Improves Cash Flow Outlook from Company’s Prior
Guidance
Company Developing Business Transformation
Initiative for Long-Term Earnings Growth
Six Flags Entertainment Corporation (NYSE: SIX), the world’s
largest regional theme park company and the largest operator of
waterparks in North America, today reported, as anticipated, weaker
financial results for the second quarter and first half of 2020 as
compared to the same periods in 2019, primarily due to the COVID-19
pandemic’s negative impact on its operations. Compared to its prior
guidance, the company improved its cash flow performance for the
second quarter and is projecting reduced cash outflows for the
balance of the year. The company has commenced a major
transformation initiative to reinvigorate long-term growth and
shareholder value, including revenue growth, improved cost
efficiencies, and an enhanced end-to-end experience for its
guests.
“I am very proud of our team’s performance in the face of
unprecedented challenges from the pandemic. We have made
transformational changes to park operations by leveraging our
experience and technology to create industry-leading safety
protocols. In close coordination with government leaders and local
communities, these protocols have allowed us to reopen many of our
parks while maintaining the safety of our team members and guests
as our highest priority. Now more than ever, we believe our guests
need opportunities for outdoor entertainment, and I am pleased that
city and state officials have acknowledged our safety standards as
a best-in-class example of how businesses can safely serve guests
during this pandemic,” said Mike Spanos, President and CEO.
“Additionally, I would like to thank our loyal season pass holders
and members for their commitment to our company during this
difficult period.”
“Our team is taking actions that will allow us to emerge a
stronger and more profitable company,” continued Spanos, “and we
have initiated a fundamental review of our business model with the
goal of becoming a more agile, consumer-centric, and
technology-savvy organization.”
Second Quarter 2020
Results
As previously announced, the company suspended operations of its
North American parks beginning on March 13, 2020, due to the spread
of COVID-19 and local government mandates, which had a significant
negative impact on the company’s financial performance. The company
resumed partial operations at many of its parks on a staggered
basis near the end of the second quarter using a cautious and
phased approach, including limiting attendance, in accordance with
local conditions and government guidelines. A schedule of park
reopening dates is set forth in Schedule A of this release.
Revenue for the second quarter of 2020 was $19 million, with
attendance of 433,000 guests, both a decrease of 96 percent
compared to the same period in 2019. The decrease was due to the
pandemic-related suspension of park operations for most of the
quarter. The decrease in revenue was also attributable to a $29
million reduction in sponsorship, international agreements, and
accommodations revenue due to the previously announced terminations
of the company’s contracts in China and Dubai, which generated
revenue in 2019; the suspension of most second-quarter sponsorship
revenue while the parks were not operating; and the
pandemic-related suspension of nearly all accommodations
operations. The company partially offset the decrease in revenue by
implementing cost savings measures immediately after park
operations were suspended.
The company’s net loss during the second quarter of 2020 was
$137 million, a decrease of $216 million compared to the prior year
period, primarily due to reduced attendance and an aggregate
increase in reserves of $8 million associated with several legal
claims. The net loss per share for the second quarter of 2020 was
$1.62, compared to diluted earnings per share of $0.94 in the
second quarter of 2019. Adjusted EBITDA1 for the second quarter of
2020 was a loss of $96 million, a decrease of $276 million compared
to the prior year period. The second quarter 2020 Adjusted EBITDA
calculation reflects an add-back adjustment of approximately $6
million of non-recurring costs related to the transformation
initiative.
Net cash outflow for the second quarter was $76 million,
excluding the one-time financing costs associated with the
company’s debt transactions, or approximately $25 million per
month. This represented an improvement compared to the company’s
previously anticipated average net cash outflow of $30-$35 million
per month. The improvement was driven by disciplined cost
management, higher than expected retention of the Active Pass Base,
which includes all members and season pass holders, and positive
cash flow from reopened parks.
