Q2 2021 Cedar Fair LP Earnings Call
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Good day, Thank you for standing by and welcome to the Cedar Fair Entertainment Company 2021 second quarter earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.
To ask a question during the session you will need the press star 1 on your telephone. Please note that today's call is being recorded if you require any further assistance. Please press star zero I would now like to hand, the conference over to your Speaker today, Mr. Michael Russell Corporate director of Investor Relations. Thank you Sir Please go ahead.
Thank you Stacey and good morning to everyone and.
Welcome to our 2020, 1 second quarter earnings Conference call earlier. This morning, we distributed via wire service our earnings press release, a copy of which is available under the news tab of our investors website at IR Dot Cedar fair of Dot com.
On the call with me this morning on Richard Zimmerman, Cedar Fair, President and CEO, and Brian Witherow, Our executive Vice President and CFO.
4 we begin on 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 SEC.
In compliance with the SEC's regulation FD. This webcast is being made available to the media and the general public as well as analysts and investors because of the webcast is open to all constituents and prior notification has been widely and on selectively disseminated all content on this call will be considered fully disclosed.
Yes.
With that I would like to introduce our CEO Richard Zimmerman Richard.
Thank you Michael and good morning, everyone. We appreciate all of you being with US today on the call today, we will focus on our remarks on 3 specific areas as usual, we will review our year to date 2021 operating results, including the performance of our parks during the quarter as well as the more real.
Look at operating trends in July.
We will provide an update on our business optimization program, which is well underway.
And lastly, I will conclude with some comments on our outlook for the business and why I'm. So confident in the future of Cedar fair and our ability to emerge from this crisis stronger and better positioned for growth and value creation.
Let me give you begin by saying I'm very pleased to report all of our parks are now open and the 2021 season is off to an excellent start.
We came into the season focused on the same strategies that drove our record performance in 2019.
We are delivering of high quality guest experience, while offering more immersive events to complement our world class attractions.
The continued execution of our strategy has produced strong results highlighted by the following performance trends first we are generating strong volume at all of our properties confirming pent up consumer demand for travel and leisure activities, especially outdoor entertainment.
Second we are seeing new highs for in park per capita spending with rguest showing a strong propensity of not only suspend but to spend more across all product categories.
Third we are driving sustained sales of advance purchase products such as season passes and all season products.
With our total number of season pass is valid for the 2021 season now exceeding the record number of purchase for the 2019 season.
And finally guest satisfaction scores continue to trend towards historical norms that most of our parks every day, we are reinforcing the long held perception among our guests that our parks offer highly valued high quality entertainment experiences.
Achieving and maintaining high guest satisfaction is key to our success in taking price and driving repeat visitation.
Our excellent performance across the these measures was achieved despite disruptions during the second quarter to our park operating calendars seasonal staffing challenges and the delayed reopening of Canada's Wonderland, 1 of our largest and most profitable parks until early July.
Now let me highlight a few of our observations so far this season.
Healthy consumer demand has driven attendance at several parks to near historical highs established in 2019, a record year for us by nearly every measure.
Over the past 5 weeks of tenants as approximated 85% of comparable same day 2019 levels a trend that supports our optimistic outlook for the second half of the year. When we have historically enjoyed some of our busiest days.
Also underscore our optimism for the balance of the year was the July 5th reopening of Canada's Wonderland, which represented another step forward for our company. This marks the first time since late in 2019 that all of our parks are open simultaneously and it positions us well for a strong second half.
While city mandated capacity restrictions are still in place at the park, we helped to operate Canada's Wonderland at near full capacity later this season.
In addition to strong attendance trends. This year, we have also generated record levels of guest spending including growth across every revenue category and.
In the month of July in Park per capita spending was $61.93.
Which represents roughly a 120% of 2019 spending levels.
The growth of in Park per capita spending has long been largely driven by increased spending on extra charge attractions, including our front of line fast lane products as well as higher guest spending across all other in park revenue categories.
As I previously noted a strong share of wallet has our guests buying up and spending more with each visit.
The trends we have seen since opening our parks in mid May through this past Sunday are encouraging and suggest consumer confidence is quite strong.
We anticipate that our strong recent momentum will continue as we move into some of our historically busiest days of the year, including our tremendously popular Halloween weekend's debt Usher in on active fourth quarter at most of our parks.
Continued strong demand will present opportunities to take price at our gates and within our parks and allow us to create additional incentives for guests to spend on goods and services during their park visits.
Now, let me switch gears for a moment to address the issue of labor availability and its impact on staffing levels at our parks.
On our last call we shared our views around our challenge is attracting candidates for seasonal labor positions like many other companies in the leisure and hospitality industries.
These challenges were compounded this year by a shortage in the number of students available through the day, 1 visa program a program. We typically rely upon to help supplement local labor pools in several of our key markets.
To attract the large number of applicants needed to fill thousands of seasonal openings across our parks. We quickly increased hourly rates offered incentives for candidates to stay on throughout the season and utilize our dormitories to expand our marketing reach beyond our local markets.
