Q3 2024 Six Flags Entertainment Corp Earnings Call
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Krista: Ladies and gentlemen, thank you for standing by. My name is Krista and I will be your conference operator today.
At this time, I would like to welcome everyone to Six Flags Entertainment Corporation, third quarter, 2024 conference call.
Krista: All Lions have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question in answer session. If you would like to ask a question during this time, simply press star, fellow band member 1 on your telephone keypad. And if you'd like to withdraw that question, again press r1.
Speaker Change: Thank you. I would now like to turn the conference over to the Six Flags Management Team. Please go ahead.
Speaker Change: Thank you, Christ up and good morning everyone. My name is Michael Russell, corporate director of Investor Relations for Six Flags.
Speaker Change: Welcome to today's call to review our 2024-3rd quarter financial results for six flags entertainment corporation. Earlier this morning we distributed the Alire Service our earnings press release.
Speaker Change: A copy of which is also available under the news tab of our investor relations website at investors.6flags.com
Speaker Change: We have also posted a short slide presentation that you can access either on the webcast page for today's call or on our our web sites presentation page.
Speaker Change: You'll find the slides provide additional information about six flags for teaching roadmap and long-term metrics for measuring our progress, which we will cover on today's call. Before we begin, I need to remind you the comments made during this call will include forward-looking statements within the meaning of the federal security laws.
These statements may involve risks and uncertainties that could cause actual results to differ from those described in such statements.
Speaker Change: For a more detailed discussion of these risks, you may refer to the company's filings with the SEC.
Speaker Change: In compliance with the SEC's Regulation FD, this webcast is being made available to the media and general public, as well as analysts and investors.
Speaker Change: Because the webcast is open to all constituents and prior notification has been widely and unselectively disseminated, all content on this call will be considered fully disclosed.
Speaker Change: On the call with me this morning are Six Flags Chief Executive Officer Richard Zimmerman and Chief Financial Officer Brian Witherow.
Speaker Change: With that, I'll turn the call over to Brian.
Brian: Thank you, Michael. Good morning and thanks to everyone for joining us today.
Brian Witherow: I want to welcome you to our first earnings call that will cover the post-merger consolidated financial results for the new Six Flags Entertainment Corporation.
Speaker Change: I'll start my remarks by recapping results for the third quarter and it's September 29, 2024 before providing some color around a performance over the last five weeks, including the impressive demand for our incredibly popular Halloween events.
Brian: I'll wrap up with an update on long lead indicators, including the status of season pass sales to date, before passing it over to Richard.
Brian: compared with 1,091 operating days for the third quarter last year.
Speaker Change: Of the 1,494 incremental operating days, 1,591 days relate to operations during the third quarter at the Legacy Six Flagsparks.
Speaker Change: Meanwhile, Legacy Cedar Fair Parks had 97 fewer operating days compared to the third quarter last year, with 71 of those fewer operating days due to a fiscal calendar shift.
Speaker Change: The balance of the remaining decrease in operating days at the legacy Cedar Fair parks was the result of planned changes to park operating calendars, as well as the impact of extreme weather and related operating disruptions.
Speaker Change: For the third quarter, we generated net revenues of $1.35 billion on attendance of 21 million visits.
Speaker Change: These third quarter results included $558 million of net revenues and $9.2 million in attendance from legacy Six Flags operations.
Speaker Change: Third quarter revenues from Legacy Cedar Fair decreased by $52 million compared to the third quarter last year, primarily due to 660,000 fewer visits during the current period.
Speaker Change: 460,000 of which were due to the fiscal calendar shift.
Speaker Change: The remaining 200,000 visit decrease in legacy Cedar Fair attendants was the result of the extreme weather and related operating disruptions during the period.
Speaker Change: As we noted on our last earnings call, extreme weather caused challenges in the beginning of the third quarter, with Hurricane Beryl disrupting demand across multiple parks in early July.
Speaker Change: Later in the quarter, Hurricane Debbie disrupted early August operations, and then operations during the last week of September were again disrupted by Hurricane Elaine.
Speaker Change: excluding the three weeks that were directly impacted by the extreme weather events.
Speaker Change: Attendance across the combined portfolio during the balance of the third quarter was up slightly over the same three-month period last year, supporting our belief that our consumer remains healthy and demand for our products remains strong.
Speaker Change: Looking at third quarter guest spending trends for a moment, out-of-park revenues for the quarter totaled $102 million, which included $21 million in revenues from Legacy Six Flags operations.
Speaker Change: Out-of-park revenues from legacy Cedar Fair operations decreased by five million dollars, the direct result of the fiscal calendar shift.
Speaker Change: Meanwhile, in part per capita spending in the period was $61.27, representing a decrease of 2% compared to the in part per cap reported by Legacy Cedar Fair in the third quarter last year.
Speaker Change: Approximately half of the decline related to the impact of the merger, with the other half attributable to a planned decrease in average season pass pricing and a higher mix of season pass visitation at the legacy Cedar Fair parks.
Speaker Change: The per capita headwinds at the legacy Cedar Fair parks were partially offset by improved guest spending on food and beverage, which was up 2% in the quarter, and higher spending on extra-charged products, including Vaseline, which was up 4% in the quarter.
Speaker Change: These positive trends underscore our guests' willingness to spend during their visits and are a tribute to our part teams who provide compelling products and high-quality guest service.
Speaker Change: Moving on to the cost front, operating costs and expenses in the third quarter totaled $894 million, which included $368 million of operating costs and expenses from Legacy Six Flags operations.
Speaker Change: The third quarter costs were made up of $575 million of operating expenses.
Speaker Change: $209 million of SG&A expense and $110 million of cost of goods sold.
Speaker Change: Third quarter operating expenses included 245 million dollars related to operations at Legacy Six Flags and an 18 million dollar adjustment to self insurance reserves at Legacy Cedar Fair.
Speaker Change: These items were partially offset by a $10 million decrease in operating expenses at the legacy Cedar Fair parks related to the calendar shift.
Speaker Change: Excluding these factors, third quarter operating expenses at Legacy Cedar Fair decreased by $11 million, the results of our plans this year to reduce standalone operating expenses as part of the first phase of our merger-related cost synergies.
Speaker Change: Meanwhile, third quarter SG&A expenses included $81 million from Legacy Six Flags operations and $55 million of merger and integration related costs.
Speaker Change: Excluding these items, SG&A expense at Legacy Cedar Fair was up nine million dollars, primarily due to higher full-time wages, including bonus expense.
Speaker Change: The $110 million of cost of goods sold in the quarter included $42 million related to Legacy Six Flags operations during the period.
Speaker Change: As a percentage of food, merchandise, and games revenue, cost of goods sold in the quarter increased 30 basis points.
Speaker Change: Ten bases point to the increase related to the operations of the Legacy Six Flags parks, with the remainder driven by an increase in food and beverage costs at the Legacy Cedar Fair parks.
Speaker Change: As we previously noted, we remain laser-focused on driving operating efficiencies and improving margins.
Speaker Change: We are moving ahead with a sense of urgency to fully realize the $120 million of merger-related cost synergies on a run-rate basis by the end of 2025.
Speaker Change: The cost-saving efforts we've initiated to date at both Legacy Cedar Fair and Legacy Six Flags put us on pace to achieve our target of realizing $50 million in run rate cost synergies by the end of 2024.
Speaker Change: Turning now to Adjusted EBITDA, which management believes is a meaningful measure of park level operating results. Adjusted EBITDA for the third quarter totaled $558 million, including $206 million of Adjusted EBITDA from Legacy Six Flags operations.
