Six Flags Entertainment Corporation (NYSE:SIX)
Q3 2021 Earnings Call
Oct 27, 2021, 8:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good morning, ladies and gentlemen, welcome to the Six Flags Q3 2021 Earnings Conference Call. My name is Catherine, and I will be your operator for today. During the presentation, all lines will be in a listen-only mode. After the speakers’ remarks, we will conduct a question-and-answer session. [Operator Instructions] Thank you.

I would now like to turn the call over to Steve Purtell, Senior Vice President, Investor Relations.

Stephen R. Purtell — Senior Vice President, Investor Relations, Treasury and Strategy

Good morning, and welcome to our third quarter 2021 call. With me are Mike Spanos, President and CEO of Six Flags; and Sandeep Reddy, our Chief Financial Officer. We will begin the call with prepared comments, and then open the call to your questions.

Our comments will include forward-looking statements within the meaning of the federal securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in such statements. And the company undertakes no obligation to update or revise these statements.

In addition, on the call we will discuss non-GAAP financial measures. Investors can find both a detailed discussion of business risks and reconciliations of non-GAAP financial measures to GAAP financial measures 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 Mike.

Mike Spanos — Director, President and Chief Executive Officer

Good morning. Thank you for joining our call.

Over the past few weeks, I have been energized by visiting our parks and spending time with so many of our team members. It has been great to witness firsthand our team’s resilience and their dedication to serving our guests. And I want to thank them for working tirelessly through the pandemic.

We have divided our call today into three parts. First, I will provide an overview of our operating performance and the strong demand trends we are seeing. Second, Sandeep will go into more detail about our financial results. Finally, I will return to provide some comments about the progress we’ve made on our three long-term strategic focus areas.

Despite the challenging environment in the third quarter, we continue to experience strong consumer demand at all of our parks. We benefited from delivering exactly what consumers are looking for thrilling and affordable entertainment for the whole family that is outdoors, and only a short drive from home. Attendance during the quarter indexed 92% of 2019 levels excluding pre-booked group sales our parks index 95% in the third quarter compared to the same period in 2019.

Fourth quarter to-date trends through this past weekend, ending October 24 have accelerated versus the 92% index. We also continue to make steady progress with our revenue management initiatives. During the third quarter, guest spending per capita was up 23% versus 2019. In addition, season pass sales trends have accelerated. As of October 3, 2021, our Active Pass Base was up 3% compared to the third quarter 2019.

While demand trends are encouraging, we continue to face a tight labor market, and we continue to incur additional costs while operating in this unprecedented environment. Looking back on the past two quarters, the speed and magnitude of the resurgence of demand was even stronger than we expected which exasperated the stress on our costs and operations. We are working on several initiatives to alleviate some of these cost pressures.

Sandeep will discuss this in more detail. Overall, we are encouraged by our continued progress yet, we are still in the early stages of transforming our operating model. We are confident that our efforts to improve all aspects of the guest experience will fundamentally reshape the future earnings power of our business.

I will now turn the call over to Sandeep, who will provide details about the quarter’s results Sandeep?

Sandeep Reddy — Executive Vice President and Chief Financial Officer

Thank you, Mike and good morning to everyone.

I would like to start by reminding you that results for the third quarter and year-to-date trends are not comparable to prior year because we closed all of our parks in mid-March last year and several of our parks remained closed or had curtailed operations through third quarter 2020. For that reason, I will provide comparisons to 2019.

Total attendance for the third quarter was 12 million guests, a 14% decline from 2019. Reflecting capacity restrictions at some of the parks that were open, the loss of a significant portion of our pre-booked group sales and an unfavorable calendar shift due to our fiscal year change which benefited the second quarter at the expense of the third quarter. Group sales, which includes school groups and company buyouts continued to experience downward pressure.

As Mike stated attendance at open parks in the third quarter index at 92% of 2019. Excluding pre-booked group sales, our parks indexed 95%. During the months of the quarter, our attendance indexed 97% in July, 89% in August and 86% in September. Concerns about the delta variants increased over the summer, and we experienced a decline in group sales in the second half of August through September.

However as Mike stated, fourth quarter to-date trends have accelerated versus the 92% index we achieved in the third quarter. Looking ahead, we don’t plan to share monthly attendance trends. However, because of the extraordinary environment, we thought it would be helpful to share this detail. Attendance from our single day guests in the third quarter represented 39% of the attendance mix, the same as in the third quarter of 2019 despite the negative impact of lower pre-book sales on single day attendance. Excluding pre-booked group sales, our mix of single day guests increased by three percentage points.

