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Ladies and gentlemen, thank you for standing by. Today's conference will begin momentarily. Until that time, your lines will again be placed on musicals. Thank you for your patience. 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. All lines have been 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, press star one again. Thank you. I would now like to turn the call over to Michael Russell. Please go ahead.

Thanks, Danica. Good morning to everyone. Welcome to today's earnings call to review our 2023 fourth quarter full year results for the period end of December 31st. Earlier this morning, we distributed via wire service our earnings press release, the copy of which is available under the news tab of our investors website at .CedarFair.com. On the call with me 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 meeting with 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 of the SEC. In compliance with the SEC's regulation of this webcast, it's 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. 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 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 a key milestone at the end of January when the S4 was declared effective and the related definitive documents were subsequently filed, including the Six Flags proxy statement and prospectus. Meanwhile, we continued to work through the antitrust approval process after receiving a second request from the Department of Justice on January 22nd. 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 have 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've heard from 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 we are confident are greater than either company could have achieved independently. Naturally, as this process moves forward, we will keep the market a prize 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 we have seen before, the 2023 operating season was a tail of two halves. By mid-season, the effects created by anomalous macro factors, namely unprecedented rainfall in California and uncontrolled wildfires in Canada, resulted in short falls in early season attendance and spring season pass sales, which posed a challenge to our potential full-year results. Consequently, we modestly adjusted ticket pricing at several key parts, 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. 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 adjusted EBITDA margins over the last six months of the year. As we have previously stated, our best opportunity to streamline costs and drive margin expansion resides in each year's second half, when operating costs are the most variable and attendance and revenues are at their peak. 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. First is resiliency. Our historical track record of quickly recovering from macro disruptions is a testament to the resiliency of our business model. 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 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. This past season is just the most recent example of how our resiliency played a key role in driving record second half performance after macro factors weighed on first half results and our plans to produce another record year. Second is our ability to sustain performance. For more than a century and a half, Cedar Fair and its iconic collection of parks have delivered sustained performance. 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. 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. The appeal of our parks and all they have to offer has withstood the test of time. Since the founding of our flagship park, Cedar Point, in 1870, our company has built upon a rich history of delivering happiness and excitement to multiple generations of families. 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. 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. And third is stability. Our culture is rooted in stability, supported by the most experienced senior leadership team among the regional amusement park players. Industry experience also runs deep among our regional VPs and general managers, responsible for overseeing and managing the -to-day operations at our parks. Fundamentally, we also have a healthy, stable business. 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 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. Brian?

