Six Flags Entertainment Corp (SIX) 2014 Q1 法說會逐字稿

Good morning and welcome to the Six Flags first-quarter 2014 earnings conference call.

My name is Kayla and I will be your conference operator for today.

All lines have been placed on mute to prevent any background noise.

After the speakers' remarks there will be a question-and-answer session.

(Operator Instructions).

I would now turn the call over to Nancy Krejsa, Senior Vice President, Investor Relations and Corporate Communications for Six Flags.

Please go ahead.

Good morning and thank you for joining our call.

With me today are Jim Reid-Anderson, Chairman, President, and CEO of Six Flags; and John Duffey, our Chief Financial Officer.

We will begin the call with prepared comments and then open the call for any questions.

Our comments include forward-looking statements within the meaning of the federal securities laws.

These statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in such statements, and the company undertakes no obligation to update or revise these statements.

In addition, on the call we will discuss non-GAAP financial measures.

Investors can find a detailed discussion of business risks and reconciliations of non-GAAP financial measures to GAAP financial measures in the Company's annual report, quarterly reports or other forms filed or furnished with the SEC.

At this time, I will turn the call over to Jim for his prepared comments.

Thank you, Nancy.

Good morning, everyone.

I am encouraged by our early performance indicators, which bodes very well for the main operating season.

Specifically, I would highlight the 7% growth in our guest spending per cap, which reinforces that both our ticket pricing and in-park revenue strategies are working.

I continue to believe that we have many years of revenue growth opportunities ahead of us, driven primarily by our pricing initiatives.

In addition, I am pleased that our Active Pass Base has grown 25%.

I know that this is a new term for you, but it represents at any point in time the combined total active Season Pass holders and guests on our membership plan.

As you know, for the last year we have increasingly emphasized membership plan.

These are similar to Season Passes in that they allow customers to make multiple visits to our parks.

However, there are two important differences.

First, members pay on a monthly basis as opposed to upfront, which makes passes more affordable.

And second, membership plans renew automatically after one year, which creates a nice recurring revenue and cash flow stream for the Company.

For this reason, members are even more valuable than Season Pass holders, and we are pleased with the uptake on membership plans by our guests.

The nice growth in the Active Pass Base and our continued success in raising per cap makes us feel optimistic about the outlook for the 2014 season and beyond.

We really feel that our strategy is right on track and it all starts with delighting our guests, ensuring they have fun at Six Flags, receive great value for their money, and are eager to visit our parks again and again.

You will recall that we finished 2013 with record high guest satisfaction ratings, and it really gives me great pleasure to share that our scores were up again in the first quarter.

In addition, a recently published independent survey recognized Six Flags as the leader in guest satisfaction amongst all regional theme parks and a close second to Disney across all theme parks.

Another key component of our strategy is innovation, which really is part of our DNA.

We take great pride in our industry-leading innovation and this is an area where we are firing on all cylinders.

For us innovation takes many forms.

For example, I just spoke about our guest satisfaction scores.

Our market research team surveys more than 1 million guests a year, providing park management with instant and valuable feedback on a daily basis in a format that allows us to respond and react, often within hours, to that feedback.

In addition, we routinely perform a myriad of incremental surveys of both guests and others who have never visited our park on a variety of special topics.

We use this independent feedback in our decision-making process as we look to expand and update our offerings.

Another area in which we have taken huge strides is our information technology.

In 2011, 2012, and 2013 our IT team was named to the InformationWeek top 500 companies, and in 2014 we were recognized as being among the Elite 100.

We earned this recognition because of our IT innovation.

For example, we recently introduced a biometric entry system for Season Pass holders.

This system eliminates a separate line and processing for our guests, providing them extra time to enjoy the park.

The biometric system also allows us to electronically load customized coupons onto guest Season Pass cards and eliminates many steps to reissue passes for future seasons.

In the area of park operations, we were the first to introduce an all-season dining pass.

It was extremely successful, well received by our guests and very profitable.

We are continuing to see excellent growth in this offering and are making further enhancements to the program in 2014.

We were also the first regional theme park to introduce a membership plan for our guests.

