Six Flags Entertainment Corporation/NEW Q1 FY2025 Earnings Call

Ladies and gentlemen, thank you for being here. My name is Abby, and I will be your conference operator today. I would like to welcome everyone to the Six Flags Entertainment Corporation First Quarter 2025 Earnings Call. I will now turn the conference over to Six Flags Management. Please go ahead.

Thanks, Abby, and good morning, everyone. My name is Michael Russell, Corporate Director of Investor Relations for Six Flags. Welcome to today's earnings call to review our 2025 first quarter financial results for Six Flags Entertainment Corporation. Earlier this morning, we distributed via wire service our earnings press release, a copy of which is also available under the News tab of our Investor Relations website at investors.sixflags.com. Before we begin, I need to remind you that comments made during this call will include forward-looking statements within the meaning of the federal securities laws. These statements may involve risks and uncertainties that could cause actual results to differ from those described in such statements. For a more detailed discussion of these risks, you may refer to the company's filings with the SEC. In compliance with the SEC's Regulation FD, this webcast is being made available to the media and general public as well as analysts and investors. Because the webcast is open to all constituents and prior notification has been widely and unselectively disseminated, all content on this call will be considered fully disclosed. On the call with me this morning are Six Flags Chief Executive Officer, Richard Zimmerman, and Chief Financial Officer, Brian Witherow. With that, I'll turn the call over to Richard.

Thank you, Michael. Good morning, everyone. Thanks for joining us today. I would like to start by sharing my perspective on where we are as we ramp up operations at all 42 of our parks in our fourth full year as the new Six Flags. We are making meaningful progress in tapping the full potential of the merger. We are seeing stronger market response to our exciting new slate of rides and attractions, improving guest satisfaction ratings, and executing on our plans to deliver significant cost savings. I'm very pleased with the pace of the integration work, and I want to thank our teams for their tireless efforts on all fronts over the past several months. As we noted in our earnings release this morning, our results showed the operating loss that is typical for a seasonal business that has very few parks in operation during the first quarter of the calendar year. While the operating loss in the quarter was greater than the combined loss of the legacy companies in 2024, it was only slightly greater than what we expected in our operating plan and was consistent with the level of off-season investment necessary to prepare our parks to open. Despite the weather and other macro-level challenges we have faced to begin the year, we remain confident in our outlook for the business and especially in our 2025 operating plan. Our plan was built around a strategy to minimize lower-value operating days, particularly in the first and fourth quarters, maximize the number of operating days in the second and third quarters that make upfront investments that will enhance the guest experience and drive demand and revenue generation as we head towards the heart of the 2025 operating season. Our confidence is backed by the solid results we generated in April despite recent weather issues. The positive momentum we are seeing in long lead indicators, such as season pass sales and school and group bookings, and the excitement being generated in our markets by the compelling slate of new rides and attractions we are introducing this year. While overall April results fell short of expectations due to the recent bout of cold and wet weather, we are nonetheless encouraged with the improving trends we saw, particularly on good weather weekends earlier in the month of April. We are also pleased with the April trends in season pass sales, positive momentum that is encouraging as we head into the peak sales months of May and June, which combined are expected to represent close to 40% of the full year sales cycle. And as more parks began to reopen last week, bookings at our resort properties trended higher, up more than 10% versus the comparable week last year, another positive indicator consumers remain engaged as we get closer to daily operations in the peak summer season. Most importantly, we saw no detectable change in guest behaviors in April despite broader market concerns when the weather was good; we were encouraged by the strong demand we saw. Our guests continue to demonstrate a willingness to spend on goods and experiences they value, reinforcing our view that high-quality, close-to-home entertainment options like ours are highly resilient, even in a choppy macroeconomic environment. We believe this positions us well to achieve our 2025 performance goals. While the economic landscape remains unclear, we continue to focus on what we can control, executing our merger integration plan, optimizing our cost structure, and enhancing the guest experience to drive demand. We remain firmly on track to achieve the $120 million in merger cost synergies by the end of the year, six months earlier than originally contemplated at the announcement of the merger. As Brian will outline in a moment and in keeping with our operating plan, we now expect current year operating costs and expenses to be more than 3% lower than combined 2024 actuals for both legacy companies. As part of our cost reduction plan, we are engaged in a corporate restructuring process designed to flatten our organizational structure, streamline decision-making, and drive cost efficiencies. As an example, earlier this month, we eliminated multiple senior executive leadership positions at the corporate level and consolidated functional ownership under a few key leads. These changes and others we have underway will create new opportunities for the next generation of leadership within the company, support the cultivation of talent across the organization, and meaningfully reduce costs. Once this initiative is completed, we will have reduced our full-time headcount by more than 10%. Our system-wide reorg effort along with additional cost-saving initiatives we've identified post-merger are designed to reset the company's cost base and deliver an incremental $60 million of cost savings above and beyond our original synergy target by the end of 2026. Before I turn the call over to Brian to review our results in more detail, let me take a moment to address the evolving tariff situation. While recent developments in U.S. trade policy have created marketplace uncertainties, based upon the tariffs as currently outlined, we believe our exposure is relatively limited. The fact that labor represents more than 50% of our operating cost structure inherently minimizes the potential impact of any new tariffs. On the non-labor portion of our cost structure, we believe we are well-positioned to substantially absorb or offset any impact without significantly affecting our cost structure or margin outlook. Naturally, our teams are already actively working with suppliers and sourcing partners pursuing mitigation strategies to offset these impacts through material substitutions, alternative sourcing and, where appropriate, pricing adjustments to protect our margins. We will continue to update the market as additional clarity becomes available. With that, I'll turn the call over to Brian for a review of our financials. After his remarks, I'll return with some closing thoughts.

