Q4 2023 Cedar Fair LP Earnings Call
23 fourth quarter earnings call.
All lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad.
He would like to withdraw your question Press Star one again, thank you I would now like to turn the call over to Michael Russell. Please go ahead.
Thanks, Danica and good morning to everyone.
Welcome to today's earnings call to review, our 2023 fourth quarter full year results for the period ended December 31.
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 Doc Cedar Fair Dot com.
On the call. This morning are Cedar Fair's CEO Richard Zimmerman.
And Brian Witherow, our Chief Financial Officer, before we begin I need to remind you that comments made during this call will include forward looking statements within the meaning of the federal Securities laws.
These statements may involve risks and uncertainties that could cause actual results to differ from those described in such statements for a more detailed discussion of those risks you may refer to the company's filings with the SEC and compliance with the SEC regulation FD. This webcast is being made available to the media and the general public as well as analysts and.
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Because the webcast is open to all constituents and prior notification has been widely and unselected lead disseminated all content on this call will be considered fully disclosed before I begin I want to reiterate that the purpose of today's call is to discuss 2023 fourth quarter and full year results and answer related questions during <unk>.
Ladies and gentlemen, thank you for standing by today's conference will begin momentarily until that time your lines will again be placed the call. Thank you for your patience.
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Q&A today management will not be taking questions about the proposed merger with six flags.
With that I'd like to introduce our CEO Richard Zimmerman Richard.
Thank you Michael good morning, and thanks to everyone for joining us today.
We're excited to be here today to discuss another very solid performance by Cedar Fair in 2023, including a record performance over the second half of the year.
But before we review our results, let me briefly bring everyone up to speed regarding where we stand in terms of the proposed merger with six flags.
I am pleased to say that we passed the key milestone at the end of January when the S. Four was declared effective and the related definitive documents were subsequently filed including the six flags proxy statement and prospectus. Meanwhile, we continue to work through the antitrust approval process. After receiving a second request from the department of Justice on <unk>.
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This was an anticipated part of the process that our respective teams had prepared for and we continue to expect the transaction to close within the first half of the year as originally contemplated.
Since announcing the proposed merger in early November we are engaged in many conversations with Cedar Fair unit holders as well as the broader investment community and we are encouraged by the strong support we have heard for many investors.
We look forward to closing the transaction in the coming months and unlocking the compelling value creation opportunities ahead for our combined company, which.
Which we are confident our greater than either company could have achieved independently and.
Naturally as this process move forward, we will keep the market apprised of other material events now, let's move on to 2023 results and our outlook for the year ahead.
I am pleased to report that Cedar fair capped off an outstanding second half of the year with a record fourth quarter performance, including new fourth quarter highs in attendance net revenues and adjusted EBITDA as.
As we have seen before the 2023 operating season was a tale of two halves by mid season, the effects created by anomalous macro factors, namely unprecedented rainfall in California, and uncontrolled wire wildfires in Canada resulted in shortfalls in early season attendance in spring <unk>.
Pass sales, which pose a challenge to our potential full year results.
Danica: Thank you for standing by my name is Danica and I'll be your conference operator today at this time I would like to welcome everyone to the Cedar Fair Entertainment Company 2023 fourth quarter earnings call.
Consequently, we modestly adjusted ticket pricing at several key parks, while also investing more in our advertising and promotional campaigns.
Along with a return to more normal weather conditions. These mid season adjustments were successful in generating incremental demand and led to a 3% increase in attendance over the balance of the season recouping a meaningful portion of our early season deficit.
Danica: All lines have been placed on mute to prevent any background noise.
Danica: After the Speakers' remarks, there will be a question and answer session. He would like to ask a question. During this time simply press star followed by the number one on your telephone keypad. He would like to withdraw your question Press Star. One again. Thank you I would now like to turn the call over to Michael Russell. Please go ahead.
In an effort to drive greater flow through from the revenues. We generated we also remain laser focused on identifying new cost efficiencies.
Michael Russell: Thanks, Danica and good morning to everyone and.
There is still more work to be done in this area. We were pleased that we achieved our goal of reducing second half operating costs and expenses from 2022 levels and improving adjusted EBITDA margins over the last six months of the year.
Michael Russell: Welcome to today's earnings call to review, our 2023 fourth quarter full year results for the period ended December 31.
Michael Russell: 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.
As we have previously stated our best opportunity to streamline costs and drive margin expansion resides in each year second half when the operating costs are the most variable and attendance and revenues are at their peak.
Michael Russell: IR docs Cedar fair Dot com.
Michael Russell: Paul.
On the call with me. This morning are Cedar Fair's CEO Richard Zimmerman.
Speaker Change: And Brian Witherow, our Chief Financial Officer, before we begin I need to remind you that comments made during this call will include forward looking statements within the meaning of federal Securities laws.
Before I ask Brian to review, our financial results in more detail I want to take just a few minutes to elaborate on the value of several intangibles of our business model that are off.
Speaker Change: These statements may involve risks and uncertainties that could cause actual results to differ from those described in such statements.
Often overlooked yet extremely important to our ongoing success.
First is resiliency.
Speaker Change: A more detailed discussion of those risks you may refer to the company's filings with the SEC.
Our historical track record of quickly recovering from macro disruptions is a testament to the resiliency of our business model.
Speaker Change: In compliance with the Sec's regulation FD. This webcast is being made available to the media and the general public as well as analysts and investors because the webcast is open to all constituents and prior notification has been widely and on selectively disseminated all content on this call will be considered fully disclosed before I begin I want.
Cedar Fair's resiliency is grounded in our ability to dynamically manage resources market, our unique brand of entertainment and deliver a diversity of engaging experience experiences that drive demand through market cycles.
This has allowed us to navigate downturns in our industry as evidenced by our recoveries from the great recession and the recent pandemic.
Speaker Change: To reiterate.
Speaker Change: Today's call is to discuss 2023 fourth quarter and full year results and answer related questions.
This past season is just the most recent examples of how our resiliency played a key role in driving record second half performance.
Speaker Change: During Q&A today management will not be taking questions about the proposed merger with six flags.
Speaker Change: I'd like to introduce our CEO Richard Zimmerman Richard.
After macro factors weighed on first half results and our plans to produce another record year.
Richard A. Zimmerman: Thank you Michael good morning, and thanks to everyone for joining us today.
Second is our ability to sustain performance.
Richard A. Zimmerman: We're excited to be here today to discuss another very solid performance by Cedar Fair in 2023, including a record performance over the second half of the year.
For more than a century and a half cedar fair and its iconic collection of parks have delivered sustained performance.
Richard A. Zimmerman: But before we review our results, let me briefly bring everyone up to speed regarding where we stand in terms of the proposed merger with six flags.
This resides in the irresistible consumer appeal created by our unique outdoor attractions that draw millions of guests to our parks each year as they have for decades.
Richard A. Zimmerman: I am pleased to say that we passed the key milestone at the end of January when the S. Four was declared effective and the related definitive documents were subsequently filed including the six flags proxy statement and prospectus.
We leverage our expertise and the economic value produced by the resilient demand for our parks to generate exceptional amounts of free cash flow much of which is invested back into our properties to drive future growth.
Richard A. Zimmerman: While we continue to work through the antitrust approval process after receiving a second request from the department of Justice on January 22nd.
Executed well this time tested approach is at the heart of Cedar Fair's sustained durability.
Richard A. Zimmerman: This was an anticipated part of the process that our respective teams had prepared for and we continue to expect the transaction to close within the first half of the year as originally contemplated.
The appeal of our parks and all they have to offer has withstood the test of time since.
Since the founding of our flagship park Cedar point and $18 70, our company is built upon our rich history of delivering happiness and excitement to multiple generations of families.
Richard A. Zimmerman: Since announcing the proposed merger in early November we are engaged in many conversations with Cedar fair unit holders as well as the broader investment community.
Our parks are woven into the fabric of their local communities, providing tens of thousands of good paying jobs as well as economic prosperity for neighboring businesses and local governments.
Richard A. Zimmerman: And we are encouraged by the strong support we've heard from many investors. We look forward to closing the transaction in the coming months and unlock and the compelling value creation opportunities ahead for our combined company.
And therefore, we take seriously our role as custodians of a unique collection of historic parks and our obligation to preserve their integrity for the generations to come.
Richard A. Zimmerman: Which we are confident our greater than either company could have achieved independently.
Richard A. Zimmerman: Naturally as this process move forward, we will keep the market apprised of other material events now, let's move on to 2023 results and our outlook for the year ahead.
And third is stability.
Our culture is rooted in stability supported by the most experienced senior leadership team among the regional amusement park players.
Richard A. Zimmerman: I am pleased to report that Cedar fair capped off an outstanding second half of the year with a record fourth quarter performance, including new fourth quarter highs in attendance net revenues and adjusted EBITDA.
The industry experience also runs deep among our regional Vps and general managers responsible for overseeing and managing the day to day operations at our parks.
Fundamentally we also have a healthy stable business or.
Richard A. Zimmerman: As we have seen before the 2023 operating season was a tale of two halves by mid season, the effects created by anomalous macro factors, namely unprecedented rainfall in California, and uncontrolled wire wildfires in Canada resulted in shortfalls in early season attendants in spring <unk>.
Our balance sheet is solid we can fund the company's capital needs and if we see attractive opportunities, we have the capacity and financial flexibility to pursue them.
Helping to drive that economic stability is the growth of our recurring predictable revenue streams, the existence of which instills confidence in our long term strategic plan and capital allocation strategies with that I'll turn the call over to Brian After which I'll return with a few closing thoughts around our outlook for the business.
Richard A. Zimmerman: Pass sales, which pose a challenge to our potential full year results.
Richard A. Zimmerman: Consequently, we modestly adjusted ticket pricing of several key parts, while also investing more in our advertising and promotional campaigns.
Brian.
Richard A. Zimmerman: Along with a return to more normal weather conditions. These mid season adjustments were successful in generating incremental demand and led to a 3% increase in attendance over the balance of the season recouping a meaningful portion of our early season deficit.
Thanks, Richard and good morning, I'll start off with a review of our record fourth quarter performance before providing more detailed recap of our full year results during.
During the quarter, our parks at 377 total operating days.
One additional day compared with the fourth quarter of 2022 during the period, we generated record.
Richard A. Zimmerman: In an effort to drive greater flow through from the revenues. We generated we also remain laser focused on identifying new cost efficiencies. While there is still more work to be done in this area. We were pleased that we achieved our goal of reducing second half operating costs and expenses from 2022 levels and improving <unk>.
Net revenues of $371 million up $5 million or 1% compared to the fourth quarter of 2022 or.
Our improved performance was driven by a 9% increase in incentives to five 8 million guest visits.
Richard A. Zimmerman: Adjusted EBITDA margins over the last six months of the year.
And a 7% increase in out of park revenues.
As we have previously stated our best opportunity to streamline costs and drive margin expansion resides in each year second half when the operating cost are the most variable and attendance and revenues are at their peak.
The increase in out of Park revenues was the result of the continued strong performance of our resort properties incremental sponsorship business and higher revenues at the NAS marketplace.
The increase in attendance reflects the robust demand for our extremely popular events, including plant in winter best as well as increased season pass visitation tied to the strong early sales in 2024 passes.
Speaker Change: Before I ask Brian to review, our financial results in more detail I want to take just a few minutes to elaborate on the value of several intangibles of our business model that are often overlooked yet extremely important to our ongoing success.
Partially offsetting the growth in attendance in out of park revenues were 7% decrease in in park per capita spending during the quarter. The decline in per capita spending was attributable to a decrease in admission spending reflecting mid year pricing adjustments, we made as well as the recovery of lower priced attendance channels in the quarter.
Speaker Change: First is resiliency.
Speaker Change: Our historical track record of quickly recovering from macro disruptions is a testament to the resiliency of our business model.
Speaker Change: Cedar Fair's resiliency is grounded in our ability to dynamically manage resources market, our unique brand of entertainment and deliver a diversity of engaging experience experiences that drive demand through market cycles.
And a shift in the mix.
Moving to the fourth quarter cost front operating costs and expenses in the period totaled $307 million up to one 1 million compared to the fourth quarter of 2022. The period over period increase was primarily attributable to $17 million of transaction costs related to the proposed merger with <unk>.
Speaker Change: This has allowed us to navigate downturns in our industry as evidenced by our recoveries from the great recession and the recent pandemic.
Speaker Change: This past season is just the most recent example of how our resiliency played a key role in driving record second half performance.
Flags these.
