Six Flags Entertainment Corp (SIX) 2016 Q3 法說會逐字稿

Good morning ladies and gentlemen. Welcome to the Six Flags third quarter 2016 earnings conference call my name is Tonya and I will be your conference operator today. During the presentation all lines will be in a listen only mode. After the speakers remarks, we will conduct a question and answer session.

(Operator Instructions)

Thank you. I will now turn the call over to Nancy Krejsa, Senior Vice President, Investor Relations. Thank you, please go ahead.

Good morning and welcome to our third quarter call. With me today are John Duffey, President and CEO of Six Flags; and Marshall Barber our Chief Financial Officer.

We will begin the call with prepared comments and then open the call your questions. Our comments will include forward-looking statements within the meaning of the federal securities laws. These subjects 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 risk 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 SEC.

At this time I will turn the call over to John.

Well thank you Nancy. Good morning and welcome to our call.

I am pleased to report year to date our attendance, revenue, and EBITDA, and modified EBITDA less CapEx are all at record levels in the Company continues to close in on another record year in 2016, which will be our seventh in a row. I am very proud of our team for this performance.

While we had a strong start to the year, we did face a challenging third-quarter due to unusually hot weather in July in the Midwestern and Eastern states, along with rainy weather in the first half of August on the East Coast, and cool temperatures in Texas. The unusual weather patterns negatively impacted attendance during many of our peak summer days. However, when the weather was normal, we saw healthy double-digit growth in attendance.

Unfortunately, many of the normal weather days were later in the quarter when schools were back in session and the strong attendance days during that time period, could not fully offset the attendance lost we experienced earlier in the quarter. As a result, our attendance declined 2% in the quarter. All of which was attributable to single day visitors.

Our senior pass strategy provided stability to our business as multi-visit pass holders continue to visit our parks even on the more inclement weather days. The higher mix of season pass holder attendance did put downward pressure on guest spending per capita which declined 1% in the quarter.

Given the changes of weather pattern from year to year because operating days can shift from quarter to quarter, we have consistently said that the most appropriate way to measure our performance is over a 12 month period. On a LTM basis our revenues increased $67 million or 5%. And our adjusted EBITDA increased $28 million or 6%.

Six Flags is a great value to our guests who are increasingly looking for fun and different kind of experiences with their family and friends. This is a key reason why our value for the money ratings improved for the sixth year in a row and reached a new all-time high in 2016. Continued success in delivering exceptional guest experiences will allow us to further grow our attendance base, while implementing modest price increases year after year.

An important part of delighting our guests is through innovation. Earlier this year, we became the first theme park company in North America to integrate virtual reality technology into our roller coasters, and the guest feedback has been phenomenal. Both are Superman and a fighter pilot stimulations have received rave reviews, and we look forward to rolling out a robust pipeline of new VR content over the coming quarters.

We continue to believe that VR is a game changer for our business. It will allow us to deliver exciting new guest experiences and expand our attendance base with minimal capital requirements as we utilize our existing coaster infrastructure.

Over the last six years, the fourth quarter has become an increasingly important quarter for Six Flags. We have seen tremendous growth due to our ongoing investments in Fright Fest and Holiday in the Park, two of our most popular events of the year. This year is no different.

You may recall that we are introducing Holiday in the Park at two new parks this year, at Six Flags St. Louis and Six Flags America outside of Washington DC. Bringing the total number of Holiday In the Park offering this special event to nine. We also believe we continue to grow Holiday in the Park at the other seven parks in addition, our international licensing business brings increasingly stability and consistency to our financial performance along with an opportunity for significant long-term revenue profit, and cash flow growth.

I am pleased to share that we kicked off the celebrate 2017 season passes, in early September, we sold a record high number of passes. Our active pass base as of September 30 was our highest ever, up a healthy 15% over prior year. Sales of our 2017 all-season dining passes were also up significantly, with our highest penetration ever.

