Q2 2023 Six Flags Entertainment Corp Earnings Call
Participants
Evan Bertrand
Gary Mick; Executive VP, CFO & Interim Controller; Six Flags Entertainment Corporation
Selim A. Bassoul; CEO, President & Executive Director; Six Flags Entertainment Corporation
Barton Evans Crockett; MD & Senior Internet Media Analyst; Rosenblatt Securities Inc., Research Division
David Brian Katz; MD and Senior Equity Analyst of Gaming, Lodging & Leisure; Jefferies LLC, Research Division
Elizabeth Dove; Research Analyst; Goldman Sachs Group, Inc., Research Division
Ian Alton Zaffino; MD & Senior Analyst; Oppenheimer & Co. Inc., Research Division
James Lloyd Hardiman; Director; Citigroup Inc. Exchange Research
Robert Samuel Aurand; Associate; KeyBanc Capital Markets Inc., Research Division
Steven Moyer Wieczynski; MD of Equity Research and Gaming & Leisure Research Analyst; Stifel, Nicolaus & Company, Incorporated, Research Division
Thomas L. Yeh; Research Associate; Morgan Stanley, Research Division
Presentation
Operator
Good morning, ladies and gentlemen. Welcome to the Six Flags Second Quarter 2023 Earnings Conference Call. My name is Drew, and I will be your operator for today's call. (Operator Instructions) I will now turn the call over to Evan Bertrand, Vice President, Investor Relations and Treasurer.
Evan Bertrand
Good morning, and welcome to our second quarter 2023 call. With me is Selim Bassoul, President and CEO of Six Flags; and Gary Mick, 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 the 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 Selim.
Selim A. Bassoul
Good morning. Thank you for joining our call. Today, we will focus on 3 areas. First, I will provide an update on the progress we have made on our transformation. Second, Gary will provide details on our financial results and our outlook for the remainder of the year. Finally, I will return to discuss our 4 key strategic pillars for sustainable long-term profit growth.
Our team continues to work hard to transform the company as we strive to reach our full potential. Any transformation begins with a vision for what the company can be. For us, our vision is to deliver a truly exceptional experience for our guests and sustainable profit growth over the long term for our shareholders. The hard work is turning that vision into a reality. Despite a challenging weather backdrop, we saw a solid growth trajectory in second quarter and first half of the year. There are 5 items I would like to highlight that serve as indicators that our transformation is taking hold.
First, our guests are responding favorably to the investments we have made in our parks, in our new seasonal events and in technology, including our new mobile app. Second, our season pass sales trends continue to be strong. Year-to-date through July, our season pass unit sales have increased over 50% versus prior year, including the newly released Six Flags plus subscription offering. After a slow start to our 2023 past sale last fall, guests have responded favorably to our simplified product assortment and the compelling value that our season pass products offer.
Third, our attendance trends continue to improve, with attendance increasing 6% in the quarter and 4% year-to-date. Despite a cold and rainy first quarter in California, followed by heavy rainfall in the Northeast and a record heat waves in the south in the second quarter. Fourth, our total guest per capita spending continues to be near record levels. As expected, our admissions per capita is down in the first half of the year as we scaled back our season pass pricing. However, we are pleased that our In-park per capita spending was only down 1% in the first half of the year and is up nearly 50% versus pre-pandemic levels.
Our consumer appears to be healthy and is responding favorably to our enhanced in-park offerings and in particular, to our revamped culinary lineup and food festivals. Our guests are spending more on food and beverage this year compared to last year, both in total units and average price paid. Finally, I am proud to say that our team continues to stay focused on costs with our operating costs up less than 1% in the first half of the year despite inflationary pressures as well as our investments in advertising and in the guest experience at our parks.
We are still in the early stages of our transformation, but we are encouraged by the recent proof points that our strategy is working, and we are excited about the opportunity to take this company to the next level.
Before turning it over to Gary, I would like to highlight an encouraging data point that speaks to the strength of our new business model. Adjusted EBITDA achieved by our North American operations, which excludes international licensing revenue increased 16% in the first half of 2023 versus the same period in 2019. Differently, we are performing better in the first half of this year on 32% less attendance. While many challenges lie ahead, we are encouraged by our year-to-date results, and we believe we have laid the foundation for many years of organic earnings growth in a healthy and sustainable manner.
Now I would like to turn the call over to Gary to discuss the financial results for the quarter and our outlook for the remainder of the year. Gary?
Gary Mick
Thank you, Selim, and good morning, everyone. I will start with attendance, revenue and per cap then transition to expenses and EBITDA for the quarter and first half of the year. I will then move on to our active pass base metrics, select balance sheet items and capital allocation.
To close, I will provide additional clarity on what we expect for the second half of the year. For second quarter of 2023, total attendance was 7.1 million guests, a 6% increase from second quarter 2022. This attendance growth fell short of our expectations due to a challenging weather environment in the second quarter with unusually high rainfall in the Northeast combined with a record heat wave in the South. Revenue in the quarter increased $8 million or 2% to $444 million. This was primarily the result of higher attendance partially offset by a decrease in total guest spending per capita of $3 or 5% versus second quarter 2022.