As noted earlier, we believe this program will enhance our renewal rates and provide even more stability to our revenue and cash flows.

Of course, a key component of our innovation is how we deploy our capital.

We invest 9% of revenue each year and introduce something new in every single park.

And just like we did for the 2013 season, we are introducing several new world record-breaking rides in 2014.

Zumanjaro is the tallest drop ride in the world, and it is located at Six Flags Great Adventure in New Jersey.

The ride hoists riders 415 feet in the sky and rockets them back down to earth at a heart-pounding 90 miles an hour.

Zumanjaro, by the way, is attached to Kingda Ka, the tallest and fastest coaster in the world.

Not only did we innovate with the best drop ride in the world, but we also leveraged our cost base efficiently by using an existing structure.

The world record-setting New England SkyScreamer swing ride will become the tallest attraction and newest brand mark at Six Flags New England.

400-foot aerial adventure will lift guests 40 stories into the air and spin them at speeds of 40 miles an hour.

While aboard riders will experience breathtaking views of the Connecticut River and the New England skyline as they spin around and around.

Goliath, located at Six Flags Great America near Chicago, is annihilating all other wooden coaster records by shattering not one, not two, but three world records and becoming the most extreme wooden coaster on the planet.

This behemoth coaster boasts the title of the world's fastest wooden roller coaster and also lays claim to the world's tallest and steepest drop on a wooden coaster, taking riders up a mammoth 165-foot lift hill, then plunging them down a record-setting 180 foot, 85 degree drop.

Guests at Six Flags Mexico in Mexico City will experience a thrilling transformation of one of the park's iconic roller coasters, Medusa, which is being reengineered into a state-of-the-art hybrid coaster.

The combination of a classic wooden structure with a new steel track provides a smoother, faster, and more thrilling ride that includes an incredible 117-foot drop, four overbanked turns and a world record-breaking three full inversions.

I cannot wait to experience these phenomenal rides and also cool off at Six Flags Over Georgia, outside of Atlanta, where we are unveiling the largest capital expansion in the park's 46-year history with the introduction of a massive tropically themed water park inside the theme park.

And that includes an 800,000 gallon wave pool and the world's first [ever blended] slide.

In addition to these amazing attractions, we have something new at all of our other parks, from water slides to smaller rides and shows to completely renovated sections of the parks.

I know I say this every year, but I do really believe that 2014 is the best lineup of new rides and attractions in our Company's history.

This is important because our guests are like you and me.

They love to experience something new and different, and we know our new attractions pull guests into our parks.

Our innovation strategy is definitely working.

In summary, we are very well positioned as we head into the heart of the operating season.

We have successfully executed price increases across our parks.

Our active base of guest passes is up, and our team is ready to rock and roll.

And talking about old rock and rollers, John, would you like to share a few more details on our first-quarter financials?

Sure.

Thanks, Jim.

I also cannot wait to rock and roll on our new rides.

My comments will be fairly brief as this was a quiet quarter and we have no year-to-date financials to discuss.

Attendance for the quarter declined by 434,000.

As we discussed on our last earnings call, we anticipated a 300,000 decline in attendance in the quarter as a result of the shift of the Easter holiday and related school spring break at some of our parks into the second quarter this year.

Unfortunately, in addition we saw some very unfavorable weather at our two Texas parks during their spring break in early March, which accounted for the remainder of the decline.

The decline in attendance was partially offset by a very strong increase in guest per capita spending in the quarter with strength in both admission and in-park spending.

First-quarter guest spending per capita increased $3.03 or 7.4%.

Our innovation and our ongoing focus on improving guest satisfaction has allowed us to continue to execute our pricing strategy.

The best indicator of our success in this area is our admission per caps, which increased $2.21 or 9.7% in the quarter.

Our focus on innovative in-park product offerings drove an $0.82 or 4.5% increase in in-park per caps.

As a result of the decline in attendance, total revenue in the quarter decreased $14 million or 15.8% with ticket and in-park revenue down 16.4% and 20.4%, respectively.

We continue to be very pleased with our Season Pass and membership strategy.

In the past we have referenced deferred revenue as a good proxy for this success.

You may have noted in the press release financial tables that deferred revenue declined by 7% as compared to the same period last year.

