United Parks & Resorts Inc (PRKS) 2018 Q3 法說會逐字稿

Good day, and welcome to the SeaWorld Third Quarter 2018 Earnings Conference Call. (Operator Instructions) Please note, this event is being recorded.

I would now like to turn the conference over to Matthew Stroud, Vice President of Investor Relations. Please go ahead.

Thank you, and good morning, everyone. Welcome to SeaWorld's Third Quarter 2018 Earnings Conference Call.

Today's call is being webcast and recorded. A press release was issued this morning and is available on our Investor Relations website at www.seaworldinvestors.com. Replay information for this call can be found in the press release and will be available on our website following the call.

Joining me this morning are John Reilly, Interim Chief Executive Officer; and Marc Swanson, Chief Financial Officer. This morning, we will review our third quarter 2018 financial results, and then we will open up the call to your questions.

Before we begin, I would like to remind everyone that our comments today will contain forward-looking statements within the meaning of the federal securities laws. These statements are subject to a number of risks and uncertainties that could cause actual results to be materially different from those forward-looking statements, including those identified in the Risk Factors section of our annual report on Form 10-K and quarterly reports on Form 10-Q filed with the Securities and Exchange Commission. These risk factors may be updated from time to time and will be included in our filings with the SEC that are available on our website. We undertake no obligation to update any forward-looking statements.

In addition, on the call, we will reference adjusted EBITDA, which is a non-GAAP financial measure. More information regarding our forward-looking statements and reconciliation of adjusted EBITDA to the most comparable GAAP measure is included in our earnings release available on our website and can also be found in our filings with the SEC.

Now I would like to turn the call over to John Reilly. John?

Thank you, Matthew. Good morning, everyone, and thank you for joining us. First, I'd like to discuss our strong third quarter results and successful summer season. And then, I'll hand it over to Marc to discuss our financial results in more detail.

We are pleased to report strong third quarter financial results. For the third consecutive quarter, we saw strong growth in attendance, in-park per capita spending, revenue and adjusted EBITDA. We believe that these results were driven primarily by our new strategic pricing initiatives, new marketing and communications initiatives and the positive reception of our new rides, attractions and events.

This quarter our successful events included Electric Ocean at our SeaWorld parks and Summer Nights at our Busch Gardens parks. We also saw the introduction of our popular Beer Fest at SeaWorld San Antonio and at Busch Gardens, Tampa Bay. Beer Fest returned to Busch Gardens, Williamsburg for the third consecutive year and continued to be a guest favorite. Our free beer promotion proved to be very popular at SeaWorld Orlando and Busch Gardens Tampa Bay this summer, and we have committed to bring that promotion back to both parks with an expanded calendar in 2019. In fact, our free beer promotion will be available year-round at Busch Gardens Tampa Bay starting in January as part of their 60th anniversary celebration.

We are particularly pleased with our third quarter attendance growth during the peak summer season, which we believe was driven in part by our calendar of popular events. Consumers have many opportunities as to where they can spend their entertainment and leisure dollars, and we are pleased so many chose to spend their time and money with us this quarter. We believe we have some of the best theme park offerings in the world representing outstanding value for consumers. While year-to-date 2018 results have been strong, there remain significant opportunity for further improvement.

We continue to see growth in season pass sales, which has been an important strategic focus for us. We believe our season pass offerings provide some of the best value in the industry. We saw strong pass sales in 2018, and a few weeks ago, we launched our 2019 season pass program, which has been redesigned to provide more value, flexibility and the most comprehensive benefits package we've ever offered. We have significant scope to improve our pass base and to increase loyalty among our guests and the predictability and recurring nature of our revenues.

We believe 2019 will be the company's biggest year ever for new attractions with brand-new one-of-a-kind rides and experiences coming to every market, providing many reasons to visit our parks over and over again. We believe we are a doing better job of communicating the highly compelling value our season pass offerings provide to our guests. Through the third quarter, we have continued to grow revenue from season pass sales at a double-digit percentage rate.

We are also pleased with our growth in in-park per capita spending, which showed a strong increase again this quarter. We have an excellent team that continues to find ways to introduce new in-demand offerings and drive increased pricing and penetration of our culinary, merchandise and other in-park offerings.

