Oct 26, 2016
Executives
Nancy Krejsa - SVP, IR & Corporate Communications John Duffey - President & CEO Marshall Barber - CFO
Analysts
Barton Crockett - FBR Capital Markets Ian Zaffino - Oppenheimer Tim Conder - Wells Fargo James Hardiman - Wedbush Securities Ben Chaiken - Credit Suisse Scott Hamann - KeyBanc Capital Markets Robert Kirkpatrick - Cardinal Capital Markets
Operator
Good morning, ladies and gentlemen, welcome to the Six Flags Third Quarter 2016 Earnings Conference Call. My name is Tanya and I will be your conference operator today.
During the presentation, all lines will be in a listen-only mode. After the speakers’ remarks, we will conduct a question-and-answer session.
[Operator Instructions] Thank you. I will now turn the call over to Nancy Krejsa, Senior Vice President of Investor Relations.
Thank you. Please go ahead.
Nancy Krejsa
Good morning, and welcome to our third quarter call. With me today are John Duffey, President and CEO of Six Flags, and Marshall Barber, our Chief Financial Officer.
We will begin the call with prepared comments and then open the call to your questions. Our comments will include forward-looking statements within the meaning of the federal securities laws.
These statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in such statements, and the company undertakes no obligation to update or revise these statements. In addition, on the call, we will discuss non-GAAP financial measures.
Investors can find both a detailed discussion of business risks and reconciliations of non-GAAP financial measures to GAAP financial measures in the company’s annual reports, quarterly reports, or other forms filed or furnished with the SEC. At this time I'm going to turn the call over to John.
John Duffey
Well, thank you, Nancy. Good morning and welcome to our call.
I'm pleased to report that year-to-date our attendance, revenue and EBITDA and modified EBITDA less CapEx are all at record levels as the company continues to close in on another record year in 2016, which will be our seventh in a row. I am very proud of our team for this performance.
While we had a strong start to the year, we did face a challenging third quarter due to unusually hot weather in July in the Midwestern and Eastern states, along with rainy weather in the first half of August on the East Coast and cool temperatures in Texas. The unusual weather patterns negatively impacted attendance during many of our peak summer days.
However, when the weather was normal, we saw healthy double-digit growth in attendance. Unfortunately, many of the normal weather days were later in the quarter when schools were back in session and the strong attendance days during that time period, could not fully offset the attendance losses we experienced earlier in the quarter.
As a result, our attendance declined 2% in the quarter all of this which was attributable to single day visitors. Our season pass strategy provided stability to our business as multi-visit pass holders continue to visit our parks even on a more increment weather days.
The higher mix of season pass holder attendance did put downward pressure on guest spending per capita which declined 1% in the quarter. Given the changes in weather pattern from year-to-year and because operating days can shift from quarter-to-quarter, we have consistently said that the most appropriate way to measure our performance is over a 12-month period.
On an LTM basis, our revenue increased $67 million, or 5%, and our adjusted EBITDA increased $28 million, or $.60. Six Flags is a great value to our guests, who are increasingly looking for fun and different kinds of experiences with their family and friends.
And this is a key reason why our value for the money ratings improved for the sixth year in a row, and reached a new all-time high in 2016. Continued success in delivering exceptional guest experiences will allow us to further grow our attendance base, while implementing modest price increases year-after-year.
An important part of delighting our guests is to innovation. Earlier this year, we became the first theme park company in North America to integrate virtual reality technology into our roller coasters.
And the guest feedback has been phenomenal. Both our Superman and our fighter pilot stimulations have received great reviews and we look forward to rolling out a robust pipeline of new VR content over the coming quarters.
We continue to believe that VR is a game changer for our business. It will allow us to deliver exciting new guest experiences and expand our attendance base with minimal capital requirements, as we utilize our existing coaster infrastructure.
Over the last six years, the fourth quarter has become an increasingly important quarter for Six Flags. We have seen tremendous growth due to our ongoing investments in Fright Fest and Holiday in the Park, two of our most popular events of the year.
This year is no different. You may recall that we are introducing Holiday in the Park at two new parks this year, at Six Flags St.
Louis and Six Flags America outside of Washington DC. Bringing the total number of Holiday in the Park at the other seven parks -- excuse me, parks offering this special event to nine.
We also leave we continue to grow Holiday in the Park at the other seven parks. In addition, our international licensing business brings increasingly stability and consistency to our financial performance along with an opportunity for a significant long-term revenue profit, and cash flow growth.
