Six Flags Entertainment Corp (SIX) 2018 Q3 法說會逐字稿

完整原文

使用警語:中文譯文來源為 Google 翻譯,僅供參考,實際內容請以英文原文為主

  • Operator

  • Good morning ladies and gentlemen.

  • Welcome to the Six Flags Third Quarter 2018 Earnings Conference Call.

  • My name is Maria, and I'll be your operator for today's call.

  • (Operator Instructions)

  • I will now turn the call our to Steve Purtell, Senior Vice President, Investor Relations.

  • Please go ahead, sir.

  • Stephen R. Purtell - SVP of IR & Treasurer

  • Good morning, and welcome to our third quarter call.

  • With me are Jim Reid-Anderson, Chairman, President and CEO of Six Flags; and Marshall Barber, our Chief Financial Officer.

  • We'll begin 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.

  • James W. P. Reid-Anderson - Chairman, President & CEO

  • Thank you, Steve.

  • Good morning, and welcome to our call.

  • I'm pleased to report that year-to-date revenue and modified and adjusted EBITDA are at record levels as our company drives towards its ninth consecutive record year.

  • Our LTM-modified EBITDA now stands at $585 million, representing growth of $39 million over prior year.

  • I'm very proud of our team for overcoming challenges year after year, consistently innovating and finding new avenues for growth.

  • Although we did not experience the dramatic hurricane events of last year's third quarter, weather was a net drag on attendance growth during Q3.

  • The sustained rain on the East Coast coupled with heat and rain in Texas did not allow us to gain the expected weather advantage over 2017.

  • In addition, severe flooding at Six Flags Over Texas and Hurricane Harbor Arlington forced us to temporarily close those parks in late September.

  • Without any doubt, this was the worst third quarter weather we have experienced since I came to the company 9 seasons ago.

  • Weather had a significant adverse impact.

  • Hundreds of thousands of visits worse than both the 9-year average and versus 2017, hard as that may seem to believe.

  • As a result, late achievement of our P-600 goal in 2018 has become more challenging.

  • Yet, our entire team is focused on delivering the best performance possible and we still consider late achievement probable based on the multiple opportunities we have for the balance of the year.

  • We are confident about our ability to deliver a very strong fourth quarter performance for several reasons.

  • First, we grew our Active Pass Base as of September 30 by 9% due to the launch of our 2019 season passes and memberships.

  • Even as we increase prices in the mid-single digits, and for the first time sold our higher-tiered memberships.

  • Our average selling price of new memberships was more than 25% higher than our traditional memberships.

  • And our record-high active membership base is more than 25% higher than prior year.

  • In August, we rolled out the foremost membership rewards program in the industry, bar none.

  • Members can earn points towards a wide array of exclusive rewards and experiences that make their memberships even more valuable.

  • This will encourage more guests to sign up for memberships and existing members to visit more often, spend more when in the park and stay in the program longer.

  • Second, we've continued to grow our All-Season Dining program, including membership dining.

  • We have increased our penetration to record levels.

  • And now there are more than 1 million active dining passes for the first time in our company's history.

  • As a result of the successful sales of All Season products, new memberships and season passes, deferred revenue is nearly $200 million, up $14 million or 8% at the end of the quarter to our highest third quarter balance ever.

  • This is despite the downward pressure on deferred revenue that comes from members who have been with us more than a year.

  • Third, Magic Mountain will be open every day in the fourth quarter after moving to a 365-day operation at the beginning of this year.

  • The transition has been extremely successful, and Magic Mountain will have more -- 35 more operating days in Q4 versus last year.

  • Four, our Mexico parks have fully recovered from the earthquake last year and are poised for nice growth in the quarter.

  • Hurricane Harbor Oaxtepec will have 21 additional operating day in Q4 as the park was closed for the majority of Q4 last year due to the earthquake damage it had sustained.

  • Fifth, we introduced Fright Fest at our newly acquired Darien Lake Park and will introduce Holiday in the Park at both Six Flags Great America and Frontier City.

  • Finally, we continue to grow through our international agreements.

  • We have added 7 new licensed parks since last year, and our quarterly run rate for revenue has increased more than 50%.

  • We have successfully grown revenue and profit in the fourth quarter every year for the last 8 years by investing in our seasonal events and increasing our Active Pass Base.

  • In fact, the majority of our growth has come in the first and fourth quarters, and we expect this trend to continue this year, as an increasing number of guests are drawn to our world-class Fright Fest and Holiday in the Park events.

  • Our membership program is growing with unit sales through September up more than 40% over last year.

  • Over time, this success will further spread revenue more evenly across the quarters, increasing the size and stability of our recurring revenue model.

  • We continue to develop a sustainable business model that ensures stable and consistent cash flow and revenue delivery and protection against both bad weather and an economic downturn.

  • I will return to discuss our longer-term business prospects.

  • But first, I will ask Marshall to review our third quarter and year-to-date financial results.

  • Marshall?

  • Marshall Barber - CFO

  • Thank you, Jim.

  • In the third quarter, year-over-year total revenue increased $39 million or 7% as a result of a 5% increase in attendance and an $11 million or 42% growth in sponsorship, international licensing and accommodations revenue.

  • Guest spending per capita was up slightly to the prior year quarter with admissions per capita spending up $0.23 or 1%, and in-park spending down $0.15 or 1%.

  • Higher ticket pricing and higher selling prices for our new premium membership tiers were offset by lower per capita spending in the newly acquired parks, which included a higher mix of waterpark attendance.

  • On a year-to-date basis, revenue was up $92 million or 8%, driven primarily by a 6% increase in attendance and a 23% increase in sponsorship, international licensing and accommodations revenue.

  • The attendance gain was driven by the newly acquired parks, full year operations of the 2 waterparks we acquired last year and 365-day operations at Magic Mountain.

  • Guest spending per capita was up 1% or $0.61 to prior year due to higher-priced tickets and memberships, partially offset by lower spending at the newly acquired parks and a higher mix of membership and season pass attendance.

  • Year-over-year cash operating costs were up 14% in the quarter, primarily driven by the following areas: cash operating expenses, including the associated lease expense related to our 5 new parks, which have significantly lower operating margins than our existing parks; an increase in minimum wages, particularly our California parks and competitive wages in other markets; and investments to support continued growth in our high-margin international licensing business.

