Six Flags Entertainment Corporation/NEW 10-K

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Merger Agreement with Former Six Flags On July 1, 2024, 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, was completed. 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" and the "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. For additional information, see the Explanatory Note in this Annual Report on Form 10-K and Note 2 . The Six Flags Merger was accounted for as a business combination using the acquisition method of accounting. Former Cedar Fair has been determined to be the accounting acquirer and the predecessor for financial statement purposes. Accordingly, unless indicated otherwise, financial results and disclosures within this Management's Discussion and Analysis referring to periods prior to the Closing Date include only Former Cedar Fair's results before giving effect to the Mergers, including financial results and disclosures for the year ended December 31, 2023. The results for Former Six Flags are included in the Combined Company's results from the Closing Date forward. Accordingly, financial results and disclosures for the year ended December 31, 2024 reflect combined operations for only July 1, 2024, through December 31, 2024, and include only Former Cedar Fair's results before giving effect to the Mergers for the first six months of 2024. Business Overview The Combined Company is North America's largest regional amusement park operator with 27 amusement parks, 15 separately gated water parks and nine resorts. Of the 42 amusement and water parks, 38 are located in the United States, two are located in Mexico and two are located in Canada. The parks generate 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, insurance, advertising and lease payments, are relatively fixed for a typical operating season and do not vary significantly with attendance. The Combined Company's principal costs and expenses have recently been impacted by increased wage rates, driven both by market rates and statutory rates, higher insurance costs, and general inflation affecting the costs of inventory, services and supplies. The Combined Company's operations are seasonal. In a typical year at Former Six Flags and Cedar Fair, approximately 70% of annual attendance and revenue occurred during the second and third quarters of each year. As a result, a substantial portion of the Combined Company's revenues are expected to be generated from Memorial Day through Labor Day with the major portion concentrated during the peak vacation months of July and August. The fall and winter seasons have also become more important to the Combined Company's operations due to the popularity of fall and winter events. Consequently, when adverse conditions or events occur during the operating season, particularly during the peak vacation months of July and August or the important fall season, there is only a limited period of time during which the impact of those conditions or events can be mitigated. Accordingly, the timing of such conditions or events can have a disproportionate adverse effect upon revenues. Each of the parks is overseen by a general manager or park president and operates 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 or park presidents of the parks. The Combined Company operates within a single reportable segment of amusement/water parks with accompanying resort facilities. The following operational measures are key performance metrics in the Combined Company's managerial and operational reporting. They are used as major factors in significant operational decisions as they are the 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. Attendance is driven by various factors, including pricing, new rides and product offerings, guest satisfaction, weather, advertising programs, perceived safety of the parks and economic conditions. Major attendance categories include single-day attendance related to a single-day ticket, including sales to groups, season pass attendance related to season passes that are valid for an operating 23 T able of Contents season, and membership attendance related to memberships that are valid for a 12-month non-cancelable period and until the guest cancels thereafter. 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 and online transaction fees charged to customers ( in-park revenues ), divided by total attendance. In-park per capita spending is driven by similar factors to attendance and is also impacted by the length of stay of the Combined Company's guests. Major in-park per capita spending categories include admission, food and beverage, retail, games and extra-charge products. Extra-charge products include premium benefit offerings such as front-of-line products. Out-of-park revenues are defined as revenues from resorts, out-of-park food and retail locations, sponsorships, international agreements and all other out-of-park operations. Out-of-park revenues are primarily driven by attendance to the parks and can increase length of stay at the Combined Company's properties as guests purchase hotel rooms and visit out-of-park food and retail locations. In addition, higher attendance levels enable the Combined Company to develop long-term corporate sponsorships and co-marketing relationships with well-known national and regional brands. The following table presents net revenues disaggregated by in-park revenues and out-of-park revenues less amounts remitted to outside parties under concessionaire arrangements (concessionaire remittance) for the periods presented. The results for the year ended December 31, 2024 include the results of Former Six Flags operations since the Closing Date of the Mergers (see Note 2 ). Certain prior period amounts have been reclassified from out-of-park revenues to in-park revenues following completion of the Mergers (see Note 1 ). Years