Q2 2019 Earnings Call

July 24, 2019

Natalia: Good morning, ladies and gentlemen. Welcome to Six Flags Q2 2019 Earnings Conference Call. My name is Natalia, and I will be your operator for today's call. During the presentation, all lines will be in a listen-only mode. After these speaker remarks, we will conduct a question-and-answer session. If you have a question at that time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. I will now turn the call over to Steve Purtell, Senior Vice President, Investor Relations. You may begin.

Operator: Good morning, ladies and gentlemen. Welcome to Six Flags Q2 2019 Earnings Conference Call. My name is Natalia, and I will be your operator for today's call. During the presentation, all lines will be in a listen-only mode. After these speaker remarks, we will conduct a question-and-answer session. If you have a question at that time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. I will now turn the call over to Steve Purtell, Senior Vice President, Investor Relations. You may begin.

Steve Purtell: Good morning and welcome to our Q2 call. With me are Jim Reid-Anderson, Chairman, 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 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. 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.

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

Jim Reid-Anderson: Thank you, Steve. Good morning, everyone, and thank you for joining our call. I'm very pleased with our performance in the quarter, especially with the progress we have made growing our Membership and Dining Pass programs. As a direct result of our growth initiatives, we set company records for Q2 revenue and adjusted EBITDA. Now that we have absorbed the incremental costs and dilutive EBITDA impact of our new domestic parks, which for the most part were not open the first 5 months of the year and were not acquired until 1 June last year, we are well positioned to accelerate growth in the back half of 2019 and full year 2020. With our record-high Active Pass Base and significantly higher membership and All Season Dining program penetration, we are tracking toward our 10th consecutive record year.

Jim Reid-Anderson: For the first 6 months of 2019, attendance and revenue both grew 5%, representing an increase of almost 550,000 guest visits and $31 million of revenue. On a comparable park basis, attendance, revenue, and EBITDA grew at our legacy parks for the first 6 months, and attendance, revenue, and EBITDA also grew at our new domestic parks for the month of June, the period we owned them in 2018. Operationally, it has been a good year. Our new rides and attractions have been very well received. Our Active Pass Base is up 2%, with our membership base at an all-time high. Our One-Day Ticket and Season Pass prices are up mid-single digits year-over-year, and we continue to increase penetration of our popular All Season Dining programs, with our active dining base up more than 25% versus prior year as of June 30th.

Jim Reid-Anderson: I want to reinforce that the company has made a strategic move to Memberships in order to aggressively shift to a recurring revenue model, and we are in the middle of that transition, one that enhances customer loyalty and will ensure consistency and stability in the long-term cash flow. Historically, most Memberships have been sold online, and I'm pleased to report an 80% increase in the proportion of guests upgrading to Memberships at our front gate in our highly successful new Membership Centers. We continued this momentum into July, our prime season for Membership sales, and as of today, our membership base is up more than 25% from this time last year.

Jim Reid-Anderson: Although there will always be a segment of our guests who prefer Season Passes, there is no reason we can't grow our membership penetration to more than 50% over the next few years, thereby greatly increasing our percentage of recurring revenue. I'm especially pleased with the accelerating adoption rate of our highest-priced Membership tiers, with the proportion of guests choosing Diamond or Diamond Elite up double digits. Higher-tiered members increase our average admissions price and have higher in-park spending and guest satisfaction. In the quarter, we successfully reached a settlement regarding the discontinued project in Dubai, and in China, our partner continues to make progress obtaining local government support for our Chongqing parks. Construction in both Hai An and Chongqing continues.

Jim Reid-Anderson: Though our partner has ongoing negotiations concerning the full integrated resort in Chongqing, we are pleased with their consistent progress and are cautiously optimistic that both Hai An and Chongqing will remain on schedule. In addition, our partner continues to have positive discussions with the local government in Nanjing, our third location in China, and is still striving to obtain all necessary approvals that will allow us to begin recognizing revenue again. We are also in the process of completing the master plan for our Saudi park, which promises to be a beautiful entertainment complex with some amazing world-record attractions. Our international agreements provide unique diversification to our portfolio and represent significant long-term upside above and beyond our base business with no capital at risk. We are pursuing additional international parks, and the opportunity for future growth remains compelling.

Jim Reid-Anderson: Before I turn the call over to Marshall, I would like to give you a quick update on the CEO transition. Our Board Search Committee is busy conducting interviews with both internal and external candidates. The process has been going very well, and there is great interest in the role. Once we have a final decision about the new CEO, we will make that public. I'm very excited about the balance of 2019, and our team remains energized and laser-focused on delivering another record year. Marshall will now share a few more details on our Q2 and year-to-date financial results. Marshall?

Marshall Barber: Thank you, Jim. Good morning to everyone on the call. Q2 revenue was up 7%, driven by an 8% growth in attendance and a 14% increase in sponsorship, international agreements, and accommodations revenue, offset by a 1% decrease in guest spending per capita. The 738,000 attendance increase was driven by incremental operating days at our new domestic parks prior to June 1, the day we assumed operations last year, and attendance shift of nearly 200,000 guests from Q1 into Q2 due to the later timing of Easter and the related spring breaks compared to 2018, the increase in our Active Pass Base, and incremental operating days from the Magic Waters Waterpark in Illinois, which we began operating in April of this year. Because of the Easter-related attendance shift between Q1 and Q2, it is more meaningful to review June year-to-date performance.

Marshall Barber: Revenue in the first half of the year was up 5%, driven by a 5% increase in attendance and a 14% increase in sponsorship, international agreements, and accommodations revenue. International agreements revenue was up $7.5 million, or 32%, in the first six months of 2019, with revenue of $20 million in Q2. This included a $7.5 million settlement related to the termination of our contract in Dubai and a cumulative catch-up revenue adjustment related to Chongqing. You may remember that we did not recognize revenue for Chongqing in Q1. Since that time, our partner has been progressing with the government approval process, and construction has continued. This adjustment brings us in line with the park opening schedule that was announced on our Q4 2018 earnings call.

Marshall Barber: Going forward, we expect to continue recognizing revenue for Chongqing and are hopeful to resume development and revenue recognition for Nanjing later in the year or early next year. While we're pleased with the progress our partner in China has made working through the challenges they have faced over the last nine months, it is possible that international revenue will remain lumpy going forward, especially if the timing of park openings changes or if broader macroeconomic issues persist. Guest spending for the first half of the year was up 3 cents to $43.33, with admissions per capita down 1% and in-park per capita spending up 1%. Per capita spending was up nicely in our legacy parks but was diluted by incremental attendance at our new domestic parks, which have significantly lower per capita spending. We remain confident that we can grow these per caps over time.

Marshall Barber: Moving on to costs, our cash operating and SG&A expenses in the first half of the year increased 9%, reflecting incremental costs at our five new domestic parks in the first five months of the year, including lease expense and cost to operate and rebrand the parks, incremental costs to lease and operate Magic Waters, increased costs from mandated minimum wage increases and competitive wage rate adjustments in several labor markets, and incremental legal and various other costs associated with our Dubai settlement, substantially reducing the settlement's impact on EBITDA. Aside from the additional costs from the six new parks, our core costs grew in line with inflation. The profit margin on our in-park sales was consistent with prior year, and the increase in cost of sales was driven by a higher volume of culinary and merchandise sales.

Marshall Barber: We had net income of $10 million and diluted earnings per share of 12 cents for the first six months of 2019 compared to net income of $12 million and diluted earnings per share of 14 cents for the same period in 2018. Deferred revenue as of June 30th was up $8 million, or 4% over prior year, due to increased sales of new memberships and All Season Dining products, and incremental deferred revenue associated with our international development agreements, offset by a higher mix of longer-tenured members versus last year. Going forward, the company expects deferred revenue growth will be muted and may decline as a growing pool of members retain their memberships beyond their initial 12-month commitment period, at which time revenue is recognized monthly, if cash is received, and no longer contributes to deferred revenue.

Marshall Barber: On an LTM basis, our Modified EBITDA margin remained the industry high at 40%. Our balance sheet is very healthy, with no borrowings on our revolver, $115 million of cash on hand, and no debt maturities before 2024. In Q2, we entered into an interest rate swap agreement for $300 million of our $800 million variable-rate term loan, which, together with our fixed-rate bonds, makes 78% of our total debt fixed at an average interest rate of 4.9%. Net leverage at the end of Q2 was 3.9 times adjusted EBITDA, which should come down as our earnings grow. We expect to pay minimal federal taxes this year and next and do not expect to become a full cash taxpayer until 2024 at the earliest.

Marshall Barber: Although our unlimited NOL carryforwards run out at the end of 2020, we have continuing limited NOL carryforwards that shield approximately $32 million of taxable income per year through 2024. We also have foreign tax credits and bonus accelerated depreciation, which enables us to write off 100% of our current-year capital spending, plus the remaining MACRS depreciation from capital expenditures made prior to 2018, the year of tax reform. We feel our leverage is very appropriate given the recurring nature of our cash flow, and we are comfortable growing our dividend every year. As has been our consistent policy, all excess cash flow remaining after dividend payments will be used to repurchase shares unless we find compelling incremental investments with a high return. At the end of June, the remaining amount authorized for share repurchases was $232 million. Going forward, there are several considerations to keep in mind.

Marshall Barber: First, our six new parks were immediately accretive to EBITDA and will provide a quick payback, but they are diluted to margins and per capita spending metrics. We also incurred incremental lease, rebranding, and operating costs during the first half of the year that were not incurred in 2018 due to the timing of the acquisition last year, making year-to-date comparisons challenging. Beginning next year, all but Magic Waters Waterpark are fully comparable to prior-year periods, which should allow us to grow EBITDA and margins again. Second, as members enter their 13th month, revenue is recognized evenly each month regardless of attendance. This has the effect of benefiting per cap spending metrics in Q1 and Q4.

Marshall Barber: Third, as we continue to be successful in upgrading higher volumes of new guest sales from Single-Day Tickets and Season Passes into our Membership programs, a growing proportion of that revenue, which traditionally had been fully earned in the current calendar year, will now shift into the following year. Finally, we expect to record stock-based compensation related to options of $4 to $5 million per quarter and will not record expense associated with Project 750 until attainment becomes probable. Like Jim, I feel very good about our ability to grow in the balance of the year and our ability to accelerate growth in the next few years. Our Active Pass Base is at a record high, which provides a strong hedge against inclement weather, and in the back half of this year, we'll be overlapping significant rainfall last year that negatively affected attendance at many of our parks.

Years.

Our active pass base is at a record high which provides a strong hedge against inclement weather.

In the back half of this year will be overlapping significant rainfall last year that negatively affected attendance at many of our parts.

Marshall Barber: The last July through June time period was the wettest 12 months of all time, and the last three years have set consecutive rainfall records in the US. We have grown nicely even in that environment. Our recurring revenue model is strong and building momentum, and we are well-positioned to continue to grow even faster once the weather reverts back to the mean. We should also benefit from our ongoing investment in special events such as Fright Fest and Holiday in the Park. The membership and All Season Dining program penetration of our Active Pass Base continues to grow, with membership units and dining units up significantly. The continued growth of these programs will drive enhanced performance in 2019 and beyond. Finally, revenue from our international agreements should accelerate further as we receive approvals in China, continue to add new locations, and over the medium term, begin opening parks.

