Six Flags Entertainment Corp (FUN) 2016 Q4 法說會逐字稿

Good day and welcome to the Cedar Fair fourth-quarter and year-end conference call. Today's conference is being recorded.

At this time I'd like to turn the conference over to Stacy Frole.

Thank you, Isaac. Good morning and welcome to our 2016 year-end conference call. I'm Stacy Frole, Cedar Fair's Vice President of Investor Relations. This morning we issued our 2016 fourth-quarter and year-end earnings release. A copy of that 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 Chief Executive Officer; Richard Zimmerman, our President and Chief Operating 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 the 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 unselectively disseminated, all content of the call will be considered fully disclosed.

Now I will turn the call over to Matt Ouimet.

Thank you, Stacy, and thank you to everyone on the phone for joining us this morning. As Stacy mentioned, Brian Witherow, our Chief Financial Officer; and Richard Zimmerman, our President and Chief Operating Officer, are both on the call with me this morning.

As we stated in today's earnings release, 2016 was the most successful year in the Company's history, producing our seventh consecutive year of record results. Based on the continuing positive trends and early reads on our 2017 season pass sales, we remain on track to achieve our $500 million adjusted EBITDA target in 2017, a year earlier than our original forecast.

While I will talk about many of the component parts of our success later in my comments, the foundation remains a long-standing commitment to delivering the best guest experience in the industry.

I want to take this opportunity to publicly thank Richard and his team for doing the heavy lifting that creates the best day of the year experience for our more than 25 million guests.

Addressing the specifics of 2016, I'm particularly pleased that once again we achieved solid growth across all three of our core revenue metrics: attendance, up 3%; in-park guest per capita spending, up 2%; and out-of-park revenues, including our resort accommodations, up 6%. This top-line revenue growth, combined with the disciplined cost management, resulted in a 5% increase in adjusted EBITDA and a 10 basis point improvement in our adjusted EBITDA margin to 37.3%.

As many of you already know, the ability to grow attendance and per-cap simultaneously can be challenging. This is particularly true as our season pass attendance continues to grow. We credit this achievement to several factors, including the positive response season pass holders had to our all-season dining program, which was only in its second full year of operation; our newly launched all-season beverage program; and the strong demand we have seen for our special seasonal events. Our marketing and revenue management teams have also done a great job activating programs that offer consumers the right price at the right time, resulting in measurable incremental behavior.

On our last call, I highlighted the progress we've made on our brand positioning work, led by our marketing teams. This branding work provides a disciplined filter for making strategic decisions on how we enhance the guest experience and how we communicate with potential guests. Cedar Fair parks have a legacy of unique identities, and this work tells us how to tap into the emotional connection that has been created over multiple generations.

It is no coincidence that the parks that were the first to have this research completed, including Knott's Berry Farm, Cedar Point, and Canada's Wonderland, were the biggest contributors to our record results in 2016. We now have completed the brand positioning work for six of our 11 parks, and plan to complete the remaining five in the near future.

While the brand positioning work often influences the choices we make in terms of which new attractions and entertainment offerings to add, it also provides positive marketing leverage by ensuring the names and backstories to the attraction tap into the emotional legacy of each park.

I will call out three simple examples to provide context. Knott's Berry Farm's Boysenberry Festival is second only to our Halloween events in terms of attendance impact. It started as Knott's Spring Bloom, but it took off once we renamed it and reprogrammed it around the boysenberry's historical roots at Knott's. Again, at Knott's, the most innovative, immersive entertainment offering at any park this year was Ghost Town Alive!. Bringing to life the characters of Ghost Town drove strong demand with limited capital investment.

And at Carowinds, the brand positioning of where the Carolinas come together turned Carowinds into an entertainment destination for Carolinians seeking homegrown thrills. By presenting the best of Carolina food, music and entertainment, we've been able to significantly increase the food and beverage per caps at this park.

