Market Overview

6 Ways Six Flags Has Performed Since New Management Took Over 6 Years Ago

6 Ways Six Flags Has Performed Since New Management Took Over 6 Years Ago

Time is a great healer and the idiom has proved its worth in the case of Six Flags Entertainment Corp (NYSE: SIX), which has gone through muddled and troubled waters, before sanity prevailed. All credits to the management team that was inducted post the company emerging from bankruptcy way back in 2010.

Below is a brief summary of what ailed the company in the past and the turnaround initiatives undertaken and the transformation that ensued:

  • Founded way back in 1961 and headquartered in Grand Prairie, Texas, the amusement park company was forced to file for Chapter 11 Bankruptcy in June 2009, as business conditions deteriorated due to dwindling attendance and alarmingly shrinking cash flow, which deprived it of cash for financing day-to-day operations.
  • Macquarie analyst Matthew Brooks sees the development as a function of debt-driven acquisitions in 2000s, poor attendance and a widening price gap with rival Cedar Fair, L.P. (NYSE: FUN).
  • Mark Shapiro, the CEO under whom the company filed for bankruptcy, announced the company's emergence from bankruptcy on March 3, 2010. The company could achieve this with the leeway provided by the bankruptcy filing and new equity commitment from new shareholders.
  • Shapiro, who oversaw the bankruptcy, was ousted shortly after and in May, the company announced the appointment of Alexander Al Weber, Jr. as the president and interim CEO. In August, the company named bankruptcy reorganization specialist James Reid-Anderson.
  • John Duffey was drafted in as the chief financial officer and Lane Balk as the general counsel in September. By December, the company was back to business with a flourish that its board announced its first quarterly dividend.
  • Duffey went on to become the company's CEO by in January 2016.

Looking At Six Flags 6 Years Into Current Management's Tenure

Fundamentals Firm Up

  • Since 2013, the company's revenues have grown roughly 14 percent to $1.26 billion in 2015. Cost of revenues as a proportion of revenues has been reigned in, standing at roughly around 44.5 percent.
  • In the four quarters in the run up to the current quarter, the company managed to beat expectations in three quarters, but failed to clear the bar only in the second quarter ended June.
  • After dropping 2 percent in 2014, attendance has climbed 11 percent in 2015. This is a notable increase from 4 percent in 2010. Revenue per capital after rising strongly to $45.86 in 2014 from $42.45 in 2013 slowed slightly to $44.26 in 2015.

Macquarie said in a note this week, since the new management took over six years ago, Six Flags has increased attendance 3.3 percent annually, boosted pass attendance from 32 percent to 56 percent, and raised ticket prices and in-park pricing 2.7 percent and 1.2 percent per year, respectively.

The firm feels Six Flags is still a growth story and its strategies still have legs to play out. With the recent announcement from peer SeaWorld Entertainment Inc(NYSE: SEAS) suspending its dividend, income seeking investors could make a switch over. That said, Macquarie is still cautious on Six Flags and has a Neutral rating on the shares of the company and a $57 price target.

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Latest Ratings for SIX

May 2020Wells FargoMaintainsEqual-Weight
May 2020SunTrust Robinson HumphreyMaintainsHold
May 2020B. Riley FBRMaintainsNeutral

View More Analyst Ratings for SIX
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