Thank you, Richard, and good morning. I'll begin by providing some additional color on our first quarter and April results before providing an update on select balance sheet items. First, it's important to remember that the first quarter is not indicative of full year performance. We would normally expect the quarter to represent roughly 7% of full year attendance and revenues, and we incurred considerable costs during the first few months of the year related to preparing our parks to open. A small number of operating days and the higher fixed nature of our early-season cost structure limits our upside and makes even small variances in performance look more meaningful than what it really reflects in terms of full year performance. Based on actual first quarter results, this year's first quarter performance tracks closer to approximately 5.5% of full year attendance and closer to approximately 6% of full year revenues based on our current full year outlook. As we noted in our earnings release this morning, first quarter results were impacted by operating calendar shifts, including strategic changes that were made to key park events such as the Boysenberry Festival at Knott's Berry Farm, which shifted to the second quarter this year. While coming into the year, we had planned to have approximately five fewer combined operating days in the first quarter compared to last year, we ended the quarter with 14 fewer days, the result of managing our park operating calendars tightly in response to inclement weather and other cost savings objectives. The fewer operating days, combined with the shift of the Knott's Berry Farm Boysenberry Festival to the second quarter, were the biggest drivers of first quarter year-over-year attendance and revenue declines. Timing variances that we expect to reverse in the second and third quarters as we expand our operating calendars, particularly at our parks where the opportunities for attendance growth are the greatest. Looking at April demand trends, which even out some of the early season calendar shifts, attendance over the past five weeks was up a little more than 1% compared to the prior year. This was despite the Midwest being plagued by heavy rain and cooler than normal temperatures over the last two weeks of the month. A strong indication that demand for our parks remains strong when not disrupted by weather. We estimate the impact of weather on April attendance was approximately 175,000 visits. Normalizing for the weather difference, April attendance would have been up approximately 8% on a year-over-year basis. Meanwhile, guest spending trends during the first quarter were also affected by the operating calendar changes. This led to a mix shift to lower-priced tickets in the absence of higher demand events like the Boysenberry Festival, which also shifted higher in-park spending visits into the second quarter. As expected, April per capita trends improved from the first quarter, consistent with the shift in our operating calendars and higher attendance levels. Based on trends to date and the strategic initiatives we have planned for the season, we expect for capital spending to continue to increase as we get deeper into the season and attendance levels move higher and length of guest stays increase. Coming out of the first quarter, we were pleased to see momentum in the sale of season passes and membership strengthen. The recent robust performance despite the weather disruptions at the end of April narrowed the sales gap to the prior year to approximately 2% in terms of units sold and 3% in terms of total sales. Shortfalls that our team is focused on closing as we head into the critical May-June sales window. Based on our current program strategies, we expect the average price of a season pass at our legacy Cedar Fair parks to be up 3% to 4%, and over the balance of the sales cycle, while the average price at our legacy Six Flags parks is projected to be essentially flat to the prior year, the result of changes to the product structure and a mix shift in pass types sold. While disappointed to see attendance over the last two weeks of April impacted by weather after building such strong momentum earlier in the month, it's important to note that April only represents roughly 20% of expected second quarter attendance and revenues, meaning there is ample time over the balance of the quarter to build upon the positive demand trends we generated earlier in the month. Based on current park operating calendars, we are expecting to pick up an incremental 37 operating days in May and June, bringing our projected total second quarter operating days to 2,028, up 36 days from the second quarter last year. This should bode well in expanding our opportunities to drive higher levels of attendance and revenues in the quarter. Shifting to the cost side of the business for a moment. From a cost perspective, our teams delivered results largely in line with expectations during the first quarter. While there were some anticipated cost timing differences that should reverse over the next two quarters, we expect where we kept controllable variable costs in check without disrupting the guest experience. In the quarter, we incurred $15 million of non-recurring merger-related integration costs and another $5 million of adjusted EBITDA add-backs for costs such as severance and commercial liability settlements. First quarter operating expenses were largely consistent with expectations. The somewhat higher level of spending was driven by two primary factors. First, a pull-forward of pre-opening maintenance work to ensure our parks were prepared and attractions were licensed and ready to open on day one. And second, an increase in early-season advertising, a strategic decision to support season pass sales and drive higher demand. These decisions resulted in an estimated expense timing difference in the quarter of approximately $10 million, which we would expect to reverse over the balance of the year. While remaining nimble in our approach, we are committed to making decisions like these that set us up for a much stronger performance as demand builds into the key second and third quarters, which by themselves are expected to represent 95% or more of full year adjusted EBITDA. At the same time, as Richard noted, we expect the steps we are taking to optimize our cost structure will reduce full year operating costs and expenses by more than 3% this year, inclusive of our second year of merger-related synergies. This aggressive cost savings effort is intended to provide some downside protection against any potential weakening in consumer demand this summer. The targeted cost reductions do not contemplate any potential outsized impacts related to tariffs, which we expect to be minimal based on the available information at this time. As we noted in this morning's earnings release, we are maintaining our full year 2025 adjusted EBITDA guidance of $1.08 billion to $1.12 billion. Our confidence in our ability to deliver another strong performance this year is underscored by the resilience of our business model as demonstrated in the past by the rapid recovery from macro events, including the Great Recession of '08, '09 and the COVID disruption. As a close-to-home, less expensive and less complicated choice for entertainment, our parks have historically performed well throughout various cycles as families always find a way to make time for fun. We believe those same staycation attributes are even more relevant today and combined with an outstanding 2025 capital program, position us well as we head into the peak summer season. Now turning to the company's balance sheet for a moment. We ended the quarter with ample liquidity, including $62 million of cash on hand and $179 million of available capacity under our revolving credit facility. Of the company's $5.3 billion of gross debt at the end of the first quarter, which included $626 million in borrowings on our revolving credit facility, approximately 70% is fixed through long-term notes. And outside of $200 million in senior notes that mature in July of this year, we have no significant maturities before 2027. We are monitoring the credit markets and evaluating options to address our July notes including the possibility of using projected balance sheet liquidity to fund the payoff. Regarding our CapEx programs, during the first quarter, we spent $140 million on capital expenditures, which is consistent with our previously disclosed expectation to spend $475 million to $500 million for the full year in 2025. As we have previously said, our plan is to invest a similar amount in 2026. Beyond our CapEx plans, we are in a strong position to use excess free cash flow to pay down debt as quickly and efficiently as possible. With that, I'd like to turn the call back over to Richard.

