Six Flags (SIX) Q4 2021 Earnings Call Transcript

Six Flags (SIX -0.84%)
Q4 2021 Earnings Call
Feb 24, 2022, 8:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good morning, ladies and gentlemen, welcome to the Six Flags of fourth quarter and full year 2021 earnings conference call. My name is Renz and I'll be your operator for today's call. [Operator instructions] I will now turn the call over to Mr. Steve Purtell, senior vice president, investor relations.

Steve Purtell -- Senior Vice President of Investor Relations

Good morning, and welcome to our fourth quarter and full year 2021 call. With me are Selim Bassoul, president and CEO of Six Flags; and Sandeep Reddy, 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 and 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 Selim.

Selim Bassoul -- President and Chief Executive Officer

Thank you, Steve. Good morning, and thank you for joining us our call. I'm very excited to speak to you today for the first time as CEO of Six Flags. Today, we have divided our call into three parts; First, I would introduce myself and describe how I have spent my first 100 days, including my initial observations about the business; Second, Sandeep will discuss our financial results; And finally, our return to discuss our strategy and priorities in more detail.

So let me tell you about myself. I started as CEO of Middleby Corporation from 2001 and to 2019. Middleby is a public company that manufactures food service equipment. We were the global leader in the manufacture of items like pizza oven, fryers, grills, stoves, and beverage equipment.

When I started at Middleby, the enterprise value was $100 million. By the time I lasts, almost 20 years later, it was valued at more than $7 billion. And Middleby has continued to grow. In fact, Middleby stock has appreciated by 50% since I left three years ago, which makes me very proud because it demonstrates that we developed and promoted the right internal leaders and we built our company to last.

Our success at Middleby was driven largely by two things; One, we developed a customer obsessed culture; And two, we empowered our people to think and behave like owners. This [Inaudible] of spirit of Innovation and Middleby, was consistently recognized as the technological leader in its industry. Middleby is of course, a different business of Six Flags, but I believe that if we can establish a customer obsessed culture, and empower our people to act like owners, then great things can happen at Six Flags, just like they did at Middleby. I have been on the board of Six Flags for two years, serving as chairman for the past year until I became CEO.

The reason I joined the Six Flags board was because I believe in the power of the brand and of the business model, and I believe that there was tremendous potential to continue to improve the guest experience. I have seven children, including a six year old daughter. So as you can imagine, I have spent a fair amount of time and money at theme parks over the years. I have seen firsthand the type of magic that can be created for a family visiting a Six Flags park.

My kids would talk about visits for weeks, and they would beg me to take them back. That's why I'm here to invigorate the magic of Six Flags. During my first 100 days, my focus was to get to know everyone. I started with the town hall meeting to introduce myself to all employees, then immediately flew out to meet with all of our past presidents.

I believe in decentralization, and in empowering business unit leaders. And at Six Flags, our business is conducted at each of our parks, not at our corporate headquarters. I wanted to send a message of empowerment and also of accountability to our parks. It is my view that our corporate office exists to serve our parks and our parks exist to serve our guests, so that will be our mentality as an organization.

I also met with more than 100 guests, gaining candid feedback about their visit to our parks. I visited both our own parks and our competitive sports, and interacted with our team members. I analyze the tremendous data Six Flags has gathered over the years, allowing me to see through the eyes of all our different types of customers, including families, young adults, single mothers, grandparents, and groups. This gave me a good understanding of the perception of Six Flags from our various constituents.

The unique identity of each Six Flags park is so evident, and we have the opportunity to further empower each park to maximize its success. I have been amazed by the passion our team members have for the company and for one another. We have a very talented and committed team. It is clear that it is tremendous demand for our brand of entertainment.

Thrills in an outdoor setting given in a friendly, clean, and safe environment where fun and memories can be created. I now understand our strengths, but also where we have opportunity to improve our performance. We'll focus our efforts in the following areas. First, we have reset our culture while we have recovered nicely from the pandemic, we need to execute better and we need to execute faster.

This requires an agile, nimble, performance oriented culture, no more corporate bureaucracy, no more overreliance simply on our brand and our history. We must elevate our game to the next level. Our goal is to be the most innovative and customer obsessed theme park company in the world, and we are creating a performance oriented culture to take us there. Second, we have reduced our layers of management from 7 to 3.

Downside the corporate office and gave more autonomy to the parks. The purpose of these changes was not to cut costs, but to create an agile organization, and to expedite decision making. We have brought in some new talent, particularly on the culinary side, and we have given additional responsibility to some of our top internal talent, including leaders with exceptional expertise in revenue management. Finally, we have reset our strategy and operational priorities.

I would provide details on our strategic direction later in the call. But at the high level, we focused on premiumization. This means we will provide a premium guest experience, and we will charge prices that are in line with the value we deliver to our guests. I will now turn the call over to Sandeep, who will give us some more details about our financial results.

Sandeep.

Sandeep Reddy -- Chief Financial Officer

Thank you, Selim, and good morning, everyone. It has been amazing to be part of Selim's first 100 days. We have significantly accelerated our speed of execution, and have begun to focus on providing a premium experience for our guests. I feel very confident in our new direction and I'm very excited for the future.