  • Year-to-date cash operating costs were up approximately 10% over 2017, primarily for the same reasons.

  • Excluding the incremental spending associated with our growth initiatives, our operating cost increases were in line with inflation for both the quarter and year-to-date.

  • Over the past 8 years, we've demonstrated significant focus on managing costs with respect to both operating expenses and capital spending.

  • And this year is no exception.

  • While we were willing to spend in support of profitable growth, we are very disciplined about not adding costs in other areas of the business.

  • We've driven our modified EBITDA margins from 24% to more than 40%.

  • And our modified EBITDA less CapEx margin to more than 31%, significantly higher than any of our competitors.

  • We continue to be, by far, the most efficient company in the industry with respect to cost management.

  • In the first 9 months, we generated $240 million of adjusted free cash flow and paid $198 million in dividends.

  • Net debt as of September 30 was $2.0 billion and our net leverage ratio is 3.7x adjusted EBITDA with no borrowings under our revolver.

  • Given the high recurring nature of our revenue, strong cash flow and significant growth opportunities, we have plenty of room to grow our dividend by high single digits for the foreseeable future.

  • Our business continues to evolve for the long-term growth.

  • And the changes we have made are positively transforming our business model.

  • As our membership, dining and international licensing programs continue to grow, a larger portion of our revenue base is recurring and has been spread more evenly throughout the calendar year, shifting attendance and revenue patterns.

  • 8 years ago, 2/3 of our attendance came in the traditional summer months.

  • While now they represent less than half.

  • The trend will accelerate in 2018 as we will have more than 20% additional operating days in the fourth quarter compared to 2017.

  • This has lowered our weather risks significantly by making us less dependent on a few key summer months.

  • This year, we significantly increased the proportion of memberships in our Active Pass Base, including premium tiers that have raised the average selling price of memberships.

  • While our members pay more and have significantly less turnover, there is a near-term accounting impact as we convert more people from 1-day tickets and season passes to memberships.

  • A portion of new membership revenue will be recognized in the first half of next year while revenue from 1-day tickets and season passes would have been fully recognized in 2018.

  • Also, as members enter their 13th month, after their compulsory period has ended, they no longer contribute to deferred revenue as their payments are recognized monthly.

  • To account for the increase in these postcompulsory members, we estimate the growth in deferred revenue over the prior year was approximately double.

  • Turning to international licensing, our strategy remains an important opportunity for the long term.

  • There's always a potential for short-term challenges when working in emerging markets.

  • And our partner in Dubai, DXBE has had performance challenges with the phase 1 complex that opened a few years ago.

  • As a result, they are currently conducting a strategic review of their assets in a particular phase 2, which includes our park.

  • DXBE is evaluating options with regard to the way forward.

  • And while there can be no assurances as to the ultimate outcome of the evaluation, DXBE is current on all their financial obligations to us.

  • In summary, we are on course to achieve another record year in 2018 and we are very confident in our setup for continued above-industry growth in 2019 and beyond.

  • Now I'll turn the call back over to Jim.

  • Jim?

  • James W. P. Reid-Anderson - Chairman, President & CEO

  • Thank you, Marshall.

  • I want you to know that we are well-positioned for long-term growth and that the outlook for 2019 is bright.

  • We have increased prices on all ticket types.

  • Our Active Pass Base is at an all-time high, which for the first time includes a growing mix of premium membership tiers.

  • And our All-Season Dining Pass continues to increase its penetration to record levels.

  • With the addition of Magic Waters in Rockford, Illinois next year, we will have 26 parks in our system, increasing our addressable market and making us more geographically diverse.

  • Tourist visitation will continue to build with greater awareness at Magic Mountain as the park moves into its second year of 365-day operations.

  • And we have the ability to expand operations in some of our other warm-weather parks.

  • Next year, we will open Fiesta Texas in San Antonio year-round on weekends.

  • And we'll expand our calendar in Mexico, adding additional operating days in Q1 and Q4.

  • Innovation is in our DNA, and year-after-year, we raise the bar to offer unparalleled, world-class thrills with something new in every park.

  • Next year, we will showcase a sweeping collection of world record-breaking roller coasters and family attractions, along with massive park upgrades and rebrands for the 2019 season.

  • At Magic Mountain, we are introducing West Coast Racers, the world's first racing launch coaster.

  • This will be the park's 20th roller coaster, more than any other theme park, extending the park's position as the thrill capital of the world.

  • At Great America, Maxx Force, a triple record-breaking launch coaster with the fastest acceleration in North America.

  • At Discovery Kingdom, Batman: The Ride, an innovative 4D Free Spin wing coaster.

  • As Fiesta Texas, The Joker Wild Card, the tallest and fastest spinning pendulum ride in the world.

  • And at Six Flags Over Texas, we're introducing Lone Star Revolution, the world's largest loop coaster.

  • We're also rebranding our water park at our Great Escape Resort in New York to Hurricane Harbor in conjunction with a major expansion of the park.

  • Looking longer term, we are working hard towards our aspirational goal of $750 million of modified EBITDA by 2020, which has become a very high bar for on-time achievement.

  • But our entire team is energized and motivated to try to deliver on the challenge.

  • The opportunities in front of Six Flags are substantial, and still in the early to middle stages of development.

  • Five key growth initiatives will drive revenue and margin for the foreseeable future.

  • The first area is increasing ticket yields.

  • We have taken pricing up 3% to 5% on every ticket type and added higher-priced membership tiers, yet our value for money ratings have continued to grow to all-time highs.

  • Our overall guest satisfaction scores have increased very nicely over 2017 and are also at all-time highs.

  • The second area is increasing sales of memberships and season passes.

  • Our newly enhanced membership program has the potential to be transformative and it's still in its first year.

  • Members spend more annually on their subscriptions than the cost of a traditional season pass.

  • And they also have much higher retention rates than season pass holders.

  • Growth of our Active Pass Base should accelerate next year and beyond as we bring on new membership tiers -- layers.

  • The third area of growth is in-park sales, especially culinary revenue.

  • Our All-Season Dining Pass and dining membership programs provide a tremendous value for our guests and a high-margin recurring revenue stream for us.

