Q1 2021 Six Flags Entertainment Corp Earnings Call

Good morning, ladies and gentlemen, welcome to the six flags Q1, and 2021 earnings conference call.

My name is Catherine and I'll be your operator for today's call.

During the presentation all lines will be in a listen only mode. After the speaker's remarks, we will conduct a question and answer session.

And you have a question at that time simply press Star and then the number one on your telephone keypad.

I'd like to withdraw your question press the pound key.

Thank you I will now turn the call over to Steve Purtell, Senior Vice President Investor Relations.

Good morning, and welcome to our first quarter 'twenty to 'twenty, one call with me on my Sparrow, President and CEO of six flags and Sandeep Reddy, our Chief Financial Officer, We will begin the call with prepared comments and then open the call to your question on.

Our comments will include forward looking statements within the meaning of the federal Securities laws. These.

These statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in such statements and the cup.

<unk> undertakes no obligation to update or revise these statements.

In addition on the call and we'll discuss non-GAAP financial measures and.

That's just can find both a detailed discussion of business risks and reconciliations on non-GAAP financial measures to GAAP financial measures and the company's annual reports quarterly reports and other forms filed or furnished with the SEC.

At this time I will turn the call over to Mike.

Good morning, Thank you for joining our call we have divided our call into three parts first I will provide an overview of our recent operating performance and the strong demand trends we are seeing.

Second Sandeep will go into more detail about our financial results and give an update on the progress of our transformation plan.

Finally, I will return to discuss why we are excited about our future over both the short and long term.

I am pleased to be able to report that the 2021 season is off to a strong start despite the significant challenges due to the pandemic last year. We were the first company able to safely reopen a theme park in North America. This year, we had the first theme parks open and California and in many cases, we have opened our parks.

Earlier than in 2019, we have either opened or announced firm opening dates for all of our theme parks with the exception of Montreal.

This is due to the creativity and adaptability of our six flags team, who worked hard to establish the highest standards of cleanliness and safety protocols on.

I'm also pleased to report that our guests are excited to return to six flags and we are seeing strong demand across all of our markets.

I've spent the last couple of months visiting many of our parks, which has allowed me to connect with our great team members understand reopening challenges reinforce our priorities and examine the effectiveness of our operations My time with our outstanding Park leaders only reaffirms that we are a highly capable team.

Healthy industry and a resilient business.

Our full time team members appreciate that we stood by them throughout the crisis did not conduct furloughs and they are excited to welcome back our guests to our parks they are leading admirably and a complex operating environment.

The signs of strong consumer demand for our parks are very clear through this past weekend, our year to date attendance trends have accelerated at our open parks, increasing to 79% of 2019 levels compared to 51% and the fourth quarter of 2020, we are seeing strong guest spending per cap.

And our active pass base has surpassed prior year first quarter levels, placing us solidly on track towards recovery.

We have centered decision, making squarely on our guests extending privileges for season passes memberships, while also offering high tiered benefits to our members who continue their payments and they have rewarded us with their loyalty.

Experiencing such robust demand at this time of year does present operational challenges. However.

We have encountered difficulties fully staffing our parks upon reopening with a shortage of labor availability due to many factors, including school COVID-19 schedules and.

Immigration restrictions limiting the number of international temporary worker visas and extended unemployment benefits keeping people at home.

We expect these labor channel just to start to abate as we enter the core of our operating season at the same time. The overall operating environment remains challenging as we balance the requirements of delivering a safe experience during the pandemic, while still delighting our guests our safety protocols have reduced right throughput which cash.

<unk> result, and longer than normal lines and less rides per guest we are continuing to require masks and our parks, but we will constantly assess this policy and partnership with our industry, the CDC and local health officials.

We're also working with local health officials on eliminating constraints around park capacity and writes seating as more Americans received their vaccinations.

Our outdoor venues have a tremendous amount of open space and therefore, our parks are naturally conducive to social distancing and all states are supportive of working with us to safely increase attendance levels.

Our recent results and guest surveys indicate that there was extraordinary demand for outdoor entertainment options close to home and we believe that this widespread desire will help drive attendance and the coming quarters.

We see this as a golden opportunity to welcome new guests and delight our loyal fans. So we are focused on opening all of our parks and delivering a great safe guest experience.

So while it is still early in the season. We are pleased by recent trends and are optimistic about both the short and long term prospects of our business.

And the first quarter. We also continue to make progress on our transformation plan, which focuses on strengthening our core business and we are on track to achieve our previously issued financial targets.

I will now turn the call over to Sandeep, who will provide details about the quarter as well as our transformation plan and results Sandeep.