I am pleased to share that when we kicked off the sale of our 2017 season passes in early September, we sold a record high number of passes. Our active pass base as of September 30 was our highest ever, up a healthy 15% over prior year.
Sales of our 2017 all season dining passes were also up significantly, with our highest penetration ever. As a result of the sales success on both these products, deferred revenue was up $32 million, or 28%, at the end of the quarter.
We feel confident in our strategy and our ability to achieve Project 600 in 2017. And as you saw from our press release this morning, the company has set a new long-term aspirational goal of achieving $750 million of modified EBITDA by 2020, illustrating our view that the long-term growth potential of this business remains strong.
So I’ll talk a little bit more about this long-term target at the end of the call. But, now, I’m going to ask Marshall to share some more details on our financial results.
Marshall?
Marshall Barber
Thank you, John, and good morning to everyone on the call. As John mentioned, it was a tough quarter with weather challenges in both July and August.
However, we were pleased that our active spaces season pass holders and members helped us mitigate some of the weather impacts, and we were encouraged by our double-digit attendance gains when weather normalized. Our ability to manage through a quarter such as this reinforces that our strategy is right on target and we'll continue to drive increasing shareholder value over the long term.
Total revenue in the quarter was down $18 million, or 3% as a result of the 2% decline in attendance, a 4% decline in admissions revenue and a 3% decline in park revenue, partially offset by growth and international licensing revenue of $4 dollars. Foreign currency rate translation associated with our parks in Mexico and Canada negatively impacted revenue by $3 million.
On a guest spending per capita basis, we were down 1%, primarily due to a higher mix of season pass attendance and a higher mix of attendance at our water parks during the extreme heat in July. Cash operating expenses for the quarter were down $10 million or 5%.
On a year to date basis, revenue was up $34 million, or 3%, driven primarily by a 2% increase in attendance, a 170% increase in international licensing revenues and a 3% growth in sponsorship revenues. Guest spending per capita was flat to prior year due to higher pricing across all ticket types, offset by both the strong mix of season pass attendance and a negative impact from foreign translation.
If you adjust for changes in foreign exchange rate, year-to-date revenue increased 4% and guest spending per capita increased 1%. Cash operating expenses were up 3 % through the first nine months of the year, driven primarily by increases in wages, along with incremental costs associated with the successful growth of our international licensing program.
In the first nine months, we generated $253 million of adjusted free cash flow and paid $161 million in dividends. We also repurchased $120 million of our stock using cash from operations, along with some of the cash raised from June 2016 debt offerings.
I am comfortable with our capital structure and believe that our policy to return all of our excess cash flow through our shareholders through dividends and share repurchases, continues to be the best return on investment for our shareholders. We have plenty of room to grow the dividend over time as our earnings and cash flow growth.
Net debt, as of September 30, was $1.4 billion and our net leverage is conservative at 2.9 times. We continue to monitor the credit environment and our board regularly evaluate a potential increase in leverage in order to enhance our share repurchase program, especially given our strong cash flow attributes, significant growth opportunities, the highly recurring nature of our revenue base and the robust credit market.
Our LTM modified EBITDA margins continues to set the standard in industry at 41% for our modified EBITDA less CapEx margin of 31% with several hundred basis points higher than any other player in the industry. And we believe we can continue to improve our modified EBITDA margin over the long-term.
Deferred revenue was a record high $148 million at the end of September, an increase of 28%. This growth resulted primarily from a successful launch of our 2017 season pass in All-Season Dining Program noted earlier.
As John mentioned -- I'm sorry, as mentioned in this morning's press release, we've began to accrue stock-based compensation expense in Q3 relating to projects to counter it. Our decision was based on our belief in the positive outlook for the company, the strength of our year-to-date attendance, especially during normal weather days, the highly successful launch of our 2017 season pass and All-Season Dining Programs in September, our ability to continue raising ticket prices while simultaneously improving guest ratings on value for the money, and the ongoing growth opportunity from our international licensing business.
The third quarter retroactive charge was $86 million and we anticipate ongoing stock based compensation charges through Q1 of 2018, although at a lower quarterly level. In summary, while inclement weather impacted us in the third quarter, our year-to-date and last 12 month's financial performance are at record levels and we are well positioned to deliver yet another record year in 2016.
We're also very encouraged by early indicators for 2017. Now I would turn the call back over to John.
John?