At each of our parks, we have gone from being market competitive to being the market leader in terms of pay rate.
This change in compensation strategy generated thousands of applicants within a very short period of time significantly improve staffing levels and allowed most of our parks to return to the original operating schedules.
I mentioned last quarter, how we view recent changes in the labor market of structural fundamental shifts that appear more permanent than transitory.
With that view of the labor market in mind, we are taking a fresh look at our seasonal labor model to determine whether there are incremental benefits to retaining a portion of our associate base on a year round basis.
This coincides with our view of incremental revenue opportunities that would utilize park assets on a year round basis, much like our resort properties, the knobs marketplace and the Cedar point Sports Center.
Based on what we see at Knott's Berry Farm, a park that already relies more heavily on full time and year round part time associates.
We believe that shifting a portion of our seasonal labor force to full time or year round part time positions will improve the training supervision and retention of our seasonal workforce meaningfully improve operating efficiencies and guest service levels.
Lead to higher guest spending levels and ultimately support our strategy for expanding the operating calendars at our parks and other resort properties.
We will keep you apprised of our progress in this area as we go along.
Before I turn the call over to Brian to review, our financial results in more detail I want to update you on the progress we've made on our business optimization program. We introduced earlier this year.
The program aims to streamline our business processes realize efficiencies and bring new ways of thinking to how we entertain our guests in order to continue to driving profitable and sustainable growth.
First we remain committed to delivering the previously communicated $50 million in annual run rate benefit over the next 2 to 3 years. Once the program is fully executed and the business has returned to historical attendance levels under normal operating conditions.
Second because we expect the lion's share of the benefit to be realized beyond the first year. The progress we share with you on the early stages of the program is more qualitative in nature.
The steps we are taking in 2021 are focused on laying the foundation to realize the significant benefits of the program beginning in 2022.
Finally.
While our original cost saving assumptions have been challenged by recent headwinds, including higher labor cost and inflationary pressures on other goods and services. We have remained flexible and continued to adapt our program by identifying new opportunities for cost savings in procurement and other areas of our business also.
We are successfully achieving the meaningful savings in advertising and marketing we had projected earlier this year in.
In addition, our procurement team is already achieving quick wins in areas like office supplies small parcel and printers.
Although not particularly large spend category they will deliver significant run rate savings on a percentage of spend basis and are indicative of the order of magnitude we hope to achieve in other areas.
In addition, our business intelligence team is now fully integrated into our pricing and workforce management processes and is driving meaningful improvements in areas like advanced sales ticket yields and increased revenue per food and beverage labor hour.
I believe we will continue to find more cost efficiency and pricing opportunities as we deepen our analysis and other areas, which should help mitigate the effects of anticipated cost pressure and keep us on track to realize the program's long term target benefit of $50 million on.
I'll pause here and turn it over to Brian for a review of our financial results Brian.
Thanks, Richard and good morning to everyone I'll begin with the discussion of our results for the second quarter before moving on to an update of our July performance trends. The first I need to remind you that given the effects of the pandemic on operating calendars and park operations in both 2021 and 2020 results for the second quarter in <unk>.
6 months periods are not directly comparable because we suspended park operations in mid March last year and had very limited operations. During the second quarter of 2020, I will also provide more relevant comparisons to 2019.
In the second quarter. This year, we had 393 total operating days compared with 39 operating days in the second quarter of 2020 and compared to 726 total operating days in the second quarter of 2019 for the 6 month period, our parks at 393 total operating days compared to 129 operating days in 2020.
And 827 operating days in 2019.
As reported in our earnings release. This morning, net revenues for the second quarter totaled $224 million versus $7 million in the same period a year ago. The increase of net revenues was attributable to an increase of 354 operating days in the period, resulting in a $3.4 million visit increase in attendance.
And a $35 million increase in out of park revenues.
Attendance in the quarter represented approximately 70% of comparable same day 2019 levels with much of the shortfall of the direct result of early season capacity limitations as well as the expected slower recovery of the group sales channel.
Excluding pre booked group business of tenants from the general admissions in the season pass channels during the quarter approximated 80% of comparable same day 2019 attendance levels indicative of the pent up demand we anticipated on reopening.
Meanwhile, in park per capita spending in the quarter totaled $55.94.
Which represented approximately 115% of comparable same day 2019 spending levels as Richard noted the increase in in Park per capita spending was the result of improved spending across all key revenue categories guests.
Guest spending on food and beverage merchandise games, an extra charge attractions was up 30% on a combined basis in the quarter over comparable same day 2019 levels the <unk>.
<unk> spending in these areas of resulted from a combination of price increases more transactions and increased spending per transactions as our guests have continued to buy up.
In addition to taking price on products within the parks based on the strong consumer demand trends, we continue to dynamically price into demand for single day tickets and minimize our reliance on promotions to drive volume.
