Q4 2022 Six Flags Entertainment Corp Earnings Call
Speaker 1: I that.
Speaker 2: Good morning ladies and gentlemen. Welcome to the Six Flags fourth quarter and full year 2022 earnings conference call. My name is Jason and I will be your operator for today's call. During the presentation all lines will be in listen-only mode.
Speaker 2: After the speaker's remarks, we will conduct a question and answer session. If you have a question at that time, simply press star then the number one on your telephone keypad. If you'd like to withdraw your question, please press star then two.
Speaker 2: Thank you. I will now turn the call over to Steve Pertel, Senior Vice President of Corporate Communications, Investor Relations and Treasurer. Please go ahead.
Speaker 3: Good morning, and welcome to our fourth quarter and full year 2022 call. With me is Celine Basole, President and CEO of Six Flags, and Gary Mick, our Chief Financial Officer.
Speaker 3: We will begin the call for repair comments and then open the call to your questions.
Speaker 3: Our comments will include forward-looking statements within the meaning of the federal securities law.
Speaker 3: These statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in such statements, and the company undertakes no obligation to update or revise these statements.
Speaker 3: In addition, on the call we will discuss non-GAF financial measures.
Speaker 3: Investors can find both a detailed discussion of business risks and reconciliations of non-GAAP financial measures to GAAP financial measures in the company's annual reports, the quarterly reports, and other forms filed or furnished with the SEC. At this time, I will turn the call over to Salim.
Speaker 4: Thank you, Steve, and thanks to all of you for joining us today.
Speaker 4: I want to begin by thanking the entire Six Flags team whose hard work, dedication and agility is helping to unlock the potential of Six Flags.
Speaker 4: On today's call, I will provide an update on the progress we've made on our transformation.
Speaker 4: Then, Gary will discuss our financial results.
Speaker 4: Finally, before opening the call to questions, I will return to discuss our long-term strategic priorities.
Speaker 4: We are fortunate to participate in an attractive and resilient industry.
Speaker 4: Regional theme parks deliver uniquely thrilling entertainment. We deliver it in a live outdoor setting that cannot be replicated online and we deliver a highly compelling value to our guests.
Speaker 4: In addition to operating in an attractive industry.
Speaker 4: Six flags has a strong position within the industry, operating in all of the top 11 markets in the US, including some of the fastest growing markets in the country.
Speaker 4: Our parks collectively have 145 roller coasters, including some of the most iconic coasters in the world, and a diverse collection of themed experiences, family events, and nearly 1000 rides.
Speaker 4: In addition, we are the largest operator of water parks in the U.S.
Speaker 4: and we have many areas for families with young children to enjoy.
Speaker 4: We have a broad entertainment offering with incredible IP through DC Comics and Looney Tunes, the largest safari operation outside of Africa, and signature events such as Fry Fest and Holiday in the Park.
Speaker 4: Despite operating with a strong position in a favorable industry, our core business began to stall prior to the pandemic.
Speaker 4: When I accepted the position as CEO a little over a year ago,
Speaker 4: it was clear that our strategy and our organization needed to be reset in order to reach our full potential.
Speaker 4: The past year has been a difficult year of transition.
Speaker 4: But I'm very proud of our team for working tirelessly to elevate the experience of every guest and to lay the groundwork for sustainable profit growth for the future.
Speaker 4: After a challenging start to the year, we course-corrected in the fall and we are pleased to have delivered a record fourth quarter adjusted EBITDA.
Speaker 4: which provides evidence that our new strategy is beginning to bear fruit.
Speaker 4: It is also the direct result of our efforts to develop an agile culture of excellence.
Speaker 4: urgency and results
Speaker 4: taking risks, challenging outdated ways of thinking, and investing in people.
Speaker 4: Our course correction in the fall.
Speaker 4: Was focal focus largely on 4 key areas that I would like to highlight for you.
Speaker 4: pricing
Speaker 4: Events, marketing and cost controls.
Speaker 4: First, on the pricing front, we simplified our product assortment and we scaled back our season pass price increases.
Speaker 4: which resulted in an improvement in our fourth quarter past sale trends.
Speaker 4: This also boosted our attendance as many of those guests visited our parks after making their purchase.
Speaker 4: Second, we amplified our efforts around seasonal events by creating three new events this fall. Kids, move fast!
Speaker 4: Oktoberfest and Veterans Day.
Speaker 4: I am so proud of our team for moving so quickly to execute these events in weeks rather than the months it would have taken in the past.
Speaker 4: In addition…
Speaker 4: Our investments in Fryfest paid off. We added two and improved our maces, shows and concerts.
Speaker 4: We also introduced a new line of retail items specifically designed for Fryfest and we opened several strategically located pop-up stores within our parks, all of which helped to drive our merchandise sales in the quarter.
Speaker 4: a new line of retail items specifically designed for Freibeth and we opened several strategically located pop-up stores within our parks, all of which helped to drive our merchandise sales in the quarter.
Speaker 4: After scaling back our marketing earlier in the year, we launched several successful media campaigns to support our 4th quarter events.
Speaker 4: focused heavily on digital and television.