Ended December 31, (In thousands) 2024 2023 2022 In-park revenues $ 2,553,486 $ 1,658,912 $ 1,692,329 Out-of-park revenues 232,415 192,257 180,191 Concessionaire remittance (76,975) (52,501) (55,137) Net revenues $ 2,708,926 $ 1,798,668 $ 1,817,383 Strategy and Project Accelerate Following the Mergers, the Combined Company has introduced Project Accelerate as its strategy to enhance shareholder value. The key objectives of Project Accelerate are to: (1) enhance the guest experience by delivering a stronger price-value proposition that drives demand; (2) identify and activate operating efficiencies that generate cost synergies and drive margin expansion; (3) maintain a disciplined approach to the prioritization and activation of capital investments to realize the full market potential of each park, while maximizing free cash flow efficiency; (4) integrate technology stacks with a focus on harmonizing systems, eliminating redundancies, and enhancing the guest-facing digital experience; and (5) evaluate the potential divestiture of non-core assets. The Combined Company plans to meet these objectives by driving revenue growth through higher levels of attendance, in-park per capita spending and out-of-park revenues, investing approximately a combined $1.0 billion in capital expenditures during 2025 and 2026, and achieving cost synergies that began in 2024 and will continue through 2025. Management plans to increase attendance by providing an improved guest experience, new marketable rides and attractions, modified operating calendars, improving its marketing strategy and focusing on increasing season pass visits through average visits per season pass and renewal rates. Management plans to increase in-park per capita spending by expanding the use of revenue management tools to drive dynamic pricing, refreshing food and beverage facilities to improve efficiency and quality of offerings, improving seasonal staffing to increase guest satisfaction and spending, and increasing attendance levels which leads to higher demand for premium products and a longer length of stay. Management plans to increase out-of-park revenues by upgrading and expanding resort offerings, improving revenue management capabilities to drive dynamic pricing and increased occupancy, and leveraging the Six Flags brand to increase sponsorship opportunities. Management plans to fund deferred investment needs and growth opportunities with the approximate $1.0 billion in planned capital expenditures over the next two years. Management plans to achieve cost synergies through operating cost reductions, organizational restructurings and elimination of duplicative overhead costs, including redundant processes and technologies. Critical Accounting Estimates Management's Discussion and Analysis of Financial Condition and Results of Operations is based upon the consolidated financial statements, 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 Consolidated Financial Statements and related notes. The following discussion addresses critical accounting estimates, which are those that are most important to the portrayal of the Combined Company's financial condition and operating results or involve a higher degree of judgment and complexity (see Note 1 for a complete discussion of significant accounting policies). Application of the critical accounting policies described below involves the exercise of judgment and the use of assumptions as to future uncertainties, and as a result, actual results could differ from these estimates and assumptions. 24 T able of Contents Business Combinations Business combinations are accounted for under the acquisition method of accounting. The amounts assigned to the identifiable assets acquired and liabilities assumed in connection with acquisitions are based on estimated fair values as of the date of the acquisition, with the remainder, if any, recorded as goodwill. The fair values are determined by management, taking into consideration information supplied by the management of the acquired entities, valuations supplied by independent appraisal experts and other relevant information. The determination of fair values requires significant judgment by management. During the measurement period, which may be up to one year from the acquisition date, adjustments to the assets acquired and liabilities assumed may be recorded with the corresponding offset to goodwill. Upon the measurement period's conclusion or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the consolidated statement of operations and comprehensive (loss) income. Adjustments during the measurement period could have a material effect on the Combined Company's financial position and results of operations in future periods. Acquisition-related expenses are recognized separately from the business combination and expensed as incurred. Impairment of Long-Lived Assets Long-lived assets, including property and equipment, are reviewed for impairment upon the occurrence of events or changes in circumstances that would indicate that the carrying value of the assets may not be recoverable. In order to determine if an asset has been impaired, assets are grouped and tested at the lowest level for which identifiable, independent cash flows are available. