Q4 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
Chris Jon Woronka; Research Analyst; Deutsche Bank AG, Research Division
Ian Alton Zaffino; MD & Senior Analyst; Oppenheimer & Co. Inc., Research Division
James Lloyd Hardiman; Director; Citigroup Inc., Research Division
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 Fourth Quarter and Full Year 2023 Earnings Conference Call. My name is Jason, and I will be your operator for today's call. (Operator Instructions) After the speakers' remarks, we will conduct a question-and-answer session. (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 fourth quarter and full year 2023 earnings call. With me is Selim Bassoul, President and CEO of Six Flags; and Gary Mick, our Chief Financial Officer. We'll begin the call with prepared comments and then open the call to your questions. Our comments will include forward-looking statements within the meaning of the federal securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in such statements, and the company undertakes no obligation to update or revise these statements.
In addition, on the call, we will discuss non-GAAP financial measures. Investors can find both a detailed discussion of business risks and reconciliations of non-GAAP financial measures to GAAP financial measures in the company's annual reports, quarterly reports and other forms filed or furnished with the SEC. Before we begin a brief remark on the pending merger with Cedar Fair. As many are already aware, on January 31, we filed with the SEC our definitive proxy relating to the upcoming shareholder meeting to consider the pending merger and related matters.
Our shareholder vote is set for March 12, and we are targeting a closing in the first half of 2024. Our call today will focus on the results of the fourth quarter and the full year 2023. We will not be taking questions about proposed merger between Six Flag and Cedar Fair or any of the associated proxy materials. At this time, I will turn the call over to Selim.
Selim A. Bassoul
Good morning. Thank you for joining our call. Before we begin, I want to express our excitement about the proposed merger with Cedar Fair. We feel that this compelling combination will deliver value to our guests, our investors, and to our employees. As a reminder, our special shareholder meeting to approve the merger will be held March 12, so please cast your vote. As we close the second fiscal year in my role as CEO, I am encouraged by the signs I am seeing that our premiumization strategy is working. I see a growing interest and engagement from families wanting to visit our parks, including multigenerational families, grandparents with grandkids, college students and young couples with babies.
Our iconic brand is synonymous with thrills and adventure, which excites children and makes adults feel like children again. My 8-year-old begs me every weekend to take her to the park, and she can't wait until she is tall enough to ride the hero coasters. I see customers willing to spend more time and more money in our parks. By reducing overcrowding and friction at guest shop points we have become an easier company to do business with and an easier park to navigate, which creates a better environment for guests and employees. Our guests on average, are spending over 40% more per visit than they were before the pandemic.
Guests of all ages can enjoy a full day of personalized and immersive experiences, complete with events, meals and attractions, while enjoying more comfort and convenience. We have added VIP lounges, more private cabanas, new kids areas with activities and rides, upgraded sit-down restaurants and expanded our culinary offerings from delicious finger foods and local brews to salads, vegan, premium ice cream, freshly baked pretzel, Korean corn dogs and kofta kebabs. Guests can chill in our sports bar and watch the game on our large TV screen or hang out in our air condition state-of-the-art e-gaming lounges where kids and adults can compete and play. Guests can enjoy new events and culinary themes festival like Oktoberfest, kids Boo fest, and Flavors of the World, and our enhanced signature events like Fright Fest with new haunted houses built with iconic horror brands such as Saw and The Conjuring. These were a hit with guests this year.
I am also encouraged to see the positive impact that streamlining our organization has had on empowering our employees and creating a culture of expediency, excellence and ownership. I will share a personal experience. I have noticed new food trends such as bubble tea, pop up in various upscale shopping malls. My first bubble tea ever was in our park and it was delicious. I watched as our team skillfully constructed this wonderful freshly prepared bubble tea using the best ingredients, best mixture of flavors and served with a smile.
Employees feel more connected to the guest, and I see the pride they have in their work. We are also seeing encouraging signs in our financials. Since 2021, we have grown guest per caps by 17%, reduced full-time head count by over 30%, lower cash expense in the face of historical levels of inflation, leveraged key partnership to expand sponsorship revenues and paid down over $300 million of debt. In 2023, Food and Beverage revenues grew in both units and average pricing, exceeding our attendance growth over the same period. We also made good progress, rebuilding our pass base using more targeted media, promotional pricing and introducing our new Six Flags Plus subscription style program in June 2023 with a more profitable balance of benefits and price.
Our progress continues with 2024 passes, which through generally are up double digit over 2023. That said, we fell short of our financial targets. We faced unforeseen challenges like historical levels of inflation, abnormally challenging weather and supply constraints. We have also made missteps and we have learned that not every element of our strategy is equally successful. But we are able to pivot quickly, and we are leveraging our experience to continuously improve and explore new opportunities. For instance, we are optimizing our events calendar to focus on those we have seen the best return, while exploring exclusive events and special access passes to drive monetization.
