Six Flags Entertainment - Q4 2023
February 29, 2024
Transcript
Speaker 0
My name is Jason, and I will be your operator for today's call. Thank you. I will now turn the call over to Evan Bertrand, Vice President, Investor Relations and Treasurer.
Speaker 1
Good morning, and welcome to our Q4 and full year 2023 earnings call. With me is Selim Basoul, President and CEO of 6 Flags and Gary Mick, our Chief Financial Officer. We'll begin the call with prepared comments and then open the call to your questions. Our comments will include forward looking statements within the meaning of the federal securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in such statements, and the company undertakes no obligation to update or revise these statements.
In addition, on the call, we will discuss non GAAP financial measures. Investors can find both a detailed discussion of business risks and reconciliations of non GAAP financial measures to GAAP financial measures in the company's annual reports, quarterly reports and other forms filed or furnished with the SEC. Before we begin, a brief remark on the pending merger with Cedar Fair. As many are already aware, on January 31st, we filed with the SEC our definitive proxy relating to the upcoming shareholder meeting to consider the pending merger and related matters. Our shareholder vote is set for March 12, and we are targeting a closing in the first half of twenty twenty four.
Our call today will focus on the results of the Q4 and the full year 2023. We will not be taking questions about proposed merger between 6 Flags and Cedar Fair or any of the associated proxy materials. At this time, I will turn the call over to Selim.
Speaker 2
Good morning. Thank you for joining our call. Before we begin, I want to express our excitement about the proposed merger with Cedar Fair. We feel that this compelling combination will deliver value to our guests, our investors and to our employees. As a reminder, our special shareholder meeting to approve the merger will be held March 12, so please cast your vote.
As we close the 2nd fiscal year in my role as CEO, I am encouraged by the signs I am seeing that our premiumization strategy is working. I see a growing interest and engagement from families wanting to visit our parks, including multi generational families, grandparents with grandkids, college students and young couples with babies. Our iconic brand is synonymous with thrills and adventure, which excites children and makes adults feel like children again. My 8 year old begs me every weekend to take her to the park and she can't wait and she is until she is tall enough to ride the hero coasters. I see customers willing to spend more time and more money in our parks.
By reducing overcrowding and friction at just choke points, we have become an easier company to do business with and an easier part to navigate, which creates a better environment for guests and employees. Our guests on average are spending over 40% more per visit than they were before the pandemic. Guests of all ages can enjoy a full day of personalized and immersive experiences, complete with events, meals and attractions, while enjoying more comfort and convenience. We have added VIP lounges, more private cabanas, new kids' areas with activities and rides, upgraded sit down restaurants and expanded our culinary offerings from delicious finger foods and local brews to salads, vegan, premium ice cream, freshly baked pretzels, Korean corn dogs and kafta kebabs. Guests can chill in our sports bar and watch the game on our large TV screens or hang out in our air conditioned state of the art e gaming lounges where kids and adults can compete and play.
Guests can enjoy new events and culinary themes festival like Oktoberfest, Kids Boo Fest and Flavors of the World. And our enhanced signature events like Tryfest with new haunted houses built with iconic horror brands such as Saw and The Conjuring. These were hit with guests this year. I am also encouraged to see the positive impact that streamlining our organization has had on empowering our employees and creating a culture of expediency, excellence and ownership. I will share a personal experience.
I have noticed new food trends such as bubble tea pop up in various upscale shopping malls. My first bubble tea ever was in our park and it was delicious. I watched as our team skillfully constructed this wonderful freshly prepared bubble tea using the best ingredients, best mixture of flavors and served with a smile. Employees feel more connected to the guests and I see the pride they have in their work. We are also seeing encouraging signs in our financials.
Since 2021, we have grown guest per caps by 17%, reduced full time headcount by over 30%, lowered cash expense in the face of historical levels of inflation, leveraged key partnership to expand sponsorship revenues and paid down over $300,000,000 of debt. In 2023, food and beverage revenues grew in both units and average pricing, exceeding our attendance growth over the same period. We also made good progress rebuilding our task base using more targeted media, promotional pricing and introducing our new 6 Flags Plus subscription style program in June 2023 with a more profitable balance of benefits and price. Our progress continues with 2024 passes, which through January are up double digit over 2023. That said, we fell short of our financial targets.
We faced unforeseen challenges like historical levels of inflation, abnormally challenging weather and supply constraints. We have also made missteps and we have learned that not every element of our strategy is equally successful. But we are able to pivot quickly and we are leveraging our experience to continuously improve and explore new opportunities. For instance, we are optimizing our events calendar to focus on those we have seen the best return. We are exploring exclusive events and special access passes to drive monetization.
