Six Flags Entertainment Corporation Common Stock New

Ladies and gentlemen, thank you for standing by. My name is Krista and I will be your conference operator today. At this time, I would like to welcome everyone to Six Flags Entertainment Corporation third quarter 2024 conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. And if you'd like to withdraw that question, again, press star one. Thank you. I would now like to turn the conference over to the Six Flags management team. Please go ahead.

Thank you, Krista. And good morning, everyone. My name is Michael Russell, Corporate Director of Investor Relations for Six Flags. Welcome to today's call to review our 2024 third quarter financial results for Six Flags Entertainment Corporation. Earlier this morning, we distributed via wire service our earnings press release, a copy of which is also available under the news tab of our investor relations website at investors.sixflags.com. We have also posted a short slide presentation that you can access either on the webcast page for today's call or on our IR website's presentation page. You'll find the slides provide additional information about Six Flags strategic roadmap and long-term metrics for measuring our progress, which we will cover on today's call. Before we begin, I need to remind you the comments made during this call will include forward-looking statements within the meaning 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 company's filings with the SEC. In compliance with the SEC's regulation FD, this webcast is being made available to the media and general public, as well as analysts and investors. Because the webcast is open to all constituents and prior notification has been widely and unselectively disseminated, all content on this call will be considered fully disclosed. On the call with me this morning are Six Flags Chief Executive Officer Richard Zimmerman, and Chief Financial Officer Brian Witherell. With that, I'll turn the call over to Brian.