Thank you, Mike and good morning to everyone.

I wanted to start by stressing that results for the first quarter on not comparable to prior year.

As we closed all of our parks and mid March last year prior to the spring break for most of our parks.

And for that reason I will provide comparisons to 2019.

Total attendance for the quarter was $1 3 million guests and 38% decline from first quarter 2019.

Revenue in the quarter was down $46 million on.

And 36% to $82 million.

Because of our fiscal quarter change, our first fiscal quarter 2021 and.

Ended on April four.

And so the boss study for us as it did in 2019.

As a result, our 2021 results include four calendar days in April when many of our parks operated.

During which we had 293000 of attendance and this was inclusive of the Easter holiday weekend.

In 2019.

Easter holiday, which affects the timing of spring break and many of our markets occurred and the second quarter.

So far sure.

This past weekend year to date attendance had open box is trending at 79% versus 2019.

This trend and tubes, this spring break period, and both yours and.

And this is a better representation of our run rate so far this year at our open box.

As a reminder.

Our second fiscal quarter, and 2021 women and on July 4th.

And will include a majority of the July 4th holiday weekend.

Which will shift attendance outside of the third quarter and into the second quarter. This year relative to our calendar in 2019.

Total guest spending per capita increased 16% and the quarter versus 2019.

Since the beginning of the membership program.

A portion of the membership revenue has been allocated between admission spending and in park spending.

Beginning in October 2020.

And the company prospectively began allocating and incremental portion.

Resulting in a reduction and a bench and spending per capita.

And and an increase and in park spending per capita with no change and total guest spending per capita.

Applying our pro forma allocation to 2019.

Admission spending per capita increased 17%.

And in park spending per capita increased 14% compared to the first quarter of 2019.

The increase and admission spending per capita compared to 2019 was driven primarily by higher realized ticket yields for both single day tickets and the active pass base as our revenue management team focused on leveraging our pricing and product mix.

The increase in park spending per capita compared to 2019.

And it reflected high consumer demand for our products.

Attendance from our active pass base and the first quarter represented 54% of total attendance was 64% for the first quarter of 2019.

Demonstrating a more balanced approach to ticket sales.

On the cost side.

Cash operating and SG&A expenses versus 2019 decreased by $29 million or 20%.

Primarily due to the following.

First.

Cost savings from our transformation efforts.

Second sale.

Savings and labor utilities and other costs.

Related to the fact that several of our parks were not operating.

And third.

Lower advertising costs.

EBITDA for the quarter was a loss of $46 million cash.

Petrol and loss of $2 million and first quarter 2019.

GAAP loss per share was $1.12.

<unk> to a loss of 82 and 2019, primarily due to the lower attendance and our box.

We are pleased with the retention of our active pass base of $4 1 million pass holders, which included $1 7 million members and $2 4 million traditional season pass holders at the end of first quarter 2021.

Our active pass base is up 1%.

<unk> first quarter 2020.

And down only 9% compared to first quarter 2019.

As we reopen our parks, we are steadily reducing the number of paused members to near zero.

And our retention of these members is a testament to our unique offering and loyal following.

Looking ahead, we expect the active pass base trends to continue to improve as we have begun selling new season passes and memberships.

A very large active pass base is a tremendous asset for our company as possible to generate more annual revenue and cash flow than single day visitors.

They utilize excess capacity and they tend to visit during off peak periods and shoulder months.

They also provide a weather hedge since they pay in advance and have the ability to visit for the entire season.

Finally, our members provide a source of recurring revenue that smooth cash flow and makes our earnings less seasonal.

Deferred revenue as of April 14, 2021 was $245 million up $96 million or 65% compared to first quarter 2020 and.

And up $67 million or 38% compared with first quarter 2019.

The increase was primarily due to the default and the revenue from members and season pass holders, whose benefits were extended through 2021 and the acceleration of season pass sales over the past few weeks after the quarter.

We expect to recognize most of this deferred revenue in 2021.

The capital expenditures for the quarter was $23 million.

And we expect our full year 2021 capital spend to be slightly lower than 2020 due to the carryover of new rights that were delivered and paid for but not commission in 2020.

Our liquidity position as of April <unk> was $524 million.

This included $461 million of available revolver capacity.

Net of $20 million of letters of credit and.

$63 million of cash.

This compares to a liquidity position of $618 million.

As of December 31, 2020.

Net cash outflow for the quarter was $95 million, representing on average of $32 million per month.

This is significantly better than the projection of 53 million to $58 million per month that we gave on our last earnings call.

This improvement was driven by higher than expected attendance and season pass sales.

Based on our anticipated talk schedules.

