Six Flags Entertainment Corp (SIX) 2015 Q2 法說會逐字稿

Good morning, ladies and gentlemen.

Welcome to the Six Flags second-quarter 2015 earnings conference call.

My name is Dorothy and I will be your operator for today's call.

(Operator Instructions)

Thank you.

I will 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 welcome to our second-quarter earnings call.

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

We will start the call with prepared comments and then open the call to your questions.

Our comments will 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 both a detailed discussion of business risks and reconciliations of non-GAAP financial measures to GAAP financial measures in the Company's annual reports, quarterly reports, or other forms filed or furnished with the SEC.

At this time, I will turn the call over to Jim.

Thank you, Nancy.

Good morning, everyone.

The first half of our 2015 season is off to a solid start, with 6% constant currency revenue growth and 11% constant currency adjusted EBITDA growth.

And we set a new Company record for both revenue and adjusted EBITDA in the second quarter and the first six months of the year, despite challenging weather at some of our parks.

In addition, we maintained our record high LTM modified EBITDA margin of 40.7%.

Over the last 12-month period, which we believe is the best indicator of our fundamental progress, revenue increased $88 million or 8%, adjusted EBITDA increased $42 million or 10%, and cash EPS increased $0.62 or 28%.

We were able to achieve this type of growth due to the continued strong execution of our strategy.

At the forefront of our strategy is delighting our guests and improving their experiences at our parks.

We continue to take positive steps forward in this area, with guest satisfaction scores remaining at record levels.

We achieve higher guest satisfaction ratings through our park teams, who are dedicated to serving our guests, and also through our ongoing innovation, which I will talk more about in a moment.

We have continued to solidly execute two other important growth drivers for the Company, which are admissions pricing and season pass/membership penetration.

Our ticket pricing is up year over year, albeit more modestly than last year, and we have made excellent progress in upselling our guests to season passes and memberships, which will contribute to our full-year revenue and profit growth.

As evidence of our progress, our active pass base of season pass holders and members is now up 32% over prior year and at the highest level in the Company's history.

Converting these guests into multi-visit consumers of our product offering helped drive a 9% attendance growth in the second quarter.

The strong growth in season pass attendance did dampen per caps in the quarter, but drove record revenue and profit performance and also positions us extremely well for the balance of the season.

We are highly focused on improving the quality and breadth of our culinary options.

We have continued to see a strong uptick in the sales of our all season Dining pass, and this will also be a solid growth driver for us in the future.

In addition, our pre-existing international licensing projects are moving forward nicely and we continue to work on signing new deals.

As I mentioned earlier, we are focused on innovation.

And I believe that we lead the industry in this area, as evidenced by our new 2015 offerings that include some of the most creative and differentiated rides and attractions in the industry.

For example, Wicked Cyclone at Six Flags New England was just named by USA Today as the best new theme park attraction in the USA, while Bizarro was named best rollercoaster.

Justice League: Battle for Metropolis, that we just introduced at both Six Flags Over Texas and Six Flags St.

Louis, has won several coveted awards and this unique dark ride has been described by some as the best on earth.

In other industry reviews, both Twisted Colossus at Magic Mountain, the world's longest hybrid coaster, and Batman: The Ride at Six Flags Fiesta Texas, a first-of-its-kind 4D free flight coaster, were named two of the best new rights in the industry and have become instant guest favorites.

We also launched our Six Flags mobile app in June, which will provide an enhanced level of service for our guests.

We introduced this app with basic features and have plans to roll out additional enhancements in the coming months and years.

We are proud of our ability to deliver exciting, diverse, and highly innovative yet affordable products for our guests in every park, every single year.

In summary, we are very well positioned as we head into the back half of the year, as we drive aggressively towards achieving our long-term target of $600 million of modified EBITDA by 2017.

John is now going to share a few more details on our financial results.

John?

Thank you, Jim.

Good morning to everyone on the call.

As Jim mentioned, 2015 is off to a solid start, with 6% constant currency revenue growth and 11% constant currency adjusted EBITDA growth for the first six months of the year.

In the quarter, our revenue growth was primarily driven by the strong 9% attendance growth, which came from record high season pass and member visitation.