John Duffey
Well, thank you Marshall. Our growth prospects have never been better and we are poised to deliver another record-breaking year in 2016.
I believe this for several reasons. First, we experienced strong attendance growth in Q3 when the weather was normal, indicating that the softness in attendance was due to weather.
Second, we are very excited about our Fright Fest and Holiday in the Park events, both extremely popular with our guests. As I mentioned, we will have two additional parks this year that will be opened for Holiday in the Park.
And third, we have a record number of season pass holders and members that will want to come and visit our parks. As we look to 2017, our planning and execution is aligned to achieve our long-term target of $600 million of modified EBITDA.
Our confidence in achieving this goal is due to the following. First, we had a very successful early sale for our 2017 season passes over Labor Day weekend, and our active pass base is at a record high up 15 % over prior year.
Second, our marketing, pricing and operational plans have been developed and our team is ready to achieve new heights. We continue to believe that we have tremendous pricing opportunities and will be taking prices three 3% to 5% in 2017.
Third, we have an incredible lineup of new capital attractions coming in 2017 that have already been well received by our guests. It is filled with the type of innovative rides, attractions, and signature events that you have come to expect from Six Flags, and includes exciting news in every single part.
We are introducing our next generation of Justice League Battle for Metropolis, our award winning multi-sensory dark ride at three of our parks. Three other parks will receive the Joker and innovative 4D Free Fly Coaster that features two beyond vertical free falls.
And in keeping with our innovation leadership, we're introducing the first-of-its-kind Uphill Water Coaster in the United States at Six Flags Fiesta Texas. We will continue to enhance our existing VR experiences through new technology with a focus on improved graphics, new sound elements, and interactive gaming features that allow our guests to compete with each other on the VR rides.
Finally, we will reopen the water parks in Oaxtepec, Mexico which will be our 19th park in Q1 2017. The new park will expand our capacity and given the proximity of the water park to Six Flags Mexico, it should also help us sell more season passes.
Fourth, we continue to invest in our special events such as Fright Fest and Holiday in the Park. In early 2017, we will be testing a new Mardi Gras concept at Six Flags Fiesta Texas and Six Flags Mexico.
These events provide yet another opportunity to expand our season and give our guests even more reasons to visit our parks and purchase the season pass. And lastly, although I cannot share specific details, we continue to speak with a number of promising potential partners that could contribute to our international licensing growth.
As we look to the longer-term, I personally have never been more excited and confident about our future. Given the success and confidence, we're launching Project 750, a new aspirational target of $750 million of modified EBITDA by 2020.
This target represents a cumulative annual growth rate of more than 8%. We believe it is important for both investors and our employees to keep their eyes set on long-term stretch goals while continue to deliver excellent results in the near-term.
We have strong track record of delivering on our targets, and we look forward to wrapping up Project 600 in 2017, and then quickly turning our sites to Project 750. The four key areas that have driven our growth and success over the last seven years will also be the keys to achieving this new long-term target.
The first area is increasing ticket deals. We continue to see ticket pricing as our biggest growth opportunity, we serve the top-10 DMAs in the United States residents has higher income than the national average, yet are under-priced compared to other forms of entertainment and others in the industry.
The second area of strategic growth is increasing sales of season pass and memberships. We have been able to grow our active pass base to its highest level ever while still growing our unique visitor base.
We have ample capacity to continue growing attendance and our goal is to do that by up selling guests to our highest priced tickets, our season passes and memberships. Our active base represents our most loyal and profitable guests who visit our parks multiple times each year.
The third area of growth is in-park sales, especially culinary revenue. We have -- we continue to have significant growth opportunities in penetration of sales within our parks, especially for products aimed at our large and growing asset pass base.
Our all-season dining program has been highly successful. Is a great value for our guests and a high margin revenue stream for us.
Penetration of this product is still low and it has the capacity to grow significantly as we increase both our active pass base and our penetration of the base. The fourth key growth driver is international licensing.
Our international strategy continues to build momentum with both our existing and potential partners. These deals are high margin for Six Flags and require no capital investment our part.
We already have agreements in place for parks in Dubai, China and Vietnam and we continue to see new partners for licensing our brand in other markets, and believe there is strong interest to license and build more parks around the world. Six Flags is deep premier brand in the global regional theme parks space and the ultimate growth and yield story.
We provide family entertainment that is affordable, in any economic environment and we consistently deliver guest excellence, innovative products and attractions. And the highest industry growth rates in attendance, revenue, EBITDA, EBITDA les CapEx.
