Six Flags Entertainment Corporation · NYSE:FUN
Six Flags Entertainment — Cedar Fair — Investor Presentation (January 2012)
61 slides from Six Flags Entertainment's investor presentation, Jan 19, 2012
Slide 1: Investor Presentation
Exhibit 99.1 Investor Presentation January 19, 2012
Slide 2: Investor Presentation January 19, 2012
Investor Presentation January 19, 2012
Slide 3: FUNFORWARD
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Slide 4: Company Overview & Key Investment Considerations
5 Company Overview & Key Investment Considerations Matt Ouimet AGENDA Park Review Richard Zimmerman Financial Review Brian Witherow Strategic Growth Opportunities Matt Ouimet Financial Goals Matt Ouimet Summary Matt Ouimet Q&A
Slide 5: Company Overview
6 Net Revenue 2011E: ~$1,028 2011E Adj. EBITDA (a) ~$375 Market Capitalization (b) $1,283 ($ in millions) Headquartered in Sandusky, OH Full-Time Employees ~1,700 Seasonal/Part-Time Employees ~35,000 Facilities: Best-in-Class Amusement Parks 1 Amusement Park Under Contract 6 Separately Gated Water P
Slide 6: People Have Choices…
7 People Have Choices… Entertainment of Choice • Deliver the “best-day-of-the-year” experience for our guests Employer of Choice • Respect, value and appreciate our employees Investment of Choice • Drive attractive total return Our Approach
Slide 7: Building Positive Momentum
8 • Smooth leadership transition • Record year in 2011, on top of record 2010 • 2010 refinancing created significant financial flexibility • Restoration of meaningful unit distributions Building Positive Momentum
Slide 8: Favorable Industry Dynamics
9 Favorable Industry Dynamics • Significant barriers to entry • Compelling value compared with other forms of entertainment • Recession resilient • Loyal, high-repeat customer base (75%+ repeat visitation) • No comparable at-home digital experience • North American focus Key Investment Consideration
Slide 9: Proven Ability to Deliver Results
10 Proven Ability to Deliver Results • 2010 and 2011 – Record attendance and Adjusted EBITDA • Decades-long, industry-leading Adjusted EBITDA margins • Stable and diversified cash flows • Experienced management team Key Investment Considerations
Slide 10: Attractive Strategic Growth Opportunities Exist
11 Attractive Strategic Growth Opportunities Exist • Enhanced guest experience • Improved consumer messaging • Dynamic pricing and advance purchase commitments • Premium product offerings • Strategic alliance fees and promotional leverage • Capital and expense productivity Key Investment Considerati
Slide 11: Total Return Investment
12 Total Return Investment • Anchored by attractive distribution yield • Unit price appreciation driven by earnings growth • Balanced approach to allocation of excess cash Key Investment Considerations
Slide 12: Barriers to Entry
13 Capital Costs Estimated cost of approximately $500+ million to construct a quality regional park • Limited visibility on return on capital at inception Real Estate Requirements Minimum requirement of 100-150 acres for park • Additional land generally required for construction of roads and local b
Slide 13: Industry-Leading Adjusted EBITDA Margins
14 Industry-Leading Adjusted EBITDA Margins Adjusted EBITDA Margins The Company has some of the highest Adjusted EBITDA margins in the industry We maintain strict cost controls • Carefully manage seasonal staffing levels • Minimal corporate overhead Pricing integrity • Strategic use of marketable di
Slide 14: Historical Adjusted EBITDA Margin
15 Historical Adjusted EBITDA Margin
Slide 15: Stable and Diversified Cash Flows
16 * Agreement (d) Acquisition of Geauga Lake in 2004 (e) Acquisition of Kings Island, Canada’s Wonderland, Kings Dominion, Carowinds and California’s Great America in 2006 (f) As defined on slide 39 Note: 2007 to 2011E Adjusted EBITDA represents Consolidated EBITDA as defined in the 2010 Credit (a)
Slide 16: Stable and Diversified Cash Flows: Resilient Performance
