Six Flags reported a loss after preferred dividends of $132.4 million, or $1.39 per share, compared with a loss of $195.2 million, or $2.07 per share, a year earlier. This would lead folks to think things are getting better.
While the reported loss improved over last year, if we strip out the loss from discontinued operations in 2006, we find the loss from continuing operations in 2007 actually increased to $130.8 million, or $1.43 per share, compared with a loss of $100.5 million, or $1.12 per share a year earlier. So it was actually worse when we take an apple to apples approach.
For the full year, loss from continuing operations rose to $244.1 million, or $2.81 per share, from a loss of $207 million, or $2.43 per share. Essentially this means that what was there in 2006 and is still there in 2007, is performing worse.
Whats more interesting is that, Six Flags' (SIX) annual sales increased to $972.8 million, up 3% from $945.7 million. Here is the thing. If your sales increase, and your loss increases, there are only two options:
1. Your sales level is not high enough to support operations.
2. You are doing a lousy job managing expenses.
That is it. Ignore every other excuse they keep spinning out at you. It is not the weather or anything else they say. Of the two, #2 is the preferable situation. Get in new management that can control costs, and you will see immediate improvement. If it is #1, your only real choice is to spend more cash to draw more people in, or, reduce the consumers costs to keep them coming back. Either of those will cause the bottom line to worsen before it gets better.