Six Flags Entertainment Corp (FUN) 2017 Q3 法說會逐字稿

Good day, and welcome to the Cedar Fair Third Quarter 2017 Earnings Conference Call.

Today's conference is being recorded.

And at this time, I'd like to turn the conference over to Stacy Frole.

Please go ahead.

Good morning, and welcome to our third quarter earnings conference call.

I'm Stacy Frole, Cedar Fair's Vice President of Investor Relations.

This morning, we issued our 2017 third quarter 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 on 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 connection with -- or 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 notifications 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.

Matt?

Thank you, Stacy, and good morning, everyone.

I'd like to start by again saying how proud I am of our entire Cedar Fair team, with a special call-out to our Park employees who continue to do the heavy lifting when it comes to delivering the best guest experience in the industry.

We know that our investors appreciate a high level of transparency, and therefore, we are continuing our practice of reporting results through significant holiday milestones.

With that said, I'm pleased to report our best post-Labor Day performance in the company's history.

As we anticipated, our Halloween events continued to grow in popularity, and the record demand for these events helped to increase our net revenues on a same-park basis through this past Sunday, October 29, to $1.24 billion, up 1% when compared with the same period a year ago.

Since the end of the third quarter, we have generated a 5% increase in attendance and a 4% increase in average in-park guest per capita spending, reaffirming our confidence in our business model, along with the strength and loyalty of our consumer base.

Since we introduced our FUNforward long-term strategy in 2012, we have seen continued success from the commitments and investments we have made to enhance the quality of the guest experience and strengthen our business model.

For example, many of the core capital investments we made in 2017, like those we made previously, will have significant long-term benefits well beyond this season.

The 2 major water park expansions at Cedar Point and Knott's Berry Farm created additional capacity, expanded the destination appeal of both parks and proved to be compelling features for season pass buyers.

We also expanded our food and beverage capacity in all of our parks, along with new group catering facilities to help service our popular All Season Dining and all-season beverage programs and the continued buildup of our group business.

And the addition of our WinterFest event at 3 more parks this year is yet another step in the process of extending our season and broadening our offerings to our guests.

The introduction of a world-class wooden roller coaster at Kings Island, the addition of the Cedar Point sports complex and the renovation expansion of the Cedar Point Express Hotel in 2017 will also serve us well for many years to come.

Additionally, we have focused on creating immersive multi-week special events which generate an urgency among guests to visit our parks.

These events have had a significant impact on our year-to-date results and will continue to benefit us going forward.

For example, this year we introduced a month-long event celebrating Canada's 150th anniversary at Canada's Wonderland, our park in Toronto.

We also expanded our daytime family Halloween offerings across all of our parks and continued to grow our nighttime Halloween events.

The expansion of our operating season into November and December with winter holiday celebrations has also driven record revenues from our advanced purchase channels, including season passes, All Season Dining and all-season beverage programs.

This has resulted in more than 30% increase in our deferred revenues at the end of the third quarter.

I also want to point out that the popularity of celebrate Canada 150 was so great that this event will become an annual tradition, featuring entertainment and food and beverage offerings that recognize the great Canadian culture.

When our FUNforward strategy was originally announced, we discussed the significance of investments in new CRM and e-commerce platforms.

We also built a new revenue management department and added new division leaders to develop best practices in food and beverage, merchandise and group sales.

Fast forward to today and we now have the foundation to capitalize on big data, deliver a focused message to current and prospective consumers and offer unique culinary experiences.

The amounts we spent on capital investments and operations allows us to strengthen our offerings and maintain the quality of our existing assets while continue to provide a guest experience that sets us apart from other regional entertainment options.

We see this differentiation manifested in the higher per caps we achieved when compared with other generic amusement parks.

We also believe our commitment to the guest experience and to the quality of our assets is what makes Cedar Fair the best long-term investment in the industry.

Our strategy for the past 30-plus years has been to take advantage of our strengths to balance near- and long-term growth and ensure investors we can confidently deliver the distributions they rely upon through all economic cycles.

As such, I'm pleased to report our Board of Directors has declared a 4% increase to our quarterly cash distribution, payable on December 15, bringing our annual rate up to $3.56, a more than 5.5% yield at today's prices.

Now I'd like to turn the call over to Brian to discuss our third quarter and year-to-date results.

Brian?

Thank you, Matt, and good morning, everyone.

As Matt mentioned, we are very pleased with our strong operating performance through this past Sunday, October 29, which puts us on track for our eighth consecutive year of record revenues.

Before I discuss the positive trends we experienced in October, I would first like to provide additional color on our third quarter results.

It's important to note that since our quarter's end on the last Sunday of the month, our third quarter results for both 2017 and 2016 each include 13 weeks of operations and an equal number of weekend operations.

As detailed in our earnings release, for the third quarter of 2017, we reported a $2 million increase in net revenues to a record $653 million.

This was the direct result of a 2% increase in average in-park guest per capita spending to $48.73.

This increase was slightly offset by less than 1% decrease in attendance and $3 million or 4% decrease in out-of-park revenues.

For modeling purposes, during the quarter, we entertained 12.4 million guests and generated out-of-park revenues totaling $65 million.

