Cash Outflow for Fourth Quarter 2020 Better
than Expectations Company Provides Update on Transformation
Plan
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 a decline in revenue
and earnings, as anticipated, for fourth quarter and full year 2020
as compared to the same periods in 2019. Because of limited park
operating schedules and capacity restrictions caused by the
COVID-19 pandemic, total attendance for full year 2020 declined 79%
compared to 2019. This loss of attendance was partially offset by
higher guest spending per capita. The company continues to maintain
a cautious and safety-first approach to operating its parks to
ensure compliance with social distancing and other safety measures,
in accordance with local health and government guidelines. In
addition, the company continues to make progress implementing its
transformation plan to modernize the guest experience and to
reinvigorate long-term profit growth.
Attendance trends in 2020 continued to improve over the course
of the year, increasing from 35% of prior year levels in the third
quarter to 51% in the fourth quarter,1 for the parks that were
open. Several of the company’s parks modified their operations by
providing drive-through or walk-through experiences for the holiday
season, and the company’s parks in Mexico were able to operate for
a portion of the quarter. As a result, every park that was open in
December 2019 was able to open in some capacity during December
2020.
“I am extremely proud of the way our team members responded in a
challenging year. They found innovative ways to safely operate our
parks and entertain millions of guests in the face of the
pandemic,” said Mike Spanos, President and CEO. “Our focus is to
open all of our parks for the 2021 season and be prepared to
satisfy the pent-up demand we anticipate for outdoor entertainment
close to home.”
“We continue to make progress on our transformation plan to
modernize the guest experience and operate as a more efficient
company, enabled by technology. I feel confident that we will see
significant benefits beginning in 2021,” continued Spanos. “We
expect the transformation to result in meaningful profit growth
once our plan is fully executed and we are back in a more normal
operating environment.”
Fourth Quarter 2020
Highlights
- Attendance was 2.2 million guests, a decline of 4.0 million
guests from fourth quarter 2019. This represented 35% of prior year
total attendance, and approximately 51% of prior year attendance at
the parks that were open, relative to the comparable prior year
period. A schedule of comparable operations for the fourth quarter
is set forth in Schedule A of this release.
- Total Revenue was $109 million, a decline of $152 million from
fourth quarter 2019.
- Net loss was $86 million, a decline of $75 million from fourth
quarter 2019.
- Adjusted EBITDA2 was a loss of $39 million, including $19
million of litigation reserve increases, a decline of $111 million
from fourth quarter 2019.
- Net cash outflow for the quarter was $56 million, an average of
$19 million per month.
Full Year 2020
Highlights
- Attendance was 6.8 million guests, a decline of 26.0 million
guests from full year 2019.
- Total Revenue was $357 million, a decline of $1,131 million
from full year 2019.
- Net loss was $423 million, a decline of $602 million from full
year 2019.
- Adjusted EBITDA was a loss of $231 million, a decline of $758
million from full year 2019.
- Net cash outflow for the year, excluding the net impact of
financing raised, dividends paid, and pre-payment of debt, was $331
million, an average of $28 million per month.
Fourth Quarter 2020
Results
(In millions, except per share and per
capita amounts)
Three Months Ended
December 31,
2020
December 31,
2019
Percentage Change (%)
Total revenues
$
109
$
261
(58)
%
Net loss attributable to Six Flags
Entertainment Corporation
$
(86)
$
(11)
N/M
Loss per share, diluted
$
(1.00)
$
(0.13)
N/M
Adjusted EBITDA
$
(39)
$
72
N/M
Attendance
2.2
6.1
(65)
%
Total guest spending per capita
$
47.00
$
40.22
17
%
Admissions spending per capita
$
27.28
$
23.60
16
%
In-park spending per capita
$
19.72
$
16.62
19
%
In fourth quarter 2020, the company generated $109 million of
revenue with attendance of 2.2 million guests, a net loss of $86
million, and an Adjusted EBITDA loss of $39 million. The net loss
and Adjusted EBITDA loss include an increase in reserves of
approximately $19 million. The total amount recorded reflects
management’s estimate of the probable outcome of a legacy class
action lawsuit. The Adjusted EBITDA calculation reflects an
add-back adjustment of approximately $5 million of non-recurring
costs related to the transformation plan, including $3 million of
employee termination costs and $2 million of consulting costs.