We have continued to optimize and refine our pricing strategy over the course of this year to drive strong growth in total revenue, and we are encouraged by the combination of strong attendance growth and our growth in total revenue per capita. While we have more to learn and further ability to refine and optimize pricing, based on our learnings to-date, we remain confident in our ability to grow attendance, total per capita spending and total revenue going forward.

We continue to see the benefits from our expense-reduction efforts and our enhanced culture of efficiency. We continue to work diligently to identify and execute on additional cost efficiencies that will flow directly to adjusted EBITDA.

As I mentioned previously, we believe 2019 will be the company's biggest year ever for new attractions with brand new rides and experiences coming to every single park market. We recently made some exciting new attraction announcements for 2019. At Busch Gardens Tampa Bay, we will introduce Florida's tallest launch coaster, Tigris, a triple launch steel coaster. The Tigris queue will include educational content about the plight of tigers in the wild and what conservationists, including the SeaWorld & Busch Gardens Conservation Fund are doing to help save them.

At SeaWorld Orlando, families will be able to walk down Sesame Street for the very first time at Sesame Street as SeaWorld Orlando in an immersive new land that brings the world-famous street to park guests connecting them to all the fun, laughter and learning of Sesame Street. Sesame Street at SeaWorld Orlando is a large area of the park that will feature the iconic Sesame Street neighborhood, including Abby Cadabby's garden, Big Bird's nest, Mr. Hooper's Store, the famous 123 stoop as well as Sesame Street characters, exciting rides, including Super Grover's Box Car Derby roller coaster, Abby's Flower Tower, Big Bird's Twirl and Whirl, Cookie Drop, Elmo's Choo Choo Train, and Slimey's Slider, dry and wet play areas and interactive experiences designed for the entire family, including a daily Sesame Street parade, SeaWorld Orlando's first-ever parade. Infinity Falls, which opened in October this year will also be new for many of our guests in the 2019 spring and summer seasons providing guests one more reason to visit in 2019. As an aside, since opening last month, Infinity Falls has received outstanding guest ratings.

At SeaWorld San Diego, we announced the first of its kind dueling roller coaster coming to the park in 2019, Tidal Twister will be an adrenaline-charged horizontal ride, twisting and banking along a tight-figure-8-track that includes the dynamic Zero-G roll. The new attraction's conservation element, Rising Tide Conservation will focus on the importance of protecting the ocean and coral reefs through sustainable aquaculture programs for marine ornamental fish.

At SeaWorld, San Antonio, we're making one of our most compelling investments ever, opening 3 unique and exciting attractions. First, Turtle Reef will be one-of-a-kind interactive sea turtle attraction that will give guests an up-close look at live, threatened and endangered sea turtles. Consistent with part of our mission to educate guests about marine animals and their habitats, we announced a partnership with the University of Texas Marine Science Institute to create the Turtle Reef attraction in an effort to highlight the plight of endangered sea turtles in the wild. The attraction will be populated with non-releasable sea turtles. Turtles that are unable to survive in the wild on their own, and will encourage guests to be more conscious about human impact on the oceans and environment.

Second, Sea Swinger will be one of the tallest, fastest and most thrilling swing rides in the entire State of Texas, swinging riders 180 degrees in both directions, while twisting them in a circle. And third, Riptide Rescue, will provide our younger guests and families an opportunity to board a rescue boat and set out on their own sea turtle rescue mission.

At Aquatica San Antonio, we will open Ihu's Breakaway Falls, a vertical one-of-a-kind multi-drop tower slide, the steepest in Texas, which is named after Ihu, Aquatica's colorful gecko, who searches for the biggest thrills, steepest hills and coolest spills in the waterpark.

At Busch Gardens Williamsburg, we will introduce Finnegan's Flyer, Virginia's first screaming swing that will soar riders more than 80 feet high over the world's most beautiful theme park at speeds reaching 45 miles per hour. At Water Country USA, guests will be able to brave the only RocketBLAST coaster on the East Coast in Virginia's first hybrid water coaster, Cutback Water Coaster.

We have just completed another successful season of Halloween events and will soon begin our annual Christmas events across all of our parks. Featuring Rudolph the Red-Nosed Reindeer, and his friends Clarice, Bumble and Yukon Cornelius. In addition to Rudolph and all of his friends, we'll have festive shopping, delicious food and beverages and live shows that will entertain everyone. We've added more days than ever for our holiday events, including expanding into weekdays in certain markets. We are excited about bringing our guests, what we believe is the best holiday entertainment value in the industry.

