Earnings Call Transcript - FUN Q2 2025

Michael Russell, Corporate Director of Investor Relations

Thank you for standing by, and welcome to the Six Flags 2025 Second Quarter Earnings Conference Call. I'd now like to turn the call over to Six Flags management. Go ahead, please.

Richard A. Zimmerman, CEO

Thank you, Michael, and good morning, everyone. Thanks for joining us today. Before we discuss our financial results, I want to address the leadership announcement we made this morning. I will be stepping down as President and CEO by the end of 2025. I plan to remain in the role until my successor is appointed, and I will work closely with the Board to identify the next leader to guide Six Flags forward. I will continue to serve as a Director of the company, so I will remain actively involved in overseeing the continued execution of our strategic plan. This will be a smooth, orderly succession process. To put this in some context, I've been in the entertainment industry for 38 years, and I've seen it evolve and change. For most of that time, it has been a goal of mine to help create a leading North American operator that can cater to all ages and entertainment styles. With the successful combination of Cedar Fair and legacy Six Flags completed last summer, we've now done that, and I couldn't be prouder of what we've accomplished so far. With that said, we've only just scratched the surface of the enormous potential of our combined company. As you'll hear us discuss in more detail this morning, we experienced some macro and weather-related headwinds in the second quarter. Even so, July was strong and the leading indicators heading into August look good thus far. We are also making great progress on integration and synergy realization. So despite the rainy weekends we saw back in May and June, I've never been more confident in our strategy to optimize our assets or more optimistic in the long-term value potential and opportunities for Six Flags. With that in mind, the Board and I have decided that now is the right time to begin the process of finding our company's next leader, someone who will build on the progress we've made so far and propel Six Flags to its full potential. Like I've said, I've been doing this for a long time. And in many ways, my career has already been more satisfying than I could have ever hoped. Being able to offer family experiences that are unique, engaging and memorable has been incredibly rewarding. And along the way, we have created a powerful new industry leader with incredibly bright prospects for long-term value creation for our guests, our associates and our shareholders. I want to thank my entire Six Flags team for all the hard work and dedication that's gotten us to this point. We have plenty of seasons still ahead of us, including some of our most popular events and some of our biggest attendance days, and we're going to make sure they go off without a hitch. I remain more committed than ever to Six Flags' success. And over the coming months, I will ensure we are executing our strategy and working diligently to achieve our objectives of increasing adjusted EBITDA, reducing net leverage and delivering on our integration efforts. Before I review the second quarter and the challenges we face, I want to start with where we are right now because the story has changed. July has been a turning point. As weather has normalized and guests have a chance to experience our new rides and other attractions, we are seeing a surge in demand for our parks, while sales of season passes and memberships are climbing fast. While we know we have ground to make up from a tough May and June, these results send a clear message. When the gates are open and the product is strong, people will visit. Now on to our early season performance. While results over the first half of the year fell well below our expectations, this does not alter our goal of delivering a strong second half nor our conviction in the long-term potential of Six Flags. Our financial results through the first 6 months of the year reflect a significant decline in attendance, driven by lower renewal rates and sales of season passes as well as disrupted demand for single-day visits, all largely influenced by macro factors, including extreme weather conditions coupled with economic uncertainty and not reflective of a loss of consumer interest. As a result of these temporary macro headwinds, we believe many guests delayed park visits during the early weeks of our operating season, making fewer impulse buys, delaying purchases of season passes and memberships and displaying a more value-conscious mindset. In our business, the impact of short-term macro-level disruptions such as weather are amplified earlier in the year when visitation urgency is lower and there are plenty of opportunities to still visit later in the season. The second half of the year has historically been the defining period for our business. As the saying goes, we make hay when the sun shines. In 2017, 2018, and as recently as 2023, macro factors weighed on the first half performance at legacy Cedar Fair, yet a return to normalized conditions, solid capital programs and a heightened urgency to visit combined to drive strong rebounds in the second half of those seasons. Years like these underscore the resiliency of our model, the strength of our brands and the importance of our ability to execute during the peak summer and fall seasons when we generate the majority of our annual attendance, revenues and adjusted EBITDA. We see a similar opportunity in the back half of 2025. Our job is to manage through short-term disruptions and focus on the things we can control, and that is exactly what we've done and will continue to do. To stimulate early season demand and drive season pass sales, we introduced several attractive limited-duration promotional offers during the second quarter. At the same time, we pulled forward advertising dollars from the second half of the year to increase consumer awareness and combat some of the macro headwinds we saw developing. While these initiatives did not offset the combination of inclement weather and softer consumer demand in the first half, we expect they will benefit the business in the second half in the longer term. We have also added operating hours and staffing where most appropriate, making sure all of our rides, attractions and revenue centers are fully operational and available to the guests to enjoy when they visit. At certain parks, this lifted seasonal labor and maintenance costs, which we've moved to offset with cost reduction elsewhere while maintaining the integrity of the guest experience. We will continue to look for second half expense offsets to balance out our full-year spending in these areas, and we remain confident we can deliver on our full-year cost reduction goals. We have also taken decisive actions to address the shortfall in this year's active pass base. The launch of our 2026 season pass program includes a reimagined pass structure that features an offer for an expanded all-park pass benefit for our top-tier pass buyers. This is intended to leverage the appeal of the all-park pass benefit and tap into the strong pent-up demand from customers who have delayed their purchases in the spring. As we get deeper into the new season pass cycle, we will offer additional enhancements as we roll into 2026, including regional pass options, the introduction of memberships at the legacy Cedar Fair parks and a comprehensive loyalty program that extends across the entire portfolio. These programmatic changes are designed to strengthen annual pass renewal rates, attract new customers and create a more robust and consistent recurring revenue stream. While we work to improve top-line performance, cost discipline remains a top priority. The significant restructuring of our organization completed in the second quarter flattened our layers of leadership, consolidated duplicative functions and improved the overall agility of our teams. These strategic measures will permanently reduce our full-time labor cost by more than $20 million on an annualized basis and enable us to operate more effectively as a unified company. Significant progress has also been made by our team to harmonize our technology stacks, including our ticketing platforms, ERP suite and our safety and maintenance systems. This and other IT refinements allow us to simplify administrative functions and will advance incremental cost savings into the future. Combined with additional cost savings we are uncovering through our centralized procurement and purchasing functions, these collective efforts support our goal of reducing 2025 full-year operating costs and expenses before adjusted EBITDA add-backs by 3% compared to last year's combined cost base.

