Six Flags Entertainment Corporation/NEW 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis is intended to facilitate an understanding of Cedar Fair's business and results of operations and should be read in conjunction with the unaudited condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q. This discussion should also be read in conjunction with Cedar Fair's consolidated financial statements and related notes thereto, and the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of Cedar Fair's Annual Report on Form 10-K for the year ended December 31, 2023. A discussion and analysis of Former Six Flags's business and results of operations can be found within the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of the Current Report on Form 8-K to be filed by the Combined Company concurrently with this Quarterly Report on Form 10-Q. Merger Agreement with Six Flags: On July 1, 2024, Six Flags Entertainment Corporation completed the previously announced merger of equals transaction contemplated by the Merger Agreement, by and among CopperSteel HoldCo, Inc., Cedar Fair, Former Six Flags and Copper Merger Sub. Upon the consummation of the Mergers, the separate legal existences of each of Copper Merger Sub, Cedar Fair and Former Six Flags ceased, and the Combined Company changed its name to “Six Flags Entertainment Corporation”. The Combined Company trades on the New York Stock Exchange under the ticker symbol "FUN". References to the "Partnership," "Cedar Fair," or "Former Cedar Fair" are to Cedar Fair prior to the Mergers, and references to the "Combined Company" are to Cedar Fair, Former Six Flags and Copper Merger Sub after giving effect to the Mergers. The Mergers were entered into to create a leading amusement park operator with an expanded and diversified property portfolio, improved guest experience utilizing the complementary operating capabilities of Cedar Fair and Former Six Flags, and the opportunity for accelerated investment in the Cedar Fair and Former Six Flags properties with the cash flows of the Combined Company. Except where specifically noted, references within Management's Discussion and Analysis of Financial Condition and Results of Operations are to Cedar Fair prior to the consummation of the Mergers without giving specific consideration to the Combined Company post-Mergers or plans of Combined Company management after the Mergers as Cedar Fair has been determined to be the accounting acquirer and the predecessor for financial statement purposes. For additional information, see the Explanatory Note in this Quarterly Report on Form 10-Q. Business Overview: The Combined Company generates revenues from sales of (1) admission to amusement parks and water parks, (2) food, merchandise and games both inside and outside the parks, and (3) accommodations, extra-charge products, and other revenue sources. The Combined Company's principal costs and expenses, which include salaries and wages, operating supplies, maintenance and advertising, are relatively fixed for a typical operating season and do not vary significantly with attendance. Each of the Cedar Fair parks are overseen by a general manager and operate autonomously. Management reviews operating results, evaluates performance and makes operating decisions, including allocating resources, on a park-by-park basis. Discrete financial information and operating results are prepared at the individual park level for use by the CEO, who is the Chief Operating Decision Maker (CODM), as well as by the Chief Financial Officer, the Chief Operating Officer, Senior Vice Presidents and the general managers of the parks. Cedar Fair operates within a single reportable segment of amusement/water parks with accompanying resort facilities. The Combined Company is expected to operate in a similar manner. Critical Accounting Policies: Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon the unaudited condensed consolidated financial statements of Former Cedar Fair, which were prepared in accordance with accounting principles generally accepted in the United States of America. These principles require management to make judgments, estimates and assumptions during the normal course of business that affect the amounts reported in the unaudited condensed consolidated financial statements. Actual results could differ significantly from those estimates under different assumptions and conditions. Management believes that judgment and estimates related to the following critical accounting policies could materially affect the unaudited condensed consolidated financial statements: • Impairment of Long-Lived Assets • Goodwill and Other Intangible Assets • Self-Insurance Reserves • Revenue Recognition • Income Taxes During the second quarter of 2024, there were no changes in the above critical accounting policies from those previously disclosed in Cedar Fair's Annual Report on Form 10-K for the year ended December 31, 2023. 17 Table of Contents Results of Operations (FORMER CEDAR FAIR, L.P.): The following operational measures are key performance metrics in Cedar Fair's managerial and operational reporting. They are used as major factors in significant operational decisions as they are primary drivers of financial and operational performance, measuring demand, pricing and consumer behavior. In-park revenues, in-park per capita spending and out-of-park revenues are non-GAAP measures. Attendance is defined as the number of guest visits to amusement parks and separately gated outdoor water parks. In-park per capita spending is calculated as revenues generated within the amusement parks and separately gated outdoor water parks, along with related parking revenues ( in-park revenues ), divided by total attendance. Out-of-park revenues are defined as revenues from resorts, out-of-park food and retail locations, online transaction fees charged to customers, sponsorships, and all other out-of-park operations. Net revenues consist of in-park revenues and out-of-park revenues less amounts remitted to outside third parties under