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Record September Year-to-Date Revenue at Six Flags

Deferred Revenue Up 21 Percent and Active Pass Base Up 13 Percent at End of September

GRAND PRAIRIE, Texas--(BUSINESS WIRE)-- Six Flags Entertainment Corporation (NYSE: SIX), the world’s largest regional theme park company, today announced revenue for the quarter ended September 30, 2017 was $580 million, an increase of $23 million or 4 percent compared to the same period in 2016. The increase was primarily driven by a 3 percent growth in attendance to 12.9 million guests, a 2 percent increase in guest spending per capita and a 23 percent increase in international licensing revenue, partially offset by decreases in sponsorship and accommodations revenue.

Net income increased $79 million or 77 percent and diluted earnings per share increased 94 percent to $2.11 for the quarter, primarily due to a reduction in stock-based compensation expense. Adjusted EBITDA1 in the third quarter increased $2 million or 1 percent to $301 million compared to the prior-year period.

The financial performance of the company was negatively impacted by several major natural events during the quarter. Hurricane Harvey negatively impacted attendance at three of the company’s parks during the last weekend of August and the week prior to Labor Day weekend, and subsequent gas shortages across Texas continued to affect attendance for several weeks. Remnants of the storm negatively affected attendance at several more parks over the holiday weekend as the storm moved northeast. Subsequently, Hurricane Irma impacted the company’s Atlanta and East Coast parks. Finally, the earthquakes around Mexico City severely disrupted the region and caused damage to the company’s new water park, which was closed due to damage and likely will not reopen until near the end of 2017.

“I am very proud of our team for this quarter’s performance given the unprecedented natural events affecting park attendance, especially following the adverse weather conditions we experienced in the second quarter,” said Jim Reid-Anderson, Chairman, President and CEO. “We are nicely positioned to deliver another record year for our shareholders in 2017, and our industry-leading team is laser-focused on executing our strategy of higher ticket yields, improved in-park revenue, attractive international licensing deals, new waterparks, and strong execution to achieve our aspirational goal of $750 million of Modified EBITDA2 by 2020.”

Total guest spending per capita for the third quarter was $42.94, an increase of $0.71 or 2 percent compared to the third quarter of 2016, as ticket price gains were partially offset by lower in-park spending per capita. Admissions per capita increased 4 percent to $25.63 and in-park spending per capita decreased 1 percent to $17.31.

For the first nine months of 2017, revenue was $1.10 billion, a 2 percent increase versus the same prior-year period, driven primarily by a 2 percent increase in attendance and a 31 percent increase in international licensing revenue, offset by decreases in sponsorship and accommodations revenue. Net income increased $59 million or 51 percent driven by a reduction in stock-based compensation expense. Adjusted EBITDA increased $1 million to $432 million. Foreign currency translation had minimal impact on year-to-date results.

The softer than anticipated financial performance through the first nine months of the year makes partial achievement of Project 600 in 2017 more challenging and, in accordance with accounting standards, is no longer deemed probable. Therefore, in the third quarter the company reversed $45 million of stock-based compensation expense to reflect an expected late achievement of the Project 600 Performance Award in 2018.

Attendance at the company’s parks for the first nine months of 2017 grew 2 percent to 24.3 million guests, while guest spending per capita was essentially flat at $42.55 compared to the prior-year period.

These guest spending per caps were driven by admissions per capita increasing 1 percent to $24.88 and in-park spending per capita decreasing 2 percent to $17.67.

The Active Pass Base, which represents the total number of guests who have a season pass or who are enrolled in the company’s membership program, increased 13 percent year-over-year as a result of the company’s continued success in marketing its multi-visit passes to guests. Deferred revenue of $179 million, a record for the third quarter, increased by $31 million or 21 percent over September 30, 2016, primarily due to incremental sales of season passes, memberships and all-season dining passes.

