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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good morning ladies and gentlemen. Welcome to the Six Flags' Q4 Full Year 2017 Earnings Conference Call. My name is Regina and I will be your operator for today's call. 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]
I would now turn the call over to Steve Purtell, Senior Vice President, Investor Relations.
Good morning and welcome to our fourth quarter 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 and the company undertakes no obligation to update or revise these statements.
In addition, on the call, we will discuss non-GAAP financial measures. Investors can find both a detailed discussion of business risks and reconciliations of non-GAAP financial measures to GAAP financial measures in the company's annual reports, quarterly reports or other forms filed or furnished with the SEC.
At this time, I will turn the call over to Jim.
Thank you, Steve and good morning everyone and welcome to our call. We finished the year with a very strong financial performance, growing fourth quarter revenue 7% and modified and adjusted EBITDA 16%, making 2017 our eighth consecutive year -- record year with $1.4 billion of full year revenue.
I'm very proud of our outstanding team members who overcame unprecedented natural events to deliver record revenue and modified EBITDA for both the fourth quarter and full year.
We were able to mitigate impacts throughout the year from hurricanes, earthquakes, massive wildfires, and record Arctic-like weather by remaining committed to our pricing strategy, further expanding and leveraging our Active Pass Base and effectively managing costs. We also made significant progress to advance our international licensing and water park programs in 2017, showing that our five growth initiatives are firing on all cylinders.
We were able to increase ticket prices by mid-single digits during the year, while at the same time increasing our value for money raising to new all-time highs. In fact, our fourth quarter revenue growth was driven primarily by a 9% increase in admission revenue per cap, demonstrating the continued success of our pricing strategy.
Our Active Pass Base, which represents the total number of guests who have a season pass or who are enrolled in the company's membership program, was up 10% over prior year end. This significantly growing group of loyal guests creates a huge recurring revenue stream for us, positioning us well for the 2018 operating season and as clearly demonstrated in 2017, providing a hedge against inclement weather events.
Our all-season dining program continues to gain penetration and grow our lucrative culinary sales. In-park revenue per capita grew by 5% in the fourth quarter, mainly due to increased food sales.
International licensing continues to gain momentum as revenue for the year exceeded $38 million, representing a growth rate of 69%. Since our last earnings call, we have announced three new parks in China, all of which will be in addition to our revenue, profit, and cash flow in 2018.
We also have a number of high potential partnership deals that we are currently working on and we expect to continue announcing new and exciting international and park developments in 2018. This licensing revenue is also recurring, further helping to diversify our sources of revenue and make our business less seasonal.
We continue to leverage our structural scale advantages to drive operational efficiencies and generate by far the highest modified EBITDA less CapEx margin in the theme park industry. We believe modified EBITDA less CapEx margin is an excellent metric to evaluate industry performance and demonstrate the strength of our operations.
In January, we announced that Six Flags Great Adventure will become the world's first solar powered park. I'm proud to say that we will soon be announcing that both our California parks will also become solar powered, bringing the total to three. In addition to benefiting the environment, the project will generate an average annual cost savings of $1 million per park from lower electric bills, truly a win-win all round.
We are delighted to extend our innovation leadership into the environmental arena as we seek productive ways to improve our margins and will look to extend this initiative to our other parks.
As you can tell, I'm very excited about the outlook for our company. Our strategy remains laser-focused on being the premier global regional theme park operator and we are really nicely positioned for the 2018 season.
Marshall is now going to share a few more details on our financial results. Marshall?
Thank you, Jim and good morning everyone. We are very pleased with our revenue growth and profitability in the fourth quarter. I will start with a discussion of our fourth quarter performance and then provide details for the full year 2017.
Revenue for the quarter was a record $257 million, an increase of $17 million or 7%. This is driven by a $9 million increase in international licensing revenue, a 5% increase in admissions revenue, and a 2% increase in in-park revenue.
Attendance in the fourth quarter was adversely impacted by two earthquakes in Mexico, wildfires in California, and bone-chilling cold weather over the Christmas holidays in most of our markets. These conditions resulted in a 3% decline in attendance.
In Mexico, schools placed a moratorium on field trips due to potentially unsafe conditions and lost school days, and our new water park closed for several months to undergo repairs.
In California, wildfires caused evacuations and poor air quality in the counties surrounding both our parks. Finally, during late December, a blanket of Arctic air spanned across the Central and Eastern United States and fueled one of the coldest periods on record for this time of year.
While these events impacted our parks in the short-term, they do did affect the underlying progress on our growth initiatives, and we are encouraged by the fact that our fourth quarter attendance grew meaningfully on non-weather impacted days.
Despite the attendance decline, we grew revenue in the quarter through higher per capita guest spending and international licensing revenue. Guest spending per capita increased $2.51 or 7%. Admissions per capita increased 9% as a result of our strategic pricing initiatives. And despite the growth in the mix of season pass attendance, which puts downward pressure on per guest, in-park per capita spending increased 5%. This resulted from new culinary offerings for Holiday in the Park and our successful all-season dining program.
