Attendance and Guest Spending Per Capita
Increase in First Nine Months of 2016
Six Flags Entertainment Corporation (NYSE: SIX), the world’s
largest regional theme park company, today announced revenue for
the first nine months of 2016 grew $34 million or 3 percent to $1.1
billion, driven primarily by admissions, in-park and international
licensing revenue. Net income declined by $36 million or 24
percent, primarily due to an $86 million pre-tax stock-based
compensation charge relating to the probable achievement of Project
600 by 2017, a long-term incentive compensation program established
by the company in October 2014.
Adjusted EBITDA1 for the first nine months of 2016 grew $12
million or 3 percent to $431 million, while attendance grew 2
percent to 23.8 million guests. On a constant currency2 basis,
revenue for the first nine months grew $42 million or 4 percent and
Adjusted EBITDA grew $15 million or 4 percent.
“Despite the soft start to the third quarter due to adverse
weather, we were pleased to achieve record revenue and EBITDA in
the first nine months of 2016,” said John Duffey, President and
CEO. “We experienced healthy growth in the back half of the quarter
once weather normalized and had record pass sales over the Labor
Day weekend when we kicked off our 2017 season pass sales campaign.
Our ticket pricing gains, the 15 percent increase in our Active
Pass Base at the end of September, and the growth in international
licensing revenue provide a strong foundation for continued
earnings growth throughout the remainder of 2016 and 2017.”
For the first nine months of 2016, total guest spending per
capita of $42.58 represented a $0.15 increase over the same period
in 2015, with an increase in admissions per capita of $0.06 and
in-park spending per capita of $0.09. A higher mix of season pass
holder and member attendance put downward pressure on per capita
spending, despite higher ticket prices. On a constant currency
basis, year-to-date guest spending per capita increased $0.51 or 1
percent.
Third quarter 2016 revenue declined 3 percent or $18 million to
$558 million, driven primarily by a 2 percent decline in attendance
that was negatively affected by adverse weather during the peak
months of the summer. International licensing revenue increased $4
million or 113 percent over prior year. On a constant currency
basis, revenue for the third quarter declined $15 million or 3
percent.
Net income declined by $55 million in the third quarter,
including the Project 600 stock-based compensation charge. Adjusted
EBITDA for the third quarter was $299 million, a decline of $9
million or 3 percent compared to the same period in 2015, which
resulted from the weather-related decline in attendance. On a
constant currency basis, Adjusted EBITDA for the third quarter
declined $7 million or 2 percent.
Diluted earnings per share for the third quarter and nine months
ended September 30, 2016 were $1.09 and $1.23, respectively, a
decrease of 34 percent and 22 percent, respectively, primarily due
to the Project 600 stock-based compensation charge.
For the third quarter, total guest spending per capita was
$42.23, down $0.64 or 1 percent compared to the same period in
2015, primarily due to a higher mix of season pass holder and
membership attendance. Both the company’s strategy to upsell guests
to multi-visit passes and the adverse weather drove a higher mix of
season pass holder and member visitation, which creates a downward
pressure on per capita spending.
For the twelve-month period ending September 30, 2016, there was
no change in net income while revenue increased $67 million or 5
percent, as compared to the prior year period. Adjusted EBITDA
increased $28 million or 6 percent to $493 million and the Modified
EBITDA3 margin of 41 percent and Modified EBITDA minus capital
expenditures margin of 31 percent continue to be the highest in the
theme park industry.
The company’s continued success in executing its season pass
strategy resulted in a 15 percent year-over-year increase in its
Active Pass Base as of the end of the third quarter. The Active
Pass Base represents the total number of guests who have purchased
a season pass or who are enrolled in the company’s membership
program. Season pass holders and members are the company’s most
valuable guests since they generate higher revenue and cash flow
for the company than a single day guest and they provide an
excellent hedge against inclement weather over the course of the
year.
Deferred revenue of $148 million increased by $32 million or 28
percent compared to September 30, 2015 primarily due to incremental
sales of season passes, memberships, and all-season dining
passes.
In the first nine months of 2016, the company invested $101
million in new capital, paid $161 million in dividends, or $0.58
per common share per quarter, and repurchased $120 million or 2.2
million shares of its common stock. As of September 30, 2016, 92
million shares were outstanding, with $434 million authorized by
the company’s board of directors for future repurchases.
Net Debt4 as of September 30, 2016 was $1,414 million, which
translates to a 2.9 times net leverage ratio.