17 Stable and Diversified Cash Flows Resilient performance during recessions (a) Acquisition of Knott’s Berry Farm in December 1997 (b) Acquisition of Michigan’s Adventure and Knott’s Soak City – Palm Springs in 2001 (c) Acquisition of Geauga Lake in 2004 (d) Acquisition of Kings Island, Canada’s Wo
Slide 17: Stable and Diversified Cash Flows: National Footprint
18 Stable and Diversified Cash Flows The Company has a national footprint that mitigates regional economic and weather risk
Slide 18: Not Dependent on Any One Park or Region
19 Stable and Diversified Cash Flows We are not dependent on any one park or region
Slide 19: Experienced Management Team
20 Experienced Management Team Management team with proven experience both with Cedar Fair and in the leisure and hospitality industry Name Position Years with Cedar Fair Years In Industry Matt A. Ouimet (53) President and Chief Executive Officer 6 mos Richard A. Zimmerman (51) Chief Operating Offic
Slide 20: Park Review
21 Park Review Richard Zimmerman AGENDA Company Overview & Key Investment Considerations Matt Ouimet Financial Review Brian Witherow Strategic Growth Opportunities Matt Ouimet Financial Goals Matt Ouimet Summary Matt Ouimet Q&A
Slide 21: Our Core Strengths
22 Leading operator of high-quality, well-maintained parks Balanced mix of families and thrill seekers Innovation leader Seasoned, dedicated management Our Core Strengths
Slide 22: Our Cornerstones
23 Our Cornerstones
Slide 23: High-Quality, Well-Maintained Parks
24 Industry-leading attractions with long useful lives • Thrill rides are unique content that drive attendance • Family rides appeal to all generations • Minimal IP royalty payments Capital investments average 9% of net revenues • Excludes annual maintenance expense (included in operating expense on
Slide 24: Innovation Leader
25 Innovation Leader 25+ years of record-breaking rides • Introduced the world’s first 200-foot, 300-foot and 400-foot-tall coasters • Introduced the world’s first corkscrew element and magnetic launched coasters First Halloween Haunt event • Successfully rolled out to other parks within our portfol
Slide 25: Balanced Mix of Families and Thrill Seekers
26 Provide the best and highest value family entertainment in each market • Strong regional identity • Multi-generational appeal • Lifetime guests • Extensive presence of classic and timeless PEANUTS characters • High guest satisfaction and repeat visitation Balanced Mix of Families and Thrill Seeke
Slide 26: Seasoned, Dedicated Management
27 Seasoned, Dedicated Management Our park General Managers have an average of 25 years of experience with Cedar Fair and 27 years within the industry Name Park Years with Cedar Fair Years In Industry H. John Hildebrandt (62) Cedar Point Raffi Kaprelyan (49) Knott’s Berry Farm Norm Pirtovshek (57) C
Slide 27: Our Parks: ~3.0+ Million Guests
28 Parks that entertain ~3.0+ million guests on an annual basis include: • Cedar Point – Sandusky, OH • Knott’s Berry Farm – Buena Park, CA • Canada’s Wonderland – Toronto, ON • Kings Island – Cincinnati, OH Our Parks
Slide 28: Our Parks: ~1.5+ Million Guests
29 Parks that entertain ~1.5+ million guests on an annual basis include: • Carowinds – Charlotte, NC • Kings Dominion – Richmond, VA • Dorney Park – Allentown, PA • California’s Great America – Santa Clara, CA Our Parks
Slide 29: Our Parks: ~1.0 Million or Fewer Guests
30 Parks that entertain ~1.0 million or fewer guests on an annual basis include: • Valleyfair – Shakopee, MN • Worlds of Fun – Kansas City, MO • Michigan’s Adventure – Muskegon, MI Our Parks
Slide 30: Cedar Point
Cedar Point 31 Sandusky, Ohio Super regional draw – largest seasonal amusement park in the U.S. Named the “Best Amusement Park in the World” for 14 consecutive years (a) Features five of the top 25 steel roller coasters in the world (a) , four hotels, two marinas and an upscale campsite Serves a six
Slide 31: Knott's Berry Farm, Orange County
32 Orange County, California Year-round park with renowned seasonal events including one of the top-rated Halloween events in the country (a) Includes three separately gated water parks in California and an adjacent 320-room, full-service hotel Located in Southern California serving a market of appr