As a result of the sales success on both of these products, deferred revenue was up $32 million, or 28% at the end of the quarter. We feel confident in our strategy and our ability to achieve Project 600 in 2017. As you saw from our press release this morning, the company has set a new long-term aspirational goal of achieving $750 million of modified EBITDA by 2020.

Illustrating our view that the long-term growth potential of this business remains strong. So I will talk a little bit more about this long-term target at the end of the call, but now I will as Marshall to share some more detail on our financial results. Marshall?

Thank you John and good morning to everyone on the call.

As John mentioned it was a tough quarter with weather challenges both July and August. However, we are pleased that our active base of season pass holders and members helped us mitigate some of the weather impacts, and we were encouraged by our double-digit attendance gains when weather normalized. Our ability to manage through a quarter such as this, reinforces that our strategy is right on target and will continue to drive increasing shareholder value over the long term.

Total revenue in the quarter was down $18 million, or 3% as a result of the 2% decline in attendance, a 4% decline in admissions revenue, and a 3% decline in in-park revenue, partially offset by growth and International licensing revenue of $4 million. Foreign currency rate translation associated with our parks in Mexico and Canada negatively impacted revenue by $3 million.

On a guest spending per capita basis, we were down 1% primarily due to a higher mix of season pass attendance and a higher mix of attendance at our water parks during the extreme heat in July. Cash operating expenses for the quarter were down $10 million or 5%. On a year to date basis revenue was up $34 million with 3% driven primarily by a 2% increase in attendance, a [113%] increase in international licensing revenues, and every 3% growth in sponsorship revenues.

Guest spending per capita was flat in the prior-year due to higher pricing across all ticket types, offset by both a strong mix of season pass attendance, and a negative impact from foreign translation. If you adjust for changes in foreign exchange rates year to date revenue increase 4% and guest spending per capita increased 1%.

Cash operating expenses were up 3% through the first nine months of the year, driven primarily by increases in wages, along with incremental costs associated with the successful growth of our international licensing program. In the first nine months, we generated $253 million of adjusted free cash flow, and paid $161 million in dividends. We also repurchased $120 million of our stock using cash from operations, along with some of the cash raised from our June 2016 debt offerings.

I am comfortable with a capital structure and believe that our policy to return all of our excess cash flow to our shareholders through dividends and share repurchases continues to be the best return on investment for our shareholders. We have plenty of room to grow the dividend over time as our earnings and cash flow grow. Net debt as of September 30 was $1.4 billion and our net leverage is conservative at 2.9 times.

We continue to monitor the credit environment and our Board regularly evaluates a potential increase in leverage in order to enhance our share repurchase program, especially given our strong cash flow attributes, significant growth opportunities, the highly recurring nature of our revenue base, and the robust credit market. Our LTM modified EBITDA margin continues to set the standard in the industry at 41% while our modified EBITDA less CapEx margin of 31%, was several hundred basis points higher than any other player in the industry.

We believe we can continue to improve our modified EBITDA margin over the long-term. Deferred revenue was a record high $148 million at the end of September, an increase of 28%. This growth resulted primarily from a successful launch of our 2017 season pass and all-season dining programs noted earlier.

As mentioned in this morning's press release, we've began to accrue stock-based compensation expense in Q3 relating to Project 600. Our decision was based in our belief in the positive outlook for the Company, the streak of our year to date attendance, especially during normal weather days, the highly successful launch of a 2017 season pass and all-season dining program in September, our ability to continue raising ticket prices while simultaneously improving guest ratings on value for the money, and the ongoing growth opportunity from our International licensing business.

The third quarter retroactive charge was $86 million, and we anticipate ongoing stock based compensation charges through Q1 of 2018, although at a lower quarterly level. In summary, while inclement weather impacted us in the third quarter, our year to date and last 12 month financial performance are at record levels, and we are well positioned to deliver yet another record year in 2016. We're also very encouraged by early indicators for 2017.

Now I would turn the call back over to John. John?

