Q1 2023 Cedar Fair LP Earnings Call
Pricing levels of per capita spending last year and continuing in the early part of our 2023 season.
Third early season bookings within our group sales channel are increasing especially among school and youth groups as our advanced bookings at our resort properties, both of which should create a solid tailwind for attendance through the remainder of the year.
Fourth we are confident the new rides and attractions scheduled to debut this season will generate higher demand and more frequent visits among pass holders and single day visitors alike and.
And finally, although unit sales of season passes are down due to the impact of weather during the first quarter as well as last fall. The average season pass prices up 7% as we head into the busiest sales cycle of season.
Having watched our teams successfully navigate the recovery from the pandemic to deliver record results in 2022, I have the highest confidence in our team's ability to effectively manage through early season challenges to build on the momentum we achieved last year.
So let me address our first quarter from a macro level then Brian can review our financial results in more detail.
While our first quarter results did not meet expectations. The shortfalls are directly attributable to the worst period of weather we've experienced in several decades at our California parks.
Cold wet and even snowy days at Knott's Berry farm, our park with the most meaningful first quarter operations prevented the park from opening at all on seven days and adverse weather conditions significantly disrupted operations on 30% of total planned operating days during the period meaningfully impacting our top.
Offline.
The impact was magnified by all season cost at several of our other parks as crews of maintenance personnel and seasonal associates, we're preparing for spring Park openings.
Given the slow start to the year, we have implemented additional initiatives to identify cost efficiencies throughout our system, while maintaining our ability to generate topline revenue growth and deliver the high quality guest experience for which our parks are known.
This includes leveraging the expertise and purchasing power of our centralized procurement group to tightly manage non labor related operating costs and minimize the impact of inflation.
Additionally, through learnings and new tools or park operators continue to improve our alignment between daily staffing levels and demand.
Our advancements in workforce management truly came to fruition in last year's second half when we reduced seasonal labor hours per operating day by 7% compared to 2019, and then in an environment of high inflation reduced our average labor rate by 2% compared to the second half of 2021.
We are looking forward to building upon that success this year.
The actions we've taken over the last several years have also created a more resilient business model, which enabled cedar fair to perform well regardless of the economic landscape.
The strong business fundamentals and compelling collection of new attractions provide us with confidence in our ability to deliver stronger full year results, even if a recession were to occur this year as some expect.
Since the great recession, some 15 years ago, we have significantly grown our recurring revenue streams with many of our most loyal guests purchasing tickets well in advance of their visits using payment plans to package season passes with other all season products and taken advantage of our resorts and premium experiences to customers.
<unk> and enhance the park visits.
For more than a decade, our team has refined its marketing outreach and to late two way dialogue with our guests through our CRM system that gets more robust and sophisticated with each season.
Our enhanced capabilities to gather and analyze guest data much of it in real time.
Has improved our effectiveness in key operational areas, ranging from yield management and labor utilization to food services and guest safety.
The steady advancements have helped maximize operating leverage, especially when demand is at its historical peak in the months of July August and October .
In short we remain very excited about Cedar fair's prospect for continued growth and value creation in 2023, let me stop here and ask Brian to review the details of our results Brian .
Thanks, Richard and good morning, I'll start by discussing our first quarter results before wrapping up my remarks with updates on our balance sheet and the current state of our long lead indicators.
As Richard mentioned due to the highly seasonal nature of our business first quarter operations represent only 5% of full year attendance in net revenues.
As such results in the period are not indicative of performance for the remainder of the year with more than 80% of our adjusted EBITDA generated during the third and fourth quarters full year performance is much more dependent on attendance during the peak summer months and during our high demand events in the fourth quarter, such as <unk> and winter fast.
For comparison purposes operating days in the first quarter totaled 161 versus 130 days in the first quarter of 2022.
The increase in operating days reflects the strategic initiative to expand the first quarter operating calendars at three of our seasonal parks Caroline's Kings Dominion and California's Great America. These.
These incremental operating days were offset in part by the effects of the highly unusual weather at our California parks, which led to park closures on multiple days during the period.
During the first quarter, we entertain $1 1 million guests and generated net revenues of $85 million.
