Q2 2020 Cedar Fair LP Earnings Call
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I'd now like to turn the call over to Michael Russell Corporate corporate director of Investor Relations. Please go ahead Sir.
Thank you James and good morning, everybody welcome to our 2022nd 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 web site at IR dots Cedar Fair Dot com.
On the call with me. This morning are Richard Zimmerman, Cedar Fair, President and CEO and Brian with around our executive Vice President and CFO.
Before we begin I need to remind you.
The 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 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 Unselectively disseminated all content on this call will be considered.
Fully disclosed with that I would like to handed over to our CEO Richard Zimmerman Richard.
Thank you Michael and thanks to everyone for joining us this morning.
I want to start this call by wishing all of you well and I hope that you in your families are safe and adjusting to what feels like a new normal.
We're now more than five months into the pandemic, while none of us have a crystal ball to know where and when this win I couldn't be prouder of how our teams have come together and adapted to the challenges at hand.
See now we have responded over the past several months gives me confidence that Cedar fair will emerge from this crisis, an even stronger company than before.
The call today, I will focus my remarks, and provide more details on threed specific areas first.
The progress we have made to date, including the reopening of parks and the ability of our team to adapt to an uncertain environment and the shifting marketplace.
Second.
The learnings and insights we gather to date that will better position us to address the effects of the pandemic moving forward, including trends, we're seeing in our business.
And finally, our near term outlook for the business, including a discussion around the strategies and initiatives. We're working on to ensure we emerged from this crisis stronger and better position for growth.
Like others in our space and an adjacent industries Cedar Fair has managed through this unprecedented period with little visibility for what comes next.
This is challenged our teams to react quickly and responsibly and to develop contingency plans under multiple scenarios to put things in perspective and to acknowledge our teams for their outstanding work recall that in January we kicked off the year with a strategy to build upon the momentum in successes of a record 2019 season.
That all change before the close of the first quarter. When we found ourselves facing unforeseen challenges that although we were from well equipped to handle quickly caused us to shift our focus from playing offense and executing our long term growth initiatives to playing defense and implementing near term countermeasures.
These efforts included closing or suspending the opening up our parks on March 14th in response to the pandemic and government mandates.
Immediately addressing liquidity and cash flow concerns, which we accomplished through our April bond financing and the implementation of extensive cost saving measures aimed at minimizing our cash burn rate.
And most importantly, maintaining a strong connection to our to our gas during this period of disruption, including our highly valued season pass holders, which we successfully accomplished two ongoing proactive communication the extension of 2020 season pass benefits and privileges through the 2021.
Season.
These efforts have been successful in minimizing our cash burn rate from operations.
After unwinding operations and a large portion of our capital projects in April we have limited our average cash burn rate since may two approximately $35 million per month in line with the average 30 million to $40 million per month that we projected on our last earnings call.
Since our last earnings call in early May our teams have identified and assess the pandemics ongoing impact on our business.
Developed plans to reopen parks, where restrictions have been lifted and provided guest in those markets with the best entertainment product possible within the recommended guidelines.
We have worked closely with state and local officials health experts and others in our industry to develop and implement best in class health and safety procedures and protocols to protect the wellbeing of our associates and our guest.
We have also develop strategies and implemented new procedures to address covert related risk, including the use of contact was temperature and security screening expanded use of mobile food ordering and cashless transactions and the temporary use of a reservation system to manage initial demand issues upon reopening.
While pleased weve been able to reopen seven of our 13 properties, thus far including two of our four largest parks Cedar point and Kings Island.
Late yesterday, we announced for parks California's Great America, Carowinds Kings Dominion and Valley Fair will remain closed for the 2020 season.
We had previously announced that are separate get separately gated waterparks Cedar point shores, and not soak city would remain closed in 2020 as well.
While disappointed that we have had to make these decisions the lack of visibility into one restrictions would be lifted in those markets combined with the diminishing number potential operating days remaining has eliminated our ability to reopen and profitably operate these four parks in 2020.
We continue to monitor and evaluate conditions related to Canada's Wonderland, Knott's Berry farm or other major parks that with a little Yelp luck could be open yet this year.
Before I hop before I ask Brian to review second quarter results I want to share briefly what we've seen and learn through this difficult period and how those takeaways, we benefit us moving forward.
First.
While our parks were met with solid demand upon reopening the ongoing uncertainty around the pandemic and recent spikes and Corona virus cases across the country has had a more negative impact on attendance than we originally anticipated.
Forecasting future attendance in such a dynamic and uncertain environment is very difficult. However, based on current trends, we expect daily it tends to be approximately 20% 25% of historical levels for the balance of the year.
Because of that we recently adjusted park operating calendars, reducing the number of operating days and hours over the balance of the season to be more consistent with those trends.
