Shares of Six Flags decline after 2nd-quarter report

Posted Monday, Jul. 22, 2013  comments  Print Reprints
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Shares of Six Flags Entertainment Corp. declined Monday after the company reported lower second-quarter earnings and addressed questions about the impact of Friday’s fatal accident on the company’s business.

Unusually heavy rain and cooler weather kept guests away from several Six Flags theme parks in the spring, contributing to a drop in revenue for the second quarter, the company announced.

Profit for the three months ending June 30 fell to $47.3 million, or 47 cents a share, from $72.2 million, or 64 cents a share, a year ago, the company said. Revenue fell 3 percent to $363.7 million in the quarter.

It’s too soon to predict how the death of a woman who fell from the Texas Giant roller coaster at Six Flags Over Texas in Arlington will affect business, CEO Jim Reid-Anderson told financial analysts in a conference call.

The accident has not had an immediate impact on attendance at any of the company’s 18 parks, and attendance, at least in the short term, will most likely be affected only at the Arlington park, executives said.

“At this time, we cannot comment on the financial impact,” Reid-Anderson said. “We would be speculating.”

Six Flags stock (ticker: SIX) closed down 61 cents a share Monday, or 1 percent, at $35.24.

In the conference call, John Duffey, Six Flags chief financial officer, said maintenance and safety are the company’s top priorities.

“I do want to emphasize we have not reduced costs related to maintenance or safety,” Duffey said. “Overall maintenance and safety spending represents approximately one-half of our total park operating costs and 25 percent of capital spending. We will never compromise on that.”

Public relations specialists said the accident should not tarnish the company’s brand if it communicates openly with the public about what happened.

Glenn Sellig, principal of the Publicity Agency, a part of Tampa-based Sellig Multimedia, said parkgoers understand that such accidents happen only rarely. But he said that when Six Flags determines the cause, the company needs to be honest and tell the public that it has gotten to the bottom of the situation and that it will never happen again.

“First and foremost, they need to put safety first and it sounds like that’s what they’re doing,” Sellig said. “They really need to do everything they can to reassure the public they are doing everything they can to find out what happened.”

Lisa LeMaster, president of the Dallas-based LeMaster Group, who worked with the company after a fatal accident on its Roaring Rapids ride in 1999, said demands on companies to provide information in a crisis have only increased with the advent of social media.

She said Six Flags should have made a company executive available to the media over the weekend rather than rely solely on prepared statements.

“You have to show a face,” LeMaster said. “I almost always advise having a human being available. The most important message early is to say, ‘We care, we’re grieving and we’re doing everything we can to find out what happened.’”

Otherwise, she said, “Somebody else is going to tell it for you. It’s definitely a different time.”

The company said revenue for the first half of the year, before taxes and expenses, reached a record $451 million, a 2 percent increase over the same period of 2012.

Grand Prairie-based Six Flags Entertainment has a 53 percent stake in the Arlington park, with the remaining 47 percent owned by multiple limited partners.

Six Flags said it had $201.2 million in cash and cash equivalents on hand as of June 30.

Sandra Baker, 817-390-7727 Twitter: @SandraBakerFWST

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