The decline is primarily due to two factors.

First, people tend to purchase Season Passes just before their initial visit to the park, so the spring break shift transferred some demand into the second quarter.

Second, we have successfully converted guests from Season Passes to membership plans.

Since membership plans are initially for one year and then convert to a monthly commitment after the first year, they tend to have a lower amount of deferred income toward the end of the first year and beyond than a traditional Season Pass.

Jim mentioned our Active Pass Base, which we started tracking last year and believe is a better indicator of future revenue growth.

This metric looks at the total combined active Season Passes and memberships outstanding at any point in time.

And as of March 31 of this year, our Active Pass Base is up 25% over March 31 of last year.

Moving to the cost side, cash operating and SG&A expenses decreased $6 million or 5.3%.

This decrease was primarily due to operating and marketing costs associated with the later spring break as well as our ongoing focus on managing costs.

Due to the strong cost management, adjusted EBITDA declined only $4.9 million in the quarter despite a $13 million revenue decline associated with the shift in Easter.

With the Easter and spring break shift, a year-to-date comparison at the end of the second quarter will be a better indicator of performance.

Free cash flow in the quarter was negative $117 million.

We always see an outflow of cash from operations in the first quarter as most of our parks are closed, and we have spending on new capital projects.

In addition, we paid out $45 million in dividends and repurchased $5 million of shares in the quarter.

As it relates to our capital structure, reported net debt as of March 31 was $1.377 billion as compared to $1.231 billion at December 31, 2013, an increase of $146 million.

With the planned new capital introductions, which will be launched in the second quarter, our focus on pricing and continued strength in Season Pass and memberships, and our relentless focus on managing costs, I think we are very well positioned for our 2014 season.

So now, I would like to turn the call back over to Jim.

Thank you very much, John.

As I mentioned at the beginning of our call, the strategy is intact and our team is energized and laser focused on executing our business plans for 2014 and beyond.

As a reminder, as we approach our goal of achieving $500 million of modified EBITDA, we intend to introduce a new aspirational financial target.

In addition to the innovation that I mentioned earlier, we will be introducing Holiday in the Park at Magic Mountain for the first time this year.

Holiday in the Park is a magical time where we transform our warm weather parks into magical winter wonderlands with millions of lights and other holiday festivities.

We believe this will be a huge success for Six Flags Magic Mountain.

We are also expanding our grad nights for high school seniors, who are locked in our park for the night with their friends.

This program has been successful at several of our parks, and we believe we can further build on this event.

Last, I would like to touch on our most recent business development announcements.

Given the strength of the Six Flags brand and the attractiveness of our industry, our international expansion staff strategy is an excellent long-term growth opportunity for the Company.

Our initial project is with an excellent partner in an excellent location, and we are progressing with other discussions to develop similar arrangements with parties in other markets outside of North America.

We will not invest any capital, but we will be actively involved in the design, development and ongoing operations of parks.

And we will receive ongoing fees for our work and intellectual property.

To ensure we continue supporting our base business appropriately while also adequately supporting our international growth strategy, we have realigned our organizational structure.

John Odum, who has 40 years of experience in the industry and previously managed our East Coast Park operations, has been named senior Vice President of International Operations.

John will manage La Ronde in Montreal and Six Flags Mexico in Mexico City and will also manage park design, development, and operation for all parks outside the United States.

Tom Iven, who had previously managed the West Coast parks for Six Flags, is now Senior Vice President of all US park operations.

Tom also has 40 years of experience in the industry.

We are extremely excited about this new growth opportunity for the Company.

I do believe that Six Flags is unique and that our brand is incredibly strong worldwide.

We have the chance to strategically drive ongoing and expanding revenue and cash growth with modest incremental investments.

Even with the excitement about international opportunities, our focus remains on the basics -- delighting our guests, leading the industry in innovation, implementing efficiencies in our operations, investing in our people, and building shareholder value by consistently growing the business and returning excess cash to shareholders through a stable and increasing dividend and share repurchases.

We are in a great place to achieve that goal short, medium, and long term.

Kayla, at this point could you please open up the line for any questions.