And we have tested where and when customers are willing to pay for convenience, and we have invested to enhance guest-facing technology and create new revenue streams. This includes adding mobile wallet and tap and pay, which now comprise 40% of all in park transactions. Our new mobile app, which makes it easier for guests to order food on mobile devices, new handheld point-of-sale devices providing greater flexibility to accommodate guests and enhance throughput dynamic pricing, which has shown traction extending the booking curve and capturing additional admissions revenue, and SixPay wristbands for water park guests who don't want to carry their wallet or cell phone.
I will discuss more exciting technological initiative later on this call. We are guided by our mission to deliver an exceptional guest experience, and we believe this will deliver exceptional returns to our shareholders over time. With that, I would like to turn the call over to Gary to discuss the financial results for the quarter and the full year.
Gary Mick
Thank you, Selim, and good morning everyone. I will start with attendance, revenue and per caps and then move to expenses and EBITDA for the quarter and the full year. I will then discuss our active pass base metrics, select balance sheet items and capital allocation. Starting with the fourth quarter. Total attendance was 4.3 million guests, a 6% increase from 2022, driven by higher season pass and single-day attendance during Fright Fest. Revenue increased $13 million or 5% to $293 million, driven by higher attendance partially offset by a decrease in total guest spending per capita of $0.96 or 1%. Admissions spending per capita decreased $1.44 or 4%, offset by an in-park spending per capita increase of $0.48 or 2%.
Guest spending per capita decreased primarily due to the lower revenue from memberships beyond the initial 12-month commitment period, what we call 13-plus, which is recognized evenly each month. 13-plus revenue was $12 million lower in Q4 2023 versus Q4 2022 due to the attrition of our legacy members. Excluding the impact of 13-plus revenue from both periods, which we believe is a better reflection of our average higher pricing in the fourth quarter and our in-park monetization efforts. Guest spending per capita would have been higher than prior year by $2.35 or 4%, which includes an increase in admission spending per capita of $1.04 or 4% and an increase in in-park spending per capita of $1.31 or 5%.
As a reminder, we made a strategic decision to discontinue the sale of new memberships in April 2022 due to the inclusion of rich benefits, difficulty to administer in the park and the drag on per caps in margins associated with this product. We launched the new Six Flags Plus in June 2023 and plan to resume growth in the 13-plus base starting in the second half of 2024. However, we expect to face 13-plus revenue headwinds in Q1 2024 that we estimate to be around $14 million.
Moving on to costs. In fourth quarter 2023, we incurred $15 million of merger-related costs associated with the proposed merger with Cedar Fair. Cash operating costs, which includes cash operating and SG&A expense, but excludes merger-related costs, increased $12 million or 8% in the fourth quarter versus the prior year. This increase was due to the following factors. First, higher tenants drove higher seasonal labor cost of sales and other variable costs. Second, we incurred incremental costs associated with new attractions and entertainment for our expanded fall events schedule. Third, we accelerated investments in guest-facing technology to ensure readiness for 2024. Lastly, higher inflation increased wages and other operating costs.
Adjusted EBITDA for the quarter was $98 million, essentially flat compared to fourth quarter 2022, which as you recall was a record with higher costs offsetting higher revenue. Moving on to 2023 full year results. Attendance increased by 1.8 million guests or 9% to $22.2 million. We estimate that adverse weather reduced full year attendance by over 1 million guests. This includes rain and snow in California during spring break, followed by a record summer heat wave in Texas and 8 consecutive weekends of rain or threat of rain in the Mid-Atlantic and Northeast after Labor Day.
Total revenue increased by $68 million or 5%, driven by higher attendance and higher sponsorship revenue partially offset by lower per capita spending. Total guest spending per capita decreased by $2.90 or 5%, driven by a decrease in admissions per capita of $2.56 or 7% and a decrease in in-park capita of $0.34 or 1%. The decrease in admissions per cap was the anticipated result of lower pass pricing in the first 3 quarters of 2023 relative to 2022 when prices were significantly elevated.
In-park per caps decreased due to the higher mix of season pass attendance, partially offset by an increase in Food and Beverage sales in '23 versus 2022 and which is driven by mobile food ordering, new culinary offerings and our expanded events calendar. For the full year, 13-plus membership revenue impact, on the year-over-year per cap comparison was negligible.
Regarding full year costs, we incurred $38 million related to an upward revision of our self-insurance reserves in the second quarter of 2023 in addition to the $15 million of merger-related costs in the fourth quarter of 2023. Cash operating costs excluding merger-related transaction costs and self-insurance reserve adjustments increased by $61 million or 8%. The majority of expense growth occurred in the second half of 2023, and was caused by several factors, many of which we expect to normalize in 2024. First, we increased advertising by $18 million in 2023 in an effort to help rebuild our Active Pass Base. We expect advertising spending in 2024 to be in line with 2023. Second, we incurred incremental expense associated with the expanded events calendar. We plan to optimize events in 2024, which will help mitigate these cost increases.
