Q1 2020 Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to Cedar Fair Entertainment company, 2021st quarter earnings call.
At this time all participants are in listen only mode. After the speakers presentation. There will be a question and answer session to ask the question. During this session you will need to press star one on your telephone. Please be advised to today's conference is being recorded if you require any further assistance. Please press star zero.
I would now like they had the conference over to your Speaker today, Michael Brussels, Corporate Director Investor Relations. Thank you. Please go ahead.
Thank you Christine good morning, everyone welcome to our 2021st quarter earnings Conference call.
Earlier. This morning, we distributed via our wire service our earnings news release, a copy of which is available under the news tab of our investors website and I are dot Cedar fair Dot com.
On the call with me this morning, our Richard Zimmerman, Cedar Fair, President and CEO and right, whether ROE, our executive Vice President 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 more detailed discussion of these risks you may refer to the company's filings with the FCC.
In compliance with the Fccs 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 on selectively disseminated all content on this call will be concerned.
Her fully disclosed.
I would like to handed over now to our CEO Richard Zimmerman Richard.
Great. Thank you Michael and thanks, everyone for joining us this morning.
It goes without saying how much the cobot 19 pandemic has impacted our lives in businesses and the reason why are industry will look back at 2020 as a watershed season for decades to come.
For the industry and especially for Cedar Fair, we look forward to this time of year as one of excitement and renewal a time when we prepare a seasonal parks to welcome gas from countless communities across the nation.
One of the many reasons why we enjoy this business why are people work so hard to make the experience we offer our guests so memorable.
Also what we're missing most right now.
In any given day of any given year health safety and well being of our guests and associates is the highest priority we have.
As an organization our steadfast dedication to helping safety is what makes this year, especially frustrating and why we're abiding by the recommendations are the CDC as well as state and local officials related to the cobot 19 pandemic. Unfortunately until further notice our parks will remain in a state of readiness.
That's why we await governmental restrictions being lifted.
Until such time or pork GE EMS and their teams are actively addressing and planning for new measures and guidelines that may be necessary inside our parks.
Whatever changes or recommended are required our overarching goal is to ensure the safety and well being of everyone at our parks, while still providing our guest where the best day experience.
Our 2019 yearend call. We were pleased to report Cedar fairs, best year ever along with a very strong long lead indicators for robust year ahead.
As anticipated 2020 started at a record pace with attendance in revenues through mid March trending well ahead of last year.
Knott's Berry farm began the year strong picking up right, where it left off last year.
And advanced purchase commitments for the 2020 season, including the sale of season passes and related products had never been stronger.
Too early March the 2020 season was shaping up to be the best fear in the company's history.
What followed during the next few weeks related to the Cobot 19 pandemic dramatically changed our business for 2020 and perhaps beyond.
Credit our talented leadership team for quickly recognizing the urgency or the situation and what skillet precision implementing a comprehensive plan to better position our company to deal with uncertainty in the near term as well as position us to be a stronger and better company in the long term.
Let me summarize for you the current state of our business as well as the actions we have taken over the last six to eight weeks to counteract the impact of an extended business disruption.
From day, one our primary concern an overarching goal was to ensure the safety and well being of our employees and park yes.
Matt abiding by the recommendations of federal health authorities and state and local guidelines.
All of the company's non essential activities were wound down to a hole in our employees were asked to work from home until further notice.
To protect our guest and park employees effective March 14th we closed our parks as well as other facilities such as the Cedar point Sports Center that it open for the 2020 season.
We endeavor, we delayed the scheduled openings of our other parks several of which were ready to open during the weekends of late March in early April.
To reduce operating expenses expenses and dramatically slow our cash burn our team went to work implementing cost cutting and cash saving measures as quickly as possible. While also suspending up to $100 million of nonessential capital projects planned for the 2020 in 2000.
21 seasons.
Many of these actions involved difficult decisions that affected our entire workforce, but these measures were necessary. During this extraordinary time to provide the company with additional financial flexibility.
Additionally, our board of directors believed it was in the best interest of the unitholders for the company to preserve liquidity through the suspension of the quarterly distribution.
With a commitment to reinstate a distribution when permitted under our recently revised debt covenants.
And finally to secure additional liquidity and address potential debt covenants last week, we completed the issuance of a 1 billion dollar notes offering.
Obtain debt covenant flexibility through 2021.
And expanded the size of our revolving credit facility.
