Parks! America (PRKA)

An Obscure Micro-cap Amidst a Strategic Shift

This drive-through safari operator is quietly undergoing a strategic shift, with a new management team operating a two-phase plan for increasing shareholder returns. The first phase of the plan includes liquidating a large portion of the balance sheet, tied up in assets that don’t add to the bottom line, and returning the capital to the shareholders. Meanwhile, the second phase calls for increasing earnings at the profitable park through better bottom-up incentives, recapitalizing the business to pay a special dividend, and finally continuing to pay out all earnings beyond what is needed to maintain a prudent leverage ratio.

My goal in this 3500 word write-up is to present the key facts about why I think Parks! America might be an interesting opportunity for investors that merits a deeper look, despite not screening that well when purely looking at the financials. As always, there are potential risks to consider. This is not financial advice or a recommendation to buy or sell any security but merely my thoughts and opinions. All investments carry risk and the potential for loss of capital. Please consult a licensed financial advisor before making any investment decisions.

 Key Data

• Thesis Date: 08/21/2024

• Stock Price: $0.40

• Market Cap: ~ $29.53 million

• Shares Outstanding: 75,727,000

• Estimated Excess (Non-earning) Assets: $7-19m

• GAAP EPS: $-0.01

Business Overview 

(source: Parks! America website)

Parks! America, Inc., through its subsidiaries, engages in acquiring, developing, and operating

local and regional theme parks and attractions in the United States. The company owns and operates three Wild Animal Safari theme parks located in Pine Mountain, Georgia; Strafford, Missouri; and Bryan/College Station, Texas. It first began as an oil and uranium company, but subsequently shut down operations and acquired the Georgia Wildlife Animal Safari Park through a reverse merger, then added the Missouri Park later on, and finally, in 2020, acquired the Texas Park (Aggieland). 

PRKA's business model is pretty straightforward. The customer rents a car or brings their own, pays a ticket price to enter, and gets to drive through the ~2.5-4 mile park with 60-75 different species of animals. There is also a walkabout adventure zoo with animal feeding and encounters, a bus tour with a guide, and a shopping and dining experience. Some important metrics when analyzing the underlying business performance include attendance and average spending per visitor, which the company hopes to drive with concession sales and higher ticket pricing over the long term. I also encourage you to visit their website (https://animalsafari.com) for a better idea of their operations.

One thing to keep in mind, however, is due to the nature of this business, their revenues are highly seasonal and somewhat weather-dependent. Around ⅔ of their total sales for the year will come between April and September, which is important to note when analyzing quarterly numbers. In terms of what these parks compete with, think of different experiences or entertainment options that consumers could opt for locally (also digitally to some extent).  For example, the company mentions waterparks, zoos, amusement parks,  other drive-through safari’s, and walk-through gardens near their three parks in their 10-K filling to outline competitors. Quality-wise, this seems like an above-average business to me because it is relatively low-maintenance, not capital-intensive, and provides a unique experience that consumers are willing to drive long distances for. Also, other operators are generally cautious about opening new attractions near existing ones to avoid local competition that would harm them both.