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 quarter, our parks had 377 total operating days, one additional day compared with the fourth quarter of 2022. During the period, we generated higher net revenues of $371 million, up $5 million, or 1% compared to the fourth quarter of 2022. Our improved performance was driven by a 9% increase in attendance to 5.8 million guest visits and a 7% increase in -of-park revenues. The increase in -of-park revenues was the result of the continued strong performance of our resort properties, incremental sponsorship business, and higher revenues at the NAAS marketplace. The increase in attendance reflects the robust demand for our extremely popular events, including taunts and winter vests, as well as increased season pass visitation tied to the strong early sales of 2024 passes. Partially offsetting the growth in attendance and -of-park revenues was a 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 the mid-year pricing adjustments we made, as well as the recovery of lower-priced attendance channels in the quarter and a shift in attendance mix. 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 -over-period increase was primarily attributable to $17 million of transaction costs related to the proposed merger with Six Flags. These costs have been classified as SG&A expenses. 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. Adjusted EBITDA, which management believes is the main measure of the company's 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%. Shifting our focus to full-year results, operating days in 2023 totaled $2,365 compared with 2,302 operating days in 2022. The 63 incremental days were the result of 80 net planned days added to our park operating calendars in 2023, largely in the first half of the year. These planned incremental days were partially offset by 17 operating days that were cancelled during the year due to inclement weather. For the full year, net revenues totaled $1.8 billion on attendance of 26.7 million guests, compared with net revenues of $1.82 billion on attendance of 26.9 million guests in 2022. The decrease in net revenues reflects the impact of a 1% or ,000-visit decline in attendance 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 -of-park revenues. The -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 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. 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. Moving on to the cost front for the full year. In 2023, operating costs and expenses totaled $1.32 billion compared with $1.29 billion in 2022. The -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%. This -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 reductions in seasonal labor hours and in park entertainment costs. These cost savings were somewhat offset by six incremental 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 SG&A expense was primarily attributable to higher planned advertising during 2023. 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 reimagining how we program and staff our parks in order to capture more permanent savings. Over the second half of the year, these efforts led to a $22 million -over-year reduction in operating expenses. We made these adjustments while still entertaining nearly 600,000 more guests during that time. Our cost-saving efforts, combined with record revenues, led to a 210 basis point expansion and adjusted EBITDA margin over the second half of the year. The reduction in second half operating costs was primarily driven by efficiencies in operating supplies and entertainment costs, as well as reductions in both seasonal and full-time labor. Over the second half of the year, our park teams reduced total seasonal labor hours by more than 550,000 hours, while our average seasonal labor rate was up a modest 1%. The changes we have made to our seasonal pay structure continue to help flatten the growth curve 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 last year, in line with expectations coming into 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 a park experience that meets the demand and expectations of our guests. On the adjusted EBITDA front, for the full year, adjusted EBITDA totaled $528 million compared to $552 million in 2022. The $24 million decrease was primarily attributable to the -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. 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. Including our cash on hand and the available capacity under our revolver, we ended 2023 with total liquidity of $345 million, an adequate level to cover -to-year cash needs. I want to look at long-lead business indicators for just a moment. As Richard previously mentioned, the early trends in sales of season-pass products have been strong, while group bookings and reservations at our resort properties are pacing in line with expectations. 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. Through the end of January, sales of 2024 season passes were up approximately $16 million, driven by a 20% increase in unit sales. The increase in unit 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 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. 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 Knotts Hotel. By comparison, we project investing between $210 million and $220 million on capital projects in calendar year 2024. Additionally, for modeling purposes, we are projecting full year 2024 cash interest payments of $140 million to $150 million and full year cash taxes of $50 million to $60 million. 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 a strategic decision to condense our operating calendars at several parks as we look to concentrate attendance over fewer days and drive better operating efficiency. 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 2,253 operating days in 2024, or 112 fewer days than in 2023. 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. 119 days in the first quarter, 303 days in the second quarter, 998 days in the third quarter, and 333 days in the fourth quarter. Despite the fewer operating days in 2024, we are confident we have the plans and initiatives in place to build on the momentum we 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.

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. 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, an observation supported by our consumer research, as well as our record second half performance in 2023 and the strong early trends in our long lead indicators like 2024 season pass sales. Second, in 2024, we are set to unveil one of our most compelling and broadest reaching capital programs ever. We are especially excited about the debut of Cedar Point's Top Thrill II, a project several years in the making and one that is certain to be one of the industry's most unique anticipated new rides of the year. Our investments in world class assets like TT2 place Cedar Fair on the amusement industry's leading edge of roller coaster technology and continue to build on our heritage of delivering thrills unlike any other. Although TT2's massive presence at our flagship park will most certainly steal this year's headlines, we are also introducing an incredible lineup of new attractions, dining, and resort options across our entire portfolio of properties. 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 help set strategies that drive revenue growth and uncover operating efficiencies that reduce costs and increase profitability. And lastly, I would emphasize few reporting periods have been impacted by macro factors as much as the first half of 2023. Under normalized operating conditions, this should translate into a comparative tailwind and a stronger first half in 2024. With Mother Nature hopefully on our side, we are excited about prospects for delivering a solid start to the year, coupled with an outstanding game plan for the peak season and the proven 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. While we continue to work to get demand back to 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. 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 call for questions.

Wonderful. Thank you. I would like to remind everyone in order to ask a question, press star and the number one on your telephone keypad. We will pause for just a moment to compile the Q&A. Your first question comes from the line of James Hardeman with Citi. Please go ahead.