Because of our reporting calendar change, our third quarter fiscal quarter 2021 ended on October 3, instead of September 30 as it did in 2019. As a result, third quarter 2021 includes three calendar days in October. This was more than offset by four days in July, which shifted out of the third quarter and into the second quarter of this year including most of the July 4th weekend.

The net reduction due to these calendar shifts in third quarter 2021 was 437,000 of attendance and approximately $24 million of revenue. We expect group sales to have less of an impact in the fourth quarter, when groups typically represent a smaller portion of our attendance than in the second and third quarters. However, our new fiscal calendar will continue to create attendance shifts in the fourth quarter, which will include an extra weekend in January compared to 2019.

We expect this reporting calendar change to shift approximately 200,000 of attendance out of first quarter 2022 into fourth quarter 2021. When netted against the shift of the October weekend out of the fourth quarter into the third quarter, we expect the changes in our fiscal operating calendar to negatively impact the fourth quarter’s attendance compared to 2019 by approximately 270,000 guests.

Total guest spending per capita increased 23% in the third quarter versus 2019. Admissions spending per capita increased 20% and in-park spending per capita increased 26%. The increase in admissions spending per capita compared to 2019 was primarily driven by our new approach to revenue management as we saw double-digit growth in admissions per capita for both our Active Pass Base and single day tickets.

Our new approach includes pricing our tickets based on a demand curve. It also includes a new pricing architecture that allows us to optimize relative pricing among our various ticket types and to significantly reduce the debt of discounted promotions. In addition, as much of our season pass sales are occurring later in the season than the historical pattern, we recognize season pass revenue over fewer visits which boosted our admissions per capita in the third quarter.

As expected, admissions per capita growth versus 2019 moderated in the third quarter. We expect to continue growing our admissions per capita over time, but we expect the growth rate to continue to moderate. The increase in in-park spending per capita compared to 2019 was due to early progress on several of our transformation initiatives, as well as a stronger overall consumer spending environment.

Highlights from our in-park initiatives include our new food and beverage strategy featuring a new food pricing architecture and the introduction of more premium offerings, our QR code-enabled FLASH Pass program, which has increased FLASH Pass adoption, our improved merchandise mix resulting in higher retail sales, and a higher mix of single day ticket visitors whose tickets, do not include parking.

The acceleration of our in-park per capita spending during our highest attendance quarter gives us confidence that our transformation initiatives are providing a sustainable lift. Revenue in the quarter were $638 million, up $17 million or 3% compared to 2019. Excluding the impact of the fiscal calendar change and the impact of reduced sponsorship international agreements and accommodations revenue, our base business revenue increased by $55 million or 9% compared to the third quarter 2019.

On the cost side, cash operating and SG&A expenses increased by $45 million or 19% in the third quarter compared to 2019. The increase was driven by several factors. First higher wage rates and incentive costs to attract and retain teams members. Second, an increase in litigation reserves primarily related to an increased estimate of the probable outcome of the settlement of legacy class action lawsuit. Third, increase security in our parks, and finally, a shift in the timing of our repair and maintenance costs based on our parks leader opening dates.

As we sit here today, the operating environment remains challenging with the tight labor market and ongoing supply chain constraints. We believe that approximately half of the additional costs we are incurring are transitory and will normalize over time.

However some of these costs, particularly wage inflation may prove to be more permanent. In terms of labor if current wage rates were to persist, we would incur additional labor expenses of $40 million annually compared to 2019 inclusive of the $20 million we called out in the EBITDA baseline we gave during our fourth quarter 2019 earnings call. This $40 million is consistent with what we called out in our previous earnings call.

Our team is working on potential opportunities to alleviate many of these cost pressures in case they persist over time. Adjusted EBITDA for the third quarter was $279 million, down $28 million or 9% versus third quarter 2019. This included the negative impact of the fiscal quarter change which shifted attendance out of the quarter, the reduction of international sponsorship and accommodations revenue, and roughly half of the $45 million cost increase in the quarter that we believe to be transitory.

We are pleased with the growth of our Active Pass Base. At the end of the third quarter we had 7.6 million passholders up 3% from the end of the third quarter 2019. This is especially encouraging because we elected to not hold a highly promotional FLASH sale that we conducted around Labor Day, the last several years before the pandemic. We expect to continue to increase our Active Pass Base through the spring while achieving higher ticket yields.

Our very large Active Pass Base sets us up for a solid fourth quarter and positions us well as we head into the 2022 season. Deferred revenue as of October 3, 2021 was $224 million, up $26 million or 13% compared to third quarter 2019. The increase was primarily due to the deferral of revenue for members whose benefits were extended.