We are also laser focused on maintaining efficient operations and we effectively limited increases in cash operating and SG&A expenses in the quarter to $5 million or 4%. This was despite increased investments in Fright Fest and Holiday in the Park events, including Six Flags New England for the first time and expenses related to our two new water parks, including our new water park in Mexico that reopened in December after completing repairs.
As a result of higher per capita spending and increase in high margin international licensing revenue and strong cost control, our modified EBITDA margin was up 242 basis points in the quarter compared to prior year. Modified and adjusted EBITDA for the quarter was at $87 million, a $12 million or 16% increase over the prior year quarter.
Moving to full year performance, attendance grew to a 16-year high, 30.4 million guests, an increase of 313,000 or 1%. Total revenue for the year increased $40 million or 3% over 2016, driven by increased ticket pricing, a $16 million increase in international licensing revenue, and increased attendance related to our two new water parks. Admissions revenue was up $26 million or 4%, and in-park revenue was up $3 million or 1%.
We're increasing pricing across all ticket types and encouraging our guests to spend more in our parks. Despite the higher proportion of season pass to membership attendance, which increased to 63% of total attendance in 2007 [ph] versus 60% in 2016, guest spending per capita increased $0.54 or 1%.
Cash operating SG&A expenses were up only 4% in 2017 despite state-mandated minimum wage hikes, incremental investments we made, opened two new water parks, and investments made to continue building out the team overseeing our growing high-margin international licensing business.
We're able to leverage our scale and cost infrastructure to offset these increases and our 2017 modified EBITDA margin of 41% remains an industry high. Full year diluted GAAP earnings per share in 2017 was $3.09 versus $1.25 in 2016.
Earnings per share increased due to reduction in stock-based compensation expense, a one-time upward adjustment as a result of tax reform, and continued growth in operating earnings. We achieved adjusted EBITDA of $519 million, an increase of $13 million or 2% over 2016.
Total capital spending in 2017 was $135 million, net of insurance proceeds, which included the remaining half of the $18 million incremental capital investment related to our new water park in Mexico.
Going forward, we're committed to maintaining capital spending at 9% of revenue. As a result of our early momentum of season pass and annual membership sales, deferred revenue was a year-end record high of $142 million, representing an $18 million or 15% increase over prior year.
As Jim mentioned, we have recently announced three new Six Flags parks coming to China, two kids' parks and an adventure park. These new products are smaller than our traditional theme parks and collectively should be treated as one large park when considering their future EBITDA contribution.
You may recall that our guidance has been that each larger park should contribute approximately $5 million to $10 million of EBITDA per year preopening and $10 million to $20 million per year post opening. While our international momentum remains strong, our partner in Dubai currency in arrears on payments due to us. While this is an unfortunate development, we remain in close contact with them.
All parties believe that opening a Six Flags park is a key to the success of the overall complex in Dubai and then the satisfactory resolution will be achieved. I was there last week and progress in building the park is excellent and the site looks beautiful.
On another topic, the recently announced tax reform is also very good news for our company and our shareholders, due to our corporate structure, domestically-sourced income, and annual capital investments.
First, we believe the lower tax rates will benefit our guests and provide a more disposal income to spend in our parks. And second, our net operating loss carryforwards, coupled with tax reform, will yield minimum federal taxes in both 2018 and 2019, with a ramp-up beginning in 2020.
We now expect our cash taxes beginning in 2020 to be approximately $40 million to $50 million lower due to tax reform. We anticipate these cash savings will grow over time with our taxable income and be passed back to our shareholders in the form of higher dividends and share buybacks.
As an example, in the fourth quarter, we increased our quarterly dividend by 9% to $0.70 a share. This month, we increased our quarterly dividend an additional 11% to $0.78 a share, representing a 22% increase within the last three months.
This is our eighth consecutive year of dividend increases. At 4.5%, our dividend yield is very attractive and we remain committed to further growing our dividend by high single-digits for many years to come.
In 2017, we repurchased $499 million or 8.4 million shares of our common stock outstanding. As of December 31st, we had $343 million remaining under our Board authorized share repurchase program.
Since February 2010, we have repurchased just under $2 billion of our common stock at an average price of $39.60. We believe our stock represents an excellent value proposition, and we anticipate continuing to use all excess cash flow to repurchase shares.
In April 2017, we, again, took advantage of the favorable credit environment to increase leverage and enhance our share repurchase program, extending our maturities with $1.2 billion of new senior notes, and redeeming $800 million of our restrictive 2021 notes.
In June, our strong financial position allowed us to lower the borrowing rate on our bank debt by 25 basis points, saving $1.4 million per year in interest costs. Reported net debt as of December 31st was $1.94 billion. The company is in excellent financial position with significant cash on hand, no outstanding borrowings on our revolver, and a modest net leverage ratio of 3.7 times adjusted EBITDA.
