What happened
Shares of Six Flags Entertainment (SIX +0.00%) rose more than 13% on Thursday. Following its third-quarter financial report, the theme park operator reached a deal with H Partners that will allow the investment firm to increase its ownership stake.
NYSE: SIX
Key Data Points
So what
Under CEO Selim Bassoul, who took the company's helm in November 2021, Six Flags is implementing a daring new strategy that hopes to improve the guest experience by lowering attendance levels. To do so, Six Flags is raising its ticket prices to bolster profitability, while using some of the proceeds to invest in new rides and attractions.
The first part of that plan is working. Attendance at Six Flags' parks plunged 33% year over year to 8 million guests in the third quarter.
The part of the plan related to boosting profits, however, is still a work in progress. Although guest spending per capita jumped 17% to $60.96, it wasn't enough to offset the steep decline in attendance. Six Flags' revenue, in turn, fell 21% to $505 million. Cost cuts helped to offset some of those lost sales, but the company's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) still declined by 19% to $226 million.
"While it will take time to achieve our ambitious goals, we are encouraged by our recent progress, with guest spending per capita up nearly 50% year to date relative to 2019, and with attendance trends and season pass sales significantly accelerating in October and early November," Bassoul said in today's press release.
Now what
H Partners believes that Bassoul's initiatives will eventually bear fruit. The investment firm worked out a deal that will allow it to boost its ownership stake to as much as 19.9% of Six Flags' stock, up from its prior limit of 14.9%.
"We are excited about the company's strategy to deliver an exceptional guest experience and to drive sustainable, long-term earnings growth," H Partners partner and Six Flags board director Arik Ruchim said in a press release. "We believe that meaningful change takes time to implement, and we are encouraged by the early signs of progress on this ambitious journey."