Our capital allocation remains the same as it has for the past seven years. We return all excess cash flow to shareholders through a balanced approach of dividends and share repurchases.
First and foremost, we have a 4.4 % dividend yield that has doubled the S&P 500. We have grown our dividend every year for the last six years and we are committed to continue growing it every year going forward.
We will use the balance of our excess cash for share repurchases as we believe that our stock provides a tremendous value. With a strong recurring cash flows a discipline capital allocation strategy and numerous opportunities to significantly increase our earnings, I believe, there is no better place to invest than Six Flags.
So, Operator, at this point, could you please open the call for any questions.
Operator
Thanks you. [Operator Instructions] And your first question comes from the line of Barton Crockett with FBR Capital Markets.
Barton Crockett
Okay. Thanks for taking the question.
And a couple if I could. One is you called out the weather as a headwind in the quarter.
I think we understand kind of anecdotally what you are saying. But is there any way to quantify how much of a weather headwind there was?
John Duffey
Thanks Barton, it's great to hear from you. As it relates to the weather, obviously we saw some issues in a number of our products associated with the weather.
As you think about the impact, it was extremely hot in late July in the Midwestern, Eastern states and we saw a lot of rain in other parts of the country. And as I said before, once we actually saw some normal weather, we did see some very good attendance growth.
Weather tends to even out over the entire year. Unfortunately, we saw some adverse weather in the six weeks of our busiest time of the year.
And we're not going to actually quantify the actual impacts on tenants associated with the weather, but I can show you that the decrease that you saw in the quarter was solely due to weather. And it really was as we mentioned, associated with one-day ticket.
We still see a large number of our season pass holders come out to our parks. As you can well imagine whenever you get adverse weather, it really impacts more on your one-day tickets
Barton Crockett
Okay. And thanks for the clarification.
I was curious about the accounting on the -- and the equity tied to the new goal in 2020. Should we expect that that's going to be a similar award of a couple of million shares of stock?
Can you clarify what that would be?
John Duffey
Good morning, Barton. Yes, the Project 750 is 900,000 shares and we will start to record it once it becomes probable.
Barton Crockett
Okay. All right.
And then…
Marshall Barber
So -- and Bart, just to add to that, our goal is always to have complete alignment between our employees and shareholders. And if you look at all of our prior projects that we put out there, many of which that we have achieved, they have, we believe, driven significant shareholder value.
Since 2010, for example, our market cap has grown over $4 billion. We've paid out in excess of $900 million in dividends, so near eight-fold return on investments for our shareholders.
And we believe that that success really has been driven by a lot of these projects that we've put in place. So Project 750, the number of shares -- actually it's significantly below what you have seen in the past and what you saw for Project 600.
But we believe it is a motivational factor for all of our employees to hit this target. And Barton, if we hit this target, it will generate another 2.5 billion in shareholder value.
Barton Crockett
Okay. That's great.
I'll leave it there. Thanks a lot.
Operator
Thank you. Your next question comes from the line of Ian Zaffino with Oppenheimer.
Ian Zaffino
Great. Thank you very much.
John did you say that season pass attendance was up in the quarter for this weather, or did you say didn’t fall as much as daily…?
John Duffey
Well, actually Ian -- and good morning. Great to hear from you.
I actually did not say whether season pass was up or down for the quarter. But, in fact, if you look at it season pass was up for the quarter.
And I think that really talks to our strategy around season pass that even when you can get -- have some inclement weather, like we saw, that you can still get attendance from the season pass holders.
Ian Zaffino
Okay.
John Duffey
Yeah. So really that attendance was really from one-day ticket holders.
Ian Zaffino
Okay. So I don't know if you remember way back in 2011, maybe that might be the closest kind of weather quarter than you had this year.
But in that quarter, you did see, I guess a larger attendance this decline but I guess it wouldn’t kind of prove your point, having more season passes today which is kind of mitigate the attendance decline. But I guess also in 2011 you had positive pricing, was there something different that we need to sort of take into account here as we shift to the business model more of the season passes?
Or how should we just think about that in the moving parts there?
John Duffey
Ian, I'm sure you're referring to the per caps. And we have been taking -- we have been taking pricing up on every single one of our ticket category, so season pass membership, one day ticket across the board.
Unfortunately, what we saw was some softness in the per caps associated really with the mix. We had a very, very high season pass mix.
