Six Flags Entertainment Corp (FUN) 2014 Q4 法說會逐字稿

Good day, everyone, and welcome to the Cedar Fair fourth-quarter and year-end conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Stacy Frole. Please go ahead.

Thank you Kim. Good morning and welcome to our 2014 year-end conference call. I'm Stacy Frole, Cedar Fair's Vice President of Investor Relations.

This morning we issued our 2014 fourth-quarter and year-end earnings release and a copy of this release can be obtained on our corporate Investor Relations website at IR.CedarFair.com, or by contacting our Investor Relations offices at 419-627-2233.

On the call this morning are Matt Ouimet, our President and Chief Executive Officer, and Brian Witherow, our Executive Vice President and Chief Financial Officer.

Before we begin, I need to caution you that comments made during this call will include forward-looking statements within the meaning of the federal securities laws. These statements may involve risks and uncertainties that could cause actual results to differ materially from those described in such statements. You may refer to filings by the Company with the SEC for a more detailed discussion of these risks.

In addition, in accordance with Regulation G, non-GAAP financial measures used on the conference call today are required to be reconciled to the most directly comparable GAAP measures. During today's call, we will make reference to adjusted EBITDA as defined in our earnings release. The required reconciliation of adjusted EBITDA is in the earnings release and is also available to investors on our website via the Conference Call access page.

In compliance with SEC regulation FD, this webcast is being made available to the media and the general public as well as analysts and investors. Because the webcast is open to all constituents and prior notification has been widely and uncollectible disseminated, all content of the call will be considered fully disclosed.

Now I'll turn the call over to Matt.

Thanks Stacy. Good morning, everyone, and thank you joining us. On behalf of our team, we are pleased to report we finished 2014 strong, and as a result achieved our fifth record year in a row. For the full year, we reported record net revenues of $1.16 billion, and record adjusted EBITDA of $431 million. The success of 2014 was led by increases in both our admissions per cap and in-park spending while comparable part attendance was consistent with last year's record levels.

For the year, the majority of our parks performed in line with or ahead of our expectations. Kings Island, where we built Banshee, a world record-breaking roller coaster, was one of our top-performing parks in 2014. As we expect with major new capital, Kings Island's new coaster help the park generate increases in both attendance and guest spending. Banshee is a great example of the success we continue to have with our strong capital programs where we focus on building scale and creating environments where people choose to go to create and share memories with families and friends.

Knott's Berry Farm, where we completely renovated the Camp Snoopy children's area as well as the park's iconic Calico Mine ride this past year, also contributed nicely to the attendance and guest per capita spending increases.

We are also pleased with the fourth-quarter performance of our parks in the Great Lakes region. These parks faced some difficult challenges throughout 2014, including a harsh winter season that extended school calendars, a water main break leading to a June weekend closure of our flagship park Cedar Fair -- Cedar Point, excuse me -- and unseasonably cool temperatures throughout the peak vacation months of July and August. Despite these challenges, the parks finished their operating season strong, generating increases in attendance and in some cases record guest spending post-Labor Day.

As many of you have experienced, it can be difficult for organizations to execute successfully in the moment while staying committed to milestones associated with long-term goals. The risk of slippage and compromise is amplified when in-season targets are under pressure. We certainly felt that pressure this summer, particularly at Cedar Point, which was following an exceptional performance in 2013. We recognize that this park's challenges were unique and not representative of a broader consumer trend, especially when taking into account the strength we were seeing throughout the rest of our portfolio.

One of our primary goals at Cedar Point heading into the 2014 season was to enhance the overall family entertainment experience similar to what we have done at Knott's over the last few years. We revitalized the park's Gemini Midway with new family rides and attractions, introduced more midway entertainment throughout the park and extended operating hours. I call this out to confirm for this audience that our team is committed to producing strong results in the current year while remaining respectful to what we need to do in order to protect and grow our business going forward. It would' have been an easy decision to cut back on some of our initiatives to reduce costs and improve margins in the short-term. However, this would have negatively impacted overall guest experience, possibly impacting a family's decision to visit our park again in the future. We believe Cedar Point's record post-Labor Day performance and the fact that 2014 was the park's second-best performance in its 145 year history reflects the success of our commitment to delivering a compelling value for the price paid at every park every day.