Excluding a noncore stand-alone water park that was closed in September of 2016, net revenues on a same-park basis increased 1% or $7 million for the third quarter.

During this period, attendance on a same-park basis increased 1% or 103,000 visits, and average in-park guest per capita spending was up 1% or $0.39.

The increased guest spending in the third quarter when compared with the same period a year ago came primarily from improvement in pure in-park spending.

Our food and beverage category led the increase in pure in-park spending, driven by the continued growth of our All Season Dining and beverage programs.

This increase was offset by less than 1% decrease in admissions revenue per capita, which we attribute to higher season pass attendance mix and recognizing season pass revenue over a greater number of park visits for the first time at 3 of our parks that will now be open in November and December.

To take out the accounting noise for our season pass program and the recognition of revenue on incremental visits over a longer period of time, admissions per capita on a non-season pass basis increased 2% during the third quarter.

As previously disclosed, attendance trends through the Labor Day weekend were below expectations due to more than a few instances of unfavorable weather on some of our traditionally peak attendance days.

For example, on Labor Day weekend, Kings Island and our new Cedar Point Shores Water Park were each forced to close for a day due to extreme weather conditions.

While disappointing at the time, over the years, we've come to realize that during the course of every season there will be ups and downs in attendance as a result of macro factors outside of our control.

Our job is to manage through these cycles and not let these factors become an excuse.

Consistent with what we would have expected, as the weather normalized, we have seen attendance recover since Labor Day, and trends improved over the remainder of the third quarter and into October, indicating once again the powerful draw of our attractions.

Moving on to the cost front.

Operating costs and expenses for the third quarter totaled $327 million, representing an increase of $11 million or 3% from the third quarter of 2016.

The increase in expenses was largely due to increases in labor costs, additional operating costs associated with new multi-week special events such as celebrate Canada 150, the timing of certain park maintenance projects and a legal reserve accrual.

The increase in labor costs this quarter was primarily due to higher seasonal wage rates, along with normal merit increases.

Excluding the impact of the closed water park and other nonrecurring costs, operating costs in the quarter on a same-park basis would have been up 2% over last year.

Adjusted EBITDA, which we believe is a meaningful measure of our park-level operating results, was $334 million for the third quarter of 2017, down $2 million or less than 1% year-over-year.

The decrease in adjusted EBITDA during the quarter of 2017 was primarily the result of the unfavorable weather conditions which reduced attendance on peak operating days.

Again, we did see these trends improve in the latter part of the third quarter and into October once weather conditions normalized.

Overall, our park GMs and their teams have done an excellent job of keeping actual cost increases inside of budget in response to the shortfall in attendance through Labor Day.

I can assure you that we remain highly focused on managing operating costs as we pursue our long-term strategy of maintaining our historically high adjusted EBITDA margins while continuing to invest in the guest experience.

At this point in time, we anticipate our 2017 full year adjusted EBITDA to be between $480 million and $490 million and our adjusted EBITDA margin to be approximately 36.5%.

We always remind everyone that it's difficult to extrapolate partial season performance into full year results, which is why we believe it's important for us to discuss our attendance and revenue trends through this past Sunday, October 29.

Based on preliminary results, same-park net revenues through the first 10 months of the year were up 1% or $12 million to $1.24 billion.

The year-over-year increase was the result of a 1% or 192,000 visit increase in attendance to 24.1 million guests and a 1% or $0.33 increase in average in-park guest per capita spending.

During the same period, out-of-park revenues decreased 2% or $3 million to approximately $133 million.

The increase in attendance was led by the ongoing popularity of our attractions, leading guests to take advantage of our advanced purchase channel and, in particular, season pass sales.

We believe this is a direct result of our marketing programs, our capital investment strategies and our special event programming, all of which provide enduring reasons to visit our parks early and to visit them often.

This has resulted in a combination of more season pass units sold and an increase in our average visit per pass holder through this past weekend.

I'm also pleased to say this trend is continuing as advanced sales for 2018 are off to a solid start.

Given the shift in attendance mix towards season passes and the extension of our operating season into November and December for 3 more parks, we're pleased that we have also been able to generate continued improvement in guest per capita spending levels through this past weekend.

The 1% increase in average in-park guest per capita spending was driven by improved spending in admissions, food and beverage and premium product offerings.

Now let me highlight a few of the items on the balance sheet.

Our liquidity and cash flow remains strong, and we ended the third quarter in solid financial position with $250 million in cash on our balance sheet.

At the end of the third quarter, our consolidated leverage ratio was 3.5x, well within our comfort range in the current credit market environment.

For the near future, we expect our average cost of debt to be approximately 5.3% and annual cash interest cost to be approximately $85 million.

Deferred revenues at the end of the third quarter were $87 million, up $21 million or more than 30% from the same time last year.

More than 2/3 of this increase is associated with our record season pass and All Season Dining and beverage sales for 2017 and the recognition of revenue on incremental visits over a longer period of time.

The balance of the year-over-year increase is associated with the solid start to our 2018 advanced sales programs.

Finally, as Matt mentioned earlier, we are increasing our quarterly cash distribution by 4% to an annualized rate of $3.56 per limited partner unit.