Speaker Change: This was partially offset by a $21 million decrease resulting from the fiscal calendar shift at Legacy Cedar Fair and a $15 million decrease due to the impacts of the extreme weather on attendance and revenues during the quarter at the Legacy Cedar Fair parks.
Speaker Change: Consistent with our commitment and long-term practice of providing transparency around operating results, let's turn our attention to results since the end of the third quarter, results that reflect the outstanding performance of our increasingly popular Halloween events, which continue to deliver some of the biggest attendance days of the year.
Speaker Change: Over the past five weeks, we entertained 6.5 million guests across the combined portfolio, an increase of 20% or more than 1 million visits compared to the combined portfolio over the same five-week period last year.
Speaker Change: The strong momentum and demand that crossed both Legacy Cedar Fair and Legacy Six Flags parks also translated into a meaningful increase in the sales of season passes and memberships.
Speaker Change: Over the five-week period, sales of 2025 season pass units were up 8%, with the average pass price up 3%.
Speaker Change: This brings the early sales of season pass units across the combined portfolio up 2% over the same time last year.
Speaker Change: based on the solid season pass base and the strong performance of October, which historically represents approximately 60% of full of fourth quarter attendance
Speaker Change: We believe we are on pace to achieve fourth quarter adjusted EBITDA of $205 million to $215 million.
Speaker Change: With actual results dependent on operating conditions and macro factors such as weather over the final two months of the year
Speaker Change: Now turning to the company's balance sheet for a moment.
Speaker Change: Our balance sheet remains in solid condition. At the end of the third quarter, we had $90 million of cash and cash equivalents on hand and approximately $4.8 billion of gross debt.
Speaker Change: Of our debt outstanding, approximately 80% is fixed through long-term notes, and outside of $200 million in senior notes which mature in July of next year, we have no significant maturities before 2027.
Speaker Change: Liquidity, as of September 29, 2024, totaled $743 million, including cash on hand and available capacity under our revolving credit facility.
Speaker Change: Deferred revenues on September 29, 2024 totaled $359 million, compared with $208 million of deferred revenues on September 24, 2023.
Speaker Change: The $151 million increase includes $144 million of deferred revenues of the Legacy Theater Fair at Six Flagsparks.
Speaker Change: with the remaining increase reflecting the strong sales of advanced purchase products at the Legacy Cedar Fair parks.
Speaker Change: Through the end of the third quarter of 2024, deferred revenues at Legacy Cedar Fair were up $7 million, or 3%.
Speaker Change: For modeling purposes, during the quarter we spent $110 million on capital expenditures.
Speaker Change: And for the fourth quarter, we expect CapEx will be in the $100 to $110 million range.
Speaker Change: Looking ahead, we expect to invest between $500 million and $525 million in capital expenditures in both 2025 and 2026.
Speaker Change: These investments represent a level of CapEx spend necessary to accelerate the integration process and begin to activate the growth potential of the combined portfolio.
Speaker Change: The investments will be primarily focused on projects aimed at increasing demand and driving higher levels of guest spending, but will also include addressing any deferred infrastructure needs across the portfolio.
Speaker Change: While we are still finalizing capital programs beyond 2026, we are targeting annual CapEx spend to be in the range of approximately 12-13% of net revenues over the long term.
Speaker Change: Lastly, from a cash flow perspective, in 2025 we are projecting annualized cash interest payments of 305 to 315 million dollars and annualized cash taxes of 130 to 140 million dollars.
Speaker Change: With that, I'd like to turn the call over to Richard.
Richard Zimmerman: Thanks, Brian. And thanks again to everyone for joining us today. Today, I'll briefly reflect on our third quarter performance, share updates on our progress towards driving long-term value creation, and discuss the key strategic initiatives that will position the new Six Flags for sustained, profitable growth.
Richard Zimmerman: I will also discuss our expectations for next season at a high level and our targets for assessing progress over the long term.
Richard Zimmerman: First, let me say that I'm excited to share with you the early progress we've made since the completion of our transformational merger on July 1st.
Richard Zimmerman: I couldn't be prouder of how our team has worked together with a sense of urgency to capture early wins while establishing a strong and stable foundation for delivering on the combined company's long-term potential.
Speaker Change: We have made significant progress on our integration process while ensuring all 42 parks maximize performance during the most important months of the year.
Speaker Change: And despite headwinds from the impact of three hurricanes, we delivered solid results.
Speaker Change: As Brian mentioned, excluding the three weeks most directly impacted by the hurricanes,
Speaker Change: Third quarter attendance across the portfolio was up slightly over the same three-month period last year and that momentum Carried into October when demand for our Halloween events pushed year-over-year attendance up 20% over the past five weeks
Speaker Change: In addition to the outstanding recent attendance trends, I am particularly pleased with the robust early demand we've seen for season passes, which is one of our best long lead indicators heading into next season.
Speaker Change: In addition to delivering a strong second half of the year, we've been focused on continuing to improve the guest experience at all our parks and build demand momentum that we can carry into 2025.
Speaker Change: As we shared with you on our last earnings call, one of the hallmarks of our long-term success is delivering unmatched entertainment and exceptional guest service.
Speaker Change: Based on decades of experience, we know guest satisfaction is vital to the sustainable long-term growth of the business.
Speaker Change: With that in mind, our team moved quickly to make recognizable improvements at the Legacy Six Flags parks that have already proven to resonate with guests and have helped produce our highest guest satisfaction scores in the last four years.
Speaker Change: The early returns from our actions are clear. Investing in the guest experience drives higher attendance and establishes a strong foundation for future growth.
Speaker Change: Our early progress reinforces our confidence that we are well positioned to continue to drive meaningful attendance growth heading into the 2025 season.
Speaker Change: I'm also happy to report that the integration process is progressing smoothly.
Speaker Change: Through Project Accelerate, our internal initiative to unlock the full potential of the new Six Flags, we're seeing the early positive results we anticipated.
Speaker Change: Swift action on our core objectives has put us in position to deliver on the revenue upside and the cost synergies we know are available from the merger.
Speaker Change: As Brian noted earlier, we are on track to achieve $50 million of cost synergies by the end of this year, and we remain confident in our ability to deliver the full projected $120 million of cost synergies on a run rate basis by the end of 2025.
Speaker Change: With our work on capturing cost synergies well underway, we have turned our focus to pursuing what we consider to be the greatest opportunity in the merger, driving significant attendance growth in the combined new portfolio.
Speaker Change: In a demand-driven business, strength in attendance acts as the catalyst for improvements across all key performance indicators, including longer length of stay, greater pricing power, higher levels of guest spending, and ultimately, improved margins and higher free cash flow.
Speaker Change: Therefore, growing attendance is our highest priority, ensuring that parks stay comfortably crowded while still providing a quality experience that keeps guests coming back year after year.
Speaker Change: Looking at the Legacy Six Flags parks, the opportunities around attendance growth are compelling. Increase in attendance back to 2019 levels would represent a 48% increase over the 22 million guests the parks entertained in 2023.
Speaker Change: A goal that we believe is both achievable and appropriate, particularly when noting the relevant market penetration rates of the Legacy Six Flags parks were roughly half those of the Legacy Cedar Fair parks in 2023.
Speaker Change: With this upside potential, as well as the strong momentum in season pass sales we have coming out of October,
Speaker Change: We believe we are well positioned to deliver attendance growth across the combined portfolio in 2025 that is ahead of our historical attendance growth rate of 1 to 2 percent.