Well thank you Marshall. Our growth prospects have never been better and we are poised to deliver another record breaking year in 2016. I believe this for several reasons, first, we experienced strong attendance growth in Q3 when the weather was normal indicating that the softness in attendance was due to weather.

Second, we are very excited about our Fright Fest and Holiday in the Park events, both extremely popular with our guest. As I mentioned, we will have two additional parks this year that will be opened for Holiday in the Park. And third, we have a record number of season pass holders and members that will want to come and visit our parks.

As we look to 2017, our planning and execution is aligned to achieve our long-term targets of $600 million of modified EBITDA. Our confidence in achieving this goal is due to the following, first, we had a very successful early sale for our 2017 season passes over Labor Day weekend, and our active pass base is at a record high, up 15% over prior year. Second, our marketing, pricing and operational plans have been developed and our team is ready to achieve new heights.

We continue to believe that we have tremendous pricing opportunities and will be taking prices up 3% to 5% in 2017. Third, we have an incredible lineup of new capital attractions coming in 2017 that have already been well received by our guests. It is filled with the type of innovative rides, attractions, and signature events that you have come to expect from Six Flags, and includes exciting news in every single park.

We are introducing our next generation of Justice League: Battle for Metropolis, our award winning multi-sensory dark ride at three of our parks. Three other parks will receive The Joker, an innovative 4D free-fly coaster that features two beyond vertical free falls. And in keeping with our innovation leadership, we're introducing the first of its kind uphill water coaster in the United States at Six Flags Fiesta, Texas.

We will continue to enhance our existing VR experiences through new technology with a focus on improved graphics, new sound elements, and interactive gaming features that allow our guests to compete with each other on the VR rides. Finally, we will reopen the water parks in Oaxtepec, Mexico, which will be our 19th park, in Q1 2017. The new park will expand our capacity, and given the proximity of the water park to Six Flags Mexico, it should also help us sell more season passes.

Fourth, we continue to invest in our special events such as Fright Fest and Holiday in the Park. In early 2017, we will be testing a new Mardi Gras concept at Six Flags Fiesta, Texas and Six Flags Mexico. These events provide yet another opportunity to expand our season and give our guests even more reasons to visit our parks and purchase a season pass.

And lastly, although I cannot share specific details, we continue to speak with a number of promising potential partners that could contribute to our International licensing growth. As we look to the longer-term, I personally have never been more excited and confident about our future. Given the success and confidence, we're launching Project 750, a new aspirational target of $750 million of modified EBITDA by 2020.

This target represents a cumulative annual growth rate of more than 8%. We believe it is important for both investors and our employees to keep their eyes set on long-term stretch goals, while continue to deliver excellent results in the near term. We have a strong track record of delivering on our targets, and we look forward to wrapping up Project 600 and 2017, and then quickly turning our sights to Project 750.

The four key areas that have driven our growth and success over the last seven years, will also be the keys to achieving this new long-term target. The first area is increasing ticket yields. We continue to see ticket pricing as our biggest growth opportunity, we serve the top 10 DMAs in the United States whose residents has higher income and national average, yet are under priced compared to other forms of entertainment and others in the industry.

The second area of strategic growth is increasing sales of season pass and memberships. We have been able to grow our active pass base to its highest level ever, while still going a unique visitor base. We have ample capacity to continue growing attendance and our goal is to do that by upselling guests to our highest priced tickets, our season passes and memberships.

Our active base represents our most loyal and profitable guests who visit our parks multiple times each year. The third area of growth is in-park sales, especially culinary revenue. We continue to have significant growth opportunities in penetration of sales within our parks, especially for products aimed at our large and growing active pass base.

Our all-season dining program has been highly successful. It is a great value for our guest and a high margin revenue stream for us. Penetration of this product is still low and it has the capacity to grow significantly as we increase both our active pass base and our penetration of that base.

The fourth key growth driver is International licensing. Our International strategy continues to build momentum with both our existing and potential partners. These deals are high margin for Six Flags and require no capital investment our part.