And we have tested where and when customers are willing to pay for a convenience and we have invested to enhance guest facing technology and create new revenue streams. This includes adding mobile wallet and tap and pay, which now comprise 40% of all in park transactions. Our new mobile app, which makes it easier for guests to order food on mobile devices, new handheld point of sale devices providing greater flexibility to accommodate guests and enhance throughput dynamic pricing, which has shown traction, extending the booking curve and capturing additional admissions revenue and 6 pay wristbands for water park guests who don't want to carry their wallet or cell phone. I will discuss more exciting technological initiative later on this call. We are guided by our mission to deliver an exceptional guest experience and we believe this will deliver exceptional returns to our shareholders over time.
With that, I would like to turn the call over to Gary to discuss the financial results for the quarter and the full year.
Speaker 3
Thank you, Selim, and good morning, everyone. I will start with attendance, revenue and per caps, and then move to expenses and EBITDA for the quarter and the full year. I will then discuss our active pass based metrics, select balance sheet items and capital allocation. Starting with the Q4. Total attendance was 4,300,000 guests, a 6% increase from 2022, driven by higher season pass and single day attendance during Fright Fest.
Revenue increased $13,000,000 or 5% to $293,000,000 driven by higher attendance, partially offset by a decrease in total guest spending per capita of $0.96 or 1%. Admissions spending per capita decreased $1.44 or 4%, offset by an in park spending per capita increase of $0.48 or 2%. Guest spending per capita decreased primarily due to the lower revenue from memberships beyond the initial 12 month commitment period, what we call 13 plus, which is recognized evenly each month. 13 plus revenue was $12,000,000 lower in Q4 2023 versus Q4 2022 due to the attrition of our legacy members. Excluding the impact of 13 plus revenue from both periods, which we believe is a better reflection of our average higher pricing in the 4th quarter and our in park monetization efforts, guest spending per capita would have been higher than prior year by $2.35 or 4%, which includes an increase in admission spending per capita of $1.04 or 4% and an increase in in park spending per capita of $1.31 or 5%.
As a reminder, we made a strategic decision to discontinue the sale of new memberships in April 2022 due to the inclusion of rich benefits, difficulty to administer in the park and the drag on per capsid margins associated with this product. We launched the new 6 Flags Plus in June of 2023 and plan to resume growth in the 13 plus base starting in the second half of twenty twenty four. However, we expect to face 13 plus revenue headwinds in Q1 2024 that we estimate to be around $14,000,000 Moving on to costs. In Q4 2023, we incurred $15,000,000 of merger related costs associated with the proposed merger with Cedar Fair. Cash operating costs, which includes cash operating and SG and A expense, but excludes merger related costs, increased $12,000,000 or 8% in the Q4 versus the prior year.
This increase was due to the following factors. First, higher attendance drove higher seasonal labor, cost of sales and other variable costs. 2nd, we incurred incremental costs associated with new attractions and entertainment for our expanded fall events schedule. 3rd, we accelerated investments in guest facing technology to ensure readiness for 2024. Lastly, higher inflation increased wages and other operating costs.
Adjusted EBITDA for the quarter was $98,000,000 essentially flat compared to Q4 2022, which as you recall was a record with higher costs offsetting higher revenue. Moving on to 2023 full year results. Attendance increased by 1,800,000 guests or 9 percent to 22,200,000. We estimate that adverse weather reduced full year attendance by over 1,000,000 guests. This includes rain and snow in California during spring break followed by a record summer heat wave in Texas and 8 consecutive weekends of rain or threat of rain in the Mid Atlantic and Northeast after Labor Day.
Total revenue increased by $68,000,000 or 5%, driven by higher attendance and higher sponsorship partially offset by lower per capita spending. Total guest spending per capita decreased by 2 point $9.0 or 5%, driven by a decrease in admissions per capita of $2.56 or 7% and a decrease in in park capita of $0.34 or 1%. The decrease in admissions per cap was the anticipated result of lower pass pricing in the 1st 3 quarters of 2023 relative to 2022 when prices were significantly elevated. In park per caps decreased due to the higher mix of season pass attendance, partially offset by an increase in food and beverage sales in 'twenty 3 versus 2022, which is driven by mobile food ordering, new culinary offerings and our expanded events calendar. For the full year, 13 plus membership revenue impact on the year over year per cap comparison was negligible.
Regarding full year costs, we incurred $38,000,000 related to an upward revision of our self insurance reserves in the Q2 of 2023, in addition to the $15,000,000 of merger related costs in the Q4 $61,000,000 or 8%. The majority of expense growth occurred in the second half of twenty twenty three and was caused by several factors, many of which we expect to normalize in 2024. First, we increased advertising by $18,000,000 in 2023 in an effort to help rebuild our active pass base. We expect advertising spending in 2024 to be in line with 2023. 2nd, we incurred incremental expense associated with the expanded events calendar.
We plan to optimize events in 2024, which will help mitigate these cost increases. 3rd, we accelerated technological initiatives, many of which we expect will help mitigate labor costs in 2024. And lastly, significant inflationary pressure estimated to have cost us $50,000,000 partially offset by full time headcount reductions and procurement savings. Adjusted EBITDA for full year 2023 was $462,000,000 essentially flat with 2022. Our active pass base as of December 31, 2023, comprised 5,000,000 passholders, flat with last year.