Speaker 4: And finally, we continue to stay focused on cost controls and draw significant margin improvement compared to fourth quarter prior years in 2019.
Speaker 4: What gives me the most optimism about our future was our team's resiliency and ability to quickly course correct during this challenging year. The success of our transformation depends on our people.
Speaker 4: And I'm so proud that our team has risen to the challenge. The path toward progress never follows a straight line. But our vision for delivering an exceptional guest experience and sustainable profit growth remains our focus. Now, turn it over to Gary who will provide more details on our financial performance.
Speaker 5: Getty?
Speaker 3: Thank you, Salim, and good morning, everyone.
Speaker 3: For the fourth quarter, 2022, total attendance was 4 million guests.
Speaker 3: a 30% decrease from 4th quarter 2021.
Speaker 3: This decrease includes 279,000 fewer guests this year due to six parks that were open for Holiday in the Park, or HIP.
Speaker 3: the prior year but we're not open this year during that same period.
Speaker 3: HIP at these northern parks has not historically been accretive to EBITDA.
Speaker 3: Adjusting for the reduced operating days due to the elimination of certain HIP events in 2022, attendance decreased 26% in the IV Corps.
Speaker 6: while still well below 2021 and 2019.
Speaker 6: The improvement in our attendance trajectory between the third quarter and the fourth quarter is encouraging.
Speaker 6: Our traditionally strong Fright Fest was augmented by three new events created and implemented by our Nimble Events teams.
Speaker 6: Fright Fest was augmented by three new events created and implemented by our nimble events teams throughout most of our parks.
Speaker 6: These events, Kids Boo Fest, Oktoberfest, and Veterans Day, drove an uplift in attendance. Total revenue for the fourth quarter was $280 million, a decrease of $37 million, or 12%.
Speaker 6: compared to the fourth quarter 2021, largely driven by lower attendance, offset by higher per capita spending.
Speaker 6: Total guest spending per capita of $65 represented an increase of $12, or 23%, versus fourth quarter 2021 and with a fourth quarter record.
Speaker 6: Admission spending per capita increased $7 or 24%, and in-park spending per capita increased $6 or 22%.
Speaker 6: The increase in admission spending per capita compared to 2021 was driven primarily by higher realized ticket prices.
Speaker 6: The increase in admission spending per capita compared to 2021 was driven primarily by higher realized ticket prices and a higher mix of single-day tickets.
Speaker 6: while the increase in in-park spending per capita compared to 2021 reflected our in-park pricing initiatives and a strong assortment of retail products, food and beverage offerings, rentals and new events.
On the cost side, cash operating and SG&A expenses versus 2021 decreased by $38 million or 19%, driven primarily by full-time salary reductions and fewer variable labor hours.
These were partially offset by inflation in the form of higher wages, supplies, and utilities.
Adjusted EBITDA for the quarter was $99 million compared to $95 million in the fourth quarter of 2021, which represents a fourth quarter record for Six Flags.
Moving to four-year results.
Since park operations were impacted during the first half of 2021 by pandemic-related closures and capacity limitations in some of our parks,
We believe it is more instructive to compare our full year results.
2019.
Relative to 2019, revenue for the full year 2022 decreased by $129 million, or 9%.
This includes a $46 million reduction in sponsorship, international agreements, and accommodations revenue.
Adjusting for this lower sponsorship international agreements and accommodations revenue.
Revenue for the full year was down $84 million, or 6%, versus full year 2019.
A tent is declined 12.4 million or 38 percent offset by an increase in total gas spending per capita of $22 or 51 percent.
In prior calls, we called out approximately $90 million of inflationary headwinds in 2022 relative to 2019.
Despite these pressures, our full year cash operating expenses and SG&A decreased by $49 million, or 6%, versus 2019 due to our aggressive optimization,
a seasonal labor based on lower attendance levels, less dollars spent on advertising, and a leaner corporate overhead structure.
In addition, we call that an increase in the annual minimum distribution to the non-controlling interest of our partnership parks.
The distribution increases via CPI and in 2022 it increased by more than 7% to $45 million.
Compared to 2019, this represents an increase of $4 million for full year 2022.
which negatively impacts our adjusted EBITDA by the same amount.
The expected impact of CPI on the annual distribution in full year 2023 is a $3 million increase versus full year 2022.
impact of CPI on the annual distribution in full year 2023 is a three million dollar increase versus full year 2022. Adjust to EBITDA.
Decreased by $62 million versus full-year 2019, but the periods are not directly comparable because of the reduction in international agreements revenue from our terminated operations in China and Dubai.
Adjusting for this impact, adjust the EBITO for full year 2022 versus the same period in 2019 decreased by $38 million or 8%.
Ajust a divino for full year 2022 versus the same period in 2019 decreased by $38 million or 8%. Our active pass space...
As of January 1, 2023.
was comprised of 5 million pass holders and legacy members of 40% decline relative to last year.
You may recall that due to the pandemic-related park closures in March of 2020, we extended visitation privileges on all season passes purchased for the 2020 operating season.
through the end of 2021.
As a result, 2 million passes were carried over from 2020 into 2021.
Adjusting for the two million pass carry-over from 2020 to 2021.