We already have agreements in place for parks in Dubai, China and Vietnam, and we continue to seek new partners for licensing our brand in other markets, and believe there is a strong interest to license and build more parks around the world. Six Flags is the premier brand in the global regional theme parks space and the ultimate growth and yield story. We provide family entertainment that is affordable in any economic environment and we consistently deliver guest excellence, innovative products, and attractions, and the highest industry growth rates in attendance, revenue, EBITDA, and EBITDA less CapEx.

Our capital allocation strategy remains the same as it has for the past seven years. We return all excess cash flow to shareholders through a balanced approach of dividends and share repurchases. First and foremost, we have a 4.4% dividend yield that has doubled the S&P 500.

We have grown our dividend every year for the last six years and we are committed to continue growing it every year going forward. We will use the balance of our excess cash for share repurchases is we believe our stock provides a tremendous value. With a strong recurring cash flows, a discipline capital allocation strategy, and numerous opportunities to significantly increase our earnings, I believe, there is no better place to invest than Six Flags.

So operator at this point, can you please open the call for any questions.

Thank you.

(Operator Instructions)

You first question comes from the line of Barton Crockett with FBR Capital Markets.

Thanks for taking the question. A couple if I could. One is you called out the weather as a headwind in the quarter. I think we understand anecdotally what you are saying. Is there any way to quantify how much of a weather headwind there was?

Thanks Barton it's great to hear from you.

As it relates to the weather, we saw some issues in a number of our parks associated with the weather. As you think about the impact, it was extremely hot in late July in the Midwestern and Eastern states and we saw a lot of rain in other parts of the country. As I said before, once we actually saw some normal weather, we did see some very good attendance growth. Weather tends to even out over the entire year.

Unfortunately, we saw some adverse weather in the six weeks of our busiest time of the year. We're not going to actually quantify the actual impact on attendance associated with the weather, but I can assure you that the decrease that you saw in the quarter was solely due to weather.

It really was as we mentioned, associated with one-day tickets. We'd still see a large number of our season pass holders come out to our parks. But as you can well imagine whenever you get adverse weather, it really impacts more on your one-day tickets.

Okay thanks for the clarification.

I was curious about the accounting on the -- and the equity tied to the new goal in 2020. Should we expect that is going to be a similar award of a couple million of shares of stocks. Can you clarify what that would be?

Good morning Barton.

Yes, Project 750 is 900,000 shares. We will start to record once it becomes probable.

Okay. All right.

Bart, just to add to that. Our goal align between our employees and shareholders. If you look at all of our prior projects that we put out there, many of which we have achieved they have, we believe, driven significant shareholder values, since 2010 for example, our market cap has grown over $4 billion. We paid out in excess of $900 million in dividends, a near eightfold return on investment for our shareholders.

We believe that success really has been driven by a lot of these projects that we put in place. So Project 750, the number of shares is significantly below what you have seen in the past and what you saw for Project 600. But we believe it is a motivational factor all of our employees to hit this target. Barton, if we hit this target, it would generate another $2.5 billion in shareholder value.

Okay, that's great. I'll leave it there. Thanks a lot.

Thank you. Your next question comes from the line of Ian Zaffino with Oppenheimer.

Thank you very much. John, did you say that season pass attendance was up in the quarter for this weather, or did you say it didn't fall as much as daily did?

Well, actually, Ian -- and good morning. Great to hear from you. I actually did not say whether season pass was up or down for the quarter. In fact if you look at it, season pass was up for the quarter.

I think that really talks to our strategy around season pass. Even when you can have some inclement weather, like we saw, that you can still get attendance from the season pass holders. (multiple speakers) Really, the attendance was from one-day ticket holders.

Okay. I don't know if you remember in 2011, that might be the closest weather quarter that you had this year. In that quarter, you did see a larger attendance decline, which would prove your point of having more season passes today so that would mitigate the attendance decline. Also in 2011 you had positive pricing. Was there something different that we need to take into account here as we shift to the business model more to season passes? Or how should we think about that in the moving parts there?

