Q1 2023 Six Flags Entertainment Corp Earnings Call
Good morning, ladies and gentlemen, welcome to the six flags first quarter 2023 earnings conference call.
My name is Becky and I will be your operator for today's call.
During the presentation all lines will be in a listen only mode.
After the Speakers' remarks, we will conduct a question and answer session.
If you have a question at that time.
The star and the number one on your telephone keypad.
If you would like to withdraw your question. Please press Star then two.
I will now turn the call over to Evan Bertrand Vice President and Treasurer. Please go ahead.
Good morning, and welcome to our first quarter 2023 call.
With me, it's swinging, Brazil, President and CEO of six flags and Gary <unk>, Our Chief Financial Officer.
We will begin the call with prepared comments and then open the call to your questions.
Our comments will include forward looking statements within the meaning of the federal Securities laws.
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.
In addition on the call we will discuss non-GAAP financial measures.
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 report.
Ordinary reports and other forms filed or furnished with the SEC.
At this time I will turn the call over to Wayne.
Good morning.
Thank you for joining our call.
I want to introduce breakthrough, our VP of Investor Relations and Treasurer.
One has been our assistant treasurer for the last two years and he has done a great job for us.
Thrilled to promote them to be our vice president of Investor Relations and Treasurer.
Welcome to all of the earnings call. This morning.
Today, we're focused on three areas.
First I will provide an update on the progress we have made on our transformation.
Second Gary will provide details on our financial results and our outlook for the remainder of the year.
Finally.
I will return to discuss why we are excited about our future over both the short and long term.
Our team continues to work hard to transform the company.
As we strive to reach our full potential.
And it transformation begins with the vision for what the company can be for us.
Our vision is to deliver a truly exceptional experience for our guests and sustainable profit growth over the long term for our shareholders.
But.
The hard work he's joining that vision into a reality.
The first quarter is seasonally our smallest quarter.
But we're pleased with the progress we are seeing.
There are five items I would like to highlight that serve as indicators that our transformation is taking hold.
First.
Our guest satisfaction scores are trending upward.
Guests are responding favorably to the investments we have made in our parks and in our new seasonal events.
Our season pass sales trends continued to improve year to date as of Sunday April certainly is our season pass sales are more than double what they were last year.
Over the same period.
Guests continue to respond favorably to our simplified product assortment and the compelling value that the whole season pass products offer.
Third.
We are proud to report the highest first quarter revenue in the history of our company, which was driven by record guest spending per capita.
That said, we still expect that our capital spending trends to moderate this year, but we are encouraged that we have gained traction with our pricing programs and that guests continue to spend an hour improved in park offerings.
Fourth.
Our attendance trends continued to improve.
While our attendance in the quarter was down compared to last year. Our results were negatively impacted by adverse weather conditions in California and Texas.
Excluding the extraordinary weather impact we estimate that attendance would have increased by 6% compared to first quarter of 2020 two.
Finally.
I am proud to say.
Our team continues to stay focused on costs, which enabled us to deliver the second highest first quarter adjusted EBITDA and six flags history.
So looking back on the past half year and a half since I was appointed CEO .
It is clear that 2022 was a year of transition.
We sold our business model from top to bottom.
And we've tested numerous initiatives many of them are successful and some were not.
But I'm proud that we were willing to be bold and to challenge the status quo.
We learned along the way.
And last fall.
We of course corrected in many ways area.
The path towards progress never follows a straight.
Bye bye.
But we are encouraged by the progress we have made over the past two quarters.
Our focus remains to deliver an exceptional experience for our guests and sustainable profit growth over the long term for our shareholders.
We are still in the early stages of our transformation.
It's about the opportunity to take this company to the next level.
I will now turn the call over to Gary who will provide details about the quarter as well as our outlook for the remainder of the Getty.
Thank you Sue and good morning, everyone.
I will start with attendance revenue and per capita spending and then transition to expenses and EBITDA for the quarter.
I will finish with our active pass base metrics select balance sheet items and capital allocation.
Total attendance for the quarter was $1 6 million guests, a 5% decrease from first quarter 2022.
As Selim mentioned, we experienced unusually cold and rainy weather in California, and Texas during the quarter, which we estimate accounted for a loss of 180000 in attendance based on a five year average attendance excluding 2020.
Adjusting for the weather, we estimate that tenants would have increased by 6%.
Revenue in the quarter was up $4 million or 3% to $142 million and was a Q1 record for six flags.
This was the result of total guest spending per capita increasing $5 or 7% versus first quarter 2022.
Partially offset by the decline in attendance.
Admission spending per capita increased $4 or 10% and in park spending per capita increased $1 or 3%.
The increase in total guest spending per capita.
Compared to 2022 was.
It was driven primarily by higher revenue from memberships beyond the initial 12 month commitment period.
What we call membership 13, plus which includes a portion of revenue that is allocated to admissions revenue and a portion that is allocated to food.
Retail and other revenue.
Approximately $5 of the admissions spending per capita increase and one dollar of the in park spending per capita increase was due to the higher 13, plus membership revenue recognition.
13, plus revenue is recognized in the month. It is received and it has an outsized impact on the first and fourth quarters as the attendance is lower than in the second and third quarters.
Excluding the impact of 13 plus.
Revenue.
