Parks America 4Q & FY 2025 Earnings Call - Texas Park Showing Accelerated Growth Despite Lagging Asset Efficiency

Doug Jaffe, Call Host, Parks America: Good afternoon, everyone. Welcome to Parks America’s fourth quarter and full-year fiscal 2025 earnings call. My name is Doug Jaffe, and I will be hosting today’s call, which will be webcast and recorded. Before we begin, I’d like to remind everyone that our comments today will contain forward-looking statements within the meaning of the federal securities laws. These statements may involve risks and uncertainties that could cause actual results to differ from those forward-looking statements. For a more detailed discussion of those risks, you may refer to the company’s filings with the Securities and Exchange Commission. In addition, we may reference non-GAAP financial measures and other financial metrics on the call. More information regarding our forward-looking statements and reconciliations of non-GAAP measures to the most comparable GAAP measures is included in our Form 10-Q. Last Friday, we filed our quarterly earnings release and our 10-Q with the SEC.

In our earnings call, in our quarterly earnings release, you will find summary information related to our segment financial results. We encourage all of our shareholders to read and complete 10-Q. In a few minutes, I will turn the call over to our President, Jeff Gannon, to answer any questions. First, we will begin by responding to questions previously submitted via email. Then, we will take any follow-up questions from live participants on today’s call. For those who would like to ask a follow-up question, you can use the raise hand feature on the bottom of your screen at any time to indicate that you have a question. When you are called on to ask your question, your line will be unmuted. When you are finished asking your question, please state that you have no further questions. Your line will be muted afterwards. And with that, we will begin.

Our first question comes from a shareholder by the name of Rich, who has a couple of questions regarding some of the parks. The first one, Jeff, is, "Can you talk about the significant increase in Texas park revenue year over year, especially in view of the fact that you offered free attendance promotion in the first quarter of 2025?

Jeff Gannon, President, Parks America: Sure. So the Texas, so we reported both, you know, if you look at the 8-K that we did, you can see the 13 weeks ended September 28th, and you can also see the entire fiscal year. Generally, Texas had higher attendance and revenue later in the year, so that the number you see for the overall fiscal year is obviously behind the recent growth rate. The reason that we don’t offer a comparison on the attendance is because we had free attendance promotions, which means that we’re just uncomfortable with the idea between reporting attendance when some of it wasn’t paid and some is paid.

So just whenever we’ve had a comparison in that quarter, which matches up a year ago on a quarter where we did the attendance promotions, we don’t disclose attendance in that quarter, but that in the future will be disclosing attendance changes again for any quarter where we didn’t have free attendance the year before. The increase is due entirely to ticket revenue, but it’s a combination of attendance increases and ticket price increases. None of it is due to in-park spending. So anything that is, including things like encounters and other things like that. So it’s general admission tickets, which is a combination of more general admission tickets being bought and the average price of those admission tickets being higher. Both of those factors together is what’s caused it.

And the biggest increases are obviously since kind of the spring break period started, which would be, you know, for that park. It’s a little earlier, so March to now. And I think the other thing to keep in mind is that the free attendance promotions obviously did raise awareness for the park and also increased in-park spending at the time then. So that is one possible reason why, say, in-park spending didn’t go up at all, is that we had some in-park spending from free admissions. But that’s not the only factor because actually, I would say more people have been to the park, even though they’re all paid this year versus some being paid and some not last year. The total falls higher this year.

Doug Jaffe, Call Host, Parks America: Terrific, and then specific to the Missouri park attendance, it was up 14%, but revenue only increased by about 7.5%. Do you have any assessments on why that occurred?

Jeff Gannon, President, Parks America: Sure. So this one’s a little complicated. There’s a few factors. One, if you notice, almost all the increase at Missouri was at the end of our fiscal year, which is through the end of September, you know, and for us, a lot of that is really through the end of, through till about Labor Day. So some of it could just be seasonality, that more of the total sales fell at a certain part of the year, which would tend to have lower prices or higher prices, you know. That’s a factor. The other factor with Missouri is simply for the full year numbers, and this is where I say it gets complicated. We had things that we did at the park previously that we don’t anymore, so we’ve eliminated. And so that’s things like food service.