We believe the actions taken to date go a long ways towards strengthening our balance sheet and protecting the long term interest of our unit holders.
Collectively our proactive measures provide us with financial flexibility and sufficient liquidity to meet our cash obligations through the end of 2021.
Even if we remain in a minimal revenue environment.
Or valued season pass holders many of whom made their purchase commitments months ago. We wanted to express our appreciation for their continued loyalty.
While providing meaningful incentives to retain their passes.
We did so by first suspending the monthly billings of our easy pay installment program until we had better visibility in the park Reopenings and second extending the expiration date of 2020 season passes as well as the add on products previously purchased.
Through the end of the 2021 season.
As a result of these steps we've seen very positive feedback expressed through social media channels as well as calls an E mails directly to our parks.
In fact, our marketing teams playing the response to our season pass extension policy is the most positive feedback they have seen for any previous company announcement.
Well, we executed several important initiatives in a short period of time.
Their impact will likely be pivotal to our business over the long term.
Although it's difficult knowing our parks are closed we believe that we've taken the proactive steps necessary to effectively weather the storm.
I'll stop here and ask Brian to review our financials Brian.
Thanks, Richard and good morning, everyone I'll start with a discussion of our results for the first quarter before reviewing our actions taken to address the impact of carbon 19.
First our.
For our first quarter ended March 29, 2020, net revenues totaled $54 million compared with $67 million for last year's comparable quarter ended March 30, Onest 2019.
The decrease in revenues for the period was the direct result of a 239000 does a decrease in attendance and a $3 million decrease in out of park revenues.
Both shortfalls were entirely due to covert 19 related part closure starting March 14th through the ended the quarter. During the last two weeks of the quarter with no parks in operation. The company lost an estimated 388000 visits and more than $20 million in revenues when compared with the same two week period a year ago.
As Richard highlighting it in his opening remarks, the record pace with established in 2019 carried a well into the first quarter of 2020.
Prior to the disruption of our operations in mid March attendance was up 149000 visits or 19% while revenues were up more than $8 million. Both of these increases were driven by record start to the 2020 season at Knott's Berry farm are only year round Park.
Also in spite of the disruption of covered 19, our season pass sales remained up more than 30% at the end of the first quarter compared to the prior year quarter, reflecting the record pace in sales, we had coming out of 2019 and the continuation of that trend to start the year.
As of the end of first quarter deferred revenues totaled $195 million, an increase of $33 million or more than 20% when compared to the same period a year ago.
On the cost side operating costs and expenses in the first quarter totaled $138 million, which was comparable to the first quarter of 2019.
Reflected in these first quarter costs was a $1 million decrease in cost of goods sold consisted with the post coven 19 decline in sales.
$7 million decrease in SGN a expense.
And at an 8 million dollar increase in operating costs, primarily driven by incremental operating costs at the Schlitterbahn parks, which weren't.
Acquired until July 1st last year.
Excluding operations from the Schlitterbahn parks operating costs and expenses in the quarter were down 6% between years on a same park basis.
For the quarter adjusted EBITDA was a loss of $89 million represent an increase loss of 21 million versus the prior year quarter.
Excluding the Schlitterbahn parks, the first quarter adjusted EBITDA loss would have been $82 million.
It's important to note that the flexibility of our business model affords us the opportunity to quickly reduce expenses across the board, including costs, we generally considered to be facts during normal operations.
As Richard mentioned since closing our parks, we have taken proactive and aggressive measures to reduce our cash burn rate and provide the financial flexibility needed to sustain a business disruption over the long term.
First we eliminated nearly all of our seasonal and part time labor cost until restrictions are lifted and we prepare to reopen our parks.
We announced salary reductions across the board, including a 40% reduction for the CEO, a 25% reduction for all other senior executives at 25% salary deferral for all other salary fulltime employees and a 25% reduction in schedule the hours for all full full time hourly employees.
We suspended all advertising and marketing expenses, we suspended cash fees for our board of directors.
We suspended quarterly distribution payments and we're taking steps to defer or eliminate at least $75 million to $100 million of non essential capital projects planned for the 2020 and 2021 operating seasons.
With these planned reductions, we now anticipate spending $85 million to $100 million on capital investments in calendar year 2020.
Jordi of which will be spent by the end of the second quarter.
We have purposefully kept our full time employees on the payroll and not aggressively pursued furloughs or layoffs as we believe this leaves us in the best position to reopen our parks as efficiently and effectively as possible once restrictions are lifted.
