Good morning. My name is Cathy and I will be your conference operator today. At this time, I'd like to welcome everyone to the Cedar Fair Entertainment Company 2021 Third Quarter Earnings Call. All lines are [ph] being placed on mute to prevent any background noise.

And after the speakers' remarks, there will be a question-and-answer session [Operator Instructions] Thank you. Michael Russell, you may begin your conference..

Thank you, Cathy, and good morning. My name is Michael Russell, Corporate Director of Investor Relations for Cedar Fair. Welcome to our 2021 third quarter earnings conference call.

Earlier this morning, we distributed via wire service our earnings press release, a copy of which is available under the News tab of our investors website at ir.cedarfair.com. On the call with me this morning are Richard Zimmerman, Cedar Fair's President and CEO; and Brian Witherow, our Executive Vice President and CFO.

Before we begin, I need to remind 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 from those described in such statements.

For a more detailed discussion of these risks, you may refer to the company's filings with the SEC. In compliance with the SEC's 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 on this call will be considered fully disclosed. With that, I would like to introduce our CEO, Richard Zimmerman.

Richard?.

Thank you, Michael and good morning, everyone. We appreciate all of you being with us today. Today's opening remarks will focus in three primary areas. First, a review of the third quarter results of our parks and resort properties as well as more recent performance trends during the month of October.

Second, an overview of how we successfully managed structural shifts in the labor market this season and how we plan to address this challenge in 2022.

Finally, we will highlight how the organizational changes we have made and the strategic initiatives we've implemented enabled us to offset many of the effects of the pandemic positioning Cedar Fair for continued growth, success, and value creation.

Let me start by saying I am extremely pleased with our company's results since the reopening of our properties in May, and particularly, over the last four months, which represents the most important stretch of the season for us.

This outstanding performance would not have been possible without the unwavering determination of our leadership team, whom I believe is the strongest, most experienced, and uniquely talented collection of professionals in our industry. Of course, they're supported by the talented and committed teams operating our parks across North America.

Collectively, we have demonstrated time and time again how to produce the best possible outcomes in highly challenging environments, while also pushing the boundaries of success when momentum is on our side.

Every day, the associates of Cedar Fair delight our guests with immersive family experiences, which is an essential element of our differentiated business model.

The strong attendance and guest spending trends we reported through Labor Day weekend continued through last Sunday, tapping off in October in which our parks entertained 3.2 million guests and generated record revenues of 219 million. Our outstanding performance was a result of providing our guests with exceptional experiences.

First, we reported record third quarter revenues, which we achieved despite 47 fewer operating days compared with the third quarter of 2019 as well as continued capacity restrictions at several parks and a group sales channel that has yet to fully recover. Second, we set a new high for in-park per capita spending.

Credit goes to our business intelligence group for its savvy use of analytics and dynamic pricing strategies to optimize pricing both at the gate and inside the parks, as demand remains strong. At the same time, our commitment to elevating the quality of our offerings, particularly within food and beverage has resonated well with our guests.

Our team's relentless focus on enhancing the guest experience and the related investments have served as catalyst for strong growth in per capita spending across all revenue channels. Third, our out-of-park revenue channels continued to perform very well.

They exceeded 2019 third quarter out-of-park revenues by 9%, despite fewer operating days, and two of our signature resort properties at Cedar Point; Castaway Bay and Saw Mill Creek, remaining closed all years for renovations.

For open resort properties, daily room rates were up an average of 6% across the system, with certain locations up as much as 25%. We are very encouraged by the strong rebound in demand for our resort properties, which remain a significant area of growth and a true differentiator for Cedar Fair within the industry.

And finally, as I previously mentioned, the impressive and growing demand for our Halloween events produce a record October again this year, with net revenues for the five-week period ended Sunday, October 31st, up more than 40% from the comparable period in 2019.

I also want to highlight the significant contribution of our advanced purchase programs to our rapid recovery and our consistent strength in attendance.