Our active pass base is down 21%.
versus 2019, our active pass space is down 35%.
Deferred revenue as of January 1, 2023 was $129 million, down $49 million, or 28% compared to fourth quarter 2021.
The decrease was primarily due to lower unit sales, the season passes, and then memberships compared to 2021.
versus 2019, deferred revenue was down $15 million or 11%.
Total capital expenditures for the year, net of insurance recoveries were 112 million dollars.
We expect to increase our capital spending to $150 million in 2023 with an increased emphasis on improving the humanities and infrastructure in our parks, adding new and exciting rides, events and attractions and implementing guest-facing technology.
We plan to further increase capital spending to a range of $150 to $200 million in 2024 and 2025.
as we look to add significant marketable attractions to most of our parks. We expect our capex to be between 9% and 10% of revenue in 2026 and thereafter.
Our liquidity position as of January 1, 2023 was $309 million.
This included $229 million of available revolver capacity.
That of $21 million of letter of credit and $80 million of cash.
As of January 1st, the outstanding balance on our revolver was $100 billion.
Over the next 12 to 18 months, we plan to use our excess cash to pay down debt as we work towards our target net leverage ratio of 3 to 4 times net debt to adjust it EBITDA.
Our next debt maturity is in 2024 and we will continue to monitor the market for opportunities to refinance this debt. Although it is likely that the interest rate on a portion of our debt will increase, we expect total interest expense to decrease over time as we continue to pay down debt.
Finally, I'd like to briefly comment on our financial goals for 2023.
We do not give formal guidance, but based on our fourth quarter performance and the early season trends, our goal is to deliver record-adjusted EBITDA for our core North American park operations in 2023, which excludes international licensing revenue. For context, our previous record was approximately $518 million.
that directly and positively impact the guest experience while continuing to focus on margin improvement over time.
Now, I will pass the call over to Selig.
Thank you, Gary.
Looking forward, with you 2023 as the next step towards successfully implementing our long-term strategy.
Our strategy is focused on enhancing the gas experience and delivering long-term, profitable growth and its rest on the following four pillars. First, our part experiences.
Second, pricing and products. Third, organizational culture and fourth, seasonal events.
Our first priority is to improve park experiences for both our guests and our employees.
The investments we are making in 2023 prioritize guest comfort by focusing on areas that directly impact the time spent in the parks including safety, cleanliness, food quality and variety, speed of service, guest amenities and technology.
who are updating and modernizing our park infrastructure, including new VIP lounges, water park cabanas and new shaded water park seating, more shade structures and benches throughout our parks and in general park verification effort with more flowers and greenery. All of these changes will enable a more seamless
and stress-free guest experience. On the technology front, we are on the process of integrating mobile payment technologies such as Apple and Google Pay.
To make checkout speed significantly quicker and to reduce stress on our frontline team members.
And we are excited to launch a new, vastly improved mobile app this summer, which will help streamline our guest experiences at our parks.
We are also investing heavily in our food service operations with new equipment and innovative facilities and staff training.
We've already received great guest feedback and we are committed to continuing to elevate the guest experience to meet their evolving expectations.
Another area that we are seeking to improve is our water parts.
Historically, water parks have been viewed as an add-on to our past products and have been integrated with the greater theme park experience.
Water parks have been viewed as an add-on to our past products and have been integrated with the greater theme park experience. However,
by changing the ticketing architecture and investing in the guest experience at Waterparks as a standalone entity.
We see great opportunity to grow in this area.
We are investing in new water coasters.
Kid place structures, slides and food and beverage upgrades that we expect will help increase attendance and impact spent.
We now have a dedicated team to evolve our strategy here, led by a newly created position of Vice President of Water Park Operations.
And of course, as always, we are adding signature roller coasters and other rides and attractions to our parks.
While our 2023 CAPEX program is focused primarily on part infrastructure and beautification, we continue to add new and exciting rides in our parks.
This season will debut a comment.
Powerwave at sea class over Texas, a first of its kind water coasters that will be the parts 14's coasters.
and we are adding some exciting rides for families, including Rookie Racer, a family coaster at Six Flags Over St. Louis,
two kids raacing costers are thick llights over Georgia and a thick L.
Fiesta Texas and electric go-karts at Magic Mountain to name just a few
We are committed to adding thrilling rides for all ages to our part and will continue to introduce new and exciting concepts over the next few years.
Finally!
I want to briefly mention an exciting new initiative we've been working on over the past year. EGAMING!
We will be launching our first eGaming venue this spring at Six Flags Fiesta Texas in San Antonio. This has been a passion project of our vice president of design and innovation for the past decade. And we are excited to finally give him the reins to execute on his vision. I won't be divulging too many details today.
but you should expect some exciting announcement in the days and weeks to come.
The second strategic priority is pricing and products. Historically, six flags pricing programs have been heavily focused on discounts.
In 2022, we eliminated many of the historical discounts, including free and ultra low-price tickets and retired several iterations of new pricing programs. Recently, we've taken our learnings and settled on an approach that balances attendance and revenue.
Over time, our goal is to deliver a premium guest experience and to charge prices that are commensurate with the value we deliver to our guests. We believe we have pricing power, but only if we deliver an exceptional guest experience.
