Deferred Revenue Up $21 Million and Active Pass
Base up 12 Percent at End of June
Six Flags Entertainment Corporation (NYSE: SIX), the world’s
largest regional theme park company, today announced that for the
quarter ended June 30, 2017, revenue increased $15 million or 4
percent, as compared to the same period in 2016, to $422 million.
This was primarily driven by a 5 percent increase in attendance to
9.5 million guests and an 18 percent increase in sponsorship and
international licensing revenue, partially offset by a 2 percent
decline in guest spending per capita. Adjusting for the
approximately 380,000 guest visits that shifted from the first
quarter to the second quarter due to the timing of Easter, second
quarter 2017 attendance grew 1 percent. Rainy weather on the East
Coast and in Texas negatively impacted attendance in the second
quarter, particularly attendance associated with one-day ticket
sales, with the resulting higher mix of season pass visitation
dampening guest spending per capita.
Net income decreased $9 million or 15 percent and diluted
earnings per share decreased 8 percent to $0.59 for the quarter,
primarily due to a $37 million charge related to the early
retirement of debt in April 2017 when the company issued new senior
notes and used the proceeds to redeem then-outstanding senior
notes. Adjusted EBITDA1 in the second quarter increased $11 million
or 7 percent to $166 million.
The softer-than-anticipated financial performance through the
first six months of the year makes achieving the Project 600 goal
more challenging and, in accordance with accounting standards, full
achievement of the 2017 Performance Award is no longer deemed
probable. Therefore, in the second quarter, the company reversed
$28 million of stock-based compensation expense reflecting an
expected partial achievement in 2017 of the Project 600 Performance
Award. This reversal partially offset the loss on debt
extinguishment described above.
“We are the leading regional theme park company in the world
operating in a very attractive industry with significant
opportunity for organic growth,” said Jim Reid-Anderson, Chairman,
President and CEO. “We have the best team in the theme park space,
and I am confident that 2017 will be another record year for our
shareholders as we deliver higher ticket yields, improved in-park
revenue, attractive international licensing deals, new waterparks,
and strong execution.”
Total guest spending per capita for the second quarter was
$41.67, which was a decrease of $0.87 or 2 percent compared to the
second quarter of 2016, as ticket price gains were more than offset
by a higher mix of season pass holder attendance. Admissions per
capita decreased 2 percent to $23.36 and in-park spending per
capita decreased 2 percent to $18.31.
For the first six months of 2017 revenue was $522 million, a
slight decline versus the prior year period, driven primarily by a
2 percent decrease in guest spending per capita, partially offset
by a 2 percent increase in attendance and a 7 percent increase in
sponsorship and international licensing revenue. On a constant
currency2 basis, revenue for the first six months of 2017 increased
$2 million. The company had a net loss for the first six months of
$6 million and loss per share of $0.06 as compared to earnings per
share of $0.15 for the same period in 2016. Adjusted EBITDA of $131
million was down slightly versus prior year but flat on a constant
currency basis.
Attendance for the first six months of 2017 grew 2 percent to
11.4 million guests while guest spending per capita decreased 2
percent to $42.10, with admissions per capita and in-park spending
per capita both decreasing 2 percent to $24.03 and $18.07,
respectively.
The company’s continued success in upselling guests to season
passes and memberships resulted in a 12 percent year-over-year
increase in its Active Pass Base, which represents the total number
of guests who have a season pass or who are enrolled in the
company’s membership program. Deferred revenue of $195 million
increased by $21 million or 12 percent over June 30, 2016,
primarily due to incremental sales of season passes, memberships
and all-season dining passes.
In the first half of 2017, the company invested $97 million in
new capital projects, paid $113 million in dividends, or $0.64 per
common share per quarter, and repurchased $379 million of its
common stock. The authorized share repurchase amount available as
of June 30, 2017, was $463 million. Net Debt3 as of June 30, 2017,
calculated as total reported debt of $2,048 million less cash and
cash equivalents of $68 million, was $1,980 million, representing a
3.9 times net leverage ratio.
Previous Announcements
On April 13, 2017, the company announced it had completed the
private sale of $1.2 billion of senior notes and that it had used a
portion of the proceeds to redeem all of its $800 million 5.25
percent senior notes due 2021 and to discharge the indenture
governing those 2021 notes. The company used the balance of the
proceeds, after paying refinancing fees, to repurchase
approximately five million shares of its common stock.
