Six Flags releases Q4 results for 2024
Posted
From the press release:
Six Flags Entertainment Corporation (NYSE: FUN), the largest regional amusement park operator in North America, today announced its results for the 2024 fourth-quarter and full year ended Dec. 31, 2024, and provided Adjusted EBITDA guidance for 2025.
On July 1, 2024, legacy Cedar Fair and legacy Six Flags closed the merger transactions (the “Merger”) to form the new Six Flags Entertainment Corporation (the “Company” or the “Combined Company”). Legacy Cedar Fair has been determined to be the accounting acquirer for financial statement purposes. Accordingly, the reported results presented in this earnings release reflect the financial results for the Combined Company from Sept. 30, 2024, through Dec. 31, 2024. The reported results for the year ended Dec. 31, 2024, reflect combined operations for only July 1, 2024, through Dec. 31, 2024, and include only legacy Cedar Fair’s results (before giving effect to the Merger) for the first six months of 2024. Financial results and disclosures referring to periods prior to July 1, 2024, include legacy Cedar Fair's results before giving effect to the Merger, including the financial statements as of Dec. 31, 2023, and for the three and 12 months ended Dec. 31, 2023.
Fourth Quarter 2024 Highlights
- Total operating days were 878, of which 538 days were contributed by the legacy Six Flags operations added in the Merger.
- Net revenues totaled $687 million, $324 million of which relates to the legacy Six Flags operations added in the Merger.
- The net loss attributable to the Combined Company totaled $264 million, which included $3 million of net income from legacy Six Flags operations added in the Merger, and net income margin was negative 38.4%.
- Adjusted EBITDA(1) totaled $209 million, $113 million of which relates to the legacy Six Flags operations added in the Merger.
- Modified EBITDA margin(1) was 30.4%.
- Attendance totaled 10.7 million guests, 5.0 million of whom attended legacy Six Flags parks added in the Merger.
- In-park per capita spending(2) was $61.60.
- Out-of-park revenues(2) totaled $48 million, $14 million of which relates to legacy Six Flags operations added in the Merger.
CEO Commentary
“Our strong fourth-quarter results reflect an outstanding October performance and the incredible popularity of our fall and Halloween themed events,” said Six Flags President and CEO Richard A. Zimmerman. “We ended the year as the new Six Flags on a high note, delivering on our goal of improving demand and increasing in-park guest spending levels, while operating our parks more efficiently. We successfully achieved more than $50 million in gross cost synergies and drove meaningful improvement in guest satisfaction scores and higher guest demand.”
Commenting on the outlook for the 2025 season, Zimmerman noted, “In 2025, we are building on the momentum we established over the second half of 2024 on both the revenue and cost fronts. We are making progress toward realizing the remaining $70 million in anticipated cost synergies from the merger, representing a targeted 4% reduction in operating costs and expenses, while advancing strategic initiatives to drive attendance and guest spending levels higher. We are seeing solid early demand trends, as evidenced by a 2% increase in attendance over the first two fiscal months of 2025 compared to combined attendance of the two legacy companies in the prior year period, as well as a 3% increase in combined season pass unit sales over that same period. We are focused on continuing to drive guest demand as we reopen the remainder of our parks and are thrilled to be introducing an exciting lineup of new rides and attractions, including compelling new marketable products at 11 of our 14 largest locations. Our investments in new thrills and experience-enhancing initiatives demonstrate our commitment to delivering world-class entertainment for guests and meaningful growth and value creation for shareholders.”
Fourth Quarter 2024 Results
Operating days in the fourth quarter of 2024 totaled 878 days compared with 377 operating days for the fourth quarter of 2023. The increase in operating days reflects the addition of 538 operating days during the fourth quarter of 2024 at the legacy Six Flags parks. That increase was partially offset by 37 fewer operating days at the legacy Cedar Fair parks in the fourth quarter of 2024 compared to the fourth quarter of 2023 primarily due to a fiscal quarter calendar shift. The 2024 fourth quarter began on Sept. 30, 2024, and ended on Dec. 31, 2024, while the prior 2023 fourth quarter began on Sept. 25, 2023, and ended on Dec. 31, 2023.