These costs have been classified as SG&A expenses.
Speaker Change: After macro factors weighed on first half results and our plans to produce another record year.
Excluding the merger related costs total operating costs and expenses for the quarter increased $4 million or 1% due entirely to higher SG&A expense. The increase in SG&A expense reflects higher full time wages as well as higher planned spending on advertising during the period.
Speaker Change: Second is our ability to sustain performance.
Speaker Change: For more than a century and a half cedar fair and its iconic collection of parks have delivered sustained performance.
Speaker Change: This resides in the irresistible consumer appeal created by our unique outdoor attractions that draw millions of guests to our parks each year as they have for decades.
Adjusted EBITDA, which management believes is a measure of the Companys Park level operating results increased $1 million to a record 89 million in the fourth quarter, while fourth quarter margin remained essentially flat to prior year at 24%.
Speaker Change: We leverage our expertise and the economic value produced by the resilient demand for our parks to generate exceptional amounts of free cash flow much of which is invested back into our properties to drive future growth executed well. This time tested approach is at the heart of Cedar Fair's sustained durability.
Shifting our focus to full year results operating days in 2023 totaled 2365, compared with 2000 and 302 operating days in 2022.
The appeal of our parks and all they have to offer has withstood the test of time.
63 incremental things were the result of 80 net planned days added to our park operating calendars in 2023, largely in the first half of the year.
Speaker Change: Since the founding of our flagship park Cedar point and $18 70, our company is built upon our rich history of delivering happiness and excitement to multiple generations of families.
These planned incremental days were partially offset by 17 operating days that were canceled during the year due to inclement weather.
Speaker Change: Our parks are woven into the fabric of their local communities, providing tens of thousands of good paying jobs as well as economic prosperity for neighboring businesses and local governments.
For the full year net revenues totaled $1 8 billion, an attendance of $26 7 million guests.
Compared with net revenues of $1 2 billion, an attendance of $26 9 million guests in 2022.
Speaker Change: Therefore, we take seriously our role as custodians of a unique collection of historic parks and our obligation to preserve their integrity for the generations to come.
The decrease in net revenues reflects the impact of the 1%.
Our 247000 visits decline in attendance.
And third is stability.
And a 1% or 60 cent decrease in in park per capita spending these declines in attendance and per capita spending were offset in part by a 5% or $10 million increase in out of park revenues.
Speaker Change: Our culture is rooted in stability supported by the most experienced senior leadership team among the regional amusement park players.
Speaker Change: The industry experienced also runs deep among our regional Vps and general managers responsible for overseeing and managing the day to day operations at our Parks fund.
The year over year decline in attendance reflects the impact of a decrease in season pass sales and lower demand during the first half of the year due to the extreme weather, particularly at our California parks the.
Speaker Change: London mentally we also have a healthy stable business.
Speaker Change: Our balance sheet is solid we can fund the company's capital needs and if we see attractive opportunities, we have the capacity and financial flexibility to pursue them.
The decline in per capita spending was largely attributable to the previously discussed decrease in admission spending which was partially offset by higher levels of guest spending on food and beverage.
Speaker Change: Helping to drive that economic stability is the growth of our recurring predictable revenue streams, the existence of which instills confidence in our long term strategic plan and capital allocation strategies.
The improvement in guest spending on F&B was driven by increases in both the number of transactions per guest and the average transaction value, reflecting the impact of continued investments in our food and beverage offerings.
Speaker Change: With that I'll turn the call over to Brian After which I'll return with a few closing thoughts around our outlook for the business Brian.
Moving onto the cost front for the full year in 2023 operating costs and expenses totaled 132 billion compared with $1 2 billion in 2022.
Brian C. Witherow: Thanks, Richard and good morning, I'll start off with a review of our record fourth quarter performance before providing more detailed recap of our full year results during.
The year over year increase was primarily attributable to $22 million of transaction costs related to the proposed merger with six flags.
During the quarter, our parks at 377 total operating days.
Excluding these merger related costs total operating costs and expenses for the year increased $5 million up less than 1%.
Brian C. Witherow: One additional day compared with the fourth quarter of 2022 during the period, we generated net.
Brian C. Witherow: Net revenues of $371 million up $5 million or 1% compared to the fourth quarter of 2022 or.
This year over year increase was the result of a $14 million increase in SG&A expense, which was partially offset by a $4 million decrease in cost of goods sold and a $4 million decrease in operating expenses. The decrease in operating expenses was primarily driven by cost savings initiatives that led to.
Brian C. Witherow: Our improved performance was driven by a 9% increase in attendance to five 8 million guest visits.
And a 7% increase in out of park revenues.
Brian C. Witherow: The increase in out of Park revenues was the result of the continued strong performance of our resort properties incremental sponsorship business and higher revenues at the <unk> marketplace.
<unk> and seasonal labor hours and in Park entertainment costs.
These cost savings were somewhat offset by 6% Ingram mental months of land lease expense at California's Great America higher early season maintenance costs at several parks and increased insurance related costs.
The increase in attendance reflects the robust demand for our extremely popular events, including plant in winter bass as well as increased season pass visitation tied to the strong early sales in 2024 passes.
The increase in SG&A expense was primarily attributable to higher planned advertising during 2023.
Brian C. Witherow: Partially offsetting the growth in attendance in out of park revenues were 7% decrease in in park per capita spending during the quarter. The decline in per capita spending was attributable to a decrease in admission spending reflecting mid year pricing adjustments, we made as well as the recovery of a lower priced attendance channels in the quarter.
Looking a little more deeply at operating costs for a moment as Richard mentioned, we remain focused on reducing operating costs and improving margins. This past year. These efforts, including taking variable costs out of the system when attendance levels were below expectations as well as setting the stage for a re imagining how we program and staff our parks in order to capture.
Brian C. Witherow: A shift in mix.
More permanent savings.
Brian C. Witherow: Moving to the fourth quarter cost front operating costs and expenses in the period totaled $307 million up $21 million compared to the fourth quarter of 2022. The period over period increase was primarily attributable to $17 million of transaction costs related to the proposed merger with <unk>.
Over the second half of the year. These efforts led to a $22 million year over year reduction in operating expenses. We made these adjustments while still entertaining nearly 600000 more guests during that time.
Cost saving efforts combined with record revenues led to a 210 basis point expansion in adjusted EBITDA margin over the second half of the year.
Brian C. Witherow: Flags east.
Brian C. Witherow: These costs have been classified as SG&A expenses.
The reduction in second half operating cost was primarily driven by efficiencies in operating supplies and entertainment costs as well as reductions in both seasonal and full time labor.
Brian C. Witherow: Excluding the merger related costs total operating costs and expenses for the quarter increased $4 million or 1% due entirely to higher SG&A expense. The increase in SG&A expense reflects higher full time wages as well as higher planned spending on advertising during the period.
Over the second half of the Euro Park teams reduce total seasonal labor hours by more than 550000 hours, while our average seasonal labor rate was up a modest 1%.
Brian C. Witherow: Adjusted EBITDA, which management believes the measure of the Companys Park level operating results increased $1 million to a record 89 million in the fourth quarter, while fourth quarter margin remained essentially flat to prior year at 24%.
The changes we have made to our seasonal pay structure continue to help flatten the growth curve along right around labor rates, which is particularly important given that seasonal labor rates are seasonal labor represents our single largest operating costs for the full year. Our average 2023 seasonal labor rate was up 2% from <unk>.
Brian C. Witherow: Shifting our focus to full year results operating days in 2023 totaled 2365, compared with 2000 and 302 operating days in 2022.
Year in line with expectations coming into the year.
Brian C. Witherow: 63 incremental gains were the result of 80 net planned days added to our park operating calendars in 2023, largely in the first half of the year.
The recent success of our cost saving measures gives us confidence going forward that we have the right strategies in place to drive incremental operating efficiencies and expand margins, while still delivering the park experience that meets the demands and expectations of our guests.
Brian C. Witherow: These planned incremental days were partially offset by 17 operating days that were canceled during the year due to inclement weather.
On the adjusted EBITDA front for the full year, adjusted EBITDA totaled $528 million compared to $552 million in 2022.
Brian C. Witherow: For the full year net revenues totaled $1 8 billion, an attendance of $26 7 million guests.
Brian C. Witherow: Compared with net revenues of $1 2 billion, an attendance of $26 9 million guests in 2022.
The $24 million decrease was primarily attributable to the year over year decreases in attendance and net revenues and to a lesser extent by the higher advertising land lease and insurance related costs in 2023.
Brian C. Witherow: The decrease in net revenues reflects the impact of the 1%.
Brian C. Witherow: Our 247000 visits decline in attendance.
Now turning to the balance sheet, we ended the year with $65 million in cash on hand, no outstanding borrowings under our revolving credit facility and total net leverage just above our stated goal of four times.
Brian C. Witherow: And a 1% or 60 cent decrease in in park per capita spending these declines in attendance and per capita spending were offset in part by a 5% or $10 million increase in out of park revenues.
Including our cash on hand, and the available capacity under our revolver. We ended 2023 with total liquidity of $345 million and adequate level to cover near term cash needs.
Brian C. Witherow: The year over year decline in attendance reflects the impact of a decrease in season pass sales and lower demand during the first half of the year due to the extreme weather, particularly at our California parks the.
I want to look at long lead business indicators for just a moment as Richard previously mentioned early trends in sales of season pass products had been strong while group bookings and reservations at our resort properties are pacing in line with expectations.
Brian C. Witherow: The decline in per capita spending was largely attributable to the previously discussed decrease in admission spending which was partially offset by higher levels of guest spending on food and beverage.
Brian C. Witherow: Improvement in guest spending on F&B was driven by increases in both the number of transactions per guest and the average transaction value.
Our total deferred revenue balance at the end of the year was $192 million, representing an increase of $19 million compared to deferred revenues at the end of 2022.
Brian C. Witherow: <unk> the impact of continued investments in our food and beverage offerings.
Brian C. Witherow: Moving onto the cost front for the full year.
Through the end of January sales in 2020 for season passes were up approximately $16 million driven by a 20% increase in unit sales.
Brian C. Witherow: In 2023 operating costs and expenses totaled 132 billion.
Brian C. Witherow: Paired with $1 2 billion in 2022.
The increase in units sold was somewhat offset by a decline in the average past price, which reflects our pricing strategy aimed at building unit volume in the early months of the program as.
Brian C. Witherow: The year over year increase was primarily attributable to $22 million of transaction costs related to the proposed merger with six flags. Excluding these merger related costs total operating costs and expenses for the year increased $5 million up less than 1%.
As well as a shift in the mix of passes sold with more than half of our season pass sales cycle remaining including the spring window that accounts for close to 50% of total sales we remain focused on maintaining the strong demand trends we've established to date.
Brian C. Witherow: This year over year increase was the result of a $14 million dollar increase in SG&A expense, which was partially offset by a $4 million decrease in cost goods sold and a $4 million decrease in operating expenses. The decrease in operating expenses was primarily driven by cost savings initiatives.
Regarding our Capex program. This past year, we spent $220 million on capex, including investments in new rides and attractions upgraded and expanded food and beverage facilities and renovations to the Knott's hotel by comparison, we project investing between 210 $220 million on capital projects in calendar year two.
Brian C. Witherow: That led to reductions in seasonal labor hours and in park entertainment costs.
Brian C. Witherow: These cost savings were somewhat offset by fixed income mental months of land lease expense at California's Great America higher early season maintenance costs at several parks and increased insurance related costs.
24.
Additionally for modeling purposes, we are projecting full year 2020 for cash interest payments of $140 million to $150 million and full year cash taxes of $50 million to $60 million.
Brian C. Witherow: The increase in SG&A expense was primarily attributable to higher planned advertising during 2023.
Finally, I want to provide an update on our planned operating days for 2024 after carefully evaluating demand levels in our performance. This past year, we've made the strategic decision to condense our operating calendars at several parks as we look to concentrated tenants over fewer days and drive better operating efficiency.
Brian C. Witherow: Looking a little more deeply at operating costs for a moment as Richard mentioned, we remain focused on reducing operating costs and improving margins. This past year. These efforts, including taking variable costs out of the system when attendance levels were below expectations as well as setting the stage for a re imagining how we program and staff our parks in order to capture.
The changes that are being implemented will primarily reduced operating days in the first two quarters, most notably at our small to mid tier parks. In total we are currently planning for 2253 operating days in 2024 or 112 fewer days than in 2023 for.
Brian C. Witherow: More permanent savings.