In the fourth quarter, our attendance recovered and per capita spending remained well above 2019 levels. Though, we saw some impact from the omicron virus toward the end of the quarter, this did not impact our Fright Fest event. As a reminder, results for the fourth quarter and full year are not comparable to prior year due to the pandemic. So my comparisons will be to 2019.

Total attendance for the quarter was 5.8 million guests, a 6% decline from 2019. Revenue in the quarter was up $56 million, or 21% to $317 million as a result of increased per capita spending. This was partially offset by a $4 million decline in sponsorship international and accommodations revenue due to the deferral of some sponsorship revenue. The change in our fiscal reporting period resulted in three fewer calendar days in October and two additional days in January for fourth quarter 2021.

Then, were included in the fourth quarter for both 2020 and 2019. The net impact was a reduction of 363,000 in attendance and $26 million of revenue. Guest spending per capita in the quarter increased 32% compared to 2019. Driven by a 28% increase in admissions spending per capita, and a 36% increase in in-parks spending per capita.

The increase in admissions spending per capita came from higher pricing on single day tickets, particularly during Fright Fest and an increase in the mix of single day guest. The increase on in-parks spending per capita, was driven by a robust consumer spending backdrop, and also by a higher mix of single day visitors who tend to spend more in our parks on average than our season passholders and members. Attendance from our active pass base in the fourth quarter represented 66% of total attendance versus 71% for fourth quarter 2019, demonstrating our success in attracting visitation of single day guests. On the cost side, cash operating in SG&A expenses increased by $30 million, or 18%, primarily due to higher wage rates and incentive costs to attract and retain team members, as well as increase security in our parks.

Adjusted EBITDA for the quarter was $95 million, compared to $72 million of adjusted EBITDA in 2019. Moving to full year performance, attendance of 28 million guests was down 16% from 2019. Total revenue of $1.5 billion was up $9 million, driven by higher guest spending per capita that offset both the increase, the decrease in attendance and the $52 million reduction in sponsorship, international agreements, and accommodations revenue. For the year, total guest spending per capita increased more than $10, or 24% due to our revenue management initiatives enhanced in park offerings and strong consumer spending trends.

Though, revenue was roughly flat to 2019, cash operating in SG&A expenses were up 5% for the year, primarily due to higher wage rates and incentive costs, increase security in our parks, and higher litigation costs offset by lower advertising costs. This resulted in adjusted EBITDA of $498 million, a 5% decline from 2019. Relative to 2019, our costs grew faster than our revenues over the past year. This is not acceptable to us, and we are focused on improving our expense management going forward.

At the end of 2021, our active pass base was 8.3 million, an increase of 600,000 was at the end of 2019. This total included 2020 season passes that were extended through the end of 2021, and have now expired. Our active base included 2.1 million members, and 6.2 million season passholders. Attendance from our active pass base for the full year represented 63% of total attendance, the same as for full year 2019.

Looking ahead, we expect our active pass base to decline throughout 2022 was this 2021, as the 2020 season passes that were extended through the end of 2021, followed by active pass base, and as we increase pricing for our traditional season passes. Deferred revenue as of January 2, 2022, was $178 million, down $27 million, or 13% from 2020, but up $34 million, or 23% from 2019. The decrease compared to 2020 was primarily due to a recognition of revenue from season passholders whose benefits had been extended through 2021, and are now fully recognized into revenue. Total capital expenditures for the year were $122 million.

We expect our 2022 capital spend to be slightly higher than 2021. Our liquidity position as of January 2, 2022, was $797 million, including $461 million of available revolver capacity, and $336 million of cash. This compares to a liquidity position of $851 million as of October 3, 2021. Net cash outflow for the quarter was $54 million, and was driven by a $42 million increase in capital expenditures versus 2019, as we ramped up capex spend later in the year.

We intend to paydown and refinance our debt later this year in order to reduce our annual cash interest costs, and to further improve our balance sheet. Looking ahead, we expect the premiumization strategy to depend less on total attendance and more on total revenue and profit as we focus on more premium guest. We expect our 2022 adjusted EBITDA to exceed our 2019 adjusted EBITDA, but we expect to deliver this through higher per caps and lower attendance. We will also have a strong focus on return on invested capital.

For 2021, our ROIC was 14.7%. We expect to grow this metric over time. We are excited about the opportunities ahead as we lay the groundwork for sustainable long-term earnings growth backed by a significantly improved guest experience. Now, I will pass the call back over to Selim, who will tell you more about our vision.

Selim Bassoul -- President and Chief Executive Officer

Thank you, Sandeep. While our results from the fourth quarter were strong, there is enormous and top potential for our business that we can capture through a shift in strategy. I would not like to discuss our new strategic direction in more detail, focusing on three areas; First, the guest experience. Second, pricing; And third, capital allocation.

Improving the guest experience is our primary focus. While there are many different ways to further delight our guest, we will prioritize the following six initiatives; Number one, improve our right efficiency and convenience. This include with reducing wait times outright, reducing ride down times, and opening rides when our guests arrive. To accomplish this, we reallocate staff from lower value activities to rides and will improve our processes in order to load rides faster and ensure cars are full every cycle.