The $0.89 per limited partner unit quarterly cash distribution is payable on December 15 to unitholders of record on December 4. The actions we've taken to strengthen our balance sheet, combined with our confidence in the long-term growth of the business, allows us to increase the distribution modestly more than our expectations for EBITDA growth this year.

We remain committed to rewarding our unitholders with a sustainable and growing distribution that reflect the ongoing strength of our business model and long-term strategy.

We believe the modest -- that modest variations in EBITDA growth should not impact the expected growth in the distribution and are -- and as such, are comfortable in committing to a target of 4% growth in the distribution each year going forward.

As always, we'll continue to prudently manage our cash flow to maximize value for our unitholders both in the near and long term.

Now I will turn the call over to Richard to provide some further color on our longer-term outlook.

Thank you, Brian.

This is an exciting time for Cedar Fair.

As you've heard today, we are coming off our best post-Labor Day performance in the company's history, and our season isn't over yet.

We now have 5 parks preparing for their upcoming WinterFest and holiday celebrations in November and December compared with 2 last year.

These immersive holiday events will provide a better and differentiated guest experience within the regions we operate by featuring imaginative themed areas, millions of vivid lights, specialty foods, ice skating and falling snow.

Based on guest feedback from our 2 events last year and the sale of season passes and other advance purchase commitments this year, we expect our 3 new events in 2017 to entertain at least an additional 500,000 guests or roughly 2% of our overall attendance for the year.

As we look forward to 2018, we have a tremendous capital lineup of new rides and attractions, including 4 new coasters.

You can read all about these world-class roller coasters in the news release we issued earlier this week, summarizing our capital program for next year.

One of the most notable is Steel Vengeance, the world's first hyper-hybrid roller coaster at Cedar Point, the roller coaster capital of the world.

At more than 200 feet tall, the new hybrid design combines a steel running track with a massive wooden structure that provides an extremely smooth ride while enabling the coaster's train to perform maneuvers previously unheard of on a wooden model.

Knott's Berry Farm will also be introducing HangTime, the West Coast first dive coaster, enhancing its position as a must-visit destination among Southern California theme parks.

The new beach-themed dive coaster will be a great complement to the successful boardwalk area we refreshed several years ago.

We are investing in more than just new rides and attractions in 2018, which I believe is an important differentiator for Cedar Fair.

We are also making investments that will provide us the opportunity to transform outdated sections of our parks into vibrant new areas as well as providing new experiences for our guests through enhanced culinary, retail and immersive entertainment offerings.

Our focus and investment in the overall guest experience has served us well in the past and will be critical to our success in the future.

At this point in time, our 5-year capital strategy includes approximately 10% of revenue being spent on marketable new rides, attractions and park infrastructures on an annual basis.

Through the use of cash on our balance sheet, we also plan to invest incremental capital dollars into development of land adjacent to our parks, primarily aimed at activating incremental revenue streams.

In 2018, this will include the new 5-story addition to Cedar Point's historic Hotel Breakers, which sits along the park's mile-long beach front.

Scheduled to open in May 2018, the 158 new rooms combined with the original hotel renovation and recent expansion of Cedar Point Shores Water Park will strengthen the park's appeal as a multi-day family destination.

We are now positioned to aggressively market outside our historical capture range to bring an incremental audience to the shores of Lake Erie.

At the same time, while we have been investing in new attractions, we've also removed low-capacity, high-cost, aging assets.

Capital and operating expense productivity was a key initiative in our original FUNforward long-term strategy and continues to be a priority for us going forward.

We will remain disciplined in terms of taking out underutilized capacity to ensure fixed costs do not creep into our cost base.

This is what allows us to consistently maintain our historically high margins between 36% and 38% without sacrificing the guest experience.

Consistent with our past efforts, we will look to optimize revenues through a balanced approach between volume and price.

We expect our average in-park guest per capita spending growth will be driven by dynamic pricing, the introduction of new products and improved capture rates while our attendance growth will be driven by volume-oriented initiatives such as season pass programs, immersive multi-week special events and the continued expansion of WinterFest.

Additionally, our brand positioning work will remain a rallying point for developing attractions and programming that are true to the unique history and local market taste at each of our parks.

The success of our brand positioning efforts has been most evident at our year-round park, Knott's Berry Farm.

This park now has 4 distinct seasons of fun, starting in the spring with the increasingly popular Boysenberry Festival before moving into summer with its immersive Ghost Town Alive!

interactive experience, where park guests become part of the story.

In the fall, the park transforms into Knott's Scary Farm, recognized as one of the best Halloween events in the world.

To complete the year, the park, along with Snoopy and the Peanuts gang, celebrate the holidays with Knott's Merry Farm.

The strength of Knott's unique regional brand and our introduction of seasons of fun have turned this park into the most visited regional amusement park in the United States.

Carowinds in the growing Charlotte market is another great example of what can be achieved when this brand positioning strategy is successfully executed.

Its unique brand position of where the Carolinas come together has helped this park already achieve its third consecutive year of record attendance in 2017.

We also see great opportunities at our California's Great America amusement park, which sits in the heart of Silicon Valley; and Cedar Point, our superregional destination, which will be celebrating its 150th anniversary in a few short years.

As you can see from today's call, the fundamentals of our long-term strategy remain in place.

Our decisions are centered on providing our guests with the best day experience each and every time they visit our parks while maintaining a disciplined approach to our cost management.