Proceeds from season pass sales produce a reliable recurring revenue stream year-after-year that underscores our confidence that our business model is a consistent generator of strong resilient free cash flow. Season pass sales also prospectively inform our fiscal planning process and capital allocation strategy.

The ongoing success we have captured from the growth of our annual season pass campaigns has served as a primary driver behind our strong topline results this year as it has for many seasons. Since 2022, season passes and related all-season products went on sale in early August.

Sales have outpaced the record sales volume during the comparable period in the fall of 2019, with the average season pass price trending up 5% year-to-date. Through the end of October this year, sales of 2022 season passes have topped more than 1 million units for only the second time ever, with all season product sales up in all categories.

Historically, the momentum of early season past sales has served as a very reliable leading indicator for next year's demand. which bodes very well for 2022. We believe the early and growing sales of our season passes and related programs validates our strategies and confirms the value guests place on our unique style of family entertainment.

The desire to have fun next summer is widely held. We are uniquely able to monetize that and we follow through by delivering amazing experiences that create value for both our guests and our unit holders.

Based on the strong results, positive momentum, and a bright outlook going forward, we are well-positioned to pay down debt in the very near-term, and resume our quarterly cash distributions longer term.

Before I turn the call over to Brian to discuss our financial results in more detail, I'd like to shift gears for a moment to focus on the labor market and how it has changed since the pandemic began.

Broadly speaking, business closures lost jobs and extended furloughs during a period of enhanced unemployment benefits, gave workers an opportunity to reassess their employment options, many delaying their return or leaving the workforce all together.

In such a tight labor market and with the J-1 visa program remaining in a state of flux, our ability to quickly attract and retain the thousands of associates we needed to open our parks for the 2021 season became our highest priority, resulting in our decision to move quickly and aggressively on wage rates.

While a difficult decision to make at the time, as we noted in our last earnings call, these adjustments were critical to ensuring our parks were adequately staffed and able to deliver the high quality experience guests have come to expect at a Cedar Fair Park.

In response to the labor pressures, we raise hourly rates to market leading levels and included various bonuses to attract and retain associates. The combination of these efforts pushed hourly pay rates as high as $20 in some markets, while the other parks use top wages to secure a hard-to-fill position, such as security and culinary staff.

While these new rates have pushed labor costs higher, I couldn't be prouder of the team's foresight and conviction as this decisive action was a significant contributing factor to the record per capita guest spending levels our parks were able to achieve this year.

On the labor front, our attention now turns towards a 2022 season and ensuring we're doing everything we can to alleviate incremental labor cost pressures. This includes a more aggressive and proactive recruiting process and adjusting our pay rate model to provide more flexibility.

We are building a labor model that allows us to adequately staff our parks to deliver a high quality guest experience and continue to drive growth in guest spending levels, but at the same time, allow us to flex rates to match the supply of labor in the market.

The anticipated return of the J-1 visa program, combined with additional operating efficiencies identified by our new workforce management and business intelligence systems should help alleviate some of the labor rate pressures. Brian will provide more detail on this shortly. I'll finish my opening remarks with these observations.

We have historically had success adjusting to labor cost increases during periods of wage rate reflation and are confident that this will continue, particularly as consumer spending remains strong and attendance returns to pre-pandemic levels.

I also believe in our team's ability to successfully manage the business through future periods of unanticipated change and invaluable characteristic they applied brilliantly through the depths of the pandemic this year. As we displayed this season, we remain steadfast in our commitment to delivering the highest quality entertainment experiences.

In fact, according to our most recent consumer research, most of our parks are in their highest guest satisfaction scores ever. For both our daytime, Halloween and nighttime haunt events. I want to acknowledge and congratulate our park teams for a job exceptionally well done.

And with that, I'll turn the call over to Brian for a review of our financial results. Brian..