This includes adding a single rider lane so that we can fill single seats that would have otherwise been empty. We'll also experiment with virtual queuing technology to help reduce wait times and allow guests to spend more time exploring our parts and less time standing in line. We're also in the process of testing digital screens throughout our parks that display current wait times for rides and restaurants. We should help our guests navigate our parks more efficiently; Number two, create fun through employee friendliness.

This means treating our guests like family, having a positive attitude and smiling. Attitudes are infectious, and my experience has taught me that the little smile can go a long way in the customer service business; Number three, part cleaners. This includes better curb appeal at the front gates, better in landscaping and clean restrooms. In fact, we are currently in the process of updating the front gate entrance experience at several of our [Inaudible] parks, and we hope to complete this work in advance of our peak summer season; Number four, better quality food.

This is a core expertise of mine in an area in which we can have an immediate impact. We have already hired a renowned executive chef to oversee our culinary program, and we have brought in a food service expert to help us deliver fast food, food fast, and efficiently. We start by focusing on the top selling items like burgers, pizza, and chicken tenders. Over the past 100 days, we have been reformulating our menu and testing new recipes on a daily basis.

In fact, I have tried over 100 burgers, 200 slices of pizza, and 100 orders of chicken tenders. We are still putting the final touches on our new culinary offerings. But based on what I've tasted so far, the quality of these items is better than any theme parks I've ever visited. So we are very excited to welcome back our guests this spring with new and improved versions of our top selling food items.

Over time, we will expand our focus to include healthier menu items, more grilled option, as well as better refreshments, including coffee and alcoholic beverages. In addition, will upgrade our point-of-sale system and kitchen operation to reduce lines and provide fresher, healthier, and better tasting food. Food and beverage represented 21% of our total revenue last year, but it can be much bigger over time; Number five, more guest amenities. In talking to our guests, they consistently requested more benches throughout our parks to sit and relax, more shaded areas to cool off, and parent lounges for some quite time.

We are already in the process of adding some of these amenities to our parks for the upcoming season; Final priority, six, is to upgrade our guest-facing technology and in particular, our mobile app. We are updating our app to make it effective, intuitive, and relevant. Improving personalization by using the wealth of data already available in our system. Over the next few months, we plan to improve our mobile app to deliver a more seamless guest experience in the following ways by increasing speed of entry at the parking lot and at the front gate.

Increasing access to a digital flashback enables guests to skip the line with the click of the button, and increasing usage of our mobile ordering system for food and beverage. More feature will be added over time as app becomes the remote control that facilitates a seamless guest experience. We're also committed to investing in technology that will help ensure a more sustainable future, such as solar energy, and waste reduction. Improving the guest experience is our obsession.

We will wake up every morning and go to sleep every night, thinking of ways to further delight our guests. Next, I would like to talk about pricing. Our guest surveys and our guest interviews had both indicated that customers are willing to pay more for better quality of service. However, we have historically ignored this data, and instead, we prioritized filling our parks to maximum capacity at the expense of the guest experience.

Data shows that guest who came on heavily discounted or free tickets pre-pandemic did not much spend much time, much money in the parks, yet they used up our park capacity. So based on our analysis, our historical reliance on heavy discounting was not the right strategy. Through premiumization, we will focus on guests who are willing to pay more for a premium experience, which will lessen the crowding of our parks, reducing pressure on our operations, and elevating the guest experience. Our pricing goal is to provide value for our guests times and value for the price paid.

We'll simplify our ticket offerings, but combining season passes and membership into a new product lineup with fewer choices and targeted blackout dates. Our new pricing architecture will not only be simpler for customers to understand, but will also create credible upsell opportunities and have the opportunity to dynamically adjust the prices based on the season and the day of the week. We have already done successful test of our new pricing program over the past month, and we are ready to roll out the changes company wide over the coming weeks. It is important to note that our ability to raise the price is directly related to our ability to deliver a higher quality guest experience.

So these two strategic priorities go hand in hand. Finally, before opening the call for questions, I would like to briefly comment on our capital allocation such. Our capital priorities have evolved, and we are currently focused on only two areas. Our number one priority is reinvesting in our business.

Our goal is to lead the industry in terms of innovation and to do that, we need to invest in our parks and in our system. Historically, innovation was measured in terms of thrill rides. In fact, for years, we have spent about 60% of capital expenditure budget on new rides and attractions, and we have been able to build an exceptional portfolio of thrill rides. While this strategy provides an effective marketing tool to attract new guests and increase the capacity of our parks, the marketing impact of each rides was short-lived.

As we sit here today, we have ample thrill rides in our parks, and while we continue to selectively add new [Inaudible] over time, our near-term focus will be to deploy our resources into guest-facing technology, food and beverage offerings, and other park infrastructure improvement for a higher guest experience impact with the lower cost than adding new rides. Now, once we have reinvest in our business, our second capital priority will be to paydown debt. These are the only two capital priorities for the time being. In conclusion, Six Flags has a truly unique portfolio of parks and with our new culture, our reset organization and our updated strategy in place, I'm confident that will delight both our guests and our shareholders over time.