Total guest spending per capita for the second quarter of 2020
was $35.77, a decrease of $6.50, or 15 percent, compared to the
second quarter of 2019. The decrease was primarily due to park mix:
half of the company’s attendance in the second quarter came from
the company’s drive-through Safari at Six Flags Great Adventure,
which reopened in May 2020 after having been converted to a free
park attraction in 2013. The safari experiences lower guest
spending per capita compared to the company’s other parks due to
the lack of in-park spending opportunities.
Admissions revenue per capita in the second quarter of 2020
increased $1.29, or 5 percent, to $25.32 compared to the second
quarter of 2019. This increase was driven by a higher mix of
single-day paid admissions, offset by the deferral of approximately
$24 million of monthly membership revenue. After a member’s initial
12-month commitment period ends, the company ordinarily recognizes
revenue from those membership payments on a monthly basis; however,
in response to the pandemic-related park closures, the company
added one additional month of membership privileges for every month
a member paid but could not visit their home park. The membership
payments received while parks were closed due to the pandemic were
deferred and will be recognized as revenue when these additional
months are used.
In-park spending per capita in the second quarter of 2020
decreased $7.79, or 43 percent compared to the second quarter of
2019, to $10.45, primarily due to the lack of in-park spending
opportunity at the company’s drive-through Safari at Six Flags
Great Adventure. The decrease was also attributable to the deferral
of approximately $6 million of monthly membership revenue related
to all-season membership products such as the all-season dining
pass. Similar to the membership admission payments described above,
this revenue will be deferred until the additional months received
for these products are utilized.
First Half 2020 Results
For the first six months of 2020, revenue was $122 million, an
80 percent decrease compared to the prior year period. The decrease
was due to an 84 percent decrease in attendance resulting from the
temporary pandemic-related suspension of park operations, and a $40
million decrease in sponsorship, international agreements, and
accommodations revenue. The company had a net loss of $221 million
and a net loss per share of $2.62 for the first six months of 2020,
compared to net income of $10 million and diluted earnings per
share of $0.12 for the same period in 2019. Adjusted EBITDA was a
loss of $138 million for the first six months of 2020, compared to
Adjusted EBITDA of $148 million for the first six months of
2019.
Attendance for the first six months of 2020 was 2.0 million
guests, an 84 percent decrease compared to 12.7 million guests in
the first six months of 2019. Guest spending per capita increased
$8.80 to $52.13 for the first six months of 2020, with admissions
per capita increasing 40 percent and in-park spending per capita
decreasing 6 percent to $35.10 and $17.03, respectively.
The improvement in admissions spending per capita for the first
six months of 2020 was primarily due to recurring monthly
membership revenue in the first quarter of 2020 from members who
retained their memberships on a monthly basis after their initial
12-month commitment period ended. Prior to the suspension of park
operations, when the company began deferring this revenue while
park operations were suspended, these payments were recognized as
received. Higher guest spending per capita by single-day guests
prior to the suspension of operations also contributed to the
improvement. The decrease in in-park spending per capita was driven
by attendance at the company’s drive-through Safari, which lacks
in-park spending opportunities.
Active Pass Base
The company is working with its members and season pass holders
to extend their usage privileges to compensate for any lost days
due to its temporary park closures, and is offering higher-tiered
benefits to members in return for maintaining their current payment
schedule. The company has also offered members the option to pause
payments on their current membership. However, as anticipated, the
company sold fewer season passes and memberships while its parks
were not operating compared to the same period in 2019. As a
result, the Active Pass Base decreased 38 percent as of the end of
the second quarter of 2020 compared to the same prior year period.
Included in the Active Pass Base were 2.1 million members, compared
to 2.6 million members at the end of 2019 and 2.4 million members
at the end of the first quarter of 2020.
Deferred revenue was $182 million as of June 30, 2020, a
decrease of $53 million, or 22 percent, from June 30, 2019. The
decrease in deferred revenue was primarily due to lower season pass
and membership sales. This was partially offset by the deferral of
revenue from members and season pass holders.