Year-to-date capital expenditures were $62 million. We expect capital expenditures of $120 million to $130 million in 2021 as we make investments to improve the guest experience and to increase capacity on our rights. Our capex this year is heavily weighted in the fourth quarter due to our cautious approach toward capital spending in the early part of 2021. We continue to believe 9% to 10% of revenue is an appropriate level of annual capital expenditures in a normalized environment.

As the recovery continues, we are focused on maximizing cash flow. Year-to-date net cash flow through the third quarter was $232 million, an increase of $26 million compared to the first three quarters of 2019. Our balance sheet is very healthy, with no borrowings under our revolver and no debt maturities before 2024. Our liquidity position as of October 3 was $851 million. This included $461 million of available revolver capacity, net of $20 million of letters of credit and $390 million of cash.

Our capital allocation priorities remain the same, first, to invest in our base business. Second, to pay down debt until we reach our target leverage range of three to four times net debt to adjusted EBITDA. Third, to consider strategic acquisition opportunities. Finally, to return excess cash to shareholders by our dividends or share repurchases.

Moving to our transformation plan as previously discussed, we expect the plan to generate an incremental $80 million to $110 million in annual run-rate adjusted EBITDA. In 2021, we expect to achieve $30 million to $35 million from our fixed cost reductions. We have already realized over $23 million through the first nine months of this year. Based on year-to-date trends, we now expect to reach the high end of $80 million to $110 million range once the plan is fully implemented and attendance returns to 2019 levels.

Thus far, our revenue management initiatives have overdelivered on our original plan. However, our cost initiatives have been negatively impacted by labor and supply chain inflationary pressures. For that reason, we expect our revenue initiatives to provide a greater proportion of the $110 million.

Relative to the midpoint of the company’s pre-pandemic guidance range of $450 million, we are well positioned to achieve our adjusted EBITDA baseline of $560 million once our transformation plan is fully implemented, and attendance returns to 2019 levels.

This EBITDA level assumes the current wage rate environment persists. We are laying the groundwork for sustainable earnings growth and once the base line is achieved, we expect to grow revenue by low to mid-single-digits and EBITDA by mid-to-high single-digits annually thereafter.

Now, I will pass the call back to Mike.

Mike Spanos — Director, President and Chief Executive Officer

Thank you, Sandeep.

I’d like to take a few minutes to review some of the progress we have made on our three strategic focus areas to drive long-term, sustainable earnings growth. Our first strategic focus area is modernizing the guest experience through technology. We want to create more personalized and customized experiences for our guests, putting them in control of their time and activities. This will result in our guests spending less time wait in line, and more time having fun and enjoying activities during each visit. We believe that improving the guest experience will be the most important driver of our earnings growth.

On past calls, I’ve discussed a number of the exciting long-term initiatives that are underway including our new CRM platform, cash to card kiosks, ride reservations and an improved mobile app to name a few. Today, I would like to provide some detail on three additional initiatives that are already starting to have an impact.

First, digital fright passes. Instead of guests having to wait in long lines to pick up hundred attraction wrist bands, this Fright Fest season they able to go right to the honored attractions using their season pass card, membership card for e-tickets. Guests are able to purchase digital fright passes on their phone from anywhere in the park by scanning QR codes. This has increased our fright pass sales while eliminating wait times for our guests.

Second, expanding our mobile dining locations across our parks and enhancing our food and beverage offerings. We continue to see the adoption of mobile dining leading to higher average transactions and improved guest satisfaction. Third, culinary partnerships, to elevate the guest dining experience we have launched two we probably serve Starbucks locations that serve a variety of the premium Starbucks drinks beloved by our guests.

Early findings reveal that selective partnerships with third-party brands, improves guest satisfaction, and increases in-park spend. Our partnership with Starbucks is only the first of several initiatives centered on enhancing our guest dining experience through strategic partnerships.

Our second focus area is to continuously improve operational efficiency. We continue to make progress in this area in particular on our centralized back office and procurement efforts. Our cost progress is currently being obscured by the labor cost and supply chain headwinds, but over time, we expect our cost savings to show up in our financial results as we scale our business, get closer to full attendance capacity and pursue additional cost opportunities.

Finally, our third focus area is driving financial excellence. While we are keeping a close eye on the delta and other variants, we are optimistic that the global recovery will continue. Timelines are hard to predict and progress will continue to vary by region, but we believe we are fast on our way to stronger guest attendance beyond the levels of 2019.

As we implement more of our transformation program and as our attendance recovers at 2019 levels, we expect to deliver $560 million in adjusted EBITDA. Even more important, once we achieve that new EBITDA baseline, we expect to sustainably grow adjusted EBITDA from our base business mid to high single-digits over time.