Conference Call
At 8:00 a.m. Central Time today, October 26, 2016, the company
will host a conference call to discuss its third quarter 2016
financial performance. The call is accessible through either the
Six Flags Investor Relations website at www.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 November 3, 2016
and requesting conference ID 1163638.
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 18
parks across the United States, Mexico and Canada. For 55 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 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; 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 www.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) See the following
financial statements and Note 3 to those financial statements for a
discussion of Modified EBITDA (a non-GAAP financial measure) and
its reconciliation to net income (loss). (4) 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 Nine Months Ended Twelve Months
Ended (Amounts in thousands, except per share data)
September 30,2016
September 30,2015
September 30,2016
September 30,2015
September 30,2016
September 30,2015
Theme park admissions $ 311,427 $ 325,758 $ 585,270 $ 573,302 $
699,787 $ 668,879 Theme park food, merchandise and other 220,667
228,014 427,293 417,658 509,825 488,180 Sponsorship, licensing and
other fees 20,284 16,450 53,936 41,568 71,501 56,380 Accommodations
revenue 5,221 5,039 13,585
13,953 16,428 16,723
Total revenue 557,599 575,261 1,080,084 1,046,481 1,297,541
1,230,162
Operating expenses (excluding depreciation
and amortization shown separately below)
151,169 152,728 387,376 368,861 483,734 454,252 Selling, general
and administrative expense (excluding depreciation, amortization
and stock-based compensation shown separately below) 44,138 52,092
132,862 135,366 176,073 174,394 Costs of products sold 44,277
43,489 90,435 84,856 106,288 98,050 Depreciation 26,740 25,693
77,391 76,755 105,424 103,197 Amortization 653 655 1,954 1,970
2,607 2,633 Stock-based compensation 89,994 9,803 96,244 36,518
115,959 87,289 Loss on disposal of assets 799 1,991 913 4,224 6,571
5,903 Interest expense, net 21,166 19,206 60,814 56,731 79,986
75,040 Loss on debt extinguishment — — 2,377 6,557 2,377 6,557
Other expense (income), net 1,318 400
2,009 (79 ) 2,311 537
Income before income taxes 177,345 269,204 227,709 274,722
216,211 222,310 Income tax expense 55,651
92,821 72,850 84,051
59,168 66,301 Income from continuing
operations before discontinued operations 121,694 176,383 154,859
190,671 157,043 156,009 Income from discontinued operations
— — — — —
545 Net income 121,694 176,383 154,859 190,671
157,043 156,554 Less: Net income attributable to noncontrolling
interests (19,212 ) (19,083 ) (38,425 )
(38,165 ) (38,425 ) (38,165 ) Net income attributable
to Six Flags Entertainment Corporation $ 102,482 $ 157,300
$ 116,434 $ 152,506 $ 118,618 $ 118,389
Weighted-average number of common shares outstanding:
Weighted-average common shares outstanding — basic: 92,204 93,913
92,538 94,201 92,336 93,954 Weighted-average common shares
outstanding — diluted: 94,155 96,183 94,654 96,616 94,670 96,369
Net income per average common share outstanding— basic:
Income from continuing operations $ 1.11 $ 1.67 $ 1.26 $ 1.62 $
1.28 $ 1.25 Income from discontinued operations —
— — — —
0.01 Net income $ 1.11 $ 1.67 $ 1.26
$ 1.62 $ 1.28 $ 1.26 Net income
per average common share outstanding— diluted: Income from
continuing operations $ 1.09 $ 1.64 $ 1.23 $ 1.58 $ 1.25 $ 1.22
Income from discontinued operations — —
— — — 0.01
Net income $ 1.09 $ 1.64 $ 1.23 $ 1.58
$ 1.25 $ 1.23
Balance Sheet Data
As of (Amounts in thousands)
September 30, 2016
December 31, 2015 Cash and cash equivalents (excluding
restricted cash) $ 238,757 $ 99,760 Total assets 2,648,792
2,428,440 Deferred income 147,732 97,334 Current portion of
long-term debt 533 7,506 Long-term debt (excluding current portion)
1,652,190 1,498,022 Redeemable noncontrolling interests
454,674 435,721 Total stockholders' (deficit) equity (18,400
) 24,216 Shares outstanding 92,042 91,551
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, nine and twelve months ended