concessionaire arrangements; see Note 3 for a reconciliation of in-park revenues and out-of-park revenues to net revenues. Six months ended June 30, 2024 vs. Six months ended June 25, 2023 (FORMER CEDAR FAIR, L.P.) The current six-month period included 906 operating days compared with 897 operating days for the six-month period ended June 25, 2023. The current period included 102 additional operating days due to a fiscal calendar shift. As a result of the fiscal calendar shift, the current period included 26 weeks of results, while the prior period included 25 weeks of results. The additional operating days due to the calendar shift were largely offset by fewer planned early season operating days at some of Cedar Fair's seasonal parks. In particular, Carowinds, Kings Dominion and California's Great America were open additional days in January and February in the prior period that were not planned in the current period. Due to the variance in impact of early season operating days to peak season operating days and the additional week of results in the current period, a same-week analysis comparing the six months ended June 30, 2024 with the six months ended July 2, 2023 has been included. The following table presents key financial information for Former Cedar Fair for the six months ended June 30, 2024 and June 25, 2023: Six months ended Increase (Decrease) June 30, 2024 June 25, 2023 $ % (Amounts in thousands, except per capita and operating days) Net revenues $ 673,231 $ 585,536 $ 87,695 15.0 % Operating costs and expenses 602,254 542,276 59,978 11.1 % Depreciation and amortization 67,327 61,775 5,552 9.0 % Loss on impairment / retirement of fixed assets, net 6,735 10,761 (4,026) N/M Operating loss $ (3,085) $ (29,276) $ 26,191 89.5 % Other Data: Attendance 9,984 8,456 1,528 18.1 % In-park per capita spending $ 59.67 $ 61.84 $ (2.17) (3.5) % Out-of-park revenues $ 96,493 $ 81,708 $ 14,785 18.1 % Operating days 906 897 9 1.0 % N/M Not meaningful due to the nature of the expense line-item. For the six months ended June 30, 2024, net revenues increased $87.7 million, or 15.0%, compared with the six months ended June 25, 2023. The increase in net revenues reflected the impact of a 1.5 million-visit, or 18.1%, increase in attendance and an 18.1%, or $14.8 million, increase in out-of-park revenues, partially offset by the impact of a 3.5% decrease in in-park per capita spending to $59.67. The increase in attendance was primarily driven by the inclusion of an additional calendar week in the current period, higher season pass sales and improved weather in California, and increased demand at Cedar Fair's parks with significant marketable new rides and attractions. These factors were partially offset by the impact of fewer planned operating days. The decrease in in-park per capita spending was primarily attributable to a planned decrease in average season pass pricing and a higher mix of season pass visitation, partially offset by improved in-park per capita spending for food and beverage and extra-charge products, including Fast Lane. The increase in out-of-park revenues was largely attributable to the additional calendar week in the current period, as well as additional sponsorship revenues and increased revenues from the Knott's Hotel following a recent renovation. The increase in net revenues included a $1.0 million unfavorable impact of foreign currency exchange rates at Cedar Fair's Canadian park. Operating costs and expenses for the six months ended June 30, 2024 increased $60.0 million, or 11.1%, compared with the six months ended June 25, 2023. The increase in operating costs and expenses was the result of a $40.9 million increase in selling, general and administrative ("SG&A") expenses, a $13.3 million increase in operating expenses and a $5.9 million increase in 18 Table of Contents cost of goods sold. The increase in SG&A expenses was primarily attributable to $21.3 million of costs associated with the Mergers, an increase in equity-based compensation plan expense as a result of improved performance expectations, and the impact of the additional calendar week in the current period. The increase in operating expenses was due to the additional calendar week in the current period. Excluding the additional calendar week, operating expenses decreased largely as a result of a planned reduction in labor costs, including declines in seasonal hours and full-time head count, and the related benefits and taxes; all of which were somewhat offset by an increase in self-insurance reserves. Cost of goods sold as a percentage of food, merchandise and games revenue decreased 1.8% driven by both planned reductions in costs and higher pricing. The increase in operating costs and expenses included a $0.5 million favorable impact of foreign currency exchange rates at Cedar Fair's Canadian park. Depreciation and amortization expense for the six months ended June 30, 2024 increased $5.6 million compared with the six months ended June 25, 2023, due to the additional calendar week in the current period. The loss on impairment / retirement of fixed assets for both periods was due to retirement of assets in the normal course of business, which in the prior period included the retirement of two specific assets. After the items above, the operating loss for the six months ended June 30, 2024 totaled $3.1 million compared with an operating loss of $29.3 million for the six months ended June 25, 2023. Interest expense for the six months ended June 30, 2024 increased $5.2 million as a result of the refinancing events during the current period, including the full redemption of the 2025 senior notes which were refinanced with a $1.0 billion senior secured term loan facility. The refinancing events also resulted in a loss on early debt extinguishment of $5.9 million during the current period. Cedar Fair recognized a $7.0 million net charge to earnings for foreign currency gains and losses in the current period compared with a $6.7 million net benefit to earnings in the prior period. Both amounts