We are excited about our lineup of new and enhanced events for 2019 that we will announce soon, that will give our guests reasons to visit again and again. We are pleased with our year-to-date progress through September. But as I mentioned, there is additional opportunity to drive significantly improved financial performance and we are intensely focused on continuing to execute as we head into the holiday season.

With that, I would like to turn the call over to Marc to discuss our financial results. I'll then return to offer some final comments. Marc?

Thanks, John, and good morning, everyone.

As John mentioned, our third quarter financial results were strong. Third quarter attendance increased 9.7%. We believe that the improved attendance resulted from a combination of factors, including our new strategic pricing initiatives, new marketing and communication initiatives and a positive reception of our new rides, attractions and events.

During the quarter, we generated revenue of $483.2 million, an increase of $45.5 million or 10.4% compared to the third quarter of 2017. The increase in revenue results from the growth in attendance and in-park per capita spending, partially offset by decreased admissions per capita.

We reported net income of $96 million, an increase of $41 million compared to the third quarter of 2017. Net income includes approximately $3.9 million of pretax expenses associated with separation-related costs recorded in the third quarter of 2018. Net income in the third quarter of 2017 includes approximately $5.1 million of pretax expenses associated with separation-related costs in the third quarter of 2017.

We reported adjusted EBITDA of $212.4 million, an improvement of $38.6 million or 22.2% compared to the prior year quarter. Adjusted EBITDA was driven by revenue increases due to growth in attendance and total revenue per capita as well as cost efficiency and realization of cost-savings initiatives.

Third quarter total revenue per capita increased to $57.91 compared to $57.52 in the third quarter of 2017, driven by strong in-park per capita spending, which more than offset a decrease in admissions per capita. The decline in admissions per capita, primarily results from the impact of new pricing strategies. In-park per capita spending growth was primarily driven by increased sales of in-park products.

We continue to make solid progress on the expense reduction front as evidenced by our expanding adjusted EBITDA margin. We have spent considerable time analyzing our cost structure at the corporate and park level and we have identified significant opportunities that we have begun to execute on to streamline our business, reduce redundant expenses and operate more efficiently.

Looking at our results for the first 9 months of 2018, total revenue was $1.09 billion, an increase of $94.4 million or 9.5%. Total attendance was approximately 18 million guests, an increase of over 1.4 million guests or 8.7%. Net income for the period was $55.8 million, an increase of $237.8 million. Adjusted EBITDA was $336.7 million, an improvement of $87.8 million or 35.3%.

Net income for the first 9 months of 2018 includes approximately $34 million of certain pretax expenses associated with separation-related costs and legal settlements. Our adjusted EBITDA calculation reflects certain add back adjustments as allowed in the company's new credit agreement as noted in the table in our earnings release.

Net loss in the first 9 months of 2017 includes approximately $293.5 million of pretax expenses associated with the following: one, $269.3 million related to a noncash goodwill impairment charge; two, $8.4 million related to noncash equity compensation expense with respect to performance awards, which vested in the second quarter of 2017; three, $8.1 million related to a loss on a early extinguishment of debt and write-off of discounts and debt issuance cost; four, $5.1 million related to separation-related costs; and five, $2.5 million related to a legal settlement accrual.

Now turning to our balance sheet. The current portion of our deferred revenue balance increased 15% in the third quarter compared to prior year. As noted in this morning's release, our net leverage ratio decreased to 3.4x adjusted EBITDA for the 12 months ended September 30, 2018. As we mentioned in this morning's release and last week's 8-K and press release, on October 31, 2018, we successfully refinanced and amended our credit facilities. This transaction, among other things, extended our term loan and revolving credit facility maturities, eliminated almost all financial covenants and generally provides the company with more financial flexibility.

In addition to the changes I just mentioned, our lenders agreed to modifications to the definition of adjusted EBITDA. As you may recall, our previous credit agreement limited the amount of certain items we could add back to adjusted EBITDA and limited other add backs to only be on an after-tax basis. Under our new credit agreement, these limitations have been removed. As a result of these changes, adjusted EBITDA is now calculated differently than it was previously, and we believe better reflects the underlying performance of our business and better aligns with how we measure and manage the business. We included a reconciliation of our previous and current adjusted EBITDA calculation by quarter and for the first 9 months of 2018 in this morning's press release.