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include, among others: a significant decrease in the market price of a long-lived asset; a significant adverse change in the extent or manner in which a long-lived asset is being used or in its physical condition; a significant adverse change in legal factors or in the business climate; an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset; past, current or future operating or cash flow losses that demonstrate continuing losses associated with the use of a long-lived asset; and a current expectation that a long-lived asset will be sold or disposed significantly before the end of its previously estimated useful life. An impairment loss may be recognized when estimated undiscounted future cash flows expected to result from the use of the asset, including disposition, are less than the carrying value of the asset. The measurement of the impairment loss to be recognized is based on the difference between the fair value and the carrying amounts of the assets. Fair value is generally determined using a combination of a cost and market approach. Significant factors considered in the cost approach include replacement cost, reproduction cost, depreciation, physical deterioration, functional obsolescence and economic obsolescence of the assets. The market approach estimates fair value by utilizing market data for similar assets. The determination of whether an indicator of impairment has occurred and the estimation of undiscounted cash flows requires management to make significant estimates and consider an anticipated course of action as of the balance sheet date. Subsequent changes arising from changes in anticipated actions could impact the determination of whether impairment exists, the estimation of undiscounted cash flows and whether the effects could materially impact the consolidated financial statements. Goodwill and Other Intangible Assets Goodwill and other indefinite-lived intangible assets, including trade-names, are reviewed for impairment annually, or more frequently if indicators of impairment exist. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include, among others: a significant decline in expected future cash flows; a sustained, significant decline in equity price and market capitalization; a significant adverse change in legal factors or in the business climate; unanticipated competition; the testing for recoverability of a significant asset group within a reporting unit; and slower growth rates. The fair value of a reporting unit is established using a combination of an income (discounted cash flow) approach and market approach. The income approach uses a reporting unit's projection of estimated operating results and discounted cash flows using a weighted-average cost of capital that reflects current market conditions. Estimated operating results are established using management's best estimates of economic and market conditions over the projected period including growth rates in revenues and costs, estimates of future expected changes in operating margins and cash expenditures. Other significant estimates and assumptions include terminal value growth rates, future estimates of capital expenditures and changes in future working capital requirements. A market approach estimates fair value by applying cash flow multiples to the reporting unit's operating performance. The multiples are derived from comparable publicly traded companies with similar operating and investment characteristics of the reporting units. It is possible that assumptions about future performance, as well as the economic outlook and related conclusions regarding valuation, could change adversely, which may result in additional impairment that would have a material effect on the Combined Company's financial position and results of operations in future periods. Self-Insurance Reserves Self-insurance reserves are recorded for the estimated amounts of guest and employee claims and related expenses incurred each period. Reserves are established for both identified claims and incurred but not reported ("IBNR") claims and are recorded when claim amounts become probable and estimable. Reserves for identified claims are based upon historical claim experience and third-party estimates of settlement costs. Reserves for IBNR claims are based upon claims data history. Self-insurance reserves are periodically reviewed for changes in facts and circumstances and adjustments are made as necessary. The ultimate 25 T able of Contents cost for identified claims can be difficult to predict due to the unique facts and circumstances associated with each claim. In addition, management has observed a pattern of increasing litigation and settlement costs in recent years. Revenue Recognition Revenues are generated 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. Most revenues are recognized on a daily basis based on actual guest spend at the parks. Revenues from multi-use products, including season-long products for admission, dining, beverage and other products, as well as the first 12-month period for membership products, are recognized over the estimated number of uses expected for each type of product. The estimated number of uses is reviewed and may be updated periodically during the operating season prior to the ticket or product expiration. The number of uses is estimated based on historical usage adjusted for current period trends. In order to calculate revenue recognized on season-long products and the first 12-month period for membership products, management makes significant estimates regarding the estimated number of uses expected for season-long products, including during interim periods. Actual usage could materially differ from these estimates which could potentially result in an inappropriate amount of revenue recognized in a given period. Income Taxes The Combined Company accounts for income taxes under the asset and liability method. Accordingly, deferred tax assets and liabilities are recognized for the future book and tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are determined using enacted tax rates expected to apply in the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax law is recognized in income at the time of enactment of such change in tax law. Any interest or penalties due for payment of income taxes are included in the provision for income taxes. A valuation allowance is recorded if, based on the weight of available evidence, it is more likely than not that some