We believe the 4% growth trajectory we've achieved since 2012 will continue in the years to come.

The strong returns from our new rides and attractions on an annual basis, combined with the quality long-term investments we've made across all of our parks and the opportunities yet to be tapped, support our expectation of continued success.

Equally important is our 30-year history of delivering steady and predictable stream of income to our investors through all economic cycles.

We know this predictable income stream is important to our investors, and we remain committed to steadily increasing our distribution to unitholders by 4% on an annual basis, consistent with our expected long-term growth rate in adjusted EBITDA.

We are excited to be a leader in an industry with the potential to grow, and we will continue to do everything necessary to be an attractive total return investment for our unitholders for many years to come.

Finally, I would like to thank everybody for the tremendously warm response I have received as I transition into the CEO role at the beginning of next year.

I appreciate the opportunity to lead our very talented team and sincerely thank Matt and the Board of Directors for trusting me with this position.

I would also like to personally thank Matt for being such an incredible leader and mentor to me as well as to our entire executive team.

His well-articulated strategy has guided us to a leadership position within the regional amusement park industry and creates many opportunities for us to use our size and expertise to drive additional growth in the future.

We look forward to his ongoing guidance and inspiration as our new Executive Chairman.

I also look forward to meeting with all of you in the future, both on the midway and at upcoming investment conferences.

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

(Operator Instructions) And we'll take our first question from Chris Prykull of Goldman Sachs.

Food and beverage, it seemed particularly good despite the weather.

I was just wondering if you can give any more color on the success of All Season Dining and the other initiatives you have in place that's driving that strength.

And then as part of that, can you provide some more details on the catering and restaurant upgrades expected in 2018 at several of the parks that you mentioned in the press release the other day?

Chris, it's Richard.

Thanks for the question.

Relative to food and beverage, our guests continue to tell us how important that is to our -- to their overall experience and how it impacts their view of our experience.

Couple of things are driving it, and I'll let Brian weigh in here in just a second.

But All Season Dining has been tremendously popular.

We continue to see increase in penetration rates.

But in addition to that, we also have invested in high-end -- in higher-end food facilities and built 4 of them in 2017, more on the way in 2018, that allow us to provide both a better culinary experience but really capture a lot more throughput and a lot more ability to service more transactions per hour.

So both of those items are driving what we saw on food and beverage.

Brian?

Yes.

On the second part of your question, Chris, and just dovetailing off of Richard's comments, those same enhancements to the overall F&B experience and physical locations has been something we've been focused on, as you know, in the catering area.

This is an area that we see a lot of opportunity for.

And so it's just a continuation -- '18 is a continuation of what we've been rolling out in '16 and '17, our upgrades to those areas, bringing up to our standards.

And so what you can expect is parks like Knott's and Canada's Wonderland that were the next on the list to be addressed, those are going to be focuses for us in 2018.

Great.

And then how should we think about the impact from the addition to Hotel Breakers in 2018?

Will it be an ADR tailwind, an occupancy tailwind or a tailwind to both?

And then maybe as part of that, just any other details you can provide on the undeveloped land?

How are you thinking about unlocking that value over time?

You mentioned tapping new revenue streams.

Any additional color there would be helpful.

Chris, relative to the new 158-room expansion of Hotel Breakers, we expect that we'll see increased demand next year with Steel Vengeance that I referenced coming in.

But one thing that I want to stress is we're replacing an aging facility, Sandcastle Suites, which we're tearing down with the new 158 acres.

So we anticipate probably a little bit of both, both ADR tailwind and a little bit of volume, a little bit of occ.

With regard to your other question on the adjacent land, listen, we are still very excited about all the opportunities on the adjacent land.

We publicly commented on hotels in Toronto and Charlotte.

Those continue to proceed.

We're not ready to make a firm announcement yet, but those continue to proceed.

Brian and I and the team continue to discuss what the opportunities are to unlock.

We have partnered once again with the City of Sandusky and Erie County here at our flagship Cedar Point property to put together an indoor sports complex that will sit next to our outdoor complex.

So I can tell you that the adjacent land and what we do to unlock value for our unitholders is a high priority for me and the team.

Our next question comes from Tim Conder of Wells Fargo Securities.

Gentlemen, a couple of things.

Just maybe a little bit of color on your season pass, single-day and group business.

Where is that trending this year as a percent of your attendance mix and then, I guess, maybe as a percent of your unique visitor mix?

Just if you can comment both ways.

And any comments on unique visitor trends within each of those categories?

Tim, this is Brian.

As it relates to season pass, I mean, as you know, not only for us but others in the space, it continues to be a growing channel for admissions.

Last year, we saw that number click up to 45-plus percent of overall attendance.

I would tell you, as we -- we're not done with the year yet and we fully expect WinterFest and Knott's Merry Farm to play a role in where these numbers shake out, but that channel has continued to growl -- grow in its weighting and is pushing closer and closer to 50% or half of our attendance on an average base across the entire system, with a number of our parks well north of 50%, even close to 60%.

Group events continues to be a growing area for us as well.

As I was alluding to earlier, that's one of the reasons why we're so committed to expanding and improving our catering facilities at the parks.