Admission spending per capita decreased $3 or 7% and in-park spending per capita decreased less than $1 or 2%. The decrease in admission spending per capita was driven primarily by lower average season pass pricing in 2023 versus last year. As Selim mentioned, we have optimized our admissions pricing, which drove past sales this year and had the expected result of modestly lowering per cap. In-park spending per capita declined versus prior year, due to the lower spend on parking, retail and flash passes as a result of higher mix of season pass attendance in the second quarter 2023 versus prior year.
Due to the inclusion of parking and other benefits associated with passes, season pass guests generally spend less per visit on these items relative to single-day ticket guests. This decline was partially offset by higher food and beverage sales in the second quarter 2023 versus the prior year, which was largely fueled by our revamped culinary assortment as well as our exciting events and festival lineup.
On the cost side, in the second quarter, we incurred $38 million related to an upward revision of our estimated liabilities for our self-insurance reserves primarily associated with general liability claims, which is recorded in our SG&A. This adjustment is not the result of an increased volume of incidents, but rather the broader impact of rising costs of claims driven by various inflationary factors, including increasing litigation and settlement costs being driven in part by a general trend of higher jury awards. This trend has been affecting many industries, leading to higher settlement amounts and more unpredictable claims outcome.
Our self-insurance reserves estimates are made utilizing our claims data history, actuarially determined estimates and other qualitative considerations. As a result of the observed pattern of increasing litigation and settlement costs previously discussed, we performed an actuarial analysis during the second quarter, which resulted in the revision of certain key actuarial assumptions. We want to clarify that this change in accounting estimate relates to open claims associated with incidents that have occurred across multiple historical periods.
For the purposes of reporting cash operating and SG&A expenses and adjusted EBITDA, we have excluded the $38 million associated with the change in estimate of our self-insurance reserves as we feel this is a better reflection of underlying operating performance in the current period and provides more meaningful comparisons to our historical results and to other companies in our industry. Cash operating and SG&A expenses were up less than 1% year-over-year. The impact of higher inflation and higher media spend was offset by cost-saving initiatives and lower full-time head count.
Adjusted EBITDA for the quarter was $161 million, a $7 million increase or 5% compared to second quarter 2022, driven by higher revenue. For the first half of 2023, our attendance increased by 4% and our total guest spending per capita decreased by 3%, driving a 2% increase in our total revenue. Cash operating costs for the first half increased 2% and adjusted EBITDA increased $6 million or 5%. As Selim mentioned, we have seen significant growth in our core North American parks, compared to the first half of 2019. Adjusted EBITDA attributable to international licensing decreased $24 million from the first half of 2019 to the first half of 2023. So adjusted EBITDA achieved by our core North American operations, increased $19 million or 16% in the first half of 2023 compared to the first half of 2019.
Our Active Pass Base as of July 2, 2023, comprised 4.6 million pass overs, which includes the new Six Flags plus subscription program represented an increase of 2% versus the same time last year. Deferred revenue as of July 2, 2023 was $177 million, up $6 million or 3% compared to the second quarter of 2022. The increase is primarily due to the higher Active Pass Base as of July 2, 2023. Total capital expenditures for the quarter was $42 million, an increase of $16 million compared to the second quarter of 2022. For the first half of 2023, capital expenditures were $67 million. We expect our full year 2023 capital expenditures to be approximately $170 million to $180 million which includes a mix of exciting new rides, continued infrastructure improvements and implementation of guest-facing technology and amenities in our parks.
Our expectation increased from our prior estimate of $150 million due to higher advent spend on marketable capital plan for future years. We are also raising CapEx expectations in future years. For 2024, capital expenditures are expected to range between $200 million and $220 million and CapEx in 2025 is expected to be between $230 million and $250 million before returning to a long-term run rate of approximately 10% of revenue. We have exciting new rides in the pipeline, and we look forward to providing you an update in the near future.
Our liquidity position as of July 2 was $362 million, this included $310 million of available revolver capacity, net of $21 million of letters of credit plus $52 million of cash. In the second quarter, we successfully increased our revolving credit facility from $350 million to $500 million, which provides us greater capacity and flexibility to pay down debt in the coming years. During the second quarter, we paid down $94 million in debt, and we have paid down an additional $50 million of debt since the end of the second quarter to today. We will continue to use free cash flow to pay down debt and reduce net leverage towards our target of between 3 and 4x.
Before I turn it back over to Selim, I want to highlight a few items to help set expectations for the remainder of the year. First, we expect the tenants to increase in the back half of the year, driven by an easier attendance comp in the third quarter. July attendance increased 11% versus prior year. We expect total guest spending per capita to decrease year-over-year due to lower average season pass prices in 2023 versus prior year as well as to the slightly negative impact of higher season pass attendance mix on in-park spend. We expect cash operating costs for the full year to increase by approximately low to mid-single digits as we battle inflationary pressures while continuing to invest in the guest experience and advertising, partially offset by our cost reduction initiatives.