Net revenues for the fourth quarter ended Dec. 31, 2024, increased $316 million to $687 million, compared to net revenues of $371 million for the fourth quarter ended Dec. 31, 2023. The increase in net revenues reflects $324 million in net revenues contributed by the legacy Six Flags operations in the three months ended Dec. 31, 2024, offset by $8 million in lower net revenues at legacy Cedar Fair operations during the fourth quarter of 2024 compared to the prior year period. The decline in legacy Cedar Fair net revenues was the direct result of fewer operating days due to the fourth quarter fiscal calendar shift, which negatively impacted net revenues by $36 million.
The $316 million increase in net revenues reflects the impact of a 4.9-million-visit increase in attendance, an $11 million increase in out-of-park revenues, and a $2.01, or 3%, increase in in-park per capita spending. The 4.9 million-visit increase in attendance included a 5.0-million-visit increase resulting from attendance at the legacy Six Flags parks during the fourth quarter of 2024, offset slightly by 115,000 fewer visits at the legacy Cedar Fair parks. The decrease in fourth quarter attendance at the legacy Cedar Fair parks was entirely due to the fiscal calendar shift and fewer operating days in the quarter, which resulted in 576,000 fewer visits in the 2024 fourth quarter.
Of the $2.01 increase in in-park per capita spending, $1.60 was related to the impact of in-park per capita spending at the legacy Six Flags parks, with the remaining $0.41 increase attributable to higher in-park guest spending on food, merchandise, games and extra-charge attractions at the legacy Cedar Fair parks. The increase in out-of-park spending was the result of the $14 million contributed by legacy Six Flags operations, offset by a $3 million decline in fourth quarter out-of-park revenues from legacy Cedar Fair operations due entirely to the fiscal calendar shift.
Operating costs and expenses in the fourth quarter of 2024 totaled $523 million, an increase of $217 million compared to the fourth quarter of 2023. The increase in operating costs and expenses reflects increases in operating expenses (up $167 million), SG&A expenses (up $23 million), and cost of goods sold (up $27 million), which were primarily the result of legacy Six Flags operations during the period. The increase in operating expenses included $180 million of operating expenses related to legacy Six Flags operations, offset by a $13 million net decrease in legacy Cedar Fair operating expenses primarily due to the fiscal quarter calendar shift. Excluding these factors, fourth-quarter operating expenses at legacy Cedar Fair increased $3 million, primarily the result of planned increases in seasonal labor costs. The increase in SG&A expenses included $27 million of expenses related to legacy Six Flags operations, offset by a $4 million decrease of SG&A expenses at legacy Cedar Fair. The increase in cost of goods sold included $26 million of cost of goods sold related to legacy Six Flags operations. Cost of goods sold as a percentage of food, merchandise and games revenue increased 170 basis points (bps), with the majority of the increase driven by the inclusion of the legacy Six Flags operations during the quarter.
Depreciation and amortization expense in the fourth quarter of 2024 totaled $106 million, an increase of $76 million compared with the three months ended Dec. 31, 2023. The increase reflected $57 million of depreciation expense that was attributable to legacy Six Flags, as well as the impact of a change in interim depreciation methodology for legacy Cedar Fair. During the fourth quarter of 2024, the Combined Company also recognized a $7 million loss on retirement of fixed assets in the normal course of business, including $2 million of retirements at the legacy Six Flags parks.
After the items above, operating income for the three months ended Dec. 31, 2024, totaled $51 million, including $32 million of operating income from the legacy Six Flags operations. This compares with $29 million of operating income for the three months ended Dec. 31, 2023.
Net interest expense for the quarter totaled $79 million, an increase of $44 million compared to the prior-year fourth quarter. The increase reflected $39 million of interest incurred on debt acquired in the Merger and incremental revolver borrowings in the fourth quarter. Meanwhile, net other expense totaled $27 million compared with $4 million of net other income during the fourth quarter of 2023. Both amounts primarily represented the remeasurement of U.S. dollar denominated notes to the functional currency of the Company’s Canadian entity.
During the three months ended Dec. 31, 2024, the Combined Company recorded a provision for taxes of $210 million, compared to a provision of $8 million for the fourth quarter of 2023. The higher provision for income taxes relates primarily to the non-cash tax effects of the change in tax status of a lower-tier partnership as part of an internal restructuring completed on Dec. 31, 2024.