Compared with the tenants of $1 5 million gas and net revenues of $99 million in the first quarter of 2022.
The decreases in attendance and net revenues are attributable to the weather challenges during the quarter, particularly at our California Parks Knott's Berry farm in California's Great America.
Unseasonably cool temperatures and record precipitation impacted demand at our two California parks on 30% of planned operating days in the quarter, including seven days when <unk> was unable to open.
The weather impacted days resulted in the direct loss of at least 225000 visits offsetting the incremental attendance produced by this year's expanded park operating calendars.
The year over year attendance comparison was also negatively impacted by approximately 140000 season pass visits at Knott's Berry farm and last years first quarter, which were attributable to the extension of 2020 in 2021 season pass privileges into the 2022 seasons.
While demand has been negatively impacted by weather as Richard noted early season trends in guest spending remains strong reflecting the effectiveness of our pricing strategies and the stickiness of guest spending from year to year.
For the first quarter in park per capita spending totaled $64 47.
Up 10% compared with first quarter last year, we are extremely pleased with the sustained momentum in per caps, particularly coming off the step function growth we've delivered over the past two years.
The improved per cap was driven by higher guest spending on admissions food and beverage and merchandise.
The increase in admission spending up 9% year over year reflects the impact of our 2023 pricing strategies as well as a slight shift in the attendance mix away from season pass visits mean.
Meanwhile, the higher guest spending on food and beverage and merchandise both up more than 15% in the quarter was primarily driven by an increase in average transaction counts.
Reflecting our guests' continued willingness to spend on the high quality products and premium experiences our parks offer.
Out of park revenues for the quarter were also strong totaling $19 million up 17% when compared with the first quarter last year draw.
Driving the increase in out of park revenues with the reopening of our Castaway Bay and sawmill Creek resort at Cedar 0.2 properties that were undergoing renovations at this time last year the.
The strong start to the year at these two resort properties was slightly offset by a small decrease in out of park revenues it not due to the inclement weather.
Moving onto the cost front operating costs and expenses in the first quarter totaled $190 million compared with $171 million for the first quarter of 2022.
The $19 million increase reflected an increase in operating expenses of $13 million and an increase in SG&A expenses of $6 million.
Slightly offsetting these increases was a small decrease in cost of goods sold related to lower attendance in the period.
The increase in operating costs was largely attributable to anticipated cost increases, including $4 million of incremental land lease and property tax expenses related to the sale leaseback of the land at California's Great America, and $3 million of higher employee benefit costs, resulting from increased head count.
The increase in first quarter operating costs also reflects a $5 million increase in preseason maintenance cost at several of our seasonal parks.
The lion's share of which represents a timing difference for the full year, we anticipate maintenance costs in 2023 will be in line with the amount incurred in 2022.
The increase in first quarter SG&A expense reflects a $3 million increase in full time wages and benefits primarily related to higher head count and a year over year increase in equity compensation expense.
And a 2 million dollar increase in advertising costs to support the expanded park operating calendars and the first quarter.
Incremental variable cost associated with the additional operating days in the quarter were offset by cost savings, we were able to realize at Knott's Berry farm as we tightly manage park operating costs in light of the weather challenges there.
Turning to the balance sheet at the end of the first quarter Cedar Fair's balance sheet was in solid financial condition with sufficient liquidity to fund future cash obligations and no near term debt maturities.
We had total liquidity of approximately $144 million includes.
Including $34 million of cash on hand, and $110 million of available borrowings under our revolving credit facility.
And net debt at the end of the quarter totaled $2 4 billion.
While we have no near term debt maturities, we will continue to look for ways to improve our capital structure and enhance our financial flexibility.
In early April just after the first quarter closed we exhausted our $250 million unit repurchase program.
Going back a total of 6 million units since the program's inception for approximately 10% of total units outstanding at just inside an average price of $42 per unit.
Regarding capital investments during the first quarter, we spent $55 million on Capex, which was in line with expectations for the three months period, and consistent with our plans to invest between $180 and $200 million for the full year.