Due to the timing of advertising spend and expected attendance growth, the increase in expenses will likely be more pronounced in the third quarter. For the full year, we are currently tracking behind our previous expectations due to the challenging weather conditions experienced in the first half of the year. Looking ahead, our strategy is gaining traction, and we have many initiatives in place to drive earnings growth, which Selim will now discuss in more detail. Selim?
Selim A. Bassoul
Thank you, Gary. I would now like to review our 4 strategic pillars to drive long-term sustainable earnings growth, which are park experience, seasonal events, pricing and products and organizational culture. First, Park experience . Over the last couple of years, we have made targeted investments in park amenities, beautification, technology and new attractions, which have reshaped the look and feel of our parts and our guests are responding positively. While we have made progress enhancing the guest experience, there is still much to do.
Our digital transformation is at the core of Six Flags, providing a seamless guest experience. This is a pivotal year as we overhaul guest-oriented technology and elevate the guest experience to new heights. There are several developments I would like to highlight today. First, we launched our new mobile app in June. We know the parts can be overwhelming at times. So the upgraded app helps guests better plan their day and fourtlessly navigate the parks using 3D interactive maps and make mobile food ordering simple and easy. We are working on many other exciting developments for the app such as live ride wait times coming later this year as well as many others we will be sharing in the near future.
Second, we rolled out SixPay , our new wrist band payment technology at several water parks, allowing our guests to conveniently purchase food and drinks without having their credit card or phone on them. We plan to expand SixPay to all water parks by next season. Third, we are developing speedy parking, a new automated service at our toll plazas providing a dedicated fast claim for pass holders to scan their passes to open the gate automatically. Fourth, we are introducing self-service digital kiosks at many of our restaurants later this year.
From my own experience in food service, these digital kiosks result in shorter queues and increase average orders through upselling and cross-selling. Fifth, we are introducing a new automated photo capture solution to provide personalized digital photography and ride videos. Capturing and sharing memories with loved ones is an important part of the Six Flags experience. We have partnered with a leading photography and video company to capture these moments throughout the park and on the roller coasters. We want our guests to remember the experience because remembered experiences make people want to repeat the experience, and we also want to enable our guests to easily share these memories with their friends on social media.
Another area of focus for us is creating fun and memorable experiences for every member of the family to create multigenerational appeal. For parents and grandparents, our rest areas have been well received. The benches, shaded areas, VIP lounges and Water park Cabanas enhance the comfort at our parks and help produce stress for families visiting with children. For younger children, we have introduced new kids activities, including pie eating contest, water balloon challenges and kids rave parties, among other things.
We have also installed theme park attractions specifically designed for smaller children, including family rights like Roco racer and Kids Flash Cosmic Coaster as well as new playground and play areas. In our water parks, we installed new play structures, several new kids slides and larger thrill rights for older children like the new rep curve Blaster . And for the teams and thrill seekers, we have an exciting lineup of marketable capital for 2024 and 2025, supported by our biggest investment in new rides and attraction in many years. Thrill rides is our DNA. We have significantly increased our CapEx investment this year and over the next couple of years in anticipation of multiple major ride introductions, and we will have exciting news to provide you in the coming weeks.
Turning to seasonal events. We have really upped our game with events this year, but we are just getting started. We recently introduced flavor of the world, a new food festival with lively street markets and specialty food items like Tanduri chicken Skewers , Pork bao buns and stacked freed of protein to highlight just a few. And Summer Nights Spectacular, a celebration featuring live music, themed food items and stunning fireworks and drone shows. This fall, we are investing to enhance popular events that we introduced last year, including a bigger October fest and a more immersive kid-friendly Boo fest.
And of course, we are going to ramp up our fan favorites like Fright Fest and Holiday in the Park. Exciting news for the horror enthusiast, we have partnered with horror movie franchises, Conjuring and Saw to develop new goolish-hunted houses in select parks that are sure to be ahead with our thrill seekers, already social media is buzzing. And we have some exciting new events to launch in 2024. Stay tuned.
Third, pricing and product. We have simplified and optimized our mission pricing. Restructuring our pricing model has been critical in driving an increase of past sales this year. We launched our new Six Flags plus in June. Six Flags plus is a year-round subscription style path, offering a compelling low monthly payment with no down payment for our guests and has a high average admissions per cap for Six Flags . In my Conversation with our guests. They express overwhelming interest in the payment flexibility and benefits of our old membership program, and Six Flags plus has been a huge success so far. We are currently testing dynamic pricing at several of our parks. And while it is still very early, we believe it has the potential to further optimize our single-day ticket sales by adjusting daily pricing based on advanced demand signals. Despite our pricing actions over the past couple of years, our prices remain well below our peers. Over time, as we continue to enhance the guest experience, we expect to increase our prices to ensure they are in line with the industry and are commensurate with the value we deliver to our guests.