Third, we accelerated technological initiatives, many of which we expect will help mitigate labor costs in 2024. And lastly, significant inflationary pressure estimated to have cost us $50 million, partially offset by full-time headcount reductions and procurement savings. Adjusted EBITDA for full year 2023 was $462 million, essentially flat with 2022. Our Active Pass Base as of December 31, 2023, comprised 5 million pass holders, flat with last year.
As you will recall, our Active Pass Base at the end of third quarter 2023 was 23% higher than the prior year third quarter. The sequential drop in prior year comparison from third quarter to fourth quarter is primarily due to two factors. First is the timing of our pass promotion, which was focused in the third quarter 2023 around Labor Day versus being focused in the fourth quarter in 2022 during our November Cyber Sale. Second, there was a difference in the expiration date of our gold season pass between 2022 and 2023.
In 2022, Gold Passes were valid through the entire year, expiring in early January of the following year. 2023 Gold Pass has expired in early October ahead of Fright Fest and are not included in the 2023 year-end pass balance. Deferred revenue as of December 31, 2023, was $128 million, down $1 million or 1% compared to the prior year. On our last earnings call, deferred revenue at the end of third quarter 2023 was up 17% over the prior year third quarter. The sequential drop in the prior year comparison in the third to fourth quarter, largely due to the 2 factors I just discussed, coupled with the transition of membership, deferred balances to 13-plus revenue due to discontinued legacy membership passes.
We have made many changes to our pass strategy over the past 2 years in an effort to find the right product mix and balance of pricing and benefits. Despite our Active Pass Base and deferred revenue balance being essentially flat versus the prior year, we feel the progress we have made on new season pass sales in this encouraging data point as we assess our outlook for 2024. As Selim mentioned, since the start of selling in late August, through the end of January 2024, pass sales are up double digits over prior year, driven by an increase in both units and pricing. CapEx spend, net of insurance recoveries was $61 million in the fourth quarter, an increase of $23 million compared to the fourth quarter 2022.
Full year 2023 CapEx was $171 million, an increase of $59 million, driven by investments in our park infrastructure, events, rides and guest-facing technology. Total liquidity as of December 31 was $377 million, which includes $299 million of available revolver capacity, net of $21 million of letters of credit plus $78 million of cash. We feel we have sufficient capacity to pay down the remaining $57 million of unsecured notes due July 2024 using a combination of free cash flow and revolver capacity.
In May of 2023, we increased our total revolver capacity from $350 million to $500 million, providing greater flexibility to pay down debt. Since 2021, we have used $311 million of free cash flow to pay down debt, inclusive of $38 million financing fees, OID and redemption premiums. We expect to continue using free cash flow to pay down debt until we achieve our target net leverage ratio of 3 to 4x adjusted EBITDA. Now I will turn it back over to Selim.
Selim A. Bassoul
Thank you, Gary. Now I would like to discuss why we are excited about the 2024 season. First, 2024 season pass sales are off to a strong start. We are selling a higher mix of platinum and diamond passes as well as more add-on products like the all-season dining and all-season flash pass. Second, we are leveraging technology and automation to improve operational efficiency and safety. For example, our new AI integrated aquatic vigilance system, which will provide real-time monitoring and improved response times to help drive down labor costs and improve safety in our water parks.
Our upcoming chat AI guest services web feature will be able to answer a large portion of guest questions and resolve the request reducing the need to transfer to a live agent, and live ride wait times to better manage the flow of guests with better accuracy and visibility. Third, we are bolstering our revenue streams through technological innovation and operational enhancements. In Food and Beverage, we are expanding mobile app food ordering to more restaurant locations and are introducing new web based QR code ordering. We are placing QR codes in high-visibility dining areas, so guests can use mobile ordering without needing to download the app.
While introducing self-serve kiosks. These sleek modern and easy-to-use kiosk have a proven track record in the restaurant industry for increasing throughput, reducing customer wait times and driving higher average spending by enticing customers to do more customization and add-ons. In retail, we launched a new automated photo capture technology which provides guests with a personalized media library of ride photos, making them simple and easy to purchase, which will provide an additional revenue stream and help create a more memorable experience. We are also planning to revamp our merchandise strategy with new higher quality and more desirable apparel, thanks to new partnership with premium vendors.
In Parking, our new speedy automated toll plaza, which will help expedite the entry process, cut down on seasonal labor at the gate and provide additional revenue. In group sales, we restructured our sales team late in 2023 by moving them out of corporate and back to the parks, enabling a more focus and localized operation. We are seeing positive signs with early bookings, pointing to solid growth in 2024. And our final reason to be excited about 2024 is the lineup of exciting immersive experiences. This includes our new Savannah Sunset Resort and Spa luxury glamping experience at Six Flags Great Adventure, where guests will enjoy sweeping views of our 350-acre Safari and participate in up-close animal encounters.