This includes more than $135 million of investments in new rides and attractions upgraded and expanded food and beverage locations and other revenue generating projects for the 2023 seasons.
Looking at long lead business indicators for a moment, we are encouraged by the strong start in solid long term booking trends, we are seeing within our group sales channel and at our resort properties.
Both of which are pacing ahead of the same time last year.
While it's still early in the year, both demand channels are trending well and showing no signs of slowing.
As it relates to our other long lead indicators season passes.
As Richard mentioned due to the impact of weather through the end of the first quarter unit sales of season passes were down 7% or approximately 118000 units when compared to last year's record pace.
Sales of season passes are often align with our guests first visit and given the shortfall in early season, a tendency to weather sales of season passes have also lagged expectations.
The slower start in unit sales was offset by an increase in the average season pass price up 7% year over year and pacing in line with expectations.
Also helping to offset the shortfall in pass sales where sales of related all season add on products, which were up $5 million collectively at the end of the first quarter on higher average pricing and increased unit sales.
Our deferred revenue balance at the end of the first quarter totaled 208 million. This compares to $234 million at the end of the first quarter last year, which included approximately $20 million of Covid related product extensions and Knott's Berry farm and Canada's Wonderland into 2022.
Excluding the extension in the prior year quarter deferred revenues would have been down approximately $6 million or 3% year over year.
Of the $6 million variance half relates to the later timing of sponsorship revenue billings in the current year, while the balance reflects the shortfall in early season pass sales.
With approximately half of our season pass sales occurring after the first quarter, including the months of May and June which account for roughly 30% of full program sales. We remain laser focused on driving unit sales higher and recouping as much of the early season shortfall as as possible, while still maintaining the integrity of our season pass.
Pricing structure.
Finally, I want to remind everybody that in addition to not currently providing annual guidance, we have returned to our normal cadence.
Providing operating results on a quarterly basis only as we mentioned on our last call. We will provide updates on our performance through July along with second quarter earnings.
And an update on our performance through October with our third quarter earnings. However, we are no longer providing interim updates relative to memorial day, the fourth of July or Labor day as those updates proved unhelpful last year due to the cyclicality of our business model.
With that I'd like to turn the call back over to Richard.
Thanks, Brian .
Today, we announced two strategic actions authorized by our board and consistent with our long term capital allocation strategy.
First we.
We declared a quarterly cash distribution of <unk> 30 per unit to be paid in the second quarter, continuing our focus are paying an attractive and sustainable distribution.
Second having recently exhausted our initial $250 million unit repurchase program authorized last August .
<unk> has approved a new authorization to repurchase units in the open market or through privately negotiated transactions up to an additional $250 million.
We believe units of Cedar fair represent an attractive investment opportunity and we will continue to be opportunistic with repurchases going forward.
The new unit buyback authorization combined with quarterly distribution payments gives us increased flexibility and returning capital unit holders and driving sustainable value creation.
Our quarterly cash distribution and renewed repurchase authorization underscores the board's confidence in the company's long term growth prospects and the resiliency of our business model, which has generated significant free cash flow over a long period of time.
These actions also reflects the board's recognition of the steady measurable progress were making towards reducing net leverage to our target of 3% to four times adjusted EBITDA.
While fulfilling our objective of consistently investing in our properties in order to generate incremental organic growth.
Near term our strategic goals are simple one drive annual attendance back closer to pre pandemic levels with a specific near term focus on restoring demand within the group channel.
To continue to grow guest spending through a combination of pricing.
<unk> and technology enhancements designed to extend length of stay increased transaction counts per guest and improve average transaction values.
Three create a sense of urgency to visit among our guests through targeted messaging that increases consumer awareness about our parks broad collection of rides attractions and entertainment offerings.
Our unique food and beverage offerings.
And there are limited duration events.
And for improved margin performance through disciplined management of operating costs, including seasonal labor without undermining the overall guest experience.
As I mentioned earlier this is an exciting time of year for us as most of our parks are just weeks away from ramping up to full seven day a week operations.
This includes Cedar point, which tomorrow will kick off it's 154 season.
When the park opens we will be debut in its newest expansion the boardwalk.