These changes will help us more efficiently manage our seasonal labor cost and resources and remain profitable all while ensuring a best day experience for our guests.
Second.
We have seen silver linings emerge from every business disruption we've ever dealt with this one which we continue to battle daily.
Has proved to be deeper and more multi dimensional in scope given the matter with which it has affected every aspect of our company.
Consequently, our efforts to counteract those effects have been far more extensive as well.
The disruption in our business has forced a detailed review of our operating cost structure and organizational design that is already identified opportunities for efficiencies.
Not only what we benefit over the long term from the incremental cost savings and system efficiencies uncovered during our view.
But our broad based examination in many areas of the business affirmed the strength of our internal decision making processes.
Although the effects of the pandemic may be felt for some time to come well we have discovered during its disruption gives us confidence we will return to normalized operations stronger and better prepared for growth than before.
And finally, our pre covert success demonstrated that we have the strongest team of professionals in the industry running this business.
Yes watching them manage through a crisis of this magnitude sheds a brighter light on just how talented they really are over the last two quarters. Our teams not only have demonstrated their competencies with analysis foresight and planning, but they have maintained a long term perspective on the business, while carrying out separate difficult, but necessary near term disk.
Actions.
While facing a complete shutdown of our parks our teams pursued opportunities to open our adjacent properties, where possible, including hotel breakers, and our luxury RV Park lighthouse point, both welcoming gas to the Cedar point Beach weeks before the gate open the gates opened at Cedar point itself.
At Knott's Berry farm, we opened its California marketplace, including Mrs knots, Chicken dinner restaurant and introduced a taste of Calico, a new limited time special outdoor food and merchandise event, which we extended after quickly selling out its originally Scott scheduled calendar.
New events like the taste of Calico reflect how we are adapting to this changing market.
Staying connected with our guest in new and creative ways is critical to the long term success of the company and also creates opportunities to further strengthen our regional brands.
CEO I'm quite proud of our entire organization Ford steadfast determination and dedication, especially since we are potentially facing a lengthy recovery.
Our return in a few minutes to conclude my remarks, but first I'll ask Brian to review our financial results Brian.
Thanks, Richard and good morning, everyone I'll start with our results for the second quarter before addressing other observations about the business.
First I need to remind you that due to the effects of the Corona virus pandemic on the company's operations second quarter results ended June 22020.
The partial operation of only three parks worlds of fun in Kansas City, Missouri, and our two Schlitterbahn Waterparks in Texas as such results for the period are not directly comparable to results for the 2019 second quarter, which ended June Thirtyth 2019. This included the full operation of legacy parks, but excluded.
Two schlitterbahn Waterparks acquired on July Onest 2019.
Due to par closures in mid March that 2022nd quarter had a total of 39 operating days 687 fewer operating days when compared to the second quarter last year and 788 fewer operating days than what was budgeted in our 2022nd quarter operating plan.
For our second quarter ended June 28, 2020, net revenues totaled $7 million versus 436 million for the 2019 second quarter.
The decrease in revenues was the direct result of the cover 19 related part closures and reflects an 8 million visit decrease in attendance and a 44 million dollar decrease in out of park revenues in Park guest per capita spending in the quarter was not meaningfully comparable between years due to the mix of parks open in the period.
And the small number of operating days I'll provide an update on more recent guest spending trends in a moment.
On the cost side operating costs and expenses for the second quarter totaled $93 million compared with $277 million for the second quarter of 2019 fewer operating days combined with cost savings measures implemented in response to suspended park operations in the period led to the year over year decline. These.
Cost savings were partially offset by costs, we incurred to reopen and operate parks beginning in mid June including costs associated with new health and safety protocols for.
For the second quarter, we reported an operating loss of $142 million compared with operating income of 102 million in the second quarter of 2019.
Operating loss was the results of the 98% decline in net revenues offset by the 185 million dollar a year over year decrease in operating costs and expenses.
Adjusted EBITDA for the period was a loss of $85 million compared with adjusted EBITDA of 163 million in the prior year period.
As Richard mentioned, we now have seven of our 13 properties open including two of our largest parks.
Seven parks, which reopened in mid June through mid July have historically represented approximately 40% of our full year attendance and revenues over the last two weeks, we're averaging between 20% 25% of historical attendance at the parks that are open.
Or roughly 15% of theoretical capacity.
In spite of the soft attendance levels and other limitations on operations, including fee or operating hours guest spending trends have been encouraging since reopening guest spending on FNB merchandise and gains at our legacy parks is up 5% year over year.
Offsetting these gains was a decline in guest spending an extra charge attractions, including Fastlane, which were only offering unlimited capacity in certain parts of this year due to social distancing concerns.
For the entire portfolio through this past Sunday year to date and park per capita spending including admissions per cap was down 8% or $3.69 compared to the same time last year.