In conclusion, these have been challenging times, but we are looking forward to a bright future. With a clear focus on improving the guest experience through technology and a talented and dedicated team to execute our strategy, we are well positioned to accelerate growth in 2022.

Catherine, at this point, could you please open the call for any questions.

Questions and Answers:

Operator

[Operator Instructions] Your first question comes from the line of Steve Wieczynski with Stifel.

Steve Wieczynski — Stifel — Analyst

Guys, good morning. So just want to make sure I’m thinking about this the right way, but with your revised EBITDA target of, let’s call it $560 million, that’s including the current labor pressures, which I think you called out as being around $40 million? So the labor pressures do start to ease over time and eventually, let’s say, maybe not go back to normal, but somewhere around there that EBITDA range would actually be closer to $600 million. I just want to make sure I’m thinking about that the right way?

Sandeep Reddy — Executive Vice President and Chief Financial Officer

Yes, good morning Steve, how are you doing.

Steve Wieczynski — Stifel — Analyst

Good.

Sandeep Reddy — Executive Vice President and Chief Financial Officer

So on the — on the EBITDA target of $560 million, you’re correct, it includes the $40 million of wage pressure and where we sit here today, we believe that these wage pressures are very likely to persist. And I think that’s why we’ve incorporated that into our baseline EBITDA target and your math, would be right, if it didn’t exist, but I think we actually expected to exist, and that’s specifically why we called it out. And really our run rate in terms of wage rates today reflects that investment that’s being done, and it’s actually are expected to continue.

Steve Wieczynski — Stifel — Analyst

And just to add on that, from here you in terms of what you’re seeing from the labor market today, would you expect that to maybe not ease anytime soon, but also, do you expect that to — have you seen that intensify at all, basically trying to get the-is it getting worse. The same or is it kind of getting a little bit, a little bit better.

Sandeep Reddy — Executive Vice President and Chief Financial Officer

So, I think where we are — the labor market continues to be pretty constrained. But what I would say is from a wage rate pressure, the pressure that we were seeing a few months ago has pretty much stayed consistent. We haven’t really seen a huge change, and I think what really-remains to be seen is, what happens to the supply side of labor as we actually go into next year. But from a rate standpoint, this is what we’re seeing right now.

Steve Wieczynski — Stifel — Analyst

Yes, OK.

Mike Spanos — Director, President and Chief Executive Officer

Yes, Steve good morning, it’s Mike. I think, to your question first, I would say it’s a volatile environment for sure. I made the call to focused on getting staffed, ensuring a safe park and provide a quality guest experience in the short-term. To your point about the longer term, second, we’ve got to deal with the current tight labor market and wage rates by operating more efficiently through process redesign, automation and technology in order to reduce cost as a percent of revenue, and we want to do that while we still enhance the guest experience. So as we said, we’re in the early stages of several initiatives to operate more efficiently. We’re going to update you all in the future as we test and learn more.

Steve Wieczynski — Stifel — Analyst

Okay, great. And then real quick second question is, you laid out how the attendance kind of trended through the quarter, but just trying to understand maybe that the in-park spend levels. Did you see any dramatic changes in terms of from July through September, was it pretty steady and pretty strong and does that continue to be pretty strong so far into the fourth quarter?

Sandeep Reddy — Executive Vice President and Chief Financial Officer

So Steve, I think that’s a great question, and I think it really ties into a lot of what we talked about in the last earnings call. We definitely saw from the in-park spend perspective and an improvement in trend as we went through as we got more stuffed. And that’s why we talked about the fact that we were making these investments in wage rates to get the quality of labor that we needed to deliver the in-park services that our guests were expecting. And sure enough, you saw that in our per caps, our per caps actually accelerated versus Q2. And we’re really pleased to see what we did.

Steve Wieczynski — Stifel — Analyst

Great, OK. Thanks guys. Appreciate it.

Operator

Your next question comes from the line of James Hardiman with Wedbush Securities.

James Hardiman — Wedbush Securities — Analyst

Hey, good morning guys.

Sandeep Reddy — Executive Vice President and Chief Financial Officer

Good morning.

Mike Spanos — Director, President and Chief Executive Officer

Good morning.

James Hardiman — Wedbush Securities — Analyst

So while we’re on the topic, just that last — Steve’s last question there, to your point Sandeep the expectation is that admissions per caps will decelerate or moderate, I should say going forward. Whereas the in-park actually accelerated during the third quarter, is there any reason to think that those in-park per caps will come down meaningfully in the next few quarters or is this a sustainable trend?

Sandeep Reddy — Executive Vice President and Chief Financial Officer

Yes, so I think that’s a very good question and very good follow-up James. So I think where we are to the extent that the investment in labor has actually helped us to accelerate on the in-park spend that that driver continues as we go into the fourth quarter. And we continue to get better at traffic and compared to Q2, Q3 we’re sequentially definitely better and we’re making progress into the fourth quarter as well.

