Six Flags Entertainment Corp (FUN) 2013 Q1 法說會逐字稿

Good morning, ladies and gentlemen, and thank you for standing by.

And welcome to the Cedar Fair first-quarter earnings conference call.

During today's presentation all parties will be in a listen-only mode.

Following the presentation there will be a question-and-answer session and instructions will be given at that time.

(Operator Instructions)

At this time I would now like to turn the call over to Stacy Frole.

Please go ahead, ma'am.

Thank you, Craig.

Good morning and welcome to our first-quarter earnings conference call.

I'm Stacy Frole, Cedar Fair's Vice President of Investor Relations.

Earlier today we issued our 2013 first-quarter earnings release.

A copy of that release can be obtained on our corporate website at www.cedarfair.com or by contacting our investor relations offices at (419)627-2233.

On the call this morning are Matt Ouimet, our President and Chief Executive Officer, and Brian Witherow, our Executive Vice President and Chief Financial Officer.

Before we begin, I need to caution you that comments made during this call will include forward-looking statements within the meaning of the federal securities laws.

These statements may involve risks and uncertainties that could cause actual results to differ materially from those described in such statements.

You may refer to filings by the Company with the SEC for a more detailed discussion of these risks.

In compliance with SEC regulation FD, this webcast is being made available to the media and the general public as well as analysts and investors.

Because the webcast is open to all constituents and prior notification has been widely and unselectively disseminated, all content of the call will be considered fully disclosed.

Now, I'll turn the call over to Matt Ouimet.

Thank you, Stacy, and good morning, everyone.

We intend to keep our prepared remarks brief this morning.

First-quarter operations are limited as our focus during this period is on preparing our parks for opening.

During the first quarter, only 5 of our 15 properties were in operation including Knott's Berry Farm, our only year-round park.

As a result, the first quarter typically represents less than 5% of our full-year net revenues.

As such we do not advise drawing any conclusions about the full year based on the first-quarter numbers alone.

We were pleased with our first-quarter results.

Net revenues for the quarter were up $14 million primarily due to the growth in attendance in in-park guest per capita spending at Knott's Berry Farm.

The quarter also benefited from an additional 21 operating days due to the later ending of our fiscal first quarter and the earlier Easter and spring break holidays in 2013 compared with last year.

Our management team at Knott's Berry Farm has done an excellent job over the past year in revitalizing the park and enhancing the overall guest experience.

These efforts, combined with a compelling new marketing campaign that brings the park back to its farm roots coupled with our new e-commerce platform, resulted in increased attendance and guest spend during the first quarter of 2013.

We look forward to introducing our guests to a new boardwalk area with three new family rides at the end of this month and continuing to build towards the true potential we believe Knott's has.

This is a market I'm particularly familiar with and I'm confident the investments we've made over the past year, along with investments we have planned for the future, are positioning this park for long-term success.

Our operating costs were also in line with our expectations for the quarter.

Our largest seasonal parks, Cedar Point, Kings Island, and Canada's Wonderland were not open during the quarter as our teams finalize preparations for the season.

As of today, we have 8 of our 11 amusement parks open including Kings Island and Canada's Wonderland.

Cedar Point, our flagship park, is scheduled to open this weekend and has already received a tremendous amount of publicity heading into its 144th operating season.

Brian will provide additional details behind the first-quarter results shortly, but first I'd like to discuss our outlook for the upcoming 2013 operating season.

Although it is much too early to determine the kind of year we ultimately will have, we are seeing continued strong growth in the second year of our FUNforward strategy.

We are particularly encouraged by the early season positive trends in season pass sales and hotel and group bookings at our parks.

Overall, season pass sales are up nicely when compared with this time last year in terms of both units sold and average unit price.

As a reminder, our season pass holders are our best goodwill ambassadors of our parks and they represent some of our most valuable customers in terms of guest spend over an entire operating season.

Our season pass products clearly offer a very compelling value proposition when compared with other sources of entertainment.

We believe the solid early season momentum in season pass sales is due to a combination of our strong lineup of new rides and attractions, compelling new marketing campaigns, and the expansion of the installment payment program we offer through our new e-commerce platform.