portion, or all, of a deferred tax asset will not be realized. The need for this allowance is based on several factors including the ten-year carryforward period allowed for excess foreign tax credits, experience to date of foreign tax credit limitations, carryforward periods of state net operating losses, and management's long-term estimates of domestic and foreign source income. There is inherent uncertainty in the estimates used to project the amount of foreign tax credit and state net operating loss carryforwards that are more likely than not to be realized. It is possible that our future income projections, as well as the economic outlook and related conclusions regarding valuation allowances could change, which may result in additional valuation allowance being recorded or may result in additional valuation allowance reductions, and which may have a material negative or positive effect on our reported financial position and results of operations in future periods. Results of Operations The Results of Operations section includes a discussion and comparison of 2024 and 2023 results. For a discussion regarding 2022 results, including comparisons of 2023 results to 2022 results, see "Management's Discussion and Analysis of Financial Condition and Results of Operations" within Cedar Fair's Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 16, 2024. 2024 vs. 2023 The results for the year ended December 31, 2024 are not directly comparable with the results for the year ended December 31, 2023 because the year ended December 31, 2024 included the results of Former Six Flags operations from the Closing Date of the Mergers forward (see N ote 2 ). The year ended December 31, 2024 included 4,369 operating days compared with 2,365 operating days for the year ended December 31, 2023, an increase of 2,004 operating days. There were 2,129 operating days in the year ended December 31, 2024 at Former Six Flags parks following the completion of the Mergers. This increase was partially offset by 125 fewer operating days at Former Cedar Fair parks driven by fewer planned early season operating days at several seasonal parks. In particular, Carowinds, Kings Dominion and California's Great America were open additional operating days in January and February in the prior period that were not planned in the current period. 26 T able of Contents The following table presents key financial information and operating measures for the years ended December 31, 2024 and December 31, 2023: Increase (Decrease) December 31, 2024 December 31, 2023 $ % (Amounts in thousands, except for per capita and operating days) Net revenues $ 2,708,926 $ 1,798,668 $ 910,258 50.6 % Operating costs and expenses 2,019,781 1,316,442 703,339 53.4 % Depreciation and amortization 318,113 157,995 160,118 101.3 % Loss on retirement of fixed assets, net 18,064 18,067 (3) N/M Loss on impairment of goodwill 42,462 — 42,462 N/M Operating income $ 310,506 $ 306,164 $ 4,342 1.4 % Other Data: Attendance 41,649 26,665 14,984 56.2 % In-park per capita spending $ 61.31 $ 62.21 $ (0.90) (1.4) % Out-of-park revenues $ 232,415 $ 192,257 $ 40,158 20.9 % Operating days 4,369 2,365 2,004 84.7 % Net (loss) income margin (1) (7.6) % 6.9 % (14.5) % N/M Not meaningful due to the nature of the expense line-item. (1) Net (loss) income margin is calculated as net (loss) income divided by net revenues. For the year ended December 31, 2024, net revenues increased $910.3 million compared with 2023. The increase in net revenues reflected $882.0 million in net revenues contributed by Former Six Flags operations during the six months ended December 31, 2024 and a $28.3 million increase in net revenues contributed by Former Cedar Fair operations during the year ended December 31, 2024 compared to the prior year. The increase in net revenues reflected the impact of a 15.0 million-visit increase in attendance and a $40.2 million increase in out-of-park revenues, partially offset by the impact of a $0.90, or 1.4% decrease in in-park per capita spending. The 15.0 million-visit increase in attendance included a 14.2 million-visit increase resulting from attendance at Former Six Flags parks during the six months ended December 31, 2024 with the remaining increase driven by higher season pass sales at Former Cedar Fair parks, improved weather, and increased demand at Former Cedar Fair's parks with significant marketable new rides and attractions. These factors were partially offset by the impact of fewer planned operating days at Former Cedar Fair. The $0.90 decrease in in-park per capita spending, which included a $0.04 increase related to the impact of in-park per capita spending at the Former Six Flags parks during the six months ended December 31, 2024, was due to a planned decrease in average season pass pricing and a higher mix of season pass visitation at the Former Cedar Fair parks, partially offset by improved in-park per capita spending for food and beverage and extra-charge products at the Former Cedar Fair parks, including Fast Lane. The $40.2 million increase in out-of-park revenues was due primarily to $35.0 million contributed by Former Six Flags operations during the six months ended December 31, 2024, with the remaining increase largely attributable to increased revenues from the Knott's Hotel following a recent renovation. The increase in net revenues was partially offset by a $3.3 million unfavorable impact of foreign currency exchange rates. Operating costs and expenses for the year ended December 31, 2024 increased $703.3 million compared with 2023. The increase in operating costs and expenses was the result of a $426.5 million increase in operating expenses, a $204.1 million increase in selling, general, and administrative ("SG&A") expenses, and a $72.7 million increase in cost of goods sold. The $426.5 million increase in operating expenses included a $424.8 million