As Richard mentioned into account for the lower demand levels. We've made changes to our park operating calendars for the balance of the year with these changes designed to optimize operations and maximize profitability.
Put things in a perspective, our parks are able to generate cash flows in excess of their variable costs at attendance levels that are significantly less than 25% of their theoretical capacity, although that's not a model we would prefer over the long term.
Looking at deferred revenues for a moment as of the end of the second quarter deferred revenues totaled $201 million down 11% compared to 227 million at the end of the second quarter last year.
The year over year decline reflects the broad based impact Cobot 19 had on park operations and the sale of all season products after mid March.
Positive note the reopening of parts has spurred the further sale of season passes and related all season products over the last eight weeks, we've generated more than $11 million in sales such products. While also reactivating billings under our installment sales program at the reopen parks.
Looking ahead, our decision to extend the U.S privileges of our season passes and all season products through the 2021 season means that revenue recognition of our deferred balance will be split between the second half 2020 and fiscal year 2021.
Based on current your attendance trends for the parks that are open and our current expectations for season pass visitation next year of the 201 million of total deferred revenue on the books at the end of the quarter, we expect to recognize approximately $42 million over the second half of 2020, and approximately 150 million in fiscal.
Your 2021.
The remaining deferred balance of $9 million relates to prepaid payments on a long term lease arrangement that will be amortized into revenue into revenue over the life of lease.
Turning to our outlook around liquidity at the end of the second quarter, our balance sheet was solid with $301 million and cash on hand, and $360 million available under our revolving credit facility.
Total liquidity at the ended the quarter was approximately 661 million, providing us with ample liquidity to meet our cash obligations through the end of 2021, even if another pandemic related shutdown should occur.
With our limited number of parks open and abbreviated operating calendars, we continue to take actions to manage our cash burn rate, which we will end to which we anticipate will average $30 million to $40 million per month over the balance of 2020. This includes all operating expenses capital expenditures and interest payments.
As we mentioned on our last call the flexibility of our business model affords us the opportunity to quickly reduce expenditures across the board when needed including cost we generally considered to be fixed during normal operations. This includes a focused on identifying additional opportunities to reduce operating costs and defer or eliminate capital expenditures.
As we head into 2021.
As we noted on our last earnings call. We took proactive measures to reduce 2020 capital spending by approximately $75 million to $100 million, which was a near term initiative to improve our financial flexibility, while all of our parks were shut down as we begin to plan for next season, we are weighing reactivating certain capital projects two inch.
Sure the properties that should be fully operational for the 2021 season, our prepared and ready to maximize revenue opportunities.
We will be better positioned to provide more visibility into these plans as well as our outlook around the 2021 capital program later in the year.
Regardless of our park operating model next year, we will continue to explore ways to reduce cash outflows and enhance our liquidity position going forward.
As we indicated in our first quarter call, we have withdrawn financial guidance due to the uncertainty of the pandemic as we look to the long term, we see little to no value for our investors and revisiting financial guidance until market visibility improves and we have clear line of sight into the reopening of our entire portfolio parks in the means.
Time, our focus will be on delivering to our guests the safe value oriented experience, they expect and deserve while being efficient with our resources and prudent with our use of cash flows.
Our near term capital allocation strategy is now focused on reestablishing growth from the core business and paying down debt to return our net leverage ratio back inside of five times adjusted EBITDA as quickly and responsibly as possible.
With that I'll turn the call back over to Richard.
Thanks, Brian.
As I mentioned in my opening remarks, our goal is to emerge from this crisis and even stronger company than before.
Effectively plan for Watts ahead, we must acknowledge the headwinds we're up against first over the last six months. The world has fundamentally changed it will require us to adapt to a changing marketplace adjust our approach to running parts of our business and renew our commitment to generating revenue and free cash flow in new and imaginative.
Ways.
Second our parks implementation of health and safety protocols as recommended by the CDC and state and local officials have been very well received but they help improve consumer confidence only to a certain point.
And third consumer confidence may not improve measurably until there is brought availability and distribution of a vaccine or treatments to reduce the spread or effects of the corona virus. This may prove to be in attendance headwind for the foreseeable future and something we must accounted for.
Collectively as a team we're much smarter today than we were few months ago, and we're putting that knowledge to work each and everyday our parks are open. It provides us with field tested experience that will drive the specifics of next year's plan configured to the unique characteristics of each property with the overarching goal of generating positive.
Free cash flow.
What we do know from decades of experience is that our product has high consumer appeal and that people will always seek opportunities to socialize with others at venues of entertainment.
We also know from experience that our business model is highly resilient surviving macro disruptions of various magnitudes over the years.
Although this pandemic presents unique challenges versus.
Economic disruptions of the past overtime, we believe guests will return to our parks as concerns around the Corona virus are addressed and minimize.