In addition, we have restructure and simplify our season-pass program, reducing this to three tiers with logical step-ups between categories.
This streamlined product architecture should alleviate stress on our guests and makes it easier for employees to serve them in our parks.
Going forward, we expect to maintain a simple lineup of single day and season pass offerings and we expect to use price as a driver of revenue growth over time. We will offer limited promotions from time to time in order to drive unit sales but we will no longer be a heavy discounter.
The third, such priority is changing our culture.
We are developing an agile culture of autonomy, urgency and excellence.
Last year, we significantly streamlined our organization, reducing layers of management and empowering people who are closest to our guests.
To be clear, this is not just about cost-garden. This is about working efficiently and putting ourselves in a position to best serve our guests.
In fact, we expect selectively add resources to our parks in area that affect the gas flexibility of the naturalability of our public completely advanced parkview.
Our new and streamlined organization features and mix of internal and external talents. We have promoted and empowered rising stars within our organization. And we have recruited talented people from other industries.
Over the past years, we have appointed new heads of digital, marketing, water parks, finance, and legal. We have also appointed many new park presidents, most of whom were internal promotions from our organization.
This powerful combination of internal theme park expertise and externally recruited talent with new skills and fresh perspectives will allow us to learn from our past while creating a new future.
Our team is really starting to gel. And from my experience, it is nothing that brings people together like delivering record results.
Our fourth such priority priority is adding quality seasonal events.
We saw great success with our festivals and events in the 4th quarter, even though many were put together quickly and with limited budgets.
In 2023, we plan to amplify our focused on festivals and events.
Starting with our first ever screen break at several of our parks, this March and April . With traditional screen break gets a little bit spooky!
This summer will be launching new events that are a flavor of the world, a food festival featuring cuisines from across the globe.
And Viva La Fiesta, a huge party in our parks featuring Latin street food and music.
Not all events will occur in every part, will be testing out additional events as well.
In the fall, we plan to invest heavily to ramp up the scares at our signature, fry-fast events while significantly boosting our investment.
In October fest, kids move fast and holiday in the park. Not only do events and festival drive urgency to visit our parks, but they also provide reasons to visit us multiple times throughout the year. It is an exciting initiative.
and we are just getting started.
To conclude, our long-term strategy is ultimately focused on one thing, the lighting our guests.
We want our guests to leave our parks with smiles on their faces and excited to come back again. And if we can do that, then we are confident that we will delight our shareholders at the world. With that, I will turn it over to the operator to open the line for questions.
to leave our parts with smiles on their faces and excited to come back again. And if we can do that then we are confident that we will delight our shareholders at the world. With that I will turn it over to the operator to open the line for questions. Operator.
Thank you. We will now begin the question and answer session. To ask a question you may press star than one on your telephone. Touch-dome phone. If you're using a speaker phone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. In the interest of time, please limit yourself to one question. At this time, we'll pause momentarily to assemble a roster.
My first question comes from Stephen Weizinski from Stiefel. Please go ahead. Yeah, you guys, good morning.
So, you know, as we think about this year, you know, just wondering if you can give any color around, you know, I know you're not going to give pure guidance, but your expectations for attendance growth over last year and Gary, you know, made a comment about higher attendance, which will, you know, obviously impact per caps, but just wondering.
maybe how you're thinking about growth this year there. And then, Selim, are you also still targeting that 25 to 27 million attendance level over time as it's kind of a normalized run rate?
Let me start first of all to say thank you for being on the call with us this morning. And yes, I am still targeting, we are still targeting the 25 to 27 million attendance and it is what is our optimal vote.
Attendance that we are shooting for and I will turn it over to Gary to answer those second part of your question Yeah, thank you. Thank you. Thank you Steve. Our good question
We are definitely targeting double digit increases in our attendance for 23 and we believe the per caps on the attendance side will decrease slightly as we grow the attendance.
Okay, that's very helpful color. And then second question, Celine, this is probably going to be for you and I'll try to ask it in a way you might give me some kind of answer. But just want to ask about your how you view your today, your land holdings. And there clearly has been a push out there by...
certain investors for you guys to look and analyze your real estate holdings. So just wondering if you can give us kind of a high level update on how you're thinking about real estate over time and what that kind of ultimately means to you.
I would say, first of all, I want to stay in saying that in the fact of dealing with land and building and that proposal.
We are open to learn from everyone and anyone. And that's what we do every single day try to have a learns mind. And I think in the case of looking at our real estate, we have a value real estate. No doubt about it that it's a value real estate. And we are always looking at opportunities to add value.
into OPCO and PROPCO.
And I could tell you, I want to give a reference to London building. We are getting to know them over the past few months. They are good people, they mean well, and definitely the proposal is valid. And we are willing to listen to everything that adds value. But at this time, I think we have other alternatives.
that brings value in line with our transformation. Okay, understood. Thanks for the color guys, appreciate it. Our next question comes from David Katz from Jefferies. Please go ahead. Hi, good morning. Thanks for taking my question. Gary, in your commentary, you made some reference to a historical level of,
I believe it was 518 and I just want to make sure we're clear about what's in there and what's not in there so that we're clear on what the basis is contemplating 2023.