increase related to Former Six Flags operations during the six months ended December 31, 2024 and a $21.1 million increase in self-insurance reserves at Former Cedar Fair (see Note 1 ). Excluding these factors, operating expenses decreased in relation to Former Cedar Fair operations largely as a result of a planned reduction in labor costs totaling $16.0 million, including declines in seasonal wage rates, full-time head count, and related benefits, and a planned reduction in operating supplies, particularly for live entertainment. The $204.1 million increase in SG&A expenses included $107.9 million of additional expenses related to Former Six Flags operations during the six months ended December 31, 2024 and $61.5 million of increased transaction and integration costs incurred as the accounting acquirer in the Mergers. Excluding these factors, SG&A expenses increased at Former Cedar Fair due to higher full-time wages of $25.3 million, including equity compensation and bonuses, and to a lesser extent, higher advertising and information technology costs. Cost of goods sold as a percentage of food, merchandise and games revenue decreased 10 basis points ("bps"). The 10 bps decrease consisted of a a 40 bps decrease driven by a combination of planned cost reductions and higher pricing at Former Cedar Fair offset by a 30 bps increase as a result of the Mergers. The increase in operating costs and expenses was partially offset by a $1.8 million favorable impact of foreign currency exchange rates. Depreciation and amortization expense for the year ended December 31, 2024 increased $160.1 million compared with 2023, which was primarily due to $152.3 million of depreciation expense attributable to the Mergers. The loss on retirement of fixed 27 T able of Contents assets for both periods was due to retirement of assets in the normal course of business, which includes $5.5 million of retirements at the Former Six Flags parks in the current period and included the retirement of two specific Former Cedar Fair assets in the prior period. During the third quarter of 2024, management tested the Schlitterbahn reporting unit's fair value due to a decline in estimated future cash flows as a result of shifting investment priorities at those locations following the Mergers. Management concluded the estimated fair value of the Schlitterbahn reporting unit no longer exceeded its carrying value. Therefore, a $42.5 million impairment of the goodwill related to the Schlitterbahn reporting unit was recorded during the third quarter of 2024. After the items above, operating income for 2024 totaled $310.5 million compared to $306.2 million for 2023. The amount for 2024 included $122.8 million of operating income attributable to the Former Six Flags operations during the six months ended December 31, 2024. Net interest expense for 2024 increased $95.8 million as a result of $78.6 million of interest incurred on debt acquired in the Mergers, as well as refinancing events during 2024, including the full redemption of the 2025 senior notes which were refinanced with a $1.0 billion senior secured term loan facility, and additional revolving borrowings in 2024. The refinancing events also resulted in a loss on early debt extinguishment of $8.0 million during 2024. Other expense (income), net primarily represented the remeasurement of U.S. dollar denominated notes to an entity's functional currency. For 2024, a provision for income taxes of $240.8 million was recorded compared with $48.0 million for 2023. The increase in the provision for income taxes was primarily attributable to the non-cash tax effects of the change in tax status from a partnership to a corporation of Former Cedar Fair as a part of the Mergers, and of a lower-tier partnership as part of an internal restructuring completed on December 31, 2024 offset partially by lower pre-tax income relative to the comparable period. After the items above and net loss attributable to non-controlling interests, net loss attributable to Six Flags Entertainment Corporation for 2024 totaled $231.2 million, or $3.22 per diluted share of common stock. The net loss included $6.1 million of net income relating to the Former Six Flags operations during the six months ended December 31, 2024. Net income for 2023 totaled $124.6 million, or $2.42 per diluted limited partner unit. Net income margin decreased largely due to the $192.8 million increase in provision for taxes and a $95.8 million increase in net interest expense, both of which were primarily as a result of the Mergers. Modified EBITDA and Adjusted EBITDA Modified EBITDA represents earnings before interest, taxes, depreciation, amortization, other non-cash items, and adjustments as defined in the Combined Company's credit agreement. Adjusted EBITDA represents Modified EBITDA less net income attributable to non-controlling interests. Both measures have been included to disclose the effect of non-controlling interests. Prior to the Mergers, Former Cedar Fair did not have net income attributable to non-controlling interests. Modified EBITDA and Adjusted EBITDA are not measurements 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 Modified EBITDA and Adjusted EBITDA are meaningful measures of park-level operating profitability, and uses them 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. These measures are provided as supplemental measures of the Combined Company's operating results and may not be comparable to similarly titled measures of other companies. The table below sets forth a reconciliation of Modified EBITDA and Adjusted EBITDA to net (loss) income for the years ended December 31, 2024 and December 31, 2023. The results for the year ended December 31, 2024 include the results of Former Six Flags operations from the Closing Date of the Mergers forward (see Note 2 ). 