Brian C. Witherow, CFO

Thanks, Richard. I'll begin with the balance sheet and a recap of use of cash this quarter. In late June, we closed a $500 million fungible add-on to our term loan. We used the net proceeds to pay off $200 million of 2025 notes while using the balance to repay a portion of our outstanding revolver borrowings. Following this transaction, we have no debt maturing until 2027 when the buyout of the noncontrolling interest of our Georgia Park is due in January and $1 billion of bonds come due in April. We intend to address these maturities in the coming months before they go current next year. Despite the headwinds to start the year, our underlying business remains solid. Adjusted EBITDA for the quarter fell well below plan. Nevertheless, we have ample liquidity with no near-term covenant or cash concerns. We ended the quarter with approximately $107 million in cash and cash equivalents and total liquidity of $540 million, including cash on hand and available capacity under our revolving credit facility. During the 3-month period, capital expenditures totaled $168 million, consistent with our previously disclosed expectation to spend $475 million to $500 million for the full year in 2025. During the quarter, we used $122 million on cash interest payments and $10 million in cash taxes. Based on outstanding debt, including forecasted borrowings on our revolver, we expect full-year cash interest payments will total approximately $320 million. We now expect 2025 full-year cash taxes will total approximately $40 million, reflecting the impact of further tax planning efforts by our team as well as the benefit of bonus depreciation deductions provided under new tax regulations. We are working to identify more cost efficiencies within our future capital programs and are now projecting a total capital expenditure spend of approximately $400 million for 2026. Cash interest payments next year are projected to total between $320 million and $330 million and cash tax payments in 2026 are projected to be in the $45 million to $50 million range. Touching on leverage. Accounting for our recent refinancing transaction and revolver borrowings, gross debt outstanding at the end of the second quarter was approximately $5.3 billion and net debt to annualized second quarter adjusted EBITDA was approximately 6.2x, which is above our target range of sub-4x. Our priority remains reducing leverage back inside of 4x as quickly as possible, which we remain confident can be accomplished through the combination of organic growth in the business and the selective divestiture of noncore assets. As we shared last quarter, we are actively pursuing 2 opportunities, including the monetization of excess land near Kings Dominion in Richmond, Virginia and the sale of land at Six Flags America in Bowie, Maryland, a park we are sunsetting after the 2025 season. We are aggressively working on the steps necessary to close each transaction as quickly as possible, and we will provide further updates as things develop. We are also actively evaluating other opportunities where similar value creation is possible. Now turning to second quarter results. Given we operate in the outdoor entertainment space, we prefer not to use weather as an excuse for soft performance, but rather acknowledge that it's an uncontrollable we need to navigate through. It's clear, however, that extreme weather across much of our North American portfolio had a meaningful impact on early season operations, particularly over the last 6 weeks of the second quarter. Over that 6-week period, combined attendance was down 12% from the same time frame last year as severe storms, excessive rain and extreme heat disrupted visitation and sales of season passes during the most critical portion of the sales cycle. By comparison, combined attendance over the first 7 weeks of the quarter when weather was not an issue was flat compared to the prior year. Overall, close to 20% of our operating days in the second quarter were impacted by weather, including 49 days in which parks were forced to close entirely. By comparison, we were only forced to close parks on 12 days due to inclement weather during the second quarter of 2024. Despite the headwinds around attendance when weather wasn't an issue, demand was solid. And when guests visited, they continue to show a desire and willingness to spend on quality items and unique experiences. This was particularly the case at some of our largest and more well-established properties. At the legacy Cedar Fair parks, admissions per capita spending was up 4% during the quarter, reflecting a 2% to 3% increase in season pass pricing and a 3% to 4% increase in single-day ticket pricing. The cost value proposition at those parks is very high, giving us clear line of sight to responsibly take pricing with demand. Meanwhile, per capita spending on in-park products at the legacy Cedar Fair parks was up 3% in the quarter, driven by higher guest spending on food and beverage, extra charge products and merchandise. Each of these positive trends underscores our belief that our consumer remains engaged and interested in the entertainment our parks offer. On the cost front, we continue to focus on realizing synergies across the portfolio while understanding that it's critical to reinvest in our underperforming parks to improve guest satisfaction scores and increase penetration rates over the long term. At the legacy Cedar Fair parks, we realized a 1% reduction in operating expenses on an adjusted EBITDA basis. The decrease was primarily driven by lower maintenance costs and a reduction in seasonal labor hours during the quarter. Much of these cost savings were reinvested at the legacy Six Flags parks as we work to enhance the guest experience and improve the value proposition of those parks. During the quarter, we incurred $11 million of non-recurring merger-related integration costs and another $28 million of adjusted EBITDA add-backs comprised primarily of $24 million of severance payments related to our recent organizational restructuring initiative and $4 million of public liability settlements. Outside of these costs, cash operating expenses in the period were driven higher by 2 primary factors: first, a shift of approximately $19 million in advertising originally budgeted for the second half of the year. As Richard noted, this was a real-time strategic decision made to combat attendance pressures we are seeing and to stimulate demand