Description

This is tiny company suitable for PAs. Parks! America (from here on referred to as Parks) wholly owns Wild Animal Safari Park which operates two safari-style parks, one in Pine Mountain, Georgia and one in Strafford, Missouri. The customer rents a car or brings their own, and drives through ~4 miles with hundreds of animals around. Each park has around 60-75 species of animals and over 500 of them on ~500 acres. It is a great family trip where you get to interact with animals (feed them); the overall customer experience is great, judging by the value proposition and the Trip Advisor ratings (4.5 stars on +700 reviews - lots of pictures for the curious investor). The experience is highly affordable as well; $25 for adults, $21 for kids and around $90 for a family of four. Parks generates revenue from tickets but also from rentals and concessions, which we believe to be currently under-penetrated. The parks operate all year round, but it is highly season during the summer months (April-September) where they generate 67% of their annual sales.

Management has significantly invested in capex (facilities) and is in the early innings of seeing financial results. Parks has experienced sustainable attendance growth and consistent price increases since current management took over in 2013. Attendance has grown about 10% CAGR while ticket pricing about 5% CAGR.

Management has been able to turn around the Georgia park growing EBITDA by more than 80% over the last two years. The Missouri Park is currently breaking even but we expect a pick up in revenue, it currently generates less than 20% of the consolidated revenues. Considering the similar business models, demographics and park features (size, animals, etc.) it is not a stretch to expect higher revenues (in the high single digits). A note on the Missouri Park, under USDA regulations, visitors are restricted to feed animals from their personal car. However, PRKA offers safari van rentals which are designed for a larger number of people and cost less per person – therefore revenues from Missouri would most likely be less than the Georgia park.

Management is well-incentivized, they own approximately 70% of the stock and over the last two years purchased 11% of the float in the open market. The current CEO Dale Van Voorhis (19% share ownership) has been with the company since 2003. Previously he ran Funtime Parks (1982-1994) that was later sold for $60 million)

The company generates around $1.3 mm in trailing FCF. The Missouri park is currently breaking even, so that’s a +50% operating margin for the Georgia park. The cost of maintaining the park and employee headcount remained unchanged over the past couple of years despite a substantial increase in foot traffic, benefiting from operating leverage. Assuming a return to profitability for the Missouri park, the company would experience low single digit top line growth, but high teens bottom line growth. Assuming the corporate tax rate changes from 35% to 21%, the company currently trades at trailing 9x FCF with substantial FCF growth upside.

Catalyst

• Missouri Park reaching profitbaility 
• Margin expansion