This past year, we also advanced important long-term initiatives that support our ability to grow our business in the years to come. These include the introduction of FunTV, and a new partnership with Time Warner Cable signed in July of last year. The first phase of our two-year renovation project of the historic Hotel Breakers on Cedar Point's mile-long beach. The first phase of the multiyear growth plan for Carowinds, our park located in the fast-growing Charlotte market. The completion of a new catering facility at California's Great America, which serves the park and the newly opened Levi Stadium. The testing on all-season dining program at three parks which will now be rolled out across all of our parks in 2015. And the first addition of our amusement dark portfolio, Wonder Mountains Guardian at Canada's Wonderland, a new 4-D interactive dark ride which has received multiple industry awards for innovation. This includes IAAPA's top award, the Impact Award, given to a new product judged to have the greatest impact on the industry going forward.

As you can tell from my opening remarks, we are pleased with the business results we have seen from our most recent investments and we are energized about what is in store for our guests in the coming years. With the continuing combination of insight, innovation and discipline, we are confident in our ability to maintain the momentum we have established over the past several years.

Finally, before I turn the call over to Brian, I want to take a moment to thank our team here at Cedar Fair. Without their commitment and dedication to both the near and long-term success of our business, we would not be able to deliver the consistently strong results our guest and investors have come to expect.

Now over to Brian for more details on our 2014 performance. Brian?

Thanks Matt. From a financial perspective, we are very pleased with our 2014 performance which, as Matt mentioned, represented our fifth straight year of record results. While the past year presented its share of unique challenges, I want to take a moment to highlight the impressive achievements of our parks.

In 2014, we achieved record net revenues and adjusted EBITDA, which included record fourth-quarter net revenues and adjusted EBITDA as our fall and winter events continue to grow in popularity. We refinanced a portion of our debt with a 10-year unsecured bond resulting in annual cash interest savings of approximately $13 million going forward, and we announced a 7% increase in our annualized distribution rate to $3.00 for 2015 which became effective for the December 2014 distribution payment.

To emphasize Matt's earlier comments, we achieved these accomplishments while also advancing many key long-term initiatives that we expect to fuel the next layer of our growth. Looking forward to the 2015 season, although still very early in the year, we are already seeing positive trends in several long lead indicators, including season pass sales, adoption of our new all-season dining programs, group bookings, including more catering events, and advanced reservations at our resort properties.

Now onto the financials. For the year, we reported revenue growth of $25 million, or 2%, to $1.16 billion. This was primarily driven by a 3% or $1.39 increase in average in-park guest per capita spending, which reached an all-time high of $45.54. Driving the increase in guest spending was a 3% increase in our admissions per cap and a 4% increase in pure in-park spending.

As we've discussed over the past few years, the development of our CRM and revenue management platforms and the introduction of a more aggressive group sales program have all contributed to our increased admissions per cap. These programs have enabled us to do a better job of segmenting our guests and providing the right offer to the right guest at the right time.

In 2014, guest spending on food and beverage was the lead driver of the growth in in-park spending as we successfully introduced bundle value meals, all-day dining programs, and all-season dining which was successfully tested at three of our parks. The all-season dining program is being rolled out Company-wide for 2015. F&B spending also continue to benefit from our productive system-wide relationship with the Coca-Cola company which we entered into at the end of the 2012 season. We are very pleased with our ability to drive improved guest spending in 2014 while also entertaining 23.3 million guests, a record number when compared with 2013's comparable park attendance.

Finally, our park revenues in 2014 increased to $127 million, up $3 million or 2% from 2013. A large portion of this increase reflects the fourth-quarter proceeds from our business insurance claim related Cedar Point's water main break earlier in the year as well as revenue received during the third and fourth quarters for the days Great America was closed to accommodate events at the new Levi Stadium.

