Six Flags Entertainment Corporation (FUN) shares took flight on Wednesday, soaring over 9% after the company delivered a strong third-quarter earnings report. Despite facing some headwinds from extreme weather and operational disruptions, the combined company, formed by the merger of Cedar Fair and Six Flags, exceeded revenue expectations and demonstrated impressive growth potential.
The company reported adjusted earnings per share of $2.10, which fell short of analyst estimates of $3.39. However, quarterly sales of $1.348 billion outpaced the consensus estimate of $1.339 billion, indicating strong consumer demand for the amusement park experience. The third quarter saw a significant increase in operating days, totaling 2,585 compared to 1,091 in the previous year. This boost was largely attributed to the inclusion of legacy Six Flags operations following the merger.
Six Flags management highlighted the positive impact of the merger, emphasizing the $170 million increase in Adjusted EBITDA to $558 million, a key indicator of park-level operating results. The company attributed this growth to the success of its integration efforts and the resulting cost synergies. Six Flags President and CEO Richard A. Zimmerman expressed optimism about the future, stating that despite operational challenges, consumer demand for their parks remained strong.
Looking ahead, Six Flags is targeting substantial cost savings. The company expects to achieve $50 million in run-rate cost synergies by the end of 2024 and is actively working towards realizing an additional $70 million in cost savings by 2025. This commitment to cost optimization will fuel reinvestment in park enhancements, aimed at improving the guest experience and driving attendance.
The company boasts strong financial standing with $743 million in liquidity, including cash on hand and readily available borrowings. This solid financial position will enable Six Flags to fund its growth initiatives while maintaining 100% ownership of the realized synergies. Building upon a robust October performance, management projects fourth-quarter Adjusted EBITDA to land between $205 million and $215 million.
In a move aimed at long-term growth, Six Flags has launched Project Accelerate, a strategic initiative to generate an annual unlevered pre-tax free cash flow of at least $800 million by 2027. This ambitious goal underscores the company’s confidence in its ability to capitalize on the combined entity’s potential and deliver sustained value for shareholders.