Finally, before I turn the call over to Brian to discuss 2016 results in more detail, I want to congratulate our California Great America team and their supporting cast from other parks in corporate. This park in particular had a very busy year in 2016. It began with hosting special events for Super Bowl 50, introducing the Taste of Orleans, a new immersive springtime event; the opening of Mass Effect, a new holographic 4D experience that was recognized by USA Today as one of the best new attractions for 2016; and the introduction of WinterFest, which transformed the park into a spectacular winter wonderland, with holiday shows and festivities for every member of the family.

These, and the many other entertainment enhancements we have made and continue to make allow us to maintain a strong price value proposition to our guests. Our 2017 season pass sales to date provide an early indication of continued positive trend lines in demand, with notable increases in both average price and number of units sold.

As always, I would caution that the majority of our season pass sales happen in the spring and early summer periods. But so, far so good.

Now, over to Brian for more details on our 2016 performance. Brian?

Thanks, Matt. From a financial perspective, we are extremely pleased with our 2016 performance, which, as Matt mentioned, represented our seventh straight year of record results. In 2016 we drove record attendance, guest spending, and out-of-park revenues, resulting in record net revenues and adjusted EBITDA.

We improved our adjusted EBITDA margin by 10 basis points to 37.3% while continuing to make targeted investment in our parks to enhance the guest experience, increase efficiencies, and expand our operating season.

We reduced our consolidated leverage ratio to 3.2 times debt to adjusted EBITDA, down from 3.4 times in 2015, with $123 million in cash on our balance sheet at year-end. We celebrated 30 consecutive years of paying a distribution to our unitholders. And we announced a 4% increase in our annualized distribution rate to $3.42 for 2017, which became effective for the December 2016 distribution payment.

These successes demonstrate the strength of our business model which has enabled us to substantially increase our return to unitholders. Since going public 30 years ago, our investors have enjoyed a compound rate of return of 11%, increasing to 17% with distribution reinvestment. During this time we've paid out approximately $2.3 billion in total distributions to investors. In 2017 we expect to pay out more than $190 million in distribution while continuing to aggressively invest in our parks to fuel the next layer of growth.

Our value creation strategy is rooted in our ability to consistently deliver growth year after year. In 2016, we reported an increase of 4% or $53 million in net revenues to a record $1.29 billion. This was driven by a 3% or 656,000 visit increase in attendance to a record 25.1 million guests. Also contributing to the 2016 performance was a 2% increase in average in-park guest per capita spending to a record $46.90, and a 6% increase in out-of-park revenues to a record $146 million.

We are very pleased with the balanced growth we've experienced across all areas of our business. The increase in attendance is a direct result of our strong 2016 capital program, combined with our innovative special events that provide immersive entertainment experiences for the entire family.

Our advanced purchase channels, including season pass sales, experienced the largest growth in 2016. We attribute this success to the Seasons of Fun that we have established at Knott's Berry Farm and are beginning to establish at our other parks. We expect this channel to continue to be a large contributor going forward, as we expand WinterFest to three more parks in 2017, providing another reason to visit our parks multiple times throughout the year.

The 2% increase in average in-park guest per capita spending was driven by a 1% increase in the admissions per cap, and a 2% increase in the pure in-park guest spend. We're pleased to see a solid lift in per-caps across both categories, particularly given the year-over-year growth in our season pass visits which tend to place additional pressures on these metrics.

The $8 million or 6% increase in out-of-park revenues for the year reflect higher occupancy rates and average daily room rates at our resort properties. Demand for accommodations remained strong, and our resort business provides a nice hedge against negative weather trends while also extending the average length of stay of our guests. This is why we will continue to strategically invest in this area over the next several years.

Moving on to the cost front, operating costs and expenses for 2016 totaled $827 million, representing an increase of $33 million or 4% when compared with 2015. The increase in cost is reflective of normal inflationary pressures, as well as the record number of guests in our parks entertained this year. The increase also reflects higher labor costs due to the increasing minimum wage rates and related pressures on seasonal labor costs.

For this reason, we established a special working group empowered to drive productivity initiatives across all of our parks. While several of these initiatives began to bear fruit this past season, we believe we will realize the lion's share of benefit from such initiatives over the next several years, as we continue to roll them amount and invest behind them.