On April 22, 2017, the company announced the opening of a new
60-acre water park in Oaxtepec, Mexico, located about 50 miles
southwest of Six Flags Mexico.
On April 27, 2017, the company announced it had entered into an
agreement with EPR Properties to operate Waterworld California,
Northern California’s largest water park, located 18 miles
southeast of Six Flags Discovery Kingdom.
On June 21, 2017, the company announced that its lenders
approved a reduction to the borrowing rate on the company’s Term
Loan B Credit Facility, which will save the company approximately
$1.4 million annually in borrowing costs.
On July 18, 2017, the company announced the appointment of Jim
Reid-Anderson, who has been serving as Executive Chairman of the
company since February 2016 as Chairman, President and CEO.
Conference Call
At 8:00 a.m. Central Time today, July 26, 2017, the company will
host a conference call to discuss its second quarter 2017 financial
performance. The call is accessible through either the Six Flags
Investor Relations website at investors.sixflags.com or by dialing
1-855-889-1976 in the United States or +1-937-641-0558 outside the
United States and requesting the Six Flags earnings call. A replay
of the call will be available by dialing 1-855-859-2056 or
+1-404-537-3406 through August 3, 2017 and requesting conference ID
1772355.
About Six Flags Entertainment
Corporation
Six Flags Entertainment Corporation is the world’s largest
regional theme park company with $1.3 billion in revenue and 20
parks across the United States, Mexico and Canada. For 56 years,
Six Flags has entertained millions of families with world-class
coasters, themed rides, thrilling water parks and unique
attractions. For more information, visit www.sixflags.com.
Forward-Looking
Statements
The information contained in this release, other than historical
information, consists of forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the
Securities Exchange Act. These statements may involve risks and
uncertainties that could cause actual results to differ materially
from those described in such statements. These risks and
uncertainties include, among others, (i) the adequacy of cash flows
from operations, available cash and available amounts under our
credit facilities to meet our future liquidity needs, (ii) our
ability to roll out our capital enhancements in a timely and cost
effective manner, (iii) our ability to improve operating results by
implementing strategic cost reductions, and organizational and
personnel changes without adversely affecting our business, (iv)
our operations and results of operations, and (v) the risk factors
or uncertainties listed from time to time in the company’s filings
with the Securities and Exchange Commission ("SEC"). In addition,
important factors, including factors impacting attendance, such as
local conditions, contagious diseases, events, disturbances and
terrorist activities; recall of food, toys and other retail
products sold at our parks; risk of accidents occurring at the
company’s parks or other parks in the industry and adverse
publicity concerning our parks or other parks in the industry;
inability to achieve desired improvements and our aspirational
financial performance goals; adverse weather conditions such as
excess heat or cold, rain and storms; general financial and credit
market conditions; economic conditions (including customer spending
patterns); changes in public and consumer tastes; construction
delays in capital improvements or ride downtime; competition with
other theme parks and other entertainment alternatives; dependence
on a seasonal workforce; unionization activities and labor
disputes; laws and regulations affecting labor and employee benefit
costs, including increases in state and federally mandated minimum
wages, and healthcare reform; pending, threatened or future legal
proceedings and the significant expenses associated with
litigation; cyber security risks and other factors could cause
actual results to differ materially from the company’s
expectations. Although the company believes that the expectations
reflected in such forward-looking statements are reasonable, it can
give no assurance that such expectations will be realized and
actual results could vary materially. Reference is made to a more
complete discussion of forward-looking statements and applicable
risks contained under the captions "Cautionary Note Regarding
Forward-Looking Statements" and "Risk Factors" in the company’s
Annual and Quarterly Reports on Forms 10-K and 10-Q, and its other
filings and submissions with the SEC, each of which are available
free of charge on the company’s investor relations website at
investors.sixflags.com and on the SEC’s website at www.sec.gov.
Footnotes
(1) See the following financial statements and Note 3 to
those financial statements for a discussion of Adjusted EBITDA (a
non-GAAP financial measure) and its reconciliation to net income
(loss). (2) Constant Currency calculations assume prior year
results for the company’s parks in Mexico and Canada are translated
at current year foreign exchange rates. (3) Net Debt (a non-GAAP
financial measure) represents total long-term debt as reported,
including current portion, and any short-term bank borrowings, less
cash and cash equivalents.