With the success we had in 2012 from the introduction of the installment payment program for season passes, we chose to expand the program into our resorts.

This program allows budget conscious consumers to book their vacations in advance and pay for the trip over a number of payments.

Approximately 20% of our hotel bookings to date have been made through the installment payment program.

While still a small portion of our overall bookings, we believe this data point is a testament to the strength of our advanced purchase commitment strategy.

In addition, current bookings on group outings are up compared with the same time last year.

Though it is still early, we are pleased to see the early season increase in group sales, a clear result of the efforts of our new sales force team.

Our investment in world-class rides, family entertainment, and premium guest experiences will continue to be key drivers of our success in 2013.

GateKeeper, a new wing coaster at Cedar Point and the highlight of our capital program this year, has truly transformed the entrance and overall landscape of the Best Amusement Park in the World.

This ride has been receiving national attention including a segment on Good Morning America which is expected to run this week, and we are looking forward to this weekend when the park gates open to the general public.

I personally had the chance to ride GateKeeper for the first time last week.

Actually, I rode it four times and I can now say with 100% confidence that riders and spectators alike will be talking about this extraordinary ride this summer and for many summers to come.

This ride is a true testament to the strength of our in-house planning and design team led by Rob Decker with whom you'll have the chance to meet at our upcoming analyst day in late June.

Our team hit the ball out of the park with the lakefront placement of the ride and transformation of the front entrance allowing everyone who enters the park to be part of the GateKeeper experience.

Not to be overshadowed by the excitement of GateKeeper, a number of other projects in our 2013 marketable capital program of approximately $100 million have generated substantial buzz in their markets.

These include a new world-class wooden roller coaster at our California's Great America Park in Santa Clara, California; a massive water park expansion at our World of Fun and Oceans of Fun park in Kansas City, Missouri; and new family attractions at several of our parks including Knott's, Kings Dominion, Carowinds, Michigan's Adventure, and Valleyfair.

As the core operating season approaches, we are confident our strong lineup of new rides and attractions will provide our guests with a best day of the summer experience each and every time they visit one of our parks.

On our last call we provided some additional detail on our incremental capital spend of $15 million to $20 million a year that we expect to make over the next several years.

I am pleased to tell you that the acceleration of the four point-of-sales systems is complete and all four systems are now online.

Moving our parks to a common point-of-sale platform allows us to provide a better guest experience in the near term through reduced wait times and greater functionality.

It also enables us to capture valuable data for use with our new customer relationship management platform, or CRM as we call it.

As you can see, we're pleased with the strong momentum through the first quarter as well as our prospects for 2013 and beyond.

While it is too early to see definitive trends at this point in the year, we anticipate 2013 will mark our fourth consecutive year of record results.

More specifically we anticipate net revenues for the full-year 2013 to be in the range of $1.09 billion to $1.115 billion, and full-year adjusted EBITDA to be in the range of $400 million to $410 million.

This season will represent the first full season of my new management team.

With our complete team now in place and having the benefit of a full planning cycle, we're excited about the opportunity to share best practices across the parks.

In doing so, we're utilizing methods and techniques that have been in play across other industries but have not commonly been used in the regional amusement park model.

In this industry, people make all the difference and I truly believe we have the right team in place at all levels of the organization to maximize growth and, ultimately, unit holder value.

I am also pleased to say that our Board of Directors has declared our 101st distribution payment.

The quarterly cash distribution of $0.625 is payable on June 17, 2013 and is consistent with our targeted annualized rate of $2.50 per limited partner unit.

Lastly before I turn the call over to Brian, on behalf of the Board of Directors I would like to thank Dick Kinzel for his years of service both as management and as a Board member.

Dick will retire from the Board this June.

In anticipation of Dick's retirement, the Board conducted a comprehensive national search and has recommended that the unit holders elect Scott Olivet, the Chief Executive Officer of Renegade Brands, to fill Dick's seat.

Mr. Olivet previously served as the Chief Executive Officer of Oakley and is a former partner of Bain and Company and brings additional public company experience to our Board.

The Board also endorsed the reelection of Eric Affeldt, our current Chairman, and John Scott, the current Chair of our Nominating and Corporate Governance Committee.