As we look ahead to 2017, we do not expect to be impacted by the same kind of mandated cost pressures around seasonal labor that we experienced in 2016.

Meanwhile, adjusted EBITDA, which we believe is a meaningful measure of our park-level operating results, totaled $481 million for 2016, up $22 million or 5% year-over-year.

On the margin front, we generated improvement in our adjusted EBITDA margins through several contributing factors, including a significant lift in attendance and improving admissions per cap and a continued growth in guest spending on in-park products, such as Fast Lane, and our all-season dining and all-season beverage programs. The improved margins produced by these factors were somewhat offset by higher labor costs I just mentioned.

In the end, this resulted in our reported adjusted EBITDA margin increasing 10 basis points to 37.3%.

Also, in 2016 we continue to build on the success of our Halloween events and expanded our winter holiday offerings with the addition of WinterFest at Great America. These initiatives, combined with disciplined cost management contributed to our record fourth-quarter results. For the quarter, net revenues totaled $192 million, a $25 million increase over the previous fourth-quarter record. And adjusted EBITDA totaled $53 million, a $16 million increase over the previous record for the period.

As you can see, the incremental revenue generated during the fourth quarter flowed through nicely.

Looking ahead, as we continue to expand our fall programs and roll out additional WinterFest events -- we have three more planned for 2017 -- we expect to see the fourth quarter grow in terms of its relevance to the full-year. It is no longer a period dominated by off-season maintenance costs that were reasonably easy to forecast. The fourth quarter has and will continue to become a meaningful contributor to attendance and revenue, making it much more difficult to predict full-year performance by the end of October, as was the case in the past.

Now let me highlight a few items on our balance sheet. As we stated in our earnings release this morning, our record 2016 performance and solid operating cash flow have resulted in another year of improvement to our balance sheet. We ended the year with $123 million in cash on hand, no outstanding borrowings under our revolving credit facility, and a consolidated leverage ratio of 3.2 times. This of course improves our financial flexibility and lessens our reliance on off-season revolver borrowings, which peaked at $101 million in 2016.

Overall, we are extremely pleased with our capital structure and the strength of our balance sheet today.

In summary, we ended 2016 in very solid financial position. We delivered on our goal of driving top-line revenue growth through improved attendance while increasing guest per capita spending, even with a higher percentage of season pass attendance. We are well positioned, heading into 2017. Deferred revenues as of December 31 were up 19%, reflecting the early strength of our 2017 season pass and all-season dining and beverage programs. And we have a capital program in place that positions us to deliver record results for an eighth consecutive year.

We continue to generate a significant amount of free cash flow, and our capital structure provides us with substantial operating flexibility. We will continue to prudently manage our cash flows to maximize value for the unitholders through a combination of cash distributions and organic growth opportunities.

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

Thank you, Brian. As our guests have come to expect, we have a compelling lineup of new rides and attractions for this coming year, all of which are scheduled to open on-time and on-budget. This includes Mystic Timbers, the world-class wooden roller coaster at Kings Island, and the newly rebranded and expanded water parks at Cedar Point and Knott's Berry Farm.

Over the last several years, our capital spending has included much more than just new rides and attractions, and 2017 is no different. Our investments are focused on creating a level of quality in guest experiences that will drive demand and value creation for many years to come.

For example, this year we are replacing, expanding, and updating our group catering facilities at Worlds of Fun in Dorney Park. These parks will have completely new facilities, allowing us to focus on aggressively growing our group event revenues at these parks. Our catering facilities are no longer simply picnic tables with a roof. They include modern kitchen facilities, free park-wide Wi-Fi, and self-service refreshment centers. The addition of executive chefs also allows us to provide customized experiences, driving higher guest spending levels through premium food offerings.

With the expansion of our water parks at Knott's and Cedar Point, we are able to solve food and beverage capacity constraints which heretofore have limited our revenue opportunities. And, as simple as it may sound, a Company-wide water park initiative to add shade, lounge-style seating, and dining tables will help improve the overall experience and extend the length of stay.