Based on the cost cutting and cash saving measures taken today as well as additional measures. We are prepared to implement in a more prolonged disruption to operations. We estimate our average cash burn rate going forward will be between $30 million to $40 million per month through the end of 2020.
This includes a base level of operating costs, while our park operations are fully suspended.
Some level of runoff related to the capital projects in process are ramping up and interest payments on outstanding debt.
Once given the greenlight to reopen our parks startup cost to do so would push this monthly burn rate up.
As Richard noted equally as important as the cash saving measures, we put in place where the financing steps, we took to improve our financial flex and flexibility and enhance our liquidity position.
First we raised $1 billion through our heavily oversubscribed and Upsized senior secured.
Notes offering price to 5.5%.
Second in conjunction with the bond offering we obtained an amendment to our credit agreement, providing us with covenant headroom through 2021, and preventing the effects of the covered 19 pandemic from distorting our covenant calculations.
During the current business disruption.
Third in concert with the bond offering we expanded our revolver from 275 million to 375 million, providing $100 million of incremental liquidity.
And lastly, we used a portion of the bond proceeds to pay down $463 million of our term loan as well as the outstanding balance on our revolver.
As part of the amendment to the credit agreement. We also agreed to a 125 million dollar minimum liquidity covenant that will apply for the end of 2021.
As a result on the financing steps taken our pro forma liquidity as of the ended the first quarter was approximately $821 million, providing ample liquidity sustain a disruption in the business that could last for 2021.
This includes $289 million of available revolver capacity net of approximately $16 million of letters of credit and $532 million of cash.
In addition to now having ample liquidity the amendment to our credit agreement allows us to to suspend testing of our financial maintenance covenants through 2020 and to use modify testing of a new senior secured maintenance covenant beginning with the first quarter of 2000 2021, providing us the financial flexibility, we need to manage our business.
For reference purposes at the end of the first quarter, our pro forma senior secured leverage ratio was 2.6 times, representing more than $170 million of EBITDA question from the four times covenant.
Richard and I would like to express our sincere thanks and appreciation for the unwavering support of our long tenured Bank group. During this unprecedented time as well as to our extended team who assisted in this very successful effort.
Looking ahead, we have withdrawn our financial guidance and long term adjusted EBITDA target until our portfolio parts are fully operational and we have better visibility on the recovery in the meantime, our parks are being maintained in a relative state of readiness for reopening.
We remain confident the situation in which we find ourselves and has only temporary and at Cedar fairs financially well positioned to manage through this difficult period until we can reopen our parks and welcome back guests with that I'll turn the call back over to Richard.
Thanks, Brian.
If the last two months has taught US anything it's that change comes quickly in todays business world.
As a tenured management team in concert with the experience and insights of our board of directors. We go to great lengths to anticipate and manage change by continuously reinforcing our foundation of excellence.
While few businesses had contemplated and specifically prepared for the effects of this pandemic. The strong foundation historical performance Cedar Fair stands upon enabled us to react quickly and take effective measures to address the recent recent challenges thrust upon our business.
The other good news is that as each day passes we are seeing life in the U.S., taking another step towards returning to normal how long. It takes before parks can reopen remains to be seen but we're encouraged by the overall trend to get businesses back up and running again and their employees back to work in the safest manner possible.
We too are planning for that day, and I'm confident in our team's ability to not only deliver on the high quality guest experience. Our guests are seeking when they visit our parks, but to effectively implement new health and safety procedures that will be required of us in the future.
The plan, we have put us in place allows us to strictly controlled cost while maintaining the ability to open parks in 2020 once restrictions have been lifted.
Given the seasonal nature of our operations with Knott's Berry farm is our only park with year round operations. It is important that we're able to restart the parks with a reasonable number of operating days remaining in the year.
We are actively working with the authorities in each of the markets. We operate in to monitor their opening timelines and address their specific requirements. Each park is different but once we have good line of sight to an opening date in any particular market. It will take us a minimum of two to three weeks to open.
Our operating teams remain ready and anxious to bring the parks back to life.
When we do reopen our parks, we will have all aspects of our operations fully prepared to meet or exceed the health and safety expectations of our guest and the requirements of local authorities.
We are actively working on new mandatory health and safety Cobot 19 training for all employees and we are introducing protocols to conduct wellness checks of employees each day.
We're also committed throughout our properties to implement enhanced and expanded sanitization measures to ensure confidence that our properties are safe to visit and enjoy without undue concern.