Eric and John have both been instrumental in the evolution of the Company over the past three years.

On that note, I'd like to turn the call over to Brian to discuss our first-quarter financial results in more detail.

Brian?

Thanks, Matt.

As Matt mentioned earlier, our first quarter represents less than 5% of our full-year results.

Given the highly seasonal nature of our business, the majority of our revenues are realized during a 130 to 140 day time frame beginning in our second quarter.

Most of our revenue is concentrated in the peak vacation months of July and August with a growing percentage starting to emerge in and around the Halloween season.

Overall, we're very pleased with the results for the first quarter.

Consolidated net revenue for the three months ended March 31, 2013 were $41.8 million, up $13.6 million from $28.2 million for the first quarter a year ago.

As Matt mentioned, the increase in net revenues was driven by increased attendance and in-park guest per capita spending at Knott's Berry Farm, which is our only park with meaningful first-quarter operations.

Revenues in the quarter also benefited from the additional 21 operating days in the period due to the current fiscal quarter ending later than in the previous year, as well as a shift in the Easter and spring break holidays which occurred in the first quarter this year compared with the second quarter of 2012.

Looking at results for the end of April for a moment, which evens out the calendar shift associated with the earlier timing of Easter and spring break, net revenues remained strong, up $12.5 million, on the continued solid momentum in both attendance and guest spending.

Operating costs and expenses for the first quarter totaled $108.1 million, an increase of $10.6 million from the prior-year quarter and were in line with our expectations.

Operating results for the first quarter include normal off-season operating, maintenance, and administrative expenses at our seasonal amusement and water parks, and daily operations at Knott's Berry Farm and Castaway Bay.

The year-over-year increase in cost and expenses is primarily attributable to the additional operating days in the first quarter of 2013 when compared with the first quarter of 2012, as well as the incremental attendance at Knott's Berry Farm during the period.

For the quarter, interest expense decreased modestly to $25.8 million, compared to $26.8 million a year ago, resulting from a full-quarter benefit of the termination of Canadian cross currency swaps which occurred in early February of last year.

As previously announced, we successfully completed a refinancing of our previous senior secured credit facilities in the first quarter of 2013 with new senior secured credit facilities along with new senior unsecured notes.

This refinancing, which was led by Roger Allen, our Vice President and Treasurer, not only enables us to take advantage of historically low rates, but it also significantly improves our financial flexibility including the widening of the financial covenants and restricted payment provisions so that we're better positioned to capitalize on opportunities in the future.

For 2013, we expect our average cost of debt including the effect of interest rate swaps to be just over 6%, resulting in total cash interest costs for the year of approximately $100 million.

For the quarter, our net loss totaled $109.1 million or $1.95 per diluted limited partner unit, which compares with a net loss of $65.4 million or $1.18 per diluted LP unit for the first quarter in 2012.

The larger net loss for the period was due to a $34.6 million non-cash charge related to the refinancing and the early extinguishment of debt, a $10.2 million unfavorable change in the net effective interest rates swaps, and a $17.2 million unfavorable change in the unrealized, realized foreign currency exchange between years.

These losses were offset somewhat by the increased first-quarter revenues.

Now let me highlight a few items from our balance sheet.

We entered the first quarter of 2013 well positioned in terms of both liquidity and cash flow.

Our receivables and inventories are at normal seasonal levels, and we have credit facilities in place to fund current liabilities, capital expenditures, distributions, and pre-opening expenses as needed.

At the end of the first quarter, we had $630 million of variable rate term debt of which all has been effectively converted to fixed rates through several swap agreements that are in effect through 2015.

We had $901 million of fixed rate bonds, $96 million in borrowings under our revolving credit facilities, and $10 million in cash on hand.

Of our total term debt, only $6.3 million is scheduled to mature within the next 12 months.

Based on our current adjusted EBITDA guidance, we expect our total leverage ratio, excluding our revolving credit facility, to be approximately 3.7 times debt to adjusted EBITDA.

Based on our recent refinancing and these performance ratios, we will have full discretion to optimize total return to unit holders through a balanced approach of distributions to unit holders, investment in our business, and debt reductions.

