FUN Q2 2025: Guides EBITDA $860M–$910M Amid Weather Woes
- Rebounding Attendance & Season Pass Growth: Management highlighted a strong recovery with July attendance registering improvements (up 1% to 4% over comparable periods) and season pass sales increasing by 700,000 units—evidence of strong consumer pent‐up demand overcoming earlier weather‐related headwinds.
- Effective Cost Management Driving Margin Improvement: Leaders emphasized accelerated cost-saving initiatives—such as pulling forward advertising and streamlining operations—to deliver permanent cost savings, which should bolster profitability as weather normalizes and operating volumes recover.
- Enhanced Capital Programs & Dynamic Pricing Strategy: The launch of new attractions (like the debut of dual-launch coasters at key parks) and the ability to flexibly adjust prices during high-demand periods signal potential for increased in-park spending and improved revenue performance going forward.
- Weather-Related Disruptions: Extreme weather led to significant attendance reductions during key weeks—up to a 12% decline in attendance over the last six weeks of Q2—resulting in lost high‐margin visitors and putting downward pressure on revenue and margins.
- Weaker Season Pass Performance: The company experienced a notable reduction in its season pass base, evidenced by a loss of over 300,000 passes in May and June, which undermines longer-term recurring revenue and volume-driven profitability.
- Increased Operational Costs Due to Pull-Forward Spending: The strategic pull-forward of approximately $25 million in advertising and maintenance spending in Q2, without immediate offsetting demand, raises concerns about margin compression and cost discipline for the full year.
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Adjusted EBITDA ($USD Millions) | FY 2025 | $1,080 million to $1,120 million | $860 million to $910 million | lowered |
Attendance | FY 2025 | no prior guidance | flat compared to the prior year; loss of 500,000 visits | no prior guidance |
In-Park Per Capita Spending | FY 2025 | no prior guidance | down approximately 3% | no prior guidance |
Operating Costs and Expenses ($USD Millions) | FY 2025 | no prior guidance | $90 million reduction in second-half; full-year down 3% | no prior guidance |
Merger-Related Cost Synergies ($USD Millions) | FY 2025 | no prior guidance | approximately $120 million on an annualized basis | no prior guidance |
-
Guidance Revision
Q: Why drop EBITDA guidance this year?
A: Management revised full‐year adjusted EBITDA guidance to $860M–$910M due to early weather disruptions and lower season pass sales impacting attendance, though recent July trends have shown improvement. -
Divestitures & Leverage
Q: What progress on asset sales?
A: They are actively pursuing noncore asset sales—such as land near Kings Dominion and Six Flags America—to help deleverage from a current net debt of 6.2× EBITDA and streamline their portfolio. -
Season Pass Dynamics
Q: How are season passes performing?
A: A marked decline in season pass renewals resulted in high‐margin visit losses; however, early momentum in the new 2026 season pass program and product enhancements is beginning to reverse this trend. -
Operating Expenses & Margins
Q: Why only 3% cost reduction despite closures?
A: Despite weather‐induced park closures, extended fall operations and adjustments in cost items like seasonal labor and advertising keep the target at about 3% lower operating expenses compared to last year. -
Cost Management & Pull-Forwards
Q: What’s the impact of pull-forward spending?
A: The strategic pull-forward of approximately $25M in advertising and maintenance increased near-term expenses, but it is offset by expected second-half permanent cost savings of around $90M. -
Pricing Strategy
Q: Will improved demand allow price hikes?
A: As attendance recovers—especially at marquee parks—the focus is on selectively increasing pricing during high-demand periods (e.g., Halloween) without alienating more price-sensitive guests. -
In-Park Spend & Mix
Q: Why is per capita spend falling?
A: Lower per capita spending is mainly due to a mix effect from a higher proportion of season pass holders receiving promotions at lower prices, although in-park ancillary revenue remains a focus for improvement. -
Attendance Guidance Assumptions
Q: What weather assumptions underlie attendance guidance?
A: The guidance for flat second-half attendance compares this year’s performance to last year’s with generally normalized weather conditions and counts on additional operating days to cushion any variability. -
Capital Expenditures
Q: What are the upcoming CapEx plans?
A: The 2025 CapEx budget remains in the range of $475M–$500M with a planned spend of approximately $400M for 2026 to support new attractions and food and beverage enhancements. -
2026 Season Pass Pricing
Q: Is 2026 pass pricing set lower?
A: For the 2026 cycle, passes launch at lower fall pricing compared to peak summer rates, with emphasis on value-added benefits rather than just a price cut, varying by park. -
Ancillary Revenue on Passes
Q: Can ancillary revenue be boosted via passes?
A: Enhancements in the ecommerce platform and mobile app will simplify the path for guests to add on complementary purchases like dining and beverages, aiming to improve renewals and overall ancillary spend. -
Legacy Parks Reinvestment
Q: How will legacy parks improve margins?
A: Both legacy Six Flags and Cedar Fair parks are receiving targeted investments in amenities and food and beverage improvements to bolster guest satisfaction and support margin recovery, despite varied performance across properties. -
Analyst Forecast Revisions
Q: Why did long-term targets change?
A: The long-term guidance was reassessed due to transient disruptions—including adverse weather and a softer season pass base earlier in 2025—without altering the underlying profit potential of the portfolio. -
Pull-Forward Opportunity Costs
Q: What are the trade-offs of pull-forward spending?
A: While pull-forward investments temporarily depress quarterly margins, they are intended to boost season pass sales and set a stronger foundation for early 2026, with the benefits outweighing the short-term cost impact. -
Divestiture Timing & Scale
Q: When will noncore asset sales complete?
A: Though market conditions govern precise timing, the process for key noncore assets is underway and expected to accelerate deleveraging and sharpen the portfolio’s focus in the near term.
Research analysts covering Six Flags Entertainment Corporation/NEW.