Thanks Richard and good morning, everyone. I'll begin by providing more detail behind our results for the third quarter before moving on to an update of our October performance trends. But first I need to remind you that the pandemic had a material impact on park operations in both 2020 and 2021.

Because we suspended park operations in mid-March last year, and still have limited operations during the third quarter of 2020, results for the third quarter of the last two years are not directly comparable. For those reasons. I will provide more relevant comparisons to the third quarter of 2019.

In 2021, operating days in the third quarter total 988 compared to 1,035 total operating days in the third quarter of 2019. As reported in our earnings released this morning, net revenues for the third quarter totaled a record $753 million, up 5% or $39 million compared to the third quarter of 2019.

The increase in net revenues was the direct result of a 29% increase in-park per capita spending and a 9% increase in out-of-park revenues during the period. Partially offsetting these gains was an 18% or 2 million visit decline in third quarter attendance compared to 2019.

Reflecting 47 fewer operating days in the period, the anticipated loss of pre-booked group sales and the impact of capacity limitations at certain parks, including one of our largest parks Canada's Wonderland.

For the quarter, attendance total 10.8 million guests or approximately 82% of 2019 levels, driven by strength in both the general admissions and season pass attendance channels. Meanwhile, in-park per capita spending in the quarter totaled a record $64.26, which represented a $14.32 increase over the comparable 2019 spending levels.

The result of improved guest spending across all revenue categories. Guest spending on food and beverage, merchandise, games, and extra charge attractions was up 37% on a combined basis in the quarter over comparable 2019 levels.

As Richard noted, in addition to greater consumer demand, the revenue lift we are seeing from our guests desire and willingness to spend more each visit is in large part the result of the commitment we've made over the past several years to improve the overall quality of our revenue centers and the products we offer.

The investments we've made to add new facilities or remodel existing ones, particularly within the food and beverage area, are resulting in improved efficiencies and higher retail sales, while also meaningfully improving the overall guest experience.

The improved forecast also reflect a combination of strategic price increases and higher transaction counts per attendee. Since reopening, we've increased prices and reduced discounts on tickets at all our parks. In addition, we continue to dynamically price into demand for single day tickets and minimize our reliance on promotions to drive volume.

For the quarter, the average admissions per cap on paid tickets was up 24% or $8.86 over comparable 2019 levels.

Finally, out-of-park revenues for the quarter totaled $83 million, with a $7 million dollar increase over 2019 levels being driven by higher online transaction fee revenue, as well as meaningful increases in average daily room rates at our resort properties, which helped offset the loss revenues at Sawmill Creek and Castaway Bay, the two resorts that have remained closed this year for renovations.

On the cost side, operating costs and expenses in the quarter totaled $424 million, compared with $369 million for the third quarter of 2019. The $55 million increase reflects a $1 million increase in cost of goods sold, a $46 million increase in operating expenses, and an $8 million increase in SG&A expense.

Of the $46 million increase in operating expenses, approximately one half was attributable to the increase in seasonal labor wages, offset in part by a reduction in seasonal labor hours as we try to better manage operating calendars to meet demand and match labor availability.

The remaining increase in operating expenses along with the $8 million increase in SG&A expense was attributable to higher costs for operating and maintenance supplies, as well as hire full-time wages, helping defray some of the increase in SG&A expense was lower advertising expense in the period.

Meanwhile, adjusted EBITDA which management believes is a meaningful measure of the company's park level operating results was $333 million for the third quarter of 2021 compared with $355 million in the third quarter 2019.

The decrease in adjusted EBITDA was largely due to the higher labor costs in the period, as well as the negative impact that operating restrictions including mandated capacity limitations had on attendance. As we prepare for 2022, we remain very optimistic about overall consumer demand.

But it's clear that the operating environment remains challenging and dynamic from a cost perspective. The tight labor market and ongoing supply chain constraints are likely to continue in the next season. Our team has been proactively working to offset wage rate pressures through cost efficiencies and incremental revenue opportunities.