Speaker Change: Our ability to successfully grow attendance and improve guest spending levels next year will be driven in a large part by our compelling capital program.
Speaker Change: As we discussed last quarter, one of our guiding principles is strategically investing capital to drive growth.
Speaker Change: Consistent reinvestment in our parks and underlying infrastructure is essential for creating long-term value.
Speaker Change: We are executing a disciplined approach to capital allocation that balances our investment in marketable new attractions and expanded in-park offerings with infrastructure improvements that often go unnoticed but are extremely important to keeping our parks running efficiently.
Speaker Change: This ensures we maintain the integrity of our parks while broadening and enhancing the guest experience.
Speaker Change: This will include investing approximately $325 to $350 million each year on marketable new attractions and revenue centers, and investing another $175 million each year on infrastructure improvements.
Speaker Change: Our marketable capital projects will be focused on the parts that generate the highest levels of potential cash flow, ensuring that our investments will drive the greatest possible returns.
Speaker Change: Before I conclude with a review of our long-term targets, I want to clarify a few points to ensure our investors understand our strategic approach moving forward.
Speaker Change: First, increase in attendance does not require and will not involve aggressive discounting.
Speaker Change: Based on our strategic approach to the business, we do not rely on price cuts to drive attendance.
Speaker Change: Our playbook focuses on delivering a high quality experience that guests value and are willing to pay for, then dynamically pricing tickets based on demand.
Speaker Change: much like they approach hotels and airlines take.
Speaker Change: Our business intelligence team's pricing strategy is time-tested and successful at setting consistent market expectations, building long-term trust with consumers, and sustainably growing attendance and per capita spending together.
Speaker Change: We have taken the successful dynamic pricing tools and practices we've spent more than a decade building and expanded them across the combined portfolio. We fully expect these tools and our team's efforts to be equally effective moving forward, just as they have been in the past.
Speaker Change: Second, we remain confident in the capital investments we have planned for the upcoming seasons and how those capital programs fit within our capital allocation priorities.
Speaker Change: As we previously noted, the Legacy Six Flags parks are foundationally strong with solid infrastructures, which we believe can be enhanced without the need for outsized capital investments.
Speaker Change: Because of this, the majority of the investments we plan to make in the parks will be responsibly deployed towards high return opportunities.
Speaker Change: that are aimed at enhancing the guest experience and driving growth.
Speaker Change: 3rd
Speaker Change: The cost synergies we outlined upon announcing the merger can be fully realized and retained.
Speaker Change: As we've already noted, we have a line of sight to deliver the entire $120 million of cost synergies on a run rate basis by the end of 2025, with $50 million expected to be achieved by the end of this year.
Speaker Change: Much of the remaining cost synergies come from eliminating redundant overhead costs, optimizing shared services, and rationalizing and leveraging our supplier base.
Richard Zimmerman: As Brian noted, while we are prepared to reinvest operating costs back into our parks to help drive growth, we intend to find additional cost savings to offset such initiatives.
Richard Zimmerman: Finally...
Richard Zimmerman: We are laser focused on managing near-term debt levels and reducing net leverage through growth and free cash flow.
Speaker Change: And, we are moving with a sense of urgency to put the necessary initiatives in motion to help us achieve our goals.
Speaker Change: In addition to driving organic growth in the business, we have also activated a comprehensive review of our portfolio, including excess and undeveloped land.
Speaker Change: This is an exercise that we have undertaken in the past, and one that is focused on optimizing our asset base.
Speaker Change: narrowing our focus and helping us accelerate our planned reduction in leverage.
Speaker Change: While we take the steps necessary to optimize near-term results, we are working tirelessly to unlock the full potential of the merger. Looking ahead, we've set ambitious but achievable targets that will help us measure our progress as we advance our strategic objectives.
Speaker Change: Ultimately, we are targeting annual unlevered pre-tax free cash flow of $800 million or more by 2027.
Speaker Change: which would imply an average growth rate of more than 10% over the next three years.
Speaker Change: This sustained level of growth can be achieved by increasing annual attendance to more than 55 million guests and expanding modified EBITDA margins to 35% or better.
Speaker Change: This level of free cash flow growth would, in turn, facilitate our ability to reduce net total leverage back inside three and a half times adjusted EBITDA by the end of 2027.
Speaker Change: We are planning to host an analyst day towards the end of the first quarter next year, at which times we will provide more specifics around the core strategies of our new long-term plan, as well as more color around our outlook for growth in the business.
Speaker Change: Further details on our Analyst Day will be forthcoming.
Speaker Change: Before we open up the call for questions, I want to emphasize my confidence in the tremendous potential for long-term value creation at the new Six Flags.
Speaker Change: Our resilient business model, strong foundation, and clear roadmap for success will drive sustained growth and profitability for the foreseeable future.
Speaker Change: by focusing on guest satisfaction, making disciplined capital investments.
Speaker Change: and emphasizing operating cost efficiencies. We are positioning Six Flags to thrive for the longterm in any market environment.
Speaker Change: I'm extremely excited about our future. We have the right strategy, the right team, and the right assets to deliver exceptional experiences for our guests and strong returns for our shareholders.
Speaker Change: Thank you for your continued support, and I look forward to keeping you updated on our progress in the quarters ahead. That concludes our prepared remarks. Krista, please open the line for questions.
Krista: Thank you.
Speaker Change: Thank you. We will now begin the question-and-answer session. If you would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. And if you'd like to withdraw that question, again press star 1.
Krista: We also ask that you limit yourself to one question and one follow-up. Your first question comes from the line of Steve Wysinski with Cecil. Please go ahead.
Steve Wysinski: Hey guys, good morning and hope you're all doing well.
Steve Wysinski: Richard or Brian, if we think about the 55 million attendance, you know, it's called a target by 2027, is there any way to help us think about, you know, how the cadence, you know, might look getting from the current run rate level out to, you know, out to 27? You know, I'm assuming it's not going to be a...
Speaker Change: you know, a straight line over the next three years, given the heavy investments that are going to need to be made in certain legacy Six Flags parks in 25 and 26, but just
Speaker Change: wondering what kind of color you could give there beyond what Richard mentioned in his prepared remarks about 25. I think he said Richard being up above that 1% to 2% kind of historical growth range. Thanks.
Brian Witherow: Yes, it's Brian
Brian Witherow: So yeah, I'd start by, you know, emphasizing what Richard said in the prepared remarks. You know, as we look at 25, and there's certainly some steps we're taking across the portfolio to position ourselves for longer-term growth, but we definitely believe there's upside in attendance.
Speaker Change: next year beyond what historical growth rates for this industry, for Legacy Cedar or Legacy 6.
Speaker Change: would have shown, you know, that low single-digit growth rate. I think your point's a good one. You know, the growth isn't often linear. That'd be easy if it was.
Speaker Change: But it does tend to ramp up and there is an inflection point, right, at some point. And as we look out, you know, we're really excited about what we have put in motion for 25, but I think we're even more excited about the capital program and the set of initiatives for 26.
Speaker Change: and what we're working on beyond 26. As we said on the call, still some of those discussions in process. But I think there is that point where, whether you call it the hockey stick or the Nike swoosh inflection point, growth will ramp. 25 has got growth, but I think looking beyond it is where you start to see that inflection point kick in.
Speaker Change: Yes, Steve, let me, good morning, it's Richard, let me jump in here. You know, as I've said often, there's two things that really drive demand in our business and that have proven to underpin our resiliency.