Since reopening we've increased prices and reduced discounts on tickets at all of our parks for.
For the quarter the average admissions per cap on paid tickets was up 13% or $4.91 over comparable same day 2019 levels.
On the cost side operating costs and expenses in the quarter totaled $227 million compared with $93 million for the second quarter of 2020.
The $134 million increase in operating costs and expenses, which was largely due to the increase in operating days in the period reflected a $21 million increase in cost of goods sold.
$89 million increase in operating expenses, and a $23 million increase in SG&A expense.
The increase in cost of goods sold was the direct result of the May reopening of our parks and the related increase in sales volume in the period.
Of the 8 am on $89 million increase in operating expenses of approximately $49 million was attributable to an increase in seasonal labor seasonal labor wages with the balance largely attributable to the earlier part of openings in 2021.
While the majority of the increase in seasonal labor costs was due to the incremental operating days in the current quarter. There was also a meaningful increase in our seasonal labor rates, which as Richard mentioned was required in order for our parks to recruit employees in such a challenging labor market.
For the second quarter, our average seasonal labor rate was approximately 40% higher than the seasonal labor rate for the comparable quarter in 2019.
And roughly 25% higher than our projected seasonal labor rate coming into 2021.
These additional rate related labor costs were offset in part by a reduction in hours work compared to about 2019, actual and 2021 budget due to the tight labor market.
The $23 million increase in SG&A expense was attributable to increased transaction fees and advertising expense due to the earlier park openings compared to last year higher full time wages related to equity compensation in prior period executive salary reductions and incremental fees incurred as a result of our business optimization program.
Meanwhile, adjusted EBITDA, which management believes is a meaningful measure of the Companys park level of operating results improved to $2 million for the second quarter of 2021, compared with an adjusted EBITDA loss of $85 million in the second quarter of year ago, the $87 million increase in adjusted EBITDA.
Reflects the severe impact of COVID-19 related park closures in 2020.
And the related improvement on 2021 second quarter attendance and revenues with parks reopening the beginning in early may.
Turning our attention to recent operating trends, including the results from Canada's Wonderland since its opening on July 5 preliminary net revenues for the 7 month period ended August 1.2021 totaled $587 million over the same period combined attendance totaled $8.6 million visits in park per cap.
The spending was $59.57 in out of park revenues totaled $91 million.
As we previously noted given the effects of the pandemic and suspension of park operations. During the summer of 2020 results for the month of July in 2021, and 2020 are not directly comparable to provide more relevant information I'll discuss performance metrics for the 5 week period of June 28 through August 1.2021 versus July.
Hi, first through August 4.2019.
Since we began reopening parts and May weekly attendance levels as a percentage of comparable same day 2019 levels have steadily improved as mandated capacity limitations have been lifted and as the parts of expanded their own limitations that will move the reservation requirements.
Over the past 5 weeks total attendance approximated 85% of comparable same day 2019 attendance levels or approximately 95% of same day 2019 levels, excluding the group sales channel.
Excluding Canada's Wonderland, which remained under capacity limitations in July total attendance for the 5 week period average, 90% of comparable same day 2019 attendance levels.
For the same period in park per capita spending was at a record $61.93.
22% above comparable in park per capita spending levels for the same 5 week period in 2019 broken down that guests per capita spending on food and beverage merchandise games, an extra charge attractions was up approximately 35% for the 5 week period, while the admissions per cap on paid tickets.
Up approximately 15%.
Meanwhile out of park revenues during the 5 week period total approximately 40 million comparable with out of park revenues during the same period of 2019.
As Richard noted the continual positive momentum in attendance combined with the sustained strength, we generated in the guest spending across all revenue categories positions us well for the balance of the year.
Shifting our focus for a moment to the balance sheet deferred revenues as of June 2007, 2021 totaled $292 million, representing an increase of $86 million or 42% compared with deferred revenues of the FERC ended the first quarter and up $65 million of 29% compared to the <unk>.
Second quarter of 2019.
The increase in deferred revenues in the quarter was driven by robust sales of season passes and other all season products. The advanced sale of single day tickets and other single day of products and improved booking trends on our resort properties since.
Since the end of the first quarter, we sold more than 1 million season passes at the end of July of this brought our total number of season passes outstanding and valid for the 2021 season or longer at Knott's Berry farm on Canada's Wonderland to approximately 2.9 million passes.
8% higher than the number of season passes and a record year of 2019.
The larger season pass base. This year has translated into the season pass visitation, representing approximately 55% of our total tenants mix through the first 7 months of the year, which compares to 65% of the mix of the disrupted 2000, twenty's season, and 53% of the mix in 2019.
All of the $292 million of the deferred revenue outstanding at the end of the second quarter approximately $30 million is projected to be recognized as revenue in 2022 due to use privileges of 2021 season passes at Knott's Berry farm and Canada's Wonderland be extended into next year.
Shifting to liquidity and free cash flow at the end of the second quarter, we had cash on hand of $293 million and $359 million available under our revolver.