  • In addition, our planned introduction of mobile dining next year will help further drive customer satisfaction and supercharge culinary revenue.

  • The fourth growth area is our strategy to acquire parks nearby our existing theme parks.

  • We are aggressively adding parks to expand our addressable market and build upon our significant and growing Active Pass Base.

  • Over the past 24 months, we have added 7 smaller parks to our portfolio at very low cost.

  • And we recently announced another lease agreement for a 43-acre water park in Rockford, Illinois, an important feeder market for Great America.

  • We expect the lease to commence shortly before the park opens for the season in the spring of 2019.

  • The 5 parks we acquired in June will also contribute over 100 operating days in the first half of next year.

  • Finally, the fifth area of growth is international licensing.

  • We have 13 parks under development and have a great pipeline of potential new deals that create a high margin, diversified source of recurring revenue with no capital investment.

  • Six Flags provides family entertainment that is affordable in any economic environment.

  • We consistently deliver guest excellence, innovative products and attractions and, of course, record revenue, adjusted EBITDA and modified EBITDA less CapEx performance.

  • Since 2010, we have returned over $3.4 billion to shareholders in the form of dividends and share repurchases and we will continue to return all excess cash flow in the future.

  • We have grown our dividend every year for the last 8 years and our dividend yield of more than 5% is more than double the S&P 500, making us at ultimate growth in yield stock.

  • Maria, at this time could you please open the call for any questions?

  • Operator

  • (Operator Instructions) Our first question comes from the line of Ian Zaffino of Oppenheimer.

  • Mark Zhang - Associate

  • This is Mark on for Ian.

  • So I guess on -- to begin, if you guys can provide I guess a breakdown of the components of the headwinds called out in the quarter, that would be very helpful.

  • So I guess more in the sense of how much of it was the result of weather, EPR and others?

  • Marshall Barber - CFO

  • So we won't actually break out the attendance that way.

  • But what we can say is that year-to-date, our attendance is up 6% or 1.4 million people, driven by the acquisition of the 5 new parks, 51 additional days at Magic Mountain, growth from Hurricane Harbor Mexico and Concord and the increase in our Active Pass Base.

  • Jim mentioned that the weather was horrendous in the quarter and year-to-date.

  • And it's several hundred thousand in attendance that we lost due to weather, several thousand higher than the 9-year average.

  • James W. P. Reid-Anderson - Chairman, President & CEO

  • And versus the last year.

  • Marshall Barber - CFO

  • And versus last year.

  • James W. P. Reid-Anderson - Chairman, President & CEO

  • So I'm going to address a question that's come up, it came up on the last call and it's come up in some of the reports that have already come out.

  • And so I'll just address this straight-up so that everybody is aware of our position.

  • We do continue to get these questions about what's described as organic versus inorganic growth.

  • And we are not going to be breaking that out.

  • We've said before, we don't do this for competitive reasons and we'll continue not to break it out.

  • We have never, ever broken out park detail.

  • We have outlined 5 key imperatives which will drive our future success and we've been consistent about that approach.

  • We view all of the growth that we have achieved as organic.

  • And the 5 initiatives have been there a long time.

  • And the organic growth flows from those 5 growth pillars which reinforce a higher value strategy, make barriers to competitive entry even stronger, spread our revenue out over the year, help drive recurring revenue and continue to reinforce what I've described about a year ago as the Amazon-proof nature of our company.

  • In addition, what we're doing is not like a traditional major acquisition.

  • We have put minimal capital into any of the new park initiatives.

  • This is simply one of those 5 growth pillars.

  • Nonetheless, we know and want you to feel comfortable with our record performance.

  • So I want to confirm clearly, as I said 8 years ago when I joined the company, our focus is 100% on driving profitability and cash flow.

  • And therefore, shareholder value.

  • That has been the same literally over the last 8 years.

  • If you look on a year-to-date or last 12-month basis, not only are we at record performance, the highest the company has ever registered, roughly 3x the value of modified EBITDA that the company had back in 2010.

  • If you look at that, we have grown revenue and EBITDA whether or not the 5 new parks are included.

  • And this will be our ninth record year.

  • Mark Zhang - Associate

  • Okay.

  • Great.

  • And I guess just a quick follow-up.

  • Is there any, I guess details on the margin profile of EPR assets that you guys could share?

  • Just wanted to, I guess, like think of how to think about it on a run-rate basis and long-term going forward on top of your Six Flags legacy margins?

  • Marshall Barber - CFO

  • So I'll provide a little bit of color on that.

  • The new parks are -- first of all, they are lower margin, they're lower per caps.

  • We think we can get those margins up over time as we put in our season pass template and our dining templates, our membership templates as well.

  • On top of that, there is a lease expense that comes with them.

  • And the lease expense does push down margins.

  • But I will tell you that, and we knew that going into this, the investment that we made and the ROI on this investment of $23 million is incredible.

  • And it is -- the payback is very quick.

  • And so while we know it does put downward pressure on margins, we think we can get the margins up.

  • And we are extremely satisfied.

  • James W. P. Reid-Anderson - Chairman, President & CEO

  • I'd add to that, Marshall, just by saying we've talked about the fact that I think people maybe assume that a lot of or all of that attendance falls in Q3.

  • And it doesn't.

  • I talked about the fact that we've got some attendance that's coming in Q4, some is coming in Q1 and Q2 next year.

  • There's more than 100 days that I talked about, coming in the first half of next year that we didn't have this year.

  • So it's important to understand that this is spread over the year.

  • And to build on Marshall's point, it's very, very positive.

  • We feel really good about the new parks.

  • And I think they're off to a fantastic start.

  • Operator

  • Our next question comes from the line of Steve Wieczynski with Stifel.

  • Steven Moyer Wieczynski - MD of Equity Research and Gaming & Leisure Research Analyst

  • So Jim, we always like to hear your current thoughts on the quarter on the core -- on your core customer base and the health of your core customer.

  • I guess what we're getting at here is, when you had days when weather wasn't an issue, is your core customer still as strong as what you would have expected?

  • James W. P. Reid-Anderson - Chairman, President & CEO

  • Yes.

  • I would say, Steve, very clearly that on days that are not impacted by weather, our core customer is strong.

  • I'd add to that the comments that both Marshall and I made about some of the strengths we are seeing with our Active Pass Base being up 9%.

