Six Flags Entertainment Corporation Common Stock New

Hello everyone, and welcome to today's conference call on Cedar Fair and Six Flags to combine in merger of equals, creating a leading amusement park operator. My name is Seb, and I'll be the operator for your call today. If you would like to ask a question on today's call, you can do so by pressing star 1 on your telephone keypad, or if you would like to withdraw your question, please press star 2. I will now hand over to the speaker's team to begin the call.

Thank you, Seb, and good morning to everyone. My name is Michael Russell, Corporate Director of Investor Relations for Cedar Fair. Welcome to today's call to discuss this morning's press release issued to The Wire jointly by Cedar Fair and Six Flags, announcing a proposed merger of equals between the two companies. Also, we will briefly touch on both companies' financial results for the third quarter of 2023, included in our press releases issued this morning to The Wire services, which can be found on our respective investor websites IR.CedarFair.com, and Investors.SixFlags.com. Before we begin, I need to remind you that comments made during this call will include forward-looking statements within the meanings of the federal securities laws. These statements may involve risks and uncertainties that could cause actual results to differ from those described in such statements. For a more detailed discussion of these risks, you may refer to the periodic filings with the SEC by Cedar Fair and Six Flags. On the call with me this morning are Saleem Basool, CEO of Six Flags, Richard Zimmerman, CEO of Cedar Fair, Brian Witherow, CFO of Cedar Fair, and Gary Mick, CFO of Six Flags. We have an action-packed call today, so let me quickly run through the agenda. Brian and Gary are going to kick things off with a brief overview of each company's third quarter results announced this morning. Then Salim and Richard will take you through a deep dive of this combination and the significant opportunities we expect to unlock together. We'll then turn the call to Brian for a review of the compelling financial benefits. After that, Richard will wrap things up before we open the floor to Q&A. With that, I'll turn the call over to Brian.

Thanks, Michael, and good morning, everyone. Today is truly an exciting day for Cedar Fair and Six Flags. we look forward to sharing more about the transaction. I'll start off by reviewing Cedar Fair's third quarter operating results before discussing preliminary results for the five-week period ended October 29th. After weather and other factors contributed to a disappointing start, we had a two-fold strategy for the second half of the year. First, generate higher demand levels with the goal of recapturing attendance disrupted by weather earlier in the year. And second, aggressively seize upon cost savings opportunities that not only improve our near-term operating margins, but also put us on a path to return to pre-pandemic margin levels over time. I'm very pleased to report the net effect of these strategic efforts resulted in a 7% increase in third quarter adjusted EBITDA to a record $388 million and a 320 basis point increase in adjusted EBITDA margin to 46.1%. These outstanding results were driven by a 100,000-visit increase in attendance and, more importantly, by a more than $25 million reduction in adjusted EBITDA-related operating costs and expenses in the quarter. Credit goes to our incredible team who tackled this challenge during the season's busiest and most intense stretch of the season. During the quarter, we entertained 12.4 million guests and generated net revenues of $842 million and net revenues of $843 million in the third quarter of 2022. The slight decrease in net revenues is primarily attributable to a 2% decrease in in-park per capita spending, offset in part by a 1% increase in attendance and a 2% increase in out-of-park revenues. During the quarter, we reduced operating expenses by $22 million, while also reducing cost of goods sold by $3 million. The decrease in operating expenses was driven by our new cost-saving initiatives, highlighted by a meaningful reduction in seasonal labor hours and in-park entertainment costs. Meanwhile, SG&A expense in the period increased $8 million, primarily due to increased marketing efforts and initial costs associated with today's announced transaction. Turning our attention to preliminary results for this past Sunday, October 29th, For the most recent five weeks, we've generated preliminary net revenues of $226 million, down less than 1% compared with net revenues for the comparable five-week period a year ago. Our revenue performance in October reflects a 2% or 69,000 visit increase in attendance, consistent out-of-park revenues, and a 3% decrease in in-park per capita spending. In total, we entertained 3.3 million guests over the five-week period. Based on our preliminary results for October through the first 10 months of 2023, we have now entertained 24.2 million guests and generated preliminary net revenues of 1.7 billion. Lastly, I want to provide a quick update on early sales of our 2024 season passes and other advanced purchase products. As of the end of the third quarter, our deferred revenue balance totaled $208 million, representing an increase of $20 million or 11% compared to deferred revenues at the end of the third quarter last year. The increase in deferred revenues has been driven by an outstanding start to fall sales of 2024 season passes and related all-season products. Through this past week, combined sales are pacing up 24% or approximately $30 million over the same time last year. We're confident that our season pass strategy and outstanding start position as well for another strong season in 2024. With that, let me turn the call over to Gary to review Six Flags third quarter results. Thank you, Brian.