We expect to be cash flow positive for the balance of the year and will not be providing a quarterly outlook on cash flow going forward.

We are obligated each april to offer to purchase the outstanding partnership units from the unitholders who own the third party interests of six flags over Texas, six flags over Georgia and.

And six flags Whitewater Atlanta.

Less than $1 million of value and units has been put to six flags during the current year tender period that will and later today.

I would now like to give you an update on the progress of our transformation plan.

We expect the transformation plan to unlock $80 million to $110 million and incremental annual run rate EBITDA once fully implemented and attendance returns for 2019 levels.

In 2021, we expect to achieve 30% to $35 billion from our organizational redesign and other fixed cost reductions.

We have already realized more than $8 million through the first quarter. This year.

As part of our transformation plan, we have incurred $44 million and cost so far.

Through the first quarter 2021.

Including the noncash write offs of $10 million that occurred in 2020.

We expect to incur the remaining $26 million in 2021, and 2022, the majority of which is related to investments and technology.

Including a new CRM system.

We continue to make progress with our revenue and cost initiatives as shown by the positive impact on our attendance per capita spending and cost savings.

Our new revenue management team is up and functioning as we focus on leveraging pricing and product mix to drive incremental unique attendance and yield higher admissions and in park spending per capita.

We launched more than 20, Rfps and Spotify and non head count cost savings initiatives, and we are seeing very promising results, especially and procurement savings.

We began migrating towards centralized shared services and finance it.

And <unk> and human resources.

And we began testing our new park labor scheduling system.

In closing my own remarks.

Operating environment remains dynamic.

We will not be providing annual guidance at this time.

However, we are extremely encouraged by the improvements we are seeing and our attendance trends and the value creation that will come from implementing our transformation plan.

We feel we are well positioned as we enter the heart of our 2021 operating season.

Now I will pass the call back over to Mike.

Thank you Sandeep innovation is in our DNA in 2021, we will be introducing several record breaking and first of their kind rides, including the Jersey Devil coaster at six flags, great adventure, and New Jersey, the world's tallest fastest and longest single rail.

Coaster inspired by New Jersey folklore.

Tsunami surge at six flags, Great American, Illinois, which will be the world's tallest water coaster and we are reintroducing west coast racers at six flags Magic Mountain and California, the world's first racing coaster with side by side tracks, which is the parks 19th Costar.

In addition, we are rebranding our water parks, and Oklahoma City, Oklahoma, and Rockford, Illinois to Hurricane Harbor, and creating a separate gate for our water Park, and Gurnee, Illinois, creating our 27th Park <unk>.

And finally due to its popularity we will continue to operate our drive through Safari, and New Jersey as a separately gated attraction the.

And the parks successfully opened in March, creating the longest season and the safaris history.

We will also be investing and our park infrastructure, adding technology to help us modernize the guest experience and in specific areas like food and beverage to help us improve our overall food quality and efficiency.

In addition to new ride and infrastructure investments, we will be introducing numerous new events and festivals and our parks. This year. Some examples include roller coaster power hours and event held on Thursday, and Friday evenings with a limited number of guests can ride roller coasters non stop while listening to a wide D J.

Our Mardi Gras Festival, which continues to grow in popularity as one of our tentpole events and a bigger than ever July 4th fast, which includes fireworks and and park events.

I believe six flags is well positioned to delight, our guests and to create significant value for our shareholders in the near term my optimism is based on a few factors.

First reopening progress we have approval to operate nearly all of our parks either today or in the near future.

And we have proven in several markets that we can safely operate our parks without capacity restrictions. So we expect to gradually ramp our capacity back to normal levels, while adhering to social distancing and other safety protocols.

Second consumer demand is very strong.

Tenants at our open parks continues to accelerate as U S consumers are eager to get out and have fun.

And six flags sits squarely in the middle of everything a consumer is looking for right now our venues are extremely safe, they're outdoors and provide ample room for social distancing, our safety standards and protocols have been recognized as best in class by all state and city and County officials.

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In addition, the vast majority of our guests drive to our parks. So we're not dependent on air travel.

Third our active pass base continues to grow which positions us well for the upcoming operating season with a built in base of guests.

As I mentioned in my opening statement, we are proud of our high customer retention and customer loyalty customer loyalty is a very powerful competitive edge of six flags and one that provides a valuable recurring revenue stream.

Over the long term I'm optimistic for several reasons first we have a unique value proposition.

Our combination of thrill rides and entertainment for the entire family provides a truly unique experience and and affordable form of entertainment that is resilient even in difficult economic periods.

In addition, our parks are located and each of the top 10 markets and the U S, giving us access to the biggest and most lucrative markets around the country.