The last July through June time period was the wettest 12 months of all time.

And the last three years is set consecutive rainfall records in the U.S.

We have grown nicely even in that environment.

A recurring revenue model is strong and building momentum, we're well positioned to continue to grow even faster once the weather reverts back to the mean.

We should also benefit from our ongoing investment and special events, such as Fright Fest and holiday and apart.

Membership and all season dining program penetration of our act to pass page continues to grow with membership units and dining units up significantly.

The continued growth of these programs will drive enhanced performance in 2019 and beyond.

Finally revenue from our international agreements should accelerate further as we receive <unk> approvals in China.

Continue to add new locations and over the medium term begin opening parks.

Marshall Barber: Now I'll turn the call back over to Jim.

And now turn the call back over to Jim. Thank you Marshall.

Jim Reid-Anderson: Thank you, Marshall. We are the leading regional theme park company in the world, and our team will never stop innovating and developing ways to capitalize on our five strategic pillars to achieve profitable and sustainable growth. First, we are increasing membership penetration on a growing Active Pass Base. Our premium Membership and loyalty programs are driving significant recurring revenue by increasing both average selling prices and retention rates. The annualized cash flow from our current base of members now represents nearly 25% of our trailing 12-month guest spending revenue, up from 20% in Q1, and benefits will compound as we continue to add new annual Membership layers. Our loyalty program provides incentives for guests to become members and to stay in the Membership program, and we now have more than three-quarters of a million members who have voluntarily signed up to be in the loyalty program.

We are the leading regional theme Park company in the World and our team will never stopped innovating and developing ways to capitalize on our five strategic pillars to achieve profitable and sustainable growth.

First we are increasing membership penetration on a growing active pass space.

Our premium membership and loyalty programs are driving significant recurring revenue by increasing both average selling prices and retention rates.

The annualized cash flow from our current base of members now represents nearly 25%.

Of our trailing 12 month guest spending revenue.

Up from 20% in Q1.

And benefits will compound as we continue to add new and you annual membership layers.

Our loyalty program provides incentives for gas to become members and to stay in the membership program.

And we now have more than three quarters of a million members, who have voluntarily signed up to be in the loyalty program.

Jim Reid-Anderson: This structure drives engagement with our members, and the guest response is that they love the program. Second, we are improving ticket yields. We have very high value-for-the-money ratings in our guest satisfaction surveys, and we provide a compelling value compared to other forms of entertainment, allowing us to strategically raise prices mid-single digits for years to come. Our growing membership program also improves ticket yields as members move into higher-price tiers. Third, we are growing our valuable in-park programs. Our expansive Active Pass Base and special events provide opportunities to sell more products when guests visit our parks. This year, we are installing Wi-Fi in all of our parks, with installation already complete at most parks.

This structure drives engagement with our members and the gas response is that they love the program.

Second we are improving ticket yield.

We have very high value for the money ratings in our gas satisfaction surveys.

And we provide a compelling value compared to other forms of entertainment.

Allowing us to strategically raise prices mid single digits for years to come.

Our growing membership program also improves ticket yields as members move into higher price tears.

Third we are growing are valuable in part programs.

Our expansive active pass space.

And special events provide opportunities to sell more products when gas visit our parks.

This year, we're installing why fight and all of our parks with installation already complete at most parks.

Jim Reid-Anderson: This will improve the guest experience and guest engagement, allow us to leverage new applications such as mobile dining and our enhanced mobile app, and provide additional guest email addresses that, along with other actions, have grown our contact list by double digits in just the last six months. Higher membership penetration will also support in-park programs as members are more likely to buy a dining pass and spend more when they're in our parks. Fourth, we are expanding in North America. We can significantly improve the profitability of acquired parks in adjacent markets by leveraging our Active Pass Base to grow attendance and revenue, and by improving acquired park margins through cost synergies.

This will improve the gas experience and guest engagement.

Allow us to leverage new applications, such as mobile dining at our enhance mobile app.

And provide a dash additional guests email addresses that along with other actions has grown our contact lists.

By double digits in just the last six months.

Higher membership penetration will also support in part programs as members are more likely to buy a dining paths and spend more when they're in our parks.

Fourth we are expanding in North America.

We can significantly improve the profitability of acquired parks in adjacent markets.

By leveraging our active pass space.

To grow attendance and revenue.

And by improving acquired park margins through cost synergies.

Jim Reid-Anderson: We have a very disciplined approach to M&A that ensures we will not overpay for acquisitions or stray from our core business, and we have been able to utilize our strong cash flow and balance sheet to quickly capitalize on opportunities. This has allowed us to acquire eight parks since announcing this strategy in Q1 2017, and there are a variety of acquisition targets remaining. Fifth, we are building our international franchise. Our strong global brand allows us to extend into emerging markets where the middle class is growing and entertainment options are limited, providing growth above and beyond our domestic markets with zero capital investment. We have eight parks in three locations under construction and are working to restart construction on four additional parks in Nanjing, China.

We have a very disciplined approach to emanate.

That ensures we will not overpaid for acquisitions.

Or strayed from our business.

And we have been able to utilize our strong cash flow and balance sheet to quickly capitalize on opportunities.

This is allowed us to acquire eight parks since announcing this strategy in the first quarter of 2017.

And there are a variety of acquisition targets remaining.

<unk>, we are building our international franchise.

Our strong global brand allows us to extend into emerging markets.

Where the middle class is growing and entertainment options are limited providing growth above and beyond our domestic markets with zero capital investment.

We have eight parts in three locations under construction.

And are working to restart construction on for additional parks in Nanjing, China.

Jim Reid-Anderson: Our pipeline remains robust, and we are optimistic that we will be able to announce new locations in the coming years. Underlying these five growth drivers, we are very comfortable consistently investing 9% of revenue into capital spending, putting something new and exciting in each of our parks every year. We are convinced that this is the absolute right level of investment, and as a direct result, our modified EBITDA less CapEx margin remains the highest in the industry by several hundred basis points. We are fully committed to enhancing shareholder value by returning all excess cash flow to shareholders in the form of dividends and share buybacks, and also protecting shareholder capital by pursuing capital-light avenues of growth with high returns on investment.

Our pipeline remains robust.

And we are optimistic that we will be able to announce new locations in the coming years.

Underlying these five growth drivers, we are very comfortable consistently investing 9% of revenue into capital spending.

Putting something new and exciting in each of our parks every year.

We are convinced that this is the absolute right level of investment.

And as a direct result are modified even less cap ex margin remains the highest in the industry by several hundred basis points.

We are fully committed to enhancing shareholder value.

By returning all excess cash flow to shareholders in the form of dividends and share buybacks.

And also protecting shareholder capital.

By pursuing capital light avenues of growth with high returns on investment.

Jim Reid-Anderson: Our dividend yield of 6.2% is among the highest in the US market. We are committed to growing the dividend every year for the foreseeable future. Our aspirational goal of $750 million of modified EBITDA by 2021 reflects an 8% annualized EBITDA growth rate from the end of 2018. While it remains an ambitious goal, we believe it is achievable given our significant and unique high-margin growth opportunities. Remember, our employees are also shareholders, and they are determined to deliver exceptional value to both guests and shareholders. As I've said on the last few calls, I believe that our shares are undervalued. Six Flags is a truly global regional theme park company with an attractive and vibrant brand, excellent team, and superb guest satisfaction scores.

Our dividend yield of 6.2% is among the highest in the U.S. market and we are committed to growing the dividend every year for the foreseeable future.

Our aspiration will goal of $750 million of modified even by 2021.

Reflects an 8% annualized Eva dog growth rate from the end of 2018.

While it remains an ambitious goal, we believe is achievable given our significance and unique high margin growth opportunities.

Remember our employees are also shareholders and they are determined to deliver exceptional value to both gas and shareholders.

As I've said on the last few colds I believe that our shares are undervalued.

Six flags is a truly global regional theme Park company.

With an attractive and vibrant brand.

Excellent team and superb guest satisfaction scores.

Jim Reid-Anderson: Over time, our five key strategic initiatives and our growing stream of recurring revenue from membership programs should allow us to re-rate to a significantly higher multiple, especially now that we are below the low end of our historical range. At this time, I'm going to ask our operator, Natalia, to open the call for any questions.

Overtime are five key strategic initiatives and our growing stream of recurring revenue from membership programs should allow us to re rate to a significantly higher multiple especially now that we are below the low end of our historical range.

At this time I'm going to ask our operator Natalia to open the coal any questions.

Ladies and gentlemen.

Operator: Ladies and gentlemen, at this time, if you would like to ask a question, please press star, then the number one on your telephone keypad. Again, that is star one. Your first question is from the line of Ian Zacina with Oppenheimer.

Time, if you would like to ask a question. Please press star sending number one on your telephone keypad.

Again that is star wine.

Andrew first question from the line of E.N. is a female with Oppenheimer.

Jim Reid-Anderson: Good morning, Ian.

The morning in one hand.

Marshall Barber: Good morning, Ian.

[Analyst]: Hey, good morning, guys. This is Mark on for Ian. Thanks for taking our questions. I guess the question would be on number one, can you guys just speak a bit on retention and specifically what you guys are seeing on the membership side? Thanks.

[Analyst] (Oppenheimer): Hey, good morning, guys. This is Mark on for Ian. Thanks for taking our questions. I guess the question would be on number one, can you guys just speak a bit on retention and specifically what you guys are seeing on the membership side? Thanks.

Hey, guys. This is mark on for you and thanks for take care questions.

So I guess you know.

Number one.

<unk> on retention know specifically, what you guys are see on P. membership.

Thanks.

Jim Reid-Anderson: Sure. We are seeing very strong retention numbers with regard to membership. If you think about what we've historically had, Mark, traditionally, the industry has had single-day visitors or season pass holders, and come the end of any year, those season pass holders go away, and then you have to fight basically to get them back. Well, we don't have that with members. They stay with us, and many of them stay for years. We've got some that have been with us right from the start of the program. The beauty, though, of the new membership program that we introduced last year is that the value opportunity there is much more significant than anything we've had in the past. We've seen that people love the program, are sticking with us, and really enjoying it.

Sure. We're we're seeing very strong retention numbers with regard to membership.

If you think about what we've historically had mark traditionally the industry has had single day visitors or season pass holders and come the end of any year. Those season pass holders go away and then you have to fight basically too.

You know to get them back while we don't have that with members they stay with us and many of them stay for years. You know if you got some that have been with US right from the start of the program.

The beauty, though of the new membership program that we introduced last year is the value opportunity theirs is much more significant than anything we've had in the past.

And we've seen that people love the program are sticking with us I'm really enjoying it obviously there is some chance just as you would get with you with any business like this but it's substantially below.

Jim Reid-Anderson: Obviously, there is some churn, just as you would get with any business like this, but it's substantially below what you'd see if you simply had a traditional Season Pass program.

You know what what you'd see with if you if you simply had a traditional season pass program.

Okay terrific. Thank you and then just falls in terms of all young girls for membership from the potential there.