Moving onto the cost front, operating costs and expenses for 2014 totaled $748 million, up $32 million or 4% from the prior year. The increase in cost was largely due to budgeted increases in operating expenses, including increases in both seasonal labor hours and rates and initiatives focused on enhancing the overall guest experience. Cost of food, merch, and games also contributed to this increase due to greater capture rates in our F&B category. As a percentage of sales, these costs remain comparable to last year.

Adjusted EBITDA, which we believe is a meaningful measure of our park level operating results, increased 1% or $6 million to $431 million for 2014. This increase is a direct result of the record revenues produced by our parks this year. Adjusted EBITDA margin for 2014 was down slightly to 37.2%, the result of attendance growth at lower margin properties as compared with 2013's record performance at our highest margin property, Cedar Point.

I'd also like to note that, in 2014, we continued to build on the success of our fall and winter events which contributed to our record fourth-quarter net revenues of $161 million and our record fourth-quarter adjusted EBITDA of $37 million, a $22 million and a $60 million increase over last year's fourth-quarter results respectively. As you can see, the incremental revenue generated during the fourth quarter flowed through nicely.

Lastly, as many investors have begun discussing the impact of the weakening Canadian dollar, it's important to note that our exposure to foreign exchange rates are limited and had a nominal impact on our 2014 results. However, if the deterioration of the Canadian dollar continues, there will be some downward pressure on our reported US dollar operating results for 2015.

Now let me highlight a few items on our balance sheet. As we stated in our earnings release this morning, our record 2014 performance and solid operating cash flow have resulted in another year of improvement to our balance sheet. We ended the year with approximately $132 million in cash on hand and no outstanding borrowings under our revolving credit facility. This of course improves our financial flexibility and lessons our reliance on off-season revolver borrowings. In 2014, the maximum outstanding balance under our revolving credit facility was $85 million compared with $123 million in 2013.

As I previously mentioned, this past year, we refinanced our highest cost of debt with a new $450 million 10-year unsecured note, lowering our average cost of debt going forward to approximately 5.3%, down from approximately 6.3% last year. This refinancing saves us $13 million annually, reducing our projected annual cash interest cost to approximately $85 million in the coming years.

We ended 2014 with a consolidated leverage ratio of 3.6 times, which is well within our comfort range in the current credit market environment. Overall, we are extremely pleased with our capital structure and the strength of our balance sheet.

To summarize, we are very pleased with our 2014 operating results, as well as our solid financial position. We continue to generate a significant amount of free cash flow and our capital structure provides us with substantial operating flexibility. We are well-positioned heading into 2015 and we will continue to prudently manage our cash flows to maximize value for our unit holders through a combination of cash distributions and organic growth opportunities.

With that, I will turn the call back over to Matt.

Thank you Brian. We are looking forward to the 2015 season as our leadership team continues to identify new areas to drive profitable growth and even higher returns from our capital investments.

As I mentioned earlier, we dedicated our efforts in 2014 both to the operation of our parks for the current season as well as pursuing initiatives whose impact would occur in future years. The payback for these efforts will begin to come in 2015. As mentioned in our release earlier this morning, these include the complete renovation of our beachfront hotel and group catering pavilions at Cedar Point, the second phase of a multiyear investment in Carowinds, including Fury 325, our world record-breaking coaster that not only flies over the new front gate but under it as well, the portfolio ride rollout of our all-season dining program, the continued development of our FunTV in-park television network and the enhanced data analytics capabilities which are increasingly valuable as we look to compare consumer behavior over multiple years.

We have been laying the groundwork at Carowinds to improve infrastructure and food offerings to support a broader audience, and the new coaster front gate area and rebranding is a key step in taking the park to the next level. Our marketing team has done an impressive job aligning the Carowinds park brand with characteristics and values of both North and South Carolina.

Over the past couple of years, we've seen very positive results to comparable brand management at Knott's Berry Farm. I'm extremely pleased with the amount of positive publicity this park has been receiving and excited for its grand opening on March 28.