<unk> renovated area designed to pay homage to cedar points, beginning in the late 19th century.
Anchoring the boardwalk is the parks newest roller coaster, the wild mouse as well as the Grand Pavilion, a modern day version of the original landmark that served as the parks bustling centerpiece for entertainment.
Serving culinary creations not found anywhere else in the park.
Grant for $1 billion is a dual level restaurant and waterfront bar with outdoor terraces overlooking the park and Cedar Point's beautiful shoreline.
And to be one of the industry's finest dining venues the majestic grant a $1 billion will stand as a cedar point centerpiece once more.
At our other properties.
The village at Knott's Berry farm is being completely revitalized for the 2023 season, while kerwin celebrates its 50th anniversary.
As part of <unk> celebration. This year. The park is introducing the all new and exciting aeronautical landing. This new aviation themed area features new rides and attractions themed food and beverage locations and re imagined classic Carnival games.
Meanwhile, guests this summer at Canada's Wonderland are set for a thrilling adventure with the addition of tender twister at giant 360 degree spinning swing right. The only one of its kind in the world and Snoopys Racing railway and exciting launch coaster for children and families in the parks planet Snoopy area.
Also celebrating our Golden anniversary this year is worlds of fun.
Throughout the season, the park will entertain guests with special events and activities to commemorate its first 50 years, along with welcoming back Zambezi Zinger, one of the parks original roller coasters, which had been re imagined and ensure to delight, our guests and associates alike.
These are just a few examples from our capital program that we're confident will deliver another outstanding year for Cedar Fair in 2023, and entertain guests at our parks for seasons to come I Hope you have an opportunity to visit one of our parks and all they have to offer sometime this summer.
Sidney that concludes our prepared remarks, please open the call for questions.
Thank you. Your first question comes from James Hardiman from Citi.
Okay.
Hey, good morning, Thanks for taking my question. So I think the weakness in the first quarter.
Bruno.
Whether you guys had.
I think it's pretty well understood.
Although you are sort of easing back from from post quarter update to a degree but is there anything you can tell us about April <unk>.
Either get any better during the month of April .
Did you see any sort of commensurate pickup.
As a patient that's held view.
Help me with the question that I think everybody's trying to figure out which is.
Excluding the weather impact.
Consumer ultimately going to show up this year.
So James Good morning. Thanks for the question, Yes, I think it's the weather on the West Coast in particular was well telegraphed I agree with you.
In April I would tell you that California dried out the east coast got a little weather, but what we did see during April is that return of the.
The start of the return of the group channel and in particular the use group.
We saw you've come back in in April largely the trends remain the same we continue to see strong per caps, we continue to see.
Mid to high single digit increase in our season pass sales price.
And in particular, what I'm pleased with Brian mentioned in his remarks, the add on products and continued to strengthen in all season dining in particular within the add on channel. So Brian anything you want to add just some additional color James on April as Richard said trends largely the same.
From first quarter, not only the positive trends Richard noted, but whether it still was a factor as heat as he mentioned.
Lesson, California, now more in the Midwest and the east and in total I would tell you again about about a third of our operating days were impacted by by weather in April .
What what remains I think the most important thing though is the fact that even after April you're still looking at probably a little more than 90% of full year attendance and revenues as is in front of us.
So nobody likes to get off to a slow start but it's.
It's really what's what we're going to do over the balance of the year, that's going to drive that full year results.
Got it and then secondly, as we think about pricing.
Maybe if you could just take a few seconds.
There's a lot of chatter about a price reduction to your point walk up pricing, which I know was done.
Miniscule piece of the mix, but maybe just contextualize that for us.
More broadly.
I would like single day ticket pricing is up.
Mid mid plus season passes are up mid to high.
Seems like setting up for a year where per caps will be up nicely.
What we often time KFC or the impact of mix right.
A number of different types of mix, but maybe walk us through how to think about it.
And is there anything that would prevent what appears to be.
<unk>.
Significant pricing increases in the individual types of ticket.
It would prevent that from meaningful per cap growth for the year.