[Analyst]: Okay, terrific. Thank you. Then just a follow-up in terms of growth for memberships and the potential there, what ending would you guys say you guys are in and how much room to grow is left? Thanks.

[Analyst] (Oppenheimer): Okay, terrific. Thank you. Then just a follow-up in terms of growth for memberships and the potential there, what ending would you guys say you guys are in and how much room to grow is left? Thanks.

So you guys are and how much room.

It was fluffed thinks it's a it's a great question. So you had me describe earlier being you know at the point where.

Jim Reid-Anderson: It's a great question. You heard me describe earlier being at the point where basically the penetration is still relatively low. We're getting 25% of our recurring revenue from memberships or of our total revenue, basically guest revenue from memberships. There's a long way to go. If I put it in simple terms, we're probably in the second or third innings.

Basically the penetration is still relatively low we're getting 25% of our recurring revenue from memberships.

Or of our total revenue base guess revenue from membership. So there's a long way to go so if I put it in simple terms, we're probably in the second or third innings.

Okay partial would you sir.

[Analyst]: Okay, great. Thank you, sir.

[Analyst] (Oppenheimer): Okay, great. Thank you, sir.

Jim Reid-Anderson: Marshall, would you add to that?

Marshall Barber: No, I think you said what needs to be said there.

No I think I think you said instead would would needs to be said there.

Jim Reid-Anderson: Okay. Thank you, Mark.

Okay. Thank you Mark.

[Analyst]: Great. Thank you, guys.

[Analyst] (Oppenheimer): Great. Thank you, guys.

Great.

Your next question from the line of Brent Andrus with the key bank capital market.

Operator: Your next question is from the line of Brett Andrews with the Key Bank Capital Market.

Marshall Barber: Morning, Brett.

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Jim Reid-Anderson: Hi, Brett.

[Analyst]: Good morning, guys. Just 2 quick ones for me first. How would you describe the weather during the Q2? I mean, was the weather normal? Was it worse than normal? One of your competitors was out with results that saw trends really pick up in the last few weeks of the Q2 and around the holidays. I was wondering if you saw similar trends in your business as your Q2 ended. Second, Marshall, can you help us tease out what per caps would have been if we strip out Premier and Magic Waters in the Q2? I think the press release seemed to indicate that they would have been up if we exclude that.

Brett Andress: Good morning, guys. Just 2 quick ones for me first. How would you describe the weather during the Q2? I mean, was the weather normal? Was it worse than normal? One of your competitors was out with results that saw trends really pick up in the last few weeks of the Q2 and around the holidays. I was wondering if you saw similar trends in your business as your Q2 ended. Second, Marshall, can you help us tease out what per caps would have been if we strip out Premier and Magic Waters in the Q2? I think the press release seemed to indicate that they would have been up if we exclude that.

Just two quick ones for me first.

How would you describe the weather.

During the second quarter I mean.

Normal was it worse than normal one of your competitors.

Without with results.

Pick up in the last few weeks at a quarter in around the holidays. So I was wondering if you saw.

Similar trends and your business is your quarter ended.

And then the second.

Maybe you'd Marshall can you help us keys out what per caps.

And if we strip out premiere in magic waters in the second quarter I think that the press release.

Seemed to indicate that they they would've been up if we exclude that.

Jim Reid-Anderson: Yeah, Brett. Let me take question number one, then Marshall can take question number two. I think it's fair to say, Marshall did describe this in his prepared comments, that the last 12 months truly have been recorded as the wettest 12 months in North American history. I can say that Q2 was still pretty bad. I wouldn't comment on July because we tried to avoid commenting on current Qs, it has continued to have significant rainfall throughout the country, especially on the East Coast. Weather has definitely impacted us in the last 12 months, we're hoping that it does turn. There hasn't been some sort of substantial reversal of that trend. Marshall, do you want to talk about the impact of the new parks on per caps?

Yeah, Brett let me take a question number one and then Marshall can take question number two.

I think it's fair to say and Marshall did describe this in his in his prepared comments that the last 12 months truly have been recorded as the wettest 12 months in North American history.

And I can say that the you know the second quarter was.

Was was still pretty bad.

You know I wouldn't comment on on July because you know we try to avoid commenting on on on current current quarters, but it has continued to to you know have significant rainfall throughout the country, especially on the east coast. So weather has has has definitely impacted us in the last 12 months and we're hoping that it. It does turn there hasn't been some sort of some substantial reversal of that of that trend martial do you want to talk about.

The the impact of all of the new parks on <unk> sure Jim the year to date, the guess spinning per cap was up three cents.

Marshall Barber: Sure, Jim. Year-to-date, the guest spending per cap was up 3 cents. If you just look at the existing parks, the legacy parks, per cap spending was up nicely. It was really diluted by park mix, which was the new parks' attendance in the mix. Our goal going forward is to further increase the per caps as we grow the membership base, the Dining Pass penetration, and we continue to apply proven revenue synergies to the parks. If you look inside the metrics, the actual per cap metrics, they're operating just as we had expected. The memberships are significantly higher than Season Passes from a per cap perspective, and the 13-plus memberships are even higher than that. The per caps are delivering. You just can't see it because of the park mix.

If you just look at the existing parks a legacy parks per capita spending was up nicely. It was really diluted by park mix, which was.

The new parks attendance in the in the mix.

Our goal going forward is to further increase the per crafts as we grow membership.

The membership base the dining best penetration.

And we continue to apply.

[noise] proven revenue synergies to the parks.

If you look inside the metrics the actual per cat metrics. There operating just as we had expected the memberships are significantly higher than season passes from a per cab perspective.

And the 13, plus memberships are even higher than that so.

So the per cabs are delivering you just can't see it because of the park next bread I would just add to that you know if you think about the two topics. We've just covered both weather and per cap with the new parks.

Jim Reid-Anderson: Brett, I would just add to that. If you think about the two topics we've just covered, both weather and per cap with the new parks, even with that, we had our highest Q2 of all time, and have delivered record numbers. It does show you the power of what we've got not only with Membership but with the core parks' organic growth and success. I feel very good about the ability to continue to see that sort of growth going forward, especially given that we have the opportunity to improve the margins and the performance of those newer parks over time.

Even with that you know we had our highest second quarter of all time and have delivered record numbers. So it does show you the power of what we've got not only with with membership, but with the core parks organic growth and success and I feel very good about the ability to continue to to see that sort of growth going forward, especially given that we have the opportunity to improve the margins and the performance of those newer parks overtime.

[Analyst]: Understood. Thank you for that. I just had one more, I guess, clarification, and I'm sorry if I misunderstood this. Marshall, I think you said the settlement from DXB was $5.7 million. I thought it was $7.5 million from one of the releases. Which one is it?

Brett Andress: Understood. Thank you for that. I just had one more, I guess, clarification, and I'm sorry if I misunderstood this. Marshall, I think you said the settlement from DXB was $5.7 million. I thought it was $7.5 million from one of the releases. Which one is it?

I understood.

Thank you for that and I had just had one more I guess clarification and I'm sorry, if I misunderstood this but Marshall I think you said a settlement from D.X.B. was 5.7 million I thought it was 7.5 million from one of the release is so.

Which one is it.

Marshall Barber: Yeah, so it's $7.5. I think that's what I said, but if I said $5.7, then I misspoke. It's $7.5.

Yeah. It's so it's seven point, but I think that's what I said, but if I said 5.7. It then I misspoke, it's 7.5 and I think what what you may have heard him also talk about is that there.

Jim Reid-Anderson: I think what you may have heard him also talk about is that the impact on EBITDA is substantially lower than that because of incremental legal and other costs associated with the settlement. There were two comments that he'd made, Brett.

The impact on ebay is substantially lower than that because of incremental legal and other costs associated with the <unk> settlement.

So.

There were two comments that he'd made friends.

[Analyst]: Understood. Thank you for that clarification.

Brett Andress: Understood. Thank you for that clarification.

Understood. Thank you for that clarification, thanks very much for it.

Jim Reid-Anderson: Thanks very much.

Marshall Barber: Great. Thanks, Brett.

Operator: Your next question is from the line of Steve Lozinski with the Stifel.

Your next question me from the line of Steve Lozinski with the people.

Marshall Barber: Good morning, Steve.

<unk>.

[Analyst]: Hey, good morning, guys. How are you?

Steve Wieczynski: Hey, good morning, guys. How are you?

Hey, good morning, guys how are you.

Marshall Barber: Great. Good.

[Analyst]: Jim, I guess if we look at the 2% growth in the Active Pass Base at the end of June, obviously, that's down from 5% at the end of the Q1. I guess the question is, does that deceleration in growth surprise you at all? Am I missing something structurally with the calendar? Or is that low single-digit growth through the first six months kind of in line with what you guys would have expected?

Steve Wieczynski: Jim, I guess if we look at the 2% growth in the Active Pass Base at the end of June, obviously, that's down from 5% at the end of the Q1. I guess the question is, does that deceleration in growth surprise you at all? Am I missing something structurally with the calendar? Or is that low single-digit growth through the first six months kind of in line with what you guys would have expected?

Great. Good so so Jim I guess, if we look at the 2% growth in the in the active pass pace at the end of June .

Obviously, that's down from 5% at the end of the first quarter.

I guess the question is does does that deceleration and growth surprise you at all and.

My missing something structurally where the calendar or you know is that low single digit growth through the first six months kind of in line with what you guys would have expected.

Jim Reid-Anderson: As you said, Steve, we're up 2% over last year's record high. Every single quarter going back for minimum 5 years since we began tracking this has been a record, although definitely weather, we think, impacted 2019 and diminished somewhat where we could have been. Now, the reality is that the composition of our Active Pass Base has been changing due to the focus on Membership, and we have higher annual prices there. The benefit of that is that members stay with us longer, which should help to grow the Active Pass Base as we go forward from here. I'm actually happy with the Active Pass Base growth where it is, an all-time record, consistently growing. I'm looking forward to seeing continued growth going forward.

So as you said, Steve were up 2% over last year's record high and.

Every single quarter are going back you know for minimum five years. This we became began tracking this has been a record.

Although definitely whether we think impacted 2019, and and diminished somewhat where we could have been.

Now the the reality is that the composition of of our active path base has been changing due to the focus on membership and we have higher annual prices there.

And the benefit of that you know is that members stay with us longer which had hot help to grow the active parts base as we go forward from here, So I'm actually happy with the active class base growth, where it is you know an all time record consistently growing and I'm looking forward to seeing continued growth going forward.

Okay Gotcha, and then second question be around the wading across the you know the four tiers are your membership program. It and I think you talked about diamond Diamond elite growing trying to double digits, but you know what I'm getting at here are you are those four tiers remaining.

[Analyst]: Okay, gotcha. Second question would be around the weighting across the four tiers of your Membership program. I think you talked about Diamond and Diamond Elite growing kind of double digits. What I'm getting at here are those four tiers remaining pretty consistent, especially on the lower end? I guess what we're trying to figure out here is your core customer still pretty healthy?

Steve Wieczynski: Okay, gotcha. Second question would be around the weighting across the four tiers of your Membership program. I think you talked about Diamond and Diamond Elite growing kind of double digits. What I'm getting at here are those four tiers remaining pretty consistent, especially on the lower end? I guess what we're trying to figure out here is your core customer still pretty healthy?