So while we still have concessions, we don’t have like a kitchen doing food service, and we’ve eliminated other things like that. That’s actually true at several of the parks. So that would just mean that you would have lower spending due to that. And then the final one, which is probably, honestly, the biggest one overall for the full year, is although our parks had some increases this fiscal year and big increases in this most recent quarter, the general experience of both animal attractions and industry attractions and industry in the United States is really poor right now. Like it’s really no growth. You can see that by looking at public peers and things like that. And actually, so it hasn’t been a good year that way. People have been very value conscious.

And that’s even more extreme in the market that Missouri operates in, which is the Branson and Springfield market. So I would say if you kind of look around, Branson attractions are down this year. And that area isn’t particularly high income in Springfield, and there’s just reluctance. So it just, it’s like across the board in terms of gift shop, in terms of any other kind of add-ons and things as compared to tickets. So while we’re doing well with admissions, there’s probably just generally real reluctance to spend on things. And people are feeling squeezed probably there, more so than at the other parks, but probably just about everywhere in terms of the overall industry. So I think that’s what you’re seeing there.

Doug Jaffe, Call Host, Parks America: Okay. And then on the Georgia park attendance, that was down actually 10%, but the revenue was only down 1% year over year. Can you comment on your efforts to increase spend per capita in Georgia and the other parks?

Jeff Gannon, President, Parks America: Yeah. So this makes the comparison difficult that way because I think those are park-specific things. So while I said that the general trend is that it’s really hard to get in-park spending going up, and like I said, look at public peers, in-park spending from just about everybody’s not great. Georgia has done certain things there that with the department managers there and everything that have really improved some stuff. And I think you’re seeing some of that. So some of it was sort of dynamic pricing things on the admission side, but actually this is one where per capita spending in the park is pretty strong due to things like gift shop. So for instance, even though attendance was down 10%, overall gift shop sales were actually up. And on a per capita basis, you know, that’s up quite a bit.

But the reason for that would be like they’ve just gotten better. I mean, actually our gift shop and other parts of our retail operation there, food service is kind of improving. And so I think it’s park-specific reasons why it’s just a more enticing offering there. And then the more complicated thing is the sort of dynamic pricing thing is charging a little bit more at a time of year when you saw more of the increase in revenue for Georgia. So actually, although revenue was not up at all for the year in this most recent quarter, it was up a lot, you’ll see. And so Georgia has seasonally pretty different prices, and prices are higher in this quarter. So less resistance to higher prices versus, you know, they were running way further behind near the beginning of our fiscal year.

Doug Jaffe, Call Host, Parks America: Got it. And then moving on, you’ve commented in the past about having more land than needed and maintaining a focus on efficient use of assets. Are there any developments over the last few months related to excess land and possible uses or transactions?

Jeff Gannon, President, Parks America: Yeah. So there was one transaction where we sold about 50 acres to a management employee in Georgia, and that for about $150,000. It’s a little less than 50 acres for a little less than $150,000. And that there might be some little things like that. In terms of land otherwise, with having more land than necessary, we don’t have more land than needed in Missouri, and Missouri is the only park that doesn’t have a loan on it. Like we would, we got permission, for instance, to sell those acres, which are not near the park. It’s in Georgia. I mean, it’s contiguous, but it’s far away from the park where guests are. It wasn’t a big deal to get the permission to make a sale of those 50 acres.

So it would probably not be a first step thing if you were going to change the footprint of the land. It would probably be something that you did after refinancing a loan or something like that, I would guess. Because obviously the loan is securing a poor performing park is basically secured by a loan usually. The land is the security for it. So I would say, could there be something like that, you know, as small as $150,000? Sure, that’s possible. But I don’t think that you should expect something that’s 10 times that or something that will really move the needle.

Doug Jaffe, Call Host, Parks America: Got it. And do you have any guidance or commentary that you can provide on plans and future efforts to further grow park business, like more work on marketing, trying to widen the attendance base, margin expansion opportunities, more opportunities per capita spend? Basically, any color where you can see weakness, where you’re focusing on would be greatly appreciated.