Thanks, James Let me jump in here and say I'll, let Brian comment on the specifics, but very broadly we've encouraged our business intelligence team to really lean into dynamic pricing. So theyre trying things all the time, we move prices and we encourage them to move prices.
Hundreds if not thousands of times during the year across our 13 sites.
Part of what Youre seeing is the testing of where the edge of how we can drive as much as possible.
And as we've shown in the recovery of the pandemic, our ability to really drive pricing and yield that into per capita gains along with increase in attendance whether excluded.
<unk> has been the key to our driving topline revenue growth.
Yes, Jim just maybe on some more specific level you need to your question about Cedar point. The park did pull back its front gate price from 85 to 80.
As you noted very small less than 2% of C of Cedar Point's tickets are sold through that and the move was done more for a from a marketing and promotional perspective to get to a a cleaner price for some of the.
The promotions that we typically run in the spring time.
We do a lot of cross promoting between the sister parks Michigan's adventure to the North Kings Island of this out in the $80 price fell a little bit better for that so it's not an effort to pull back pricing. In fact as you noted we're leaning in on pricing and as Richard mentioned dynamically pricing the web price and Thats, where the majority of tickets are sold.
So.
I think to your comment on mix that always plays out and.
And specifically what we've seen so far year to date. We've commented season pass is up 7%, but if you look at the individual park level youre going to see increases that are probably closer to double digits. It's just right now with not being a little slow and thats one of our higher.
Passes in the system, so thats dragging that average down, but we're really pleased with what we're seeing out of out of the market's reaction to the price increases in each one of the markets.
Got it and just to clarify is there any reason to think that there would be a significant shift.
Neither in the direction of season passes or the direction of single day tickets that we think about 2000.
Too early to know for sure, but anything that you're pushing in one direction or the other.
No I would say that our approach on pricing is very consistent with what we had last year in both of those.
Some of the single day ticket increase.
The increase that we are able to generate last year.
Was that was the outcome of unplugging some of the discount channels that we had in place that that's gone now so now we're looking at really pure increases.
I wouldn't say there is anything thats, a demonstrative shift ultimately at the end of the day.
As you know the percent of season pass of the overall attendance can play a bit into that admissions per cap.
But as you noted it's way too early in the season and to know where that's going to land. We've got we've got a window of time here still in front of us where we sell a lot of season passes and so we're focused on that first and foremost.
Makes sense, thanks, guys and good luck.
Thanks James.
Your next question comes from Thomas Yes.
Thanks, So much I wanted to dig a little bit into the record per cap. This quarter I can follow up on James's question on pricing it sounds like Brian from your last comment that whether or not only impacted that season pass unit sales, but the mix of past pricing, because California trends higher could you maybe just put into context.
Any of the new initiatives around path here that you've introduced how that is being adoption and what are you seeing there in terms of the early.
Changes on potential per cap uplift from there.
Yes sure. So you are correct. Thomas this is as I just mentioned to James question.
When we talk about things at the model that level and we talked about these averages some of the underlying truth has got a little bit lost and what we're pleased with us.
The push in each one of our markets to get high single digit increase in season pass.
Pricing is being received well as are some of the other.
<unk> all been changes in the season pass.
Which would be things like.
The new prestige pass very limited is only in three of our properties right now, but the guest reaction.
And reception to that new product has been very strong what pulls down as I mentioned, not only knotts Berry farm being soft one of our highest past prices, but Canada's Wonderland is having a fantastic year to start in terms of season pass sales and it's one it would sit towards the lower end of the past.
<unk> spectrum and so.
That's impacting the average price a bit but the recovery in terms of units. We're very pleased with what we're seeing out of Canada and their response to past sales and just to clarify Bryan's comment Canada's Wonderland gets translated and foreign exchange So in U S dollars.
It lowers the mix, even though their functional curve in Canadian dollars. They are priced appropriately and similar to our U S box, but at 74 cents on the dollar would just less credit for it when we factored in.
Got it makes sense and then just to drill.
Drill down a little bit more on the season.
Season pass revenues I think you cited that there has been an increase in revenue recognition per season pass visits this quarter is that driven purely by the pricing is it safe to assume or is there anything changing around the assumption youre, making about the attendance for those pass holders through the rest of the season.