Pretty consistent, especially on the lower end and I guess, you know what we're trying to figure out here is your your your core customer still pretty healthy.

Jim Reid-Anderson: Our core customer is very healthy. Certainly, the thing that most pleasantly surprised us is what you were getting at there, Steve, that we didn't anticipate having as high a percentage of Diamond Elite as we do. It's been a very positive overall experience. There's been stability in those numbers over time. If anything, there's been a little bit of a growth in the Diamond Elite side at the expense of Gold, Plus, and Platinum, which I think obviously works in our favor. This one definitely, we're surprised in a good way, and it reinforces that our guests seem to be in a good place.

Our core customer is.

Very healthy and certainly the thing that most pleasantly surprised this is what you were getting at their Steve that we didn't anticipate having as high a percentage of Diamond Diamond elite.

As we do so it's been very positive overall experience there's been stability in those numbers overtime, if anything that's been a little bit of a growth in the diamond Diamond elite side at the expense of gold plus and platinum, which I think obviously works in our favor so.

This one definitely where where surprise in a good way and it reinforces that the our guests seemed to be in a good place.

[Analyst]: Okay, great. Thanks, guys. Appreciate it.

Steve Wieczynski: Okay, great. Thanks, guys. Appreciate it.

Okay, great. Thanks, guys appreciate it.

Jim Reid-Anderson: Thank you very much.

Thank you very much.

Your next question me from the line of Jane card him into with the Wedbush Securities.

Operator: Your next question is from the line of James Hardiman with the Wedbush Securities.

Jim Reid-Anderson: Hi, James.

Marshall Barber: Morning, James.

Hi, Jane Morton James.

[Analyst]: Hi, good morning. How are you guys doing?

James Hardiman: Hi, good morning. How are you guys doing?

Good morning.

Are you guys doing.

Jim Reid-Anderson: Pretty well.

[Analyst]: Thanks for taking my questions. I guess just the point of clarification, obviously, wanted to flush this out a little bit. It sounds like in China, your Chongqing park, that you both recognize revenue for the Q2, and you also did a catch-up payment for the Q1, and you expect to continue recognizing revenue going forward on that. Is that accurate?

James Hardiman: Thanks for taking my questions. I guess just the point of clarification, obviously, wanted to flush this out a little bit. It sounds like in China, your Chongqing park, that you both recognize revenue for the Q2, and you also did a catch-up payment for the Q1, and you expect to continue recognizing revenue going forward on that. Is that accurate?

Well thanks.

Thanks for taking my question I guess, just a point of clarification, obviously wanted to flush.

But.

But it sounds like in China, you're you're <unk>.

Park that that.

Both recognize revenue for the second quarter and you also did a a catch up payment.

For the first quarter and you expect to continue recognized.

Is that accurate.

Jim Reid-Anderson: That's correct. It wasn't so much a catch-up payment. Why don't you describe it, Marshall?

That's correct. It wasn't so much a catch up payment why don't you describe it Marshall yeah. It wasn't a catch up payment per se, but we had to stop recording revenue in the first quarter.

Marshall Barber: Yeah, it wasn't a catch-up payment per se, but we had stopped recording revenue in Q1. Really, we were just getting back on the schedule that we had talked about in Q4. Our expectation now is that we'll continue to record revenue there going forward.

So really we were just getting back on the schedule that we had talked about in the fourth quarter.

And so our our expectation now is it will continue to will continue to record revenue there.

[Analyst]: Okay. That's really helpful. Yeah, my bad.

James Hardiman: Okay. That's really helpful. Yeah, my bad.

Going forward Okay.

That's really.

Jim Reid-Anderson: Thanks.

[Analyst]: Catch-up Revenue Recognition, I guess I should say.

James Hardiman: Catch-up Revenue Recognition, I guess I should say.

Thanks to catch up.

Catsup revenue recognition I guess I should say correct.

Jim Reid-Anderson: Correct. That's right.

[Analyst]: I guess my next question would be, if the timetable holds, I think for Nanjing, you had talked about 6 to 9 months. We were pleasantly surprised this morning that you were able to hold the timetable in Chongqing. Should we similarly expect an announcement on Nanjing on the Q3 call if that holds up? I guess sort of secondary question there, if you're able to keep that timetable, should we expect a similar revenue recognition catch-up for 1Q and 2Q in the Q3 numbers?

So I guess my next question then would be if if the timetable holds I think for Nanjing, you would talked about.

James Hardiman: I guess my next question would be, if the timetable holds, I think for Nanjing, you had talked about 6 to 9 months. We were pleasantly surprised this morning that you were able to hold the timetable in Chongqing. Should we similarly expect an announcement on Nanjing on the Q3 call if that holds up? I guess sort of secondary question there, if you're able to keep that timetable, should we expect a similar revenue recognition catch-up for 1Q and 2Q in the Q3 numbers?

Six to nine months.

You know pleasantly surprised this morning that you were able to hold the timetable function.

Should we similarly expect.

An announcement on Nanjing on the third quarter call if if that holds up.

And I guess sort of secondary question, there, if you're able to keep that time table.

Should we expect a similar revenue recognition catch up for.

Two q. in in the third.

Jim Reid-Anderson: James, I genuinely cannot comment and say time it here or there. We don't know because those discussions are ongoing. The reality is that once we get to the point that we are comfortable, I promise you we'll communicate. Yes, if it's a positive decision, then we have the ability to record a catch-up value for that park. It's too early to say that right now, although discussions are ongoing and they seem very positive.

So James I I genuinely cannot comment and say you know time it here or there we don't know because those discussions are ongoing.

But you know the reality is that once we get to the point that we are comfortable I promise you will communicate and and yes. If it's positive decision then we have the ability to record a catch up.

Value too for that park, but it's too early to say that right now although discussions are ongoing and they seem very positive.

[Analyst]: Got it. I guess just lastly on the international front, maybe with the first China site, maybe an update on construction. I'm assuming the opening date is still on schedule there, but maybe just update us. I think there's a lot of investors or potential investors that aren't sure we'll ever get to that finish line. Maybe just a little bit of an update there.

James Hardiman: Got it. I guess just lastly on the international front, maybe with the first China site, maybe an update on construction. I'm assuming the opening date is still on schedule there, but maybe just update us. I think there's a lot of investors or potential investors that aren't sure we'll ever get to that finish line. Maybe just a little bit of an update there.

Got it and then I guess, just lastly on the international front may maybe with that.

The first China site.

Maybe an update on construction and and I'm, assuming the opening date.

It's still on schedule, there, but but maybe just update us I think there's a lot of.

Investors are potential investors that are that are sure we'll ever get to that finish line. So maybe just a little bit of.

Jim Reid-Anderson: Yeah, no, I'm happy to go through that. I can tell you that the parks that we have talked about, both in Haiyan and Chongqing, the construction has continued there. The timing that we had given you, I think Marshall referred to this as being on the Q4 call, those hold at this time. If there's ever an update, I promise you we will give you an update, but we're progressing at both of those parks.

Yeah, No I'm happy to go through that and I and I can tell you that the.

The parks that we have talked about both in high N. and strong Ching construction is continued there and the timing that we had given you I think martial refer to this as being on the fourth quarter colds those hold.

At this time, if there's ever an update I promise you. We will give you an update but we're progressing at both of those parks.

Okay. Thank you.

[Analyst]: Okay. Thank you.

James Hardiman: Okay. Thank you.

Jim Reid-Anderson: Thanks very much, James.

Thanks, very much James.

Your next question is from the line of Michael Fort with centrist.

Operator: Your next question is from the line of Michael Fortz with SunTrust.

Hey come on guys.

[Analyst]: Hey, good morning, guys.

Michael Fortz: Hey, good morning, guys.

Jim Reid-Anderson: Good morning.

Marshall Barber: Morning.

Good morning morning.

[Analyst]: Hey, Marshall, just clarification, housekeeping question, and I may have missed it. How much did you record in international licensing revenue during Q2?

Michael Fortz: Hey, Marshall, just clarification, housekeeping question, and I may have missed it. How much did you record in international licensing revenue during Q2?

Hey, martial just a clarification housekeeping question and I may have missed it what.

How much did you record in international licensing revenue during the quarter.

Marshall Barber: $20 million.

$20 million.

[Analyst]: It was $20 million, and that included the $7.5 settlement and I think the catch-up, as you referred to it, to James's question.

Michael Fortz: It was $20 million, and that included the $7.5 settlement and I think the catch-up, as you referred to it, to James's question.

It was 20 million in that included the seven and a half settlement and the.

I think the the ketchup as you refer to it to to James This question.

Marshall Barber: That's correct.

That's correct.

[Analyst]: Okay. Perfect. Just with regards to the Membership program, have you ever broken out or can you talk about give us a little context to maybe what percentage of your Membership activity are coming from upgrades of Season Pass versus people who may have never been part of the Active Pass program before?

Michael Fortz: Okay. Perfect. Just with regards to the Membership program, have you ever broken out or can you talk about give us a little context to maybe what percentage of your Membership activity are coming from upgrades of Season Pass versus people who may have never been part of the Active Pass program before?

Okay.

Perfect and it just with with regard to the membership program.

Have you ever broken out or can you talk about.

Give us a little context to me what percentage.

<unk> membership activity are coming from upgrades a season pass versus people, who may have never been part of the active patch program before.

Jim Reid-Anderson: I won't give you a number, Michael, but I can tell you that it is a fairly high proportion. We're really getting from a number of sources. We're getting Season Pass holders who are upgrading to memberships. We're also getting single-day visitors. Because of our ability to go after new potential members and Season Pass holders through our Wi-Fi program, we're actually finding new people that maybe would visit the park but never be registered for us to contact. It's coming from multiple sources. If you said single greatest source, it would probably be Season Pass holders.

Well I won't give you a a number my cold, but I can tell you that it is a a fairly high proportion were getting really getting from a number of sources were getting season pass holders who are upgrading to memberships. We're also getting single day visitors and because of our ability to.

Go after you know new potential members and season pass holders through R.Y. five.

Program, we were actually finding new people that maybe would visit of the part but never be registered for us to contact so it's coming from multiple sources, but if you said single greatest source it would probably be season pass holders.

[Analyst]: Okay. Thank you.

Michael Fortz: Okay. Thank you.

Okay. Thank you.

Jim Reid-Anderson: Thanks very much, Michael.

Thanks very much thank you.

Marshall Barber: Thank you.

Your next question is from the line of David Cats with the Jefferies.

Operator: Your next question is from the line of David Katz with Jefferies.

Marshall Barber: Morning, David.

More than David.

[Analyst]: Hi, good morning, everyone. Congrats on a solid quarter.

David Katz: Hi, good morning, everyone. Congrats on a solid quarter.

Hi, good morning, everyone, Oh, congratulations on a solid quarter.

Jim Reid-Anderson: Thanks, David.

Marshall Barber: Thank you.

Thanks.