Admissions and in park spending per capita were essentially flat with the prior year.
On the cost side.
<unk> operating and SG&A expenses versus 2022 increased by $5 million or 3%.
Primarily driven by higher advertising spend as.
As we have previously mentioned, we decided to meaningfully increase our advertising spend this year with a focus on digital channels to support our season pass products.
Adjusted EBITDA for the quarter was a loss of $17 million.
Compared to a loss of $17 million in the first quarter of 2022 with the increase in revenue offset by higher advertising expenses.
Our active pass base as of April 2023.
Comprised $3 2 million pass holders, representing a decline of 11% versus the same time last year.
As Tony mentioned earlier, our season pass unit sales are up significantly year to date.
But our season pass sales last fall were significantly lower than the prior year period.
Thus, we entered 2023 with a lower active base, we are closing the gap.
And as of Sunday April 30th our active pass base is down 4% compared to last year.
Deferred revenue as of April 2nd 2023 was $152 million down $33 million or 18% compared to first quarter 2022.
The decrease was primarily due to the lower active pass base as of April 2nd 2023.
Our improvement in season pass sales this year as reflected in the growth of our deferred revenue during the quarter.
Our year end deferred revenue balance as of January one 2023, which was $129 million grew by $23 million or 18% in the first quarter of 2023. This compares to a $7 million or 4% increase in deferred revenue during the first quarter of 2022.
Total capital expenditures for the quarter were $25 million.
We expect our full year 2023 capital spend to be approximately $150 million with a balanced approach between exciting new rides continued infrastructure improvements and increased emphasis on implementing guest facing technologies and amenities in our parks.
Our liquidity position as of April 2nd was $224 million. This.
This included $159 million available revolver capacity net of $21 million of letters of credit.
Last week, we successfully upsized, our revolver from $350 million to $500 million and raised $800 million of eight year, 725% unsecured notes, which we used to pay down $893 million of the 'twenty 'twenty four unsecured notes and a tender offer.
Sure.
Over the next 15 months.
We plan to use the excess free cash flow to pay down the remaining portion of our 2024 notes in addition to our revolver balance.
Before I turn it back over to Selim I want to highlight a few items to help you think through the remainder of the year.
First in 2022, our year over year attendance trends were consistent with our 2021 attendance trends until mid June at which point, we began to see meaningful declines that continued to accelerate through the end of September .
Before our attendants began to improve sequentially in October through the end of the year.
This is important as you think about our year over year attendance cops.
Second we expect inflationary cost headwinds of approximately 6% in 2023 relative to 2022.
While we expect to offset much of these cost headwinds through additional cost savings programs, we are selectively adding back costs that directly and positively impact the guest experience.
As a result, we expect to see full year 2023 costs increased by low single digit percentage versus last year.
Finally, we continue to expect our full year 2023, adjusted EBITDA to be higher than our previous record of $518 million of adjusted EBITDA.
<unk> by our core North American operations in 2018, which excludes international licensing revenue.
As compared to 2022, we expect this result to be driven by higher attendance, partially offset by lower per capita spending.
We expect to grow revenue.
Foster than costs driving margin expansion.
Now I will pass the call back over to Susan.
Thank you Gary.
There continues to be a growing consumer demand for local out of home entertainment and we believe six flags.
Squarely in the middle of everything is it consumer is looking for.
We believe the way to capture this demand and optimize profit in a sustainable manner is by continuously improving the guest experience.
That will continue to be our intense focus.
Our stretchy rests on four strategic pillars.
First.
Park experiences.
Second pricing and products.
Third seasonal events.
And fourth organizational culture.
Our first priority is to improve product experiences for both our guests and our employees.
The investments we are making focus on the areas that directly impact guess time spent in the parks, including safety cleanliness food quality and variety.
Speed of service and guest amenities.
As a facilitator.
All of these priorities. We are currently undergoing an extensive digital transformation game.
Aimed at creating a more seamless guest experience increasing sales through both existing and new revenue streams, and making easier for our frontline team members to serve our guests.
We plan to rollout our new mobile App in June .
Which will deliver features such as.
A schedule of events to help our guests plans that they in the park.
The seamless ability to purchase an excess flash passes without visiting guests services.
What was the clinical feedback.
Guests will be able to upgrade from single day tickets to season passes or from lower tiers season pass categories to higher tier options.
Interactive maps for.
Features that helps guests navigate all parks.
An improved mobile food ordering system, which we expect will help increase the usage of our mobile mining system.
We believe this will help raise our in park spending because our average mobile food orders the value is 10% higher that and on mobile order.
In addition to technology, while investing more in our infrastructure than we have in any year over the last decade.
Our primary focus is on guest amenities, including shaded area.
Guests keep corn during the hot summer months.
Extra seating options throughout our parks for our guests to sit down and relax.
And our new and refurbished restaurants and bars.
We are also focused on park vacation and have added flowers and greenery throw all dog parks. In addition to lots of painting of rides and buildings to improve our opinions.
We have also introduced new luxurious VIP lounges in several of our parks.
To allow our most loyal guests to relax in a comfortable environment during the day.
We continue to prioritize investments in foodservice quality and delivery and recently hired a new operations chief to standardized equipment and processes, including increased automation and to create a culinary training program in the parks.