No.
It's a bit we're always moving.
And making the appropriate adjustments to draws on season passes and the related all season products.
It is tied to both price, but also anticipated visitation patterns. So based on what we saw last year at each one of the parks, we will adjust from time to time, but nothing nothing significant to us.
Great and if I could just squeeze one more on cost on that.
Planned higher head count this quarter I think we start to lap some of those increase within QQ any color around expectations for just staffing level compared to last year. It sounds like consumer health is still.
It's still there as we get into kind of a full operating season, how should we think about maybe at the operating days normalize how should we should expect the wage.
Okay.
In.
Yes ill break it into two pieces our comments on the call about some of the cost.
Increase in Q1.
Related to anticipated.
Increases in some head count or the benefits related to that to your point that sort of a year over year Q1 in comparability that we will start lapping here last year, if we flash back to where we were a year ago, and we were bringing back.
Some of the positions are Great example group sales right. While group sales was unplugged during 2020, one and there wasn't much business. We saw a lot of attrition and a decline in those those staffs across our systems, we began breaking those folks those folks back onto the <unk> billing those open positions during the first half of <unk>.
'twenty two to be prepared for going into 'twenty three than what we thought was going to be a very strong bounce back year for group.
So we're seeing that start to lap the first half of the year still has some comparability, but we will see more of an apples to apples comparison as we get into the second half of the year for.
That that is an example of some of the full time pressure as it relates to seasonal.
As we said on the call very pleased with what our teams in the field have been able to do in terms of reducing hours on a per operating day. We continue to look for efficiencies at all we've got much better at that over the course of the 'twenty two season as our teams got.
Used to the new tools and just got smarter right I mean as the season went on as we go into 'twenty three we feel very confident in terms of where we're at from a from an early season staffing model.
The pipeline for for.
New hires.
And filling those seasonal positions has been very strong.
Going to continue to try and use that to our advantage to manage and keep rate average rate down as we noted 2%.
Down in the second half of 'twenty two versus 'twenty, one we will see how the rest of this year develops but we feel really good about where we're at on our seasonal staffing basis, both from the pipeline, but also our ability to manage the hours and the rate associated with seasonal labor.
Thank you so much.
The next question comes from Mike.
Alright.
Hey, guys good morning.
Mike.
Point on that last question as we think about ours.
I guess just in terms of labor costs, how we think about hours in the system versus average wage rates for this year is there any general parameters to think about and I know some of this hit in the first quarter harder because of the extent to be extended calendars at certain parks, but just on a on an annualized basis, how should we think about it.
Yes, so I'll take a step back for a second and I want to hit a point that you referenced there again first quarter is a little bit of an odd quarter for us.
Well, we look at our business and the operating cost structure is very variable and we have the ability to adjust labor up and down as I was just mentioning in response to Thomas' question, particularly seasonal labor up and down.
To better meet or marry with the demand levels that we're seeing on a daily basis first quarter is very different first quarter. It's much more of a fixed cost structure for most of our parks at Knott's Berry farm side, where we did as we mentioned on the call carve out a lot of variable costs as we werent seeing the demand levels that we would normally have expected sans the weather most of the other.
Properties are preparing to open so all of those costs are fixed the maintenance labor the seasonal labor the kids in the parts cleaning the parks getting ready to open there is very little that you can pull out of that without putting at risk to your ability to open. So first quarter is a challenging quarter from the standpoint when revenue isn't there at a park like Knott's Berry farm, there's little that we can do it the other <unk>.
<unk> to help offset that.
As we look at the rest of the year, Mike and we think about labor again I'll just emphasize we feel really good about where we're at from.
From the flow of applicants and our hiring process that that's going to allow us we believe to keep average rate really tight to where it was in 'twenty. Two we will if we have to flex up in some markets to fill hard hard to fill positions like security.
Or like cards to name a couple we'll do what we have to with rates very surgically and specific job classifications, but we feel really good where we're at from a rate perspective, and then any our pressure is going to be associated with more days in the system like we saw in the first quarter. We added days at those three seasonal parks, but with added cost.