Before we turn the call over for questions, I want to briefly touch on our announcement in this morning's earnings release regarding the restatement of financial statements included in our previously filed 2012 Form 10-K.

The purpose of this restatement is to correct the accounting treatment for the retirement of a ride at one of our parks in 2011.

Earlier this year, we disclosed our plans to move off of the composite depreciation method beginning in fiscal 2013.

In the process of changing accounting methods and responding to an open SEC comment letter, we determined that our accounting treatment for the retirement of a ride at one of our parks in 2011 was an error under the composite method.

More specifically, the discrete charge related to that asset retirement, which totaled $8.8 million on a pretax basis, should have been recorded to the income statement in 2011 rather than being deferred and recorded in the composite pool as was originally disclosed in our 2011 Form 10-K.

The correction of this error results in adjustments to the financial statements that will decrease pretax earnings in 2011 by $8.8 million and increase pretax earnings in 2012 by $1 million.

These adjustments will have an immaterial impact on the comparative balance sheet for the years presented.

Most importantly, the resulted adjustments do not affect our ongoing park operations or our historical or future cash flows.

At this time, we'd like to open up the call for questions.

Craig?

Thank you very much.

At this time we will begin the question-and-answer session.

(Operator Instructions)

And our first question does come from the line of James Hardiman with Longbow Research.

Good morning.

Thanks for taking my call.

I guess just first, briefly here I was hoping you could help us out with our models for the second quarter.

Any way you could quantify how much you think the incremental operating days as well as the earlier Easter and spring break affected either sales or EBITDA or ideally both for the first quarter, and does that all come out of the second quarter?

I know you gave us April to date numbers, but just wondering how we should think about the calendar for 2Q and I guess for the rest of the year if there are any notable callouts there?

Sure, James, this is Brian.

As I said on the call, and Matt as well said, in the first quarter we had 21 additional operating days.

In the second quarter, that will swing and we will have 26 less operating days in the second quarter of '13 compared to '12.

But I think more importantly to note is as we said through the end of April those timing differences, those operating day differences had essentially washed.

There was a total of two differences in operating days by the end of April, and we were still up $12.5 million in revenue, $13.6 million at the end of the first quarter, so we've held on to most of those gains by the time the calendar evened out.

But for the balance of the year, I can tell you there's no significant change in operating days in the third or fourth quarter.

Got it, thanks.

And then in terms of the guidance, remind me again, the $15 million to $20 million of incremental spend over the next couple years, is that entirely CapEx or is there some SG&A in there as well?

Yes, most of that, if not all of it, is CapEx.

There may be a little software cost that ends up getting expensed but most of that is CapEx.

Okay.

And then just speak to the guidance.

It looks like it's about 2% to 4% on the top line, 2% to maybe 5% in terms of EBITDA.

Talk about how that flowthrough works in general.

If you're at the high end of the guidance, or even better than the top line guidance, does all that fall through to the bottom line?

Then, I guess, bigger picture, when do you anticipate more meaningful margin growth as we move forward?

As we talked about -- James, good morning this is Matt.

Good morning.

As we talked about before, I think over time we would expect to see some of that flow through at a greater rate than we've seen during my first couple years, but we are continuing to invest for both the short-term and the long-term as well as continuing to invest in the guest experience, which supports the value proposition which is one of the points I wanted to touch on today.

I think the industry still has -- the industry broadly still has a great value proposition, but as we all continue to push pricing, I think it's important that we remember we've got to sustain or even improve that value proposition.

So, yes, there's a substantial fixed cost nature to this business as you realize, and I would expect as revenue grows over time, we will continue to see that flowthrough improve.

An example for us at a micro basis is Knott's Berry Farm, which is our 365-day park, has one of the lowest margins in the Company.

And you can imagine as we grow revenues there, that that would flow through at a bigger number.

Okay.

And just so I'm clear, in addition to the $15 million to $20 million, are there any sort of incremental investment costs in operating expenses that ultimately go away once we get past that?

And how should we think about quantifying those incremental costs?

I don't think they're of the magnitude to call out, James.

I think that we have done things we've talked about before.

Our CRM system, which a lot of people -- customer relationship management -- use a lot of different definitions for that, but it might be helpful for this group.