Ian, I'm sure you're referring to the per caps. We have been taking pricing up on every single one of our ticket categories. So season pass, memberships, one-day tickets across the board. Unfortunately, what we saw was some softness in the per caps associated really was the mix. We had a very high season pass mix. We talked about in the past, we tend to see a little bit higher season pass mix of our total attendance because of that increase in active pass base. I think that was amplified in this quarter because of the fact that really the drop we saw and the softness we saw in attendance was all related to one-day ticket holders.

Okay, that's really helpful. Thank you very much.

Thank you. You next question comes from the line of Tim Conder with Wells Fargo.

Thank you. John, did you say that attendance was up double-digit post-Labor Day? Maybe just extend that? Any comment post-Labor Day in the quarter. Or if you would, carry that onto what you're seeing and fourth quarter here year to date? Or quarter to date, I'm sorry?

Tim, actually the weather impact we saw was really the first six weeks of the quarter. It was about mid-August where the weather started to turn around. Since mid-August through the end of the quarter is where we saw that double digit increase in attendance.

But as I mentioned earlier, unfortunately, that's when a lot of schools go back into session, a lot of our parks moved to weekend only operations. Even with that is very strong attendance gains that we saw, we weren't able to offset that softness that we saw in the beginning of the quarter.

Okay.

Tim, as you know, we don't talk about guidance. What I would say is one of the things that make us feel good about our ability to finish the year strong, and our ability to hit our targets in the future is that we have seen a very good start to Fright Fest. I would just leave it at that.

Okay. A couple of other things John.

You talked about the low penetration of the season dining pass relative to your total active pass base. Any quantification you can put on that? Again season dining passes as a percent of the total active base. Also, any color you're seeing year-to-date, year-over-year in spending between a member versus a traditional season pass type customer spending on an in-park basis?

I will take the second part of the question first, Tim. We really don't see any difference in spending patterns between season pass holders and members: it is fairly consistent. As it relates to the all-season dining program, that is a program that we put in place a few years ago, but it has been tremendously successful. We saw very good increase in our penetration for 2016.

As I mentioned, we are off to a great start in terms of our all-season dining passes for 2017. I think you'll see that reflected in that deferred revenue increase. For competitive reasons we don't talk about specifics in terms of the actual penetration but we feel really good not only about where we stand today a penetration, but I think the future growth opportunities.

Okay. Maybe a couple more close to housekeeping items.

Marshall, I don't know if you want to take these, or John? Just the absolute numbers on your International revenue, the licensing revenue and the costs. As we moved to 2017, any changes in the covenants related to your builder basket? What would be distributable in the ability to distribute dividends or opportunistic share repurchase? And finally, I know it is the government, so we will leave it at that. But any update on timing of ruling from the IRS on your private letter ruling request?

Good morning, Tim. I'll take your first, I think I'll take it in the order you gave it.

Our International revenue for the quarter was $8 million. Our costs were approximately $1 million. We are excited over the fact that the growth has been great in Q3 on International revenue as it has been all year.

In terms of the builder baskets, the question was on the amount of share repurchase, is that what it was? The share repurchase we've done $120 million to date. And we will be looking to do another -- finish out the year between $200 million and $230 million.

The final question on the REIT, there is no update at this point on the REIT. As you know, we have NOLs that we anticipate paying a minimal cash tax through 2018. And for others who may not be aware, we filed a private letter ruling request from the IRS and we are awaiting their response. We have not gotten a ruling to this point. We do remain confident about the outcome, though.

Just to add a little more on the International. As we talked about, we feel very strongly that we will be able to continue to get more deals. As I mentioned earlier, we have many discussions that are ongoing. We've got three announcements currently out there. We think we continue to built the number of deals that we have out there.