28 T able of Contents Years Ended December 31, (In thousands) 2024 2023 Net (loss) income $ (206,665) $ 124,559 Interest expense, net 234,770 138,952 Provision for taxes 240,843 48,043 Depreciation and amortization 318,113 157,995 EBITDA 587,061 469,549 Loss on early debt extinguishment 7,974 — Non-cash foreign currency loss (gain) 30,557 (5,594) Non-cash equity compensation expense 63,809 22,611 Loss on retirement of fixed assets, net 18,064 18,067 Loss on impairment of goodwill 42,462 — Costs related to the Mergers (1) 118,336 22,287 Self-insurance adjustment (2) 14,865 — Other (3) 16,662 752 Modified EBITDA 899,790 527,672 Net income attributable to non-controlling interests 24,499 — Adjusted EBITDA $ 875,291 $ 527,672 Modified EBITDA margin (4) 33.2 % 29.3 % (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, contract termination costs, retention bonuses, severance related to the Mergers, integration team salaries and benefits, maintenance costs to update Former Six Flags parks to Cedar Fair standards, onboarding of new advertising firms, and travel costs. See Note 2 for additional information related to the Mergers. These costs are added back to net (loss) income to calculate Modified EBITDA and Adjusted EBITDA as defined in the Combined Company's credit agreement. (2) During the third quarter of 2024, an actuarial analysis of Former Cedar Fair's self-insurance reserves resulted in a change in estimate that increased the incurred but not reported ("IBNR") reserves related to these self-insurance reserves by $14.9 million. The increase was driven by an observed pattern of increasing litigation and settlement costs. See Note 1 for additional information. (3) Consists of certain costs as defined in the Combined Company's credit agreement. These costs are added back to net (loss) income to calculate Modified EBITDA and Adjusted EBITDA and include enacted cost savings initiatives related to overhead and administrative costs incurred by Former Six Flags, specifically for insurance premiums, legal costs and information technology costs; repairs for unusual weather events; certain legal and consulting expenses; Mexican VAT taxes on intercompany activity; severance and related benefits; payments related to the Partnership Parks; cost of goods sold recorded to align inventory standards following the Mergers; and contract termination costs. This balance also includes unrealized gains and losses on pension assets and short-term investments. (4) Modified EBITDA margin (Modified EBITDA divided by net revenues) is not a measurement computed in accordance with GAAP and may not be comparable to similarly titled measures of other companies. Modified EBITDA margin is provided because management believes the measure provides a meaningful metric of operating profitability. Modified EBITDA margin has been disclosed as opposed to Adjusted EBITDA margin because management believes Modified EBITDA margin more accurately reflects the park-level operations of the Combined Company as it does not give effect to distributions to non-controlling interests. For 2024, Adjusted EBITDA increased $347.6 million and Modified EBITDA margin increased 390 bps compared with 2023. The increase in Adjusted EBITDA included $319.6 million as a result of the Mergers and $28.0 million due to Former Cedar Fair operations. The increase in Modified EBITDA margin included a 280 bps increase as a result of the Mergers and 110 bps due to Former Cedar Fair operations. The $28.0 million increase in Adjusted EBITDA and 110 bps increase in Modified EBITDA margin from Former Cedar Fair operations was primarily due to the impact of higher attendance on net revenues in 2024. 29 T able of Contents 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. With the Combined Company's revolving credit facility and cash on hand, the Combined Company has sufficient liquidity to satisfy existing cash obligations at least through the first quarter of 2026. The Combined Company's capital allocation priorities include reducing outstanding debt and reinvesting in the business. As such, the Combined Company has not declared a dividend and has no immediate plans to do so. Capital expenditures for the Combined Company are expected to total between $475 million and $500 million in 2025. Capital expenditures will include the opening of new high-thrill roller coasters at Cedar Point, Six Flags Great America, Canada's Wonderland, Six Flags New England, Kings Dominion, Six Flags Great Adventure and Six Flags Over Georgia; two new family-friendly attractions at Carowinds; water park renovations at Kings Island, Hurricane Harbor Los Angeles and Hurricane Harbor Arlington; and upgraded and expanded food and beverage facilities across the park portfolio. Cash interest payments for the Combined Company are expected to range from $305 million to $315 million in 2025. Cash payments for income taxes for the Combined Company are expected to range from $105 million to $115 million in 2025. As of December 31, 2024, deferred revenue totaled $308.3 million, including non-current deferred revenue. This represented an increase of $116.6 million compared with total deferred revenue as of December 31, 2023, of which $122.8 million was attributable to Former Six Flags. The decrease in the remaining total deferred revenue was largely attributable to the amortization of prepaid lease payments for a portion of the California's Great America parking lot, the termination of transaction fees in California due to new regulations, and lower season-long product sales for the upcoming season. Cash Flows The following table presents key cash flow information for the years ended December 31, 2024 and December 31, 2023: Years Ended December 31, 2024 2023 (Amounts in thousands) Net cash from operating activities $ 373,412 $ 325,675 Net cash for investing activities (472,616) (220,422) Net cash from (for) financing activities 117,973 (143,001) Effect of exchange rate