For the second half of the year. These efforts led to a $22 million year over year reduction in operating expenses, we made these.
Brian C. Witherow: Adjustments, while still entertaining nearly 600000 more guests during that time.
For additional modeling purposes, the breakdown of planned operating days by quarter, which will be impacted by natural shifts in the timing of holidays as well as by shifts in the timing of our fiscal quarter ends are as follows.
Brian C. Witherow: Our cost saving efforts combined with record revenues led to a 210 basis point expansion in adjusted EBITDA margin over the second half of the year.
119 days in the first quarter 203 days in the second quarter 998 days in the third quarter and 333 days in the fourth quarter.
Brian C. Witherow: The reduction in second half operating cost was primarily driven by efficiencies in operating supplies and entertainment costs as well as reductions in both seasonal and full time labor.
Despite the fewer operating days in 2024, we are confident we have the plans and initiatives in place to build on the momentum established over the second half of 2023, pushing attendance at our parks back closer to 2019 pre pandemic levels with that I'd like to turn the call back over to Richard.
Brian C. Witherow: Over the second half of the Europe heart teams reduce total seasonal labor hours by more than 550000 hours, while our average seasonal labor rate was up a modest 1%.
Brian C. Witherow: As we have made to our seasonal pay structure continue to help flatten the growth curve along right around labor rates, which is particularly important given that seasonal labor rates are seasonal labor represents our single largest operating costs.
Thanks, Brian.
While somewhat disappointed by the way 2023 began as I hope you can tell from our comments. This morning, we are extremely pleased with our performance over the second half of the year and even more excited about the opportunities. We believe can build on that momentum in 2024.
Brian C. Witherow: For the full year, our average 2023 seasonal labor rate was up 2% from last year in line with expectations coming into the year.
Our positive outlook continues to be shaped by several factors first consumer demand for amusement Park entertainment remains strong and is pacing to soon surpass pre pandemic attendance levels and observations supported by our consumer research as well as our second our record second half performance in 2023.
Brian C. Witherow: Our recent success of our cost saving measures gives us confidence going forward that we have the right strategies in place to drive incremental operating efficiencies and expand margins, while still delivering a park experience that meets the demands and expectations of our guests.
Brian C. Witherow: On the adjusted EBITDA front for the full year, adjusted EBITDA totaled $528 million compared to $552 million in 2022.
And the strong early trends and our long lead indicators like 2020 for season pass sales.
Second in 2024, we are set to unveil one of our most compelling and broadest reaching capital programs ever.
Brian C. Witherow: That $24 million decrease was primarily attributable to the year over year decreases in attendance and net revenues and to a lesser extent by the higher advertising land lease and insurance related costs in 2023.
We are especially excited about the debut of Cedar Point's top thrill to have projects several years in the making and one that is certain to be one of the industry's most unique and anticipated new rides of the year.
Brian C. Witherow: Now turning to the balance sheet, we ended the year with $65 million in cash on hand, no outstanding borrowings under our revolving credit facility and total net leverage just above our stated goal of four times <unk>.
Our investments in World class assets like <unk> play Cedar fair on the amusement industry, leading edge of roller coaster technology and continue to build on our heritage heritage of delivering thrills. Unlike any other.
Brian C. Witherow: Including our cash on hand, and the available capacity under our revolver. We ended 2023 with total liquidity of $345 million and adequate level to cover near term cash needs.
Although TT twos massive presence at our flagship park or certainly steel. This year's headlines. We are also introducing an incredible lineup of new attractions dining and resort options across our entire portfolio of properties.
Brian C. Witherow: I want to look at long lead business indicators for just a moment as Richard previously mentioned early trends in sales of season pass products had been strong while group bookings and reservations at our resort properties are pacing in line with expectations.
Third with each new season, we leverage more business intelligence and data analytics to inform our decision making processes as evidenced this past year by our agility. These expanded capabilities helped set strategies that drive revenue growth and uncover operating efficiencies that reduce cost and increase profitability.
Brian C. Witherow: Our total deferred revenue balance at the end of the year was $192 million, representing an increase of $19 million compared to deferred revenues at the end of 2022.
Brian C. Witherow: Through the end of January sales in 2020 for season passes were up approximately $16 million driven by a 20% increase in unit sales.
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And lastly, I would emphasize few reporting periods have been impacted by macro factors as much as the first half of 2023.
Brian C. Witherow: The increase in units sold was somewhat offset by a decline in the average pass price, which reflects our pricing strategy aimed at building unit volume in the early months of the program as.
Under normalized operating conditions. This would this should translate into a comparative tailwind and a stronger first half of 2024 with mother nature hopefully on our side. We are excited about our prospects for delivering a solid start to the year, coupled with an outstanding game plan for the peak season and the proven.
Brian C. Witherow: As well as a shift in the mix of passes sold with more than half of our season pass sales cycle remaining including the spring window that accounts for close to 50% of total sales we remain focused on maintaining the strong demand trends we've established to date.
Strength of our all important second half.
We are fortunate to have a business model that has demonstrated resiliency and strength in varying economic and market conditions I am encouraged with how effectively our mid season strategic decisions drove performance over the second half of the year.
Brian C. Witherow: Regarding our Capex program. This past year, we spent $220 million on capex, including investments in new rides and attractions upgraded and expanded food and beverage facilities and renovations to the Knott's hotel.
Brian C. Witherow: By comparison, we project investing between 210 $220 million on capital projects in calendar year 2024.
While we continue to work to get demand back to pre pandemic levels and at the same time operate our parks more efficiently. We believe we are well positioned to deliver another outstanding year in 2024 and remain laser focused on delivering solid returns for our investors.
Brian C. Witherow: Additionally for modeling purposes, we are projecting full year 2020 for cash interest payments of $140 million to $150 million and full year cash taxes of $50 million to $60 million.
As a reminder, we have no further updates on the merger beyond what I shared at the beginning of the call today, we ask that you keep your questions focused on our performance and our results.
Brian C. Witherow: Finally, I want to provide an update on our planned operating days for 2024 after carefully evaluating demand levels in our performance. This past year, we've made the strategic decision to condense our operating calendars at several parks as we look to concentrated tenants over fewer days and drive better operating efficiency.
Danica that's the end of our prepared remarks, please open up the call for questions.
Wonderful thank you.
I'd like to remind everyone in order to.
Ask a question press Star then the number one on your telecom key patents.
Brian C. Witherow: The changes that are being implemented will primarily reduce operating days in the first two quarters, most notably at our small to mid tier parks. In total we are currently planning for 2253 operating days in 2024 or 112 fewer days than in 2023 for.
<unk> suggested a moment to compile the Q&A.
Your first question comes from the line of James Hardiman with Citi. Please go ahead.
Hey, good morning.
For additional modeling purposes, the breakdown of planned operating days by quarter, which will be impacted by natural shifts in the timing of holidays as well as by shifts in the timing of our fiscal quarter ends are as follows.
So.
My question was going to be do you think you've turned the corner in terms of attendance following the fourth quarter.
But Richard you said it sounds like the answer is yes. Thanks, Sean.
Brian C. Witherow: 119 days in the first quarter to 103 days in the second quarter 998 days in the third quarter and 333 days in the fourth quarter.
Your final comments, there that you thought that.
Demand is youre going to outpace 2019.
I'm, assuming by demand remaining attendance.
Brian C. Witherow: Despite the fewer operating days in 2024, we are confident we have the plans and initiatives in place to build on the momentum established over the second half of 2023, pushing attendance at our parks back closer to 2019 pre pandemic levels with that I'd like to turn the call back over to Richard.
I guess, if I look at the numbers.
You were down about 5% versus 2019 in 2023.
So it would take 5% attendance growth to get back there do you think that in the cards I guess weather permitting.
I would say James good morning, good to talk with you. Thanks for the question. When you look at what we did over the second half of the year and the strong demand and ability to generate.
Richard A. Zimmerman: Thanks, Brian.
Richard A. Zimmerman: While somewhat disappointed by the way 2023 began as I hope you can tell from our comments. This morning, we are extremely pleased with our performance over the second half of the year and even more excited about the opportunities. We believe can build on that momentum in 2024.
Significant revenue in what is already our biggest period of the year and in particular in the fourth quarter.
We always talk about the strength of Halloween and we always talk about the strength, we saw in winter fast and that showed through this year. The fact that we really were able to push through 2019 level highest attendance in the fourth quarter. This.
Our positive outlook continues to be shaped by several factors first consumer demand for amusement Park entertainment remains strong and is pacing to soon surpass pre pandemic attendance levels and observations supported by our consumer research as well as our second our record second half performance in 2023.
This year in 2023 I.
I think we have turned the corner and I think while there's always been a great.
Deal a focus from the sell side community on the strength of the consumer we're seeing really strong demand across all of our regions. We saw the recovery in southern California in particular in the second half of the year, we had an extremely strong year, which we commented on in the Ohio Valley and we commented on was that throughout.
Richard A. Zimmerman: And the strong early trends and our long lead indicators like 2020 for season pass sales.
Richard A. Zimmerman: Second in 2024, we are set to unveil one of our most compelling and broadest reaching capital programs ever.
Richard A. Zimmerman: We are especially excited about the debut of Cedar Point's top thrill to have projects several years in the making and one that is certain to be one of the industry's most unique and anticipated new rides of the year.
The last couple of calls so we do think where there is no extraneous factor like weather and we're seeing really strong demand.
Richard A. Zimmerman: Our investments in World class assets like <unk> play Cedar fair on the amusement industry, leading edge of roller coaster technology and continue to build on our heritage heritage of delivering thrills. Unlike any other.
Okay.
Got it.
It sounds like we're taking a wait and see but you feel feel pretty pretty good fair.
We are confident in the demand that we're seeing and it's supported both as I said in my remarks, both by our research and what we're seeing in our leading indicators.
Although TT twos massive presence at our flagship park or certainly steel. This year's headlines. We are also introducing an incredible lineup of new attractions dining and resort options across our entire portfolio of properties.
Got it and then Brian.
I'm trying to figure out a smart way to ask this question but.
Richard A. Zimmerman: Third with each new season, we leverage more business intelligence and data analytics to inform our decision making processes as evidenced this past year by our agility. These expanded capabilities helped set strategies that drive revenue growth and uncover operating efficiencies that reduce costs and increase profitability.
I can't remember if it was the second quarter to third quarter. When you initially talked about sort of getting that base layer of season pass sales on the books.
Then you would lean into price after that and it seems like.
Lot of ways that played out here in the second half, particularly.
Richard A. Zimmerman: <unk>.
Richard A. Zimmerman: And lastly, I would emphasize few reporting periods have been impacted by macro factors as much as the first half of 2023.
Fourth quarter.
I guess as we think about.
What we saw which was a really nice increase.
Richard A. Zimmerman: Under normalized operating conditions. This would this should translate into a comparative tailwind and a stronger first half of 2024 with mother nature hopefully on our side. We are excited about our prospects for delivering a solid start to the year, coupled with an outstanding game plan for the peak season and the proven.
In attendance.
Offsetting by a pretty meaningful decline in per caps how.
How much of that is.
As a precursor to what we'll see.
In 2024.
I guess, specifically as we sit here today, the lower season pass sales.
Richard A. Zimmerman: Strength of our all important second half.
Season pass prices I should say.
Richard A. Zimmerman: We are fortunate to have a business model that has demonstrated resiliency and strength in varying economic and market conditions I am encouraged with how effectively our mid season strategic decisions drove performance over the second half of the year.
How much does that impact per cap.
In 2024.
And as we sit here today, our or is pricing back to being I don't know.
Flat on a year over year basis on the season passes with the potential to grow that or are we continuing to see lower season pass pricing into.
Richard A. Zimmerman: While we continue to work to get demand back to pre pandemic levels and at the same time operate our parks more efficiently. We believe we are well positioned to deliver another outstanding year in 2024 and remain laser focused on delivering solid returns for our investors.
Into the new year.
Yes, James So I think first it's important to note that.
As we talked about that strategy of building a strong base for season pass and leaning into volume early we did adjust pricing, but only had a handful of parks.
As a reminder, we have no further updates on the merger beyond what I shared at the beginning of the call today, we ask that you keep your questions focused on our performance and our results Danica. That's the end of our prepared remarks. Please open up the call for questions.
I think.
Unfortunately, youre just the realities of our operating.
Calendar in the parks that are open.
Speaker Change: Wonderful thank you.