As you will recall, our active pass base at the end of Q3 2023 was 23% higher than the prior year Q3. The sequential drop in prior year comparison from 3rd quarter to 4th quarter is primarily due to 2 factors. 1st is the timing of our past promotion, which is focused in the Q3 2023 around Labor Day versus being focused in the Q4 in 2022 during our November cyber sale. 2nd, there was a difference in the expiration date of our gold season pass between 20222023. In 2022, Gold Passes were valid through the entire year, expiring in early January of the following year.
2023 Gold Passes expired in early October ahead of Fright Fest and are not included in the 2023 year end pass balance. Deferred revenue as of December 31, 2023 was $128,000,000 down 1 prior year. On our last earnings call, deferred revenue at the end of Q3 2023 was up 17% over the prior year Q3, The sequential drop in the prior year comparison from 3rd to 4th quarter largely due to the two factors I just discussed, coupled with the transition of membership deferred balances to 13 plus revenue due to discontinued legacy membership passes. We have made many changes to our pass strategy over the past 2 years in an effort to find the right product mix and balance of pricing and benefits. Despite our active pest base and deferred revenue balance being essentially flat versus the prior year, we feel the progress we have made on new season pass sales in this encouraging data point as we assess our outlook for 2024.
As Selim mentioned, since the start of selling in late August through the end of January 2024, Pass sales were up double digits over prior year, driven by an increase in both units and pricing. CapEx spend, net of insurance recoveries, was $61,000,000 in the 4th quarter, an increase of $23,000,000 compared to the Q4 2022. Full year 2023 CapEx was $171,000,000 an increase of $59,000,000 driven by investments in our park infrastructure, events, rides and guest facing technology. Total liquidity as of December 31 was $377,000,000 which includes $299,000,000 of available revolver capacity, net of $21,000,000 of letters of credit plus $78,000,000 of cash. We feel we have sufficient capacity to pay down the remaining $57,000,000 of unsecured notes due July 2024 using a combination of free cash flow and revolver capacity.
In May of 2023, we increased our total revolver capacity from $350,000,000 to 500 $1,000,000 providing greater flexibility to pay down debt. Since 2021, we have used $311,000,000 of free cash flow to pay down debt, inclusive of $38,000,000 financing fees, OID and redemption premiums. We expect to continue using free cash flow to pay down debt until we achieve our target net leverage ratio of 3 to 4 times adjusted EBITDA. Now, I will turn it back over to Sylvain.
Speaker 2
Thank you, Gary. Now, I would like to discuss why we are excited about the 2024 season. 1st, 2024 season pass sales are off to a strong start. We are selling a higher mix of platinum and diamond passes as well as more add on products like the All Season Dining and All Season Flash Pass. 2nd, we are leveraging technology and automation to improve operational efficiency and safety.
For example, our new AI integrated aquatic vigilance system, which will provide real time monitoring and improved response times to help drive down labor costs and improve safety in our water parks. Our upcoming chat AI guest services web feature will be able to answer a large portion of guest questions and resolve their request reducing the need to transfer to a live agent. And live ride wait times to better manage the flow of guests with better accuracy and visibility. 3rd, we are bolstering our revenue streams through technological innovation and operational enhancement. In food and beverage, we are expanding mobile app food ordering to more restaurant locations and are introducing new web based QR code ordering.
We are placing QR codes in high visibility dining areas, so guests can use mobile ordering without needing to download the app. We're introducing self serve kiosks. These sleek, modern and easy to use kiosks have a proven track record in the restaurant industry for increasing throughput, reducing customer wait times and driving higher average spending by enticing customers to do more customizations and add ons. In retail, we launched a new automated photo capture technology, which provide guests with a personalized media library of right photos, making them simple and easy to purchase, which will provide an additional revenue stream and help create a more memorable experience. We are also planning to revamp our merchandise strategy with new higher quality and more desirable apparel, thanks to new partnership with premium vendors.
In parking, our new speedy automated toll plaza, which will help expedite the entry process, cut down on seasonal labor at the gate and provide additional revenue. In group sales, we restructured our sales team late in 2023 by moving them out of corporate and back to the parks, enabling a more and localized operation. We are seeing positive signs with early bookings pointing to solid growth in 2024. And our final reason to be excited about 2024 is the lineup of exciting immersive experiences. This includes our new Savannah Sunset Resort and Spa Luxury Glamping Experience at 6 Flags Great Adventure, where guests will enjoy sweeping views of our 350 Acres safari and participate in up close animal encounters.
We are also planning the most exciting year yet for FryFest. We are amping up the thrills with new haunted houses, scare zones and other new hair raising attraction to take the fear factor to a new level. This will include more IP branded houses, which were a big hit this past year. And of course, new rides and attractions. The anchor of a great amusement park is its rides, and we have always been known for having the most and best in the industry.
