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spk01: Good morning, ladies and gentlemen. Welcome to the Six Flags Q3 2021 Earnings Conference Call. My name is Katherine, and I will be your operator for today. During the presentation, all lines will be in a listen-only mode. After the speaker's remarks, we will conduct a question and answer session. If you have a question at that time, simply press star and then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. I will now like to turn the call over to Steve Pertel, Senior Vice President, Investor Relations.
spk00: Good morning and welcome to our third quarter 2021 call. With me are Mike Spanos, President and CEO of Six Flags, and Sandy Bredy, our Chief Financial Officer. We will begin the call with prepared comments and then open the call to your questions. Our comments will include forward-looking statements within the meaning of the federal securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in such statements, and the company undertakes no obligation to update or revise these statements. In addition, on the call we will discuss non-GAAP financial measures. Investors can find both a detailed discussion of business risks and reconciliations of non-GAAP financial measures to GAAP financial measures in the company's annual reports, quarterly reports, and other forms filed or furnished with the SEC. At this time, I will turn the call over to Mike.
spk04: Good morning. Thank you for joining our call. Over the past few weeks, I have been energized by visiting our parks and spending time with so many of our team members. It has been great to witness firsthand our team's resilience and their dedication to serving our guests. And I want to thank them for working tirelessly through the pandemic. We have divided our call today into three parts. First, I will provide an overview of our operating performance and the strong demand trends we are seeing. Second, Sandeep will go into more detail about our financial results. Finally, I will return to provide some comments about the progress we've made on our three long-term strategic focus areas. Despite the challenging environment in the third quarter, we continue to experience strong consumer demand at all of our parks. We benefited from delivering exactly what consumers are looking for. thrilling, and affordable entertainment for the whole family that is outdoors and only a short drive from home. Attendance during the quarter indexed at 92% of 2019 levels. Excluding pre-booked group sales, our parks indexed 95% in the third quarter compared to the same period in 2019. Fourth quarter to date trends through this past weekend ending October 24th have accelerated versus the 92% index. We also continue to make steady progress with our revenue management initiatives. During the third quarter, guest spending per capita was up 23% versus 2019. In addition, season pass sales trends have accelerated. As of October 3rd, 2021, our active pass base was up 3% compared to the third quarter 2019. While demand trends are encouraging, we continue to face a tight labor market, and we continue to incur additional costs while operating in this unprecedented environment. Looking back on the past two quarters, the speed and magnitude of the resurgence of demand was even stronger than we expected, which exasperated the stress on our costs and operations. We are working on several initiatives to alleviate some of these cost pressures. Sandeep will discuss this in more detail. Overall, we are encouraged by our continued progress, yet we are still in the early stages of transforming our operating model. We are confident that our efforts to improve all aspects of the guest experience will fundamentally reshape the future earnings power of our business. I will now turn the call over to Sandeep, who will provide details about the quarter's results. Sandeep?
spk02: Thank you, Mike, and good morning to everyone. I would like to start by reminding you that results for the third quarter and year-to-date trends are not comparable to prior year because we closed all of our parks in mid-March last year and several of our parks remained closed or had curtailed operations through third quarter 2020. For that reason, I will provide comparisons to 2019. Total attendance for the third quarter was 12 million guests. a 14% decline from 2019, reflecting capacity restrictions at some of the parks that were open, the loss of a significant portion of our pre-booked group sales, and an unfavorable calendar shift due to our fiscal year change, which benefited the second quarter at the expense of the third quarter. Group sales, which includes school groups and company buyouts, continued to experience downward pressure. As Mike stated, Attendance at open parks in the third quarter indexed at 92% of 2019. Excluding pre-booked group sales, our parks indexed 95%. During the months of the quarter, our attendance indexed 97% in July, 89% in August, and 86% in September. Concerns about the Delta variants increased over the summer. and we experienced a decline in group sales in the second half of August through September. However, as Mike stated, fourth quarter to date trends have accelerated versus the 92% index we achieved in the third quarter. Looking ahead, we don't plan to share monthly attendance trends. However, because