Couple of those products, most notably Knott's Berry farm, our are a big a large portion of the fourth quarter operations right not all of our parks have us as much meaningful fourth quarter operations as others. So I think some of those pricing adjustments weigh a little bit more maybe on the fourth quarter than they necessarily will as we roll into 'twenty four.
I'd like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad.
Speaker Change: My suggestion moment to compile the Q&A.
Danica: Your first question comes from the line of James Hardiman with Citi. Please go ahead.
James Hardiman: Hey, good morning.
As youre back to that sort of a full.
James Hardiman: So.
Throated portfolio of parks operating that said, even at the parks, where we did.
James Hardiman: My question was going to be do you think you've turned the corner in terms of attendance following the fourth quarter.
Prices back to adjust to sort of how the market around us in those few markets had moved.
James Hardiman: But Richard you said.
It sounds like the answer is yes, thanks, Sean.
We have started to take price backup as we as we always do on our season pass program right on a market by market basis.
Your final comments, there that you thought that.
James Hardiman: Demand is youre going to outpace 2019.
Thus our pricing the playbook around season pass is the falls, which is the least expensive then it bumps up a little for the winter sales cycle and then the spring and summer are the highest so we'll continue to roll through that and read market by market, but as we think about going into next year.
I'm, assuming by demand remain attendance.
I guess, if I look at the numbers.
You were down about 5% versus 2019 in 2023.
James Hardiman: So it would take 5% attendance growth to get back there do you think that's in the cards I guess weather permitting.
Where the consumers at where per caps are going to come out.
I always have to sort of separate and isolate admissions versus the end part we continue to be pleased with what we see on on guest spending inside the park, particularly around food and beverage I think there is some more work that we have in store for a few of those other in park channels like merchandising gains in 2024, and then we.
I would say James good morning, good to talk with you. Thanks for the question. When you look at what we did over the second half of the year and the strong demand and ability to generate.
Speaker Change: Significant revenue in what is already our biggest period of the year and in particularly in the fourth quarter.
Speaker Change: We always talk about the strength of Halloween and we always talk about the strength, we saw in winter fast and that showed through this year.
Certainly believes that a channel like guest spending an extra charge, most notably vaseline will be lifted and benefited by those those higher attendance numbers that we're expecting going into next year.
Speaker Change: We really were able to push through 2019 level highest attendance in the fourth quarter.
Speaker Change: This year in 2023.
Speaker Change: I think we have turned the corner and I think while there's always been a great.
Got it and so should I interpret all of that.
Yes.
Speaker Change: The deal of focus from the sell side community on the strength of the consumer we're seeing really strong demand across all of our regions.
Positivity on attendance plays out in 2024 based on some of Richard's commentary.
Should we not assume there is a significant give back on the per cap front like we saw in the fourth quarter.
Speaker Change: Saw the recovery in southern California, particularly in the second half of the year, we had an extremely strong year, which we commented on in the Ohio Valley and we commented on was that throughout the last couple of calls. So we do think where there is no extraneous factor like weather and we're seeing really strong demand.
I think the ultimate the answer to that James is going to depend a little bit on mix.
Of channel, which channels the majority of that lift come from Amaze, you know season pass and group are smaller admissions per cap or.
Speaker Change: Okay.
Less expensive ticket.
Got it.
On a per cap basis than than single day.
Speaker Change: It sounds like we're taking a wait and see but you feel feel pretty pretty good fair.
And so depending on where that mix that.
That mix shakes out in the incremental attendance as well as which parks right I mean, the higher per cap parks.
Speaker Change: We are confident in the demand that we're seeing and it's supported both as I said in my remarks, both by our research and what we're seeing in our leading indicators.
That's where more of the growth comes from that could change that but it's fair to say that is as attendance gets back to those 2019 pre pandemic levels and each of those channels.
Speaker Change: Got it and then Brian.
Brian C. Witherow: I'm trying to figure out a smart way to ask this question but.
Brian C. Witherow: I can't remember if it was the second quarter to third quarter. When you initially talked about sort of getting that base layer of season pass sales on the books.
There is naturally some mathematical pressure on the admissions per caps, but theres a lot more revenue and that's the type a problem we'd like to have.
Got it thanks, guys I appreciate it guys and good luck.
Speaker Change: And then you would lean into price after that and it seems like.
Thanks, Jamie Thanks, Jamie.
Okay.
Speaker Change: Lot of ways that played out here in the second half, particularly.
Great. We will go to our next question from.
Steve Rubin.
Speaker Change: Fourth quarter.
Speaker Change: I guess as we think about.
Stifel. Please go ahead.
What we saw which was a really nice increase.
Hey, guys good morning.
So so Richard look I.
Speaker Change: In attendance.
Speaker Change: Offset by a pretty meaningful decline in per caps how.
Understand you don't give annual guidance here.
But.
Speaker Change: How much of that is.
If we're sitting here this time next year.
Speaker Change: As a precursor to what we'll see.
Would you be disappointed if you didn't exceed.
Speaker Change: In 2024.
Speaker Change: I guess, specifically as we sit here today, the lower season pass sales.
I would say not so much the EBITDA threshold from 2023, given the obviously the easy weather comparison as you guys are going to have in the first half of this year, but probably a better comparison would be to look back at 2022, which I think was around 550 million of EBITDA. So.
Speaker Change: Season pass prices I should say.
Speaker Change: How much does that impact per cap.
Speaker Change: In 2024.
Speaker Change: And as we sit here today, our or is pricing back to dean.
If you didn't exceed that level this year.
Speaker Change: Flat on a year over year basis on our season passes with the potential to grow that or are we continuing to see lower season pass pricing.
Some of the factors that we need to be watching or thinking about.
Steve It's a great question and the backdrop would be whether its 24 or any year that we create a plan for we look at our portfolio and go where the opportunities we start to factor in and have factored in that we invest to continue to see over time and our parks through the capital the capital projects and predict the bigger projects to drive demand.
Into the new year.
Speaker Change: Yes, James So I think first it's important to note that.
James Hardiman: As we talked about that strategy of building a strong base for season pass and leaning into volume early we did adjust pricing, but only at a handful of parks.
<unk> in select markets. So we try and time that appropriately, but we can't control. The weather, we always talk about that we look closely at the economies around our parks it's market by market. So we constantly look for what we think the potential is for each park each year and how do we unlock that.
I think.
James Hardiman: Unfortunately, youre just the realities of our operating.
James Hardiman: Calendar in the parks that are open.
James Hardiman: Couple of those products, most notably Knott's Berry farm, our are a big a large portion of the fourth quarter operations right not all of our parks have us as much meaningful fourth quarter for operations as others. So I think some of those pricing adjustments weigh a little bit more maybe on four quarter than they necessarily will as we roll into 'twenty four.
And certain parks. So we will have the bigger products and we expect more growth out of those certain certain parks will be and.
Markets that potentially are really doing well, meaning the consumers feeling really good in certain markets made the consumer may be stress. So I think yes.
James Hardiman: As youre back to that sort of a full.
James Hardiman: Throated portfolio of parks operating that said, even at the parks, where we did take prices back to adjust to sort of how the market around us in those few markets had moved we have started to take price back up as we as we always do on our season pass program right on a market by market basis.
We always talk and we always get asked on this call about the health of the consumer said that in my first thing. So we monitor that as closely as we can but what we see.
We never really get the credit and we've talked about this from from I think.
James Hardiman: Our pricing the playbook around season pass is the falls, which is the least expensive then it bumps up a little for the winter sales cycle and then the spring and summer are the highest so we'll continue to roll through that and read market by market, but as we think about going into next year.
The broader market for the recurring nature of our revenue streams. So I don't think each year about disappointment, we're always disappointed when when something we can't control gets in the way, but that's where in the outdoor business. So weather and other things like that are just part of who we are but when I think about building our plan and while I will evaluate at the.
James Hardiman: Where the consumers at where per caps are going to come out.
End of the year, how close did we get to the potential that each park had that year factoring all the things that we do control.
James Hardiman: Always have to sort of separate and isolate admissions versus the in park. We continue to be pleased with what we see on on guest spending inside the park, particularly around food and beverage I think there is some more work that we have in store for a few of those other in park channels like merchandising gains.
And how we program our parks what days were open.
I think youll see us reacting to where we think the opportunities are but the other thing that I'll underscore that we're going to continue to look at at the end of each year and as we do as we go through each season.
James Hardiman: In 2024.
James Hardiman: And then we certainly believe that a channel like guest spending an extra charge, most notably vaseline will be lifted and benefited by those those higher attendance numbers that we are expecting going into next year.
We're committed to dynamic pricing, we're committed to using our business intelligence capabilities in data analytics to drive our decision, making both now but we plan on a continual basis, we're talking about 24, and thats important and Thats.
Speaker Change: Got it and so should I interpret all of that.
Right in front of us, but we're already working on 25, and 26 and 27, because we believe in the long term health of this business, we've got to deliver in the short term and that's what we're focused on but we're also planning for the longer term.
Speaker Change: If the positivity on attendance plays out in 2024 based on some of Richard's commentary sure.
Speaker Change: Should we not assume that there is a significant give back on the per cap front like we saw in the fourth quarter.
We can sustain our performance over a period of time.
Speaker Change: Okay.
Speaker Change: I think the ultimate the answer to that James is going to depend a little bit on mix.
Okay got you thanks for that Richard and then if I go back to.
Speaker Change: Of channel, which channels does the majority of that lift come from Amaze, you know season pass and group are smaller admissions per cap or.
James kind of ask this question I'm going to ask maybe a little bit of a different way but.
You noted you obviously adjusted ticket pricing in your marketing spend in the second half of 2023 in order to get some of that lost attendance back and it seemed like that clearly worked.
Speaker Change: Less expensive ticket.
Speaker Change: On a per cap basis, and then single day.
Speaker Change: And so depending on where that mix that.
I guess the question is do you think you took.
Speaker Change: That mix shakes out in the incremental attendance as well as which parks right I mean, the higher per cap parks.
Too much price action and I know again. This is Brian mentioned, it's a small component. It's a small part of your parks, but meaning do you think trying to get that price action back now is going to be a little bit more difficult and I hope that.
Speaker Change: That's where more of the growth comes from that could change that but it is fair to say that is as attendance gets back to those 2019 pre pandemic levels in each of those channels.
All makes sense.
Speaker Change: There is naturally some mathematical pressure on the admissions per caps, but theres a lot more revenue and thats the type a problem we'd like to have.
Yes, no I think I understand the question I go back to our broad thoughts on dynamic pricing and then I'll ask Brian to weigh in.
The optimized volume and price and you never get it quite right you get as much as you can and then you evaluate where you are on the continuum and you continue to adjust.
Speaker Change: Got it makes sense I appreciate it guys and good luck.
Speaker Change: Thanks, Jamie Thanks, Jamie.
Speaker Change: Great. We will go to our next question from Steve.
Steve: Steve Rubin scheme.
I think we did what we needed to do and I would term our pricing adjustments modest I'd also say as we look to the strength coming out of the fall season pass sales. We took our biggest price increases two things are now winter price at those parks, where we saw the strongest demand so.
Steve: Stifel. Please go ahead.
Steve: Hey, guys good morning.
Steve: So Richard.
Steve: Look I understand you don't give annual guidance here.
Steve: But.
Steve: If we're sitting here this time next year.
Steve: Would you be disappointed if you didn't exceed.
It's constantly watching the market and how our consumers are reacting and making sure we're trying to optimize that revenue stream Brian.
Richard A. Zimmerman: I would say not so much the EBITDA threshold from 2023, given the obviously the easy weather comparison as you guys are going to have in the first half of this year, but probably a better comparison would be to look back at 2022, which I think was around 550 million of EBITDA. So.
Yes, I think Steve I would just add.
As we as we go through any year, there is always going to be points in time various ticket channels in various markets.
Richard A. Zimmerman: If you didn't exceed that level this year.
We might bump our head.
And Thats a lot easier to navigate on a day by day or week by week basis in things like single day tickets.
Richard A. Zimmerman: Some of the factors that we need to be watching or thinking about.
Richard A. Zimmerman: Steve It's a great question and the backdrop would be whether its 24 or any year that we create a plan for we look at our portfolio and go where the opportunities we start to factor in and have factored in that we invest continuously over time in our parks through the capital the capital projects in particular, the bigger projects that drive demand.
I think what we saw the most pressure.
Past year was as we said earlier was in season pass in several markets and you have to remember those those that pricing strategy in those sales strategy around season pass are set in the summer leading to that late August launch of each year is our <unk> program.