E gaming is an exciting new opportunity that you are launching at six flags Fiesta, Texas in conjunction with our partner Coca Cola.
Our E gaming facility state of the art and a first for theme parks and the Grand opening is on May 20, <unk> 20th.
We look forward to offering our gamer enthusiasts and uplift in our parks to enjoy alongside our SYGMA should rights and other attractions.
In 2023, we are making a concerted effort to improve our water park experience not only are we adding significant water rights and attraction with a focus on family oriented entertainment.
But we're also adding new food and beverage facilities as well as expanded cabana seating.
And we're excited to launch where he spent technology that allows our guests to purchase food and drinks without having that credit card with them.
Six flags offer some things for everyone.
Our team is particularly focused on adding experiences and amenities that cater to families. In addition to our core thrill seekers guests.
As part of our focus on families will be amplifying the IP in our parks, including our true surprise to us the Looney tunes and DC comics character in our parks.
In 2023, and we plan to further incorporate these beloved characters and all into our seasonal events and festivals.
And of course, we will always be committed to I think thrilling ride and roller coasters draw our theme parks for guests of all ages.
One final point on the guest experience.
The number one complaint.
Our guests is right downtime.
<unk> will always be down from time to time due to scheduled maintenance and other safety precautions.
But we do have an opportunity to improve our own performance.
A few weeks ago, we announced that we are consolidating our maintenance and engineering departments and restructuring our operations to make us more efficient and provide greater oversight and accountability for all Reits.
This will take time to improve but we know that our guests will appreciate grid to ride availability and uptime when they visit our parks. So it's worth prioritizing our time and energy in this area.
The second strategic priority is pricing and product.
Our goal is to deliver a premium guest experience and to charge prices that are commensurate with the value we deliver to our guests.
For single day ticket, we are piloting a dynamic pricing program in our parks that will enable us to automatically change a specific price point based on demand for that part and that date is.
If successful this program will enable us to extend our booking curve drive yield on our busy these days and drive volume on our slower dates.
We believe we have pricing power, but only if we deliver an exceptional guest experience. We have learned that price increases should be gradual and should be accompanied by continuous and meaningful.
<unk> is the guest experience.
Our goal is to continue the success, we saw last year in improving our guest satisfaction scores across all of our parks and if we can do that then we can increase prices gradually overtime.
Our third strategic priority is adding quality seasonal events.
Events and festivals drive urgency to visit our parks and provide our members and pass holders reason to visit us multiple times throughout the year in.
In 2023, we plan to amplify our folks on festivals and events.
So far this year, we have introduced several new events, including screen break.
Diagnose and be fast and develop yes.
All of which have received positive guest feedback.
Looking ahead, our summer schedule includes new events, such a flavors of the world.
Six flags fireworks spectacular and parades.
In the fall and winter months.
It will feature an enhanced Oktoberfest, <unk> kids, who first and holiday in the park amongst others.
In addition to giving guests more reason to visit our parks, we believe our events in particular those hosted at night.
I guess more reason to stay in our parks longer resulting in more fun on more value to the guest and increased guest spending per visit.
The fourth strategic priority changing our culture.
What I'm most proud of is the talented and dedicated team we have built to execute our stretch.
We have a powerful combination of internal theme park expertise and externally recruited talent with new skills and fresh perspectives.
We are a much leaner and more nimble organization.
We move fast we challenge the status quo and we innovate.
We empower our frontline team members to make decisions that will delight, our guests and we hold each other accountable for performance.
Above all our team has created a customer obsessed culture.
And this is what gives me the confidence to say, we can take all performance to the next level and unlock the potential of six flags.
I look forward to updating you on our progress as we strive to continue to improve the guest experience and increase our profitability.
Operator at this point could you. Please open the call for any questions.
Okay.
We will now begin the question and answer session.
Ask a question.
Press Star one on your Touchtone phone.
If you are using a speakerphone please pick up your handset before pressing the keys.
If at any time. Your question has been addressed and you would like to withdraw your question. Please press star. Thank you.
At this time, we will pause momentarily to assemble our roster.
The first question comes from Jamie Hardinger with Citi. Please go ahead.
Hey, good morning.
Thanks for taking my call. So just a point of clarification help us walk through.
What looks like some some per cap benefit that you called out as a result of the.
13, plus cohort.
I I.
The membership pass or something of a discontinued I understand it there were some people that are grandfathered in but I would have thought that if anything there are fewer of those lessons those revenues coming in today than a year ago help help us sort of understand the puts and takes and how we should think about that going forward should there be.
The incremental benefit from from.
The shoulder periods.
Membership revenues going forward.
Jamie Let me answer.
So first the first part of the question about memberships memberships.
What are our most loyal.
Guests.
And they are in essence, when you reach membership.
13, plus meaning they've been with you over a year.
They are not only the most loyal they are the most profitable.
Oh however.
However.
Our membership has a lot of course in a lot of complication of execution in our parks.
And however, it doesn't.
The fact that members by himself are very loyal and very profitable once you get to 13 plus yeah.
I'll turn it over to Gary now to address specifically the impact.
Thanks Ashley.
Jamie what.
Well what happens is we recognize the revenue on 13, plus monthly and as we don't have any new members coming in we're not.
<unk> allocating that through the year based on visits per park.