Given our reliable cash flow and confidence in our ability to grow earnings, as we have done historically, we will monitor credit markets to assess low interest rate opportunities that will allow us to accelerate share repurchases and further reduce share count.
As we look ahead, I want to highlight some changes to the first quarter operating calendar. Magic Mountain has shifted to a 365-day operation, adding 54 additional operating days in the first quarter, and our new water park in Mexico that opened in the second quarter of 2017 is open 51 days this quarter.
So, in summary, we're very pleased with our fourth quarter and full year performance.
And now I'll turn the call back over to Jim. Jim?
Thank you, Marshall. We are poised to deliver our ninth consecutive record-breaking year in 2018, targeting Project 600 and maintaining strong momentum towards achieving Project 750, our aspirational goal to achieve $750 million of modified EBITDA by 2020.
Our parks have never looked better, and our ride and attraction lineup for 2018 will be our most impressive ever, with news in every one of our parks. We will be introducing five record-breaking or first of their kind rides, including two record-breaking roller coaster; WONDER WOMAN Golden Lasso Coaster, the world's first single rail coaster; and Mardi Gras Hangover, the world's tallest looping coaster.
Our Active Pass Base is at record level and we are taking pricing up with little or no pushback from our guests. Our all-season dining pass penetration continues to increase, and we now have eight international licensing parks. We will also have the benefit of a full year of operation from our two new water parks, new 365-day operations at Magic Mountain and Mardi Gras and Holiday in the Park announcements at other parks still to come.
Beyond 2018, we have plenty of room to grow. Our five growth areas are all in early to middle stages and each one will contribute nicely to our anticipated growth going forward. The first area of growth is increasing attendance through further penetration of season passes and memberships, delivering ever-increasing recurring revenue.
Approximately 60% of our unique guests still visit on a single-day ticket, giving us a tremendous opportunity to drive penetration of our Active Pass Base for many years to come.
Because we have excess capacity and are growing capacity every year by adding new rides, park zones, operating days, and water parks, we can add additional attendance with little incremental costs.
We will continue to grow our special events, including our highly profitable Fright Fest and Holiday in the Park events, which both hit record levels and we'll put more focus on memberships to benefit from their higher pricing and retention rates.
The second area of growth is our strategic approach to ticket pricing. We have pricing power in all of our markets and continue to take prices up 3% to 5% every year. We anticipate pricing growing in this range for years to come.
The third area of growth is leveraging our growing attendance to drive in-park revenue, especially our all-season dining pass. Our dining pass has been a huge success and continues to be a very popular product, with increasing penetration of our growing Active Pass Base.
Together with FLASH Pass, photo, shopping and other all-season products, we have the opportunity to encourage repeat visitation and gain additional recurring spending from our most loyal guests.
The fourth area of growth is our international licensing business. Six Flags is in a unique position among regional theme park operators to leverage our highly recognized and highly valued brand outside of North America.
We already have eight parks under development in two countries. Because the parks require no direct investment from Six Flags, our future international park openings are limited only by our ability to find new partners and suitable sites. This strategy is a true differentiator for us, generating $38 million of revenue in 2017 and $91 million since the program began in 2014.
And remember, as we open previously-announced parks, we will move to a higher rate of revenue and earnings growth under that model, a nice slug of future earnings growth still to come.
The fifth area of growth is our strategy to acquire water parks in the seat of markets of our existing theme parks. We have expanded our addressable market by adding two new water parks in 2017 and we have several more promising discussions in progress. The opportunity is large scale. We can have multiple water parks in each of our markets and there are dozens of potential opportunities and it is highly accretive to earnings.
Our momentum is stronger than it has ever been. We have pricing power and are benefiting from two powerful megatrends. First, consumers, especially millennials, favor experiential entertainment over possessions; and second, growth of the middle class in emerging markets. We are insulated from disruption in the retail space caused by e-commerce, making our business Amazon-proofed, and we have high barriers to entry in all of our markets.
Our season pass membership, all-season dining and other pass programs, along with our multiyear international licensing and sponsorship deals; provide a significant and growing source of recurring revenue. We believe that as the stability and consistency of this model is recognized by our investors, we will see our multiple increase further boosting our share price.
We are laser-focused on exceeding $600 million of modified EBITDA in 2018 and on achieving our aspirational target of $750 million by 2020. Our ongoing success comes from our consistent and powerful growth strategy and from having the best people in the industry. This success clearly shows in our financial results.
We are 100% committed to return all excess cash generated to our shareholders every year in the form of a growing dividend and share repurchases. With record performance every year and a dividend yield that is more than double the S&P 500; we are the ultimate growth in yield stock. I know you've heard me say this before, but I can assure you that I have never felt more confident about our company or our growth prospects.