Richard A. Zimmerman: <unk> in select markets. So we try and time that appropriately, but we can't control. The weather, we always talk about that we look closely at the economies around our parks and it's market by market. So we constantly look for what we think the potential is for each park each year and how do we unlock that.
And so you put in place a pricing strategy that it's harder to.
Downward on season pass and certainly there were several markets in our portfolio that.
By the time, we get to the first quarter of.
'twenty three on the economies, where maybe the consumer had changed a little bit from where they were back in July August when we were setting those prices. So.
Richard A. Zimmerman: And certain parks. So we will have the bigger products and we expect more growth out of those certain certain parks will be and.
The way the program works is you just have to ride it out.
Richard A. Zimmerman: Markets that potentially are really doing well and the consumer is feeling really good in certain markets made the consumer may be stress. So I think yes.
And then make those adjustments for the next year, that's a different story when it comes to single day tickets that you can dynamically price up and down as the season progresses.
Richard A. Zimmerman: We always talking we always get asked on this call about the health of the consumer said that in my first thing. So we monitor that as closely as we can but what we see.
Okay, Brian real quick can you give the operating days by quarter again, you broke up a little bit I think I've got the third and the fourth quarter, but I couldnt hear the first and second quarters.
We never really get the credit and we've talked about this from from I think.
Yes sure. It was 119 days in the first quarter eight.
Richard A. Zimmerman: The broader market for the recurring nature of our revenue streams. So I don't think each year about disappointment, we're always disappointed when when something we can't control gets in the way, but thats, where an outdoor business. So weather and other things like that are just part of who we are but when I think about building our plan and while I will evaluate at the.
803 in second 998 in the third and 333 in the fourth.
Okay, great. Thanks, guys appreciate it.
Thanks, Dave.
Alright. Our next question comes from Thomas <unk> with Morgan Stanley. Please go ahead.
Thanks, So much good morning, I wanted to ask about the cost outlook on a standalone basis, Brian you sounded pretty confident in the cost controls that you've been putting in place than in the recent filing you had identified $45 million of savings I think baked into the standalone expectations and I think it implies that total company expenses would actually be.
Richard A. Zimmerman: End of the year, how close did we get to the potential that each park had that year factoring all the things that we do control.
Richard A. Zimmerman: And how we program our parks what days were open.
Richard A. Zimmerman: I think youll see us reacting to where we think the opportunities are but the other thing that I'll underscore that we're going to continue to look at at the end of each year and as we do as we go through each season.
Down is it fair to say that fewer operating days are incorporated in that view and Thats a net EBITDA positive contributor and then maybe just beyond that on the core expenses, how youre managing to that outlook.
Richard A. Zimmerman: We're committed to dynamic pricing, we're committed to using our business intelligence capabilities in data analytics to drive our decision, making both now but we plan on a continual basis, we're talking about 'twenty, four and Thats important and Thats.
Yes, Jonathan I think you hit it right on the head a big part of our.
Richard A. Zimmerman: Right in front of us, but we're already working on 25% and 26 and 27, because we believe in the long term health of this business, we've got to deliver in the short term and that's we're focused on but we're also planning for the longer term.
Our.
Our strategy and approach to getting more efficient is as we said on the call.
Focusing more of our attendance into a into a shorter operating season, particularly at the mid tier parks.
Richard A. Zimmerman: We can sustain our performance over a period of time.
It's also about as we've talked about in the past.
Speaker Change: Okay got you thanks for that Richard and then if I go back to.
Re imagining how we program the parks, meaning what's the.
James kind of asked this question I'm going to ask maybe a little bit of a different way but.
How do we program the parts of the entertainment at the parks.
That's less dependent on seasonal labor our largest single cost.
Speaker Change: You noted you obviously adjusted ticket pricing in your marketing spend in the second half of 2023 in order to get some of that lost attendance back and it seemed like that clearly works.
And so youre seeing some of that.
Thank you.
Youll see some of that play out.
And consistent with our comments on the call, where we're taking those 112 operating days.
Speaker Change: I guess the question is do you think you took.
Too much price action and I know again. This is Brian mentioned, it's a small component. It's a small part of your parks, but I mean, meaning do you think trying to get that price action back now is going to be a little bit more difficult and I hope that.
Out of this out of the out of the system. This year, that's a big part of that but it's also as we said on the call the need to in any given year adjust <unk>.
Nimble if I use that term around variable operating cost to better mirror the demand levels. So.
Speaker Change: All makes sense.
Speaker Change: Yes, no I think I understand the question I go back to our broad thoughts on dynamic pricing and I'll ask Brian to weigh in.
We're very effective the teams were.
Especially effective this past year.
It was adjusting for.
Speaker Change: Looking to optimize volume and price and you never get it quite right you get as much as you can and then you evaluate where you are on the continuum and you continue to adjust.
Our staffing levels pulling some of those variable costs down when attendance wasn't where we had expected because of the macro factors Richard mentioned, but it also cuts the other way right I mean, it means when attendance is strong you need to make sure that you are staffed well one of the things that we pay very close attention to during the course of the year is how our seasonal lag.
Brian C. Witherow: We did what we needed to do and I would term our pricing adjustments modest I'd also say as we look to the strength coming out of the fall season pass sales. We took our biggest price increases now winter price at those parks, where we saw the strongest demand so.
<unk> dollars are translating to the in park revenue channels and there's a direct correlation when our staffing levels are more challenged and that's often a natural structural challenge in the in the shoulder months before the kids are out of school in the summer where staffing can be a little challenge and we see that weigh on per cap. So we have to be.
Speaker Change: It's constantly watching the market and how that can power consumers are reacting and making sure we're trying to optimize that revenue stream Brian.
Brian C. Witherow: Yes, I think Steve I would just add.
Our teams have to remain nimble on staffing up in staffing down and then the more permanent changes are the things that we've talked about which is adjusting those operating calendars adjusting the programming of the parks.
Brian C. Witherow: As we go through any year, there is always going to be points in time various ticket channels in various markets, where we might bump our head.
Brian C. Witherow: And thats a lot easier to navigate.
To structurally lower the over they will grant glass.
Brian C. Witherow: By days or week by week basis, and things like single day tickets I think what we saw the most pressure.
Great.
And then I wanted to revisit the bifurcation you were seeing earlier this year between Midwest strengthened in California weakness and Richard you talked about the recovery in southern California in the second half as the postmortem on that and just some of the pricing strategies that you've enacted suggest that it was the weather related.
Brian C. Witherow: The past year was as we said earlier was in season pass in several markets and you have to remember those those that pricing strategy in those sales strategy around season pass are set in the summer leading to that late August launch of the <unk>.
Problem, primarily or more price sensitivity in some of the regions that you saw the most impact and as a follow up to that I think that the logic trying.
Brian C. Witherow: Each year is our <unk> program.
Brian C. Witherow: And so you put in place a pricing strategy that it's harder to do.
Brian C. Witherow: Downward on season pass and certainly there were several markets in our portfolio that.
Start the season pass sales at a lower price and stimulating demand would be that it would drive in park spending strength.
Brian C. Witherow: By the time, we get to the first quarter of.
Brian C. Witherow: 'twenty three on the economies, where maybe the consumer had changed a little bit from where they were back in July August longer setting those prices. So.
I did notice that the.
Food and Bev per guest was also I think a little bit lower on a year over year basis any comments on how youre seeing that play out that'd be great.
Brian C. Witherow: The way the program works is you just have to ride it out.
Brian C. Witherow: And then make those adjustments for the next year that's different story when it comes to single day tickets that you can dynamically price up and down as the season progresses.
Yes from our standpoint, as we looked at and looked at all of 'twenty three we saw what others in the industry and some adjacent industry saw which was.
Brian C. Witherow: Okay, Brian real quick can you give the operating days by quarter again, you broke up a little bit I think I've got the third and the fourth quarter, but I couldnt hear the first and second quarters.
A little bit of consumer weakness out in California over the first half of the year a lot of that was impacted by weather very early on but once you got to the middle of the summer we started to see the trends start to shift in terms of what consumers are doing with their time and their dollars. So yes.
Brian C. Witherow: Yes sure. It was 119 days in the first quarter eight.
Brian C. Witherow: 803 in second 998 in the third and 333 in the fourth.
We always say and you go back to <unk> seven the <unk> hundred.
Speaker Change: Okay, great. Thanks, guys appreciate it.
<unk> nine we first saw weakness in all seven.
Speaker Change: Thanks, Dave.
Out in California, and that kind of bled through to the east. So I think what we saw was a firming up of the consumer marketplace in California.
Speaker Change: Alright. Our next question comes from Thomas <unk> with Morgan Stanley. Please go ahead.
Thomas: Thanks, So much good morning, I wanted to ask about the cost outlook on a standalone basis, Brian you sounded pretty confident in the cost controls that you've been putting in place than in the recent filing you had identified $45 million of savings I think baked into the standalone expectations and I think it implies that total the company expenses would actually be.
So as Brian mentioned, when we start and we spur a lot of volume that puts people in the park and then we can we can react to that demand once people get through the gates.
And make sure that we're staffed appropriately to grab the food and beverage do more transactions per hour.
Thomas: Down is it fair to say that fewer operating days are incorporated in that view and Thats a net EBITDA positive contributor and then maybe just beyond that on the core expenses, how youre managing to that outlook.
When you do a significant increase in attendance as we saw it will put a little pressure on the per caps because Youre Park has a lot more folks in it but thats a challenge. It is a type a problem. That's the challenge we like to have and I think all of the investments we've made over the past several years really support us being able to drive higher per capita.
Brian C. Witherow: Yes, Jonathan I think you hit it right on the head a big part of our.
Brian C. Witherow: Our.
Once people get in the car and then lastly, I'll say when.
Brian C. Witherow: Strategy and approach to getting more efficient is as we said on the call.
We now look at 'twenty four I talked about the really compelling capital investment lineup. We've got this year when you put in things like top thrilled to that drives not only a lot of people to the park, but it also drives things like premium charges are front of line fast Lane program. So we're really excited by what I think we can do.
Brian C. Witherow: Focusing more of our attendance into a into a shorter operating season, particularly at the mid tier parks.
Brian C. Witherow: It's also about as we've talked about in the past.
Brian C. Witherow: Re imagining how we program the parks, meaning what's the.
Brian C. Witherow: How do we program the parts of the entertainment at the parks.
This year, because we're more back to a traditional lineup.
Brian C. Witherow: That's less dependent on seasonal labor our largest single cost.
Look at 'twenty, one 'twenty two 'twenty three the investments we made were very disrupted by the pandemic 2020, one and how we came out of that so this is the year that we're now back to what I would call our more traditional playbook of really using.
Brian C. Witherow: And so youre seeing some of that.
Speaker Change: Thank you.
Speaker Change: Youll see some of that play out.
Speaker Change: And consistent with our comments on the call, where we're taking those 112 operating days.
Speaker Change: Out of this out of the out of the.
World Class investments to drive not just the attendance and the demand, which gives us a little bit of pricing power at the gate, but also driving what happens once people get through through the gates.
Speaker Change: The system. This year, that's a big part of that but it's also as we said on the call the need to in any given year adjust.
Speaker Change: Main nimble if I use that term around variable operating cost to better mirror the demand levels. So we're.
Got it last one from me I might have missed it but knowing things might change after that pending merger do you have a sense of the capex outlook on a standalone basis, just for modeling purposes.
Speaker Change: We're very effective the teams where we are.
Speaker Change: Specialty effective this past year.
Speaker Change: Adjusting.
Speaker Change: Our staffing levels pulling some of those variable costs down when attendance wasn't where we had expected because of the macro factors Richard mentioned, but it also cuts the other way right I mean, it means when attendance is strong you need to make sure that you are staffed well one of the things that we pay very close attention to during the course of the year as how are seasonal.
Okay.
Thomas for next year.
Our planning $2 10 to $2 20.
Capital.
And for 'twenty, three what was the number for the full year.
The high end of that it is right around the right into 'twenty.
Okay perfect. Thank you.
Thanks Thomas.
Speaker Change: <unk> dollars are translating to the in park revenue channels and then there's a direct correlation when our staffing levels are more challenged and that's often a natural structure.
Alright. Our next question comes from Michael Swartz with tourists security. Please go ahead.
Hey, guys good morning.
Speaker Change: Challenge in the in the shoulder months before the kids are out of school in the summer where staffing can be a little challenge and we see that weigh on per cap. So we have to be our teams have to remain nimble on staffing up in staffing down and then the more permanent changes are the things that we've talked about which is adjusting those operating calendars adjusting the programming.