Thanks, Brian. As we look towards the rest of the year, I'd like to take a few minutes to expand on our strategic road map and how we're positioning Six Flags to deliver sustainable growth in 2025 and beyond. First and foremost, as I mentioned earlier, we have made significant progress on our merger integration and synergy realization plans. From a systems perspective, our IT integration is on track. Guest data across all parks will be migrated to our in-house ticketing platform by year-end, providing a seamless experience for all park pass holders and enabling a more unified approach to pricing, promotion, and CRM. Integration of the full technology stack remains a multi-year initiative, although we're pleased with the groundwork that has already been laid to advance that effort. Our ongoing portfolio optimization efforts are another key to our strategy to strengthen the business and realize the full potential of the merger. I'm pleased to say that these efforts are well underway as evidenced by the recent announcement of our plans to close our Maryland parks after the 2025 season. The decision to close Six Flags America and Hurricane Harbor at the end of this season was a difficult but necessary one. A decision that aligns with our broader priorities to simplify our operations, reduce portfolio risk, and focus resources on high-margin, high-growth parks. Proceeds from the divestiture of non-core assets such as this will support debt reduction and the transactions are expected to be cash flow accretive, reduce our leverage ratio, and modestly improve EBITDA margins. It's premature to provide a specific timetable for the sale process but it's reasonable to say it could take 12 to 18 months or more to complete. Along with other asset sale efforts, including excess land adjacent to King's Dominion, near Richmond, Virginia, we will work diligently with our real estate advisers to execute these transactions as efficiently as possible while maximizing value. As it relates to future divestiture of assets, we don't have any plans to close any additional parks at this time. We will continue to evaluate all options and consider other potential transactions to enhance shareholder value. In the meantime, we are excited at the prospect of operating all 42 of our parks for the 2025 season. We have also made great progress building out our capital plans for the next few years, with our capital strategy remaining disciplined and tightly aligned with our growth priorities. As Brian mentioned earlier, we still expect to invest approximately $1 billion in capital projects for the 2025 and 2026 seasons. Should macroeconomic conditions meaningfully change, we will have several levers at our disposal to reduce our use of cash, most meaningfully our ability to quickly adjust the scope of our CapEx program. Approximately 30% of our annual CapEx budget is allocated to infrastructure projects that are more discretionary, have shorter lead times, and can often be delayed until later periods. Along with our ability to adjust our operating cost structure up and down to match demand levels, this affords us the flexibility to rationalize our use of cash should market conditions change materially from plan. We will continue to be disciplined and nimble in deploying capital. Despite broader concerns around the economy, we remain focused on executing our strategic road map, driving top-line growth, capturing synergies, and resetting our cost structure, optimizing our portfolio of assets, and improving capital efficiency, which positions Six Flags well to deliver quality earnings growth, substantial free cash flow growth, and enhance value for our shareholders. We are excited to share more details of our long-term strategy at our upcoming Investor Day, where we will outline our growth objectives through 2028 and the pathway to a 40% margin and a clear line of sight for unlocking more shareholder value. In closing, I want to thank our associates for their commitment to delivering an exceptional guest experience to the investment community. We appreciate your continued support and confidence and look forward to keeping you updated on our progress as we pursue our long-range targets. Abby, that concludes our opening remarks. Please open the line for questions.