Hopefully, you can sense that I'm highly energized to serve in this role, and I look forward to updating you on our continued progress in the months ahead. Operator, at this point, could you please open the call for any questions?

Questions & Answers:

Operator

Certainly, sir. [Operator instructions] Our first question comes from the line of James Hardiman with Citi. Please go ahead.

James Hardiman -- Citi -- Analyst

Hey, good morning. Thanks for taking my call, and I appreciate all the color around the new strategy. Selim, so I guess my first question would just be the previous management team, which wasn't that long ago, came in and it was pretty clear at the time that Six Flags was going to need to take a pretty significant step back before we move forward. I know you haven't given any new targets, but it doesn't seem like that's the position that we're in today.

But I guess, how would you characterize the earnings opportunity versus the previous targets that were that were laid out? And ultimately, how would you characterize this? I guess, I don't want to call it a turnaround, but how would you characterize the new era of Six Flags?

Selim Bassoul -- President and Chief Executive Officer

James, first of all, good morning. And one, I think that we feel very comfortable, comfortable that moving forward, our potential for earning growth and EBITDA has substantial potential to go up. So we start, first of all with what was the change. As I mentioned, the first change in strategy is to price for the value of our parks.

And that's very important that we go back and look at what happened before. So before, we were very much looking at attendance, "let's fill up the parks", Today, we're looking at premiumization strategy. So truly, we want to invest in what I call the social aspects of our parks since where we're going to spend our money. I spent the first 100 days basically talking to guests, whether it's members or seasons past or single day tickets.

I also spent time looking at our parks and our competitors park. And it's just clear that, first of all, guest we're willing to pay more for a different experience at Six Flags. Meaning, if we can reduce the wait lines and improve ride efficiency and convenience, create a better environment for families to come in to our parks, make sure the cleanliness of our park, to curb appeal of our front entrances, our landscaping, the food, in my basically script, I talked about food representing 21% of our revenues. I think this is a huge opportunity to improve on our food offering and on our boost.

Revenues from food and merchandizing, as well as EBITDA from that segment and then, of course, the guest-facing technology. And this is most probably something that we have lacked in the past. We have not been as strong, especially on a mobile app, and we are truly spending a lot of money on making sure that our app is intuitive, seamless, relevant and allow people to order online much easier. And in order to do that, we'll talk about changing the way we approach the food.

So going back, while I don't want to give guidance. I would like to say, that we will most probably beat and exceed our EBITDA numbers in of 2019. Maybe that's a good start to start this --

Sandeep Reddy -- Chief Financial Officer

I'll just add one point to that what Selim said. So I think just for context, is giving you the strategic context of what we're looking at as we going forward. But I think apart from the fact that in 2022, we expect to exceed 2019 EBITDA levels. We are expecting to this in a very different construction.

We're expecting to do it with less attendance, and higher per capita spending. And that goes back to the premiumization strategy that we talked about. And our goal while we're doing this, is to maintain or improve our per cap spending levels at 2021 levels while we're doing this. So it's definitely a pivot and a shift, compared to what we've been talking about previously.

And I think, that's why it's important to have that context behind the numbers, as well as the strategic framework that's [Inaudible] laid out.

James Hardiman -- Citi -- Analyst

Got it. And then, just maybe speak to the test program that you ran over the course of last month. I think a lot of people are trying to just figure out, what is the order of magnitude that we're talking about here? When we talk about less attendance and more per caps? Whether it's versus 2019 or versus 2021, how big of a swing should we expect? And ultimately, it's clear that the underlying goal is to have better EBITDA, but the revenue line, just to clarify, we should also expect, despite negative attendance and positive per caps at the revenue level, we should expect growth over where we previously were. Is that correct?

Sandeep Reddy -- Chief Financial Officer

Sure. Great question, James, and I think number one, we talked about revenue growth of revenue and profit being the priority. So that's number one. Specifically to attendance, yes, we expect to be lower than 2019 attendance levels, but we expect to be at 2021 levels or above.

And so I think that's that's basically the trade off to be talking about. So if you want to get that sense of order of magnitude, that's the order of magnitude of attendance trade off [Inaudible]

James Hardiman -- Citi -- Analyst

OK. And just to clarify, remind me where you were in 2020 attendance versus 2019 for the full year. I know you gave us those numbers -- but when you think about that on a full year basis as the baseline, even though the most recent fourth quarter numbers were better than the full year number, presumably, but that's how we should think about that?

Sandeep Reddy -- Chief Financial Officer

Correct. We were 32.8 million of attendance in 2019. We were 27.7 million in 2021. So what we are saying is, we're not really striving for 32.8 million, but we're striving to be at 27.7 million or better.

James Hardiman -- Citi -- Analyst

Got it. That's really helpful. Thanks, guys.

Sandeep Reddy -- Chief Financial Officer

Welcome.

Operator

Thank you. The next question is from the line of David Katz with Jefferies. Your line is open.

David Katz -- Jefferies -- Analyst

Hi. Good morning, everyone. Good to talk to you again and appreciate you taking my questions. Thanks for all the details so far.