Considering the adverse weather that we saw at our Texas parks in May and early June and on the East Coast at the end of June, we are very pleased with the attendance growth.

We continue to make good progress on our season pass penetration strategy.

We know that our focus on upselling guests to a season pass or membership and doing so early in the year is the right strategy for several reasons.

First, season pass holders and members generate higher revenue and profit than single-day visitors, since they pay a higher price for their pass than a one-day admission ticket.

And they also spend more in total at our parks over the multiple visits than one-day visitors.

Second, season pass holders and members provide a stable and reliable recurring revenue stream year after year.

And third, whereas single-day visitors may cancel their visit due to bad weather on a particular day and may not return to our park that season, our season pass holders and members often reschedule their visit to another day as they have already paid for their past.

Therefore, locking in season pass holders and members early in the season serves as an excellent hedge against bad weather over the course of the entire season.

The strong trend of season pass and membership sales continued into the second quarter and our active pass base as of June 30, 2015, was up 32% over June 2014.

In addition, our deferred revenue balance at June 30 was $149 million, an increase of $20 million over June 30, 2014, and nearly double the amount of deferred revenue we had 5 years ago.

We now have the highest active pass base and the highest June deferred revenue balance in the Company's history.

The incremental deferred revenue, combined with the incremental monthly revenue from members that are beyond their initial 12-month commitment, positions us very well for the balance of the year.

Our guest is spending per cap declined $2.18 or 5% in the quarter.

And year-to-date guest spending per cap declined $1.86 or 4%.

The decline is the result of the following factors.

First, we experienced a significantly higher mix of season pass holder and member attendance in the second quarter and year to date.

You may recall that in our second quarter of last year, we experienced an attendance decline, primarily due to lower visitation by season pass holders and members.

This year, we experienced a very strong acceleration in visitation by passholders due to our higher active pass base.

As we have noted in the past, higher season passholder and member attendance puts downward pressure on per caps since there is a lower ticket and in-park revenue reported for each individual visit.

On a full-year basis, however, both revenue and profit are much higher per guest as they visit multiple times.

The second factor that negatively impacted our per cap figures was foreign currency.

With the Mexico peso weakening 18% and Canadian dollar weakening 13% versus the same time period last year, foreign exchange rates negatively impacted total guest spending per caps in the quarter and year to date by $0.44 and $0.53, respectively.

The third factor relates to our relatively new membership plan.

We have a growing number of guests joining our membership plan and it is becoming a larger part of our active pass base.

Members pay for their passes by making monthly payments and following their initial 12-month commitment, we recognize revenue each month as we receive their payment, unlike a season pass or the first 12 months of a membership plan, where we record revenue based on visitation.

You may recall that in last year's second quarter, many of our members paid their monthly fees, but did not visit our parks.

That enhanced our per caps.

In the second quarter of this year, members beyond the initial 12-month commitment visited our parks more frequently than last year, which had the effect of decreasing the second-quarter admissions per cap, since we only recorded three months of the revenue associated with these members over a higher attendance base.

We continue to implement ticket pricing initiatives across all of our ticket types and strategically manage the timing and duration of our discount offerings to further optimize both season pass sales and overall revenue.

Given our all-time high scores for value perception and our large pricing gap versus peers, we continue to believe we are in the middle innings of a long-term opportunity to increase ticket prices.

The strong attendance-related revenue, offset by $2 million of lower international licensing revenue, generated a $10 million or 3% growth in total revenue for the quarter.

Year-to-date revenue increased $21 million or 5%.

The foreign exchange impact I mentioned earlier negatively impacted revenue by $4 million and $6 million in the quarter and year to date, respectively.

If you adjust for foreign exchange impacts, revenue in the quarter and year to date grew 4% and 6%, respectively.

As it relates to international licensing revenue, we have mentioned before that the revenue will be lumpy as it relates to the quarters.

And we continue to believe this will be a significant revenue and EBITDA growth driver going forward.

International licensing revenue was down $2 million in the quarter, while year to date, it was up $1 million.

The second-quarter decline is simply related to the timing of various deliverables, and both our Dubai and China projects are making excellent progress.