for season passes and single-day tickets heading into the peak summer season. And second, a pull forward into the second quarter of approximately $6 million of preopening maintenance investments at several of our underpenetrated parks, a strategic initiative to ensure rides were licensed and ready to operate on opening day. These decisions resulted in an estimated expense timing difference in the quarter of approximately $25 million, which we would expect to fully reverse over the balance of the year. While we pulled forward spending on maintenance and marketing and reinvested cost savings, we still expect to reduce our full-year operating costs and expenses, excluding adjusted EBITDA add-backs, by 3%. Our cost-saving efforts are always aligned with our business, which is back-half weighted, meaning the opportunities for reducing costs are greatest and least disruptive to the business during the third and fourth quarters. Before I turn things back over to Richard, let me provide some more color around our recent performance trends and our updated outlook for the full year. Over the past 4 weeks, attendance is up more than 300,000 visits or 4% over the same 4-week period last year, and demand trends are accelerating. We are particularly pleased with the improved results considering the ongoing attendance headwind that a smaller active pass base represents. For the full 5 weeks of July, attendance was up 1% and preliminary net revenues were down approximately 3%, reflecting the pressure on guest spending due to attendance mix and the impact of recent promotional offerings in the market. At the legacy company level, attendance in July at our Cedar Fair parks was up 3% or more than 180,000 visits, and preliminary revenues were up 2% or approximately $7 million, demonstrating the strong consumer appeal of our more established properties. Meanwhile, demand trends at our legacy Six Flags parks improved significantly from the second quarter, but remained down 1% or approximately 54,000 visits for the month. At the individual park level, we're seeing returns on the initiatives we've implemented and the investments we've made. The recent improvement in attendance has been led by the performance of our 15 largest properties where our capital programs were concentrated this year. Combined attendance at those 15 locations was up 5% over the past 4 weeks, underscoring our belief that the second-quarter headwinds were transient and not reflective of a fundamental change in the business. Case in point, recent demand trends at Cedar Point, Kings Island, Canada's Wonderland, Knott's Berry Farm and Kings Dominion have meaningfully accelerated, reflecting the strength of our loyal customer base and the value of the investments we made at those parks this season. On a combined basis, attendance at those 5 parks over the past 4 weeks was up 8% or approximately 250,000 visits. Canada's Wonderland and the introduction of the new dual launch coaster AlpenFury has been nothing short of a standout success story. Since the July 12 debut of its new coaster, the park has seen attendance improve by 20% over the prior year during the same time frame, which in turn has helped drive a more than 20% lift in Fast Lane sales. Moreover, since the coaster's opening, there has been a surge in season pass sales, up more than 100,000 units in the weeks following the coaster's debut. We are seeing similar success at the legacy Six Flags parks where we concentrated our efforts and our capital investments in 2025, including Magic Mountain, Fiesta Texas, Six Flags Great America and Six Flags Over Georgia. Attendance at those 4 parks was up approximately 76,000 visits or 6% over the last 4 weeks of July. In addition to the green shoots we are seeing emerge from this year's capital program, our 2026 season pass program is off to an outstanding start across the system. We launched the program several weeks earlier this year to take advantage of anticipated pent-up market demand. Since the end of the second quarter, we've seen increased season pass sales of 700,000 units, reducing our second quarter deficit by more than half in only 1 month. The strong start represents the first step in building a solid foundation for the 2026 season and provides meaningful momentum for the remainder of the 2025 season. Now let me address our updated guidance. Through the first 7 months of the year, we've seen both the impact of a very challenging first half and the encouraging rebound that began in July. Taking this into account, along with our outlook for the balance of the year, we are revising our full-year 2025 adjusted EBITDA guidance to a range of $860 million to $910 million from the prior range of $1.08 billion to $1.12 billion. This revision reflects the impact of the extraordinary weather disruptions earlier in the year, a smaller active pass base heading into the second half and a consumer who appears more value conscious than a year ago. It also reflects the strong response we've seen in July and the weather conditions over the balance of the year are comparable to the prior year and the current macroeconomic conditions maintain. At the midpoint of this guidance, we expect attendance for the second half of the year to be flat compared to last year after accounting for the loss of 500,000 visits associated with the removal of lower-margin, higher-risk winter holiday events at 4 parks this year. We expect that in-park per capita spending over the second half of 2025 will be down approximately 3%, consistent with our most recent trends and reflective of the projected impact of planned promotional offers and attendance mix over the balance of the year. And lastly, the midpoint reflects the expected reduction of second-half operating costs and expenses, excluding adjusted EBITDA add-backs, by approximately $90 million compared with the second half of 2024. Achieving our back-half cost reduction goal of $90 million will bring full-year costs and expenses down 3% compared to last year's full-year combined spend for the legacy companies. As we noted in this morning's release, approximately 1/3 of these savings reflect costs that were shifted in the first half of the year and approximately 2/3 representing permanent cost savings. On an annualized run rate basis, the second-half permanent cost savings bring our total merger-related cost synergies at the end of 2025 to approximately $120 million when compared with the cost synergies we achieved in 2024.