We previously announced we're kicking up capital through 2026 to bring a wide spectrum of new attractions targeting every member of the family. And we are following a different strategy that had been done in the past with a focus on putting the right ride in the right place at the right path. For 2024, we will have a new Dino Off Road adventure at 6 Flags Over Texas, which brings you face to face with life-sized animatronic dinosaurs. New steam town theming at 6 Flags America, where the path meets the future and will include the all new steamroller ride, an exciting family ride with 4 rotating arms, a new DC Kids universe at Fiesta, Texas. This young family friendly environment will bring adventures to our youngest thrill seekers.
And you ride like the fan favorite Giga discovery in both Six Flags, Great America and in St. Louis, a teen favorite ride that creates unique thrill experiences. This ride has been very successful in our other parks. The Surfer at Six Flags Over Georgia, an intense ride of 144 feet high, 60 miles per hour and almost 600 feet of track complete with a splash zone. And the super boomerang at 6 Flags Great Adventure, a triple tower launch coaster with 10 air moments, which we expect to open in time for its 50th anniversary celebration.
We operate in a highly competitive market where customers have the choice of many diverse entertainment options. To compete for our share of the discretionary leisure wallet requires continued smart investment in our guest innovations, immersive experiences and premium park offerings. This keeps us on our toes and we don't take anything for granted. I want to finish with 2 big surprises for me this past year. 1st is being awarded the best and brightest company to work for in 2023 in Dallas and in the nation.
Given all the challenges executing this strategy, I truly did not expect it. When you think of all the great companies in Dallas and in the U. S, it's an honor and it's quite humbling. It is a testament to the great leadership we have at our parks. I am grateful for our employees who are fully dedicated and willing to work hard to create a great experience.
This is a very competitive environment and we have to continue to be the best each and every day. 2nd is being part of the largest digital alliance in our industry. This is a credit to our Chief Digital Officer and his team. We are proud to partner with great innovators such as Google, Dell, Pure Imagination, Fuel, Snow Flake and HCL Tech to bring the latest technology to our parks, transforming the amusement park experience to be more personalized, immersive and memorable. With that, operator, would you please open the call for any questions?
Speaker 0
Thank you. We will now begin the question and answer session. Our first question comes from James Hardiman from Citi. Please go ahead.
Speaker 4
Hey, good morning. Thanks for taking my call. So, Salim, you laid out all the reasons why you're excited about 2024. I guess I should presumably interpret that as you think there should be some top line growth here. I don't know if you want to sort of put some broad numbers around that.
But I guess as I drill down a little further, if we look back to 20 22, you had big per cap growth, right, big pricing growth, but attendance declined, I think more than that. 2023 was sort of the reverse, right? You had solid attendance growth, but then some modest per capita algo look like? Should it be a more balanced approach to revenue growth where we can see both attendance and per cast growing in the year? Thanks.
Speaker 2
Well, thank you, James. Thank you so much for this call. So I as you know, we are not providing guidance. However, I will tell you that the difference between 2022 2023 is simply the fact that we refocused on building the active base. And we ended up saying, okay, it was a matter of recalibrating our pricing, rejiggering our membership.
As you well know, in 2022, we had stopped it, stopped the legacy member. And in June or July, we reentered the 6 Flags Plus membership. So we were working on reactivating the rebuilding the base. We also spent money on media, talking about advertising and media, talking about all the things we put in. We had to launch this new membership and we had to push it up.
We also spend a lot of energy on technology. We also when we tried to say we needed to go after food service and retail. So we tried to change our food ordering, mobile food ordering penetration, which was low and we spent a lot of money on this, a lot of resources. We went after alcohol penetration. We went after transaction per hour and then we went enter what I call the daily dining plan and the season dining plan.
As you remember in 2022, we eliminated it and we relaunched a much more win win for us and for our guests. And then there were a lot of renovation with bars and coffee shops. So I look at this and I see the emphasis being on food service and there was a lot of resource spent. Now, some of the things that we did not do well. So we did not do well in 'twenty three as we launched a lot of new events.
So we launched tons of events. So if you remember, we had a calendar in the Q4 of 2022 when we said let's go back and ramp up events. And we went, we kicked off Viva La Fiesta, Flavors of the World, Summer Vibe celebration, Eats and Islands Eats and Beats and I can keep on going on and realized and we had fireworks and drone show and realized that not all those events panned out. To realize that it did not drive additional season passes, some of them. We also realized that they were cannibalizing other things we're doing in the park, longer operating hours, staffing those events cost us a lot of money in manpower and now we're streamlining in 2024 to say what works and what didn't work.
So a lot of experiment in 2023 versus 2022 in rebuilding the base and part of it was pricing, part of it was offering more perks like the events. And at this moment going into 2024, a lot of learnings will happen in 2022 2023. So that's why I'm excited about 2024.