As Jim mentioned earlier and as we've stated in the past, our quarterly reported results could be significantly impacted by various factors, including visitation mix, holiday timing, school calendars, weather, and other variables.

Therefore, we believe the trailing 12-month period is the best indicator of our financial performance.

On an LTM basis, our revenue increased 8%, driven by a 6% attendance gain and a 2% increase in total revenue per capita.

While we are pleased with our revenue gains, we remain diligently focused on managing our cash operating expenses.

Year-to-date cash operating costs increased less than 4% to prior year, despite some upward pressure on wages due to increases in the minimum wage in several states, offset partially by the impact of favorable foreign exchange rates.

Our focus on profit growth drove a $4 million increase in adjusted EBITDA to an all-time high $149 million in the second quarter.

Year to date, adjusted EBITDA is up $9 million or 9%.

On a constant currency basis, adjusted EBITDA was up 11% year to date.

For the 12-month period ended June 30, 2015, adjusted EBITDA was $448 million, up 10%.

And our modified EBITDA margin was an industry-leading 40.7%.

LTM modified EBITDA minus CapEx of 32.6% is the best in class by several hundred basis points, hence our great success in delivering cash earnings growth.

Cash earnings per share for the quarter was $1.11, an increase of $0.08 or 8% over prior year.

LTM cash EPS is now $2.85, up $0.62 or 28% over prior year.

Diluted earnings per share of $0.67 was flat to Q2 2014, while year-to-date diluted EPS was a loss of $0.05 versus earnings of $0.05 last year.

The decrease was primarily driven because 2014 included a gain related to the final sale proceeds from our ownership in Dick Clark Productions and 2015 included the one-time write-off of deferred financing fees relating to the debt refinancing.

Return on invested capital increased 15.5% -- from 15.5% at the end of 2014 to 16.1% at the end of the second quarter 2015.

We repurchased 13 million of our shares in the quarter, bringing year-to-date share repurchases to $21 million.

We were pleased to complete our debt refinancing at the end of June, since our revolver would have become current at the end of the year.

And with the attractive debt markets, we thought it was an opportune time to refinance our debt with more favorable covenants, increase our leverage by $130 million, and increase our revolver from $200 million to $250 million

The higher leverage provides us the flexibility to repurchase approximately $180 million to $200 million of our shares in the balance of the year, if we so choose, while maintaining a very conservative balance sheet.

Our net debt leverage ratio remains at a comfortable level of 3.1 times.

Like Jim, I remain very optimistic about the balance of 2015 and our long-term future.

And with LTM-modified EBITDA of $487 million through the second order, we continue to make excellent progress towards achieving our goal of $600 million of modified EBITDA and nearly $3.75 of cash EPS by 2017.

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

Thank you, John.

As I mentioned at the beginning of the call, our strategy is intact and our team is energized and laser focused on executing our business plans for 2015 and our longer-term aspirational modified EBITDA goal.

I remain confident that our strategic pricing, yield, and season pass initiatives, along with our continued focus on in-park revenue and growth in international licensing, all the while effectively managing our costs, will continue to create significant value for our shareholders in 2015 and for many years to come.

At almost 4.5%, our dividend yield remains one of the most attractive yields in the market.

And we believe that debt refinancing allows us to use our balance sheet strategically to create further shareholder value by repurchasing additional shares if we so choose.

Given our strong business momentum, our robust active pass base, and our other significant long-term opportunities, I believe our stock is a tremendous value.

This is a great industry and there is no better brand than Six Flags in the global regional theme park space.

Quarter by quarter, year by year, we deliver guest excellence, innovative products and attractions, and remarkable financial results consistently.

We have just completed our 19th record quarter since emerging from bankruptcy.

And I want you to know that your Six Flags team is relentlessly focused on delivering a strong back half of the year so we can jointly celebrate our sixth record year in a row.

Dorothy, at this point, could you please open the call up for any questions?

(Operator Instructions) Joel Simkins from Credit Suisse.

Thanks for providing some of the parameters around the puts and takes on per caps, particularly FX.

The question here, Jim, is clearly, the consumer sees great value in the season pass.