Investments of this nature are what continue to differentiate a Cedar Fair Park from a generic amusement parks. This is one reason our per-caps remain the best in the regional amusement park industry.

In addition, we will continue to invest capital around our labor optimization efforts, including more self-serve locations to support our all-season beverage program and more self-serve kiosks at select food locations.

2017 is also a noteworthy year as there are several years' projects, years in the making, that are now coming to light. One month from now, we will see the first tournament at the Cedar Point Sports Center, our new amateur sports complex overlooking Cedar Point. The result of a public/private partnership with Erie County, the City of Sandusky, and Sports Force, this facility is already receiving strong interest from baseball, softball, lacrosse, and soccer teams which we expect will drive additional demand for our hotel rooms and park tickets. We received outstanding support from Erie County, the City of Sandusky, and Sports Force in making this a reality. They have truly been great partners, and we hope to announce similar public/private ventures in other markets in the near future.

To serve the additional demand created by this facility, Cedar Point will increase its hotel room count by nearly 20% over the next two years. This includes an additional 69 rooms in our newly rebranded and renovated Cedar Point Express Hotel that will be open for this coming season; and a new 158-room tower at the Hotel Breakers, scheduled to open in 2018. These expanded resort offerings at Cedar Point continue to enhance the park's super-regional appeal and allow us to lean in more aggressively in terms of marketing efforts in our outer markets.

I also want to update you on our rezoning application for California's Great America in Santa Clara, California. I am pleased to announce that at the end of last month, we received approval of our rezoning request. This approval essentially provides us the certainty we need to move forward with the long-term master plan for this property.

Our research indicates there is significant growth potential for this park, as Santa Clara and the surrounding Bay Area is one of the fastest-growing markets in the US, with a very strong economy. There is a large resident base, an extremely attractive collection of marquee employers, and a uniquely large number of office workers within walking distance of the park.

Given this significant market opportunity, we expect this park will contain some of the best thrill rides available, along with a full complement of family fun and unique dining and entertainment venues that will serve both our park guests and others. We will provide more information on this multiyear strategy as we move forward with our investments.

I would now like to highlight our immersive entertainment offerings, which we believe differentiate the guest experiences at our parks when compared with other regional entertainment offerings. Ghost Town Alive!, our extremely popular interactive experience at Knott's Berry Farm, will return for a second year with new characters and even more interactive Old West fun, as bandits and cowboys battle for control of the West. Similar to last year, new storylines and plot twists will be revealed throughout the season, ensuring guests will never experience the same adventure twice.

Additionally, the award-winning Battle for Cedar Point, an augmented reality game that incorporates technology into the park experience, will return in 2017. This battle concept is also being introduced at Kings Dominion in combination with the park's rollout of free, park-wide Wi-Fi. And Knott's is introducing a pay-for-play virtual reality experience called VR Showdown at Ghost Town.

Also, we will be expanding the operating season into November and December at three more parks with our new WinterFest holiday festivals. Kings Island, Carowinds, and Worlds of Fun will each be transformed into spectacular winter wonderlands, with holiday shows and festivities for every member of the family.

As Brian mentioned earlier, Cedar Fair has a long history of delivering returns to our investors. Since going public 30 years ago, our investors enjoyed a compound rate of return of 11%, increasing to 17% with distribution reinvestment. This long-term success has come from making significant investments that are designed to not only have immediate impact, but also serve to create value for decades to come.

The continued high-quality enhancement to our parks, the lengthening of our operating season via WinterFest, the expanded impact of our CRM and revenue management systems, the activation of our 1,400 acres of land available for development with resort hotels and amateur sports venues, and the dramatic growth opportunity created by the rezoning of California's Great America provide us with the confidence that we will continue to grow Cedar Fair well into the future.

We are well positioned to make 2017 our eighth consecutive year of record results. And we remain laser-focused on continuing to deliver both short- and long-term returns to our investors.

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

(Operator Instructions). Barton Crockett, FBR.

