Six Flags Entertainment Corporation · NYSE:FUN
Six Flags Entertainment — Cedar Fair — Investor Day (August 2019)
57 slides from Six Flags Entertainment's investor day presentation, Aug 9, 2019
Slide 1: Welcome to Cedar Point – Cedar Fair Analyst Days
Welcome to Cedar Point Cedar Fair Analyst Days August 8-9, 2019 Welcome to Cedar Point Exhibit 99.1
Slide 2: Forward-Looking Statements
Some slides and comments included here, particularly related to estimates, comments on expectations about future performance or business conditions, may contain “forward-looking statements” within the meaning of the federal securities laws which involve risks and uncertainties. You can identify forw
Slide 3: Cedar Fair Executives
Cedar Fair Executives Richard Zimmerman CEO Tim Fisher COO Brian Witherow CFO Kelley Semmelroth CMO Duff Milkie GC Craig Heckman HRO Jason McClure VP & GM – Cedar Point
Slide 4: The Origins of Cedar Point
The Origins of Cedar Point 1870: Cedar Point founded as a bath house, beer garden, dance hall.
Slide 5: Season Pass - circa 1901
Season Pass - circa 1901 Ox ya a if . 2 mat i aoe
Slide 6: Hotel Breakers Opens 1905
Hotel Breakers Opens 1905 Notable Guests: Abbott and Costello Calvin Coolidge Dwight D. Eisenhower Warren G. Harding Hellen Keller Annie Oakley John D. Rockefeller Teddy Roosevelt William Howard Taft Woodrow Wilson
Slide 7: The Sea Swing - 1914
The Sea Swing - 1914 17:—A Sea Swing, Cedar Peint-on-Lake Erie.
Slide 8: Coaster Construction - 1965
Coaster Construction - 1965
Slide 9: Awarded 2018 Best New Ride
Awarded 2018 Best New Ride
Slide 10: Voted Best Amusement Park – 2019
Voted Best Amusement Park – 2019
Slide 11: Vision and Mission
Vision: To be the preferred choice for regional entertainment. Mission: To make people happy by providing them fun, dynamic and memorable experiences they can share with their family and friends year after year.
Slide 12: Cedar Fair Entertainment Company
Cedar Fair Entertainment Company
Slide 13: Why FUN: Compelling Investment Rationale
Why FUN Compelling Investment Rationale Company Operations Financial Industry has high barriers to entry Consumers prioritizing experiences over possessions Invests in high-quality assets Pursuing long-term growth opportunities MLP offers a tax-efficient means to invest in entertainment Balance Shee
Slide 14: Q2 2019 Results – Comparable Operating Calendar Basis
Q2 2019 Results – Comparable Operating Calendar Basis Net Revenues 3% Adjusted EBITDA 5% Attendance <1% In-Park Per Capita Spending 4% Out-of-Park-Revenues 4%
Slide 15: Strong Preliminary Results Through First Seven Months
Strong Preliminary Results Through First Seven Months Year-to-date same-park net revenues up 4%, or $31 million, through August 4, 2019, driven by: 1% increase in attendance 3% increase in in-park per capita spending 4% increase in out-of-park revenues Number of unique visitors are UP year over year
Slide 16: Schlitterbahn – Preliminary July Results
Schlitterbahn – Preliminary July Results Since the July 1st acquisition, the two Schlitterbahn properties have contributed: Approximately $27 million in net revenues Including $3M of out-of-park revenues Combined attendance of 446K visits In-park per capita spending of $55.98
Slide 17: Recent Transactions
Recent Transactions BAC 2. A Seven Creek SCHLITTERBAHN. RESORT WATERPARKS & RESORTS California's Great America
Slide 18: Schlitterbahn Acquisition
Schlitterbahn Acquisition Acquisition Overview $261 million purchase price (subject to working-capital adjustments) Two award-winning water parks 221-room resort (New Braunfels) Combined 2018 performance 1.2 million guests $68 million total revenues Right to acquire a 3rd property in Kansas City, Ka
Slide 19: Schlitterbahn Acquisition – New Braunfels and Galveston
New Braunfels 70 acres 51 attractions Named Worlds #1 Water Park for 22 years straight Year-round accommodations 26 acres 33 attractions World’s Tallest Water Coaster Indoor / Outdoor Sections Galveston Schlitterbahn Acquisition
Slide 20: Acquisition of Sawmill Creek Resort
Hotel and Conference Center 190 acres, 28 waterfront acres 236-room resort lodge 50,000 square feet of conference space Minutes from Cedar Point Three restaurants and two pools Tom Fazio-designed golf course Marina and ½-mile beach The Shops at Sawmill Creek Resort Amenities Acquisition of Sawmill C
Slide 21: California's Great America – Land Purchase
California’s Great America – Land Purchase Acquisition Overview 112 acres in Santa Clara $150 million purchase price Eliminates $6-7M in annual net costs