I just wanted to follow up. Selim, much of your commentary was around investing in digital, investing in the parks, and at the same time, the commentary around costs growing faster than revenues. When we put the pieces together, you said that revenues are going to start to outgrow costs. And how do we contemplate the investment in the context of keeping the costs from growing too much? If you see what I'm getting at.

Just a little of context there would be helpful.

Selim Bassoul -- President and Chief Executive Officer

Yeah. David, good morning. And first of all, definitely we are looking at revenues growth outpacing cost growth over when you look across the year. We're not looking at quarter-by-quarter, but over the year.

In 2022, when you look back, our basically revenue growth will be faster, growing faster than our cost growth. So when I look at our cost, when you think about our cost, they are mainly in the parks, and it's mostly about hourly wage is our biggest cost. And then we have a cost on the goods side. So on the hourly wage inflation, I think we are very comfortable that between the pricing strategy we've put together, as well as most probably looking at what's happened in 2021.

I think we are very well-positioned for our most probably stabilizing our hourly wage from there. On the goods side, which is where we are looking at most probably food costs, merchandizing cost, parts cost. We are today rationalizing our SKUs, we are standardizing purchasing across the parts and we are adjusting suppliers. We are looking at substituting products, now technology such as ERP, automation of security, digital flash passes is another driver of reducing some of our operating costs.

So from a cost standpoint, we are truly remaining committed to lowering our fixed and variable cost, and we have to resize our cost structure.

David Katz -- Jefferies -- Analyst

Understood. And if I may follow up quickly. Through all of your thoughtful and comprehensive commentary, there was no mention whatsoever of M&A. Should we consider that to be outside your consciousness in pretty much any form at this point?

Selim Bassoul -- President and Chief Executive Officer

I think, honestly, I cannot comment on specific M&A right now. And, you know my background came from M&A. So you've seen my background, we have consolidated a major industry in my previous life. And however, today we are singularly focused on improving our execution and paying down debt.

That's our priority number one. Now, I would say over time we may consider M&A, but I don't see it in the foreseeable future. Honestly, I want our strategy right now is, "let's go get our balance sheet better and let's get to our guest experience", is where we're going to spend most of our money in making sure that we create one of the best guest experience in what I call a regional amusement parks.

David Katz -- Jefferies -- Analyst

Perfect. Thank you very much.

Operator

Thank you. The next one, we have the line of Ben Chaiken with Credit Suisse. Please go ahead.

Ben Chaiken -- Credit Suisse -- Analyst

Hey, how's it going? Admission per caps rather was strong all year. My take was that there was some organic items in there, but also some in organic, such as mix or changes to the season pass allocation that contributed to the increase. As we think about '22 admission per caps, what headwinds and tailwinds do we need to consider when comparing '22 versus '21? That would be great if we could ballpark quantify that as well. Thanks.

Sandeep Reddy -- Chief Financial Officer

That's a great question, Ben. And I think one of the things that's really important to note is we actually talked about this in the last call and Q3, a big shift that's happened over years with the premiumization strategy and the new product architecture that we're rolling out. We're really looking at probably a very similar cadence of sales of process and visitation in 2022 versus 2021. Therefore, we don't expect to see a deterioration in the per caps to '21 versus '22 from that factor, which was what we discussed on the Q3 call.

And frankly, apart from the fact that the visitation pattern should be very similar, we're taking incremental pricing like we are. If anything, we see upside to admissions, perhaps versus 2021.

Ben Chaiken -- Credit Suisse -- Analyst

Gotcha. And just to clarify, when you say visitation patterns, are you referring to [Inaudible] mix like single day versus season past?

Sandeep Reddy -- Chief Financial Officer

I think it's more of a season pass sales. If you recall last in 2021, the season pass sales started occurring later in the year because of the pandemic and coming out of it. And so, we actually ramped up pretty significantly, and the revenue was recognized over a compressed time period. This year, because we are actually focused more on new season pass products and not really selling new membership products.

The timing of it will similarly be much later. And as a result, the pattern of which the revenue gets recorded will be very similar. And I think the headwind that we were anticipating from that basically goes away. But you bring up a good point on single day ticket, we've done extremely well on single day ticket in the fourth quarter.

We continue to expect to see single day ticket strength to play out as we move forward. And in the prepared remarks, we talked about active pass base more than likely being lower than 2021 levels throughout 2022. What we see at the same time, a robust penetration of single day tickets to drive our revenue.

Ben Chaiken -- Credit Suisse -- Analyst

Gotcha. That's helpful. And then I think, Selim [Inaudible] on the call and then one thing we've noticed over the last few weeks is that a handful your parks, especially those that are open year-round, is what appears to be a simplification of your pricing strategy and also a net increase in pricing? Assuming we're correct. Are you able to share any of the early results from this around the pricing uplift or the attendance impact? Yeah.

Thanks.

Selim Bassoul -- President and Chief Executive Officer

Well, it's still very early, Ben, to talk about this, but I have to tell you the results have been very encouraging. I would say we have been very pleased with just the few couple of weeks that we've had so far. It's been very, very good. I believe that's on the few parts that have been open with the new pricing strategy, it's been a very, very good.