Finally, organizational culture. Very important to me and critical to our success. we are leaner , more nimble, and we have removed any necessary layers, which has created a culture of ownership among our team members. During my extensive visits to our parks, I interact with our front client park employees who are friendly and frequently go beyond the call of duty to make their own kind of magic for our guests. They work each day to improve the guest experience with small gestures that bring smiles to our guests. I observed more and more families having fun with their kids and grandkids. I see teenagers celebrating with their friends.
They were all drawn to our parks with people that cherish. Ultimately, our success depend on our ability to light our guests with unique and thrilling experiences they cannot get anywhere else. And our ability to deliver an exceptional guest experience will depend on the engagement, creativity and collaboration of the talented people across our organization.
Following a year of transition, our strategy is beginning to take hold and we believe we are now on a sustainable growth trajectory in our top and bottom line. We look forward to updating you on our progress as we strive to continue to improve the guest experience and to increase our profitability over time. Operator, at this point, would you please open the call for any questions?
Question and Answer Session
Operator
(Operator Instructions) The first question comes from James Hardiman with Citi.
James Lloyd Hardiman
I just wanted to follow up. I think you said that versus your previous expectations you might be tracking a little bit behind. I think we had talked about an EBITDA number this year, somewhere in the low $520 million range. Maybe if you can give us an update on that number? Do you still think you'll do north of at least call it, $500 million this year. And ultimately, how do you get there? Obviously, the algorithm previously was sort of double-digit attendance growth, a little bit of an offset from per caps. How are you thinking about those items?
Gary Mick
Yes. James, great question. The question boils down to how much of the first half weather impact we can make up in the second half -- the remaining 6 months of the year. And at this stage, it's certainly still an unknown as it's hard to make up for the lost revenue in the first half. We have challenging targets in the second which is built into our original estimate of north of $520 million. Selim laid out a significant number of initiatives that we are all really aggressively working on to collect and see how much of that we can make up. At this stage, that is remains to be seen. It remains to be execution, and we need to have fairly good weather, right, to collect what was hampered by the weather in the first half but I think we're somewhere in the range of $510 million.
James Lloyd Hardiman
$510 million. Okay. That's helpful. And then maybe same line, if we could dig in a little bit more on July. I think you said July attendance was up 11%. Is there any way to think about sort of the revenue trend in July, I think versus the Street expectations per caps were lighter than we were anticipating how much of that 11% was even up by declining per cap. And as we go forward, do those comparisons get easier or tougher, right? So if we're thinking about a plus 11% in July, all else equal, does that 11% get better or get worse from here?
Gary Mick
So July's per caps are going up against increased pricing in July of 2022. We increased our average prices on passes through August, which was our peak average monthly pricing for season passes. So the per caps will -- in terms of admissions will be a downward pressure on July offsetting some of that 11% pickup in attendance. So that's kind of where that stands.
James Lloyd Hardiman
Okay. And just to clarify, if I think about that the downward pressure, does that indicate that the per cap decline in July was -- is likely to be greater than what we saw in 2Q?
Gary Mick
Yes. Well, let's just do the quarter. The quarter per cap for Q3 would follow that general trend on admissions, so down 1 or 2 points on the admission side. The in-park spend will make up some of that. So it will be -- Q3, I see the per caps as being down just a little bit more from Q2, again, that 1, 2-point range. And then Q4 really -- Q4 really changes the dynamic because the average pass pricing in Q4 and '22 came down quite a bit, and we have a nice inflection point there.
James Lloyd Hardiman
Got it. So Q3 per cap is somewhat worse than Q2 before we get somewhat better in Q4?
Gary Mick
Right. Yes, Q4 changes the trajectory.
Operator
The next question comes from Steve Wazinski with Stifel.
Steven Moyer Wieczynski
So to follow up on James' question, I mean, as we think about, obviously, weather was extremely impactful through the second quarter. I don't know if you guys have an estimate of what you think the actual impact was? Or was it just so extreme that it's kind of tough and given the mix with passes and whatnot, it's kind of tough to really kind of gauge what attendance would have looked like or saying that a different way, I mean, if weather -- the days when weather has been normalized, has attendance essentially met or exceeded your expectations?
Gary Mick
Steve, the weather hedge that weather impact on our Q2 really feels like somewhere between 5 and 6 points of lost attendance. So that's kind of where we see that playing out. In terms of when we have a good day versus a bad weather day, the attendance lift is notable. It's exactly where we are or even exceeds our expectations. So we use that certainly in the season pass sales up 50% year-to-date, really give us some guidance as to the second half attendance lift. On good days, we do well.
Steven Moyer Wieczynski
So if I'm -- to make that clear, so second quarter attendance was up a little over 6%. You guys think it would have been more in that -- call it, 10% to 11% range. Is that...
