Parks America's Strategic Reawakening: Unlocking Value in Regional Attractions (OTCQX:PRKA) - PRKA Stock Research Report

## Executive Summary / Key Takeaways * Strategic Reorientation Under New Leadership: Parks America (PRKA) is undergoing a significant strategic pivot, moving past a costly proxy contest to focus on operational efficiency, targeted marketing, and disciplined capital allocation. This includes a critical turnaround effort at its Texas park and a major capital investment in Georgia. * Mixed Q3 2025 Performance with Promising Trends: While consolidated revenue growth was modest at 0.8% year-over-year, the Texas Park surged 45.8% in revenue due to new pricing and marketing, and Missouri continues its positive momentum. Georgia faced weather-related headwinds, highlighting operational vulnerabilities. * Enhanced Operational Technology and Marketing Overhaul: The company's new ticketing platform enables dynamic pricing and improved guest experience, while a new advertising agency is implementing targeted digital campaigns, aiming for returns "north of 3-to-1" on ad spend. * Strengthening Financial Health and Capital Restructuring: PRKA improved its working capital to $2.23 million and reduced its debt-to-equity ratio to 0.22:1.00. The recent Reverse/Forward Stock Split and OTCQX listing aim to reduce administrative costs and enhance market presence. * Long-Term Value Creation Hinges on Asset Optimization: Management is evaluating underperforming assets, with a decision on the Texas Park's future expected by September 2025. Future capital returns (dividends/buybacks) are contingent on achieving sustained liquidity and generating excess capital. ## Setting the Scene: Parks America's Niche in the Entertainment Landscape Parks America, Inc. (PRKA) operates three regional safari parks across the United States: the Wild Animal Safari in Pine Mountain, Georgia; the Wild Animal Safari in Strafford, Missouri; and Aggieland Safari near Bryan/College Station, Texas. Established in its current form in 2005 with the acquisition of the Georgia Park, the company's business model centers on acquiring, developing, and managing local and regional entertainment assets, primarily focused on wildlife experiences. This positions PRKA in a specialized segment of the broader theme park and attractions industry, distinct from the global giants and large regional players. The competitive landscape for PRKA is multifaceted, encompassing both direct and indirect rivals. Direct competitors include major theme park operators like Six Flags Entertainment Corporation (TICKER:SIX), SeaWorld Entertainment (TICKER:SEAS), Cedar Fair, L.P. (TICKER:FUN), and even, at the highest end, The Walt Disney Company (TICKER:DIS). These larger entities typically exhibit stronger brand recognition, broader geographic reach, and more robust financial performance, often driven by higher attendance and diversified revenue streams. For instance, Six Flags, with its focus on thrill rides, and SeaWorld, with its marine-based attractions, generally demonstrate more robust financial performance through higher margins and cash flow generation from their larger scale. PRKA, in contrast, operates smaller, more niche regional parks, which inherently limits its market share and growth trajectory compared to these industry behemoths. PRKA's competitive advantages, or "moats," are rooted in its unique wildlife experiences and a potentially leaner cost structure. Its focus on educational and immersive animal interactions fosters customer loyalty and can support pricing power in its regional markets. This differentiation allows PRKA to offer a more intimate, nature-based experience, contrasting with the high-thrill or technology-driven spectacles of larger competitors. Furthermore, its streamlined regional operations may lead to notably lower operating costs, providing an efficiency edge against high-cost rivals. However, PRKA faces significant competitive disadvantages, including its smaller scale, limited geographic reach, and dependence on seasonal tourism, which can lead to weaker profitability and higher per-unit costs compared to its larger, more diversified counterparts.