They're coming frequently and using it.

But with that said, if you looked back on the set up into the season and perhaps going forward, do you feel like you could have gotten a bit more aggressive on pricing, particularly in that preseason selling period?

And how does that shape your vision going into next season?

I don't feel that we could have been more aggressive on pricing.

I'm very comfortable with what we did with regard to pricing.

Our pricing today is higher than it was the equivalent period last year.

I think the key here, Joel, was that we had unbelievable early success in attracting season pass holders and members.

And if you remember the numbers that we described on our calls in terms of the active base, they have been double-digit levels higher than at any point we have ever seen in our past.

So I think what we have achieved is remarkable success in gaining season pass holders -- not only gaining, retaining and continuing to build on that.

So the way that I would think about it is we just registered our 19th record quarter; fifth record year.

It's a remarkable run of success and I really feel like we are only part way through the process.

I am completely confident in terms of our approach on pricing; the price increases we have put in are holding.

Guests do recognize the tremendous value of the offering and our active base is up 32%.

And I think that we are going to take the right steps, quarter by quarter, year by year, to increase that pricing appropriately and not put ourselves in the position where we see some sort of regression.

Sure, that's fair.

And I know you are always going to have some puts and takes from a weather perspective in any given year.

But just to put this topic to bed, can you guys quantify any impact to attendance or profitability, particularly in Texas?

We are not going to do that, Joel.

It's not because we don't want to share information with you.

It's just that the reality is in this industry, what we've found is there is weather every single year, pretty much at every park.

And we don't want to rely on that as some form of excuse.

The reality is that across this Company, we have registered quarter after quarter of record performance.

Over the last 12 months, as I said a little while ago, our revenue is up $88 million or 8% and adjusted EBITDA up 10%.

Cash flow, cash EPS, is up 28% since the equivalent period last year.

And so, yes, there are weather impacts that happen.

But they just work out over the period of a year.

And the performance, I think, shows that.

Sure.

And just one final question and I'll jump back in the queue.

But obviously, you sound as positive about the outlook for the business as ever.

You are sitting on a pretty significant buyback capacity: $278 million currently.

So how should we be thinking about your willingness to get out there and be aggressive, particularly given the stock has languished a bit and will probably be under a little bit of pressure this morning?

I think it would be a mistake for us to describe in detail what we will do with regard to the buyback.

I think John described it well, that we will take the opportunity to buy at appropriate times.

And we do that really for the good of our shareholders.

We will look for the right moments and make purchases.

But we are not going to lay out a specific plan that says here's where we're going to do.

What you should know, Joel, and I know that you really understand this business, you really understand the industry.

We believe the shares are undervalued.

A 28% increase in cash EPS in the last 12 months and, as you said, the stock has gone up, but it hasn't gone up that much.

And there's more to come.

So we think it's undervalued and we will buy at the appropriate time.

I would echo Jim's comments.

If you recall, most of our share buybacks are weighted towards the back half of the year, mainly due to both cash flow and our ability to do it under our debt covenants.

So as I mentioned, we expect to have significant share buybacks in the back half of the year.

Okay.

Thanks, guys.

Tim Conder with Wells Fargo Securities.

Jim, on the -- we ask this every quarter and I think a lot of people have a strong interest in it, just to see the progress.

So any color you could give us on the mix between traditional season passes and your membership, that would be helpful.

And then to follow on Joel's question about weather.

We know Texas, Dallas parks, Chicago, New Jersey, and LA are your most significant parks.

And Texas well documented all the weather in the second quarter there.

But can you give any color here on what's going on?

It appears Texas is better in July, but Chicago maybe the standout area to watch a little bit.

But everything else seems pretty good.

So any color from that perspective would be helpful.

Finally, you are continuing to book revenue related to China, yet at this point, we haven't had too much detail on what's going on there.

Any timeline or any color on that going forward?

Okay.

I think much as I think you -- I know everybody would like to have a detail with regard to the mix between season pass and membership.

We will not break that out for a variety of reasons.

But what I can tell you is that overall, we've definitely seen a fairly large increase, as you can tell from the per cap effect, a fairly large increase in season pass holders overall; the combination of both membership and season pass holders.