After the items noted above, net loss attributable to the Combined Company for 2024 totaled $264 million, or $2.76 per diluted common share, which included $3 million of net income related to legacy Six Flags operations during the fourth quarter. This compares with a net loss of $10 million, or $0.20 per diluted limited partner unit, attributable to the Company, for the three months ended Dec. 31, 2023.
Adjusted EBITDA and Modified EBITDA margin, which management believes are meaningful measures of park-level operating results, increased $120 million to $209 million and 650 bps to 30.4%, respectively, compared to the fourth quarter of 2023. The increase in Adjusted EBITDA included $113 million from legacy Six Flags operations and a $7 million increase from legacy Cedar Fair operations, including the impact of the fiscal quarter calendar shift. The 650 bps increase in Modified EBITDA margin included a 410 bps increase related to legacy Six Flags operations and 240 bps increase due to legacy Cedar Fair operations. The $7 million increase in Adjusted EBITDA and 240 bps increase in Modified EBITDA margin from legacy Cedar Fair operations reflects a decrease in operating costs and expenses during the fourth quarter of 2024, offset by lower attendance and revenues, due to the fiscal quarter calendar shift. See the attached table for a reconciliation of net loss to Modified EBITDA and Adjusted EBITDA.
Balance Sheet and Liquidity Highlights
Deferred revenues on Dec. 31, 2024, totaled $308 million, compared with $192 million of deferred revenues on Dec. 31, 2023. The $117 million increase reflects the inclusion of $123 million of deferred revenues at the legacy Six Flags parks as of Dec. 31, 2024, offset somewhat by a decrease of $6 million, or 3%, at the legacy Cedar Fair parks. The decrease in deferred revenues at the legacy Cedar Fair parks reflects the normal amortization of prepaid lease payments related to California’s Great America, the elimination of transaction fees in California, and a slight decrease in sales of advance purchase products, including sales of season passes and related products, for the 2025 season.
Liquidity as of Dec. 31, 2024, totaled $578 million, including cash on hand and available borrowings under the Combined Company’s revolving credit facility.
Net debt(3) on Dec. 31, 2024, calculated as total debt of $4.96 billion (before debt issuance costs and acquisition fair value layers) less cash and cash equivalents of $83 million, totaled $4.88 billion.
Six Flags Announces Investor Day and 2025 Financial Guidance
Six Flags announced today that it will host an Investor Day at its Cedar Point park on May 20, 2025, beginning at 9:00 AM ET. Additional details regarding event registration will be provided by the Investor Relations Department in the coming weeks.
For 2025, Six Flags is targeting Adjusted EBITDA of $1.08 billion to $1.12 billion, exclusive of any portfolio optimization efforts.
“Since finalizing the Merger nearly eight months ago, our team has been diligently executing against the initiatives within Project Accelerate, our long-term strategic plan to drive sustainable, long-term growth and maximize the full potential of the Merger,” said Zimmerman. “Our 2025 guidance reflects the strong progress we’ve made to date and our belief in the opportunities ahead as we execute our initiatives to drive higher levels of attendance and guest spending, while realizing cost synergies and maximizing operating efficiencies. At our Investor Day in May, we will share our vision for the future of Six Flags, outlining our comprehensive strategy to build on our momentum and providing long-term performance objectives. I am so proud of everything our team has accomplished to date, and excited about the tremendous opportunities ahead for Six Flags.”
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There's a lot to parse out there, but if I'm reading it right, I am again concerned that per capita spending on the legacy Cedar Fair side is not keeping pace with inflation. But this is the groan text:
We are making progress toward realizing the remaining $70 million in anticipated cost synergies from the merger, representing a targeted 4% reduction in operating costs and expenses, while advancing strategic initiatives to drive attendance and guest spending levels higher.
+1 to whomever actually went with "cost synergies" and "strategic initiatives." But I'm underwhelmed that they only think they can get 4%, and even more underwhelmed that they're not even close.
Jeff - Editor - CoasterBuzz.com - My Blog
For 2025, Six Flags is targeting Adjusted EBITDA of $1.08 billion to $1.12 billion, exclusive of any portfolio optimization efforts
Well that is nice of them to telegraph this for us- we should expect a park to be closed or sold in 2025.