Our CRM is designed to be able to attach a transaction to an individual or a household.

And that's the key.

A POS system will let us measure transactions and do a lot of different things, but once we can attach it to a household we should see some productivity from that both on the marketing side as well as on the yield management side.

And so, we spent we said low single digits on the CRM this year.

Last year and beginning of this year.

Low single digit millions on that, but that would be the only one of note I think I'd call out.

Great, and then just last question here, capital spending program.

Maybe compare it to years past, obviously, one of the marquee rides this year is at your biggest park.

I don't know if you can compare and contrast that to a year in which you maybe have more or new attractions but at less meaningful parks.

How should we think about that in a historical context?

The best example probably is Leviathan which went into Canada's Wonderland last year, which was our strongest growth park that we had in the system and, obviously, it is one of the big four to start with.

So, I think intellectually and based upon the depth of the management experience here that is incredibly deep from an industry standpoint, we understand how these major investments, particularly at the big four parks, should drive meaningful attendance and we're expecting that at Cedar Point this year.

Excellent.

Thanks, guys, and good luck this year.

Thank you very much.

And our next question does come from the line of Scott Hamann with KeyBanc Capital Markets.

Hello, good morning everyone.

Just in terms of how you're thinking about the guidance on the top line, the mix between the attendance and the spending per caps?

Yes, Scott, good morning.

Consistent with what we've said before, we still believe that we -- sustainable attendance growth is in more the -- a quarter of our growth will come from sustainable attendance growth and about three-quarters comes from pricing or yield as we refer to it, Scott.

And we continue to think about that on a long-term basis.

Obviously, there will be years that that mix will change; and as we get into the year, we'll be able to decide which of those levers is more productive for us on any given year.

So we're staying with it.- On a long-term basis we stay with that plan.

But it could change on an annual basis.

Okay.

And just, this year it seems like you have a few attendance headwinds in terms of the Knott's Soak City and the Oceans of Fun water parks.

Can you quantify maybe what that was in terms of attendance last year?

We don't break out attendance from individual parks, and I don't know that we'll have particular headwinds there.

I actually feel great, I have great confidence in our strategy for Worlds of Fun and Oceans of Fun, which is now one ticket.

And I feel very strong -- and we're seeing that evidenced in our season pass sales, and obviously Knott's has performed very well for the first quarter.

Okay.

And then just on the new program, the Fast Lane Plus that you're putting in at some of the parks, can you speak to some of the adoption rates that you're seeing versus the Fast Lane?

And then just maybe within that program overall, I mean last year was very successful but are there opportunities to increase the capacity and pricing of those programs this year?

Early indications are that we're still in the sweet spot in terms of Fast Lane Plus as well as Fast Lane.

It is a very productive way to bifurcate a little bit.

But most consumers to date, and Scott, again, back to how small these numbers are so please be careful with them, but most consumers today are buying the Fast Lane Plus.

I will exercise extreme caution.

Thanks.

(laughter) Thank you, Mr. Hamann.

And our next question does come from the line of Tim Conder with Wells Fargo Securities.

Thank you.

Matt, just if you could just go over the differential in pricing even though, again, taking your caution that the numbers are small between Fast Lane and Fast Lane Plus.

And then, any color as to what adoption rate that you had seen in 2012 and are expecting any growth in adoption penetration here in '13?

Tim, it's Brian.

As far as the pricing is concerned with Fast Lane Plus, at Cedar Point it's an incremental $15 charge.

At the other four properties it's an incremental $10 charge.

Okay.

And as a reference benchmark, you're roughly $35 for Fast Lane?

Is that still pretty fair for the benchmark base Fast Lane?

No, it ended the 2012 season at a much higher point than that.

As you may recall, it's a tiered pricing product that differentiates from park to park.

But at a park like Cedar Point, for example, a single pass for Fast Lane would be $65, tiering down to $50 for four or more, and so the Fast Lane Plus is the $15 on top of that.

Each of the parks has a slightly different pricing, but I can tell you the average price probably pushes out in the low to mid-$50s.

Okay.

And then, Matt or Brian, whoever wants to answer this.

Any color here just on the attendance?