And then as we think about uniques, that tends to move pretty consistently with some of those broader macro factors that we see during the course of the year.

The unique visitor, the family or the couple that come once a year are often influenced by the weather at a certain time of the year.

So during the course of '17, we've seen that bounce all around as weather patterns have bounced all around.

Okay.

And along that line, whoever wants to take this, gentlemen, is there any way to quantify the weather impact in Q3 not only from the rains from the residual parts of the hurricanes but maybe any fire issues impacting Santa Clara during Q3?

Tim, we've had a fair amount of internal debate on this.

And what I can tell you is that as we looked at September and October and saw the comeback in October -- in the pent-up demand we knew that was there, the dynamics of what we see, we saw exactly what we wanted to see.

So I don't know that we can give you an exact number.

But I will tell you that everything we've seen since post Labor Day, our best performance in history, points to the strength in our business model and the loyalty of our customers that we expected to see going forward.

Okay.

And then maybe 2 more, if I may -- 2 housekeeping and one more broad question.

The 500,000 guests, Richard, that you alluded to related to the new expanded events, was that an annual number?

Or are you particularly commenting on Q4?

And then related to the CapEx, the 10% of revenues, is that all encompassing?

Or is there a part where you could have some incremental CapEx?

So those are the housekeeping.

And then whoever wants to take this.

Santa Clara, Valleyfair!

trajectory of investments, where are we compared to the 3-year plan that you launched and continuing to go beyond that at Charlotte?

Well, let me dive into a couple of those.

Tim, this is Brian.

So WinterFest, the 500,000 that Richard commented on, that's our first year -- well, second year, I guess, for Great America, expectation for the attendance lift in those 3 new parks.

So except Great America, which is in its second year, that's our expectation for attendance of those parks, and it would all be fourth quarter, of course, with that event starting around the Thanksgiving holiday or just after.

As it relates to the CapEx question, 10% of revenues, as we said in our prepared remarks, that's the amount that we believe is necessary to invest in the marketable new attractions and rides as well as the park-level infrastructure to generate the 4% EBITDA growth that we're targeting.

Incremental pieces, Richard alluded to some of the things that we're hunting in terms of activating the adjacent land around the parks.

That has the potential to sit on top of that.

But those items, as Richard alluded to, will be about activating incremental revenue streams that we like to think of as, we'll call it, sticky revenue or sticky EBITDA, things that aren't just episodic but provide a wholly incremental revenue stream that's sustainable and growable.

Tim, relative to your question on Santa Clara and Valleyfair!, when we look at Great America next year, very excited about the coaster and we've got over a dozen other food and beverage and place-making projects in line.

I got to take you back to the success we've had at Carowinds, where we went in and really did the same type of transformation.

I'll use a word I like to use.

We learned a lot of lessons as we went through that.

We've embedded them in our approach to Great America.

And we are right -- we've got a similar time frame of 3 or 4 years to make a major impact in that market.

So I think we're right on schedule on that one.

In terms of Valleyfair!, a little bit more complicated, and you'll see us continue to study that one and figure out what the right cadence is and what the right size is.

We recently completed our brand positioning work there, and we are leaning heavily into that to determine what our next steps would be in the future.

From Stifel, our next question comes from Steve Wieczynski.

So I guess, when you look at that 4% EBITDA growth kind of forecast that you guys have out there for the next couple of years, can you just break down maybe how you guys kind of come up with that number?

And just -- I guess, just kind of high level, how do you think the business -- how do you think about the business going forward in terms of operating expenses, attendance, stuff like that?

And just -- what I'm getting at is how are you getting to that 4% number?

Yes.

Steve, it's Brian.

So as Richard said, when you look back at the last 6 years and sort through everything, we've grown at basically that pace over the last 6 years.

And as you can tell, it's never as nice and smooth a growth as maybe we would like or investors would like.

It can tend to be a little choppy based on macro factors like the weather as well as our capital programs.

So as we look ahead, we're confident that, with the core assets that we have under management, that we can continue to maintain that growth pace that we've been on for the last 5 or 6 years.

It's going to probably continue to be a little choppy.

We're extremely excited about '18 and as Richard mentioned, the 4 coasters that we're introducing, along with a number of other new rides and attractions across the system.

So we think the '18 capital program may be as good as we've ever had.

And so what that growth looks like in '18 may be a little bit ahead of that 4% pace.

But we're talking about what the average looks like over the next 5 to 6 years, and I think, as I said, we're pretty confident and comfortable that we can continue.

So if I ask that a little bit differently.

If we had a -- if we have a stable weather environment for the foreseeable future and we have a stable economy, basically where it is today, looking back though, you would say that, that 4% number would be probably conservative.

Is that fair to say?

I'd say, Steve, that looking back, while we can grab a year that might have had some bumps in it and growth wasn't what it was over the broad window of time in the last 6 years, I would say those -- that situation has sort of played out, right?

I mean some years were a little better than others.

I don't know that we're ever going to have perfect in all of those categories that you outlined.

So I'm going to say that the 4% is probably the realistic and most practical way to look at growth in Cedar Fair going forward.

Okay, got you.

And then second question is just a bigger-picture question.

It's for Matt and Richard.