So the dollar impact of booking the revenue of 13, plus and almost all of our members are now 13, plus has an outsized impact on Q1.
Right and I understand the Q1 benefit relative to the rest of the year, but maybe help us understand versus.
A year ago right I mean are there more members.
Coming into the system somehow or what's happening there or if you.
You hit that 13 month exactly exactly that's the key Jamie you got it.
Last year many of them were still in there.
Monthly payment mode to hit their first 12 months and so that's allocated differently and as they get to 13, plus then it's booked as we receive it.
Okay. So it sounds like.
Given the fact that youre not selling new memberships that the retention rate of those members must be.
Exceedingly high if we're still getting.
The third of the people hitting that 13 months.
<unk>.
Anniversary are still greater than the number of people that are dropping out of that that membership total Jamie we have not been willing to give those figures on membership, but I'm going to tell you anecdotally, where we are.
As I traveled extensively the parks and I am in the parks almost every weekend literally I am visiting parks every weekend.
The number one question people ask me.
Could you please bring back membership.
And this is what I received and this is what I guess and there's some things that we're studying and analyzing and evaluating but this is all I can tell you is the number one question and this is why people value the memberships.
Okay. That's helpful. And then I guess just sort of open ended question ethylene.
I'm sure you're going to want to talk about this one but you mentioned how guest satisfaction scores are trending upward maybe just give us some more color on that how much of that is the reintroduction of some of the products that were eliminated how much of that is just fewer crowd.
The role that events are playing any color, we could get there would be great well I'm going to give you two colors I mean that gives you a color that happened this specific weekend.
Any colors that happened that's happening online for the last I would say six to seven months, our online postings specifically in respect of our own internal guest satisfaction scores at three measures have been very positive we remain having negative comments about our right downtime and other.
And we're trying to improve that and we'll talk about that later in the call, but ultimately people are looking at a premium to sort of part of our friendliness of our stuff you're talking about our ease to get into our park the flow of our foodservice choices and variety.
Oh, our amenities people talked about the shades debentures, even though they look simple.
But literally the ability to position those shades, making sure. They are all over the park to make sure they where people can sit now were introducing our VIP lounges. So our guest satisfaction with <unk> have gone up now let me talk to you anecdotally.
For the first time.
I've been invited while Ive been invited in the past, but the first time I decided to attend.
Understood.
Meeting of Warren Buffett, Berkshire Hathaway.
I went to Omaha, I did the pilgrimage to Omaha.
And I was in line.
Was all decked out in all six lakh paraphernalia.
I had my jacket to stick Black my shirt to C class and I was in line there was thousands and thousands of people I understand so the record attendance.
And it was fun to be that I picked up a lot of tips from those two items.
Harley and warm, but what as far as important as I was walking the line.
Almost.
Every person say do you work at two o'clock.
Yes, I wish I did flag.
And they said we have Chad cherished memories at six flags, we love that brand.
And then I run into.
Professor <unk>.
We grew up.
Just a couple of miles away from our Gurnee Park in Illinois.
And now he is a professor at the University of Florida in Jacksonville, and he said flame my memories of supplies are unbelievable.
And now my brother still lives.
Just two miles away from your park and Gurney in Chicago.
And he goes there reached family.
All the time and he told me that the parks have gotten better and better and better.
Kudos to you.
None that I was the new seal Slim I can tell you heating from my brother the parks are much better more invested in food is better.
If the ambiance survives oftentimes the stuff is so friendly and welcoming and hospitable.
The water park is a lot more better than it's ever been and this made my day being through that this weekend.
And that's basically telling you where we are.
That's really good color, thanks, a lot and good luck.
Thank you Jamie the next question next.
Our next question comes from David Leiker with Stifel. Please go ahead.
Hey, guys good morning.
So.
As we think about the remainder of the year.
From an attendance standpoint.
Gary I know in the last call you kind of called out a you were expecting kind of a double digit attendance growth for.
For this year I just want to understand it.
If you're still kind of thinking about the year of that way. Obviously you had some some weather impacts in the first quarter I would guess that April weather wasn't that great either so how should we think about attendance for the second quarter.
It's still being up relative to last year, but not that high and then you start to see some significant growth in the back half of the year and that could still get you into that double digit.
Kind of growth range for the year.
Yeah. Thank you Steve.
Sure.
Excellent line of thinking.
But when I look at our tenants.
Leading indicators.
I would look at season passes I look at group sales.
And both are very strong where we're seeing some some really impressive growth that definitely supports.
What I see as a double digit growth for the full year.
What.
It is interesting compared to Q2 is Q2 was still pretty solid in terms of attendance until let's.
Let's say the middle of June when things started to drop off and we talked about that on our opening remarks.
So.
The Q2 attendance certainly has a chance to be up double digits, but will show really remarkable gains against the third quarter, which would be where the majority of our lift will be done on attendance, but.
We are seeing.
It's interesting as the Q1 being down five weather affected.
And April is up nicely and May is also showing even greater progress for attendants then.
In April so.
We're moving the right direction things point to.
Fairly confident on double digit growth in attendance.
Okay, that's great color Gerry.
And then second question probably for use of lean, but you know marketing spend and.
So I'm trying to understand here is how we should be thinking about marketing spending for the rest of the year. It seems like there's been high correlation here between.