Additionally, the multi-year renovation of our historic Hotel Breakers on Cedar Point's mile-long beach will be completed and the newly refurbished and improved hotel will debut with the start of the 2015 season in early May. At the same time, our important group catering business will benefit from a similar refurbishment effort to the park's catering facilities.

In 2015, we will also be introducing Rougarou, a brand-new coaster experience at Cedar Point. As we discussed on our last call, this is a new strategy for us. We're taking an older, less popular coaster and transforming it into an exciting new experience through the introduction of new floorless trains. I encourage all of you to book a trip to Cedar Point this year to experience the newly renovated Hotel Breakers and to take a ride on Rougarou.

Last, on capital, we will introduce our second addition of our amusement dark portfolio at Knott's Berry Farm this spring. Voyage to the Iron Reef is a new 4-D dark ride that will take our guests on an interactive adventure beneath the Knott's Boardwalk where they will battle mysterious sea creatures threatening to wreak havoc on the park.

Outside of capital, we have several new initiatives which hold great promise for the 2015 season. We expect the momentum we have seen in food and beverage to continue as we roll out our all-season dining program to all our parks and continue to expand bundled value options.

Additionally, within the in-park spending category, Carrie Boldman, our corporate Vice President of Merchandise and Games who joined us about a year ago, will have the have the benefit of a full planning cycle. Similar to what we have experienced across our food and beverage category, we are expecting tangible results from best practice sharing, including price consistency and a new experiential sweetshop concept which will be tested in 2015 at Cedar Point and Kings Island.

Our operators have created an impressive menu of special events at all of our parks. These are designed to keep the park experience dynamic throughout the year, serving as an additional motivation for those who are procrastinating and adding value to the benefits our season pass holders receive.

Our CRM and revenue management platforms have now been in place for a full season and we are encouraged with the results of many of the tests we conducted in 2014. As we head into 2015, we are reaching new households to grow our customer base and further refining both our marketing and pricing strategies for segmented groups. Essentially these platforms provide us with additional levers to pull to optimize our marketing spend and maximize revenues through attendance and guest spending trends.

Lastly, I'd like to highlight FunTV, led by Matt Shafer, our Corporate Vice President of Strategic Alliances. This is a system-wide TV network offering in-line entertainment for our guests at all of our parks. The network was introduced in the beginning of 2014 season and we signed a contract with Time Warner in early July to begin selling out of home impressions. The guest response to the in-house content design to entertain and educate our guests on our product offerings was very strong. Additionally, feedback from the Time Warner sales team is encouraging. We expect FunTV to generate solid returns in 2015 and continue to build over the next several years.

Before we take questions, I want to emphasize today that the attributes of our business model and our operations have remained unchanged and are foundational to our success. All should be familiar to you.

Our parks provide a broadly appealing collection of rides, attractions, and shows that are popular with an economically attractive, loyal family audience. We have assembled a leadership team that has deep industry experience along with new competencies to support a more targeted approach to marketing and per cap growth. We invest in innovative new attractions at scale, responding to trends in consumer entertainment with an eye towards sustained appeal over the long term, and barriers to entry are significant, limiting direct regional competition.

While operating the business can present dynamic challenges, these fundamentals ensure a credible resiliency in the business model that supports a reliable and growing distribution. Our record 2014 results and our plans for 2015 once again confirm the quality of our business model.

I am pleased to say we remain on track to achieve our FUNforward long-term growth goal of $450 million or more in adjusted EBITDA by 2016. We also recognize our FUNforward goal has become a more near-term target and we owe our investors an update on the initiatives that will support our key growth drivers going forward.

Many of you have been referring to this as FUNforward 2.0, which we feel is appropriate as our six key growth drivers have not changed. They are enhance guest experience, improved consumer messaging, dynamic pricing and advanced purchase commitments, premium product offerings, strategic alliance fees and promotional leverage and capital and expense productivity. These are still our primary priorities and we believe they will continue to drive our growth over the long-term. We will update you on these initiatives during our first-quarter call which we anticipate will be held at the end of April.