Richard A. Zimmerman, CEO

Thanks, Brian. While we are disappointed by the need to lower full-year adjusted EBITDA guidance, we believe it is a prudent and realistic measure given uncertain market dynamics and a slower first half than we expected at the outset of 2025. Importantly, we would anticipate much stronger second half results with normalized weather conditions, improved demand trends, a positive response to our 2025 capital program and disciplined expense control. We are mindful of our company's leverage and remain committed to paying down debt as quickly as possible. As Brian noted, we are evaluating an opportunity to monetize non-core assets, which could significantly accelerate deleveraging. The near-term headwinds we faced in the first half of 2025 were ill-timed just as we are coming off an outstanding fourth quarter and hitting our stride as a combined company. But exogenous factors do not change the long-term trajectory or the outlook for Six Flags. We've already seen demand return as weather has improved and believe the strategic actions we are taking will result in the performance we are targeting for the second half of 2025 as well as set us up for a breakthrough 2026 season. As we move through the second half of the year, we are focused on executing the opportunities over which we have control, building upon the momentum we've seen in July and delivering the kind of guest experiences that drive loyalty and sustained growth. A key part of this work is our systems integration project, which is on track to deliver a new ticketing platform, a fully reengineered in-park mobile app and a more interactive e-commerce site, all scheduled to launch in November. To close, let me bring everyone back to the bigger picture. We are building a better business with a more stable cost structure and an expanded suite of products and an unrelenting drive to create unforgettable moments for every guest who visits our parks. Our strategy is clear: invest in value-enhancing profitable growth, rapidly reduce leverage and create value for our guests, our associates and our shareholders. Let me leave you with this. Our company is strong, our strategy is sound and the opportunities are real. We will continue to manage this business with discipline, with an eye on the long term, knowing that along the way, there will always be difficult cycles, unanticipated surprises and unexpected volatility. What matters, however, is that we continue to stay focused on our guests, execute with excellence, and invest where we see durable returns.

