JackGlass wrote:They made the right move by rejecting this horrible offer.
Just looking at the comments on social media, everyone seemed to hate this idea. Six Flags has built up a bad reputation, as being cheap and stingy when it comes to investing and taking care of their parks. Cedar Fair has built up a great reputation.
If Six Flags took over Cedar Fair, the quality of those parks would almost certainly decline. If Cedar Fair took over Six Flags, the quality of the Six Flags parks, would almost certainly increase.
Six Flags needs to invest in the parks they have and clean up their image before they try taking over companies like Cedar Fair and Sea World Entertainment.
Everyone is missing the point. Part of the offer was to keep CF board members on running the company. So it would basically transform SF into a CF run company not the other way around since CF would have control over the company.
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The offer was $20 below what would make it appealing to shareholders and compensate them for huge benefits of MLP structure. 18% premium on stock price was ridiculous and just 12% above target price. Also, most of the deal being in SF stock is not appealing. SF stock is down huge in the last year. Not enticing to be offered SF stock. Having CF in exec positions doesn't cover for the low ball offer. Also, SF is struggling to have organic growth, CF is not only producing it, but has a bunch of new assets coming or just purchased that have massive upside potential. Schlitterbahn results are great already. The outdoor sports complex event bookings in year 2 what was projected for year 4 or 5 according to CF. Saw Mill Creek was the second biggest booker for the Outdoor sports complex after CP properties when bought. CF can expand that more and have the indoor sports complex coming which means more revenue off theme park season. The Carowinds hotel is opening in November and Wonderland hotel in early 2021. CF has no need to sell or merge and stated they aren't for sale. They however had to hear out any offer as a fiduciary responsibility to share holders, they could be sued otherwise. They couldn't turn down a great offer, say if it were $100 share or something without bringing it to shareholders to a vote, if a really big premium was offered.
The actually offer is being questioned by a few analysts b/c of the low per share price. There is some speculation SF might have another below expectation quarter coming again perpetuating the lack of organic growth narrative on Wall Street. This offer was a display they are trying to do something. There is also the notion that they are having trouble finding a CEO they want, hence let CF's management take over. The entire thing is odd b/c SF in many ways, ie...SF is pushing memberships as their new grand model the last 2 years. CF is wholly against memberships and in their analyst day presentation spent time explaining why they are against a membership structure. They think it hurts pricing power. So, SF in theory wanted a management team against the core of their new model started 2 years ago. A management team pushing the destination park, hotel/resort model for years and their 2 additions this year were in that area. This is an area SF is not really into beyond Darien Lakes(operating lease park). Great Adventure is the place a hotel could work. GAdv has no close by lodging and they have a lot of land. Other big parks like SFMM have plenty of nearby lodging and the park hasn't a bunch of extra suitable land/spots like GAdv
I think Great Adventure was originally supposed to build cabins, similar to Light House Point. This was part of the original plan for Great Adventure (Pre Six Flags)
Something like that would be awesome. Especially with all the wooded land that Great Adventure has.
Q3 earnings report at market close Tuesday 10/22, Conf call wednesday morning.
Prediction: SF misses outright or under performs ie...revenue up YoY, but the internals disappoint and the lack of abilityto demonstrate organic growth continues. The announced results and the call the next day usually doesn't forecast well, usually bodes to a "pre announced miss", as SF normally announcing pre market the day of the conf call. Q2 they put out mediocre results in a 11pm press release before morning conf call. Btw, Q3 2018 was a miss.
Revenue: 621M increase 1M Net Income: 200M decrease 5M EBIDTA: 307M increase 507K Attendance: 14M increase 400K Total per cap: 42.44 decrease 0.58 Admit per cap: 25.17 decrease In park spend: 17.27 increase 0.11 Deferred Revenue 198M increase 5M/2% Sponsorships International: 26M decrease 26% or 11M
9months numbers are also down but to get the full picture might have to wait till full year to see how if some of the numbers are made up by the difference in how membership revenue is claimed. After the 1st 12months memberships revenue is claimed per month, which means Q4 may be bigger than past years as the big membership push which started in 2018 starts to get possibly a significant number beyond 12 months.