Marketing spend in visitation to the park. So do you think at some point in the future, you'll you'll actually have the opportunity to pull back on marketing with you know without impacting or losing attendance extra.
Excellent question.
Think that.
Marketing is sometimes very difficult to measure the impact, but we've seen compared to the testing can you last year, when we cut back on marketing and this year that there is a correlation as you well said about marketing media span and attendance.
However, we have realized that this year, specifically, while increasing our marketing spend to promote all the initiatives, we have and I want to just give color of all what we are doing very briefly about what's happening.
So we are this year.
Adding a record number of.
Festivals.
Which you have to put more flavors of the world Viva La Fiesta.
Then we're going to continue building on October 1st Summer nights celebration, which includes fireworks and lighting and synchronized fireworks.
Then we are also adding seasoned pass appreciation calendar for off season pass holder.
We are adding 20.
New food and beverage items that are popular amongst all demographics.
Especially especially our young adult such as small deals.
Korean corn dogs and many many other things.
We also are introducing a brand new mobile app.
And we are trying this year with all the initiatives, we're trying to send the word out that.
There's a lot more excited to come to six flat, it's not only about thrive and in fact, we are investing more rides on adding more water rights for families.
More events for families. We are also doing a lot of immersive family events, such as family Bingles Scavenger Hunt eating contest. So all of this happening this year in 2023, it makes it very important well put it including indoor goods good kids play.
All of this needs to tell people, it's a revamped.
Reinvested.
So this is why we're going to spend more money. This year in marketing to tell about all the things that are happening all the innovation is happening in a box.
Okay, great. Thanks, guys appreciate it.
Thank you.
The next question comes from Ben Chaiken with Credit Suisse. Please go ahead.
Hey, good morning.
Morning.
Hey on pricing I think last quarter, there was a discussion around admission per caps and your expectations for the year implied year over year declines.
This quarter was up it was flat ex the.
Pass accounting I guess that my question would be given the traction you're seeing on attendance. Your commentary on April and May have your expectations around price changed at all now that work few months into the season, there's some pretty healthy results sometimes.
Thank you Ben.
At this stage no. It's important to recognize Q1 is less than 10% of our total.
Activity really for the year on certainly on the revenue side.
Yeah.
It's I think we raised prices significantly last year. So Q1 'twenty two over Q1 'twenty one we were up guest.
Spending I think it was about 34%.
And so we're holding onto that you removed the impact from 13, plus and were flat with spending but that.
That to me says that we're delivering on the value and we've reset the baseline for future growth on attendance and.
Per caps.
Okay.
We simplified pricing, but reducing.
Overlapping promotion, which we we also made it easier for people to understand our pricing. It was very confusing last year, but also at the same time, we realized one thing very important is we lost you.
Pushed.
Pricing a little bit more ahead of our premium amortization.
And we really like that.
We kind of push rates.
As higher we've done in just a single year.
Readjusted and we're realizing the impact of the adjustment our season passes.
I should have increased.
And we're comfortable where we are right now.
No.
We also I'm going to share with you something that as our season pass have increased.
We've seen a few things also go out of balance Susan.
Season pass holders don't spend as much money on flash passes.
Single day ticket holder and last year, we had a tremendous number of single day.
<unk> is sold.
And that generated a lot of flash passes.
As we take the mix back away from single day ticket to season passes.
We've seen a flash passes which are highly profitable come down.
A little bit.
So we have to readjust.
Our business model, it's a lot of learning between in the last most probably 18 months for me and for this team, but two are figuring it out and we're very optimistic and I'm not looking at a quarter or two.
We are taking big bets.
And those bets I'm not about a quarter or two.
We have always said that this is a three year.
Glen.
So what I took the job I signed up for a three year transformation and.
And we're seeing the impact we start with the guest satisfaction scores, which started to how we started loading and optimizing our pricing structure.
We're now launching a lot of initiatives.
Guest friendly that will increase.
This time spent in our parks and the visitation of those six.
Season pass holder in our parks.
<unk> also that technology.
It's a big thing for us.
And we needed to.
But he vamp automobile op and I'm proud to say that.
And we have a new mobile app launching in June .
We are having a lot of technology happening also that I can talk about now.
And gave you would like to add something.
I'd like to finish up with Ann Thank you squamous excellent.
<unk> been fleshed fastest they're also very much a part of attendance and attendance is relatively light in the first part of the year.
As we go into May we're seeing pretty nice uptick so.
I still believe per caps as I said on the last earnings call will be down modestly.
And that is more of a function that we raise prices very aggressively as phillipe just setting in 'twenty two.
Okay understood. That's all helpful. Just if I could squeeze one more in I think you made a comment with Gerry that 23 costs are going to be up low single digit percentage versus last year, if I caught that.
Correctly, just to confirm is that excluding cogs cost of products sold.
Then if you could kind of help us in the context of a growing top line, 6% inflation can you help us better understand some of the cost offsets.
Yes, absolutely.
One of our most successful initiatives. This year has been our procurement strategy.
We have centralized procurement here at six flags and our new Vice President of procurement is doing a wonderful job we're seeing.
Some real gains there and this takes a little bit of time to to to filter through the financials because most of the activity of course is in Q2 and Q3.
We're also optimizing our cost structure in relation to.
What we've done with maintenance as Phil mentioned, we have maintenance, we have operations and so we have engineering now all under in general one.