Of the $2.01 increase in in-park per capita spending, $1.60 was related to the impact of in-park per capita spending at the legacy Six Flags parks
Turns out people will spend more without surcharges! I hope United is paying attention.
To be fair, the legacy Flags were kinda giving everything away. They had nowhere to go but up!
Jeff - Editor - CoasterBuzz.com - My Blog
I don't see the combined company as an interesting investment given the chaos in government creating uncertainty in our world this summer, the ongoing inflation, government job losses (which will hurt the DC area parks for sure), the start of tariff wars, etc. People are cutting back, just how much is the unknown variable. I have to believe there is a reason why Ouimet walked from the board, he probably knew what a challenge it would be to have to redirect attention away from legacy CF parks to deal with the mess that legacy SF parks are which are only going to hurt the "Fun Forward" program that was working so well at CF.
At this point we know that to achieve "synergy" goals job losses have occurred in marketing/sales/PR by combining park responsibilities, some leadership positions have gone unfilled (eh hhhmm Cedar Point VP/General Manager), pay has been cut, etc. which you have to think will have an impact on the quality of legacy CF parks that were far ahead of the legacy SF park experience.
At around 21 minutes on the call, they talked about how their review of their portfolio is now pretty much complete and that they open to "selling some non-core properties to increase shareholder value" - but no specifics in terms of the parks or any timeline on that bar they "look forward to operating their 42 parks this season".
They also talked about selling undeveloped land at Kings Dominion, "expecting a transaction within 18 - 24 months".
Nothing to see here. Move along.
I have no doubt that the legacy Six Flags parks will see some notable improvements in terms of the overall guest experience. But between the synergies and the giant portfolio of parks, there's no way the best operating legacy Cedar Fair parks won't slide a bit in terms of that experience. I feel like they'll find a level of service where Cedar Point and Great Adventure (just an example) will have similar operations and guest experiences. A dramatic improvement for the Great Adventure experience still has the ability to translate into a noticeable downgrade in the Cedar Point experience if both parks are running in a near identical manner.
To be honest, I think that in the couple of years prior to the merger*, in my experience there wasn't a huge delta at a Cedar Fair park vs. a Six Flags, in the way that there would have been in the Story/Burke and Kinzel era.
*based on visits to Magic Mountain, Knotts, California's Great America, Carowinds, Dorney & Great Adventure - I am sure that there was a scale of quality within both chains, perhaps more so in Six Flags.
Nothing to see here. Move along.
BrettV:
I feel like they'll find a level of service where Cedar Point and Great Adventure (just an example) will have similar operations and guest experiences.
I have to disagree based solely on the fact that when it was just Cedar Fair, ride operations at Kings Island were night and day different than Knott's. Each park is going to continue to have different resource challenges, including local labor markets and management capability. They will all have the same set of goals, but different results.
These comments bring up a bigger issue. How do you scale operational excellence? The baseline before the merge was already in decline on the FUN side, if I'm to believe the trip reports. But now you have to set a standard that fans out across an awful lot of properties. Extend the same thing to the other areas, like culinary and live entertainment. And to be clear, you don't get there by micromanagement.
Jeff - Editor - CoasterBuzz.com - My Blog
I actually think it is a form of micromanagement that gets you there. It’s going to be the same brand to franchise auditing model that many chains use. It’s why you can walk into any chick-fil-a and get a fairly consistent experience.
That is exactly what I hope that they don't do. That's the route Merlin went down and essentially going to each of their parks was/is painful because they ultimately robbed them of everything that made them unique.
They should be able to find a way to do each of the five things that their 'Project Accelerate' calls for without having each park feel exactly the same as each and every McDonalds or Walmart.
Nothing to see here. Move along.
You just know some executive was beaming reading that buzzword riddled chart.
What does it even mean, it’s the most generic bull**** filled straight out of any corporation boardroom approach. What are they actually doing to make the parks better, or are they good enough and it’s time to move into the cut every cost phase?
That's about the same in terms of anything meaningful as many consultants produce. Management types though tend to eat up such meaningless jargon though.