(Operator Instructions) Barton Crockett with FBR Capital Markets.

I was very interested in the per cap growth metric that you reported.

I guess I was wondering how reliable of a gauge that is of the underlying trend, given all the kind of things that could be skewing it at this point, including the change in accounting for -- the change in mix in your Active Pass Base, does that affect it at all?

And just the seasonality, the fact that this first quarter is less than 10% of the year and was skewed by Easter.

Does any of that have an impact on this number, or is it a real solid indicator of the underlying trend?

We believe it's a solid indicator of the underlying trend, Barton, for several reasons.

While this is a small quarter, you are right, seasonally 5% of our attendance, the reality is that we have outlined for all of our investors that we have gone through a multiyear strategy around pricing.

And we have probably taken the most aggressive increases in pricing on both our main gate and also with regards to Season Pass in the last few months.

And we have seen that that has been successful.

It's held.

So I think the fact that ticket pricing is up and that we have been very careful and smart about the way we have priced in park, we think that's solid -- although you are actually right.

It is the smallest quarter.

And just to add on that, I agree with Jim that I think it's a good indicator.

As you think about memberships, we began selling memberships in February of 2013.

So we are just now seeing those memberships renewing on a month-to-month basis.

So there was very little impact per cap associated with membership.

Secondly, in terms of mix Season Pass versus one-day tickets, there was a very slight difference in the mix, so very little impact associated with that as well.

Okay.

And then the new metric, this Active Pass Base -- and last year I think you said that your Season Pass was 48% of attendance.

Can you give us a similar percentage now for this new metric?

We are not going to disclose -- as you know, we disclose Season Pass at the end of this year.

But given the change with deferred revenue and everything else, we wanted people to understand that the mix has changed.

We have more members and, therefore, looking at active base is a better way of looking at the trends for the future.

I would say to you that the mix is not dissimilar to last year.

So that Season Pass mix is not dissimilar, so that's not skewing the number.

What we are truly seeing is an increase in our overall membership and Season Pass base versus where we were last year.

And there are unique guests, so it's not that there's duplication there.

These are all unique guess and we've seen that increase.

That's great.

And then one last question -- on the international opportunity for parks, how many parks are built around the world outside North America per year or per decade that you think could be potentially licensing opportunities for Six Flags?

I think there are a number of parks that are built.

We not talking about hundreds, but there are a number built every year.

And I think that number is going to increase.

And I'll tell you why.

There's a growing middle-class -- you know this, Barton -- a growing middle-class across the world.

And when you look at Asia especially, the Middle East, there is more disposable income.

And people want to share that sort of magical experience of visiting a Six Flags or a theme park.

And so I believe that this number will grow over time.

I know the number of calls that we get, the number of very strong parties that we are talking to who would like to build parks with us -- it's really up to us to decide who we want to do this with and where.

And we are going to be very cautious about that because if you take the wrong steps with the wrong partners it can be more trouble than it's worth.

So we are focused on it.

We have announced our first park.

Over time we will announce more.

And we think this will be a great opportunity for us.

And the reason we can do this is that we do have a global brand.

And that people who come here and see the brand, they know what it's like, and they want to take it home with them.

Great, thank you.

Afua Ahwoi with Goldman Sachs.

A couple questions from me.

First, on this new Active Pass that you gave us of 25%, I know you said you have been tracking for about a year now.

So maybe can you give us -- is there any color you can give us on how that looks sequentially, so in maybe fourth quarter of last year and third quarter?

And then also maybe remind us how on a go forward I'm assuming the membership may affect how we look at a deferred income number.

So maybe can you remind us on the accounting of that, how it flows through, so that -- especially since deferred revenue, as you said, over time may not be as helpful as an indicator as it used to be of forward trends?

And then just finally, on the international parks, I know, given that you may be -- you will be rolling out more of these.

To the extent you can share, what are the economics?

How do they look like?

How does each deal structure come about?

Is it a development fee or what percent of revenues you take as a license, to the extent you can share?

Let me start with the third one and then we'll go to the first two.

Afua, you know we don't give any guidance.

I know you would like to know the details, but with regard to international, for a number of reasons we are not going to give guidance because we are actively in discussions.

