How Is Six Flags Likely To Grow Over The Next Two Years?
We estimate that Six Flags’ (NYSE:SIX) revenue and EBITDA will grow by around 5% over the next two years. We have created an interactive dashboard that shows the factors that will drive this growth for Six Flags. You can adjust revenue and margin drivers to see the impact on the company’s overall revenue and EBITDA. Below we discuss our expectations and forecasts for the company.
Six Flags’ Revenue & EBITDA Growth Over The Next Two Years Will Primarily Be Led By Theme Parks Ticket Segment
Theme Park Tickets accounts for over 50% of the company’s revenues, and we expect this revenue stream to lead the growth for the company over the next two years. Visitor spend inside theme park on food & merchandise will likely be the second biggest contributor to the overall growth. Below we discuss the drivers that would contribute to the incremental growth for Six Flags.
Theme Park Ticket Revenues Expected To Grow 6% By 2019
Theme Park Ticket revenues are estimated to grow 6% or $45 million by 2019, primarily led by steady growth in attendance as well as average ticket price. Both these drivers have seen low-single-digit growth over the last few years, and we expect this trend to continue in the coming years as well. While attendance at theme parks in general is on the rise, and Six Flags is also benefiting from this, average ticket prices are usually raised by theme park operators almost on an annual basis to cope with the increasing costs, which are passed on to the visitors. Accordingly, we forecast two price increases over the next two years.
Theme Park Food & Merchandise Likely To See Modest Growth
We estimate the Theme Park Food & Merchandise will grow by 2% or $11 million over the next two years. The modest growth forecast can be attributed to average spend per guest inside theme parks, which we expect to remain around $17, as it was over the last two years. Sponsorship & Licensing fees will likely add another $8 million to the overall revenues while we estimate Accommodation to have a negative impact of $1 million. It should be noted that Six Flags’ Accommodation revenues have declined of late, and we expect this trend to continue given massive competition in the hotel industry, which impacts the overall revenue per available room (RevPAR) for many players. On the other hand, the company’s licensing fees are growing, as international third parties operate or are coming up with Six Flags branded theme parks. Currently, the co-branded theme parks are expected to open in Dubai and China.
Based on the incremental growth in above segments, we expect the overall revenues to grow by 5% or $63 million over the next two years. We don’t expect any change in the EBITDA margin and forecast it to remain at 45%, which will translate into incremental EBITDA of $29 million by 2019.
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