I think I just wanted to kind of focus and first question on some of the commentary around channel mix as I recall coming out of the pandemic you guys had kind of had cut back on some of the lower value.
Channel business. It sounds like you brought some of that back.
How should we think about that going forward or are we just kind of back to status quo pre COVID-19 or is that still a focus to limit some of that lower value stuff going forward.
Speaker Change: The parks to.
Speaker Change: To structurally lower the over they will grant glass.
Great.
Speaker Change: And then I wanted to revisit the bifurcation you were seeing earlier this year between Midwest strengthened in California weakness and Richard you talked about the recovery in southern California in the second half as the postmortem on that and just some of the pricing strategies that you've enacted suggest that it was the weather related.
I would say Mike that the.
The approach is still to limit that.
It's I wouldn't say, we've pivoted all the way back but in some markets I think you always have to.
Pay attention to and analyze the results and make adjustments where appropriate so we have.
Speaker Change: Problem, primarily or more price sensitivity in some of the regions that where you saw the most impact and as a follow up to that I think that the logic trying to start the season pass sales at a lower price and stimulating demand would be that it would drive in park spending strength.
Some of the.
Shoulder months, where demand is naturally structurally just a little bit lower because maybe schools still in session.
Things like that weather isn't as is as nice as July or August.
We've allowed a few of those programs on a market by market basis to come back in to our marketing strategy, but I wouldn't say, it's a wholesale pivot all the way back to where we were pre pandemic.
Speaker Change: And I did notice that the food and Bev per guest was also I think a little bit lower.
Speaker Change: Year over year basis, any comments on how youre seeing that play out that'd be great.
Speaker Change: Yeah.
Speaker Change: Yes from our standpoint, as we look at and looked at all of 'twenty three we saw what others in the industry and some adjacent industry saw which was.
Okay great.
And just from a cost standpoint, you talked about some of the variable cost to remove in the back half of the year.
Speaker Change: A little bit of consumer weakness out in California over the first half of the year a lot of that was impacted by weather were very early on but once you got to the middle of the summer we started to see the trends start to shift in terms of what consumers are doing with their time and their dollars. So yes, we yes.
I guess, partially in reaction to the softer attendance we saw in the first half of the year, but I guess as we go into 'twenty four and season pass sales, where they are with some of the momentum you talked about going into the year I guess, how does that translate to how you think about some of the costs at least in the first half of the year, you're adding back cost.
Speaker Change: We always say and you go back to <unk> seven the <unk> hundred nine we first saw weakness in <unk> seven.
Or do you think some of the changes you made in the second half of the year should be.
Speaker Change: Out in California, and that kind of bled through to the east. So I think what we saw was a firming up of the consumer marketplace in California.
Sustainable.
Into the first part of 'twenty four.
Yes, I think there are it's a little bit of a mixed bag right. There is there is certainly some cost savings that we mined this past year that I would say as I said, just a little bit earlier or the direct response to us adjusting variable cost to the demand levels and if we could go back.
So as Brian mentioned, when we start and we spur a lot of volume that puts people in the park and then we can we can react to that demand once people get through the gates.
Speaker Change: And make sure that we're staffed appropriately to grab the food and beverage do more transactions per hour.
And have higher demand levels, we'd allow those costs back in to make sure we're delivering not only the guest experience that.
Speaker Change: When you do a significant increase in attendance as we saw it will put a little pressure on the per caps because Youre Park has a lot more folks in it but thats a challenge. It is a type a problem. That's the challenge we like to have and I think all of the investments we've made over the past several years really support us being able to drive higher per capita.
Our guests want but also that we're driving the revenues that we know we can get win win the attendance levels are higher.
But there are there are also permanent savings in there and I think we will start to see more of those coming in related to the adjustments were made that.
We are making to the park operating calendars as well as to how we program. The parks I think what's important to note, though is the difference between the first half of the year for us in the second half of the year and with even more of a concentration in Q3.
Speaker Change: Once people get in the car and then lastly, I'll say when.
Speaker Change: We now look at 'twenty four I talked about the really compelling capital investment lineup. We've got this year when you put in things like top thrilled to that drives not only a lot of people to the park, but it also drives things like premium charges are front of line fast Lane program. So we're really excited by what I think we can do.
That's where the lion's share of our variable cost set and Thats, where we can have the biggest impact our first quarter, especially in a little bit of our second quarter is a much more fixed cost base, particularly at the park level, where if we overreach and try and take cost too aggressive too were too aggressive in trying to take cost out of the system. We.
Speaker Change: This year, because we're more back to a traditional lineup.
Speaker Change: When I look at 'twenty, one 'twenty two 'twenty three the investments we made were very disrupted by the pandemic 2020, one and how we came out of that so this is the year that we're now back to what I would call our more traditional playbook of really using.
Run the risk of not being prepared to open the parks in spring that April may timeframe that they normally open so we want a pretty thin.
I'll call it sort of that fixed off season cost base.
Speaker Change: World Class investments to drive not just the attendance and the demand, which gives us a little bit of pricing power at the gate, but also driving what happens once people get through through the gates.
At the park level.
In the fourth quarter for some parks like Cedar point, which closed down at the end of October or in the first quarter for the lion's share of our seasonal parks that arent open year round and so on.
Speaker Change: Got it last one from me I might have missed it but knowing things might change after that pending merger do you have a sense of the capex outlook on a standalone basis, just for modeling purposes.
More of what Youre going to continue to see more of the ability to get savings out of the system will lie in the third and fourth quarters with a bigger focus of course on the third quarter.
Speaker Change: Okay.
Speaker Change: Thomas for next year.
Okay. That's helpful. Thanks, Brian.
Speaker Change: We are planning $2 10 to $2 20.
Thanks, Mike.
Speaker Change: Of capital.
Okay. Our next question comes from Chris <unk> with Deutsche Bank. Please go ahead.
Speaker Change: And for 'twenty, three what was the number for the full year.
Speaker Change: The high end of that it is right around right at 220.
Hey, good morning, guys.
Okay perfect. Thank you.
Thanks for all details yes, thanks for all the details so far.
Speaker Change: Thanks Thomas.
Speaker Change: Alright. Our next question comes from Michael Swartz with tourists security. Please go ahead.
Just wanted to revisit.
The comments about adjusting the park operating days and totally understand it from a.
Michael Arlington Swartz: Hey, guys good morning.
Certainly from an operational expense standpoint, but I guess.
Michael Arlington Swartz: I think I just wanted to kind of focus on first question on some of the commentary around channel mix as I recall coming out of the pandemic you guys have kind of had cut back on some of the lower value.
Your plan or your goal is to.
Get more attendance into fewer days in the <unk>.
Question there was how.
How much risk do you see to that and also from a from our in park spend standpoint, if the if the parks are going to be a little bit more crowded on certain days, particularly in shoulder seasons.
Michael Arlington Swartz: Channel business. It sounds like you brought some of that back.
Michael Arlington Swartz: How should we think about that going forward or are we just kind of back to status quo pre COVID-19 or is that still a focus to limit some of that lower value stuff going forward.
Is there any inhibitor on.
Then on an ability to spend.
Speaker Change: I would say Mike that the.
Hey, Chris.
Let me jump in here as Richard when I think about the days that we're stripping out a lot of them or the days that we saw in the first quarter. We added the test keeping some of our markets Charlotte Richmond and Great America open.
Speaker Change: The approach is still to limit that.
Speaker Change: It's I wouldn't say, we've pivoted all the way back but in some markets I think you always have to.
Mike: Pay attention to and analyze the results and make adjustments where appropriate so we have.
Throughout the on the weekends through January and February.
By default kind of like winter fast those were lower length of stay days. They werent full summer days, where you get a $6 $7 eight hour length of stay.
Mike: In some of the.
Mike: Shoulder months, where demand is naturally structurally just a little bit lower because maybe schools still in session.
No.
By default, what we're stripping out as a much shorter length of stay you're losing the visit so as you think about the revenue implications of that.
Mike: Things like that weather isn't as is as nice as July or August.
Mike: We allowed a few of those programs on a market by market basis to come back in to our marketing strategy, but I wouldn't say, it's a wholesale pivot all the way back to where we were pre pandemic.
Long as you get those guys to come and we're confident that we can drive the attendance and the operating calendar. We've got the operating calendar, we always constantly fine tune year by year and there is the constant debate on our side to add days you take days out where is the opportunity but in terms of driving the per capita.
Speaker Change: Okay great.
Speaker Change: And just from a cost standpoint, you talked about some of the variable cost to remove in the back half of the year.
Point, you back to whether it's July August or in particular October theres, such flexibility and scalability in each of our sites, we drive our highest per caps on our biggest days.
Speaker Change: I guess, partially in reaction to the softer attendance we saw in the first half of the year, but I guess as we go into 'twenty four and season pass sales, where they are with some of the momentum you talked about going into the year I guess, how does that translate to how you think about some of the costs in the first at least in the first half of the year, you're adding back cost.
And Thats not just admission pricing. It's also per capita is within the park because you're driving longer length of stay so we've got an ability to scale what we do.
Speaker Change: Or do you think some of the changes you made in the second half of the year should be.
We built all of our new food facility. So on lower demand days, we could only opened one line not to open a half a facility we've got that ability within our the way we construct our experience to really take and go grab as much revenue as we can get from our from our guests and give them an opportunity to make sure we're servicing them at a level that they want.
Speaker Change: Sustainable.
Speaker Change: Into the first part of 'twenty four.
Yes, I think there are it's a little bit of a mixed bag right Theres certainly some cost savings that we mined this past year that I say as I said, you just a little bit earlier or the direct response to us adjusting variable cost to the demand levels and if we could go back.
So.
Mindful that we've got to be prepared for it but we've built our parks to be able to drive per capita is even on the biggest of days.
Speaker Change: And have higher demand levels, we'd allow those costs back in to make sure we're delivering not only the guest experience that.
Okay.
Speaker Change: Our guests want but also that we're driving the revenues that we know we can get when when the attendance levels are higher.
Thanks, Richard So super helpful and just as a follow up to that I mean, the number of part D is it looks like you have in plan right now is that it rounds to down 5% for the year right now for 712 days.
Speaker Change: But there are there are also permanent savings in there and I think we'll start to see more of those coming in related to the adjustments, we'll make that we're making to the park operating calendars as well as to how we program. The parks I think what's important to note, though is the difference between the first half of the year for us in the second half of the year.
We tried to speak about that in terms of hours and maybe this is extra.
Exercise and splitting the atom, but it would certainly be less than that in hours right based on what you just.
What you just said.
Yes, just the way the math would work.
Speaker Change: With even more of a concentration in Q3.
Speaker Change: That's where the lion's share of our variable cost set and Thats, where we can have the biggest impact our first quarter, especially in a little bit of our second quarter is a much more fixed cost base, particularly at the park level, where if we overreach and try and take cost to aggress to were too aggressive in trying to take cost out of the system.
It would be it would be less than that but as you know Chris the other thing.
And this is our anticipated calendar coming in.
Whether we'll.
23 have an impact on it as well will demand if demand comes back strong we are not opposed to sliding and incremental day in here or there.
Speaker Change: We run the risk of not being prepared to open the parks.
To meet that demand and that goes for operating hours as well right. We will shrink hours during the course of the year.
Speaker Change: In spring.
Speaker Change: April may timeframe that they normally open so we want a pretty thin.
Based on weather factors, maybe not close the whole day, but close up early or will extend hours around demand. So the key here is again I'll go back to that word nimble, we have to remain nimble and flexible around some of these things.
I'll call it sort of that fixed off season cost base at.
Speaker Change: At the park level.
Speaker Change: In the fourth quarter for some parks like Cedar point, which closed down at the end of October or in the first quarter for the lion's share of our seasonal parks that arent open year round and so more of what youre going to continue to see more of the ability to get savings out of the system will lie in the third and fourth quarters with a bigger focus of course on the third.
While while responding to how the market's evolving around us.
Gotcha. Thanks, Brian just one last one for me if I can real quick.
Is it.
Do you think it is.
Is there a thought given to maybe starting to attach some kind of ancillary pre sale for the season pass products.
Speaker Change: <unk>.
Speaker Change: Okay. That's helpful. Thanks, Brian.
Speaker Change: Thanks, Mike.
Speaker Change: <unk>.
It's obviously involves some kind of discount but it gets you guys are.
Speaker Change: Okay. Our next question comes from Chris <unk> with Deutsche Bank. Please go ahead.
Whatever it might be 50, or 75 100 bucks of.