Second our transformation initiative will fundamentally improve our guest experience and our profitability. We are already seeing the early benefits and our improved single day ticket mix, our in park spending growth and cost savings from our leaner organizational structure and our procurement efforts.

But we're just getting started and we are on track to deliver the full $80 million to $110 million of incremental EBITDA. When we are back on a normalized operating environment.

Third and most importantly, we have a talented and dedicated team of people who have created a guest centric culture. Our team members have exhibited tremendous resiliency during a very challenging period.

Our organizational design resulted in a strong balance of theme park expertise and outside industry perspectives, which will help us stay true to the past while embracing the future the strength of our people is truly why im confident that our future is bright.

We believe the strategic actions, we are taking to transform our company will drive our growth and enhance shareholder value.

I look forward to updating you on our continued progress and as we ramp back up to normal operations. You can expect to hear about our progress on our three key strategic initiatives to modernize the guest experience through technology to.

To improve operational efficiency and to drive financial excellence.

Catherine and at this point could you. Please open the call for any questions.

Yes, Sir ladies and gentlemen at this time of day, we'd like to ask a question. Please press star and then the number one on your telephone keypad.

And your first question comes from the line of David Katz with Jefferies.

Hi, good morning, everyone.

And thanks for taking my question and all the commentary.

Mike.

And Sandeep I just wonder if you can comment yet at this point about how you envision the mix of visitation between.

Membership and pass holders versus single day visitors and.

And any insight on what you would consider to be kind of an optimal mix.

So David I think Thats, a great question and I think we actually probably touched on this a little bit on the last earnings call as well.

And what we see is very encouraging is the penetration of single day tickets.

As a sign of pent up demand as we can.

Came out of the falling of loss share and item to the first quarter of this year, where you can see that there is a big pick up with the weight of active pass dropping from $6 $4 54.

Driven by single day tickets, that's great, but we've always said and we'll continue to actually emphasize that single day tickets, where an opportunity that we called out and the fourth quarter and 19 earnings call, but it's an and not and all so we also have a very robust active pass base and if you actually went through.

Our comments is we're very encouraged because there are active and spaces is not to return to growth about 1% against 2020 and up.

9% only against 2019, despite the lack of spring season pass sales. So so where we are is we're looking for balanced growth. We're looking to grow single day tickets, we're looking to grow the active pass base and I think this this healthy growth will be what we expect to see the dynamic Gulf has been moved to growth.

Overall attendance and overall per caps with a balanced approach on.

On costs.

And if I can just follow that up I I, I recall, the and rather than or if we think about the growth rates of each of those two buckets.

On <unk>.

Do you expect one should we be expecting the single day to grow more than the past base or is that.

Still TBD.

And David another great question, because if you've looked at the trend and the last few quarters. It's clear that single day ticket has actually outpaced versus active pass base.

Which has made sense because we were underpenetrated on single day tickets.

As that starts to normalize I think you'd see more balanced growth between all the cohorts, but I think we still obviously had some runway on single day tickets, which is manifested and the weight of single day tickets cities and so far.

But I expect that as time goes this is going to really start normalizing.

I appreciate that and one last one if I may if I were a regular <unk>.

Six flags customer and I'm not quite that cohort at this stage of life, but.

And what would I observe in terms of the F&B change this year versus what I might have seen.

Prior to COVID-19.

Yes, I think.

It's a great question and the key is prior to COVID-19.

We introduced something really exciting last here just around the time COVID-19 broke and and we started reopening and the summer which is the mobile food ordering and.

And I think that mobile food ordering option continues to be enhanced and rolled out.

And as they actually go into the heart of the operating season, and and that is a pretty big change that.

And is now going to be seen for the first time and some of the parks effectively your guidance.

<unk> been open and I can tell.

And so that's exciting.

Something that we continue to refine and improve.

And as things go along but that would be one big call out on the F&B side that we've talked about previously the other as part of our transformation initiatives we've talked about.

And in the assortment of the food offerings and specifically in Texas. We've talked about this previously is that will be rolled out on.

New assortments and exciting offerings and.

The take up has been excellent on what we've actually rolled out so.

See this manifesting in the per caps and when we've seen very strong per.

Put caps on Ips and and this reflects.

And the attraction.

On the attractiveness sorry.

The offerings and park and it's also combined with a desire to spend there is pent up demand and does disposable income.

With the propensity to spend from a cash flow coming into the product. So it's all it's all the win win from that perspective.

Thanks, very much good luck.

Thanks, Jim.

Your next question comes from the line and Eric Wold with B Riley Securities.

Thank you good morning.

Two questions and then May I just.