Our first question comes from James Hardiman with Citigroup.

This is Sean Wagner on for James Hardiman. I believe the 36 additional operating days works out to about 2% growth in operating days in the second quarter. How do you expect the tender and sales growth in that quarter to compare to that number?

I'll let Brian address the numbers, but I want to emphasize what we've mentioned in our guidance. From the start, we've believed that the second and third quarters present significant opportunities for the combined Park portfolio. Our focus is on those higher-margin days, which we anticipate will be highly beneficial, and we're seeing very strong demand as we approach the second and third quarters.

Yes, Sean, we don't have specific quarterly guidance. I'm going to couch my comments carefully here. As Richard mentioned, the focus coming into 2025 was about optimizing the operating calendar and taking out lower value days in the first and fourth quarter, or maybe you characterize a slightly different in, say, days that have a lower ceiling and maybe a lower floor at the same time because of the variability of weather. Adding back days in the second and third quarter will be higher value days that we believe represent the ability for higher margin days, but also higher attendance days.

Okay. And I guess is there any quantification you can give us on the Easter and/or Boysenberry Festival shifts? And now that Easter is behind us and most of the Boysenberry Festivals have occurred. Do you expect to make all of that up in Q2? Or did poor weather kind of hold any of that back?

Weather has certainly been a factor in April, particularly in the Midwest, which was the most affected area. We experienced a loss of around 175,000 visits during the last two weeks of April. The Boysenberry event is still ongoing, so I don’t want to provide an inaccurate figure regarding it. We will be in a better position to give you a clear update once the Boysenberry event has concluded.

Our next question comes from the line of Steve Wieczynski with Stifel.

So Brian, I want to clarify something. I believe you mentioned in your prepared remarks that you're expecting first quarter attendance to be around 5.5% for the full year, and first quarter revenues to be about 6% for the full year. This seems different from what your release stated, which indicated approximately 7% for both. I assume this is based more on historical data. I just want to confirm that I understood you correctly, as there are quite a few investors who seem a bit concerned about the information in the release.

Yes, Steve. The 7% would be more of a historical or what we would normally expect coming into a year given some of the headwinds around timing of operating calendars and other factors. The pace that we're on right now, you heard correctly. On attendance, we're currently tracking where first quarter would represent 5.5% of full year attendance based on our outlook over the balance of the year and revenues closer to 6%. The key thing to take away is that the first quarter is not a material quarter by any stretch. It's a very important quarter for setting up the stage for getting the parks ready to open. In terms of the trend lines, as we said, it's somewhat of an inconsequential or not indicative quarter when it comes to what full year potential looks like.

Okay. Got you. And then second question, probably for you, Richard, but I want to ask about the decision to close the Six Flags Park in Maryland. But look, I guess the thesis is essentially shut the park down that land there. I mean I'm from Maryland, that land has to be worth a decent amount of money, and then you'll be able to keep the majority of those folks essentially at your Kings Dominion Park, which is relatively close in the grand scheme of things. So I guess the question is, as we kind of look across your portfolio, I know you said you're not actively looking to shut other assets down. But to me, it would seem like there are other opportunities to do the same type of thing across the portfolio. And so while you're maybe not shopping something today, is that the right way to think about it?

I appreciate the question, Steve. Reflecting on the specific land parcel, it reminds me of our transaction at the legacy Cedar from 2022 involving the land under our Santa Clara park. There are instances where we encounter unique opportunities, akin to the land in Maryland beneath our D.C. Park and the additional land at Richmond, both of which have tremendous potential for value creation that exceeds our expected results moving forward. As we examine the chance to redeploy capital, we aim to responsibly manage the investments in our company. It is our responsibility to identify these opportunities and act swiftly. We intend to proceed as quickly as possible to maximize value. As I mentioned in my prepared remarks, we have parks throughout North America, providing numerous chances for visitors to purchase tickets in various regions, including D.C., Baltimore, and down through Raleigh and Richmond. Regarding the broader portfolio, we will continue to assess potential opportunities. Currently, we don’t see much chance related to the underlying land across the rest of the portfolio, but we remain open to maximizing value as we review some of our smaller locations.