Incremental cleanliness measures will be consistently applied and pervasively visible. This includes facilitation social distancing on right inside restaurants in the common areas of our parks regular cleaning of rides hand rails, and restrooms disinfection of tables chairs and other common surfaces in our dining too.
Facilities and along our midway's.
And added locations and equipment for our guests to Washington Sanitized their hands.
We're also actively working on enhancements and expanded use of technology platforms, including our park mobile apps in order to improve the guest experience going forward.
These enhancements will include such things as the use of apart reservation system to better manage park attendance.
Expanded use of castle cashless transactions.
The potential introduction of virtual queuing.
And the broader use of mobile ordering for food and initiative that we began rolling out in 2019 to good success at several of our parks.
Lastly, we are soliciting feedback from our guest in order to understand their expectations around the park experience in a post cobot 19 World. This includes gaining some perspective on what we should expect in terms of potential visitation once our parks reopened.
Before we take your questions I want to close my prepared remarks with the message for our associates.
Thank you for your patience and continued dedication to our company during a difficult and unusual time in our history.
Every day as we anticipate better days ahead I encourage you to look for a silver lining in what we're going through.
One of mine is that with change comes opportunity when our parks do finally reopened we should be excited about the chance to regain some of our lost momentum by tapping into pent up demand for an experienced that few can offer and that no one does better than we do.
Unlike most businesses our parks offer what our friends and families have been missing most while being stuck at home the opportunity to finally bring some excitement into their lives again.
The backbone of Cedar fair resides in our 15 parks and they are well known regional brands all of which over the years have received high praise from consumers and won multiple industry Awards collectively I believe our portfolio properties represents the strongest family of parks in the business, which means we have a lot going for us when we can.
Resume operations.
Our mission is to make people happy which has been at the cornerstone of our growth and success over many decades I am confident that our industry in Cedar fair, specifically can develop and execute new operating procedures to address standardization and social distancing best practices. I am also confident that we can create.
Guest experience that will be a welcome relief from what most of experienced over the last few months.
It will certainly be different.
But it will still be fun and have memory, making at its core.
That concludes our prepared remarks Kristina please open the call for questions.
Certainly at this time I would like to remind everyone in order to ask a question. Please press Star then the number one on your telephone keypad. Our first question comes from Brent Andrus from Keybanc capital markets. Your line is open.
Hi, good morning.
So Richard.
Arps when the parts do initially reopened how are you thinking about the consumer.
Propensity to return to the theme parks I know there's been some survey work out there, but just curious what you're hearing.
From your customers about their demand when the parts reopened.
We will as I mentioned in my remarks, we're in the middle of conducting research right now there will be a lot more extensive but we are constantly having interactions with our customers whether through social media or through more informal channels.
They are looking forward to win the parks open returning so I think I think as you look at the broader reopening of society. There will be you know there will be there will be lots of different reactions to what we see as each of the states in the markets reopen I think there's a large segment of people will be looking for the entertainment as I said and I think the law.
So be some some consumers that are concerned about stepping through the environment I think the strength of our business model. The appeal we've seen in.
In some disruptions in the past be that Sars in 2003, and our Toronto Park kind of gives us a window into how to think about it but we are as we are just curious as everybody else is to see how the consumer reaction. We are certainly monitoring everything else is going on in our environment.
Thanks, I appreciate the color on that and then another one that I understand you can't predict when the parts reopened but.
What what stage. We're parts are you feeling we're making the most progress.
Where do you have the most confident.
And what parts or possibly going to take.
A little bit longer to reopen here.
I'll say it this way just said in my prepared remarks, we're working very closely with all the state and local officials.
To build out the protocols for operating once we do in the safest manner possible.
I will tell you that it is going to be market by market as you referenced that your question, but what I'm encouraged by is the engagement in the accessibility of all the state local officials in every one of the markets, but they've been great partners and having this conversation we understand what their concerns are and we certainly have.
Make sure that they understand our perspective.
The strategic value of us reopening our parks is not lost on us it's important to our employees on our associates, it's important to our guest and it certainly important to the communities that we operate in so we understand the importance of getting reopened if we can as soon as possible. After we get the a green light.
Thank you.
Thanks, Brett.
Your next question comes from Tim Conder from Wells Fargo Securities. Your line is open.
Thank you and and gentlemen, a again I think yourselves and other than industry doing a great job managing to the difficult situation.
Little color. Please if you could on the season pass units versus deferred.