Operator, at this point, if you could please open the call for any questions.
[Operator Instructions]
Our first question will come from the line of Barton Crockett with B. Riley FBR. Please go ahead.
Okay, great. Thanks for taking my questions. And I was interested in the commentary around Dubai. I know you had an impasse like a year-or-so ago with Vietnam and that led like to a reversal of some revenues that have been accrued.
I'm just wondering if you see any potential for a similar kind of occurrence with Dubai, and if you could size what that is? And your expression of overachieving confidence in overachieving the $600 million target for this year, is that regardless of what happens in Dubai? Or is there some impact that that could have on your outlook for this year?
Good morning Barton. Thank you for the question. In terms of Dubai, our cash payments that we've received are in line with the work that we've completed and the revenue that we've recognized. So, we're not in a position where a reversal would be required. We are in close contact. As I said, I was there last week and we expect this issue to be resolved without any delay in construction or the park opening day.
And as you can see, from their public filings that they've made, they've gone through a full financial and operational restructuring. Our park is key to the success of the complex and we're focused on getting this issue resolved.
Okay. And just to elaborate a little bit more. The arrears, the statement that they're in arrears, is that because of liquidity constraints? Or is that because of some contractual disagreement with them, where perhaps they're trying to reset terms?
They -- yes, I don’t want to get into the details of the conversation with them, but they are going through a restructuring and so I think it has to do with their debt renegotiations and those items. And they -- if you look at their financials, they have the cash. So, it's just a matter of us working out a few issues.
Okay. And even with -- I think one of their issues is that attendance has not been where it was hoped when they raised capital and IPO-ed and raised some debt. Is their attendance at such a level where you guys have spoken to kind of an average range or a range of EBITDA contribution from parks preopening, post opening? Are their attendance orientated [ph] or such that perhaps this doesn't fit in that range? Or do you think it still fits in that range given what we've seen with the performance so far there?
Barton I'd reinforce what Marshall said. We can't talk to the attendance of their other parks. That's obviously a question for them, but we're very confident about the ability for our park to succeed that the brand is so strong there. I think it will be a very powerful and positive addition to their park lineup.
Okay. And if I can switch gears a little bit. I mean -- and then I'll hop off. But I know you guys had this great growth in admissions per capita in the fourth quarter like 9%, which seemed way in excess of your apples-to-apples pricing. I was just wondering what drove that; was there some mixed benefit, and any thoughts about the pricing strategy going into 2018?
Yes, Barton, it was really two things. It was our pricing, at least for the ticket per cap, and there was some park mix that's contributed to that as well with the struggles we had in Mexico, being offset by success in other parks.
I think the most important thing, Barton; you've heard me talk about the fact that pricing is such a huge opportunity for us. And as we described on our last call, we took very aggressive steps from a pricing perspective and I think that's showing up. When you take the mid-single-digit price increases, you will get a benefit, and we're seeing them.
Okay, that's great. Thank you very much.
I would add, Barton, one other thing, but -- and to reinforce -- I know I said it before, but you've got to understand that pricing remains a multiyear opportunity, and it’ll just continue to be a core component of our growth strategy. We have years of upside ahead of us.
Okay, great. Thank you.
Your next question will come from the line of Ian Zaffino with Oppenheimer. Please go ahead.
Good morning Ian.
Hey, good morning guys. This is Mark on for Ian.
Good morning Mark.
Thanks for taking my question. Yes, so I guess, just a quick one. In terms of your operating expense, I know you guys mentioned that you try to keep it to the 4% growth year-over-year. And this year, despite operating expenses and sort of extraordinary expenses in the quarter, are you expecting -- what the expectations are going forward in 2018, given the early stages of your growth initiatives, and then like what a more normalized rate will look like and how that drops down to EBITDA. Thank you.
Okay, yes. So, our organic costs should increase in line with inflation. As you know, we're very focused on controlling costs and offsetting any wage pressures from mandated minimum wage increases or a tightening labor market. When you think about next year, on top of that, you would have -- we have 365-day operations for Magic Mountain. And I mentioned in my script, a large part of that was in Q1.
We also have another additional 35 days in the fourth quarter. We have a full year of Hurricane Harbor Mexico and Hurricane Harbor Concord and a full year impact of our recently announced international licensing deals.
Our investments will increase, will result though in increased revenue and EBITDA. And we feel confident that even with all those additional items, we will be able to continue to grow the margin.
Okay, terrific. That's very helpful. And then, I guess, on the international licensing, I might have missed it, but is there any updates on Vietnam? And any additional new developments there?
No, we're continuing to work, not just in Vietnam, but across multiple markets, and discussing opportunities with various partners. And as soon as we have something that we've signed, we will let everybody know. But I must let you know that the opportunities are multiple in nature and it includes Vietnam.
Okay, terrific. Thank you guys very much.
Thank you very much Mark.