Heading into 2022, we are working to maximize labor efficiencies and reduce seasonal labor hours across the portfolio through more automation, the expanded use of technologies, and process redesign where appropriate.

To further offset some of the cost headwinds, our business intelligence team is also focused on optimizing yields through more dynamic pricing and creating additional revenue streams throughout the system, something we did very well this season.

Turning our attention to operating trends in October, preliminary net revenues for the 10-month period ended October 31st, 2021 totaled $1.2 billion. Over the same period, attendance totaled 17.3 million visits; in-park per capita spending was $62.73; and out-of-park revenues totaled $153 million.

The outstanding performance trends from the third quarter continued to build through the month of October, as demand for our haunts and other Halloween-themed events continues to grow.

For the five week period ended October 31st, 2021, preliminary net revenues totaled a record $219 million, representing an increase of 42% or $65 million from the comparable five-week period in 2019.

This increase was driven by an 8% increase in attendance to 3.2 million total visits, a 32% increase in in-park per capita spending to a record $64.86 and a 33% increase in out-of-park revenues to $19 million.

As we approach the final months of the year, the ongoing strength we continue to drive in guest spending and out-of-park revenues combined with the improving attendance trends, positions us very well heading into 2022.

Shifting our focus for a moment to the balance sheet, deferred revenues as of September 26th, 2021 totaled $211 million, representing an increase of $62 million or 42% when compared to deferred revenues at September 29th, 2019.

Of the $211 million of total deferred revenue outstanding at the end of the quarter, approximately $100 million is projected to be recognized as revenue during the fourth quarter of this year. The balance will be recognized as revenue in 2022 or later, including our 2022 season passes and all season pass products.

Additionally, this will include the use privileges of 2021 season passes at Knott's Berry Farm and Canada's Wonderland that have been extended into next year due to the pandemic.

As Richard noted, since being launched in August, only sales of next year season passes and all season products are off to a very good start, pacing ahead of the record sales trends from the fall of 2019. Today, our balance sheet is healthy with no outstanding borrowings under our revolving credit facility and no debt maturities before 2024.

At the end of the third quarter, we had total liquidity of $922 million, including cash on hand of $563 million and $350 million available under a revolver, net of $16 million of letters of credit. This compares to $652 million of total liquidity at the end of the second quarter, reflecting $270 million of positive cash flow in third quarter.

Finally, our capital allocation priorities remain consistent with what we previously indicated. First, continue to reinvest in the business. As we previously announced, our plans are to invest $175 million to $200 million in new rides and attractions and other park improvements in 2022.

Second, pay down debt until we reach our net debt target of $2 billion or less. As Richard indicated, based on current liquidity levels, we are confident that we are well-positioned to begin paying down debt in the very near future as we look to further enhance the strength and financial flexibility of our balance sheet.

And third, remain committed to reinstating the distribution to our unitholders. Based on our rapid recovery from the pandemic, our confidence in the business model going forward and our outlook for a strengthening balance sheet.

We believe we will be well-positioned to reinstate a quarterly cash distribution to unitholders no later than the first quarter of 2023. With that, I'd like to turn the call back to Richard..

Thanks Brian. At the outset of the pandemic, we made a pledge to our guest, unitholders, and employees that Cedar Fair would emerge from the COVID-19 disruption stronger than when it began. We are successfully advancing our strategic initiatives to achieve that goal.

We anticipate the strong demand levels continuing for Winterfest and Knott's Berry Farm events through year end, which will provide additional flexibility towards delivering on our primary goals of returning operations to pre-pandemic levels, reducing leverage, and reinstating unitholder distributions.

As I noted in my opening remarks, the organizational changes we have made and the strategic initiatives we've implemented have allowed us to systematically attack and offset the lingering challenge from the pandemic's disruption.

The new workforce management platform, the build out of our new business intelligence group, and the hiring of our first CIO, are all good examples of the steps we have taken to strengthen our company operate efficiently and capitalize on our strategic advantages.