  • Amazing growth that I described there with regard to membership.

  • And memberships at the premium level selling at a far higher level than we had previously anticipated.

  • So we feel that consumers overall are in very good shape, at least in decent shape.

  • They're looking for great values.

  • And we feel that we do offer a really good value and a family offering that is unparalleled.

  • We're building, as I described earlier, competitive barriers to entry that really make it difficult for anyone to be able to penetrate our markets.

  • And so when you look at that, the overall view I would give is I feel pretty good about where we are.

  • Steven Moyer Wieczynski - MD of Equity Research and Gaming & Leisure Research Analyst

  • Okay.

  • Got you.

  • And then the second question is kind of a bigger picture question around the consumer.

  • So Jim, as you talk to your core customers, have you gotten a sense that, with people essentially having less free time than they do in the past, do you sense other family entertainment offerings that require a smaller time commitment could be starting to eat away at demand for full-day theme park visits?

  • And then kind of on that same page as that question, Jim.

  • Given how strong the economy currently is, do you believe some of your customers are essentially buying up into bigger or more extravagant vacation alternatives and potentially moving away from going to your parks?

  • James W. P. Reid-Anderson - Chairman, President & CEO

  • So I think, Steve, to the point, the first and more important thing is to understand that our active -- people signing up who want to be with us.

  • Whether they are season pass holders or members are up 9% on the record that we had last year.

  • So that would point you to a very clear indication that people love coming to our parks and are consistently signing up for that.

  • That's point number one.

  • To take each of the items that you argued there or at least put forward, one was, are there folks switching to shorter visits or are they switching to longer visits, going to a Disney or a Universal?

  • And we just have not seen that.

  • We really haven't.

  • I think that really what we saw was just the horrendous weather quarter that has impacted us.

  • Yet, we still delivered record revenue and profitability.

  • And that's our goal.

  • We want to deliver cash flow, profit, grow shareholder value.

  • So we've not seen anything that would indicate there are shorter offerings that are more attractive to guests or that people are switching to bigger vacations.

  • Just not happening.

  • Steven Moyer Wieczynski - MD of Equity Research and Gaming & Leisure Research Analyst

  • Okay.

  • Got you.

  • Then one more quick one, if I could.

  • Jim, you talked about the $750 million for 2020 is now, I think you referred to it more as a high bar at this point.

  • Can you maybe help us think about what has changed since you put that target out there?

  • And I know you don't like talking about weather but is it more weather-related issues or is it the international component?

  • I know you've had some issues in certain markets over there.

  • Might that not be kicking in quick enough to bridge that gap?

  • James W. P. Reid-Anderson - Chairman, President & CEO

  • I don't think so, Steve.

  • To the point of what has changed, I think the reality is that we've had a couple of rough weather years.

  • And there's no doubt that we would have preferred to be at a higher point today so that the $750 million target would have been a little easier to achieve.

  • It's a big growth and it requires a lot of hard work.

  • But if you look at our history, we have delivered on projects.

  • And we are working very aggressively, not only to deliver $750 million but also 600.

  • And I feel very good about the 5 key initiatives that I talked about earlier.

  • We have been taking ticket pricing up successfully.

  • Nothing has changed there to make us concerned.

  • Membership and season pass penetration and -- that's going extremely well, nothing has changed there to make me concerned.

  • In-park revenue and just the success we've had with our All-Season Dining Pass is fantastic.

  • And I would argue, and I've said this to you before, that we may be in the third innings on dining.

  • The North American expansion strategy with these new parks, there are lots of opportunities for us still to succeed there.

  • And international licensing, we have added 7 new parks in the last year.

  • So I don't look at any of these and say, "Okay, well, if that's not working, we really haven't succeeded," or anything like that.

  • I feel like we have been slammed by weather.

  • We have the right imperatives.

  • I wouldn't change a single thing in terms of what we're doing.

  • And we're going to aggressively go after it.

  • But it's realistic to say that the growth to date in EBITDA hasn't been at the level that we would have liked to have had if weather had cooperated.

  • Operator

  • Our next question comes from the line of James Hardiman of Wedbush Securities.

  • James Lloyd Hardiman - MD of Equity Research

  • Maybe a little clarification.

  • Jim, a couple of times you've mentioned all the operating days you're going to be getting from Premier Parks.

  • Maybe it would be helpful, if you don't want to give us sort of actual numbers, just help us understand the phasing of Premier Parks relative to your existing business.

  • I think third quarter attendance has typically, for you guys, been somewhere between 40% and 50% of the year.

  • Is Premier Parks similar to that?

  • Is it outside in one direction or another?

  • Maybe just help us out with that.

  • James W. P. Reid-Anderson - Chairman, President & CEO

  • The phasing.

  • Why don't you take this, Marshall.

  • Marshall Barber - CFO

  • Yes.

  • So those parks, there's 3 water parks and then the 2 other parks, one of which is in Buffalo, they have been more traditional summertime attendance.

  • So with Oklahoma, for example, it does have some Q1, Q2 attendance and operating days.

  • But in general, it's Memorial Day to Labor Day, they're probably heavier penetrated in those -- in that time period.

  • Now we will be changing that over time.

  • We are adding Holiday in the Park this year at Frontier City.

  • We'll be doing some spring events at all the parks.

  • And ultimately we'll do what we've done at the rest of our parks, extend this -- the operating season.

  • We have already starting selling memberships.

  • So ultimately that's one of the ways we're going to grow the margins there and also grow the profitability there, is by expanding the calendar.

  • James Lloyd Hardiman - MD of Equity Research

  • Got it.

  • And then -- I think the term you used was probable that you would get to the target for this year.

  • I guess first, just remind us what that target is?

  • I want to say it was 605 once you added Premier Parks?

  • And then I don't you don't like to talk about post quarter results.

  • But presumably, if you think it's probable, what you've seen so far in the quarter.

  • So I'm assuming it's probably half the quarter is in the bag at this point, maybe clarify that.

  • But if not, I'm assuming what you've seen thus far suggests that you're very much on pace to get to that number.

  • James W. P. Reid-Anderson - Chairman, President & CEO

  • So James, $605.3 million is our number.

  • $605.3 million.

  • We are not going to talk about the current quarter.