The decrease in attendance was due to the temporary
pandemic-related limitations on park operations at several of the
company’s parks, and capacity restrictions at the parks that were
open. Four parks provided drive-through or walk-through only
experiences for the holiday season, and the company’s parks in
Mexico were open for only a portion of the quarter.
The decrease in revenue was primarily a result of decreased
attendance, offset by improved guest spending per capita. The
decrease in revenue was also attributable to an $8 million
reduction in sponsorship, international agreements, and
accommodations revenue, primarily related to the suspension of most
sponsorship revenue while certain parks were not operating and the
pandemic-related suspension of the majority of the company’s
accommodations operations. The company partially offset the
decrease in revenue by implementing cost savings measures during
the quarter.
The improvement in admissions spending per capita for fourth
quarter 2020 was primarily due to recurring monthly membership
revenue from members who retained their memberships following the
initial 12-month commitment period, and an increase in the mix of
single-day guests. In-park spending per capita in fourth quarter
2020 increased due to a higher mix of single-day guests, who tend
to spend more per visit. In addition, revenue from recurring
monthly all season membership products, such as the all season
dining pass, from members who retained their memberships following
the initial 12-month commitment period contributed to the in-park
spending per capita increase.
Full Year 2020 Results
(In millions, except per share and per
capita amounts)
Year Ended
December 31,
2020
December 31,
2019
Percentage Change (%)
Total revenues
$
357
$
1,488
(76)
%
Net (loss) income attributable to Six
Flags Entertainment Corporation
$
(423)
$
179
N/M
(Loss) earnings per share, diluted
$
(4.99)
$
2.11
N/M
Adjusted EBITDA
$
(231)
$
527
N/M
Attendance
6.8
32.8
(79)
%
Total guest spending per capita
$
48.45
$
42.37
14
%
Admissions spending per capita
$
29.85
$
24.86
20
%
In-park spending per capita
$
18.60
$
17.51
6
%
For full year 2020, the company generated revenue of $357
million with attendance of 6.8 million guests, a net loss of $423
million, and an Adjusted EBITDA loss of $231 million. The net loss
and Adjusted EBITDA loss include an increase in reserves of $32
million related to certain litigation matters, inclusive of the $19
million increase in reserves taken in the fourth quarter. The
Adjusted EBITDA calculation reflects an add-back adjustment of
approximately $35 million of non-recurring costs related to the
company’s transformation plan, including $4 million in employee
termination costs, $20 million in consulting costs, and $10 million
in non-cash write-offs of ride assets.
The decrease in attendance was primarily due to the temporary
pandemic-related suspension of park operations beginning in March
2020, and limited attendance at the parks that were open. The
company resumed operations at many of its parks on a staggered
basis near the end of second quarter 2020 using a cautious and
phased approach, which included limiting attendance to encourage
social distancing. In fourth quarter 2020, four parks provided
drive-through or walk-through only experiences for the holiday
season, and the company’s parks in Mexico were open for only a
portion of the quarter.
The decrease in revenue was primarily the result of the decrease
in attendance, offset by improved guest spending per capita. The
decrease in revenue was also attributable to a $70 million
reduction in sponsorship, international agreements, and
accommodations revenue primarily related to the previously
announced terminations of the company’s contracts in China and
Dubai, which generated revenue in 2019; the suspension of most
sponsorship revenue; and the pandemic-related suspension of the
majority of the company’s accommodations operations. The company
partially offset the decrease in revenue by implementing cost
savings measures during the year.
The improvement in admissions spending per capita for 2020 was
primarily due to recurring monthly membership revenue from members
who retained their memberships following the initial 12-month
commitment period, and an increase in the mix of single-day guests.
