Six Flags Entertainment Corporation (NYSE:SIX), the world’s largest regional theme park company, today announced revenue for the first nine months of 2016 grew $34 million or 3 percent to $1.1 billion, driven primarily by admissions, in-park and international licensing revenue. Net income declined by $36 million or 24 percent, primarily due to an $86 million pre-tax stock-based compensation charge relating to the probable achievement of Project 600 by 2017, a long-term incentive compensation program established by the company in October 2014.
Adjusted EBITDA1 for the first nine months of 2016 grew $12 million or 3 percent to $431 million, while attendance grew 2 percent to 23.8 million guests. On a constant currency2 basis, revenue for the first nine months grew $42 million or 4 percent and Adjusted EBITDA grew $15 million or 4 percent.
“Despite the soft start to the third quarter due to adverse weather, we were pleased to achieve record revenue and EBITDA in the first nine months of 2016,” said John Duffey, President and CEO. “We experienced healthy growth in the back half of the quarter once weather normalized and had record pass sales over the Labor Day weekend when we kicked off our 2017 season pass sales campaign. Our ticket pricing gains, the 15 percent increase in our Active Pass Base at the end of September, and the growth in international licensing revenue provide a strong foundation for continued earnings growth throughout the remainder of 2016 and 2017.”
For the first nine months of 2016, total guest spending per capita of $42.58 represented a $0.15 increase over the same period in 2015, with an increase in admissions per capita of $0.06 and in-park spending per capita of $0.09. A higher mix of season pass holder and member attendance put downward pressure on per capita spending, despite higher ticket prices. On a constant currency basis, year-to-date guest spending per capita increased $0.51 or 1 percent.
Third quarter 2016 revenue declined 3 percent or $18 million to $558 million, driven primarily by a 2 percent decline in attendance that was negatively affected by adverse weather during the peak months of the summer. International licensing revenue increased $4 million or 113 percent over prior year. On a constant currency basis, revenue for the third quarter declined $15 million or 3 percent.
Net income declined by $55 million in the third quarter, including the Project 600 stock-based compensation charge. Adjusted EBITDA for the third quarter was $299 million, a decline of $9 million or 3 percent compared to the same period in 2015, which resulted from the weather-related decline in attendance. On a constant currency basis, Adjusted EBITDA for the third quarter declined $7 million or 2 percent.
Diluted earnings per share for the third quarter and nine months ended September 30, 2016 were $1.09 and $1.23, respectively, a decrease of 34 percent and 22 percent, respectively, primarily due to the Project 600 stock-based compensation charge.
For the third quarter, total guest spending per capita was $42.23, down $0.64 or 1 percent compared to the same period in 2015, primarily due to a higher mix of season pass holder and membership attendance. Both the company’s strategy to upsell guests to multi-visit passes and the adverse weather drove a higher mix of season pass holder and member visitation, which creates a downward pressure on per capita spending.
For the twelve-month period ending September 30, 2016, there was no change in net income while revenue increased $67 million or 5 percent, as compared to the prior year period. Adjusted EBITDA increased $28 million or 6 percent to $493 million and the Modified EBITDA3 margin of 41 percent and Modified EBITDA minus capital expenditures margin of 31 percent continue to be the highest in the theme park industry.
The company’s continued success in executing its season pass strategy resulted in a 15 percent year-over-year increase in its Active Pass Base as of the end of the third quarter. The Active Pass Base represents the total number of guests who have purchased a season pass or who are enrolled in the company’s membership program. Season pass holders and members are the company’s most valuable guests since they generate higher revenue and cash flow for the company than a single day guest and they provide an excellent hedge against inclement weather over the course of the year.
Deferred revenue of $148 million increased by $32 million or 28 percent compared to September 30, 2015 primarily due to incremental sales of season passes, memberships, and all-season dining passes.
In the first nine months of 2016, the company invested $101 million in new capital, paid $161 million in dividends, or $0.58 per common share per quarter, and repurchased $120 million or 2.2 million shares of its common stock. As of September 30, 2016, 92 million shares were outstanding, with $434 million authorized by the company’s board of directors for future repurchases.
Net Debt4 as of September 30, 2016 was $1,414 million, which translates to a 2.9 times net leverage ratio.
Conference Call
At 8:00 a.m. Central Time today, October 26, 2016, the company will host a conference call to discuss its third quarter 2016 financial performance. The call is accessible through either the Six Flags Investor Relations website at www.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 by dialing 1-855-859-2056 or +1-404-537-3406 through November 3, 2016 and requesting conference ID 1163638.
About Six Flags Entertainment Corporation
Six Flags Entertainment Corporation is the world’s largest regional theme park company with $1.3 billion in revenue and 18 parks across the United States, Mexico and Canada. For 55 years, Six Flags has entertained millions of families with world-class coasters, themed rides, thrilling water parks and unique attractions. For more information, visit www.sixflags.com.