Speaker 4
Got it. And then maybe sort of a separate question. One of the things I've been asked a lot over the past few months, this isn't a merger question, but I think it maybe came up as a result of the merger, it's just what's the proper level of investment in your business? If I look at whether it's OpEx or CapEx relative to your closest peer, right, the level of investment has historically been less. So maybe 44% OpEx as a percentage of sales versus 48% at your peer.
CapEx has been well, CapEx this year was about 12% of sales, but historically you've been in that high single digit range. Your closest peer has been more in that fourteen percent range historically. So how do I think about that as we move forward? Is there a need to increase investment to sort of catch up? Or do you think there are just structural differences in sort of how you versus your peers would need to invest properly?
Thanks.
Speaker 3
Yes. Hi, James, it's Gary. So we don't comment on the merger in that sense. And we're operating our business this year as if the merger is not going to happen. We're assuming, of course, that it is, but we're running our business as we always would, right?
So when you look at the investments on CapEx historically, as you mentioned, it's been in the single digits 8%, 9% of revenue. And so we have increased it as you saw this year 12% and we plan to increase it in 2024 and 2025 because we do need to improve the guest offerings in rides, marketable capital and food and beverage retail.
Speaker 4
Just to clarify though, you say increased CapEx in 2024 and 2025. Is that above the 12% that we saw in 2023? Or is it just similarly higher than it's historically been?
Speaker 5
And
Speaker 4
then sort of similar question on OpEx, like where does that go from here? It sounds like you think that the growth in OpEx, unlike 23 can be maybe less than the growth in sales, but maybe clarify.
Speaker 3
Yes. So in terms of it's similar to what we announced in the last quarter earnings call, James. We're going to run around $2,000,000 to $2,200,000,000 for 2024, that's the anticipated spend at that point. That includes maintenance, by the way.
Speaker 4
Any thoughts on the OpEx side?
Speaker 3
In this case, we're looking at, as Selim pointed out, we spent quite a bit on events. And as we look to reduce the events that are not ROI accretive, we anticipate the expenses will come down. We don't, of course, have an idea as to the inflation impact of this.
Speaker 2
Can I give a little bit more flavor on to OpEx, please? I'm going to break it down into 4 truly buckets. The bucket number 1 is we spent in the 3rd and 4th quarter a lot of money on events and advertising. So let's talk about events. So we'll most probably streamline the events and we'll have a lot less spending on the event because we figured out the one that works and the one that didn't work.
On advertising, we'll expect to have a flat advertising as we maximized and we found that our advertising and media promotion was very effective. So this level of advertising will be flat in 2024. However, we'll continue to most probably invest in technology as we continue having resources in creating still we have 3 elements. We are investing in continue investing in self serving kiosks, AI in 2024 and some retail initiative that includes technology. But that's not really, I'll call it, slightly a bump up from where we were in 2024.
But the biggest, the largest large buckets that most probably will be a problem for us and we have to figure out is wages. So what's happening is kicking up in 2024 is what I call state mandated minimum wages that have now kicked out in 2024 across minimum wages. So now they are all coming in. Almost 90% of the states are now mandating they issued those mandates somewhere in most probably 2018, 2019. I remember when I was at Middleby, all the restaurants were worried about their wages going up and then it was a delayed process and it all hits in 2024.
It will hit the industry. It will hit the restaurant business, the hospitality, where labor rate, hourly labor rates with minimum wages are going up. So this most probably will be the biggest issue we have to deal with going into 2024.
Speaker 3
Right. We have tremendous focus on reducing our costs, James. There's no question of that whatsoever. But these other upside factors that we've been suspension make it difficult to predict the total number.
Speaker 4
Got it. That's great color. Thanks, Gary. Thanks, Flynn. Thank you.
Speaker 0
The next question comes from Steve Wieczynski from Stifel. Please go ahead.
Speaker 6
Yes. Hey, guys. Good morning. So I want to ask James' question, maybe his first question there a little bit differently. And look, Salim, I know you're not going to give specific guidance for this year, but trying to understand how you guys are thinking about per caps.
Look, obviously, there's shifts in attendance and attendance mix. But look, if we sit here a year from now, I guess the simple question is, are per caps both on the attendance and in park side, do you think you can grow those over 2023?
Speaker 2
Yes. Steve, that's a great question. In park spend has not been an issue for us. It will grow and it's grow. If you take so we need to start focusing on something where we haven't done as good of a job going through it because now we're underserved very well is what you call the 13 plus members.
And maybe I'll turn it to Gary a little bit to discuss the 13 plus and the impacts of 13 plus on what's happening in 2023 and why the numbers. So if we start taking away 13 plus from the equation, you've seen that our per cap has grown in Parq. And maybe I'll turn it over to Gary to go at it a little bit.