Thank you, Michael. Good morning, and thanks to everyone for joining us today. I want to welcome you to our first earnings call that will cover the post-merger consolidated financial results for the new Six Flags Entertainment Corporation. I'll start my remarks by recapping results for the third quarter ended September 29, 2024, before providing some color around our performance over the last five weeks including the impressive demand for our incredibly popular Halloween events. I'll wrap up with an update on long lead indicators, including the status of season pass sales to date, before passing it over to Richard. On a consolidated basis, operating days in the third quarter of 2024 totaled 2,585 days, compared with 1,091 operating days for the third quarter last year. Of the 1,494 incremental operating days, 1,591 days relate to operations during the third quarter at the Legacy Six Flags parks. Meanwhile, Legacy Cedar Fair parks had 97 fewer operating days compared to the third quarter last year, with 71 of those fewer operating days due to a fiscal calendar shift. The balance of the remaining decrease in operating days at the Legacy Cedar Fair parks was the result of planned changes to park operating calendars, as well as the impact of extreme weather and related operating disruptions. For the third quarter, we generated net revenues of $1.35 billion on attendance of 21 million visits. These third quarter results included $558 million of net revenues and $9.2 million in attendance from Legacy Six Flags operations. Third quarter revenues from Legacy Cedar Fair decreased by $52 million compared to the third quarter last year, primarily due to 660,000 fewer visits during the current period, 460,000 of which were due to the fiscal calendar shift. The remaining 200,000 visit decrease in Legacy Cedar Fair attendance was the result of the extreme weather and related operating disruptions during the period. As we noted on our last earnings call, extreme weather caused challenges in the beginning of the third quarter with Hurricane Beryl disrupting demand across multiple parks in early July. Later in the quarter, Hurricane Debbie disrupted early August operations, and then operations during the last week of September were again disrupted by Hurricane Elaine. Excluding the three weeks that were directly impacted by the extreme weather events, attendance across the combined portfolio during the balance of the third quarter was up slightly over the same three-month period last year, supporting our belief that our consumer remains healthy and demand for our parks remains strong. Looking at third quarter guest spending trends for a moment, out-of-park revenues for the quarter totaled $102 million, which included $21 million in revenues from Legacy Six Flags operations. Out-of-park revenues from Legacy Cedar Fair operations decreased by $5 million, the direct result of the fiscal calendar shift. Meanwhile, in-park per capita spending in the period was $61.27, representing a decrease of 2% compared to the in-park per capita reported by Legacy Cedar Fair in the third quarter last year. Approximately half of the decline related to the impact of the merger, with the other half attributable to a planned decrease in average season pass pricing and a higher mix of season pass visitation at the Legacy Cedar Fair parks. The per capita headwinds at the Legacy Cedar Fair parks were partially offset by improved guest spending on food and beverage, which was up 2% in the quarter, and higher spending on extra charge products, including Fast Lane, which was up 4% in the quarter. These positive trends underscore our guests' willingness to spend during their visits and are a tribute to our park teams who provide compelling products and high-quality guest service. Moving on to the cost front, operating costs and expenses in the third quarter totaled $894 million, which included $368 million of operating costs and expenses from Legacy Six Flags operations. The third quarter costs were made up of $575 million of operating expenses, $209 million of SG&A expense, and $110 million of cost of goods sold. Third quarter operating expenses included $245 million related to operations at Legacy Six Flags and an $18 million adjustment to self-insurance reserves at Legacy Cedar Fair. These items were partially offset by a $10 million decrease in operating expenses at the Legacy Cedar Fair parks related to the calendar shift. Excluding these factors, third quarter operating expenses at Legacy Cedar Fair decreased by $11 million The results of our plans this year to reduce standalone operating expenses is part of the first phase of our merger-related cost synergies. Meanwhile, third quarter SG&A expenses included $81 million from Legacy Six Flags operations and $55 million of merger and integration-related costs. Excluding these items, SG&A expense at Legacy Cedar Fair was up $9 million, primarily due to higher full-time wages, including bonus expense. The $110 million of cost of goods sold in the quarter included $42 million related to Legacy Six Flags operations during the period. As a percentage of food, merchandise, and games revenue, cost of goods sold in the quarter increased 30 basis points. 10 basis points of the increase related to the operations of the Legacy Six Flags parks, with the remainder driven by an increase in food and beverage costs at the Legacy Cedar Fair parks. As we previously noted, we remain laser focused on driving operating efficiencies and improving margins. We are moving ahead with a sense of urgency to fully realize the $120 million of merger related cost synergies on a run rate basis by the end of 2025. The cost saving efforts we've initiated to date at both Legacy Cedar Fair and Legacy Six Flags put us on pace to achieve our target of realizing $50 million in run rate cost synergies by the end of 2024. Turning now to adjusted EBITDA, which management believes is a meaningful measure of park-level operating results, adjusted EBITDA for the third quarter totaled $558 million, including $206 million of adjusted EBITDA from Legacy Six Flags operations. This was partially offset by a $21 million decrease resulting from the fiscal calendar shift at Legacy Cedar Fair and a $15 million decrease due to the impacts of the extreme weather on attendance and revenues during the quarter at the Legacy Cedar Fair parks. Consistent with our commitment and long-term practice of providing transparency around operating results, let's turn our attention to results since the end of the third quarter, results that reflect the outstanding performance of our increasingly popular Halloween events, which continue to deliver some of the biggest attendance days of the year. Over the past five weeks, we entertained 6.5 million guests across the combined portfolio, an increase of 20% or more than 1 million visits compared to the combined portfolio over the same five-week period last year. The strong momentum and demand across both Legacy Cedar Fair and Legacy Six Flags parks also translated into a meaningful increase in the sales of season passes and memberships. Over the five-week period, sales of 2,025 season pass units were up 8%, with the average pass price up 3%. This brings the early sales of season pass units across the combined portfolio up 2% over the same time last year. Based on the solid season pass base and the strong performance of October, which historically represents approximately 60% of fourth quarter attendance, we believe we are on pace to achieve fourth quarter adjusted EBITDA of $205 million to $215 million, with actual results dependent on operating conditions and macro factors such as weather over the final two months of the year. Now turning to the company's balance sheet for a moment. Our balance sheet remains in solid condition. At the end of the third quarter, we had $90 million of cash and cash equivalents on hand, and approximately $4.8 billion of gross debt. Of our debt outstanding, approximately 80% is fixed, through long-term notes, and outside of $200 million in senior notes, which mature in July of next year, we have no significant maturities before 2027. Liquidity, as of September 29, 2024, totaled $743 million, including cash on hand and available capacity under our revolving credit facility, providing us with ample financial flexibility going forward. Deferred revenues on September 29, 2024 totaled $359 million, compared with $208 million of deferred revenues on September 24, 2023. The $151 million increase includes $144 million of deferred revenues of the Legacy Cedar Fair Six Flags parks, with the remaining increase reflecting the strong sales of advanced purchase products at the Legacy Cedar Fair parks. Through the end of the third quarter of 2024, deferred revenues at Legacy Cedar Fair were up $7 million, or 3%. For modeling purposes, during the quarter we spent $110 million on capital expenditures. And for the fourth quarter, we expect CapEx will be in the $100 to $110 million. Looking ahead, We expect to invest between $500 million and $525 million in capital expenditures in both 2025 and 2026. These investments represent a level of CapEx spend necessary to accelerate the integration process and begin to activate the growth potential of the combined portfolio. The investments will be primarily focused on projects aimed at increasing demand and driving higher levels of guest spending but will also include addressing any deferred infrastructure needs across the portfolio. While we are still finalizing capital programs beyond 2026, we are targeting annual CapEx spend to be in the range of approximately 12% to 13% of net revenues over the long term. Lastly, from a cash flow perspective, in 2025, we are projecting annualized cash interest payments of $305 to $315 million in annualized cash taxes of $130 to $140 million. With that, I'd like to turn the call over to Richard.