One just a follow up on the on.

The last question is around.

And the active pass base and season back and I guess and could you.

Look at.

Trends and started the year memberships being flat, but season pass is increasing from two one to two four.

How should we think about those trends would you expect to be.

On the season pass and membership, it's going to increase and a similar rate or.

We will migrate and members and can you just kind of what you've been expecting given how you are marketing those two plants.

So Eric.

I'll take that and I think we're actually extremely encouraged that membership is pretty much flat as we go from Q4 to Q1 and can be y.

We had close to 20% of on members on pause and I'll close blocks and.

And that was.

And until we actually got reopen and as they have been reopening we've been taking members off on pause so on.

No I think we're down to 5% and terms of paused members and and as they open up on a box and go to almost now so it's really testament to the fact and as we've taken a pause and and effectively payments have been restarting photos board members, we haven't seen it and nutrition right.

On the membership.

As we actually move into the peak of the operating season.

And you see that that headwind go away and new membership sales to basically take off and growth, whereas the case of traditional season passes.

Box for reopening and and.

And the season was beginning to get a couple.

It gets more traction.

So the natural demand come through and we sold the traditional season passes and the <unk>.

First quarter. So it's encouraging I think is this more of the dynamic of how are we coming on of COVID-19.

And that that you saw in terms of the balance between membership and season pass, but we're pleased with that.

Direction of both both numbers.

Perfect and then last question with California.

Governor and even given the green light for business to return to 100% occupancy or 100 and capacity on June 15th how do you expect your parks and the state to play into that or are you planning to move to 100% on that date or is still more gradually throughout the year.

I mean on this Eric the reality is our parks have been operating 100% capacity, and Texas, Oklahoma, and Georgia already and we've demonstrated that we can very safely operate in those states. So so as far as vehicles and we've already got the playbook. We are demonstrating that we can do it and.

And I think at the moment.

On states like California.

Lift capacity restrictions and are able to and that is operating at full capacity.

And the confidence we can get there pretty quickly on immediate.

Yeah.

Perfect. Thank you guys appreciate it.

Your next question comes from the line of Stephen <unk> with Stifel.

Yeah, Hey, guys good morning.

So so micro sandeep wanted to see if you could provide us with some some color or feedback that you've gotten from guests during recent visits and I and I guess, what I'm trying to figure out is.

Mike you talked about the lower ride throughput and potential longer wait times for rides and so is this something that.

I guess at this point on kind of okay with and they understand it or are they showing up they don't like it basically means and they potentially would delay visits and until some of these capacity limitations are eventually removed.

Steve Good morning, how are you good.

My direct interaction with the guests and what I'm reading is very consistent across all geographies. The first is they are just really excited and appreciative were open.

The second is they actually quite understand the COVID-19 safety protocols.

And they've articulated that.

Quite well.

Through surveys as well as and personal interactions and Theyre also clear on two other things, which we're working collaboratively with all the state and local county governments.

The first is day do you want to get on more rides per day, and they understand that the safety protocols of cleaning the coasters and in some states, where we're not seeding every row is the frustration and then the other issue that has been a frustration, which we mentioned and our prepared remarks is as we're ramping up.

Staffing, we have seen longer lines, which I'm not happy with it that food and beverage locations, but that will abate as the season goes.

But we are focused on working with the states and counties. They all want to work with us to expand the park capacity and also with the up with our guidance we've seen out of the CDC to allow less.

Less constraints on ride capacities and other areas of the park. So we're very.

Confident we're going to continue to see progress as we see more vaccinations throughout the nation.

Okay got you thanks for that and Mike and then second question would be around the in park spend and it obviously it continues to be very strong and we've seen that across a lot of other verticals that we're looking at but.

How do you guys think or maybe talk us through how you guys are thinking about the way the in park spend will kind of move through the rest of the year and I guess again, what I'm trying to get out here is there are people coming in and just loaded with stimulus money and other things like that and that should start to abate through the summer or do you think the consumer right now is just so healthy debt.

And you would expect kind of current run rate levels too.

To be maintained through the rest of the year.

So Steve I think.

<unk> expenses actually like I said in my previous answer as well.

And robust I think we've introduced a lot of innovations and improvements in terms of product offerings. Both in terms of ease of transaction.

And on mobile food ordering and in terms of the assortment with the example, I gave and Texas. So.

There is definitely.

Enhancement to the assortment and the ease of transactions hold against that is an enabler.

To the point that you're making.

And I guess on noted the disposable income and that's great and I.

And the propensity to spend is high and we are.

Expect that tendency to continue to play on I don't think it drives up anytime very quickly.