primarily represented the remeasurement of U.S. dollar denominated notes to the Canadian entity's functional currency. During the six months ended June 30, 2024, a benefit for taxes of $12.2 million was recorded to account for PTP taxes and federal, state, local and foreign income taxes compared with $10.4 million for the six months ended June 25, 2023. The increase in benefit for taxes was primarily attributable to a higher estimated annual effective tax rate resulting from the effect of costs related to the Mergers on partnership pre-tax income. After the items above, net loss for the six months ended June 30, 2024 totaled $77.9 million, or $1.54 per diluted limited partner unit, compared with a net loss of $81.0 million, or $1.58 per diluted limited partner unit, for the six months ended June 25, 2023. As stated above, the results for the six months ended June 30, 2024 included an additional calendar week as compared with the six months ended June 25, 2023. On a same-week basis, or comparing the six months ended June 30, 2024 with the six months ended July 2, 2023, net revenues would have increased $17.1 million, or 3%, and attendance would have increased 0.5 million visits, or 5%. In-park per capita spending would have decreased $2.10, or 3%, and out-of-park revenues would have increased $5.7 million, or 6%. Operating costs and expenses, including costs related to the Mergers, on a same-week basis would have increased $24.9 million, or 4%, as a result of a $35.9 million increase in SG&A expenses offset by a $10.6 million decrease in operating expenses and a $0.4 million decrease in cost of goods sold. Depreciation and amortization would have decreased by $0.7 million, or 1%. The fluctuations in loss on impairment / retirement of fixed assets, interest expense, loss on early debt extinguishment, foreign currency loss (gain), and benefit for taxes on a same-week basis were not materially impacted by the additional calendar week in the current period. After these items, net loss on a same-week basis would have increased $25.1 million, or 48%. For purposes of reconciling in-park revenues and out-of-park revenues to net revenues, concessionaire remittance on a same-week basis totaled $21.0 million for the six months ended July 2, 2023. Three months ended June 30, 2024 vs. Three months ended June 25, 2023 (FORMER CEDAR FAIR, L.P.) The current three-month period included 789 operating days compared with 736 operating days for the three-month period ended June 25, 2023. The current period included 86 additional operating days due to the fiscal calendar shift. The current period included the results for the 13 weeks ended June 30 while the prior period included the results for the 13 weeks ended June 25. The additional operating days due to the calendar shift were somewhat offset by fewer planned early season operating days at some of Cedar Fair's seasonal parks. Due to the calendar shift and the resulting change in operating days, a same-week analysis comparing the thirteen week period ended June 30, 2024 with the thirteen week period ended July 2, 2023 has been included. 19 Table of Contents The following table presents key financial information for Former Cedar Fair for the three months ended June 30, 2024 and June 25, 2023: Three months ended Increase (Decrease) June 30, 2024 June 25, 2023 $ % (Amounts in thousands, except per capita and operating days) Net revenues $ 571,616 $ 500,982 $ 70,634 14.1 % Operating costs and expenses 387,281 352,090 35,191 10.0 % Depreciation and amortization 57,015 48,094 8,921 18.5 % Loss on impairment / retirement of fixed assets, net 4,121 7,125 (3,004) N/M Operating income $ 123,199 $ 93,673 $ 29,526 31.5 % Other Data: Attendance 8,635 7,397 1,238 16.7 % In-park per capita spending $ 59.54 $ 61.46 $ (1.92) (3.1) % Out-of-park revenues $ 73,228 $ 62,483 $ 10,745 17.2 % Operating days 789 736 53 7.2 % N/M Not meaningful due to the nature of the expense line-item. For the three months ended June 30, 2024, net revenues increased $70.6 million, or 14.1%, compared with the three months ended June 25, 2023. The increase in net revenues reflected the impact of a 1.2 million-visit, or 16.7%, increase in attendance and a 17.2%, or $10.7 million, increase in out-of-park revenues, partially offset by the impact of a 3.1% decrease in in-park per capita spending to $59.54. The increase in attendance was primarily driven by the calendar shift in the current period, higher season pass sales at Knott's Berry Farm, and increased demand at Cedar Fair's parks with significant marketable new rides and attractions. These factors were partially offset by the impact of fewer planned operating days. The decrease in in-park per capita spending was primarily attributable to a planned decrease in average season pass pricing and a higher mix of season pass visitation, partially offset by improved in-park per capita spending for food and beverage and extra-charge products, including Fast Lane. The increase in out-of-park revenues was largely attributable to the calendar shift in the current period, as well as additional sponsorship revenues and increased revenues from the Knott's Hotel following a recent renovation. The increase in net revenues included a $1.9 million unfavorable impact of foreign currency exchange rates at Cedar Fair's Canadian park. Operating costs and expenses for the three months ended June 30, 2024 increased $35.2 million, or 10.0%, compared with the three months ended June 25, 2023. The increase in operating costs and expenses was the result of a $25.9 million increase in SG&A expenses, a $4.7 million increase in operating expenses and a $4.6 million increase in cost of goods sold. The increase in SG&A expenses was primarily attributable to $11.1 million of costs associated with the Mergers, an increase in equity-based compensation plan expense as a result of improved performance expectations, and the impact of the calendar shift in the current period. The increase in operating expenses was due to the calendar shift in the current