I guess, with the transition kind of coming along, and I guess, maybe, Richard, for you to start, is -- do you see any big changes in terms of philosophy or the way you're going to take the company versus the way Matt ran it, which obviously was outstanding?

Any big changes there?

Or anything that you think might need to be addressed a little bit sooner?

Great question, Steve.

Thank you.

I think a lot of the -- we have a strong foundation for growth, and we've built so many good things that I think are not only long-term investments in facilities but long-term investment in our capabilities and the resources within our company.

We're going to continue to mine those.

A lot of what you're going to see is a continuation of some very successful strategies, which have been -- which had done really well for our unitholders and have really provided our guests with an enhanced experience that we continue to leverage today.

So it's a lot of the same thing.

But as we get into '18 and '19, we're going to lean hard into places where we think that there's more growth to be unlocked.

And I will tell you -- you've heard me say, and I've talked through it when I've met with investors, how important our guest experience is.

You're going to hear me lean more and more into how important our employee experience is to provide that guest experience.

We have hired a new Head of HR, Craig Heckman.

We've got big plans to modernize our whole approach to HR.

We underwent a similar journey when we hired Kelley Semmelroth, our CMO, back in 2012 to modernize our approach to marketing.

And I'm really excited about this initiative to make sure that we've got the quality workforce we need to provide the service model that I think our guests deserve.

So Matt?

Yes.

Steve, I was actually enjoying not answering questions.

Look, Richard has the benefit of 30 years in this industry.

We are very fortunate to have that type of background.

He's been a thought partner for me ever since I got here.

And he also will have a very active, engaged board as a collective group of thought partners.

What I do know is I've already seen him -- and I'll say this in my closing comments again, I'll be a little redundant, already seen Richard aggressively go after things that maybe I hadn't gotten to, and that's politely.

And so I don't think you're going to see a lot of change here.

What I hope you see is the continued growth that we've demonstrated over the last 5 years.

And our next question comes from Barron Crockett (sic) [Barton Crockett] of B. Riley, FBR.

It's Barton Crockett.

I think one of the things is just looking a little bit closer at your guide for the year, which would imply, I think, like a 16-or-so percent to 34%-or-so kind of growth in EBITDA year-over-year in the fourth quarter.

Is the fourth quarter a period where you think there's a reason to expect margin expansion?

Or should our base kind of case be that maybe there isn't margin expansion and revenues are up meaningfully partially because of these 500,000 incremental guests?

Yes.

Barton, it's Brian.

As I said earlier, very excited about the opportunities to continue to expand the season into the fourth quarter with WinterFest, not only the 3 new parks but the continued evolution and growth at Great America and even Knott's Berry Farm for that matter.

I mean we're up against some -- hopefully what will be a low bar in terms of weather at Knott's Merry Farm in December of 2016.

That said, as we think about things from a margin perspective, first year of WinterFest, as we saw with Great America, is pretty cost laden as with the related start-up costs.

So long term, is there opportunity with margin and the addition of those incremental bodies in the fourth quarter?

Sure, no doubt about it.

But I think our expectations are that it's going to be a little bit slower and developing.

Barton, one -- this is Richard.

By the way, one thing to keep in mind is our strong October performance will also have an impact on the fourth quarter.

So just to point that out to you.

Okay.

But this is really -- a strong revenue quarter in the fourth quarter year-over-year is really essentially what you're saying?

Yes, I mean, definitely.

I mean we expect those bodies -- those guests coming for WinterFest as well as, as Richard just said, the strength that we just articulated that October represented, fourth quarter should definitely be a nice top line quarter comparative to '16.

Okay.

And then stepping back, very big picture, maybe overly big picture, but your business is obviously incredibly sensitive to weather.

And I know the base kind of commentary from everyone is that weather normalizes and you get good days and bad days.

And overall, it's kind of a stable scenario.

But I'm just wondering if you really think that, that's the best base assumption, that there's a stable scenario.

Or not to -- this may be an unanswerable thing, but one of the things that -- it would seem as if there's some degree of change in weather patterns that's maybe negative for summer but maybe expanding the warm weather opportunities into things like Christmas.

Maybe these kind of expansions into winter in the park are a hedge against patterns -- weather patterns changing.

And I'm just wondering if you guys think about that, if that enters into kind of your strategic thoughts about the expansion of the holiday period investments and activities.

Barton, let me jump into this one.

The broad macro, we can't control, we certainly react to.

But one of the reasons we've put in place such a strong emphasis on advanced purchase commitments is to make sure we get that commitment early.

It benefits us in a lot of ways and helps us overcome some of these factors you pointed out.

The other thing I would say, just for a note, as we continue to see the increase in our season pass base because it provides such a great value, we also see, in terms of all-season beverage and All Season Dining, those guests that purchase that, their NPS scores are higher and their renewal rates are higher.

So as we continue to think about the issue that you pointed out, I think we'd focus back on the guest experience, providing a really compelling reason to come visit early and often and really jump into that advanced purchase commitment.

So Barton, this is Matt.

Look, I think we're not -- maybe there's an area to think about climate change in terms of our decisions.

But I do think we've positioned all of our parks to be responsive to whatever the weather conditions are.

An example is the water park with -- the major renovations we've made to almost all of our water parks across the system so if we have an unseasonably hot summer, we can accommodate that.