[Analyst]: I know that we've maybe addressed this matter, but I just wanted to make sure I'm clear about it. When I read the release about Active Pass growth for the first six months and then I look at the Q1 release, I believe the Q1 indicated 5% growth and the six months indicated 2% growth, which kind of implies a direction in that Active Pass growth. Am I reading that correctly? How should I interpret that?

David Katz: I know that we've maybe addressed this matter, but I just wanted to make sure I'm clear about it. When I read the release about Active Pass growth for the first six months and then I look at the Q1 release, I believe the Q1 indicated 5% growth and the six months indicated 2% growth, which kind of implies a direction in that Active Pass growth. Am I reading that correctly? How should I interpret that?

I I, just I I know that we maybe address this matter, but I I just wanted to make sure.

Yeah, when I read the release about active pass.

For the first six months and then I look at the first quarter.

I believe the first quarter indicated five per cent growth and <unk>.

And indicated 2% growth.

Which kind of implies.

<unk> you know direction.

Active patch broke.

Reading that correctly, how should I interpret that.

Jim Reid-Anderson: Go ahead, Marshall.

Go ahead.

Marshall Barber: Yeah, you are reading that correctly. One of the things that Jim mentioned was that we've actually grown, had record quarters every quarter since 2014. We've done that by finding different ways to continue to grow what has really become a massive Season Pass and Membership base of 8 million people at the end of the year. Memberships is a way that we will continue to grow. You are reading it correctly. I think having a record.

Yeah. You are you are reading that correctly, you know what are the things that.

But that Jim mentioned was that we've actually grown ahead record corners every quarter. Since 2014, we've done that by finding different ways to continue to grow what is really become a massive a season pass and membership base of 8 million people at the end of the year and so memberships as away.

That we will continue to grow so but you are reading it correctly added.

Having a record.

Jim Reid-Anderson: Yeah, no, go ahead. Oh, go ahead. Let me clarify one thing, though, Marshall, because, David, I want to make sure that we understood what you said because you talked about the growth being over the end of the year, I think, but I may have misheard you. The growth is over the equivalent time period last year. Remember that the base of active pass holders does move as we go forward and changes over time. Marshall's right. It's an absolute record. Our comparison of 2% is to June of last year as well, not to December of 2018.

Well, one thing, though martial because David I want to make sure that.

We understood what you said because you talked about.

The the growth being over the end of the year I think but I may have missed <unk>. The the growth is over the equivalent time period last year.

So remember that the the the base of of you know active Passholders does move as we go forward and changes over time, so marshals right, it's an absolute record.

But our comparison of 2% is to June of last year as well not to December of of of 2080.

[Analyst]: Right. I think we're clear. Thank you. My second issue that I wanted to raise is just within operating expenses, I think in there was sort of one-time rebranding. I want to make sure that we're sort of treating the OpEx the right way going forward. Have you indicated to us how much the one-time rebranding was? We're just trying to sort of get to the run rate that we should be thinking about going forward.

David Katz: Right. I think we're clear. Thank you. My second issue that I wanted to raise is just within operating expenses, I think in there was sort of one-time rebranding. I want to make sure that we're sort of treating the OpEx the right way going forward. Have you indicated to us how much the one-time rebranding was? We're just trying to sort of get to the run rate that we should be thinking about going forward.

Right.

Hmm.

Thank you and it's my second issue.

It is just within operating expenses.

I think in there.

<unk>.

Sort of one time.

Branding.

And I want to make sure that we're sort of treating the affects the right way going forward.

Have you indicated to us how how much the one time rebranding.

And you know, we're just trying to sort of.

But we should be thinking about going forward.

Marshall Barber: Sure. Yeah, we have not broken out exactly what the rebranding is, but the cost increases were driven by the new parks, which included the rebranding. If you strip out the new parks, I think you can assume we'll be in line with inflation, which is where we have been year-to-date.

Sure Yeah, we have not broken out exactly what the rebranding is but the cost increases.

We're driven by the new parks, which included the rebranding. So if you strip out if history about the new parks.

Think you can do.

Assume will be in line with inflation, which is where we have been here today.

And and one last one if you don't mind, which is Jim I heard your commentary around.

[Analyst]: Got it. One last one, if you don't mind, which is, Jim, I heard your commentary around stock and stock value and so forth. Is it fair to ask the question about how you think about repurchasing your own stock relative to the investment opportunities that you have and how you see those two comparing with each other today?

David Katz: Got it. One last one, if you don't mind, which is, Jim, I heard your commentary around stock and stock value and so forth. Is it fair to ask the question about how you think about repurchasing your own stock relative to the investment opportunities that you have and how you see those two comparing with each other today?

Stock and stock value and so forth.

Is it fair to ask the question about how you think about repurchasing your own stock relative to the investment opportunities.

That you have and and how those too.

Those two comparing with each other today.

Yeah, I think that that's a really good question.

Jim Reid-Anderson: Yeah, I think that that's a really good question, David. You know that I am one of the largest personal shareholders in the company. I think I'm in the top five. I firmly believe in the ability for the company to grow consistently and for the share price to continue to grow. If you look at the company's position, it's fairly simple. We return all excess cash flow to shareholders. I've described this being in the form of growing dividends and share repurchases. In the last few years, we've basically returned nearly $3.7 billion to shareholders in the form of dividends and share buybacks. It's very clear that we believe in the potential for growth. You've also got to remember there's seasonality to this business. We tend to build most cash over the summer as the parks are open.

David and and you know that I am one of the largest personal shareholders in the company I think I'm I'm in the top five so I firmly believe in the ability for the company to grow consistently and for the share price to continue to grow.

But if you look at the the company's position, it's fairly simple we return all excess cash flow to shareholders. I've described this being in the form of a growing dividend and share repurchases.

In the last few years, we've basically you know retire nearly $3.7 billion.

To shareholders in the form of dividends and share buybacks. So it's very clear that we believe in the potential for growth.

But you've also got to remember this seasonality to this business. So we tend to build most cash.

Over the summer as the parks are open and then we spend most capital in the first half of the year.

Jim Reid-Anderson: We spend most capital in the first half of the year. We tend not to, if you look, unless there's some sort of special event, we tend not to repurchase shares in the first half of the year. We tend to do it in the second half. We'll continue to look for opportunities to repurchase shares using our strong cash flow and balance sheet as we go forward.

So we tend not to if you look on unless there's some sort of special event, we tend not to repost your shares in the first half of the year, we tend to do it in a second huh.

And we'll continue to look for opportunities to repurchase shares using our strong cash flow and balance sheet as we go forward.

Marshall Barber: Yeah. The only thing I'd add to that is, as we balance whether to do share repurchases or other acquisitions like we did last year, it's really about shareholder value. If we can get parks for a great value that we know that we can add synergies to, like we did with the last purchase that we did, then we'll obviously go after those parks. We'll never overpay. As you said, we always have our stock price, which we think is a great value as a backstop for excess cash.

Yeah, and the only thing I'd add to that is we balance whether to do share repurchases or other acquisitions like we did last year, it's really about shareholder value in if we can get it we can get parks for a great value that we know that we can add synergies too like we did with the last purchase that we did and will will obviously go after those parks.

But we'll never overpaid and as you said, we always have our stock price, which we think is a great value.

As a backstop for excess cash.

[Analyst]: Got it. Thank you and congrats. Thanks for taking my questions.

David Katz: Got it. Thank you and congrats. Thanks for taking my questions.

Thank you and congrats thanks for taking my questions. Thanks very much.

Jim Reid-Anderson: Thanks very much, David.

Marshall Barber: Thanks, David.

Your next question is on the line of Tyler between with a g. any capital markets.

Operator: Your next question is from the line of Tyler Batory with the G&E Capital Markets.

Marshall Barber: Morning, Tyler.

Oh Tyler.

[Analyst]: Hey, good morning, everyone. Thanks for taking my questions here. I wanted to ask about the acquisition parks, specifically Chicago and the Premier Parks. How are those performing versus your expectations when you did those transactions? Any color you can provide on what those parks are doing as far as contributing to Season Pass sales and memberships.

Tyler Batory: Hey, good morning, everyone. Thanks for taking my questions here. I wanted to ask about the acquisition parks, specifically Chicago and the Premier Parks. How are those performing versus your expectations when you did those transactions? Any color you can provide on what those parks are doing as far as contributing to Season Pass sales and memberships.

Hi, Good morning, everyone. Thanks for taking my question, Sir So I wanted to ask about the acquisition parks, specifically Chicago when the Premier parks.

How are those performing.

Versus your extra expectations. When you did those transactions and any color you can provide on what those parks are doing as far as contributing to season pass sales and memberships.

Marshall You go ahead and take this sure yeah I. We are very pleased now the the Chicago Park is is brand new so.

Jim Reid-Anderson: Marshall, you go ahead and take this.

Marshall Barber: Sure. Yeah, we are very pleased. Now, the Chicago Park is brand new, so we haven't really had enough time to do anything there, although we are selling upgrades to Chicago Park. In terms of the Premier Parks, I think I'd say that we're very pleased with how they finished up last year. We're also very pleased with how they're doing this year. We've had some rain in Buffalo. Even with that, we were able to grow for a comparable period in June for those parks. I think the other thing that Jim mentioned it in the script, but if you look at the June month, those parks grew in attendance, revenue, and EBITDA, which was the comparable period. If you look at the existing parks, they actually grew on a year-to-date basis in attendance, revenue, and EBITDA. International also grew in revenue and EBITDA.

We haven't really added you know enough time to.

Do anything there, although although we are selling upgrades to Chicago Park.

In terms of the Premier parks.

I think I'd say that we're very pleased with.

They finished up last year were also very pleased with how they're doing this year, we've had some rain in Buffalo.

But.

Even with that we were able to grow.

For comparable period in June for those parks.

You know I think I think the other thing.

Jim mentioned in the script, but.

You know the the if you look at the June month, those parks grew in attendance revenue and even.

Which is the comparable period, if you look at the existing parks.

That they actually grew up in a year today bases in attendance revenue and even to an international also grew in revenue and eat it too. So I think we we got a nice balance of growth in.

Marshall Barber: I think we got a nice balance of growth in all three of those areas.

In all three of those I want to add one more thing, which is Marshall reference some some whether in in Buffalo and it's really important to note that on days. When there is whether we do extremely well in other words on normal days, we do extremely well and I mentioned earlier that even with all of that we set records in the second quarter. So we're very proud not only of our existing parks.

Jim Reid-Anderson: I want to add one more thing, which is Marshall referenced some weather in Buffalo. It's really important to note that on days when there isn't weather, we do extremely well. In other words, on normal days, we do extremely well. I mentioned earlier that even with all of that, we've set records in Q2. We're very proud not only of our existing parks, the original ones, but the new parks that we added, Premier and Rockford, they're doing very well.

Original ones, but the new parts that we added premiere and Rockford, they're doing very well.

[Analyst]: Okay. Great. That's helpful. I wanted to ask if you have any updated thoughts on M&A, potential industry consolidation. Obviously, been a few deals out there since the last call. What do you think about the opportunity set that's out there?

Tyler Batory: Okay. Great. That's helpful. I wanted to ask if you have any updated thoughts on M&A, potential industry consolidation. Obviously, been a few deals out there since the last call. What do you think about the opportunity set that's out there?

