Six Flags Investor Day Webcast (May 20, 2025 09:00 AM ET)

Yeah, I think the only thing I would add, Steve, to that is, you know, connect to what Christian talked about in terms of that regional pass play. So, as we think about these assets, right, and as Richard noted, you know, you're talking about 16 parks that represent that next call it roughly a little inside of 10% of the park level. Two of those are already earmarked for sale, right? Great America out in Santa Clara where we sold that underlying land back in 2022 and Six Flags America which we just announced sunsetting at the end of this season. Of the remaining, we've got to look at what the economic opportunities are for each of those parks. But we also need to think about how they fit into that regional pass play. At the end of the day, I think some parks will fall into both buckets. Some will still be critical from a strategic perspective. And some will be parks that'll be lower priority parks for us because they just don't represent as much upside to that attendance growth.

Yes. So, we'll get into some more specifics here in just a bit, but as we've consistently said, the path to EBITDA margin improvement, getting to that 40% is driven both by a more aggressive approach to the cost structure, resetting the cost base as Richard said earlier, and from there building on that 10 million gap in or clearing that 10 million gap in attendance. It's not necessarily linear, right? The path to that will accelerate. This is a leveraged business as we saw out yesterday. A park like Cedar Point which is already pretty well optimized from a cost structure generates close to 4 million guests a year. There's a lot of leverage in that system that doesn't exist right now across the board. And so as we get more parks to tap into that full penetration or closer to their full penetration, I think that's how we get there and get to the 40%. Beyond that, it really comes down to I think we have to see. I mean, is there some upside? I would tell you the 40% is an average across the board, right? So some of this is ultimately going to come back to, tie back to Steve's question about the portfolio. Where's the portfolio mix? We probably have a half dozen or so parks in the system right now that are generating EBITDA margins well in excess of 40%. So, really part of the answer is where we are from a mix perspective. And then the guest acquisition costs beyond that. As you look to acquire that next rung of attendance growth beyond 10 million, what do those guest acquisition costs look like? It gets a little bit more expensive the deeper you go, right? Acquiring that next guest.

I would just say, Lizzie, to your point in terms of the 55 million at the time that we disclosed or communicated that, that was meant to more reflect, and if you recall it was a 55 million or more. It was more of a baseline threshold. We had to get above 55 million in order to achieve the type of revenue growth we were looking for, the type of free cash flow generation we were ultimately looking to generate and get leverage back inside to a more comfortable range. As Richard said, the 58's the right target for the portfolio as we see it today. The discounting on the legacy Six Flags side historically, I think more ties back into Richard's earlier comments about value proposition, right? If you provide a strong value, if there's compelling reason for guests to come, you don't need to discount. It gets back to what we're going to talk a little bit more about. I'll highlight Christian hit on this. We've got to keep the parks crowded, comfortably crowded, not overrun, right? And that's where discounting can get a little away from you. We're not discounters. We've never been deep discounters. And I think the focus is getting that 58 million visitors back as fast as possible the right way.