So that's where we are. But we need to remember that's a very, very small, small gesture. But it's been very, very encouraging. But let me share with you why I am very optimistic about pricing architecture.

So let's talk about it a little bit more specifically. So our pricing architecture that occurred is very data based. One of the things that Six Flags has was makes it a powerful company, is the fact that the data is back [Inaudible]. It's so good data they have.

They can manage, They can slice, and manage attendance, and in so many ways. And I think one of the reason why I was very confident when we started looking at our pricing architecture is talking to our guests. It was clear to me that those guest was randomly selected. We went through calling all types across the nation, single day tickets, the groups, membership, season passes, they all want "we're willing to pay more for a better experience in the park".

In fact, one of the comment I've had received constantly is our parks have become overcrowded. Both our parks and our water parks. And when I asked the question, "How much more elasticity you can say?", I found out that there was a lot of elasticity here for Six Flags. And I think as I look forward to pricing, I think we shall play for scales, which means taking adventure or elasticity, which would significantly accelerate our growth and provide more EBITDA.

Then, the other interesting part that is interesting for us is the timing. "Was the inflation happening?", it's really the timing for us to institute pricing is fantastic. Everybody is accepting, the consumer are accepting price increases. And I think today, we will continue adjusting very fast, according to what happened to the inflation.

If we see in the first half or the second half in 2022. But I have to tell you one thing our strategy here is to make sure when we get pricing from our guest, it's based on the value we create for them. And when inflation moves behind us, we want this pricing to stick as well. And that's OK.

We're not just riding the inflation curve. We want to make sure that the value is there. So that's when everything goes back to normal. Our guests feel that the pricing that the new pricing sticks beyond just inflation.

Ben Chaiken -- Credit Suisse -- Analyst

That's helpful. And then, just like the last one as a follow up. At the parks that you have implemented the new pricing, are you seeing attendants pull back as expected? Or is it holding in their?

Selim Bassoul -- President and Chief Executive Officer

I'm going to let Sandeep answer that because he's analyzing the data.

Sandeep Reddy -- Chief Financial Officer

Yeah. I think, Ben, it's pretty early times right now to actually get into that bunch of detail, but I think, Salim said it's a good read. We're very encouraged because we've been testing now for a few weeks and we're so encouraged by what we've seen so far that we're rolling out the test across all the products in the system. And so that should give you an idea that it looks pretty good and they're very confident of where we're going.

Ben Chaiken -- Credit Suisse -- Analyst

Thank you. Appreciate it.

Operator

Thank you. The next one, we have the line of Stephen Grambling with Goldman Sachs. Your line is open.

Stephen Grambling -- Goldman Sachs -- Analyst

Hi. Thanks. Maybe a follow up on expenses. Sandeep mentioned to focus on improving expense management going forward and Selim, you mentioned the reduction in the layers of management.

Has that already been implemented in any way to think about quantifying the savings or potential reinvestment opportunity that those changes represent?

Sandeep Reddy -- Chief Financial Officer

So, let me take that, Stephen, and I think there's two layers to the changing layers of management. A lot of that happened the end of Q4 2021, so that's already embedded in our estimates as we go forward. But what's Selim was talking about was, a broader cost structure discussion. We are looking at our total amount of cost with the fixed costs of variable costs very insatiably.

And I think what we want to do is, make sure that we look under every rock to find what we can actually do to make sure that we find productivities, and at the same time create basically an ability to invest further to improve the guest experience as we go through. But all of this with the principle of making sure that our revenues are always growing faster than our costs. And that really would be what I would say, the cost element that we are looking at will take a little bit longer to play out. But I think the actions on the management structure already happened at the end of Q4 21.

Stephen Grambling -- Goldman Sachs -- Analyst

Got it, and then there was a lot of discussion around reinvesting in the park, but also moving away from the thrill rides. How should we think about the net impact of capex going forward versus your historical spend? Perhaps relative to sales.

Sandeep Reddy -- Chief Financial Officer

Yeah. I think, what I would say on this is, the very important thing that we've highlighted is for 2022, capex shouldn't be much different from 2021. And I think for 2021, if you want to look at the percentage, it was about 8% of sales. But rather than looking at a percentage, I think we're pivoting more to an absolute value in terms of capex dollars.

And we really believe that the amount of capex dollars that we're deploying right now makes sense, given the capital that we've already gone in thrill rides, and given that the assets that we can leverage because what we're talking about, whether it's guest technology or whether it's food and beverage offerings or park infrastructure is much less expensive to invest in than a thrill rides. And so we don't really think about it, necessarily in terms of percentage terms at this point. We're still evolving the strategy, of course, but that's how we're thinking about it.

Stephen Grambling -- Goldman Sachs -- Analyst

Helpful, thanks so much.

Sandeep Reddy -- Chief Financial Officer

Thank you, Stephen.

Operator

Thank you. The next one, we have Paul Golding with Macquarie.