period. Excluding the calendar shift, operating expenses decreased largely as a result of a planned reduction in labor costs, including declines in seasonal hours and full-time head count, and the related taxes and benefits. Cost of goods sold as a percentage of food, merchandise and games revenue decreased 1.7% driven by both planned reductions in costs and higher pricing. The increase in operating costs and expenses included a $1.3 million favorable impact of foreign currency exchange rates at Cedar Fair's Canadian park. Depreciation and amortization expense for the three months ended June 30, 2024 increased $8.9 million compared with the three months ended June 25, 2023 largely due to additional planned operating days in the current period. The loss on impairment / retirement of fixed assets for both periods was due to retirement of assets in the normal course of business, which in the prior period included the retirement of one specific asset. After the items above, operating income for the three months ended June 30, 2024 totaled $123.2 million compared with operating income of $93.7 million for the three months ended June 25, 2023. Interest expense for the three months ended June 30, 2024 increased $2.7 million as a result of the refinancing events during the current period, including the full redemption of the 2025 senior notes in full which were refinanced with a $1.0 billion senior secured term loan facility. The refinancing events also resulted in a loss on early debt extinguishment of $5.9 million during the current period. Cedar Fair recognized a $1.8 million net charge to earnings for foreign currency gains and losses in the current period compared with a $10.7 million net benefit to earnings in the prior period. Both amounts primarily represented the remeasurement of U.S. dollar denominated notes to the Canadian entity's functional currency. During the three months ended June 30, 2024, a provision for taxes of $20.2 million was recorded to account for PTP taxes and federal, state, local and foreign income taxes compared with $13.7 million for the three months ended June 25, 2023. The increase in provision for taxes was primarily attributable to higher pretax income from Cedar Fair's taxable subsidiaries in the current period. 20 Table of Contents After the items above, net income for the three months ended June 30, 2024 totaled $55.6 million, or $1.08 per diluted limited partner unit, compared with $53.6 million, or $1.04 per diluted limited partner unit, for the three months ended June 25, 2023. As stated above, the results for the three months ended June 30, 2024 included a calendar shift as compared with the three months ended June 25, 2023. On a same-week basis, or comparing the thirteen week period ended June 30, 2024 with the thirteen week period ended July 2, 2023, net revenues would have increased $14.2 million, or 3%, and attendance would have increased 0.4 million visits, or 4%. In-park per capita spending would have decreased $1.62, or 3%, and out-of-park revenues would have increased $4.1 million, or 6%. Operating costs and expenses, including costs related to the Mergers, on a same-week basis would have increased $14.6 million, or 4%, as a result of a $23.3 million increase in SG&A expenses offset by an $8.5 million decrease in operating expenses and a $0.1 million decrease in cost of goods sold. Depreciation and amortization would have increased by $4.0 million, or 8%. The fluctuations in loss on impairment / retirement of fixed assets, interest expense, loss on early debt extinguishment, foreign currency loss (gain), and provision for taxes on a same-week basis were not materially impacted by the calendar shift in the current period. After these items, net income on a same-week basis would have decreased $28.9 million, or 34%. For purposes of reconciling in-park revenues and out-of-park revenues to net revenues, concessionaire remittance on a same-week basis totaled $17.3 million for the thirteen week period ended July 2, 2023. July Update For the five week period ended August 4, 2024, preliminary attendance for the Combined Company totaled 10.9 million visits, which was down 3% compared with the five week period ended August 6, 2023. A majority of the decline in attendance was attributable to four parks where operations were either partially or entirely disrupted, including a utility disruption at Michigan's Adventure, flooding at Valleyfair, and the effects of Hurricane Beryl on Schlitterbahn Waterpark Galveston and Six Flags Hurricane Harbor Splashtown in Houston, Texas. Adjusted EBITDA (FORMER CEDAR FAIR, L.P.) Adjusted EBITDA represents earnings before interest, taxes, depreciation, amortization, other non-cash items, and adjustments as defined in Cedar Fair's current and prior credit agreements. Adjusted EBITDA is not a measurement of operating performance computed in accordance with generally accepted accounting principles ("GAAP") and should not be considered as a substitute for operating income, net income or cash flows from operating activities computed in accordance with GAAP. Management believes Adjusted EBITDA is a meaningful measure of park-level operating profitability, and uses it for measuring returns on capital investments, evaluating potential acquisitions, determining awards under incentive compensation plans, and calculating compliance with certain loan covenants. Adjusted EBITDA is widely used by analysts, investors and comparable companies in the industry to evaluate operating performance on a consistent basis, as well as more easily compare results with those of other companies in the industry. This measure is provided as a supplemental measure of Cedar Fair's operating results and may not be comparable to similarly titled measures of other companies. The table below sets forth a reconciliation of Adjusted EBITDA to net income (loss) for the three and six-month periods ended June 30, 2024 and June 25, 2023. Three months ended Six months ended (In thousands) June 30, 2024 June 25, 2023 June 30, 2024 June 25, 2023 