speaker
Chantelle
Conference Operator

Good morning, my name is Chantelle and I'll be your conference operator today. At this time, I would like to welcome everyone to the Cedar Fair Entertainment Company 2021 fourth quarter earnings call. All lines can be placed on mute to prevent any background noise. After the speaker's 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. If you would like to withdraw your question, please press star one again. Thank you. Michael Russell, you may begin your conference.

speaker
Michael Russell
Corporate Director of Investor Relations

Thank you, Chantal, and good morning to everyone. My name is Michael Russell, Corporate Director of Investor Relations for Cedar Fair. Welcome to today's earnings call for the review of our fourth quarter and full year results ended December 31st, 2021. 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.cedarfair.com. On the call with me this morning are Richard Zimmerman, Cedar Fair President and CEO, and Brian Witherow, our Executive Vice President and CFO. Before we begin, I need to remind you the comments made during this call will include forward-looking statements within the meaning of the federal securities laws. These statements may involve risks and uncertainties that could cause actual results to differ from those described in such statements. For a more detailed discussion of these risks, you may refer to the company's filings with the SEC. In compliance with the SEC's Regulation FD, this webcast is being made available to the media and the general public, as well as analysts and investors. Because the webcast is open to all constituents and prior notification has been widely and unselectively disseminated, all content on this call will be considered fully disclosed. With that, I'd like to introduce you to our CEO, Richard Zimmerman. Richard?

speaker
Richard Zimmerman
President and CEO

Thank you, Michael, and good morning to everyone on the call. We appreciate you taking the time to be with us this morning and hope you're all staying well. Before we get into our 2021 operating results and our outlook for the upcoming 2022 season, I'd like to address one specific topic. As we announced on February 1st, and as confirmed in SeaWorld's statement yesterday evening, SeaWorld did make an unsolicited non-binding proposal to acquire Cedar Fair. The original proposal was for $60 per unit, which they subsequently and informally increased to $63 per unit. Consistent with its fiduciary responsibilities, our board, together with its external advisors, carefully evaluated the proposal and determined it was not in the best interest of the company and its unit holders. As we will discuss this morning, the board and management have a high degree of confidence in our long-range strategic plan, We look forward to reinstating a sustainable distribution to our unit holders, and we are confident that continued successful execution of our plan will result in meaningful per unit value creation. That said, the board is open-minded and always committed to acting in the best interest of unit holders. They will continue to consider any opportunities to create value for our unit holders. With regard to the SeaWorld proposal, we will have no further comment at this time. Turning now to our results for the fourth quarter and full year 2021, our opening remarks today will address three primary areas. First, an overview of our strong operating performance from this past season, as well as the strategies we will deploy as we carry that momentum into the 2022 season, our first full operating calendar since 2019. Second, Brian will provide additional details around our 2021 performance. as well as the steps we are taking to further accelerate growth and achieve our capital allocation priorities. Finally, I will conclude with a summary of our outlook for the business and strategies for driving unit holder value both in the near and longer term. I'm pleased to report that 2021 proved to be another outstanding year for Cedar Fair. That's quite remarkable given the macro environment at this time last year when the country was experiencing a surge in coronavirus cases, COVID restrictions prevented our only year-round park, Knott's Berry Farm, from operating, and we had not yet established opening dates for any of our seasonal parks. Yet by early November, we had completely turned the tide, generating record revenues in the third quarter in the month of October, driven by steadily improving attendance trends and new highs in guest spending levels. Our performance during this four-month period clearly demonstrated the strong demand for our well-maintained, best-in-class parks and world-class collection of entertainment offerings and, with the eventual return to normalized demand, the attractive long-term growth potential of our business model. Our outstanding performance over the second half of 2021 puts us on track to achieve one of our key strategic objectives coming out of the pandemic. the reinstatement of a sustainable and growing distribution to our unit holders. As we noted in our earnings release this morning, we believe we are well positioned to reinstate the distribution by the third quarter of this year, if not sooner. Before discussing our prospects for the year ahead, let me review some of our highlights from this past year. First, we generated robust net revenues of $1.34 billion. Demand for our parks was strong, with total attendance on a comparable operating day basis at 85% of 2019 levels. Third, in-park per capita spending was up 28% versus the previous record levels we established in 2019. Fourth, results from our out-of-park revenue channels were solid, finishing the year on par with 2019. And finally, through the early going, sales of 2022 season passes and related all season products are pacing ahead of the then record pace set for the sale of 2020 season pass products. These results reflect the strength and quality of our regional park brands, and they would not have been possible without the swift and decisive actions taken last spring by our operations team. These efforts were led by our chief operating officer, Tim Fisher, who oversaw an aggressive park-by-park recruiting and hiring campaign that kept our opening dates on schedule. By the time we reached the peak operating month of July, in the middle of the most difficult labor market I've seen in my 30-plus years in the industry, our parks were adequately staffed, remained so for our busiest weeks of the year, and most important, were prepared to deliver the high-quality experience our guests have come to expect. Our successful recruiting strategy meant our revenue centers were staffed and in operation whenever our parks were open, helping us achieve the record in park per capita spending levels we generated this past season. These results were driven by higher levels of guest spending across all key revenue categories, particularly admissions, food and beverage, and extra charge attractions. While these positive revenue trends benefited from a strong consumer backdrop, They are also the result of a strategic plan we initiated long before the pandemic's arrival. Our core strategic initiatives, which are grounded in many years of consumer research, are focused on expanding our park offerings and enhancing the guest experience in an effort to extend length of stay, encourage repeat visitation, and provide more opportunities for guests to spend with each visit. Building a more robust culinary infrastructure capable of delivering higher quality food and beverage offerings will rarely capture headlines like the addition of a world-class coaster. But the impact it has on improving the guest experience can be equally as powerful for many seasons to come. As well, the new technology enhancements that eliminate the need for cash in our parks, allow guests to make purchases and pay with touch-free apps, minimize lines at our food and beverage locations, and increase the number of sales transactions per hour. Our continued investment in new technologies also improves the real-time analytics of attendance and guest spending data, which gives our newly formed business intelligence team the tools they use to optimize revenue management initiatives around the entire guest experience. On the other side of the coin, we're applying the same level of discipline as we work to mitigate the current inflationary pressures on our cost structure. most notably around labor rates. While our goal is to offset the immediate impact of higher labor costs as quickly as possible, we have confidence in the effectiveness of our time-tested measures to regain our cost of revenue equilibrium. These include revenue management and pricing strategies, workforce management technologies, and other operating efficiencies that should steadily improve margins over time. I was especially pleased last season at how our revenue strategies helped to partially offset higher operating costs as we got deeper into the season. While we anticipate continued cost and labor market pressures for the foreseeable future, our success in navigating the abrupt structural changes last season, combined with our dynamic data-driven pricing and labor rate management strategies, give us confidence that we can successfully manage through whatever additional headwinds we might face going forward. Based on the pace of the recovery over the past six months, as well as the strength of long lead indicators such as the sales of season passes and other all-season products, we believe we're well positioned to deliver another outstanding year in 2022. With that, I will turn the call over to Brian for a review of our financial results. Brian?

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