Texas-based Six Flags Entertainment has been boasting about its international growth opportunities for years. Thursday, the topic was more of a downer.
Earlier this month, a partner announced plans to halt the company’s move into a theme park complex in Dubai. And several projects in the works in China will be delayed roughly a year, set to open now in 2020, 2021, and 2022.
“Although the timing of these revenue adjustments is unfortunate, our partner in China remains fully committed to developing and opening these parks, and construction is continuing,” CEO Jim Reid-Anderson said during a call with analysts.
The delay in China openings resulted in a $15 million revenue reversal for the fourth quarter, the regional theme park operator said Thursday.
Revenue for the quarter that ended Dec. 31 increased 5 percent year-over-year to $270 million, with attendance up 3 percent and per-person spending up 6 percent. But net income fell by $19 million to $79 million. Shares fell 13 percent to close at $54.87 Thursday; the company’s stock took a dive after its third-quarter earnings call as well.
Executives said they believe that reaching a 2020 target of $750 million in modified earnings before interest, taxes, depreciation, and amortization is “highly unlikely;” instead, they hope to reach that goal by 2021.
Part of the reason for that anticipated miss is “a potential lumpiness of our international development assets” in the near future, Reid-Anderson said.
Reid-Anderson said the China delays are due to the economy falling into a “general malaise due to global trade tensions and the lowest pace of GDP growth in almost 30 years” as well as lending restrictions, new policies around real estate transactions, and government turnover that is slowing down development. The company is working with partners to open 11 parks in different parts of China.
In Dubai, the situation is very much up in the air, with developer DXB Entertainments struggling financially and failing to draw as many visitors as expected. Reid-Anderson said Six Flags has no say in the outcome or timing of a decision about how to move forward.
Reid-Anderson sounded much more optimistic about a project in Saudi Arabia that is expected to open in 2022.
“There is so much going on there that is positive. And there is a lot of money behind this that comes straight from the Royal family,” he said. “And so we feel very confident about the opening of the park in Saudi Arabia and our ability to continue to work with our partner there to not only build this park, but potentially other parks.”
Read Original Article