It's been a year of pent up demand and that issue is manifesting and I think we're likely to see that.

The key over here, though is.

And when does it start.

Basically normalizing.

And you think youre going to see that at some point, we definitely see.

Food and beverage was a big opportunity pre pandemic and we called out and transformation is one of the unlocks the value that we see and so we do see growth the magnitude of it and things will boost.

And so far as time goes along but it's definitely going to be growth.

And I would say growth versus 2019, because that was where we were pre pandemic.

Understood. Thanks, guys appreciate it.

Thanks.

Your next question comes from the line of Tyler Battery with Janney Montgomery.

Good morning, Thank you John.

Just one question from me I, just I wanted to circle back to the comment on labor.

Craig can you expand on that a little bit to talk more about.

And how you might address some potential shortfalls.

The labor pool and that might be out there and what are you seeing in terms of.

Wages as well.

So great question, Tyler and I think Mike touched on the fact that time.

Definitely.

And I just had on opening up we've been experiencing labor shortages and.

There are a few factors.

Mike mentioned the school COVID-19 schedules.

Immigration restrictions and the number of internationally.

Temporary worker visas and.

And then I think the extended unemployment benefits combined with the stimulus checks alright, and sending people to stay healthy stay home more on the short term.

And so I think from that perspective, the shortages that we experienced and effective and the food and beverage side that Mike just mentioned.

And other areas and the park as well.

But I think we do have a plan b, one live and executing the plan to get fully staffed as we enter the hanmi operating season.

And and.

And basically probably seen some some media on some hiring that we do.

Doing currently and.

Media push to actually.

To bring in more employment on the season and labor front, we're doing job fairs bidding advertising.

So I think we are confident we are going to get there.

And by the onto the operating season and.

And it's already been good progress since since March.

But I think there is to some extent wage pressure.

Demand supply dynamics, and but the thing about the wage pressure is not new I mean, we called it out on on Q4 and 19 earnings call.

And where we do need to surgically adjust wage rates, we're doing it as necessary and it won't be with.

And we see a clearer.

Retail bank and per cap growth and.

And value and revenue.

And I think overall what that means is we're very comfortable that this was all within the construct of our adjusted EBITDA target of $530 million to $560 million and and we continued on the path of getting there and and this is one piece of it but we feel we'll get past day boats for me.

Supply of labor on some expenses as well as and from a profitability standpoint, I think we're pretty pretty comfortable that we haven't covered.

Okay, Okay Fair day I'll leave it there. Thank you very much flow problem.

Accounts.

Your next question comes from the line of James Hardiman with Wedbush.

Hey, good morning.

On I'm wondering if it.

Morning.

Really good quarter here.

The number I wanted to hone in on was this.

Attendance level of 79% versus.

2019 year to date is that a comparable number is on an apples to apples number I appreciate sort of putting it at a place where the calendars are comparable.

And I know you talked about opening some parks a little bit earlier than you did in 2019 and is that a similar number of operating days as I compare those two numbers.

Sure. So James I think the headline is it is very comfortable on the open box in terms of a trend rate and it's.

It's about 79 percentage year to date to include Easter and spring break and both years. So it's that's when it could be like for like in terms of the events.

From an operating days perspective, it's kind of a mixed bag just because of what they've actually been dealing with and this past year, we talked last year about all day.

Innovations have been actually brought in including holiday and the pump and then still.

And what we have tried to walk through events, which are unique in nature. It was so successful and we continue them into January so you've got more operating days from that.

And then I think from a timing standpoint, and especially against 19.

And so our Texas parks basically wasn't open on the and beyond what people or what's going on in 'twenty. One. So there's puts and takes on like that in terms of operating days and not all created equal.

But I think when you think about the bulk of the pump the attendance and that really starts coming and once you guys approach Easter and spring break and and that's how that's going on ahead of these up and the majority of the weeds of attendance comes from that time period, which is why we highlighted the 79% year to date, because it really smoothed out the majority of them.

And the attendance was occurring.

And I and I think debt that trend rate is a very good indication of where on trend and attendance is going on with the box right now.

Okay, and I guess my.

Follow up there would be.

I think through the fourth quarter call.

You said that attendance was pretty similar to the fourth quarter, which was about 50% or 51% of 2019 levels.

No through February there's and there's a lot less weight to that but I guess, if I think about 70, 979% year to date here in 'twenty one have the last cut.

A month, maybe the last month have been significantly better than that.

You hit it on the head on James you're exactly right.

To get from roughly the same as Q4, 279% year to date, we have performed significantly better and the last couple of months and that has what has happened and that's precisely and we'll be talking about have you been seeing any significant acceleration and trend.