Jeff Gannon, President, Parks America: Sure. So in the last few months, within the last six months, we’ve hired on two people. I say a corporate because they’re remote from the parks, but they’re allocated. So you see their salaries allocated to the personnel costs for each of the parks when you see that line there. And we’ll probably add one more person, I think. And so that’s events and other marketing things. We’ll have a lot more small events testing things out throughout the year coming up. And in terms of additional sales and margin expansion, things like in the parks, my guess on that would be encounters. I think we mentioned that Missouri encounters were up a lot this most recent quarter, and I think they’ll grow a lot over time in Missouri. They may even grow a bit at Georgia, but certainly they’ll grow a lot in Missouri.

Honestly, a lot of animal encounters, that is driven a lot by like effective social media and to some extent like your website and things like that to do it. That’s a very web-driven thing. I think that the new team that we have there and everything will mean that we will do more animal encounters. It is a small percentage of the business. You know, each park is usually only a couple % at most, but it’s not inconceivable that, you know, you have something where it goes up 50 or 100% in a year by growing that. Not a big number overall to the park, but it could grow that. That is more profitable than the things we’ve been de-emphasizing, which are like at the parks, you know, things like food service, vehicle things, things that cost a lot of money for us.

Animal encounters are basically something we can do with the labor that we have and aligns pretty well that way, so I think that that will be the category that grows the most, and then I think that in terms of additional marketing things, it will be events and social media would be how I would describe it.

Doug Jaffe, Call Host, Parks America: Okay, and you’ve noticed, excuse me, you’ve noted that you run each park as its own segment and rely on local management and incentivize them to manage and grow their park businesses. Can you lay out a little more granularity on what incentive metrics and packages look like and your assessment of the performance results of each approach?

Jeff Gannon, President, Parks America: Sure. So in terms of reviewing each year with the GMs, what their raises will be, bonuses will be, things like that, the targets that they’re aiming for is that they’re expected to hit are that the EBITDA needs to be greater than 20% of their non-cash assets. We’ve been disclosing non-cash assets for a while for this reason because we don’t want people to be reading these reports and think that cash that they’re holding is that you can’t tell the difference between cash and other assets they have. So we don’t penalize them in any way for cash because that’s not something that they manage. Those decisions you’re seeing are corporate decisions. So they need to exceed a 20% EBITDA return on their assets over the full year. And then they need to submit a CapEx budget that is less than one third of their EBITDA, basically.

So, you know, if a park had, you know, $2 million in non-cash assets or something, then it would be expected to generate, say, $400,000 in EBITDA or something, and then it would be expected to keep it under one third of that amount there. So they, for instance, would not submit something that’s 150,000 if they only had 400,000 EBITDA. And that drives bonus, which is based on basically a percentage number that has to do with their base pay and stuff. So it pretty much any to the extent that they increase EBITDA over assets, they increase bonus over base pay is a good way of thinking about it. So those two percentages are linked, basically. And then in terms of like raises, that has to do with incremental improvements on that. So is the percentage this year better than the percentage last year?

That’s not formalized in that way, but that’s what’s laid out for them. And then we look at, you know, were there other reasons why something unusual happened or needs to be done. Say there might be a CapEx thing that can’t be divided up between years, so there’s no way for them to avoid it. And then we’d have to talk about that. The park that is not operating under that approach right now is Texas because I realistically do not think that Texas is capable of hitting that number within this year. But I also think it’s capable of improving a great deal. And so they kind of have a separate discussion about what their goal should be for this year and what that trajectory should look like and everything.

But the two parks we consider doing adequately well that they should be judged the same way every year are Missouri and Georgia at this point. And it’s really just based on EBITDA divided by assets. And then CapEx relative to EBITDA. Those are really the two things they’re judged on. And that drives, like I said, both bonus and potential for raise.

Doug Jaffe, Call Host, Parks America: Got it. And on the CapEx front, can you provide any plans such as acquisitions, such as the acquisitions landscape and general opportunities environment, any other types of unique opportunities you may be planning, such as a golf course or shareholder returns?