Leadership.
At each park and this is providing some efficiency gains there and were selectively looking at cost optimization strategies throughout the company.
Thank you.
The next question comes from Thomas <unk> with Morgan Stanley . Please go ahead.
Thank you so much.
It sounds like from your previous answers that you're happy with the simplified season pass pricing strategy, maybe as we hit the mid June timeframe and we lap the increases from last year is there any way to help dimensionalize, how the blended pricing on a path.
Civic basis kind of shakes out versus last year.
I can just go back to the blended overall.
We'll look at both.
<unk> admissions and in park spending Thomas will will be down modestly for the year.
I can easily break it down much more granularly than that.
Okay, no that that's particularly unhelpful.
And then on just <unk>.
In park spending being flat ex membership maybe help us dig into some of the headwinds or tailwind there during the quarter do you expect to see continued tailwind on premium product mix or any signs of consumer slowdown on the attachment rates are older sizes or anything like that.
Yes, a good good question, it's on a lot of our minds.
We're seeing.
Just really good customer appreciation for the value we're bringing in.
And.
And as I mentioned on the.
Our call. This morning satisfied might be the word I would use for the being flat to prior year and it's really important to remember we raised prices 34%.
And offerings for.
Our overall guest spend per cap.
Most of that came from the Ips changes. So we're lapping some really some really high comps. So I'm satisfied now is as the team here sitting and resting on laurels absolutely not we have mobile ordering as Tony mentioned, we have dynamic pricing, we have VIP lounges, we have E gaming we.
We've been installing some new.
Premium cabanas.
With lots of initiatives going on that we believe will drive the in park spending.
Throughout the year.
Okay, Great and just maybe last one for me following up on James's initial questions about the membership revenue accounting as we think about Q2 and three Q.
Is it right to assume that you.
Non 13, plus members over the course last theater. So maybe the two Q3 Q headwind related to that particular accounting court becomes less of a factor going forward in 'twenty four I would imagine that everybody is 13, plus and so you start to see less of a one Q4 Q.
Kind of shoulder period benefit.
It actually because the attendance.
It goes up so dramatically in Q3 and Q2 <unk>.
Impact from recognizing 13, plus revenue monthly is much more muted. So you don't see the upside impact being that dramatic.
Okay. Thank you.
The next question comes from Chris <unk> with Deutsche Bank. Please go ahead.
Hey, good morning, guys. Thanks for all the details so far.
Wanted to ask you your thoughts on how much you plan to use kind of dynamic pricing this year.
As you heard through the you know the peak months and get some.
More data points on where attendance is shaking out and how weather and other things or are impacting you. So can you give us a few thoughts on.
Where you might stand on using more dynamic.
Flexible pricing.
Yeah. Thank you Chris.
We are essentially piloting dynamic pricing three of our largest parks. This begins in July .
Impact.
We'll.
Hopefully be immediate.
There's a lot of work to do to get the.
Dynamic pricing fully developed.
A lot of data sharing a lot of data aggregation.
And so as it rolls out and becomes promising which we believe it will have a nice very nice upsized impact.
It will be even more powerful in 'twenty four.
Okay.
Thanks, Gary and then as a follow up.
So last year, you talked a lot about variation in performance by park in some some pretty big variations based on.
The pricing strategies.
Other things that when you look at the season, knowing that it's still early but.
Do you think you expect theres going to be still.
Still very wide variation among your parts or do you think you maybe do some things that narrow the.
Yes kind of a delta between the top and bottom parks.
The investment cycle that we're in really makes a difference so as we invest in our parks and all the areas that Selim has laid out in front of US today, It makes a significant impact and bringing.
The outliers more towards the mean.
Happy with that.
I'll take a moment to.
Congratulate our folks the team in Mexico, They had a wonderful first quarter.
Great Great job guys.
Great question I would like to step in and tell you last year, we had tremendous variation between our parks and not.
Not only between the big and the small but through the.
The big bump amongst themselves also given some of the big ones had variation among themselves and I think this year. If your question is right on.
And that's something we've been watching me and the leadership team and all of the park presence I think the variation there is a lot better. This year, we are more in sync all the parts seem to be in sync right now.
We are charging all ahead.
Altogether much much more synchronized.
Okay very good thanks, guys.
Thank you.
Yeah.
The next question comes from David Katz with Jefferies.
Go ahead.
Hi, good morning, everyone. Thanks for taking my questions. So I wanted to go back to a comment you made earlier on about the number one question people addressing with you when you see them are you.
You know about membership.
Can you just elaborate a bit more on the puts and takes of how you were thinking through the membership I think you may have made a comment earlier that and I want to make sure I have it right is that membership people tend to less to buy flash passes what what are all the issues and help us.
Kind of understand how youre thinking about that.
I think first of all when you think about the monitor ship. We had we had I think four five membership program.
Very complicated for Apache to execute because every member's dime.
Diamond Elite VIP elite gold I can't remember, how many they way it.
It was very complicated.
For our part for our park frontline employees to honor it create a lot of friction and a lot of most probably.
Arguments between our most loyal fans and our frontline employees that's number one number two there.
There was tremendous perks.
At.
We could not execute.
Simply either from technology want it all from our ability to execute they had they would come in they had specific area in our park.