Slide 32: Kings Island
33 One of the largest seasonal amusement parks in the U.S. Features a children’s area named “Best Kids’ Area in the World” for eleven consecutive years (a) Local market includes approximately 15 million people Cincinnati, Ohio (a) Source: Amusement Today, September 2011
Slide 33: Canada's Wonderland
34 Toronto, Canada Largest amusement park in Canada Hosts several cultural festivals per year in the park Serves diverse Toronto metropolitan market of approximately nine million people One of the “Top Three” destinations in the world for coaster quantity
Slide 34: New Fun for 2012: Rides and Attractions
35 Broad and compelling rides, attractions and events Investing ~$90 million across all of our properties Leviathan – 306-foot-tall, 92-mph roller coaster at Canada’s Wonderland • One of the tallest and fastest roller coasters in the world Stinger – 138-foot-tall inverted shuttle coaster at Dorney P
Slide 35: New Fun for 2012: Family Attractions and Events
36 Focus on balancing family attractions and thrill rides Dinosaurs Alive! – coming to Cedar Point, Canada’s Wonderland, Dorney Park and Kings Dominion Soak City Water Park – rebranding and expansion of water park at Kings Island, including the addition of a new wave pool “Luminosity - Ignite the Ni
Slide 36: New Fun for 2012 - Leviathan Video
37 New Fun for 2012 Leviathan Video
Slide 37: Financial Review
38 Financial Review Brian Witherow AGENDA Company Overview & Key Investment Considerations Matt Ouimet Park Review Richard Zimmerman Strategic Growth Opportunities Matt Ouimet Financial Goals Matt Ouimet Summary Matt Ouimet Q&A
Slide 38: 2011 Financial Highlights
40 2011 Financial Highlights Year-over-year record attendance trends Season pass visits up significantly • High perceived value • Strong “influence factor” Group business improving Successfully converted some front gate admissions into season passes Attendance Breakdown
Slide 39: Debt Profile
43 (in millions) 12/31/2011 Revolving Credit Loans (due 2015) $ – Term Debt: Term loan averaging 4.0% (due 2017) 1,156 Notes: 9.125% senior unsecured notes (due 2018) Less Current Portion – Total Long-Term Debt $ 1,556 Total Leverage Ratio ~4.2x Senior Secured Leverage Ratio ~3.1x Debt Profile
Slide 40: Debt Profile
Debt Profile 44 Debt Profile • ~$800 million of outstanding term debt has been converted to a fixed-rate through the use of several interest rate swap agreements • No debt maturities until our revolving credit facility matures in 2015 Revolver capacity = $260 million • Cost of debt is expected to be
Slide 41: Key Financial Considerations
45 Year-end earnings conference call on February 21, 2012 at 10:00 am ET Key Financial Considerations We generate a significant amount of free cash flow (FCF) • Record guest attendance and financial results in 2011 • Additional revenue and FCF growth opportunities in 2012 and beyond • Additional FCF
Slide 42: Strategic Growth Opportunities
46 Strategic Growth Opportunities Matt Ouimet AGENDA Company Overview & Key Investment Considerations Matt Ouimet Park Review Richard Zimmerman Financial Review Brian Witherow Financial Goals Matt Ouimet Summary Matt Ouimet Q&A
Slide 43: Strategic Growth Opportunities
47 Strategic Growth Opportunities There are six key growth drivers in our business 1. Enhanced guest experience 2. Improved consumer messaging 3. Dynamic pricing and advanced 4. Premium product offerings 5. Strategic alliance fees and 6. Capital and expense productivity purchase commitments promotio
Slide 44: Enhanced Guest Experience
We deliver compelling value for the price paid, at every park on every day 48 Enhanced Guest Experience “New Fun” – Compelling new rides, shows and events at rational capital levels • Balancing of thrill and family-friendly offerings to sustain valuable family : teen audience mix Quality enhancement
Slide 45: Improved Consumer Messaging