I was very impressed by the deferred revenue commentary, up 19%. But I've noted that in the past couple of years, you've had kind of good growth in deferred revenue that's been well in excess of the revenue and attendance growth for the year. How would you describe the correlation, at this point in the year, between the deferred revenue and what actually happens for the year? And what are the puts and takes on why those numbers would be similar or different as the year progresses?

Sure, Barton. It's Brian. As we said in prior calls, and worked very actively on over the last few years, has been to pull forward as much of the sale of products like season pass, all-season dining, all-season beverage et cetera, to as early as possible. So our marketing teams, our CRM teams have done an excellent job of pulling those purchases as early as possible in the process.

So I think the increases that we talk about year-over-year are reflective of those efforts. Some of it is incremental. But if we are honest, there's probably a little bit of a pull-forward effect. So some of what you are alluding to, as far as where the trend is as of 12-31, and then where it goes to, it probably reflects a little bit of that, so that pull-forward effect. But from our perspective, we'd rather get that business booked as quickly as possible and as early as possible.

So we are very happy and pleased with where we are at right now in terms of season pass, the season pass-related programs, as well as some of the individual ticket programs that we've got out there. But, that being said, it is a small view into the full 2017 season. So we have to keep the momentum going.

Okay. And then I was also curious about the commentary on wage pressure. So I think you were saying that you don't expect the same type of cost pressure in 2017 that you saw in 2016. And I was wondering if you could be a little bit more granular there. Would you expect expense growth to be 1 percentage point or so less? If you could quantify it, that would be helpful.

Barton, it's Matt. I'll take a shot at it, and maybe to ask Richard to jump in here. But I think the pressure we saw from mandated wages last year was substantially greater than what we see that's coming at us this year. To the extent that there is pressure -- and I can't necessarily quantify it, although we've obviously put some numbers in our budget as we have moved forward -- it would come more from full employment in the marketplace, which we would hope would then translate into consumer dollars available for spending to visit the park.

Richard, anything else?

No. Just every market is very unique in its region. But I think the availability of labor is something we are more focused on this year. Last year, it was more about the affordability.

And then just one other thing, if I could throw it in here. Stepping back, the Great America property is a beautiful property. You're doing a lot to enhance it. Looking forward a few years, this right now is not one of your largest parks in attendance; but looking forward a few years, do you think that the opportunity is for this to become one of your three largest parks to be in that ZIP Code of contribution to the Company as you invest in it?

I think our expectation is it would be one of our top-tier parks. There is -- it's a long way from being representative of the assets that we have at our largest parks today. But it is certainly the most dynamic and attractive -- one of the most dynamic and attractive marketplaces we operate in. So we have very high expectations for that park.

Okay. That's great. Thank you very much.

(Operator Instructions). James Hardiman, Wedbush Securities.

This is Sean Wagner on for James. The 2016 EBITDA growth was a little better than the 2017 distribution growth. Should we think about the 2018 distribution as just kind of being in line with the 2017 EBITDA growth that you've essentially guided to? Or does this year's performance kind of create an opportunity for outsized distribution growth, or what goes into that decision moving forward?

Sure, Sean, this is Brian. First, let me say we are extremely pleased with the market's reaction to the increase that we put in place back in November. The 4% increase in the distribution was based on our outlook for the full-year growth in EBITDA at that point in time.

As I said on the call, the ability to forecast with the same degree of accuracy that we had in the past gets made more difficult as we continue to expand our fourth-quarter operations. And that's only going to continue to become more difficult.

At this point in time I would tell you that management and the Board is very pleased with where we are at. I don't see us seeing another interim increase; but, rather, we'll let the 2017 season play out and see where we are at at the end of the year. It may come down to, at some point in time, where the cadence of increase in the distribution needs to get pushed back into the first quarter of the following year if the fourth quarter becomes harder and harder to predict in October or November, but we are not there yet.

I would just say that we are really happy with where the market is at from a response to the distribution, and we're going to continue to try and grow it as the business grows.

Okay, that's helpful. And just real quick, is there any color you could give us on WinterFest? Any lessons you've learned there, adding it to another park this year? And kind of how should we think about it moving forward? When would you expect, as you are adding additional parks, when would you expect the incremental contributions from those to flatten out?