Gary Mick
Yes, that's correct. Exactly.
Steven Moyer Wieczynski
So that would -- I mean, that would essentially still -- I mean if you kind of normalize that, you guys still would be on that pace for that double-digit increase in attendance for the full year?
Gary Mick
Yes. Yes, absolutely.
Steven Moyer Wieczynski
Just want to make sure that's -- I understood that right. Okay. Second question, this is probably for you, Selim. But as we think about the increase in expected -- your expected capital expenditures moving forward, just -- I'm just trying to understand why those might be so elevated moving forward? I mean is this -- you talked about the ride. So is this more ride-related things? Or Selim, as you dug into the parks, are there there's just more overall improvements that need to be made at this point versus what you were previously expecting. I mean, in order for you to really get the pricing where you want it to be over time.
Selim A. Bassoul
That's a great -- Steve, that's a great question. First of all, our DNA at the end is thrill ride, and we have to go back and reinvest in right. So in the last most probably 2 years of my tenure, which is last year and this year, we've been very focused on premiumization and beautification. And I would say one of the reason that I'm going to diverse -- digress a little bit. One of the reason of July was good for us, despite the weather is the investment we've made in most probably putting more shades, shaded structures, putting on more cooling systems, listings misters and [spa zones] and doing those air-conditioned areas like VIP lounges and others.
So -- those were most probably where we are today. Going into '24 and '25, we're going back to putting new rides in. So a lot of our CapEx will be on exciting rides. That gives us a -- we need to go back and we're retiring a bunch of rides that have high maintenance. And then we're replacing them with very exciting drilling rides, state-of-the-art, new rides. We're putting a lot of money into this. Second, I could tell you, the other thing we need to discuss is our Ride downtime. And part of addressing the ride downtime is going back and looking at resolving issues and maintenance and upgrading maybe trains in making sure that our parts are fully stocked, to make sure that we are always predicting and making sure that we're predicting our maintenance and making sure that we'll write it up. So it's a combination of maintenance, but it's not the biggest part. The biggest part is the thrill ride. We're having a lot of thrill rides expenditures.
Operator
The next question comes from Thomas Yeh with Morgan Stanley.
Thomas L. Yeh
So the acceleration of season pass product adoption from up 2% at the end of June, it's up 50% in July. That seems to get you pretty close on an overall season pass base to not so far off from where 2019 levels were. It sounds like the price changes you've made incrementally is the right place to be? Is kind of the right way to think about it? And on an admissions pricing on an apples-to-apples basis, do you think you can kind of grow this from here?
Gary Mick
Yes.Thomas, good question. our season pass lift in the first quarter year-to-date. So we're using year-to-date, so from January to the March is somewhere April -- thank you, Evan -- was up about 100%. And year-to-date, it's up 50%. I think that's the right metric. And hopefully, I've answered your question in that regard. Looking at the pricing, we definitely have optimized our season pass pricing and look at that going forward. SixPlus has been a really strong success as Selim indicated. And going forward from fourth quarter on, we have the opportunity to gently lift season pass pricing over prior year.
Selim A. Bassoul
Okay. I just want to further clarify, that 2% you're referring to is actually the Active Pass Base, which is up year-over-year, 2% as of June and Gary was talking about the sale of the season pass units.
Thomas L. Yeh
And then just another one on the cost control side. where are you finding the most efficiencies? I think you mentioned that inflation is still working against you, and there's plans to lean a little bit more into media spending, just given some of the attractions coming online. Is there still room for more head count reduction just as the attendance base optimizes?
Gary Mick
We're having success in procurement. We're doing a nice job there, working with our suppliers. We have reduced our full-time head count, but we don't have a significant -- And in soon even initiatives in that regard going forward but our parks are continued to improve their operational efficiencies, and that's where we're seeing our biggest lift in the cost reduction side.
Selim A. Bassoul
I would like to add also that our procurement has been very, very good. We have done a great job in supply chain. This continues to be something you want to push. I also believe that we have continued to lower some of the head count through automation and rationalizing our F&B locations. .
Operator
The next question comes from Ian Zaffino with Oppenheimer.
Ian Alton Zaffino
Great. As far as the weather comments you made, have you seen any -- or have you taken any actions regarding the whether it's on pricing, more marketing, et cetera. And actually, what's kind of your philosophy on pricing in kind of poor weather periods and then I don't know if you commented at all on July heat and how that was impacting the parks?
Gary Mick
Yes. You bet, Ian. So the challenges we have there is -- I'm sorry, what was the question again? Forgive me.
Ian Alton Zaffino
So it was basically -- what's your philosophy as far as pricing actions, marketing actions and poor weather periods and then also July heat and obviously...
Gary Mick
Right. So one of the things we have had success with and it's still early in the stages is dynamic pricing. And we had started with 3 parks, and we've expanded it to 6. So that -- it actually dynamic pricing in its own way acts as a weather hedge, which is pretty nice. And the next fairly significant step we need to do is increase the Active Pass Base, right?