of the extraordinary environment, we thought it would be helpful to share this detail. Attendance from our single-day guests in the third quarter represented 39% of the attendance mix, the same as in the third quarter of 2019, despite the negative impact of low pre-book sales on single-day attendance. Excluding pre-book group sales, our mix of single-day guests increased by three percentage points. Because of our reporting calendar change, our third fiscal quarter 2021 ended on October 3rd instead of September 30th, as it did in 2019. As a result, third quarter 2021 includes three calendar days in October. This was more than offset by four days in July, which shifted out of the third quarter and into the second quarter this year, including most of the July 4th weekend. The net reduction due to these calendar shifts in third quarter 2021 was 437,000 of attendance and approximately $24 million of revenue. We expect group sales to have less of an impact in the fourth quarter when groups typically represent a smaller portion of our attendance than in the second and third quarters. However, our new fiscal calendar will continue to create attendance shifts in the fourth quarter, which will include an extra weekend in January compared to 2019. We expect this reporting calendar change to shift approximately 200,000 of attendance out of first quarter 2022 into fourth quarter 2021. When netted against the shift of the October weekend out of the fourth quarter into the third quarter, we expect the changes in our fiscal operating calendar to negatively impact the fourth quarter's attendance compared to 2019 by approximately 270,000 guests. Total guest spending per capita increased 23% in the third quarter versus 2019. Admission spending per capita increased 20%, and in-park spending per capita increased 26%. The increase in admission spending per capita compared to 2019 was primarily driven by our new approach to revenue management, as we saw double-digit growth in admissions per capita for both our active pass base and single-day tickets. Our new approach includes pricing our tickets based on a demand curve. It also includes a new pricing architecture that allows us to optimize relative pricing amongst our various ticket types and to significantly reduce the depth of discounted promotions. In addition, as much of our season pass sales are occurring later in the season, then the historical pattern we recognized season pass revenue over fewer visits, which boosted our admissions per capita in the third quarter. As expected, admissions per capita growth versus 2019 moderated in the third quarter. We expect to continue growing our admissions per capita over time, but we expect the growth rate to continue to moderate. The increase in in-park spending per capita compared to 2019 was due to early progress on several of our transformation initiatives, as well as a stronger overall consumer spending environment. Highlights from our in-park initiatives include our new food and beverage strategy, featuring a new food pricing architecture and introduction of more premium offerings, our QR code-enabled FlashPass program, which has increased FlashPass adoption, our improved merchandise mix, resulting in higher retail sales, and a higher mix of single-day ticket visitors whose tickets do not include parking. The acceleration of our in-park per capita spending during our highest attendance quarter gives us confidence that our transformation initiatives are providing a sustainable lift. Revenue in the quarter was $638 million, up $17 million, or 3%, compared to 2019. Excluding the impact of the fiscal calendar change and the impact of reduced sponsorship, international agreements, and accommodations revenue, our base business revenue increased by $55 million, or 9%, compared to the third quarter 2019. On the cost side, cash operating and SG&A expenses increased by $45 million, or 19%, in the third quarter compared to 2019. The increase was driven by several factors. First, higher wage rates and incentive costs to attract and retain team members. Second, an increase in litigation reserves, primarily related to an increased estimate of the probable outcome of the settlement of a legacy class action lawsuit. increased security in our parks, and finally, a shift in the timing of our repair and maintenance costs based on our parks' later opening dates. As we sit here today, the operating environment remains challenging with a tight labor market and ongoing supply chain constraints. We believe that approximately half of the additional costs we are incurring are transitory and will normalize over time. However, some of these costs, particularly wage inflation, may prove to be more permanent. In terms of labor, if current wage rates were to persist, we would incur additional labor expenses of $40 million annually compared to 2019, inclusive of the $20 million we called out in the EBITDA baseline we gave during our fourth quarter 2019 earnings call. This $40 million is consistent with what we called out in our previous earnings call. Our team is working on potential opportunities to alleviate many of these cost pressures in case they persist over time. Adjusted EBITDA for the third quarter was $279 million, down $28 million, or 9%, versus third quarter 2019. This included the negative impact of the fiscal