Six Flags Entertainment Corporation/NEW

Largest North American regional park operator working through a Cedar Fair/Six Flags merger with a heavy loss and extreme leverage.

Strengths

• Scaled, diversified portfolio (41 parks) with 91% gross margin and positive operating cash flow (10.6% OCF margin, 71st pct)
• Merger synergy potential and strong brand/asset base

Risks

• Net margin -51.6% and operating margin -44% with negative ROE (-291%, 9th pct) on a loss year
• Distress-level leverage (D/E 9.4, 100th pct), sub-1.0 current ratio, integration execution risk and weather/seasonality sensitivity

Notable findings

• Weak liquidityCurrent ratio 0.69 (<1)
• High leverageHigh leverage (debt/equity 9.40)
• Net lossNet loss (net margin -51.6%)
• Exec changeRecent 8-K item 5.02 8-K ↗
• Buying back stockNet buyback — share count -32%/yr over 1y
• Revenue declineRevenue -65.3% YoY
• Pending mergerMerger Agreement with Former Six Flags On July 1, 2024, the previously announced merger of equals transaction contemplated by the Merger Agreement, by and among CopperSteel HoldCo, Inc