In-park spending per capita in 2020 increased due to a higher mix
of single-day guests, who tend to spend more per visit. In
addition, revenue from recurring monthly all season membership
products, such as the all season dining pass, from members who
retained their memberships following the initial 12-month
commitment period contributed to the in-park spending per capita
increase. These increases were partially offset by lower total
guest spending per capita from attendance at the company’s
drive-through Safari and drive-through Holiday in the Park events
in California, Illinois and Massachusetts, which offered limited
in-park spending opportunities.
Active Pass Base
The company extended the use of all 2020 season passes through
the end of 2021 and offered members the option to pause payments on
their current membership through spring 2021. The company is also
offering higher-tiered benefits to members that elect to maintain
their current payment schedule. As anticipated, the company sold
significantly fewer season passes and memberships while many of its
parks remained closed, compared to the same period in 2019. As a
result, the Active Pass Base, which includes all members and season
pass holders, decreased 51% as of the end of fourth quarter 2020
compared to fourth quarter 2019. The Active Pass Base included 1.7
million members as of the end of 2020, compared to 2.6 million
members as of the end of 2019. It also included 2.1 million
traditional season pass holders compared to 5.1 million season pass
holders at the end of 2019. The Active Pass Base as of December 31,
2020, was approximately flat compared to the active base as of
September 30, 2020, and approximately 19% of members had elected to
pause their memberships as of December 31, 2020.
Deferred revenue was $205 million as of December 31, 2020, an
increase of $61 million, or 42%, from December 31, 2019. The
increase in deferred revenue was primarily due to the deferral of
revenue from members and season pass holders whose benefits were
extended through 2021, partially offset by lower season pass and
membership sales.
Balance Sheet and
Liquidity
As of December 31, 2020, the company had cash on hand of $158
million and $460 million available under its revolving credit
facility, net of $21 million of letters of credit, or total
liquidity of $618 million. This compares to $673 million of
liquidity as of September 30, 2020. The company’s net cash outflow
was $56 million for fourth quarter 2020, or an average of $19
million per month, which was an improvement from the company’s
prior guidance range of $25 to $30 million per month. The company’s
cash flow benefitted from the sale of excess land in the fourth
quarter 2020 for $8 million. For full year 2020, net cash outflow,
excluding the net impact of financing raised, dividends paid, and
pre-payment of debt, was $331 million, or an average of $28 million
per month.
The company estimates that its net cash outflow in the first
quarter of 2021 will be, on average, $53 to $58 million per month.3
The expected cash outflow is due in part to normal seasonality, as
most of the company’s parks are closed during the first quarter and
typically incur expenditures to ramp up for the spring season. In
addition, in the first quarter of 2021, the company expects to
incur incremental cash interest expense and to experience temporary
pandemic-related limitations on park operations. The company is
striving to become cash flow positive for the last nine months of
2021; however, this will be dependent upon all of the company’s
parks opening and attendance levels continuing to normalize. The
company is able to take additional measures or further modify park
operations and park schedules to reduce cash outflows, if needed.
At this time, the company believes it has sufficient liquidity to
meet its cash obligations through the end of 2021 even if all its
parks are unable to open. The company has no debt maturities until
2024.
For full year 2020, the company invested $98 million in new
capital projects, net of property insurance recoveries, paid $22
million in dividends, and prepaid $51 million of its 4.875% notes
due 2024. Net debt as of December 31, 2020, calculated as total
reported debt of $2,623 million less cash and cash equivalents of
$158 million, was $2,465 million.
On August 26, 2020, the company further amended its credit
facility to, among other benefits, suspend testing of its senior
secured leverage ratio financial maintenance covenant through
December 31, 2021. The company’s lenders also approved modified
testing of its senior secured leverage ratio financial maintenance
covenant through December 31, 2022. Through the duration of the
amendment period ending December 31, 2022, the company agreed to
suspend paying dividends and repurchasing its common stock, and to
maintain minimum liquidity of $150 million.
Transformation Plan
Update
The company commenced a major transformation plan in March 2020
to reinvigorate long-term profit growth, which includes revenue and
cost initiatives. The company is focused on improving and
modernizing the guest experience through technology, continuously
improving operational efficiency, and driving financial
excellence.