SIX FLAGS ENTERTAINMENT CORPORATION
Statement of Operations Data (1)
Three Months
Ended Six Months Ended Twelve Months Ended
(Amounts in thousands, except per share data)
June 30, 2017
June 30, 2016 June 30, 2017 June 30, 2016
June 30, 2017 June 30, 2016 Theme park admissions $
221,913 $ 215,762 $ 272,861 $ 273,843 $ 714,431 $ 714,118 Theme
park food, merchandise and other 174,012 168,336 205,172 206,626
519,713 517,172 Sponsorship, licensing and other fees 22,706 19,220
35,996 33,652 68,673 67,667 Accommodations revenue 3,741
3,748 7,871 8,364
15,996 16,246 Total revenue 422,372
407,066 521,900 522,485 1,318,813 1,315,203 Operating expenses
(excluding depreciation and amortization shown separately below)
145,768 142,096 237,880 236,207 491,080 485,293 Selling, general
and administrative expense (excluding depreciation, amortization
and stock-based compensation shown separately below) 53,423 54,467
88,348 88,724 175,079 184,027 Costs of products sold 37,489 36,020
45,070 46,158 108,491 105,500 Depreciation 26,171 25,273 52,814
50,651 106,453 104,377 Amortization 651 651 1,299 1,301 2,601 2,609
Stock-based compensation (15,305 ) 4,244 (3,315 ) 6,250 106,774
35,768 Loss on disposal of assets 1,657 597 2,327 114 4,181 7,763
Interest expense, net 27,156 20,190 48,157 39,648 90,381 78,026
Loss on debt extinguishment 37,109 2,377 37,109 2,377 37,667 2,377
Other expense (income), net 568 (8 )
(335 ) 691 658 1,393
Income before income taxes 107,685 121,159 12,546 50,364 195,448
308,070 Income tax expense (benefit) 36,054
41,059 (1,537 ) 17,199 57,803
96,338 Net income 71,631 80,100 14,083 33,165
137,645 211,732 Less: Net income attributable to noncontrolling
interests (19,605 ) (19,213 ) (19,605 )
(19,213 ) (38,817 ) (38,296 ) Net income (loss)
attributable to Six Flags Entertainment Corporation $ 52,026
$ 60,887 $ (5,522 ) $ 13,952 $ 98,828 $
173,436 Weighted-average number of common shares
outstanding: Weighted-average common shares outstanding — basic:
87,136 93,054 89,133 92,707 90,575 92,766 Weighted-average common
shares outstanding — diluted: 88,832 95,412 89,133 94,953 92,479
95,142 Net income (loss) per average common share
outstanding: Net income (loss) per average common share outstanding
— basic: $ 0.60 $ 0.65 $ (0.06 ) $ 0.15 $ 1.09
$ 1.87 Net income (loss) per average common share
outstanding — diluted: $ 0.59 $ 0.64 $ (0.06 ) $ 0.15
$ 1.07 $ 1.82
Balance Sheet
Data As of (Amounts in
thousands)
June 30, 2017 December 31, 2016 Cash and
cash equivalents (excluding restricted cash) $ 68,279 $ 137,385
Total assets 2,543,687 2,487,672 Deferred revenue 195,319
123,955 Current portion of long-term debt 28,867 29,161 Long-term
debt (excluding current portion) 2,019,190 1,624,486
Redeemable noncontrolling interests 505,321 485,876 Total
stockholders' deficit (554,734 ) (186,490 ) Shares
outstanding 85,563 90,849
Definition and Reconciliation of Non-GAAP Financial
Measures
We prepare our financial statements in accordance with United
States generally accepted accounting principles ("GAAP"). In our
press release, we make reference to non-GAAP financial measures
including Modified EBITDA, Adjusted EBITDA and Adjusted Free Cash
Flow. The definition for each of these non-GAAP financial measures
is set forth below in the notes to the reconciliation tables. We
believe that these non-GAAP financial measures provide important
and useful information for investors to facilitate a comparison of
our operating performance on a consistent basis from period to
period and make it easier to compare our results with those of
other companies in our industry. We use these measures for internal
planning and forecasting purposes, to evaluate ongoing operations
and our performance generally, and in our annual and long-term
incentive plans. By providing these measures, we provide our
investors with the ability to review our performance in the same
manner as our management.