And it doesn't make sense to say here's what we are going to make.

But what I can say is what we've said before, that we are in a position where we will not put any capital in, but we will generate revenue.

And the revenue will come from a few sources including licensing our IP, overseeing park management and also being in a position to help develop and build the park, wherever it is.

So, we are in a very good place.

And it starts immediately, as soon as we sign deals we generate revenues.

Now, there are some costs associated with this.

But overall, it's a very good long-term business opportunity that is ongoing and builds over time.

So that's really is far as we are going to go.

I know you would love more detail, but we won't give it.

With regard to the active base, which was your first question, it's going to be a similar answer.

But you really said, give us color on what it looks like.

Now remember, this is, as you said, the first year, so it's difficult to say this is exactly how the trends will always look.

But I think they will be similar.

The membership portion will generally be in a position where we will see a build, we think, because we are so active on this front, whereas with regard to Season Passes, that builds during the year and then falls off at the end of the year.

So if you look at a traditional baseline for this, Season Passes would always increase during the year and then disappear at year end because they no longer exist.

With memberships we will always have an active base because we will have people who stay with us and then we will build on that over time.

Yes, and let me just touch on the accounting for the memberships.

So when a guest purchases a membership, it's very similar to -- the accounting is very similar to a traditional Season Pass.

We would at that time book deferred revenue for the entire amount.

And the difference between a membership and the traditional Season Passes we would also book a receivable for the remaining amount of money that the individual owes.

We would recognize that revenue similar to a Season Pass.

We recognize it based on a historical trend of visits.

The only difference is that a Season Pass absolutely all the revenue would be recognized by the end of the year, typically.

And with the membership, since it's a 12-year (sic) contract, there may be a portion that would fall into the succeeding year.

When the membership converts to a month-to-month, in month 13, then we would recognize that revenue that they are paying on a month-to-month basis in that month.

Okay.

Thank you.

Tim Conder with Wells Fargo Securities.

Staying on the hot topic of the day, the Active Pass statistic, if I'm thinking about this right, realistically it's just another form of the Season Pass.

You've got the broad Season Pass.

And then you've got active membership and then what we'll call the traditional Season Passes.

So, I guess on that -- and, Jim, you had mentioned also within what you were talking about you are seeing, I guess, the growth in the membership part is coming from a incrementally new customer and not just switching from the Season Passes to that?

Or what type of mix are we [season switch] versus an incremental customer?

We think it's both, actually, Tim.

We believe that there are new customers who sign up and we believe there are many Season Pass holders who switch across as well.

So it's actually both.

Is it more what you are seeing here in the first year?

Is it more of that crossing over, or is it an incremental customer, I guess is the question?

Because at the end of the day the 25% stat is a great increase, but it seems awfully large, to be honest with you.

So we're just trying to get a better understanding of the drivers there within that overarching bucket.

It is a big increase, Tim.

You are absolutely right.

But you've got to remember at the first quarter, any point in time your lowest level historically of Season Passes that people have signed up for.

So I think it's definitely both.

We've definitely got incremental people who have signed up and we've got Season Pass holders who have gone with the traditional Season Passes.

If you think about it this way, we would start selling new Season Passes in the fall and we have historically done that.

Now what we've got -- we've still got that going on, the people that have signed up for Season Passes in the fall and then as they have come into spring they are doing the same thing.

And on top of that we've got people who have just said I want to be a member of Six Flags.

And I want to be in a position where my pass automatically renews.

So with what we've done here I truly believe we have generated not only incremental revenue but incremental pass holders.

So it's a combination of both but I cannot breakout the split for you.

Okay.

Well again, the business approach here with the membership gives much smoother revenue consistency over time.

So it's a great (inaudible) as many as you can transition over great and hopefully by the easier payment you are driving incremental volume here.

Tim, you're right.

And the reason that that's important is, if you think about over time, as John mentioned, once you get past that 12 months, then it's monthly revenue recognition.

So it does, over a period of time, the more you convert, it smoothes your revenue out.

Okay.

And then, Jim, on the capital expenditures you talked about roughly the 9% of revenues as CapEx.

Two questions, I guess, on that.