Okay, Great. That's helpful. And then I wanted to ask if you have any thoughts on.

Potential industry consolidation you know obviously been a few deals out there since the last call. So wondering what you think about the opportunity set that's out there.

Jim Reid-Anderson: There are always opportunities out there. I think I mentioned in the prepared comments that we're looking at potential deals. These tend to be smaller deals involving single or a handful of parks together. We do that on an ongoing basis as a matter of course. With regard to bigger deals, we look at everything that comes up, but we are extremely disciplined about how we spend our shareholders' money. There have been several deals that we have walked away from because we have felt that they have been too expensive. We'll continue to do that and only make purchases that we think will really add long-term shareholder value.

But there are always opportunities out there.

I think I mentioned in my prepared comments that we're looking at a potential deals these tend to be smaller deals.

No involving single or or a handful of parks together. So we do that on an ongoing basis as a matter of course with regard to bigger deals you know we look at everything that comes up.

But we are extremely disciplined about how we spend our shareholders money.

And so you know there have been several deals that we have walked away from because we we have felt that they have been too expensive.

And we'll continue to do that and only make purchases that we think will really add long term shareholder value.

[Analyst]: Okay. Great. That's all from me. Thank you.

Tyler Batory: Okay. Great. That's all from me. Thank you.

Okay. That's all from me thank you.

Jim Reid-Anderson: Thanks, Tom.

Marshall Barber: Great. Thanks.

Thanks. Thanks.

Operator: Your next question is from the line of Tim Condor with Wells Fargo Securities.

Your next question is on the line of Tim Conned her with a wells Fargo Securities.

Jim Reid-Anderson: Hi, Tim.

Marshall Barber: Morning, Tim. Thank you. Good morning, gentlemen. A couple of just clarifications on China first. Broadly, when you look at China collectively, would you say the timeline overall has improved, stayed the same, or slipped a little since 90 days ago?

Marshall Barber: Morning, Tim.

I stand him.

Tim Conder: Thank you. Good morning, gentlemen. A couple of just clarifications on China first. Broadly, when you look at China collectively, would you say the timeline overall has improved, stayed the same, or slipped a little since 90 days ago?

Thank you good morning, gentlemen, a couple just clarification from China first so broadly you wouldn't look at trying to collectively would you say the timeline overall.

As improve stayed the same or slipped a little since 90 days ago.

Jim Reid-Anderson: I think the timeline that we described 180 days ago still holds right now, Tim, and same as it was 90 days ago. If anything changes, we will update you and all of our shareholders.

I think the timeline that we described 180 days ago still holds right now Tim and the same as it was 90 days ago and if anything changes.

We will update you and and all of our shareholders.

Marshall Barber: Okay. Okay. Within the international revenues, was anything recognized for Saudi Arabia during the quarter? Yes. Saudi Arabia is recognizing revenue as we've always done. If you think about the way that we recognize revenue in the pre-opening periods, it's largely a fixed amount of revenue that we spread over the time it takes to develop and build those parks. We are recording revenue with all parks on a quarterly basis that are in process. Okay. Okay. Jim or Marshall, whoever wants to take this, in relation to the cash taxes, you gave a little bit of commentary, Marshall, quite a bit, actually, in the preamble. Could you just remind us the cash tax amounts, 2019, 2020, 2021, that you expect to know? You guys have talked about that in conferences and so forth.

Tim Conder: Okay. Okay. Within the international revenues, was anything recognized for Saudi Arabia during the quarter?

Okay, Okay, and then within the international revenues <unk> was anything recognized for Saudi Arabia during the quarter.

Marshall Barber: Yes. Saudi Arabia is recognizing revenue as we've always done. If you think about the way that we recognize revenue in the pre-opening periods, it's largely a fixed amount of revenue that we spread over the time it takes to develop and build those parks. We are recording revenue with all parks on a quarterly basis that are in process.

Yes, so Saudi Arabia.

As we're recognizing revenue.

As we've we've always done so.

If you think about the way that these.

We recognized revenue in the Preopening periods, it's largely a fixed amount of revenue that we spread over.

The time it takes to develop and build those parks. So we are recording revenue.

With all parts on a quarterly basis that are in process.

Tim Conder: Okay. Okay. Jim or Marshall, whoever wants to take this, in relation to the cash taxes, you gave a little bit of commentary, Marshall, quite a bit, actually, in the preamble. Could you just remind us the cash tax amounts, 2019, 2020, 2021, that you expect to know? You guys have talked about that in conferences and so forth. Just maybe give us an update, remind us where those stand at this point.

Okay, Okay, and then a gym or Marshall whoever wants to take this in in relation to the to the cash taxes, you get a little bit of commentary martial quite a bit actually in the preamble, but could could you just remind us the cash tax amounts 19, 2021 that you expect to know <unk> you guys have talked about that in conferences and so forth that just maybe give us an update remind us war those were those stand at this point.

Marshall Barber: Just maybe give us an update, remind us where those stand at this point. Sure. 2019 will be very similar to 2018. It'll be $30 to $35 million. The same is true in 2020. In 2021, there'll be a lot of variables, but we'll start to grow in 2021. It could be, depending on earnings, up to $50 million or so. In 2024 is when we'll really become a full taxpayer. Okay. Okay. Gentlemen, back to any comments on, and you gave some color, and we appreciate that. Any color on the memberships as of June 30th as a percent of your total Active Pass Base and a comparable, maybe, amount from a year ago?

Marshall Barber: Sure. 2019 will be very similar to 2018. It'll be $30 to $35 million. The same is true in 2020. In 2021, there'll be a lot of variables, but we'll start to grow in 2021. It could be, depending on earnings, up to $50 million or so. In 2024 is when we'll really become a full taxpayer.

Sure. So 19 will be very similar to do that as an 18, it'll be $30 million to $35 million. The same is true in 2020.

In 2021, we'll have a there'll be a lot of variables, but we'll start to grow and 2021.

You know it could be.

Dependent on earnings up to $50 million or so but.

And then and then in 2020 fours when we're really become a full taxpayer.

Tim Conder: Okay. Okay. Gentlemen, back to any comments on, and you gave some color, and we appreciate that. Any color on the memberships as of June 30th as a percent of your total Active Pass Base and a comparable, maybe, amount from a year ago?

Okay. Okay.

And then a a gentleman back to the any any comments on then you gave some color and we appreciate that any any color on the memberships as of June 30th.

As a percent of your total active pass base and then it comparable maybe amount from a year ago.

Jim Reid-Anderson: Yeah. If you remember, Tim, we don't comment on the Active Pass Base totals until the end of the year. We'll be happy to do it then. What I can tell you is that it's been growing really, really nicely. As I said, double-digit growth overall, shifting percentage of the mix in favor of Memberships. We're really, really happy with that growth.

Yeah, <unk>, we don't if you remember Tim we don't comment on the active off base totals until the end of the year and we you know we'll be happy to do it then but what I can tell you is that it it's been growing.

Really really nicely as as I said.

Double digit growth overall shifting percentage of the mixed in favor of membership. So we're really really happy with with that growth.

Marshall Barber: Okay. Lastly, gentlemen, the growth in the memberships that you talked about and was asked about earlier, historically, and I think trying to think of this for one of your competitors also, has that been impacted to a degree by park visitation, meaning if Q2 has some weather impacts, does that impact the rate at which members sign up? I know they can do it online also, but is that a factor that could have potentially had some impact here?

Tim Conder: Okay. Lastly, gentlemen, the growth in the memberships that you talked about and was asked about earlier, historically, and I think trying to think of this for one of your competitors also, has that been impacted to a degree by park visitation, meaning if Q2 has some weather impacts, does that impact the rate at which members sign up? I know they can do it online also, but is that a factor that could have potentially had some impact here?

Okay.

And lastly, gentlemen.

The the growth in the memberships that you talked about and was asked about earlier.

Historically, <unk> and trying to think of this for when your competitors also has that been impacted to it agreed by part visitation, meaning if a teacher who has some weather impacts does that impact the the the rate at which members sign up I know they can do it on line also but is that a factor that could potentially had some impact here.

Jim Reid-Anderson: Yeah. It definitely, Tim, can have an impact. If there's really bad weather, it can affect you for a period of time. As we've always said, over a period of a year or so, it tends to even out, even though it has been certainly a rough 36 months, as Marshall described. We're still at record levels, not only in terms of the Active Pass Base, but we've never seen levels like we have today of member sign-up. They're really powering ahead and doing very, very well. I also mentioned in the script the ability that we now have to sign people up in park as well as online. Even if somebody is not able to be at the park for whatever reason, we can still sign them up online.

Yeah. It definitely 10 can have an impact if you know if there's you know really bad weather. It can affect you for a period of time, but as we've always said over a period of a year or so it tends to even out even though you know it has been a certainly a rough 36 months as Marshall described we're still at record levels not only in terms of the active pass base, but we've never seen levels like we have today of men.

Member sign up there, they're really powering ahead and doing very very well and I also mentioned in the script the ability that we now have to sign people up in park as well as online. So even if somebody is not able to be at the park for whatever reason, we can still sign them up online so.

Jim Reid-Anderson: While it may have some sort of dampening effect if weather is bad, we're certainly, I think, powering through that.

While it may have some sort of dampening a fact that the weather is bad we're certainly I think powering through that.

Marshall Barber: Okay. Thank you, gentlemen.

Tim Conder: Okay. Thank you, gentlemen.

Okay. Thank you Joe.

Jim Reid-Anderson: Thanks very much, Tim.

Marshall Barber: Thank you.

Thanks very much.

Your next question based on the line of Alec smell ratio with <unk>.

Operator: Your next question is from the line of Alex Morosia with Berenberg.

Jim Reid-Anderson: Hi, Alex.

Hi allegory.

Marshall Barber: Morning, Alex.

[Analyst]: Hey, good morning. Thanks for taking my questions. Just a quick follow-up on some of these Season Pass descriptions you've been talking about. Are you seeing any success in the ancillary Season Passes such as the Season Flash Passes or the Picture Pass right now?

Alex Morosia: Hey, good morning. Thanks for taking my questions. Just a quick follow-up on some of these Season Pass descriptions you've been talking about. Are you seeing any success in the ancillary Season Passes such as the Season Flash Passes or the Picture Pass right now?

Hey, good morning, Thanks for taking my questions just a quick follow up on.

Some of these season pass.

Description she'd been talking about three seeing any success and the ancillary season passes such as the secret flash classes or the picture cash right now.

Jim Reid-Anderson: Yeah. I should really have commented about that because we are seeing success there. The programs that we have in place target multiple areas for getting Season Passes and actually Memberships. The increases there have been very strong too.

Yeah, I should I should really have commented about that because we are seeing success. There the programs that we have in place.

Target multiple areas for getting season passes and actually memberships and so the the increase is there have been very strong too.

Okay, great. Thanks, and then just one on the balance sheet you mentioned.

[Analyst]: Okay. Great. Thanks. Then just one on the balance sheet. You mentioned during the comments earlier that you're currently unconcerned with the debt right now, given that a lot of it matures in 5+ years. Are you planning to deploy any cash towards repayment in the near future?