quarter change, which shifted attendance out of the quarter, the reduction of international sponsorship and accommodations revenue, and roughly half the $45 million cost increase in the quarter that we believe to be transitory. We are pleased with the growth of our active power space. At the end of the third quarter, we had 7.6 million pass holders, up 3% from the end of the third quarter 2019. This is especially encouraging because we elected to not hold the highly promotional flash sale that we conducted around Labor Day the last several years before the pandemic. We expect to continue to increase our active pass space through the spring while achieving higher ticket yields. Our very large active pass space sets us up for a solid fourth quarter and positions us well as we head into the 2022 season. Deferred revenue as of October 3rd, 2021 was $224 million up $26 million or 13% compared to third quarter 2019. The increase was primarily due to the defer of revenue from members whose benefits were extended. Year-to-date capital expenditures were $62 million. We expect capital expenditures of $120 million to $130 million in 2021 as we make investments to improve the guest experience and to increase capacity on our rides. Our CapEx this year is heavily weighted in the fourth quarter due to our cautious approach towards capital spending in the early part of 2021. We continue to believe 9% to 10% of revenue is an appropriate level of annual capital expenditures in a normalized environment. As the recovery continues, we are focused on maximizing cash flow. Year to date, net cash flow to the third quarter was $232 million, an increase of $26 million compared to the first three quarters of 2019. Our balance sheet is very healthy. with no borrowings under our revolver and no debt maturities before 2024. Our liquidity position as of October 3rd was $851 million. This included $461 million of available revolver capacity, net of $20 million of letters of credit, and $390 million of cash. Our capital allocation priorities remain the same. to invest in our base business. Second, to pay down debt until we reach our target leverage range of three to four times net debt to adjust the EBITDA. Third, to consider strategic acquisition opportunities. Finally, to return excess cash to shareholders via dividends or share repurchases. Moving to our transformation plan, as previously discussed, we expect the plan to generate an incremental 80 to 110 million dollars in annual run rate adjusted EBITDA. In 2021, we expect to achieve 30 to 35 million dollars from our fixed cost reductions. We have already realized over 23 million dollars through the first nine months of this year. Based on year-to-date trends, we now expect to reach the high end of 80 to 110 million dollar range once the plan is fully implemented and attendance returns to 2019 levels. Thus far, our revenue management initiatives have over-delivered on our original plan. However, our cost initiatives have been negatively impacted by labor and supply chain inflationary pressures. For that reason, we expect our revenue initiatives to provide a greater proportion of the $110 million. Relative to the midpoint of the company's pre-pandemic guidance range of $450 million, we are well positioned to achieve our adjusted EBITDA baseline of $560 million once our transformation plan is fully implemented and attendance returns to 2019 levels. This EBITDA level assumes the current wage rate environment persists. We are laying the groundwork for sustainable earnings growth, and once the baseline is achieved, we expect to grow revenue by low to mid single digits and EBITDA by mid to high single digits annually thereafter. Now I will pass the call back to Mike.
spk04: Thank you, Sandeep. I'd like to take a few minutes to review some of the progress we have made on our three strategic focus areas to drive long-term sustainable earnings growth. Our first strategic focus area is modernizing the guest experience through technology. We want to create more personalized and customized experiences for our guests, putting them in control of their time and activities. This will result in our guests spending less time waiting in line and more time having fun and enjoying activities during each visit. We believe that improving the guest experience will be the most important driver of our earnings growth. On past calls, I've discussed a number of the exciting long-term initiatives that are underway, including our new CRM platform, cash-to-card kiosks, ride reservations, and an improved mobile app, to name a few. Today, I would like to provide some detail on three additional initiatives that are already starting to have an impact. First, digital fright passes. Instead of guests having to wait in long lines to pick up haunted attraction wristbands, this fright passes. fast season, they are able to go right to the haunted attractions using their season pass card, membership card, or e-tickets. Guests are able to purchase digital Fright Passes on their phone from anywhere in the park by scanning QR codes. This has increased our Fright Pass sales while eliminating wait times for our guests. Second, expanding our mobile dining locations across our parks and enhancing our food and beverage offerings. We continue to see the adoption of mobile dining leading to higher average