Investor Presentation April 2019
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Investor Presentation April 2019 April 2019 1 Disclaimer Presentation is subject to safe harbor laws • Presentation includes forward looking statements about events and financial results • Actual events or results may be materially different • Risks are described in the company’s filings with the SEC • Statements are made subject to “safe harbor” provisions of Private Securities Reform Act of 1995 • Full disclaimer and reconciliation of Non-GAAP financial measures to GAAP measures are at the end of this presentation April 2019 2 Overview of Six Flags Global leader in an attractive industry • Exceptional brand & business Ongoing Growth Opportunity foundation 750 • Substantial growth opportunities 594 Base business o 558 North American expansion strategy 520 545 o 477 International licensing 444 o 416 379 • Strong, recurring cash flow 323 o Industry-leading EBITDA and 223 EBITDA less CAPEX margins o Efficient CAPEX (1)(2) • Excellent Growth and Yield stock 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2021(3) o ~8% Mod. EBITDA CAGR through 2021 Adjusted EBITDA Modified EBITDA o ~6% Dividend yield (>3x S&P 500) $MM $MM (1) Excludes SFKK as discontinued operation (2) 2009 Modified EBITDA calculation includes revenue from Six Flags Great Escape Lodge and Indoor Water Park so it is consistent with future periods (3) Reflects late achievement of Project 750, an aspirational goal set by the company in October 2016 to achieve $750MM of Modified EBITDA expected by 2021 April 2019 3 Investment Thesis Global leader in an attractive industry • Attractive industry o Stable in a weak economy o High barriers to entry • Exceptional brand and business foundation o Focused strategy o Expansive array of entertainment & services • Substantial growth opportunities o Innovative products and programs o Membership / Season Pass penetration o Pricing and ticket yield management o In-park revenue initiatives o North American expansion strategy o International licensing • Financial Excellence o Strong recurring revenue and cash flow o Industry-leading margin o Favorable capital allocation strategy o NOL carry forward • Employees closely aligned with shareholders April 2019 4 Attractive Industry Stable industry with high barriers to entry • Stable in normal economy – resilient in a weak one • Compelling value relative to other forms of entertainment o Consumers focused on experiences • High recurring revenue • High barriers to entry o $500-700MM investment; 3+ years development o Key North American markets already served April 2019 5 Investment Thesis Global leader in an attractive industry • Attractive industry o Stable in a weak economy o High barriers to entry • Exceptional brand and business foundation o Focused strategy o Expansive array of entertainment & services • Substantial growth opportunities o Innovative products and programs o Membership / Season Pass penetration o Pricing and ticket yield management o In-park revenue initiatives o North American expansion strategy o International licensing • Financial Excellence o Strong recurring revenue and cash flow o Industry-leading margin o Favorable capital allocation strategy o NOL carry forward • Employees closely aligned with shareholders April 2019 6 A Focused Strategy Delivering excellence in all we do April 2019 7 26 Strategically Located Parks Prime locations; economic and weather diversity; limited direct competition • $1.5 billion revenue • 32 million guests • 52,000 employees o 2,400 full-time • 925 rides / 145 coasters * April 2019 8 Top Rated Rides Home to many of the top coasters and rides USA Today Best New Attraction World’s tallest, fastest roller coaster Industry’s Best New Attraction 2015 41 story drop at 91 miles per hour Immersive interactive ride World’s tallest and steepest World’s First 4D Free Fly Coaster World’s Tallest Swing Carousel Ride wooden coaster Flip head over heels 400 ft. aerial swing ride April 2019 9 Expansive Array of Entertainment More than coasters… we provide thrills and entertainment for all ages Waterparks Games Concerts & Shows Family Coasters Animals Events April 2019 10 Investment Thesis Global leader in an attractive industry • Attractive industry o Stable in a weak economy o High barriers to entry • Exceptional brand and business foundation o Focused strategy o Expansive array of entertainment & services • Substantial growth opportunities o Innovative products and programs o Membership / Season Pass penetration o Pricing and ticket yield management o In-park revenue initiatives o North American expansion strategy o International licensing • Financial Excellence o Strong recurring revenue and cash flow o Industry-leading margin o Favorable capital allocation strategy o NOL carry forward • Employees