Net of $16 million of letters of credit for total liquidity of $652 million. This compares to $631 million of total liquidity at the end of the first quarter.
On the $21 million of positive cash flow, we generated in the second quarter was meaningfully better than our prior guidance of a net cash burn of approximately $60 million per month and benefited from the very strong 2021 season pass sales the earlier reopening of parks and higher than expected of tenants and.
<unk> spending levels during the period.
Based on recent trends and our current outlook for the business. We now expect that we will be cash flow positive for the balance of 2021. However, this will depend on all of our parks remaining open as planned attendance levels continuing to normalize and no resurgence of the pandemic and related disruptions to our operations.
Before I turn the call back over to Richard I'd like to review, how our debt covenants impact our ability to make or reinstate distribution payments.
In September of 2020, we amended our credit facility to among other benefits suspend the testing of our senior secured leverage ratio covenant through calendar year 2021, our lenders also approved modifying the testing of the senior secured leverage ratio through calendar year 2022 on into the first half of 2023.
We've agreed to suspend paying distributions were making other restricted payments, while the senior secured leverage test remains suspended or modified and to maintain a minimum liquidity position of $125 million through calendar year 2022, while we remain committed to reinstating the distribution when permitted and most appropriate a move to.
The meaningful and sustainable distribution hinges on our ability to reestablish momentum in the core business and reduce our net leverage ratio to more historical levels over time.
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Finally, we will continue to withhold current year and long term financial guidance until we have of more informed outlook into the second half of 2021, and a higher degree of confidence for the overall market environment prospectively with that I'd like to turn the call back over to Richard.
Thanks, Brian.
Looking forward, let me echo the confidence and optimism, Brian just expressed about our business over the remainder of the 2021 season as well as the long term.
We are confident that our team is up to the task of continuing to successfully execute our initiatives and build upon our momentum.
Ensuring we are delivering the high quality guest experience our parks are known for and offsetting the effects of current macro factors that weigh on the performance of our business such as inflationary pressures in labor constraints.
Next let me address our outlook around capital allocation.
I want to reemphasize that our near term capital allocation strategy remains unchanged. We are focused on responsibly investing in our parks reestablishing growth in the core business and paying down debt to return our net leverage ratio back inside 5 times adjusted EBITDA as quickly and responsibly as possible.
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Longer term, we are committed to getting net leverage back down within our historical range of 3 to 4 times adjusted EBITDA.
As Brian mentioned, although our distribution currently remains suspended due to covenant related restrictions our board is committed to reinstating a growing sustainable distribution.
He is committed to reinstating of growing and sustainable distribution with the effects of the worldwide pandemic. Aside our company has shown over the decades, the competent execution of our flexible and resilient business model can generate the excess levels of free cash flow needed to consist.
<unk> invest in our business while at the same time returning capital to unitholders.
Underlying the sustainability of that success is our commitment to investing in and continually enhancing the overall guest experience, which has become the hallmark of Cedar Fair's regional parks. It is the primary driver behind our continued growth in season pass sales and overall attendance and the reason why guests visit our.
Parks multiple times throughout the season.
With this in mind, we remain focused on investing in each of our parks and the underlying strategic initiatives that will drive our success going forward.
Through the first 6 months of the year, we invested $25 million on our parks, primarily on essential compliance and infrastructure requirements as well as the restarts of select on finished 2020 projects, including ongoing renovations of our Castaway Bay and sawmill Creek resort properties at Cedar point.
Both of which are year round properties that fit nicely within our strategy for expanding the operating calendar.
For the remainder of this year, we plan to invest another 50 to 75 million to finish our resort renovations as well as to kickoff projects planned for the 2022 season, bringing our projected total capital spend for calendar year 2021 to approximately 75 to 100 million.
Yeah.
Based on the positive trends established through the first 7 months of the year as well as our renewed confidence in the recovery of the business over the remainder of 2021, we now plan to invest between $175 million to $200 million in calendar year cap in calendar year 2022 to achieve our overarching.
<unk> goal of consistently providing immersive and unforgettable guest experiences.
While we continue to invest in our legendary portfolio of rides and attractions are consumer research continues to reinforce the significance of food and beverage and the high quality menu options, we offer as essential components of delivering a memorable park experience as.
As we learned during the pandemic there is a clear and strong desire among our guests to attend festivals and other limited duration events at our parks.
We have witnessed this firsthand at Knott's Berry farm, where we achieved some of our highest customer satisfaction scores by hosting creative culinary events, such as the taste The Boysenberry Festival.
Because we believe food and beverage plays such a significant role on our organic growth, we will be investing aggressively for the 2022 season to upgrade and expand our facilities across the portfolio. While at the same time, improving the capabilities technologies and efficiencies of our food preparation and delivery systems.