Parking that they'd have to par Pacific area.
And our amusement park.
You should not put strategies.
That underneath and create friction between.
As you as your loyal guests.
U S. Our frontline employees.
It was not working at the end and I can tell you very clearly that our park President will tell you. The biggest friction was auto it was our most loyal employees, so having said that philosophically.
We we understand that those members are loyal and we understand that they are very profitable, but we need to be able to give them. The service that they expect and that we had to build technology, we have to build a way to train our employees to serve as somewhat.
And we need to reduce the simplicity of that so in totally we are debating reintroducing maybe a membership.
In the second half of this year, but it's going to be a very different membership. It's the membership that has a lot of value and it's something that maybe would most probably would be simple and we can create that satisfaction drawn now let's talk about.
Oh.
Certain things that.
People spend singularly ticket holders.
I would also very valuable to us.
But the visit a lot less south parks.
Oliver.
Paid parking.
And the attachment rate on single day ticket holders.
And flash pass, which is a very profitable program for us.
Is.
Very high.
And from that perspective.
It doesn't happen to be the same with members and season pass holder why because they can come after them.
So they're not going to keep on buying flash passes so our job is to find other ways to monetize them.
Yeah, David if I could add a little to that too as well.
We really are focused on the mix of our season passes and Diamond is of course, our highest priced product.
And to <unk> point, it's been earlier, we are really focusing on.
Diamond entrance at Diamond entrance to the park to the AD and to go through quickly and to have the VIP lounges.
To be able to give them a special section in all water Park special section I'll parse, making sure that they get a special attention making sure that.
And Thats requires two things training of our frontline employees.
And technology, we want to while those members we want to while our most loyal fans, which are our diamond holders.
Our members, if we ever reintroduce that membership.
And our basically platinum season pass holders those three categories need to be wild and that's why I'm very excited about what we're doing both in innovation and technology now single day ticket holders, we have they will come.
They would continue come as they've always come to our park now some of them have transferred into buying season pass holder and we have data that suggests that given.
The friendliness amenities, the beautification and <unk>, we have data that tell us that several of those single day ticket holders have converted into season passes to a higher rate than we've had in the past.
Yeah.
Okay.
And if I can just ask a quick follow up.
Given sort of the context of the day.
Are you seeing any.
Indications or data points or any numbers.
That suggest any consumer.
Trepidation or weakness or anything.
Such an odd time as we've been waiting for a year for a recession to arrive.
Yeah.
David.
Wondering when that will.
Will happen if it does at this stage are our consumer our guests.
Spending in there they are strong.
Doing theyre doing just fine.
Okay perfect. Thank you.
The next question comes from Eric Wold with B Riley Security. Please go ahead.
Thank you and good morning.
Just a quick follow up question on the dynamic pricing pilot and I know we're early.
On that but maybe you can share some additional thoughts on.
How wide of a band you might be thinking we could see prices on the high end and the low end versus kind of the baseline as you would have to think about.
More than demand sits in there and then and then how do you balance.
The desire to drive attendance on the.
On a slower days without starting to push up against kind of guest satisfaction and crowds and the parks or whatnot, we hope will be Dr. Helen.
Cool.
Eric on the dynamic pricing I think it's still too early to.
To be able to make some some predictions as to the.
The impact.
If if I was an airline it would be a little bit easier.
But.
As the consultants who were working with its certainly is promising but I think thats something that we can talk about on the next quarter. So I can I can address a little bit you're balancing attendance and.
I guess satisfaction, we have basically told from the day withdrawn we have data that tells us that our parks will always be agreeable to our guests within that.
$25 million to $27 million.
Yes, yes.
And we are still thriving striving to get to that number.
And.
That's where we are trying to achieve so last year, we ended up roughly in the 20 plus million.
We are now climbing back up to go up towards the $25 million to $27 million and.
Eric.
Really believe in this strategy that we're on because it's it's a better experience for our guests at $25 million rather than in 19, I think we had $33 million or darn close to it.
And it's just it's just too crowded and when you go that model with you want a lot of attendance and less on the per cap.
Again, the experience is not what we're after I'd much rather have $25 million at it.
At a higher per cap.
So that's where we're headed strategically.
Helpful. Thank you both.
The next question comes from Barton Crockett with Rosenblatt Securities. Please go ahead.
Alright, thanks for taking the question.
I wanted to just understand a little bit better this calculation of the weather impact.
You said it would have been up 6%.
Down 5%.
I think a lot of these days were disrupted my went right now.
Cedar Fair said, 30% of their days were disrupted by weather in May.
Mainly knott's Berry farm and L. A.
And I know that if it's raining on Saturday and a lot of people will not go on Saturday don't come on Sunday. So there is a risk of extrapolating.
The good weather days that maybe benefited by the bad weather days. So I'm just curious if you could explain how you came up with that.
We can get you know make sure we're comfortable with it.
And I'll throw a little humor out there.
If it rained on Saturday in California. It also rained on Sunday.
It was a rough quarter.
But what we did partners, we compared to a five year average.
Of what the attendants would be with normalized weather, we comparatively against that metric can and came up with our math and in April .
Supports.
That directional that we have Kevin.
Okay.
I'll talk more offline.
In terms of you know talking about April .
I'm just curious what is April and early part of me is not weather impacted.