  • I think you know we have never done so, and won't do so today.

  • And your point that the half of it's done is not correct.

  • We still have 2/3 of the quarter left in terms of -- roughly in terms of attendance.

  • James Lloyd Hardiman - MD of Equity Research

  • Okay.

  • That's very helpful.

  • Marshall Barber - CFO

  • Still a long way to go.

  • James Lloyd Hardiman - MD of Equity Research

  • Okay.

  • I guess lastly for me.

  • The commentary on Dubai.

  • I believe that park was initially slated to open in the fourth quarter of next year.

  • Should we be pushing that back, given that -- I'm assuming you didn't have a whole lot of wiggle room to get that into 2019?

  • And then I guess more broadly -- I think it was 3 Chinese parks that were expected to open in the fourth quarter of next year as well.

  • Maybe give us an update on those guys' construction, how's that coming along?

  • Anything you could give us would be great.

  • James W. P. Reid-Anderson - Chairman, President & CEO

  • I think high level, and maybe, Marshall, you can then talk through timing.

  • I think it's fair.

  • I mean you heard my commentary or the commentary earlier that Marshall talked about Dubai.

  • But at a high level, given their strategic review, it probably makes on-time opening in 2019 unlikely.

  • And I think on our next call, we'll probably be able to talk more clearly about what that opening would be or when it would be.

  • But Marshall, with the exception of Dubai, why don't you go through all the other parks which are on time?

  • Marshall Barber - CFO

  • Okay.

  • So you mentioned the Chinese parks.

  • We -- those start to come online in Zhejiang, the theme park, water park and kids' park are early 2020.

  • The Chongqing parks are during 2020.

  • That's a theme park, a water park, a kids' park and an adventure park.

  • Those are mid-2020.

  • And then Nanjing, those will start to open up in 2021.

  • The water park, Kids World first, the adventure park in 2021 as well in Nanjing.

  • And then the Nanjing Theme Park will actually open up in 2022 midyear.

  • Then that leaves Saudi, which is scheduled to open up in 2022.

  • James W. P. Reid-Anderson - Chairman, President & CEO

  • And I want to reinforce that, that's an incredible lineup of new parks to come and a lot of revenue that will come.

  • But concurrently, we have it -- a small team that is working very aggressively on other partners and other licensing.

  • And over time, as I've said before, they are like -- basically like M&A deals.

  • We'll announce them as soon as we have news, but don't forget that we're working on those in the background.

  • James Lloyd Hardiman - MD of Equity Research

  • Okay.

  • But just to clarify, I thought the first round of Chinese parks were originally slated for late next year.

  • Did I just get that wrong?

  • Or did those get pushed back?

  • Marshall Barber - CFO

  • They have it's -- technically, it's the first of 2020.

  • I think ultimately -- earlier we were saying late 2019, which was in the fourth quarter.

  • So it -- really the shift is month or 2. It's not much.

  • Operator

  • Our next question comes from the line of Brett Andress of KeyBanc Capital Markets.

  • Brett Richard Andress - Associate VP

  • I just wanted to dig a little bit more into your weather comments from earlier.

  • But you said it had an impact of hundreds of thousands of visits.

  • I guess can you elaborate a little bit more on that, specifically how many hundreds of thousands of visits?

  • I mean it is a pretty wide range to think about.

  • James W. P. Reid-Anderson - Chairman, President & CEO

  • Sure.

  • It is a wide range.

  • So in very -- and we have mechanisms to tracking this very carefully.

  • In very simple terms, if you go back over the 9 year or 9 season period that I had described, it's 700,000.

  • If you simply look year-on-year, it's 500,000.

  • Marshall Barber - CFO

  • Yes, I think, maybe some more color, and I'm not sure if you mentioned it already, we had 1/3 more bad weather days in Q3 than we did last year.

  • And that's pretty significant.

  • It was the worst Q3 weather since 2011.

  • The weather is going to improve.

  • It's not going to be this way forever.

  • I think what sets us apart, though, is that we have 5 growth engines, and 4 of them deliver.

  • And we have record year-to-date performance both in revenue and in EBITDA.

  • So we got the growth engines that delivered internationals, the North American expansion strategy, All-Season Dining, pricing, yielding and the membership program.

  • So we're doing what we need to do to drive the business.

  • And the weather will improve.

  • It's not going to be worse than average forever because the average -- we're going to get back to the mean, at least.

  • So we're very confident in what we're doing.

  • And we know that the weather will clear and we'll get great growth again.

  • Brett Richard Andress - Associate VP

  • Got it.

  • That's very helpful, that detail there.

  • And then the last one I had, and this is more of a housekeeping, maybe I missed this.

  • But did you give us the growth in international revenue during the quarter?

  • Marshall Barber - CFO

  • I believe we did.

  • But it's -- let's see, it is -- so it's $40 million.

  • It's a growth of 40% over prior year, year-to-date.

  • Brett Richard Andress - Associate VP

  • Got it.

  • And that's specifically just international?

  • Marshall Barber - CFO

  • That is international.

  • Operator

  • Our next question comes from the line of Tim Conder of Wells Fargo Securities.

  • Timothy Andrew Conder - MD and Senior Leisure Analyst

  • A couple of things.

  • Jim, again, we love your business model.

  • We love what you guys are doing and the sustainability and how you're broadening that out.

  • But I think if you look at companies, great companies that are out there, when they do break down their minimum in a collective comparable bucket versus something that's less than 12 months that's been in the portfolio, i.e.

  • acquired.

  • And I think that would be very helpful for the investors to understand and give a further confidence in the broader great business model and the great business and cash flow business that you have.

  • So anything -- and again, if you could just reconsider that, I think that would help.

  • And you're not giving away, in our view, any of the company jewels, so to speak, secrets.

  • So however you want to address that or not.

  • The other thing, just revisit on the housekeeping here.

  • On the international side, you talked about maybe some additional investments.

  • Any additional color, gentleman, on that?

  • What that is?

  • And then specifically the revenue in the quarter versus the EBITDA?

  • Marshall Barber - CFO

  • So in terms of the international business, and I think maybe investments is -- it may be what's tripping you up.

  • But it's the -- we actually spent more in OpEx year-to-date than we did in prior years.

  • So we're really investing in human resources and human capital.