Chris: Hey, good morning, guys.
Built in revenue that theyre going to spend and encourage them to come is that is that something thats on the radar yet.
Chris: Thanks for all details yes, thanks for all the details so far.
Chris: I wanted to revisit the.
We've used.
Chris: The comments about adjusting the park operating days and totally understand it from a.
From time to time.
And both of those.
Season pass credits credit dollars, if you will in markets here or they are trying to test various things that resonate I think what I can tell you Chris.
Chris: Certainly from an operational expense standpoint, but I guess.
Chris: Your plan or your goal is to.
Chris: Get more attendance into fewer days in the <unk>.
Chris is that you'll continue to see us.
Chris: <unk>.
Chris: Much risk you see to that and also from a from our in park spend standpoint, if the if the parks are going to be a little bit more crowded on certain days, particularly in shoulder seasons.
Finding ways to evolve season pass, it's such a critical part of our of our overall attendance at north of 50.
50% of the attendance mix.
So finding ways to engage and create that stickiness for that season pass holder is key so nothing.
Chris: Is there any inhibitor on.
Chris: Then on an ability to spend.
Speaker Change: Hey, Chris.
Concrete I can point to right now, but certainly something we have tested and will likely continue to look for ways.
Let me jump in here as Richard when I think about the days that we're stripping out a lot of them or the days that we saw in the first quarter. We added the test keeping some of our markets Charlotte Richmond and Great America open.
Like that to continue to drive more demand for the season pass products.
Okay.
Good thanks, guys.
Richard A. Zimmerman: Throughout the on the weekends through January and February by default kind of like winter fast those were lower length of stay days. They werent full summer days, where you get a $6 $7 eight hour length of stay.
Yeah.
Alright. Our next question comes from Eric Wold with B Riley Securities. Please go ahead.
Thanks.
Morning, with you I guess.
Speaker Change: So.
The season past question.
Speaker Change: By default, what we're stripping out as a much shorter length of stay you're losing the visit so as you think about the revenue implications of that.
Longer term could have broader sense, you talked in the press release that the 20% increase in <unk>.
And unit sales will be a nice tailwind for this year all season long and kind of.
Speaker Change: Long as you get those guys to come and we're confident that we can drive the attendance in the operating calendar you've got the operating calendar, we always constantly fine tune year by year and Theres a constant debate on our side do you add days you take days out where is the opportunity but in terms of driving the per capita.
Thinking beyond that can you do you have the data that you could share what unit sales are now versus what they were pre pandemic any sense of how that demographic.
Meyer has shifted back then and then maybe even.
Speaker Change: Point, you back to whether it's July August or in particular October.
What the average distances from apart versus back then and try to get a sense of.
Speaker Change: Such flexibility and scalability in each of our sites, we drive our highest per caps on our biggest days.
What what's changed in terms of maybe the Tam we're going to reach around these parts that could have a much more broader long term benefit versus youre going to short term pricing fluctuations for a given season.
Speaker Change: And Thats not just admission pricing. It's also per capita is within the park because you're driving longer length of stay so we've got an ability to scale what we do.
Yeah, Eric it's Brian.
But I'd start with is in terms of the demo of the season pass holder.
Speaker Change: We've built all of our new food facility. So on lower demand days, we could only opened one line not to open a half a facility we've got that ability within our the way we construct our experience to really take and go grab as much revenue as we can get from our from our guests and give them an opportunity to make sure we're servicing them at a level that they were.
We haven't seen significant change.
In that area.
We have seen that that radius around the park the product.
Can you to maybe inch outward a little bit further over time, maybe that's been exaggerated post pandemic.
Speaker Change: So.
Speaker Change: Mindful that we've got to be prepared for it but we've built our parks to be able to drive per capita is even on the biggest of days.
<unk> seen a lot of regional business models, where folks are more willing to drive from a little further out.
Speaker Change: Okay.
As opposed to getting on a plane, which is more expensive more complicated.
Richard A. Zimmerman: Richard <unk> Super helpful.
Speaker Change: As a follow up to that I mean, the number of part D is it looks like that you Havent plan right now is that it rounds to down 5% for the year right now for 712 days.
And so we are seeing our season pass penetration, maybe reaching a little bit further out I don't know yet, but it's it's a material.
Shift, but but it is moving in that direction.
Speaker Change: If we tried to speak about that in terms of hours and maybe this is <unk>.
And then lastly in terms of the pre pandemic versus post pandemic volume.
Speaker Change: Exercise and splitting the atom, but it would certainly be less than that in hours right based on what you just what.
Still even 2023 in spite of it being a shortfall of a couple hundred thousand.
Speaker Change: What you just said.
Speaker Change: Yes, just the way the math would work.
Units to the 'twenty two record level that pass program was still above our 2019 season pass program in total units sold so.
Speaker Change: It would be it would be less than that but as you know Chris the other thing.
Speaker Change: This is our anticipated calendar coming in.
Speaker Change: Whether will we saw 23 have an impact on it as well will demand if demand comes back strong we are not opposed to sliding and incremental day in here or there.
We have we set a new bar.
And are continuing to try and work our way north from there.
Helpful. Thank you very much.
Speaker Change: To meet that demand and that goes for operating hours as well right. We will shrink hours during the course of the year.
Thanks, Eric.
Alright. Our next question comes from <unk> with Goldman Sachs. Please go ahead.
Speaker Change: Just on weather factors, maybe not close the whole day, but close up early or will extend hours around demand. So the key here is to is again I'll go back to that word nimble, we have to remain nimble and flexible around some of these things.
Hi, Good morning, Thanks for taking the question just wanted to dig a bit more into attendance on.
As I look to what you talked about <unk> for October trends, you talked about 2% increase in attendance and a threep.
Speaker Change: While responding to how the market's evolving around us.
3% decrease in in park spending so it feels like there was just a meaningful step down in November and December to kind of end up where you did for the full quarter, especially because I would've thought.
Speaker Change: Got you. Thanks, Brian just one last one for me if I can real quick is.
Speaker Change: Is it.
Speaker Change: Do you think it is.
Speaker Change: Is there a thought given to maybe starting to attach some kind of ancillary pretty sale for the season pass products.
The biggest contributor so maybe if you can talk about that and just kind of anything that changed as you got through to the later months of the quarter.
Speaker Change: It's obviously involves some kind of discount but it gets you guys.
Yes, Brian It really dovetails back to my earlier comment that it's a little bit of mix and the parks that are operating particularly still in November and December you Youre, losing.
Speaker Change: Whatever it might be 50, or 75 100 bucks of.
Speaker Change: Built in revenue that theyre going to spend and encourage them to come is that is that something thats on the radar yet.
Maybe one of your top.
Speaker Change: We've used.
Two parks in terms of ticket pricing and Cedar point is it shuts down at the end of October.
Speaker Change: From time to time.
Speaker Change: And both those season pass credits credit dollars. If you will in markets here or they are trying to test various things that resonate, yes, I think what you will what I can tell you.
<unk> is the other ones are one to typically in terms of <unk>.
<unk> point on tickets and season passes et cetera, and and not as the one park, where we did wil prices back pretty significantly for that fall renewal because of how we felt the market had moved.
Speaker Change: Chris is that you'll continue to see us.
Finding ways to evolve season pass at such a critical part of our of our overall attendance at north of 50, 50% of the attendance mix.
From where our 'twenty three pricing was originally set so because <unk> is a little bit more a piece of that pie. It's really just a function of the mix play in the seasonality of our business.
Speaker Change: So finding ways to engage and create that stickiness for that season pass holder is key so nothing.
Speaker Change: Concrete I can point to right now, but certainly something we have testing and we will likely continue to look for ways.
I think the other thing is.
As it relates to the in park spend that's where our cedar point or even the schlitterbahn water parks come into play.
Speaker Change: Like the asset to continue to drive more demand for the season pass product.
Not being present in those as much in those fourth quarter numbers. Those are two of your biggest.
Speaker Change: Okay.
Speaker Change: Good thanks, guys.
Speaker Change: Yeah.
In your highest overall per cap parks. They are the longest length of stay of any parks in our system. So as they come out of the numbers those those variances get swung a little bit more mathematically if I can say that.
Speaker Change: Alright. Our next question comes from Eric Wold with B Riley Securities. Please go ahead.
Speaker Change: Thanks.
Morning, with you I guess.
Eric Wold: The season past question.
Eric Wold: Longer term could have broader sense, you talked in the press release that the 20% increase in <unk>.
Then then overall now that's not to say that the pricing strategy or the pricing program. That's in play right now is not going to have an impact on admissions per cap going into 'twenty four there's certainly going to be some mathematical impact on pricing as we go into 'twenty four on a park by park basis, So nonsense admission per cap.
Eric Wold: And unit sales will be a nice tailwind for this year all season long and kind of.
Eric Wold: Thinking beyond that can you do you have the data that can you just share what unit sales are now versus what they were pre pandemic any sense of how that demographic.
It is not going to be where it was in the first half of 2023 because of the changes we made there as an example that said we expect to see a lot more attendance and a lot more revenue and thats ultimately for us what matters. Most is the revenue number as Richard said earlier, it's about optimizing volume and pricing, it's not about <unk>.
Eric Wold: Meyer has shifted back then and then maybe even.
Eric Wold: What the average distances from a park versus back then and try to get a sense of.
Eric Wold: What what's changed in terms of maybe the Tam we're going to reach around these parks that could have a much more broader long term benefit versus your kind of short term pricing fluctuations for a given season.
<unk>, either one of them independently.
Lindsay I'll go back to my comments, which were in November and December Winter Fest is a much shorter length of stay particularly on the east Coast. We were pleased with the attendant Toronto had a very strong.
Brian C. Witherow: Yeah, Eric it's Brian.
Brian C. Witherow: But I'd start with is in terms of the demo of the season pass holder.
Brian C. Witherow: We haven't seen significant change.
Winter first program and there.
Brian C. Witherow: In that area.
Brian C. Witherow: We have seen that that radius around the park the product.
When you look at U S reported you lose you lose on the foreign exchange piece of it so if you're driving a lot of volume up in Canada.
Can you to maybe inch outward a little bit further over time, maybe that's been exaggerated post pandemic.
Lower length of stay that just a mathematical impact on your FERC.
Got it that makes sense and just one follow up so I know last year in the first quarter you had a couple of big headwind from particularly the California weather, which was really bad you had I think the impact of.
<unk> seen a lot of regional business models, where folks are more willing to drive from a little further out.
Brian C. Witherow: As opposed to getting on a plane, which is more expensive more complicated.
The season pass, which had previously been extended and was not in 2023. So I guess any kind of early reads on what youre seeing so far and John you May now leave February I know, it's a much lower volume quarter, but as the California has had some kind of weather issues. So just kind of any early reads there of what you're seeing.
Brian C. Witherow: And so we are seeing our season pass penetration, maybe reaching a little bit further out I don't know yet, but it's a material.
Brian C. Witherow: Shift, but but it is moving in that direction.
Brian C. Witherow: And then lastly in terms of the pre pandemic versus post pandemic volume.
Yes, I would say.
As we said in our prepared remarks the best.
Brian C. Witherow: Still even 2023 in spite of it being a shortfall or a couple of hundred thousand.
Long lead indicators, we have at this point are looking at those season pass on related all season products sales, which are extremely strong as well as early bookings around group events and reservations at our hotels and those are pacing in.
Brian C. Witherow: Units to the 'twenty two record level that pass program was still above our 2019 season pass program in total units sold so.
Brian C. Witherow: We have we set a new bar.
In line with our expectations. So from a long lead indicators those feel really good at this point in time as it relates to California weather.
Brian C. Witherow: And are continuing to try and work our way north from there.
Speaker Change: Helpful. Thank you very much.
Speaker Change: Thanks, Eric.
We certainly didn't want to see that that weakness so of extreme weather, but a very different scenario to what we what we experienced last year I'd say, what we've seen so far through the first month and a half or so of 'twenty four is more comparable typical California winter, which as youll get weaker rain, but it's not.
Speaker Change: Alright. Our next question comes from really began with Goldman Sachs. Please go ahead.
Goldman Sachs: Hi, Good morning, Thanks for taking the question just wanted to dig a bit more into attendance on.
Goldman Sachs: <unk>.
Goldman Sachs: Look to what you talked about <unk> for October trends, you talked about a 2% increase in attendance and a three.
Anywhere near.
The extreme anomalistic weather patterns, we saw in 2023.