Number one is, as you start to get the fee income related to the international parks, should we think about that 9% of CapEx as still your total revenues or, exclusive of that fee income?

And then also you started to allude to at our conference this past fall that maybe 9% potentially could start to come down a little bit.

Just any update on that.

And again, just color how you are going to define it going forward.

I think that's a very good question, Tim.

And here's what I'd say.

Certainly for the next couple of years we are going to be at the 9% level and we would include any incremental revenue from the international side in that.

Over time, as that grows, then clearly we would be in a position to be able to reduce the overall percentage of total revenue bit by bit.

And that was part of our thinking all along with regard to how we would treat it.

So I'm not going to give you a number and say we are going to go from 9% to whatever, but over a period of time we will reduce that a little bit.

We still want to be in a position where we invest capital.

I think we are at the lowest overall at our 9% across the industry, we're very efficient, and we've got top ratings in innovation.

So we can be -- we can continue to be efficient, and we will look at it over the next few years.

Okay, and then lastly, how are you internally thinking about comparables?

Because obviously in the second quarter last year there was a weather impact on many of your parks.

And in the third quarter, unfortunately, you had the accident in Texas.

And that is one of your larger parks, and that impacted there too.

So, is it fair to say that you somewhat have easy comparables in the second and third quarters of this year?

Yes.

As everyone knows, we did have some horrendous weather in the second quarter of last year.

And so, obviously, our hope is that we don't see that weather this year.

So, we are looking at hopefully seeing some nice increases with some good weather.

What I would also say, though, is that we are closely watching a lot of the school systems because they are adding days on to the end of the year in June to make up for the snow days.

So that's one area that we are watching closely.

Okay, great.

Thank you, gentlemen.

James Hardiman with Longbow Research.

Couple from me -- I don't want to harp too much on the first-quarter attendance, given the size of the quarter.

But I might as well, while we are here.

Can you just remind us, sort of walk us through the operating calendar, which parks were open when in the first quarter?

And then you touched on the negative weather that you saw in Texas.

Can you maybe touch on some of the other weather trends?

I am assuming Magic Mountain was open for most of the quarter.

I think the Atlanta park was maybe weekends in March or something like that.

Walk us through that and maybe the weather impact there.

Yes.

Basically, we had five parks open, the year-round parks, which are -- there are three of those.

It's LA, San Francisco, and Mexico City.

And then we had the two parks in Texas that opened up at the beginning of March -- San Antonio and Dallas.

And Atlanta was open towards the end of the quarter.

So that's why, unfortunately, we did see normal weather in the California markets, which was a great indication of the fact that even with pricing increases there we saw nice attendance.

Unfortunately, with only five parks open, having adverse weather in two of those parks, Dallas and San Antonio, obviously impacted attendance.

And unfortunately, most of that weather was on the weekends.

And just remember that in both those Texas parks their spring break is at the beginning of March.

So that did not shift at all.

Okay, very helpful.

The other thing that's important, which you started to talk about there, James, is that in essence we lost half our days because of this, because of the weather.

And I think that in addition you got this Easter shift which had a huge effect.

So, we look at it very simplistically.

You've got these effects that take place.

We got hit a little bit with weather.

But we fundamentally believe that over the course of the season these things tend to even out.

And that has been proven year in, year out.

If you look at the weather effects we've had in the last two or three years, we have had some big ones.

But every year we have hit new highs.

Our goal is to do that again this year even if the first quarter was softer for a number of reasons.

Great.

And if I look at the attendance, when I tease out the 300,000 visitor calendar shift I get to an attendance decline of about 8%.

Sounds like a lot of that is weather.

Obviously, it's difficult for you guys to quantify what that impact was.

But when I look at the per capita increases, admissions and in-park -- are you guys seeing that any of the pricing increases may have affected attendance in a negative way, or do we think it's all weather that drove that decline?

Our view is that when you look at where the declines took place, it was in Texas, that's the attendance decline.

And it was all weather.

That's what we've seen.

And as John described, many of the price increases that we took, we actually started taking them in the fall last year.

And we had a very strong Fright Fest, very strong Holiday in the Park with these same price increases in.