Slide 22: Capital Structure – Debt Maturities
Capital Structure – Debt Maturities Amounts in Millions Total debt outstanding of $2.2B as of 06/30/19 Cash on hand totaled $325M as of 06/30/19 Consolidated Leverage Ratio of 4.4x as of 06/30/19 Full-year cash interest costs expected to be approximately $98M for 2019 Full-year cash interest costs p
Slide 23: Investment of Excess Cash Flow
Investment of Excess Cash Flow (a) Based on unit price as of July 31, 2019, of $50.47 Strong free cash flow from operations Reduce leverage inside 4.0x Sustainable and growing distribution $3.70 per limited partner unit Yield of 7.3%(a) 32 consecutive years of distributions Prioritize investments in
Slide 24: Strong Long-Term Growth and Recession Resilient
Strong Long-Term Growth and Recession Resilient Acquisitions: 1992 – Dorney Park 1995 – World of Fun 1997 – Knott’s Berry Farm 2001 – Michigan’s Adventure 2004 – Geauga Lake 2006 – Paramount Parks (five parks)
Slide 25: Core Strategies within the Long-Range Plan
Core Strategies within the Long-Range Plan Broaden the Guest Experience More visits from existing guests Incremental visits from new guests Expand the Season Pass Program Increase Market Penetration through Targeted Marketing Efforts Pursue Adjacent Development
Slide 26: LRP – Macro-Environment Considerations
LRP – Macro-Environment Considerations Experiences Over Possessions Bifurcated Economy Time Poverty “On Demand” Economy Weather Highly Concentrated Portfolio Value around F&B offerings Affordability of overall visit Preference for “bite-sized” visits (4 or less hours) Forecast and actual weather bot
Slide 27: LRP – Constructive Initiatives
LRP – Constructive Initiatives Bifurcated Economy “On Demand” Economy Time Poverty Experiences Over Possessions Weather Highly Concentrated Portfolio Extended payment plans for SP including all-season products Unlimited visits for SP Expand resort accommodations More efficient, higher volume F&B ret
Slide 28: Broadening the Guest Experience
Broadening the Guest Experience
Slide 29: Consumer Insights
Consumer Insights We’ve held numerous Focus Groups to explore which types of entertainment experiences are most likely to motivate visitation. Key Findings: Something for everyone - consumers are seeking entertainment options that can accommodate all types of people, ages and interests Disconnecting
Slide 30: Consumer Insights – Top Reasons to Visit Parks
Consumer Insights Rides and events remain top reasons for visiting our parks, with high-park-interest guests driven by water parks and family coasters. Top Reasons to Visit Parks: Family Rides Thrill Coasters Water Rides Seasonal Events Anniversary Celebrations
Slide 31: Traditional Attractions Still Important
Traditional Attractions Still Important
Slide 32: "Seasons of FUN" Model for Creating Urgency
“Seasons of FUN” Model for Creating Urgency
Slide 33: Growth of 4th Quarter Special Events
Growth of 4th Quarter Special Events 2016 – first year for the event (one park and approximately 200K in attendance) 2018 – five parks and approximately 1M in combined attendance 6th WinterFest park being added for 2019 The popularity of Haunt has increased over the past two decades and the event no
Slide 34: Introduction of Grand Carnivale
Introduction of Grand Carnivale Introduced at 4 parks in 2019: Kings Island Kings Dominion Worlds of Fun Dorney Park Driving lift in nighttime attendance and unique visitors Initial Net Promoter Scores have been outstanding Scheduled for roll out at additional parks for the 2020 season
Slide 35: More Immersive Attractions
More Immersive Attractions Forbidden Frontier Inspired by Ghost Town Alive at Knott’s Berry Farm which debuted in 2016 Professional character actors engage guests to solve the mystery on Adventure Island Guests help islanders find the missing treasure map
Slide 36: 3rd Party IP – Monster Jam
3rd Party IP – Monster Jam Monster Jam Freestyle Ride Experience Monster Jam Thunder Alley
Slide 37: Critical Role of Food & Beverage
Critical Role of Food & Beverage Our research tells us that today food and beverage play a critical role in the guest experience Consumers want unique experiences and offerings they can’t get at home We’ve been focused on enhancing our existing facilities and adding more immersive dining experiences
Slide 38: Forbidden Frontier on Adventure Island at Cedar Point
Forbidden Frontier on Adventure Island at Cedar Point
Slide 39: Cedar Point's Frontier Festival
Cedar Point’s Frontier Festival
Slide 40: Cedar Point - Monster Jam