Operator, Operator

Your first question comes from the line of Steve Wieczynski from Stifel.

Steven Moyer Wieczynski, Analyst

So Richard or Brian, I guess to start, I'm kind of confused in terms of your macro pressure comments. When you refer to macro pressures, are you referring to weather? Or are you indicating that you've seen a material change in customer spending patterns because of macro fears, which aren't weather-related? I just can't figure out what you guys are referring to. Weather headwinds make sense to us. But if you're saying your customer base has slowed or become more cautious in terms of spending, I guess that would be somewhat confusing given spend patterns across a lot of other consumer verticals have remained pretty healthy at this point. So any color there would be helpful.

Richard A. Zimmerman, CEO

Steve, let me jump in here, and Brian can weigh in. When we talk about macro factors, weather is clearly a dominant factor, as you said. And when we look at that, clearly, that impact was significant. The other thing that we look at is we look at the spending once people come inside the gate, we've commented on that. We are seeing a little bit of pressure on our lower income consumer. As we look at our demographics and the folks that are coming, we think that there are segments of our markets that are feeling pressure in different ways market by market.

Brian C. Witherow, CFO

Yes. I would like to add that we are closely monitoring the difference between lower-end and higher-end consumers. We haven't noticed a significant change in customer behavior at the parks. When guests are present, they are spending, especially at our larger and more established locations. In the first half of the year, we observed that the urgency for visitation was much lower compared to later in the year. This trend suggests not a shift in consumer behavior, but rather a change in consumer mindset, indicating that the value proposition must be very appealing. We are focusing on the lower-end consumer and tracking their movements, but we are not seeing any major changes in guest behavior once they are inside the parks.

Steven Moyer Wieczynski, Analyst

I understand your question. I'm trying to get a clear picture of our current position compared to a few months ago when we set those financial targets for 2028. Weather has indeed posed a significant challenge in May and June, but I'm curious why that would greatly affect the long-term goals we established. It seems to me that those targets would have accounted for potential weather-related issues and macroeconomic challenges, allowing us to still aim for the $1.5 billion target. I'm wondering if the recent leadership change has prompted a reassessment of that target, as I'm a bit unclear on the direction we're taking.

Richard A. Zimmerman, CEO

Steve, we believe the challenges we encountered in the first half of the year are mostly temporary and do not indicate a fundamental change in consumer behavior that would affect the long-term potential of the business. That said, we will reevaluate our long-term guidance after the season ends and following the release of our full-year 2025 financial results. Looking at the recovery we’ve observed, in July we had a 1% increase in attendance over five weeks and a 4% increase over four weeks, with an 8% rise in the last two weeks of the month. The acceleration we've seen shows a strong response and an increase in visitors. In fact, during the first two days of this week, we experienced an uptick of almost 90,000 visits on Monday and Tuesday. As we consider the long-term outlook, we still believe our strategies will allow us to reach that potential, but we want to evaluate how the second half of the year plays out. I want to be clear; while I’m the CEO, our focus is on finishing 2025 strongly and building significant momentum for 2026. This approach will enable us to concentrate on our long-term goals and revisit them after the year concludes and into early next year.

Operator, Operator

Your next question comes from the line of Arpine Kocharyan from UBS.

Arpine Kocharyan, Analyst

So you mentioned accelerating divestitures. Could you give a broader sense of what you're looking at and the timing of those divestitures, fully understanding that some of that is more tied to sort of the transaction markets. But sitting here today, how would you size that opportunity beyond what we already know? And what could that mean for deleveraging targets that you have medium term? And I have a quick follow-up.

Richard A. Zimmerman, CEO

Yes. I'll jump in, and again, Brian can weigh in. As we look at the portfolio, we're clearly taking a strategic look at it, working closely with our Board. And we'll have more to share as we go through that. We're trying to execute very quickly on the 2 noncore asset sales that we talked about and have a process underway for each of those. We're also engaged in evaluating the rest of what we think is potential given market conditions and how quickly we can move to potentially divest other things that we would consider noncore.

Brian C. Witherow, CFO

Yes. I would add that over 90 percent of our EBITDA comes from our largest 15 or 16 locations. Our primary focus in optimizing the portfolio includes several key objectives: narrowing management's focus, reducing risk, and simplifying our capital needs to those most critical and strategic assets. While deleveraging will be a benefit, these objectives remain our priorities in portfolio optimization.