So our belief is truly, James, that it's a weather issue.

Great.

And then just last question -- if I think about this Easter shift, should we be thinking about this as a net neutral to your business, or is it possible that a later Easter when more of your parks are presumably open and up and running is potentially a net positive for you guys for the year?

How should I think about that?

We are not going to give you guidance on what the number would be.

I would make any assumptions one way or the other, James.

Okay, fair enough.

Thanks, guys.

(Operator Instructions) Ian Zaffino with Oppenheimer.

The question beyond that biometric -- tracking or verification that you are doing now, can you help us understand -- maybe two years ago there was no tracking of any of your customers, so you really had no idea who was who.

What portion is it now?

Where do you think it's going to get to?

And do you have the CRM systems behind that to support an effort like this?

I know you mentioned couponing, but what could be the potential for this opportunity?

Well, as Jim mentioned, we are very pleased with the biometric systems that we have put in place at all of our parks.

And I'll start with the biometric is basically a finger scan -- it's not a fingerprint, but it's a finger scan that basically allows us to for the most part process Season Passes when they enter the gate instead of coming through the gate and having to go to a separate area to process Season Passes.

So from what we've seen so far, it's extremely efficient and our guests are extremely pleased with what they are seeing and not have to wait in two lines.

As it relates to from an efficiency standpoint our hope is that we will obviously see some lower cost associated with that as we have fewer people assigned to those processing efforts.

But long term, the goal is to be able to get everything put on to the Season Pass.

We now have the coupons on those Season Passes.

And over time be able to track a lot of the spending data as people are in the park.

And I think that will provide us a lot of good indications in terms of how people spend money and where we can have the best programs for Season Pass.

Ian, I want to clarify, because you said that historically two years ago maybe we didn't have any idea.

The truth is the Company has always had tremendous information.

And perhaps the right way to characterize it is that we may not have been using that information appropriately.

So, I described earlier that we carried out research for guest satisfaction surveys, over 1 million people, 1 million guests.

And then we do hundreds of thousands more specific surveys when we need to.

And with our Season Pass processing system and the improvement in the biometric, we now have access to millions of people.

And our goal is very simple.

It is to put our guests in a position where the whole process is much easier for them, but to put us in a position where we can sell even more effectively.

And so, we use the example of coupons and it's much simpler for guests now.

Literally the coupons are all on their Season Pass, basically.

And they are able to process sales directly through that and we can track it.

So we are actually in a position now, with what we have, that we can track tremendous amounts of information.

And it's simply going to be getting better and better.

When you ask question about Season Passes, basically 100% of our guests were in the position where we can track in a fair amount of detail.

So the whole goal ultimately is to be able to be in a position to use this to drive more revenue for the Company.

And really there is very little that we are missing.

We are updating as we go along.

We are improving software.

We are making changes here and there.

But we have what we need to be able to successfully do this.

We have an incredibly strong marketing organization, not only at a corporate level but in the park that supports this and supports our pricing initiatives.

And you heard already we have been recognized in the Elite 100 for InformationWeek from an IT perspective.

I have to tell you, Ian, this is an area I feel incredibly positive about.

Yes.

I just look at this as the added benefit of almost like a loyalty program or a loyalty card.

If you look at most industries, whether it's in quick service restaurants or it's at retailers, the introduction of these loyalty cards have had a pretty big impact on businesses.

But just a final question, and I know this has been asked already but I wanted to ask it maybe a different way, is -- on the international expansion it looks like we got one deal.

But I think you guys have been talking about it for, I don't know, four years or so where the opportunity has been -- you have been vetting these opportunities for four years now.

Are we going to see an acceleration in the number of international deals?

Can we expect one a year, one every six months?

Or is it just sort of like going to be every couple years or so?

Any color on the pace of these deals would be helpful.

Ian, it's very hard to be able to predict.

It's like M&A, right?

You can't actually predict specifically when deals are going to be signed.

So it would be wrong of me to say this is when a deal will be signed.

What I can tell you -- you referred to four years ago.

But Six Flags is really in a completely different place than where was four years ago.

We were coming out of bankruptcy then.