All right. Well, welcome back from that break. Let's get into what everybody really wants to talk about, which is what's the economics of everything that we've talked about. Richard hit the high points of what our strategic objectives are. Christian touched on a lot of the initiatives that underscore those strategic objectives. What I'm excited to talk about is how does that translate into the topline revenue growth that we're so confident this business is capable of generating. And after that, we'll also spend some time touching on what I know you all want to talk about, which is what's our outlook around costs and how does a more disciplined approach to the cost structure translate into achieving the 40% EBITDA margin that Richard highlighted. But first before we get into that, I do want to touch on a concept that Richard hit in his prepared remarks around the stability and the consistency of our business model as demonstrated here on this slide. It shows the combined portfolio, the strength of the combined portfolio in generating steady sustainable attendance growth through all types of economic cycles. It underscores the resiliency and the stickiness of the business model and the fact that our guests keep coming back year after year for the compelling offerings that our parks have. Growing attendance has translated into an even higher level of revenue growth. And if we carved out of this M&A and international licensing arrangements, the historical growth rate over this time frame would have been about 100 basis points less, but still pacing ahead of attendance, reflecting the fact that we're not discounting to drive that attendance growth, that we're getting attendance growth, we're getting guest spending, and driving both of those consistently through various economic cycles. Again, all proving the reliable, highly resilient nature of the business model. So what do the strategic initiatives that Christian hit on related to driving attendance and guest spending mean for revenue growth going forward? He talked about the core drivers. What I want to get into is how those initiatives underscore the predictability of that revenue growth and give us confidence in the outlook for the business going forward. First, as Christian noted, it all starts with the number one growth driver for us. That's attendance. As we've previously noted, the strategic plan is built around driving demand and growing attendance, getting the 10 million visits back. And why do we think this is a rational target? Well, it's something that we've done before. As Christian noted, these are attendance levels that our parks have achieved pre-pandemic. If you look at the two sides of the portfolio coming out of the merger, on the legacy Cedar side, we're trending at about 97, 98% of pre-pandemic attendance levels. On the Six Flags side, we're still below that, but those are attendance levels that we've achieved in the past and we can achieve again. Set another way, our parks have shown the ability to drive and can do it again. More importantly, our strategies around attendance are focused on moving more of our guests into what we call our advanced purchase channels, season pass and group. It's important for a couple reasons. One, predictability. These are long lead channels. Purchases are made well in advance and they tend to be less susceptible to those macro events that disrupt visitation, weather, time, poverty. It's been a strategic focus for us on the Cedar side for a number of years and it's going to be a focus going forward. But I want to turn to something that most people maybe don't realize. When we get asked about season pass, we're always asked how big can season pass get. And we'll often answer if we could turn every one of our single day visitors into a season passholder, we would. Now that's not a practical situation. That's not everybody's going to become a season passholder. This slide emphasizes the value that a season pass holder represents. We always talk about how season pass can pressure per caps as a single day visit. A season pass is a lower per cap than a single day visitor. But that said, when you look at that season pass holder over the season, over the four or five visits, they represent a much more profitable unique guest, in some cases representing as much as a two to three turn increase in terms of total guest spend depending on the park. Because of those economics and the predictable stable nature of season pass and membership base, it won't come as a shock to you that our focus for growing attendance, getting those 10 million visitors back, is highly concentrated on two things: one, expanding the season pass base, and two, increasing the average visitation for those season pass holders. More than 80% of the targeted attendance lift, as Richard noted, is expected to come from those two objectives. Now, let's turn to how that growth in attendance can translate into increased revenue spend and ultimately higher margins. What does a 10 million visit lift in attendance and the related impact on in-park guest spending ultimately mean? So between 2025 and 2028, we believe we're well positioned to generate $600 million or more of revenue growth. This slide breaks that down into the four or five core buckets as we see that revenue growth. As we previously noted, it's all about keeping the parks comfortably crowded. That extends length of stay. It increases demand for premium experiences like front-of-the-line, fast lane, or flash pass. It increases food and beverage spend with that longer length of stay. It leads to better pricing power on a going forward basis. The targeted revenue increases on in-park spend, whether we're talking about food and beverage, merch, or fast lane, we're projecting approximately 90% will be derived from higher transaction counts and higher transaction values. Roughly only 10% is coming from pricing. Meanwhile, you look at the admission side. So, selling more season passes, selling more single day