518 and I just want to make sure we're clear about what's in there and what's not in there so that we're clear on what the basis is for contemplating 2023. Thank you David DeG. And Jim.
is the amounts that are not included for deal with our international licensing, which in what we're forecasting out to 23 is not significant. So we're talking probably in the range of 4 million. Sorry, so the 4 million.
The 4 million is what you would earn this year or what you're taking out to get to 518. The 518 was the you dad forward to the 518 to give you 522. I see. And so that's a reasonable basis for us to think about where you might go in 2023, but your suggestion is higher than that.
No, I did that. That's our goal, David. I like to look at it framed up against 2019 Q4, which gives us a good idea of the trends. When you look at attendance, and we talked, I mentioned HIP, we pulled that out of this year. So take the 279 out of attendance, let's say from 2019. So we ended up being down about 29% versus that's the attendance. But per caps versus 19 are up 46% on the admissions.
to 2023, but we don't get too far ahead of ourselves. We're seeing really good trends in our past sales and the attendance for Q1, but it's still pretty small relative to the total year.
Very helpful. Thank you. You bet. Our next question comes from Chris Waraka from Doitch Bank. Please go ahead. Hey, good morning guys. Thanks, thanks for all the color so far. My question, we've covered some ground on kind of the top line, but my question would be, you know, as you begin to bring, margin, bring, bring some expenses back with, with the tenments rebounding, you know, is there an expectation for margin?
this year or maybe it's a longer term target of where you can get through with this new optimal mix of lower attendance versus 19, but much higher per cap. Is there any way to put some boundaries around that? Yes, absolutely. Our long-term plan is to get into the 40s for adjusted even in margins. North of that would be fantastic. We think that's going to take a three-year climb, Chris. Okay.
Very helpful things. Our next question comes from James Hardiman from Wedbush Securities. Please go ahead. Good morning and thanks for taking my call. Just to clarify that last point, so it sounds like if we piece this together, double digit increase in attendance per cap down slightly, at least on the ticket side. So I don't know, maybe high single digit revenue growth. The margin comment is sort of the idea that margins will take a step back in 2023 or do you still, you know, obviously there's a sort of three year climb.
But I'm just making sure I understand the margin commentary should we expect margins to be better worse in 23 Yes, we're expecting the margins to be better James in in 2023 We're still very aggressive on the cost side and we're gaining deficiencies the park residents leadership of the parks all of our staff are really running the show more efficiently and we expect margins to climb meaningfully in 23 and 24
James to just get a little bit more color to what Gated just said. We have done a lot of work on the cost discipline, but at the same time we are still still investing in the guest experience. So we want to make sure that it's a trade-off where we want to make sure that our cost discipline, which was very strong in 2022, and gives us a lot of benefit in 2023.
will be boss probably a little bit balanced toward investing in areas where it affects direct to the gas exchange. And I'm talking specifically about looking at a couple of items. We want to invest in technology and automation, which will most probably at the beginning be more complex on us, but will most probably end up in 24, 25 becoming a way of reducing P Ah Error Economy
But we'll still be ahead of margins, but we don't want to be ahead of ourselves too much So I want to reinforce that we believe that we can grow a margin by the mid-40s range within the next three years Got it. That's really helpful and then Hopefully this question doesn't end up being too complicated But it seems like there's some complicated factors that impacted your your per caps in the fourth quarter And I'm hoping you can unpack some of that. Obviously there's there's some accounting stuff with the way the memberships work and shoulder season right
recognize revenues and on fewer visits in the winter time. Maybe quantify that. I think mixed play to big role, right? You got rid of parts that were less margin-occurative. I'm assuming they were also lower per caps. So maybe tease that out. And then I think it sounds like the season pass prices came in some point over the course of the fourth quarter. So I get that at the end of the day, I'm trying to figure out how much of that sort of flows through into 2023.
And so any help on sort of the apples to apples numbers based on the current season pass or the setup and a normal mix would be helpful. So any any help there would be great. Thanks James. So it's it's always interesting to especially in my position to learn the abs and flows of of our per caps. So excuse me guys what I'm getting at here is that we have a $3 per cap increase in Q4 that relates to the accounting issues around new memberships. We have memberships as we go as they grow into after their first 12 months they become what we call here 13 plus members and the revenue is charged directly as it's received. So it's amplified in Q4 when you have lower tenants. But that's $3 of the increase.
Then the rest of it is actually driven by success through the initiative that we launched in Q4. We really pick up a lot of per cap with a fright fest. Our Honda House attractions are very successful, boofest and an October fest, all listed IPS quite a bit. So all of this, you know, put place into that Q4 lift. But I guess if I make sort of follow up your minutes, sounds like even X that $3 accounting benefit, right? We per caps are up pretty meaningfully and you're sort of guiding them to be.
I feel really confident about this is we have gotten our past product corrects, our three tiers that Suleam talked about. They are priced really right in the sweet spot and it is higher than 21 and 19, right? So we're going to have a list relative to those prior years.