<unk> added attendants and avid added revenue and so when we're adding hours, it's going to be specifically to generate more revenue and not just adding hours for the sake of ours.
Okay, Great and maybe this is splitting hairs, but if we.
Kind of.
Look at the operating days in the first quarter, where weather was cooperative is there any way to think about how attendance trended during those days.
Yes, I will say.
What we've seen this.
The start of this year in the first quarter is that when weather has been good demand has been solid we were very pleased with the expanded operating calendars.
Three parks.
This year and and when weather was good.
The demand was there.
What does happen, sometimes and we've seen this definitely at Knott's Berry farm long or prolonged bad weather, sometimes it takes more than just one or two days of nice weather to sort of overcome right people have seen it ran for the last three or four days you finally get a couple or three or four weeks you finally get a couple of nice days we.
We might not be the first thing, they're going to come and do so you really need a stretch of some nice weather to start seeing a new trend.
But what I would tell you is when weather has been good demand has been has been very solid Mike its Richard I'd go back to take you back to on that point when we added the days for winter fast starting in 16 17, 18 does take a while for us to train the markets that we are back open January February is not a time that a park like Charlotte <unk>.
<unk> was open so we were really pleased with the solid performance on the on the decent weather days.
And think that this is sort of a tradition and as we get season pass holders and others to understand that we will be open one of the encouraging things I thought was that.
We saw a nice mix for the park between season pass and demand tickets, even January and February that tells me that both people knew but that season pass holders who are bringing their friends and that's a good thing for us in January and February in those markets.
Thank you.
Okay.
As a reminder, if you'd like to ask a question. Please press Star then the number one on your telephone keypad.
The next question comes from Ricardo Chinchilla.
During the call I mean, we're pleased with with where the balance sheet stands right now where the capital structure set there is no near term maturities. The 2025 notes that you referenced those are on our radar.
And we're going to look to be opportunistic, but we have runway there's still two more years on those so we're not.
We're not going to say there isn't a sense of urgency that we have to do something right now we want to remain opportunistic when the market conditions are right.
To address those I would say as Richard mentioned the goal continues to be to work leverage down back into that 3% to four times adjusted EBITDA range. We think we're on the path towards that as we as we showed at the end of 'twenty two finishing the year with net leverage right around the high end of that we want to continue to see that work its.
<unk> south below four times that will probably be done through a combination of both growth in the business and potentially taking out some more debt.
But from a capital structure perspective, we feel good where we're at right now.
The cost of debt is.
At least on a relative basis.
As inexpensive compared to where the market is today and so we're going to enjoy that while we can.
Okay.
Thank you so much for answering my question.
Welcome.
The next question comes from Eric Wold.
Okay.
Okay.
Thank you good morning.
That'd be routing securities.
A follow up question.
On pricing it does it from your comments around.
Average pricing on season pass and kind of running up double digits.
It doesn't sound like.
Pricing.
As a whole is really.
Our concern for consumers, but maybe as you've done 20 revenue management.
The court.
Are there any points, where you found.
Simply the pushback or adverse reactions or maybe.
Certain items or areas, where consumers may be hitting.
Deliberate or hitting the wall on pricing or you don't think they're really anywhere in the parks.
We have room to go if need be to take prices higher.
Yes.
Eric Good morning, Richard.
Regarding the health of the consumer and certainly we've gotten those questions lots over the last year as people try and interpret I would tell you that those who are coming are spending healthily.
We obviously got impacted by weather, but once they get to the parks, we've seen no slowdown in what they want to spend on what they want to spend on its broad based.
If we are highly concentrated in one area and we saw there is trailing off.
We certainly would make adjustments, but our revenue management team is watching both parking inside park pricing inside the park, but also with admission so.
We're watching it closely but again I'll go back to one point that I mentioned before we continue to see strength in this year over year strength for several years in the all season dining in particular, that's been a really solid program for us.
It just shows that I think the consumer right now has a deep share of wallet or target customer against mom with young children mom has the wallet and we continue to focus on the quality and making sure we're providing the experience that gets them to the part that's appealing, but then once they get there give them plenty of opportunity to enjoy what they told us.