tickets, more group. That mix, roughly 75% is expected to come from volume, 25% from pricing. This again, this is a volume story. It's a volume strategy and it translates all the way through the topline revenue side of the business. So, let's take another moment to pause here and talk a little bit about cost. Everybody wants to know what's the cost outlook? What's the algorithm around costs? As we noted on our first quarter earnings call, big focus on resetting the cost base over the next two years. As Richard talked about, 2025, we've targeted a net reduction in our operating costs and expenses of 3%. That equates to about a $60 million net reduction in costs compared to the combined spend of the two companies in 2024. In 2026, we're looking to generate another $60 million of gross cost savings. We believe those gross cost savings, a lot of which will be the continuation of initiatives that we activate here in 2025, some labor related, some non-labor related, will offset the pressures from inflation and other growth in organic topline influence variable costs, which will keep our cost structure in 26 relatively flat to 2025. From there, we've reset the base and as we think about costs going forward beyond 2026, more in line with inflationary growth rates longer term. So, by flattening out the cost curve while still driving higher levels of demand, increasing guest spending within the parks, that leads, as we said earlier, to that improved margin and overall getting to that 40% long-term target. So then what does all this mean from a free cash flow perspective and a capital allocation standpoint? This is a simple algorithm of how we think about the business from the standpoint of generating more cash and achieving that long-term priority of meaningfully reducing net leverage. As we've talked about, it starts with the topline revenue growth, 6% CAGR in terms of attendance and revenue growth. It continues with that disciplined cost structure, one that supports a sub-inflationary growth rate over the next four years and ultimately leads to that step function in adjusted EBITDA and margin. From there, our capital allocation priorities are pretty clear. Continue to reinvest in the business as Richard noted while paying down debt to get leverage back inside of a range that we're comfortable with, back inside of four times. As Richard noted, further optimization of the portfolio is certainly a focus for us, but it's not a priority to get leverage back inside of four times. It will only help accelerate the achievement of those goals and on a modest level when you look at the properties that are on our radar. So, taking a closer look at the core use of cash for a second. Christian hit on this in terms of capital investments. Our philosophy is to invest it back in the business. We invest in the infrastructure and safety of our parks. We invest in our associates, but we invest in maintaining the attendance base and growing the attendance base of the parks. So that entails investing roughly two-thirds of our annual capital programs on new marketable products. So think the thrill rides that you saw yesterday, the food and beverage enhancements, the retail additions we make to our parks. The other third is on those infrastructure and IT related technology investments over time. We think the average investment will be in the 12 to 13% of net revenues. But any investments in those marketable products, in those food and beverage locations, those retail centers have to deliver returns in excess of our cost of capital. So what does this all mean from a free cash flow generation standpoint? Based on the planned levels of capex spend on the screen you see 2025 to 2028 and our estimated payments for taxes and interest, we're projecting growing annual free cash flow by more than $400 million over the next four years, a compelling growth rate of more than 40%. From an overall capital allocation standpoint, as I said, we remain focused on getting leverage down. So, we're going to use all available free cash flow to improve the balance sheet and repay debt. Once we're below four times, back in a more comfortable range, that will provide us with some more flexibility and optionality. After that, we'll be able to allocate our capital based on our forecasted returns. One of which will include taking a look at where the stock is trading at. We view acquiring our own stock as one of the core investment choices. And based on where the stock price is today, if we were inside of four times, we would favor repurchasing shares at these levels. And I think that's something most of our investors would fully agree with. So the path to sustainable profits and higher shareholder value, what does that look like? As Richard noted, just reiterating, by 2028, entertaining 58 million guests and generating $3.8 billion in revenues, representing a 6% growth rate in both, combined with that disciplined cost management and the operating leverage that this business can deliver, that will return $1.5 billion in adjusted EBITDA and margins of 40%. It will also achieve that goal of getting back inside of four times leverage in a little more than two years following the closing of the merger. So if we pull it all together, what does a win look like? As Christian said, it's the successful execution of the strategy built around capturing significant cost savings in the near term. Over the near and long term, continuing to drive topline attendance and revenue growth. From there, it's about optimizing the use of free cash flow, reducing leverage, and investing in the business to continue to fuel future growth. That ultimately leads to higher shareholder value. We believe we've got the right team in place. We believe we have the right initiatives in place to achieve those goals. And I would say that this team has never been more excited about the future of this company. So with that, I'm going to stop and turn it back over to Michael. So we're going to go right into our second Q&A.