We are also planning the most exciting year yet for Fright Fest who are ramping up the thrills with new haunted houses, scare zones and other new hair-raising attraction to take the fear factor to a new level. This will include more IP-branded houses, which were a big hit this past year. And of course, new rides and attractions. The anchor of a great amusement park is its rides, and we have always been known for having the most and best in the industry. We previously announced we are kicking up capital through 2026 to bring a wide spectrum of new attractions, targeting every member of the family, and we are following a different strategy that had -- what had been done in the past with a focus on putting the right ride in the right place at the right park.
For 2024, we will have a new Dino Off Road Adventure at Six Flags over Texas which bring you face-to-face with life size animatronic dinosaurs. New Steam Town theming at Six Flags America where the past meets the future and will include the all-new steamroller ride, an exciting family ride with 4 rotating arms. A new DC Kids Universe at Fiesta Texas. This young family-friendly environment will bring adventures to our youngest thrill seekers. A new ride, like the fan favorite Giga Discovery in both Six Flags America and in St. Louis, a teen favorite ride that creates unique thrill experiences. This ride has been very successful in our other parks.
The Surfer at Six Flags over Georgia, an intense ride of 144 feet high, 60 miles per hour and almost 600 feet of track complete with a splash zone. And the super boomerang at Six Flags Great Adventure. A triple tower launch coaster (inaudible) moment, which we expect to open in time for its 50th anniversary celebration. We operate in a highly competitive market where customers have the choice of many diverse entertainment options. To compete for our share of the discretionary leisure wallet requires continued smart investments in our guest innovation, immersive experiences and premium park offerings. This keeps us on our toes, and we don't take anything for granted.
I want to finish with 2 big surprises for me this past year. First is being awarded the best and brightest company to work for in 2023 in Dallas and Indonesia. Given all the challenges executing the strategy, I truly did not expect it. When you think of all the great companies in Dallas and in the U.S., it's an honor and it's quite humbling. It is a testament to the great leadership we have at our parks. I am grateful for our employees who are fully dedicated and willing to work hard to create a great experience. This is a very competitive environment, and we have to continue to be the best each and every day. Second is being part of the largest digital alliance in our industry. This is a credit to our Chief Digital Officer and his team.
We are proud to partner with great innovators such as Google, Dell, Pure Imagination, Fueled, Snowflake and HCL Tech to bring the latest technology to our parks, transforming the amusement park experience to be more personalized, immersive and memorable. With that, operator, would you please open the call for any questions.
Question and Answer Session
Operator
We will now begin the question-and-answer session. (Operator Instructions) Our first question comes from James Hardiman from Citi.
James Lloyd Hardiman
Selim, you laid out all the reasons why you're excited about 2024. I guess I should presumably interpret that as you think there should be some top line growth here. I don't know if you want to sort of put some broad numbers around that. But I guess, as I drill down a little further, if we look back to 2022, you had big per cap growth, ride -- big pricing growth, but it's attendance declined, I think, more than that. 2023 was sort of the reverse, right? You had solid attendance growth, but then some modest per cap declines. As we think about 2024, what's the growth outgo look like? Should it be a more balanced approach to revenue growth where we can see both attendance and per cap growing in the year?
Selim A. Bassoul
So as you know, we are not providing guidance. However, I will tell you that the difference between 2022 and 2023 is simply the fact that we refocused on building the active base. And we ended up saying, okay, it was a matter of recalibrating our pricing, rejiggering our membership. As you all know, in 2022, we had stopped it, stopped the legacy members. And in June or July, we reinstated Six Flags Plus membership. So we were working on reactivating the -- rebuilding the base. We also spent money on media, talking about advertising and media talking about things we put in. We had to launch this new membership and we had to push it up.
We also spent a lot energy on technology. We also -- where we tried to say, we needed to go after food service and retail. So we tried to change our food ordering, mobile food ordering penetration, which was low, and we spent a lot of money on this, a lot of resources. We went after alcohol penetration. We went after transaction per hour, and then we went into what I call the daily dining plan and the season dining plan, as you remember, in 2022, we eliminated it relaunched a much more win-win for us and for our guests. And then there were a lot of renovation with bars and coffee shops.