For those members whose initial 12-month commitment period
ended, but who continued paying for membership on a monthly basis
after the parks temporarily closed for the pandemic, revenue will
be deferred until the end of their membership. In contrast,
payments from members whose initial 12-month commitment period had
ended in 2019 were recognized as they were received and had limited
contribution to deferred revenue in the prior year period.
Balance Sheet and
Liquidity
As of June 30, 2020, the company had cash on hand of $296
million and $460 million available under its revolving credit
facility, net of $21 million of letters of credit, or total
liquidity of $756 million. Based on the parks that are currently
open, the company estimates that its net cash outflow2 through the
end of 2020 will be, on average, $25-$30 million per month. The
company has no debt maturities until 2024.
In the first half of 2020, the company invested $73 million in
new capital projects, net of property insurance recoveries, paid
$21 million in dividends, and prepaid $51 million of its 4.875
percent notes due 2024. Net debt as of June 30, 2020, calculated as
total reported debt of $2,620 million less cash and cash
equivalents of $296 million, was $2,324 million.
In April, the company amended its credit facility to, among
other things, suspend testing of its senior secured leverage ratio
financial maintenance covenant through December 31, 2020. The
company’s lenders also approved modified testing of the senior
secured leverage ratio financial maintenance covenant through
December 31, 2021. Through the duration of the amendment period
ending December 31, 2021, the company agreed to suspend paying
dividends and repurchasing its common stock, and to maintain
minimum liquidity of $150 million.
In response to curtailed operations, and to preserve the
company’s liquidity position and prepare for multiple
contingencies, the company continues to take actions to reduce
operating expenses and defer or eliminate certain discretionary
capital projects planned for 2020 and 2021. The company is able to
take additional measures or further modify park operations and park
schedules based on changing conditions.
At this time, the company anticipates it has sufficient
liquidity to meet its cash obligations through the end of 2021 even
if the currently open parks are forced to close; however, if its
operations continue to be significantly reduced in 2021, the
company would likely require additional covenant relief during 2021
from its credit facility lenders. The company will continue to
explore options to further reduce cash outflows and be prepared to
respond to a more protracted reduction of operations.
Transformation
Initiative
The company launched a holistic transformation program to
reinvigorate revenue growth, reduce operating expenses by
optimizing the company’s operating model, and improve its guests’
end-to-end experience through technological advancements. Through
this transformation initiative, the company is targeting
significant improvement to its financial performance and to the
guest experience. The company will not make a final determination
of the costs or associated savings until it completes the work. The
company anticipates that a portion of the work will be completed by
the fourth quarter of 2020, and the remaining portion will be
completed when the parks are again operating at a more normal
capacity.
Conference Call
At 8:00 a.m. Central Time today, July 29, 2020, the company will
host a conference call to discuss its second quarter 2020 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 through August 7, 2020, by dialing
1-855-859-2056 or +1-404-537-3406 and requesting conference ID
6867339.
About Six Flags Entertainment
Corporation
Six Flags Entertainment Corporation is the world’s largest
regional theme park company and the largest operator of waterparks
in North America, with 26 parks across the United States, Mexico
and Canada. For 58 years, Six Flags has entertained millions of
families with world-class coasters, themed rides, thrilling
waterparks and unique attractions. For more information, visit
www.sixflags.com.