Jeff Gannon, President, Parks America: We’re in the off season now from, you know, when we’re reporting to you now to we’ll have, you know, I’d say between now and March. We would say anything that we’re going to say about like shareholder returns. So I’d expect that, you know, we know what the CapEx things and stuff. So if you see, if we have anything to say about that, we’ll say it over the next few months on that front. In terms of acquisitions and things like that, I don’t expect anything immediately on that. It might get more interesting in terms of prices and things, you know, because we have seen some tightening of like financial conditions sort of in these things, and like I said, the industry hasn’t been doing as well this year as in the past.

Generally, though, you know, investing in our own parks has made a lot more sense than trying to go out and buy a park or something. I can tell you from the multiples involved in the, let’s say, in the last year or so. That might change though, but I haven’t seen anything to indicate that quite yet. And then, like I said, shareholder returns is something that would be next few months we’d probably say anything we have to do about that.

Doug Jaffe, Call Host, Parks America: Now we have a couple of questions from a shareholder by the name of Gavin. Can you please elaborate on the Georgia land sale? How much was the total sale value? And do you plan to sell more of the unused land there?

Jeff Gannon, President, Parks America: So the Georgia land is the least valuable land of any of the parks probably, and we have quite a lot of it. The arrangement was originally based on $3,000 an acre and 50 acres, but I think it was adjusted down slightly on that. Like we ended up doing like maybe 40 and a half acres or something. So, you know, I don’t have that in front of me, but it was very, very close, maybe $145,000 instead of $150,000 or something. But it would have been based on $3,000 an acre and 50 acres as what was the maximum that could have been done. And that land had no utility to the company. So I think that was a pretty easy decision that way. I don’t know.

I mean, if someone came to us to discuss that they had plans for what could be done with unused land, then certainly we’d be open to talking about that. That would be true there. It would be true at Aggieland. But I don’t know how much interest there is in that kind of thing because that land is not particularly valuable that way. And there’s not like a shortage of land there. The land in Texas and Aggieland is, you know, four or five times more valuable probably than the land in Georgia. So it’s not that significant. I wouldn’t worry about it too much.

Land that’s really close to the park that we might actually use that has, you know, even if it’s just we could improve something with parking over here or some event space thing here if we did this or that, that we would not touch. I can tell you, because that park is the most profitable and the land is the least valuable there. So it would be stuff that would be over on that same side where we sold that land, which just in terms of road access, power lines, all sorts of stuff that was never going to be something that we were going to use for the park. So that was an easy decision on that one.

Doug Jaffe, Call Host, Parks America: The Missouri park, the turnaround has been very successful, and there should be some congratulations on that. Why have similar strategies not worked in Texas, and why are you continuing to stick with this park given your original plan to sell it and the lack of progress?

Jeff Gannon, President, Parks America: I’d say two things on that. One, you know, I just mentioned EBITDA versus assets as being kind of the way that we focus on running the company. It is absolutely true that the assets at Texas are very high. And so right now, on a trailing basis, the EBITDA versus those assets is not good enough. I will say a few things though. One, Texas’s growth is obviously higher in the most recent quarter than it was for the whole year. You know, in terms of change in EBITDA, I think, yeah, this most recent quarter, not for the full year, but this most recent quarter, there’s no doubt that like Texas contributed more in EBITDA improvement year over year than any park. So, and that’s being a much smaller park than, say, Georgia.

The main reasons are, you know, if you have something that’s growing, let’s say, right, it won’t continue to grow at this rate for very long, but say you have a business that’s growing 40% or something. If you have that happening and a lot of that is dropping straight to the bottom line, then you can envision a future of just a year away or something where it looks a lot more interesting from the perspective of the value of it as a continuing business versus the value that someone will put on it as like a ranch or something like that, and although right now, I suppose looking on it on an EBITDA basis, like a multiple EBITDA for last year’s EBITDA, yeah, it still looks like the land is more valuable than the business that’s on that land.