I'll conclude by saying, while we are pleased with our strong financial performance for the first 9 months of the year, we believe we have significant opportunity for further improvement. We will continue to focus on driving additional attendance and revenue while reducing the unnecessary costs and continuing to identify more efficient ways to operate our business. Our results clearly indicate we are making progress and give us additional confidence that we will deliver meaningful adjusted EBITDA growth in 2018 and beyond.

Now let me turn the call back over to John to share with you some closing comments. John?

Thank you, Marc. As you've heard today, we are confident in the direction we're heading and encouraged by the results we are seeing in our business. Our confidence extends to our long-term view and the significantly improved financial performance we believe this company can deliver over the next few years and beyond. We're excited about the future and we look forward to sharing our progress with you.

Before we open the call to your questions, I have some closing comments. As many of you know, we are one of the world's leading animal rescue organizations and we are proud of our efforts to protect and save wildlife, including more than 33,000 animal rescues in total. This quarter, we helped rescue 641 animals. Through the first 9 months of the year, we have helped rescue over 2,200 animals and it's our hope and expectation that our actions also inspire our guests to consider and protect animals and the wild wonders of the world.

Finally, I want to thank our outstanding team of ambassadors and leaders in all of our parks who are committed to our success as a company. They are focused on providing exceptional service and meaningful experiences to our guests, and their dedication of these objectives was key to producing these results. We have some of the best employees in the theme park industry, and I'm especially proud to be working with them.

Now let's take your questions.

(Operator Instructions) Our first question today will come from Steven Wieczynski of Stifel.

So with season pass sales up double-digits this quarter, I guess, the question we get a lot from investors is, where do you think you can get that pass penetration rate to over time? Your business obviously is different than some of your peers, but how do you guys -- do you have any idea about where you can get that penetration rate over time?

This is John. And thanks for the question. We're encouraged by our performance in the pass area year-to-date through the third quarter. And we're pleased with the role that our pass sales have had in driving up total revenue across our parks and also in driving up the strong attendance performance that we had year-to-date in our parks. We believe there is significant opportunity to further grow that going forward. What I'd say is the results that we've seen year-to-date through Q3 are partly the result of testing and learning and sharper messaging and communications around our pass efforts. However, most of our parks didn't launch our new pass structures with tremendous new benefit structures, options, affordable entry pricing, some of the best, I think value and benefits in the industry, we didn't launch that really until Q4. So we believe there is significant opportunity ahead of us on the pass side. And I would say it's an important strategic initiative for us, because growing our deferred revenues and improving the predictability and recurring nature of our revenue stream is something that we think is going to help us on the path to achieving our goals. So significant upside ahead.

Okay. Got you. And another question for you John, and maybe I'm reading too much into this, but you talked about in your prepared remarks about finding additional cost savings, and maybe I'm reading too much in this, but it almost sounds like you have found additional cost savings since the last time we heard from you guys, which would have been early August. I guess the question I'm trying to get to is here, when we look at your 2020 EBITDA targets, is it fair that, that cost savings number that's embedded in that 2020 target might be a little bit low at this point?

Steve, it's John. Thanks for the question. What I would say, as we said on the last call, we've identified and we are executing on that $50 million in cost savings. And I think since our last call, you've seen some activity on that front from us. We've restructured part of our business to streamline the way we operate. We've gone vendor by vendor across the business in our corporate office and in our parks to reduce redundant expenses. And we're going to continue mining for cost opportunities going forward. That said, as I said before, we've identified and we're already executing on that $50 million. And as with any business, we have a laser focus on costs, and we're going to be looking for more opportunities as we move forward.

Okay. Got you. And one more quick one for me. Just John, maybe you can close your ears on this one. But just -- what's going on with the CEO announcement, I think you said back in February, you were targeting around a 6-month search. I guess, now we're 9 months into this, I guess, where do you guys stand now from that perspective?

I wasn't -- I'll take that question. This is John. The board search is underway for the CEO position. And what I'd say to you is, Marc and the management team and I are laser focused on executing on our strategic initiatives, and we're pleased with the progress that we've seen quarter-to-date in our pricing, in our marketing and communications initiatives, on our cost focus on the rollout of our new attractions and events. And we're going to continue to do that and press forward, and we believe there is significant opportunity as we move forward in the business.