Yeah, great question. I think when you look at it, this business for parks that have optimized their cost structure, as I mentioned before, high amount of leverage in the business. And so what we've historically seen for parks like Cedar Point, Knott's Berry Farm, Kings Island to name a few, those parks, the incremental revenue at that point can often flow through at somewhere between 55 to 65% responsibly. Now, as we think about, as I mentioned before, that guest acquisition cost certainly gets a little bit more expensive the deeper you try and go, but we would fully expect flow through in that 55 to 65%. So whether you're looking at it net of those cost savings, which pushes that down to more in that 55%, or you look at it inclusive of those cost savings, it's closer to that 65%. But that's consistent with the historical results of the business.

Yeah. I think that's the key. In the moment our focus is on investing in the parks and paying down debt to get from five down inside of four times. We see a clear path to that. As we think about the partnership parks, the only notice that we've given is on Georgia to this point. That first payment isn't until the first quarter of 27. So, there's some time on that. We've talked about optimization of the portfolio. Some of the asset sales that we have out there right now or in process, the excess land in Richmond, the park just outside of DC, rough estimates at this point, when you think about the market rates for land in those two regions could be $200 to $250 million or more of gross proceeds. I think a lot still to be figured out on that front. There's still entitlements to be gotten, which will always make it more valuable, and then we have to see in terms of end use depending on who we would ultimately send those to, how much usable land in both cases fits the end use purpose. But that would help offset that as well.

Yeah, I think it's a great point and we follow per cap neurotically as a management team. It's one of the core metrics. It gives us a little bit of comfort in terms of where the health of the consumer is, but it's an output, it's not a controllable. So, to Richard's point, I think one of the things that we are going to have to provide a little bit more visibility into, maybe pull the curtain back a bit more, is talking about those things like transaction counts, average transaction values. Because as Richard noted that slide, looking at what a season passholder means versus a single day visitor, you can see it starkly there. Per cap because of the way season pass plays into it is a bad visit from just that metric by itself. But in terms of that unique visitor and what it means to the business, if we could turn every one of our visitors into a season passholder we definitely would do that. And again, we built this model to achieve our goals. We don't have to drive per capita. If we can get the 10 million, drive per capita there's even more there. So we're not going to stop. We're trying to drive per caps.

Yeah. And just maybe tackling it from a slightly different angle in terms of how we're looking at the relative spend between the sides of the portfolio. Coming into 25, a lot of the capital program was already sort of set on both sides. And so just to put it into some perspective, I'd say of that marketable product, about 60% was spent on the Cedar Fair side of the portfolio, about 40% on the Six Flags parks in our portfolio. As we think about the plan for 26, that gets inverted. We're going to, as Christian noted, invest where the opportunities are the richest. You push those two things together. We're focused, as both Richard and Christian noted, the top 15 parks in the portfolio, 80% of the attendance. Those parks are going to get the lion's share of the capital, especially the big marketable product. Doesn't mean that our other parks don't get something. They all have capital needs. And so there will be capital projects at every one of the parks in the system, but the lion's share, the focus, is on those bigger parks where the opportunities are the greatest.

Yeah, I'd say historically on the Cedar side, the resorts and some of the other ancillary capital intensive sides of the business like the dormitories that we have at a number of the properties push that up probably 100 or 200 basis points, probably closer to 200 basis points. The other thing that I'd note is that what maybe has changed a little bit structurally, and this is a little bit of inside baseball, when you think about the cost of these capital projects today, one of the significant shifts post-pandemic hasn't been so much in the cost of the products themselves. So a $10 million coaster is still, with a little bit of inflation, still close to a $10 million coaster. But what's really increased is the cost of constructing that ride. What used to be able to be constructed for 70, 75 cents on the dollar, so that $10 million coaster cost you $17 to $18 million fully to get it put in place and operational. Those costs have now accelerated in some markets to as much as 125% of that cost. So that $17, $18 million coaster is now a $25, $27 million attraction, while the cost of the attraction itself, the steel, the design, etc., has not gone up significantly. So that's played in. Now we have to be smart with our capital allocation. We can't just let that creep come in. So it's caused us to have to narrow our focus. Maybe five big attractions is now four big attractions in today's world. But trying to stay disciplined on capex is critical to the capital allocation strategy.

