Six Flags Announces First Quarter 2021 Performance

Cash Outflow for First Quarter 2021 Better than Expectations

ARLINGTON, Texas–(BUSINESS WIRE)–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 revenue of $82 million and attendance of 1.3 million for first quarter 2021. Results for first quarter 2021 are not directly comparable to the same prior year period due to the company’s COVID-19 related suspension of operations and operating restrictions beginning on March 14, 2020. The company believes it is most relevant to compare its results in the first quarter of 2021 to the first quarter of 2019, in addition to the first quarter of 2020.

As anticipated, the company reported a decline in attendance for first quarter 2021 as compared to the same periods in 2020 and 2019. Because of fewer operating days and capacity restrictions, total attendance for first quarter 2021 declined 15% compared to 2020 and 38% compared to 2019.

Since the company’s parks began re-opening with limited operations in June 2020, attendance trends compared to 2019 have continued to improve. In first quarter 2021, attendance at the company’s open parks was 95%¹ of first quarter 2019 at those same parks; unlike first quarter 2019, first quarter 2021 included the Easter holiday period. Year-to-date through April 25, which includes the Easter holiday period in both 2021 and 2019, attendance at the company’s open parks was approximately 79% compared to the same period in 2019. The company has re-opened or announced re-opening dates for all its theme parks with the exception of its theme park in Montreal. Park opening dates for the 2021 season are set forth in Schedule A.

“I am extremely proud of the way our team members have maintained the readiness of our parks so that we can quickly ramp up to entertain our guests and capture the strong consumer demand for regional, outdoor, out-of-home entertainment,” said Mike Spanos, President and CEO. “Our focus is on safely re-opening all of our parks and working with local health officials to eliminate capacity constraints so we can delight the millions of people who count on Six Flags to deliver fun for all.”

“We continue to make progress on our transformation plan as we implement new technology to modernize the guest experience and drive operational efficiencies. We are already seeing significant benefits in 2021,” continued Spanos. “We expect the transformation to result in meaningful profit growth once our plan is fully executed and we return to a more normal operating environment.”

First Quarter 2021 Highlights

• Attendance was 1.3 million guests, a decline of 238,000 guests and 822,000 guests from first quarter 2020 and 2019, respectively. This represented 85% of first quarter 2020 total attendance, and approximately 95% of first quarter 2019 attendance, at the parks that were open.
• Total Revenue was $82 million, a decline of $20 million and $46 million from first quarter 2020 and 2019, respectively.
• Net loss was $96 million, a decline of $11 million and $27 million compared to first quarter 2020 and 2019, respectively.
• Adjusted EBITDA² was a loss of $46 million, $4 million worse than first quarter 2020 and $14 million worse than first quarter 2019.
• Net cash outflow for first quarter 2021 was $95 million, an average of $32 million per month.

First Quarter 2021 Results

In first quarter 2021, the company generated $82 million of revenue with attendance of 1.3 million guests, a net loss of $96 million, and an Adjusted EBITDA loss of $46 million. As previously announced, the company elected to change the method of determining its fiscal quarters and fiscal years beginning in first quarter 2021. The change resulted in four additional calendar days in first quarter 2021 versus both 2020 and 2019, and during these additional days the company had attendance of 293,000 guests in 2021. The Adjusted EBITDA calculation reflects an add-back adjustment of approximately $10 million of non-recurring costs related to the transformation plan, including $1 million of employee termination costs, $2 million of technology costs, and $7 million of consulting costs.

Certain of the company’s memberships include bundled products and offerings. Since the beginning of the membership program, a portion of the membership revenue has been allocated from Park admissions revenue to Park food, merchandise and other revenue. Beginning in October 2020, the company prospectively began allocating an incremental portion of membership revenue from Park admissions revenue to Park food, merchandise and other revenue. This resulted in a reduction in reported Admissions spending per capita and an increase in In-park spending per capita, but the allocation of revenue between Park Admissions revenue and Park food, merchandise and other revenue has no impact on Total revenues or Total guest spending per capita.

Results of first quarter 2021 compared to first quarter 2020

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 most of the parks that were open. In 2020, the company temporarily suspended operations at all of its parks in mid-March due to the pandemic.

The decrease in revenue was primarily a result of decreased attendance. The decrease in revenue was also attributable to a $6 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 driven by its transformation plan, lower advertising costs, and lower salaries, wages and other costs related to the fact that several of the company’s parks that were operating in first quarter 2020 were not operating in first quarter 2021.

Total guest spending per capita in first quarter 2021 decreased 1% compared to first quarter 2020. Applying a pro forma allocation from Admissions spending to In-park spending in 2020, Admissions spending per capita decreased 3% and In-park spending per capita increased 2%.

Results of first quarter 2021 compared to first quarter 2019

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 most of the parks that were open. Attendance compared to first quarter 2019 was positively impacted due to the Easter holiday falling on April 4, 2021 versus April 21, 2019, which shifted a portion of the company’s operating calendar from the second quarter to the first quarter in 2021, inclusive of the four additional calendar days in first quarter 2021 due to the change in reporting calendar.