Obviously very very good an impressive results there.
But but new units less than.
20% still again, not shabby, but less than that 30% or excuse me, 30% and versus the deferred dollars only up 20.
Is that is there anything going on with mix or add on purchases versus the tickets is it.
Discounting is it lists groups and just a little more color on that if you could.
Yeah, Tim it's Brian.
As far as as the the season pass as we said it and our remarks very pleased with that momentum we had coming out of 19, what we saw early in 2020. The difference that you're alluding to is really driven by a couple of things first deferred revenue would would reflect a lot more than just season pass while season pass is definitely the lions share of.
It.
There are other components everything from deposits from groups and deposits on hotel rooms, and other items as such that fit in there so that plays into the deferred number.
From a percentage perspective as does the fact that into the sales number is is it is more of a gross number and as you.
And appreciate the sales that happened last year, we started drawing on some of those season passes.
From fall visits and 19, so the deferred numbers already seeing some draw out of it which the sales number would that would be the gross number.
Okay. Okay help that's very helpful. Brian.
And gentlemen, how would you think about the dynamic between.
You are going to be most likely limited on capacity in an initial opening and then that will ramp up.
How should we think about the the need to offer some early incentives to get to get the customers to to come back versus say unlimited on capacity. So.
It is what it is and then be able to maintain a pricing our limited incentives how should we think about that dynamic.
Fair question, Tim It does I think about when we reopened our parks and what we expect to see.
We we typically operate our parks at much lower than full capacity historically, so in many of the summer weekdays, we're nowhere near full capacity. So as we think about what capacity limitations may be and and having a reservation system upfront, obviously want to step into it make sure we're in compliance with with our commitments on for the local.
And state and local guidelines, but as we think about how to out of price it or how to think about stepping into that business model. Yeah. We're gonna monitor the very closely.
And make sure that we are serving the customers. We've got a lot of as you know we've got up and you. Just asked a question about season pass was going to large base a season pass holders out there who want to make sure get their value. So as we think it through I think we're going to monitor that and lean heavily into the revenue management function that we built out over the last few years that aside.
So well to make sure we're being appropriately responsive to what we see.
The conditions are on the ground as we open up.
Okay. So it sounds like potentially preference given Richard too.
The season passes that would make that make the most since it would it would seem to be.
I think we want to balance the season pass versus the broader appeal, but we we want to make sure that the season pass holders get value for that for their purchase.
Okay, and then and then lastly.
Right.
What type of timeline should we be looking at you talked about the enhancements that are in development on them on the mobile apps the reservations virtual queuing an already testing some of the mobile food ordering in prior years.
How should we see that timeline should we see several those functions pretty soon.
With that as the parks reopen given some what are the needs.
I'll, let Brian way here in just a second.
And you can add onto it to my comments, but some of the things that were referencing for instance, like the reservation system, we've actually had.
Been utilizing that on small pilot.
Some of our parks over the last couple of years. This would be a much broader application. So certainly this little bit more build out but for the most part a lot of these are not new concepts that we haven't even thought about or explored.
And.
The to specific timeline will depend on each of the measures. We can give you probably a little bit better timeline, Tim as we get deeper into this summer and we see what the opening is and how far we are in our thoughts and the state local guidelines, what we're trying to accomplish but Brian.
Yes, sure I think Tim just following up on Richard's comments some of that protocols.
Our and the rollout of those protocols and the assistance or other procedures meant to address that those will be dependent on on ultimately the timeline for opening I think you're going to expect that they'll be certainly saw new procedures covert 19 related protocols that will be required as part of both.
Okay, and others that will be more about enhance guest service.
Longer term.
Clearly some of the technology developments Richard alluded to on the reservation platform that we have utilized in the past and expanding that to a broader utilization isn't necessarily as complicated as maybe something that's a brand new introduction and so certainly got these things will rollout over over probably a multitude of timelines.
The ones that are most critical we'll we'll get out as quickly as possible in order to be open.
Great. Thank you as always gentlemen.
Thanks, Tim.
Your next question comes from Steve plays in ski from Stifel. Your line is open.
Hi, guys good morning.
Thanks.
So Richard you talked about season passes were up over 30% at the end of the quarter and I don't know if you can tell us or you will tell says, but any idea where that number is now meaning at the end of April.
I don't know that I can give you and I don't have Andy the specific percentage what I can tell you is that through April, particularly as we March or April we have continued to sell season passes so.
[music].