transactions and improved guest satisfaction. Third, culinary partnerships. To elevate the guest dining experience, we have launched two We Proudly Serve Starbucks locations that serve a variety of the premium Starbucks drinks beloved by our guests. Early findings reveal that selective partnerships with third party brands improves guest satisfaction and increases in park spend. Our partnership with Starbucks is only the first of several initiatives centered on enhancing our guests' dining experience through strategic partnerships. Our second focus area is to continuously improve operational efficiency. We continue to make progress in this area, in particular on our centralized back office and procurement efforts. Our cost progress is currently being obscured by the labor costs and supply chain headwinds. But over time, we expect our cost savings to show up in our financial results as we scale our business, get closer to full attendance capacity, and pursue additional cost opportunities. Finally, our third focus area is driving financial excellence. While we are keeping a close eye on the Delta and other variants, we are optimistic that the global recovery will continue. Timelines are hard to predict and progress will continue to vary by region, but we believe we are fast on our way to stronger guest attendance beyond the levels of 2019. As we implement more of our transformation program and as our attendance recovers to 2019 levels, we expect to deliver $560 million in adjusted EBITDA. Even more important, once we achieve that new EBITDA baseline, we expect to sustainably grow adjusted EBITDA from our base business mid to high single digits over time. In conclusion, these have been challenging times, but we are looking forward to a bright future. With a clear focus on improving the guest experience through technology and a talented and dedicated team to execute our strategy, we are well positioned to accelerate growth in 2022. Catherine, At this point, could you please open the call for any questions?
spk01: Ladies and gentlemen, at this time, if you'd like to ask a question, please press star and then the number one on your telephone keypad. Your first question comes from the line of Steve Wazinski with Stifel.
spk08: Hey, guys. Good morning. So just want to make sure I'm thinking about this the right way. But, you know, with your revised EBITDA target of, you know, let's call it $560 million, That's including the current labor pressures, which I think you called out as being around 40 million. So if the labor pressures do start to ease over time and eventually, let's say, maybe not go back to normal, but somewhere around there, that EBITDA range would actually be closer to 600 million. I just want to make sure I'm thinking about that the right way.
spk02: Good morning, Steve. How are you doing? Good. So on the EBITDA target of 560, you're correct. It includes the $40 million of wage pressure. And where we sit here today, we believe that these wage pressures are very likely to persist. And I think that's why we've incorporated that into our baseline EBITDA target. And your math would be right if it didn't exist, but I think we actually expect it to exist. And that's specifically why we called it out. And really, our run rate in terms of wage rates today reflects that investment that's being done. And it And it's actually expected to continue.
spk08: And just to add on that, you know, from here, in terms of what you're seeing from the labor market today, would you expect that to maybe not ease anytime soon, but also, you know, do you expect that to, you know, have you seen that intensify at all? Basically trying to get the, you know, is it getting worse the same or is it kind of, you know, getting a little bit better?
spk02: So I think where we are, the labor market continues to be pretty constrained. But what I would say is from a wage rate pressure, the pressure that we were seeing a few months ago has pretty much stayed consistent. We haven't really seen a huge change. And I think what really remains to be seen is what happens to the supply side of labor as we actually go into next year. But from a rate standpoint, this is what we're seeing right now.
spk04: Okay. Steve? Yeah, Steve, good morning. It's Mike. I think to your question, first I would say it's a volatile environment for sure. I made the call to focus on getting staffed, ensuring a safe park, and providing a quality guest experience in the short term. To your point about the longer term, second, we've got to deal with the current tight labor market and wage rates by operating more efficiently through process redesign, automation, and technology in order to reduce costs as a percent of revenue. And we want to do that while we still enhance the guest experience. So as we said, we're in the early stages of several initiatives to operate more efficiently. We're going to update you all in the future as we test and learn more.
spk08: Okay, great. And then real quick, second question is, you know, you laid out how the attendance kind of trended through the quarter. But just trying to understand maybe the in-park spend levels, did you see any dramatic changes in terms of from July through September? Was it pretty steady and pretty strong? And does that continue to be pretty strong so far into the fourth quarter?