Meanwhile, we must redouble our efforts to enhance the strong regional brands of our parks and reinforce our positioning as the preferred choice for safe family friendly Entertainment.
To accomplish these goals we have begun a process of reviewing all aspects of our business with the ultimate goal of reestablishing the topline momentum we had coming out of 2019, while identifying an incremental operating efficiencies and adding new capabilities aimed at capitalizing on emerging shifts and consumer preferences.
Our efforts can be bucketed into several core elements first it is critically important that we stay closely engaged with our customers.
This is particularly important in our markets were parks were unable to open in 2020 that requires us to refresh our marketing approach and embrace our guest as pseudo insiders offering them regular updates in progress reports on such things as new rides attractions and dining options as well as technology based improvements designed to.
Enhance park safety and guest service.
We must proactively seek guest feedback and welcome it while developing interactive programming that seeks new levels of communication and engagement.
It's fair to say that the disruption of coded 19 has provided us the motivation and opportunity to rethink our overall approach to marketing, including where we advertise and how we engage with the consumer.
The second element of our business review process is organizational design.
Our effort here is focused on identifying ways to centralize functionality mine incremental cost efficiencies eliminate redundancies across the portfolio ensure that and ensure that we have the right resources and capabilities in place to deliver on our strategies and growth targets.
Third is operational efficiency going forward is vitally important that we look to maintain and improve our discipline around cash burn, including the search for incremental cost savings and system wide efficiencies that will drive expenses lower.
Standardizing processes and systems, both guest facing in back of House has been one of our priorities for several years now coming into this year, we had several systems standardization initiatives well underway that we elected to pause once the pandemic it.
We have already reactivated several of these projects, including staffing related system initiatives designed to capture cost savings and improve onboarding procedures.
Finally, our future investments operating strategies and entertainment programming most factor in the new normal as part of our decision making process. This includes using our experiences and observations from this year's cobot impacted park operations as a baseline for improving the guest experience for the 2021.
Season.
The momentum we had coming out of 2019 and through the first few months of this year tells us that our emphasis on events and more experience will entertainment truly resonates with our guest.
While we believe this will remain a true differentiator for our parks. We are using this time to reevaluate how this strategy must adjust to account for new operating safety protocols and how we can use scalable technology based solutions to enhance the guest experience and respond to changes in consumer preferences.
With so much uncertainty in the marketplace, we must not lose sight of why people come to our parks in the first place to engage in something out of the ordinary that is at the heart of our value proposition offering guest an extraordinary place to go with friends and family to have fund that is carefree thrilling and memorable regard.
Most of the hurdles, we must clear to get there it remains our job to deliver on that experience.
That concludes our prepared remarks, James please open the call for questions.
At this time I'd like to remind everyone in order to ask a question. Please press star followed by the number one on your telephone keypad don't klosterman, while we compile the Q and a roster.
Our first question comes from the line of Steve was then ski with Stifel. Go ahead. Please your line is open.
Good morning, guys.
So you talk about visitation trends they've been below what you would have expected in you're now expecting I think you said visitation to be kind of the 20% to 25% of historical levels.
I guess the question is going to be twofold. Here I guess first can you can you maybe help us think about where you thought visitation would be and I guess I'm, just trying to get a handle and how disappointing visitation has been.
And then can you help us think about EBITDA breakeven free cash flow breakeven metrics with visitation in that range and I think Brian you said you could be profitable with visitation.
Below that range, so I'm not sure if that's you're referring to real visitation or theoretical capacity hope all that makes sense.
Yes, Steve it's Brian good morning.
Let me try and answer it this way out the shoot I mean, we're not going to get into specifics I think coming into that in terms of what our models work coming into this because I think there were such uncertainty around what I can tell you is all the discussions that we had in each of our jurisdictions with state and local officials was modeling back to cups.
Cassidy limitations on that were up 50% of those theoretical numbers.
So as I said I think on the last call for some of our big parts theoretical capacity is.
50, plus thousand Gaston, so keeping that cap somewhere in the mid Twentys was was where that was where the capacity limitations were going to be I think we felt coming in to getting parks reopened we would see an initial rush Bob based on pent up demand and then then that would sort of.
Fall back into its new normal I will say as we said on the call the that.
The reality has been to those numbers are definitely inside of those capacity limits and so while disappointing we are encouraged by the fact that it hasn't.
It hasn't fallen off it's sort of just found its new level.
And its and its remain pretty steady the visitation trends have been very consistent with what we've seen historically guests are starting to the weekends as they got as they always have Saturdays or the big demand days, Fridays and Sunday sort of sitting.
Very close behind and then weekdays or it's a little bit harder to drive volume and that as I said, all pretty consistent with historical levels.
Historical performance the levels of a tenants that were at we're still able to operate profitably.
That's a little bit easier at the larger parks, where there's more leverage.