So, I'll start up, and again I'd let Richard jump in here. Look, we were extremely pleased with what we saw at Great America. Again, I'll let Richard speak to that. I think, Sean, this year what we expect, quite honestly, is modest results out of our WinterFest. There's some startup costs associated with the first year, as well as ramp-up in demand which happens over multiple years. Clearly if we saw what we saw at Great America that would exceed our expectations at this point. But we've got relatively modest expectations but are very pleased with the offering.

Richard?

Thanks. And, Sean, just in terms of quality event, I can tell you we are extremely pleased with the quality event we put on and the guest reaction to it. If I think back to when we started out with Halloween and our very successful haunt events, it took four or five years to get to this level of quality. So I'm very pleased with what we are able to give our guests in the first year. And I think that bodes well (technical difficulty) for the success of the future events going forward.

That's very helpful. Just tagging onto that. Are there any parks that aren't realistic targets to add WinterFest to because of seasonal weather or anything like that?

We have an internal debate on that, and I suspect that will be resolved in the next couple years. Obviously those that do not have a population base immediately adjacent, and those which tend to have more severe winters are the outliers at this point.

Okay, that's very helpful. Thank you very much.

Tyler Batory, Janney Capital Markets.

Just a couple questions for you on Knott's. Obviously we are getting close to lapping the opening of Harry Potter in California. So first just wondering if you can comment specifically on any trends you are seeing at that park, now that Harry Potter has been open for a few quarters.

And then, second, how are you thinking about CapEx spending at that park? Would you anticipate that moving higher, just given what the competition is doing out there?

Tyler, I've got to give calls out to my marketing team. We had identified the risk associated with Harry Potter's opening; obviously see that coming. But despite that -- or because of that; you can decide which that is -- we had another record year at Knott's this year. And so we did not see any demonstrable impact on our business associated with the opening of Harry Potter. And we will not respond in capital to whatever Disney does or whatever Universal does. That's not part of our playbook.

What we will do is continue to position Knott's as the communities' park. And the expansion of the water park this year to create capacity in our peak summer months is a good example of where we can differentiate Knott's from the other major players at a very modest capital investment. But you will continue to see us invest in Knott's. We believe there is still running room there of note, particularly when we are priced at about $100 for a season pass. And as you have noted, the other players are well above $100 for a single day, at this point.

Okay great. And is there any additional comments you can make on adding lodging or hotel in some of your parks? I know that's something that you've been working on in the past. I'm not sure if there's anything that you can say on that front.

Tyler, this is Brian. As we said on the call, we are very pleased with the growth we've continued to see in that channel for us. The resort properties that we do already have in ownership and operation continue to perform well. We saw ADRs and op rates improve across the system this past year, and that's on the yields of -- increases in 2015. So we are going to continue to look to expand that; what that means that each park, very different conversations.

We have some parks, as we've said publicly, that we believe the markets can support additional hotels. We are in conversations with a couple of -- on a couple of markets, and gone through our due diligence and feasibility studies to understand what that means. And we are in conversations with the hotel groups to negotiate deals around flags or brands for those properties.

At some of our other parks, the accommodations may mean more of the higher-end campground facilities that we already have at four of our parks. So definitely an area of growth for us; I think something that's a differentiator for us in the space. And we're going to continue to lean into it.

Okay, great. That's helpful. And then last, do you have an updated number, just for CapEx in 2017, just given some of the projects that you have going on here?

Sure. So just to give a little context: in 2016, the CapEx totaled roughly $160 million. And that -- a little bit of an elevated number from maybe some metrics; or some and CapEx dollars that we've talked about in the past was related to projects beyond the core, such as hotel expansion, the addition of the youth sports complex in Sandusky.

For 2017, the outlook right now is that we'll be investing roughly $135 million in infrastructure and marketable capital. We also, though, anticipate investing an additional what could be sized as much as $30 million to $40 million to activate some of those expansion opportunities we were just talking about, regarding resorts. Additional youth sports facilities that we are in discussions with -- Matt mentioned on the call; and then the incremental WinterFest projects that we've got on the radar.