And granted, again, the whole quarter's 5% of your revenues, but any color on the attendance that you can give us here in the first quarter?

And then, Matt, specifically, you said you got your POS rolled out here ahead of the season.

Just refresh us on the time line of fully integrating the POS and the CRM.

Well, I'll take the latter first, Tim.

That's happening on a realtime basis as we speak.

That data will continue to build over the course of the year and our analysts will be trying to mine it for stuff that has value.

So, that's active as we speak.

It obviously gets more valuable as you get more data into the system.

So, we're looking forward to that.

I think that's helpful.

We're not going to give detailed -- we don't do it for the first quarter, give attendance information.

What I would like to emphasize perhaps is two things.

One is, obviously Knott's has, as we've indicated here and Brian has shown the results through the end of April, Knott's has been -- is showing the value of our long term strategy, particularly in terms of investing in product in a very competitive marketplace.

And showing both attendance and per-cap gains in a park that's open 365 days.

The other big number we talked about earlier, and we're not going to go into specifics, is just the season pass sales.

And season pass revenues are up at all parks across the whole system.

I think, again, that's a validation of the value proposition that consumers are seeing.

It also would lead to an expectation that the mix of our attendance would continue to grow to be more season pass holders.

And that's a good thing.

They are the most valuable consumers.

They also have the advanced purchase commitment requirement that we like.

And so, season pass programs continue to grow and we think that's a good thing.

First quarter is good evidence of that.

Okay.

Tim, what I would want to add to that as far as attendance is concerned, you can expect to see our first indication of how the year is going near the end of June.

We'll disclose year-to-date attendance trends in and around that time frame ahead of second-quarter numbers.

Great, okay.

And Matt, I know you're not going to give specific numbers.

Can you give us more general ranges?

Are we talking low-singles, mid-singles on season passes?

I know we're parsing hairs here a little bit, but any additional color you can give us percentage growth year-over-year, sir?

I don't want to go into details.

I will tell you that we're very pleased with the results so far.

Okay.

And then, lastly.

You talked about doing some bracelets at the water parks, preloaded money.

Can you say how that's, the rollout, how that's going?

I can tell you better when the water park opens, but --

No, no, I know it's open but I mean, just again, all -- they're not open yet, but all the -- will that go across, just to check here, across all of the facilities here and is that on track?

Well, so two things on that, Tim.

One is, and we do think there is an opportunity because of the limitations of the wallets are in the locker at the water parks, to expand per cap by selling a preloaded bracelet that you buy as you enter the park.

What we are doing this year as we typically do is we're testing at one of our parks.

We're rolling it out, actually, at Dorney Park.

And we're not doing it just in the water park.

We're actually doing it for the amusement park as well and would expect to, based upon what we learn there, like we did with Fast Lane at Kings Island as another model, be able to expand that across the system if we see the success we anticipate with it.

There is -- there will be a consumer training period because this is not a device that they know that they value yet, and so we will learn a lot at Worlds of Fun.

I actually envision at some point industry-wide that it's part of the ticket package you buy going forward because the more we can do an on all-inclusive or advanced purchase basis, the better the benefits for us, and also I think the better experience for the consumer.

So, Dorney Park is the test model this year and hopefully that will prove a valuable not only exercise, but a valuable tool for us going forward.

And Matt, again, in that comment that you just made, how is that -- how will that integrate or will it initially end with the POS and the CRM system or does that have to then, as you say, have to be all packaged together over time with the --?

It will all tie together.

It will all tie -- that data will all tie together.

Even this year as you test that?

Yes, even this year because it will be basically a merchandise type item you're selling and then, obviously, we'll know where that data gets used, where that particular preloaded band, if you will, gets used.

Great.

Okay I'll get back in queue for any others.

Thank you, sir.

Thank you, Tim.

And our next question does come from the line Afua Ahwoi with Goldman Sachs.

Thank you.

I have two questions.

First, correct me if I'm wrong but I think we've mentioned in the past about the benefit of having the installments is also getting people to book on your website and able to upsell to some products within the park.

Are you seeing continued traction with that?

And then secondly, some of the other consumer companies have indicated that the fourth quarter was maybe impacted by some either delayed income tax refunds or higher payroll taxes.