In the first nine months of 2017, the company invested $117 million in new capital projects, paid $168 million in dividends, or $0.64 per common share per quarter, and repurchased $499 million or 8.4 million shares of its common stock. The authorized share repurchase amount available as of September 30, 2017, was $343 million.

Net Debt3 as of September 30, 2017, calculated as total reported debt of $2.02 billion less cash and cash equivalents of $83 million, was $1.94 billion, representing a net leverage ratio of 3.8 times Adjusted EBITDA.

Conference Call

At 8:00 a.m. Central Time today, October 25, 2017, the company will host a conference call to discuss its third quarter 2017 financial performance. The call is accessible through either the Six Flags Investor Relations website at investors.sixflags.com or by dialing 1-855-889-1976 in the United States or +1-937-641-0558 outside the United States and requesting the Six Flags earnings call. A replay of the call will be available by dialing 1-855-859-2056 or +1-404-537-3406 through November 2, 2017 and requesting conference ID 1772357.

About Six Flags Entertainment Corporation

Six Flags Entertainment Corporation is the world’s largest regional theme park company with $1.3 billion in revenue and 20 parks across the United States, Mexico and Canada. For 56 years, Six Flags has entertained millions of families with world-class coasters, themed rides, thrilling water parks and unique attractions. For more information, visit www.sixflags.com.

Forward-Looking Statements

The information contained in this release, other than historical information, consists of forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act. These statements may involve risks and uncertainties that could cause actual results to differ materially from those described in such statements. These risks and uncertainties include, among others, (i) the adequacy of cash flows from operations, available cash and available amounts under our credit facilities to meet our future liquidity needs, (ii) our ability to roll out our capital enhancements in a timely and cost effective manner, (iii) our ability to improve operating results by implementing strategic cost reductions, and organizational and personnel changes without adversely affecting our business, (iv) our operations and results of operations, and (v) the risk factors or uncertainties listed from time to time in the company’s filings with the Securities and Exchange Commission ("SEC"). In addition, important factors, including factors impacting attendance, such as local conditions, natural disasters, contagious diseases, events, disturbances and terrorist activities; recall of food, toys and other retail products sold at our parks; risk of accidents occurring at the company’s parks or other parks in the industry and adverse publicity concerning our parks or other parks in the industry; inability to achieve desired improvements and our aspirational financial performance goals; adverse weather conditions such as excess heat or cold, rain and storms; general financial and credit market conditions; economic conditions (including customer spending patterns); changes in public and consumer tastes; construction delays in capital improvements or ride downtime; competition with other theme parks and other entertainment alternatives; dependence on a seasonal workforce; unionization activities and labor disputes; laws and regulations affecting labor and employee benefit costs, including increases in state and federally mandated minimum wages, and healthcare reform; pending, threatened or future legal proceedings and the significant expenses associated with litigation; cyber security risks and other factors could cause actual results to differ materially from the company’s expectations. Although the company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will be realized and actual results could vary materially. Reference is made to a more complete discussion of forward-looking statements and applicable risks contained under the captions "Cautionary Note Regarding Forward-Looking Statements" and "Risk Factors" in the company’s Annual and Quarterly Reports on Forms 10-K and 10-Q, and its other filings and submissions with the SEC, each of which are available free of charge on the company’s investor relations website at investors.sixflags.com and on the SEC’s website at www.sec.gov.

Footnotes

(1) See the following financial statements and Note 3 to those financial statements for a discussion of Adjusted EBITDA (a non-GAAP financial measure) and its reconciliation to net income (loss).
(2) 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).
(3) Net Debt (a non-GAAP financial measure) represents total long-term debt as reported, including current portion, and any short-term bank borrowings, less cash and cash equivalents.