Going forward, we will plan to use our first-quarter calls as an opportunity to provide updates and insight on our progress within key growth drivers and any new long-term initiatives that may be coming online. Focus of our second- and third-quarter calls will be on currencies and consumer trends and operating results.

To conclude, we achieved another record season in 2014 and we believe the momentum will continue into the 2015 season when we expect to produce our sixth straight year of record results.

Now we will open the call for any questions or comments you may have.

(Operator Instructions). Afua Ahwoi, Goldman Sachs.

Thank you. Good morning team. Just two questions for me. First of all, given the harsh winter from last year, is there any sense you have on the school calendars for this year so far? Is that -- is it better, worse? Any thoughts on that?

And then secondly, maybe if you can talk a little bit -- I know you might give some long-term growth later on, but just curious. We just had Six report and they've been very successful with some of their holiday events. Is that an opportunity for Cedar Fair as well?

Good morning Afua. The school calendar, I think it is just probably too early to conclude pro or con on whether the school calendars will change as a result of weather. On a fundamental basis, independent of weather, the school calendars are essentially where they were last year.

There has been some flexibility built into the system in some states as they've gone to a total hours requirement versus a total days requirement. But I think as we sit here at this time of year with a predictive temperature tomorrow of -17 degrees in Sandusky, it is probably too early to address that.

We continue to look at opportunities to expand our calendars. Quite honestly, Knott's has a very successful holiday program that we continue to invest into and see results from. And so we will continue to explore where it makes sense for our parks where either the climate is favorable or they are already in an operating mode.

Thank you.

Barton Crockett, FBR Capital Markets.

Thanks for taking the question. I was interested. Brian, you said at the outset in your script that you are seeing positive trends in season pass adoption of all-season dining, group bookings, and advanced reservations at the properties. But I'm not sure I heard any numbers. Is there any detail you can give us around what you're seeing that is positive there?

Yes. At this point in time, it's such a small window ,we are not going to get into any specifics. Probably the largest component or the one that's most far along in its development would be season pass. What I can tell you there is we are up well into the double digits in terms of units and pricing continues to pace up as well. We went into 2015 with a plan to focus on reestablishing volume in season pass sales at some of our parks, and so we are a little bit more discreet with some of our price increasing. But we are very pleased with the overall revenue lift we've seen to this point.

To give you some flavor, what I will tell you is, at the end of 2014, deferred revenues were a little North of $61 million compared to $45 million at the same time in 2013, so up $17 million or north of 35%. That's reflective of the season pass -- positive movement in season pass sales as well as the initial sales around the season-long dining.

Just to refresh, we weren't selling season dining at this point in time last year. We didn't introduce that until late in the spring at the three parks we tested it. But the early penetration rates on that have been very encouraging, as have trends in those other areas I mentioned.

I might just add that part of what is sitting in the deferred revenue is accelerated renewals. That is a direct function of our CRM -- the application of our CRM systems. Our ability to communicate very effectively with those on a renewal basis is continuing to show results, so you may see a little acceleration in there as well.

Okay. Great. And I was also curious what the renovation of the hotel there. When will we be able to get some visibility into the impact of that on your business? When did it start to generate advanced bookings lists, or should we see a lift in rate? Do we see that now is the word getting out or is that more close to the season launch?

When it comes to hotel bookings, Barton, we are already up at this point in time meaningfully over 2014 levels. It is a small, as I said a moment ago, it's a small window of performance or bookings versus the full year.

The booking leadtime is a lot more compressed today than it was maybe three or four years ago. So we are not going to give specifics at this point on any results in Q1. But I can tell you that, as it relates to the Hotel Breakers, the early booking numbers look very good and the responses from the guests have been encouraging.

And we have just recently started pushing out photos of the renovation, which is dramatic. Brian and I walked that with Richard Zimmerman the other day. So I suspect word-of-mouth will build pretty strongly on this. And it's encouraging because it could initiate a longer length of stay. I think the hotel will produce an environment now that people want to stay longer. And it also attracts a little bit more of the benefit oriented consumer which tends to spend more in the park. So we have good hopes for it.