So a larger Active Pass Base also is a nice weather hedge. So we are spending more on media in the third and fourth quarters. And we're going after a good sale at the end of August and into may be in weekend. And fundamentally, as the weather is -- continues to be hotter every year, it seems, at least it feels that way to me, we are going to be looking at more indoor venues, more air-conditioned venues, more air conditions, restaurants, et cetera.
So then our guests. And Selim talked about shade and he talked about the benches and the VIP lounges and the gaming is actually a pretty nice initiative in that regard, too, because it provides a very nice cool environment and a whole another product and marketing initiatives that we have. So we're looking at more indoor venues and continued effort on shade and missing equipment, et cetera.
Selim A. Bassoul
I would also bring up something, I think that most probably something different than most of our other peers is our memberships. I think our membership allow us to counter weather effects because when you look at membership, which happens, we have been able to still be able to sell membership, whether the weather is -- whatever the weather is happening. And this has been validated in June, July, since we launched our Six Plus -- Six Flags Plus membership. So we see that as somewhat of a hedge in terms of continuing selling passes and offsetting some of single-day ticket impact during those days.
Ian Alton Zaffino
Okay. And then can you also maybe comment on how the parts -- the ex U.S. parks did? And any potential for additional parks outside of the U.S.?
Gary Mick
Ian, what -- can you clarify what you mean U.S. parks did?
Ian Alton Zaffino
The non-U.S. part, how did Mexico do, I guess, in particular, just given that there's probably less weather issues there. And then the second piece would be any discussions or are you doing anything as far as developing or thinking about any new parks internationally?
Gary Mick
I'll answer the first part of the question. I'll let Selim talk about if we have any additional opportunities internationally. We don't allocate out our international parts in a specific way, Ian. But Mexico is still doing very, very well. So Selim, the next question for Ian, was do we have any additional international opportunities?
Selim A. Bassoul
Yes. We are working on our projects. In Saudi Arabia, which is due to open in the fall of 2024. And it's still being built and at this moment, we are acting as a license source of Six Flags to them. And we're at this moment, waiting for the project to be working open. So we are at the last stage of it with our team working along with the Qiddiya team in Saudi Arabia, and we're very excited about that project. So more to come, most probably in 2024.
Operator
The next question comes from David Katz with Jefferies.
David Brian Katz
I'd love just a little further perspective in view of the increased spending for next year and the year after. Is it possible or fair for us to think about EBITDA lifting along the way? I'm just trying to envision the capital set up as we move to that spending period the next couple of years?
Selim A. Bassoul
I can answer thing. I think, David, we've done a lot of work on the cost discipline and allowed us also to invest in the guest experience while still eliminating inefficiencies that are costly to the business. We are also looking at data and predictive analytics to reduce labor costs and implement process improvement without negatively impacting the guest experience.
I think we are investing also in technology and automation to reduce operating expenses. So CapEx on infrastructure and replacing inefficient rights will also reduce expenses. Those rights have high maintenance. So my feeling is operating leverage efficiency as attendance growth to target levels will allow us to increase margin over time.
So I believe we can grow margin into the mid-40% long-range term. And that's our objective to modify. Modified EBITDA in the mid-40% in the long term.
David Brian Katz
Understood. But in part, I suppose, of that formula, is there a potential for revenue lift along the way as well in driving that EBITDA? Or does that CapEx necessarily need to be in place before the revenue lift can occur also?
Gary Mick
So David, a fair number of our installation this year in '23 have been delayed in their installation construction progress. And so those are going to hit at the second half of this year and into '24, we'll have the full impact. So between that and what we're doing for '24 and we're going to -- we have a better execution plan on installing the '24 rides and we have a little more time to plan to get it done. So the 2 are going to actually work simultaneously together, provide a really nice package improvement for our guests. And I do believe we can increase revenue on our...
Selim A. Bassoul
I would like to most probably add a little bit more flavor on that. I think on one end, I think we've seen that our pricing structure that we started in the fall has started to pay off with the season pass increases we've had. So let's put basically admission on one side. Let's talk about the in-park. I believe that our biggest opportunity to monetize an in-park part goes into 2 areas: F&B, which remains, in my opinion, at this moment in maybe 20% of our penetration. And I would like to see that 1/3 of our revenues. And I think we have a lot of things going there. Number one is mobile food ordering.
Second would be self-serving kiosk, making sure that our seasonal events that have basically upped our per cap this year when they are done well, events done well have upped our per cap. Then on the retail side, I think the retail is our biggest -- second biggest opportunity.
We need to -- we are preparing a complete retail strategy to improve our sales in that area. And finally, I would add a third one, Group sales. I would say when it comes to group sales, I think we have huge opportunities to continue to grow that opportunity. We continue to be below pre-pandemic levels, and we are in line with what we saw last year but we have not gotten to pre-pandemic levels. So we're putting a strategy to grow our group business, and we feel better by engaging local businesses to come and experience our parks. So 3 initiatives that I see driving a big part of our EBITDA margins, F&B, retail and group sales.