Richard Zimmerman: First it's guest satisfaction. We're tracking along at four years high on both side of the portfolio So we're really pleased with that and second is Brian talked about a really compelling capital program. I think 25 is really strong I'm really excited about the 26 program, which I think may be the the best capital lineup. I've seen in my
Speaker Change: almost four decades. So I think we've got ability to drive it, how the markets react, and the particulars of any particular set of macro conditions like weather always have an influence, but I think we're taking the necessary steps to drive that demand.
Steve Wysinski: That's great color, guys. And the second question, if we think about the $800 million of unlevered free cash flow out to 2027, if we do some math here and kind of back into some things,
Speaker Change: You know, we're kind of getting you guys somewhere around, you know, let's call it about, you know, one point.
Speaker Change: $2.8 to $1.3 billion of
Speaker Change: and Justin Ebert. And if that math is right or directionally right, just wondering if you could help us think about how your...
Speaker Change: How you guys are thinking about the, you know, the per caps, you know, how those kind of trend in the out year.
Speaker Change: are out in the out years. And then, you know, does that target include any of your original revenue synergies? You know, we heard about the expense synergies.
Speaker Change: But didn't get any color around that, you know, the original 80 million of revenue synergies. Thanks
Speaker Change: Yes, Steve, it's Brian. On the revenue synergies, what was never really encompassed in that number, that $80 million number, was what, as we said on the call, we think the real upside in full potential or realizing the full potential of this merger is, and that is the big opportunity to drive attendance growth.
Speaker Change: You know, several years, you know, much of the growth, the revenue growth that's going to come from the merger should be a step function in growth and attendance, which is often at odds with per caps.
Speaker Change: But it's critical to the long-term success of the business, right? So, you know, we remain confident in our ability to continue to grow per caps But there's no doubt that the primary near-term focus is on driving revenue growth through through attendance
Speaker Change: Okay, gotcha. Thanks guys, appreciate the color. Thanks, Steve.
Speaker Change: Your next question comes from the line of James Hardiman with Citi. Please go ahead.
James Hardiman: Hey, good morning. Thank you for taking my questions. You know, obviously, if you look at sort of the performance of your stocks and
James Hardiman: Since the merger closed, it seems like there's been somewhat of a shifting narrative and, you know, in talking to investors, I think that narrative seems to be that you guys were surprised by, A, the lack of investments that had been
James Hardiman: being made at the Six Flags parks.
James Hardiman: and then B, that the level of investment that would be required to sort of begin that turnaround was much greater than you.
James Hardiman: originally anticipated. So maybe speak to those notions, what was surprising, what's been sort of part of your expectation set all along. And then maybe specifically if you can speak to 2025, I mean, you've sort of laid out
Speaker Change: how to think about the cost synergies next year. He also made the point that...
James Hardiman: Ultimately, all that's going to fall through to the bottom line. I don't know if that's going to be the case next year. Are there incremental sort of OPEX investments that need to be made short term that we won't see offset next year? But maybe how to think about OPEX specifically, but sort of the margin profile in 2025.
James Hardiman: Yeah, James, thanks for the question. Good morning, it's Richard.
James Hardiman: You know, when I think about the state of the business, we keep talking about how resilient our business model is, and whether that's a legacy six or legacy cedar. You know, there's a tremendous amount of appeal for our product. As you saw, 20% up.
James Hardiman: both to the appeal of Halloween, but also how we tap into that appeal on a scale that few can match in each of our particular regions. So as I think about
James Hardiman: the questions we've gotten since the merger was consummated. A lot of them actually revolve less around the investment, some of it was around the investment, but a lot of it was around the health of the consumer.
James Hardiman: And what we have said from the beginning is that on days where weather is good, we were encouraged by the demand we were seeing. And that was particularly true in October where the weather was outstanding, but also the third quarter where we said we were up slightly if you took out three weeks.
James Hardiman: impacted greatly by hurricanes. Now, weather's part of our business. We're an outdoor business, but.
James Hardiman: We've got an incredibly resilient business model because of the demand that we can generate. The assets we have, that we put together, the strength of this combined company.
James Hardiman: We have what we need to be able to drive demand and continuously improve all of our parks. There's things we want to work out on the Legacy Cedar side. There's things we want to work on on the Legacy Six side.
James Hardiman: But you'll hear us continue to speak to the broader strategic themes of
James Hardiman: As I said in my prepared remarks, reinvesting capital that generates a return and that very specifically taps into consumers that are willing to spend. Our results prove that even though it's a bifurcated economy,
James Hardiman: The appeal of our product is there. Our consumers are healthy. And when they come, they are spending and they're coming in, you know, in in numbers that are high percentages based off of last year. So I think the state of where we are as a combined portfolio, we have incredibly
James Hardiman: resilient, irreplaceable assets that allow us to continue to drive demand. Brian on the margin front.
Brian Witherow: Yeah, James, on the margin front, as we said in our prepared remarks,
Brian Witherow: You know, margin remains a key focus for us, has been, you know, going back to, you know, 2023 on the legacy Cedar side of things. And as we've talked about.
Brian Witherow: It's both being more efficient on the cost side, but it's also about driving attendance. So as we look to 25...
James Hardiman: Certainly, leveraging our fixed cost base with higher attendance levels is critical. But it's also important that we remain focused on activating additional cost efficiencies to offset, you know, any pressure that may come from our decisions to layer in incremental costs.
James Hardiman: at the parks, whether that be related to expanding the operating calendars or efforts to improve the guest experience.
James Hardiman: As an example, I would tell you on the seasonal labor front, as we've gotten into operations over the second half of the year, we're finding both on the legacy Cedar and legacy six side that it isn't always about adding hours, but using the hours more efficiently.
James Hardiman: So, I think as we're taking our workforce management tools and applying them across a broader portfolio, the ability to take the same hours and use them more efficiently are going to be critical to driving that higher margin as we roll into 2025.
Speaker Change: Got it. That's helpful. And then I wanted to follow up maybe a little bit on Steve's question.
Speaker Change: We've got this $800 million, free tax, unlevered, free cash flow number. Maybe help us with a walk.
Speaker Change: in both directions. I guess in one direction to get us to EBITDA, I guess the missing piece would be CapEx, right? And so I think where people are landing is somewhere, you know, $1.25 to $1.3 billion in adjusted EBITDA.
James Hardiman: And then in the other direction, it seems like the missing pieces would be taxes and interest to get us to a...
James Hardiman: Fully levered, after-tax free cash flow number. Any help with that? I think
James Hardiman: maybe using some of the pieces that you've given us, something in the 350 to 400 million seems like where we would land that plane in terms of the all-in free cash flow number. Any help there would be thanks. It would be helpful. Thanks.
Speaker Change: Yeah, let me, I guess, start at a high level and just say we're not going to provide EBITDA guidance. And so, you know, but as you try and do the walk back, we've given the, you know, where we believe the cash interest and the cash tax numbers are for 2025, you know, certainly we're not going to be satisfied with those levels and there are steps we're going to take to try and drive both of those things down over time. So, looking out more long-term to 26, 27, you know, as we advance those efforts on our side of the table, we'll provide some more visibility into that, I think, over time. If you think about CapEx, you know, as we said, 500 to 525 million for the next couple of years. You know, we said all along that we were going to.
James Hardiman: you know, try and activate the integration process and the opportunity to drive growth as fast as we could, and then settle back into what we think is the longer-term CapEx.