We feel really good about International. When you think about that International, we talked about being not only an area where it requires zero capital on our part, but it has very high margins; margins in the area of approximately 80%. As we continue to add more and more of these deals, absolutely that will be margin accretive. We excited about not only the opportunities on the revenue side, but on the profitability side, as well.

Thank you gentlemen for all the color.

Thank you. Your next question comes from the line of James Hardiman with Wedbush Securities.

Good morning, thanks for taking my call.

The $600 million target for next year, obviously you did not give guidance, that's close to guidance as we will normally get with one year to go. It would seem to suggest a nice acceleration from here.

By my math you're going to need double-digit EBITDA growth to get to that $600 million next year. I really appreciate the commentary on the pricing increases. I think you mentioned 3% to 5% price increases as we think about next year. I was hoping you could help us put that into context. I don't think that's a number you normally give, but is that a larger than normal price increase?

And then, I'm assuming that is a gross number over the last two years obviously you have been hurt by this mix issue as more people get season passes. Any way to think about a net per cap number? Or maybe just think about is the mix impact going to be less than it's been? How should we think about that?

Let me start on your question particularly around Project 600 and what we need to do to really achieve that goal. James, as you mentioned, we do not provide guidance but let me talk a little bit about why we feel confident that we can get to $600 million of EBITDA in 2017. It really starts with the same drivers that have really grown our business over the last several years, and it will continue into next year. It will be that focus on pricing that you talked about but also we believe we have the ability to continue to get season pass and membership penetration.

We've had a great start already with our active base being up 15%. In-park, we feel very good about our expansion of our in-park opportunities, particularly as it relates to all-season dining. Our special events, Fright Fest, Holiday in the Park, we will have two additional parks this year. We will be expanding those parks, as well as all of our parks, in the future.

And then, the International that I talked about. Our feeling that with what we're seeing cut the number of discussions that we have ongoing, it is our belief that we will continue to land more and more deals.

Quite honestly, James, I will also say normalized weather. We saw some softness in our attendance this year that was unplanned, it was due to abnormal weather. When we look at every single one of those days by park where we had adverse weather, we can pinpoint it to weather. Where we didn't have weather we saw very good attendance growth. So our belief is obviously, with some more normalized whether next year, that we will get some of that attendance back.

As a relates to per caps, the softness that we seen in per caps in the downward pressure has really been around the success of our season pass strategy. Quite honestly, as long as we continue to get that success, it is going to continue to put downward pressure on those per caps.

But I can assure you as we look -- it's really a mix issue, James. As we look to our per caps on a specific ticket type basis, every single one of those is going up. So I'd love to say that our per caps will increase in 2016, but if we continue to be successful on our season pass strategy, it's going to put some downward pressure on those per caps.

Okay, that's helpful. Maybe an update on the Mexico water park. When is that slated to open? Having not been here in a while in terms of opening up a new park, how should we think about that ramp? Obviously it is going to be a positive to attendance, is it going to be EBITDA positive, but maybe dilutive to margins, I would assume? How should we think about that dynamic?

James, we are very excited about the water park in Mexico for a number of reasons. It's actually going to open up in February 2017. So we are very excited about that. We're excited for a couple of reasons, first, we believe this will be a state of the art water park that's located in a great area in Mexico and will drive a lot of local attendance.

We also believe that the proximity to our theme park in Mexico, and what we've seen in our other parks where we have water parks located nearby, we think there's a huge benefit for season pass and combo passes. So, our goal James, is to -- this will be accretive in 2017 in its first year.

One of the beauties of this is that it requires a relatively low amount of capital when you think about it. If you were to start a water park from scratch, you're talking about potentially $100+ million to build a water park. We're going to and this $15-$18 million in this park. So we will get an extremely good return from this.

Okay, that's helpful. Basically we should be assuming that since it's a water park, it's a negative to per caps that it is accretive to EBITDA, or that it's additive to EBITDA, but probably a negative EBITDA margins is that fair to say?