Net income (loss) $ 55,553 $ 53,564 $ (77,914) $ (80,982) Interest expense 40,040 37,366 74,736 69,495 Interest income (215) (178) (575) (692) Provision (benefit) for taxes 20,210 13,663 (12,206) (10,427) Depreciation and amortization 57,015 48,094 67,327 61,775 EBITDA 172,603 152,509 51,368 39,169 Loss on early debt extinguishment 5,911 — 5,911 — Non-cash foreign currency loss (gain) 1,763 (10,837) 7,002 (7,134) Non-cash equity compensation expense 9,135 2,567 14,419 7,620 Loss on impairment / retirement of fixed assets, net 4,121 7,125 6,735 10,761 Costs related to the Mergers (1) 11,128 — 21,275 — Other (2) 803 15 1,574 (101) Adjusted EBITDA $ 205,464 $ 151,379 $ 108,284 $ 50,315 (1) Consists of third-party legal and consulting transaction costs, as well as integration costs related to the Mergers. Integration costs include third-party consulting costs, travel costs and contract termination costs. See Note 11 for additional information related to the Mergers. These costs are added back to net income (loss) to calculate Adjusted EBITDA as defined in Cedar Fair's current and prior credit agreements and were recorded within "Selling, general and administrative" in the unaudited condensed consolidated statement of operations and comprehensive income (loss). 21 Table of Contents (2) Consists of certain costs as defined in Cedar Fair's current and prior credit agreements. These costs are added back to net income (loss) to calculate Adjusted EBITDA and have included certain legal expenses, severance and related benefits, and contract termination costs. This balance also includes unrealized gains and losses on short-term investments. For the six months ended June 30, 2024, Adjusted EBITDA increased $58.0 million compared with the six months ended June 25, 2023. On a same-week basis, or comparing the six months ended June 30, 2024 with the six months ended July 2, 2023, Adjusted EBITDA would have increased $22.5 million, or 26%. The increase in same-week Adjusted EBITDA was primarily due to an increase in net revenues driven by higher attendance, as well as lower planned costs, particularly labor costs, in the current period. For the three months ended June 30, 2024, Adjusted EBITDA increased $54.1 million compared with the three months ended June 25, 2023. On a same-week basis, or comparing the thirteen week period ended June 30, 2024 with the thirteen week period ended July 2, 2023, Adjusted EBITDA would have increased $18.2 million, or 10%. The increase in same-week Adjusted EBITDA was primarily due to an increase in net revenues driven by higher attendance, as well as lower planned costs, particularly labor costs, in the current period. Adjusted EBITDA for the six months ended July 2, 2023 (i.e. the same-week prior period) was calculated as a net loss of $52.8 million plus interest expense of $69.5 million, interest income of $0.7 million, benefit for taxes of $10.4 million, depreciation and amortization expense of $68.0 million, non-cash foreign currency gain of $6.0 million, non-cash equity compensation expense of $7.6 million, loss on impairment / retirement of fixed assets of $10.8 million, and other net benefit of $0.1 million. Adjusted EBITDA for the thirteen week period ended July 2, 2023 (i.e. the same-week prior period) was calculated as net income of $84.5 million plus interest expense of $37.4 million, interest income of $0.2 million, provision for taxes of $13.7 million, depreciation and amortization expense of $53.0 million, non-cash foreign currency gain of $10.7 million, non-cash equity compensation expense of $2.6 million and loss on impairment / retirement of fixed assets of $7.0 million. Liquidity and Capital Resources: The Combined Company's principal sources of liquidity include cash from operating activities, funding from long-term debt obligations and existing cash on hand. Due to the seasonality of the business, pre-opening operations are funded with revolving credit borrowings, which are reduced with positive cash flow during the seasonal operating period. Primary uses of liquidity include operating expenses, capital expenditures, interest payments, and income tax obligations. Following the Mergers, the Combined Company's revolving credit facility was amended to increase the revolving credit facility capacity to $850 million. With the increased revolving credit facility capacity and the Combined Company's cash on hand, the Combined Company has sufficient liquidity to satisfy existing cash obligations through the third quarter of 2025. Full year capital expenditures at the Cedar Fair parks is expected to total between $200 million and $220 million for 2024. Full year capital expenditures at the Six Flags parks is expected to total between $200 million and $220 million for 2024. Capital expenditures at the Cedar Fair parks include the debut of a world-class roller coaster at Cedar Point, a dive coaster at Dorney Park, the expansion of the children's areas at both Knott's Berry Farm and Kings Island, new water park attractions at Canada's Wonderland, the world's first water coaster for kids at Schlitterbahn New Braunfels, and other rides and attractions, as well as upgraded and expanded food and beverage facilities across the portfolio. Capital expenditures at the Six Flags parks include four new roller coasters, dozens of new rides and guest experiences, and a new world-class resort safari experience at Six Flags Great Adventure Resort. Cash interest payments on an annualized basis for the Combined Company are expected to range from $300 million and $310 million. Cash payments for income taxes on an annualized basis for the Combined Company are expected to range from $140 million to $150 million. Cash Flows (FORMER CEDAR FAIR, L.P.) The following table presents key cash flow information for Former Cedar Fair for the six months ended June 30, 2024 and June 25, 2023: Six months ended June 30, 2024 June 25, 2023 (Amounts in thousands) Net cash from operating activities $ 68,627 $ 13,135 Net cash for investing activities (117,968) (124,494) Net