As previously announced, executing the transformation will
require one-time charges of approximately $70 million, of which $60
million will be cash and $10 million will be non-cash write-offs of
ride assets. Approximately $35 million has been incurred through
the end of 2020. The company expects the remaining charges to be
incurred through the end of 2021. Approximately two-thirds of the
investments in 2021 will be made on the company’s technology
platform, mainly directed towards modernizing the guest experience,
beginning with the implementation of a state-of-the-art Customer
Relations Management system.
(Amounts in thousands)
Three Months Ended
Year Ended
June 30,
2020
September 30,
2020
December 31,
2020
December 31,
2020
Amounts included in “Other expense,
net”
Consultant costs
$
6,155
$
12,145
$
2,160
$
20,460
Employee termination costs
—
1,555
2,807
4,362
Amounts included in “Loss on disposal
of assets”
Ride / asset write-offs
—
9,351
403
9,754
Total transformation costs
$
6,155
$
23,051
$
5,370
$
34,576
As previously communicated, the company expects its
transformation plan to generate an incremental $80 to $110 million
in annual run-rate Adjusted EBITDA. The company expects to realize
$30 to $35 million of benefits in 2021, independent of attendance
levels, and to achieve the remaining benefits through incremental
revenue opportunities and lower variable costs once the plan is
fully implemented and the company is operating in a normal business
environment. Relative to the mid-point of the company’s
pre-pandemic guidance range of $450 million, this implies a new
earnings baseline of $530 to $560 million once the plan is fully
implemented and the company is operating in a normal business
environment.4
Change in Reporting
Calendar
As previously announced on December 28, 2020, the company
elected to change the method of determining its fiscal quarters and
fiscal years, such that each fiscal quarter (beginning with the
fiscal quarter commencing January 1, 2021) shall consist of
thirteen consecutive weeks ending on a Sunday5 and each fiscal year
(beginning with the fiscal year commencing January 1, 2021) shall
consist of 52 weeks or 53 weeks, as applicable, and shall end on
the Sunday closest to December 31. The company made the change to
align the company’s reporting calendar with how the company
operates its business and to improve comparability across periods.
A summary of the comparable reporting periods is set forth
below.
Q1
Q2
Q3
Q4
2019
January 1- March 31
April 1 – June 30
July 1 – September 30
October 1 – December 31, 2019
2020
January 1- March 31
April 1 – June 30
July 1 – September 30
October 1 – December 31, 2020
2021
January 1 – April 4
April 5 – July 4
July 5 – October 3
October 4 – January 2, 2022
The first quarter of 2021 will have four additional days
compared to the first quarter of 2020; however, because the
company’s parks were not operating in April 2020, this difference
will not have a material effect on the comparability between
periods.
Conference Call
At 7:00 a.m. Central Time today, February 24, 2021, the company
will host a conference call to discuss its fourth quarter and full
year 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 March 3, 2021 by dialing 1-855-859-2056 or +1-404-537-3406
and requesting conference ID 2195816.
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 59 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 of 1933, as amended,
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 local health and
government guidelines, (ii) expectations regarding the scope and
duration of pandemic-related limitations on park operations, (iii)
estimates of our net cash outflow and incremental cash interest
expense in the first quarter of 2021, (iv) our ability to be cash
flow positive for the last nine months of 2021 and our ability to
take additional measures or further modify park operations and park
schedules to reduce cash outflows, (v) the adequacy of our
preparations for or the sufficiency of our liquidity, (vi)
expectations regarding future actions and initiatives to increase
profitability, including expectations regarding the anticipated
focus, timing, costs, benefits and results of our transformation
plan, as well as our incremental annual run-rate Adjusted EBITDA
and anticipated earnings baseline resulting from the plan, (vii)
our ability to significantly improve our financial performance and
the guest experience, and (viii) expectations regarding pent-up
demand for outdoor entertainment, including for our parks.
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)
Comparable operations in the third quarter
exclude attendance from Six Flags Discovery Kingdom and Six Flags
Great America, as these parks had modified operations with minimal
attendance in the third quarter of 2020. Comparable operations in
the fourth quarter are set forth in Schedule A of this release.
(2)
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
(loss) income.
(3)
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.
