Cash Outflow In-Line with Expectations
Transformation Plan Underway
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 the third quarter and first nine
months of 2020 as compared to the same periods in 2019. Nine of the
company’s 26 parks were closed in the third quarter due to the
COVID-19 pandemic, and parks that were open during the period were
subject to attendance limitations. 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 conditions and government
guidelines.
While operating conditions continue to be challenging,
attendance trends improved from a range of 20% to 25% of prior year
levels upon the initial reopening of certain parks in the second
quarter to approximately 35% in the third quarter, for the parks
that were open.1 The company opened its waterpark in Oaxtepec,
Mexico on September 12 and its theme park in Mexico City on October
23, and announced plans to open Six Flags Great America, in
Illinois, for a holiday walk-through experience during late
November through December.
In addition, the company made progress on implementing its
transformation plan to improve the guest experience and to
reinvigorate long-term profit growth. The company believes this
plan will help it to emerge stronger and more profitable once the
pandemic subsides.
“I would like to thank our team members who have risen to the
challenges presented by COVID-19 and improved business performance
each month as we safely opened more parks, increased capacity of
the parks that were open, and aggressively controlled costs,” said
Mike Spanos, President and CEO. “Additionally, I would like to
thank our large base of loyal season pass holders and members who
stayed with us during this difficult period and continue to come
out to our parks in growing numbers.”
“The early results of our operational transformation appear
extremely promising, and I believe that we will emerge from the
pandemic as a stronger and more profitable organization,” continued
Spanos. “We made substantial progress towards our goal of
modernizing the guest experience as we become a more agile,
consumer-centric, productive, and technology-savvy organization. We
expect the transformation to enable significant profit growth once
our plan is fully executed in a post-pandemic environment.”
Third Quarter 2020
Highlights
- Attendance was 2.6 million guests, a decline of 11.4 million
guests from the third quarter of 2019. This represented 19% of
prior year total attendance, and approximately 35% of attendance at
the parks that were open, relative to the comparable prior year
period.
- Total Revenue was $126 million, a decline of $495 million from
the third quarter of 2019.
- Net loss was $116 million, a decline of $296 million from the
third quarter of 2019.
- Adjusted EBITDA2 was a loss of $54 million, a decline of $361
million from the third quarter of 2019.
- Net cash outflow for the quarter was $82 million, an average of
$27 million per month.
First Nine Months 2020
Highlights
- Attendance was 4.6 million guests, a decline of 22.1 million
guests from the first nine months of 2019. This represented 17% of
prior year total attendance.
- Total Revenue was $248 million, a decline of $979 million from
the first nine months of 2019.
- Net loss was $338 million, a decline of $528 million from the
first nine months of 2019.
- Adjusted EBITDA was a loss of $192 million, a decline of $647
million from the first nine months of 2019.
- Net cash outflow for the first nine months was $275 million on
a pro forma basis, excluding the net impact of financing raised,
dividends paid, and pre-payment of debt, an average of $31 million
per month.
Third Quarter
2020 Results
(In millions, except per share and per
capita amounts)
Three Months Ended
September 30,
2020
September 30,
2019
Percentage
Change (%)
Total revenues
$
126
$
621
(80
)%
Net (loss) income attributable to Six
Flags Entertainment Corporation
(116
)
180
N/M
(Loss) earnings per share, diluted
(1.37
)
2.11
N/M
Adjusted EBITDA
(54
)
307
N/M
Attendance
2.6
14.0
(81
)%
Total guest spending per capita
46.82
42.44
10
%
Admissions per capita
27.92
25.17
11
%
In-park spending per capita
18.90
17.27
9
%
In the third quarter of 2020, the company generated $126 million
of revenue with attendance of 2.6 million guests, net loss of $116
million, and an Adjusted EBITDA loss of $54 million. Net loss
includes non-recurring charges of $2 million in employee
termination costs, $12 million in consulting costs, and a $9
million non-cash write-off of ride assets. These non-recurring
charges were all related to the company’s transformation plan. The
Adjusted EBITDA calculation reflects an add-back adjustment of
approximately $23 million of non-recurring costs related to the
transformation plan.
The decrease in attendance was due to the temporary
pandemic-related suspension of operations at nine of the company’s
26 parks during the quarter and limited attendance at the parks
that were open. 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 $22
million reduction in sponsorship, international agreements, and
accommodations revenue primarily related to the previously
announced terminations of the company’s contracts in China, which
generated revenue in 2019; 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 the third
quarter of 2020 was primarily due to recurring monthly membership
revenue from members who retained their memberships following the
initial 12-month commitment period. An increase in the mix of
single-day guests also contributed to the improvement.
