Theme park leader Six Flags Entertainment (FUN -1.23%) reported third-quarter earnings on Wednesday, Nov. 6, that highlight the ongoing impact of its July 2024 merger with Cedar Fair. The company recorded net revenue of $1.35 billion, slightly above the expected $1.34 billion. Net income decreased to $111 million, down from $215 million the previous year.
The quarter appeared challenging yet promising, as Six Flags navigated merger-driven cost challenges while capitalizing on revenue synergies.
| Metric | Q3 2024 | Analyst Estimate | Q3 2023 | Change (YOY) |
|---|---|---|---|---|
| Revenue | $1.35 billion | $1.34 billion | $842 million | 60% |
| Net income | $111 million | N/A | $215 million | (48.4%) |
| Adjusted EBITDA | $558 million | N/A | $388 million | 43.8% |
| Adjusted EPS | $1.10 | $2.98 | N/A | N/A |
| Attendance (guests) | 21 million | N/A | 12.4 million | 69% |
Source: Six Flags Entertainment. Note Analyst consensus estimates for the quarter provided by FactSet. The 2024 attendance figure includes 9.2 million guests who attended legacy Six Flags parks added in the merger.
Overview of Six Flags Entertainment
Six Flags Entertainment operates as a leading manager of a network of theme parks. As a result of merging with Cedar Fair in July 2024, it combines extensive resources to enhance operational efficiencies and market presence. With its attractions primarily spread across North America, Six Flags is committed to delivering unique and unforgettable experiences to visitors of all ages. The company strategically focuses on increasing attendance and optimizing park operations, both crucial for its continued success and financial health.
The recent merger has shifted Six Flags' business focus somewhat and integrating Cedar Fair's operations has been a major task. This merger aims to unlock potential synergies, strengthen market position, and ultimately enhance shareholder value. Successfully managing operational costs while continuing to allure guests requires precise execution, particularly to manage the integration's complexities.
Quarterly Highlights and Challenges
During the quarter, Six Flags reported a notable increase in operating days and attendance. This success is attributed to the merger with Cedar Fair, which expanded park capacity and footfall. Attendance reached 21 million guests, a 69% jump from 12.4 million the previous year. However, the company faced hurdles in the form of weather disruptions that tempered guest spending. In-park spending per visitor reduced slightly to $61.27 from $62.70, reflecting the challenge of balancing entry pricing with guest satisfaction.
Operating costs rose markedly due to integrating legacy operations, contributing to total expenses of $894 million --almost double from $467 million a year before. Despite these added costs, the company achieved $50 million in cost synergies so far, with plans to reach an additional $70 million by 2025. Aided by these synergies, Adjusted EBITDA for the third quarter increased by $170 million (up nearly 40%), totaling $558 million.
The quarter was also marked by significant strategic initiatives. Six Flags announced "Project Accelerate," aiming to drive $800 million in annual free cash flow by 2027. This initiative focuses extensively on optimizing both operational processes and guest services. Key objectives include drawing over 55 million annual visitors and boosting Modified EBITDA margins, painting a promising picture for long-term enhancements and profitability.
Investment in attractions is a pivotal strategy for Six Flags. As competition persists across the entertainment industry, continuously captivating audiences with new, exciting offerings is crucial. The company maintains a strong stance on capital allocation, carefully weighing investment against integration costs and merger-related debt to ensure a competitive edge.
Looking Forward
As it moves forward, Six Flags remains optimistic about performance in upcoming quarters. Management's guidance suggests the fourth quarter's adjusted EBITDA to be in the range of $205 million to $215 million. Early indicators, such as October attendance and 2025 season pass sales, reinforce this positive projection. The company aims to leverage operational synergies with Cedar Fair to further capitalize on newfound market leverage.
Investors are advised to watch detailed metrics surrounding future attendance figures and adjusted EBITDA margins. These areas will highlight the effectiveness of integration strategies and the potential realization of additional synergies. As Six Flags Entertainment transitions, its strategic focus on enhancing guest experiences, cost management, and operational effectiveness will be key for continued growth and development.