And our next question comes from the line of Arpine Kocharyan with UBS.

So Brian, Richard, I understand your points about the Easter shift and the transition from Q1 to Q2. However, April seems to be performing weaker than expected considering the Easter shift. While I recognize you mentioned weather impacts, I'm curious about what reassures you in maintaining the current guidance. It appears you haven't observed significant effects from the weakening consumer on your business. Are there any additional factors you're monitoring closely? The main question is, what early indicators are you seeing that support your decision to keep the guidance as is? I also have a brief follow-up.

We remain confident in our ability to meet our full-year targets. We monitor long lead indicators, and we've discussed season pass sales extensively today, along with the performance of our parks as they open. For instance, we opened Cedar Point last Saturday in less-than-ideal weather with temperatures around 47 degrees and strong winds, yet we welcomed nearly 18,000 visitors who were eager to enjoy the reopened top attractions, highlighting the tradition of our opening day. This kind of demand, especially in poor weather, reinforces our confidence. Regarding consumer health, we have seen positive results in our e-commerce channel this year. Since January 1, we’ve experienced a 1% increase in unit volume, with mid-single-digit growth in pricing across our offerings. This indicates that consumers recognize and are willing to engage with our value. Additionally, we are excited about our food and beverage strategy, which includes renovating 11 restaurants and implementing a crew serve model. This model enhances service capacity, increases menu variety, and raises the average transaction value. The results have been impressive, with per capita spending up year-over-year at all locations. The average transaction value has risen nearly 10%, and five locations have seen transaction counts increase by over 50%, with four doubling their transactions. It's not just about price; we are successfully encouraging customers to explore higher-quality menu options, driving revenue efficiently. Moreover, as we manage costs, we expect operating expenses to decrease by 3% or more this calendar year. Although we faced challenges in the first quarter, we are set to grow top-line revenue efficiently and reduce costs, which aligns with our strategic goals. All these factors give us strong confidence in achieving our operating plan for 2025 and building a successful future. We will provide more details on these topics during our Investor Day on May 20.

Looking forward to that. That's super helpful. Just a quick follow-up, Richard, if I may. In terms of your asset sales, is it possible at all to put in perspective kind of what your expectations are in terms of proceeds for the combined land sale and the Maryland sale? I guess I'm trying to understand what's the extent of deleveraging we could expect from those to the extent you can answer, understanding there could be some sensitivity around how much you can say. Sorry, I appreciate anything I could get.

I'll let Brian weigh in as well, but we'll have a lot more to say about our deleveraging target. We will discuss the proceeds from this or any other potential actions leading up to 2028 on May 20. We aim to unlock substantial proceeds, especially from land sales. Any additional approaches we consider will need to generate a significant impact, while also simplifying our business model. We want to ensure that the capital we reinvest in the business targets high-potential, high-revenue growth opportunity sites.

Yes, Arpine, we're not going to put a specific price on those two locations. But if you were to go out and look at a range of market price per acre, you can see a gross proceeds number that could easily get north of a couple of hundred million dollars.

And our next question comes from the line of Thomas Yeh with Morgan Stanley.

I wanted to ask about progress on unifying your season pass selling strategy. I think you've been implementing a more consistent pricing on the legacy Six Flags footprint than was historically used. So any more color you can provide on how you've seen behavior shift on the Six Flags side, maybe both in terms of the blended pricing to date and the pace of adoption you expect and how much do you think that contributed to the gains that you saw in the last like four or five-week period?

Listen, Thomas, it's Richard. What we saw over the last four or five-week period, indeed, was indicative of where we think we could go. We strongly believe in a consistent approach to the market. So as the market understands they can make their own decisions on value that we provide and see that the value gets greater. We think there's a tremendous opportunity in June and July, given the membership aspect of the Six Flags program, and we've got that's sort of the installment and some of the pieces. We really do need to get back to what I laid out in my prepared remarks, which is getting everybody on the same ticketing system. We harmonized the programs at a high level. We did not want to give up on this season, and we rolled out the All Park Passport, which lets you visit any of our parks in the portfolio. So there's a lot more work to do, but it's really going to be a lot easier, and we're going to be a lot more efficient and effective when everybody is on the same ticketing system when all the data is fed into our data warehouse, and the CRM folks that are on our team can go in and mine the value out of our guests and the relationship we have with them and focus on driving more visits and getting more out of every visit from those set and pass holders. Brian, anything you want to add?

