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What is happening
Shares of Six Flags Entertainment (NYSE: SIX) were up more than 13% on Thursday. Following the third quarter financial report, the theme park operator reached an agreement with H Partners that will allow the investment firm to increase its stake.
Keep on
Led by CEO Salim Basul, who will take over the helm in November 2021, Six Flags is implementing a bold new strategy that hopes to improve the guest experience by reducing guest attendance. To do this, Six Flags raised ticket prices to increase profitability by using some of the revenue to invest in new rides and attractions.
The first part of the plan worked. Six Flags park visitors declined 33% year-over-year to 8 million guests in the third quarter.
However, the profit-maximizing part of the plan is still being worked out. Spending per guest increased 17% to $ 60.96, not enough to make up for a sharp drop in attendance. Six Flags’ revenue, in turn, dropped 21% to $ 505 million. The cost reduction helped offset some of the sales loss, but the company’s adjusted profit before interest, taxes, depreciation and amortization (EBITDA) still dropped 19% to $ 226 million.
“While it will take some time to reach our ambitious goals, we are encouraged by recent progress, with per capita spending up nearly 50% this year compared to 2019 and a significant increase in attendance and season ticket sales in October. and at the beginning of the year … November, “Basul said in today’s press release.
and now
H Partners believes that the Basaul initiative will bear fruit over time. The investment firm entered into an agreement that allows it to increase its stake in Six Flags to 19.9% from the previous limit of 14.9%.
“We are excited about the company’s strategy of delivering an exceptional guest experience and long-term sustainable revenue growth,” said Arik Ruhim, HPpartners Partner and Six Flags Board Director, in a press release. “We believe that significant change will take time to materialize and we are encouraged by the first signs of progress on this ambitious path.”
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Joe Tenebrusan has no position in any of the listed stocks. The Spotted Flower has a location and recommends six flags. The Motley Fool has an obvious policy.