  • James W. P. Reid-Anderson - Chairman, President & CEO

  • In other words, with the growth that Marshall talked about, Tim, with that growth, we've had to add literally a handful of people and that adds some cost.

  • So it's part of the growth in the cost base and that's the reason.

  • But much of the -- go ahead.

  • Timothy Andrew Conder - MD and Senior Leisure Analyst

  • The rest of your -- any margin on the international?

  • James W. P. Reid-Anderson - Chairman, President & CEO

  • Yes.

  • The margins are still right up there.

  • They are very, very good margins.

  • Marshall Barber - CFO

  • Yes.

  • I was going to say that, yes.

  • James W. P. Reid-Anderson - Chairman, President & CEO

  • I think the other thing here is, coming back your first point, the companies that you're describing, many of them are spending $500 million to $1 billion to buy companies.

  • We're not doing that.

  • We've outlined very clearly that we have a strategy that has 5 initiatives, and that includes snapping up, sometimes buying, sometimes just leasing small parks that can complement what we have and, in fact, strengthen our position, our competitive position as I talked about barriers to entry.

  • And you may not have picked up on it, but I gave you the data point that I think should really matter, which is whether you look on a year-to-date or an LTM basis, we have grown revenue and EBITDA, whether or not those new parks are included.

  • And then I think your final point was, literally, the difference between revenue growth and the EBITDA.

  • And clearly we would've preferred to have had a higher EBITDA growth rate.

  • But Marshall outlined some of those cost increases that have really driven this.

  • You want to talk to that, Marshall?

  • It's cost and it's also the new parks, the margins on the new parks.

  • Marshall Barber - CFO

  • Yes.

  • So it's really the cost associated with the new parks.

  • The lease expense associated with the new parks.

  • The costs on a year-to-date basis to operate the water park in Concord that we picked up last year.

  • Magic Mountain going 365 days, which was -- you saw that in the first quarter, is very positive from an EBITDA perspective.

  • And then mandated minimum wage increases and competitive wage, rate increases in several markets.

  • But if you take out the spending that we did to grow revenue, our costs are up with inflation, and that's including the minimum wage costs that we've been working to offset.

  • So we -- I think we pride ourselves in being very, very cost-focused.

  • And I think you could ask anybody in the company in that...

  • Timothy Andrew Conder - MD and Senior Leisure Analyst

  • Hello?

  • (technical difficulty)

  • James W. P. Reid-Anderson - Chairman, President & CEO

  • We want to apologize, for some unknown reason the phone line went dead.

  • And we are back, Tim.

  • We, I think, answered your question.

  • But if you have another question, please feel free to go ahead.

  • Timothy Andrew Conder - MD and Senior Leisure Analyst

  • Yes, yes.

  • No problem.

  • Just a little -- on the lease expense, any quantification you can give us there, just to sort of gauge that impact on a year-over-year?

  • And then lastly, Jim, we've asked, again, any color you can give us here on the membership mix versus the season passes.

  • What you're seeing is great with the tiering, getting additional pricing and that mixing up even more than you anticipated.

  • So any color there?

  • And then just collectively, the unique visitors year-to-date, on a year-over-year basis, how that's trending?

  • Marshall Barber - CFO

  • Okay.

  • So on the lease expense, it's going to be about $14 million on a full year basis.

  • In terms of the season pass mix, the Active Pass Base is up, season pass owners do tend to visit more when the weather is not good more -- at least more so than 1-day ticket holders.

  • So the mix, obviously, would show that as of right now.

  • And then I think your other question was on the unique visitors.

  • We think it's probably best to look at that at year-end.

  • We think by year-end, we'll be flat or up a bit.

  • Timothy Andrew Conder - MD and Senior Leisure Analyst

  • Okay.

  • And I guess on the membership versus the season passes, it -- kind of where is that in the total Active Pass Base?

  • And maybe that percentage year-over-year?

  • James W. P. Reid-Anderson - Chairman, President & CEO

  • So we're not breaking out the percentage of our total Active Pass Base that is membership in that way.

  • But we can tell you that membership, as I described earlier, is up tremendously, very, very strong growth.

  • And season passes is holding its own fairly nicely.

  • So we feel pretty good about the overall position.

  • We did, and maybe we described, we did have a little bit of a hiccup, didn't we, in the quarter, Marshall?

  • And just talk a little bit about the issue that we had with our FLASH sale, as some people are aware of this and some aren't.

  • Marshall Barber - CFO

  • Yes.

  • So in terms of the FLASH -- we have a FLASH sale in September for our season passes and memberships.

  • It's our annual presales which allows us to lock pass holders and members in advance, encourage visitation both in the fourth quarter and the following year.

  • We did experience technical difficulties with our third-party online ticket stores.

  • For that week, we had to take our parks offline as we approached the Labor Day deadline.

  • As a result, we extended the deadline to allow guests to complete their purchase.

  • We did see the expected volume spike a week later when the new deadline happened.

  • But it is likely that some sales were lost.

  • So I think that would sort of not be worried about that, but...

  • James W. P. Reid-Anderson - Chairman, President & CEO

  • So Tim, overall, we're really happy with what we are.

  • We did have a glitch in the quarter, which would have thrown -- anybody trying to analyze our data would be thrown, not only by that season pass sale, but by the fact that we now have members.

  • So it's very difficult for people to track credit card data, et cetera.

  • But I can tell you, overall, with Active Pass Base up 9%, the highest level in our history, we're feeling very, very good about where we are.

  • Timothy Andrew Conder - MD and Senior Leisure Analyst

  • Agreed.

  • And credit card data, especially on theme parks, to me has just never made that much sense, given -- with especially growing memberships you can charge that credit card each month, so it doesn't give you that good of an indication versus in-park spend or anything overall.

  • Operator

  • Our next question comes from the line of Barton Crockett of B. Riley FBR.

  • Barton Evans Crockett - Analyst

  • I guess I was wondering a little bit more about Dubai.

  • I'm wondering if you could explain what it means for a strategic review to be taking place.

  • If that means that potentially the park doesn't even launch the second phase?

  • And if there is any risk, or there is no risk, to fees that you have already collected having to be reversed, which I think is something that happened in Vietnam.

  • If there is a risk here, if things totally fall apart, of that happening.