Forward Looking
Statements
This release contains forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the
Securities Exchange Act of 1934, as amended, including statements
regarding (i) our ability to continue to safely and profitably
operate our parks, or reopen our parks that are temporarily closed,
in accordance with CDC and local health guidelines, (ii) estimates
of our net cash outflow during the time our operations are limited
or fully suspended and for the balance of the year, (iii) the
adequacy of our preparations for or the sufficiency of our
liquidity, (iv) expectations regarding future actions and
initiatives to increase profitability and resilience, and (v) our
ability to significantly improve our financial performance and the
guest experience. Forward-looking statements include all statements
that are not historical facts and often use words such as
"anticipates," "intends," "plans," "seeks," "believes,"
"estimates," "expects," "may," "should," "could" and variations of
such words or similar expressions. 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, factors impacting attendance,
such as local conditions, natural disasters, contagious diseases,
including the novel coronavirus (COVID-19), or the perceived threat
of contagious diseases, events, disturbances and terrorist
activities; regulations and guidance of federal, state and local
governments and health officials regarding the response to
COVID-19, including with respect to business operations, safety
protocols and public gatherings; recall of food, toys and other
retail products sold at our parks; accidents or contagious disease
outbreaks occurring at our parks or other parks in the industry and
adverse publicity concerning our parks or other parks in the
industry; availability of commercially reasonable insurance
policies at reasonable rates; inability to achieve desired
improvements and our financial performance targets set forth in our
aspirational goals; adverse weather conditions such as excess heat
or cold, rain and storms; general financial and credit market
conditions, including our ability to access credit or raise
capital; 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, waterparks and 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; environmental laws and
regulations; laws and regulations affecting corporate taxation;
pending, threatened or future legal proceedings and the significant
expenses associated with litigation; cybersecurity risks and other
factors could cause actual results to differ materially from the
company’s expectations, including the risk factors or uncertainties
listed from time to time in the Company’s filings with the
Securities and Exchange Commission (the “SEC”). Although we believe
that the expectations reflected in such forward-looking statements
are reasonable, we make 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 our
Annual and Quarterly Reports on Forms 10-K and 10-Q, and our 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)
Projected net monthly cash outflow
reflects the company’s current estimate of reduced revenues,
ongoing park and operating costs, capital expenditures, contractual
obligations of the company’s parks that are less than wholly-owned
(Six Flags Over Texas, Six Flags Over Georgia and Six Flags White
Water Atlanta), federal and state income tax obligations, debt
amortization and interest, including the most recent financing
transactions, and the costs associated with the company’s
transformation initiative, assuming limited operations at the parks
currently open. The company’s ability to predict the impact of the
COVID-19 global pandemic on its brands and future prospects is
limited. In addition, the magnitude, duration and speed of the
pandemic is uncertain. As a consequence, the company cannot
estimate the impact on its business, financial condition or near-
or longer-term financial or operational results with certainty.
Schedule A
Name of Park
City
Opening Date
Six Flags Great Adventure – Safari
only
Jackson, NJ