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The company's "technology" in this context is primarily operational rather than proprietary product innovation. In mid-January 2024, PRKA implemented a new ticketing platform and point-of-sale system across all parks. This operational upgrade was designed to improve the guest experience and enhance functionality for park customer service teams. Critically, this system provides additional flexibility for testing promotions, creating bundles, and launching dynamic pricing models. While this change had a "net neutral impact on our profitability," it enabled the company to "adjust prices by day of week and by season," allowing it to "tap into consumer pricing power during peak periods and drive additional demand, particularly during our low seasons." For investors, this operational technology signifies a modernizing approach to revenue optimization and customer engagement, directly impacting revenue per visitor and potentially improving margins by better aligning pricing with demand. It is a foundational improvement aimed at enhancing the core business's efficiency and revenue generation capabilities. ## A Strategic Pivot: New Leadership, Renewed Focus The recent history of Parks America has been marked by significant internal and external challenges, culminating in a strategic reorientation under new leadership. The company faced a costly and distracting proxy contest initiated by Focused Compounding Fund, LP, which incurred $2.04 million in expenses for fiscal year 2024. While the initial attempt to reconstitute the Board failed, the subsequent Annual Meeting on June 6, 2024, saw a new Board elected, including four nominees from Focused Compounding. This transition led to Lisa Brady stepping down as President and CEO on June 14, 2024, with Geoffrey Gannon, Portfolio Manager at Focused Compounding, assuming the role of President. Under Gannon's leadership, PRKA has embarked on a focused strategy to enhance operational performance and shareholder value. A key initiative involves a complete overhaul of the company's marketing strategy. PRKA "dropped the ad agency we were using" and is now "currently developing new advertising for all three parks." This new approach, which includes targeted digital advertising with reported returns "north of 3-to-1 per dollar spent," is being rolled out in phases, starting with Aggieland, then Georgia, and finally Missouri. This phased approach may result in "a gap of several months during which there is very limited advertising at some parks" during the off-season, but is intended to drive higher sales during the peak season from March onwards. Operational leadership has also seen key changes. Mike, who previously oversaw "consistent year-over-year improvements" at the Georgia Park, has returned as its General Manager. At the Missouri Park, Patty continues to serve as GM, and management credits her with driving "improved results compared to the Parks! past lousy performance," noting "a lot of positive momentum in Missouri." In a particularly bold move, Geoffrey Gannon himself has relocated to College Station to act as the interim General Manager for the Texas Park (Aggieland) through the end of fiscal year 2025. This "limited time effort" is explicitly aimed at attempting a turnaround, with the understanding that the park's continued operation is not guaranteed if a meaningful improvement is not achieved within the year. ## Financial Performance: A Tale of Three Parks Parks America's financial performance in the third quarter and year-to-date fiscal year 2025 reflects a company in transition, with mixed results across its segments but clear signs of strategic impact. For Q3 2025, total revenue saw a modest increase of 0.8% year-over-year to $3.48 million, primarily driven by a 1.2% rise in Park revenue to $3.40 million. However, animal sales declined by 15.0% to $78,262, mainly due to timing. Year-to-date 2025, total revenue slightly decreased by 0.8% to $7.25 million, while Park revenue saw a marginal 0.1% increase to $7.10 million. On a pro forma basis, adjusting for the new ticketing platform's impact on customer transaction fees, total Park revenue for Year-to-Date 2025 increased by 0.8%. Segment-wise, the performance varied significantly: * Georgia Park: Revenue decreased by 8.6% in Q3 2025 to $1.98 million and 7.2% year-to-date to $4.10 million. This decline was largely attributed to persistent rainy weather conditions impacting attendance, animal food sales, and food service revenue. Segment income also decreased to $988,670 in Q3 2025, with an operating margin of 49.4%, down from 53.3% in Q3 2024. This highlights the park's vulnerability to external factors and the need for ongoing investment to enhance its value proposition. * Missouri Park: Revenue saw a slight decrease of 1.8% in Q3 2025 to $656,191, primarily due to a management decision to shift from full food service to independently owned food trucks and reduced animal food sales from adverse weather. Despite this, attendance increased by 6.8% in Q3 2025, driven by field trips and group visits. Segment income was $216,749 in Q3 2025, maintaining a 33.0% operating margin, and saw an increase year-to-date, benefiting from lower cost of sales and operating expenses. * Texas Park (Aggieland): This segment was a standout performer, with revenue surging by 45.8% in Q3 2025 to $761,047 and 23.4% year-to-date to $1.70 million. This impressive growth was driven by a positive response to new admission pass pricing and effective new marketing strategies, leading to a 44.0% increase in attendance. Segment income dramatically increased to $333,531 in Q3 2025, boosting its operating margin to 40.7% from 18.7% in Q3 2024, despite higher operating expenses. \ Consolidated net income for Q3 2025 was $824,370, a significant improvement from $67,870 in Q3 2024. This was substantially aided by a credit of $103,657 in Q3 2025 (and $670,814 YTD 2025) related to the contested proxy matters, primarily from insurance proceeds and the reversal of waived legal fees, contrasting sharply with the $2.04 million in expenses incurred in Fiscal 2024. The company's effective tax rate for Q3 2025 was 24.0%.

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\ PRKA's financial health and liquidity are also showing signs of improvement. Working capital increased to $2.23 million as of June 29, 2025, from $1.60 million at September 29, 2024, reflecting a reduction in accounts payable due to the proxy insurance proceeds. The debt-to-equity ratio improved to 0.22 to 1.00 from 0.25 to 1.00 over the same period, indicating a stronger balance sheet. Net cash provided by operating activities significantly increased to $882,885 year-to-date 2025, compared to a net cash outflow of $63,742 in the prior year, driven by higher net income and favorable working capital changes. Capital spending increased to $1.18 million year-to-date 2025, primarily for Georgia Park improvements. The company also completed a refinancing of its Texas Park term loan on September 30, 2024, securing a $2.50 million loan with a 10-year term and a 7.0% effective interest rate, backed by a cash collateral reserve from Focused Compounding.