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Slide 47: Cedar Fair
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Slide 48: Dynamic Pricing and Advance Purchase Commitments
54 Dynamic Pricing and Advance Purchase Commitments We offer all consumers the right price (and no less), focused on true incremental behavior New “accesso” e-commerce platform installed • Common to other industry players • Provides real-time data and dynamic pricing modification • Supports incremen
Slide 49: Premium Product Offerings
56 Fast Lane to be launched in all parks; Fright Lane at Halloween Early entry for resort guests and strategic partners Premium parking and dining experiences Others under development Premium Product Offerings We will continue to expand our premium offerings to benefit- oriented consumers
Slide 50: Capital and Expense Productivity
58 Capital and Expense Productivity • Multi-year strategic plan for capital that protects the base and supports new reasons to visit Encouraging manufacturers to innovate at lower costs • Avoiding creep in the fixed cost base through removal of inefficient capacity • IT system investments to reduce
Slide 51: Financial Goals
59 Financial Goals Matt Ouimet AGENDA Company Overview & Key Investment Considerations Matt Ouimet Park Review Richard Zimmerman Financial Review Brian Witherow Strategic Growth Opportunities Matt Ouimet Summary Matt Ouimet Q&A
Slide 52: FUN is a Total Return Investment
60 1. Quality Distribution 2. Unit Price Appreciation Achieved by Driving • Disciplined execution of our business plan • Solid balance sheet FUN is a Total Return Investment Total Return Reliable and Growing Sustainable Earnings Growth • An attractive distribution yield in a low yield environment •
Slide 53: Financial Performance Objectives
61 Financial Performance Objectives • Target $450+ million in Adjusted EBITDA by 2016 ~4% CAGR • Sustain margin discipline • Target total leverage ratio of <4.0x Repayment of $25 million term debt in 2012 Opportunistic prepayments beyond 2012
Slide 54: Financial Performance Objectives: Adjusted EBITDA Growth
62 Financial Performance Objectives Adjusted EBITDA (a) Growth • Enhanced guest experience • Improved consumer messaging • Dynamic pricing and advance purchase commitments • Premium product offerings • Strategic alliance fees and promotional leverage • Capital and expense productivity ($ in millions
Slide 55: Distribution Outlook
63 Distribution Outlook • Anticipate 2012 annual distribution of $1.60 per LP unit Pay out in $0.40 quarterly cash installments Implied yield of ~7% at $23 unit price • Target record distribution in excess of $2.00 per LP unit in 2013 • Considerations for future distribution growth Growth of FCF Inv
Slide 56: Distribution Outlook
64 Distribution Outlook $1.29 $1.43 $1.53 $1.60 $1.66 $1.76 $1.80 $1.84 $1.87 $1.90 $1.92 $1.23 $0.25 $1.00 $1.60 More than $2.00 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Restoring historical distribution commitment
Slide 57: Summary
65 Summary Matt Ouimet AGENDA Company Overview & Key Investment Considerations Matt Ouimet Park Review Richard Zimmerman Financial Review Brian Witherow Strategic Growth Opportunities Matt Ouimet Financial Goals Matt Ouimet Q&A
Slide 58: Key Investment Considerations
66 Favorable industry dynamics Proven ability to deliver results Attractive strategic growth opportunities exist Total Return Investment • Anchored by attractive distribution yield • Unit price appreciation driven by earnings growth • Balanced approach to allocation of excess cash Key Investment Con
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Slide 60: Cedar Fair
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Slide 61: EBITDA Adjustments
EBITDA Adjustments EBITDA Adjustments ($ in millions) 12/31/10 12/31/09 EBITDA $247.6 $307.8 Plus: loss on early extinguishment of debt 35.3 -- Plus: net effect of swaps 18.2 9.2 Plus: unrealized foreign exchange (gain) on Note (17.5) -- Plus: equity-based compensation (0.1) (0.0) Plus: loss on impa