Yeah. I think just adding to what Richard said, those workforce management tools that we spent the last several years developing and are rolling out across the combined portfolio now give us the opportunity to in real time adjust those staffing levels quickly. Not only as Richard noted on a day that maybe we were expecting 15,000 and it's overcast and slightly raining and we only have 7,000, getting that labor down quickly so that on the nicer days that labor is available to you and you've not just wasted labor. I think it's also important during the day these tools have allowed us to be more efficient with our labor hours. I'll give you an example. Morning rush at the park, you need labor at the front of the park. You need them in the toll booth, the ticketing booth, etc. You get to after 12, 1:00, you don't need those still fully staffed. I think in the old days, it used to be you worked at the ticketing booth, you worked at the ticketing booth. Now, with those workforce management tools, we're moving our resources, our associates around the parks where, as Richard said, making those hours work harder for us. So, I think the other piece is on the full-time side of things. We talk about this reorg effort that we're under right now. The goal being by the end of it reducing our full-time staff by 10% or more. A lot of that happens in the field. 85% of our costs exist in the field at the park level. It's a flattening of the organization. It's a rethinking of how we make decisions within the organization. We can do that without disrupting the guest experience and deliver those cost savings. But inherent in your question is what do the guests give us credit for? Why do they come? Ridership. Are your rides open? Are you giving as many rides as you can? Are both coaster trains on the coasters? So your higher ridership. We monitor that all the time. As ridership goes up, as rides per guest go up, NPS goes up. Can you get into food and beverage and get a piece of pizza, get the chicken fingers when you want them? As our food line goes down and we have more volume and capacity to serve, our NPS goes up. So, some of this is really simple and remembering what the guests will give us credit for. It's the basics of the business done really well and making sure that we're moving the, our goal is to have 95% uptime on our attractions. If you come, we want everything running. We want you to get eight, nine, 10 rides a day. If we get to those types of levels, NPS goes through the roof. So, we know what to monitor. It's our job to provide that experience on a really lean efficient structure.

Yeah. So maybe I'll tackle the last question first. Coming out of the merger and we commented on this a couple earnings calls ago, we continue to try and find ways to find more tax efficiencies in the structure. We pushed the two organizations together almost a year ago. Still some more opportunity there. But that's what's been reducing the tax rate, eliminating some of the old legacy partnership entities that were in the system. As we think about bonus depreciation, listen, we're a capital intensive business. We do benefit from accelerated depreciation currently. There are some bills being proposed that would increase that bonus depreciation. We'll see how that plays out. We haven't assumed any of that just because who knows where that's going to land coming out of the process. But certainly we'll take advantage of it. It's on our radar. It's something that we're monitoring and as we get more clarity, we'll take advantage of that. I think in terms of the cost side of things, as we think about just some broad buckets, our focus in 2025 of the net cost savings that we're looking to generate, I'd say it skews a little bit more heavily labor, about two-thirds labor, about a third non-labor. As we get into 2026, I think that balances out a little bit more. The expectation is it's about 50/50. More of our centralized procurement and purchasing efforts continue to bear more fruit. Certainly as some of our contracts come up with our third-party vendors and partners, that allows us to renegotiate terms. That will be an ongoing effort. So in the near term it's a little bit more labor intensive and that's both behind the scenes, Thomas, but also at the park level. As I said, 85% plus of our cost structure exists at the park level and so there's no way around tackling that side of the business heavily because that's where the opportunities are the richest. And it aligns with the calendar like Richard said. Shrinking our operating calendar or adjusting how we program parks is a big area of opportunity and focus. We've got to do it in a way though that doesn't disrupt the guest experience. And one of the things we see right now, just 50% of our cost structure is labor. Right now, this is the best, certainly on the seasonal side, labor market we've seen in almost a decade. So, we're not seeing any wage pressure except in some very isolated categories. And that's a good place to be.