In a highly inflationary environment like this, it is critical that we smartly manage all aspects of the business, both on the cost side and the revenue side. We will remain diligent and managing cost, while at the same time, ensuring we don't sacrifice the quality of the guest experience.

On the revenue front, we must remain creative in finding new and exciting ways for our guests to spend and we must continue leaning into dynamic pricing. Over the next couple of weeks, several of our parks begin transforming their Midways into Winter Wonderland, while other properties are winding down a very successful 2021 season.

As we begin plans for the season ahead, I want to thank our guests for their continued loyalty through the pandemic and our incredible team of dedicated associates who continuously achieve amazing things. For our unitholders, please know that we appreciate your trust and confidence as we continue to get stronger every day.

I've never had more confidence in our business than I do right now and I'm excited to see how much fun is in store for 2022. Cathy, at this point, would you open up the call for questions..

Thank you. [Operator Instructions] And your first question will come from James Hardiman of Wedbush..

Hey, good morning. Thanks for taking my call and congrats on a really strong -- certainly month of October, but even the tail end of 3Q.

I wanted to sort of ask -- obviously, we don't need to get too deep into sort of the month-by-month trends, but maybe characterize the so called delta dip if you had one versus the last time we spoke, I think second quarter attendance was down 20, third quarter was down 18. Obviously, there were some puts and takes there.

And so I don't want to just straight line that from where we were to where we are, because it seems like maybe things got a little bit worse, and then they got better as sort of the Delta impact subsided.

So, maybe walk us through the last few months?.

Good morning, James. Its Brian.

At a high level, I would say, we've been very pleased with the trend lines we've seen, you know, across the system, certainly at the very beginning of the season, getting open was a little choppy, with certainly not all our parts coming online at the same time and staffing challenges that as Richard noted that the decisions we made, how to remedy and I think the results speak to the success that we had with that with those decisions and those changes we made around staffing.

In terms of demand -- and certainly throughout any season, as you know, having followed us as long as you have there's ups and downs. I will say this year, we found ourselves focused on some of those macro trends that we used to hate talking about and got away from, like weather. But certainly that played into it.

We really didn't see a demonstrative impact in any of our markets, really on the, from the Delta side of things. From a guest spending perspective, the trends have only continued to improve. Our per capita number in Q2 was just a hair inside of $56. That improved over $64 in Q3 and then pushing $65 in October, as we've as we've disclosed.

So, I'd say in the trends have only continued to improve in certain metrics and have remained very steady in others..

Got it. That's really encouraging. And then maybe if we could hone in on October a little bit, attendance better than 2019, which seems like a watershed moment for you and the industry. I think that's the first time I've heard that since the pandemic. You did have 6% more operating days in October over the last five weeks, I guess I should say.

Is it as easy to just say that on a same-day basis, which is a metric you've given at times in the past, were up 2% -- attendance was at 2% on a comparable number of days, math probably isn't that easy.

But then also, are you still facing those same headwinds that you were in the third quarter right? Capacity limitations or restrictions and the headwind from pre-book sales? I guess in other words, would that number have been even better, where you're not facing those things or did those things themselves subside to some degree?.

Yes, James. This is Richard. Good morning. Listen, I think this the strength in October, irrespective of the number of days was really encouraging. As I said in my remarks, we did have a few more days, just way the calendar fell. But from my perspective, it was more validation of the extremely strong demand we've seen and I was very pleased.

As Brian said, we were watching all the weather trends, not something we've done in a while, but I think overall -- I think gets back to why we are so committed to our event strategy.

Halloween is the perfect example both daytime and nighttime of why we think the event strategy drives urgency to a limited duration because of the limited duration event. So, I think strategically what we saw was a validation of our view of the business.

But again, I'm pleased with the way the team performed, really pleased at the high guest satisfaction. And to your point, just thinking about it, I think the other thing that I would point out is, we were up on what was it then record month of October by all respects.