Your next question comes from the line of James Hardiman with Wedbush Securities. Please go ahead.
Hi good morning. Thanks for taking my call.
Hey Jim.
Good morning. I wanted to touch on the water parks. Obviously, that's a leg of the strategy that was added on last year. Maybe give us any color on where you stand in having those conversations with some of these water parks across the country.
And is there an opportunity to bring on any additional water parks for the 2018 operating season? Obviously, with the Concord parks, you were able to bring it online shortly after acquiring it. So, it sounds like it doesn't take long. Maybe give us an update there.
I think that's right, James. It's a great opportunity for us and we're really excited about it. And in the right circumstances, you can bring these parks online very quickly. In the case of Concord, we're able to -- in the case of Oaxtepec that took a little bit longer because we were reconfiguring a park that had been shut down. But in both cases, both of those have been negotiated over long periods of time, as I described last time.
The opportunity does add this incredible driver to leverage the large and growing Active Pass Base that we have and to accelerate growth. It's proven, as you described, with regard to both those parks. Mexico sold record season passes and Concord actually achieved its highest attendance days in history under our leadership.
So, we are speaking with a number of promising potential partners, obviously not at the point where we can share details yet. We will -- but it's just like any other M&A transaction, the timing of the deal is just hard to predict. But our goal would be to add parks in 2018.
But in order to do so, we want to get the best possible terms. We want the shortest payback with the lowest investments. And so we'll continue to do that privately, get to the point where we're happy, and then we will announce. But discussions are ongoing, James.
Great. Let me ask it this way. The $600 million that you think you'll get to this year in modified EBITDA, is there anything in there, whether it's from the water parks or from the international deals that hadn't officially been announced yet?
So, as we described when we talked about the ability for us to get to Project 750, we're very excited about that, James, because we have five major growth initiatives that we think each contribute really nicely to getting us there.
So, each of those is part of getting to $750 million. So, that includes international and water parks. The water park piece, specifically, and then international, it does give you that driver, and it really helps the Active Pass Base.
And similar to the Mexican water park addition, if we make an investment that is above and beyond the norm and in this case, let's say we make a capital investment in excess of the 9% revenue target, which we're continuing to reiterate for CapEx, then we'll make an adjustment to the Project 750 goal to reflect that.
So, we don't look at it and say, okay. We can just go out and make a bunch of acquisitions, use up a lot of capital and still get to the $750 million. We're trying to make sure that we're doing it as part of the normal course of business and getting to that $750 million the right way.
That's helpful. And then, I guess, just lastly for me. You've got a lot of international parks that have been announced. I think we're at eight. Can you just maybe give us an update in terms of when you think those various parks might open up and we can ultimately transition from that $5 million to $10 million a year to the $10 million to $20 million?
Yes, I think it's a great question, and we do have timing on parks that's laid out. I think that all of these can obviously change as time goes on. But in essence, we're looking at Dubai to be towards the end of 2019, early 2020.
And then in terms of the Chinese parks, they will vary. But in essence, they start coming online towards the end of 2019 with a water park [Indiscernible] and then working our way through the rest of the parks that are announced opening in 2020. So, by the end of 2020, all eight should be opened. And that's when you see the full step-up.
And I've put it into perspective to you, rightly or wrongly, as you think about run rate, which will help just with our existing parks and you think about what that would mean as we get to that run rate. Right now, we're looking at circa $40 million of revenue that I described earlier. As the parks are up and running, it's realistic to think in terms of adding $15 million, $20 million of incremental revenue just with the existing eight parks by 2020, 2021, that sort of range.
Got it. Thank you.
Your next question comes from the line of Michael Swartz with SunTrust. Please go ahead.
Hey, good morning everyone.
Good morning
Hi Michael.
I just wanted to talk about Magic Mountain going to the 365. I guess the first question would be I guess what are you seeing at current now that that's in process? And I guess, that's been opened for a couple of weeks now maybe relative to expectations? And I think you broke out for us at least the incremental days that we'll add in the first quarter, but can you talk about maybe what you expect from attendance or how you expect that to impact per capita in the first quarter?
So, Michael, you're looking to me to give you guidance and I will not give you guidance, but I will help you and I'll talk through my thinking because I'm so excited about Magic Mountain. I have believed for a long time, this is just the greatest park. And the fact that we haven't been open every day is just -- it's a huge opportunity for us. It's located in the largest, most lucrative travel market, 48 million visitors, 24 million Southern Californians. All these people visit all of our competitors who are open every day.
The park is the undisputed thrill capital of the world. We have a record-breaking 19 roller coasters, no other park has that many and our calendar will be on par with the other destination theme parks as a result of this.
While I won't give you an actual guidance number, I can tell you that we wouldn't have made the decision if we didn't think it would have a positive impact on EBITDA. And what I can say is that the initial view that I have and I'm just telling you my gut, is extremely positive. We're seeing a great reaction to the fact that we're open every day. Our guests love it. Our employees love it. And as a result, I'm very optimistic for this year.