Our next question will come from James Hardiman of Wedbush Securities.

So understandably, I know you guys don't typically want to give any park level results. But maybe more big picture, right. For a number of years the SeaWorld parks were dragging down the broader company with a number of issues there. I'd be curious if you could characterize the makeup of the recovery, right? This has been a really healthy year and, I guess, in particular, regional parks, how they are doing just given the fact that the other big guys in this space have really struggled to see organic growth in the last couple of years. Obviously, your SeaWorld-branded parks are doing really well. I'm just curious, how we think about the various pockets of how we think about the theme park space and how those are doing for you guys?

James, this is John. I'll take the question. What I would say is, our performance improvement is rather broad-based across the portfolio and we won't break it down for you as you understand by specific markets. But what I will say is, if you look at sources of residency from tourists to locals to international, we've seen improvement on a number of fronts and in a number of ticket product categories. We believe that, again, our marketing, our pricing strategies and our attraction and events rollout has helped to drive that across the portfolio. So it's been rather broad-based, although, we won't comment by market or by brand specifically.

Okay. Fair enough. And then let's talk about the per cap numbers, admissions per cap, in particular. But I think the trade-off that we've seen this year is one that, that investors will take any day of the week, a decline in admissions per cap, but then real nice growth on the attendance line and even the in-park line. I guess, maybe talk about how much of that was a calculated trade-off, what you saw heading into this year that made you think that, that was a trade-off that you could successfully pull off. How much of that should we expect to continue? And maybe how much of that is related to maybe the initiative that was started under the previous management team to really grow the local Florida business and Southern California for that matter, maybe hoping to offset some of the destination customers from other parts of the U.S. and overseas that had fallen off?

James, this is John. I'll take the question. And I'll take actually the latter part first. As I said, in response to your first question, the performance has been rather broad-based and we've seen improvement from locals and from tourists across the portfolio. Certainly with the locals, we believe with the incredible value and benefit structure and options and low monthly payments that our pass programs offer, we're well positioned on that front going forward.

To your larger question about our strategic pricing initiatives across the business, we've been in a mode of driving total revenue and we've been focused on driving total revenue year-to-date, and as you say that's been a profitable trade-off for us. So we're focused on driving total revenue and total per cap, and we've been successful at both of those year-to-date. As you know, we've been refining and optimizing our strategy this year, and it's really been a test and learn environment and it's all in an effort to maximize that, that total revenue. So to-date, these strategies have delivered modest admission per cap declines, but significant attendance increases and we've seen attendance increases in total per caps and significant increases in total revenue and very strong increases in our in-park pricing and per cap performance.

So we're learning every day as we continue to refine and optimize toward our pricing initiatives. And you should expect that we'll continue to pursue pricing strategies going forward that maximize total revenue generation and we'll be optimizing the trade-off between price and attendance. But in summary, to be clear, I would say we do expect to be able to drive increases in total per caps, admissions per caps, in-park per caps and admissions revenue going forward.

Our next question will come from Brett Andress of KeyBanc Capital Markets.

First, just a housekeeping here. You mentioned in your prepared remarks, how many operating days are you adding in the fourth quarter this year?

We're expanding -- the comment with regard to the fourth quarter, we're expanding a few operating days in some of our seasonal markets. But what we're doing in our year-round markets -- or our markets where we're open year round, we're going to have more Christmas operating days. So a higher percentage of the days that we're open will be days where the Christmas event packages are offered to our guests. So for example, in the past, we might have only offered those on weekends, or Friday through Sunday, and we will be expanding those for Monday through Thursday. So we think there is a significant opportunity there.

Got it. Okay. And I just want to make sure I understand your new credit agreement. So you're able to add back some expenses that were over the previous agreements limit. But, I mean, how should we think about that into the fourth quarter? And I guess, particularly what happens with the $10 million benefit from the estimated cost savings that you had last year? So I guess, what are the puts and takes in the fourth quarter around that? And then also building off that, how do these credit agreement changes in the add backs, do they alter your view of your 2020 targets at all?