So I look at this, and I say the emphasis has been on food service, and there was a lot of resource spent. Now some of the things that we did not do well. So we did not do well in '23 as we launched a lot of new events. So we launched tons of events. So if you remember, we had a calendar in the fourth quarter of 2022, when we say let's go back and ramp-up events. And we went -- we kicked off Viva La Fiesta, Flavors of the World, Summer Vibes celebration, (inaudible) and I can keep on going on and realize -- and we had fireworks and drones show, and realized that not all those events panned out. To realize that it did not drive additional season passes, some of them. We also realized that they were cannibalizing other things we're doing in the park, longer operating hours, staffing those events cost us a lot of money and manpower. And now we're streamlining in 2024 to say what works and what didn't work. So a lot of experiment in 2023 versus 2022 in rebuilding the base. And part of it was pricing. Part of it was offering more perks like the events. And at this moment, going into 2024, a lot of learnings were happened in 2022 and 2023. So that's why I'm excited about 2024.
James Lloyd Hardiman
Got it. And then maybe sort of a separate question. One of the things I've been asked a lot over the past few months, this isn't a merger question, but I think it maybe came up as a result of the merger (inaudible). What's the proper level of investment in your business? If I look at whether it's OpEx or CapEx, relative to your closest peer, right? Whether or not you team up with them, the level of investment has historically been less. So maybe 44% OpEx as a percentage of sales versus 48% at your peer. CapEx has been -- well, CapEx this year was about 12% of sales. But historically, you've been in that high single-digit range. Your closest peer has been more in that 14% range historically. So how do I think about that as we move forward? Is there a need to increase investment to sort of "catch up" or do you think there are just structural differences in sort of how you versus your peers would need to invest properly?
Gary Mick
James, it's Gary. So we don't comment on the merger in that sense. And we're operating our business this year as if the merger is not going to happen. We're assuming, of course, that it is, but we're running our business as we always would, right? So when you look at the investments on CapEx historically, as you mentioned, it's been in the single digits, 8%, 9% of revenue. And we have increased it, as you saw this year, 12%, and we plan to increase it in '24 and '25 because we do need to improve the guest offerings and rides marketable capital and food and beverage retail.
James Lloyd Hardiman
Just to clarify though, you say increased CapEx in '24 and '25. Is that above the 12% that we saw in '23? Or is it just similarly higher than its historically been? And then sort of a similar question on OpEx, like where does that go from here? It sounds like you think that the growth in OpEx, unlike '23 can be maybe less than the growth in sales, but maybe clarify.
Gary Mick
Yes. So in terms of -- it's similar to what we announced in the last quarter earnings call, James, we're going to run around [2 to 2.20] for 2024. That's the anticipated spend at that point. That includes maintenance by the way.
James Lloyd Hardiman
Any thoughts on the OpEx side?
Gary Mick
In this case, we're looking at -- as Selim pointed out, we spent quite a bit on events and as we look to reduce the events that are not ROI accretive, we anticipate the expenses will come down. We don't, of course, have an idea as to the inflation impact of this...
Selim A. Bassoul
Can I give a little bit more flavor on to OpEx, please? I'm going to break it down into 4 truly buckets. The bucket number 1 is we spent in the third and fourth quarter a lot of money on events and advertising. So let's talk about the events. So we'll most probably streamline the event, and we'll have a lot less spending on the event -- we figured out the one that worked and one that didn't work. On advertising, we'll expect to have a flat advertising as we maximized and we found that advertising and media promotion was very effective. So this level of advertising will be flat in 2024. However, we'll continue to most probably invest in technology as we continue having resources in creating -- still, we have 3 elements.
We are investing in -- continue investing in self-serving kiosk, AI in 2024, and some retail initiatives that includes technology. But that's not really, I call it, slightly a bump up from where we were in 2024. But the biggest -- the largest large bucket that most probably will be a problem for us and we have to figure out is wages. So what's happening, it's kicking up in 2024 is what I call state-mandated minimum wages that have now kicked out in 2024 across minimum wages.
So now they are all coming in. Almost 90% of the states are now mandating -- they issued those mandates somewhere in most probably 2018, 2019. I remember when I was at Middleby, all the restaurants were worried about their wages going up and then it was a delayed process, and it all hits in 2024. It will hit the industry. It will hit the restaurant business, the hospitality, where labor rate -- hourly labor rate with minimum wages are going up. So this most probably will be the biggest issue we have to deal with going into 2024.
Gary Mick
Right. We have tremendous focus on reducing our costs, James. There's no question that whatsoever. But these other upside factors that Selim just mentioned make it difficult to predict the total number.
Operator
The next question comes from Steve Wieczynski from Stifel.
Steven Moyer Wieczynski
So I want to ask James' question, maybe his first question there a little bit differently. And look, Selim, I know you're not going to give specific guidance for this year. But trying to understand how you guys are thinking about per caps. Look, obviously, there's shifts in attendance and attendance mix. But look, if we sit here a year from now, I guess the simple question is, are per caps both on the attendance and in-park side, do you think you can grow those over 2023?
