you talked about on the call. The plan is to sell the assets to help pay down the debt and delever them. And he's talked about some sales letter they have in Maryland and some other interest but he said that probably wouldn't close until late twenty twenty seven or twenty twenty eight. So I think that's the problem is they have so much debt. They do have assets that they're trying to sell, or they might strip more parks, who knows, but basically they need to They need to sell assets to de lever at the same time that they are maneuvering to get overall visitation and spending up so they can on a quarter by quarter basis basically make more money than they have to

5:21 pay to service. So that this is my take on it. We could go into all the individual things. We could look at the numbers, if you want, Scott, We could look at the strategy what he talked about with pass holders we could look about the events and the capital plan and the rollout and what they've talked about. They talked about a lot about uptime. He was pushed about July and gave a very interesting answer about whether or not stuff is attendance is softening. What do you think? What would you like to talk about, Scott? No, I think that you know, I think you encapsulated that very well. In essence, they had a loss of twenty point one million before.

6:01 Practices, right, and then there's all this that's. That's the real bottom line that we have. That well, certainly investors are going to look at that is the real bottom line. So I am thrilled to see that they are chipping away at that that disparity of numbers of how much they owe versus how much they're But but again, I ask any of you if if you if you make a certain amount of money and you owe significantly more. I mean, this is exactly what happened to so many people on an individual level in the eighties. They charged everything. They were like, oh yeah, I'll just kick that kick that can down the street a little bit, and ended up, you know, in bankruptcy because they were in trouble I am glad to see. On the one hand, I am very glad to see that that the efforts are slowly scratching.

6:58 Away right at yes, at the at. The at the problem. And it sounds as though with the combination of increasing repeat visitation, which I think should be number one. I think that should be their number one priority. And and the only reason I say that is I have seen that save parks significantly more than constantly raising your prices. Right, it is better. It is better to make your money on clicks of a turnstyle than on fewer clicks of the turnstile at a higher price. That's right, especially when your problem is dead. He said that. Well, and again, John and I come from the same world. So you know, we've we've seen it happen, we've seen it successfully work, and so it's that's a that's a good thing. That's a very good thing.

7:48 I think that I think that you know, John has been saying everything right, take to your point, you know, everything that he said on the call, his strategy at this point. This is maybe like a but I can't. I think he's doing an excellent job actually with with with the hand that with the situation that he's in and to exactly yourfort He basically said that because some of the not you know, not all of the investors in the Q and a kind of understand. And so they were they were bringing up a lot of stuff that I think is not the point that they were talking about. They were like, which numbers should we be looking at? And his point is you should be looking at the same park numbers because they sold a bunch of parks.

8:29 So you know, if you look at your if you look at their aggregate revenue, they lost the revenue from all those other parks, right, and their per cap numbers are kind of changed because per cap is, you know, generally aggregate, but you lost a bunch of parks, but those parks were underperforming, so you've got a lot of numbers that are skewed here. So he was saying, you've got to look at the same park numbers because that's what we're trying to measure against, and those are all up. And they did ask about how come your They pushed him like, how come that your per cap spending is down one percent? Shouldn't it be up because you lost a bunch of low performing parks. And he's like, no, because we're trying to increase visitation because we want them to come more frequently, and he talks about the lifetime value of a guest improving, so he wants them to come more than four times a year and to come to more events, and that way they'll spend more. But that makes the per cap number go down because they have one pass sale and that person then visits more than four times, so it lowers the overall per cap.

9:26 So the people were kind of I think he was saying exactly what you're saying, and he was just trying to clarify to a lot of the investors that don't really understand the theme park numbers and they're just concerned. And I will also add just so that we don't get yelled at in the comments. So there was. The headline numbers that you're going to see out there are like they lose two hundred million or something. That is not the whole story, because what I'm concerned with is looking at how much the parks you're making and how much that they're paying. So it's twenty million dollars loss. There was a tax charge that they got on here because basically normally when you lose twenty million, you know, you would produce a tax benefit, but instead they reported one hundred and fifty seven million tax charge, and that charges what doubled the loss. But that is an accounting catchup because companies book quarterly taxes against their estimated full year rate, and when the estimate changes, the correction comes in.

10:25 So I looked at the tank QK table to verify that. But that's why I just I just because most of the news stations just set two hundred million OAR the loss, which is not like quite right right because part of its attax recalculation. The real number we're looking at is how much they're losing and operating. But Scott, you're right, he's doing exactly. I think what you're saying. Yeah, I think, but I think you know, and I'm usually the positive one, but I will say I think they are doing I think they're doing what they're saying. I think this is part of a much longer term plan. But I also think it's fair to say they are racing to equilibrium there. They're they're racing desperately to get to a point where they are uh not losing money.