closely aligned with shareholders April 2019 11 Substantial Growth Opportunities Five strategic growth initiatives driven by industry-leading innovation Total Revenue ($MM’s) • Membership / Season 1,464 Pass penetration 1,359 1,319 1,264 • Improving ticket yields 1,176 1,110 • In-park initiatives 1,070 1,013 • North American 976 913 expansion strategy • International licensing (1) 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 (1) 2009 Revenue restated to include Six Flags Great Escape Lodge and Indoor Water Park, which was consolidated for reporting purposes beginning January 1, 2010 April 2019 12 Innovation Leading the industry in innovation Recent Innovations o First-of-Kind Rides o All Season Dining o News in Every Park, Every Year o Virtual Reality Rides Disciplined Capital Spending: 9% of Revenue Asset Maintenance New rides and 25% attractions 60% 15% In-Park April 2019 13 2019 Ride Innovation 2019 again brings something new to every park April 2019 14 Membership & Season Pass Penetration Growing Active Base of members and season pass holders – up 5% as of March 31, 2019 • Generate more annual revenue and cash flow than single day visitors • Build recurring revenue • Visit during off-peak periods • Provide weather hedge • Only about 40% of our unique visitors have a pass April 2019 15 Premium-tiered Membership Program Grows contractual, recurring revenue stream • Offers up to 50 new, never-before- offered benefits • Creates Members, our most loyal and profitable guests – Higher retention rates – 3x lifetime revenue of Season Pass holder • Provides three revenue sources – Higher annual prices w/auto-renewal – Easy upgrades / add-ons • Member Dining • Member THE FLASH Pass – Incremental in-park spending April 2019 16 Ticket Yield Management A multi-year approach to Admissions Revenue ($MM) improve ticket yields 810 741 715 688 • Increase ticket prices 642 577 602 542 511 483 • Drive Membership penetration • Execute dynamic pricing 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 • Continue to raise guests’ Admissions Per Cap – vs. Others* value-for-the-money ratings $35.37 • Close / surpass pricing gap vs. $28.47 others $25.30 o SIX parks serve top 10 US markets SIX FUN SEAS *FY2018 April 2019 17 In-Park Revenue Initiatives Highly profitable businesses In-Park Revenue ($MM) within the business 554 525 • More than 2,500 locations 500 449 460 437 • New products and programs 414 401 o All Season Dining Pass 375 o Broader offerings o Enhanced venues 2009 2010 2011 2012 2013 2014 2015 2017 2018 April 2019 18 North American Expansion Strategy Seeking to own or operate parks in markets adjacent to our theme parks • We are already the largest waterpark operator in North America • Dozens of potential targets • Strategy will: o Expand active pass reach to adjacent markets o Create demand for membership and season passes by providing additional value o Leverage significant active pass base to sell combo upgrades April 2019 19 International Licensing Nanjing Theme Park, Waterpark, Kids World & Zhejiang Theme Park, Saudi Theme Adventure Park Waterpark & Park Kids World Chongqing Theme Park, Dubai Waterpark, Kids Theme World & Park Adventure Park Long-term strategy to license brand outside North America • Thirteen parks signed in China, Dubai and Saudi Arabia • Strong global brand recognition – seeking additional partners • Growing middle class, disposable income, and demand for entertainment • Zero capital investment • Fees related to design & development, licensing, and management services o $5-10MM EBITDA per park per year pre-opening o $10-20MM EBITDA per park per year post-opening o Small parks earn $2-4MM pre-opening and $4-6MM post-opening April 2019 20 Investment Thesis Global leader in an attractive industry • Attractive industry o Stable in a weak economy o High barriers to entry • Exceptional brand and business foundation o Focused strategy o Expansive array of entertainment & services • Substantial growth opportunities o Innovative products and programs o Membership / Season Pass penetration o Pricing and ticket yield management o In-park revenue initiatives o North American expansion strategy o International licensing • Financial Excellence o Strong recurring revenue and cash flow o Industry-leading margin o Favorable capital allocation strategy o NOL carry forward • Employees closely aligned with shareholders April 2019 21 Strong Recurring Revenue Higher ticket pricing and strong attendance fuel revenue Attendance / Guest Spending Per Capita Revenue ($MM) 42.97 42.58 1,464 41.60 40.18 41.07 41.61 39.33 39.41 32.0 1,359 36.84 37.55 1,319 30.4 30.1 1,264 28.6 1,176 26.1 25.7 25.6 1,110 1,070 24.3 24.3 1,013 23.3 976 913 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 (1) 2009 (1)2010 2011 2012 2013 2014 2015 2016 2017 2018 Attendance (MM)