Arpine Kocharyan, Analyst

Okay. And then a quick clarification question. You highlighted acceleration in cost saves for the back half of about $90 million from what I think was closer to $70 million before today. But then there is about $25 million of pull forward of costs that moved from the back half to Q2. So what's sort of the upside to actual synergies outside of that pull forward of cost? I'm trying to understand a little bit better. On a full-year basis, what's the upside today versus what you were looking at in terms of cost synergies?

Brian C. Witherow, CFO

Yes. Coming into the year, I'll remind you, Arpine, we realized between the 2 combined companies close to $55 million of synergies in 2024. As we roll into '25, our goal was to finish realizing the original $120 million target. And so we had set an objective of $65-plus million of synergies for this year. The $90 million target for the second half of this year, if you look at what we would consider the permanent cost savings, as I said, of the $90 million second half reduction, close to 2/3 of that is permanent cost savings. When we annualize on a run rate, a few of those items like the full-time headcount reductions as one example, we get close to that $65-plus million of permanent cost synergies in 2025, getting us to that full $120 million. We will continue to look for more cost savings, and there are additional synergies as we roll into 2026. We'll provide more of an outlook on that as we get to the end of this year and we focus on next year. But for this year, we'll have checked the box on realizing the $120 million of original merger-related cost synergies once we execute on the second-half objectives and targets.

Operator, Operator

Your next question comes from the line of James Hardiman from Citi.

James Lloyd Hardiman, Analyst

So maybe let's just do a little bit of math on the guidance. If we look at the midpoint previously versus today, I think we're talking about a $215 million cut versus the prior guide. Now obviously, you don't give us explicit quarterly guidance, but I get to maybe, I don't know, $160 million miss versus Q2. And ultimately, I'm getting to maybe an implied sort of $50 million to $60 million lower in the second half. Maybe if you could share how we should be thinking about that math. Ultimately, what of the guide down is 2Q versus the back half of the year? And particularly as we think about the second half reduction in expectations, how much of that is just the lost season pass revenues that it's pretty difficult to make up, right, if people weren't there in May and June buying those season passes? And how much of it is sort of everything else? That would be helpful.

Brian C. Witherow, CFO

Yes, it's Brian. I'll respond this way, and you can let me know if I'm addressing your question or if we need to explore a different angle. As we entered this year, the midpoint of our guidance range of $1.1 billion was primarily based on volume, specifically an attendance growth of about 3 percent. A significant portion of this was dependent on our goal to substantially increase the active pass base. However, as you've pointed out and mentioned in our prepared comments, that goal was not met in the first half of the year. We faced considerable disruptions, losing over 300,000 season pass sales in May and June, which were largely due to weather issues that we've discussed. This presents the most notable challenge we encountered. Regarding the cost side, we plan to implement not only the cost savings we identified at the year's start but also additional savings that will be linked to the reduced volume and lower attendance levels we've experienced this year. Looking ahead to the second half, as outlined in our prepared remarks, we project flat attendance considering the decrease in our season pass base and the removal of around 500,000 visits tied to the four winter events we are canceling. This reflects an anticipated growth of 1% to 2% for the remaining business, despite having a season pass base that is still down year over year.

James Lloyd Hardiman, Analyst

That is helpful. And then maybe a question about costs. We talked about the fact that you really leaned into advertising spend and I guess, maintenance spend is going to be a little bit different than that. But maybe walk us through the timing of that spending. Obviously, if it's raining and cold, advertising might not really move the needle. So I'm guessing that this was more once weather got a little bit better that you sort of leaned into that. But I'm trying to just figure out how much of that OpEx spend was incremental and what that ultimately looks like next year? Because even when I sort of back out the $25 million of cost that you've laid out, it seems like a lot of growth in terms of operating expenses. So just trying to think through that.

Brian C. Witherow, CFO

Let's break it down. Your remarks on advertising are spot on. The majority of the pull forward relates to advertising. I agree that pulling forward advertising is a different situation compared to maintenance, which can vary due to unpredictable factors throughout the year. Our decision to pull forward advertising happened before the severe weather conditions intensified in late May. We don't switch on advertising instantly; we initiated it as we entered Q2. With hindsight, one might question whether we would have made that decision had we foreseen the weather conditions for the next six to seven weeks. However, at the time, it seemed like the right strategic choice. Although we did not see immediate results, we believe it positively impacted us in July and the recent weeks and will continue to do so moving forward. Regarding cost savings, our goals for this year were always aimed at the latter half. As you know, we are primarily a second-half business, with July, August, and October being crucial months. Historically, these months account for over 80% of full-year EBITDA. This is when we experience peak staffing levels and can effectively manage costs without compromising guest experience. Our goal for cost savings has always been more focused on the second half, but this process has been expedited due to our pull forward strategy. In the first quarter, we discussed pulling forward nearly $10 million in advertising and maintenance, and we've now added another $25 million in Q2. Overall, first-half costs are projected to be between $30 million and $35 million, with some of the advertising from the first quarter likely carrying into the second quarter. The second half of the year holds the greatest potential for realizing cost savings, and we've already begun implementing the necessary decisions to achieve significant portions of that $90 million target.