spk02: So, Steve, I think that's a great question. And I think it really ties into a lot of what we talked about in the last earnings call. We definitely saw from an in-park spend perspective an improvement in trend as we went through as we got more staffed. And that's why we talked about the fact that we were making these investments in wage rates to get the quality of labor that we needed to deliver the in-park services that our guests were expecting. And sure enough, you saw that in our per caps. Our per caps actually accelerated versus Q2, and we're really pleased to see what we did.
spk08: Great. Okay. Thanks, guys. Appreciate it.
spk01: Your next question comes from the line of James Hardiman with Wedbush Securities.
spk09: Hey, good morning, guys. Good morning. So while we're on the topic, just that last question there, to your point, Sandeep, the expectation is that admissions per caps will decelerate or moderate, I should say, going forward, whereas the end part actually accelerated during the third quarter. Is there any reason to think that those in-park per caps will come down meaningfully in the next few quarters, or is this a sustained trend?
spk02: Yeah, so I think that's a very good question, a very good follow-up, James. So I think where we are, to the extent that the investment in labor has actually helped us to accelerate on the in-park spend, that drive-out continues as we go into the fourth quarter. and we continue to get better at staffing, and compared to Q2, Q3 was sequentially definitely better, and we're making progress into the fourth quarter as well. So we'll see two things. One, we'll see wage pressure, because the rates actually there are gonna roll through the financials and the expenses, but we still should be seeing tailwinds on the in-park spend. That being said, I think it really was said on the last call, we say it again, We're definitely benefiting from the consumer discretionary backdrop that we're dealing with right now. And that's a tailwind which we don't know how long that will sustain for. But what is for certain is that a lot of the value that we're seeing on impact spent is driven by our transformation initiatives.
spk09: Thank you.
spk02: So the direction is definitely up in terms of increased spend, but we do expect some level of moderation once the consumer discretionary environment becomes a little bit more stabilized.
spk04: James, it's Mike. Good morning. Sandeep said it well. We were very pleased that the in-park spending was up 26%. As you said, that's an increase from the 22% in Q2. Where I get excited is about the future. what we've done with transformation, we've built capability. And that capability, a big part of it is in our revenue management initiatives and how we're also connecting that to in-park merchandising, food and beverage, retail games. And that muscle is in the organization. So I'm very confident that that's gonna build to sustained earnings after we get to that adjusted EBITDA of $560 million. We're going to continue to build that capability, continue to refine both in the short term and the longer term.
spk09: Got it. And then I did want to hone in a little bit about some of the attendance commentary. So I guess first, Safe to say that you're attributing the sequential deterioration over the course of the quarter to Delta concerns. October was better than the 92% of 2019 levels that you called out for the quarter, which would imply an even bigger step up versus September. I guess two things there. Safe to say that we're still not at 2019 levels, but I'm assuming you would tell us if we were at 2019 levels, just given what a benchmark that is for the industry. But then also, do you attribute that October improvement to maybe people feeling better about Delta or is there something else in October? I know some parks are maybe got some different calendars, but help us unpack some of that.
spk04: Yeah, you bet, James. So first, I think it starts with, excuse me, Fright Fest is huge, you know, so I start there. Second is consumers continue to want to engage with us because we offer thrills, we're safe, we're outdoors, we're close to home, and we know we have not been a source of spread of COVID given our contactless protocols and safety standards. And as I've said, we've had governors tell us we're best in class. We did, as you said, attendance at open parks accelerated 92% of 2019 levels in Q3. We have seen an acceleration of that in October through October 24th. And we've also seen group sales coming back as well. So we do feel good about that. Now specific, a couple other things you mentioned, which is part of it, but the good news here is we're seeing, your point maybe about capacity constraints and delta, Let's just start with capacity. Montreal and Mexico had constraints in the third quarter. Mexico is now at full capacity as of October 18th. So I think that's a good thing. In terms of Delta, you know, I think Sandeep said it really well. I feel good about our trends. But, yeah, we're going to be always focused on the safety of our guests and team members. We continue to feel good about attendance. Again, we're outdoors. We've got hundreds of usable acres. And timelines are going to vary by region, but we're optimistic about the global recovery, and we need to be ready to capture the demand.
spk09: That's all really helpful. I appreciate it on a pretty open-ended question, but I appreciate the candor. Thanks, guys.
