Six Flags Entertainment's CEO Discusses Q4 2011 Results - Earnings Call Transcript

Six Flags Entertainment Corp. (

SIX

)

Q4 2011 Earnings Call

February 15, 2012, 9:00 a.m. ET

Executives

Nancy Krejsa – SVP, IR and Corporate Communications

Jim Reid-Anderson – Chairman, President, CEO

John Duffey – CFO

Lisa Brozewicz – Keybanc Capital Markets

Al Weber – COO

Analysts

Ian Zaffino – Oppenheimer & Co.

Ian Corydon – B. Riley & Co.

Robert Kirkpatrick – Cardinal Capital

Presentation

Operator

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Good morning, ladies and gentlemen. Welcome to Six Flags’ fourth quarter and full-year 2011 earnings conference call. My name is MaryAnn and I will be your operator for today’s call. At this time, all participants are in a listen-only mode. After the presentations, we will conduct a question-and-answer session. (Operator instructions). This conference is being recorded. If you have any objections, you may disconnect at this time.

I would now like to turn the call over to Nancy Krejsa, Senior Vice President, Investor Relations and Corporate Communications for Six Flags. Ma’am, you may begin.

Nancy Krejsa

Good morning, and thank you for joining our call. With me are Jim Reid-Anderson, Chairman, President, and CEO of Six Flags; Al Weber, our Chief Operating Officer; and John Duffey, our Chief Financial Officer.

We will begin the call with prepared comments and open the call to your questions. The company would like to caution you that comments made during this call will include forward-looking statements within the meaning of the Federal Securities Laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in such statements and the company undertakes no obligation to update or revise them.

For a detailed discussion of these risks you may refer to the company’s annual and quarterly reports filed with the SEC.

Statements made on our call today include non-GAAP financial measures, which have been reconciled to the most directly comparable GAAP measure, and included in our earnings release or other forms filed or furnished with the SEC.

The company emerged from Chapter 11 Bankruptcy in April of 2010, and since we believe it’s an appropriate and useful comparison, we compare full-year 2011 result to full-year 2010 results during this call, and do not distinguish between the 2010 predecessor and successor periods.

At this time, I’d like to turn the call over to Jim.

Jim Reid-Anderson

Thank you, Nancy, and good morning to everyone on the call. I’m proud to say that we finished 2011 on a very strong note, with another record quarter in terms of attendance, revenue, and profitability.

Revenue in the quarter increased a strong 13%, and this revenue growth, along with our ongoing cost management drove a $13 million or 60% improvement in EBITDA, which ended at $35 million for the quarter.

In the last three months of the year, we set record attendance levels for both our Frightfest and Holiday in the Park events, generating attendance growth of 16% in the quarter. These two programs centered around the Halloween and Christmas holidays, are extremely valuable brands for Six Flags, and our investments in them for the 2011 season, particularly Frightfest, reflects the type of revenue and profit growth we can generate through focused and targeted investment.

In 2011, we built Frightfest in to our biggest and scariest event ever, and we will continue to build this national brand and our more localized Holiday in the Park brand in the future.

Throughout 2011, we went from strength to strength, overcoming some obstacles and setting numerous financial and non-financial records for the company, while building solid momentum for the future. We achieved our aspirational target of $350 million of Adjusted EBITDA, and we improved Modified EBITDA margin to 37.4%, a company record and an industry high. We also generated $193 million of free cash flow in 2011, a record high representing a 51% increase over 2010.

In addition to improving revenue growth and the efficiency of our operations, we were also laser focused on product innovation. Our 2011 capital investments, which were targeted at delivering news in every park, along with our newly introduced Go Big marketing campaign, were key to driving attendance and revenue growth throughout the year, and also helped drive double-digit increases in season past unit sales, and a continued rebound in group sales.

Because of our innovation and customer focus, in 2011, we achieved all-time high guest satisfaction ratings for our parks, including record scores for overall guest satisfaction, cleanliness, and most importantly, value perception. These types of results are further evidence that our strategy is working, and support our belief that we have further growth opportunities for our company.

Employee morale, as measured by our annual employee survey and other on-going feedback mechanisms, reached a new peak for the company in 2011. I have mentioned to you before that our employees are our most important asset, and it’s really rewarding to see our momentum build in this area.

The last operating achievement I want to highlight is regarding safety. Safety is the foundation of everything we do, and in 2011 through appropriate focus, we achieved our best safety record yet. As a result of these and other operational and financial achievements, our shareholders earned a 52% return on their investment in Six Flags in 2011, up 182% since we emerged from bankruptcy in May of 2010.

All in all, it was an excellent year for our company, for our guests, employees, and shareholders alike. I couldn’t be more pleased with our progress to date.

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