We talked about in the past that we tend to see a little bit higher season pass mix of our total attendance because of that increase in active pass base. I think that was amplified in this quarter because of the fact that really the drop that we saw and the softness that we saw in attendance was all related to one-day ticket holders.
Ian Zaffino
Okay. That's really helpful.
Thank you very much.
Operator
Thank you. Your next question comes from line of Tim Conder with Wells Fargo.
Tim Conder
Thank you. John, did you say that attendance was up double-digit post Labor Day or I guess maybe just extend that?
Any comment post Labor Day in the quarter or if you would carried that onto what you're seeing in fourth quarter here year-to-date or quarter-to-date, I'm sorry?
John Duffey
Tim, actually the weather impact that we saw was really the first sixth weeks of the quarter. And so it was about mid-August where the weather is started to turn around.
So since mid August to the end of the quarter is where we saw the double-digit increase in attendance. But as I mentioned earlier, unfortunately, that's when a lot of schools go back into session, a lot of our parks moved to we can only operations.
So even with that very, very strong attendance gains that we saw -- we weren't able to offset that softness that we saw in the beginning of the quarter.
Tim Conder
Okay.
John Duffey
Tim, as you know I -- we don't talk about guidance. What I would say I think one of the things that make us feel good about our ability to finish the year strong and our ability to hit our targets in the future is that we have seen a very good start to Fright Fest.
And I’m just going to leave it at that.
Tim Conder
Okay, okay. A couple other things, John, you talked about the low penetration of the season dining pass relative to your total active pass base.
Any quantification you can put on that? Again, season dining passes as a percent of the total active days.
And then also, any color what you're seeing year-to-date year-over-year in spending between a member versus a traditional season pass type customer spending on an impart basis?
John Duffey
Well, I'll take the second part of the question first, Tim. And that is, we really don't see any difference between spending pattern between season pass holders and member, that’s fairly consistent.
As it relates to the all season dining program that is a program that we put in place just a few years ago, but it's been tremendously successful. We saw very good increase in our penetration for 2016.
And, as I mentioned, we are off to a great start in terms of our All-Season Dining passes for 2017. I think you'll see that reflected in that deferred revenue increase.
But, we -- for competitive reasons, we don't talk about specifics in terms of the actual penetration, but we feel really, really good, not only about where we stand today on penetration, but I think the future growth opportunities.
Tim Conder
Okay. And then, maybe a couple more close to housekeeping items.
Marshall I don't know if you want to take these or John. Just the absolute numbers on your international revenue, the licensing revenue and then the cost, and then as we look to 2017, any changes in the covenants related to your builder basket?
And therefore, what would be distributable in the ability to distribute dividends or opportunistic share repurchase. And then finally, I know it's the government so we'll leave it at that, but any update on timing of ruling from the IRS on your private letter ruling request?
Marshall Barber
Good morning, Tim. So I'll take your first -- well, I think I'll take them in the order that you gave it.
Our international revenue for the quarter was $8 million and our costs were approximately 1 million. We are excited over the fact that the growth has been great in Q3 on international revenue, as it has been all year.
In terms of the builder baskets, the -- in terms of -- the question I guess was on the amount of share repurchase, is that what it was? The share repurchase we've got $120 million to date.
And we will be looking to do another I guess finish out the year between $200 and $230 million. And then the final question on the REIT.
There is no update really at this point on the REIT. As you know we have NOLs that we anticipate paying minimal cash tax through 2018.
And for others who may not be aware, we filed a private letter ruling request from the IRS and we are waiting the response. But we have not gotten a ruling to this point.
We do remain confident about the outcome though.
John Duffey
Hey, Tim. Just to add a little bit more on the international.
As we talked about, we feel very, very strongly that we'll be able to continue to get more and more deals. As I mentioned earlier, we have many discussions that are ongoing.
We've got three announcements certainly out there. But we think that we continue to built the number of deals that we have out there.
So we feel really, really good about international. And when you think about that international, we've talked about it being, not only an area where it requires zero capital on our park, but it has very high margins, margins in the area of approximately 80 %.
So as we continue to add more and more of these deals, absolutely that will be margin accretive. We're excited not only about the opportunities on the revenue side, but on the profitability side as well.
Tim Conder
Great. Thank you, gentlemen for all the color.
Operator
Thank you. Your next question comes from the line of James Hardiman with Wedbush Securities.
James Hardiman
Hi, good morning. Thanks for taking my call.
