Six Flags Entertainment Corporation (SIX) Q4 2023 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presents mixed signals: a positive increase in attendance and revenue, yet offset by higher costs and decreased per capita spending. The Q&A reveals optimism for 2024, but lacks specific guidance, causing uncertainty. Despite increased CapEx and technological investments, the unclear management responses and weather impacts raise concerns. The market cap indicates moderate sensitivity, thus the stock price is expected to remain relatively stable, leading to a neutral prediction.
Key Financial Performance
Total Attendance Q4 2023 4.3 million guests, a 6% increase from 2022 driven by higher season pass and single day attendance during Fright Fest.
Total Revenue Q4 2023 $293 million, an increase of $13 million or 5% driven by higher attendance, partially offset by a decrease in total guest spending per capita.
Guest Spending Per Capita Q4 2023 Decreased by $0.96 or 1% primarily due to lower revenue from memberships beyond the initial 12 month commitment period, with 13 plus revenue down $12 million compared to Q4 2022.
Adjusted EBITDA Q4 2023 $98 million, essentially flat compared to Q4 2022, with higher costs offsetting higher revenue.
Total Attendance Full Year 2023 22.2 million guests, an increase of 1.8 million guests or 9%, despite adverse weather reducing attendance by over 1 million guests.
Total Revenue Full Year 2023 $1.4 billion, an increase of $68 million or 5%, driven by higher attendance and higher sponsorship revenue, partially offset by lower per capita spending.
Total Guest Spending Per Capita Full Year 2023 Decreased by $2.90 or 5%, driven by a decrease in admissions per capita of $2.56 or 7% and a decrease in-park spending per capita of $0.34 or 1%.
Cash Operating Costs Q4 2023 Increased by $12 million or 8% due to higher attendance driving higher seasonal labor costs, incremental costs for new attractions, and inflation.
Adjusted EBITDA Full Year 2023 $462 million, essentially flat with 2022.
Active Pass Base Q4 2023 5 million pass holders, flat with last year, with a sequential drop due to timing of promotions and differences in pass expiration dates.
Deferred Revenue Q4 2023 $128 million, down $1 million or 1% compared to the prior year.
CapEx Q4 2023 $61 million, an increase of $23 million compared to Q4 2022.
Total Liquidity Q4 2023 $377 million, including $299 million of available revolver capacity and $78 million of cash.
Debt Paid Down Since 2021 $311 million of free cash flow used to pay down debt.
Operating Highlights
New Products: Introduction of new rides and attractions including a Dino off-road adventure, steam town teaming, DC kits universe, Giga Discovery, The Surfer, and Super Boomerang.
Food and Beverage Innovations: Expansion of mobile app food ordering, introduction of web-based QR code ordering, and self-serve kiosks to enhance guest experience and increase revenue.
New Experiences: Launch of Savannah Sunset Resort and Spa luxury glamping experience and enhanced Fright Fest with new haunted houses and attractions.
Market Positioning: Proposed merger with Cedar Fair, targeting closing in the first half of 2024, aiming to enhance market position and deliver value to guests and investors.
Season Pass Sales: 2024 season pass sales are up double-digits compared to 2023, indicating strong market demand.
Operational Efficiencies: Implementation of AI integrated aquatic vigilance system and chat AI guest services to improve operational efficiency and safety.
Cost Management: Streamlining organization and reducing full-time headcount by over 30% while managing inflationary pressures.
Strategic Shifts: Focus on premiumization strategy, optimizing events calendar, and leveraging technology for enhanced guest experiences and operational efficiencies.
Risk or Challenges
Merger Risks: The pending merger with Cedar Fair presents risks related to regulatory approvals and potential integration challenges post-merger.
Inflation Impact: Historical levels of inflation have posed significant challenges, increasing operational costs and affecting overall profitability.
Weather Challenges: Adverse weather conditions, including rain and extreme temperatures, have negatively impacted attendance, with estimates suggesting a reduction of over 1 million guests in 2023.
Supply Chain Issues: Supply constraints have been identified as unforeseen challenges affecting the company's operations and ability to meet customer demand.
Membership Revenue Decline: The decline in revenue from memberships beyond the initial commitment period has impacted overall guest spending per capita.
Operational Costs: Increased operational costs due to higher attendance, seasonal labor, and inflationary pressures have affected profitability.
Competitive Pressures: The company operates in a highly competitive market, necessitating continuous investment in guest innovations and experiences to maintain market share.
Guidance & Outlook
Premiumization Strategy: The company is seeing a growing interest from families, with guests spending over 40% more per visit than pre-pandemic levels.
Technological Innovations: Investments in mobile wallets, tap and pay, and a new mobile app to enhance guest experience and operational efficiency.
New Attractions and Events: Introduction of new rides and immersive experiences, including themed festivals and enhanced signature events.
Cost Management: Streamlining operations and reducing full-time headcount by over 30% while managing inflationary pressures.
Merger with Cedar Fair: Pending merger expected to close in the first half of 2024, with a shareholder vote scheduled for March 12.
2024 Revenue Expectations: Expecting strong growth in 2024 season pass sales, with double-digit increases in units and pricing.
CapEx Projections: CapEx for 2024 is expected to continue focusing on park infrastructure and guest-facing technology.
Financial Outlook: Anticipating headwinds in 13 plus revenue in Q1 2024, estimated at around $14 million.
Debt Management: Plans to use free cash flow to pay down remaining $57 million of unsecured notes due July 2024.
Active Pass Base: Expecting growth in the 13 plus base starting in the second half of 2024.
Shareholder Return Plan
Merger Related Costs: Incurred $15 million of merger related costs associated with the proposed merger with Cedar Fair.
Debt Repayment: Used $311 million of free cash flow to pay down debt since 2021.
Revolver Capacity Increase: Increased total revolver capacity from $350 million to $500 million in May 2023.
Future Debt Repayment: Expect to use free cash flow to pay down remaining $57 million of unsecured notes due July 2024.
Key Q&A
Earnings Word Cloud
SIX Transcript
The earnings call presents mixed signals: a positive increase in attendance and revenue, yet offset by higher costs and decreased per capita spending. The Q&A reveals optimism for 2024, but lacks specific guidance, causing uncertainty. Despite increased CapEx and technological investments, the unclear management responses and weather impacts raise concerns. The market cap indicates moderate sensitivity, thus the stock price is expected to remain relatively stable, leading to a neutral prediction.
SIX Report
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