Paul Golding -- Macquarie Group -- Analyst

Thanks so much for taking the question, and Selim, congrats on the new role. I was hoping we could get some more color around how you're thinking higher level about the active pass base. I know. Sandeep, you were referencing that pass base vs.

single day mix. This is falling. And I guess my question is, is this intentional? You've got a new pricing structure that you referenced in the prepared remarks. How should we think about your view around single day as a proportion of mix, whether you're going to lean into pass or not, and the puts and takes of the recurring revenue base.

Selim Bassoul -- President and Chief Executive Officer

So let me give you a stratification of our guest. That's very important to talk about. On any given day, our highest value guest is the single day guests. They spend more time in park versus as food, souvenirs and parking, and their cap per guest as they come as a single day ticket is the highest.

The season passholder guest has the highest lifetime value, so we are trying to truly find a balance mix of both, but truly the biggest interest for us is making sure that single day just becomes somebody who's coming into our park exponentially higher rate because they come to our park, they spend more money and they are usually coming because they find the park as a destination and aspiration. They are willing to spend that money to come to our park.This has been something that we've seen a trend growing on single day tickets in 2021, and we're seeing it started at the beginning of this year. So we're very excited about that. And I want to turn it to Sandeep.

If you want to add a few more colors on that.

Sandeep Reddy -- Chief Financial Officer

Yes. I think, Selim hit it perfectly. The only thing I would just add to that is, with the pricing discussion that he had previously on the call, we expecting to get increased yield on each unit of the active pass base that we sell. So looking at the absolute number of active pass base units is probably less relevant than the yield from each unit that you sell or hold.

And I think that's really the way to think about it. And that's how we're thinking about total revenue. We're not talking about specifically attendance or active pass base units. We're talking about revenue growth.

Paul Golding -- Macquarie Group -- Analyst

Got it. So, pushing price broadly. And then another question, I guess, around the investment, in guest-facing technologies is a lot of emphasis in the strategy around making the guest experience more efficient, more premium, I guess. Is there anything that we should be thinking about in terms of how this strategy may also focus on reducing physical wage hours in terms of just the digitization of the experience? Should we think that, as we see some of these platforms roll out that we may see some attached relief in terms of labor cost?

Sandeep Reddy -- Chief Financial Officer

No. I think that's a really very good question, and I think there's two pieces of it; Guest-facing technology are to really enable the experience of the guest and make it much more seamless to enjoy the park and everything that we offer in the park. There's an opportunity to leverage technology to get productivity in terms of labor management as well. Anything which is not specifically guest-facing in terms of labor that we're deploying, we're looking for ways to actually automated and actually move it out completely and eliminate that labor because not only is it going to be much more efficient and effective, but I think from a productivity and seamlessness standpoint, that's a lot better for us as well.

And that's the layer beneath what we talked about on cost structure. When we talked about looking at our fixed and variable costs, that includes investments that we may need to make on a capital standpoint which drive cost improvements on the --

Selim Bassoul -- President and Chief Executive Officer

Give you example, Paul, would be automating the back of the kitchen and that expertise I have, and automating our security. And we are working in truly putting some amazing state of the art technology for automating our security and automating our back of the house kitchen.

Paul Golding -- Macquarie Group -- Analyst

Great. Thank you so much.

Selim Bassoul -- President and Chief Executive Officer

Thank you, Paul.

Operator

Thank you. The next one, we have the line of Steve Wieczynski with Stifel.

Steve Wieczynski -- Stifel Financial Corp. -- Analyst

Yeah. Hey, guys, good morning. I want to ask you about the capital allocation strategy, which now sounds like reinvesting in your business is number one, paying down debt is number two. And historically, Six Flags has always been more about what we call a dividend growth story.

Now that seems like that's clearly changed. I guess, the question is, how are you thinking about reinvesting in the business and growing those ROIC, which you referenced in your prepared remarks? And I guess, what level do you think you can get those ROIC in order to justify essentially not returning cash to shareholders at this point?

Sandeep Reddy -- Chief Financial Officer

So, Steven, I think this is a great question. I think if we look at where we were on ROIC this past year, we were at about 15%, it's slightly lower than where we've been historically at our peak. So there's tremendous runway to at least get to that level, but we believe there is significant upside way beyond that as well. And so, our focus is we're continuing to invest in the business to drive that our ROIC enough.

We're not ready to give a specific number, but there's tremendous potential to have incremental ROIC appreciation. So as long as we can keep on driving that, this investment opportunities, our capital allocation priorities remain the same that we just talked about investing in the business, and paydown debt and get the balance in the better shape.

Selim Bassoul -- President and Chief Executive Officer

So Steve, I believe in my experience over time, and again, going back to my previous life, the best investment for return for shareholder is making sure that you create a total shareholder return in terms of creating the best EBITDA, the best cash flow, the best balance sheet cleanliness. And I think distributing dividends is not something we have much better way to return to shareholders than distributing dividends at this moment. Our opportunities in investing and getting return on invested capital from old investment are going to make in the the parks will yield very strong return back into our shareholder. And down the road, who knows more additional M&A that comes on top of that.

I think it's fantastic. So I want to tell you something, Steve, because you bring up something about our prioritization of capex. I have to say that while we have ample thrill rides in our parks, and we are most probably, in thrill rides, we have more civilized than any of our competitors in all our parks. Park to park, we have more than anybody else in thrill rides.