spk01: Thank you.
spk09: Thanks, James.
spk01: Your next question comes from the line of Ian Zafino with Oppenheimer.
spk03: I agree. Thank you very much. You know, just sort of a question on cost versus price. You know, I think in the past you've mentioned that, you know, as your employees and as your demographics get paid more, that raises your labor costs, obviously, but then there's a commensurate offset on the revenue line. I guess you're not seeing that now, just given that we're talking about kind of flat admissions per cap, you know, in the face of this $40 million of incremental cost. Maybe you can kind of give us some color there. Thanks.
spk02: Yeah, I think, Ian, it's a good question. And I think what I will say is there's two different things going on. And I think you're actually talking about the cost pressures that we are seeing already. And I'll talk a little bit more about the drivers in the quarter. But what I would say is we've historically been able to see the pricing come through when costs actually go up. And if you look at what's happening in our per caps, you look at our admissions per caps and what we're actually yielding, we're doing extremely well because our per caps are up 20%. And we are actually seeing that very consistently across all ticket types. So we are seeing the pricing yields. along with the cost structure as it's evolving. And we are expecting to see a continuation of this as we go along. But I think specific to the cost right now, the environment, as we touched on earlier, is tough. I mean, we have $40 million of wage pressure that is clearly in front of us that we've actually incorporated into our adjusted EBITDA baseline of $560 million. And I think that's where things are at, but we're very confident in our ability to price to cover the costs.
spk04: Yeah, Ian, it's a fair question. I mean, as we think about the future, we are committed to an operating expense ratio, and we've talked about that. I would say in the short term, as I've said, we know there are a lot of short-term unknowns. It's a fluid, challenging operating environment. So in the short term, as I said, I made the call we're going to spend more on costs to ensure we had the right guest experience. We felt great about getting staffed and safe, but we're still in the early stages. Now, I would say also, though, we are very confident, and I like our recovery when I think about our business. Really strong bounce back in the revenue. Liquidity is very good. Good per caps and attendance momentum. And our active path space shows really good resilience, which I also think bodes well. to that resilience and brand loyalty really implies that there's also more pricing power. Now, I would say, as I think about that, we are going to focus on the future. And to your point, that gets from a financial excellence. We've got to be zoned in on that operating expense ratio. We've got to be more thoughtful about the cost in terms of process redesign, automation technology, and modernizing the guest experience through that technology. And they're not mutually exclusive. So we're going to stay focused on that. We're confident in that adjusted EBITDA of $560 million as we get to the 2019 levels. And after that, we'll be in the mid to high single-digit EBITDA growth after that 2019 attendance levels.
spk03: Okay. And then just as a follow-up, what's sort of the target date for the 560? Is this something you think it could hit very soon, or is it going to be a little while?
spk02: So, Ian, I think it's a little bit difficult to predict timelines. I think Mike said it towards the end of the prepared remarks. But I think as we see sequential improvement in attendance, we feel more and more confident that it's closer rather than farther away. But you saw what happened with the Delta variant in the third quarter. We're looking good in July, and then we had an August-September blip in terms of a slowdown. So we just don't want to get ahead of ourselves. We're doing all the things that we need to do to actually drive towards that. But I think the health environment is really going to be the driver of when the attendance comes back. But I think we're very optimistic that this is sooner rather than later based on the way the health outlook has been evolving.
spk03: All right, great. Thank you so much.
spk02: Thank you.
spk01: Your next question comes from the line of Stephen Grambling with Goldman Sachs.
spk05: Hey, thanks. I guess as a follow-up, maybe I'll ask the question a little bit differently, but what's been the historical kind of rule of thumb for flow-through from admissions per cap and in-park per cap growth as we think about how strong it's been so far, and how might that flow-through have changed from some of the actions you've taken versus some of the labor inflation? Thanks.