So the product is right, the pricing is right, and we've launched media as well in this first quarter, and it's really starting to have a nice impact. Okay, that's really helpful. Appreciate it guys, good luck. Thank you. Our next question comes from Michael Swartz from Truist. Please go ahead. Hey guys, good morning. I just wanted to dig into the fourth quarter attendance trends a little more in depth. I think you said back in November and the third quarter call that your October attendance was down 15% if I remember that correctly versus the same period in 19. If I'm just doing the math, it looks like November , December may have been down 60, some percent on the same.
which I think most of us remember Southwest Airlines really struggled because their airports are primarily based in the South and it came down so far. So that certainly impacted our attendance. But I think the thing to take away is the trend trajectory change. We were down 43% versus 19 and Q3.
but only 29% in Q4. So there's just a really tremendous climb and we're seeing that trend continue into the first quarter of this year. Okay, and then I think you'd mention that the inflation cost had when that you faced in 2022 was about $90 million versus 19. Any way of thinking or quantifying what that looks like as we move into 2023.
Thank you. It's a very nice thank you for all the catpex color. It seems like this is a little bit of a change. I think initially when we came in, you were talking more about shipping catpex to maybe more IT, other kind of items that I suppose to arise. For now, I think just the emphasis is that kind of a ride, which is sort of what the previous catpex cadence was a few years ago.
He's got a proper characteristic, a characterization of what's going on here. Just trying to understand how you're thinking about how to come here. Yeah, that's a great question. I want to take that one based on what Salim has approved for 2023. He is, you are just jazz, aren't you boss about? I am. What are you excited about? What we're doing. I like to think of it as I take the cathode and break it down into marketable and things that the guest feels and sees.
And so if we're going to spend $150 million, let's say in 2023, a chunk of that goes to maintenance, but most 70% is something that guests sees, feels, touches, and improves the guest experience. And I would argue the maintenance, because when we renovate a ride, it's performance to the top of its ability, and we're always finding ways to reduce downtime, which is something that is one of Selim's primary initiatives. So, assume out of that 150 million 70% is going to marketable, it's going to excitement, it's going to events, attractions, ride, guest-facing technology.
E-gaming, e-gaming, beautifications, absolutely. And then when we lift it to possibly 200 million, the percentage grows to 80% of that is going to marketable capital. And we have a slate of rides that, and attractions, and more e-gaming that is coming in 24 and 25. We're actually, in many of our parks, we're looking for the long term tenure plan, where it takes a long time to let's say, if you have, you want to change your pathways in the park. And that's disruptive because your parks open, and people are walking around. So that takes a long time to do. But we're very excited about the ride capital, the attractions, the events, and what we're investing in over the next three years. So let me add a few more color from this. So we have started in 2022, and our CAPEX program was mostly focused on.
park infrastructures and beautification. Now we're back to adding new and exciting rides in our parks. So I'm very excited about Aquaman at Six Flags over Texas. And it's really a first of its kinds, water coasters that will be our parks 14th coasters at Six Flags over Texas. Then we are very excited about the rides for families. And we talked about that that we're trying to be very exclusive company and want to attract anyone who's excited and interested in our unique skills and to deliver fun for people of all ages. And from that, we are adding exciting rides for families. Rookie coasters, a family coaster at St. Louis, took its racing coaster at Six Flags over Georgia and Fiesta Tech. We are going to tremendous electric go-kart at Magic Mountain.
That's in 2020 streak. In addition to adding through new routes for all ages, we are also adding new exciting concepts that will attract young people like fantastic screen break that's happening as spring break. It's the first of its event for teenagers and college graduates to have a great fun, an amazing fun. It's a disruptive event that we're putting together in our parks in the next few weeks. Then I will talk about...
The other type of cat-packs were doing making it easier for our guests to come to our park And that's where a lot of cat-packs going in which is guest-facing technology mobile app with approving Improving our app tremendously and it will be kicking off at the beginning of the summer season We'll have a completely new app that's interactive maps very exciting of how you can order that With the mobile app we want to improve our mobile ordering dining dining and make it much easier to do that I don't want to be able to look at our mobile ordering system to look like the key at the McDonald's I love going there and I be able to customize my food my burger and do it right at the click of my phone
Second, we have implemented mobile payment technology. I talked about it in the past. We did not even have an Apple Pay. And now we are going into Apple Pay so our parks and it's been a tremendous ease to do business. And Google Pay and digital. And digital pay. Let's put it this way. We have continued to improve our contactless screening, security screening. So we're reducing our wait lines and the back search to enter our parks. So now you walk seamlessly through our contactless security system. We're going to website redesign. A much better redesign that taking place in the next few weeks. We've gone to QR code flash path that has been a tremendous ease of skipping the line, including one shop. We have basically done the one shop. In addition, we have a lot of interesting ways to improve guest-facing technology. I can't really tell you. Almost another 20 items right there on our list. But it's exciting. It's exciting. So we've come from a 2022, which was a total strategy change.
And a culture change to today truly being there to start propelling the growth of our business in a complete new way. Okay, great. That's great color. And you know, just as a follow-up, I guess you guys know you can't dangle anything in Fundal Arts without, or cheese in Fundal Arts without asking you a follow-up. On the eye gaming side, how are we supposed to be thinking about this? Is this going to be a profit center? Is it going to be more like a ride as far as engagement-wise? How do we think about this? And I know it's early and I know it's going to take probably several years to roll out. But how do we actually get our head around this and think about maybe the direction we're even going to take it? Thanks. Yeah, thanks, Ian. We're very excited about it.