That number continues to grow to some degree certainly we're not seeing the same level of sales in that season pass channel right now that we would have seen last year, because we would have been open but what's encouraging is we do continue to sell.
Okay got you appreciate that.
You talked about the cash burn being 30 to 40 million per month, and you could actually drive that down lower its a parks are closed for an extended period of time.
Any idea to help us kind of thinking about where you could potentially get that down to or what what you could do further to drive that number lower.
Yes, Brian.
Put a specific number on at this point in time, but maybe I can answer that for you. This way right now that 30 to 40.
As I mentioned on the call. It includes both the Opex burn rate as well as the other big component in there is the debt facility in interest costs associated with that outstanding.
Opex burn rate.
It is really based on the scenarios as Richard described in his comments that were keeping the parks in a state of readiness were working tirelessly on each of our markets to get our parks back up and running as soon as possible and so in doing so and we're maintaining as we said as I said it.
Prepared remarks, maintaining.
Our full time staff.
And in some cases pared back hours, but still on the payroll as we try and remain on what we're calling sort of an idle state and a state of readiness to get open as soon as possible. If we were looking to or had better visibility that the parks aren't going to get open for some reason at all in 2020 as an example, we can take a lot.
Our aggressive look at at all the cost across the board and pull that number down but it would definitely be under a scenario, where we're not trying to reopen in 2020.
Okay got you appreciate that and last question and this one is totally in the we use and you can.
You're probably laugh when I ask it but in your release you talked about not opening the parks and use the you use the term near term.
The term near term means different things the different people.
Any any idea or any help on what that actually means what does near term mean to you guys.
You know I I'd answer that I think it's a great question, Steve I'd answer. It. This way. This is probably the most dynamic situation and environment I've seen in the to well over three decades that I've been doing is literally the information on the ground changes day by day, and sometimes dramatically. So in each of the respective markets. We operate in so one.
We say in the near term what that means is we're constantly getting new information about the state of the reopening of the different markets what the actual that tied to the both the consumer mentality and the the actual health trends that underlie reacting the situation. So the near term just means that.
Near term is very different even someplace potentially like a california versus maybe some other state be it, Missouri or North Carolina or some of the other places that we operate in or Toronto, where were Canada is a different country. So when you think about near term.
That we've always thought about that in a in a in a more general sense that it's not longer term, meaning you know.
Years and years and years, but.
I think thats going to it's going be different market by market. That's about as much clarity is I can give you.
Okay. Appreciate it guys. Thanks a lot.
Your next question comes from James Hardiman from Wedbush. Your line is open.
Hi, good morning.
So you may have already given us all you're going to give us on I think it was going to Tim's question, but is there any way to think about.
What percentage of full capacity, you're port we operate at typically.
Word because it.
But any way to think about sort of typical.
Versus capacity and then how much you think you might need to scale back the typical levels to be able to practice social distancing in your parts.
Hi, James It's a it's Brian.
Yes, so at a high level I guess, what the way I would answer it is.
The outside of a handful of days each year most of our parks would operate in a normal day.
Probably some place.
At or below 50% of theoretically theoretical capacity.
As you know full well being close to the Cedar point.
Cedar point.
Can do 50, plus thousand people on a day and that's maybe not.
Medical capacity, but it's getting up there, let's put it in the 90 plus percent kind of range.
But on average.
Thats not what is doing over the course of in tires operating season. The average attendance is as probably like I said closer to 50% of that so I think we think about the impact of limiting capacity up against the theoretical.
Capacity number the answer really comes down in large part too on a park by park basis, just based on the structural limitations of the bar and then also I think at the end within each market and the same requirements are going to be there, while we think that ultimately longer term well sort to sort of a nice.
Standardization around what that might look like as an industry, we can't say that for certain at this point in time on but what I can say is that now given the fact that most of the parks don't operate anywhere near.
Theoretical capacity and only close to half we can we can do a numbers that are significantly less than theoretical capacity and still be at a very profitable level.
In terms of of daily operations.
Okay, and you think you have the.
Technology in place.
Right now to do you talked about this hark reservation system, how exactly where that work if you're not going to let everybody in that wants to come.
Well as it I'm not going to comment on the specifics James but we are ready to do reservations. When we open up and we are doing they're going to do extensive communication with our guest to make sure. We're very clear and there's a lot of clarity about.
How that system will work.
Okay, and then last question for me.
Can you maybe dig into.
The season pass.