James Hardiman: which is, as we said on the call, 12 to 13% of net revenues. So depending on how you model it, you'll come up with your CapEx number, but what I would just underscore is 800 million or more of unlevered pre-tax cash.
James Hardiman: for Free Cash Flow is what we're targeting in 2027. We're not going to be satisfied just stopping at 800, but there's there's a lot of work to be done between now and then.
Speaker Change: Understood. Appreciate the call, Brian.
Speaker Change: Thank you for watching. I'll see you next time. Bye.
Speaker Change: Your next question comes from the line of Chris Woronka with Deutsche Bank. Please go ahead.
Chris Woronka: Hey, good morning, guys. Thanks for all the details so far.
Chris Woronka: I was hoping maybe you could talk a little bit about, you know, well, I think one of the opportunities you mentioned in the past but haven't
Speaker Change: talked about quite as much recently, retail and arcade within the Legacy Six Flags portfolio. Can you maybe put some borders around that in terms of the size of the opportunity and how you realize it? Thanks.
Speaker Change: Yeah, Chris, I think I'd step back to a higher level. We think there's, as I said earlier, we think there's a lot of opportunity once we get the guests, drive that demand, and get them inside the gates.
Speaker Change: That opportunity, as you know, we have focused heavily on food and beverage, and we think there's a lot of runway there. We increasingly see the appeal, as we keep our parks comfortably crowded, of the premium experiences.
Speaker Change: that we offer and continue to try and.
Speaker Change: you know, that they want us to.
James Hardiman: to roll out.
James Hardiman: In terms of, you know, in part games and merchandise, we think there's equal opportunity. What we've seen is where we go in and reinvest.
James Hardiman: and rehab and renovate and upgrade the facilities. We've seen nice return on facility by facility basis. So we're working through those plans right now. Again, we just closed the merger four months ago. But we do think there's incredible opportunity for merchandise and what we call games to play a role in the experience.
James Hardiman: and also generate some nice revenue lifts over time, but it will take some capital investment for us to get there, but we've factored all that in. When we talk about investing in revenue centers, that's all of the things once you get inside the bar.
James Hardiman: Okay, gotcha. Thanks, Richard. And then, you know, the second question is kind of related to your, you know, the comment about asset sales being
James Hardiman: possibly a part of your longer range value creation plan. I know you won't get into specifics, but can you maybe give us, again, some pointers on kind of what's gonna inform those decisions and maybe a thought as to how, is that something that can happen in the next 12 to 18 months, or is it kind of more of a notional, aspirational goal if the opportunity is right? Thanks.
James Hardiman: Thank you.
Speaker Change: Thanks, Chris. As I think about this portfolio optimization, we've done this in the past on the Cedar side, certainly sold two small water parks in 2012-2013.
Speaker Change: We underwrote a comprehensive review several years later that led to the sale of the land underneath our Santa Clara Park. I would say I wouldn't put a time frame around it as much as I think we're working closely with the board and we're looking internally.
Speaker Change: at our capital structure, our capital allocation priorities. And what we're trying to do, and I'll go back to what I said in the August call, every park in our portfolio has a role, if it plays its role right. These are irreplaceable assets.
Speaker Change: But we also want to make sure that we're investing to drive growth across the combined portfolio. So I wouldn't put a time frame on it, but we're going to be very diligent and work methodically through what we think is possible and what would make sense as we think about our capital structure and capital allocation priorities.
Speaker Change: OK, very good. I appreciate it. Thanks guys.
Speaker Change: Your next question comes from the line of Michael Schwartz with Truist Securities. Please go ahead.
Michael Schwartz: Hey guys, good morning. Maybe just wanted to dig into the fourth quarter guidance, which you guys have not given quarterly guidance.
Michael Schwartz: As I can remember in the past, maybe you're just maybe your your rationale for doing so, but then maybe give us some of the moving pieces if you can, you know, as it pertains to, you know, attendance or per caps assumptions in that in that EBITDA guidance range.
Speaker Change: Yeah, Mike, it's Brian. You're right. I mean, typically, one, we've not, it's been a long time since we gave short-term annual guidance, let alone quarterly guidance. But I think on the heels of the merger just closing four months ago, there's a lot of noise. And, you know, as you've seen in the earnings statement this morning, and you'll see in the 10Q later, you know, just based on the reporting requirements, it's sort of, you know, difficult to glean, you know,
Speaker Change: Current quarter versus prior year because it's a combined New Coast Six Flags versus Legacy Cedar so just trying to provide a little bit of clarity and and And give the street a little bit more, you know visibility as to how we we see that the quarter developing given how strong October was right? I mean a 20% lift in attendance
Speaker Change: is quite frankly very impressive and something we're really proud of. That said, we want to make sure that we don't get out over our skis on what that might mean for the balance of the quarter.
Speaker Change: October is about 60% of the attendance, and so as you look at, you know, rolling that forward for the balance of the year, you know, what happens in November and December from a macro factor perspective, you know, again, we're in the outdoor entertainment business, weather is always an issue. It's a much more truncated
Speaker Change: portfolio that's in operation over the balance of the of the year.
Speaker Change: and so you know from a from a full
Speaker Change: you know, quarter perspective, we're going to have less operating days in the fourth quarter than we did
Speaker Change: last year on a combined basis. A lot of that is because of some calendar shift again with Cedar Fair on the Cedar Fair side of things.
Speaker Change: We've added some days back on the Legacy 6 side of things. But net-net, we're confident that we're tracking towards that 205 to 215 range we gave, which I think is a nice way to finish off the year and continue to build momentum as we roll into 2025.
Speaker Change: Okay, great. And maybe help us with the...
Speaker Change: You know, the $50 million in run rate savings.
Speaker Change: did you did you generate any any cost savings in the third quarter? I think I think you had mentioned something as it pertained to the legacy fund business in the quarter but maybe give us a sense of how much of that's already been enacted maybe how much we can see in the fourth quarter. Just the business is so seasonal this isn't going to be linear I know that but any any guidelines or parameters you can provide that'd be great.
Speaker Change: and some accounting noise around self-insurance reserves. Again, looking just really at the core operating costs for or the operating expenses for Legacy Cedar, we're down approximately $11 million in the quarter. And again, that's been driven by the initiatives that we put in place. We talked about at the beginning of the year, those standalone operating cost savings, the first phase of the synergies, both the Legacy Cedar and Legacy Sixth Side that we were looking to activate.
Speaker Change: here in 2024, certainly more of those stand alone. We felt the opportunity was greater on the legacy Cedar side. And so that's where more of those savings have been generated. As we go into the fourth quarter, you're right, Mike. It's not linear because as I just mentioned, you got a lot less operations and a lot less opportunity to take out variable costs.
Speaker Change: Michael Witherow, Michael Russell, Richard Zimmerman
Speaker Change: here in the last several weeks, over the last month or two, activating some of the other cost synergies, the duplicative overhead costs.
Speaker Change: leveraging some of the you know the the advantages of scale. We won't have a full year you know pocketed of what those those cost savings will mean to us by the end of the year but we'll have on a run rate basis got them moving and that's everything from third-party professional services and other such things that you know we've been operating with a sense of urgency to get those those synergies mined as quickly as we can.
Speaker Change: Okay, great. Thanks, Brian.
Brian Witherow: Thank you, Michael.
Speaker Change: Your next question comes from the line of Matthew Boss with JP Morgan. Please go ahead.