Okay, great. And then just one final thing. The accommodation and other revenue line was up 20% or so on a relatively small base. You mentioned that you got some insurance proceeds. Was that in that line in this quarter? And if, so can you cite that?

Yes, there's a couple of items going through, the largest of which would be the business interruption insurance on the Cedar Point's closure from the water main break. That was in the low single digits, so not a material number, but that's part of it.

The other piece that sliding through there is some of the revenue on events related to the closures around Great America with the Levi Stadium activity. That revenue associated with events there that isn't really part of the park's normal operations, that's flowing through there as well. So I would anticipate, as that partnership with the 49ers and Levi Stadium continues to develop, that we will hopefully see growth in that channel. But those would be the two items that are driving some of that incrementality you see in that line item.

Okay. That's great. I appreciate it. Thank you.

Jewel Simkins, Credit Suisse.

This is Christie Fredericks on for Joel. I just have two questions. The first is how are you currently viewing M&A opportunities?

Welcome. It's nice hearing your voice. So the way we look at this, look, over the past few years, we've focused on strengthening our balance sheet and creating a flexible capital structure. This allows us to take advantage of opportunities when they present themselves. At this point in time, we believe there are plenty of opportunities for organic growth within our parks, and we're going to be aggressive about pursuing those -- Charlotte, expansion at Carowinds would be a very good example. But in regards to M&A, we are always looking for potential acquisition opportunities, but only if it's at the right price at the right time.

Right, thanks. And also given just the improvement on guest spend thus far, how do you anticipate changes going forward with lower gas prices?

Traditionally, we haven't seen an impact from movement in gas prices, either pro or con. Obviously, if that contributes to the investors -- the consumers feeling like they have a little more disposable income, that should be a positive, but we have yet to see that play out.

Okay. Great. Thanks.

Tim Conder, Wells Fargo Securities.

Thank you. Brian, on the Canadian dollar, you said that it really didn't have an impact here in the 2014 year just completed. At current spot rates, would it be more noticeable in 2015?

Welcome, Tim. First let me say that our exposure to the Canadian exchange rate, what we're talking about here is a non-cash item. It's not reported US dollars EBITDA or revenue, whatever line item you want to pick. But yes, at current spot rates as well as what we are seeing, some of the forecasts we're seeing for the next six to nine months, it has the potential to be somewhere in the $5 million to $10 million range, which would make it more meaningful than it was in 2014, but still something that's very manageable I think on the overall landscape.

Okay. And thank you for the color both on the deferred revenue and the outlook on the season passes. Any comment you could make there on season passes as it relates to what that represented in 2014 versus 2013 of your total attendance?

Sure. I would say that what we saw in 2014 as it related to season passes continue to be encouraging. They continue to represent a little north of 40% of our overall attendance. Matt mentioned some of our CRM initiatives in 2014 were very much focused around season pass, both trying to drive higher renewal rates, which we saw a positive movement in, to drive increased visitation which was up in 2014 over 2013, so the average season passholder coming to the park more often, which gives us -- the more we can drive that, the more pricing power we have in that channel. So that's very encouraging. And we're also looking to activate the season passholder earlier, which we were successful on. So I would say most key metrics as it related to season pass in 2014 other than maybe the total units sold compared to 2013 were all very positive.

I might build on that a little bit, which is also to talk about our group sales business, which if we are experiencing more broadly some recovery in the consumer economy and the business is feeling better, that's a place we see considerable traction last year. We just came back from celebrating with the sales teams, and so that's a business we're going to continue to build. And that's one of the reasons we've got the investment in the catering facilities that are going on at many of our properties, including Santa Clara next to the Levi Stadium which we just briefly touched on. But we have a facility there that sits on the edge of our property that is now serving essentially as a hotel ballroom with revenue generation in the off-season for a lot of events that are either connected to the stadium or just connected to the community at large. So I think businesses are feeling a little better and that's translating into the group business as well.