Speaker 3
No, thanks. Salim, and great questions, Steve. Just in general, to answer the question on 2024 per caps, both admission and in park, we anticipate to be elevated over 2023. If you take out the 13 plus as Salim just mentioned from the Q4, our both admissions and in park are up like, let's say, an average of 4%. So almost all of our products that we are pricing into 24 are priced with an increase over prior year.
The thing we do actually like the 13 plus revenue stream. It is a subscription based revenue stream. So once the 13 plus member gets beyond the 12 month initial commitment period, the revenue flows in monthly. What makes Q1 and Q4 difficult in terms of analyzing the per caps is that it's time based, right? It's recognized monthly as opposed to our season pass base, which is recognized in an activity sense or business per pass.
So while we have the headwind in Q1, Selim, that we mentioned regarding the 13 plus, it really is just a function of a pass divided by 12. So as we sell more 2024 season passes that of course replaces the revenue from 13 plus, but that revenue goes into deferred in the 1st part of this year and doesn't get recognized until the parks actually open. So there's a timing difference between those 2. But we do appreciate 13 plus revenue. The guests love the monthly payment option.
They are most loyal guests. And we appreciate the cash flow in the slower months. So the 6 plus that Salim launched last year, that will start rolling off being in the 12 month commitment period and will actually roll into 13 plus in the second half of the year, which will help rebuild that base.
Speaker 6
So from a cadence perspective, it seems like 1Q is obviously the toughest comparison. You talked about the $14,000,000 headwind. So your per caps, especially on the attendance side, will probably be down in 1Q. And then from there, it kind of eases and grows through the year. Am I kind of thinking about it the right way?
Speaker 3
Yes, you have it exactly.
Speaker 6
Okay. And then Salim, look a bigger picture question, I'm not sure what you'll say here, but, look, this is a business that was supposed to do whatever EBITDA level you want to throw out there that you guys have talked about before, but a number that is much higher than where your run rating today. So look, I guess the simple question is, is your premiumization strategy finally all comes together, attendance normalizes. What level of and you don't have to give an exact number, but what level of EBITDA do you eventually see Six Flags getting to?
Speaker 2
Excellent question. I think this has been most probably I'm going to do a mea culpa here because I underestimated the cost and the complexity of the transformation. We had to change a lot of things. We had to change the culture from attendance to yield, from a corporate centralization to party centralization, some several layers of management to serialize all, not only. We had to most probably change our demographic a little bit and increase the presence of families in our parks.
In addition, I have to tell you that was surprising to me. It was how much old and calcified systems that we had in our computer system, ERP system that were CRM system, POS system that were hard to integrate and evolve. We had no choice. To be successful, we had to use modern cloud based tool that allow us to react and change with agility and execute our strategy to achieve what literally in 2024 and 2025, what I call achieve above average outcomes at below average cost. And the way I look at that is, if you remember, I had spoken about it last year, early last year, I started figuring out that the original projection of 4 of what we call $710,000,000 was not achievable given it was not achievable by end of 2024.
So I went back and I said I needed 2 more years. If you remember, I have said I would like to start looking at 2025 and 2026, start achieving those numbers. And that's what I'm feeling comfortable about.
Speaker 6
Okay, great. That's very good color. Thank you guys so much.
Speaker 0
The next question comes from Thomas Yih from Morgan Stanley. Please go ahead.
Speaker 7
Thanks so much. I wanted to ask about the past sales pacing into January. Gary, you mentioned some timing impact related to 4Q, keeping it flat. Is the January number relatively clean? So now we're on an apples to apples basis and we're seeing more unit growth even on higher blended pricing.
Is that a fair characterization? Yes. I will
Speaker 3
simply say that our 2024 season passes, Thomas, are up double digits over the same period prior year.
Speaker 1
Okay. That's helpful.
Speaker 3
Through the end of January, yes.
Speaker 7
Specific to 24 pass sales relative to the 20 3 1?
Speaker 3
Yes, we just we use it holistically. We use the period holistically, Thomas.
Speaker 7
Okay, understood. Yes, and then apologies in advance for torturing you more on the 13 plus membership revenue dynamic. But I guess excluding that, you highlighted the underlying 4% is maybe the right way to think about the trend line. Is that expectation for that as you see it now because of the pricing stabilizing more and your strategy kind of lining out a little bit more that that's a fair outlook in terms of an expectation on the core?
Speaker 3
Yes. I think that's fair. It's early in the year to make a long term prediction. But based on what initiatives we laid out on our commentary and Salim has talked about, we feel that's a reasonable expectation of per capita.
Speaker 7
Okay, helpful. And then just last one for me. On weather, I know you mentioned some headwinds. Obviously, there were clear headwinds through the year, but nothing very specific to 4Q. Was weather net bad guy in the quarter just reported and maybe any commentary on the weather conditions that you were seeing in February January that would be helpful?
Speaker 3
Yes. Thanks for that question. And yes, weather impacted us in 2 ways. If the we mentioned 8 weekends of continuous rain or threat of rain post Labor Day weekend. And of course, Fright Fest 80% of our EBITDA pretty much comes out of October.