But I don’t know that that will be the case in a year or something, and certainly maybe not two years or so. I also will say that I would be, you know, although it’s true that Missouri has improved and has improved each year for a little bit and definitely does better in terms of EBITDA versus assets, I would be stunned if Texas isn’t doing more EBITDA than Missouri this year, this fiscal year 2026 for us. I think Texas will be our second biggest park in terms of like contribution to earnings and all of that. Even if Missouri does quite well, I don’t see how they could exceed Texas. Now, having said that, Texas is using a lot more capital. So we’re very aware of that. But yeah, Texas will probably generate more in earnings this upcoming year than Missouri will.

I don’t see how that’s not going to be the case. It’s just that it will earn a lower return on its capital. That’s true. So the answer is basically it has a future where you can see it getting to that, and it certainly will generate more in EBITDA. You know, it’s not a perfect measure, but EBITDA minus CapEx is going to be significantly positive for the first time in a while, and if it’s growing quickly, then I wouldn’t be thinking that you should sell a business that is somewhat cash flow generative and growing very fast. I think that’s the simplest answer.

Doug Jaffe, Call Host, Parks America: Right. And it sounds like you said like you’re not going to be exploring the sale of Texas Park, but if you were in fact to do so, how much would you expect to generate from such a sale?

Jeff Gannon, President, Parks America: The last appraisal for the property was at $14,000 an acre. It has 450 acres. It only uses some of that for the park, so in theory, that’s $6 million-$6.5 million or something. It has a little bit of the loans been paid down, but it had a $2.5 million loan on it, so I suppose that means you would have some number net of the loan, which is close to $4 million or something if you were successful in doing that. You know, you need to put something like that out on the market for a while, and there would have to be other things. Costs probably, you know, that you wouldn’t really net that full amount, but I suppose that that is kind of the sort of number that we’d be thinking about.

Like I said, I mean, even if you look at EBITDA of the last year and certainly what EBITDA could be in a year or two or something, we’re getting to a point where I’m not sure. It’s kind of hard to answer what would a sale of the park net because the question is, well, do you use what’s a sale of raw land and stuff? That was clearly the case a year or two ago. Or do you say what’s a sale of the business? We’re getting to a point where I would assume that the park is worth more alive than dead, basically.

Doug Jaffe, Call Host, Parks America: Okay. And I don’t see any additional questions at this time. So, Jeff, I don’t know if you have any closing remarks that you’d like to finish up with.

Jeff Gannon, President, Parks America: No. The only thing that I would say, and I probably didn’t emphasize enough, is one thing is particularly in the last quarter, the growth for each of the parks, I think, was park specific. So, you know, for each of them, my best guess is that their local tourism market did not grow. I would say they were probably around 0% growth for like our comparable peers in the area. So that is just something with like because there would be a question for Missouri, for instance. All of them far outgrew their sort of the industry. So the one caution that I would have on that is just like if you’re getting any sense from looking at this that there’s a tailwind that way, that’s not the case.

The industry conditions are kind of like mediocre right now, but the growth for the company was good for specific reasons, having most to do with marketing at each of the parks.

Doug Jaffe, Call Host, Parks America: All right. Terrific. Well, with that, we will wrap up. Oh. I do see one other question here regarding competition. Bear with me for a minute. I just ended up losing it. Basically, if there were any peers that you had any, you know, admirable comments about, and then we can wrap it up.

Jeff Gannon, President, Parks America: Oh. I would say it’s a variety of different things. I think for each of the markets that we’re in, the peer that we’d have the most to say about in positive ways is actually not another animal attraction. There are some good safaris around the country, but they don’t really compete with us because they’re in completely different states and not in the same region. But we have mentioned even in the 10-Ks and things that we have some well-known attractions in each of the locations by each of us, obviously Branson, but also I think we mentioned Callaway Gardens and the having to do with Pine Mountain. And there’s a big seasonal one that Santa’s Wonderland near College Station, which is a very fine attraction there.

Doug Jaffe, Call Host, Parks America: All right. Terrific. Well, with that, that concludes today’s call. We want to thank everyone for calling in and participating, and have a wonderful afternoon.