on cash and cash equivalents (1,083) 2,047 Net increase (decrease) in cash and cash equivalents $ 17,686 $ (35,701) Net cash from operating activities in 2024 totaled $373.4 million, an increase of $47.7 million compared with 2023. The increase was primarily due to the inclusion of operations of Former Six Flags operations since the Closing Date of the Mergers offset by higher merger-related costs. Net cash for investing activities in 2024 totaled $472.6 million, an increase of $252.2 million compared with 2023. The increase was due to net cash consideration paid for the Mergers and the inclusion of capital expenditures of Former Six Flags operations since the Closing Date of the Mergers. Net cash from financing activities in 2024 totaled $118.0 million, an increase of $261.0 million compared with net cash for financing activities in 2023. The variance was primarily attributable to $315 million of revolving credit facility borrowings outstanding and $1.0 billion of senior secured term loan facility borrowings, both of which were somewhat offset by $1.1 billion of redeemed senior notes in the current period. For a discussion regarding 2022 cash flows, including comparisons of 2023 results to 2022 cash flows, see "Management's Discussion and Analysis of Financial Condition and Results of Operations" within Cedar Fair's Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 16, 2024. Contractual Obligations As of December 31, 2024, the Combined Company's primary contractual obligations consisted of outstanding long-term debt agreements and related interest, certain obligations pertaining to the Partnership Parks (see Note 7 ), and various commitments under lease agreements (see Note 11 ). The Combined Company has also committed to capital expenditures between $175 million to $225 million, most of which will be paid in 2025, and license commitments of approximately $10 million per year through 2030 and $6.5 million per year from 2031 through 2035. Before reduction for debt issuance costs, the Combined Company's long-term debt agreements as of December 31, 2024 consisted of the following: 30 T able of Contents • $995 million of senior secured term debt, maturing in May 2031 under the 2024 Credit Agreement, as amended. Amortization payments of $10 million per year, paid in equal quarterly installments, are required to be made on the term debt. The term debt bears interest at a rate equal to Term Secured Overnight Financing Rate ("SOFR") plus a margin of 200 bps per annum or base rate plus a margin of 100 bps per annum. There was $10.0 million of current maturities outstanding and payable within the next twelve months as of December 31, 2024 related to the senior secured term debt facility. • $500 million of 5.375% senior unsecured notes, maturing in April 2027. 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. 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. Interest is payable under the 2029 senior notes semi-annually in January and July. • $200 million of 7.000% senior secured notes, maturing in July 2025. Interest is payable under the 2025 Six Notes semi-annually in January and July. • $500 million of 5.500% senior unsecured notes, maturing in April 2027. Interest is payable under the 2027 Six Notes semi-annually in April and October. • $800 million of 7.250% senior unsecured notes, maturing in May 2031. Interest is payable under the 2031 Six Notes semi-annually in May and November. • $850 million of 6.625% senior secured notes, maturing in May 2032. Interest is payable under the 2032 Six Notes semi-annually in May and November. • $315 million of borrowings under the $850 million senior secured revolving credit facility under the 2024 Credit Agreement, as amended. 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, as amended). The 2024 Credit Agreement also provides for the issuance of documentary and standby letters of credit. After letters of credit of $40.6 million as of December 31, 2024, the Combined Company had $494.4 million of availability under the former revolving credit facility. Letters of credit are primarily in place to backstop insurance arrangements. During the third quarter of 2024, $165 million of the outstanding balance of the 2025 Six Notes was paid on July 1, 2024 and the remaining $56.9 million outstanding balance of the 4.875% senior unsecured notes due July 2024 of Former Six Flags was paid on July 31, 2024. With respect to the revolving credit facility only, the 2024 Credit Agreement, as amended, 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 step-downs of 25 bps after every four consecutive quarters, culminating at 4.5x beginning with the test period ending on or about December 31, 2027. The 2024 Credit Agreement, as amended, 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, as amended, 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 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 then-available Cumulative Credit (as defined in the 2024 Credit Agreement), so long as no event of default has occurred and is continuing. 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. 