SIX FLAGS ENTERTAINMENT CORPORATION

Statement of Operations Data (1)
Three Months Ended Nine Months Ended Twelve Months Ended
(Amounts in thousands, except per share data)

September 30,
2017

September 30,
2016

September 30,
2017

September 30,
2016

September 30,
2017

September 30,
2016

Theme park admissions $ 331,244 $ 311,427 $ 604,105 $ 585,270 $ 734,248 $ 699,787
Theme park food, merchandise and other 223,861 220,667 429,033 427,293 522,907 509,825
Sponsorship, licensing and other fees 20,798 20,284 56,794 53,936 69,187 71,501
Accommodations revenue 4,515 5,221 12,386 13,585 15,290 16,428
Total revenue 580,418 557,599 1,102,318 1,080,084 1,341,632 1,297,541
Operating expenses (excluding depreciation and amortization shown separately below) 166,662 151,169 404,542 387,376 506,573 483,734
Selling, general and administrative expense (excluding depreciation, amortization and stock-based compensation shown separately below) 47,311 44,138 135,659 132,862 178,252 176,073
Costs of products sold 45,951 44,277 91,021 90,435 110,165 106,288
Depreciation 27,962 26,740 80,776 77,391 107,675 105,424
Amortization 571 653 1,870 1,954 2,519 2,607
Stock-based compensation (35,740 ) 89,994 (39,055 ) 96,244 (18,960 ) 115,959
Loss on disposal of assets 2,010 799 4,337 913 5,392 6,571
Interest expense, net 25,721 21,166 73,878 60,814 94,936 79,986
Loss on debt extinguishment 37,109 2,377 37,667 2,377
Other expense (income), net 375 1,318 40 2,009 (285 ) 2,311
Income before income taxes 299,595 177,345 312,141 227,709 317,698 216,211
Income tax expense 98,665 55,651 97,128 72,850 100,817 59,168
Net income 200,930 121,694 215,013 154,859 216,881 157,043
Less: Net income attributable to noncontrolling interests (19,605 ) (19,212 ) (39,210 ) (38,425 ) (39,210 ) (38,425 )
Net income attributable to Six Flags Entertainment Corporation $ 181,325 $ 102,482 $ 175,803 $ 116,434 $ 177,671 $ 118,618
Weighted-average number of common shares outstanding:
Weighted-average common shares outstanding — basic: 84,480 92,204 87,676 92,538 88,711 92,336
Weighted-average common shares outstanding — diluted: 85,876 94,155 89,434 94,654 90,545 94,670
Net income per average common share outstanding:
Net income per average common share outstanding — basic: $ 2.15 $ 1.11 $ 2.01 $ 1.26 $ 2.00 $ 1.28
Net income per average common share outstanding — diluted: $ 2.11 $ 1.09 $ 1.97 $ 1.23 $ 1.96 $ 1.25
Balance Sheet Data
As of
(Amounts in thousands)

September 30, 2017

December 31, 2016

Cash and cash equivalents (excluding restricted cash) $ 82,683 $ 137,385
Total assets 2,528,288 2,487,672
Deferred revenue 178,619 123,955
Current portion of long-term debt 29,161
Long-term debt (excluding current portion) 2,020,184 1,624,486
Redeemable noncontrolling interests 505,321 485,876
Total stockholders' deficit (573,027 ) (186,490 )
Shares outstanding 83,737 90,849

Definition and Reconciliation of Non-GAAP Financial Measures

We prepare our financial statements in accordance with United States generally accepted accounting principles ("GAAP"). In our press release, we make reference to non-GAAP financial measures including Modified EBITDA, Adjusted EBITDA and Adjusted Free Cash Flow. The definition for each of these non-GAAP financial measures is set forth below in the notes to the reconciliation tables. We believe that these non-GAAP financial measures provide important and useful information for investors to facilitate a comparison of our operating performance on a consistent basis from period to period and make it easier to compare our results with those of other companies in our industry. We use these measures for internal planning and forecasting purposes, to evaluate ongoing operations and our performance generally, and in our annual and long-term incentive plans. By providing these measures, we provide our investors with the ability to review our performance in the same manner as our management.