Yes, Thomas, we anticipated that 2025 would be a bit challenging due to the efforts Richard mentioned regarding ticket and program harmonization as we reset the season pass and membership programs for both sides of our portfolio. With a later Easter and perhaps postponing some opening days further into the season, our timing will be behind where we ended last year. However, I'm optimistic about the sales trends, which are up mid-single digits in unit sales over the first five weeks of April. It's also crucial to recognize that there are various sales opportunities; the sale of 2025 passes in May and June is a significant part of the overall sales cycle. Soon, we will be gearing up for late summer sales of 2026 passes, and we expect to have a clearer understanding of the program by then. The ticketing platform harmonization will also be more advanced. Our teams are currently concentrated on the May and June period, but there is a lot of preparatory work being done for future launches, which presents multiple chances to effectively drive the season pass program.

Got it. That's helpful. And then maybe just a quick follow-up going off of the initial question on the full year attendance implied guidance. I think 5.5% for Q1 puts you at around a 2% growth rate for the year. This might be using too much gain on a small number at this point, but do you anticipate there's room for attendance to still grow above historical trends, which I think is what you guided to last quarter? Or could the slightly lower-than-expected Q1 in April take you down a little bit on that?

Go ahead, Brian.

Yes. I think you made a great point, Thomas. The level of precision can vary significantly based on whether we consider 5.5%, 5.7%, or 5.3%. Currently, our tracking indicates that the first quarter will be closer to 5.5%. However, we believe there is potential for this figure to increase. We see considerable opportunities in June, reflected by the extended operating calendar, and July looks promising as well due to favorable weather comparisons from last year. Therefore, depending on how these factors unfold throughout the year and how you model them, it's possible to achieve a growth figure that exceeds 2% for the entire year.

And our next question comes from the line of Ben Chaiken with Mizuho.

First, on costs, I believe there's a significant update that we might have overlooked. You're indicating costs are lower by 3% or more. I have a couple of clarifications. Firstly, do you mean all cash costs or just the difference between revenue? Secondly, should we expect the 3% decrease to appear in the profit and loss statement, or do we need to adjust that for inflation? Will our reported costs reflect a decrease of 3% or more? Finally, what changed compared to your previous target of $70 million for the year, which I don't believe would have resulted in a decrease of 3% or more? I have a few follow-up questions as well.

So Ben, let me jump in here first, yes. So what we're saying is, when I say down 3% operating cost and expenses, I would exclude cost of goods sold. So that's a separate calculation, separate look at things; this is operating expenses and SG&A combined. So it will be down 3% for our forecast. We did say that we hit our $120 million. We hit $50 million of cost synergy savings last year. And this year, we'll hit all 70. That's how we complete the $120 million. So we're comfortable we've got the decisions in place. We're executing on the reorg. We understand the need to actually expand margins as one of the reasons we did this deal. That's tapping the potential of the merger. So as we look forward, we're continuing to hunt for a little bit more, but also emphasize that the $60 million I referenced in my remarks sits on top of that $120 million. That's both the impact in '26 of decisions we're making this year, but also other things that we can't get to until we harmonize the tech stack. So we're plotting out the integration and mining the fruits of the integration over the next 12 to 24 months. We're pleased we got to 50% more than the cost synergies and savings we originally promised, and we continue to look to be as efficient as possible.

Understood. Maybe just to follow up there for a second in case I missed it. So I totally hear you on the cost ex COGS, but is that a net of insulation number? Or then will we layer in inflation on top of that? I'm just trying to modeling perspective, think about where our expectation should be?

Yes, Ben, it's Brian. That number is all-in inflation inclusive. The only thing I would call out, and I think you alluded to this in how you asked the question, that would be excluding any integration or other adjusted EBITDA add-backs, like severance as we go through this reorg effort there'll be a chunk of severance over the second half of the year related to that. So really looking at your sort of recurring normal course operating costs and expenses, inclusive of SG&A in that target.

Understood. And then what are the $60 million? And I totally appreciate the incremental $60 million that are coming out in '26, which is, I think, a new data point. Can you maybe dive in about what encompasses those $60 million? And is that also a net of inflation number as well?

We'll have more to say in a couple of weeks as we look at the profile of our 2028 target. But I would say, as I said, some of that is the residual impact, the remaining impact of decisions we're making in real time as we go through reorganizing our company, some are things that we can't get to until next year. We're still building out the operating plan. But we think that, that level of savings takes a big chunk out of the inflation impact in next year. So Brian?

Yes. And I would say, right now, that target may be slightly different. That's a gross synergy or cost savings target for '26. We'll be doing a lot more work as we get into later in the year in '25 and building of the '26 plan, where inflation and some of the other things that may obsess so that’s our growth incremental synergy peak that sits above and beyond the original $120 million that we had announced with the merger.

Got it. And then just a lot in a very quick third one. In an ideal world regarding the land sales in Maryland, would you get certain entitlements on that land and mainland prior to selling, for example, data in order to maximize value? Are you trying to do that currently? Maybe a better way of asking it?