So we will see two things, one we’ll see wage pressure because the rates actually — they are going to roll through the financials on the expenses, but we still-we still should be seeing tailwinds on the in-park spend. That being said, I think it really was said on the last call, we say it again, we are definitely benefiting from the consumer discretionary backdrop that we’re dealing with right now.

And that’s a tailwind which we don’t know how long that will sustain for. But what is so certain is that a lot of the value that we’re seeing on in-park spend is driven by our transformation initiatives. So yes, so the direction is definitely up in terms of increased spend, but we do expect some level of moderation once the consumer discretionary environment becomes a little bit more stabilized.

Mike Spanos — Director, President and Chief Executive Officer

James, it’s Mike. Good morning. Sandeep said it well, we were very pleased that the in-park spending was up 26%. As you said, that’s an increase from the 22% in Q2. Where I get excited is about the future. What we’ve done with transformation, we’ve built capability. And that capability, a big part of it is in our revenue management initiatives and how we’re also connecting that to in-park merchandising, food and beverage, retail games. And that muscle is in the organization. So I’m very confident that that’s going to build to sustained earnings after we get to that adjusted EBITDA of $560 million. We’re going to continue to build that capability, continue to refine, both in the short term and the longer term.

James Hardiman — Wedbush Securities — Analyst

Got it. And then I did want to hone in a little bit about some of the attendance commentary. So I guess, first, safe to say that you’re attributing the sequential deterioration over the course of the quarter to Delta concerns. October was better than the 92% of 2019 levels that you called out for the quarter, which would imply an even bigger step-up versus September. I guess two things there. Safe to say that we’re still not at 2019 levels, but I’m assuming you would tell us if we were at 2019 levels, just given what a benchmark that is for the industry. But then also, do you attribute that October improvement to maybe people feeling better about Delta? Or is there something else in October? I know some parks are maybe — got some different calendars. But help us unpack some of that.

Mike Spanos — Director, President and Chief Executive Officer

Yes. You bet, James. So first, I think it starts with — Fright Fest is huge. So I start there. Second is consumers continue to want to engage with us because we offer thrills, we’re safe, we’re outdoors, we’re close to home. And we know we have not been a source of spread of COVID, given our contactless protocols and safety standards. And as I’ve said, we’ve got governors tell us we’re best-in-class. We did, as you said, attendance at open parks accelerated to 92% of 2019 levels in Q3. We have seen an acceleration of that in October through October 24. And we’ve also seen group sales coming back as well. So we do feel good about that.

Now specific a couple of other things you mentioned, which is part of it, but the good news here is we’re seeing — your point maybe about capacity constraints and Delta, let’s just start with capacity. Montreal and Mexico had constraints in the third quarter. Mexico is now at full capacity as of October 18. So I think that’s a good thing.

In terms of Delta, I think Sandeep said it really well. I feel good about our trends. But yes, we’re going to be always focused on the safety of our guests and team members. We continue to feel good about attendance. Again, we’re outdoors. We’ve got hundreds of usable acres. And time lines are going to vary by region, but we’re optimistic about the global recovery, and we need to be ready to capture the demand.

James Hardiman — Wedbush Securities — Analyst

That’s all really helpful. I appreciate it on a pretty open-ended question. I appreciate the candor. Thanks, guys.

Sandeep Reddy — Executive Vice President and Chief Financial Officer

Thank you.

Mike Spanos — Director, President and Chief Executive Officer

Thanks, James.

Operator

Your next question comes from the line of Ian Zaffino with Oppenheimer.

Ian Zaffino — Oppenheimer — Analyst

Hi. Great. Thank you very much. Just sort of a question on the cost versus price. I think in the past, you mentioned that as your employees and as your demographics get paid more, that raises your labor cost, obviously, but then there’s a commensurate offset on the revenue line. I guess you’re not seeing that now, just given that we talked about kind of flat admissions per cap in the face of this $40 million of incremental cost? Is — maybe you can kind of give us some color there? Thanks.

Sandeep Reddy — Executive Vice President and Chief Financial Officer

Yes. I think it’s a good question. And I think what I will say is there’s two different things going on. And I think you’re actually talking about the cost pressures that we are seeing already. And we want to talk a little bit more about the drivers of the quarter. But what I would say is we’ve historically been able to see the pricing come through when costs actually go up. And if you look at what’s happening in our per caps, you look at our admissions per caps and what we’re actually yielding, we’re doing extremely well because our per caps are up 20%. And we are actually seeing that very consistently across all ticket types.