More and more, Richard and the team are creating indoor dining facilities of scale, much like kind of the Harmony Hall we have at Carowinds, et cetera, which work both in hot weather and cold weather, et cetera.

So I can't tell you that we have thought about it as broadly as you just laid out, but I do think all of us in the industry should make sure that the infrastructure is designed to deal with whatever changes come across our radar, literally our radar.

Our next question comes from James Hardiman of Wedbush Securities.

Just wanted to say congrats, Richard, on the new gig.

I'm looking forward to working with you some more.

And obviously, Matt, thanks for your stewardship over the years.

I think a lot of people listening in on the call have made a good amount of money on Cedar Fair units over the last 5 or 6 years, so thanks for that.

(inaudible) next 5, James.

Yes, let's hope so.

So I wanted to stay on the weather conversation, I know your favorite topic.

But obviously, it was a disappointing summer last year, and I think we blamed the bulk of that on weather.

We seem to be in the same situation this year.

Obviously, when weather is bad, you don't -- your parks don't do as well.

When it gets better, they do better.

But on balance, are you saying that weather was materially worse this year than it was last year?

And I guess, beyond that, I feel like we talk about weather every year.

Was it significantly worse this year than it's been maybe the last handful of years?

Yes.

James, it's Brian.

So I'll go back to what you just -- the comment that you just made, which was the weather tends to average itself out over the course of the year.

Clearly, if -- when we talk about smaller bite sizes of the season, through Labor Day, I would tell you, I think, and everybody in the space would probably say the same thing, it was challenging.

Weather since Labor Day has been solid, if not very good, and the attendance has followed.

Through all of that, I think when we sort of back and if we strip out Wildwater Kingdom and look at the parks that we had under management, even in spite of challenging weather, we still saw attendance being close to flat, maybe off just a little bit.

But most of our attendance shortfall, even through Labor Day, the biggest chunk of it was more a comparability issue with Wildwater Kingdom.

So we don't like to talk about weather, as Richard said, but when you look at short windows of results, it's hard to ignore the impact that it has.

And the other thing I would just throw out is, at times, it isn't really just the weather itself.

It's the forecast that we're dealing with.

And so when we're sitting under a nice high-pressure system and the weather forecasters are talking about sun, sun, sun and not a chance of rain, the guest mindset is very different when than we're dealing with the impact -- like we did around Labor Day with implications of the tropical storm that Harvey created sweeping up through the Midwest and into the East.

So weather is what it is.

We can't make excuses of it.

We just have to figure out how to work around it.

So let me ask the question another way.

I mean, you were hoping to get to $500 million this year.

Obviously, it looks like we're going to come in a little bit short of that.

I guess, in absence of knowing sort of how this year compares to last year, are you seeing -- and obviously, you talk a lot about your CRM system and understanding your customer better than ever.

Are you seeing particular parks that are maybe underperforming others exclusive of weather?

Are there particular demographics that are maybe outperforming others, whether it's age, race or geography?

Is there anything you can tell us from a consumer perspective or from a geographical perspective that might help shed light on sort of what has been, I think, a little bit worse than most were expecting this year?

James, it's Richard.

One of the challenges we have is we can't always talk in averages.

Matt has said this forever.

When we look at some of the components, I referenced Carowinds having a record year for the third year in a row in attendance, a record at both the water parks where we expanded.

We've got some very good stories within it.

The answer is never in the averages, James.

But when we look at the things that we really look to see the consumer response, be it any demographic category or in a particular region, we're seeing the response that we want.

So the Great Lakes region we called out in August, Brian talked about the Labor Day and Harvey.

The Great Lakes region, we're geographically concentrated there.

But as the weather has gotten better there and that's -- so we certainly had impact through Labor Day.

But again, as -- we've seen the normalization, we've seen tremendous response from those parks.

And you can read through that we're very pleased with October, as we've said, particularly in the Great Lakes region, where we've got 3 of our 4 biggest parks.

Yes.

And James, the other thing I would is I don't think that there's anything that we see at one park versus the others that would tell us fundamentally that anything is changing in terms of our consumers' tastes, in terms of the demand for the product and the entertainment offerings that we have.

So there's -- we still feel that everything is very healthy, and I think park by park, the post-Labor Day results would support that.

Got it.

And then, Brian, I think you made a comment in your remarks that 2018 maybe will do even better than that 4% longer-term growth rate.

Obviously, that would be a pretty meaningful acceleration versus what looks like, I guess, about 1% growth at the midpoint this year.

How should we think about what's driving that acceleration?

I guess if the answer is weather, the answer is weather.

But I just wanted to understand sort of the puts and takes.

And then you've given us some real good guideposts in terms of how to think about the incremental WinterFest for this year's fourth quarter.

Any idea how we should shape that up as we look to next year?

So just leveling back up for a second to the first half of your question.

'18, I guess my comment, probably more so I should caveat, really depends on where we finish '17, right?

We still have a couple months left here in '17 and some high expectations for WinterFest.

And so depending on where we finish, that clearly is going to have some impact and influence on how I might answer that question as it relates to '18.

I'm not going to tell you, on one hand, that weather -- we're going to expect great weather.

It really is more about -- our excitement around '18 is really grounded in our capital program.