In-park spending per capita in the third quarter of 2020
increased due to a higher mix of single-day guests, who tend to
spend more on a per visit basis. In addition, recurring monthly
all-season membership product revenue, such as the all season
dining pass, from members who retained their memberships on a
monthly basis following the initial 12-month commitment period
contributed to the increase.
First Nine Months
2020 Results
(In millions, except per share and per
capita amounts)
Nine Months Ended
September 30, 2020
September 30, 2019
Percentage Change (%)
Total revenues
$
248
$
1,227
(80
)%
Net (loss) income attributable to Six
Flags Entertainment Corporation
(338
)
190
N/M
(Loss) earnings per share, diluted
(3.98
)
2.24
N/M
Adjusted EBITDA
(192
)
455
N/M
Attendance
4.6
26.7
(83
)%
Total guest spending per capita
49.13
42.86
15
%
Admissions per capita
31.05
25.15
23
%
In-park spending per capita
18.08
17.71
2
%
For the first nine months of 2020, the company generated revenue
of $248 million with attendance of 4.6 million guests, net loss of
$338 million, and an Adjusted EBITDA loss of $192 million. Net loss
includes non-recurring charges of $2 million in employee
termination costs, $18 million in consulting costs, and a $9
million non-cash write-off of ride assets. These non-recurring
charges were all related to the company’s transformation plan. The
Adjusted EBITDA calculation reflects an add-back adjustment of
approximately $29 million of non-recurring costs related to the
transformation plan.
The decrease in attendance was due to the temporary
pandemic-related suspension of park operations beginning on March
13, 2020, and limited attendance at the re-opened parks. The
company resumed operations at many of its parks on a staggered
basis near the end of the second quarter of 2020 using a cautious
and phased approach, which included limiting attendance to
encourage social distancing, in accordance with local conditions
and government guidelines. 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 $62 million decrease 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 while certain parks were not operating; and the
pandemic-related suspension of the majority of the company’s
accommodations operations.
The improvement in admissions spending per capita for the first
nine months of 2020 was primarily due to recurring monthly
membership revenue from members who retained their memberships
following the initial 12-month commitment period. An increase in
the mix of single-day guests also contributed to the
improvement.
In-park spending per capita in the first nine months of 2020
increased due to recurring monthly all season membership product
revenue, such as the all season dining pass, from members who
retained their memberships on a monthly basis following the initial
12-month commitment period and the increase in single-day
attendance mix. These increases were partially offset by limited
catered outing revenue driven by the COVID-19 pandemic and
attendance at the company’s drive-through Safari, which offers
limited in-park spending opportunities.
Active Pass Base
The company extended the use privileges for 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 49% as of the end of
the third quarter of 2020 compared to the third quarter of 2019.
The Active Pass Base included 1.9 million members, compared to 2.6
million members at the end of 2019 and 2.1 million members at the
end of the second quarter of 2020. It also included 1.9 million
traditional season pass holders compared to 4.5 million season pass
holders at the end of the third quarter of 2019.
Deferred revenue was $199 million as of September 30, 2020, an
increase of $1 million, or less than 1%, from September 30, 2019.
The increase in deferred revenue was primarily due to the deferral
of revenue from members and season pass holders whose benefits were
extended into 2021, almost entirely offset by lower season pass and
membership sales.
Balance Sheet and
Liquidity
As of September 30, 2020, the company had cash on hand of $214
million and $459 million available under its revolving credit
facility, net of $22 million of letters of credit, or total
liquidity of $673 million. This compares to $756 million of
liquidity as of June 30, 2020. The company’s average monthly net
cash outflow was approximately $27 million per month, which was
within the company’s prior guidance range.
Based on the parks that are currently open, the company
estimates that its net cash outflow through the end of 2020 will
be, on average, $25-$30 million per month.3 The company has no debt
maturities until 2024.
In the first nine months of 2020, the company invested $90
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 September 30, 2020,
calculated as total reported debt of $2,621 million less cash and
cash equivalents of $214 million, was $2,407 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.
In response to curtailed operations, and to preserve the
company’s liquidity position, 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 believes it has sufficient liquidity to meet its
cash obligations through the end of 2021 even if the open parks are
forced to close.
Transformation Plan
The company commenced a major transformation plan in March 2020
to reinvigorate long-term profit growth, including revenue
initiatives and productivity initiatives. The organization will
focus on modernizing the guest experience through technology, and
providing more value for its guests’ time and money.
Executing the transformation plan will require one-time charges
of approximately $69 million, of which $60 million will be cash and
$9 million will be non-cash write-off of ride assets. Approximately
$29 million has already been recorded through the end of the third
quarter. The company anticipates that it will incur approximately
$5 million in charges in the fourth quarter of 2020, with the
remaining charges expected to be incurred by the end of 2021.