(4)
Information reconciling forward-looking
Adjusted EBITDA to net (loss) income is unavailable to the company
without unreasonable effort. The company is not able to provide
reconciliations of Adjusted EBITDA to net (loss) income because
certain items required for such reconciliations are outside of the
company’s control and/or cannot be reasonably predicted, such as
depreciation, amortization and the provision for income taxes.
Preparation of such reconciliations would require a forward-looking
balance sheet, statement of income and statement of cash flow,
prepared in accordance with GAAP, and such forward-looking
financial statements are unavailable to the company without
unreasonable effort. The company provides a range for its Adjusted
EBITDA outlook that it believes will be achieved; however, it
cannot accurately predict all the components of the Adjusted EBITDA
calculation.
(5)
When a fiscal year contains 53 weeks,
approximately every 5 to 6 years, the fourth quarter of that fiscal
year will contain 14 weeks.
Schedule A
Comparable Operations for
Fourth Quarter 2020
Name of Park
City
Comparable Period1
Six Flags Over Texas
Arlington, TX
10/1 – 12/31
Six Flags Over Georgia
Austell, GA
Six Flags St. Louis
Eureka, MO
Six Flags Great Adventure2
Jackson, NJ
Six Flags America
Largo, MD
Frontier City
Oklahoma City, OK
Six Flags Fiesta Texas3
San Antonio, TX
Hurricane Harbor Oaxtepec
Oaxtepec, Mexico
10/3 – 12/13
Six Flags Mexico
Mexico City, Mexico
10/23 – 12/18
Holiday In The Park Lights Only –
No Rides
Six Flags Magic Mountain
Valencia, CA
11/20 – 12/31
Six Flags New England
Agawam, MA
11/27 – 12/31
Six Flags Great America
Gurnee, IL
11/27 – 12/31
Six Flags Discovery Kingdom
Vallejo, CA
12/04 – 12/31
(1)
For the parks that were open in fourth
quarter 2020, the comparable period denotes the period that parks
had operations in both 2019 and 2020.
(2)
In addition to regular operations, Six
Flags Great Adventure operated the drive-through safari through the
Thanksgiving weekend and offered a drive-through Holiday in the
Park Lights event on select evenings in December.
(3)
In addition to regular operations, Six
Flags Fiesta Texas offered a drive-through Holiday in the Park
Lights event on select evenings in December.
Statement of Operations Data
(1)
Three Months Ended
Year Ended
(Amounts in thousands, except per share
data)
December 31, 2020
December 31, 2019
December 31, 2020
December 31, 2019
Park admissions
$
58,958
$
144,530
$
202,646
$
815,782
Park food, merchandise and other
42,635
101,748
126,306
574,440
Sponsorship, international agreements and
accommodations
7,009
14,722
27,623
97,361
Total revenues
108,602
261,000
356,575
1,487,583
Operating expenses (excluding depreciation
and amortization shown separately below)
107,348
125,101
389,726
607,791
Selling, general and administrative
expenses (excluding depreciation, amortization, and stock-based
compensation shown separately below)
31,394
42,290
127,765
185,920
Costs of products sold
11,165
23,008
34,119
130,304
Other net periodic pension benefit
(2,205)
(1,038)
(5,190)
(4,186)
Depreciation
31,284
28,597
119,159
115,825
Amortization
6
600
1,014
2,405
Stock-based compensation
1,323
1,927
19,530
13,274
(Gain) loss on disposal of assets
(2,769)
(943)
7,689
2,162
Interest expense, net
38,127
27,046
154,723
113,302
Loss on debt extinguishment
—
253
6,106
6,484
Other expense, net
5,711
4,016
24,993
2,542
(Loss) income before income taxes
(112,782)
10,143
(523,059)
311,760
Income tax (benefit) expense
(27,014)
21,298
(140,967)
91,942
Net (loss) income
(85,768)
(11,155)
(382,092)
219,818
Less: Net income attributable to
noncontrolling interests
—
—
(41,288)
(40,753)
Net (loss) income attributable to Six
Flags Entertainment Corporation
$
(85,768)
$
(11,155)