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Finally, I can't underscore enough how excited our park teams are the once again be entertaining guests. We hope you all have a chance. This season joined thousands of our loyal guests to gather along our mid ways of dust to watch Grand Carnival or of tend the celebration of our 150 at the anniversary at Cedar point or the 100th anniversary of <unk>.
<unk> Berry farm.
High caliber of special events like these are being offered across our entire portfolio of properties. It is what we do best.
Creates memories for a lifetime and most of all of it makes people happy Stacey at this point could you open up the call for questions.
As a reminder, if you would like to ask a question that is star followed by the number 1 on your telephone keypad. Once again that is star 1 if you would like to ask a question.
Your first question comes from James Hardiman from Wedbush Securities.
Hey, good morning, Thanks for taking my call. So.
Hopefully this won't go off the rails I know, it's always a little bit dicey, when we try to do math.
Sure.
But wanted to run through a couple of the numbers on.
Obviously.
Significant the July was I think 85% on the same park basis.
You gave us that number excluding group sales, which was 95% I believe.
Both of those numbers included Canada's Wonderland.
You know, where I'm going with the sort of Canada's Wonderland, excluding that it was 90%.
I'm, assuming that still includes the group sales numbers, so I guess, what I'm getting out of it.
If we wanted to adjusted for the group sales pieces of that same 10% and we're basically comparable to 2019, excluding both Canada's Wonderland and the group sales piece.
Hey, James It's Brian, Yes, I would say of your math is directionally correct.
The at the group business.
We said early on just like in prior macro events, the most disrupted the slowest to recover.
And.
As we evaluate how we're trending this year, we know it is hard to make up for lost business and group in the spring.
On an earlier season.
A lot of those those outings are just of that time of the year and while we can shift some of it we have seen some positive momentum in that in that channel. We're looking at the business as we said sort of Sam's group to evaluate how we're doing within the.
Season pass and general admission and Thats about right. It's been about of a 10% GAAP from that group business.
Okay, perfect and then.
The other big topic, you've obviously, what's going on with respect to labor.
I thought the number you gave us was really helpful that that.
The seasonal labor labor rate is 40% higher versus 2019.
I guess of couple of questions on that.
We think about.
Obviously, that's the sort of a gross number before we factor in offsets in terms of labor hours.
I guess is there any way to think about total labor inflation and whether on a percentage basis or even better on a dollar basis.
Versus 2019, given those 2.
Setting.
Factors and whether you want to do it well I guess it would be helpful. If we could think about this year the.
The remainder of this year, but then also 2022, where I think correct me if I'm wrong. The way you set up some of these bonuses maybe maybe the gross number is a little bit less than that 40% as we look to next year.
James Good morning, It's Richard Love of he let me first start and then Brian can weigh in on on the specifics of your question around the numbers.
On the labor front listen we're very pleased that with the as I said in my remarks with the the reaction in each of our regional markets to being the market leader, we generated the kind of staffing levels that we needed to be able to return to a more normalized operating schedule. So we were really pleased with the quick response, so I'd start there.
Second again.
I'll reiterate part of the reason, we we created the business intelligence function was really focus on work force management I'm really excited by the tools that we're putting in place on the way the teams. The park operating teams are using them. So.
It's good to see that we can provide more tools. When you see an element of our of our cost structure of that seems to be the escalating and lastly, al on the staffing front I'll just reiterate how proud I am of the team and all of the good work, they're doing providing a high quality guest experience with increasing NPS scores week over week.
In 1 of the toughest challenging most challenging environments I've seen in the over 30 years I've been doing this so my hat's off to Tim Fischer, Chief operating officer and hit the teams in the field, who are where I think of really doing tremendous work, Brian on the specifics of the the numbers.
James just to provide a little bit more color around that those those numbers at 40%.
Is reflective of the rate adjustments, we've taken as well as the anticipated impact of those incentives for associates to stay on.
There are definitely as you alluded to some offsets that aren't reflected in that whether that be subsidies were receiving in the market like Toronto.
Or or the labor hour reductions right. So that overall rate impact is not flowing all the way to the bottom line in terms of hours as you would imagine part of the reason why we're paying the rates. We're paying is because it's been challenging as Richard said in the call to to get the numbers of associates and fill all of the.
And the position. So we're we're down in hours in part because of that were also down on hours because of efficiencies the operators are mining in identifying.
Throughout the season.
And as well as changes that we're making to operating calendars as as you may recall, we have 5 parks within the system right now that are on operating <unk>.
Days of week, as we try and maximize the attendance up against.
The staffing challenges and so parks like Valley Fair worlds of fun.
Dorney Park to name just a few of our operating 4 of 5 days of week vs..7 so all of those things net down to a much less of an impact percentage wise.
At least our outlook for the balance of the year. However at the end of the day, there is very dynamic and where the balance of the year goes rate wise staffing availability wise, we still have to continue the manage.
Let me ask it this way if I may.
In the context of the $50 million of of EBITDA enhancement I think the last time, we spoke you thought about $15 million of upside to revenue and call. It 300 basis points of margin expansion as that algorithm change should we think about I mean, obviously youre sticking to the $50 million book should we think about maybe.