Okay. All right. That's great. Thank you very much.

Tim Conder, Wells Fargo Securities.

Brian, you commented on the deferred revenue. Can you just remind us the cadence? Historically -- and, granted, you said you've seen a little bit of pull-forward this year, I'm guessing helped by the WinterFest that you had. But the historical, how much of your season passes, for a given year, say, 2017, are historically sold by the end of Q4, Q1, Q2? Just a little color on that. And then again, over time, we would expect that to shift probably a little bit from what you said earlier.

Yes, Tim so we've -- as I said earlier we been able to pull forward or get people -- get our consumers, our guests to buy season passes and other tickets earlier. I'm not going to give specific percentages. But I will tell you still the lion's share of season pass sales and the related season pass products, like all-season dining and beverage, still get sold between March and the end of June.

So while pleased that we are up 19% in terms of our deferreds, as of the end of 2016, we still have to maintain the momentum as I said earlier as we get into the first and second quarters. Because without a doubt, that's when the bulk of the sales occur.

Tim, it's Matt. So the other thing I think that we have not talked enough about is the total combined advanced purchase that occurs in our system these days. If you take the season pass sales and you take the group sales and you take those who buy single-day or multi-date tickets ahead of their visit, which is an increasing percentage due to our CRM efforts, et cetera, we are over two-thirds of our business today is committed before people arrive at the park. And so, I just wanted to put that out there because we've never really talked about that the same way.

Very helpful, Matt. Thank you. Along that line, then, any color that you would give to sort of breakdown those buckets, how that generally runs of deferred revenue? And then, maybe your season dining, how is that growing relative to the season pass? Or maybe you can talk in terms of attachment rates or however you feel comfortable.

Yes. So I'll give you -- I'll be at the highest level, and then I'll turn it over to the guy with the detail, Brian. We've migrated to the place where over 45% of our attendance is coming from season pass holders. The largest percentage on top of that is obviously our group business, which is another 20% to 25%, rough numbers. And then there are the ticket sales I referred to otherwise.

But Brian, maybe you can give some more granularity on kind of the attach -- obviously not be attachment rate -- but give Tim some context.

Yes. Within the deferreds, we don't break down, Tim, publicly what piece is season pass versus the various supporting programs. I will tell you in terms of dollars, though, the lion's share is actual season pass. It's the highest priced product of anything that's in that channel. And it's also the -- by nature of the fact that you are not penetrating on those other programs at 100%, it's also the largest in terms of the volume of units.

As we think about dining plans and beverage plans, I think maybe taking a step back for a second because as Matt said, we don't disclose publicly what those penetration rates are or attachment rates are. We are only in really -- 2016 was the second or third year of dining for most of our parks. And it was really the first year for all-season beverage. And so, what I'll tell you is we've seen improving penetration or attachment rates each year in the dining as it's gone along. So those parts that were in their third year had shown two straight years of improving those rates. And we would expect that to continue as we continue to refine our marketing and communication methods and messages to the season pass holders and the guests, both in terms of dining and beverage.

Okay, okay. And then, gentlemen, if I may on Santa Clara, so clearly a significant hurdle cleared here with the rezoning. How should we think about capital commitments there over the next couple of years? When do pieces of that come online? Is there any way to draw somewhat of an analogy or parallel to the $50 million-plus three-year plan that you are now entering the third year at Carowinds?

Tim, I think I'll be more comfortable talking about that probably in 3 to 6 months as we roll out our sequence master plan. But we do see parallels. I'm not sure the absolute dollars is the same, but we do see parallels with what we've done at Carowinds. We need to go in and we need to update infrastructure and create capacity for people to eat and do other things when they visit the park. We need to add significant new rides, a la Fury, et cetera. And we have a unique opportunity there for year-round operation, dining and entertainment. And so I want to be more articulate; and, candidly, a little more disciplined on my side before I'm able to give you more detail.

And the same question Matt -- I know it's a little further out -- on Valleyfair.