Promotions that you're running I think what I heard you say that if you bulky path.
That's going to be good not only for 2020 book for 2021.
You got the case and if so is there any way to think about how much money is essentially being taken off the table.
In terms of revenues for 2021.
I'll start and again, Brian can can jump in here given all the uncertainty that was created by Cobot 19, James we want to make sure that we made a crystal clear to our season pass holders that they received the intended value for their season passes and that's why we extended through the pass all the way through 2021, we believe that was the right thing to do.
[music] for our customers.
The steps we've taken the date of gone a long way sorts communicating that in terms of the actual numbers, though Brian.
Yes sure James.
Its a.
Thats helpful ill step back for a second and give you some some color on where we were.
Purchase at the end of the decision was made religion provide you know and communicate the value that.
We wanted a season pass holders to get out of their 2020 passes and what they expected to get.
At the time, the Cove and 19 certain disrupted everything we were a maybe a little bit ahead of 50%.
For the season pass sales cycle on trending as we set our prepared remarks significantly better.
Than than last year in terms of units in dollars, but in terms of the the calendar cycling about halfway through based on on historical.
Sales.
All of those past its all about half or purchase under underpayment plans and so as we think about the impact on 21, there's there's two sides to a right. There is the revenue side the cash side.
From the cash side, we still don't have all the cash related to season pass sales there are folks that won't be once we read and write reinstate the easy pay billing cycles will start getting those cash payments and those dollars coming back again, so that depending again this all depends on how long in the park state.
Closed the longer they stay close to more of those payments start to slide into 21, so that would benefit us in 21.
To the extent on the revenue size and extend the parks stay close longer youre going to have more deferred revenue still sitting there on the books starting January onest of 21 21 to draw and so I can't really give me the specifics because it's all dependent really upon when the parks reopen but while we are.
But as that once the parks do reopened there's more sales to be gotten whether that be later. This year are related to 2021, our passes that we would normally start selling or it's in the spring of 21, when we would normally be selling a young guy probably about a half or or so of our of our normal sales cycle.
Got it really helpful. Thanks, guys.
Thanks James.
Your next question comes from Mike Swartz from Suntrust. Your line is open.
Hey, guys good morning.
Maybe just shift a little bit.
Wanted to talk about not.
So having a very strong start to the season, there and remember one of the big pushes this year with some of the local marketing to local visitors JB.
Give us a sense of how that was going.
And that's something that you will continue to repeat going forward.
Yeah, I'll take that Mike. Good morning, Great question, you know as we said in our prepared remarks knots was off the strongest.
Start ever we were seen response to our targeted marketing efforts in the tourism channels that was that we're starting to gain traction. We're pleased with what we saw there but equally important was in January and February Ram is peanuts celebration at Knott's as one of our tent pole dense under the seasons of fun, Ben or so if you go back to.
What we've talked about extensively over the last year strategically you know our are leaning into limited duration events to drive urgency in certain markets. During certain times of here really was playing out well it not so we've always said not probably has is the poster child for our seasons of phone approach and the early part of the years anchor.
And that peanut celebration, we saw great response, so we think all those things continue to play well once we get to the other side of the the impact of the pandemic and we're back to.
More regular operating schedule, we still feel very strongly about the strategies. We've put in place that helped us get the momentum going into this and we think over time, they will help drive our momentum when we come out of this.
Great color.
The other question I have is somewhat similar but this is going to be a big year for knots, and Cedar point to your biggest park celebrating.
Bursaries any any color on what you're planning to do there and is it somewhat of a dynamic of when the parks open or will you look look the push some of those.
Celebration did 2021.
Yes, Mike Great question, you know, we haven't made any official announcements yet we have already announced at some of the limited duration events, we have like the Grand carnivals, we'll be taking place in 21, not 20, just given the the uncertainty that exist in the need to plan for those types of things.
We're still evaluating what we will do.
For both not 100, then Cedar Point's hundred 50, us, but that's really going to be tied to when the potentially we can reopen the parks and what what we're able to to get done based upon when they reopen so that's one we're still.
Still studying closely.
Okay. Thank you.
Your next question comes from Paul Golden from Macquarie. Your line is open.
Hey, guys. Thanks for taking my question.
I was wondering if you could give us some color on what you're seeing in the labor market I know that.
In past results, you talked about some rate pressure and I wonder to what extent.
These shifts in the labor market there.
Regulatory piece continues to be.
Essential headwind in the future or other.