September 30, 2016 and September 30, 2015:
Three Months Ended Nine
Months Ended Twelve Months Ended (Amounts
in thousands, except per share data)
September 30,2016
September 30,2015
September 30,2016
September 30,2015
September 30,2016
September 30,2015
Net income $ 121,694 $ 176,383 $ 154,859 $ 190,671 $ 157,043 $
156,554 Income from discontinued operations — — — — — (545 ) Income
tax expense 55,651 92,821 72,850 84,051 59,168 66,301 Other expense
(income), net 1,318 400 2,009 (79 ) 2,311 537 Loss on debt
extinguishment — — 2,377 6,557 2,377 6,557 Interest expense, net
21,166 19,206 60,814 56,731 79,986 75,040 Loss on disposal of
assets 799 1,991 913 4,224 6,571 5,903 Amortization 653 655 1,954
1,970 2,607 2,633 Depreciation 26,740 25,693 77,391 76,755 105,424
103,197 Stock-based compensation 89,994 9,803 96,244 36,518 115,959
87,289 Impact of Fresh Start valuation adjustments (2) 22
41
66 119 107
213
Modified EBITDA (3) 318,037
326,993
469,477 457,517 531,553
503,679
Third party interest in EBITDA of certain operations (4)
(19,212 )
(19,083
) (38,425 ) (38,165 ) (38,425 )
(38,165
) Adjusted EBITDA (3) $ 298,825 $ 307,910 $ 431,052
$ 419,352 $ 493,128 $
465,514
Weighted-average common shares outstanding — basic:
92,204 93,913 92,538 94,201 92,336 93,954
The following table sets forth a reconciliation of net cash
provided by operating activities to Adjusted Free Cash Flow for the
three, nine and twelve months ended September 30, 2016 and
September 30, 2015:
Three Months Ended Nine
Months Ended Twelve Months Ended (Amounts
in thousands, except per share data)
September 30,2016
September 30,2015
September 30,2016
September 30,2015
September 30,2016
September 30,2015
Net cash provided by operating activities $ 236,176 $ 240,521 $
374,754 $ 385,409 $ 463,106 $ 448,477 Changes in working capital
58,679 59,969 24,667 8,483 (17,373 ) (33,479 ) Interest expense,
net 21,166 19,206 60,814 56,731 79,986 75,040 Income tax expense
55,651 92,821 72,850 84,051 59,168 66,301 Amortization of debt
issuance costs (1,173 ) (1,068 ) (3,331 ) (3,451 ) (4,398 ) (4,640
) Other (income) expense, net (745 ) (159 ) 203 (369 ) (6,601 )
3,486 Interest accretion on notes payable (90 ) (115 ) (322 ) (739
) (439 ) (1,047 ) Changes in deferred income taxes (51,649 )
(84,223 ) (60,224 ) (72,717 ) (42,003 ) (50,672 ) Impact of Fresh
Start valuation adjustments (2) 22
41
66 119 107
213
Third party interest in EBITDA of certain operations (4) (19,212 )
(19,083
) (38,425 ) (38,165 ) (38,425 ) (38,165 ) Cash paid for interest,
net (26,746 ) (28,523 ) (63,401 ) (63,028 ) (70,889 ) (69,394 )
Capital expenditures, net of property insurance recoveries (20,219
) (21,144 ) (100,914 ) (91,219 ) (123,892 ) (103,609 ) Cash taxes
(5) (3,327 ) (3,606 ) (14,000 ) (8,539
) (20,436 ) (12,683 ) Adjusted Free Cash Flow (6) $
248,533 $ 254,637 $ 252,737 $ 256,566 $
277,911 $
279,828
Weighted-average common shares outstanding — basic:
92,204 93,913 92,538 94,201 92,336 93,954 (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 three years. Cash taxes paid represents
statutory taxes paid, primarily in Mexico. (6) Adjusted Free Cash
Flow, a non-GAAP measure, is defined as Adjusted EBITDA less (i)
cash paid for interest expense net of interest income receipts,
(ii) capital expenditures net of property insurance recoveries, and
(iii) cash taxes. We exclude deferred financing costs related to
our debt from the definition of Adjusted Free Cash Flow in order to
present our debt costs for the current period without including the
amortization of financing costs that were previously paid. Adjusted
Free Cash Flow as defined herein may differ from similarly titled
measures presented by other companies. Management uses adjusted
free cash flow 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 these measures 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.
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Six Flags Entertainment CorporationNancy Krejsa,
+1-972-595-5083nkrejsa@sftp.comorStephen Purtell,
+1-972-595-5180spurtell@sftp.com
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