Valleyfair is a little further out. We have a new general manager up there. We lost a guy we really thought highly of, so we put another guy we really thought highly of up there. And so we are going to spend some time, me particularly at Valleyfair, this year, understanding that marketplace. We are reaching out to some of the corporate leaders up in that area to help us understand the marketplace a little better.

So that's a little further out, Tim.

Great. And thanks, and congrats to all the whole team for a great year.

Well, we appreciate it, Tim.

(Operator Instructions). Matthew Brooks, Macquarie.

Can we just get back to the attendance growth again? It seems pretty impressive to grow like 11% in the fourth quarter, on the back of the pretty strong growth you had in both of the last two years. I wonder if you can talk to it again, and maybe talk a little bit more about the drivers and perhaps quantify a little bit more whether it was adding WinterFest. I guess some of it was pent-up demand from the weather impact of Q3, and anything else that was driving that.

I don't think I can do a better job than you just did. Obviously the Halloween events, we enjoyed a really good Halloween season. And I do think there probably was some pent-up demand from people who hadn't had the opportunity or chose not to visit early in the year. What did we have, Richard? About 20 extra days of operation at WinterFest? And we are very pleased with that.

The other thing I probably should call out as you think about next year, we did close one water park at the end of this year, a freestanding water park, Wildwater Kingdom at Geauga. That will affect our attendance next year. That will take us back a little bit. It's rather immaterial as it relates to EBITDA. But I just want to call that out as you are modeling next year.

And I think it was -- a big chunk of it was the Halloween season, where we got very lucky in terms of the weather and that pent-up demand; and then, no doubt about it, 20 extra days of WinterFest was helpful.

Yes, as we look forward, I would expect 20 to 25 days at each of the parks that come online.

All right. And also, if you look through it, you sort of disclosed it differently. But if you look at the food, merchandise, and games spending per visit, it was down slightly, I think about 4%, and down about 0.5% for the full year.

Could you comment on that? Is that because some of the revenue is shifting to people buying the passes, and then it shows up in your accommodation and extra charges instead?

Matthew, this is Brian. So if you're looking at -- in terms of the income statement presentation in the financials, or in the earnings release, a little bit of a different classification there. As we said on the call, we are very pleased with the spend, the pure in-park spend that we generated. And it was driven in large part by F&B; and then secondly, what we would categorize as extra charge attraction, Fast Lane and Fright Lane being the core drivers in those. Those items -- those dollars, that guest spend appears in the accommodations and other. So that may be where you are seeing a little bit of that disconnect.

Right. And if you look at your SG&A and take out the stock comp, it looked like it was down 4%, which was good. Is there anything that you can call out there in terms of why that was down a little bit?

No; as far as SG&A is concerned, in any given year there's always a few different projects that you might activate in one year versus another. Usually most of what's impacting that is comp-related items. So outside of maybe changes in the unit price and its impact on equity comp-related, there wasn't anything that I would say is a significant callout.

Okay. And last one for me. I know you don't want to disclose stuff about individual parks. But can you say whether growth in attendance and EBITDA was higher at the parks where you invested more capital last year?

We can absolutely say that. We've done analysis, which we always do for the Board, that shows returns on the individual assets. And we're very fresh with that information, and we can say that where we invested, we absolutely saw the returns.

Okay great. Thanks for your time.

That concludes today's question-and-answer session.

Ms. Frole, at this time, I'd like to turn the conference back over to you for any additional closing remarks.

Thank you. I'll pick up here. Thank you, everyone, for your interest in Cedar Fair, and certainly for your time today. We are fortunate to have a business model that has demonstrated resiliency in varying economic and market conditions. We are extremely proud of our parks and remain committed to broadening the guest experience, becoming more than just a place to ride rides. Our high quality assets, well-run parks, and constant focus on operating excellence continue to differentiate Cedar Fair. And our unique blend of thrills and family entertainment creates a loyal repeat customer base. As a result, we remain confident in the long-term strength of our business. And we are on track to meet our Fun Forward 2.0 goal by the end of 2017, a full year earlier than planned. Thank you.

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.

This concludes today's call. Thank you for your participation. You may now disconnect.