More on the top line and less margin expansion to still get the same $50 million number.
Yes, Richard said.
James in his comments, we continue to adjust our program and look deeper as we've gotten further into areas like procurement, we're identifying some more cost savings.
Which has been very encouraging and I think the team there that we are building out feels very optimistic.
On that by itself would be very hard to offset the kind of pressures.
And we're seeing in terms of labor headwinds rate headwinds and so that's a piece of it but I think you hit on it right. Another big part is the advancements we're making around business intelligence, while that team will benefit us on both the cost and revenue side I would say we are seeing some very.
Quick wins out of out of them on the revenue side that may change the math behind our original $50 million slightly but we remain confident in our ability to deliver on that in the end.
Great. Thanks, Brian Thanks, Richard.
Thanks, James Thanks, James.
The next question is from Stephen Grambling from Goldman Sachs.
Hey, there thanks.
In the opening remarks, so apologies, but is there any sense as you think about the strength in per caps.
How much of that do you feel like is underlying kind of consumer demand versus any kind of shifts you are seeing in the season passes and how do you generally.
Trying to assess.
On the sustainability of that trend.
Stephen Good morning, it's Richard.
Great question, when you think about what we're seeing in trying to evaluate the strength of the consumer we start going back to 2019, which was a record year for us on a record low.
Evel of per cap at the time, we saw increasing over a really strong 2019 in 2020, even though our operations were disrupted and we're really pleased to get open at 10 of our properties. We saw strength in consumer spending last year in the midst of you know the.
The the disruption so I think what we're seeing is that back to fundamentally what we believe about the business model. There is a lot of appeal to our product. We're an outdoor experience that can be sampled by and enjoyed by thousands of people on a day. So we see a lot of demand for our product and I do think what we're seeing.
Validates the pent up demand, but we've seen of continued strength in spending that relates to some of the things that we've put in place be it the business intelligence funky.
Function revenue management function.
That.
He has really ramped up this.
This year, improving but we're also seeing the the pay off if it well the the benefit of some of the investments. We made in 2017, 2018, 2019, particularly around food and beverage, which I hit on in my prepared remarks. We this is the continuation of several years of a lot of impact in the food and beverage area.
Increasing per caps because of the high quality menu items, we are providing the culinary talent, we've put into the each of the respective parks the first.
So all of these that we've built out over the last few years. So I think what we're seeing now is the continuation of strength that we saw before clearly the pent up demand and we've heard the term revenge spending there is some of that embedded in what where and others in the industry are seeing but we're also seeing the continuation of trends that existed.
Prior to the pandemic.
And maybe as a quick follow up on that are you seeing any differences across the parks of geographies. It sounds like it's broad based but then are you also seeing any change on the type of consumer who is showing up on your part of it I realize the the attendances quickly recovering but are you finding that it's a different type of customer who is arriving.
We've not we've not seen that it's a different customer all of our consumer research shows we're getting absence absence, the disruption of the group business, which Brian commented on which we expected and typically in the spring there'll be a lot of youth groups coming but put that to the side. What we're seeing this summer is guests that look exactly like the guest.
Who are coming in 2019, when we're ramped up at full speed.
As I've been walking the mid ways been up at Cedar point seen there of 150 <unk> anniversary celebration parade. The guests that I'm seeing are having a great time in the end from a profile perspective look a lot of it.
Who you would expect our target audiences mom with kids and families and where they are coming out in droves right. Now. So we've seen sustained strength, we've seen increasing not just spending, but we've seen strong and increasing our attendance levels. During the month of July this is typically.
July and August of 2 of our biggest months of the year. So we're right in the middle of it but we feel really really good about the results that we put on the board of the performance in July.
Got it mom is flush and revenge spending thanks, so much I'll jump on the queue.
Your next question is from Eric Wold.
Thank you.
Good morning, guys.
Couple of questions I guess.
1 of kind of going back to the the last question a bit nice driving the Johnsey noted that the season pass visitation mix.
It's comparable to 19 in the 55% of versus 53.
8% more.
Season pass holders this year versus 19, I guess that implies fewer average visits per per pass holder I guess can you confirm that and I guess it will be the apples to apples increase.
Good day of visitation of you've been able to drive.
The <unk> 19.
Yes, Eric it's Brian So as you can imagine this year much like last year. The disruption is still on the operating calendar.
Is probably playing with some of these metrics that's why as we as we compare.
On metrics like season pass mix in 'twenty, 1 we go back the 20, we go back to 19.
There is no doubt we have slightly more passes outstanding right now as I had mentioned about 8% higher.
Then where we were at the same time of 19.6.
The season pass visitation is trending roughly in line with where we would have expected. It is slightly below 19, some of that related to just the the fact that way of less operating days.
On the current year as we get into a more apples to apples I guess I'll say on on operations, although as I mentioned before not all of our parks opened 7 days of week as they normally would be in months like July and August.