And that both categories, memberships and season pass holders, have increased really nicely.

So I'm not going to give you a specific number.

At the end of the year, we will publish the percentage of attendance that comes from that group, but we won't split it today.

I would say -- and again, we've said this over and over and John said it in his comments.

The reality is that as we convert folks to season passes and memberships, they provide tremendous benefits for us.

And we have published the long list before, but in very simple terms: we definitively see higher revenue, higher profit, and higher cash flow.

And it comes over the full season versus in any one period of time.

They come back regularly and they spend more.

I think the second benefit that they bring -- and I think this leads into your second question.

The second benefit is they bring us stability; tremendous stability.

And what we're seeing now is a history of a company that registered losses in Q1, registered losses in Q4, is now seeing much more stable revenue generation across the season, because we've got much higher season pass.

And specifically, because we have introduced members.

And we are seeing a tremendous number of members who stay with us post the 12th month and into the 13th.

And we register that income and that revenue monthly.

So I think that I won't give you the breakdown, but you can see that the stability that comes from that is very, very strong.

With regard to weather, I'm not going to give you specifics with regard to weather.

Weather evens out over a 12-month period.

Last year, we had some bad weather.

This year, we have some bad weather.

And Tropical Storm Bill came through, hit Texas hard, then went on to the East Coast.

But when you stand back and you look: 19 record quarters, 5 record years.

This industry is excellent.

This Company is excellent and we are only partway through the process.

We are sitting, as we said, on 32% higher active base.

John talked about the deferred revenue.

This is really a great place to be.

John, do you want to talk about China and Dubai revenue recognition quickly?

Sure.

As it relates to our international licensing, as you know, there is several elements to the revenue associated with our contracts.

And each one of those is either set towards we recognize the revenue either on a time basis or predominantly, as I'd mentioned earlier, as we meet certain deliverables.

As it relates to China, we still feel extremely good about the relationship there and the timeline.

We continue to make progress.

We are not at a point now where we can provide any additional color on the timeline or locations.

But I think in time, we will be in a position to share a little bit more data on that.

Again, it's -- given that we negotiate on multiple deals, it's a mistake for our shareholders for us to share any specific details.

But what we can say is that we are progressing really nicely, not only with China and Dubai, but also with other markets that we are looking at.

And as we said, while there is a little bit of lumpiness, this international business is providing us a very steady monthly income and quarterly income.

And I think that we are going to see that grow over a period of time.

Okay.

Thank you, gentlemen.

Ian Corydon with B. Riley.

Understanding that you don't give guidance, you guys obviously have a much better view into what happened in the back half of last year with respect to the overall attendance mix and then the mix within the active pass base.

Can you talk about the trends there?

And is there any reason to suspect that the per cap trends you saw in Q2 wouldn't continue into the back half?

Well, what I would say is that, as we've talked about, the more season pass and member visitation that we see, that does put downward pressure on per caps.

As Jim mentioned, our active base is up 32%.

So I think we feel that we would continue to probably have a slightly higher mix of season pass and memberships even in the back half of the year than we saw last year.

Got it.

Thank you.

Darton (sic - Barton) Crockett with FBR.

Thank you for taking the question.

I wanted to ask a little bit more on the per cap side, and that is this.

On an apples-to-apples basis, I know there was a mix headwind on per cap.

But on an apples-to-apples basis, was your admissions revenue per cap -- were you charging more for the season pass, for the membership, and for the day tickets on apples-to-apples basis?

You would have to go week by week, month by month, category by category and look at that.

As of today, we absolutely are, in every single category, up.

And what you have to be able to do is look at different points in time.

So example, in the fall, season pass prices have always been lower.

And then over a period of time, as you get closer to the high season, which is now, prices go up.

And we are at higher price points across every single category.

So the single greatest driver of per cap decline, without any doubt, is that we have been so successful with season pass sales that that higher mix of season pass sales and the multiple visits effect pushes your per cap down.

That plus foreign exchange are the drivers of why per caps are down, which is I think what your question is.

Yes, that's the inverse of it.