I bet this season they will keep all the parks, and play the Trump impacts by ear, and see what the axe they have wielded to staffing and maintenance will do, while fixing food, and water parks.
In terms of park ops, I agree it’s very heavily loval job market affected, but I felt CP and Dorney where basically back to normal. And KD was still a mess when I visited.
I find it interesting they are having investor day at CP, but hey a two ride year technically so Zamperla better deliver!
IMO this company is a very bad investment. They are propping up the bottom line with cost cutting that is going to affect attendance. They have no plan for growth. The new attractions that they are currently installing are targeted to the same customer base that only lets them operate their assets about 50% of the days of the year, if that. And that customer base is not of a high disposable income. PRKS does have attractions for other customers, but their new installations are for this same customer base as Six Flags, so their future doesn't look much brighter.
Add to this the impending economic disaster of having a demon in the White House and a Congress that fully supports him, it just doesn't look good in the long run.
Would it be fair to say that there are less synergies across a group of theme parks than there would be across a group of grocery stores, for example?
I use that example as it's closer to me professionally. The stores operate almost exactly the same as one another, they sell the exact same products & share a supply chain, new stores are cookie cutter versions of each other, the same IT is in each, etc etc. Plus we operate in a market where there aren't regional differences in building code, tax structures, etc.
If you have a group of theme parks that share some characteristics but not all, it feels less of a slam dunk in that respect.
Nothing to see here. Move along.
In my opinion, they've really screwed up over the last several years by following the Tim Fisher approach, pushing cheap season passes and not raising prices on them to keep up with inflation. I also don't think it's a good strategy to have a single park pass cost the same across the chain. A Cedar Point pass costs the same as a World's of Fun pass and is cheaper now than it was in the early 2000's. That makes no sense. A day ticket to any Florida park costs more than a season pass to Cedar Point. I guess they figure they'll pack them in and make it up with Fastlane sales. They added twice as many parks to the passes this year and kept prices on the all park option pretty much the same (at least on the legacy Cedar Fair side). Their debt has not decreased at all and I believe it more than doubled with the Six Flags merger while the revenues slightly less than doubled. Not a formula that makes it easy to survive when the cost of debt goes up or the economy cools.
I don't think there is a ton of cost savings to be had with the merger that won't impact the bottom line and guest experience. We've already seen them go to a regional approach with PR/Communications and even park level general managers. A property like Cedar Point without someone actually in charge seems like a questionable move. They canned the top marketing officer that had done brand studies in each of the legacy CF markets to better understand what guests identified with. Would have been nice for her to do the same in the Six Flags markets, but that would go against homogenization, standardization, efficiencies, and synergies (yay corporate buzzwords). Six Flags corporate was already a dictatorship with not much structure underneath it before the takeover so there wasn't much to cut there. They mentioned they've achieved $50 million of $120 million in cost savings. Where is the other $70 million coming from?
I think they've taken a very brazen approach with one of their top five most important properties - Six Flags Great Adventure - and it is probably going to be a disaster in the short term. Ironically, I think there's a lot of opportunity at that property in particular for a hotel and attendance growth. I hope whatever capital they are putting into it over the next year or two is very strong along with the marketing behind it and that they don't pull it after what is almost certain to be a lousy year there this year.
Cutting Live E all over the place is concerning too because it makes it less likely that they will get anyone but teens on season passes without a ton of extra money to visit. Yes, the parks do have kiddie attractions, but is it really enjoyable for a parent to stand there watching their kid go around in circles? If I was them, I'd be prioritizing working with the manufacturers on quality family type rides that everyone can enjoy together. They don't have the budget to do Disney theming, but they've mostly ignored this idea for years. Imagine if they installed a ride like FireChaser or Big Bear Mountain instead of a playground and a stage on that island at Cedar Point. They had a merch expert there in Carrie and could have printed money with an attraction like that. Instead they went cheap with Wild Mouse. It might have checked the box, but they couldn't have seriously expected a ride like that to move the needle in terms of attendance and merch sales.
I hate worrying about the future of the company and the parks we all love, but I'm afraid it isn't going to end well. Zimmerman and his buddies might bail out with their parachutes before it really hits the fan, but I'm not very optimistic right now about Cedar Flags.
-Matt
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