Approximately two-thirds of the investments in 2021 will be on the
company’s technology platform to enable the realization of the
expected transformation value.
Transformation Costs Breakout
by Quarter
(Amounts in thousands)
Three Months Ended
Nine Months Ended
June 30, 2020
September 30, 2020
September 30, 2020
Amounts included in "Other expense
(income), net"
Consultant costs
$
6,155
$
12,145
$
18,300
Employee termination costs
-
1,555
1,555
Amounts included in "Loss on disposal
of assets"
Ride / asset write-offs
-
9,351
9,351
Total transformation costs
$
6,155
$
23,051
$
29,206
The company expects the transformation plan to generate an
incremental $80 to $110 million in annual run-rate EBITDA. 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
million4 once the plan is fully executed and the company is
operating in a normal business environment.
The company expects to realize approximately half of the
transformation benefits through a reduction in fixed costs that is
independent of attendance levels. The company expects to realize
the other half of the benefits through incremental revenue
opportunities and lower variable costs.
Conference Call
At 7:00 a.m. Central Time today, October 28, 2020, the company
will host a conference call to discuss its third 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 November 6,
2020, by dialing 1-855-859-2056 or +1-404-537-3406 and requesting
conference ID 9944798.
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 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, including
expectations regarding the anticipated focus, timing, costs,
benefits and results of our transformation plan, as well as our
incremental EBITDA and anticipated earnings baseline resulting from
the plan, 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)
Comparisons of open parks to prior year
exclude attendance from Six Flags Discovery Kingdom and Six Flags
Great America, as these parks had modified operations with minimal
attendance in 2020.
(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
income (loss).
(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 income (loss) is unavailable to the company
without unreasonable effort. The company is not able to provide
reconciliations of Adjusted EBITDA to net income (loss) 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.
Statement of Operations Data
(1)
Three Months Ended
Nine Months Ended
Twelve Months Ended
(Amounts in thousands, except per share
data)
September 30, 2020
September 30, 2019
September 30, 2020
September 30, 2019
September 30, 2020
September 30, 2019
Park admissions
$
72,920
$
352,664
$
143,688
$
671,252
$
288,218
$
823,547
Park food, merchandise and other
49,342
242,059
83,671
472,692
185,419
574,966
Sponsorship, international agreements and
accommodations
4,065
26,457
20,614
82,639
35,336
97,573
Total revenues
126,327
621,180
247,973
1,226,583
508,973
1,496,086
Operating expenses (excluding depreciation
and amortization shown separately below)
113,833
189,820
282,378
482,690
407,479
602,246
Selling, general and administrative
expenses (excluding depreciation, amortization, and stock-based
compensation shown separately below)
33,661
51,241
96,371
143,630
138,661
177,747
Costs of products sold
12,980
53,508
22,954
107,296
45,962
129,035
Other net periodic pension benefit
(995)
(1,038)
(2,985)
(3,148)
(4,023)
(4,473)
Depreciation
28,780
30,084
87,875
87,228
116,472
116,139
Amortization
5
601
1,008
1,805
1,608
2,417
Stock-based compensation
7,907
3,903
18,207
11,347
20,134
(66,109)
Loss (gain) on disposal of assets
10,065
2,659
10,458
3,105
9,515
2,433
Interest expense, net
38,392
28,336
116,596
86,256
143,642
113,149
Loss on debt extinguishment
—
—
6,106
6,231
6,359
6,231
Other expense (income), net
13,470
231
19,282
(1,474)
23,298
(125)
(Loss) income before income taxes
(131,771)
261,835
(410,277)
301,617
(400,134)
417,396
Income tax (benefit) expense
(36,243)
61,626
(113,953)
70,644
(92,655)
107,001
Net (loss) income
(95,528)
200,209
(296,324)
230,973
(307,479)
310,395
Less: Net income attributable to
noncontrolling interests
(20,644)
(20,376)
(41,288)
(40,753)
(41,288)
(40,753)
Net (loss) income attributable to Six
Flags Entertainment Corporation
$
(116,172)
$
179,833
$
(337,612)
$
190,220
$
(348,767)
$
269,642
Weighted-average common shares
outstanding:
Basic:
84,829
84,413
84,730
84,276