Okay, great. Thank you both for the color.

(Operator Instructions). Josh Borstein, Longbow Research.

Good morning Matt, Brian and Stacy. Congrats on a good year. Just looking into 2015, how should we think about the operating leverage of the business right now? Should we anticipate something similar in 2015 that will balance investment and flow through like we saw in 2014?

I think yes, you should anticipate similar there. I think one of the things we are trying to be respectful of, Josh, is the opportunity to continue to make investments that have multi-year payoffs. I do think that will probably keep our margin about where it is today. The caveat is obviously there's great leverage in this business and we saw it in the fourth quarter.

But there are things and we haven't talked much about it yet at all, but we do think things like Wi-Fi in our parks are going to become a fundamental requirement, and those in the near term from an expense standpoint or capital standpoint, it's not overly expensive but it does pressure you a little bit on the flow-through.

Just to add to Matt's comments, I would say, as we look at 2014 versus 2013, one of the things that I mentioned on the call was how the mix of the parks' performance plays in. As we are extremely focused as you can imagine on getting Cedar Point to return to its 2013 levels of performance, while 2014 was a great year, it was the second best year ever, it was down. And so whenever your highest margin property isn't performing up to the prior-year standard, that puts some pressure on the overall mix. So I think some of that will be at play as well, but I echo Matt's comments that we will continue to stick to our initiatives and objectives when it comes to investing in the guest experience.

Great, thank you for that. And how should we think about admissions per caps growth rate versus in-park growth rate? Do you expect a balanced result this year?

Yes. I think it will be a balanced result. But what we are very pleased with is that we continue to have strong price value feedback from our consumers. And that is one of the reasons we built the rides we built; it's one of the reasons we operate parks, longer hours, etc. So I feel we still have a lot of room to run there. That may vary by park.

The other is our in-park offerings, particularly food and beverage. As the quality and variety of the offerings have improved, we've seen greater capture because in the parks it's traditionally about capture.

And then finally, we touched on initiatives that our head of Merchandise is starting to rollout which was not an area of particular focus over the past several years. So I think we're going to see it at both the front gate and in-park spend this year.

Just last for me, looking at 4Q and peeking into 2015 here, how does the consumer behavior look to you? Do you think the consumer has gained additional confidence that might translate into higher consumer spend?

Clearly, the consumer felt good about themselves in the fourth quarter, maybe better by indication versus the prior year. We are hopeful about that, I think it tends to swing with the mass media sometimes. But all the early indications that we've got and although the metrics are relatively small relative to our total season pass sales, etc., indicate that people are looking forward to the summer and they've got a little extra money to spend.

And are you still satisfied right now with the price elasticity you're seeing in the consumer?

I am excited about that, quite honestly. And that varies by park. So our new systems let us take advantage of that in a way that we probably had to do in a more crude manner before. So I am excited about that.

Thanks so much for taking my questions. Good luck of the rest of the year.

(Operator Instructions). It appears there are no further questions today. Speakers, I'll turn the conference back to you for additional or closing remarks.

First of all, thank you, everyone, for your interest in Cedar Fair. As I hope we've conveyed today, we had a very strong finish to 2014 which reaffirms our confidence in our long-term business strategy and the strength and loyalty of our consumer base. During this past year, we were also able to advance important long-term initiatives and we hope these initiatives combined with our strong capital program will make 2015 another record year for Cedar Fair. We are proud of where we've come from and we are optimistic about the growth opportunities ahead of us.

From an investor standpoint, this is a great industry, and Cedar Fair is an exceptional company. We produce a significant amount free cash flow, which when combined with our strong balance sheet, will allow us to continue to deliver value to our unit holders both in the near and long-term. We look forward to speaking with you on our next earnings call. Stacy?

Thank you, everyone, for joining us on the call today. Should you have any follow-up questions, please feel free to contact me at 419-627-2227. We look forward to speaking with you again in about three months to discuss our first-quarter results and long-term targets. Thank you.

That does conclude our conference call today. Thank you all for your participation.