Goldman Sachs: 3% decrease in in park spending so it feels like there was just a meaningful step down in November and December to kind of end up where you did for the full quarter, especially as as I would've thought okay, but with the biggest contributor. So maybe if you can talk about that and just kind of anything that changed as you got through to the later months of the quarter.
Okay. That's helpful. Thanks, so much.
Yes, I would say I'd Echo Brian's comments and again I would just say on the days, where we're opening the whether its the same year over year I'm encouraged by what I see.
If we were down percentage wise to last year I'd be discouraged, but I'm encouraged okay. Thank you.
Speaker Change: Yes, Brian It really dovetails back to my earlier comment that it's a little bit of mix and the parks that are operating particularly still in November and December you Youre, losing.
Alright, we will go to our next question <unk> <unk> with Macquarie Capital. Please go ahead.
Thanks, So much Richard Brian I, just had a question around the F&B comment you noted that transaction count in transaction value were up that was a bright spot in the per cap mix I was wondering how much of that is being driven by.
Speaker Change: And maybe one of your top.
Speaker Change: Two parks in terms of ticket pricing and Cedar point is it shuts down at the end of October.
<unk> is the other ones are one to typically in terms of pricing point on tickets and season passes et cetera and.
Penetration greater penetration of mobile food ordering and how far along we are in the rollout of that in order to see.
Speaker Change: And <unk> is the one park, where we did wil prices back pretty significantly for that fall renewal because of how we felt the market had moved.
Continued tailwind potentially to help per caps relative to attendance and then my second question is on the.
From where our 'twenty three pricing was originally set so because <unk> is a little bit more a piece of that pie. It's really just a function of the mix play in the seasonality of our of our of our business.
The selling part of SG&A, just as you see your pass count rise. This impressive 20% that you noted.
How nimble are you to roll back some marketing if you feel that it's appropriate. Thank you so much.
Speaker Change: I think the other thing is.
Speaker Change: As it relates to the in park spend that's where our cedar point or even the schlitterbahn water parks come into play.
Yes, I'll start with your F&B question, Paul we continue to experiment with.
Speaker Change: Not being present in those as much in those fourth quarter numbers. Those are two of your biggest.
Different ways too.
Speaker Change: In your highest overall per cap parks. They are the longest length of stay of any parks in our system. So as they come out of the numbers those those variances get swung a little bit more mathematically if I can say that.
Optimize those efficiencies using mobile for.
For food and beverage ordering and other aspects of the park as well, including most recently this past year starting to test.
Some mobile purchasing capabilities around something like fast lane. So the challenge with all of those things always within the park the ability to scale at today's where you might have 40 or 50000 people in the park. So.
Speaker Change: Then then overall now that's not to say that the pricing strategy or the pricing program. That's in play right now is not going to have an impact on admissions per cap going into 'twenty four there's certainly going to be some mathematical impact on pricing as we go into 'twenty four on a park by park basis, So knox's admission per cap.
I think it's helped.
In some of the parks on a modest level, but more of the benefit I would say more of that lift in the average transaction count.
Speaker Change: It is not going to be where it was in the first half of 2023 because of the changes we made there as an example that said we expect to see a lot more attendance and a lot more revenue and thats ultimately for us what matters. Most is the revenue number as Richard said earlier, it's about optimizing volume and pricing, it's not about <unk>.
The average transaction value is the outcome of the investments we've made to replace old tired inefficient facilities with higher throughput better experience facilities for our guests that we can scale, our staffing levels up and down more easily within that's where we're driving more.
Speaker Change: <unk>, either one of them independently.
<unk> at this point in time, not giving up on on making an impact more around the mobile side.
Speaker Change: Lindsay I'll go back to my comments, which were in November and December Winter Fest is a much shorter length of stay particularly on the east Coast. We were pleased with the attendance Toronto had a very strong.
Things and we are actually rolling out our new mobile App as we speak.
Speaker Change: Winter first program and there.
As we get into the 'twenty four season at the various parts of the nonsense, maybe next up on the on the schedule, which will have more functionality around that but the challenge is always just how do you operationalize it and it's at an effective level on those big attendance days, that's just a unique challenge to our business.
Speaker Change: When you look at U S reported you lose you lose on the foreign exchange piece of it. So if you're driving a lot of volume off of Canada with a lower length of stay that just a mathematical impact on your per cap.
Lindsay: Got it that makes sense and just one follow up so I know last year in the first quarter you had a couple of big headwinds from particularly the California weather, which was really bad you had I think the impact of.
As it relates.
Two.
So season pass I'll, let Richard provide that.
Lindsay: The season pass, which had previously been extended and was not in 2023. So I guess any kind of early read on what youre seeing so far and John you May now be February.
Some color on that.
Yes, Paul you want to restate your question, so I make sure I got that on season pass sure.
See this pop in season pass sales on a unit basis and so it was just asking around how nimble you are with the marketing aspect of your SG&A in terms of.
Your ability to throttle down if you find that to be.
Useful from a cost savings perspective, given how much.
Attendance, you may have already sort of pull forward or captured with the season pass sales.
I understand the question, Paul and I put that in the broader bucket of it's not just season pass advertising when we advertise and we go out with a season pass in advertising, particularly the spring, where we sell 50% of our.
Traditionally it's 50% of our units that also tells people to the parks open for business. So theres a duality to all the advertising we have in the spring versus the early summer.
I think one of the things that we are monitoring the effectiveness of our spend.
And we have been nimble, we dialed it up we dialed it down coming out of the pandemic, we dialed it way down because we thought we had the ability to do that and there were different market conditions, then I would say in every market. We're trying to find that optimal level of spend that drives the demand we want and in each year.
There are unique opportunities and unique challenges this year with TT two coming on at Cedar point, we want to make sure that we've got the.
The.
Program for advertising that will draw and extend the reach of Cedar point, It's a super regional as a destination of its own. So we want to make sure that there's as much challenge and under spending in some markets. When you've got opportunity is overspending and maybe trying to push too hard it's a constant tug of war and we don't.
All that down to the market by market opportunities each year.
That's great color. Thanks, so much.
Thanks, Bob.
And our next question comes from that.
Now with Oppenheimer. Please go ahead.
Alright. Thank you very much just wanted to ask a question on the Capex I know you said I think 10 to 20.
Can you maybe give us an idea of the components of that as far as right is there any intention to increase F&B spend I know you had done that in the past.
And any other kind of components you could give us would be helpful. Thanks.
Yes, Ian I would say the profile this year as I said in my earlier remarks, we're getting back to our more traditional profile, we had an opportunity to dial down.
During the coming out of Covid on rides and attractions.
We've dialed that back up we continue to invest in food and beverage and I think what youll see this year is.
A little more spend on our rides and attractions continued investment under food and beverage, but also other guest amenities throughout the park so.
I think the profile is very similar.
To what you saw this year when we spent close to 122 or $220 million I'm sorry.
But again part of that $2 20 in 'twenty three was attached to the Knott's hotel so little more investment in the in the hotel and resort business, but nothing to the level Knott's was really one of the last renovations that in terms of our existing hotel portfolio. We've got some work on.
On the calendar coming up not this year, but in future years down.
Schlitterbahn to make sure that we touch their resort component that was one of the things that we were very excited about and that acquisition. All the way back in 19 was that there was a resort component, but we want to make sure that we're investing appropriately to drive demand number one to continue to instill the guest amenities, both in food and beverage and elsewhere and third increasingly you're going to see us.
It kind of ties back to our last answer invest in technology to make sure we're infusing.
<unk> technology into our into our into our parks, where not only rolling out the mobile apps at all of our large parks through the spring, but we're also domino a new Wi Fi at all of our parks. So we continue to prioritize those initiatives that our guests tell you that the guests tell us that they've that put a lot of value.
Alright, great. Thank you very much.
Thank you.
Alright. Our next question comes from Robert <unk> with Keybanc capital market.
Hi, Thank you I wanted to ask about EBIT margins, you talked in the past about being able to get back to the mid to high 30 threes when you've got attendance back to 2019 levels Youre talking pretty positively about the tenant's ramp here. This morning, I guess, if I look at the deal filings and sustainable and projections the margins don't quite get back to those levels.
So I'm just trying to understand some of the puts and takes kind of your long term margin outlook and kind of the ramp from here.
Yes.
Ian.
As we said in our prepared remarks, I mean driving margin expansion is a core priority remains that.
As it relates to the model.
In the S. Four.
That was filed I would say again, that's a that's a working model that was review with our board back in the summer of 2023 not necessarily reflective.
Of where we stand today on the plan that we have built for 2024.
As we set our greatest opportunity for margin expansion in the second half of the year.
And we've built a plan for 2020 for that if we see the kind of weather.
That we would expect and that translates into the demand levels. We would expect we would certainly.
I expect to see margin expansion from where we're at right now.
Getting all the way back to pre pandemic levels is going to be a function of.
Ultimately those attendance levels and in this new cost environment. It is critical to get back to that 27 plus million dollars I'm, sorry, 27, plus million attendance level to get there.
Thank you and just a quick one on group I know come into the year you were missing $1 4 billion group visits for 2019 any way you could frame up kind of where we exited the year and what you think you can get further back in 2024.
Yes, Robert it's Richard.
Very encouraged by what we saw over the last six months, we saw a strengthening in the group channels and now as we look forward.
We said in our prepared remarks group is in line with expectations. We're seeing what we would expect to see our expectations. Another year out from the pandemic. If you go all the way back to.
All the way back to 2008 2009, it took us about three years to recoup the groups that are the slowest channel will come back, but we saw companies booking we saw youth group bookings in the second half looking really good.
Still seeing that trend as we would expect to see coming out of a macro disruption. So I've got I'm very encouraged by what we're seeing without our group channel understanding that.
We did we did it.
Filter out some of the lower priced more demand oriented channels through groups, but when we look at what is rep driven what is specific day, both in the youth and the corporate sector I'm very encouraged right now.
Thank you.
Alright.
Today.
I will turn the call back over to Richard King for closing remarks.
Thanks to everybody for joining us and your continued interest in Cedar Fair. We hope you all have a chance to visit one of our parks. This season as we keep you apprised of our progress on the 2024 season Michael.
Yes.
Thanks, again, everybody with additional questions I invite you to contact our Investor Relations Department at 4196272233 in our next call will be in early May After we released our 2024 first quarter results.
That concludes our call today thanks, everyone.
Thank you all for joining you may now disconnect.
With our board back in the summer of 2023, not necessarily reflective of.
Where we stand today on the plan that we have built for 2024.
As we said our greatest opportunity for margin expansion in the second half of the year.
And we've built a plan for 2020 for that if we see the kind of weather.
We would expect and that translates into the demand levels, we would expect.
Certainly.
I expect to see margin expansion from where we're at right now.
Getting all the way back to pre pandemic levels is going to be a function of.
Ultimately those attendance levels and in this new cost environment. It is critical to get back to that 27 plus million dollars I'm, sorry, 27, plus million attendance level to get there.
Thank you and just a quick one on group and they'll come into the year, you were missing, but $4 billion group because it's first 2019 anyway, you could frame up kind of where we exited the year and what do you think you can get further back in 'twenty 'twenty four.
Robert It's Richard.
Very encouraged by what we saw over the last six months, we saw a strengthening in the group channels and now as we look forward.
We said in our prepared remarks group is in line with expectations, but we're seeing what we would expect to see our expectations. Another year out from the pandemic. If you go all the way back to.
All the way back to 2008 2009 took us about three years to recoup the groups that are the slowest channel to come back, but we saw companies booking we saw youth group bookings in the second half looking really good.
Still seeing that trend as we would expect to see coming out of a macro disruption. So I've got I'm very encouraged by what we're seeing without our group channel understanding that.
We did we did it.
Filter out some of the lower priced more demand oriented channels through groups, but when we look at what is rep driven what is specific day, both in the youth and the corporate sector I'm very encouraged right now.
Speaker Change: Thank you.
Speaker Change: Alright that does conclude today's Q&A.
Speaker Change: I will turn the call back over to Richard King for closing remarks.
Richard A. Zimmerman: Thanks to everybody for joining us and your continued interest in Cedar Fair. We hope you all have a chance to visit one of our parks. This season as we keep you apprised of our progress on the 2024 season Michael.
Speaker Change: Yes.
Michael: Thanks, again, everybody with additional questions I invite you to contact our Investor Relations Department at 400 96272233 in our next call will be in early May after we release, our 2024 first quarter results.
Michael: Anika that concludes our call today thanks, everyone.
Speaker Change: Thank you all for joining you may now disconnect.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Sure.