Alex Morosia: Okay. Great. Thanks. Then just one on the balance sheet. You mentioned during the comments earlier that you're currently unconcerned with the debt right now, given that a lot of it matures in 5+ years. Are you planning to deploy any cash towards repayment in the near future?

During the the comments earlier that you're currently unconcerned with the debt right now given that a lot of it matures and five plus years, but are you planning to deploy any cash towards repayment near future.

Well, our our plan has been like <unk> like it's been over the last several years is earnings grow the the leverage will come down so right now other than the amortization of the term loan which we have.

Marshall Barber: Well, our plan has been like it's been over the last several years. As earnings grow, the leverage will come down. Right now, other than the amortization of the term loan, which we have, we don't plan on any other paydowns in the future.

We don't plan on any other pay downs in the future.

[Analyst]: Okay. Got it. Thank you.

Alex Morosia: Okay. Got it. Thank you.

Okay got it thank you.

Jim Reid-Anderson: Thanks, Alex.

Thanks I like.

Your next question I found a line of Chris <unk> with Goldman Sachs.

Operator: Your next question is from the line of Chris Prickle with Goldman Sachs.

Jim Reid-Anderson: Hi, Chris.

Marshall Barber: Morning, Chris.

Hi, Christa gross.

[Analyst]: Good morning, guys. Thanks so much for taking the questions.

Chris Prykull: Good morning, guys. Thanks so much for taking the questions.

The morning, guys. Thanks, so much for taking the question.

Marshall Barber: You bet.

But.

[Analyst]: On admissions per capita, how should we think about the growth of that line item going forward, given the success that you're having in upselling memberships? I guess all else equal, Q3, you don't have as many incremental operating days from acquisitions, really just Magic Waters, I guess. Would that number be sort of more similar to what you actually are seeing from a price increase standpoint?

Chris Prykull: On admissions per capita, how should we think about the growth of that line item going forward, given the success that you're having in upselling memberships? I guess all else equal, Q3, you don't have as many incremental operating days from acquisitions, really just Magic Waters, I guess. Would that number be sort of more similar to what you actually are seeing from a price increase standpoint?

On on admission per capita.

How should we think about the growth of that line item going forward given the success that you're having it up selling memberships you know I guess all else equal.

Three Q. you don't have as many incremental operating days from from you know acquisitions really just magic waters, I guess and so you know would that number be sort of more similar to what you actually are seeing from a price increase standpoint.

Yeah that that's true it is it's much more comparable in the third quarter.

Marshall Barber: Yeah, that's true. It's much more comparable in Q3. There is always a park mix that will impact it. If it's really hot and water parks do better, that'll impact it. Yeah, generally, it's comparable in Q3, and we should see some growth.

There is always a park mix that will impacted so if if.

If it's really hot and Waterparks do better that'll impacted but but yeah generally.

It's comparable in Q3, and we should see some growth I would add to that that over time, you should see in acceleration above that.

Jim Reid-Anderson: I would add to that that over time, you should see an acceleration above that growth that Marshall talks about. If you think about the mix that we've got, we've got several factors that work. First of all, you don't have the new parks' comparison impacting it the same way as you have traditionally. Per capita will be normalized as we go into Q3 and forward. Then over time, as memberships become a much bigger proportion of our overall base, they are at higher price points than traditional Season Passes. So we should see a shift in our favor from a per capita perspective over a period of time.

Growth that Marshall talked about it you know if you think about the mix that we've got we've got several factors that well first of all you don't have the new parks.

You know <unk>.

Comparison impacting it the same way as you have traditionally so perhaps we'll be normalized as we go into Q3 and forward and then over time as memberships become a much bigger proportion of our overall base.

They are at higher price points than traditional season passes and so you know we should see a shift in our favor from a <unk> perspective over a period of time.

[Analyst]: Got it. That's helpful. Just going back to the Active Pass Base for a second, I don't mean to harp on it. I think it was up 2% year-over-year as of 30 June 2019. It was up 8% last year, 10% the year before that. Obviously, each of those growth rates on top of a record base, to your point. How should we think about your ability to grow the Active Pass Base going forward? What's a reasonable rate? What are the key levers? Is it really just going to grow with population growth from here? Do you look at that metric as a leading indicator for attendance internally?

Chris Prykull: Got it. That's helpful. Just going back to the Active Pass Base for a second, I don't mean to harp on it. I think it was up 2% year-over-year as of 30 June 2019. It was up 8% last year, 10% the year before that. Obviously, each of those growth rates on top of a record base, to your point. How should we think about your ability to grow the Active Pass Base going forward? What's a reasonable rate? What are the key levers? Is it really just going to grow with population growth from here? Do you look at that metric as a leading indicator for attendance internally?

God. That's helpful. And then you know just going back to the active pass space for a second I don't I don't mean to harp on it.

I think it was up 2% year over year as of 638% last year, 10% the year before that.

Obviously each of those growth rates on top of a record based here point, how should we think about your ability to grow the active pass base going forward of what what what's a reasonable rate what are the key levers is it really just going to grow with population growth from here.

And then do you look at that metric as a as a leading indicator for attendance internally.

Jim Reid-Anderson: It's a very good metric. I think you know we're the only company that actually publishes our Active Pass Base. Annually, we describe what it is. At the end of last year, it was 8 million. I can assure you that there isn't a regional theme park company that has the sort of Active Pass Base that we have. It is growing nicely. Even with all of that, when you look at penetration, we are only in the position where 40% of our unique visitors have a pass. I look at it, and I say, Over time, we will consistently and aggressively go after growing the Active Pass Base. It's a big number, but there's tremendous opportunity to be able to grow it. My perspective is you will see growth there. It will vary.

So it's it's a very good metric and I think you know we are the only company that actually publishes are active pass base and annually. We we describe what it is at the end of last year was 8 million.

I can assure you that there isn't a regional theme park company that has sort of active Pos base that we have.

And it is growing nicely and yet even with all of that.

When you look at penetration.

We are only in the position where 40% of our unique visitors have upon.

So I look at it and I say overtime, we will consistently and aggressively go after growing the active pop space, It's a big number, but there's tremendous opportunity to be able to grow it.

So you know my my perspective is you will see growth there. It will very it depends on you know the initiatives that we have in place, but we anticipate growth I just won't give you a number.

Jim Reid-Anderson: It depends on the initiatives that we have in place. We anticipate growth. I just won't give you a specific number. As you know, we won't provide the guidance, Chris.

You know specific number as you know we won't provide the guidance Chris.

[Analyst]: Fair enough. Worth trying. How many trips per year are Season Pass and members at right now? How has that trended over time? Has it been up or down?

Chris Prykull: Fair enough. Worth trying. How many trips per year are Season Pass and members at right now? How has that trended over time? Has it been up or down?

Fair enough worth trying.

How many how many trips per year.

Our season pass and members that right now and and how is that trend it over time hasn't been up or down.

It's our our season pass and members visit three to four times are members actually visit more and actually the hired to your members visit more often than the lower tier members.

Marshall Barber: Our Season Pass and members visit three to four times. Our members actually visit more. Actually, the higher-tier members visit more often than the lower-tier members. If they get a Dining Pass, they visit even more. In general, it's been three to four times that's been consistent. It's been up a point or down a point different years. That's generally what we see is three to four times.

If they get a dining pass they visit even more.

But in general it's been three to four time, that's the times that's been consistent it's been up a point or down a point you know different years, but that's generally what we see is three and we really haven't seen much of a change in terms of the number you know the number of visits as Marshall said.

Jim Reid-Anderson: We really haven't seen much of a change in terms of the number of visits, as Marshall said.

[Analyst]: Got it. maybe just lastly, dividend growth. How are you all thinking about that going from here?

Chris Prykull: Got it. maybe just lastly, dividend growth. How are you all thinking about that going from here?

Got it and it may be just lastly, Ah dividend growth, how how are you all thinking about that going from here.

Jim Reid-Anderson: Chris, we will be growing the dividend, and we'll do it consistently over the next few years. I'm not going to give you a number and say, Here's what it's going to be, because obviously, that's decided annually by our board in meetings. A strong, sustainable cash dividend is a really important part of the value proposition that we offer shareholders. We will grow that every year just as we have done successfully for the past eight years.

So Chris we will be growing the dividends I will do it consistently you know over the next few years I'm not going to give you a number and say here's what it's going to be because obviously, that's decided annually by our board in in meetings, but strong sustainable cash dividend.

It is a really important part of the value proposition that we offer shareholders and we will grow that every year just as we have done successfully for the past eight years.

[Analyst]: Great to hear. Thanks so much. Good luck the rest of the summer.

Chris Prykull: Great to hear. Thanks so much. Good luck the rest of the summer.

Great to hear thanks, so much and good luck the rest of the summer.

Jim Reid-Anderson: Thanks very much.

Marshall Barber: Thanks, Chris.

Thanks for you Chris.

Operator: Your next question is from the line of Paul Golding with McClary Capital.

Operator: Your next question is from the line of Paul Golding with Macquarie Capital.

Your next question me from the line of Paul Golding with Maclary capitals.

Jim Reid-Anderson: Hi, Paul.

Marshall Barber: Good morning, Paul.

Hi, Paul waterfall.

[Analyst]: Hi. Good morning. Thanks for taking my questions. My first question is around loyalty. I was wondering if there was anything you could say to size, incremental monetization, or the opportunity with the loyalty program for Membership members.

Paul Golding: Hi. Good morning. Thanks for taking my questions. My first question is around loyalty. I was wondering if there was anything you could say to size, incremental monetization, or the opportunity with the loyalty program for Membership members.

Good morning, Thanks for taking my question.

My first question is around loyalty I was wondering if there was anything you could say to size incremental modernization or the opportunity with the the loyalty program for past for membership numbers.

Jim Reid-Anderson: Yeah, that's a really good question, Paul. I described earlier that we already have 750,000 people who signed up. By the way, we don't force people to take loyalty. They sign up for it. It's been a very positive response. It's an exclusive benefit only for members. It rewards the people who are most loyal and who voluntarily sign up. They earn the majority of their points by spending money in the park. There really is a goal to monetize loyalty. They're rewarded for behaviors that we want to encourage. It's not just spending money. It's visiting the park, going on rides, participating in contests, doing surveys, things that really engage guests. They're in a position where it's quite attractive for them because they can redeem points for food, souvenirs, park tickets, and one-of-a-kind experiences.

Yeah. That's a really good question poll I described earlier that we already have 750000 people, who signed up by the way, we don't force people to take loyalty they sign up for it and so it's been a very positive response, it's an exclusive.

Benefit only for members.

And it rewards the people who are most loyal and who you know voluntarily sign up.

They under the majority of their points by spending money in the park. So there really is a a goal to monetize.

Loyalty and they're rewarded for behaviors that we want to encourage so it's not just spending money is visiting the park going on rides.

Participating in contests doing surveys things that really engage gas.

And they're in a position where it's quite attractive for them because they can redeem points for food souvenirs Park tickets from one of a kind experiences and these are relatively low cost to us, but really valued highly by members.

