Six Flags has released the company’s Q1 2022 financial results. The numbers are interesting, though subject to some interpretation. There were also a number of comments about plans Six Flags has for the company as well as the operations of their parks.
The Six Flags Q1 2022 earnings report
The Six Flags Q1 2022 investor call started off with talk about the parks and what the CEO, Selim Bassoul, is calling the company’s “Objective Number 1”. This is to “improve ride efficiency and convenience”. He was shocked that nearly 30% of the seats on their roller coasters would go out empty because of inefficient loading of groups not willing to split up.
The initiative to add single-rider lanes to more and more attractions has been working. It has increased the throughput of each attraction by filling those empty seats with single riders. This also goes a long way towards making the wait-times shorter. It also increases the number of rides per day a guest can enjoy.
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Instead of focusing on the park-wide and costly Flash Pass program to skip the lines, parks have started offering the ability for guests to purchase single passes to skip the lines instead. This has been met with success so far.
Similar actions enacted by Disney’s parks were reported by Disney as being a huge financial gain for the parks. So we can only assume Six Flags will likely see the same windfall over time.
Park beautification
Six Flags is also working on park beautification projects throughout the chain. This will include many improvements to the front gate / ticketing areas as well as to their restaurants. You can also look forward to more “premium brand” restaurant names coming to the Six Flags parks. Starbucks and Fatburger were both mentioned.
The chain also started their hiring process much earlier than in previous years. This is to ensure staffing levels for the 2022 season will be higher than they were last season. This had been a key guest complaint.
So what did the Six Flags Q1 2022 call reveal about the numbers for Q1? First, keep in mind that this is considered the slowest quarter for Six Flags. This is because many of their parks are still closed for the year. Total attendance for Q1 2022 was reported at 1.7 million. This is an increase of 25% over the same quarter the year before.
Part of this attendance increase however, was due to an increase in the number of operating dates in this quarter. Revenue for the quarter was reported at $138 million, up $56 million (68%) from Q1 2021.
Easter holidays
Six Flags also reported that due to the Easter holiday season falling later than normal in 2022, this would put many of those particular operating days into the Q2 2022 earnings report, rather than fall into the current Q1 report. The end result of this shift is that they believe about 200,000 more quests who would have normally been tabulated for Q1 are now going to fall into next quarter’s report.
There were also comments about how the performance of the chain in Q1 2021 was hampered by some COVID related closures of parks that would normally have been open. In particular the parks in California and Mexico were kept shut down.
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Back to the Q1 2022 numbers. Six Flags reported that guest spending PerCaps increased 34% ($19) this year compared to the 2021 performance numbers. The breakdown of spending increases came down to an increase of 31% ($10) in guest spending on admission and a 39% ($9) increase on in-park spending.
Six Flags did note that some of the increases may be seen as slightly exaggerated however as to how their accounting tracked things during Q1 2021. This was especially in the cases of how memberships were handled while parks were closed.
Compared to 2019
Operating expenses for 2022 however, also increased by 19% ($23 million). This was because various parks were closed in Q1 2021, while others were allowed to open with capacity restrictions. As we’ve seen elsewhere, Six Flags did compare some figures to their Q1 2019 report. This gave a better idea of how things are going now compared to pre-pandemic figures.
When compared to 2019, revenue was only reported to have increased by 8%. This was primarily caused by a 58% increases in admissions PerCaps and a 58% increase towards in-park PerCap spending. Attendance in 2022 also shows a 19% decline compared to the chain’s attendance levels in 2019.
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So what’s the end result? Six Flags reported an overall loss of $65.6 million (or adjusted EBITDA of $16 million) for Q1 2022 three-month time period. While a loss is still a loss, this is still an improvement over the $95.8 million (adjusted EBITDA $46 million) loss reported during the Q1 2021 season. Annual Pass sales thus far for 2022 has also seen a decline of 3.6 million pass holders (12%) compared to the chain’s pass holder base the previous year.
This later figure is likely caused by the current overhaul in the park’s Season Pass offerings, as well as the end of the Membership program. Again, many of the parks were still closed during this time-frame. This means a clearer look at the 2022 Six Flags pass holder program won’ be seen until the Q2 report.
Future plans
As for the future, Six Flags is again doubling down on the concept of increasing daily and season pass pricing along with a plan to plus the guest experience. It is accepting that attendance numbers may continue to decline as they adjust their product offering and pricing levels. Six Flags allows that the low pricing and free ticket offerings kept their chain-wide attendance at around 30 million a year.
They now feel that 30 million a year in their parks resulted in “suffocating our parks” and brought their guest scores way down.
While Six Flags didn’t officially set a new goal for this lower attendance concept, they believe that an attendance drop of 10 to 15% might be the place to start. The idea is the lower attendance numbers will result in shorter lines for ride as well as restaurants, improving the overall guest experience.
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Bassoul also confirmed during the Six Flags Q1 2022 call that the ending of the meal plans did indeed come about following those viral videos from users. These had explained how they used the meal plan to their ultimate benefit. They had saved thousands of dollars over the years – by eating all their off-hour meals at the parks. In short, Bassoul described the meal plan as being “very unprofitable for us.”
The current meal plan is no longer being offered as a new purchase option. Six Flags says it will have to re-evaluate the concept. It will see if a revised version of the plan might be something they could offer again in the future.
They are also considering the ability to make monthly payments for the season passes. This was probably the most requested feature lost with the retirement of the old Membership pass plans.
Reaction
The end result for Six Flags saw the market take a less than favorable response to the report. The company’s stock price took a brief dive (from $29.8 to $27.9) following the release of the report. It later returned to a similar level of where it was before, only to continue a slow decline back down again. By the end of the following day the price had settled at $29.21.
A month prior SIX was trading in the $42-43 range, so it looks like investors were expecting some disappointment from this quarter’s report.
While the quarterly reports at most other theme park chains seemed focused on returning their business back to normal on the operations side in anticipation of potentially record setting demand, Six Flags is taking their company down an entirely different tactical path. It is perhaps one more akin to Disney, but trying to increase the quality and price of their offerings in exchange for dialing back their attendance goals. That said, normally comparing Six Flags to Disney would be more like comparing apples and oranges.
Improving the park experience
I think we can all safely agree that Six Flags is not on the same level as Disney. I do see some merit in Selim Bassoul’s plans for the company. It is now freely admitting that the company was previously more focused on driving up attendance figures (even through the use of bring-a-friend free tickets) and that their guest experience had suffered for it. They are also open that it may take some time for this strategy to bear fruit.
However, driving up the price point before you have properly implemented plans to improve the park experience is going to be a bit more of a hard sell. Cutting back operation hours at select locations compared to previous years is also not the best way to increase your guest approval ratings. Some parks were showing schedules where the park was only open from noon to 5pm on select days.
In addition, some parks also reported more rides still closed than you would normally expect at this time of year. Six Flags clearly has a ways to go to see their new mission points take shape.