cash from financing activities 37,412 57,952 Effect of exchange rate on cash and cash equivalents (701) 1,397 Net decrease in cash and cash equivalents $ (12,630) $ (52,010) 22 Table of Contents Net cash from operating activities for Cedar Fair for the first six months of 2024 totaled $68.6 million, an increase of $55.5 million compared with the same period in the prior year. The increase was primarily due to an additional calendar week in the current period, as well as an increase in net revenues driven by higher attendance and lower planned costs, particularly labor costs, in the current period. Net cash for investing activities for Cedar Fair for the first six months of 2024 totaled $118.0 million, a decrease of $6.5 million compared with the same period in the prior year. The decrease was due to the timing of capital expenditures. Net cash from financing activities for Cedar Fair for the first six months of 2024 totaled $37.4 million, a decrease of $20.5 million compared with the same period in the prior year. The decrease was primarily attributable to less revolving credit facility borrowings and additional payments for debt issuance costs in the current period somewhat offset by repurchases of limited partnership units in the prior period. Contractual Obligations As of June 30, 2024, Cedar Fair's primary contractual obligations consisted of outstanding long-term debt agreements. Before reduction for debt issuance costs, Cedar Fair's long-term debt agreements at such date consisted of the following: • $1.0 billion of senior secured term debt, maturing in May 2031 under the 2024 Credit Agreement. The term debt amortizes at 25 bps quarterly, or $10.0 million per year, and bears interest at SOFR plus a margin of 200 bps per annum or base rate plus a margin of 100 bps per annum. There were $10.0 million of current maturities outstanding as of June 30, 2024. • $500 million of 5.375% senior unsecured notes, maturing in April 2027, issued at par. The 2027 senior notes may be redeemed, in whole or in part, at various prices depending on the date redeemed. Interest is payable under the 2027 senior notes semi-annually in April and October. • $300 million of 6.500% senior unsecured notes, maturing in October 2028, issued at par. The 2028 senior notes may be redeemed, in whole or in part, at various prices depending on the date redeemed. Interest is payable under the 2028 senior notes semi-annually in April and October. • $500 million of 5.250% senior unsecured notes, maturing in July 2029, issued at par. The 2029 senior notes may be redeemed, in whole or in part, at various prices depending on the date redeemed. Interest is payable under the 2029 senior notes semi-annually in January and July. • $88.0 million borrowings under the former $300 million senior secured revolving credit facility under the 2024 Credit Agreement. The 2024 Credit Agreement was amended concurrently with the Mergers resulting an increase in the senior secured revolving credit facility capacity to $850 million. The revolving credit facility bears interest at Term SOFR or Term Canadian Overnight Repo Rate Average plus a margin of 200 bps per annum, or base rate or Canadian prime rate plus a margin of 100 bps per annum; matures on July 1, 2029, following the amendment to the 2024 Credit Agreement and subject to a springing maturity date on the date that is 91 days prior to the final maturity of certain indebtedness in an aggregate outstanding principal amount greater than $200 million on such date; and requires a commitment fee of 50 bps per annum on the unused portion of the revolving credit facility, which is subject to decrease to 37.5 bps upon achievement of a 3.5x Net First Lien Leverage Ratio (as defined in the 2024 Credit Agreement and following the consummation of the Mergers). The 2024 Credit Agreement also provides for the issuance of documentary and standby letters of credit. After letters of credit of $19.9 million as of June 30, 2024, Cedar Fair had $192.1 million of availability under the former revolving credit facility. Letters of credit are primarily in place to backstop insurance arrangements. See Note 11 regarding the Combined Company's assumption of Former Six Flags and Former Cedar Fair's notes and the addition of guarantors as to various debt obligations in connection with the completion of the Mergers. With respect to the revolving credit facility only, the 2024 Credit Agreement includes a maximum Net First Lien Leverage Ratio (as defined in the 2024 Credit Agreement) financial maintenance covenant, which is required to be tested as of the last day of each quarter except for the quarter in which the consummation of the Mergers occurred. The maximum Net First Lien Leverage Ratio following the consummation of the Mergers is 5.25x beginning with the test period ending on or about December 31, 2024, with 25 bps step-downs each year culminating at 4.5x beginning with the test period ending on or about December 31, 2027. The 2024 Credit Agreement and fixed rate note agreements include restricted payment provisions, which could limit the Combined Company's ability to pay dividends. Under the 2024 Credit Agreement, if the pro forma Net Secured Leverage Ratio (as defined in the 2024 Credit Agreement) is less than or equal to 3.00x, the Combined Company can make unlimited restricted payments so long as no default or event of default has occurred and is continuing. If the pro forma Net Total Leverage Ratio (as defined in the 2024 Credit Agreement) is less than or equal to 5.25x, the Combined Company can make restricted payments up to the Cumulative Credit (as defined in the 2024 Credit Agreement). Irrespective of any leverage calculations, the Combined Company can make restricted payments not to exceed the greater of 7.0% of Market Capitalization (as defined in the 2024 Credit Agreement) and $200 million annually. 