Operator
The next question comes from Elizabeth Dove with Goldman Sachs.
Elizabeth Dove
I just wanted to ask bigger picture. You've been working through the premiumization strategy. I think your goal was to get to that 25 million to 27 million level of attendance over time. Clearly, it's been tough with weather. There's been some commentary about weaker per cap, not just from you, but the other regionals, even Disney last night, we're in a different world today. Has anything changed about your kind of pricing versus attendance formula going forward? Or do you think those are still the kind of right puts and takes and levels going forward?
Gary Mick
Lizzy , Good question. I think we have a powerful opportunity to show the viability and future opportunity at the strategy that we are executing upon. And when you look at pulling out the international licensing that we've exceeded 2019 EBITDA in the first half by 16%. It really gives us a base from which to launch from. And as the season pass pricing in '22 comes down in the last 4 months of the year, we cross over and we start having increased ever season best pricing on a monthly basis going forward to combined capital into that -- this marketable capital that -- but we're going to have some exciting announcements in the next couple of weeks and you have the cost structure reset.
You put those all together, and we really think we have an ability to capture future attendance and the enhanced value will be perceived by our guests and we'll have in-park spend, and we eventually can get there. So when it happens, is a basis of execution and time, but we firmly believe we are on the right path.
Operator
The next question comes from Robert Aurand with KeyBanc Capital Markets.
Robert Samuel Aurand
I guess following up on that last question on the longer-term outlook. In the past, you've talked about that as kind of a 3-year turnaround understanding kind of the speed bumps of this year. Is that a 3-year target still intact? Or do you see it getting pushed out at all?
Selim A. Bassoul
I would still say that the 3-year target is -- I talked about -- I extended it, if you remember, last year to end of 2025. So if you remember, I have said that the target is most probably, we'll try to achieve our target of being close to $700 million in EBITDA by end of 2025. And we're still looking at that as a target for us, yes.
Robert Samuel Aurand
All right. And then maybe a higher level question around the new membership program. I know you had said last call, that was the number one question, you were getting from people was to bring back the membership. Now you've brought it back as kind of a one-size-fits-all option or before you had -- you have many different memberships. So understand the simplification on your end, but how does that kind of fit with the consumer now just kind of having the one option to choose from.
Selim A. Bassoul
Well, I can answer that. Guests have responded very positively to the release of our new Six Flags Plus. So we started it in early June. We are seeing a similar mix in sales of Six Flags Plus product versus traditional seasonal path as we had in prior years about 1/3 is similar to what the legacy membership used to be in the past, 1/3 of our sales are coming from membership right now. And we just started selling them in June. So it will take time to rebuild that base. Now we should not forget that we grant the membership program, the old legacy ones. So I think I will be able to give you a lot more color on Six Flags Plus is most probably in the first quarter of 2024. And you're seeing good results so far in the first 40 days. .
Operator
The next question comes from Barton Crockett with Rosenblatt.
Barton Evans Crockett
It's Barton Crockett. And I just wanted to drill in a little bit more on July. And I think the question was put out there, but I'm not sure I heard it answered, which is was the weather in July when you guys had this nice kind of acceleration. Was weather better? Was that part of what helped -- how would you describe the weather backdrop in July?
Gary Mick
From my perspective, Barton, it was better, but not great. And I think there's more upside to that 11% with normalized weather.
Barton Evans Crockett
Okay. And then also leaning into the CapEx plans. I think you guys, as recently as like your March earnings call for the fourth quarter, we're talking to a range of like 150 to 200. And now you're up to like 250 at the high end for CapEx in '24 and '25. Can you walk us through kind of the process that got you to decide that you need to spend more in that period? Was a decision that you need to just -- and also, it seems like the tone of what you're talking about with CapEx. I mean when you started, you were talking about less emphasis on the rides and more on kind of just a comfortable kind of amenities and the benches. And now it's more kind of on the slow rise. Just walk us through kind of the process that and what's changed in these intervening months to get you from where you were to where you are?
Gary Mick
Yes. Thank you, Barton. Good question. The lift in '24 was somewhat related to -- we have a 50th anniversary coming up at our park in New Jersey, and we had an opportunity to add a nice ride kind of late in the game. And that's a little bit rare because it takes generally a while to design and build a coaster. So we had a fortunate opportunity, and we decided to take it. So that's the lift versus what we had expected to spend in the short run. In the long run, we're looking at all aspects of the CapEx. And Selim laid that out fairly well and a couple of questions ago, we want -- the focus is eliminating ride downtime. And sometimes that's maintenance and new trains and new parks and all that sort of thing. And sometimes it's replacing an agent ride.