84,687
84,242
Diluted:
84,829
85,045
84,730
84,938
84,687
84,959
Net (loss) income per average common share
outstanding:
Basic:
$
(1.37)
$
2.13
$
(3.98)
$
2.26
$
(4.12)
$
3.20
Diluted:
$
(1.37)
$
2.11
$
(3.98)
$
2.24
$
(4.12)
$
3.17
Balance Sheet Data
As of
(Amounts in thousands)
September 30,
2020
December 31,
2019
September 30,
2019
Cash and cash equivalents
$
213,907
$
174,179
$
211,797
Total assets
2,864,972
2,882,540
3,020,703
Deferred revenue
198,563
144,040
197,674
Current portion of long-term debt
—
8,000
8,000
Long-term debt
2,620,920
2,266,884
2,268,704
Redeemable noncontrolling interests
544,020
529,258
545,386
Total stockholders' deficit
(1,076,705)
(716,118)
(635,187)
Shares outstanding
84,951
84,634
84,517
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, nine and twelve months
ended September 30, 2020 and September 30, 2019:
Three Months Ended
Nine Months Ended
Twelve Months Ended
(Amounts in thousands, except per share
data)
September 30,
2020
September 30,
2019
September 30,
2020
September 30,
2019
September 30,
2020
September 30,
2019
Net (loss) income
$
(95,528)
$
200,209
$
(296,324)
$
230,973
$
(307,479)
$
310,395
Income tax (benefit) expense
(36,243)
61,626
(113,953)
70,644
(92,655)
107,001
Other expense (income), net (2)
13,470
231
19,282
(1,474)
23,298
(125)
Loss on debt extinguishment
—
—
6,106
6,231
6,359
6,231
Interest expense, net
38,392
28,336
116,596
86,256
143,642
113,149
Loss (gain) on disposal of assets
10,065
2,659
10,458
3,105
9,515
2,433
Amortization
5
601
1,008
1,805
1,608
2,417
Depreciation
28,780
30,084
87,875
87,228
116,472
116,139
Stock-based compensation
7,907
3,903
18,207
11,347
20,134
(66,109)
Impact of Fresh Start valuation
adjustments (3)
—
—
—
—
—
6
Modified EBITDA (4)
(33,152)
327,649
(150,745)
496,115
(79,106)
591,537
Third party interest in EBITDA of certain
operations (5)
(20,644)
(20,376)
(41,288)
(40,753)
(41,288)
(40,753)
Adjusted EBITDA (4)
$
(53,796)
$
307,273
$
(192,033)
$
455,362
$
(120,394)
$
550,784
Weighted-average common shares
outstanding
84,829
84,413
84,730
84,276
84,687
84,242
The following table sets forth a reconciliation of net cash
(used in) provided by operating activities to Adjusted Free Cash
Flow for the three, nine and twelve months ended September 30, 2020
and September 30, 2019:
Three Months Ended
Nine Months Ended
Twelve Months Ended
(Amounts in thousands, except per share
data)
September 30,
2020
September 30,
2019
September 30,
2020
September 30,
2019
September 30,
2020
September 30,
2019
Net cash (used in) provided by operating
activities
$
(43,261)
$
214,668
$
(153,964)
$
340,865
$
(84,256)
$
411,986
Changes in working capital
(38,955)
74,481
(127,396)
54,412
(153,069)
50,182
Interest expense, net
38,392
28,336
116,596
86,256
143,642
113,149
Income tax (benefit) expense
(36,243)
61,626
(113,953)
70,644
(92,655)
107,001
Amortization of debt issuance costs
(2,091)
(831)
(4,558)
(2,703)
(5,418)
(3,710)
Other expense (income), net (2)
14,254
(1,034)
19,432
(1,418)
27,307
4,440
Interest accretion on notes payable
(276)
(324)
(881)
(988)
(1,203)
(1,325)
Changes in deferred income taxes
35,028
(49,273)
113,979
(50,953)
86,546
(90,192)
Impact of Fresh Start valuation
adjustments (3)
—
—
—
—
—
6
Third party interest in EBITDA of certain
operations (5)
(20,644)
(20,376)
(41,288)
(40,753)
(41,288)
(40,753)
Capital expenditures, net of property
insurance recovery
(17,337)
(26,900)
(90,446)
(122,025)
(108,597)
(142,907)
Cash paid for interest, net
(26,772)
(32,711)
(78,704)
(92,444)
(99,257)
(108,564)
Cash taxes (6)
(2,270)
(7,546)
(4,596)
(24,953)
(7,852)
(30,303)
Adjusted Free Cash Flow (7)
$
(100,175)
$
240,116
$
(365,779)
$
215,940
$
(336,100)
$
269,010
Weighted-average common shares outstanding
- basic:
84,829
84,413
84,730
84,276
84,687
84,242
(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 $12.1 million and $18.3
million and employee termination costs of $1.6 million for the
three and nine months ended September 30, 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)
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)
“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.
(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/20201028005306/en/
Stephen Purtell Senior Vice President Investor Relations and
Treasurer +1-972-595-5180 investors@sftp.com
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