Brett, it's Marc. I can take that. Yes, on the new agreement, obviously, we're pleased that on a number of fronts, the new credit agreement not only extended the maturity on the loans, but also on the revolver. It removed almost all the financial covenants, and we're left with just that, that is bringing first-lien to 6.25x on the revolver. And then, as you mentioned, we redefined adjusted EBITDA to be more consistent and more aligned with how we view the underlying performance of the business. And so some of the things that we weren't able to add back due to caps or because it was on an after-tax basis, a lot of those items were unusual in nature, like legal settlements, legal costs or they were more generally kind of onetime-type things or unusual, like a lot of -- we had a lot severance this year as you noted. So we think that, that agreement more aligns with how we think about the business.

Going forward into Q4, we would not have the $10 million pro forma adjustment in Q4. So that will not be in our number this year. But as far as the -- how we think about the long-term goal, our number is still $475 million to $500 million that's what we're focused on. And it will be hard to tell you today like what type of kind of onetime things we're going to have in 2020 that we would exclude out of this agreement -- under the new agreement. So no change in our view other than just, we like the flexibility that this new credit agreement gives us. And we like -- we just like a lot of things that we're able to take of care with this.

Got it. And if I could squeeze one more in, just a more question on Infinity Falls. Obviously, that delay was disappointing. But do you think that had any impact on your attendance in the third quarter? And then also, from where you sit today, if you look at Sesame Street, that attraction next year, what is your confidence level on being able to open that on time in the spring?

This is John. Thanks for the question. I was -- I've been out at Infinity Falls every weekend. I can tell you, we are thrilled with the consumer reaction to the product. People are happy, excited getting off the ride. We've seen it open with very high guest satisfaction survey results. It's a really unique ride, it's got the tallest drop for a rapids ride in the world. And I think it's one that people of all ages are enjoying so far.

The way I'd answer your question about the third quarter is that, clearly, we didn't see the benefits that we expected from Infinity Falls in the third quarter, because it didn't open until October. And we're clearly disappointed about that, and we have a number of measures in place and we're further ahead in our revamp capital strategy in terms of planning and opening new attractions going forward.

That said, we're encouraged about Infinity Falls, and the way I'd look at it is that when you move into next year with Sesame Street at SeaWorld Orlando, for much of the year, we're going to have 2 new attractions at SeaWorld Orlando and we just love the Sesame IP. We've put it in our other parks. We're doing it in a very big way here in Orlando. So we're excited about the combination of that and Infinity Falls next year, and I feel good about our ability to open Sesame Street as planned.

Our next question will come from Barton Crockett of B. Riley FBR.

Okay. I guess, a couple of things on the credit agreement. You talked about the loosening of covenants. One of the meaningful covenants that was under the former credit agreement was restricted payments basket on things like dividend or maybe share repurchase. When you say you have no covenants, is that -- what is that included? Do you have no restricted payments basket? And also, what can you tell us about the interest expense trend that you see on this new agreement versus the old?

Hey, Barton, this is Marc. So I can take that question. So yes, what we said is, we removed almost all of the financial covenants. And so, to your point, we're left with the springing covenant there on the revolver of 6.25%. We would still calculate our ratio as far as for our restricted payment basket. So that has not changed. We would will still have, depending where we fall, we're at 3.4x now. So below 3.5x, we have an unlimited restricted payment basket assuming the net leverage ratio on a pro forma basis after giving effect to any payment of such restricted payments is no greater than 3.5x. So we would probably -- if we made any payment, we'd probably tick above 3.5x, in which case, we would be between 3.5 and 4x, we're at $120 million or 7.5% of market cap. So we like where we are and we're fine with the restricted payment basket carrying over from the original agreement.

What was your...

Interest expense?

Interest -- yes. So the interest expense on the -- we were at L plus 225 and now we're at L plus 300 on the Term B-2 that went into the Term B-5, the 5 was already at L plus 300. So we picked up 75 basis points in interest costs on $544 million. So about $4.1 million, an increase in interest expense. But again, we're pleased with that rate that we got given market conditions.

Okay. So what's the add backs your EBITDA is better. So clearly you're improving EBITDA just with improvements in the business. What can you tell us now about your view of your capacity to return cash, again through dividend or share repurchase and your interest in one versus the other?

Yes, a good question. This is Marc. I can take that. So what I can tell you is, the management team and the board are definitely focused on the best use of cash for shareholders, and we don't have anything to report to you right now. But, as you noted, our cash has been improving, and so I think just register that we will be working with our board to consider that whether it's dividends, buybacks, all the different things you can do with cash, we'll make sure that they are in the best interest of shareholders and that will be a focus for us.