Matthew Boss: Great, thanks. So maybe on the top line, could you elaborate just maybe a little bit more on the cadence of attendance trends in the third quarter relative to the drivers of the October magnitude, and just how much you see this tied to macro or weather relative to early execution wins?
Speaker Change: Yeah.
Richard Zimmerman: Matt, good morning. It's Richard. I'll jump in here and then Brian can fill in. I think we kind of walked you through when we looked at the third quarter, a lot of noise. We just did the merger.
Richard Zimmerman: When you got to October, listen, last year there was a little bit of weather on the east coast, so we benefited from better weather on the east coast, but we also, you know, when we look at the two halves of the portfolio, the legacy cedar side was up against the record, and to be up what we were up in October.
Speaker Change: says both the strength of the, of our
Speaker Change: double-digit, you know, high double-digit increases.
Speaker Change: on what was a record year in part of our portfolio. So every year we look at October and we go, how's Halloween going to get bigger? And every year it does get bigger, in part because the second half of the year, we've always said this.
Speaker Change: You know, 70 to 80 percent of our revenues in EBITDA get generated in the back half of the year.
Speaker Change: Part of it is the weather, quite frankly, has gotten better and very conducive. Part is the appeal of something like Halloween.
Speaker Change: And, you know, the last part is as we keep growing season passes and building a higher season bass base year after year, whether that's at the standalone companies or the combined companies, we continue to have more passes that can be used in the back half of the year as we start selling the next year season passes. That higher level of our biggest program really underscores the attendance foundation for the back half of the year. Brian, anything you want to add?
Brian Witherow: I would just underscore your point, Richard, on the impact of weather. We're in the outdoor entertainment business, as I said earlier, so it's not a question of if.
Brian Witherow: Weather can have an impact, but rather when and where, and we're not going to use weather as an excuse, but I do think it's helpful. And we do this. We believe it's helpful. And we do this exercise as we're going through and evaluating our results. We carve off, as Richard said, those weeks.
Brian Witherow: and there's no doubt that July with Beryl and September with Lane were more impacted in the quarter than August. Debbie was modestly impactful in the southeast and when I look at you know as you're trying to it as we're trying to assess that the health of the consumer you know where demand fits
Speaker Change: If I just take out the week, the one week in August that Debbie did hit, attendance in August was up 4% sans that one week. So again, it continues to underscore, as I think Richard just said, our consumer is still healthy and willing to spend on experiences.
Speaker Change: and certainly when weather conditions provide it, they're showing up.
Speaker Change: Great, and then maybe a follow-up, Brian, just on the bottom line. How best to think about maybe linearity of the 35% EBITDA margin target by 2027 relative to low 30s today, just incorporating the, I think you said, the Nike swoosh top line progression commentary.
Brian Witherow: Yeah, so I think Matt, you know, when it comes to
Speaker Change: you know, margin or any one of those key performance indicators.
Brian Witherow: You're right, it isn't linear. So much of margin is driven by the attendance number, so I think it depends on how you model out, you know, the opportunity to drive attendance, right? As we get more efficient, and listen, we're not done, there's more work to be, you know, completed and more initiatives.
Speaker Change: to be executed against, but we've made good strides on the operating efficiency side of things.
Speaker Change: And as we get more and more efficient, that allows more of that attendance and revenue lift to follow the bottom line faster. So that remains a focus for us, but I think it really depends on how you model out the attendance lift, because that's such a big driver for margin in this business.
Speaker Change: Great. Best of luck.
Speaker Change: Thank you, Scott.
Speaker Change: Your next question comes from the line of Ben Shachin with Mizuho. Please go ahead.
Speaker Change: Subs by www.zeoranger.co.uk
Ben Shachin: Hey, how's it going? Thanks for taking my questions. Can we, just going back to the October acceleration, is there anything we need to be aware about?
Speaker Change: concerning comparability. So not taking away from the 20% year-over-year, but just as we think about the progression from 3Q to October. So 3Q adjusted for weather per operating day on our numbers was up around 6%.
Speaker Change: year-over-year, which is obviously very healthy, but then October is up 20. Were the operating days comparable in those periods? And then what's the latest thought for operating days on the full year? Is it still down around 112 days year-over-year for the full year?
Brian Witherow: Hey, Ben, it's Brian. So on your 112, you're looking just at the legacy Cedar side, correct? That's correct. Yep, yep.
Speaker Change: Yeah, you know, again, you know, weather dependent over these last couple of months and what they might mean for the parks left with operations. We're still in the hunt for that general.
Speaker Change: trend line for operating days on the legacy Cedar side of things.
Speaker Change: In terms of the comparability, you know, that number, that 20% lift north of a million visits.
Speaker Change: is on an apples-to-apples basis, as best as we can do. So that's comparing the equivalent five weeks versus the equivalent five weeks the year before on a combined basis.
Speaker Change: So, you know, I'd say, you know, again, what we saw in October, as Richard said, was
Speaker Change: at the Legacy Six Parks or Haunt or Hollow Weekends at the Legacy Cedar Parks.
Speaker Change: Got it. Sorry, go ahead.
Speaker Change: focusing on how to drive the October. So on both sides.
Speaker Change: You know, what we saw in October...
Speaker Change: was reasonably similar on both sides, just outstanding demand. But I think that comes from the planning that all of our ops teams do to get ready for handling bigger crowds. And what I'm most pleased with, and we say this all the time, it's counterintuitive, we do our highest per caps on our biggest attendance days because of the scalability built into our model.
Speaker Change: Got it. Just to clarify very quickly, I understand that it's a comparable trailing five-week, but I know those operating days are moving around a lot, so you think the operating days in October this year are comparable to the prior year, just to be clear?
Speaker Change: Sands, some weather impact, I would say generally yes. I mean, we're looking to add days back, you know, Ben, when it, you know, when it comes to the most, the highest demand times of the year. So, you know, over the last couple years we have added days into October and that's going to be an area that we continue to look closely at. You know, as Richard likes to say, you know, you fish where the fish are. And our guests have told us October, September, late September, October with the Halloween events is when they want to come, when it's probably the level of urgency is the greatest. And so, you know, we'll continue to look to add days, but on a general, at a highest level, the operating days are generally comparable.
Speaker Change: Very helpful. And then switching to Legacy 6, EBITDA down 6% year-over-year. On our numbers, that's pretty comparable to the underlying run rate in 2Q. I assume that in your original underwriting you had somewhat higher expectations, I would think. Can we talk about some of the levers to drive 6 EBITDA higher? I know you guys mentioned getting back to 2019 levels of attendance. How do we do that? Is that...
Speaker Change: cutting price, investing in the park, investing in, you know, incremental operating days, and then related, when you think about reaching those 2019 levels of attendance for six,
Speaker Change: Does that drive higher, lower, or comparable levels of EBITDA than were generated in 2019 for that legacy operation? And then, I guess, why? Thanks.
Speaker Change: Ben, thanks for the question. Let me jump in here, you know, and I think it I'll go back to my prepared remarks We don't think we have to aggressively discount
Speaker Change: to be able to drive demand and drive attendance at Legacy Six or at Legacy Cedar.
Speaker Change: So, you know, that's not our philosophy. We want to build demand.
Speaker Change: We saw that demand start to build now, so we don't, you know, as we think about it, you know, we don't think that we need to stray from what has been a time-tested formula. It does take time.
