Shapiro Spins Like Crazy for Six Flags

| About: Six Flags (SIX)
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Mark Shapiro is working overtime "putting some lipstick on the pig" that is Six Flags (NYSE:SIX).


We told you on our last call that we planned to be flat in attendance through May. Then in June internally we knew we had difficult comps in June. 2007 was up 10% in attendance in June over 2006 and revenue in June for 2007 was up 13% over June 2006, so we knew we had a difficult June in front of us. Therefore for us to come out flat for the first six months in attendance plus 5% in revenues and plus 3% in guest spending is extremely gratifying. We’re in a good position so to speak walking into July. We knew this business, this year for us, was going to be about July, obviously going up against the I would say favorable comps we had last year with the Texas rain which really hurt us and of course the accident in our Kentucky park which we had at the end of June last year that impacted us negatively for the month of July. Remember July is essentially 30% of our business and August is 20% of our business, so July is historically the most significant month for the company.

So, what did he just say? If we go with last years results, based on the "difficult comps" the company is going up against last year, SIX is in real trouble. Even though last year was so good, it suspended the dividend, refinanced debt at oppressive terms and had large shareholders throw in the towel.

Remember though, it was just last fall that Shapiro blamed God for the disappointing results then that are "tough comps" now. Funny what time can do.... It should be noted here that the weather was credited as having a "positive effect this year".

More Shapiro:

We are at or above all time highs on our guest satisfaction scores, ranging from overall visit, intend to visit again, intend to recommend to a friend, cleanliness, restroom cleanliness, speed of our ride lines, speed of our food lines. I could not be happier with the product that our parks and our park presidents by way of leadership are putting out there.

So, why do results suck?

Jeff Speed got into the act:

Attendance for the quarter declined to 8.6 million while year to date attendance was flat at 10.1 million. As we highlighted on our first quarter call, the second quarter attendance reflects fewer operating days this year due to the Easter holiday falling in the first quarter this year as opposed to the second quarter last year.

Now, remember the Q1 call when the company jumped up and down and patted itself on the back because of the Q1 attendance jump that was caused by the very Easter Holiday it now blames for the Q2 drop? Of course Easter got far less credit then than it does blame now.

More Speed:

...we ended the June quarter with approximately $153 million of cash and liquidity consisting of $66 million in cash and $87 million available on our revolver and we have since paid down the revolver further such that we now have approximately $150 million available. However, as you and we are well aware, the redemption date for our mandatory redeemable preferred stock or [PERS], is approximately one year away, and we have approximately $130 million of senior notes remaining outstanding and due in February 2010.

At this point I’m not going to comment on the what, when, how, or why regarding the strategy to deal with these obligations.

Uh, why not? If you are going to end every sentence with "free cash flow positive" [EBITDA] then you have to address the fact that cash is already spoken for. You also should mention that next August, Six Flags is obligated to pay $288 million to preferred stockholders. On Thursday, for the second straight quarter, it suspended dividend payments to those shareholders. That will save the company $5 million, for now, but the amount will be tacked on to next summer's bill.

Three words not mentioned on the call? Earnings Per Share.....I wonder why?

Disclosure: None