Based on on not only the size of the park, but also the revenue channel channels available. So parks like Kings Island in Cedar point have more levers to pull than some of our smaller mid tier parks.
And that's why we made that changes to the operating calendar as Richard said on the call.
Testing the operating calendars onto more mirror the demand current demand trends, we're seeing was important in order to stay above those breakeven levels.
That that you are asking about our parks as I said on the call can be profitable uncover their variable cost.
At numbers, well inside of 25% of theoretical capacity.
So we've made the necessary changes to the operating plan to try and maximizes profitability on a numbers.
And while disappointed that trends are a little bit softer than we'd like we are encouraged by the fact that folks are still coming out to the parts one once they got reopened.
Okay got you and then second question would be just around the parks that had been open for the last whatever for six weeks, where when you when I look at it but if we look at attendance mix.
Wondering if you've seen any kind of changes in who's coming to the parks I mean, I guess I'm trying to get out here are you starting to see more unique visitors or you've seen an uptick in single day ticket sales.
Yeah, Steve Good morning, It's Richard let me take that one what we're seeing Brian referenced the initial reopening we saw good surgeon season pass holders as we get deeper into the parks being opening and we see.
What the what the crowd looks like everything's kind of sorting to what we had seen pretty cold weather that was the single day versus season pass mix, whether that's how people spend time in the park even on reduce capacities were starting to see the I'd put it this way, we're starting to see our business.
Metrics start to revert to the norm that we would expect to see just on a lower level of demand.
Okay Gotcha, Thanks, guys really appreciate it.
Thanks, Dave.
Our next question comes from the line of James Hardiman with Wedbush Securities Go ahead. Please your line is open.
Hey, Thanks for taking my call.
Just a quick clarification.
On this idea of that.
Daily attendants will be 20, 25% of historical levels going forward just to be clear obviously, that's only the park that are open but also with that only the park.
Only the days they are open meeting as you've now adjusted calendars to be closed on certain days a week do I also need to adjust that for for.
The percentage at time, Theyre actually hoping to get through an actual attendance overall corporate attending number.
Yes, James Good morning, it's Brian.
I think that the comment of attendance trends continuing along the path that we've seen to this point 20, 25% is comparable to prior year on days open.
The effort to to compress the operating calendar at those parks, where we have gone from seven days down to four or down to five.
Is about trying to compress and push that attendance into fewer days and maybe push that percentage up but we're talking about numbers that are so small that it's still sort of really fits into that range. What I will say is just to be a little Claire that's been the average we have we have without a doubt certainly some weeks that we've been out.
And and definitely on certain days, particularly at our larger parks. So your point Kings Island seen attendance.
Performance be in that 30, plus in that 30% to 40% range.
But the same kind of macro factors like weather and whatnot that play and that maybe push other days down when you put it all together it's in that 20, 25% range, we're definitely seeing some outperformance in certain weeks based on favorable weather and other macro factors.
Okay. That's helpful and then I'm.
A bigger question you.
Sort of what needs to happen for you get back to breakeven EBITDA.
And then I guess sort of the question there.
I guess, a you've now said that you're closing for par does that bring or that that you're not going to open those ports for the rest of your net bring sort of your baseline operating expenses down meaningfully as we'd look.
[music].
Through the back half of the year and I guess is there a scenario in which pork currently open if you don't get anything else opened up that we could get back to breakeven EBITDA or is that.
Yes, three vaccine is that we've got sort of a pipe dream here.
Yes.
James It's Richard you know as we look at the rest of the year, we've got an ability as we said on our last call and Brian as we said our prepared remarks to operate profitably at these sites that were open given the profile of how weve configured our our operations. So as we think about what needs to happen over and above that I would say that certain.
Only in this is what we said last call we maintain some parks in the state of readiness, Thats, where Canada's Wonderland at Knott's Berry farm, our as we as we put more of our parks in the deep hibernation, we've got an ability to mine some cost efficiencies and and make sure we're being as disciplined as possible around that the cash we are spending.
Yes.
But all of that we have factored in as we think about that $30 million to $40 million cash burn rate on average Brian anything you want to add to that end just to be clear James I want to make sure as we think about breakeven.
I would separate where we're at here in 2020, given the disruption and the inability to open up more than 50% of our gains right. We've got seven of the 15 gates currently open.
And we're not going to get them all open as as we just have disclosed yesterday.
So breakeven in 2020 is really off the table right now what we're evaluating for parks the decision to either close parks or reopened parks is really around that breakeven number or as close to it as possible on a park level basis. Our goal is to see that we.
And cover the variable costs clearly without the fault.
Portfolio opened its very challenging to cover the corporate overhead costs that sit on top of the park operations.