As we've actually gone into post earnings column of Q4.

And and that is why we said we expected to see some pent up demand.

The level of pent up demand has exceeded our expectations.

And the direction is very very encouraging.

Got it and then maybe last follow up to my follow up and I apologize.

To that point about pent up demand I mean, obviously, you've still got some.

Parks that need to open up you've got still some caps on attendance.

And some of your parks, but if I just think about.

And maybe this is an unanswerable question, but do you think there is more demand for your parks and 'twenty one and then there was in 2019.

So James I think that's it.

And it's pretty early to make that call.

Its clear that people have and Jody.

Had the access to pox uniformly across the nation debt.

They do the unlikely to have now and so the pent up demand is very strong, but would really help me and know that as we get into this color in terms of what the magnitude would be the direction is very clear based on what you're seeing.

What I will say is.

And while the pent up demand is very strong I think Mike alluded to it and the prepared remarks as well.

He is capacity constraints.

And the sudden and certain states like Texas, Oklahoma and Georgia.

The capacity constraints have been lifted and the operating income.

Essentially with no capacity constraints, and we're operating very safely and.

And we were able to deliver on our experienced debt. Thank you.

We'd like to look like on a guess on debt.

However, I think in certain states, California, as an example, and I think it came up on the 90 and question there are restrictions and and I think that puts and limitation on a good guest experience at some point with the capacity restrictions that we have including things like white throughput.

So so.

So I think that is going to be.

We need to get price, but I think and across the question. John 15. Once capacity restrictions are lifted does it change yes. A dose then you can actually realize more full demand, but I think as we go through the summer.

It's going to probably happen at varying times across different states different parks. So it isn't quite clear when it's all going to happen and.

And so I'd say.

2019 was a very normal and 2021 is not a very nominal growth.

Demand may be there, but the deposits to actually realizing that demand.

He is not as linear.

As it would be and a normal situation.

Yeah.

Really great color thank Andy.

Thanks, Jay and James James and maybe for you and just as on track and the questions. A couple of different thoughts here first I think it's important.

And that everyone understands we've learned a lot about our guests during COVID-19.

And that has focused us on unique visitation and making sure we deliver products and promotions for different cohorts. So for example, safari and many of the special events.

We've executed we're going to continue those going forward and as we said, where we have a safe product and it's cash flow positive and.

It drives that unique.

Patients and positiveness, we're going to do it and we've also leveraged our revenue management team.

The second thing I would say, maybe a little bit more specific to your question. We got to remember that our parks typically operate on an average of 50% of the theoretical Max capacity. So that does provide us ample capacity.

To me, what we see as very consistent and improving demand across all geographies.

And we've proven and we've been selling this to all the states and the counties, we've entertained over 8 million guests since the pandemic and.

And as we've proven we can do it safely.

And our collaboratively working with us as the CDC moves as vaccinations move they want to help us expand capacity. So we'll continue to do that and we'll continue to safely operate as we capture that demand.

Really helpful. Thanks, Mike.

Your next question comes from the line of Ian Zaffino with Oppenheimer.

Okay, great. Thank you very much.

Just wanted to.

And so on my question on the labor side.

You mentioned that you think is going to abate over on leases short and you just going to abate over time.

Why is that specifically I guess, because a lot of the headwinds you had mentioned seem like they're going to persist for some time so.

And I get more time to kind of find people and turn over every stone or kind of what's driving your confidence in and your thoughts on is going to abate.

Yes.

On a good question and I think the keys and as part of it.

The drivers that we mentioned the why is it labor shortage.

School schedules.

And frankly as schools close for the summer.

A lot of our employees.

On the season, the legal standpoint tend to be school kids, who were looking for.

And welcome into summer and and debt will be a big unlock and terms of.

Labor supply.

And I think that's why we'd expect debt.

From Memorial Day weekend, we should be and pretty good shape.

And that supply and basically being unlocked.

Okay.

And then just on on the M&A side I mean.

And what did you bid ask right now or how is COVID-19 sort of changed or.

At least some potential targets went through COVID-19, and obviously that was pretty rough for them and has that changed the dynamics of M&A and share.

And you're thinking about it now.

Yeah and it's.

Mike.

Just give you a consistent answer that.

Provided on the last earnings call. Our first priority is to invest and our base business Our park infrastructure.

From a capital allocation and our transformation and strategy is all about profit from our core that's our focus.

Okay. Thank you very much guys.

Thanks again.

Your next question comes from the line and Brent Andrews with Keybanc capital market.

Hey, good morning.

One of your more questions a few more questions on the 79% versus 19.

And I guess first is there any way to break that down.