So the $600 million target for next year, and obviously you don't give guidance, but that's just close to guidance as we would normally get with one year to go. It would seem to suggest a nice acceleration from here.
By my math you're going to need double-digit EBITDA growth to get to that $600 million next year. I really appreciate the commentary on the price increase I think you mentioned 3% to 5 % price increase as we think about next year.
I was hoping you could help us put that into context. I don't think that's a number you that you normally give, but is that a larger than normal price increase?
And then, I'm assuming that's a gross number and over the last few years obviously you have been hurt by this mix issue as more people get seasons passes. Any way to think about sort of a net per cap number or maybe just think about is the mix impact going to be less than it's been?
How should we think about that?
Marshall Barber
Well, let me start on your question, particularly around Project 600, and what we need to do to really achieve that goal. James, as you mentioned, we don’t provide guidance, but let me talk a little bit about why we feel confident that we can get to 600 million of EBITDA in 2017.
And it really starts with the same drivers that have really grown our business over the last several years. And it will continue into next year.
So it will be that focus on pricing that you talked about but also up, we believe that we have the ability to continue to get season pass and membership penetration. We've had a great start already with our Active base being up 15%.
In-park, we feel very good about our expansion of our in-park opportunities, particularly as it relates to all season dining. Our special events, Fright Fest, Holiday in the Park, and we will have two additional parks this year.
But we will be expanding those parks as well as all of our parks in the future and then, the international that I talked about. Our feeling that with what we're seeing the number of discussions that we have ongoing, that to our belief that we will continue to land more and more deals.
As its -- and quite honestly James, I will also say normalized weather, right? We saw some softness in our attendance this year that was unplanned.
It was due to abnormal weather. And when we look at every single one of those days by park, where we had adverse weather, we can pinpoint it to weather and where we didn't have weather, we saw a very good attendance growth.
So our belief is obviously, with some more normalized weather next year that we will get some of that attendance back. As it relates to per caps, the softness that we seen in per caps and the downward pressure has really been around the success of our season pass strategy.
And quite honestly, as long as we continue to get that success, it’s going to continue to put downward pressure on those per caps. But I can assure you that as we look to all of our -- it's really a mix issue, James.
As we look to our per caps on a specific ticket type basis, every single one of those is going up. So I'd love to say that our per caps will increase in 2016, but if we continue to be successful on our season pass strategy, it's going to put some downward pressure on those per caps.
James Hardiman
Okay. That's helpful.
And then maybe an update on the Mexico Water Park, when is that slated to open? And having not been here in a while in terms of opening up a new park, how should we think about that ramp?
Obviously, it’s going to be a positive to attendance? Is it going to be EBITDA positive, but maybe dilutive to margins, I would assume?
How should we think about that dynamics?
John Duffey
Well, James, we're very excited about the water park in Mexico on for a number of reasons. It's actually going to open up in February of 2017.
So we're very excited about that. And we're excited for a couple of reasons.
First is, we believe that this will be a state-of-the-art water park that's located in a great area in Mexico and will drive a lot of local attendance. But we also believe with the proximity to our theme park in Mexico, and what we've seen in other parks where we have water parks located nearby, we think that there's a huge benefit for season pass and combo passes.
So, we -- our goal Jim -- James, is to -- this will be a creative in 2017 in its first year. One of the beauties of this is that it’s requires a relatively low amount of capital when you think about it.
If you were to start a water park from scratch, you're talking about potentially $100 million plus to build a water park. We're going to invest $15 million to $18 million in this park.
So we will get an extremely good return from this.
James Hardiman
Okay. That's helpful.
But basically we should be assuming that since it's a water park, it's a negative to per caps but that it's accretive to EBITDA, or that it's additive to EBITDA, but probably a negative to EBITDA margins, is that all fair to say?
Marshall Barber
No. No.
Actually, our water parks have extremely high margins, but actually better margins then the theme parks. So, one is it will be an increase to EBITDA, two, it will be accretive to our EBITDA margins.
It will, obviously, be lower on the per cap side because our water parks have lower per caps in the theme parks.
James Hardiman
That’s extremely helpful. And then just last clarification, Marshall, when you talk to -- when we were talking about the REIT situation.
I think you made the comment that you remain confident about the outcome; I was hoping you could expand on that a little bit? I think investors are generally sort of assuming that that's less likely than not.
How should -- help us handicap that? It seems like you guys feel pretty good that you’ll be able to get that establish?