23 Table of Contents Pursuant to the terms of the indenture governing the 2027 senior notes, which includes the most restrictive of the restricted payments provisions under the terms of the Combined Company's outstanding notes, if the pro forma Total-Indebtedness-to-Consolidated-Cash-Flow Ratio (as defined in the indenture governing the 2027 senior notes) is greater than 5.25x, the Combined Company can still make restricted payments of $100 million annually so long as no default or event of default has occurred and is continuing. If the pro forma Total-Indebtedness-to-Consolidated-Cash-Flow Ratio is less than or equal to 5.25x, the Combined Company can make restricted payments up to its restricted payment pool. Cedar Fair's pro forma Total-Indebtedness-to-Consolidated-Cash-Flow Ratio was less than 5.25x as of June 30, 2024. On November 9, 2023, Cedar Fair entered into supplemental indentures related to the 2025 senior notes, 2027 senior notes, 2028 senior notes and 2029 senior notes (the "Amendments") following receipt of requisite consents from the holders of the notes. The Amendments enabled Cedar Fair to select November 2, 2023, the date the Merger Agreement with Six Flags was entered into, as the testing date for purposes of calculating, with respect to the Mergers and related transactions, any and all ratio tests under those notes, each of which was satisfied when tested on November 2, 2023. To become operative, the Amendments required a payment upon the consummation of the Mergers. The payment related to the 2025 senior notes was still required despite the redemption of those notes in May 2024. Financial and Non-Financial Disclosure About Issuers and Guarantors of Registered Senior Notes As discussed within the Long-Term Debt footnote at Note 6 , Cedar Fair had three tranches of fixed rate senior notes outstanding as of June 30, 2024 that were registered under the Securities Act of 1933: the 2027, 2028 and 2029 senior notes, or the "registered senior notes". Cedar Fair, L.P., Canada's Wonderland Company ("Cedar Canada"), Magnum Management Corporation ("Magnum"), and Millennium Operations LLC (“Millennium”) were the co-issuers of the registered senior notes as of June 30, 2024. The registered senior notes are irrevocably and unconditionally guaranteed, on a joint and several basis, by each wholly owned subsidiary of Cedar Fair (other than the co-issuers) that guaranteed the credit facilities under the 2024 Credit Agreement. A full listing of the issuers and guarantors of the registered senior notes as of June 30, 2024 can be found within Exhibit 22. Following the second quarter of 2024 and substantially concurrently with the closing and in connection with the Mergers, the Combined Company entered into supplemental indentures to assume all of Cedar Fair's obligations under the indentures governing the registered senior notes. In addition, under the supplemental indentures for the registered senior notes, each of the Former Six Flags subsidiary guarantors under the 2024 Credit Agreement, as amended, agreed to fully and unconditionally guarantee the registered senior notes. Additional information with respect to Cedar Fair's registered senior notes and the related guarantees follows without giving specific consideration to the effect of the Mergers and the related supplemental indentures unless explicitly stated. The registered senior notes each rank equally in right of payment with all of each issuer’s existing and future senior unsecured debt. However, the registered senior notes rank effectively junior to any secured debt to the extent of the value of the assets securing such debt, including under the 2024 Credit Agreement (and previously ranked effectively junior to any secured debt under the 2017 Credit Agreement, as amended, and the 2025 senior notes). In the event that the co-issuers (except for Cedar Fair, L.P. prior to the Mergers and Six Flags Entertainment Corporation following the Mergers) or any subsidiary guarantor is released from its obligations under the senior secured credit facilities, such entity will also be released from its obligations under the registered senior notes. In addition, the co-issuers (except for Cedar Fair, L.P. prior to the Mergers and Six Flags Entertainment Corporation following the Mergers) or any subsidiary guarantor can be released from its obligations under the registered senior notes under the following circumstances, assuming the associated transactions are in compliance with the applicable provisions of the indentures governing the registered senior notes: i) any direct or indirect sale, conveyance or other disposition of the capital stock of such entity following which the entity ceases to be a direct or indirect subsidiary of Cedar Fair (or Six Flags Entertainment Corporation following the Mergers) or a sale or disposition of all or substantially all of the assets of such entity; ii) if such entity is dissolved or liquidated; iii) if an entity is designated as an Unrestricted Subsidiary (as defined in each indenture); iv) upon transfer of such entity in a qualifying transaction if following such transfer the entity ceases to be a direct or indirect Restricted Subsidiary (as defined in each indenture) of Cedar Fair (or Six Flags Entertainment Corporation following the Mergers) or is a Restricted Subsidiary that is not a guarantor under any credit facility; or v) in the case of the subsidiary guarantors, upon a discharge of the indenture or upon any legal defeasance or covenant defeasance of the indenture. The obligations of each guarantor are limited to the extent necessary to prevent such guarantee from constituting a fraudulent conveyance or fraudulent transfer under applicable law. This provision may not, however, protect a guarantee from being voided under fraudulent transfer law, or may reduce the applicable guarantor’s obligation to an amount that effectively makes its guarantee worthless. If a guarantee were rendered voidable, it could be subordinated by a court to all other indebtedness of the guarantor, and depending on the amount of such indebtedness, could reduce the guarantee to zero. Each guarantor that makes a payment or distribution under a guarantee is entitled to a pro rata contribution from each other guarantor based on the respective net assets of the guarantors. 