spk02: Yeah, I think it's a really good question, Steve, and I think it's... probably less comparable to the current environment, more because of some of the dynamics that we talked about on how the driving forces behind the admissions per caps and IPS. So I touched on this in the prepared remarks, but I want to recap them because it's important to bear in mind. So we're really pleased on where we are on the per cap trends, and we saw a 20% increase in admissions per caps, which is a deceleration from 24%, that we saw the prior quarter. And it's very good because it's been driven by growth in both the active pass phase per caps and single day ticket admissions per caps, both actually growing in the double digits. But the one thing I would say about this particular situation because of the pandemic year, we've actually sold season passes much later in the year. So as a result of this, the amount of per cap boost that we're getting because of the shorter window of time over which the revenue is being recognized is actually lifting the per cap in this particular year, and that's one of the reasons why we started expecting that admissions per cap trend to moderate. So that's one. Then I would say the next one would be on IPS. There are two different things going on over there. One, we talked about the labor investments that we've made, and as we got staffing in a better place in the third quarter relative to the second, we saw that we were able to execute a lot more, and we saw a sequential acceleration in in-park spend. That's great, and I think that the transformation initiatives that were already underway in the second quarter continued as well. But the key over here is we have a backdrop of consumer discretionary spend, which is very elevated in the marketplace, so we're not quite sure what actually sustains on that particular piece of it, hard to predict exactly how much that is either. But overall, we tend to actually see a pretty good flow through from the increase in per caps in our EBITDA.
spk05: Okay, and I guess one other follow-up just on the labor pressures and the shortages that you talked about in the past. Are you seeing any significant difference in either those wage pressures or the shortages based on geography given some states kind of let some of the stimulus lap earlier? Thanks.
spk02: Yes, Steve, it's a very good question. I would say that there are nuances by state, but broadly it's a nationwide problem. We're definitely seeing this across the board, and I think sequentially we've gotten better at staffing in some parks versus other parks just because of the variation by geography, but it's tough everywhere. It is not easy. It is a national issue that we're dealing with right now. But again, we're really pleased about the initiatives we took And we talked about on the last call, we put in the seasonal incentive plan. It's worked really well. So our staffing has actually sequentially improved. And we expect to keep improving it as we go into the fourth quarter. So it's looking good, but the backdrop is tough. And that's exactly what we talked about in the prepared remarks.
spk04: Yes. Stephen, the only thing I would put on top of it is I do think one thing I see is the closer you get to the population centers, it does get easier to get staffed. I think that's probably the one thing we have seen across parks. But everything else Sandeep said is right. I do feel good about our retention recruitment incentives. We've improved, but it's going to continue to be a big focus area for us in terms of connecting that to execution. That's helpful. Thanks so much.
spk01: Our next question comes from the line of Ben Chagin with Credit Suisse.
spk07: Hey, how's it going? Good morning, Ben. Good morning. Hey, sorry, just to clarify, as you think about the, I apologize if I missed it, but as you think about the higher range in EBITDA that you called out, on the revenue side, how do you delineate between maybe like sustainable idiosyncratic things that you guys are doing versus maybe what we're seeing in the overall consumer environment? And I'm not suggesting that the current environment will or will not uh maintain i'm just curious on the thought process and then part two just to clarify did you say that growth in admissions per caps there'll be growth in 22 versus 21 is your expectation sorry if i missed any of that previously thanks no i think uh very good questions um uh ben i think uh number one i think uh when we talk about the uh 561 ebitda goal that we actually updated to
spk02: And we also talked about the fact that it's going to come more from revenues and less from costs, given the environment that we're facing right now. We're really over-delivered on our plan so far on the revenue side. And I think you can see that in the admissions for caps and the impact spend for cap trends that you've been seeing so far this year. And so what we have caveated in my previous answer as well, I did mention to Steve that, look, I mean, the consumer discretionary environment is definitely – one which is allowing for heavy spend from the consumers. And so we're not quite sure how much of a drop-off there will be if that moderates later on. But what we can see is that exclusive of that, from our transformation standpoint, we see value from the admission side, which is extremely strong. And that's really a function of our revenue management process. And that revenue management process has been in place for the entire year. And we've done a really good job with the revenue management team of adjusting pricing across different ticket types and making sure that we're actually moderating our promotional expenditures as well, our promotional activity as well, to actually drive that yield from the admission side. So that's a big piece where we're really confident that it's more driven by transformation and is relatively agnostic of the consumer discretionary spend that's going on right now.