May 29
Frontier City
Oklahoma City, OK
June 5
Six Flags Over Georgia
Austell, GA
June 15
Six Flags Hurricane Harbor Arlington
Arlington, TX
June 18
Six Flags Over Texas
Arlington, TX
June 19
Six Flags Fiesta Texas
San Antonio, TX
June 19
Six Flags Hurricane Harbor Oklahoma
City
Oklahoma City, OK
June 20
Six Flags St. Louis
Eureka, MO
June 22
Six Flags Darien Lake – campground
only
Darien, NY
June 25
The Great Escape The Lodge – hotel
only
Queensbury, NY
June 26
Six Flags White Water Atlanta
Marietta, GA
June 29
Six Flags America
Largo, MD
July 1
Six Flags Discovery Kingdom – animals
only
Vallejo, CA
July 2
Six Flags Great Adventure
Jackson, NJ
July 3
Six Flags Great America – water park
only
Gurnee, IL
July 20
Hurricane Harbor Rockford
Rockford, IL
July 20
Hurricane Harbor New Jersey
Jackson, NJ
July 23
La Ronde
Montreal, Quebec, Canada
July 25
Statement of Operations Data
(1)
Three Months Ended
Six Months Ended
Twelve Months Ended
(Amounts in thousands, except per share
data)
June 30, 2020
June 30, 2019
June 30, 2020
June 30, 2019
June 30, 2020
June 30, 2019
Park admissions
$
10,962
$
252,508
$
70,768
$
318,588
$
567,962
$
821,860
Park food, merchandise and other
4,523
191,655
34,329
230,633
378,136
565,859
Sponsorship, international agreements and
accommodations
3,658
33,047
16,549
56,182
57,728
107,007
Total revenues
19,143
477,210
121,646
605,403
1,003,826
1,494,726
Operating expenses (excluding depreciation
and amortization shown separately below)
62,681
178,348
168,545
292,870
483,466
601,130
Selling, general and administrative
expenses (excluding depreciation, amortization, and stock-based
compensation shown separately below)
30,800
56,170
62,710
92,389
156,241
182,106
Costs of products sold
2,214
43,513
9,974
53,788
86,490
125,608
Other net periodic pension benefit
(994)
(1,055)
(1,990)
(2,110)
(4,066)
(4,725)
Depreciation
29,032
28,674
59,095
57,144
117,776
115,063
Amortization
402
601
1,003
1,204
2,204
2,428
Stock-based compensation
6,020
3,553
10,300
7,444
16,130
(59,829)
Loss (gain) on disposal of assets
513
(690)
393
446
2,109
160
Interest expense, net
51,047
29,572
78,204
57,920
133,586
111,798
Loss on debt extinguishment
5,087
6,231
6,106
6,231
6,359
6,231
Other expense (income), net
4,252
(1,278)
5,812
(1,705)
10,059
(486)
(Loss) income before income taxes
(171,911)
133,571
(278,506)
39,782
(6,528)
415,242
Income tax (benefit) expense
(55,661)
33,675
(77,710)
9,018
5,214
100,635
Net (loss) income
(116,250)
99,896
(200,796)
30,764
(11,742)
314,607
Less: Net income attributable to
noncontrolling interests
(20,644)
(20,377)
(20,644)
(20,377)
(41,020)
(40,381)
Net (loss) income attributable to Six
Flags Entertainment Corporation
$
(136,894)
$
79,519
$
(221,440)
$
10,387
$
(52,762)
$
274,226
Weighted-average common shares
outstanding:
Basic:
84,704
84,288
84,680
84,207
84,582
84,174
Diluted:
84,704
84,868
84,680
84,882
84,582
85,094
Net (loss) income per average common share
outstanding:
Basic:
$
(1.62)
$
0.94
$
(2.62)
$
0.12
$
(0.62)
$
3.26
Diluted:
$
(1.62)
$
0.94
$
(2.62)
$
0.12
$
(0.62)
$
3.22
Balance Sheet Data
As of
(Amounts in thousands)
June 30, 2020
December 31, 2019
June 30, 2019
Cash and cash equivalents
$
295,956
$
174,179
$
113,798
Total assets
2,968,934
2,882,540
2,938,066
Deferred revenue
182,386
144,040
235,109
Current portion of long-term debt
—
8,000
8,000
Long-term debt
2,619,929
2,266,884
2,269,761
Redeemable noncontrolling interests
544,020
529,258
545,386
Total stockholders' deficit
(970,782)
(716,118)
(749,807)
Shares outstanding
84,757
84,634
84,335
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 (loss)
income to Adjusted EBITDA for the three, six and twelve months
ended June 30, 2020 and June 30, 2019:
Three Months Ended
Six Months Ended
Twelve Months Ended
(Amounts in thousands, except per share
data)
June 30, 2020
June 30, 2019
June 30, 2020
June 30, 2019
June 30, 2020
June 30, 2019
Net (loss) income
$
(116,250)
$
99,896
$
(200,796)
$
30,764
$
(11,742)
$
314,607
Income tax (benefit) expense
(55,661)
33,675
(77,710)
9,018
5,214
100,635
