Second-Quarter Results Fall Short of Expectations
Six Flags Entertainment Corp.’s stock (SIX) plummeted 5% in premarket trading on Thursday following the release of the company’s second-quarter earnings report. The Arlington, Texas-based theme park operator reported net income of $21 million, or 25 cents per share, for the quarter ending on July 2. This represents a significant decrease from the $45 million, or 53 cents per share, earned during the same period last year.
Revenue Rises, but Fails to Meet Estimates
While revenue did experience a slight 2% increase to $444 million, it fell short of analysts’ expectations. The FactSet consensus had projected earnings-per-share (EPS) of 78 cents and revenue of $465 million. This revenue shortfall was primarily due to a decline in total guest spending per capita, which decreased by $3.11. This decrease was comprised of a $2.56 drop in admissions spending and a 55 cent decrease in in-park spending.
Factors Contributing to Decline in Spending
According to the company, the decrease in admissions spending per capita was primarily driven by lower average pricing on season passes in the second quarter of 2023 compared to the same period in 2022. Similarly, the decrease in in-park spending per capita was mainly attributed to reduced spend on parking, retail, and flash passes. This reduction resulted from a higher proportion of attendance from season pass holders in the second quarter of 2023 compared to the previous year.
Impact on Earnings
The decline in total guest spending affected Six Flags’ earnings-per-share (EPS), which were further dampened by an increase in self-insurance reserves. This boost in expenses resulted in higher selling, general, and administrative (SG&A) costs for the company.
Stock Performance and Market Comparison
Year-to-date, Six Flags’ stock has experienced a 1.7% decrease, whereas the broader market, as measured by the S&P 500 (SPX), has gained 16%.