I would add that, just using the strategy, if you think about it bigger picture, it enables us to leverage our assets to increase turnover, grow revenue EBITDA, return on invested capital and we don't add anything incremental in capital. The parks there, it's sitting there. And so as we assess how Magic does and this initial optimism that we have, we would look at other warm weather parks and potentially adding them as we move forward. But obviously, no decisions have been made on that front yet.
Okay. And then maybe, Marshall, just I know the impact of tax reform in the U.S. doesn't have maybe a material impact on cash taxes until 2020, but how should we be thinking about the effective tax rate or how you're thinking about provisioning in 2018 and 2019?
So, the -- obviously, the tax reform bill is extremely good news for us, both for our company and our shareholders. Our goal is, as you know, to return all excess cash to shareholders through dividends and stock buybacks. So, we'll be saving between $40 million and $50 million in 2020, and that will grow with our income.
From a provisioning standpoint, if you include all state and foreign taxes, our effective rate will be in the low 20s, low 20% range. We also think the lower tax rate will benefit our guests and give them more money to spend in our parks. And any savings we have will be passed directly to the shareholders, so through share repurchases.
So, we'll be -- we think 9% is the right capital. We won't be increasing that because that's the appropriate amount. So, we'll end up giving all that money back to shareholders.
I can just add, Marshall. I mean as we look at it -- and you look at $40 million to $50 million of savings starting in 2020 and growing from then on, it's not altogether clear to us that the tax savings are reflected in the current share price or our trading multiple. And if you simply do the calculations, do an NPV on it, that's a huge amount of cash.
And it gives us the ability not only to do everything we need to do with the business, which we're already doing, funding, to pay these dividends that are spectacular, sitting at a 4.5% yield today, and to be able to buy back shares. So, I think we're in a very good place, and I just don't think people have worked it out yet just how powerful this is.
All right. That's it from me. Thanks guys.
Great. Thanks Michael.
Your next question comes from the line of Tyler Batory with Janney Capital Markets. Please go ahead.
Thanks. Good morning.
Good morning.
Hi Tyler.
So, first question for you on CapEx. Here I think in the past, you talked about that moving lower than 9% as a percentage of revenue, but it sounds like you're now targeting 9%. So, I just wanted to be sure that I heard you correctly, and then just ask your thoughts on CapEx spending long-term.
So, yes, we do spend 9% of our revenues on CapEx. We will -- as we increase our international revenue, we will begin to lower that. So, nothing's really changed in terms of our guidance on that. As international becomes more of a piece of our revenue, we'll lower that.
I would just add, Tyler, to say that, certainly, in the near-term, we're not looking to take that 9% down dramatically. I think we're able to fund activities and continue the great growth that we've seen and we'll continue to do that. Obviously, we're not going to spend money unnecessarily, but we'll certainly be in that 9% range for the foreseeable future.
Okay, great. That's helpful. And then historically, you guys have talked about season pass customers visiting the park three to four times per year. Has that changed at all recently? Is it possible that, that could go to five times or more just as you start to increase the popularity of some of these events?
We still fit, Tyler, in the three to four range and have consistently been there. Is it feasible that we might see an increase? It's certainly possible, because if you think about what we've done with the shoulder season, it's really rather remarkable, right?
Pull up and think about Six Flags back in 2009 losing about $10 million of EBITDA in the fourth quarter and the Six Flags that you just saw today that generates almost $100 million of EBITDA. So, we've expanded that fourth quarter really dramatically and turned it into a big positive for us. And we're working actively to try and transform the first quarter, so that becomes a positive for us. It's hard work to get there, but we never give up.
And part of that involves having these other activities, other events, whether it's Mardi Gras and we work on testing other little events as well and that could possibly lead to a scenario where people visit more often. It's just that the range that we have given really -- we really do sit in that range now and expect it to continue, certainly through 2018, 2019.
Okay, great. And then just last question. Do you guys recognize any revenue from those three new China theme parks in 2017?
It was very, very small.
Minuscule.
Very, very small.
Okay, great. That's all from me. Thank you.
Your next question comes from the line of Steve Wieczynski with Stifel. Please go ahead.
Hey guys, good morning.
Hi Steve.
Good morning. So, you've talked a couple of times and through this call about how you view your stock as being undervalued. But I guess in the quarter, you guys didn't buy back any stock. Can you just help us think about the disconnect there? And I'm not sure if you guys were kind of trying to figure out how the tax policy changes would play-out or what, but then maybe also help us think about how we should view buybacks for 2018 as well.
So, Steve, I'll answer this and, Marshall, you jump in whenever you want. We didn't buy back any shares in the fourth quarter because we took advantage of the less restricted covenants regarding restricted payments to buy back shares in the third quarter when the share price was lower. So, we actually were able to buy more shares than if we've waited until Q4.
