SIX 08 Q3 Conf Call Transcript

[GADVwow]

http://seekingalpha.com/article/105092-six-flags-inc-q3-2008-qtr-end-09-30-08-earnings-call-transcript

[WadeJ]

I've been anxiously awaiting your take on this report wow.  What were your high and low points?  Personally, I think it would be a grave mistake to rip out the current regime after a report like that.  Even if they slightly missed the forecast, its still impressive to see what they pulled off in these econmic times. They had a major uphill battle and I think they are finally climbing it .

[GADVwow]

From the call:

Mark Shapiro:

...We're going to put value on steroids. More hours, more days, longer days, longer season, in every park then ever before. I'm not going to get into what our specific advertising creative is going to be but we're going to be creative on our pricing......

Than ever before...not just going back to 07....than ever before.

Also clear from the call:

A restructuring of the debt is coming soon, one way or another.

Again, Mark:

....We said we intend to clean up the balance sheet once and for all, and we're exploring all of our options. That's it.

And then Jeff Speed:

To echo Mark's comment, we're really not going to get into any degree of specifics around timing or exactly what we're thinking. The headline is that it's the last piece of the turnaround that we have to address and we're going to address it proactively....

NOTHING negative was said about Cedar Fair...a first in recent memory...

And, with the credit crunch, the company recently withdrew all available funds on its $250 million revolver, to ensure it could make it through this off-season.

Lastly, note the company is anticipating $90 million in capital spending this season...quite a bit more than FUN's $62 million....which is rather amazing. How smart that is on either company's part remains to be seen.

[rjholla2003]

Please investors, give them time!

[WadeJ]

Thanks wow... it was killing me not knowing all of the details since I was on my phone

Honestly, I think Cedar Fair is making a HUGE mistake.  These regional parks will be where it's at in 2009 due to the economic crisis and it sounds like Six Flags is placing bets to make sure they crush FUN by capitalizing when it matters.

I still don't get the .28 though

[GADVwow]

And of Cedar Fair's $62 million, more than 1/3 is devoted to one coaster at Kings Island...sure sounds like the last year under Gary Story and Great Adventure getting the lion's share of that cap ex...great for the park that gets it...not so great for everything else.  How bad is it over at Cedar Fair?  Well, one of the major rides they trumpeted on their conference call was the Geauga Lake ride moved to Carowinds...Carolina Cobra...one of those boomerangs that Six Flags installed at park after park and roundly got made fun of for...nearly every park a boomerang and an SLC...a fate Great Adventure somehow avoided on both counts!

[WadeJ]

thankfully I think the low capacity killed our chances of a boomerang and we already had an invert ;d.

I agree, cf is pulling a 2005 six flags move. very ironic...

[saxman47]

I still don't get the .28 though

Me neither....I bought SIX almost 3 years ago, and the company is in infinitely better shape than it was back then, but I've lost almost all of my money.  Just goes to show that knowing about the theme park business doesn't translate into knowing about investing I guess.

I'm thinking the reason the stock is so low is because fears of chapter 11 bankruptcy are still very real.  When Shapiro said they needed to "cut away the debt"......the ONLY solution I can think of is bankruptcy.  I don't think they could pay off $2 billion even if they sold half of their parks, which no one would want to buy in this economic climate anyway.  It is true though.....the company as it stands now has no future.  Even if they begin turning profits of ~$100 million a year, that debt will not be payed down in any reasonable amount of time.  I think Shapiro referred to the debt as "a noose" that the company and it's employees cannot live with any longer.

[WadeJ]

Very good points. 

Regarding filing chapter 11... I think it would completely destroy them IMO.  Just thinking of the rumored sale of Magic Mountain comes to mind.  It completely killed attendance for a while because folks started to think the park already closed.  They had to come up with an awareness campaign just to fight off the rumors.

It would destroy peoples confidence in the product (even more so) to the point that they might think safety has been compromised or that many rides or attractions may be closed, or that perhaps the employees may be disgruntled - those that remain of course.

Chapter 11 would have so many serious implications that I commend them for trying so incredibly hard for staying out of it.  Eventually though, they may have no choice.  Keep in mind though that it isn't unusual for debt to take years to pay off for such a large company.  They need debt restructuring big time and they need to continue making money.  As long as they continue down that road, there is no reason or excuse for the stock to be this low other than grudges I guess.

[GADVwow]

SIX closed today at 26 cents.

Sigh.