  • James W. P. Reid-Anderson - Chairman, President & CEO

  • So first of all, there's no risk to fees having to be reversed.

  • And I think you heard Marshall talk earlier about the fact that they are up-to-date on their payments.

  • So no, there is no such risk.

  • With regard to strategic review, it's -- we cannot speak for our partner.

  • They have a phase 1 that launched with several parks.

  • They had a phase 2 plan to launch with other businesses, including our park.

  • They are going through a strategic review because that phase 1 has not -- basically not gone well.

  • So they're trying to work through what they do next.

  • We don't have an answer.

  • I wish I could give you an answer to say, this is what will happen.

  • But the risk for us is minimal.

  • And I would tell you that this was our smallest park, in terms of our expectations, with regards to revenue and EBITDA in terms of the outlook.

  • So whilst we would never want the park not to go ahead, if it happens, it's something we would manage through very successfully.

  • Barton Evans Crockett - Analyst

  • Okay.

  • And so when you make that comment that it's your smallest, in the past you guys have given a range of pre-opening fees, $5 million to $10 million in EBITDA contribution from those fees.

  • And I think $10 million to $20 million post-opening.

  • By saying this is the smallest, would it be fair to put that at the low end of those ranges?

  • James W. P. Reid-Anderson - Chairman, President & CEO

  • It would be at the lower end of the ranges we've given you in the past, Barton.

  • Barton Evans Crockett - Analyst

  • Okay.

  • All right.

  • And then switching gears a little bit to the membership.

  • Are you guys kind of starting to get a meaningful uplift in the membership fees in the first quarter of next year?

  • It strikes me that you did the big kind of push.

  • Starting this year, you have talked about a 25% increase for a 25% more average revenue per member.

  • And I think the monthly accounting kicks in after someone has been there 13 months.

  • So we kind of start to notice this on the P&L in the first quarter of next year, which is seasonally small, so that revenue lift could be very noticeable?

  • James W. P. Reid-Anderson - Chairman, President & CEO

  • So Barton, you're right on the money.

  • Your accounting skills are very good.

  • And in fact, that's right about the 13th month.

  • Once that kicks in, you move to the monthly basis.

  • And I think, if you think about Q1 this year, you saw some of that benefit as we were growing members.

  • But now we've accelerated that.

  • So you will see a spreading of revenue, not only in terms of Q1 but also Q2 and Q4.

  • The lighter quarters are impacted in a positive way.

  • And then the heavier quarter, which is Q3, does get an impact the other way, which we -- Marshall had talked about.

  • There's a softening of revenue in Q3 because some of that membership money does move into other quarters.

  • Marshall Barber - CFO

  • Right.

  • And actually -- and I don't know if we mentioned it, but nearly half of our membership base now has passed their 12-month commitment, which is a pretty significant stat.

  • So we're going to get growth.

  • The real growth, as you correctly pointed out, will start to come in Q1.

  • Although we didn't really launch that program until the end of February.

  • So it'll be -- we'll have a group of -- I guess, a tranche of sales that are going to go into the 13th month in March.

  • But then really in April, May, June, this big growth that we've had this year will start to move into their 13th month.

  • So I suspect you'll see a bigger impact in the second quarter.

  • Now we have seen growth year-over-year, just as we've been selling memberships for the last several years, and they've been staying with us.

  • So -- but it will accelerate in Q2.

  • James W. P. Reid-Anderson - Chairman, President & CEO

  • And Barton, remember we would never cut you out of a Q&A.

  • Ever.

  • Operator

  • Our next question comes from the line of Michael Swartz of SunTrust.

  • Michael Arlington Swartz - Senior Analyst

  • Just wanted to -- some points of clarification on the cost side.

  • I think you had mentioned, Marshall, some of the growth investments during the quarter.

  • Would those have fallen in SG&A?

  • Marshall Barber - CFO

  • Actually, what's driving the SG&A is 2 things, really.

  • It's the noncash comp where last year we had a credit related to Project 600 as we went from partial achievement to late achievement.

  • And then beyond that, the marketing for the new parks ends up in SG&A.

  • And so that's really what's the other -- I guess the other driver of SG&A is marketing the new parks.

  • And then most of the remainder of that falls into the operating expenses, but the marketing does go into SG&A.

  • Michael Arlington Swartz - Senior Analyst

  • Okay, that's helpful.

  • And then I just -- again, a point of clarification.

  • Were you saying that the baseline rate of cost inflation is still within the 3% to 4% range, is what I think you called out before?

  • Marshall Barber - CFO

  • That's correct.

  • Michael Arlington Swartz - Senior Analyst

  • Okay.

  • And that's helpful.

  • And then just as we see more in -- more, I guess, of your Active Pass Base maybe shift towards membership, give us a sense of what the retention or maybe the annual value of those membership customers looks like relative to season pass holders?

  • James W. P. Reid-Anderson - Chairman, President & CEO

  • So we've described before how powerful this is.

  • And I think the very simple way to think about it, and it's overly simple, is that if you have a member with a dining pass, you're looking at 5x the value of a single-day visitor and roughly 2 to 3x the value of a season pass holder.

  • That's very, very high-level, but that's how powerful it is.

  • And if you extend that through and you think we've taken an assumption there on a member that might just give up their membership at a fairly early date.

  • If you assume that they stay with us, and we're seeing a load of them stay with us, that relationship goes up fairly dramatically from 5x to much higher.

  • Operator

  • Our next question comes from the line of Tyler Batory of Janney Capital Markets.

  • Tyler Anton Batory - VP of Travel, Lodging and Leisure

  • Just wanted to follow up a little bit on the membership side of things.

  • I mean when you look at the members that you've added year-to-date, you really have seen a lot of growth there.

  • I mean how many of those folks are brand-new guests that have never visited the Six Flags versus single-day ticket holders last year that are now converting, versus maybe repeating pass holders that are converting or maybe even members that are buying a higher-tier pass?

  • James W. P. Reid-Anderson - Chairman, President & CEO

  • We have that data, Tyler, but we're not going to break it down.

  • What I will tell you is that our focus has been on converting the guests we have very aggressively.

  • So by far, the highest proportion, our existing guests that we're converting across.

  • And we're not just doing it online, we're also doing it very aggressively in the parks and we're getting better and better at doing it.