And Thats only made more challenging by the fact that two of our four largest parks, including our largest revenue and EBITDA contributing park Knott's Berry farm the other being Canada's Wonderland still remain closed so now as we look towards 21, I think it's a different discussion and the as we said, we're not going to forecast right now because of all the uncertainty.
Around Cove, it and the outlook for 21 could change dramatically in a very short period of time, but we have more the difference between 2021, we've been reacting in a moment in 2021, when we get the plan allows us a lot more runway as we work towards towards being north of that breakeven.
Point.
And James last thing that I'd I'd also add we touched on our prepared remarks, we're confident in our liquidity.
And we've made sure that weve.
All the resources, we need to work through this and then be ready and poised for growth on the other side.
Great. One last question, if I could flip it in and I apologize you sort of open the door that that with a little bit of luck.
Maybe Canada's Wonderland him and maybe more notably not could could open back up this year.
Not specifically.
You've taken Great America off the table. So help me understand why one park in California might open up and the other one won't obviously, there's different operating calendars, there, but what we need to happen for for really any parking in California to open up but specifically not.
Well I'd say first James it's a good question, we evaluate each of our parks on a market by market basis.
And even out in California, there was a market different stream, northern California, and Southern California is we got into the Corona virus pandemic. Some of the counties around in the Bay area were among the first in the country shutdown things and locked down so the part of the answer lies in the unique conditions surrounding our parks.
Secondly, as you look at Knott's, we've got an opportunity because the weather is is favorable to run events like taste of calico now into now morphing into the taste of knots. So to the extent that we've got an opportunity to create new ways to both stay engaged with our customers to strengthen our brand and that a and create you know whether its.
Food events Experie Entrail event that let us.
Get some level of activity at our parks, we think thats extremely beneficial to us So I would say from a northern southern California, It's clearly the conditions in the marketplace and the economic potential and the size differences. The two parks factors in the as well.
Got it perfect. Thanks, guys.
Thanks James.
Our next question comes from the line of Brett Andrews with Keybanc capital markets. Go ahead. Please your line is open.
Hi, good morning.
Congrats answered.
Good morning, the answer part of this already but can you help us with the variability of attendance depending on I guess, the coded status and that in that region I'm just trying to find a.
Per cent of last year number that is normalized for coated spikes, if I guess, there's such a thing.
Yes, Brad its Brian.
I would say that.
The experienced that we've seen for the seven parks that are open has been relatively consistent again, the two big Park Cedar point in Kings Island, very very loyal.
Guest base Big season pass basis, probably help those two parks as well.
And so from from that standpoint, if there have been parks in the portfolio that maybe have outperformed the theres a little bit it would be those two parts, but but broadly speaking the trends have been pretty comparable.
Of our seven parks that are open in four of them.
Exist in our located in two states, Ohio, and Texas, both which are our spike space I guess as as.
As we think about it we're hearing referenced.
And so we don't have a really.
Unfortunately, we don't have parks operating all across the country in a variety of states, where we see a big distinction between.
States, where kit KOVA cases are higher than others.
It's really been I think more a function of of the season pass base to size the season pass base and the loyalty of the a of the of the guest base at each of those part.
Got it makes sense and us when can you give us some color on what Oh.
Fall festival replacement means for the fourth quarter.
It's Cedar point Kings Island, I guess I'm, just trying to think about how to model theme park attendance as we kind of comp.
The events that you would normally do.
I think a if you think of something that's more family friendly than our traditional Halloween event think of something that's got a lot more food elements like we've seen and taste of not so taste of calico.
It will really be something that the draws out it has more family oriented than we've done in the past, but one of the learnings we've got out of out of all of our events in the record year year. We have we referenced in 2019 is at food and beverage plays a really important part in the appeal of our product.
And then we'll adapt that with some entertainment that's focused on the family.
Thank you.
Our next question comes in line of Tim Conder with Wells Fargo Securities Go ahead. Please your line is open.
Thank you and good morning, gentlemen.
Wanted to follow up on.
The ongoing line of questioning here a little bit.
One.
So just a just to be clear.
I didn't really see any changes in visitation trends I know again you had.
Cedar point and Kings Island open in July, but with the spikes and co, but and then maybe in some other states other than Ohio, those maybe leveling off.
I haven't really seen any discernible difference with the news flow there.
No at this point again, we're trending towards what I would put is is the type of visitation, particularly from season pass holders that we would have expected pre cobot as Brian Brian mentioned in his in his earlier remarks, when we opened up we had a few days some.
You left at Cedar point than Kings Island that were season pass holder only we knew we had a big Cesar pass base out there. So that was the initial launch.
And now that we've opened it up it's really settled into a pattern that that looks very similar to what we had pre cove itself.
Okay. Okay.
On the season passes.
Again parks weren't opened so it makes it difficult to sell those.