Barton, this is John. I would just add, before we take the next question that with regard to the refinancing, we're pleased with the results and we believe that the flexibility of the results better position us moving forward in the business.

Our next question will come from Jason Bazinet of Citi.

I just have 2 quick questions. The $27.7 million they're adding back for prospective savings that's in the release, how does that -- how do we think about that in the context of the $50 million number? In other words, is it -- I said presumably there is some portion of cost saves that have already been realized, and then the other interpretation is since your new credit agreement limits it to 18 months forward that some of those cost saves may in fact happen beyond 18 months, but before we get to year end '20. So if you could just comment on that breakdown. And then my second question is, I believe under the old sort of main B plan, the idea was we're going to rejigger the Orca show in San Diego in '17 and then in Texas in '18, and then Orlando in '19. And I know it happened in San Diego, and you guys successfully made it through that. But can you just give us an update on Texas and Orlando?

Hey Jason, it's Marc. I can take the first one, and then John will take the second one. So the $27.7 million is part of that $50 million that we've talked about and so those are items that we've taken action on or like in our case like some of the restructurings we've done, some of the vendors that we no longer use. And you're right, there will be some longer term items that go beyond the 18 months as you get out into 2020. But I think that's the right way to think about it. I will leave you with, we just have a continued focus on this. So we work on this every day and every week. And so as we identify more items, obviously that bucket will continue to grow and that's what we're executing towards and working on.

This is John. I'll take the second question there with regard to the Orca show. And we -- clearly, we've learned from of our experience on the West Coast and we will -- we have made some changes in our planning as we go forward in Florida and Texas. For example, we will not be closing the show as we make the transition. These amazing animals will be available for the public to view as we make the transition. That said, we're on schedule and over the next year or so, you should see us make that transition as announced.

Has anything happened in Texas so far? Or that's yet to unfurl?

We have not made the transition in Texas. But as I said, the planning and our progress is underway and we expect to make that within the next year or so.

Our next question will come from Michael Swartz of SunTrust.

Just wanted to touch on the admissions per cap piece. It was a little softer than we had expected. I guess frame it relative to your 2020 targets that you provided in August. I'm just trying to understand with the growth in per caps that you had expected, if we break that down into in-park versus admissions, should we see growth in both of those per your targets?

This is John. I'll take the question. When we first communicated the 2020 goal, we did provide an illustrative roadmap with attendance sensitivities and per capita sensitivities, and then our cost work outline. We've clearly made significant progress along the attendance line and the total revenue line with $94 million in total revenue growth year-to-date, and even a slightly accelerated pace with $45.5 million growth in the quarter. And that said, we do believe we can grow admissions per caps going forward. As I said before, we've been in a test and learn mode with admissions per caps. Throughout the year, we've been pleased with the progress that we made and been able to grow total revenue and total per capita. But we believe on the admissions front going forward, we will have the ability to grow that.

Okay. That's great. And second question, just in terms of, here is how we think about the fourth quarter, and I think someone that asked about the number of operating days. But how do we think about the event or attraction lineup in 4Q this year versus last year? What's maybe new that wouldn't have occurred in the year ago period?

This is John. I'll take the question. If you look at our year, we've launched, I think 15 new attractions and events across the portfolio. I think it's one of the best attraction lineups that we've ever had. That said, I think '19 is even better, and I'd say the best that we've had. In Q4, so we have the benefit of -- it's the first year for Electric Eel, it's the first year for many of our attractions across the portfolio, Oscar's Wacky Taxi and a number of others. We also have expanded Christmas calendars, where as I mentioned before, a higher percentage of our operating days are going to offer the Christmas event in Q4. And then also, I would end with Infinity Falls. It's a brand-new attraction in the market having really just opened about a month ago, later than we expected, but we expect to see a benefit from that in the quarter.

Okay. Great. And then just one last if I can. For the third quarter, and I believe we were up against fairly easy comps in several of your parks just given the weather and hurricane, the days closed due to the hurricanes last year. Could you just give us a sense of maybe the year-over-year change in down days or maybe just some statistic that you look at?