Jim Reid-Anderson: These are relatively low-cost to us but really valued highly by members. In addition, we get information about members and over time about people who are related to the members or friends of members. We encourage them to join up in the loyalty program and also to become a member. We're in a position where the growth has been very strong and building every day. We think the potential to monetize it is very strong.

In addition, you know we get information about members and about over time about people who are related to the members or friends of members.

And we encourage them to you know to to join up in the loyalty program. It will become a member so we're in a position where the growth has been very strong and building every day and we think the potential to monetize is very strong.

Marshall Barber: Yeah. I think the other thing I'd add to that is if you're a member prior to February 2018, you don't have the ability to get loyalty unless you upgrade into the new membership program. We've now made it very easy on the app. It's really just a one-click upgrade into the new membership program. They commit to another 12 months. They also get to enjoy the loyalty. It's been a nice incentive to upgrade from the old membership program into the new one as well.

Yeah, I think the other thing I'd add to that is.

If you're a member prior to February of 2018, you don't have the ability to get loyalty unless you upgrade into the new membership program. So we've now made it very easy on the AP. So it's really just a a one click upgrade into the new.

Membership program.

They commit to another 12 months and then they also get to enjoy the loyalty. So it's it's been a nice.

Incentive to upgrade from the old membership program into the new one as well.

[Analyst]: The difference in the upgrade is you're saying going from traditional Season Pass to Membership or a prior version of the same Membership program?

And the difference in the upgrade is.

Paul Golding: The difference in the upgrade is you're saying going from traditional Season Pass to Membership or a prior version of the same Membership program?

Saying going for traditional season pass to membership or a prior version of the same membership program <unk>. Yeah. Prior version of the same membership because we know if we can get them into the new membership they commit to 12 months and then they have the opportunity to upgrade into the platinum the diamond in the Diamond desire <unk> right. Okay.

Marshall Barber: Yeah, a prior version of the same membership because we know if we can get them into the new membership, they commit to 12 months, and then they have the opportunity to upgrade into the platinum, the Diamond, and the Diamond Elite.

Jim Reid-Anderson: The higher tiers.

Marshall Barber: Right.

[Analyst]: I see. I see. Great. Well, that's helpful. My last question is around Project 750. Just keeping it in sight, I was hoping that you could give some color around if there's a main focus or lever to pull in the coming periods to get there if you were to focus on one strategic goal.

Paul Golding: I see. I see. Great. Well, that's helpful. My last question is around Project 750. Just keeping it in sight, I was hoping that you could give some color around if there's a main focus or lever to pull in the coming periods to get there if you were to focus on one strategic goal.

I see.

Great Oh, that's that's helpful. And then my my last question is around project 757, just keeping it inside I was hoping that you could give some color around if there's a main focus or whatever to pull in the coming period to get there. If you were to if you were to focus on one strategic goal.

Jim Reid-Anderson: I would say it's not going to be a focus on one strategic goal, I don't think, really, Paul, because we have five initiatives, five major initiatives. They all have tremendous potential. If you made me fourth-rank them, I would definitely say the whole opportunity to drive attendance through membership and season pass penetration will probably be top of my list, followed by pricing, ticket yields, and then in-park potential through culinary and other programs, especially membership programs, and then the North American expansion strategy and international. Those five will drive the success we get in going after Project 750. As I said earlier, the entire organization, in terms of full-time staff, are shareholders. They really want very badly to be able to achieve this goal.

I I would say, it's not going to be a focus on one strategic goal.

I don't think really because pull because we are we have five initiatives five major initiative there. They all have tremendous potential, but if you maybe fourth rank them I would definitely say the whole opportunity to drive attendance through membership.

And season pass penetration will probably be top of my list followed by pricing ticket yields and then in park.

Potential through parliamentary and other programs, especially membership programs.

And then the North American expansion strategy and international those five well drive.

The you know the success, we get in going off to project 750.

The entire as I said earlier, the entire organization in terms of fulltime stuff, our shareholders and they really want very badly to be able to achieve this goal.

[Analyst]: Great. Thanks so much. I appreciate it.

Paul Golding: Great. Thanks so much. I appreciate it.

Great. Thanks, so much appreciate it thank you.

Jim Reid-Anderson: Thank you.

Marshall Barber: Thank you.

Thank you.

Your final question is from the line of <unk>.

Operator: Your final question is from the line of Ryan Sundy with William Blair.

Marshall Barber: Morning, Ryan.

<unk> yeah, thanks, taking a question.

[Analyst]: Hey. Good morning, Richard. Morning, Ryan. Yeah. Thanks for taking my question. Again, I'll end here on one last active pass-based question. Could you maybe talk about how the sales cycles line up between Season Passes and memberships? Because it feels like Season Passes are incented to be sold earlier before the season starts. I would think membership maybe happens closer to the date of visitation. Just wondering if there's maybe a misalignment of timing there, and maybe that's working towards kind of a lower pass-based growth number earlier in the year.

Ryan Sundby: Hey. Good morning, Richard. Morning, Ryan. Yeah. Thanks for taking my question. Again, I'll end here on one last active pass-based question. Could you maybe talk about how the sales cycles line up between Season Passes and memberships? Because it feels like Season Passes are incented to be sold earlier before the season starts. I would think membership maybe happens closer to the date of visitation. Just wondering if there's maybe a misalignment of timing there, and maybe that's working towards kind of a lower pass-based growth number earlier in the year.

Just <unk>.

<unk> again I'll end here on one that's actually pass based question.

Could you maybe talk about how the cell cycles wind up between two can passes and memberships because it it feels like Susan passes are intended to be sold earlier before the season starts.

And I would think membership maybe happens closer to the data visitation. So just wondering if there's a maybe a mis alignment of timing there and maybe that that's.

You know working towards her lover pass based growth younger earlier in the year.

Marshall Barber: Right. The Season Pass, you're right. Because we actually increase price throughout the year, the Season Pass incentive is to buy now. From a Membership perspective, we're working to sell those people a Membership as well. In terms of where the big sales are, it's really the incentive, if you think about it, because if you buy it in May, June, July, if you buy a Membership, you get 365 days, whereas if you buy a Season Pass, you just get to the end of the season. The incentive to switch is really higher in the summer months than it is in the lower months. We've actually seen and I think we talked about it in Q3 and Q4. We've seen nice growth and transition from Season Pass into Memberships in all quarters.

Right. So the season pass you're right, we because we actually increase prize throughout the year season pass incentive is to buy now.

We still for membership perspective, we like we're we're working to sell those people a membership as well, but in terms of where the big sales are it's really the incentive if you think about it because.

If you buy it in May June July if you buy a membership you get 365 days, whereas if you buy a season pass you just get to the end of the season. So the incentive to switch is really higher in the summer months.

That it is in the in the lower month, but we've actually seen it I think we we talked about a two three and before we see nice growth in transition from season pass.

India memberships in all corners, but but just in terms of the the natural <unk> you know.

Marshall Barber: Just in terms of the natural cadence, there is a little bit of a difference. It's summer for Memberships, and the incentive would be more in Season Pass.

There is a little bit of a difference it's it's summer for memberships and instead of would be more in season pass certain I would I would add on top of that that we have.

Jim Reid-Anderson: Ryan, I would add on top of that that we have a team that is dedicated to looking at sales, obviously, and marketing. There is a calendar that is very clearly laid out to optimize timing on how we sell Membership, Season Pass, Single-Day Tickets. For example, coming up in about a month, we have a flash sale which focuses on Season Passes and making sure that we sell a lot of Season Passes in advance of next season. We have the same sort of thing for Membership. We have it sometimes for Single-Day Tickets. That is a calendar that's laid out and goes throughout the year and targets optimizing how we sell. That has traditionally been very successful and continues to be.

You know a team that is dedicated to looking at at sales obviously in marketing and there is a calendar that is very clearly laid out to optimize timing.

How we sell membership season pass single day tickets. So for example.

Coming up in about a month, we have a flash sale, which focuses on season passes and making sure that we sell a lot of season passes in advance of next season.

And we have the same sort of thing for membership we have it for sometimes for for a single day tickets and that as a calendar. This laid out and goes throughout the year and targets optimizing how we sell.

And and that has traditionally been very successful and continues to be.

Oh, Great and then just last and China. So next quarter, we're kind of back to normal right for that.

[Analyst]: Okay. Great. Just lastly on China. Next quarter, we're kind of back to normal, right, for the three parts that are kind of approved. If that's right, Marshall, just given kind of the catch-up stuff and the Dubai payment, can you just tell us what's a good number to kind of use for that going forward?

Ryan Sundby: Okay. Great. Just lastly on China. Next quarter, we're kind of back to normal, right, for the three parts that are kind of approved. If that's right, Marshall, just given kind of the catch-up stuff and the Dubai payment, can you just tell us what's a good number to kind of use for that going forward?

Three parks that are gonna approved and.

And they have pets right.

Marshall just given that kind of a catch up stuff and that to buy payment key just talk.

What's it what's a good number to use for that going forward.

Well, we're not going to give guidance for what the revenue number is what I, what I will say is that there is.

Marshall Barber: Well, we're not going to give guidance for what the revenue number is. What I will say is that it is a normal revenue recognition for the Saudi Park, the four parks in Chongqing, and then the three parks in Hai An.

No it is.

A normal revenue recognition for the Saudi Park.

The four parks in Chunking, and then the three parks in a high and.

Jim Reid-Anderson: It's eight parks. You remember from my comments that we're still waiting on Nanjing for the remaining four parks. Eight parks total, not three, as you had mentioned there.

So it's eight eight parks and you remember from from my comments that we're still waiting on Nanjing for the remaining four parks. So eight parts total not not three as you had mentioned there.

[Analyst]: Yeah. Sorry. I meant the three sites.

Ryan Sundby: Yeah. Sorry. I meant the three sites.

That's where I'm at three sites three sites, yes, yeah, yeah, yeah. Okay.

Jim Reid-Anderson: 3 sites. Yes.

[Analyst]: Yeah. Yeah. Yeah.

Ryan Sundby: Yeah. Yeah. Yeah.

Jim Reid-Anderson: Got it.

[Analyst]: Okay. Okay. That helps. Thank you.

Ryan Sundby: Okay. Okay. That helps. Thank you.

Okay.

Jim Reid-Anderson: Thanks very much, Ryan.

Thank you.

Marshall Barber: Thank you.

Thanks, very much right you.

There are no further questions are there any closing remarks.

Operator: There are no further questions. Are there any closing remarks?

Jim Reid-Anderson: There are, Natalia. Thank you. Our 2019 season is off to a good start. We are looking forward to delivering our 10th consecutive record year. Thank you very much for your continued support of Six Flags. We hope to see you in one of our exciting parks very soon. Take care. Natalia, that ends our call. Yep.

There are <unk>. Thank you.

So our 2019 season is off to a good start and we are looking forward to delivering our 10th consecutive record year. Thank you very much for your continued support a six flags, we hope to see you in one of our exciting parks very soon.

Take care.

Oh.

Taleo that ends our call yes.

Operator: Thank you. This concludes today's Six Flags quarterly earnings conference call. Thank you for your participation. You may now disconnect.

Thank you. This concludes today's six flags quarterly earnings conference call. Thank you for your participation you may now disconnect.

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