And from the Mid Atlantic all the way to Montreal, all of our parks were under the threat of rain or it actually did rain for 7 out of those 8 days. We calculate we lost about 150 1,000,000 of attendance at those areas or about $10,000,000 of revenue in Q4. So in one sense, I'm proud of the efforts that Parks and our team did to generate the $98,000,000 because we had the weather headwind of $10,000,000 of revenue and we had the $13,000,000 plus of $12,000,000 So we went into it $22,000,000 down in terms of revenue and ended up $13,000,000 up. So all in all, a good performance and that is the strength of Fright Fest at our other locations. So when we added the IP haunted houses this year and increased investment, the attendance lift and the revenue lift above prior year came from the Fright Fest, Boo Fest and Oktoberfest that we laid out at the other parks that were not so much affected by weather.
So that gives us just real excitement about the same time period in 2024 and Selim is increasing the investment in Fright Fest as he mentioned and we're adding more IP, more excitement, more haunted houses. It's going to
Speaker 4
be a blast.
Speaker 7
Great. That's helpful context. Thank you.
Speaker 0
The next question comes from Ian Zaffino from Oppenheimer. Please go ahead.
Speaker 8
Hi, great.
Speaker 7
Just wanted to ask
Speaker 8
a question on season pass is so far. Can you maybe help us understand what maybe the what each cohort is doing as far as you're getting more diamond sales? Buckets between the highest tier passes, lowest tier passes and maybe what you're kind of seeing as far as demand for each of them? Thanks.
Speaker 3
Yes. Thanks, Ian, and good morning. We have a promotion going on right now in the parks that are preparing to open up, which is we are offering the diamond level benefits if you purchase at the platinum base. And so at this stage of our promotional period, we have a healthy increase in the higher tier passes.
Speaker 8
Okay. So take up has been much better year over year now.
Speaker 3
Yes.
Speaker 8
And then as far as the operating calendar, any intentions to curtail the operating calendar? I know in the past in the previous management team that was sort of a push to do that and then there was maybe an expansion of the calendar after that. How are you guys now thinking about the operating calendar and maybe the opportunity to kind of curtail the less profitable or the money losing days? Thanks. The operating calendar
Speaker 3
will be very much the same as it was in 2023. The thing that will be different is the events that we are hosting at our respective parks during the days they are open. So on days where we did an event and it was marginally attended in the prior year, we will still be open, but we won't invest that much in the event on those days.
Speaker 8
Okay. Thank you very much.
Speaker 0
Our next question comes from Robert Alland from KeyBanc Capital. Please go ahead.
Speaker 5
Hi. Thank you for taking my questions. Maybe a quick follow-up on kind of the year to date trends you're seeing. I know we had some weather in February, but I kind of wanted to ask it in the context of maybe any commentary you can give us on what you're seeing in Mexico. I know that has an outsized impact in the Q1 and can sometimes skew what we're seeing domestically.
Speaker 3
Mexico continues to do very well and is certainly helpful to the Q1. In the U. S, we are actually down 4 operating days due to weather versus the same period. So let's go to the we call it the 1st 8 weeks ended February 25. We lost 4 operating days against a first quarter last year that had bad weather.
So weather is still a factor, but it's really early. It's the smallest part of our season At this stage, we're not concerned.
Speaker 5
Thank you. And maybe I can ask one about the Saudi Arabia project. Any updates you can give there under the deal filings indicate opening in spring 2025. Is there anything we should be thinking about from a modeling perspective and how that might flow through?
Speaker 2
First of all, we're very excited about the Saudi project. It's going to be the largest, most immersive park in the world. In fact, it will be the world's largest park. I have visited there. I've been there.
We're working our partners and our contractors and our team are working around the clock. In fact, I was there And we're excited. I think what is exciting about it is, in this case, it is not only we're licensing the park, but we are also going to manage and operate the park. And we are finalizing the agreement with Qiddiya, who is our Saudi partner. And I think everything is moving forward to be to add value there.
It will be our first time where we operate a park we don't own. So we're very excited about that.
Speaker 5
Thank you.
Speaker 0
Our next question comes from Chris Woronka from Deutsche Bank. Please go ahead.
Speaker 5
Hey, good morning guys. Thanks for taking all the questions so far. Wanted to kind of this is really kind of a customer mix or behavior question. Is it possible for you guys to kind of bucket out maybe broadly what happened to a customer as you go back and look at 'twenty three versus 'twenty two, if somebody was on an unlimited food meal pass that didn't reoccur last year, did that person come back to the park? And then kind of secondarily, some of the pass programs that expired that you replaced with new plans.
Did those did you see those customers come back to you in a different way or did they drop out or did they move up a plan or moved down a plan? Any way to just think about that at a high level? Thanks.
