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Six Flags Announces Second Quarter 2022 Performance

·13-min read

ARLINGTON, Texas, August 11, 2022--(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 second quarter 2022 financial results.

"This is a transitional year for Six Flags, as we reset the foundations of our business model to focus on delivering a premium guest experience, while at the same time, correcting for decades of heavy price discounting," said Selim Bassoul, President and CEO. "Our guest satisfaction scores are well above 2021 and our guest spending per capita has increased more than fifty percent versus pre-pandemic levels. We believe our initial progress validates the potential of our new strategy, and provides a very healthy earnings base from which we can grow."

Second Quarter 2022 Results

Three Months Ended

(Amounts in millions, except per share data)

July 3, 2022

July 4, 2021

% Change vs. 2021

Total revenue

$

435

$

460

(5

)%

Net income attributable to Six Flags Entertainment

$

45

$

71

(36

)%

Net income per share, diluted

$

0.53

$

0.81

(35

)%

Adjusted EBITDA (1)

$

155

$

170

(9

)%

Attendance

6.7

8.5

(22

)%

Total guest spending per capita

$

63.87

$

51.94

23

%

Admissions spending per capita

$

36.35

$

28.68

27

%

In-park spending per capita

$

27.52

$

23.26

18

%

Total revenue for second quarter 2022 decreased $24 million, or 5%, compared to second quarter 2021, driven by lower attendance and a $5 million reduction in sponsorship, international agreements and accommodations revenue. The decrease in attendance was net of a favorable visitation shift of approximately 200 thousand guests from first quarter to second quarter 2022 due to the later timing of the Easter holiday in 2022, which impacted operating calendars as a result of schools scheduling spring-break vacations in the second quarter of 2022 versus the first quarter in 2021. The decrease in attendance was partially offset by higher guest spending per capita.

The $11.93 increase in guest spending per capita compared to second quarter 2021 was driven by a $7.67 increase in Admissions spending per capita and a $4.26 increase in In-park spending per capita. The increase in Admissions spending per capita was primarily driven by higher realized ticket pricing and a higher mix of single day tickets. The higher In-park spending reflects the company’s in-park pricing initiatives.

The company partially offset the decrease in revenue with lower cash operating costs. The reduction in operating costs reflected full-time headcount reductions, fewer total employee hours worked, and lower advertising costs. These efficiency measures were offset by higher wage rates, increases in repair and maintenance, utilities, and other costs due to inflation.

The company had a net income of $45 million in second quarter 2022. The income per share was $0.53 compared to an income per share of $0.81 in second quarter 2021, driven by lower revenue and a $17 million loss on extinguishment of debt. Adjusted EBITDA was $155 million, a decrease of $15 million compared to second quarter 2021. During the second quarter 2021, the company received $11.3 million related to one of its terminated international development agreements in China. Excluding the impact of the payment, Adjusted EBITDA decreased $4 million compared to second quarter 2021.

First Half 2022 Results

Six Months Ended

(Amounts in millions, except per share data)

July 3, 2022

July 4, 2021

% Change vs. 2021

Total revenue

$

574

$

542

6

%

Net loss attributable to Six Flags Entertainment

$

(20

)

$

(25

)

N/M

Net loss per share, diluted

$

(0.24

)

$

(0.30

)

N/M

Adjusted EBITDA (1)

$

140

$

125

12

%

Attendance

8.3

9.9

(16

)%

Total guest spending per capita

$

66.21

$

52.51

26

%

Admissions spending per capita

$

37.75

$

29.26

29

%

In-park spending per capita

$

28.46

$

23.25

22

%

Total revenue for first half 2022 increased $32 million, or 6%, compared to first half 2021, driven by higher per capita spending. This was offset by lower attendance. As a result of the change to the company’s reporting calendar, three fewer days were included in first half 2022 compared to the first half 2021, which accounted for 89 thousand additional guests in first half 2021.2

The $13.70 increase in guest spending per capita compared to first half 2021 was driven by an $8.49 increase in Admissions spending per capita and a $5.21 increase in In-park spending per capita. The increase in Admissions spending per capita was primarily driven by higher realized ticket pricing and a higher mix of single day tickets. The higher In-park spending reflects the company’s in-park pricing initiatives.

The increase in revenue was offset by higher operating costs, driven by increased operating days in first half 2022 compared to the prior year period, which was negatively impacted by pandemic-related closures and operating restrictions. In addition, the company experienced higher wage rates, and increases in repair and maintenance, utilities, and other costs, due to inflation. These cost increases were offset by efficiency measures including reductions in full-time headcount, fewer total seasonal employee hours worked, and lower advertising costs.

The company had a net loss of $20 million in first half 2022. The loss per share was ($0.24) compared to a loss per share of ($0.30) in first half 2021. Adjusted EBITDA was $140 million, an improvement of $15 million compared to first half 2021, reflecting higher revenues and improved margins. During the second quarter 2021, the company received $11.3 million related to one of its terminated international development agreements in China. Excluding the impact of the payment, Adjusted EBITDA increased $26 million compared to first half 2021.

Balance Sheet and Capital Allocation

Net debt as of July 3, 2022, calculated as total reported debt of $2,478 million less cash and cash equivalents of $75 million, was $2,403 million, representing a 4.7 times Adjusted net leverage ratio. Deferred revenue was $171 million as of July 3, 2022, a decrease of $139 million, or 45%, from July 4, 2021. The decrease was primarily due to the deferral of revenue in the prior year period from guests whose benefits were extended from 2020 into 2021 due to the pandemic and lower unit sales of season passes and memberships.