The decrease in revenue was primarily a result of decreased attendance, offset by improved guest spending per capita. The decrease was also attributable to a $17 million reduction in sponsorship, international agreements, and accommodations revenue, primarily related to the termination of the company’s contracts in China and Dubai in 2020 and 2019, respectively; 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 driven by its transformation plan, lower advertising costs, and lower salaries, wages and other costs related to the fact that several of the company’s parks that were operating in first quarter 2019 were not operating in first quarter 2021.

Total guest spending per capita in first quarter 2021 increased 16% compared to first quarter 2019, driven by higher realized ticket yields for both single day tickets and from the Active Pass Base, which includes all members and season pass holders. In addition, the increase in In-park spending reflects high consumer demand for the company’s products. Applying a pro forma allocation from Admissions spending to In-park spending in 2019, Admissions spending per capita increased 17% and In-park spending per capita increased 14% in first quarter 2021 compared to first quarter 2019.

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 membership through the time their respective home park opened in 2021. The company also offered higher-tiered benefits to members that elected to maintain their payment schedule instead of pausing. As a result of these retention efforts, the Active Pass Base increased 1% as of the end of first quarter 2021 compared to first quarter 2020 and decreased 9% compared to first quarter 2019. The Active Pass Base included 1.7 million members as of the end of first quarter 2021, approximately flat compared to the end of 2020. However, as the company reopens its parks, paused members have resumed payments. Approximately 5% of memberships remained paused as April 4, 2021, compared to approximately 19% of members as of December 31, 2020. The Active Pass Base also included 2.4 million traditional season pass holders compared to 2.1 million season pass holders at the end of 2020.

Deferred revenue was $245 million as of April 4, 2021, an increase of $96 million, or 65%, from March 31, 2020, and $67 million, or 38%, from March 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.

Balance Sheet and Liquidity

As of April 4, 2021, the company had cash on hand of $63 million and $461 million available under its revolving credit facility, net of $20 million of letters of credit, or total liquidity of $524 million. This compares to $618 million of liquidity as of December 31, 2020. The company’s net cash outflow was $95 million for first quarter 2021, or an average of $32 million per month, which was an improvement from the company’s prior guidance range of $53 to $58 million per month. The company’s cash flow primarily benefited from higher than expected attendance and season pass sales.

The company estimates that it will be cashflow positive for the last nine months of 2021.³ However, this will depend on all of the company’s parks remaining open and attendance levels continuing to normalize.

For first quarter 2021, the company invested $23 million in new capital projects. Net debt as of April 4, 2021, calculated as total reported debt of $2,624 million less cash and cash equivalents of $63 million, was $2,561 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 transformation plan in March 2020 to reinvigorate long-term profit growth, which includes both revenue and cost initiatives. The company is focused on 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 $44 million has been incurred through first quarter 2021, including all of the non-cash write-offs of ride assets. The company expects the remaining charges to be incurred in 2021 and 2022. The majority of the remaining investments will be made on the company’s information technology infrastructure, mainly directed towards modernizing the guest experience, beginning with the implementation of a Customer Relations Management system.

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, lower fixed costs, 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 Adjusted EBITDA 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, 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.

The second quarter of 2021 will have four additional days compared to the second quarters of 2020 and 2019, and will include the majority of the July 4^th holiday weekend.

Conference Call

At 7:00 a.m. Central Time today, April 28, 2021, the company will host a conference call to discuss its first quarter 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 May 5, 2021 by dialing 1-855-859-2056 or +1-404-537-3406 and requesting conference ID 7486573.

About Six Flags Entertainment Corporation

Six Flags Entertainment Corporation is the world’s largest regional theme park company with 27 parks across the United States, Mexico and Canada. For nearly 60 years, Six Flags has entertained hundreds of millions of guests with world-class coasters, themed rides, thrilling waterparks and unique attractions. Six Flags is committed to creating an inclusive environment that fully embraces the diversity of our team members and guests. 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) the effect, impact, potential duration or other implications of the COVID-19 pandemic and any expectations we may have with respect thereto including efficacy and deployment of the COVID-19 vaccines, (ii),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, (iii) expectations regarding the scope and duration of pandemic-related limitations on park operations, (iv) our ability to be cash flow positive for the last nine months of 2021, (v) the adequacy of our preparations for or the sufficiency of our liquidity, (vii 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, (viii) expectations regarding consumer demand for regional, outdoor, out-of-home entertainment, including for our parks, and (ix) expectations regarding tax liability for 2020 and the ability of our federal operating loss carryforwards to offset future tax liability. 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 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; political or military events; 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; 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

Contacts

Stephen Purtell

Senior Vice President/

Investor Relations, Treasury and Strategy

+1-972-595-5180

investors@sftp.com

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