Speaker 2
We do not divulge this data. We have not divulged it in the past, but I can give you some flavor about it. And I think the flavor has been we've learned something, which is interesting for us. We've learned some good stuff that happened. So some of our members that were some of the people want to go in membership ended up in season passes.
So our season pass is up. Our single day ticket has been up too in 2023. We feel good about it. I think what has been interesting for us, what we've learned and I don't know if it's in the industry wide or it's only for us, When it rains on a Saturday, you don't expect those people to come on a Sunday, meaning, meaning if you miss that Saturday and you say, okay, it's beautiful Sunday, people have made plans. So we tend to lose those people when weather is bad on a Saturday.
So my expectation would be we'll make it up on the following day. If you were not coming on a Sunday, you come in the following day and they did not show up. So for us, we are we have been impacted by water significantly and it's something a criteria that I did not anticipate in that business when I became CEO. It was not as big of a factor than it is today. So going forward in 2024, we are working on a program and that affects mostly single day ticket, let's put it this way, which is a very healthy, profitable, high margin part of our business.
And we are working on a program that we're launching in most probably soon that I will be able to talk about that most probably guarantees for a single day ticket against weather. So we are putting the element of it and it's very exciting. It will be a unique it will never have been done in the industry, will be the first to most probably launch something for our single day ticket to take away the impact of weather for those guests.
Speaker 5
Okay, very helpful. Thanks, Selim.
Speaker 0
This concludes our question and answer session. I would like to turn the conference back over to Selim Basol for any closing remarks.
Speaker 2
I want to say first thank you on behalf of the 6 Flight team. We appreciate your continued support. Now I want to take a few minutes to add a little bit to recap a little bit some of what we talked about.
Speaker 5
I'm sure there are a
Speaker 2
lot of things going on. And I want to take a minute to talk about our accomplishments in the last 2 years, but most of probably where we're going in 2024. And I was preparing a few handwritten notes to wrap up our conversation because a lot of things happening, exciting things happening in 2024 for us. So if I look at our accomplishments in the past 2 years, we did 3 things that I'm very proud of. 1, we basically changed our culture from output to outcome.
And that means we created a culture of ownership, accountability and performance. And I'm very proud to say that our team responded well to this, both at the parks and at corporate. However, as I mentioned earlier, I underestimated the cost and complexity of the transformation. We had to change the culture from attendance to yield, from centralization to decentralization, from many layers of management. The company was bloated, honestly, because we expected maybe the result of pandemic to last longer and people stopped it.
And literally, we realized very quickly in 2022 that the result of 2021 were different. Then we tried to create the beautification and premiumization trying to attract multi generation family in our parks. We also the second element is we know that to create a seamless customer experience, we needed to go after the choking points. And that needed innovation. It needed technology.
We had no choice. In that, we implemented a lot of things. We implemented what I call guest facing technology, where we knew that if I gave you convenience and value, you will pay me for that convenience and value. That's the result of our speedy gates that has been very promising so far, where it's a toll gate where you come in, you don't have to go through a manned toll booth and you go in seamlessly in our parks. I gave you an ability to come to our restaurant now and start using self serving kiosks where you can customize to nth degree your burger order, even your pizza, your chicken tenders and people are paying us for us.
So we understand that indulgence comes only if you're willing to create convenience, ease of doing business and value. And in that case, we are focused on those three things convenience, value and ease of doing business. And that's why our pickup will continue growing in 2024, 2025 and 2026. We also in technology we had to attack labor. And to that extent, we are automating many of our functions and we are lucky that AI and our IT team has embraced it very strongly.
We are now using AI in many parts of our business from our customer service to our personalizing our guest experiences to improving operational efficiencies 2, basically using AI based safety measures. That's in our water parts affecting our lifeguards who are very it's a very tough job, tedious and very expensive to train and hire and get. The 3rd element that I'm very proud about is the change we've done and I have to say, I want to say thank you for our investors who stood by us. Thank you for our analysts. Thank you for our Board that allowed me to focus on profitability and not revenue as our top priority.
We have changed our business model, reflecting a strategic shift in the market condition and our challenges. We are totally focused on increasing our EBITDA, our margins and we are only doing it at the fact that we're providing better value for our guests. In that case, we faced tremendous inflation since I took over the job. Right after I took over the job, the Ukraine war started. We had not only inflation, we had supply chain constraints.
2nd, we had weather, climate change that occurred very roughly for us. Those are not excuses. We are just saying when we're doing a major transformation and you compounded on top of it with weather and inflation, it was tough. And now we're putting this behind us. The transformation is yielding great, great benefits.
We are very pleased about it. We're almost at the end of it. We have another more most probably a year to complete it and I'm very confident that by end of second half of twenty twenty four and 2025 and twenty twenty six we are back on track to what we promised our investors to be. Very exciting times and I want to thank all of you for making us better. I know you've asked a lot of good questions, tough questions, and we've gone through some great wins and some mistakes we've made.
But we've learned the missteps have made us better and we are a great company going forward. Thank you.