However, because these non-GAAP financial measures are not
determined in accordance with GAAP, they are susceptible to varying
calculations, and not all companies calculate these measures in the
same manner. As a result, these non-GAAP financial measures as
presented may not be directly comparable to a similarly titled
non-GAAP financial measure presented by another company. These
non-GAAP financial measures are presented as supplemental
information and not as alternatives to any GAAP financial measures.
When reviewing a non-GAAP financial measure, we encourage our
investors to fully review and consider the related reconciliation
as detailed below.
The following table sets forth a reconciliation of net income to
Adjusted EBITDA for the three, six and twelve months ended
June 30, 2017 and June 30, 2016:
Three Months Ended Six Months
Ended Twelve Months Ended (Amounts in
thousands)
June 30, 2017 June 30, 2016 June
30, 2017 June 30, 2016 June 30, 2017
June 30, 2016 Net income $ 71,631 $ 80,100 $ 14,083 $
33,165 $ 137,645 $ 211,732 Income tax expense (benefit) 36,054
41,059 (1,537 ) 17,199 57,803 96,338 Other expense (income), net
568 (8 ) (335 ) 691 658 1,393 Loss on debt extinguishment 37,109
2,377 37,109 2,377 37,667 2,377 Interest expense, net 27,156 20,190
48,157 39,648 90,381 78,026 Loss on disposal of assets 1,657 597
2,327 114 4,181 7,763 Amortization 651 651 1,299 1,301 2,601 2,609
Depreciation 26,171 25,273 52,814 50,651 106,453 104,377
Stock-based compensation (15,305 ) 4,244 (3,315 ) 6,250 106,774
35,768 Impact of Fresh Start valuation adjustments (2) 9
22 19 44 64
126 Modified EBITDA (3) 185,701 174,505
150,621 151,440 544,227 540,509 Third party interest in EBITDA of
certain operations (4) (19,605 ) (19,213 )
(19,605 ) (19,213 ) (38,817 ) (38,296 )
Adjusted EBITDA (3) $ 166,096 $ 155,292 $ 131,016
$ 132,227 $ 505,410 $ 502,213
Weighted-average common shares outstanding — basic: 87,136 93,054
89,133 92,707 90,575 92,766
The following table sets forth a reconciliation of net cash
provided by operating activities to Adjusted Free Cash Flow for the
three, six and twelve months ended June 30, 2017 and June 30,
2016:
Three Months Ended Six Months
Ended Twelve Months Ended (Amounts in
thousands)
June 30, 2017 June 30, 2016 June
30, 2017 June 30, 2016 June 30, 2017
June 30, 2016 Net cash provided by operating
activities $ 193,454 $ 191,583 $ 132,866 $ 138,578 $ 457,523 $
467,451 Changes in working capital (36,705 ) (39,089 ) (33,763 )
(34,012 ) (10,898 ) (16,083 ) Interest expense, net 27,156 20,190
48,157 39,648 90,381 78,026 Income tax expense (benefit) 36,054
41,059 (1,537 ) 17,199 57,803 96,338 Amortization of debt issuance
costs (970 ) (1,092 ) (2,141 ) (2,158 ) (4,486 ) (4,293 ) Other
expense (income), net 204 (1,057 ) 1,375 948 3,087 (6,015 )
Interest accretion on notes payable (298 ) (115 ) (390 ) (232 )
(571 ) (464 ) Changes in deferred income taxes (33,203 ) (36,996 )
6,035 (8,575 ) (48,676 ) (74,577 )
Impact of Fresh Start valuation
adjustments (2)
9 22 19 44 64 126 Third party interest in EBITDA of certain
operations (4) (19,605 ) (19,213 ) (19,605 ) (19,213 ) (38,817 )
(38,296 ) Capital expenditures (45,566 ) (38,153 ) (97,200 )
(80,695 ) (145,443 ) (124,817 ) Cash paid for interest, net (11,052
) (7,973 ) (46,826 ) (36,655 ) (78,986 ) (72,666 ) Cash taxes (5)
(3,197 ) (4,694 ) (5,859 ) (10,673 )
(12,453 ) (20,715 ) Adjusted Free Cash Flow (6) $
106,281 $ 104,472 $ (18,869 ) $ 4,204 $
268,528 $ 284,015 Weighted-average common
shares outstanding — basic: 87,136 93,054 89,133 92,707 90,575
92,766 (1) Revenues and expenses
of international operations are converted into U.S. dollars on an
average basis as provided by GAAP. (2) Amounts recorded as
valuation adjustments and included in reorganization items for the
month of April 2010 that would have been included in Modified
EBITDA and Adjusted EBITDA, had fresh start accounting not been
applied. Balance consists primarily of discounted insurance
reserves that will be accreted through the statement of operations
each quarter through 2018. (3) “Modified EBITDA”, a non-GAAP
measure, is defined as our consolidated income (loss) from
continuing operations: excluding the cumulative effect of changes