Did you see any of that at all with your customer base?

Was there any segmentation between maybe higher and lower, and anything you can call out in terms of broader consumer trends?

Thank you.

Yes, Afua, it's Brian, thanks.

I'll take the latter part first.

I would say no.

In part, given that most of our properties aren't in operation, it's tough to say or see any real impact from that.

We honestly believe if that scenario is playing out that it could work for our advantage as those refunds are now coming online more in concert when our parks are opening and season pass sales tend to be most robust, so we think that could work it to our advantage.

Clearly, at Knott's Berry Farm, the only park that was in operation for that time period, you can take away from the numbers we and the comments we made on the call has performed very well.

So, we really didn't see any impact there.

As far as the payment plan is concerned, I'll talk more broadly.

The eCommerce platform as we've said last year, we saw strong growth in the eCommerce revenues and sales in 2012 and continue to see traction there.

The installment program being one piece of that continues to be received very well by our consumers, our guests.

And we continue to expand the use of, as Matt mentioned on the call, the use of the installment beyond just season passes pushing it out to hotel or accommodations products, as well as looking to push it out to single day tickets later here this summer.

Thank you.

(Operator Instructions) And our next question does come from the line of Ray Cheesman with Anfield Capital.

You mentioned earlier that you have increased flexibility in your right side of the balance sheet.

Is that -- would you be using that in the future for M&A or is that for capital expenditures?

Or is that to tweak the distributions back to unit holders?

Ray, this is Matt.

Let me take that.

One of the things that, obviously, there's a lot of decisions we make, but obviously us and the Board, one of the biggest ones is capital allocation, essentially your question.

And the way we've always talked about it is the importance of the quality distribution for this particular investment instrument.

So, I would start by saying that everything we do gets bumped up against the distribution which at this time we said we need to make it long-term sustainable.

I believe we've done that.

And we want to grow that as EBITDA grows.

Beyond that, we've got all the classic considerations that you would appreciate from two factors.

One is generating the amount of cash we will generate.

The other is the degree of leverage that we've gotten ourselves to at this point.

So, it is growth in investment in the business as you might expect us to continue to think about as we've got these large installed asset base.

I tell people we only rolled out our FUNforward initiative in January of last year so, and we believe in those initiatives and we're seeing traction.

But we're also starting to investigate what the next generation of growth looks like in terms of FUNforward 2 while keeping our eye on the ball.

So, there will be some more investment in the business.

I would expect it's what I would call directly organic or near organic for sure.

And then we'll do all the classic considerations that follow beyond that.

Does it makes sense to pay down debt, does it makes sense to increase the distribution, or does it make sense to buy back stock at some point?

The other thing, and, Ray, I'm sorry I'm not familiar with you, but the other thing we've told people consistently is we have about $400 million, I think it's $405 million of bonds that are still out there that really are not affordably recalled, called if you will, until the fall of next year.

And that will be a little bit of a defining moment for us as we consider our capital structure going forward.

And hopefully rates will stay where they are, and we will have a big advantage at that point in time.

I don't know if that helps you, but that's kind of the broad picture.

Thank you very much.

I was also wondering, as I sit here outside of Denver and we had a little frost and snow last night, if the odd weather in America has -- I know these aren't your key operating days yet, but if the weather's had any impact on the second quarter.

I don't know if Elitch Gardens is open yet, but if they were, God bless them.

Actually, they are and I can't imagine it's much fun.

Yes, and so what happens with us in our business is that weather in any short abbreviated period of time, give me a weekend, give me a holiday weekend, give me a month, whatever, can swing rather meaningfully.

But over the course of 120, 130 day operating season, year after year it tends to average out.

And so, we have not experienced anything I would call unusual to date this year.

And we expect by the time we get to the end of the year, it won't be part of the math that we go through.

Perfect.

One last one.

The season passes, you said they're spread across the entire system, but we see here at say Vail Resorts, when they put in one big lift people tend to focus on the mountain that got the extra CapEx over the summer as opposed to the other couple in their system.

Are you finding the same thing, that it's heavily weighted this year toward, for example, your GateKeeper product which is clearly a very high profile item for you to add?