But just to get supporting evidence for the opportunity, which is that you guys believe you can charge more, because essentially Cedar Fair charges more in their markets and you should be able to narrow that gap and maybe surpass them.

On an apples-to-apples basis, is that playing out?

Are you actually growing?

I understand there's seasonal variations, but in general, do you feel like you are growing?

If you look at our website today, go to any of our parks, go to any park and look at the price points for a single-day ticket or a season pass ticket, the price points are higher than they were last year.

We are absolutely part way through a long-term pricing opportunity, which is playing out well.

You could not possibly deliver 19 record quarters without that sort of growth and pricing.

That's what we are getting.

Okay.

Are you able to quantify what that kind of average growth is right now?

Is it a 5% pace; 3% pace?

How would you ballpark it?

I would say that in the last few years, we have probably been at a slightly higher pace, maybe in the 5% to 6% range.

And more recently, as we said earlier, perhaps a more modest pace, probably in the 3% range.

Okay, that's helpful.

And on the attendance growth that you are seeing, can you give us a little bit of a breakdown in terms of are these people -- is this 9% growth new people to Six Flags or is it the same people coming back more frequently?

Is there any way to break that down?

We don't break it down.

We won't publicly break it down, but we have got both.

We have got existing guests who we are converting and we have got new guests.

Okay.

All right, that's all helpful.

Thank you very much.

Ian Zaffino with Oppenheimer.

Thank you very much.

Not that we haven't asked this question 1,000 different ways, but I'll try and ask it a different way.

Were you surprised by the mix that you witnessed this quarter?

How heavily it skewed toward season passes?

Is there something that you did maybe in your advertising or your marketing, or did something happen, or is this part of your strategy?

If you could just elaborate on that a little bit, that would be great.

Well, I would say that we weren't surprised by the mix, because we have full color into our active pass base, how many season pass and membership units we are selling.

What I would say is that we were very pleased with what we saw, particularly earlier on in the year, in terms of unit sales.

Okay, thank you.

James Hardiman with Wedbush Securities.

It's Sean Wagner on for James today.

You covered most of my questions.

Just trying to wrap my head around the season pass and the membership.

With all the significant growth you're seeing in that base and the decline in the per cap spending, is that decline -- should we expect that for the foreseeable future?

Or is that something that will turn around with your all seasons dining and whatever other programs that you are running?

We don't provide any guidance with regard to per caps or anything else.

The only number that we give out there is the long-term target of $600 million of modified EBITDA.

But what I would say to you, as just repeating what John said earlier, with a substantially higher active base, which we have, and this growth in both season passes and memberships, that naturally does put pressure on per caps.

Per cap is a very straightforward calculation based upon the anticipated number of visits that a season pass holder is going to have.

So you will always see a lower per cap with higher season pass visitation.

It's that simple.

Okay.

That's fair enough.

I guess -- go ahead.

The other thing that I would point out, just so everyone is clear on the memberships, particularly when members go beyond that one-year initial period, is, as I mentioned, we recognize revenue on a monthly basis when we collect that, regardless of whether there's a visitation or not.

So that in and itself will move per caps around from quarter to quarter.

Sometimes we will have revenue without visitation; other times, we will have revenue with a lot more visitation.

Okay.

Then my follow-up question would be with the significant growth you've had in the active base, how much room is there to grow that further?

And how much confidence do you have that the base that you have now you will continue to retain year after year?

Well, you can never be certain that you are going to be able to retain the base, obviously, because we're predicting the future.

But right now, I would say to you we're very confident.

We've had an incredible year.

We are continuing to see very nice growth in season passes and memberships.

And so our confidence level is very high with regard to this area.

And I think what is really required is for folks to pull up and really think through what matters for shareholders.

And what really matters for o shareholders is higher revenue, higher profitability, and higher cash earnings per share.

And we are delivering on all three of those.

And the per cap, while meaningful and interesting, is a function -- it's a calculation, a simple calculation which does not in itself represent pricing when there are such big swings taking place in mix.

All right.

Thanks a lot, guys.

Afua Ahwoi from Goldman Sachs.

Just two questions from me.

The first one is of three buckets you mentioned impacting per cap, maybe could you give us a sense of which was the largest impacts and the least?