So, I think you know we actually ended up in a position where we spent something like $450 million in share buybacks in 2017, the second-highest year in our history. And then in terms of return to shareholders -- and I'm really proud that in the year, we returned over $700 million -- actually $727 million to shareholders between share repurchases and dividends, which is the highest amount in any year.
I mean that's basically -- we returned what Six Flags was worth when we emerged from bankruptcy. Put that into perspective. So, it's not that we try to time these things, but I think we did pretty well with the purchases and we'll continue to do targeted buybacks as we go forward.
Yes. The only thing that I'd add to that, Jim, is it was $499 million.
That's right.
$500 million, yes.
Okay, that's great color. Appreciate it. And then the second question Jim. You talked about having excess park capacity. How do you balance that excess capacity? Meaning, how do you walk that fine line of trying to get more folks in the park versus potentially making the parks too crowded and potentially irritating some guests?
So, I think it is really a good question, Steve. I bet you've heard me talk about the fact that we really sit at around 50% to 60% of capacity. And we've actually sort of said that number's gone up, because if you look at our attendance, our attendance has grown from 23 million back in 2009 up to 30 million now -- more than 30 million, but our guests rate us far higher than they did in 2009 on pretty much every score. We're at record levels, value for money, literally every measure you look at, they're far happier.
So, there is no issue in terms of guests feeling that the experience is somehow going backwards. It's actually improved and part of the reason is this multiple-layered approach that we've taken, both strategically and operationally, to adding value. So, they see what we've done. They see that we add something new in every park every year. They see that we've added special events. They see that Fright Fest has expanded and it's the best haunt event out there and most consistent in terms of execution. They see Holiday in the Park. They love the fact that we sell memberships, and they're signing up for that in ever-increasing numbers.
So, overall, when we look at what we've done and then we combine with that the fact that we've added new rides every year, going back to the last line nine -- eight, nine years, there's more to do in every single park and there's more time to come and do it.
So, I am not concerned about a capacity issue. Clearly, there may be one or two days in the year when the parks can be crowded, certain parks are crowded, but our season pass holders know those days and they tend to adjust and come on other days. I think we've got an incredible ability to continue going and really driving this success for the long-term.
Okay. great. That's great color. Thanks a lot guys. Appreciate it.
Thank you.
Thank you.
Your next question will come from the line of Barton Crockett with B. Riley FBR. Please go ahead.
Okay, great. I got in for a follow-up. And I thought this would have been asked, but I wanted to get in with it. The -- are you able to give us any sense of how much of an impact these California fires and the frigid cold temperatures and the earthquake had on attendance? I mean, normally, you guys have been growing attendance in the fourth quarter nicely. Here it dipped a bit. But if we were to normalize, I mean, how much of an impact did this stuff have? Is there any way to talk about that?
Yes, we don't -- I don't think we want to get into the details. It's always a little hard. But the record cold certainly had a big impact. The earthquakes, I mentioned in the prepared comments that our park in Mexico, the kids were not even allowed to -- the schools weren't even allowed to go on outings because of the earthquakes. And that's just now starting to get resolved. And then the wildfires did have an impact, particularly in Northern California and Southern Californian as well.
I would build on that by saying, literally, the fourth quarter saw the worst of all three of those that Marshall mentioned. If you think about the earthquakes, that shut down the water park that was going to be opened. It affected our Mexican theme park as well because of Marshall's reference to schools. Schools were not allowed to go out and travel.
The wildfires, you saw the evacuations that the fire came right up to the -- literally, to the fence at Magic Mountain. And then the record cold didn't just affect us, it affected others and really shut down that last week or two in 2017.
So, there's zero doubt in my mind that it had an effect. And the zero doubt in my mind that on the days when we didn't have bad weather, the parks were teeming with people and very successful.
So, as I look forward, I'd say, I'm literally trying not to jinx us with this, but I'm very hopeful that 2018 will not see the weather effects that we had in 2017 and that it will continue to be a great year.
But Barton, at this point, you have to look at Six Flags and look at the history of what we've delivered. Eight record years and the only company in the regional theme park industry to grow -- to have these records this year, in 2017. And we did that because of the strategy we're employing because of the strong Active Pass Base. And because of what we've done and value, people are coming to the parks. They're spending money even in these extreme events. I'm very proud of that and I feel very good about the start to 2018 and what we have ahead of us.
Okay, that's great. Thank you.
Thanks Barton.
Your next question comes from the line of Ryan Sundby with William Blair. Please go ahead.
Hey guys, thanks for taking my question.
Hi Ryan.
Good morning.
Hey. Just a quick follow-up here on, I guess, your response to Michael's question on Magic Mountain. And I totally acknowledge that this is -- you're early here, but what are the -- I guess, what would you need to see for Magic Mountain start to consider some of your other warm weather parks to go full year?