Selim A. Bassoul
Yes. Steve, that's a great question. In park spend has not been an issue for us. It will grow and it's growing. If you take -- so we need to start focusing on something where we haven't done as good of a job, going through it because now (inaudible) very well is what you call the 13-plus members. And maybe I'll turn it to Gary a little bit to discuss the 13-plus and the impacts of 13-plus on what's happening in 2023 and why the numbers -- so if we start taking away 13-plus from the equation, you've seen that our per cap has grown in park. And maybe I'll turn it over to Gary to go at it.
Gary Mick
Just in general, to answer the question on 2024 per caps, both admission and in-park, we anticipate to be elevated over 2023. If you take out the 13-plus as Selim just mentioned from the fourth quarter, our -- both admissions and in park are up like, let's say, an average of 4%. So almost all of our products that we are pricing into '24 are priced with an increase over prior year. The thing -- we do actually like the 13-plus revenue stream. It is a subscription-based revenue stream. So once the 13-plus member gets beyond the 12-month initial commitment period, the revenue flows in monthly. What makes Q1 and Q4 difficult in terms of analyzing the per caps is that it's time based, right? It's recognized monthly as opposed to our season pass base, which is recognized in an activity sense or business per pass.
So while we have the headwind in Q1, Selim, that we mentioned regarding the 13-plus, it really has just a function of a pass divided by 12. So as we sell more 2024 season passes that of course replaces the revenue from 13-plus, but that revenue goes into deferred in the first part of this year and doesn't get recognized until the parks actually open. So there's a timing difference between those two. But we do appreciate 13-plus revenue. The guests love the monthly payment option. They are our most loyal guests and we appreciate the cash flow in the slower months. So the Six Plus that Selim launched last year, that will start rolling off, being in the 12-month commitment period and will actually roll into 13-plus in the second half of the year, which will help rebuild that base.
Steven Moyer Wieczynski
So from a cadence perspective, it seems like 1Q is obviously the toughest comparison. You talked about the $14 million headwind. So your per caps, especially on the attendance side will probably be down in 1Q and then from there, it kind of eases and close through the year. Am I kind of thinking about it the right way?
Gary Mick
Yes. You have it exactly.
Steven Moyer Wieczynski
Okay. And then, Selim, look a bigger picture question. I'm not sure what you'll say here. But look, this is a business that was supposed to do whatever EBITDA level you want to throw out there, you guys have talked about before, but a number that is much higher than where you're run rating today. So look, I guess the simple question is, as your premiumization strategy finally all comes together, attendance normalizes what level of -- and you don't have to give an exact number, but what level of EBITDA do you eventually see Six Flags getting to?
Selim A. Bassoul
Excellent question. I think this has been most probably -- I mean, I do a mea culpa here because I underestimated the cost and the complexity of the transformation. We had to change a lot of things. We had to change the culture from attendance to yield, from a corporate centralization to park decentralization, some several layers of management to (inaudible) only. We had to most probably change our demographic a little bit and increase the presence of families in our parks. In addition, I have to tell you that was surprising to me. It was how much old and calcified systems that we had in our computer system, ERP system, point of sale -- CRM system, POS system that were hard to integrate and evolve. We had no choice.
To be successful, we have to use modern, cloud-based tools that allow us to react and change with agility and execute our strategy to achieve what literally in 2024 and 2025, what I call, achieved above average outcomes at below average cost. And the way I look at that is, if you remember, I had spoken about it last year -- early last year, I started figuring out that the original projection of what we call the $710 million was not achievable given -- it was not achievable by end of 2024. So I went back and I said I needed 2 more years. If you remember, I have said I would like to start looking at 2025 and 2026 start achieving those numbers. And that's what I'm feeling comfortable about.
Operator
Your next question comes from Thomas Yeh from Morgan Stanley.
Thomas L. Yeh
I wanted to ask about the pass sales pacing into January. Gary, you mentioned some timing impact related to 4Q, keeping it flat. Is the January number relatively clean? So now we're on an apples-to-apples basis, and we're seeing more unit growth even on higher blended pricing, is that a fair characterization?
Gary Mick
Yes, I will simply say that our 2024 season passes, Thomas, are up double digits over the same period prior year. That goes through the end of January.
Thomas L. Yeh
So specific to the '24 pass sales, relative to the '23 ones?
Gary Mick
Yes. We just -- we use it holistic -- we used the period holistically, Thomas.
Thomas L. Yeh
Understood. And then apologies in advance for torturing you more on the 13-plus membership revenue dynamic. But I guess, excluding that, you highlighted the underlying 4% is maybe the right way to think about the trend line. Is that expectation for that as you see it now because of the pricing stabilizing more and your strategy kind of lining out a little bit more, is that a fair outlook in terms of an expectation on the core?
Gary Mick
Yes, I think that's fair. It's early in the year to make a long-term prediction. But based on what initiatives we laid out on our commentary and Selim has talked about, we feel that's a reasonable expectation on per caps.