Four coasters, including a major coaster at the flagship park; and a big coaster at Knott's, our second largest park, is a great -- are great anchors for an outstanding '18 capital program.

And so that's what's got us excited.

Sure, we'd love to believe that July and August are going to be a little bit nicer next year, but that will be what it will be and it's outside of our control so we'll work around it.

As it relates to WinterFest, can't give you specifics at this point in time.

We need to see how those events develop at the 3 new parks this year to really understand what the potential is for them in year 2 as well as the additional parks that will come online even after that.

So we need to get through a first year of those parks and the second year of Great America, but we fully anticipate those events to continue to develop over a 3- or 4-year period.

And I would tell you, we do think it probably hits a normalized run rate around that fourth or fifth year when awareness has been built and we can start pricing into the demand.

And from Macquarie, our next question comes from Amanda Adami.

I know you've talked extensively about weather so far, so not to belabor the topic.

But I was just wondering specifically if the wildfires in California had any impact on Knott's Berry Farm attendance.

And if so, would October have been even a bit stronger here if not for the fires?

Amanda, thanks for the question.

This is Richard.

No, we didn't see any impact at Knott's Berry Farm.

We were pleased with their September and October.

Okay.

And then one more.

Could you give any detail on what kind of percent price increase you're seeing on your 2018 passes that you've sold so far?

We're not going to get into -- I mean I can't give you specifics.

I will tell you the approach around season pass the last couple of years, '16 and '17 and '18 program is going to be very similar.

We've pushed overall price increases that have been in low to mid-single digits in terms of lift.

It's such a small piece of the full program.

That -- I don't want to comment on where we're at this point in time other than say we're very pleased with the start -- the solid start to the sales program and that we're running pretty much a similar playbook to what we did the last 2 years.

And we have a follow-up question from Tim Conder of Wells Fargo Securities.

Brian, on the maintenance costs that you mentioned, were those pulled forward here?

And should that then therefore make Q4 and maybe Q1, from that perspective, a little bit easier versus those pull-forward costs?

Tim, are you talking about the pure P&L hit of maintenance -- some of the timing of the maintenance that we referred to?

Yes.

Yes.

I mean -- so listen, the opportunity for us to sort of control maintenance costs is most available in the first and fourth quarters when a lot of those projects are more discretionary in nature.

During the course of the season, we have a roller coaster go down from a lift chain breaking or whatnot.

We're repairing and fixing that immediately so that the guest service isn't sacrificed.

So the timing -- when we talk about timing, it's -- at this point, in the third quarter numbers, it's probably more about just the timing of when those types of incidents happen.

I would say from a quarter-to-quarter, as I look at '17 to '16, not anything dramatic or material in terms of the difference between the 2 years.

And as I said in my prepared remarks, the parks have done an outstanding job, given the shortfall they had earlier on, of managing out of a lot of the discretionary items and are doing so in the fourth quarter of this year for all those same reasons.

Okay.

And then another question.

An ongoing question here is yet to be asked.

Any rethinking of your approach to season passes, the traditional pass versus potentially looking at more of an ongoing membership type of approach?

And then lastly, due to some issues here, you didn't achieve the $500 million goal this year, even though that would have been a year early.

When should we expect maybe a new strategy rollout being given?

Tim, Richard.

Relative to your season pass question, we're very comfortable with our approach.

We monitor everything that happens in our industry.

But we've driven record season pass sales growth and all-season add-on products year-after-year, so we're very comfortable with our approach.

We've trained the market.

The markets are responding, and we see great value.

The markets certainly have told us, the regional markets we operate in, that there's great value, so we're comfortable with that.

We'll always continue to monitor everything that goes on within the space.

Relative to long-term guidance, we see 4% as the average.

There will be years where we probably overperform a little; years, as Brian said, choppy as you've seen over the last 6 years, where we don't quite get there.

But we look at over the longer term, that, that 4% number is sort of our aiming point and our anchoring point.

So from a -- we're not going to give a specific year or a specific number.

We're just pointing towards trying to make sure that we deliver on that year after year after year into the future.

And that concludes today's question-and-answer session.

Mr. Ouimet, I'd like to turn the conference back to you for additional or closing remarks.

Thank you, operator.

I would like to thank all of you for the support you've given me personally and our team here at Cedar Fair over the years.

Richard is absolutely the perfect person to lead the company into the future.

He's been an outstanding thought partner for me, and I've already seen him, as I mentioned earlier, aggressively addressing the opportunities and challenges we will face in the future.

This is a great company, and I look forward to continuing to work with Richard, his team and the board in my new role as Executive Chairman.

I also want to close by saying how much I've always valued the active dialogue we have had with our investors.

These discussions have clearly informed and improved the decisions we've made.

I know that this approach to investor engagement and transparency will remain a core value under Richard's leadership as will Cedar Fair's commitment to making decisions that drive both the near- and long-term results.

Thank you.

Stacy?

Thank you, everyone, for joining our call today.

Should you have any follow-up questions, please feel free to contact our Investor Relations Department at (419) 627-2233.

We look forward to speaking with you again in about 3 months to discuss our fourth quarter and year-end results.

And this does conclude today's presentation.

Thank you all for your participation.

You may now disconnect.