On July 1, 2022, the company redeemed $360 million in aggregate principal amount of its senior secured 7.000% Notes due 2025 at a redemption price of 103.5%. Additionally, the company repurchased 3.5 million shares of its common stock at an aggregate cost of $96.8 million, leaving 83.0 million shares outstanding as of July 3, 2022, and $134.9 million remaining on the previously authorized share repurchase program. In first half 2022, the company invested $55 million in new capital, net of insurance recoveries.

Conference Call

At 7:00 a.m. Central Time today, August 11, 2022, the company will host a conference call to discuss its second quarter 2022 financial performance. The call is accessible through either the Six Flags Investor Relations website at investors.sixflags.com or by dialing 1-833-629-0614 in the United States or +1-412-317-9257 outside the United States and requesting the Six Flags earnings call. A replay of the call will be available on the company’s investor relations site https://investors.sixflags.com.

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 61 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 or virus variants, and any expectations we may have with respect thereto including the continuing efficacy of the COVID-19 vaccines, (ii) the adequacy of our cash flows from operations, available cash and available amounts under our credit facilities to meet our liquidity needs, including in the event of a prolonged closure of one or more of our parks, (iii) our ability to significantly improve our financial performance and the guest experience, (iv) expectations regarding consumer demand for regional, outdoor, out-of-home entertainment, including for our parks, and (v) expectations regarding our annual income tax liability and the availability and effect of net operating loss carryforwards and other tax benefits.

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 and Monkeypox, 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 or other health emergencies such as Monkeypox, including with respect to business operations, safety protocols and public gatherings; economic impact of political instability and conflicts globally, including the war in Ukraine; recall of food, toys and other retail products sold at our parks; accidents or incidents involving the safety of guests and employees, 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; macro-economic conditions (including impact of inflation on 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)

See the following financial statements and Note 4 to those financial statements for a discussion of Adjusted EBITDA (a non-GAAP financial measure) and its reconciliation to net income (loss).

(2)

Comparable periods are January 1 through July 4, 2021, compared to January 3 through July 3, 2022, resulting in three additional days from January 1 through January 3 in 2021.

Statement of Operations Data (1)

Three Months Ended

Six Months Ended

Twelve Months Ended

(Amounts in thousands, except per share data)

July 3, 2022

July 4, 2021

July 3, 2022

July 4, 2021

July 3, 2022

July 4, 2021

Park admissions

$

241,777

$

245,165

$

314,764

$

289,499

$

820,914

$

421,377

Park food, merchandise and other

183,081

198,897

237,350

230,121

662,680

322,098

Sponsorship, international agreements and accommodations

10,564

15,725

21,415

22,191

45,029

33,265

Total revenues

435,422

459,787

573,529

541,811

1,528,623

776,740

Operating expenses (excluding depreciation and amortization shown separately below)

173,582

183,768

283,526

276,411

653,847

497,592

Selling, general and administrative expenses (excluding depreciation, amortization, and stock-based compensation shown separately below)

50,350

47,204

85,457

76,693

199,154

141,748

Costs of products sold

35,710

39,194

45,825

46,409

125,144

70,554

Other net periodic pension benefit

(1,920

)

(1,690

)

(3,371

)

(3,333

)

(5,885

)

(6,533

)

Depreciation

27,532

28,047

56,575

56,874

114,113

116,938

Amortization

5

5

11

11

22

22

Stock-based compensation

3,223

3,001

7,448

9,638

19,272

18,868

Loss (gain) on disposal of assets

98

719

(2,002

)

1,239

8,896

8,535

Interest expense, net

35,978

38,048

73,508

76,468

149,476

152,987

Loss on debt extinguishment

17,533

17,533

17,533

Other expense, net

898

831

1,361

8,450

11,033

27,631

Income (loss) before income taxes

92,433

120,660

7,658

(7,049

)

236,018

(251,602

)

Income tax expense (benefit)

24,716

29,257

5,603

(2,613

)

57,838

(65,870

)

Net income (loss)

67,717

91,403

2,055

(4,436

)

178,180

(185,732

)

Less: Net income attributable to noncontrolling interests

(22,325

)

(20,883

)

(22,325

)

(20,883

)

(43,208

)

(41,527

)

Net income (loss) attributable to Six Flags Entertainment Corporation

$

45,392

$

70,520

$

(20,270

)

$

(25,319

)

$

134,972

$

(227,259

)

Weighted-average common shares outstanding:

Basic:

84,992

85,673

85,594

85,437

85,789

85,183

Diluted:

85,242

86,751

85,594

85,437

86,525

85,183

Net income (loss) per average common share outstanding:

Basic:

$

0.53

$

0.82

$

(0.24

)

$

(0.30

)

$

1.57

$

(2.67

)

Diluted:

$

0.53

$

0.81

$

(0.24

)

$

(0.30

)

$

1.56

$

(2.67

)

As of

July 3, 2022

January 2, 2022

July 4, 2021

(Amounts in thousands, except share data)

(unaudited)

(unaudited)

ASSETS

Current assets:

Cash and cash equivalents

$

74,802

$

335,585

$

252,887

Accounts receivable, net

70,473

97,722

124,846

Inventories

47,531

27,273

36,038

Prepaid expenses and other current assets

69,990

55,455

66,094

Total current assets

262,796

516,035

479,865

Property and equipment, net:

Property and equipment, at cost

2,552,144

2,501,829

2,445,453

Accumulated depreciation

(1,297,710

)

(1,250,902

)

(1,205,950

)

Total property and equipment, net

1,254,434

1,250,927

1,239,503

Other assets:

Right-of-use operating leases, net

180,836

186,754

193,254

Debt issuance costs

3,832

4,899

5,966

Deposits and other assets

8,101

6,170

6,006

Goodwill

659,618

659,618

659,618

Intangible assets, net of accumulated amortization of $272, $261 and $249 as of July 3, 2022, January 2, 2022 and July 4, 2021, respectively

344,176

...