Richard A. Zimmerman, CEO

Yes, James, I'd like to revisit the advertising question. It's Richard. Looking back at 2024, we anticipated that a significant portion of our growth heading into 2025 would be linked to the season pass. We aimed to strategically support that program in the spring, and we did. In 2024, we increased advertising in late July through August to enhance the second half of the summer. Although we didn’t achieve our desired outcomes from that effort, it did contribute to a 20% increase in October attendance, as Brian mentioned. There’s typically a lingering effect from advertising that reminds consumers of our presence. It’s always challenging to quantify the impact directly, but we wanted to ensure we had the resources needed to effectively pursue season pass sales. Currently, it appears that we may be seeing some residual effects from our advertising investments as we started the 2026 season very strongly, which should also support our performance in the second half of the year. We're satisfied with this progress, but there is still much work ahead.

Operator, Operator

Your next question comes from the line of Ben Chaiken from Mizuho.

Benjamin Nicolas Chaiken, Analyst

Maybe just a clarification on cost. I don't totally follow the variables. So I guess your guide prior to this quarter was for cash cost to be down 3%. That's kind of like what we were talking about on 1Q. But then attendance was materially lower with incremental park closures. I think you kind of suggested in the prepared remarks somewhere around 30 incremental park closure days year-over-year. So why is minus 3% still the right answer? Shouldn't that be an opportunity for cost to be much lower?

Brian C. Witherow, CFO

We will continue to seek additional savings. However, we also need to balance investing in underperforming parks and building the necessary momentum heading into 2026. The main areas where we can reduce costs are labor and maintenance expenses, which we have already addressed regarding advertising. Seasonal labor and maintenance costs are our most significant opportunities for impact. As we consider ways to further reduce costs, these factors will influence our decisions. Additionally, potential savings that are not included in the 3% target may come from fluctuations in the cost of goods, which could provide some tailwind for cost savings. Our aim remains to achieve approximately a 3% reduction, translating to nearly $60 million less in combined spending compared to last year.

Benjamin Nicolas Chaiken, Analyst

Yes. I am trying to understand what the impact would be if the parks were closed for an additional 30 days. Can you clarify how this would affect the costs that are contributing to the overall decline of 3%?

Brian C. Witherow, CFO

Well, so you're talking about within the second quarter. Yes. I mean, listen, within the second quarter, we had...

Benjamin Nicolas Chaiken, Analyst

No, I'm discussing the full-year cash costs, and the goal remains a 3% reduction, which is consistent with the original target of minus 3%. However, there were 30 days of park closures.

Brian C. Witherow, CFO

Yes. We are adding days back in the second half of the year. So there's a year-over-year comparison issue that goes the other way, to your point about the more closed days in the second quarter this year. We're adding 30 to 35 incremental days in the fall as we look to tap into the strong demand for the Halloween events that we offer, Fright Fest, Haunt, etc. And so that puts pressure on that number going the other way, but still in line with achieving the original target of 3%.

Benjamin Nicolas Chaiken, Analyst

Okay. And then as you've seen demand come back in the last few weeks, does that give you any confidence in the ability to push price? Maybe you could kind of expand on your price thought process in the back half of the year under different demand scenarios, right? You talked about the last 4 weeks being up 4%, the last 5 weeks being up 1% and the expectation that pricing will be down 3%...

Richard A. Zimmerman, CEO

Ben, we are closely monitoring our pricing strategy. When we see an increase in demand, we are adjusting our prices accordingly. We have identified parks that are performing exceptionally well and are capitalizing on that. Halloween, in particular, continues to be a significant opportunity for us. We have added additional days because we believe this will not only increase attendance but also enhance our pricing power. Regarding admission pricing, we aim to balance our approach for value-conscious customers while also increasing prices on peak days. We have been proactive in enhancing our front-of-line experience, which has received a positive response at the parks where we've implemented pricing increases. We are adjusting prices where feasible based on demand. Additionally, as Brian mentioned, if we look at the second quarter from last year, the operating schedule was quite inconsistent, with some parks being open for shorter durations. This year, as I noted in my earlier comments, we have extended operating hours at the parks to encourage longer visits and provide more value to our guests in a year-over-year comparison.