Six Flags needs to learn from Cedar Fair. The rides draw people in, the experience keeps them coming back.
Anderson keeps trying to make the point "We are financially disciplined" There's a difference between being financially disciplined and being so cheap that it hurts your business.
9% of revenue on Capital expenditures is low. Only 15% of that is used for in park infrastructure??? That is terrible.
JackGlass wrote:Six Flags needs to learn from Cedar Fair. The rides draw people in, the experience keeps them coming back.
Anderson keeps trying to make the point "We are financially disciplined" There's a difference between being financially disciplined and being so cheap that it hurts your business.
9% of revenue on Capital expenditures is low. Only 15% of that is used for in park infrastructure??? That is terrible.
They need an Industry professional
Can't wait for the conf call, It's going to be just like the last few. JRA saying we have records but the increases are nothing,,,revenue increase 1M, EBIDTA increase 507K, these are paltry increases and net income was down 5M, as well as per caps.
The organic growth argument with analyst will be on again...
"The increase in attendance was primarily driven by the higher Active Pass Base growth in the parks the company began operating on June 1, 2018, and the new park in Rockford, Illinois."
So they are basically saying legacy parks as a whole are stagnant and increases are really coming from the added operating lease parks. That's where the 400K attendance increase came from. The lack of organic growth is why analysts have been all over SF for the last 18months. SF refuses to do in depth break out to show how much the new parks added to prove the legacy parks are growing. The fact is as a whole the growth is either non existent or so low to be negligible hence they don't break it out like Cedar Fair did in their Labor Day Q3 preview report and their investor presentation
Conf call was a JRA special. Defensive making the same excuses which Wall Street hasn't bought. Stock went from down 5% pre call to down 11% post call. JRA had bees up his bonnet and at what point told an analyst I can't believe you asked that? JRA is usually pretty surly but he was at a new level. Just like on CNBC interview he's calling the M&A talk in his prepared openings statement with Cedar Fair pure rumor..."stuff reported by some people." He's acting completely dismissive there was any offer though nobody blatantly asked yes or no did you make an offer.
Cedar Fair and SEAS stocks down about 2% in sympathy with SF down 11%. Wall Street sees SF pretty mediocre numbers despite good weather in most of the country in Q3 and thus may be expecting similar from others, yet to report
CoasterRiderSC wrote:Could the CF merger/takeover have really been just a speculation and not really something SF was attempting?
I think SF floated something, it got leaked and Cedar Fair shot it down quickly. SF instead of acting spurned should be finding away to convince Wall Street as they still aren't buying what SF &JRA selling on the earnings. They keep saying we reporting record revenue and WS is not impressed by a 1M revenue increase YoY Q3. Every time they have reported the last 4 quarters they have been hit by 5% to 12% the next day, the stock recovers some as people buy on the drop and collect some dividends and then it sells off on underwhelming earnings again. Stock down from $63 to $45 from Q1(feb) thru Q3(today), SEAS and Cedar Fair are up in the same time frame.
After a series of negative news such as pressure on the capital chain, layoffs, arrears of wages, and project shutdowns, Shanshui Cultural Park's companies have suffered equity freezes.
According to investigation, the equity freeze was triggered by a contract dispute.
Based on Shanshui Cultural Park's capital chain status and debt disputes, the freezing of its company's equity is likely to indicate that companies that have defaulted on their debts have started to claim through legal channels," an industry source who declined to be named told the Beijing Business Daily reporter. In fact, Shanshui Cultural Park is currently facing a number of claim lawsuits, mainly involving the suppliers and builders of the Shanshui Six Flags theme park.