11:10 They're not losing money before the company has to fold, and it is a it is a multi tiered strategy. And I think that all the tears are right. It's good to see that they are working. But as we say so often on this show, we this is we have to see how it pans out, you know, we have to see how it's fully executed. Because this can be in theory all the wonderful things, and it's working. It's certainly working in the short term. If it continues to work in the long term, that will be wonderful, and it will it will help. It's like it's like it's like they're underwater and they got to get They got to get to the surface before they can't hold their breath any longer.

11:53 That's right. That That's how I felt. I will say I agree with you one hundred percent on that. That's that was my big takeaway from this. I will say, though, to give rightly credit, I didn't sense anything on the calls. He was not. You would not know that. You know from from his He's doing what a great leader does, which is calm, planning, reorienting leadership. He brought in all new leadership. The whole c suite almost has been redone. I mean he's doing exactly what he should be doing. And if you know, you wouldn't sense that they're panicked from from how he's presenting it, and he's kind of yeah, And. My guess is he's not panicked. My guess is he's not panicked because I mean, going back to my analogy of being underwater free divers, the first thing that's going to kill them is to panic. So he and he knows that. And he is also now although I did not hear this particular call, he is also very good about being both transparent and non alarmist. So he can be transparent and he can say we've got these problems.

13:01 But every time he says that, it's usually followed up with and like I said, I did not hear this particular call, but it's usually followed up with and here's here's the steps we're taking to correct it, and here's the challenge that we're here, here's the challenge, here's how we're meeting that challenge, and how we're going to continue to move forward. So you know, everybody, you're right, there's always going to be those clickbait headlines that are you know, six Flags loses two hundred million dollars. There's always going to be that. It's never things are never as good or as bad as people want to make them out to be, because it's only when things are stellar or when things are absolute crap that people really want to read about them. So journalism, the journalists are going to find ways to get you to click, and some journalists more than others. But it's it's it's important to recognize that, no, the story. I'm not saying for a moment that the six Flags story is great. You know, the birds are singing, the sun has come up, but I think it is fair to say that they are, like I said, struggling to get to the surface before they run out of breath, and they're swimming in the right direction. Let's see how it.

14:04 Turns out of speaking of swimming in the right direction. He did say something that was very interesting that sounded almost exactly like Scott, which something you say all the time he was pushed on the call. It was a very interesting question that was like posed by in the Q and a section from one of the I think one of the banks, but they asked essentially, is he going to be putting his capex into hard capex, which would be coasters or soft capex, which would be events. And he basically said events because they make they have they right drive a better ROI. Basically, it's basically what he said.

14:44 He says events are a very efficient way to deploy capital as we go forward, which is exactly when Scott says, when Scott how many times that Scott said it, how many holla screams could you run instead of one coaster? That's effectively I think what really said, yeah, and. Again we were literally in the same park at the same time when the when that kind of discussion was being being had, And you know, I think I don't know whether people necessarily because what will happen is there are people who just simply don't like Halloween, so therefore they see no value in doing a Halloween event, or they don't they won't be they don't want to worry about staffing it, or they don't want to have the XT, they don't want to work the extra hours or whatever.

15:32 But when you break it down to dollars to profit and loss, he's absolutely right. You know, you can excuse me, you can continue to invest in big pieces of twisted steel which only draw attendance for somewhere around two years, or you can invest that money, you can invest less money and and get bigger clicks, get more clicks on the turnstile, and and quite honestly, per caps generally speaking, per caps for day product and per caps for event or festival product, whether it's Halloween or Christmas or whatever.

16:15 The per caps for the events actually are higher because there's a fews on it. It's limited, so people have to buy it. Then day product with your season pass holders, season pass holders by merch the first time they come and never again. That's an exaggeration, but that's the basics. So again, we were John and John was. I don't want to I don't want to people to think that, yeah, he was in the office next to my No, not, we weren't. He was like still way up higher on the food chain than I was. But but we were living the same microcosm in the same park at the same time when this was proven. So I'm glad to see that he can take it and make it a bit more macro and fingers crossed, hopefully we'll get there in time.

17:01 Right to your point about Halloween not being appealing to everybody, I think he did address that also because while he did talk about how they're going to have, he's calling it America's biggest Halloween party, which I think is also a pretty good strategy to remind people that six Flags has the biggest footprint of. All of the chains. You know, they have parks all over and a lot of people have access to six Lex parks. And when you combine that with a regional pass and then you say every six Flags is doing a Halloween event, then you get this four hundred and forty eight experiences, one hundred and seven mazes, eleven of them are new for twenty twenty six, with four new ips he has announced yet. So he did talk a lot about Halloween, but he also mentioned that the Bois Andberry Festival he called out by name at Knotsberry Farm and said that it's a fantastic event that drives very high percast. You just said that, very high visitation and very high pass renewal, and they're looking to launch more food and beverage festivals with that same template at other big markets. So I think he is also saying it's not just about Halloween, it's also about how do we bring back the seasons of fun. Basically, and you know, expand it and to more places.