Speaker Change: And we said that from the beginning, you know, there's there's messaging that you got to do with the market, you got to people understand how you're formatting your season pass program. I will tell you, we're particularly pleased with the impact of the additional advertising and media that we put in place in the third quarter, wait a little bit on results. But in the third quarter, but clearly helped the fourth quarter. And when we think about driving that demand forward, I don't want to step over an 8% increase over the last five weeks in season pass sales.
Speaker Change: on a 3% higher price.
Speaker Change: We're willing to step in to...
Speaker Change: Um,
Speaker Change: are making the changes to put on the total portfolio.
Speaker Change: our approach and make sure we're fine-tuning all those levers. We think we have all the levers, but we really manage this on a season-by-season basis, less a quarter-by-quarter basis, and I'll go back to my earlier comments. You want to drive demand, focus on guest satisfaction, and put in compelling new rides and attractions and great revenue centers. Brian, anything you want to add?
Brian Witherow: I think you hit it well, Richard.
Speaker Change: And do you think those levels of, so that's very helpful, but reaching those 2019 levels of attendance, does that drive higher, lower, or comparable levels of EBITDA? How would you would you expect?
Brian Witherow: Well, I think, you know, Ben, when you look at I'll use the legacy cedar, right, as as maybe the, you know, the proxy for answering that, you know, look at, you know, legacy cedar coming out of the pandemic where, you know, we're within, you know, a couple hundred basis points or so 200, 300 basis points.
Speaker Change: of 2019 attendance levels and our pacing, whether you look at it on a trailing 12-month basis.
Speaker Change: or some of the forecasts that are out there of being well above where we were in 2019 from an EBITDA basis. So certainly, higher attendance, as Richard said, does not
Speaker Change: get driven by discounting. And as we've seen over the years, higher attendance drives higher levels of guest spending. And doing, entertaining more guests while managing cost efficiently, you know, pushes again that leverage up and drops more to the bottom line.
Speaker Change: Thank you very much.
Ben Shachin: Thanks, Ben.
Speaker Change: Your next question comes from the line of Thomas Yee with Morgan Stanley. Please go ahead.
Thomas Yee: Thanks so much. I just wanted to double-tap on that season-past momentum. Richard, you just mentioned the average past pricing up 3% even with the unit growth.
Thomas Yee: can you just help us think about whether you're seeing the mix of tiers evolve as you kind of refine the product offering and what goes into these season passes. It seems like you know there's potentially more price taking on the higher end prestige.
Thomas Yee: product. Any help on the mixed shift and also just whether the all parts pass adoption has been helping at all?
Brian Witherow: It's Brian. You know, in terms of the all-pass adoption, I think we're early. I mean, we're pleased.
Speaker Change: with what we're seeing, but it's such a small sample size. I don't think we want to get too excited or too out of our skis on that just yet. And there's still, you know, a lot to be done in terms of harmonizing the products from a benefits perspective, getting on the same.
Speaker Change: ticketing system will be a big part of allowing us to take that next step and that's you know the efforts that are underway right now as you know we plan for for next year already right going on sale and 25 with 26 passes that's the objective
Speaker Change: In terms of the mix...
Speaker Change: You know, we've
Speaker Change: Harmonize the programs, take maybe a first step in harmonizing the programs as best we can not being on a singular system ticketing system And so you know we're watching how how the the the guest Purchasing patterns shift around a little bit on that. I think what we're most pleased with you know in addition to seeing the big
Speaker Change: Jump in demand of units, which isn't surprising given what we've historically seen when attendance is up season pass sales follow And so, you know October being what it was
Speaker Change: It certainly was somewhat expected, but pleasantly so. But I think more so we're really pleased with the fact that we're seeing average pricing up, right? 3%. We'll see how that plays out again. As you noted, that's often a function of mix. But as we start to get into the spring sales and having this momentum, it gives our business intelligence team more of a tailwind when it comes to the pricing side of things. So I think we're well positioned as we roll into calendar year 2025.
Speaker Change: Okay, that's helpful. And then just a clarification on the unliberal free cash flow outlook. You have these partnership puts coming up on the Six Flags side. Is your sense that that's still a good ROI to deploy capital into to buy that out? Or just, you know, given your other capital priorities, I just wanted an update on how you think about that. And should we assume that the adjusted EBITDA for your 2027 guidance is essentially the same as your modified EBITDA by then, if we're thinking about the building blocks there?
Speaker Change: Yeah, Thomas, it's Richard. Hey, you know, Dallas and Atlanta, the original partnership part...
Speaker Change: are great assets in tremendous markets, tremendous franchises.
Speaker Change: We absolutely believe that there's a place in our portfolio.
Speaker Change: and we'll work towards making sure that we exercise those at the appropriate time.
Speaker Change: But are
Speaker Change: As we look at where there's opportunity, Dallas fast-growing, Atlanta over 6 million, 7 million and growing, both those markets are extremely attractive. So it's really difficult to find M&A. I think of the partnership parks as built-in M&A. But in terms of the specifics around modified margin, I'll throw that one over to Brian.
Brian Witherow: Yeah, in terms of what we've assumed in the modeling, Thomas, is that the modified and adjusted would be the same from that perspective.
Speaker Change: Okay, great. And if I could just squeeze one last one in. I think part of the lever on growing attendance over time, you mentioned last quarter, is both driving greater pass adoption and just improving the visitation on a per-guest pass basis. Now that you're kind of a little bit more into it, are there any structural reasons why the per-visit count might not come...
Speaker Change: closer, from the Legacy Six Flags perspective, closer to Legacy Theatre? Or, you know, ask another way. I guess, do you expect the season pass mix from an attendance perspective to run higher than the, you know, high 50s, near 60% of attendance that you've seen so far in terms of pulling both of those levers?
Speaker Change: I would say Thomas against Richard. There's no structural reason why we can't both increase our penetration rate but also increase the visitation rate on season passes.
Speaker Change: I've always said, listen, we want to sell if we could sell everybody that comes to the
Speaker Change: Be that thrill-oriented, be that family-oriented, but also, you'll see us as we do, as we've announced next year, invest in the water parks.
Speaker Change: you know, which season pass holders consistently tell us in all markets.
Speaker Change: is a really highly valued part of the experience. They want to be able to come and visit the water parks in the summer, drives urgency in the summer, but also high perceived value, particularly from those guests that purchased the season pass. So we think there's no structural reason, and we're investing behind making sure we can tap that growth potential.
Speaker Change: Appreciate it. Thank you so much.
Speaker Change: Your next question comes from the line of Paul Golding with Macquarie Capital. Please go ahead.
Paul Golding: Thanks so much. I was just hoping to reconcile some of the comments on operating days in light of the comfortably crowded commentary. Brian, you were noting that some of the busier season periods you were looking at operating days, but Richard, you were also noting that you were looking to extend the stay in certain days that were busier. How should we think about the portfolio-wide view of operating days on a run rate basis going forward? Thanks.
Speaker Change: Yeah, you know, I think, you know, Paul, when it comes to operating days, there's always going to be puts and takes, right? Our operating teams in the field are always...
Speaker Change: you know trying to figure out ways to be more efficient and nothing's more efficient than taking
Speaker Change: you know some days out that might be lower value days and pushing that attendance if you can to other times of the year. I think we were very successful on that this past year on the legacy cedar properties.
Speaker Change: particularly the mid-tier parts where we made a lot of operating adjustments early in the season, a little bit in the fall, but it was probably more of a spring adjustment to the calendar.