John Duffey
Yeah, James, we have not heard anything negative from the IRS in terms of the outcome. So, the reason we filed to the private letter ruling is because we were confident that we had a strong position and we still feel that way.
Marshall Barber
James, unfortunately, this is, obviously as you know it’s something that’s outside of our control. And we are awaiting their response.
We’re not sure -- we don’t want to speculate as to the timing of the potential outcome, but as Marshall said, we remain confident about the outcome.
James Hardiman
Very helpful. Thanks, guys.
John Duffey
Thank you.
Operator
Thank you. Your next question comes from the line of Ben Chaiken with Credit Suisse.
Ben Chaiken
Hey, guys.
John Duffey
Good morning, Ben.
Ben Chaiken
Hey, good morning. Could you remind us -- is the early stock comp, is that for confidence in Project 600 or is that for expectations of hitting it earlier than expected?
John Duffey
So, we are accruing as if we were headed at the end of 2016 -- 2017, I’m sorry.
Ben Chaiken
Okay. Got it.
John Duffey
So, on time.
Ben Chaiken
Okay. And then for international, how do you think about that in terms of the new goal and the contribution there?
Any color would be great even if it's just the timeline of when you think those new projects are going to open?
John Duffey
Yeah. As you look to both Project 600 and 750, obviously, international will be a component of achieving that goal.
And we’re not going to talk about specifics in terms of how many deals that would take. But, as I said, we feel very, very good about our ability to continue to not only to grow the revenue associated with our existing deals, but continue to grow the number of deals.
So, it will be a factor in achieving our goals.
Ben Chaiken
Okay, more survey for 750 and opening up like of the full-time operations of the Park and where this would be on like some type of run rate?
John Duffey
The parks that we have announced if you recall, the first park is -- will not be open until 2019. So it will be obviously it’s incremental driver as we think about 2020.
But it will not be significant.
Ben Chaiken
Okay, that's really helpful. And then the rationale for the stock comp of 900,000 versus and it was roughly 2.4 million was that -- I guess any more color on how you guys thought about deciding on that number?
Is just -- do you think that stocks will be higher or what is the?
John Duffey
Yeah as we looked at its been -- it was we wanted to make sure that we had a project that would align our employees with the shareholders. We feel that -- that is the right number to be able to motivate our folks.
As we look at the share value creation, I mentioned 2.5 billion obviously some of that will be shared with the employees. But we thought that was the right amount as we looked forward in terms of effectively motivates our employees.
Ben Chaiken
Okay that's helpful. And then last quick one just the new water park in Mexico do you think that taps into a new customer base to sale season pass?
Or is that just is it too close to the other location? That it more suggesting enhancing its value, so it’s helping sale season pass but is like a new customer I guess it’s a…
John Duffey
Well, I believe it does open up a new customer. Not only -- a new customer base in terms of located within I would say the Mexico City market where our theme park is but also that new customer base is located down towards the water park as well.
So, I think it does a number of things. I think it increases the attendance base that we can attract and it will migrate more people from one-day ticket over to season passes because it gives them even more reason to come to the parks.
Ben Chaiken
That's really helpful, thanks a lot.
Operator
Thank you. Your next question comes from the line of Scott Hamann of KeyBanc Capital Markets.
Scott Hamann
Thanks good morning. Hey John, just in terms of…
John Duffey
Morning…
Scott Hamann
Great. Thanks.
Just following up on -- on Ben's question about new audience, can you -- can you talk about the growth you seen in unique visitors this year maybe how that's trended versus prior year?
John Duffey
Yes. We have seen a increase in unique visitation and again, the unique visitation would be if you just assume, you take our season pass holder and assume that they are equivalent to one.
We have seen this year an increase in the unique visitation which actually I think speaks a lot to the fact of our whole strategy, when that is still the case even when we saw a decline in the number of one-day tickets because of the weather in the third quarter even with that we’re still up in unique visitation.
Scott Hamann
Okay, great. And then in terms of the operating days for 2016, what was the variance versus 2015 and especially in the fourth quarter, what should be the gain in operating days for this year versus last year?
John Duffey
So the operating days from year-to-date basis for 2016 is about the same as it was last year. Looking into Q4, it's going to be very similar and we will finish the year very similar except for the addition of the Holiday in the Park in St.
Louis and the park outside of Washington. That's going to be about roughly 40 days of additional operating days.
Scott Hamann
Okay, perfect. And I guess maybe just finally.