spk07: Gotcha, and then just to clear that second part, are you assuming that admission per caps next year are up versus 21? Sorry, just to confirm.
spk02: Yeah, I think it's basically early days right now because of admissions. Compared to 19, for sure, there's different strength. But because of the dynamics of the season pass, and we sold the season pass later in the season, as the cadence of sales of season passes basically starts reverting to historical norms, you could see some pressure in relative terms compared to 21. But against 19, the yields that we're seeing broadly are very, very strong. So I think we should still see strength.
spk04: Yeah, Ben, I think, you know, obviously the other offset is ideally and hopefully we anticipate there's going to be more attendance next year in 22 as well. So, you know, obviously we're tracking both of those between your point, the admissions yield, the per caps, but We also expect to see a nice continued momentum on the attendance line. And if passes are sold earlier, obviously, that will support as we move into 22 as well in the early part of the year. Gotcha.
spk07: Do you guys have any way to quantify that the dynamic of season passes maybe being sold over a smaller period this year for us or too early?
spk02: I think it's too early, Ben, because I think as we're coming through the pandemic, we changed the cadence of our promotional activity. We didn't do the Labor Day season pass sale or flash sale that we have done historically. So I think things will start normalizing as we go into 22. But I think because of the pandemic situation being very different in 22, likely, compared to 21, you will see some noise, 21 versus 22, as we go through.
spk07: Cool. Thank you very much.
spk01: Next question comes from the line of Ryan Sundby with William Blair.
spk06: Yeah, hi. Good morning, everyone. I know this is a smaller part of the business, but I think if we take licensing out of 2019 numbers, it still looks like sponsorship and accommodations are down pretty meaningfully in the quarter. As we see attendance start to go back towards 2019 levels, when should we see that side of the business kind of catch up to?
spk02: That's a great point, Ryan. Yes, that's definitely the case. And I think definitely both sponsorship and accommodations have been impacted by the pandemic this year. And as we move into next year, we should start seeing recovery on that side as well. But we agree with you.
spk06: Okay, great. And then as you look at Closing out that remaining attendance gap versus where we were in 2019, are there any, I guess, parks or maybe key demographics, I think historically families with kids were about half your visitation, that kind of stand out that need to recover? And then I guess as we see vaccines are allowed to the children under 12, do you see that as a material impact to visitation for next year?
spk04: Ryan, it's Mike. I don't. As I said, what we are seeing consistently in every geography, if I understand your question, is we are getting guest recognition for the fact we're safe, we're outdoor, and we're close drive from home. And that's given the guest a high level of confidence and safety. Second, we've been recognized for our safety protocols. As we've talked about in previous calls, we're contactless from the point of purchase to your entry in the park all the way through to your active pass space activation. And that gives guests a high degree of comfort coming to our parks. And then, of course, you've got the usable acre factor where they just feel they can naturally and effectively in many city of the park socially distance. So what we like is the fact we're seeing the capacity constraints lifted. We saw that in Mexico, as I stated. Right now, the only one we have under that situation is Canada. And we continue to get great feedback from all the park areas, cities, and the counties that they want us to continue to expand operations, which I think is very good. So we're seeing across all cohorts, whether it's families, young adults, teens, It's a very consistent feedback on a strong trust in what we're doing safety-wise.
spk06: Great. So it doesn't sound like there's any one group that's been suppressed or held back.
spk04: No. And, you know, the one I didn't mention, but, you know, just because we brought up in the prepared remarks, is just we're seeing the same feedback in group sales. You know, people, the groups want to get back out. They want togetherness. They just want togetherness and memories in a place that's thrilling, safe, and fun. And that's who we are at Six Flags.
spk06: Yeah, I think we all do. Thanks.
spk01: And there are no further questions at this time.
spk04: Thanks, Catherine. Thank you for your continued support. Our mission is to create fun and thrilling memories for all. as we leverage our iconic brand and the investments we have made in the guest experience to launch our next phase of growth. Take care, and we hope to see you at our parks for the last weekend of Fright Fest and for our Holiday in the Park event this winter.
spk01: Ladies and gentlemen, this concludes today's conference call. We thank you for your participation. You may now disconnect.
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