Anthony Berni

Anthony Berni from Jefferies asked about Six Flags' capital allocation priorities, specifically how deleveraging is weighed against CapEx spend, and requested ROIC targets for CapEx. He also inquired if the elevated D&A in Q4 2025, attributed to accounting changes, represents a new normalized run rate.

Answer

President and CEO John Reilly highlighted flexibility in CapEx beyond maintenance, with an accelerated focus on efficiency and automation projects. CFO Brian Witherow clarified that CapEx investments aim to exceed the weighted average cost of capital (WACC), and all excess free cash flow will be directed towards debt reduction until net leverage is sustained below 4x. Brian Witherow confirmed that the elevated D&A in Q4 2025, due to purchase price adjustments and an accounting change, should be considered the new normalized run rate.

Anthony Berni of Jefferies inquired about the company's capital allocation priorities, specifically how deleveraging is weighed against CapEx spend, and asked for ROIC targets for CapEx. He also asked for clarification on the elevated D&A in the quarter, questioning if it represents a new run rate or a one-time change.

Answer

CEO John Reilly highlighted sufficient flexibility in CapEx spend beyond maintenance, with an accelerated focus on efficiency and automation investments. CFO Brian Witherow added that CapEx projects will target ROIs exceeding the weighted average cost of capital. He reiterated that the priority, after reinvesting for growth (with 2026 CapEx planned at $400 million-$425 million), is to funnel all excess free cash flow towards deleveraging until net leverage is sustainably below 4x. Regarding D&A, Witherow confirmed that the elevated level was due to accounting noise related to purchase price adjustments and an accounting change for legacy Cedar assets, and should be considered the new normalized run rate absent significant asset base changes.

Asked for a breakdown of the 2024 EBITDA decline between flying and leasing, details on various expense lines (wages, maintenance, D&A, interest), the status of labor negotiations, the nature of EASA flying opportunities, and how a potential macro slowdown is factored into guidance.

Answer

The EBITDA decline is primarily from 767-200 lease returns impacting the CAM segment and lower block hours in the airline segment. Salary and maintenance costs are expected to fall, offset by higher depreciation and interest. No new labor agreements are anticipated in 2024. EASA opportunities are mainly short-term passenger charters. The 2024 guidance is considered conservative, assuming a flat macro environment rather than a further significant downturn.