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, even 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 31 T able of Contents 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 so long as no default or event of default has occurred and is continuing or would occur as a consequence thereof. The Combined Company's pro forma Total Indebtedness to Consolidated Cash Flow Ratio was less than 5.25x as of December 31, 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 Former 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, which was made 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 Three tranches of fixed rate senior notes outstanding as of December 31, 2024 were registered under the Securities Act of 1933: the 2027, 2028 and 2029 senior notes, or the "registered senior notes". The Combined Company, Canada's Wonderland Company ("Cedar Canada"), Magnum Management Corporation ("Magnum"), and Millennium Operations LLC (“Millennium”) are the co-issuers of the registered senior notes. Substantially concurrently with the closing and in connection with the Mergers, the Combined Company entered into supplemental indentures to assume all of Former Cedar Fair's obligations under the indentures governing the registered senior notes. Pursuant to the supplemental indentures, each of the Former Six Flags subsidiary guarantors under the 2024 Credit Agreement agreed to fully and unconditionally guarantee the registered senior notes. As a result, the registered senior notes are irrevocably and unconditionally guaranteed, on a joint and several basis, by each wholly owned subsidiary of the Combined Company (other than the co-issuers) that guarantees the credit facilities under the 2024 Credit Agreement, as amended. A full listing of the issuers and guarantors of the registered senior notes can be found within Exhibit 22. 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, the 2025 Six Notes and the 2032 Six Notes. In the event that the co-issuers (except for the Combined Company) or any subsidiary guarantor is released from its obligations under the 2024 Credit Agreement, such entity will also be released from its obligations under the 2027 and 2029 senior notes and from its guarantee under the 2028 senior notes. In addition, the co-issuers (except for the Combined Company) 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) in the case of co-issuers (other than the Combined Company), 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 the Combined Company or a sale or disposition of all or substantially all of the assets of such entity made in accordance with the applicable indenture; ii) if such entity is dissolved or liquidated; iii) if an entity is designated as an Unrestricted Subsidiary (as defined in each indenture); iv) in the case of the 2027 and 2029 senior notes, 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 the Combined Company 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. 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 December 31, 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 are 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 did not guarantee the credit facilities or senior notes (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 $123.6 million and $14.3 million as of December 31, 2024 and December 31, 2023, respectively. 32 T able of Contents Summarized Financial Information (In thousands) Six Flags Entertainment Corporation (2024) Cedar Fair L.P. (2023) (Parent) Magnum (Co-Issuer Subsidiary) Cedar Canada (Co-Issuer Subsidiary) Millennium (Co-Issuer Subsidiary) Guarantor Subsidiaries Balance as of December 31, 2024 Current Assets $ 214 $ 74,710 $ 58,221 $ 147,184 $ 1,928,466 Non-Current Assets 1,878,531 2,196,232 675,573 2,518,804 6,993,517 Current Liabilities 160,229 1,699,979 20,032 227,100 607,921 Non-Current Liabilities 366,315 10,444 365,239 1,877,375 2,918,671 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 Year Ended December 31, 2024 Net revenues $ 98,489 $ 489,776 $ 160,414 $ 2,007,248 $ 1,116,695 Operating (loss) income (8,248) (159,791) 54,641 126,476 258,298 Net (loss) income (214,263) 120,777 34,607 — 332,344 Year 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 Quantitative and Qualitative Disclosures about Market Risk The Combined Company is exposed to market risks from fluctuations in interest rates and currency exchange rates on operations in Canada and Mexico, and from time to time, on imported rides and equipment. The objective of the Combined Company's financial risk management is to reduce the potential negative impact of interest rate and foreign currency exchange rate fluctuations to acceptable levels. Market risk sensitive instruments are not acquired for trading purposes. Interest rate risk is typically managed using a combination of fixed-rate long-term debt, interest rate swaps that fix variable-rate long-term debt, and variable-rate borrowings under a revolving credit facility. Translation exposures with regard to Canadian and Mexican operations are not hedged. As of December 31, 2024, variable rate debt included $995 million of senior secured term loan facility borrowings and borrowings under an $850 million revolving credit facility under the 2024 Credit Agreement, as amended. Assuming the outstanding senior secured term loan facility borrowings and the daily average balance over the past twelve months on revolving credit borrowings of approximately $166.8 million, a hypothetical 100 bps increase in 30-day SOFR on the variable-rate debt would lead to an increase of approximately $11.6 million in cash interest costs over the next twelve months. A uniform 10% strengthening of the U.S. dollar relative to the Canadian dollar and Mexican peso would have resulted in a $7.8 million decrease in operating income for the Combined Company's six months ended December 31, 2024. 33 T able 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 risks and uncertainties 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: 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; 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; 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 risks and uncertainties, including those listed under Item 1A in this 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 this Annual Report on Form 10-K 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 report. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. The information appearing under the subheading "Quantitative and Qualitative Disclosures about Market Risk" under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" of this report is incorporated herein by reference. 34 T able of Contents