Six Flags Entertainment Corporation (FUN) Earnings

Management highlights

- **Leadership Refresh & Organizational Restructuring** * Completed a full refresh of the C-suite, adding Mark Pauls as Chief Operating Officer, Amy Martin Ziegenfuss as Chief Marketing Officer, and Ash Walia as Chief Financial Officer, all with deep relevant industry experience. * Restored experienced on-site park presidents at the largest parks, granting full P&L accountability and decision-making authority close to guests to improve responsiveness to changing conditions. * Completed a deep dive analysis of previously identified underperforming parks, and confirmed meaningful upside relative to historical performance; improved leadership, accountability and commercial execution in Q2 already delivered higher adjusted EBITDA and better margins at these parks. - **Commercial & Guest Strategy** * Implemented more precise audience segmentation to tailor messaging, products, and value propositions to different guest groups (first-time families, thrill seekers, pass holders, premium experience seekers). * Shifted marketing investment allocation to measure incremental revenue and contribution per campaign/channel, rather than just impressions or gross sales, supported by unified ticketing, CRM, and first-party data capabilities to improve acquisition efficiency and renewal rates. * Grew the active season pass/membership base 6% entering peak summer season; demand for higher-tier products remains strong, average prices increased for both single-day and combined pass/membership products, and multi-park visitation continues to grow. Management views the tradeoff of lower per-visit admission revenue for higher upfront pass revenue and incremental in-park spending from more frequent visits as attractive, with a core goal of maximizing total seasonal and lifetime guest value. - **Guest Experience & Capital Allocation** * Prioritized ride uptime as a core guest experience metric; uptime improved in Q2 though performance remains uneven across parks. Increased repair and maintenance spending at some parks to reduce downtime, with safety as a non-negotiable priority. Improved uptime and throughput are expected to rebuild guest trust, drive repeat visits, and support long-term pricing power. * All capital projects compete for funding based on guest experience impact and long-term return projections. 2026 capital investments include new attractions at multiple parks and America 250 themed programming, designed to drive new and repeat visitation. * Simplified the portfolio via the sale of 7 smaller non-core parks, allowing the company to focus leadership, operating resources, and capital on higher-potential properties and reduce leverage. - **Balance Sheet Progress** * Used proceeds from the non-core park sale and improved operating cash flow to reduce outstanding borrowings, ending Q2 with $135 million in cash, total liquidity of $837 million, and net debt of $4.9 billion. * Deferred revenue grew on a same-park basis, reflecting growth in memberships and advanced ticket/pass sales.

Guidance

- Management expects adjusted EBITDA to grow year-over-year in the second half of 2026, despite two near-term headwinds for early Q3: an unfavorable July 4th calendar shift (the holiday fell on a Saturday in 2026 versus a Friday in 2025) and wildfire-related air quality disruptions that caused temporary park closures across parts of the U.S. Undisturbed July days delivered very strong performance, including the highest single-day summer attendance on a same-park basis in five years, confirming underlying guest demand remains strong. - Q3 2026 is planned to have 2,133 operating days, 66 more than Q3 2025, driven by an extra week of summer operations for northern and midwestern parks due to the timing of Labor Day. - Longer term, Six Flags reaffirms its target of delivering adjusted EBITDA margins in the mid-30% range over time, and reducing net leverage to a long-term target of 4.0x net debt to adjusted EBITDA. - No current plans for additional portfolio divestitures in 2026.

Segment performance

Six Flags reports results on a same-park basis (excluding 7 non-core parks sold and 1 park closed after 2025) for year-over-year comparison. In Q2 2026: - Net revenue: Increased 2% to $864 million, despite 44 fewer operating days (a 3% reduction in total operating days). - Attendance: Increased 4% (adding 449,000 visits), driven by growth in season pass and member visitation. - Adjusted EBITDA: Increased 7% to $249 million, with a 120 basis point same-park margin expansion year-over-year. First half 2026 adjusted EBITDA increased 63% ($56 million) year-over-year. Trailing 12 month adjusted EBITDA totaled $801 million, up from $745 million for full year 2025. - Per capita spending: Declined less than 1% year-over-year, entirely due to mix shift (higher share of season pass/membership visits, which spread revenue across multiple visits), not weak pricing. Like-for-like pricing increased across all admission product categories, and in-park guest spending on food, beverages, and attractions remained healthy.

Risks & headwinds

- Near-term Q3 performance faces temporary headwinds from an unfavorable July 4th calendar shift and wildfire-related air quality disruptions across multiple regions, which caused temporary park closures and reduced attendance in affected periods. - Ride uptime performance remains uneven across the park portfolio, requiring incremental repair and maintenance spending at some locations. - The fixed/semi-fixed cost structure of park operations means that reducing operating days mechanically increases expense per operating day, even as total costs are managed with discipline. - Progress on deleveraging and margin expansion is still in early stages, with results expected to accumulate over time rather than being immediate.

Analyst Q&A

• Q: How did July trend after accounting for holiday calendar and air quality impacts, and what is the outlook for second half EBITDA growth? /

  A: Management did not provide specific quarterly guidance, but reaffirmed expectation for full second half 2026 adjusted EBITDA growth over the trailing 12-month $801 million baseline. While July faced the cited headwinds, undisturbed days saw very strong demand, including the highest single-day summer attendance in five years. The 6% growth in the active pass/member base, higher renewal rates for membership products, extra operating days from the favorable Labor Day calendar, and the expanded scope of the annual Halloween event all support growth, with larger opportunity for growth in Q4 than Q3. (217 character)

• Q: What is the path to deleveraging, and can Six Flags manage upcoming required legal settlements in Georgia? /

  A: Management reaffirms the long-term target of 4.0x net leverage and maintains confidence in hitting this goal. Capital expenditure is planned between $400 million to $425 million annually, with disciplined allocation to support growth while paying down debt. The company has sufficient liquidity to cover the upcoming Georgia settlement when it comes due, and remains on track to meet deleveraging targets over time. (196 character)

• Q: What is the opportunity to increase pre-sale ancillary revenue attachment to pass sales, and how is capital allocation shifting between hard and soft capital investments? /

  A: Increasing pre-sale ancillary attachment is a core deliberate strategy. New flexible dining plans (with adjusted pricing for all-season plans and affordable limited options) have delivered double-digit early attachment rate growth in initial parks, and optimized Fast Lane queuing pricing strategies are rolling out for 2027. Going forward, the company will add more low-capital, high-return food and beverage themed events across the portfolio (following the successful Boysenberry Festival model at Knott's Berry Farm) as an efficient use of capital to drive visitation and per-cap spending. (299 character)

• Q: Is the portfolio divestiture process complete, and where does Six Flags target consumers across the economic spectrum? /

  A: There are no planned portfolio changes for 2026, so the current park base is stable for consumers and investors. While management will always review options to create shareholder value long-term, no additional transactions are pending. The park portfolio already offers attractions for all consumer segments, from thrill rides to family-focused areas and premium events. New data and marketing capabilities will allow better segmentation to reach all audiences across the income spectrum, expanding the company's addressable market. (257 character)

• Q: What is the status of excess land sale initiatives, and will proceeds be used for deleveraging? /

  A: Management reaffirms that all excess asset sale proceeds will be used to pay down debt, in support of the 4.0x leverage target. The largest ongoing initiative, for the former park site in Bowie, Maryland, has a signed purchase agreement, with closing expected in late 2027 or early 2028 as the buyer completes due diligence. Excess land in Richmond, Virginia, has strong third-party interest, with bids currently under evaluation. (204 character)