They are willing to spend money on so.
I think all in all I would go back to the resiliency of our business model at a high level I think that's what we're proving out once again.
Got it and then follow up other than labor I know touched on earlier any parts of the park with the operation that you are still seeing.
Inflationary pressures continue to move higher this year that you may need to kind of address or are things starting to kind of level out versus last year I expect labor.
Yes, Thanks, Brian .
Would say that.
There are still inflationary pressure.
Much of the.
The business.
But much like where we are seeing with seasonal labor that pressure is moderating from where it where it was.
So whether youre talking about something like utility costs or insurance cost there. It still has some inflationary pressure, but not nearly as much as it was in 2020 or 2021.
Got it thank you guys.
Your next question comes from Barton Crockett.
Hi.
Barton Crockett.
From Rosenblatt and thanks for taking the question.
I was curious just.
Just given.
So all that youre, starting in with the season pass sales units.
Theres ever.
Historical kind of precedent for excuse.
Season pass sales starting off.
Unit wise down like this.
And attendance.
To shrug that off and season pass sales able to shrug that off.
And that's positive for the year.
Is there any example of that happening.
Yes, Barton it's Richard Good morning. Thanks for the question, Yes, we've got lots of lots of history that would tell us that once you get into the meat of the season.
<unk> got ability to make this up ill go back to last year, even in the fourth quarter than we had.
Spectacular weather October , but when we drove we drove both demand tickets and season pass sales in that window. We're hurting I'll remind you 2022 by a rainy labor day, which is where we lost a few season pass sales, but to your question. We've got lots of examples of having slow starts and then really.
Coming on strong during the meat of the summer. This is where are the cyclicality and the seasonality of our calendar is very different than maybe others in the space. We really are as we keep reiterating a back half company.
<unk>.
With some dry weather, we believe we can generate the momentum we need to really carry the day through the rest of the year. The other thing that when I look at history.
We're recovering in the group channel to a significant degree we were able to recover in history with same same store sales on the group side being similar year over year. So I do think the comeback of groups is a great tailwind for us right now.
Okay and then.
It seems likely that.
You guys would have a meaningful opportunity to kind of sell more season passes.
The tenants ramps up for the Memorial day holiday weekend.
Just wanted to confirm I mean does that look like.
Next really big shot on goal for you guys and do you expect all your parks to be up and fully operating for that weekend.
Yes in terms of opening Barton I mean all of the.
The parks are as Richard noted in our prepared remarks.
On pace to get to those seven day, a week operations over the next few weeks.
Your points are really good one right I mean, as I said on the call.
We're going to do close to a third of our full program sales.
Around season pass in the months of May and June for the exact reason you just mentioned season pass holders often are buying in advance of that first visit.
And so whats been challenging us and one of the frustration is quite honestly is while knott's has struggled weather-wise we haven't had.
Many of our other parks in operation to start, making those sales and having those first visits and so that all starts to change over the next couple of weeks Cedar point opens tomorrow as Richard noted Canada's Wonderland, which has had a couple of weekends of private events and we'll be opening to the general public. So there is there's a lot of excitement and energy as we're as we're going into.
And our marketing teams are laser focused on selling as many passes as possible over the course of this over the next eight weeks.
Okay, great. Thank you very much.
Thanks Barton.
There are no further questions at this time I'll now turn the call back over to Richard King for closing.
Thanks to everybody for joining us and for your continued interest in Cedar Fair. This is an exciting time of year for our team as we look forward to welcoming back our guests for another fun filled season for the analyst community in early June we will be participating in two conferences Morgan Stanley inaugural travel and leisure conference on June 5th.
In New York and Stifel Cross sector Insight Conference June <unk> and June <unk> in Boston.
We're attending either of these events, we look forward to seeing you there Michael.
Thanks again, everybody. Please feel free to contact our Investor Relations Department at 4196 to seven two to three three.
And our next call will be in August after we released our 2023 second quarter results.
Sidney that concludes our call today thanks, everyone.
Thank you you may now disconnect.
Yeah.
Thank you.
Okay.
Sure.