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\ ## Capital Allocation and Future Outlook: Disciplined Growth and Value Creation Parks America's capital allocation strategy and future outlook are underpinned by a commitment to disciplined investment, asset optimization, and shareholder value. Management acknowledges the highly seasonal nature of the business, with advertising and sales naturally lower during the off-season (September through February) and expected to pick up significantly from March onwards. This seasonal pattern dictates the timing of marketing pushes and cash flow generation. A major focus for capital expenditure in fiscal year 2025 is the Georgia Park. Management anticipates "very, very high" CapEx for the year, with "at least 50% of that... due to one project" – a significant restroom facility rebuild to address tornado damage and enhance the guest experience. This is viewed as a long-term investment, not an annual recurrence, and is expected to return to "maintenance level" CapEx in subsequent years. This investment aims to improve the "park's value proposition" and address historical underinvestment. The future of the Texas Park (Aggieland) remains under critical review. President Geoff Gannon's direct involvement in a "limited time effort" to turn around its performance during fiscal year 2025 signals a high-stakes period. A decision on the park's future, including a potential sale, is expected around September 2025, contingent on achieving a "meaningful turnaround." This reflects a disciplined approach to capital allocation, where underperforming assets that do not earn their cost of capital may be divested to reallocate resources more effectively. For the Missouri Park, while management's hopes for achieving Georgia-like segment margins in the next fiscal year are "not high" due to its smaller scale, they see long-term potential with "considerably higher sales." The park's recent positive momentum and "fixable" issues suggest a strategic commitment to nurturing this asset for consistent performance. Regarding broader capital allocation, management emphasizes that current cash levels are constrained by unpaid legal fees from the proxy contest and seasonal slowness. Therefore, there are "no immediate needs to be determining what to do with cash right now" for dividends or traditional stock buybacks. However, the long-term plan involves returning capital to shareholders via dividends or buybacks, a consideration for "the end of September of next year probably," dependent on generating "excess capital" and maintaining "appropriate liquidity levels" as the number one priority. Management explicitly states that using Parks America as a "long-term investing vehicle" for equities, akin to a holding company, is not considered efficient due to SEC limits and tax leakage for shareholders, reinforcing their focus on direct and efficient shareholder returns. Further enhancing its corporate structure, stockholders approved a Reverse/Forward Stock Split at the annual meeting on March 7, 2025, which became effective on April 30, 2025. This capital restructuring, involving a 1-for-500 reverse split followed by a 5-for-1 forward split, aims "to reduce excessive administrative costs associated with having a disproportionately large number of stockholders who owned relatively few shares." This move also facilitated the company's transition from the OTCPink market to the OTCQX market effective May 2, 2025, signaling an improved market presence and potentially greater liquidity, though management cautions that the ultimate effect on stock price and liquidity cannot be predicted with certainty. ## Navigating the Road Ahead: Risks and Opportunities Parks America's path forward, while strategically reoriented, is not without its risks and challenges. The ultimate effect of the Reverse/Forward Stock Split on the market price and liquidity of the common stock remains uncertain, as market dynamics are influenced by numerous factors beyond share count. Operationally, the company remains vulnerable to external factors such as adverse weather conditions, which significantly impacted attendance and sales at the Georgia and Missouri Parks in Q3 2025. The competitive environment, particularly in Georgia with an increased number of safari parks, continues to pose a challenge, although management notes that these competitors have not duplicated PRKA's success. The turnaround effort at the Texas Park is a critical strategic gamble. Should President Gannon's "limited time effort" fail to yield a "meaningful turnaround" by September 2025, the company faces the complex decision of divesting the asset, which could involve a lengthy process and potential wind-down of operations. This carries both financial and reputational risks. Furthermore, while the company's liquidity has improved, the seasonal nature of its business means cash flow can be negative during the off-season, necessitating careful management of its cash reserves, especially with ongoing capital expenditures. Despite these risks, significant opportunities exist. The new ticketing platform and dynamic pricing model offer a technological lever to optimize revenue and enhance guest experience, potentially increasing revenue per visitor. The overhaul of marketing strategy, led by a new agency and targeted digital campaigns, aims to improve advertising effectiveness, which has historically been a weakness, particularly in Georgia and Texas. The strong performance of the Missouri Park under current management, and the planned capital investments in Georgia, signal a commitment to strengthening core assets. The potential sale of underperforming assets like the Texas Park could unlock capital for reinvestment in more profitable ventures or for direct return to shareholders, aligning with the company's disciplined capital allocation philosophy. ## Conclusion Parks America stands at a pivotal juncture, having weathered a period of internal strife and external challenges to emerge with a clear, albeit ambitious, strategic roadmap. Under new leadership, the company is actively pursuing operational excellence through targeted marketing, dynamic pricing, and focused capital investments, particularly in its Georgia Park. The impressive turnaround at the Texas Park in Q3 2025, alongside sustained momentum in Missouri, offers a glimpse into the potential for value creation when strategic initiatives align with effective execution. The core investment thesis for PRKA hinges on the successful execution of its strategic reorientation: demonstrating sustained profitability from its core assets, optimizing its portfolio through potential divestitures, and ultimately, returning capital to shareholders. While the path is not without risks, particularly concerning the Texas Park's future and the inherent seasonality of the business, the company's improved financial health, disciplined capital allocation philosophy, and commitment to enhancing operational technology position it for a strategic reawakening. Investors should closely monitor the progress of the Aggieland turnaround, the impact of new marketing campaigns, and the company's ability to generate consistent free cash flow, as these will be critical indicators of PRKA's long-term success in unlocking value from its unique regional entertainment assets.