Hey, good morning. 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, based on one of your final comments there that you thought that demand is soon going to outpace 2019. I'm assuming by demand we mean attendance. I guess if I look at the numbers, you were down about 5% versus 2019 in 2023. Do you think so it would take 5% attendance growth to get back there? Do you think that's 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, the ability to generate 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 Winterfest and that showed through this year. The fact that we really were able to push through 2019's level, highest attendance in the fourth quarter, this year in 2023, I think we have turned the corner and I think while there's always been a great deal of focus from the Southside 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 think where there is no extraneous factor like weather, we're seeing really strong demand.

Got it. It sounds like we're taking a wait and see but you feel pretty

good. Fair? We are confident in the demand that we're seeing and it's supported, as I said in my remarks, both by our research and what we're seeing in our leading indicators.

Got

it.

Then, Brian, I'm trying to figure out a smart way to ask this question but I can't remember if it was the second quarter or the third quarter when you initially talked about getting that base layer of season pass sales on the books and then you would lean into price after that. It seems like in a lot of ways that's played out here in the second half, particularly the fourth quarter. I guess as we think about what we saw, which was a really nice increase in attendance offset by a pretty meaningful decline in per caps, how much of that is a precursor to what we'll see in 2024? I guess specifically as we sit here today, the lower season pass prices, how much does that impact per caps in 2024? As we sit here today, is pricing back to being flat on a -over-year basis on the season passes with the potential to grow that or are we continuing to see lower season pass pricing into the new year?

Yeah, James. 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 at a handful of parks. I think unfortunately, or just the realities of our operating calendar and the parks that are open, a couple of those parks, most notably Knott's Berry Farm, are a big, a large portion of the fourth quarter operations. Not all of our parks have as much meaningful fourth quarter operations as others. I think some of those pricing adjustments weigh a little bit more maybe on fourth quarter than they necessarily will as we roll into 2024 as you're back to the full throated portfolio of parks operating. That said, even at the parks where we did take prices back to adjust to how the market around us in those few markets had moved, we have started to take price back up as we always do in our season pass program. On a -by-market basis, adjust our pricing. The playbook around season pass is the falls that is the least expensive, then it bumps up a little for the winter sale cycle, and then the spring and summer are the highest. We'll continue to roll through that and read -by-market. As we think about going into next year, where the consumer is at, where per caps are going to come out, we always have to separate and isolate admissions versus the in-park. We continue to be pleased with what we see on guest spending inside the park, particularly around food and beverage. I think there's some more work that we have in store for a few of those other in-park channels like Merchandising Games in 2024. We certainly believe that a channel like guest spending on extra charge, most notably Bass Lane, will be lifted and benefited by those higher attendance numbers that we are expecting going into next year.

Got it. Should I interpret all of that? If the positivity on attendance plays out in 2024 based on some of Richard's commentary, should we not assume that there's a significant give back on the per cap front like we saw in the fourth quarter?

I think the ultimate answer to that, James, is going to depend a little bit on mix of channel. Which channel does the majority of that lift come from? As you know, season pass and group are smaller admissions per cap or a less expensive ticket on a per cap basis than single day. Depending on where that mix shakes out in the incremental attendance as well as which parks. The higher per cap parks, if that's where more of the growth comes from, that could change that. It's fair to say that as attendance gets back to those 2019 pre-pandemic levels and each of those channels recover, there's naturally some mathematical pressure on the admissions per cap. There's a lot more revenue and that's a type A problem we'd like to have. Got it.

Thanks, guys. Appreciate it, guys. Good luck. Thanks, James. Thanks, James.

Great. We will go to our next question from Steve Wazinski with Stiefel. Please go ahead.

