The Interpreter Posted August 4, 2006 Share Posted August 4, 2006 http://msnbc.msn.com/id/14167149/ By Rick Aristotle Munarriz Updated: 9:36 a.m. ET Aug 3, 2006 A good day at an amusement park is filled with a fair share of highs and lows. Why should a regional operator's financial report be any different? Six Flags(NYSE: SIX) closed out a challenging early-summer season with a wider-than-expected loss on essentially flat revenue growth of $356.1 million. There's a lot more to the top-line flatness than meets the eye, though. The company suffered a 14% decline in attendance, but helped offset that with a 14% spike in per capita spending. The trend continued into the current quarter, with double-digit gains in per capita spending in July on a 13% dip in turnstile clicks. The report comes just days after rival Cedar Fair(NYSE: FUN) also failed to live up to Wall Street expectations, despite taking a different stance than Six Flags. It lowered admission prices, but still didn't generate the desired attendance gains. Investors need to be realistic here. Six Flags' CEO Mark Shapiro is on the right path. He didn't have the luxury of an entire offseason to lay out his plan of providing cleaner, more family-friendly experiences, but the early indications are that those who are showing up at Six Flags are mostly having a good time. Exit surveys are clocking in at five-year highs in many key categories, and some of the findings are certainly Plan-A-affirming. Guests who saw a show or interacted with a character are spending 48% more than the average guest. Those who agree that the park is cleaner and feels safer this year are spending 20% more. The plan is a sound one. It just needs time, and now Six Flags has that luxury. The company's creditors are relaxing debt covenants that were being violated during the chain's makeover. That patience will be tested if Shapiro's changes don't restore the company to financial stability come next season. That's when Plan B would rear its ugly head. And that's one thrill ride no one wants to see. Cedar Fair is one of the many income-producing companies in theIncome Investorstock research service. If youwant to check out the other high-yielding investments that Mathew Emmert likes these days, check out Income Investor with a free 30-day trial subscription. Longtime Fool contributor Rick Munarriz enjoys taking his family on coaster treks over the summer. He did his part by heading over to Six Flags Great Adventure and Six Flags Great Escape two months ago. He owns units in Cedar Fair. T he Fool has a disclosure policy. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early. Quote Link to comment Share on other sites More sharing options...
WooferBearATL Posted August 4, 2006 Share Posted August 4, 2006 Hmmm, guest that see a show or spend time with a character spend 48% more. How long have I been harping about how elimination of entertainment at Kings Island is a mistake? Quote Link to comment Share on other sites More sharing options...
jzarley Posted August 4, 2006 Share Posted August 4, 2006 This was a pretty boring conference call, too... Sharpiro was brilliant to do the mid-Quarter conference call with the analysts in June. He took the hit in the stock price then that would have only been compounded if all that news would have come out with the Q2 earnings results. By the time the Q2 release came out, it was old news to the analysts. SF still has a long, hard road in front of it and they're far from out of the woods yet, but Shapiro just proves over and over again what a savy guy he is... Quote Link to comment Share on other sites More sharing options...
jzarley Posted August 4, 2006 Share Posted August 4, 2006 ...although, this is somewhat of a schizophrenic management approach to Shapiro's announced strategy: http://www.denverpost.com/business/ci_4134300 I think it's interesting that the spokesperson said this was a "normal" reconsideration of staffing at this point in the season, yet Shapiro made the point on the conference call that 20% of their annual revenue is made during the month of August. My guess would be that they must be pretty sure at this point that Elitch Gardens will be one of the parks to go... Quote Link to comment Share on other sites More sharing options...
WooferBearATL Posted August 4, 2006 Share Posted August 4, 2006 ...although, this is somewhat of a schizophrenic management approach to Shapiros announced strategy: http://www.denverpost.com/business/ci_4134300 I think it's interesting that the spokesperson said this was a "normal" reconsideration of staffing at this point in the season, yet Shapiro made the point on the conference call that 20% of their annual revenue is made during the month of August. My guess would be that they must be pretty sure at this point that Elitch Gardens will be one of the parks to go... That move makes that Pretty Obvious I'd say. Quote Link to comment Share on other sites More sharing options...
jzarley Posted August 7, 2006 Share Posted August 7, 2006 ...although, this is somewhat of a schizophrenic management approach to Shapiros announced strategy: http://www.denverpost.com/business/ci_4134300 I think it's interesting that the spokesperson said this was a "normal" reconsideration of staffing at this point in the season, yet Shapiro made the point on the conference call that 20% of their annual revenue is made during the month of August. My guess would be that they must be pretty sure at this point that Elitch Gardens will be one of the parks to go... That move makes that Pretty Obvious I'd say. ...and this now confirms it: http://www.denverpost.com/business/ci_4144186 Quote Link to comment Share on other sites More sharing options...
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