a ee Cedar Point - Monster Jam
Slide 41: Changing Landscape of Food & Beverage
Changing Landscape of Food & Beverage
Slide 42: Park Staffing
Park Staffing Training of our seasonal employees is critical to successfully operating our parks Our programs encourage seasonal employees to return the following year 45% of our seasonal staff worked for Cedar Fair prior to the 2019 season We are making investments in seasonal wages to remain compe
Slide 43: Park Staffing – Recruiting and Housing
Park Staffing Hired local recruiting managers at every park Expertise at the park level allows for more effective recruiting strategies Employee housing at most parks is essential for attracting and retaining out-of-market seasonal labor Implementation of new workforce management system to improve l
Slide 44: Resort and Accommodations Management Program
Resort and Accommodations Management Program Cedar Fair and BGSU have collaborated on the development of a resort school curriculum. At full enrollment the program will include 200 students Students enrolled in the program will fill summer internships at Cedar Point and the adjacent properties Sched
Slide 45: Expanding the Season Pass Program
Expanding the Season Pass Program
Slide 46: Season Pass Channel
Season Pass Channel Season pass visitation has increased from approximately 33% of total attendance 10 years ago to more than 50% of the mix today Total number of season passes sold today exceeds 2.5M units – a 100% increase from 10 years ago Total season pass visitation has increased to more than 1
Slide 47: Evolution of the Season Pass Program
Evolution of the Season Pass Program Objectives: Address affordability concerns for our value-oriented guests while maintaining admissions price integrity Drive higher unit sales through “stickier” retention Increase the average visitation of our season passholder base The goal of our season pass pr
Slide 48: Objectives of Season Pass Loyalty
Objectives of Season Pass Loyalty Key Objectives SP Payment Plan Loyalty Program Subscription Affordability X Retention X Visitation X X Pricing Power X Purchase Urgency X X
Slide 49: PassPerks Loyalty Program
PassPerks Loyalty Program Our objective is to create a loyalty program that delivers surprises and provides incentives to our most engaged guests, season passholders. Deliver a program that resonates with season passholders Play into our guests emotions by delivering the unexpected Drive incremental
Slide 50: Enhanced Targeted Marketing Efforts
Enhanced Targeted Marketing Efforts
Slide 51: Market Sizing Study
Market Sizing Study The market sizing study was done to better measure the current penetration of markets feeding our parks and to develop a better understanding of consumer segments within those markets. Key Findings: Attendance penetration is strongest with demographic groups that are on the decli
Slide 52: Pursue Adjacent Development
Pursue Adjacent Development
Slide 53: Evolution of the Accommodations Channel
Evolution of the Accommodations Channel Our accommodations portfolio has grown substantially over the past 8 years: Total hotel rooms have increased from 1,900 in 2011 to more than 2,300 in 2019 (including the acquisitions of Schlitterbahn and Sawmill Creek Resort) Total luxury RV sites has increase
Slide 54: Adjacent Development – Accommodations
Adjacent Development – Accommodations Opening Q4-2019 Year round accommodations 129 rooms Adjacent to Carowinds Targeted opening Q2-2021 140 rooms projected Adjacent to Canada’s Wonderland
Slide 55: Cedar Point Sports Center
Cedar Point Sports Center Indoor Facility Scheduled to open January 2020 145,000 square feet Court space accommodates 10 basketball courts and 20 volleyball courts AAU basketball, JO volleyball, wrestling, cheer, gymnastics Outdoor Facility Opened March 2017 – performance is pacing well ahead of the
Slide 56: Key Takeaways
Key Takeaways Growth We’re confident we have the strategies and initiatives in place to drive attendance, per capita and revenue growth for the foreseeable future Leverage Our priority is responsibly reducing total leverage back below 4.0x as quickly as possible Re-establish balance sheet flexibilit
Slide 57: Appendix – Reconciliation of Adjusted EBITDA
Appendix RECONCILIATION OF ADJUSTED EBITDA (In thousands) (1)On a comparative calendar basis, Adjusted EBITDA for the three months ended July 1, 2018 was calculated as net income of $42.1 million plus interest expense of $21.3 million, provision for taxes of $13.7 million, depreciation and amortizat