Could you give us some background on how you're effectuating that? Is that just coming from the monthly membership being gone? And how are you thinking about this going forward and balancing it with past visits? And then secondly on the Optase removed intentionally in Q4. I was wondering if there's more opera...
Now take the first part of your question. The single-day ticket has a fair amount to do with our water parks. We have not in our opinion done a good enough job monetizing our water parks. And we're going to be implementing a very effective ticket pricing at the water park level, which will drive our single-day ticket up as a mix.
But it is also one of the drags, as I mentioned earlier, on attendance as to, I'm sorry, not attendance, the average pricing, average admission pricing for 2023. Can you repeat your second question? Sure, Gary. Yeah, sure. The, uh, the opt is that were removed in Q4 that were not a creative, uh, from Ernie's perspective, as we lap the start of, of another year and we're still in this winter season and Q1, how should we think about the opportunity for you to, uh, take out more, you know, potentially dilutive opt days, as we think about 23 as a whole? So, I think, I think what you're asking is what, what it would do the operating calendar look like?
And 2023? Essentially. They write. And if we might expect to see more of these opportunistic reductions and non-accretive opt-As. Yes, Paul. Absolutely. We're definitely looking at that. And you will notice our magic mountain in California is not open during midweek as an example. And so, yes, we're analyzing at a great level what is even more creative than what is not on a daily basis. And if it doesn't make sense to run our park, we...
definitely will not do that. So the number of days that should be out. Now we are increasing our hours. So it's something that's very important. Again on the same, on the in-hark's spending side is the number of hours we operate our parks on a day. So we're going to increase our hours, but we're doing our updates. Great, thanks for that. Our next question comes from Ryan Sunby from William Blair. Please go ahead. Thanks for the question. Can you draw in on the double digit increase in the 10th and 10th year? Is that mostly a function of the pricing structure change or is that coming from the new rise and the event you have planned? And then as we think about rebuilding the 10th and 10th year, how much is that dependent on bringing new guests into the park versus maybe recaps you into the guest that didn't come into your language?
Now, Ryan, that's a harder question to answer as we look at the future 23. I will say that pricing has certainly something to do with it. Our product pricing and offering that we have right now on our website is proving to be very effective and really matches the product offering that we currently have and is being very much appreciated by our guests. So then definitely the rides and the events, the Liam and talked about he's bringing on flavors of the world. He's bringing on, we have a La Fiesta. We have Rock the Block, which is right. So these events are definitely an appeal and as we launch them and announce them on our website, the guests get more excited and and start purchasing their season pass. I would add Ryan a couple more color on this.
First of all, we are building on three things. I think we built on the fact that our attendance was most probably the lowest we've seen in 20. We've come from a base where we've had an attendance that's pre-low and we're starting from a lower attendance and rebuilding that company. So you're asking about, are we seeing people that we've lost come back? Yes, we've seen. It's a mix of a lot of new guests coming in and some of them who when we froze the membership are starting to start coming back because they wondered if we're going to reopen the membership or not and now they are starting to become regular season passholder results. I would also say that many of the single day tickets that were single day ticket last year are starting to come back as season passholder. We've seen a little bit of this coming through but the most important. The fact that finally the online post think.
of our guests and our guest satisfaction scores have trended upwards. And now people realize that all the efforts we've put in in beautification in creating those, even those three events that were put in in a very quick time, limited budget, October fast, boot fast, Veterans Day celebration, brought a lot of great people in the fourth quarter and saw the way how we improved our fry fast. And I give full credit to our new culture and our new team that stepped up and got it done. So I think now we published also all those seasonal events.
And the park experience has been a lot better. I get notes, I know about people telling me how we have become a lot easier to do business with, friendlier to work with, cleaner parks, shades, food service has gotten much, much better in terms of flows. I think a lot of it is bringing a lot of momentum. We're feeling very good about going forward for 2023. Good here, thanks. Our next question comes from Eric Wold from Be Riley Securities. Please go ahead. Thank you. Good morning.
Just going to follow a question on a bunch of the parts from practical questions. If you think about the outlook of getting into the 40% plus margin level in the next three years, along with the goal getting to that still at 25 to 27 million optimal tenants, maybe talk about the pricing strategy with both season passes and single-day tickets kind of embedded within that outlook, given kind of what you learned last year when you first took them up and took them back down. I actually think about how you think about pricing each of those two cohorts over that three year period.
a bunch of the parts from practical questions. If you think about the outlook of getting into the, the 40% plus margin level in the next three years, along with the gold getting to that still at 25 to 27 million, optimal 10. Maybe talk about the pricing strategy with both season passes and single, they take it kind of embedded within that outlook given what you learned last year when you first took them up in single back down. How should you think about how you think about pricing each of those two cohorts over that three or period? Yeah.