Now, while we're investing in our parks and our systems, including guest-facing technology, food service, and infrastructure improvements that are most guests-facing. And while rides have not been our priority this year, we are introducing record breaking and first-of-its-kind rides this year. So at Magic Mountain, we're introducing Wonder Woman Flight of Courage single roller coaster, and it will be the park's 20th coaster. At Fiesta, we're introducing Dr.

Daboll Cliffhanger, the world's steepest dive coaster. In Dallas, Aquaman Power Wave, the first of its kind water coaster in North America and our park's 15th coaster. Catwoman whip, going in St. Louis.

Discovery Kingdom signed Windows Safari, a unique combination of family coaster, animal exhibit. And we are rebranding waterpark in Darien Lake as Hurricane Harbor. So, we're doing a lot when it comes to rides, still. But it's not the property where we were spending 60% of our capex, so it's going to be fascinating to see how we go back and listen to our guests in terms of what they really need, and talking about that, I'm going to give you some simple things.

On our guest experience, we want to make sure that our best guests, one of the issues I've heard is, we lose a lot of people on food service because our rates are so long and by the time they order their food, the food is cold enough and in the best of shape, and we need to make sure that we are dedicating pick up lanes for our guests who are ordering food digitally through our mobile app. And I think that will improve significant the guest experience. Similar to single rider lane, we're going to most probably also reduce the [Inaudible] point. So those are some of the examples, though.

So thank you. Thank you very much. And let's go to one more question. Ryan, I think you are next?

Operator

Thank you. The next one, we have the line of Ryan Sundby with William Blair.

Ryan Sundby -- William Blair and Company -- Analyst

Hey, guys, thanks for taking my question. So, with the focus on premiumization, can you talk about what rebranding investment is maybe needed here to help communicate this change to the consumer? What we see maybe a new marketing effort here to help explain the shift and why prices are going higher in a better experience? And then, it's just more about reaching out to a new or different guest than what you've attracted to the parks in the past? Or maybe one that's been turned away by a experience previously? Or it's just more about segmenting and enhancing the experience for your current guests that have been in the park for years?

Selim Bassoul -- President and Chief Executive Officer

I think let's look at the marketing approach, the marketing approach is no longer going to be traditional, we're going to be going through and we are basically hiring right now. We've hired a few and we are realigned our marketing department to look at three segments of how we're going to market all those new changes to our guest. Number one, we're going to go to social media, a very, very strong social media. We are lucky to have some phenomenal influencers that use our parks and we reach out to a couple of them and we're going to basically keep on spreading the message to influencers.

Number three, that has been interesting for us. We have not been using a lot of SEOs, search engine optimization, to make sure that when you look at the internet and you search, we have not put a lot of energy on that. So we're putting a lot of SEOs investments to make sure that when you're looking at outdoor entertainment, we always come up first, and we'll detail what our outdoor entertainment means.

Ryan Sundby -- William Blair and Company -- Analyst

Is this more about reaching a new or different guest than maybe what you've attracted to in the past?

Selim Bassoul -- President and Chief Executive Officer

Definitely. I can tell you that we would like to reach a, I hate to go back to retail, but let's assume and it's easy to do that, it's not exactly equivalent, but think about the Wal-Mart, Kmart, customer we're going to a target customer, hopefully with what we're going to do and we want to attract more families, want more strollers in our park, that's for sure. That's most probably a big new area that we have not been focusing on in the past. Families in our parks with strollers coming in our park.

So we're investing in kids areas. We can get kids meals. We're investing in a tremendous way to bring families back to our park, which has not been an emphasis.

Ryan Sundby -- William Blair and Company -- Analyst

Thank you, very helpful.

Operator

Thank you. We don't have any further questions at this time. Presenters, please continue.

Selim Bassoul -- President and Chief Executive Officer

So I would like you to have a closing remarks. I would like to thank all the dedicated and hardworking employees of Six Flags for committing to our new strategy and vision. This is a great time for Six Flags to shine, and I'm thrilled to be part of your team. We want to remain one of the very best places to work for the most promising and diverse talent, as evidenced by our recognition from Forbes as one of America's best employers for new graduates in 2021.

And one of the best employers for women in 2021. To our investors, thank you for your support. Our guests are seeking truth in an environment that is fun, safe, convenient, and affordable. Something Six Flags is uniquely able to offer.

I look forward to seeing you in our park this season to witness our improvement firsthand. Have a blessed day and thank you.

Operator

[Operator signoff]

Duration: 62 minutes

Call participants:

Steve Purtell -- Senior Vice President of Investor Relations

Selim Bassoul -- President and Chief Executive Officer

Sandeep Reddy -- Chief Financial Officer

James Hardiman -- Citi -- Analyst

David Katz -- Jefferies -- Analyst

Ben Chaiken -- Credit Suisse -- Analyst

Stephen Grambling -- Goldman Sachs -- Analyst

Paul Golding -- Macquarie Group -- Analyst

Steve Wieczynski -- Stifel Financial Corp. -- Analyst

Ryan Sundby -- William Blair and Company -- Analyst

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