Well, there are a number of metrics that we look at. But I don't know if you remember, Ryan. You may not. I know many of the others will. When I first joined the company, we did an intense review of breakeven points to all of our parks. And what we did was we really went back to basics. And all of the park Presidents worked very hard to make sure that we could reduce breakeven points on any day that we're open, we can maximize profitability. That's the net of it all.
And so the concern would be in opening up a park that there'd be several days where you don't get past that breakeven point. And so that was the starting point to the work around Magic to make sure that there would not be days where you don't get past the breakeven point, or at least minimize them, and then you really maximize the days when you're way past breakeven.
And so my positive outlook on Magic is reinforced by that, that we really are not seeing days where you wouldn't be way past that breakeven point and very comfortable in terms of the revenue and the profitability that's being generated, which if you think about the fixed costs being fixed and the relatively limited incremental variable costs, it gives you a definite upside. So, if we see that success for a year, we would then look at other warm weather parks, then come to a conclusion as to whether we want to do that there as well.
Okay, great. Thank you so much.
Thanks Ryan.
Thank you.
Our next question will come from the line of Chris Prykull with Goldman Sachs. Please go ahead.
Good morning. Thanks for taking the questions.
Hi Chris.
Good morning.
I had a couple of quick follow-ups. On Holiday in the Park, I'm just wondering if the new event at Six Flags New England performed above or below your expectations. And then, obviously, did the colder weather have an impact on that park late in the season?
Yes. So, I would say that Holiday in the Park New England performed really above our expectations until that Arctic winter blast hit and we had to shut down. So, we were very encouraged by Holiday in the Park, not only in New England. But I would tell you, without disclosing numbers, not only was Fright Fest a record level for us, both in terms of revenue and EBITDA, but so was Holiday in the Park.
Fair enough. And then I just had a follow-up on expense growth, more specific to wages. Do you expect 2018 wage growth to be more or less than it was in 2017? And then maybe just more broadly, how do you think about announcements from other companies, other consumer companies raising wages? And how wide of a gap on an absolute basis? And I know it will vary by market, but are your wages over this summer versus some of these other companies that are announcing wage increases?
So, for 2018, we have six markets where we operate that have legislated increases in their minimum wages. We expect to be able to manage that to about $5 million to $6 million, which is basically similar to the amount that it's been for the last four years.
We're going to work to offset it, like we have every year, as much as possible. And these markets -- the markets that we're in, where we have these minimum wage increases; we have been able to increase prices faster. And so in all of those markets, our margins have been growing.
In terms of -- what was the second--
So, Chris, I would basically say that when you look at others in the industry and moving up, we are doing whatever we have to do to match to make sure that we get all the people we need.
I do have to say, Marshall, just describe the incremental costs and the minimum wage side; we've been dealing with that for the last four or five years very successfully. We anticipate that will continue, but I need you to know that we have not had problems recruiting people.
While it's definitely a tighter market, there's no doubt about it. If you look at the folks that are applying for jobs, we have definitely been able to fill all the jobs we need. And I think part of it is that we're in top 10 DMAs and, therefore, have access to a much larger group of folks who are looking for work.
So, whilst, let's say, it's tighter than it was five years ago, we still get more than enough applications to be able to fill all the jobs that we have and we pay appropriately.
That's good to hear. And then on all-season dinings, can you just give an update on whether penetration is there? And then expectations for 2018, any changes or tweaks that you're making to the program?
Yes. We -- I would say that 2017 was another great year for all-season dining in terms of the progress that we made, really good growth. And you heard in Marshall's comments, he talked about the culinary growth and the success that we've had there. It's really tremendous; I mean, very, very strong growth.
But I want to say that I'm not happy. And I'm not happy because, somehow, we didn't for perform. I think we did great. But I'm not happy because the penetration is still so low, and that gives us a really great opportunity for upside going forward.
I mean, if you think about it, the in-park per capita increased 5% in the fourth quarter. Our culinary numbers were up at the highest level they've ever been in history. They provide excellent value for guests. Our guests love them. They're fantastic margins for Six Flags and our penetration is low. So, trust me, there is more to come. I'm not going to tell you about what we're going to announce yet. In time, you will see as we start to unveil step-by-step what we're doing, but we see big opportunity here.
Great. Thanks for taking the questions.
Thanks Chris.
Thank you.
At this time, there are no further questions. I will now turn the conference back over to management for any further remarks.
Okay. Well, thank you very much, Regina. Thank you for all for joining our call today and for your ongoing support. I think, as you know, Six Flags is a quality growth and yield company, the best and most innovative operator in a very attractive space, with operational momentum, the highest margins among its peers, strong recurring cash flow and an experienced and trustworthy team of employees, by the way, most of whom are shareholders in the company.
I love our people in our parks and I hope you can visit one of our amazing properties in 2018 to experience the magic firsthand. Thank you for joining our call today and take care.
Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.