So, I think it really does point to the underlying strength of the business model and the resiliency of it..

That's really helpful. Thanks guys..

Thanks James..

Thanks James..

Our next question will come from Mike Swartz of Truist Securities..

Hey, good morning guys. Just maybe a quick follow-up on James' first question. I think he said attendance like-for-like was about 82% of 2019 levels in the third quarter. I didn't see it, maybe I missed it.

What did that look like without the capacity limitations that Canada's Wonderland and I guess softer group sales dynamics?.

Yes, good morning, Mike. It's Brian. So, yes, the 82% number that we disclose is a reported versus a reported. So, certainly, the less operating days, the 47 less operating days is impacting that -- the capacity limitations and the in the softness in the group channel. A little harder to isolate those latter two, just based on their nature.

Certainly, if we just look at a comparable operating day to operating day, much like we've seen in previous months and as we talked about in Q2, we picked up several 100 basis points of comparative attendance year-over-year.

And certainly the group, as we talked about in Q2 has put as much pressure as maybe 9% -- 8% to 10%, maybe, let's say 9%, on average pressure against that number as well.

So, it's a little harder on -- a park like Canada to quantify the capacity limitations other than certainly knowing that August is one of that park's best performing months and having those capacity limitations and it was very discernible to see when you were bumping your head on certain days..

Okay, that's very helpful.

And then just switching over to the labor environment, you provided a lot of color in the call and I think on the second quarter call, you had mentioned that labor costs were -- or hourly labor costs were up something like 40% versus 2020 or I guess, 2019, maybe provide us with an update there and maybe your comfort going into 2022? And then maybe what type of inflation you're expecting for the following year?.

Sure, Mike. As a relates to the hourly rate, given the changes that we made, as Richard alluded to that, I think right at the ship, if I could put it that way. And those changes were all largely embedded in those Q2 rates that we spoke about.

So, not much further creep around rates in terms of its 2021 versus 2019 or 2021 expectations budget, however you want to look at it. So, those comparatives -- those percentages, I think are largely still in line with what we previously disclosed.

As we look towards next year, I think our belief is that the adjustments we've taken this year, while they were definitely taken out of necessity, given the short runway, we had to get parks open, that there -- we don't anticipate the need to take meaningful increases again next year. I think we're well-positioned based on our current status.

As Richard noted in our prepared remarks and commented on the runway that we have more runway more opportunity to plan, more opportunity to recruit, I think we have opportunities to build more flexibility into that staffing model those -- that wage rate model for next year and so that's going to be our focus.

So, certainly trying to find ways to minimize rate pressure through adjusting the model a little bit as well as, as I mentioned, taking hours out continuing to find efficiencies, whether that be through automation or the use of more technology, better planning, it's going to have to -- some of the pressure is going to have to come off through both ours as well as driving more price.

We talked about that, we have to push price. We've been very successful doing that this year and we think we're well-positioned to continue that..

Okay, great. Thank you..

And our next question will come from Eric Wold of B. Riley Securities..

Thank you. Good morning. Just one more question on labor, that'd be the only the only topic here.

But I guess, with your move to hire and pay aggressively to get the parks staffed, are you still experiencing any notable deficiencies in any parks or any region of the country that that may be adversely impacted the ability to kind of operate rides, you're going attractions open that may have impacted attendance or is that really in the past?.

Yes, Eric. Good morning. It's Richard. We have not seen -- everything, we've seen has been broad based. So we've not seen any pockets of either strength or deficiency, if I use your term. No, we've seen the similar trends across all the country, and certainly, North America. So, nothing notable to call out there that would be a pocket.

Again, we're pleased with the way we're able to both attract, but retain the staff. And as Brian said, and as I said in my prepared remarks, just looking to do everything we can to optimize the labor that's available to us..

Okay.

But nothing that impacts the ability to get attractions or rides open in the parks, those are all sort of operating at full capacity -- full ability?.