  • So it really is a very high proportion of our existing guests.

  • And what we're working hard to do is not just convert them to becoming a member, we're converting them to becoming a Diamond or Diamond Elite member at the much higher price points and then selling them culinary programs at the same time and other membership-type deals.

  • So that's the goal.

  • Early on it's hard work, but as you get better and better at it as we have been, we're seeing that success come through.

  • And I think in essence, what happens is that the revenue lags a little bit just because some of it shifts into future years as you go through that growth spike.

  • Tyler Anton Batory - VP of Travel, Lodging and Leisure

  • Okay, that make sense.

  • That's helpful.

  • And then just to follow-up here.

  • When you mentioned adding some incremental operating that you used for San Antonio and, I think, Mexico as well.

  • Can you talk a little bit more about that?

  • What drove that decision?

  • Maybe how many extra days are going to be coming in 2019?

  • And could what you're adding be of significance of an impact as Magic Mountain this year?

  • James W. P. Reid-Anderson - Chairman, President & CEO

  • Well, let me -- Marshall will answer that question.

  • But let me give you a high-level view.

  • Your point on Magic Mountain there is really critical.

  • We have had such a great reaction to Magic Mountain being open 365 days a year that it led us, as I described on the last call, to really look at all of our parks and see where we could do this.

  • And we had 2 parks -- a lot of parts saying, "We would like to do that," but 2 parks slugging it out to say they would like to add -- it's become much broader in terms of opening.

  • And so both of those have said they would like to do it.

  • And we have looked in detail at the consumer, our guests, when they visit, what the best period would be, and hence the decision.

  • So you want to talk about Mexico and Fiesta in the detail?

  • Marshall Barber - CFO

  • Yes.

  • I think the detail is, for Fiesta, it's -- we are going weekend operations, which will pick up 14 days in the -- first -- mostly in the first quarter.

  • Mexico is expanding their calendar.

  • I think Mexico is a park, ultimately, that can be 365 days.

  • It's in a huge market.

  • But we are doing much like we did in Magic Mountain.

  • We are testing days.

  • We're making sure we can be profitable on every day that we are open.

  • So we're expanding the calendar in the first and the fourth quarter there as well.

  • And it's an interim step.

  • I think ultimately, assuming those days go well which we fully expect they will, we'll be looking at 365 days beyond that.

  • And then Jim also mentioned the new parks have over 100 days in the first half, where we didn't own them last year.

  • Operator

  • Ladies and gentlemen, our final question comes from the line of Ryan Sundby of William Blair.

  • Ryan Ingemar Sundby - Research Analyst

  • Just wanted to follow up on the tuck-in strategy and the potential network effect you can trace from that.

  • Is there maybe any color you can give us around Texas?

  • And how maybe Active Pass growth is looked at, at Six Flags Over Texas and Fiesta after the addition of the waterpark down in Houston?

  • James W. P. Reid-Anderson - Chairman, President & CEO

  • So again, I think this is one, Ryan, that we want to see a full year to be able to give a little more color on that.

  • But I can tell you that the reaction, not just from guests but also from our teams, has been incredibly positive with regard to the new parks that have been added.

  • And we've structured it so that those new parks slip in under Fiesta and under Six Flags Over Texas.

  • So the reaction, very positive, guests love it, they love the fact that they can visit multiple parks and be able to go to a different waterpark if they want to.

  • So the initial view has been extremely positive.

  • And we are seeing it.

  • If you think about the comments that I made about membership and the success with the growth in membership and our Active Pass Base, that I think is the #1 representation of why this has been received so positively.

  • Off millions and millions of season passes, we're growing by another 9%.

  • And I think not only that, we've taken pricing up, we've taken pricing up even more on memberships and we've got more Active Pass Base holders.

  • Ryan Ingemar Sundby - Research Analyst

  • Got it.

  • And then I guess, just to -- some follow-up on the weather here.

  • What's -- is there a cumulative impact that happens from kind of bad weather, maybe 1 or 2 years in a row?

  • Because it seems like, intuitively, you should be able to recapture the loss, kind of attendance and profit this year.

  • But then I'm trying to judge that against your comments on -- your 750 target and how that might have been curbed by weather.

  • So just any thoughts on, is there a cumulative impact on attendance next year from what it...

  • James W. P. Reid-Anderson - Chairman, President & CEO

  • That's a really good question, Ryan.

  • You do -- we have consistently said that, in a sort of normal year you will get weather here and there, and people will find ways of just visiting at different times and come back and you'll recapture that weather.

  • I think that, that would be the case normally and we do believe that.

  • I think the issue here is that those numbers are just so significant, it's very difficult to be able to recapture that.

  • So we'll aim to do that.

  • And we'll work hard to do that.

  • I think in terms of this year, you said, we would work hard to do that.

  • But I think it will be very difficult to be able to recapture that sort of shortfall.

  • Marshall Barber - CFO

  • Yes.

  • And if you just look at the percentage growth, for us to just sit up here and talk and we say, "We're going to grow 12% a year through 2020." We do think when weather normalizes that there will be -- we'll come roaring back.

  • But the numbers are just big enough now to where we say, it's -- we're going to work hard to get there.

  • But it is -- it's a high bar.

  • James W. P. Reid-Anderson - Chairman, President & CEO

  • Okay, Maria, I think that may be the end of our questions.

  • So I'm going to make some closing remarks.

  • And while talking about weather and the last comment Ryan made, while there were clearly dark clouds in the sky during the third quarter, I do want you all to know that the future is very bright.

  • Our team is really deeply committed to building lasting memories for our guests and to drive substantial value increases for our shareholders.

  • Remember that almost all of our full-time employees are shareholders and so there is tremendous alignment of interest across this company.

  • This is my favorite time of the year in our parks, mostly because of how much our guests love Fright Fest.

  • And I hope that you will visit one of our parks very soon so that you can experience amazing Fright Fest and Holiday in the Park events.

  • And do not forget, we're currently sitting at a 5.4% yield, this is an amazing value of the company.

  • This is time to buy Six Flags shares.

  • Thank you so much for joining us today and take care.

  • Maria, that concludes our call.

  • Operator

  • Thank you, ladies and gentlemen.

  • This does conclude today's quarterly call.

  • You may now disconnect.