Many people in the industry believe that the Six Flags project, which has made Shanshui Cultural Park proud, has also become the biggest drag on its business performance.
Beijing Commercial Daily also learned exclusively from the partner of Zhejiang Shanshui Six Flags, Shanghai Jigao Amusement Equipment Group Co., Ltd. (hereinafter referred to as "Shanghai Jigao"). Then signed a contract for the purchase and installation of amusement equipment. However, within the time agreed in the contract, [b]Shanshui Liuqi did not pay more than 1 million yuan for settlement, and Shanghai Jigao did not receive payment after repeated inquiries for more than half a year.[/b] Therefore, the company sent to Zhejiang in mid-September this year. Shanshui Six Banners issued a "Reminder Letter" and brought it to court. In November, the Haiyan County Court officially opened the case and accepted the case.
The financial problems in Shanshui Cultural Park are likely to cause losses to a large number of subcontracting cooperative enterprises and engineering companies. According to data, there are more than 200 related lawsuits in Shanshui Cultural Park. The content of the judgment involves construction disputes and sales contracts. Disputes, disputes over loan contracts, disputes over labor disputes, etc.
Delays &/or cancellation of the China parks will not be good. SF has not been producing organic growth domestically. The foreign license deals were seen as easy money with no Capex. Analysts had been factoring in these parks to the forward projections. Expect a slight downward earnings projections for 2020 b/c the parks thought to be opening in 2020 are pretty surely not & the others likely delayed, some were already pushed back to 2021. In the last conf call SF was talking about the delays being partial regulatory on one site & the other site designed for multi parks was to spread out the openings to not overwhelm with dry park, water [ark, adventure park opening all in close succession. These delays may however have been more about finances, as the finances of the developer didn't turn bad since October. Contractors has not been being paid at all or in full for about a year or more.
JackGlass wrote:Has Michael Spanos revealed anything about his strategy for Six Flags? Or will that be announced during the Q4 conference call?
Nothing announced. Q4 conf call will be very interesting & should be around Feb 12th. No real movement on the stock. Don't know if the news hasn't filtered widely or people really reacting b/c of vacations & light trading volume during Xmas & New Years weeks. SF reported decreased foreign revenue from projections in Q3 b/c of Dubai cancellation & China delays. Riverside further problems are going to be another hit & make analysts skeptical possibly of the foreign deals producing the EBIDTA SF has projected & it occurring in a timely manner. Vietnam & Dubai parks cancelled & now this. The last thing SF needs with being under scrutiny about their lack of domestic park organic growth
Last edited by Sven18 on January 1st, 2020, 1:26 pm, edited 1 time in total.
Here's another article regarding the collapsing Chinese deals.
These deals were a great idea in theory. but so far not a single one has come to fruition. I really hope Spanos focuses on organic growth at the parks Six Flags actually owns, because these overseas licensing deals seem like a wild goose chase.
JackGlass wrote:These deals were a great idea in theory. but so far not a single one has come to fruition. I really hope Spanos focuses on organic growth at the parks Six Flags actually owns, because these overseas licensing deals seem like a wild goose chase.
I really don't see any short term change in their 5 pillars of growth they outline, which are mostly based on non organic things. SF essentially made it seem the new CEO was to continue/complete the current plan. The organic revenue growth plans are essentially conversion of pass holders to members with a higher price point & getting member/pass holders to buy season dining. The other major component of domestic growth is operating leases(non organic). The first significant data on members will come in the 2019 annual, the 1st full year of financial with the membership push. The concern for SF is did they get all the easily converters essentially, which won't be really known till 2020 annual. SF could end up soon in the same spot they were in before, where they maxed out on cheap passes, they may soon plateau on membership. The dining pass have a lot of room to run potentially. There is no other real identified new major domestic growth initiative they have set forth. SF don't have the hotel/resort, sports complex, etc...of Cedar Fair & Halloween. HITP is already almost everywhere. How much more can you really get out of Frightfest?