Other expense (income), net (2)
4,252
(1,278)
5,812
(1,705)
10,059
(486)
Loss on debt extinguishment
5,087
6,231
6,106
6,231
6,359
6,231
Interest expense, net
51,047
29,572
78,204
57,920
133,586
111,798
Loss (gain) on disposal of assets
513
(690)
393
446
2,109
160
Amortization
402
601
1,003
1,204
2,204
2,428
Depreciation
29,032
28,674
59,095
57,144
117,776
115,063
Stock-based compensation
6,020
3,553
10,300
7,444
16,130
(59,829)
Impact of Fresh Start valuation
adjustments (3)
—
—
—
—
—
11
Modified EBITDA (4)
(75,558)
200,234
(117,593)
168,466
281,695
590,618
Third party interest in EBITDA of certain
operations (5)
(20,644)
(20,377)
(20,644)
(20,377)
(41,020)
(40,381)
Adjusted EBITDA (4)
$
(96,202)
$
179,857
$
(138,237)
$
148,089
$
240,675
$
550,237
Weighted-average common shares
outstanding
84,704
84,288
84,680
84,207
84,582
84,174
The following table sets forth a reconciliation of net cash
(used in) provided by operating activities to Adjusted Free Cash
Flow for the three, six and twelve months ended June 30, 2020 and
June 30, 2019:
Three Months Ended
Six Months Ended
Twelve Months Ended
(Amounts in thousands, except per share
data)
June 30, 2020
June 30, 2019
June 30, 2020
June 30, 2019
June 30, 2020
June 30, 2019
Net cash (used in) provided by operating
activities
$
(50,316)
$
167,020
$
(110,703)
$
126,197
$
173,673
$
404,638
Changes in working capital
(81,719)
(2,918)
(88,441)
(20,069)
(39,633)
55,645
Interest expense, net
51,047
29,572
78,204
57,920
133,586
111,798
Income tax (benefit) expense
(55,661)
33,675
(77,710)
9,018
5,214
100,635
Amortization of debt issuance costs
(1,611)
(865)
(2,467)
(1,872)
(4,158)
(3,885)
Other expense (income), net (2)
5,284
(40)
5,178
(384)
12,019
5,648
Interest accretion on notes payable
(285)
(326)
(605)
(664)
(1,251)
(1,338)
Changes in deferred income taxes
57,703
(25,884)
78,951
(1,680)
2,245
(82,534)
Impact of Fresh Start valuation
adjustments (3)
—
—
—
—
—
11
Third party interest in EBITDA of certain
operations (5)
(20,644)
(20,377)
(20,644)
(20,377)
(41,020)
(40,381)
Capital expenditures, net of property
insurance recovery
(21,693)
(47,666)
(73,109)
(95,125)
(118,160)
(137,716)
Cash paid for interest, net
(20,274)
(28,307)
(51,932)
(59,733)
(105,196)
(106,590)
Cash taxes (6)
(367)
(12,097)
(2,326)
(17,407)
(13,128)
(32,584)
Adjusted Free Cash Flow (7)
$
(138,536)
$
91,787
$
(265,604)
$
(24,176)
$
4,191
$
273,347
Weighted-average common shares outstanding
- basic:
84,704
84,288
84,680
84,207
84,582
84,174
(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 “Other expense
(income), net” include amounts related to our transformation
initiative. These amounts are excluded from Modified EBITDA as they
are non-routine, non-recurring and unrelated to our ongoing
operations and costs necessary to operate our business.
(3)
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. Balances
consisted primarily of discounted insurance reserves that were
accreted through the statement of operations each quarter through
2018.
(4)
"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.
(5)
Represents interests of third parties in
the Adjusted EBITDA of Six Flags Over Georgia, Six Flags Over Texas
and Six Flags White Water Atlanta.
(6)
Cash taxes represents statutory taxes
paid, primarily driven by Mexico and state level obligations. Based
on our current federal net operating loss carryforwards and reduced
operations due to the COVID-19 pandemic, we anticipate paying
minimal federal income taxes in 2020 and do not anticipate becoming
a full cash taxpayer until 2024. During the years 2021 through
2024, we have significant federal operating loss carryforwards
which will offset the majority of our taxable income.
(7)
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 (used in) 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: https://www.businesswire.com/news/home/20200729005096/en/
Stephen Purtell Senior Vice President Investor Relations and
Treasurer +1-972-595-5180 investors@sftp.com
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