Thomas L. Yeh
Okay, helpful. And then just last one for me. On weather, I know you mentioned some headwinds, obviously, there were clear headwinds through the year, but nothing very specific to 4Q, was weather net bad guy in the quarter, just reported? And maybe any commentary on the weather conditions that you were seeing in February and January, that would be helpful.
Gary Mick
Yes, weather impacted us in 2 ways. We mentioned 8 weekends of continuous rain or threat of rain post Labor Day weekend. And of course, Fright Fest, 80% of our EBITDA pretty much comes out of October. And from the Mid-Atlantic all the way to Montreal, all of our parks were under the threat of rain or it actually did rain for 7 out of those 8 days. We calculate we lost about 150,000 of attendance at those areas, more about $10 million of revenue in Q4. So in one sense, I'm proud of the efforts that parks -- our team did to generate the 98 million because we had the weather headwind of $10 million of revenue, and we had the 13-plus of 12. So we went into it $22 million down in terms of revenue and ended up 13 million up. So all in all, a good performance. And that is the strength of Fright Fest at our other locations. .
So when we added the IP, haunted houses this year and increased investment, the attendance lift and the revenue lift above prior year came from the Fright Fest, Boo Fest and Oktoberfest that we laid out at the other parks that were not so much affected by weather. So that gives us just real excitement about the same time period in 2024, and Selim is increasing the investment in Fright Fest, as he mentioned, and we're adding more IP, more excitement, more haunted houses, it's going to be a blast.
Operator
The next question comes from Ian Zaffino from Oppenheimer.
Ian Alton Zaffino
I just wanted to ask a question on season passes so far. Can you maybe help us understand what may be the -- what each cohort is doing as far as getting more diamond sales. Have you noticed any sort of meaningful change in the buckets between the highest tier passes, lowest tier passes and maybe what you're kind of seeing as far as demand for each of them?
Gary Mick
We have a promotion going on right now in the parks that are preparing to open up, which is we are offering the diamond level benefits if you purchase at the platinum base. And so at this stage of our promotional period, we have a healthy increase in the higher tier passes.
Ian Alton Zaffino
Okay. So pickup has been much better year-over-year than that. And then as far as the operating calendar, any intentions to curtail the operating calendar. I know in the past and the previous management team, that was sort of a push to do that, and then there was maybe an expansion of the calendar after that. How are you guys now thinking about the operating calendar and maybe the opportunity to kind of curtail the less profitable or the money-losing days?
Gary Mick
The operating calendar will be very much the same as it was in 2023. The thing that will be different is the events that we are hosting at our respective parks during the days they are open. So on days where we did an event and it was marginally attended in the prior year, we will still be open, but we won't invest that much in the event on those days.
Operator
Our next question comes from Robert Aurand from KeyBanc Capital.
Robert Samuel Aurand
Maybe a quick follow-up on kind of the year-to-date trends you're seeing. I know we had some weather in February, but I kind of wanted to ask it in the context of maybe any commentary you can give us on what you're seeing in Mexico? I know that has an outsized impact in the first quarter and can sometimes skew what we're seeing domestically?
Gary Mick
Mexico continues to do very well, and it's certainly helpful to the Q1. In the U.S., we are actually down 4 operating days due to weather versus the same period. So let's go to the -- we call it the first 8 weeks ended February 25. And we lost 4 operating days against a first quarter last year that had bad weather. So weather is still a factor, but it's really early. It's the smallest part of our season at this stage, we're not concerned.
Robert Samuel Aurand
And maybe I can ask one about the Saudi Arabia project. Any updates you can give there, under the deal filings indicate opening in spring 2025. Just anything we should be thinking about from a modeling perspective and how that might flow through?
Selim A. Bassoul
First of all, we're very excited about the Saudi project. It's going to be the largest, most immersive park in the world. In fact, it will be the world's largest park. I have visited there. I've been there. We're working -- our partners and our contractors and our team are working around the clock. In fact, I was there recently. And they are working almost 24/7, and we're expecting to open in the first quarter -- by this time next year. And we're excited. I think what is exciting about it is, in this case, it is not only we're licensing the park, but we are also going to manage and operate the park, and we are finalizing the agreement with Qiddiya, who our Saudi partner, and I think everything is moving forward to add value there. It would be our first time where we operate a park we don't own. So we're very excited about that.
Operator
Our next question comes from Chris Woronka from Deutsche Bank.
Chris Jon Woronka
I wanted to kind of -- this is really kind of a customer mix or behavior question. Is it possible for you guys to kind of bucket out maybe broadly, what happened to a customer as you go back and look at '23 versus '22 if somebody was on an unlimited food meal pass that didn't reoccur last year. Did that person come back to the park? And then kind of secondarily, some of the past programs that expired that you replaced with new plans. Did those -- did you see those customers come back to you in a different way or if they drop out or do they move up the plan or move down a plan. Any way to just think about that at a high level?