Hey, guys. Good morning. Richard, I understand you don't give annual guidance here. But if we're sitting here this time next year, would you be disappointed if you didn't exceed, I would say not so much the EBITDA threshold from 2023 given the easy weather comparisons 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 if you didn't exceed that level this year, what are 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 it's 24 or any year that we create a plan for. We look at our portfolio and go where are the opportunities. We start to factor in and have factored in that we invest continuously over time in our parks. The capital projects, and particularly the bigger projects, drive demand 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 certain parks will have the bigger products and we expect more growth out of those. Certain parks will be in markets that potentially are really doing well, meaning the consumer is feeling really good. And certain markets may, the consumer may be stressed. So I think we always talk and we always get asked on this call about the health of the consumer. I've said that in my first thing. So we monitor that as closely as we can. But what we, you know, we never really get the credit, and we've talked about this from, I think, 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 something we can't control gets in the way, but that's, we're an outdoor business. So weather and other things like that are just part of who we are. But when I think about building a plan and what I will evaluate at the 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 and how we program our parks, what days were open. I think you 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, as we do, as we go through each season, we're committed to dynamic pricing. We're committed to using our business intelligence capabilities and data analytics to drive our decision making, both now, but we plan on a continual basis. You know, we're talking about 24, and that's important. And that's, you know, 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 so that we can sustain our performance over a period of time.

Okay, gotcha. Thanks for that, Richard. And then if I go back to, I think James kind of asked this question, I'm going to ask it maybe a little bit of a different way. But, you know, you noted you obviously adjusted ticket pricing and 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. I guess the question is, do you think you took too much price action? And I know, again, this is a, Brian mentioned, it's a small component, it's a small part of your parks. But I mean, meaning, you know, do you think trying to get that price action back now is going to be a little bit more difficult? And I hope that, you know, all makes sense.

Yeah, 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 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. I think we did what we needed to do, and I would term our pricing adjustments modest. I'd also say, you know, as we look to the strength coming out of the fall season pass sales, we took our biggest price increases to the now winter price at those parts where we saw the strongest demand. So it's constantly watching the market and how our consumers are reacting, and making sure we're trying to optimize that revenue stream. Brian?

Yeah, I think, Steve, I would just add, you know, as we go through any year, there's always going to be points and times, various ticket channels and various markets where we might bump our head. And that's a lot easier to navigate on a day by week basis in things like single day tickets. 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 that pricing strategy and those sales strategy around season pass are set in the summer, you know, leading to that late August launch of each year's, or each heart's program. You know, and so you put in place a pricing strategy that it's harder to adjust downward on season pass. And certainly, there were several markets in our portfolio, that by the time we got to the first quarter of 23, the economies, maybe the consumer had changed a little bit from where they were back in July, August, when we were setting those prices. So, you know, the way the program works is you just have to ride it out, 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.

Okay, Brian, real quick, can you give the operating days by quarter again? You broke up a little bit. I think I got the third and the fourth quarter, but I couldn't hear the first and second quarters.

Yeah, sure. It was 119 days in the first quarter, 803 in the second, 998 in the third, and 333 in the fourth.

Okay, great. Thanks, guys. Appreciate it. Thank you.

All right, our next question comes from Thomas Gay 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, and in the recent filing, you had identified 45 million of savings, I think, based into the standalone expectations, and I think implied that total accompanying expenses would actually be down. Is it fair to say that fewer operating days are incorporated in that view, and that's a net EBITDA positive contributor, and then maybe just beyond that on the core expenses, how you're

Yeah, Thomas, I think you hit it right on the head. A big part of our strategy and approach to getting more efficient is, as we said on the call, focusing more of our attendance into a shorter operating season, particularly at the mid-tier parks. It's also about, as we've talked about in past, reimagining how we program the parks, meaning how do we program the parks, the entertainment of the parks that's less dependent on seasonal labor, our largest single cost, and so you're seeing some of that play out in consistency with our comments on the call, where we're taking those 112 operating days 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 and remain nimble, if I use that term, around variable operating costs to better mirror the demand levels. So what we were very effective, the teams were especially effective this past year, was adjusting 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're staffed well. One of the things that we pay very close attention to during the course of the year is how our seasonal labor dollars are translating to the in-park revenue channels, and there's a challenge, 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 way on per cap. So we have to be, our teams have to remain nimble on staffing up and 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 to structurally lower the overhead costs.