Or is the weather, Okay and then.
Are you seeing the season pass base continue to kind of grow.
Yes.
The weather in April I haven't.
Followed directly.
So I can't comment on that it feels like.
Year over year was somewhat normal.
At least for us.
And in that regard what was the second part of your question sorry Barton.
Okay season pass base.
What's happening there.
Very strong.
Versus the prior year.
And so it's continued to grow in April year over year and sequentially versus March.
Yeah, absolutely yeah and into May.
Alright, and then just one final thing.
This comment that you can consolidate the maintenance and the engineering save money.
And to improve the performance of downtime with right now.
Doesn't necessarily you know.
I wonder about that because it seems like cost savings, yet youre talking about improving the performance.
I wonder about that because it seems like cost savings, yet youre talking about improving the performance.
Wondering if you could kind of flesh that out a little bit I mean, how is it that you can be more efficient and yet improve the right.
Performance, yes.
Good point and that's actually why we did it.
We have had traditionally in our parks operational silos.
And so maintenance.
<unk> be separate and leadership from operations and operations would be separate from engineering and they really need to work together to give.
The guests the best experience and the minimal downtime and then what we're also doing is we're combining that effort and it really call. It coordinated effort under one under under one really excellent leader with a capex investment that's going into the rides, where we renovate the drive system, we renovate the control systems when we.
Provide new trains.
You put all that together and we get a really nice.
I believe lift.
Or I should say a reduction in our downtime.
It's not about reducing the heads out in those departments, it's about getting them to work together.
And to delivering the best experience for our guests and we believe this will have a positive impact.
Okay, great. Thank you.
Youre welcome.
Okay.
This concludes our question and answer session I would like to turn the conference back over to Linda <unk> for any closing remarks.
Yes first of all I want to thank you all for your continued support.
We have one of the most iconic frame brand in the U S.
As witness during this weekend as it was.
Waiting in line.
And everybody approached me to tell me how much they love <unk>.
However.
However, we have not kept pace with brand building in the past few years, our innovation was lagging our guest experience was average at best.
<unk> would enter invested in terms of infrastructure technology and guest amenities.
Today.
We are pushing more events.
And more interactive family initiatives to getting our guests to spend longer time in our parks and to increased season pass holders visitations per year.
As the world's largest thrill and regional theme Park company.
We are back adding more exciting rights to our parks and water parks.
We have increased the annual Capex budget for the company.
Two a record number in 2023 2024 and 2025.
We are investing in our path to become more kids and family friendly.
We are boosting our R&D on technology.
We're increasing our marketing and media spend in 2023 to promote all of those initiatives and let me remind you what they off.
Yeah.
We are basically.
We're rolling out <unk>.
Several festivals such us develop yes, the flavor of the world.
Celebration time, a nice celebration October fast too fast in addition to our Fright Fest and holiday in the park.
We are launching family coasters.
We are putting good flight and play area in our water parks, where a building gets indoor play area.
We are launching for the first time and all day dining and that's all day dining is different than our seasonal pass dining which has higher cap.
Then our regular foodservice and it's something that our customer at a single day ticket holder have asked.
We are adding.
Grades and dazzling fireworks.
With lights and music Synchronised music in the evenings, we are launching 20 food items, such as Korean corn, corn dog, and markdown and more and more 20 more items coming.
We are adding interactive family entertainment shows such as Grannies gone Challenge Pie eating contest, primarily bingo scavenger hunt.
Others, we are revamping our merchandising offerings.
We are leaning more heavily in right specific merchandise something our guests have been asking for.
We are also introducing a host of new merchandise, we supposed to toys train models.
In apparel with higher quality fabrics and more trendy designs.
We are launching our new mobile app.
John we are so excited about that it will make it easier for our guests to navigate outbox less friction.
We are putting in Chris off touch screen order stand to take out weight with client to reduce where client for our guests similar to what you see at the fast food chains.
Such as Mcdonald's and Taco Bell.
We are rolling out our roller coaster coffee stores across the chain offering hot drinks cold brew as well as baked goods, including theme baked goods, which gets can relax.
Into.
It didn't create impulse buying opportunity for our guests.
We are launching.
And we've opened several of our VIP launches with all the bells and whistles that guest will love.
Yeah.
Then.
I could not talk about this without talking about those initiatives.
Starting with our employees.
They are the foundation of our culture.
And as a leader I tried to build on that we take care of our people. So as soon as they can take care of our customers and the rest take care of itself.
People show up every day and they are working hard to improve the guest experience to make our parks cleaner friendlier and more fruitful, we all work hard to reduce friction and to make us easier to do business with smoother to navigate our parks we are not.
Not all there yet, but we have made steady progress in our front gate in our restaurants in our parking.
The beauty of what happened this past year is too great working collaboration amongst our team. This has never been like this it.
It looks like it was always heavily tilted toward corporate decision, making now it is more balanced with our parts being able to make more of a local decisions. It is beautiful to see I am proud to say that most of our employees today are acting like owners.
Thank you I hope you can come and experience.
All the new infrastructure changes.
The technology improvement firsthand and.
And hopefully this summer you come and celebrate with us.
Our summer celebration, all flavors of the world.
Thank you.
The conference has now concluded.
You for attending today's presentation you may now disconnect.
Okay.
[music].