Excuse me by region.

I guess it would be more interested and what some of the southern and maybe less restricted parts.

<unk> did and then second to your earlier answer that March and April trended above.

But that 79%.

Which was implied is there any way to quantify what March and April maybe more.

Versus 2019.

So Brett I think the first part of your question was.

Was there a variation across geographies and the answer and just broad based and good.

And consistently good across all geographies.

And specifically region by region.

And the second is what.

What I would say is it's going to be a little bit difficult for me to quantify March and April were not going to get into that sort of level of detail.

And to do the math and then.

And if we were close to 50% and the first couple of months and and.

And now with another couple of months go on and it's about 79%.

It has been pretty good and <unk>.

March and April.

For it to and it's gotten to the 79% numbers. So.

Very strong very strong and a significant exploration.

And I think as Mike said and the prepared remarks.

Great demand came with its challenges because some of the labor issues that they had and and then.

I think.

We're on a fully cognizant of where things are and right now and we expect a very robust demand going forward and that's why we're looking at the other day trend and saying this is a very good indication on where they are trending from a demand standpoint at this point.

Got it Okay, and then second question more of a.

And a modeling question and I mean, we've never had to model a fourth of July shift for six flags before I think so.

Is there any way to frame up.

And what kind of impact.

That could have or will have for you. This year, maybe just putting some.

Some some bookends around it.

Yeah, I think from a trend standpoint, just like they've given you the color debt.

And they're giving you right now you're going to have that color. When we reported Q2, including the flow through July so from a from a modeling standpoint, what I would say as Jim.

Just like you saw the attendance value shift from Q2 to Q1 for about 293000.

With the calendar shift.

And youre going to see.

Those days go out of Q2, and you're going to see the.

And the four days and July come into Q3, so order of magnitude.

And typically has a much bigger event on July 4th because it's in the summer workers are on Easter.

And you're going to see a net benefit in terms of value of attendance in Q2 as a result of the chip.

And and I think the the.

The headline and I would say from a trend standpoint is we will basically normalized and give you the normalized and constrained as the price.

We reported Q2.

Alright, thank you.

Okay.

And your last question comes from the line of Alex <unk> with benchmark.

Hi, Good morning, guys. Thanks for taking my question.

You touched on this a bit but I'm trying to learn more about the labor constraint impact on customer experience and which parts of the park outside of food and beverage will be most heavily impacted by continued labor shortages and and then how are you working with customers to make sure they understand the impact.

Alexander Good morning.

So I think it's very consistent with what we said we're being first of all were on the labor or specific to availability, we're being very focused by type of functional.

Work and what the competitive market is and assessing that and so we've got a very good plan in place Sandeep debt, we've got a lot going on right now.

Last week, and this week with national higher and weak.

So that's the first thing the second as we've leveraged technology to deal with the problem and this was even.

The big the early part of COVID-19, when you think about it.

We've been able to address this as we've just allowed a lot of technology to provide contactless entry our front gate processes significantly faster than it was before.

We've used mobile dining.

And mobile dining only pickup areas.

And we've communicated that to the guests in the park, we've been very proactive and signage and and other ways to let them know that.

And we will continue to do that so it's predominantly technology either theres. Other parts. If you look at things like the reverse Atms and games and that's also been a big enabler and a faster experience and parts of the park.

Also done work with our flash pass to accelerate that process tourist waiting so theres a lot we've been doing with technology and we'll continue to do that.

Okay. That's helpful. Mike and secondly, you mentioned in the prepared remarks, Ive spoken with and survey and guests to get feedback on just your general thoughts right. Now have you asked and the study about guest entertainment preferences. Once we see a lot of other options open to full capacity and just sports stadiums movie theaters and some other places.

Yeah. So we survey guests every week Alex and.

The consistent feedback we are seeing is hurt gas are broadly and out of home.

And they want safe they.

And they want fun.

Thrilling with coasters.

And it's real important to them to be outdoor and drive away from that experience, which is why we feel very good the way we're positioned well.

The demand, where it's coming from but those seem to be the very consistent.

Themes that we're seeing from guests and that's been very consistent and it's very broad based across all the geographies as well.

Got it thank you.

And there are no further questions at this time.

Thank you for your continued support the essence of our transformation plan is using technology to create and improved and personalized guest experience. We are solidifying our connection with our guests from the time they purchased their ticket all the way through to their online visits.

Six flags is truly the preferred regional destination for entertainment, creating fun thrilling memories for all take care and we hope to see you at our parks this summer.

Ladies and gentlemen, this concludes today's conference call. We thank you for your participation you may now disconnect.

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John.

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John.

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