So, when I buy a season pass, is it park-specific like toward GateKeeper or is it system-wide across the entire country?

Yes, the vast majority we sell are park specific, and actually, when I look across the whole system, everybody is in a really good place.

We do sell a Platinum Pass which is good at all of our parks, but because we're so geographically dispersed, there's not a lot of Platinum Passes sold for that reason.

But a good success across all of them.

Obviously where we have new capital investment, the industry generally sees a bump in the year they do the new capital investments.

Okay.

Thank you very much.

Thank you.

And our next question is a follow-up from the line of Tim Conder with Wells Fargo Securities.

Yes, I just wanted to circle in on, you did give us some good commentary on the season passes, Matt and Brian, but anything that you're seeing on those presales related, is there a direct correlation with your parking and then also anything you may be doing on the food front?

I guess, Tim, the way I would characterize it is that the, as I said to one of the previous questions, the eCommerce activity or transactions on the eCommerce platforms across the system continue to be strong.

That those products extend beyond just ticket sales to advanced parking, Fast Lane purchases, et cetera.

To give you, hopefully maybe give you a little bit of color on that, deferred revenue on the balance sheet at the end of the first quarter, which would encompass a lot of that beyond just season pass, although season passes is the lion's share of those dollars, is up a little more than $15 million or 30% from the same time a year ago.

So, very strong numbers that I think speak towards the strength in early season activity that Matt was commenting on.

Great.

Thank you.

Thank you, Tim.

And our next question is another follow-up from the line of Ray Cheesman with Anfield Capital.

I'm sorry, I forgot to ask you before.

At our water park here, Water World, we don't have a preloaded bracelet setup.

We have a buy all you can eat or not.

How do you guys see the economics flowing through of a program like that as opposed to a preloaded, preset kind of thing on your wrist?

You know, it's interesting Ray.

We have a -- the good news is with 11 parks we can test various different models.

And so, we have opportunities even here at Cedar Point where you can pay -- we have the all you can eat opportunity for various venues in the park, et cetera.

So, we'll bump it up against the other models as the season advances and try to figure out which one gets you to the best place.

My experience has always been if I can get you to buy something ahead of time in a bundled package, then we get greater price elasticity.

And as I said before, as odd as this sounds, the consumer feels greater satisfaction because Dad is not pulling his wallet out for every single ice cream cone.

Is there some way that you ultimately arrive at a place where you simply connect my credit card to my bracelet through the POS?

Oh yes.

Do I have an unlimited ability to spend?

We essentially do that with our hotel portfolios today.

Okay.

So yes, I think all of those devices.

I do think this bracelet idea has real good opportunity, but it will take a while like anything else to train the consumer that this is a better way to have the experience, and that's a lot of what we'll do at Dorney Park this year is the marketing and education component of that.

Best of luck with that program.

Thanks.

And at this time there are no further questions.

I would like to turn the call back over to Matt Ouimet for any closing comments.

Well first of all, thank you for your questions.

Before I conclude, I'd like to note that the invitations were recently e-mailed for our upcoming analyst day event to be held at Cedar Point in late June.

I encourage all the analysts on the call to attend as it will be a great opportunity to meet our management team and experience Cedar Point, the Best Amusement Park in the World for 15 straight years.

For additional information regarding the event, please feel free to reach out to our investor relations department.

On behalf of our Board of Directors and the management team, I'd like to thank you again for your time this morning and your ongoing interest in Cedar Fair.

As we head into our core operating season, we feel very good about Cedar Fair's plans, progress, and potential, driven by the highly talented personnel at our parks with the support of the team here in Sandusky and our Board of Directors.

We remain committed to acting in the best interests of all unit holders by executing a strategy that creates maximum value in both short- and long-term.

I look forward to see seeing you on the midway this summer.

Stacy?

Thank you, everyone, for joining us on the call today.

Should you have any follow up questions, please feel free to contact me at 419-627-2227 or Lisa Broussard at 419-609-5929.

We look forward to speaking with you again in about three months to discuss our second-quarter results.

Thank you.

Ladies and gentlemen, that will conclude the conference for today.

We do thank you for your participation.

You may now disconnect your lines at this time.