The wintry months of January to March aren't exactly the hot season for amusement park operators. Still, Q1 sets the theme for the year's busier second and third quarters -- and so it was that investors tuned in last week to hear how things are looking at Six Flags (SIX +0.00%), now under new management with former Middleby leader Selim Bassoul as CEO.
The news was good.
Working off an admittedly low base, given the slow season and the comparison to a pandemic Q1 2021, Six Flags nonetheless grew its park attendance numbers 25%, its revenue 68%, and -- well, no profit, unfortunately, but Six Flags cut its losses by 31% year over year. Six Flags welcomed 1.7 million guests to its parks in the quarter, extracted $138 million in revenue from their wallets, and lost $0.76 per share in the process.
Image source: Getty Images.
Investors may not be thrilled with the loss, but it seems to me that Six Flags is setting itself up to make a lot of money this year, once the weather warms and attendance picks up.
Consider: How many guests show up at a park is determined partly by the weather. But how much guests spend once they arrive at the park is very much a function of management. In that regard, Bassoul promised to "improve the guest experience [and] park appearance," and to keep rides operating more consistently and fill them more efficiently. As Bassoul explained in his post-earnings conference call, improving the rides experience is "Objective No. 1" at Six Flags -- and by all the evidence, he's been successful with it, because Six Flags' performance in Q1 was simply stellar.
Per capita, Six Flags grew ticket revenue 31% to $43.28 for the price of admission. Then it proceeded to grow spending inside the park gates by 39%, to $32.18 per customer. All told, each guest visiting Six Flags in the quarter anted up about $75.46 for the privilege, a 34% increase over last year.
Admittedly, it's hard to discern these improvements on Six Flags' bottom line right now, what with most of the company's parks closed during the first quarter. But as the weather warms, pandemic precautions lift, and Six Flags reaches full capacity, I expect we'll see swelling admissions numbers amplified by these improvements in efficiency, resulting in much larger sales and earnings.
Management may not have provided investors with any guidance for future sales or profits, but when you consider that already over the past 12 months, Six Flags' earnings are already almost back to where they were in the pre-pandemic year 2019, I've a hunch 2022 will be a very good year to own Six Flags stock.