Good question, Eric. As I look forward to 23, the pricing structure, as we mentioned earlier, comes down a bit because of our aggressive. We arguably push too hard in 22, and so relative to 22, the pricing comes back a bit, but we are no longer going to be a discounter. And when even we do a promotion, we will consider offering, let's say, one pass like if it's gold, we might offer the platinum at the gold price level. We always want the customer to be able to level up. Right. And so that's the approach that we're taking. We also reduced our pricing on the highest level diamond pass. For some of you, remember, we got up to, I think north of 300 in 22. And we're going to be able to get a higher price level. And that's at 150. And it's also proven to be a very effective price point when you can attend all of our parks and all of the perks that we're offering with that pass. So these elements really, really feed into, we're feeling pretty good about.
the pricing structure in 2023 and then when you go on beyond 23 and in 24 and 25 This this year is is I think the Reset years so to speak on pricing and again, it's minimal and it's only on the admission side and It grows from here on out all these investments that Selim just mentioned and they go into the park 150 million 180 million 200 million, but whenever we end up spending in our capex to drive the growth at all of our parks this will enable us to consistently increase our admission value. We most probably also
to go away the meal dining plan, dining meal plan and all of that. I think we've learned and we had to course correct in September to realize that literally we needed to most probably create the experience before charging the aggressiveness you've done and I think people needed to see the value of our pricing and I'm comfortable right now that we have created a fantastic balance between the value of delivering and the pricing of delivering. On the other hand I want to continue to mind-bring reminding everybody that our pricing today is still higher than 2021 and 2019. Our single day ticket remains much higher too. We have not, that it and we're seeing the trends to work so far even though it's a very still low season for us. We are very encouraged by what we're seeing in the past eight weeks but
I think there are other, first of all, I'm going to tell you what I'm looking at it right now. When I think about our business long-term ban, I think there are opportunity and hospitality. Let's put it this way. I think we should be in the hotel business at one point, down the road. I'm not talking in 2020, but down the road, I see that opportunity of us. Our guests ask us that all day long. They say, I wish you had a property. It's easier for us if you have a property on in the park. And we have that space to do that. So look at opportunity in what I call hospitality. We have a little bit of a few hotels that we manage and they do well. They do well. And they are not in the best part of the country and they still do well.
And what I'm not saying, best part of the United States, are not in the fast-growing area of the country. I don't want to say that. They are amazing, beautiful places. I don't want to, beautiful places, but they don't have the support of the population. Do you imagine if we did something in New Jersey in Magic Mountain, here in Dallas, Texas, in Fiesta, in San Antonio, where if you have the population that support those hotels? I think number two, I would say the second thing, is we always will look at M&A down the road. I think there is opportunities in M&A down the road. And that would be a huge opportunity. As you see, our background in to this is, I've come from M&A at Middle B, and I think M&A has been a big propeller of value for us for 20 plus years. And I think there is a way to increase the opportunity of investing in the e-gaming. I believe e-gaming is a game changer for us down the road. It's too early for us to tell where it's going to go, but...
If you look at the prospect of eGaming and if we do it right, this should be a big opportunity for us going forward. Understood. Thank you. Then one quick follow up on the the margin commentary when you're talking about in grade and 40% and then mid 40s in a few years. Just to be totally clear that suggested even not modified even. Yes. Yes. Yes. Thanks. Thanks. And I would characterize it in the in the 42 range at 25. I think might it would be modified to be the mid 40s. I'm fine. Okay. So just pause for a second. So is it just is it greater than 40% for adjusted? Yeah. So if you look at if you look at what's happening over the next few years, we'll be we have our partnership units are coming over call option in 27 and 28.
And likely we'll be owning those parts in those years. So we'll be coming into a period where there is no difference between modifying the density of the dye. Okay. Okay. I guess we can catch up on one. Our next question is a follow-up from David Katz from Jeffries. Please go ahead. Hi, just thank you. Just wanted to touch quickly. I think you have a maturity out there. Gary, can you just give us a quick thought on how you might be dealing with balance sheet next year or so? Thanks.
I'm sorry, David. One more time. I think you may have a maturity out there for 24. I was asking, you know, how you're thinking about approaching that, you know, strategy and timing and, you know, any other sort of balance you'd initiatives you might be focused on. Yeah. I'm going to turn that over to Steve. David, so, yeah, so the 24 maturity they grow current in July , you know, we've, carefully, we'll be looking at the market and be opportunistic about refinancing those when the time is right. We also have a revolver.
to renew coming up. So both of those items were looking at over the next few months. When is your revolver mature? April , it goes current in April . And it goes current in April . OK, so it's perfect. Thank you very much. Yeah, and guys, I want to just clarify the difference between modified and adjusted EBITDA. That's in the partnership park share, which is roughly 50 million. And, you know,
When I'm talking it's low 40s, that's what I've been indicated on this call. And if you go back to modify the EBITDA, it's mid 40s. So we're both correct. I just want to make sure that we both understand it in terms of those two differences. Does that answer that question? Any other questions? No. There are no more questions in the queue. This concludes our question and answer session. I would like to turn the conference back over to Celine Besoul for any closing remarks. I want to thank everybody for their continued support. We are very excited to enter a new season and look forward to seeing you in one of our parks.
Take care and have a great day. Thank you. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect. Thank you.