However, because these non-GAAP financial measures are not determined in accordance with GAAP, they are susceptible to varying calculations, and not all companies calculate these measures in the same manner. As a result, these non-GAAP financial measures as presented may not be directly comparable to a similarly titled non-GAAP financial measure presented by another company. These non-GAAP financial measures are presented as supplemental information and not as alternatives to any GAAP financial measures. When reviewing a non-GAAP financial measure, we encourage our investors to fully review and consider the related reconciliation as detailed below.

The following table sets forth a reconciliation of net income to Adjusted EBITDA for the three, nine and twelve months ended September 30, 2017 and September 30, 2016:

Three Months Ended Nine Months Ended Twelve Months Ended
(Amounts in thousands)

September 30,
2017

September 30,
2016

September 30,
2017

September 30,
2016

September 30,
2017

September 30,
2016

Net income $ 200,930 $ 121,694 $ 215,013 $ 154,859 $ 216,881 $ 157,043
Income tax expense 98,665 55,651 97,128 72,850 100,817 59,168
Other expense (income), net 375 1,318 40 2,009 (285 ) 2,311
Loss on debt extinguishment 37,109 2,377 37,667 2,377
Interest expense, net 25,721 21,166 73,878 60,814 94,936 79,986
Loss on disposal of assets 2,010 799 4,337 913 5,392 6,571
Amortization 571 653 1,870 1,954 2,519 2,607
Depreciation 27,962 26,740 80,776 77,391 107,675 105,424
Stock-based compensation (35,740 ) 89,994 (39,055 ) 96,244 (18,960 ) 115,959
Impact of Fresh Start valuation adjustments (2) 10 22 29 66 52 107
Modified EBITDA (3) 320,504 318,037 471,125 469,477 546,694 531,553
Third party interest in EBITDA of certain operations (4) (19,605 ) (19,212 ) (39,210 ) (38,425 ) (39,210 ) (38,425 )
Adjusted EBITDA (3) $ 300,899 $ 298,825 $ 431,915 $ 431,052 $ 507,484 $ 493,128
Weighted-average common shares outstanding — basic: 84,480 92,204 87,676 92,538 88,711 92,336

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, 2017 and September 30, 2016:

Three Months Ended Nine Months Ended Twelve Months Ended
(Amounts in thousands)

September 30,
2017

September 30,
2016

September 30,
2017

September 30,
2016

September 30,
2017

September 30,
2016

Net cash provided by operating activities $ 246,790 $ 236,176 $ 379,656 $ 374,754 $ 468,137 $ 463,106
Changes in working capital 40,949 58,679 7,186 24,667 (28,628 ) (17,373 )
Interest expense, net 25,721 21,166 73,878 60,814 94,936 79,986
Income tax expense 98,665 55,651 97,128 72,850 100,817 59,168
Amortization of debt issuance costs (960 ) (1,173 ) (3,101 ) (3,331 ) (4,273 ) (4,398 )
Other expense (income), net 979 (745 ) 2,354 203 4,811 (6,601 )
Interest accretion on notes payable (333 ) (90 ) (723 ) (322 ) (814 ) (439 )
Changes in deferred income taxes (91,317 ) (51,649 ) (85,282 ) (60,224 ) (88,344 ) (42,003 )
Impact of Fresh Start valuation adjustments (2) 10 22 29 66 52 107
Third party interest in EBITDA of certain operations (4) (19,605 ) (19,212 ) (39,210 ) (38,425 ) (39,210 ) (38,425 )
Capital expenditures (19,348 ) (20,219 ) (116,548 ) (100,914 ) (144,572 ) (123,892 )
Cash paid for interest, net (29,850 ) (26,746 ) (76,676 ) (63,401 ) (82,090 ) (70,889 )
Cash taxes (5) (5,320 ) (3,327 ) (11,179 ) (14,000 ) (14,446 ) (20,436 )
Adjusted Free Cash Flow (6) $ 246,381 $ 248,533 $ 227,512 $ 252,737 $ 266,376 $ 277,911
Weighted-average common shares outstanding — basic: 84,480 92,204 87,676 92,538 88,711 92,336
(1) Revenues and expenses of international operations are converted into U.S. dollars on an average basis as provided by GAAP.
(2) Amounts recorded as valuation adjustments and included in reorganization items for the month of April 2010 that would have been included in Modified EBITDA and Adjusted EBITDA, had fresh start accounting not been applied. Balance consists primarily of discounted insurance reserves that will be accreted through the statement of operations each quarter through 2018.
(3)