Great, makes sense. And then I wanted to revisit the bifurcation you were seeing earlier this year between Midwest strength and California weakness, and Richard, you talked about the recovery in Southern California in the second half. Is the postmortem on that and just some of the pricing strategies that you've enacted suggest that it was a weather-related problem primarily, or meant 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 of trying to start the season pass sales at a lower price and stimulating demand would be that it would drive in-park spending strength, and I did notice that the food and bev per guest was also I think a little bit lower on a -over-

Yeah, from our standpoint, as we looked at and looked at all of 23, we saw what others in the industry and some adjacent industries saw, which was 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 yeah, we always say, and you go back to 07, the 08, 09, we first saw weakness in 07 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. So as Brian mentioned, when we start and we spur a lot of volume, that puts people in the park, and then 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. When you do a significant increase in attendance, as we saw, it will put a little pressure on the per capita, because your park has a lot more folks in it, but that's a challenge. That's 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 once people get in the park. And then lastly, I'll say, when we now look at 24, I talked about the really compelling capital investment lineup we've got this year. When you put in things like Top Thrill 2, that drives not only a lot of people to the park, but it also drives things like premium charges, our front of the park, and then we have the new online Fastlane program. So we're really excited by what I think we can do this year, because we're more back to a traditional lineup. When I look at 21, 22, and 23, the investments we made were very disrupted by the pandemic, 20 and 21, 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 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 the gates.

Got it. Last one from me, I might have missed it, but knowing things might change after the pending merger, do you have a sense of the capex outlook on a standalone basis, just for

the next year? Next year, we are planning 210 to 220 of capital.

And for 23, what was the number

for the full year? The high end of that. It was right around, right at 220. Okay, perfect. Thank you.

Thanks, Thomas.

All right, our next question comes from Michael Schwartz with Trumis Security. Please go ahead.

Hey, guys, good morning. I think I just wanted to kind of focus in on the first question on some of the commentary around channel mix. And as I recall coming out of the pandemic, you guys just kind of had cut back on some of the lower value channel business, and it sounds like you brought some of that back. So how should we think about that going forward? Are we just kind of back to as quote pre COVID? Or is that still a focus to limit some of that that lower value stuff going forward?

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, you know, pay attention to and analyze, you know, the results and make adjustments where appropriate. So we have in some of the shoulder months where demand is naturally structurally just a little bit lower because maybe school is still in session. You know, things like that weather isn't as is, you know, as nice as July or August. You know, 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 it's a wholesome pivot all the way back to where we were pre pandemic.

Okay, great. And just from a cost standpoint, I mean, you've talked about some of the variable costs you removed in the back half of the year, just, I guess, I guess, partially in reaction to the softer attendance we saw in the first half of the year. But I guess as we as we go into 24, and you know, with season past sales, what 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, you know, some of the costs in the in first at least in the first half of the year, you adding back costs? Or do you think, you know, some of the changes you made in the second half of the year should be sustainable into into the first part of 24?

Yeah, I think there are it's a little bit of a mixed bag, right? There's there's certainly some cost savings that we mined this past year that I said, as I said, you just a little bit earlier, are the direct response to us adjusting variable costs to the demand levels. And if we could go back and have higher demand levels, we'd allow those costs back in to make sure we're delivering, you know, not only the guest experience that our guests want, but also that we're driving the revenues that we know we can get when when the attendance levels are higher. But there are there are also permanent savings in there. And I think we'll start to to see more of those coming in related to the adjustments, you know, as we'll make that we're parks. I think what's important to note, though, is the difference between the first half of the year for us and the second half of the year, and with even more of a concentration in Q3, that's where the lion's share of our variable costs sit. And that's 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 costs too aggressive, too aggressive in trying to take costs out of the system, we run the risk of not being prepared to open the parks in spring, you know, that April May timeframe that they normally open. So we want a pretty thin, I'll call it sort of that fixed offseason cost base at the park level. In the fourth quarter for some parts like Cedar Point, which closed down at the end of October, or in the first quarter for lion's share of our seasonal parks that aren't open year round. And more of where you're 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.