It does, Chris. Yeah, I would say that right now what we've assumed is that the incremental attendance is going to be similarly cast to what we've historically seen. It skews, as I noted, very much into the season pass channel. 80% of the targeted attendance lift is coming from expanding the season pass and membership base or increasing the average visitation. Every one of our parks has slightly different characteristics in terms of guest spend and guest behavior. But when you look at it on the monolith level or on that consolidated level, we're assuming a similar kind of guest behavior with that incremental attendance.

Yeah. So I'll start at the first part of your question. The forecasted numbers or the targets that we've set, as Richard noted at the beginning, it does exclude Six Flags America, which we've announced we're sunsetting. It does exclude from the 28 targets Great America in Santa Clara because that lease runs through mid June of 2028. So unless we decide to extend and exercise one of our options to extend that lease, that park's last year without that extension would be after the 27th season. Those are, when you look at those two parks, to your point Lizzie, those are two parks that are very low on the ranking of margins. So certainly help get to that 40%. But there are a number of other parks in the system that sort of fit that same bill. They're smaller parks, what we would call the mid-tier parks in the system that have been more impacted by some of the inflation that we've seen post-pandemic, most notably around labor. As Richard noted, 50% of the cost structure is labor and the lion's share of that is seasonal labor. In many of these cases, we have some of those parks that have seen their average wage rate go from $10, $11 to $17, $18. That's a lot to absorb when you don't have four or five million visitors a year to pass that through to. So as we think about the parks going forward, we're diligently working on driving improvement in margin at all those parks. We saw some nice improvement this past year when we reprogrammed parks like the mid-tier parks on the Cedar Fair side to mirror some of the best practices and the standards that we saw at some of our Six Flags parks and that helped. But there are still a number of the parks that are, and Christian noted this, still well below pre-pandemic margin levels because of that inflation around seasonal labor.

Yeah, I'll maybe start and let Richard jump in. I think as we look at 2025, still very early in the season. We're only in mid-May and still more than half of our properties aren't even open yet this season. We're really excited about the capital program for this year. We've got great product in a number of core markets that we think can fuel topline growth, both attendance and in-park spend. This park in particular, you saw it yesterday with TT2 and Siren's Curse which will be coming online, but there are a number of other parks in the portfolio. So still very early but we're just as excited about 2025 as we were coming into the year. So I don't think our expectations have changed. We've always said that as we think about the long-term path, as I mentioned earlier, not necessarily linear, there's an inflection point. We think the second half of this year has a great opportunity to continue to prove, improve the guest experience at a number of the parks and fuel growth going forward at that faster than historical growth rate.

Yeah, I mean, I think you articulated it well, James. If you start breaking it apart, admissions per cap would be under pressure from season pass. Now, there's a lot of pricing opportunity at a number of our parks. When you look at the average price of a legacy Cedar season pass, it's in the $115, $120 range. The legacy Six Flags is closer to $75, maybe $80. So there's a lot of pricing power. How quickly can we get to that? There's a lot of puts and takes to that. It's hard to forecast that out specifically, but our objective is to get price on the Six Flags side, which will offset some of that pressure. Season pass puts pressure as we showed on the screen. It puts pressure on the other in-park spend items as well. Our season pass holders buy all season dining. That puts pressure on food and beverage. They don't spend as much on merchandise and games and some of the other things. So, there is some natural pressure on per caps in this kind of scenario, but more crowded parks, more comfortably crowded parks lead to longer length of stay and higher spend, which tends to be an offset. So to Richard's point, if there's pressure on per caps, we believe when you wash through all those puts and takes, flat to maybe modestly down a little bit. We'll certainly provide more visibility into that as we get into 25 and into 26 and we start seeing how that develops. But the volume play is the right play to getting to that $1.5 billion of EBITDA and margins of 40%.