So we looked at that very closely, and we're also really trying to enhance the customer experience through the CapEx investment. And we feel that it will really bring additional attendance and revenue and excitement and ultimately bottom line profits to our investors and shareholders.
Barton Evans Crockett
So it sounds like you just leaned into it more and you decided that this was the number that made more sense?
Gary Mick
And looking at the ride package, which we will announce over time, as Selim mentioned, there's some of the rides of state-of-the-art and state-of-the-art is generally expensive. So as we look into it and we say, yes, that's a great ride. Yes, it fits in that part. Yes, it's the right metric. Yes, it's the right dynamic. And wow, okay, that's what it costs. All right. And we all agreed that was the right thing to do.
Operator
This concludes our question-and-answer session. I would like to turn the conference back over to Selim Bassoul for any closing remarks.
Selim A. Bassoul
Thank you very much. Once I want to thank everybody for all your questions and your interest in Six Flags. I would like to recap my talking points with a concluding statement. Six Flags has a strong position with a very attractive industry. We talked about our 4 strategic pillars: our park experience of culture of pricing and product, our seasonal events. So when you look at all what has been accomplished in the last 20 months since I took over as CEO, we have basically implemented a lot of new items from doing our events better and stronger and new and immersive like screen break, like flavors of the world, like summer night spectacular, including fireworks and run shows, parades, gaming fest, and now we're enhancing what we started last year, new October fest , Boo Fest.
And then we're expanding on the best Halloween event in the world, Fright Fest and then HIP, Holiday in the park. Through our park experiences and the improvement in our premiumization, we seeing improvement in past sales, 50% year-to-date through July, attendance ,6% in Q2. Our F&B is up despite poor weather. We lost in 2Q almost 400,000 in attendance. In our pricing product, we launched again. As we listen to our guests asking us to bring back a monthly -- a low monthly payment with no down payment, we launched at Six Flag Plus, which so far in the first 45 days have been very well received.
Our culture have changed. Innovation now is our out core. We have a lot of digital transformation, which has become seamless to our people, and we could not have done that result, the hard work of our team member. Our parks have become friendlier, cleaner and a lot more smiles, our seasonal workers and our frontline employees at our parks have embraced the vision and embraced the fact that we want to be easier to do business with. I applaud each one of them. We are seeing promising trends despite weather challenges, again, strong pass sales, 50% year-over-year through July. Attendance trends are improving, Q2 6%, July 11%, improving F&B, improving sponsorship sales.
Our digital transformation, driving our guest experience and lowering our costs, our ability to now capture memories through videos and photos using artificial intelligence and be able to capture people on the rides as they are riding our coasters, self-serving kiosk, speedy parking, water park Wrist Band , a new mobile app and a new website. All of those have happened at a fast speed of execution. Kudos to all our teams.
We've gone to multigenerational appeal. We want to be able to appeal to kids activities, kids ride and play structure, comfort and shaded area and VIP lounges for parents and grandparents, thrill rides and new haunted houses for our thrill seekers and teens and then we want to capture all of this on video and picture and they can stream them all day long.
Immersion, I believe that remembered experience bring repeated visits. We want to engage all of our sensors. Our guests now want to go and experience our Dino Adventure, a scream punk as we expand them throughout all our parks. We have exciting new revenue initiatives, dynamic pricing, increasing mobile food ordering, seasonal events and e-gaming. On our cost control, we continue to be driven by cost discipline. Automation, reduced downtime, procurement, committed to deleveraging our debt. We look at a target of 2.5 to 3x long-term net leverage target.
We paid $94 million down in Q2 with an additional $50 million paid down through today, almost $150 million paid since the beginning of Q2. Our second half expectation, low to mid percentage per cap decline. Active Pass headwinds, more media to launch our full promotion. Remember, last year, we did not have a good fall set. So now we're trying to put media behind it and go back to having a good full sale promotion of CapEx of $170 million, $180 million.
Now we do not give EBITDA guidance, but do we expect to make -- we do not expect to make up weather-related losses. Our ultimate strategy is focused on delighting our guests. I have spent enough time analyzing our offerings and operations, traveling around our parks to observe guest behaviors and talking to our friends to uncover hidden opportunities. You did hear today on how we are innovating across every part of our business from culture, digital training, revenue management, guest-facing technologies, immersive experiences, rides, beautification, food service, retail and much more. Success requires not just leveraging your strengths, but also taking risks, overcoming challenges and learning from failure, evolving your vision and sometimes reinventing yourself. That is true for both our organization and our leadership. We are excited about our momentum.
On behalf of the Six Flags team, we appreciate your continued support and the support of our shareholders and investors, our guests and fans, our suppliers, our bankers and most important, the support of our team and our employees who, without them, nothing could have happened. We have many exciting events lined up for the second half of the season including Fright Fest, Kids Boo Fest, October fest, and Holiday in the Park. We still have 40% of our revenues coming still so far and we hope to see you at all those events this year. Have a great day, and we look forward to speaking with you next quarter. Thank you.
Operator
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