18:12 He did. Also, another thing he mentioned that was interesting was about the data. Not many people talk about this, but he did talk about how they are working on again unifying their data so they can provide more targeted offers to people. So we saw that Christmas in July offer that they that they put out there for some of their parks. But I think that what he's talking about is a more unified data system that could serve up stuff to people. So anyway, I think he's saying all the right things, and if you buy into this vision, you could foresee sometime in the future where all the parks do different festivals that are localized, because he talked about the park presidents and why they're important because each park has its own entertainment.

18:58 Needs and whatnot. So you know, you do all that, and then you can imagine where they would know who who's attending the individual park and be able to market the food festival directly to them and incentivize them to come back. So it just is a is a nice flywheel. So I think it all makes sense. And just to quickly just to quickly circle back on your on your him gathering data and utilizing that to help make good decisions moving forward, and just even it's so funny when these kind of things come up because again we never really know exactly what we're going to talk about. Philip does all the work, but we don't know where the conversation is going to go until we actually start talking. But two nights ago I did a session at Iappa HQ and we were talking. It was co presented with Matt Heller and and yes there were some listeners in the session. So hi, guys, I told you I'd mentioned on the show. Anyway, one of the things that we mentioned even in just creating excellent guest service is have you have to understand your audience, You have to stand you have to have the data in order to react to it. You can't just say, well, I think it's going to be this, or oh, don't be stupid, it's always this, it's not. And to make things databased, to make things to continue to expand that that information gathering side is again another really smart, another really smart move. So if I were if all my money, all of my investments were all in six Flags stock,

20:29 and if and their success was going to make or break me, as an individual, I still would not be released, releasing a sigh of relief, but I would still be watching carefully and cheering on from the sidelines, right right. A few last notes to button up here. I'm sure, I'm sure commenters will ask about that. So he did bring up the up time, and he physifically said, our continuing work on up time and throughput delivers more attraction experiences per guest, rebuilds a guest trust, supports repeat visitation, and strengthens long term pricing power. And they are they've improved in the quarter, although performance remains uneven. A lot of our commenters have have have said that, and I think he's aware. He said that the companies said that their deferred maintenance would reverse in the second quarter to support uptime, So they are like actively trying to improve the park experience, which he's been working on, but it's a slow process. He was asked about July. If you remember we talked about Comcast saying that July was starting to soften, you know, July, like the June July, the summer basically was softening, which is which is what Universal talked about on their last earnings call. He was asked about that twice and he sort of didn't really answer basically, so he kind of gave exactly what you said, Scott exactly.

21:54 He kind of was like, well, there were wildfires that impacted a lot of their parks, had clothes for air quality. And then the July four so he kind of talked about counter and then he said, but we had our most attended day ever on record in the chains in July, and so we kind of tried to push back. But when asked about actual numbers, like can you give us a like like number, he did not so well. And even that question, even that question probably asked by someone who listens to our show, because didn't we just talk about is summer the new souldier seats? You know? Right? Yeah? So yeah, so we're the industry is all is all there. We know what's going on. He knows what's going on.

22:36 It is a it is a compelling question. But again, as you've said, he's doing all the right things and let's just hope he can get them done quickly enough. And Halloween's going to do well for them. You just know it is, because with their with their past base growing by six percent already, and then there they're annual pass sales up seven percent. Like those people are going to come back for Halloween and for Christmas. They does this is how it works. That's why they bought the pass. Like that's me saying it and Scott saying, you know. But so I think it's it's gonna it's they're gonna They're gonna do fine the next few quarters. But then we'll see what happens. So speaking of the next thing that was announced on the same morning is well back up a slipe it. We're recording this on Friday, a little bit early. They supposedly today they have announced a new annual past program, which we we'll talk about next week because I didn't have time to look at it.

23:28 But yesterday, at the same time as earnings, they also announced that Great America is going to get Camp Timber Trail, which is a nine attraction family land for twenty twenty seven. It's a very large build here and it's all family based. So of course this is going to what Scott and I've been talking about, where it's the same thing as in Looting Tune's area at Magic Mountain, where the family market, especially the young family market, is one of the only markets that's continuing to spend still right now as one of the strongest spinning markets, and so this seems like it's geared directly to them. It's also he was also asked on the call about the K shaped economy and where he thinks their customers land on it, which which is?