We will see how that trend line goes what I can say is we're really encouraged in spite of the disruption in the in the group channel, which we're confident can recover.
The shift and growth in general admission.
Has been significant and so that's important to us as you've heard us talk about in the past things like unique visitor being an important metric for us continuing to identify more gas that can ultimately get plugged into the season pass.
The pipeline for ultimately conversion up to that to that higher better product and we're very encouraged by what we've seen in demand in those other channel. So there is no doubt that some of the use of numbers are of danone down a little bit but not to the point that has us has us concerned and we will reevaluate as we get through the year right. We're still leave.
<unk> had just heading into August and fall is such a huge demand time for our season pass holder to come out and enjoy things like the <unk> events and then for those parks that have the winter fast.
Events in November December those are of high demand season past times as well.
Perfect.
The the push towards season pass or towards the single day has been a big.
The focus so we didn't see that and I guess the second question.
Obviously with the goal of.
On.
Moving more of parts towards the year round or these increased number of operating days at the parks take advantage of demand and initial thoughts if you think about across the entire portfolio.
What the total increase in operating days could be versus kind of of the pre pandemic baseline.
You know Eric it's Richard Good morning. Thanks for the question, we're evaluating that right now you saw of start to dip our toe in.
And of that last year, when we opened up some of our parks in November and December.
Looking at the Charlotte Park down here, we did a few extra days where the.
Valuation what makes sense I will tell you go back to 2019, we're very encouraged by the strong first year performance of Winter Fest at Canada's Wonderland. So it really really said to us there's a lot more opportunity than we think if we reconfigure how we deliver our product and what the guest experience is that's the learning that debt I take away from.
Last year's disrupted operations 2020, we were able to put on limited duration festivals and events that really kept us engaged connected and engaged with our customer but also had great appeal. So as we think about expanding the number of calendar days of what we're thinking about it is what that product looks like on those days where.
The open how we can configure it and use of events to make it special.
And continue to stay engaged through all 4 seasons of the year on.
On to our seasons of fun banner and give people more reason to use the season pass, but also more reason to buy the season pass.
Got it. Thank you guys appreciate it.
Thanks, Eric.
And as a reminder, if you would like to ask a question that is star 1 what's the <unk>.
Again that is star 1 if you would like to ask a question. Your next question comes from Michael Swartz of true list.
Hey, guys. Good morning, just wanted to touch on Capex and some of your comments in your.
The prepared remarks.
<unk> laid out about $175 million to $200 million in capital expenditures that Youre planning for 'twenty 2.
Im guessing is that trying to understand is that a new baseline or does that have some catch up spending embedded in it and then with the whole year round the opportunity would that necessitate a greater level of ongoing capital investment.
Yeah, Mike It's Brian.
As it relates to Capex I think we're still committed to our long term goal as we previously noted of getting that debt investment in the core business back into the $9.90 of 10% of range of range, It's a little difficult right now right with the disruption.
Due to the business to look at some of those metrics from the same traditional sense as we had on the cap the planned spend for the calendar year 'twenty..2 2022 is still somewhat ahead of that pace.
As we as Richard noted were reactivated several key projects that were caused back in 2020, most notably the renovation of the 2 year round resort Cedar point, Castaway Bay and sawmill Creek.
Both of which we believe is going on are going to play key roles in our our strategy of expanding the operating calendar at the at park and in that market.
I would say, yes, there is definitely some.
Escalated spend for calendar year 2022 because of.
Some of them sort of deferred projects of course projects.
And then just with the the <unk>.
Todd or maybe plan to go year round operations would that necessitate structurally higher spending or anything incremental above the 9 to 10.
No.
Nick It's Richard No. We think that 9 to 10 is a comfortable range from 4.
What we need to do as we look forward so.
No I don't think when you think about the extra day is it's certainly higher capex.
But it's capital it's Capex light if I could use that term, obviously, we will monitor and make sure that.
We keep the facilities up to their share.
They are high quality condition, but no we think the opportunity to expand the operating calendar is 1 that that is both debt will see great demand for and have a lot of appeal to our guests, but also something that really is capital efficiency.
Okay, great. Thank you and maybe of.
A follow up on the on.
Maybe just provide us some color or granularity on what you're seeing with some of your forward looking metrics whether thats.
Sports Center bookings or we're talking about hotels or some of them.
The resort properties anything you can give us a little more color on maybe from the back half of the year.
No what we've always said.
2 leading indicators, Mike first season passes.
We've talked about the strength now in in mid August will go on sale shortly with our 2020 to say sales so.
To be able to give you some color on that as we get deeper into the fall.
Resort performance has been outstanding we like what we see in terms of and are encouraged by the close of the bookings, but also the Astra performance day that's.
That's not just the hotels.
In Sandusky that been southern California at Knott's Berry farm, and even down here down the <unk> performing.