A couple of things there could you sort of say where the units are at the end of Q2 on a year over year basis, and then maybe break that down between what's been extended versus have been new purchases for the season.
Yes, Tim it's Brian.
So as it relates to season passes.
Just to reset say as we said it on the first quarter call sales were up more than 30% at the end of Q1.
We missed unfortunately, because of the disruption from Cove it.
Very big it will probably the largest three month single three month window of sales volume typically a little more than 40% of our sales volume happening in Q2 between April and June.
And so that definitely was a big below as I said.
In my prepared remarks pleased by the fact that at the partner driven by the parks that got reopened.
Over the last eight weeks, we've generated more than $11 million in sales of all season products, including season passes.
And so that that has definitely helped when we look at where we're at year to date I'll take it beyond Q2, I'll take it basically through the end of July.
Year to date season pass units because of missing out on that big window.
Went from being up more than 30% now to being down a little more than 30%.
Or roughly 900000 units behind where we were at the same time last year.
And so.
Certainly disappointed that we lost very strong momentum coming out of Q1 because of coven.
But thats the world, we find ourselves and.
Okay.
And Brian I guess it'd be fair to say that that would you still have on the books a pretty significant percentage of those are the extensions that correct.
Yeah actually Tim all of the.
Season passes and the related products all season products that have been sold to date.
Our.
Our products that have the extended privileges and benefits through the 21 season for the parks that we just announced.
The four parts that we just announced would not be opening in 2020.
Their 2020 products have come down.
And we will not be selling any more of those products. We will go on sale later this year with 21 passes.
In 21 products at the sort of than in the normal cadence.
And so everything that I, just referred to in terms of where the volumes are and and the dollars we talked about in our prepared remarks around deferred revenue that all the all of those dollars and products will have.
Benefits in 2021.
Okay. Okay.
And then.
Lastly, in you talked about the large for parks being Cedar point Kings Island.
And Toronto.
Just to remind us see that collectively or or on an individual part basis. What those represent represented in 2019 of your revenue and EBITDA.
Yeah, the for the four big parks and assist.
Our north of 80% of of the combined company, whether we're talking about revenue or EBITDA.
So having two of those parks open is definitely a reopen has been beneficial getting Canada and not open would be that much more beneficial even for an abbreviated a fall a calendar.
Okay. Thank you.
Our next question comes from the line of Michael Sports with Tree with Securities Go ahead. Please Sir your line is open.
Good morning, guys.
Thank you for Brian just given the fluid the of the situation into more of the the measured you'd take into condense.
Regions within the guidance can you maybe give us a sense of what your expectation guaranteed operating days in the back half of the year, whether that requeue. Thank you everyone looking it.
Yes, Mike it's a challenging won.
Given given the ever dynamic nature of the of of co vid I'd hate to throw a number out there at this point in time just based on on the fact that.
At any point in time parks like Cedar point Kings Island, if governor to wine in Ohio decided.
That even like weight cases were trending on that we would get closed down I think it's fair to say I mean based on the that the announcements we made yesterday, we're shuttering all parks beyond those two properties after labor day and.
And so you're looking at weekend operations really.
Those two parts for let's call it broad strokes about eight weeks.
And.
Can't make any speculation really on where Canada.
We'll sort to and if we'll be able to get knots open up as Richard said, a little bit earlier on response. So one of the question. So it's really a very dynamic situation that's hard to put a specific number on it.
Okay.
That's fair.
Second question, just obviously will be having winterfest entity to parks this year.
Can you just senses the expense little bit typically associated with with news events at year end frequent basis or maybe it's a girl.
Yes, so winterfest at.
At this point it that's going to be a decision yet to be made it really is going to come down to two where where we sort out with with not and Canada's Wonderland. Those are two of our most profitable parks when it comes to the winter or holiday.
Event being hosted.
The answer to the question in terms of the cost varies.
Park by park, but on average across the system.
A normal year when we're hosting the event the annual operating costs of that may be somewhere in the mid to high single digits.
From an opex perspective.
And so.
The.
That those dollars of course are going to go away. If we're not operating those events, but at the same time, so as the attendance and revenue. So the events been very profitable for us at a number of our parks. So disappointed that we won't be able to hosted at partially carowinds.
And then Great America to name a couple again this year, but thats, just again sort of the circumstances, we find ourselves and.
Great. Thank you.
Hi.
Your next question comes from the line of Sarah Murray with Credit Suisse.
Go ahead. Please your line is open.
Hey, guys. This is Sarah on for Ben.
Banks have insinuated, some potential future cost saving as you recalibrate the bread admit I know, it's early but can you guys ballpark. How you think about the magnitude of those savings and if not should we expect more formal guidance at any point.
Yes.
Brian.
We'll be working through that.
Analysis, a lot of is going to depend on what our outlook is for the 2021 season, but I think it's fair to expect that will provide.