24:13 Which was a hilarious question, which he also dodged. He dodged pretty expertly because you don't want to say on Urn's call that all of our you know, all of our customers are poor. But basically he dodged it, and he kind of talked about how they have premium Halloween upsell experiences. They're building more upsell experiences there, but they're trying to keep the parks affordable, right, So he dodged it in a good way. But he also talked about these family offerings that they're building to kind of build out so that they can more target to demographics. And that's what this is. So I'm sure all of you have already heard already, but it's three all new attractions for rethmed and two are classics that are just staying there and getting a little bit of reskin. The main one is the Skyhawk glides through the tree tops, and and it's so it's Skyhawk, which is going to be billed as Michigan's longest, tallest, and fastest a spended family coaster.

25:08 It looks really cool. That's what everybody is talking about. Did you just say Michigan's longest, fastest. Sorry mid the Midwest, the mid thank you, thank you, because I'm like, A, the park is not in Michigan, and b the Midwest. There we go. I did the vocal warm so I'm still having I'm still getting I. Don't know, I just every now and then we get a little tech glitch and I was just making sure that you know, I didn't hear that incorrectly. So I'm sure everyone's right about this. What do you think, Scott? So, No, this is just so on par It's so on par with what we've seen in all the other parks, you know. In fact, Skyhawk looks suspiciously like the new family coaster at Bush Tampa. So it is. And the thing I love about it is we are finally getting into that realm of the park being comfortable calling it a family coaster because for so many years, so much of my career in the attractions industry. It has either been more thrilling, more dangerous, more terrifying than anything ever before, or it's a kiddy coaster. And so this is something that families can do together. You know, you've heard me say it before. The days of at least for the moment, and this may completely change, but for the moment, the days of the family coming to the park and setting up a meeting place and meeting time and everybody going off to do their own thing, those days, based on the current demographic, are pretty much gone. The current family

26:41 demo wants to do things together, you know. They they and I hate sound like a broken record, but these are also the families that were established during Covide, so they're trying. They have this. They have a different sense of togetherness. They're not a separatist, so they want to go out and have their experiences together. Not mommy and Daddy'll watch you ride the stupid thing and then you can go sit with Anti June while we go on the coasters, because that would be really fun. This is a coaster everybody can do together, or a larger demographic can do together. And I think that is something that we've seen tracking with other parks I think it is exactly and the fact that it is a full realm that is dedicated to this speaks volumes. I mean when six Flags, when Great America put in rakshasa that was sort of a let's PLoP this down in the middle of nowhere. It's not themed to go with any of their areas. It makes zero sense, but it's a kick ass coaster. This is This just comes across as more organized, more planned, more focused.

27:54 There's intent. There's intent here, and I like seeing that. It is interesting. You A lot of what you're saying sounds very similar to the president of a Coma who I watched during Ayappa Honors to gave a presentation as part of the manufacturer's panel, and she said basically exactly what you're saying, that the biggest trend they see is that families want to be able to do rides together, which actually is more of a need or a call for innovation from the manufacturer because you have to make the ride be more interesting, like it can't be what used to be like just a kid's ride, which is like pretty dull, Like it has to be interesting enough for the whole family to be engaged. But it also has to be safe or accessible to the child, and these two things previously before technology were difficult to achieve together, and so it was fascinating to hear that perspective, which is actually, I think the inverse of what a lot of people think.

28:54 You know, they think that because it's a family coaster, it's going to be lame, or it's going to be you know, not as fun or whatever. But her point is, no, we've been improving our technology so that you can make it interesting for everybody but also still allow the kids to write it. That's that's what they're trying to do. And also recognizing what what terrifies adults and what terrifies children is not necessarily the same thing, right, and you have to identify both of those so that you can find that happy middle ground. And if you think this coaster sounds like it's not going to be that much fun, look up the video, the promotional video of what it's going to how it's going to look, you know, look find the AI video of it, because it looks like, no, it is not. It's not Falcon's Flight in Kadea, but it's also not the Caterpillar coaster at your local fair.

29:47 It looks like it is fun. It looks like it is it is zippy, it's got some speed to it, but there's nothing that's going to make kids absolutely wet themselves and be terrify. So it's an interesting it is. It is unique to me because it's the first time in my career in theme park where the family together market has been really focused on, and I love that. Well cool. We didn't get to United Parks, but we didn't get. To anything except for six Flags, so there you go. All right, Well, on behalf of six Flags our show.

30:31 Our show is over, and on behalf of Philip and myself. This is green Tag theme Park in thirty Thank you so much for listening, and we will see you all next week