“Modified EBITDA,” a non-GAAP measure, is defined as our consolidated income (loss) from continuing operations: excluding the cumulative effect of changes in accounting principles, discontinued operations gains or losses, income tax expense or benefit, restructure costs or recoveries, reorganization items (net), other income or expense, gain or loss on early extinguishment of debt, equity in income or loss of investees, interest expense (net), gain or loss on disposal of assets, gain or loss on the sale of investees, amortization, depreciation, stock-based compensation, and fresh start accounting valuation adjustments. Modified EBITDA as defined herein may differ from similarly titled measures presented by other companies. Management uses non-GAAP measures for budgeting purposes, measuring actual results, allocating resources and in determining employee incentive compensation. We believe that Modified EBITDA provides relevant and useful information for investors because it assists in comparing our operating performance on a consistent basis, makes it easier to compare our results with those of other companies in our industry as it most closely ties our performance to that of our competitors from a park level perspective and allows investors to review performance in the same manner as our management.

"Adjusted EBITDA," a non-GAAP measure, is defined as Modified EBITDA minus the interests of third parties in the Adjusted EBITDA of properties that are less than wholly owned (consisting of Six Flags Over Georgia, Six Flags White Water Atlanta and Six Flags Over Texas). Adjusted EBITDA is approximately equal to “Parent Consolidated Adjusted EBITDA” as defined in our secured credit agreement, except that Parent Consolidated Adjusted EBITDA excludes Adjusted EBITDA from equity investees that is not distributed to us in cash on a net basis and has limitations on the amounts of certain expenses that are excluded from the calculation. Adjusted EBITDA as defined herein may differ from similarly titled measures presented by other companies. Our board of directors and management use Adjusted EBITDA to measure our performance and our current management incentive compensation plans are based largely on Adjusted EBITDA. We believe that Adjusted EBITDA is frequently used by all our sell-side analysts and most investors as their primary measure of our performance in the evaluation of companies in our industry. In addition, the instruments governing our indebtedness use Adjusted EBITDA to measure our compliance with certain covenants and, in certain circumstances, our ability to make certain borrowings. Adjusted EBITDA, as computed by us, may not be comparable to similar metrics used by other companies in our industry.

(4) Represents interests of third parties in the Adjusted EBITDA of Six Flags Over Georgia, Six Flags Over Texas and Six Flags White Water Atlanta.
(5) Based on our current federal net operating loss carryforwards, we believe we will continue to pay minimal amounts for cash taxes for the next two years. Cash taxes paid represents statutory taxes paid, primarily driven by Mexico and state level obligations.
(6) Management uses Adjusted Free Cash Flow, a non-GAAP measure, in its financial and operational decision making processes, for internal reporting, and as part of its forecasting and budgeting processes as it provides additional transparency of our operations. Management believes that Adjusted Free Cash Flow is useful information to investors regarding the amount of cash that we estimate that we will generate from operations over a certain period. Management believes the presentation of this measure will enhance the investors' ability to analyze trends in the business and evaluate the Company's underlying performance relative to other companies in the industry. A reconciliation from net cash provided by operating activities to Adjusted Free Cash Flow is presented in the table above. Adjusted Free Cash Flow as presented herein may differ from similarly titled measures presented by other companies.

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Six Flags Entertainment Corporation
Stephen Purtell, +1-972-595-5180
Senior Vice President
Investor Relations and Treasurer
spurtell@sftp.com

Source: Six Flags Entertainment Corporation