Sure. From our data and the analysis that we review, we don't believe that weather had a material impact on the quarter versus last year. And that said, last year was a very difficult weather quarter for us. Year-to-date, weather has been unfavorable even to 2017, which I have said -- as I said was a difficult weather year for us. So both 2017 and 2018, which year-to-date has been worse than 2017 are what I would characterize are historically bad weather years for us, as you look back at least 5 to 6 years. Despite that, we've been able to generate increased demand and total revenue. So we're pleased with the attractions that our initiatives, and that's what we control, have had on performance of the business.

(Operator Instructions) Our next question will come from Tim Conder of Wells Fargo Securities.

Gentlemen, a couple of clarifications if I may. Marc, on the deferred, if you could just maybe hit that again and give us any color you can on the breakdown there. And then the question on capital allocation, wanted to revisit that. Remind us your core CapEx, and then given your cash position and the refinancings recently done, the ability potentially to allocate more capital, how are you seeing some of those things outside of that core, maybe not more on the hotel side or other things like that?

Hey Tim, this is Marc. I can take that first question, and then, I can probably turn over to John on the second one. But yes, our current deferred revenue balance is up 15%. I would say that's being led by our season pass sales. So we have other items in our deferred revenue. But the bulk of the increase has been led by our season pass sales, which as we've talked about we're pleased with.

And on that -- if I may, John before you hop in on that season pass part. Marc, can you kind of talk to us, again, maybe units and what type of pricing you're getting there? And then just year-to-date, John, Marc, whoever wants to take this part, the unique visitors what you're seeing and is that concentrated in one area, the residents, tourists versus another?

Yes. So I will comment on maybe the first part of your question, and then John can add anything. But we don't want to necessarily break down all the components of season pass. I think what we can tell you is that, we're pleased and as we said that the units and revenue are up double digits for the quarter. So that we're pleased with that story, and we are getting pricing on the passes as well. And then on the unique visitors, we've not really shared that in the past. I think what I'd come back to as John mentioned, I mean, we're seeing growth in multiple sources of residency, so whether -- as we mentioned, whether it's local or tourist or international. So we're pleased with those results from all those different source of residency.

Okay. On the capital allocation question, this is John. I'll take that one. As you know we made significant changes and implemented a revamped capital strategy across the company where the planning has been affected this year, but you'll see the impacts from that as we move forward. And the key to that is more attractions, more rides, more events more frequently across our parks introducing newness more often. And we think that energy and excitement will continue our momentum on the revenue and the attendance front across the portfolio. We've also lowered our capital target -- our base capital target from 175 to 150. And we're confident we're going to deliver on that over time. Longer term, I'd say, we still believe lodging is a priority for us to your question in the company. However, as we look at this revamped capital strategy, we have done some realigning of our strategic priorities to make sure that attractions and attendance driving attractions in our parks are a top priority.

Okay. One last one gentlemen, if I may on the international front. I just wanted to kind of confirm, you said across all sources and, I guess, one of the worries that we've had and some other investors is the decline in the pound and the real, and how historically that's had an impact maybe a little bit outsized on your relative to some of your other competitors in town, in Orlando, especially. But you said you're doing some different measures than in the past to mitigate that. Can you just give us an update? Are you seeing anything yet, and how are those measures progressing?

Hey Tim, it's John. I'll take the question. In terms of sources of residency being up in a broad way, that means international attendance was up, some markets are up, some markets are down, but the net is that international attendance is up. And it's up for Q3 and year-to-date. That said, when you look at it historically, we're nowhere where we used to be or we believe we can be. We think there is significant opportunity ahead, and there is some, I think, I believe there are some encouraging signs looking ahead. That said, the way that we get there or the way our plan gets us there is that we have an opportunity to improve our marketing, sales and communications strategies international, and we have begun to do this. And we've seen the results from revamping our marketing, communications and sales strategies in the U.S. And we think some of that rigor and discipline will benefit us in the international markets. We don't control currencies, but we do control our execution in these markets and believe there is opportunity.

Ladies and gentlemen, this will conclude our question-and-answer session. I would now like to turn the conference back over to Mr. John Reilly for any closing remarks.

Thank you. I would like to close the call by again thanking our employee ambassadors across this company for their contributions to our strong performance in the third quarter, and for their efforts every day to further our mission to protect animals. Our progress in the third quarter gives me increasing confidence in our continued ability to execute on our strategic initiatives and to achieve our long-term goals. Thank you all for joining us this morning.

The conference is now concluded. We thank you for attending today's presentation. You may now disconnect your lines.