So we are seeing the pricing yields along with the cost structure as it’s evolving, and we are expecting to see a continuation of this as we go along. But I think specific to the cost right now, the environment as we touched on earlier, is tough. I mean we have $40 million of wage pressure that is clearly in front of us that we have actually incorporated into our adjusted EBITDA based on a $560 million. And I think that’s where things are at, but we’re very confident in our ability to price to cover the cost.

Mike Spanos — Director, President and Chief Executive Officer

Yes, Ian, it’s a fair question. I mean, as we think about the future, we are committed to an operating expense ratio. And we’ve talked about that. I would say in the short term, as I’ve said, we know there are a lot of short-term unknowns. It’s a fluid, challenging operating environment. So in the short term, as I said, I made the call, we’re going to spend more on costs to ensure we had the right guest experience. We felt great about getting staffed and safe, but we’re still in the early stages.

Now I would say also though, we are very confident and I like our recovery when I think about our business, really strong bounce back in the revenue. Liquidity is very good. Good per caps and attendance momentum. And our Active Pass Base shows really good billings, which I also think bodes to their resilience and brand loyalty really implies that there’s also more pricing power.

Now I would say, as I think about that, we are going to focus on the future and to your point, that gets from a financial excellence, we got to be zoned in on that operating expense ratio. We got to be more thoughtful about the cost in terms of process redesign, automation, technology and modernizing the guest experience through that technology, and they’re not mutually exclusive.

So we’re going to stay focused on that. We’re confident that adjusted EBITDA of $560 million as we get to the 2019 levels. And after that, we’ll be in the mid- to high single-digit EBITDA growth after that 2019 attendance levels.

Ian Zaffino — Oppenheimer — Analyst

Okay. And then just as a follow-up, what sort of the target date for the $560 million? Is this something you think you could hit very soon? Or is it going to be a little while?

Sandeep Reddy — Executive Vice President and Chief Financial Officer

So again, I think it’s a little bit difficult to predict time lines. I think Mike said it toward the end of the prepared remarks. But I think as we see sequential improvement in attendance, we feel more and more confident that it’s closer rather than further away. But you saw what happened with the Delta variant in the third quarter. We’re looking good in July, and then we had in August, September blip in terms of a slowdown.

So we just don’t want to get ahead of ourselves. We’re doing all the things that we need to do to actually drive toward that. But I think the health environment is really going to be the driver of when the attendance comes back. But I think we’re very optimistic that this is sooner rather than later based on the way the health outlook has been evolving.

Ian Zaffino — Oppenheimer — Analyst

All right. Great. Thank you so much.

Sandeep Reddy — Executive Vice President and Chief Financial Officer

Thank you.

Operator

Your next question comes from the line of Stephen Grambling with Goldman Sachs.

Stephen Grambling — Goldman Sachs — Analyst

Hey, thanks. I guess as a follow-up, maybe I’ll ask the question a little bit differently. What’s been the historical kind of rule of thumb for flow-through from admissions per cap and in-park per cap growth as we think about how strong it’s been so far? And how might that have that flow-through have changed from some of the actions you’ve taken versus some of the labor inflation? Thanks.

Sandeep Reddy — Executive Vice President and Chief Financial Officer

Yes. I think it’s a really good question, Steve. And I think it’s probably less comparable to the current environment, more because of some of the dynamics that we talked about on how the driving forces behind the admissions per caps and IPS. So I touched on this in the prepared remarks, but I want to recap them because it’s important to bear in mind.

So we’re really pleased on where we are on the per cap trends. And we saw a 20% increase in admissions per caps, which is a deceleration from 24% that we saw the prior quarter. And it’s very good because there’s been a growth in both the Active Pass Base per caps and single-day ticket admissions per caps, both actually growing at the double digits. But the one thing I would say about this particular situation because of the pandemic year, we’ve actually sold the season passes much later in the year. So as a result of this, the amount of per cap boost that we’re getting because of the shorter window of time of which the revenue is being recognized is actually lifting the per cap in this particular year. And that’s one of the reasons why we said we’re expecting that admissions per cap trend to moderate. So that’s one.

Then I would say the next one would be on IPS staff. There are two different things going on over there. One, we talked about the labor investments that we’ve made. And as we got staffing in a better place in the third quarter than the second, we saw that we were able to execute a lot more, and we saw a sequential acceleration in in-park spend. That’s great. And I think that the transformation initiatives that were already underway in the second quarter continued as well. But the key over here is we have a backdrop of consumer discretionary spend, which is very elevated in the marketplace. So we’re not quite sure what actually sustains on that particular piece of it, hard to predict exactly how much that is either. But overall, we tend to actually see a pretty good flow-through from the increase in per caps in our EBITDA.