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Downward rate pressure could help going forward.
I'll, let Brian again, I'll, let Brian way entered the second but what we are seeing.
What we were trending towards as we thought there was.
Probably we're not going to see the same challenge on the availability front as we've seen in the past so.
Again trying to take it out of a broad broad based look at it market by market, we're seeing very different things depending on on on which market, we speak too, but I will say that I think we've got an ability to lean into our recruiting tactics in our in our employment brand as we think about it to be very attractive we're all.
So monitoring some of the things that are happening within the environment related to colleges and whether they go back whether they stay virtual so the environments changing around us and we think that will impact the availability as to rate.
We will always be competitive in the markets that we were at hand.
Now I'll leave it at that.
Great and.
I guess, just a follow up to that then on.
Availability or.
Need for a certain hours with the new initiatives that you're talking about rolling out that have been test capacity out there.
And cashless component.
Any color you could shed on.
If there maybe some longer term margin impact that we could.
Consider that that could be favorable you know in out years from that.
The policy, Brian So I mean, as we as we get into this and again a lot of these these questions are hard to answer just because we don't have clear and define direction on on certainly some of the requirements I think early on on the thought would be that some of the procedures and protocols. It will be added coming out of coven 90.
I would put pressure on margins, but at the same time, how we're looking at is this as a as a great reset and going back in and taking a hard look at at the operating cost of all of our parks and trying to.
Fine more efficiencies clearly a move to.
Protocols, where we're more focused on cashless transactions as an example, I will allow for labor efficiencies.
Those may take a little bit of time to get too and so I think.
The initial thought is that there may be some incremental operating costs early on.
Fishing season will develop a little bit more over time.
Great. Thanks, so much.
Again, if you have any questions or any follow up questions. Please press star one.
Touchtone phone.
Your next question comes from Eric Wold from B. Riley FBR. Your line is open.
Thank you good morning, I apologize if somebody's I've been asked in different ways came a little bit late but I.
In discussions with with local governments around potential restrictions on on attendance that baby in place from that when the ports to reopen.
Have you got a sense of how many are going to what the variance of users.
Limitations based on commit Steve barcode occupancy or kind of based on your historical argument because I know that historically cooperate well below Max levels and so do you think the restriction to be based on what your levels had been or based on those theoretical backs levels.
I think the conversation really right now are great question. Thanks for four jumping on the conversation right now really revolves around making sure we open up and operate in the safest manner possible as you can imagine when you're dealing with a number of different state and local there's a variety of perspectives on that.
In addition to that our parks are built very differently. Some very big some very large some little more little more concise. So the answer slightly is going to be slightly different end market by market.
And we're in the middle of those conversations so.
We'll be able to give you more color on that as we get deeper into the conversations get closer to understanding.
Were seeing local authorities are in come out on their requirements.
Okay, Perfect and then I know you've got a great ability to.
Thank you mediation with their season pass holders in terms of.
Potential limitations and capacity limits and reservation or whatnot, what about the I'm trying to drive about seemingly ticket buyers.
There are ways to communicate to them before they get to the park in May see that.
Build out from the day or you get turned away from the gain that that what does that figure there and then how would you handle.
Taking turned away is any different it if you need to versus your previous times.
Well.
Yes, there is Brian selling as Richard mentioned on the call first off.
As we rollout and are in the process of surveying our gas it's not only season pass holders through our CRM platform. We have the most information on but it's it's staying in contact and surveying a single ticket holders that we do have information on and so we definitely are polling.
Staying in communication with all of.
The folks that we have within our CRM database, which has more than just season pass holders.
I think as we get back into a situation where we're in an operations again, we'll use all the the available on technologies and tools at our disposal, which will be everything from the mobile apps that we have on our part to our social media platforms to communicate with with gas boat season pass holders and.
And not season pass holders.
That's helpful. Thank you guys.
There are no further questions at this time of turn the call back over to Richard Zimmerman.
Thank you for your interest in ongoing support Cedar Fair once we reopened I hope all of you will get a chance to get out and visit our parks. This summer and experience first hand, what makes US unique we eagerly await award from officials and all of our markets that our parks are permitted to reopen.
And we look forward to keeping you apprised of progress on that front Michael.
Thank you for joining us today should you have any follow up questions. Please feel free to contact our Investor Relations Department for 196 to seven two to three three we look forward speaking with you again at about three months to discuss our second quarter results. Thanks, very much Christina calls over.
Thank you ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect.
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