No, actually our water parks have extremely high margins, actually better margins than the theme parks. So, one is it will be and increase to EBITDA; two it will be accretive to our EBITDA margins. It will obviously be lower on the per cap side, because our water parks have lower per caps than the theme parks.

That is extremely helpful. Last clarification Marshall, when we were talking about the REIT situation. You made the comment that you remain confident about the outcome, I was hoping you could expand on that a little bit? Investors are generally assuming that's less likely than not. Help us handicap that? It seems like you guys feel pretty good that you'll be able to get that REIT status.

Yes James, we have not heard anything negative from the IRS in terms of the outcome. The reason we filed for the private letter ruling is because we were confident we had a strong position and we still feel that way.

James, unfortunately, this is something that is outside of our control. We are awaiting their response. We do not want to speculate as to the timing or the potential outcome. But, as Marshall said we remain confident about the outcome.

Very helpful, thanks guys.

Thank you.

Thank you. Your next question comes from the line of Ben Chaiken with Credit Suisse.

Hello guys. Can you remind us is the early stock comp -- is that for confidence in Project 600 or is that for expectations of hitting it earlier than expected?

We are accruing as if we will hit it at the end of 2016 -- 2017 I'm sorry. On time.

Got it. For International, how do you think about that in terms of the new goal in the contribution there? Any color would be great even if it's just the timeline of when you think those new parks are going to open?

As you look to both Project 600 and 750, obviously International will be a component of achieving that goal. We're not going to talk about specifics in terms of how many deals that would take, but, as I said, we feel very good about our ability to continue to not only to grow the revenue associated with our existing deals, but continue to grow the number of deals. So, it will be a factor in achieving our goals.

I was more referring more to the 750 and the opening up of the full-time operations of the park and where this would be on some type of run rate basis.

The parks that we have announced, if you recall, the first park will not be open until 2019. It will be an incremental driver as we think about 2020. But it will not be significant.

Okay, that's helpful. The rationale for the stock comp of $900,000 versus roughly $2.4 million? Any more color on how you thought about deciding upon that number? Do you think that stocks will be higher?

We looked at it, Ben. We wanted to make sure we had a project that will align our employees with shareholders. We feel that is the right number to be able to motivate our folks. As we look at the share value creation, I mentioned $2.5 billion, obviously some of that will be shared with the employees. We thought that was the right amount as we looked forward in terms of to effectively motivate our employees.

Okay that's helpful. Last quick one, does the new water park in Mexico -- do you think that taps into a new customer base to sell season pass, or is that too close to the other location that it just more so enhances the value? So still helping sell season pass, but is it like a new customer?

I believe it does open up a new customer. Not only a new customer base in terms of located within, I'll say, the Mexico City market, where our theme park is, but also that new customer base that's located down towards the water park, as well. I think it does a number of things. I think it increases the attendance base that we can attract, and it will migrate more people from one-day tickets over to season passes, because it gives them even more reasons to come to the parks.

That's really helpful, thanks a lot.

Thank you. Your next question comes from the line of Scott Hamann of KeyBanc Capital Markets.

Thanks good morning. Just following up on Ben's questions about new audience. Can you talk about the growth you seen any unique visitors this year and maybe how that's trended versus prior years?

Yes. We have seen an increase in unique visitation and again, the unique visitation would be if you just assume you take our season pass holder and assume they are equivalent to one. We have seen this year an increase in the unique visitation, which actually I think speaks a lot to the fact of our whole strategy, when that is still the case even when we saw a decline in the number of one-day tickets because of the weather in the third quarter. And even with that we are still up in unique visitation.

Okay, great.

In terms of the operating days for 2016, what was the variance versus 2015 and especially in the fourth quarter, what should be the gain in operating days for this year versus last year?

The operating days from year-to-date basis for 2016 is about the same as it was last year. Looking into Q4, it's going to be very similar and we will finish the year very similar except for the addition of the Holiday in the Park in St. Louis and the park outside of Washington. That's going to be about roughly 40 days of additional operating days.