Speaker Change: taking days out and sliding that attendance to other times of the year. And so we're going to continue to do that where it's most appropriate, but where demand is the greatest and you know, there's probably no
Speaker Change: You know, no time of the year that's more focused than, as we said, the fall, late September, October. Given most of the parks are open daily, Memorial Day to Labor Day, there's not much to be done there and there's not a lot of reason to take days out there, other than maybe adjusting late August.
Speaker Change: as school calendars continually move around. But as you look at October, I'll give you a great example. Go back five or six years ago and Cedar Point, one of our largest parks in the portfolio, was only open on the weekends for their Halloween event. We added Friday nights.
Speaker Change: the entire portfolio at every park, but there are certainly some parks in the portfolio where it's going to make a lot of sense, and we'll give a lot of thought to it.
Speaker Change: Thanks Brian. Just a quick follow-up on the mix of new attractions for the Capital Plan going forward. Legacy Cedar Fair has historically had a really robust festival and
Speaker Change: unique sort of holiday celebration slate. Is that, I guess, how should we think about how that might influence the mix of capital projects for Legacy 6 going forward as part of that capital plan that's been outlined? Thanks.
Richard Zimmerman: Paul, good question. As we think about it, it really is the answer, as Brian always says, different park by park, region by region. As we look at how we intend to sequence the investment, what demos we're...
Speaker Change: We're targeting, we're working through exactly how the events will work, and where they will work, and how they'll unfold. Clearly, Halloween's our
Speaker Change: best and our biggest example of an event.
Speaker Change: We do things like boysenberry and other things. There's been some...
Speaker Change: some traction with Oktoberfest and some of the Six Flags parks. So we're going to evaluate how to be most effective in our messaging and most effective at driving the demand.
Speaker Change: But clearly, as we think about all four seasons, we just want to make sure we've got enough firepower in all four seasons to really put that demand underneath the season pass program and give people a reason to come out all four seasons, but it will be very different park by park.
Speaker Change: Great, thanks so much.
Speaker Change: I'm
Speaker Change: Hey, good morning, guys. This is Isaac Salazan, on for Ian. Thanks for taking all the questions. I just had one follow-up as far as ticket pricing. You mentioned in the prepared remarks, you won't lean into discounting to drive that higher attendance. So maybe if you could just give some color on daily ticket and dynamic pricing strategy on the legacy, six and fun side, for the larger parks, and maybe your expectations on admissions pricing relative to historical levels for next year. Thanks.
Speaker Change: As we said in the prepared remarks, building
Speaker Change: that demand, and nothing's more helpful in doing that than getting those advanced purchase commitment channels as robust as possible. So season pass, group bookings, that's what gives our business intelligence.
Speaker Change: team that manages the dynamic pricing around single-day tickets.
Speaker Change: the most confidence to lean in. As Richard noted in the prepared remarks, we've spent over a decade building out the team and the tools.
Speaker Change: behind dynamic pricing and believe, you know, based on what we've been able to successfully accomplish over the last
Speaker Change: several years, you know, that that approach and strategy has been very successful and we're now, you know, expanding that, bringing all of the parks
Speaker Change: across the combined portfolio into that tool set and under that team's oversight. So as we roll into 2025, having a strong season pass base, continuing to get those group bookings and hotel reservations where appropriate.
Speaker Change: or where applicable, I should say, going in the right direction gives that team a lot of confidence in their ability to lean in. So we're going to be as aggressive as the market allows when it comes to dynamic pricing, but we're not going to be sloppy, as they like to say, pigs get fat, hogs get slaughtered. Our markets have been trained to expect certain levels of increases, but we're going to be responsible with the increases we take given the economic environment we find ourselves in.
Speaker Change: Okay, understood. Thank you. And then as a quick follow-up, the balance of the $175 million of
Speaker Change: CapEx that you guided to for 25 and 26. Just as a follow-up to the previous question, maybe you can just provide some additional details as far as how you see that being spread out between Legacy 6 and CDER. Thanks.
Speaker Change: Still working through that.
Speaker Change: Isaac, so, you know, I wouldn't give you a breakdown right now because some of it still depends on what we find in the field.
Speaker Change: But we're working through that. What I would say is we're touching every park, every park getting some infrastructure money because they should. And we're making sure that we're addressing the needs of each particular park.
Speaker Change: Okay, great. Thank you very much.
Speaker Change: Thank you very much.
Speaker Change: Your final question comes from Lizzie Dove with Goldman Sachs. Please go ahead.
Lizzie Dove: Morning. Thank you for taking the call.
Lizzie Dove: question. I just want to go back to the point on operating day.
Lizzie Dove: The kind of, you know, ramping of attendance growth over time and just which...
Speaker Change: Yeah Lizzy, it's Bryan. That's correct. If you look at where the operating days were trending compared to where they were pre pandemic, the Legacy6,
Speaker Change: assets.
Speaker Change: They were down about 400. I don't know that we've reached a final conclusion yet on what's the right
Speaker Change: number of days to add back. As I said just a little bit ago, there's always going to be puts and takes. I don't think every one of those days was a high value day and they probably needed to be taken out of the system. Similarly to what
Speaker Change: you know, we did coming into 2024 at the Legacy Cedar Parks.
Speaker Change: We'll add days back responsibly, as I mentioned.
Speaker Change: We've...
Speaker Change: You know, we constantly play around with the operating calendar based on what the markets and the consumers are telling us.
Speaker Change: But no decision has been made yet as to, you know, of those 400 days, you know, how many will ultimately, over the long term, get added back. But I can tell you, you know, we're not going to, you know, try and boil the ocean. You know, we'll dribble some days back into the system where it's most appropriate and where the risk is the least, and we'll see what the returns are on that. And if we like it, we may add more days. If we don't, we may pause or we may reverse course.
Speaker Change: Got it. And then I guess more of a housekeeping point, but just on the kind of calendar shift. So I think it was roughly 90 days of operating day difference you had in 3Q, which was about 20 million of EBITDA impact.
Speaker Change: I think 4Q is about half of that from an operating day deficit comparatively year-on-year. So, is it right to think that, you know, that what you're guiding to factors in, you know, let's say half of that, so 10 million or so, but I know different days are worth different amounts. So, just curious what you're kind of factoring in from a calendar shift EBITDA impact in the fourth quarter.
Speaker Change: Yeah, so for fourth quarter, we're trending, you know, again, this will all this will be impacted a little bit by weather over the balance of the year, you know, but we're trending with operating days at legacy Cedar being down roughly 40 over the over the fourth quarter, legacy six.
Speaker Change: being up maybe 15 to 20 days, so you've got, you know, net, you know, somewhere around, you know, 20 to 25 less days on a combined basis in the fourth quarter.
Speaker Change: Got it, thank you.
Lizzie Dove: Ladies and gentlemen, I would now like to turn the call back over to Richard Zimmerman for closing comments.
Richard Zimmerman: Thanks for joining us on today's call and thanks for your continued interest in our company.
Speaker Change: As a heads up, we will be participating in several banking conferences before the end of the year, two being hosted in Miami by Deutsche Bank and Jeffries, one in New York hosted by Morgan Stanley, and one in Boston hosted by Truist. We hope to have a chance to visit with many of you in person at one of these events. Otherwise, I want to wish you and your families a safe and happy holiday season. Michael?
Michael: Thanks Richard
Michael: Please feel free to contact our Investor Relations Department at 419-883-4222.
Speaker Change: 6, 2, 7.
Speaker Change: 2233.
Speaker Change: for your results. Krista, that concludes our call today. Thanks everyone.