$
(423,380)
$
179,065
Weighted-average common shares
outstanding:
Basic:
85,008
84,560
84,800
84,348
Diluted:
85,008
84,560
84,800
84,968
Net (loss) income per average common share
outstanding:
Basic:
$
(1.00)
$
(0.13)
$
(4.99)
$
2.12
Diluted:
$
(1.00)
$
(0.13)
$
(4.99)
$
2.11
Balance Sheet Data
As of
(Amounts in thousands)
December 31, 2020
December 31, 2019
Cash and cash equivalents
$
157,760
$
174,179
Total assets
2,772,691
2,882,540
Deferred revenue
205,125
144,040
Current portion of long-term debt
—
8,000
Long-term debt
2,622,641
2,266,884
Redeemable noncontrolling interests
523,376
529,258
Total stockholders' deficit
(1,158,547)
(716,118)
Shares outstanding
85,076
84,634
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 months and year ended
December 31, 2020 and December 31, 2019:
Three Months Ended
Year Ended
(Amounts in thousands, except per share
data)
December 31, 2020
December 31, 2019
December 31, 2020
December 31, 2019
Net (loss) income
$
(85,768)
$
(11,155)
$
(382,092)
$
219,818
Income tax (benefit) expense
(27,014)
21,298
(140,967)
91,942
Other expense, net (2)
5,711
4,016
24,993
2,542
Loss on debt extinguishment
—
253
6,106
6,484
Interest expense, net
38,127
27,046
154,723
113,302
(Gain) loss on disposal of assets
(2,769)
(943)
7,689
2,162
Amortization
6
600
1,014
2,405
Depreciation
31,284
28,597
119,159
115,825
Stock-based compensation
1,323
1,927
19,530
13,274
Modified EBITDA (3)
(39,100)
71,639
(189,845)
567,754
Third party interest in EBITDA of certain
operations (4)
—
—
(41,288)
(40,753)
Adjusted EBITDA (3)
$
(39,100)
$
71,639
$
(231,133)
$
527,001
Weighted-average common shares
outstanding
85,008
84,560
84,800
84,348
The following table sets forth a reconciliation of net cash
(used in) provided by operating activities to Adjusted Free Cash
Flow for the three months and year ended December 31, 2020 and
December 31, 2019:
Three Months Ended
Year Ended
(Amounts in thousands, except per share
data)
December 31, 2020
December 31, 2019
December 31, 2020
December 31, 2019
Net cash (used in) provided by operating
activities
$
(36,916)
$
69,708
$
(190,880)
$
410,573
Changes in working capital
(48,542)
(25,673)
(175,938)
28,739
Interest expense, net
38,127
27,046
154,723
113,302
Income tax (benefit) expense
(27,014)
21,298
(140,967)
91,942
Amortization of debt issuance costs
(1,977)
(860)
(6,535)
(3,563)
Other expense, net
17,278
7,875
36,710
6,457
Interest accretion on notes payable
(276)
(322)
(1,157)
(1,310)
Changes in deferred income taxes
20,220
(27,433)
134,199
(78,386)
Third party interest in EBITDA of certain
operations (4)
—
—
(41,288)
(40,753)
Capital expenditures, net of property
insurance recovery
(7,918)
(18,151)
(98,364)
(140,176)
Cash paid for interest, net
(19,847)
(20,553)
(98,551)
(112,997)
Cash taxes (5)
(1,321)
(3,256)
(5,917)
(28,209)
Adjusted Free Cash Flow (6)
$
(68,186)
$
29,679
$
(433,965)
$
245,619
Weighted-average common shares outstanding
- basic:
85,008
84,560
84,800
84,348
(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, including consulting costs of $2.2 million and $20.5
million and employee termination costs of $2.8 million and $4.4
million for the three and twelve months ended December 31, 2020,
respectively. 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)
“Modified EBITDA”, a non-GAAP measure, is
defined as our consolidated (loss) income 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)
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.
(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 (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/20210224005164/en/
Stephen Purtell Senior Vice President Investor Relations,
Treasury and Strategy +1-972-595-5180 investors@sftp.com
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