Operator, Operator

Your next question comes from the line of Ian Zaffino from Oppenheimer.

Ian Alton Zaffino, Analyst

I wanted to dive deeper into the in-park spending and the 4% decline you're mentioning. What factors are contributing to that? You mentioned some promotions, but you also indicated that customers are generally doing fine. Why are promotions necessary at this stage? Is that primarily for the lower-end customers? Additionally, when you refer to the mix, could you clarify that? If season passes are decreasing, we would expect an increase in daily passes based on attendance. Wouldn't that create an opposite effect? I also have a follow-up question.

Richard A. Zimmerman, CEO

Yes, Ian, if we look at the attendance mix, particularly in the second quarter, season passes will be utilized as expected. A higher percentage of season pass holders can impact per capita spending. However, during extreme weather events, as we experienced over those seven weeks, we see a significant drop in demand for single-day tickets. This scenario puts additional pressure on per capita figures. Currently, we are focusing on promotional offers to attract customers by providing them with opportunities for lower prices on certain days, like Tuesdays versus Saturdays. We are increasingly responding to demand by adjusting prices dynamically based on insights from our business intelligence and revenue management teams, who are monitoring weekly trends and raising prices during the week. We are committed to maximizing revenue in this environment. Brian, would you like to add anything regarding the 4% decrease?

Brian C. Witherow, CFO

Yes. I mean I think I'll just go back to what you were saying in terms of mix. Ian, mix cuts a few different ways. You touched on one, which is channel mix. Within the channel mix, we're also seeing, as an example, season pass a little bit more migration this year as we harmonize the legacy programs to align with one another. We're seeing in terms of the '25 pass mix, a little bit of a migration down at our Six Flags parks to some of the lower-priced products in that mix. So that's putting a little bit of pressure. It's not only mix between season pass and single-day tickets, but it's also within the individual channels as well. As we think about promotions, as Richard said, going forward, our focus is to try and add value. As we said, the consumer seems much more value conscious this year than the last couple of years. And what we've tried to do historically is instead of discounting tickets, provide more value in products, whether that be season pass or single-day tickets to get people to move. And we do that out of the goal of not eroding the price integrity of our ticketing structure, right? And so things like the all-park add-on as a benefit for those migrating up to the highest tier passes in our system for next year. The objective there is to test that, again, what has proven successful historically and get folks migrating back up to those higher-priced products that maybe they had in '25 bought down as we harmonize the products. So that's the mix comment that we're talking about.

Operator, Operator

Your next question comes from the line of Thomas Yeh from Morgan Stanley.

Thomas L. Yeh, Analyst

Just to clarify on the 2026 pass cycle, on an apples-to-apples Gold or Prestige basis, is the initial pricing you're launching with starting at a lower level versus last year? And how much of that is promotional versus a reaction to the incremental pressure that you flagged on the low-end consumer?

Brian C. Witherow, CFO

Yes, Thomas, in terms of pricing, again, going to vary a little bit park to park in general and what you're comparing to, right? Are you comparing to where we let off, in which case, as Richard noted, fall is always much lower than where the previous season is letting off with its peak summer pricing. So from that perspective, if you're comparing there, you're going to see all the parks down. But if you're comparing back to last fall, for the parks where the comparison is easy, and it's a little bit more challenging as we weren't necessarily fully harmonized on some of our Six Flags parks last year to the program we're offering now. I would say on the Cedar side, the price is flat to up. On the Six side, it's going to vary a little bit across the good, better, best menu. But I would say at the Gold and Prestige, more of the incentive, if you want to call it, incentive, is in the value add, not in a price reduction.

Operator, Operator

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

Richard A. Zimmerman, CEO

Thank you all for joining us on today's call. For those who couldn't attend Cedar Point during our Investor Day, we hope you can visit one of our parks in your area before the end of the 2025 season. We're excited for you to see many of the improvements we've made since the merger. In our next earnings call in early November, we'll provide an update on our parks' performance during the busy Halloween season, which is expected to be one of our busiest times of the year. In the meantime, we'll keep you informed about other developments as they arise.

Michael Russell, Corporate Director of Investor Relations

Thanks, Richard. Please feel free to contact our IR department at (419) 627-2233. As Richard mentioned, our next earnings call will be in November after the release of our 2025 third quarter results.

Operator, Operator

Thank you, everyone, for your participation. You may now disconnect.