And then the second question, on the membership, given you're now going on almost three years -- or maybe three years of members, what are you seeing on the retention rate?

I recall that was part of the opportunity with a membership that you could see better retention than you see with the season pass, which I believe was in the 50% retention rate area.

On your first question, regarding just the impacts on per cap, I would say clearly, the largest driver was just overall mix.

So we had more season pass and member visitation, so that obviously had a significant impact on per caps.

And then the other two, I would say that probably the smallest would have been the foreign exchange.

As it relates to membership, we continue to see a very good retention rate on memberships; very pleased.

It's higher than what we had originally expected.

And so I think that talks to the fact that our guests continue to see, particularly members and season pass, continue to see a great value in those passes.

And we continue to see very good retention.

I would agree with that.

It's really been a very pleasant surprise.

I think once people sign up for the membership, I think they really love the fact that it's differentiated and that they are able to sign up once and then they are locked in and the whole family can be locked in.

And then they are charged monthly, as John described.

And people very rarely -- it happens, but they very rarely go back and then actively cancel.

We do have some people that do it, but it's not at that high a rate.

And so it is undoubtedly helping to build that active base and it's one of the reasons that we are seeing that 32% growth.

I'm curious: are you seeing season pass customer switching to membership?

Or are you seeing single-day visitors become members?

We see both.

Both of those things happen.

Some of the season pass holders switch and then some single-day do as well.

And then we get some new people who may not have signed up for a season pass or even for a single day that would sign up for a membership because they like the value offering and the ability to spread the payments over a period of time.

Got it.

Thank you.

Joel Simkins with Credit Suisse.

Two quick follow-up questions here.

I believe you guys have a couple of pretty significant in-park deals coming up next year, I believe with Kodak and [Excessive].

So how do you continue think about these important in-park revenue centers?

And I know it's early and it seems like more of a trial, but how has these all seasons retail shaped up versus your expectations?

I think that with regard to the two parties that you mentioned, Joel, again, it would be unfair to talk about the approach to discussing things with either of those or to any third party that we have a relationship with.

I would say that the relationships are very strong with both those groups.

And our goal would be to retain and further build on those relationships to create even better experiences for our guests.

So I would highlight those as positives.

And we will assess that even more closely over the coming months.

With regard to retail, it has been a success.

Not at the level -- I talked about all seasons dining and the success of that program.

That's been a runaway success, and I think retail is more a work in progress.

And I think we've learned a lot and we will continue to build on that as we go forward.

Sure.

And just one other quick question here on capital.

I know we've got a ways to go before 2016.

You've been remarkably consistent with capital over the last couple of years.

You certainly had a nice consumer response to the new attractions this season.

With that in mind, do you continue to follow this strategy or do you potentially dial it back, given that you got a pretty strong response this year?

I think that we will keep going with this capital strategy, Joel.

But the news in every part, as you know, because you are so active in visiting parks and so knowledgeable, as I said earlier, about what's going on -- it really works.

And it's pulling guests to our parks.

It's part of the reason that we are seeing such strong progress on the active pass base.

So we will maintain that.

We always look to provide excitement and news.

Coming up shortly, we will be announcing in the next four to six weeks, we're going to be announcing our new attractions for 2016.

Like everyone else, you are just going to have to wait a little bit longer to hear about that.

I'm looking forward to that video.

Thanks, guys.

Karen Tan (sic - Wang) with Wells Fargo Securities.

Our questions have already been asked and answered.

Thanks so much.

There is no further questions at this time.

Okay.

Well, thank you very much, as always, for joining our call and your ongoing support.

If you haven't already, I really do hope you can visit one of our parks and experience some of our incredible rides, attractions, and of course, my personal favorite, which is our food.

I do want to just reinforce what I said at the beginning and I've said throughout this call.

We really do remain laser focused on delighting our guests, creating incremental value for our shareholders, and delivering our 6th record year.

That's our goal and we're working hard to get there.

Take care.

Thank you, Dorothy.

Thank you, ladies and gentlemen.

That does conclude the conference call for today.

We thank you for your participation and ask that you please disconnect your lines.