Okay, perfect. Finally, in terms of the performance of the parks with the weather volatility, can you give us a few of the parks that were out performers and a few of the parks that were relative underperformers?

Scott, we do not give specifics around the parks in terms of their actual performance. I will refer back to what we said in terms of the weather. We saw it rain in the Midwest, we saw heat and rain in the East, and we did see some rain, as well, in Texas. The only parks that I would say we had normal weather were the California parks, with the exception of some -- a stretch of extreme heat in LA in late July.

For the most part, California was normal, as well as Mexico. I talked about the fact on the days where we saw normal weather, we saw nice increases in attendance. Also in the parks that were less impacted by weather had more normal weather, we did see very nice attendance growth.

Okay. Just one more question on operating days. As you look in to 2017 are the any nuances that we should be aware of on where we are doing our models?

Really the only thing you would need to think about is that Easter shifts to Q2 in 2017, it's on April 16 versus 2016 when it was on March 27. That will cause a shift out of Q1 and into Q2 and we will provide a little more color on that later.

As you think of total operating days, 2016 versus 2017 very similar.

There won't be any incremental Holiday in the Park days next year then?

We have not announced anything at this point, Scott.

Roger that, thanks.

Thank you.

(Operator Instructions)

Your next question comes from the line of Robert Kirkpatrick with Cardinal Capital Management.

Good morning. Hi John. Under what circumstances would you enter into the construction of a new park in the United States?

Honestly Rob, we really have no plans to do any construction of new parks in the United States. If you look at all of the markets, they are already covered by existing parks. As a matter of fact the last part that was actually built in the United States was the Hard Rock Park on the East Coast, and that actually has been shut down. We believe with all of the markets covered, we do not see anyone.

That's one of the things that we talked about in terms of why this is such a great business to invest in because of the high barriers to entry. We don't see anyone really building brand-new theme parks in the United States. That's why we believe the growth opportunity of having this brand, this Six Flags brands, to be able to take that overseas, is really a significant growth driver.

Therefore licensing your name for someone else will not be a consideration either?

We will look at it every opportunity that may arise. I wouldn't say that's totally out of the question but, at this point in time probably highly unlikely.

Great, thank you so much and congratulation on continuing to progress towards your various project goals.

Thanks Rob.

At this time there are no further questions. I will return the floor to management for closing remarks.

Thank you Tonya.

We hope you can come visit one of our parks soon. This coming weekend is the last weekend of our biggest and scariest Fright Fest event ever. We have added a dozens of new haunted mazes, Halloween themed live shows and hundreds of ghouls roaming our parks. Our very popular Holiday in the Park winter wonderland event kicks off in mid-November and runs through the first week in January. So nine of our parks will be open for this event Six Flags St. Louis, Six Flags great America Washington DC having it for the first time ever. With the millions of holiday lights, some of the largest Christmas trees in the US, HIP is an event that you and your kids should not miss.

So finally before we sign off, I'd like to share one more item with you. It is with mixed emotions that I share that Nancy Krejsa has made a personal decision to retire at the end of February 2017.

Now, I've work with Nancy for over 20 years. And I can honestly say that she is the best in the business. Most of you know Nancy and hope you join me in thanking her for her tremendous contribution to the company over the last six-years and wishing her all the best in her retirement.

Effective immediately, Steve Purtell will manage all of our investor relations activities. Nancy will work by his side supporting the transition through the end of February. Steve has been with Six Flags for four years as our Treasurer and head of International Business Development. He will remain Treasurer of the company and transition his International responsibilities to others on the International team as he assumes the Investor Relations responsibility. Many of you have already met Steve and I know you will enjoy working with him.

So in closing, I want to reiterate that this team believes in and is committed to our long-term strategy of creating fun, thrilling memories for our guests, innovating new rides, services, and technology, and building shareholder value. Thank you for the time and take care.

Thank you for you participation in today's Six Flags third-quarter 2016 earnings conference call. You may now disconnect.