The performing well as we get deeper into the season. So groups is something that I think it will take some time to rebuild we talked about that although I will tell you. We've gotten calls from some clients. The traditionally come see us in the fall and they are coming back. So we're starting to see a little bit of momentum of the group channel is the phone rings.
And people think about what theyre doing in the fall of some of our traditional group of coming back to us. So.
Nothing significant enough yet that I would establish a trend, but I like the like the the optics of what I'm seeing.
Okay. Thank you.
Your next question is from Brett interest from Keybanc.
Hi, good morning.
First just the housekeeping what capacity restrictions currently in place.
At Canada's Wonderland, and then when do you think that could go.
The full capacity.
Brad It's Richard Good morning, you know they are in tier 3 I think it is right now and Thats going to the government just extended that through August 26, there was another tier of that sits above that right now.
They're doing the numbers that I think you can kind of work out the math that would say the.
We're not yet back to I think 75% or 80% of.
2019 level, but as I think as we look forward.
The trends there on the on the pandemic side. The vaccination, Canada has made great progress on the vaccination from so we think the health trends are working well as we as we look at the fall towards us being able to open up to a further degree obviously, we're staying close to the provincial government up there and give us very strong relationship with the.
Health and safety administration up there.
We're in constant contact in terms of what we're doing and how we can keep in lock step with what theyre seeing as well so we get the latest information on the health side.
Got it Okay and then it seems like the guest experience is getting better and better each week.
But just to put a little more color on that are you back to 2019 levels at this point I guess, what kind of GAAP.
Do you see that you still have to fill.
And then of that last question.
If you take a snapshot of the most recent week or the last few days have you seen any noticeable impacts from delta it doesn't sound like it but just wanted to check the box.
Let me take the first question on on what we're seeing in terms of NPS I will tell you we've seen in some respects what I would expect to see the parks, where we've had grand Carnival.
The island of Cincinnati.
<unk> saw a nice pickup in NPS not just the guests really responded and what makes us feel really good about our longer term strategy is that the events of driving both our performance, but also higher NPS scores as people come out and experience. The event, so where clos were not yet back to 2019, but we're closing the gap.
And we think as we get into the fall with our traditional Halloween event. We think Thats also another way that we can close the gap.
Brian you want to take the second 1.
Yes, Brett in terms of the most recent performance.
Can't say that we've seen anything demonstrative.
Tell you this last week in terms of when we look at the light volume and demand 1 of our probably top 3 or so in terms of the comparative against those same day 2019 attendance levels, so highly dynamic situation.
Lot of the news that we're all seeing out there is maybe coming out of markets that we don't have parks in and we're just going to as Richard said, we're going to have to wait and see how our markets in the in the state and local authorities in those markets react in and we will have to adjust accordingly, but so far.
There's been nothing demonstrative in terms of any impact to the business and the demand that we're seeing.
Got it thanks guys.
Your next question comes from Paul Golding from Macquarie Capital.
Thanks, so much for taking the question.
First a housekeeping question are any of your parks currently on <unk>.
Reservation system still or have they all come off I guess, except for Canada, maybe.
Canada is on our reservation system the rest of for the most part are not on we're going on we're going to continue to monitor the demand but for the most part Canada is the place where we've got.
On the tightest restriction.
Got it and then with respect to the.
2022, Capex plan and sort of guided expectation there.
I guess I'm trying to think about how much of that is locked in versus.
Susceptible to fluctuations based on whether the supply of materials is available or the supply chain for some of this.
The new attractions or maintenance Capex.
Just out there just trying to get a sense of how locked in that is versus maybe.
Still early in the process, maybe gets pushed into 'twenty, 3 or could see some price inflation, even from there any color on that would be great. Thanks.
I would say that we're seeing like every other business Paul.
Supply chain challenges, but as we think through our cycle on getting parts ready for opening next year.
Again, we will come out with our our announcements around all of our of our new opening products I won't steal the marketing team's thunder and a couple of weeks here, but when we look at the product lineup of when we look at our commitment to food and beverage I think youll see the spend start to concentrate in the spring and summer as we get into the 2022.
Capital and then like we see every year, we will start spending and we will start constructing things for the 23 season.
In the second half of the year. So once we get the.
Get down to weekend operations. This year, we'll keep working on 22 product, but then as you get into the middle of 'twenty, 2 and we've opened up all of that product then we'll start working on 23 product.
Got it thanks, so much Richard.
There are no further questions in queue I would now like to turn the call back over to Mr. Richard Zimmerman for closing remarks.
Thank you everybody for participating on today's call and especially for your interest in Cedar Fair, We hope to see you at 1 of our parks yet the season in the meantime, please be well and have some fun Michael.
Thanks again, everybody should you have any additional questions. Please feel free to contact our Investor Relations Department at 400, 96272233, and we look forward to speaking to you again.
In November after releasing our 2021 third quarter report Stacy that wraps our call for today. Thanks again, everyone.
This does conclude today's conference call. Thank you for your participation you may now disconnect.
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