Selim A. Bassoul
We do not divulge this data. We have not divulged in the past, but I can give you some flavor about it. And I think the flavor has been we've learned something, which is interesting for us. We've run some good stuff that happened. So some of our members that were -- some of people want to go in membership, ended up in season passes. So our season pass is up. Our single-day ticket has been up too in 2023. We feel good about it. I think what has been interesting for us, what we've learned, and I don't know if it's in the industry-wide or it's only for us, when it rains on a Saturday, you don't expect those people to come on a Sunday. Meaning if you missed that Saturday and you say, okay, it's beautiful Sunday, people have made plans. So we tend to lose those people when weather is bad on a Saturday.
So my expectation would be we'll make it up on the following day. If you were not coming on a Sunday, you come in the following day, and they did not show up. So for us, we have been impacted by weather significantly. And it's something a criteria that I did not anticipate in that business when I became CEO. It was not as big of a factor than it is today. So going forward, in 2024, we are working on a program and that affects mostly single-day ticket, let's put it this way, which is a very healthy, profitable, high-margin part of our business. And we are working on a program that we're launching in most probably soon that I will be able to talk about that most probably guarantees for that single-day ticket against weather.
So we are putting the element of it, and it's very exciting. It will be unique. It will never have been done in the industry. We will be the first to most probably launch something for our single-day ticket to take away the impact of weather for those guests.
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
I want to say first, thank you on behalf of the Six Flag team, we appreciate your continued support. Now I want to take a few minutes to add a little bit -- to recap a little bit some of what talked about, I'm sure there are a lot of things going on. And I want to take a minute to talk about our accomplishments in the last 2 years, but most of probably where we're going in 2024. And I was preparing a few hand written notes to wrap up our conversation, but a lot of things happening, exciting things happening in 2024 for us.
So if I look at our accomplishments in the past 2 years, we did 3 things that I'm very proud of. One, we basically changed our culture from output to outcome. And that means we created a culture of ownership, accountability and performance. And I'm very proud to say that our team responded well to this, both at the parks and at corporate. However, as I mentioned earlier, I underestimated the cost and complexity of the transformation. We had to change the culture from attendance to yield from centralization to decentralization, from many layers of management, the company was bloated, honestly, because we expected maybe the result of pandemic to last longer and people staffed it and literally you realized very quickly in 2022 that the result of 2021 were different. Then we tried to create the beautification of premiumization, trying to attract multi-generation family in our parks. We also -- the second element is we know that to create a seamless customer experience, we needed to go after the chocking points. And that needed innovation. It needed technology. We had no choice. And in that, we implemented a lot of things.
We implemented what I call guest-facing technology, where we knew that if I gave you convenience and value you will pay me for that convenience and value. That's the result of our speedy gates that has been very promising so far, where it's a toll gate when you come in, you don't have to go through a man toll booth and you go in seamlessly in our parks. I gave you an ability to come to our restaurants now and start using self-serving kiosks where you can customize to a nth degree your burger order, even your pizza, your chicken tenders and people are paying us for that.
So we understand that indulgence comes only if you're willing to create convenience, ease of doing business and value. And in that case, we are focused on those 3 things: convenience, value and ease of doing business. And that's why our per cap will continue growing in 2024, 2025 and 2026. We also, in technology, we had to attack labor. And to that extent, we are automating many of our functions. And we are lucky that AI, and our IT team has embraced it very strongly. We are now using AI in many parts of our business, from our customer service to our personalizing our guest experiences, to improving operational efficiencies, to basically using AI-based safety measures. That's in our water parks, affecting our lifeguards who are very -- it's a very tough job -- and very expensive to train and hire and get.
The third element that I'm very proud about is the change we've done. And I have to say I want to say thank you for our investors who stood by us. Thank you for our analyst. Thank you for our Board that allowed me to focus on profitability and not revenue as our top priority. We have changed our business model, reflecting a strategic shift in the market condition and our challenges.
We are totally focused on increasing our EBITDA, our margins, and we are only doing it at the fact that we're providing better value for our guests. In that case, we faced tremendous inflation since I took over the job. Right after I took over the job, the Ukraine war started. We had not only inflation, we had supply chain constraints. Second, we had weather, climate change that occurred very roughly for us. Those are not excuses. We are just saying when we're doing a major transformation, and you compound it on top of it with weather and inflation, it was tough. And now we're putting this behind us.
The transformation is yielding great, great benefits. We are very pleased about it. We're almost at the end of it. We have another most probably a year completed, and I'm very confident that by end of -- second half of 2024, and 2025 and '26 we are back on track to what we promised our investors to be. Very exciting times, and I want to thank all of you for making us better. I know you've asked a lot of good questions, tough questions, and we've gone through some great wins and some mistakes we've made, but we've learned, the missteps have made us better, and we are a great company going forward. Thank you.
Operator
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