In terms of the performance of the parks with the weather of volatility, can you give us a few of those -- the parks that were all performers and a few of the parks that were relative underperformers?
John Duffey
Look, Scott, we don’t give specifics around the parks in terms of their actual performance. What I’ll refer back to what we said in terms of the weather.
We saw rain in the Midwest, we saw heat and rain in the East, and we did see some rain as well in Texas. So probably the only parks that I would say that we had normal weather where the California parks with the exception of some astrictive extreme heat in LA in late July.
So but for most part, California was normal as well as Mexico. And I think that’s and I talked about the fact that on the days where we saw normal weather, we saw a nice increases in attendance.
And also in the parks that were less impacted by weather have more normal weather. We did see very, very nice attendance growth.
Scott Hamann
Okay. And then just one more question on operating days.
As you look into 2017 are there any nuances that we should be aware of when we’re doing our models?
John Duffey
Really the only thing that you would need to think about is the Easter shifts in Q2 in 2017; it's on April 16 versus 2016 when it was on March 27. So that will cause a shift out of Q1 and into Q2 and we will provide a little more color on that later.
Marshall Barber
But as you think of -- you can think of total operating days, '16 versus '17 very similar.
John Duffey
Right.
Scott Hamann
So there won't be any incremental holiday in the park days next year then?
John Duffey
We have not announced anything at this point, Scott.
Scott Hamann
Roger that, thanks.
Operator
Thank you. [Operator Instructions] And your next question comes from the line of Robert Kirkpatrick with Cardinal Capital Markets.
John Duffey
Good morning Rob.
Robert Kirkpatrick
Good morning. Hi John.
Under what circumstances would you enter into the construction of a new park in the United States?
John Duffey
So honestly Rob, we really have no plans to do any construction of new parks in the United States. If you look at all of the markets they are really covered by existing parks.
And as a matter of fact I think the last park that was actually built in the United States was the Hard Rock Park on the East Coast. And that actually has been shut down.
So we believe with all of the markets covered, we don’t see anyone. And that's one of the things that we talked about in terms of why this is such a great business to invest in because of the high barriers to entry.
We don't see anyone really building brand-new theme parks in the United States. And that's why we believe that the growth opportunity of having this brand, the Six Flags brands to be able to take that overseas is really just a, a significant growth driver.
Robert Kirkpatrick
And therefore licensing your name for someone else would not be a consideration either?
John Duffey
We will look at it every opportunity that may arise. So I wouldn't say that's totally out of the question, but at this point it is highly unlikely.
Robert Kirkpatrick
Great. Thank you so much and congratulation on continuing to progress towards your various project goals.
John Duffey
Thanks Rob.
Marshall Barber
Great. Thanks Rob.
Operator
Thank you. At this time, there are no further questions.
I will return the floor to management for closing remarks.
Marshall Barber
Thank you, Tonya. So we hope you can come visit one of our parks soon.
This coming weekend is the last weekend of our biggest and scariest Fright Fest even ever. We have added a dozens of new haunted mazes, Halloween themes, live shows and hundreds of goggles roam in our parks.
Our very popular Holiday in the Park winter wonderland event kicks off in mid-November and runs through the first week in January, so nine of our parks will be open for this event including Six Flags St. Louis and Six Flags America and Washington DC having it for the first time ever.
With millions of holiday lights, some of the largest Christmas trees in the U.S. HIP is an event that you and your kids should not miss.
So finally before we sign off, I'd like to share one more item with you. It is with mixed emotions that I share that Nancy Krejsa has made a personal decision to retire at the end of February 2017.
Now, I've work with Nancy for over 20 years. And I can honestly say that she is the best in the business.
Most of you know Nancy and I hope you join me in thanking her for her tremendous contribution to the company over the last six-year and wishing her all the best in her retirement. Effective immediately, Steve Patel will manage all of our Investor Relations activities.
Nancy will work by his side supporting the transition through the end of February. She has been with Six Flags for four year as our Treasurer and Head of International Business Development.
She will remain Treasurer of the company and transition his international responsibilities to others on the international team has she assumes the Investor Relations responsibility. Many of you have already met Steve and I know you will enjoy working with him.
So in closing, I want to reiterate that this team believes in and is committed to our long-term strategy of creating fun, thrilling memories for our guest, innovating new rides, services, and technology, and building shareholder value. Thank you for the time and take care.
Operator
Thank you for your participation in today’s Six Flags third quarter 2016 earnings conference call. You may now disconnect.