Stephen Grambling — Goldman Sachs — Analyst

Okay. And I guess one other follow-up just on the labor pressures and the shortages that you’ve talked about in the pass. Are you seeing any significant difference in those wage pressures or the shortages based on geography, given some states kind of let some of the stimulus lap earlier? Thanks.

Sandeep Reddy — Executive Vice President and Chief Financial Officer

Yes, Steven, it’s a very good question. I would say that there are nuances by State. But broadly, it’s a nationwide problem. We’re definitely seeing this across the board. And I think sequentially, we’ve gotten better at staffing in some parks versus other parks just because of the variation by geography, but it’s tough everywhere. It is not easy. It is a national issue that we’re dealing with right now. But again, we were really pleased about the initiatives we took, and we talked about on the last call, we put in the seasonal incentive plan. It’s worked really well. So our staffing has actually sequentially improved, and we expect to keep improving it as we go into the fourth quarter. So it’s looking good, but the backdrop is tough. And that’s exactly what we talked about in the prepared remarks.

Mike Spanos — Director, President and Chief Executive Officer

Yes. So Stephen, the only thing I would put on top of it is, I do think one thing I see is the closer you get to the population centers, it does get easier to get staffed. I think that’s probably the one thing we have seen across parks. But everything else Sandeep said is right. I do feel good about our retention recruitment incentives, we’ve improved, but it’s going to continue to be a big focus area for us in terms of connecting that to execution.

Stephen Grambling — Goldman Sachs — Analyst

That’s helpful. Thanks so much.

Operator

Your next question comes from the line of Ben Chaiken with Credit Suisse.

Ben Chaiken — Credit Suisse — Analyst

Hey, how is it going?

Mike Spanos — Director, President and Chief Executive Officer

Good morning, Ben.

Ben Chaiken — Credit Suisse — Analyst

Good morning. Hey, sorry, just to clarify. As you think about the — I apologize if I missed it, but as you think about the higher range in EBITDA that you called out, on the revenue side, how do you delineate between maybe like sustainable idiosyncratic things that you guys are doing versus maybe what we’re seeing in the overall consumer environment? I’m not suggesting that the current environment will or will not maintain. I’m just curious on the thought process.

And then part two, just to clarify, did you say that growth in admissions per cap still be growth in ’22 versus ’21, is your expectation? Sorry, if I missed any of that previously. Thanks.

Sandeep Reddy — Executive Vice President and Chief Financial Officer

No. I think — very good questions, Ben. I think — number one, I think when we talk about the $560 million EBITDA goal that we actually updated too, and we also talked about the fact that it’s going to come more from revenues and less from costs given the environment that we are facing right now, we’ve really overdelivered on our plan so far on the revenue side. And I think you can see that in the admissions per caps and the in-park spend per cap trends that we’ve been seeing so far this year.

And so what we have caveated in my previous answer as well, I did mention that to Steve that — look, I mean, the consumer discretionary environment is definitely one which is allowing for a heavy spend from the consumers. And so we’re not quite sure how much of a drop-off there will be if that moderates later on. But what we can see is exclusive of that from a transformation standpoint, we see value from the admission side, which is extremely strong. And that’s really a function of our revenue management process. And that revenue management process has been in place for the entire year.

And we’ve done a really good job with the revenue management team of adjusting pricing across different ticket types and making sure that we’re actually moderating our promotional expenditures as well, our promotional activity as well to actually drive that yield from the emission side. So that’s a big piece where we’re really confident that it’s more driven by transformation and is relatively agnostic of the consumer discretionary spend that’s going on right now.

Ben Chaiken — Credit Suisse — Analyst

Got you. And then just to clear that second part. Are you assuming that admission per caps next year are up versus ’21? Sorry, just to confirm.

Sandeep Reddy — Executive Vice President and Chief Financial Officer

Yes. I think it’s basically early days right now because of admissions. Compared to ’19, for sure, there’s a definite strength. But because of the dynamics of the season pass, and we sold the season pass later in the season as the cadence of sales of season passes basically starts reverting to historical norms that you could see on pressure in relative terms compared to ’21. But over — against ’19, the yields that we’re seeing broadly are very, very strong. So I think we should still see strength.

Mike Spanos — Director, President and Chief Executive Officer

Yes, Ben, I think the — obviously, the other offset is ideally and hopefully, we anticipate there’s going to be more attendance next year in ’22 as well. So obviously, we’re tracking both of those between your point, the emissions yield, the per caps, but we also expect to see a nice continued momentum on the attendance line.

[Speech Overlap] Yes, if passes are sold earlier, obviously, that will support as we move into ’22 as well in the early part of the year.