No. We had -- we're able to put on the level of guest experience and product that we wanted. Had we seen those types of pockets, I think we would have seen that show up in our guest satisfaction scores. And again, we achieved some of our highest scores ever at almost every park both daytime and nighttime and that's one of the things I'm most proud of..

Yes. And I would just add to Richard's comments. The staffing levels are reflective, the adequacy of the staffing levels, as Richard just commented, are reflected in those per caps.

Our ability to generate the per cap numbers that we did in Q3 and in October would not have been possible had we had shortages of staffing, particularly in key retail channels..

Got it.

And then final question on the season pass front any kind of underlying drivers in terms of the strength of renewals of prior pass holders versus first time purchasers coming into the mix? And any just sort of shifts in kind of the demographic of that season pass buyer that you're seeing in terms of age, family composition, distance from the park, anything that would kind of call out a trend?.

Eric, the season passes, as I said, is critical program. We've got more information, and we watch it very closely, we got more information on season pass holders than we do on our single day tickets and we're catching up on that. But when I look at that, no -- we going into this, we knew we had to watch the renewals and what was happening.

We've seen them start to trend strong depending part by part. You've got the extension of the use benefits at Knott's Berry Farm and Canada's Wonderland into next year. So we knew that would be a little bit of a headwind. But we're seeing, in our data, of what we'd expect to see in a normal year. So, it feels a little bit like normal.

Again, renewals started out little slower, been strengthening over the course of the sales period so we continue. Even though fall is our second biggest period, the winter holiday period that we're going into is increasingly becoming important. So we're going to watch that closely as we work our way through that..

Perfect. Thank you, both..

Thanks Eric..

[Operator Instructions] We will now go to Paul Golding of Macquarie Capital..

Thanks. So much, congrats on a phenomenal quarter. I had a question on the $175 million to $200 million in 2022 spend on new rides and attractions.

I was wondering, if you could give us any color on how the supply chain may or may not be impacting that given the numbers seems to be holding about the same but we've seen costs and actual material transport et cetera, be impacted? And then I have a follow-up. Thanks..

Paul, good morning, it's Richard. We've seen some isolated challenges with supply chain. Certainly, they are out there. But with planning ahead and getting our orders in early like we like to do we've minimized that. So some of the projects on an isolated basis, we might have challenges getting to.

But overall, I think we'll be able to debut what we need to and what we want to next season. So nothing that, I think that we're seeing will impact our ability to get up and running with all of the things that we will -- that we detailed in our last earnings call and release in terms of new product next year, but also those ancillary products.

So working our way through that nothing significant. It's there, certainly, we're monitoring it, but we're working our way through it..

That's great to hear.

And then on guest experience, I was wondering if you could give any color on how some of the guest experience digitization or optimization products and initiatives have been trending, whether it's front of line or mobile ordering, anything that could be a bellwether for how the uptake is driving experience or per cap quality there? Thanks..

One of the notable things, Paul, in what we see this year is that we're across, as we said in our remarks, we're up across all revenue channels. So we're still evaluating all the data to distill out what we think is really driving.

But, so it's a huge lift on all fronts, certainly, we think we've benefited from the revenge spending that we've talked about. But more importantly, we think we're benefiting from, as Brian said, several years of initiatives really aimed at unlocking more transactions, listening to our guests, trying to take some of those friction points out.

So, we have seen good uptake and the things we've put out there, but improving our consumer technology is going to be a big part of our platform going forward.

We anticipate as we said in prior calls that the business optimization we'll get to that over, and see the benefits of that over a two to three year timeframe, but more to come on that front as we get into upcoming calls and quarters..

Great. Thanks so much..

Thanks Paul..

Our next question will come from Stephen Grambling of Goldman Sachs..

Hi. Thanks for taking the questions.