24 Table of Contents The following tables provide summarized financial information for each of the co-issuers and guarantors of the registered senior notes (the "Obligor Group") as of June 30, 2024 and December 31, 2023. Each entity that was a co-issuer of the registered senior notes is presented separately. The subsidiaries that guaranteed the registered senior notes were presented on a combined basis with intercompany balances and transactions between entities in such guarantor subsidiary group eliminated. Intercompany balances and transactions between the co-issuers and guarantor subsidiaries were not eliminated. Certain subsidiaries of Cedar Fair did not guarantee the credit facilities or senior notes as the assets and results of operations of these subsidiaries were immaterial (the "non-guarantor" subsidiaries). The summarized financial information excludes results of the non-guarantor subsidiaries and does not reflect investments of the Obligor Group in the non-guarantor subsidiaries. The Obligor Group's amounts due from, amounts due to, and transactions with the non-guarantor subsidiaries have not been eliminated and included intercompany receivables from non-guarantors of $13.7 million and $14.3 million as of June 30, 2024 and December 31, 2023, respectively. Summarized Financial Information (In thousands) Cedar Fair, L.P. (Parent) Magnum (Co-Issuer Subsidiary) Cedar Canada (Co-Issuer Subsidiary) Millennium (Co-Issuer Subsidiary) Guarantor Subsidiaries Balance as of June 30, 2024 Current Assets $ 88 $ 51,453 $ 106,521 $ 199,247 $ 1,699,119 Non-Current Assets (252,537) 2,056,171 648,733 2,483,778 2,021,393 Current Liabilities 54,717 1,727,349 42,695 337,060 148,589 Non-Current Liabilities 369,951 2,020 361,128 1,648,238 135,149 Balance as of December 31, 2023 Current Assets $ 445 $ 13,876 $ 46,641 $ 346,820 $ 1,618,550 Non-Current Assets (269,050) 1,916,183 627,130 2,387,798 1,955,628 Current Liabilities 160,560 1,525,756 188,975 223,098 107,007 Non-Current Liabilities 148,854 2,019 16,985 2,141,096 141,402 Six Months Ended June 30, 2024 Net revenues $ 20,064 $ 179,953 $ 46,497 $ 724,736 $ 166,617 Operating (loss) income (26,385) (99,019) 4,365 66,459 51,370 Net (loss) income (77,897) (36,274) 6,636 — 65,595 Twelve Months Ended December 31, 2023 Net revenues $ 87,790 $ 478,478 $ 173,321 $ 1,935,516 $ 447,639 Operating income (loss) 84,005 (153,697) 67,459 126,165 182,687 Net income 125,284 72,213 98,108 — 263,071 25 Table of Contents Forward Looking Statements Some of the statements contained in this report (including the "Management’s Discussion and Analysis of Financial Condition and Results of Operations" section) that are not historical in nature are forward-looking statements within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements as to management's expectations, beliefs, goals and strategies regarding the future. Words such as "anticipate," "believe," "create," "expect," "future," "guidance," "intend," "plan," "potential," "seek," "synergies," "target," "will," "would," similar expressions, and variations or negatives of these words identify forward-looking statements. However, the absence of these words does not mean that the statements are not forward-looking. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. These forward-looking statements may involve current plans, estimates, expectations and ambitions that are subject to risks, uncertainties and assumptions that are difficult to predict, may be beyond the Combined Company's control and could cause actual results to differ materially from those described in such statements. Although management believes that the expectations reflected in such forward-looking statements are reasonable, they can give no assurance that such expectations will prove to be correct, that the Combined Company's growth and operational strategies will achieve the target results. Important risk factors that may cause such a difference and could adversely affect attendance at the Combined Company's parks, future financial performance, and/or the Combined Company's growth strategies, and could cause actual results to differ materially from expectations or otherwise to fluctuate or decrease, include, but are not limited to: general economic, political and market conditions; the impacts of pandemics or other public health crises, including the effects of government responses on people and economies; adverse weather conditions; competition for consumer leisure time and spending; unanticipated construction delays; changes in capital investment plans and projects; anticipated tax treatment, unforeseen liabilities, future capital expenditures, revenues, expenses, earnings, synergies, economic performance, indebtedness, financial condition, losses, future prospects, business and management strategies for the management, expansion and growth of the Combined Company’s operations; failure to realize the anticipated benefits of the Mergers, including difficulty in integrating the businesses of Former Six Flags and Cedar Fair; failure to realize the expected amount and timing of cost savings and operating synergies related to the Mergers; legislative, regulatory and economic developments and changes in laws, regulations, and policies affecting the Combined Company; acts of terrorism or outbreak of war, hostilities, civil unrest, and other political or security disturbances; and other factors discussed under the heading "Risk Factors" within Part II, Item 1A of this Quarterly Report on Form 10-Q, in Cedar Fair's Annual Report on Form 10-K, in Former Six Flags' Annual Report on Form 10-K and in the other filings made from time to time with the SEC. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of the Quarterly Report on Form 10-Q and are based on information currently and reasonably known to management. The Combined Company does not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after the filing date of this document.