We're working closely with the jurisdictions in Richmond and also in D.C. to make sure that the process yields a benefit for the company, but certainly a benefit for the community. Entitlements are always part of that process. We have found both jurisdictions extremely engaged and looking to help in the process. So I think those conversations will be productive. There's always a tug of war. There's always some tension in the timeline between getting entitlements and what ultimately the property becomes when you redevelop a property and the proceeds you get. So we'll look for the intersection that maximizes value, but that also delivers it an efficient time frame, and very pleased with the cooperation and the discussion so far with the local jurisdictions.

And our next question comes from the line of Matthew Boss with JPMorgan.

So Richard, maybe in light of the near-term economic uncertainty that you cited, how are you thinking about balancing price versus volume near term? And then it fix lag on the recapture opportunity from attendance, just how best to think about the annual cadence of attendance recapture if we think about maybe the linearity of recapturing the lost attendance relative to investments or initiatives that you have in place multi-year?

As we consider the opportunity for market penetration, it's one of the key chances for the combined company. We see under-penetrated markets within the portfolio stemming from both legacy companies. In the past, we have seen good traction in the first year, increasing in the second year, leading to growth over time. We will share our insights on what we anticipate for the next few years beyond 2025 and early 2026 in May. I don’t want to get ahead of those comments as we have a strong presentation planned, and we are eager to share it. The opportunity is significant. In the under-penetrated areas, if we bring those up to expected levels, there’s a potential for $10 million in the near term, with even greater long-term potential. Looking towards 2028, we’ll examine how to stimulate demand with our capital plans, which are coming together well. I'm thrilled about the positive responses we’ve seen in all the parks that have opened, especially with the new coasters that are launching. There’s a real enthusiasm in each market, and we have a core customer base that wants to return year after year. Our focus is on executing effectively, providing an exceptional guest experience, and encouraging repeat visits. Brian, would you like to add anything?

At a high level, our business plan for 2025 is focused on driving demand, as Richard mentioned, by capitalizing on the opportunities in front of us. We remain confident in our ability to enhance guest spending, which we expect to increase as we progress through the season and as attendance patterns evolve. We've talked about maintaining a comfortably crowded environment in our parks, which is crucial for extending guests' length of stay, leading to higher spending on food, beverages, and premium experiences. Although we may not see significant increases in the first quarter or in April, the ongoing improvement in per capita spending is very encouraging, especially considering the initiatives we've implemented. Richard touched on our early success in areas like food and beverage with our renovations and new locations. It's about both volume and per capita, with pricing following suit. We will continue to implement dynamic pricing as before, but we are establishing a minimum price threshold. We are not discounting, as we want to maintain pricing discipline, informed by our past experiences that indicate demand remains inelastic even during tough economic periods. Therefore, we will focus on pricing strategies rather than reducing prices.

Great. And then maybe just a follow-up, Brian, on the cost side. Could you just walk through the puts and takes to consider as it relates to maybe this year's reset of the base relative to the underlying operating cost growth to consider as we think about relative to the low to mid-single-digit growth historically?

Yes. I think entering this year, as Richard mentioned earlier, we are continuing the work that started last year after the merger was finalized. It was difficult to implement significant changes during the season, so we had to plan and prepare but wait until after the season ended to make many of those changes. This meant that for some of our parks, we had to wait until early November, while for others the wait extended to early January. The effort to reset our cost base is comprehensive. It includes a review and restructuring of our organization and focuses on non-headcount cost savings, such as harmonizing our IT systems and negotiating better terms with our vendors and suppliers. Initially, the opportunities for savings are more focused on headcount, but they gradually shift towards non-headcount areas. As Richard pointed out, some contracts will take longer to resolve, affecting our timeline for savings into 2025 or the algorithms for 2026. Regarding external pressures, we are always facing inflation, which we are managing. However, as we indicated in response to Ben's question, we have factored this into our target of achieving a cost reduction of 3% or more.

So Matt and I believe that this will mark a significant reset as we integrate these companies, with 2025 being a pivotal year. When we mention re-architecting our business, it goes beyond just changing the organizational structure. We have implemented extensive analysis, comparing different sites with one another, and have invested time in revising our decision-making processes. This approach encompasses a comprehensive evaluation of our organization, focusing not only on structure but also on how decisions are made. I am very satisfied with the improvements we are making in terms of clarity within the organization, and we are committed to being as effective and efficient as possible. We are actively steering the business using key performance indicators and integrating data and analytics around these KPIs into all of our decisions.

And our next question comes from the line of Michael Swartz with Truist Securities.

Maybe just with all the macro and consumer uncertainty out there. Maybe if we just take a step back and go back to prior periods of consumer weakness, where do we typically start to see some of the cracks in the foundation as it pertains to your business?