in accounting principles, discontinued operations gains or losses,
income tax expense or benefit, restructure costs or recoveries,
reorganization items (net), other income or expense, gain or loss
on early extinguishment of debt, equity in income or loss of
investees, interest expense (net), gain or loss on disposal of
assets, gain or loss on the sale of investees, amortization,
depreciation, stock-based compensation, and fresh start accounting
valuation adjustments. Modified EBITDA as defined herein may differ
from similarly titled measures presented by other companies.
Management uses non-GAAP measures for budgeting purposes, measuring
actual results, allocating resources and in determining employee
incentive compensation. We believe that Modified EBITDA provides
relevant and useful information for investors because it assists in
comparing our operating performance on a consistent basis, makes it
easier to compare our results with those of other companies in our
industry as it most closely ties our performance to that of our
competitors from a park level perspective and allows investors to
review performance in the same manner as our management. "Adjusted
EBITDA", a non-GAAP measure, is defined as Modified EBITDA minus
the interests of third parties in the Adjusted EBITDA of properties
that are less than wholly owned (consisting of Six Flags Over
Georgia, Six Flags White Water Atlanta and Six Flags Over Texas).
Adjusted EBITDA is approximately equal to “Parent Consolidated
Adjusted EBITDA” as defined in our secured credit agreement, except
that Parent Consolidated Adjusted EBITDA excludes Adjusted EBITDA
from equity investees that is not distributed to us in cash on a
net basis and has limitations on the amounts of certain expenses
that are excluded from the calculation. Adjusted EBITDA as defined
herein may differ from similarly titled measures presented by other
companies. Our board of directors and management use Adjusted
EBITDA to measure our performance and our current management
incentive compensation plans are based largely on Adjusted EBITDA.
We believe that Adjusted EBITDA is frequently used by all our
sell-side analysts and most investors as their primary measure of
our performance in the evaluation of companies in our industry. In
addition, the instruments governing our indebtedness use Adjusted
EBITDA to measure our compliance with certain covenants and, in
certain circumstances, our ability to make certain borrowings.
Adjusted EBITDA, as computed by us, may not be comparable to
similar metrics used by other companies in our industry. (4)
Represents interests of third parties in the Adjusted EBITDA of Six
Flags Over Georgia, Six Flags Over Texas and Six Flags White Water
Atlanta. (5) Based on our current federal net operating loss
carryforwards, we believe we will continue to pay minimal amounts
for cash taxes for the next two years. Cash taxes paid represents
statutory taxes paid, primarily driven by Mexico and state level
obligations. (6) Management uses Adjusted Free Cash Flow, a
non-GAAP measure, in its financial and operational decision making
processes, for internal reporting, and as part of its forecasting
and budgeting processes as it provides additional transparency of
our operations. Management believes that Adjusted Free Cash Flow is
useful information to investors regarding the amount of cash that
we estimate that we will generate from operations over a certain
period. Management believes the presentation of this measure will
enhance the investors' ability to analyze trends in the business
and evaluate the Company's underlying performance relative to other
companies in the industry. A reconciliation from net cash provided
by operating activities to Adjusted Free Cash Flow is presented in
the table above. Adjusted Free Cash Flow as presented herein may
differ from similarly titled measures presented by other companies.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170726005276/en/
Six Flags Entertainment CorporationStephen Purtell,
+1-972-595-5180Senior Vice PresidentInvestor Relations and
Treasurerspurtell@sftp.com
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