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Hurricanes, earthquakes, and wildfires aren’t good for the theme park business.
Executives with Six Flags Entertainment Corp. — which has parks in areas including Texas, Georgia, Mexico, and California that were affected by storms and natural disasters— said attendance in August, September, and October had taken a hit.
“We have never before seen a quarter with four hurricanes and three earthquakes,” said Jim Reid-Anderson, the company’s chairman and CEO, in a call with analysts to discuss third quarter earnings on Wednesday.
The toll was so severe that the company no longer believes it can meet a scaled-down goal of $576 million in modified earnings before interest, taxes, depreciation, and amortization for the year. In July, executives said bad weather during the second quarter was harmful enough to financial results that reaching an earlier target of $600 million in earnings would not be probable.
Despite all the woes, the regional theme park operator saw revenue in the quarter that ended Sept. 30 increase 4 percent year-over-year to $580 million. Profits increased $79 million to nearly $201 million. Attendance grew 3 percent to 12.9 million visitors and guest spending per capita was up 2 percent. International licensing revenue leapt 23 percent.
“Congratulations on being able to grow despite kind of Biblical natural headwinds,” said FBR Capital analyst Barton Crockett.
Reid-Anderson said business had already recovered in Texas and was close to coming back in Mexico, though the water park there was damaged and not expected to reopen until close to the end of the year.
The CEO said he is confident that the company will see a strong fourth quarter and 2018, in part because of the way attendance has rebounded after past weather events.
“Specific weather events have not historically disrupted our fundamental progress, which depends much more on our own specific initiatives to drive growth,” he said.
One of those initiatives is opening Six Flags Magic Mountain, north of Los Angeles, 365 days a year starting January 1. The change will add about 100 days to the park’s calendar in 2018. The company announced that the park was moving to full-year operations in August, but executives discussed the decision at length during Wednesday’s call.
“Opening Magic Mountain every day will allow us to more fully access 48 million tourists that visit Southern California every year,” Reid-Anderson said. “The park has seen significant growth and expanded its calendar over the last seven years, and this will put its calendar on par with the other theme parks in the region.”
Universal Studios Hollywood, Disneyland Resort, and Knott’s Berry Farm are between about 30 and 60 miles away. The Six Flags park, which has 19 roller coasters, has been at a disadvantage in attracting out-of-towners because of its schedule.
“In essence, we’ve been locked out of being able to really target the 48 million tourists, because if you think about it, when we’re dealing with groups, especially international groups, they want to know that they can come on any day they choose, and we’ve not been able to offer that for them,” Reid-Anderson said. “So I think we’ve been losing out, and that’s really what drove the opportunity.”
Reid-Anderson said there’s a campaign going on with existing guests and through media to make sure people know about the new 365-day operations.
“Especially when we come to digital, where we have a tremendous team working on getting our digital messaging through, we think we can go international with that at relatively low cost compared to where traditionally you’d have to spend a lot of money,” he said. “Feeling pretty good about the ability to do that, but it will build over time.”