Ben Chaiken — Credit Suisse — Analyst

Got you. Do you guys have any way to quantify that the dynamic of season passes maybe being sold over a smaller period this year for us or too early?

Sandeep Reddy — Executive Vice President and Chief Financial Officer

I think it’s too early, Ben. Because I think as we come in through pandemic, we changed the cadence of our promotional activity. We didn’t do the season — the Labor Day season pass sales, FLASH sale that we have done historically. So I think things will start normalizing as we go into ’22. But I think because of the pandemic situation being very different in ’22 likely versus compared to ’21, you will see some noise ’21 versus ’22 as we go through.

Ben Chaiken — Credit Suisse — Analyst

Cool. Thank you very much.

Sandeep Reddy — Executive Vice President and Chief Financial Officer

Welcome.

Operator

The next question comes from the line of Ryan Sundby with William Blair.

Ryan Sundby — William Blair — Analyst

Hi. Good morning, everyone.

Ben Chaiken — Credit Suisse — Analyst

Good morning, Ryan.

Ryan Sundby — William Blair — Analyst

Hey. I know it’s a smaller part of the business, but I think if we take licensing out of 2019 numbers, it still looks like sponsorship and accommodations are down pretty meaningfully in the quarter. As we see our tenants start to go back toward 2019 levels, when should we see that side of the business kind of catch up too?

Sandeep Reddy — Executive Vice President and Chief Financial Officer

That’s a great point, Ryan. Yes, so that’s definitely the case. I think definitely, both sponsorship and accommodations have been impacted by the pandemic this year. And as we move into next year, we should start seeing recovery on that side as well. So — but that’s — we agree with you.

Ryan Sundby — William Blair — Analyst

Okay. Great. And then as you get closing out that remaining attendance gap versus where we were in 2019. Are there any, I guess, parks or maybe key demographics — I think historically, families with kids were about half of the visitation — that kind of stand out that need to recover? And then, I guess, as we see vaccines are allowed to with children under 12, do you see that as a material impact to visitation for next year?

Mike Spanos — Director, President and Chief Executive Officer

Ryan, it’s Mike. I don’t. As I said, what we are seeing consistently in every geography, if I understand your question, is we are getting guest recognition for the fact we’re safe, we’re outdoor, and we’re close drive from home. And that’s given the guest a high level of confidence in safety.

Second, we’ve been recognized for our safety protocols. As we’ve talked about in previous calls, we’re contactless from the point of purchase to your entry in the park, all the way through to your Active Pass Base activation. And that gives guests a high degree of comfort coming to our parks. And then, of course, you got the usable acre factor where they just feel they can naturally in effectively a mini city of the park socially distance.

So what we like is the fact we’re seeing the capacity constraints lifted. We saw that in Mexico, as I stated. Right now, the only one we have under that situation is Canada. And we continue to get great feedback from all the park areas of cities and the counties that they want us to continue to expand operations, which I think is very good. So we’re seeing it across all cohorts, whether it’s families, young adults, teams. It’s a very consistent feedback on a strong trust in what we’re doing safety-wise.

Ryan Sundby — William Blair — Analyst

Great. So it doesn’t sound like there’s any one group that’s been suppressed or held back?

Mike Spanos — Director, President and Chief Executive Officer

No. And the one I didn’t mention, but just because we brought up in the prepared remarks, is just we’re seeing the same feedback on group sales. People — the groups want to get back out. They want togetherness. They just want togetherness and memories in a place that’s thrilling, safe and fun. And that’s what who we are at Six Flags.

Ryan Sundby — William Blair — Analyst

Yes, I think we all do. That’s great. Thanks.

Operator

And there are no further questions at this time.

Mike Spanos — Director, President and Chief Executive Officer

Thanks, Catherine. Thank you for your continued support. Our mission is to create fun and thrilling memories for all as we leverage our iconic brand and the investments we have made and the guest experience to launch our next phase of growth. Take care, and we hope to see you at our parks for the last weekend of Fright Fest and for our Holiday in the Park event this winter.

Operator

[Operator Closing Remarks]

Duration: 50 minutes

Call participants:

Stephen R. Purtell — Senior Vice President, Investor Relations, Treasury and Strategy

Mike Spanos — Director, President and Chief Executive Officer

Sandeep Reddy — Executive Vice President and Chief Financial Officer

Steve Wieczynski — Stifel — Analyst

James Hardiman — Wedbush Securities — Analyst

Ian Zaffino — Oppenheimer — Analyst

Stephen Grambling — Goldman Sachs — Analyst

Ben Chaiken — Credit Suisse — Analyst

Ryan Sundby — William Blair — Analyst

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