We talked about the opportunities, but I think the primary goal of this team was to make sure that the base business was functioning the way we wanted it to.

And I think we've proven over the last few years that we have done that.

The Company is firing on all cylinders, and I think the differentiator here is that the brand is incredibly strong.

We have been carefully vetting a number of opportunities.

And we are at the point now where we have, as you know, executed one, and we are positioned to be able to do more.

But I genuinely cannot tell you when because things, as you know, can go wrong in these processes.

And we want to be at the point where we are certain before we promise.

Okay, thank you very much.

Scott Hamann with KeyBanc Capital Markets.

Just a couple quick ones -- I apologize if I missed this, but did you quantify what percent of your revenue is coming from the APB program now and where you expect that to be?

And then secondly, on the cash balance sequentially down pretty significantly, how should we think about what's going on there?

In terms of the amount that's coming from the Active Pass Base?

Yes.

Yes, John, that's it.

We don't disclose the breakout of our revenue from Season Pass and memberships versus one-day tickets.

What we saw was our mix in the quarter in terms of attendance was fairly similar to what we saw last year.

I don't know if that answers your question.

Yes.

So it should be similar to what you have been reporting as Season Pass historically?

It's very similar.

That's correct.

What was your second question again?

On the cash balance from the end of the year to end of the quarter.

Typically, the first quarter is the lowest amount of cash.

If you look at historically, you'll see that's true.

And that is due to the fact that obviously it's our lightest quarter from a performance standpoint, but we also have a lot of our capital being put in place so there's a lot of spending around our capital.

Our goal is what we talked about before, is that to use as much of our cash as possible for both dividends and share repurchase.

And not have a lot of cash sitting on hand.

So, you will see that the cash balance was low at the end of the first quarter because typically that's our low point of the year for cash, but also because of the fact that we were fairly aggressive over the last 12 months on our share repurchase program.

Sounds good, thanks.

Barton Crockett with FBR Capital Markets.

I was curious about the excess land which you guys had flagged in your last earnings report.

What is your current thinking about the possibility of selling that, getting some money for that over some foreseeable time horizon?

Have you started any process to monetize that?

And could you also give us some thoughts about the materiality of the land value there?

Is it something that if you sold it could be a sea change in your leverage or just a nice but modest blip?

I think as we look at the excess land, and we said that we view this as land that is not needed to expand any of our parks, so in the right market we would like to monetize that.

I think we have seen some increase in the markets.

And again, that's really the three areas that we have excess land -- our New Jersey park, St.

Louis, and our Maryland park.

So, we are continuing discussions with real estate developers to see if there is -- gauge any interest on being able to monetize that land.

We will continue to do that.

We just want to make sure that we get a good price for that land.

I would say in terms of a sea change around our debt, I think the answer to that would be no.

I think your description of nice but modest is more accurate.

Great, thank you.

Tim Conder with Wells Fargo Securities.

Just one other related to the leverage.

I would think any proceeds you get from the land you would use most likely to go to share repo.

My understanding is that would be free outside of your other covenant buckets.

Is that true?

That's correct.

Okay --

And that would be our approach, Tim.

As John had outlined earlier, any excess cash dividends, share repurchases.

Okay, and in relation to the leverage, just to reiterate, your goal is to stay in that three to four times.

Could you potentially at some point in the future, especially as you start to get additional revenue coming in from the fee side, could you look to maybe re-lever a little bit and then again look to return some additional capital to shareholders?

Yes.

I think what we've said, Tim, is that we are very happy with where our leverage is today.

But similar to put we did a little over a year ago, where our leverage had gotten down to basically less than two times, with the favorable debt markets we took advantage of those and took on some additional leverage.

We are not opposed to doing that if we see our leverage continue to decline with EBITDA growth.

Great, thank you.

Thank you.

There are no further questions at this time.

Are there any closing remarks?

There are, Kayla.

As always, thank you all for joining our call today.

I do hope that you can take the time to visit our beautiful parks this season to experience all that we have to offer.

You can rest assured that our team is focused on delighting our guests and creating incremental shareholder value in the years ahead.

Take care.

Kayla, that completes our call.

Thank you.

This does conclude today's call.

You may now disconnect.