I may have missed some of this in the opening remarks, but I'm just curious if you could weighing on how you're thinking about labor cost inflation over time, as we look over the next couple of quarters and if you're seeing material differences by geography both in terms of rate and just the shortages that we've heard about?.

Yes, Stephen, it's Brian. Good morning. As it relates to the staffing challenges, certainly, there is modest differences from park to park, but I would characterize it similar to Richard's earlier comment that that tight labor market is really a nationwide problem, something we're seeing across all our properties here in North America.

So, certainly, the ones that are a little bit more of a distance from the bigger metropolitan areas may have some incremental challenges, while those that are closer, staffing gets a little bit easier, at least the population base is a little bit deeper.

In terms of our outlook, the -- as I mentioned on -- to an answer to an earlier question, the step functions that we took in rate this year to address the staffing challenges, I think those rates are very relevant still for next year, not necessarily seeing a need for those to increase.

And in fact, as we noted in our comments we're trying to build more flexibility with more runway to plan, we want more flexibility in the labor model going forward. There are certainly some tailwinds that can help us. They are seeing the J-1 Visa program come back.

We had a modest amount of associates that came through that channel this year little later in the game, but seeing that continue to get back to its historical levels will definitely benefit us.

And then as I just mentioned, certainly more runway to plan our staffing models to recruit should benefit us as well as we look to offset some of the rates pressures we saw this year..

And then perhaps another follow-up to one of your comments earlier about attendance, I mean, can you just shed any light on what you're seeing in terms of group attendance? What -- where that is trending versus kind of normalized levels and anything that you're anticipating or seeing into next year?.

Yes, Stephen, it's Richard. On the group channel, listen, as we shared on earlier calls, back in 2008, 2009 that's usually the first to get disrupted and the longest to come back. What we've been surprised by, frankly, is the phone has been ringing from our corporate clients.

So, we're starting to see a pickup in activity, not yet seeing that through the gate. So, there is some interest, although, the folks on the corporate side that we're talking to want to configure. They're asking for a little more flexibility in terms of how people use the park.

So we're thinking about how to evolve our offerings to match where we think the market is going on that front, could be more limited operation on a Thursday night, things like that.

How can we customize it for them? But one of the really important channels for us every year is youth sales, with schools returning and everybody back to in-person learning, we're monitoring where the school systems will be in terms of their ability, or desire to go to some of our traditional days in the spring.

So, we've been encouraged by the conversations we've had and the discussions so far. But again, still a little too early to kind of forecast how quickly group comes back. I would stay with our historical view that first to be disrupted last to come back. So we think there will be some impact on 2022.

But feel better about it when we look at 2023 and beyond..

And one last one, just on the business optimization program the $50 million, has anything changed in terms of your thinking about that number and the split between cost and revenues? And how does the strength in per caps maybe fit into that program? Meaning could there be any difference in flow-through from the strong per caps as a result of some of the things you're doing there?.

Our ability to achieve the $50 million that we've outlined, no significant update in terms of the timing or the components, we're still working our way through, as we said in our prepared remarks, trying to be as efficient as possible and optimize on both the expense and revenue side, so no update for you other than that.

We remain confident in our ability to hit the target..

Fair enough. Thanks so much..

And with that, does concludes our Q&A session. I'd like to turn things back to Richard Zimmerman for closing remarks..

Thanks, everyone, for your participation in today's call, and especially for your investment or continued interest in Cedar Fair. As the holiday season approaches, I know I speak for Brian, Michael and our entire team at Cedar Fair, wishing you must cheer and endless fun.

We look forward to seeing you at the upcoming -- at an upcoming conference either in-person or via video.

Michael?.

Thanks again, everybody. If you have any additional questions, please contact our Investor Relations department at 419-627-2233, and we look forward to speaking with you again in February after releasing our 2021 year-end earnings report. Cathy, that ends our call for today..

Thank you. And again, ladies and gentlemen, that does concludes today's call. We'd like to thank you again for your participation. You may now disconnect..