More guidance as.
As we get towards third quarter or even towards the end of the year and have better visibility right now as Richard said earlier in that in our 30 to 40 million. We've we've estimated where we think those dollars, maybe and thats reflected in there, but clearly with more.
Runway behind us more visibility into the upcoming season on those those assumptions and estimates get refine and so we'll provide more clarity around that.
Either with the third quarter or the yearend earnings call.
Got it that's really helpful. Thank you.
And again as a reminder, if you'd like to ask your question. Please press Star then one on your telephone keypad. Our next question comes from the line of Stephen Grambling with Goldman Sachs.
Go ahead. Please your line is open.
Good morning, Thanks for taking the question you touched on this in your intro, but.
Clearly, there's been mixed leisure trends by sub sector in some areas are coming back pretty strong, whereas uniformly. It seems parts has seen a little bit about challenged environment. So as you reduce operating days in many ways gear up for next year in the downtime what are consumers, telling you that they want to see you do to feel more comfortable coming back and how you're preparing for the possibility.
Well go back C.
Or treatment not acting as a panacea to the pandemic next year.
Yes, Steve It's a great question as we think about what when we try and listen to what our consumers are telling us.
Clearly you know there's the could pandemic in the Corona virus overhang on broader consumer sentiment.
What they're telling US is it's less about us and more about the broader society.
I can't give you any specifics in terms of.
Whether or not or how you know the ramp up will happen what the recovery will look like whether that will be like a light bulb that turns on or whether or not.
People will dip their toe in the water and come back out what I can tell you is that we're trying to plan for.
As we have this this year plan for a very dynamic situation, we what I feel good about as we've seen an ability to flex our model up and flux our model down both chase opportunities with events like taste of Calicoes. We've said are opening some of our hotels at Cedar point to maximize the beach or carve up the operating calendars.
We have to make sure that we condensed the demand and make sure we're operating profitably so regardless of what the consumers.
We'll see we're prepared to react to the environment and as Brian said plan for we've got a little bit more time to plan rather than just react.
The other thing Steve that I would just add to Richard's comment our research, which is ongoing and I think this is pretty consistent with what we're hearing and our conversations with our other.
Industry.
Partners and other operators in the industry is the top two concerns for the guest are around.
Health and standardization in the parks and social distancing and so you know as I said earlier 2020, we've been we've all had to be very reactive and try and respond to that the it with the opportunity is for US as we go into 21 is to be a little bit more proactive in trying to address those concerns assuming.
That they stay on top of mind for the consumer which based on what we know today I think that has to be the assumption and so I think is we set our prepared remarks, a lot of the initiatives, we have whether they'd be tenax technology based or or other programmatic initiatives for the 21 season, there will be focused on again trying to to it.
The rest those top of mind concerns for the consumer based on the research that we're getting.
As a quick follow up I mean is is there an opportunity to effectively rather than kind of waiting and seeing in some ways, how the consumer reaction how the.
The virus.
Malls can you change the narrative in any way and I think you referenced some marketing initiatives.
Is there an opportunity there is there any expectation that you can ramp up marketing or otherwise to kind of tell.
A story of where.
Mark stood in from a.
Hi, gene cleanliness et cetera standpoint.
Yeah, we've been Steve It's a great question, we've been we've been heavily focused on engaging our customers through digital and social media channels. We've been very active in the communication and clearly as we look ahead, that's something that we're going to lean hard into as we get into 21. It allows us to be little more nimble little bore little more.
Front foot leaning in a very dynamic environment. So we've got the in house capability to manage a lot of that we've built to suit or there are CRM system, so, particularly our season pass holders we've been very active and it really is a two way dialogue. So as we think about the things that we can we can put out there to make sure that the guest or comp.
Vertebral, those who are coming and Brian Brian hit on this or giving us high marks for the experience we have the procedures. We've put in place many of the things that we're doing event.
The state and local officials have taken what we put together protocols and procedures and laying them over other industries. So I think the consumer feedback we're getting is that our guess really like the experience in our giving us credit for those things already.
Got it thanks, so much since the one.
Thanks, Dave.
There are no further questions in queue at this time I'd like to turn the call back over could Richard Zimmerman for some closing remarks.
Thank you everybody for joining us on the call today and for your interest in ongoing support a cedar fair. We will continue to focus on taking the steps necessary to emerge from this current crisis, a stronger and better position company. We look forward to keeping you apprised of that progress on upcoming calls and in the meantime, please take care and stay safe.
Thank you again Michael.
Yes, thanks for joining US everyone should you have any follow up questions. Please give me a call at 4196 to seven two to three three and we look forward to speaking with you again about three months from now discuss our third quarter results.
That's the end of our call. Thank you.
Ladies and gentlemen, this does conclude today's conference call. We thank you for your participation you may now disconnect.
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