Good question, Mike. It's Richard. Reflecting on '08 and '09, we noticed a significant decrease in season pass sales as we approached that period, with groups even canceling their bookings. Our resort bookings fell sharply at that time. However, this year, we're not experiencing anything similar. In fact, we've seen a 10% increase in the opening weekend at Cedar Point and bookings for that weekend. Although people are booking later, they are still booking. Our small group booking channel, for groups of 100 to 150, is showing strong performance, and youth and student groups are also performing well. While we do see companies exercising caution in their bookings, they are opting to evaluate longer-term options instead. With season pass sales contributing over 50% of our attendance, we closely monitor that channel. Additionally, looking at our e-commerce performance, we've observed a 1% increase in volume and mid-single digit pricing growth. This indicates that, unlike some other sectors, we are not seeing a decline in consumer engagement. Our consumers and markets are responding as we anticipated as we enter late spring.

Okay. That's very helpful. I have a question regarding the first quarter. I understand there are various factors at play due to Easter and some calendar changes. However, when I examine the legacy Six Flags business, it appears that the rate of EBITDA decline was nearly triple compared to last year. Can you help clarify why that was the case?

Yes, Mike. So I think as you look at the two sides of the portfolio, we certainly with the Six Flags side of our portfolio, the Six Flags parks more of those opening up earlier. We invested, and it's a big chunk of the timing difference I mentioned on the cost side. I'd say more of it is happening from the cost side as we brought forward a lot of off-season whether you want to call it maintenance or preopening costs. We brought a lot of those from a timing perspective earlier in the year here in 2025. And so that's a bigger part of the equation on our Six Flags side of the portfolio. On the Cedar side, a little bit more of the headwind is related to the shift of Knott's Berry Farm, but that's really the only part that we have on that side of the portfolio that has any significant or meaningful first quarter operations. On the Six Flags side, we did see a little bit of headwind on some of the calendar issues, but not as demonstrative as maybe what we saw with Knott's Berry Farm's Boysenberry Festival.

And our next question comes from the line of Ian Zaffino with Oppenheimer.

Thanks for the update. I know you mentioned food and beverage, and I wanted to ask if you've noticed any changes in that area. Specifically, are you seeing an increase in more discretionary food and beverage choices? Is there any sign of weakness, or is it holding up as well as the other food and beverage offerings?

Yes, Ian, it's Richard. You were a bit hard to hear. I believe you mentioned different segments of food and beverage. I would say we've observed strong performance in our meal category and robust demand for beverages, including adult beverages, across the board. On weekends, if it rains, snack sales tend to drop slightly since customers may not stay as long. However, on typical sunny weekends, we see strong performance in everything we track. We have already opened 11 locations, with a couple more set to open in May. Here at our local Charlotte park, we're also adding an adult swim-up beverage bar, which many have been asking about. This highlights our consumers' desire to enjoy the food and beverage options, which we see as a key contributor to guest satisfaction. We view it as a potential for revenue growth as well, and it remains a topic of conversation that encourages repeat visits. Yes. I'll let Brian weigh in. Yes. I'll let Brian weigh in. Yes. I'll let Brian weigh in. Yes. I'll let Brian weigh in. Yes. I'll let Brian weigh in. Yes. I'll let Brian weigh in. Yes. I'll let Brian weigh in. Yes. I'll let Brian weigh in. Yes. I'll let Brian weigh in. Yes. I'll let Brian weigh in. Yes. I'll let Brian weigh in. Yes. I'll let Brian weigh in.

And our final question comes from the line of David Katz with Jefferies.

I appreciate you staying on just a little bit longer. Just a quick detail. There was some discussion about a couple of hundred million in deals. It seems that American Hurricane was over 100 million, but there are a couple of hundred million in total. Could we clarify that a bit? What else is included in that couple of hundred? Are you ready to discuss that at this point, or will that be saved for Ohio?

No, I'll let Brian clarify, but the comments about the real estate value of the land in Richmond and the land in D.C. could be $200 million or more, I think, is what we said.

Correct. Yes. We're not putting a price on anything separate at this point, David, and we're still working through the process with our real estate advisers, and I'm going to try, as Richard said, maximize those values. We were just trying to put a neighborhood. If you look at market prices out there on a per acre basis, you can get the math that's north of $200 million for those two combined locations that we've talked about to this point.

And that will conclude our question-and-answer session. I will now turn the conference back over to Mr. Richard Zimmerman for closing remarks.

Thanks for joining us on today's call. Brian, Michael, and I look forward to seeing many of you on Investor Day, if you decide to share our perspective on the growth potential of a larger and more formative Six Flags, as well as our plan for monetizing the growth for the benefit of our shareholders and other constituents across North America and beyond. We will be sure to keep you updated on our progress along the way. Michael?

Thanks, Richard. Please feel free to contact our IR department at (419) 627-2233 and our next earnings call will be in August after the release of our 2025 second-quarter results. Abby, that concludes our call today. Thank you, everyone.

Thank you. And ladies and gentlemen, again, this concludes today's call, and we thank you for your participation. You may now disconnect.