Okay, that's helpful. Thanks, Brian. Thanks, Mike.

Okay, our next question comes from Chris Veronica with Deutsche Bank. Please go ahead.

Hey, good morning, guys. Thanks for all details. Yeah, thanks for all details so far. Wanted to revisit the comments about adjusting the park operating days and totally understand it from a certainly from an operational expense standpoint. But I guess, you know, your plan or your goal is to get more attendance into fewer days. And the question they always, you know, how much risk do you see that and also from a, you know, from an in-park spend standpoint, if the parks are going to be a little bit more crowded on certain days, particularly in shoulder seasons, you know, is there any inhibitor on, you know, then on an ability to spend? Yeah, Chris,

let me jump in here. This is Richard. You know, when I think about the days that we're stripping out, a lot of them were the days that we saw in the first quarter that we added to keeping some of our markets, Charlotte, Richmond and Great America open, you know, throughout the on the weekends through January and February. By default, kind of like Winterfest, those were lower length of stay days. They weren't full summer days where you get a six, seven, eight hour length of stay. So, you know, by default, what we're stripping out is a much shorter length of stay, you're losing the visit. So as you think about the revenue implications of that, as long as you get those guys to come and we're confident that, you know, we can drive the attendance in the operating calendar we've got, you know, the operating calendar, we always constantly fine tune year by year. And there's the constant debate on our side. Do you add days? Do you take days out? Where is the opportunity? But in terms of driving the per capita, I would point you back to whether it's July, August or in particular, October, there's such flexibility and scalability in each of our we drive our highest per caps on our biggest days. And that's not just admission pricing, it's also per capita is within the park because you drive longer length of stay. So we've got an ability to scale what we do. You know, we built all of our new food facilities. So on lower demand days, we can only open one line, not two, you open half a facility. We've got that ability within our the we construct our experience to really take and go grab as much revenue as we can get from our guests and give them an opportunity to make sure we're servicing them at a level that they want. So mindful of that we've got to be prepared for it. But we built our parks to be able to drive per capita even on the biggest of days.

Okay. Thanks, Richard. Super helpful. Just, as follow up to that, I mean, the number of park days looks like they haven't planned right now is rounds to down 5% for the year, right? Down 4.7 112 days. If we if we tried to think about that in terms of hours, and maybe this is a, you know, 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.

Yeah, just the way the math would work. 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, you know, whether we'll saw in 23 have an impact on it, as well will demand if the man comes back strong, we are not opposed to sliding, you know, an incremental day in here or there, you know, to meet that demand. And that goes for operating hours as well, right? We will shrink hours during the course of the year based on weather factors, maybe not close the whole day, but close up early or will extend hours around demand. So, you know, the key here is, is to is again, I'll go back to that word nimble, we have to remain nimble and flexible around some of these things. While while responding to how the markets evolving around us.

Gotcha. Thanks, Brian. Just one last question for me if I can real quick is, is it is do you think it is, is there thought given to maybe starting to attach some kind of ancillary pre sale to the to the season pass products? And, you know, it's obviously involves some kind of discount, but it gets you guys, you know, whatever might be 50 or 75 100 bucks of, you know, built in revenue that they're going to spend and them to come. Is that that's something that's on the radar yet?

We've used from time to time those those even past credits, credit dollars, if you will, in markets here, they're trying to test various things that resonate. Yeah, I think what you'll what I can tell you, Chris, is that you'll continue to see us finding ways to evolve season pass. It's such a critical part of our overall attendance at north of 50, you know, 50% of the attendance mix. So finding ways to engage and create that stickiness for that season pass holder is key. So nothing, you know, concrete, I can point to right now, but certainly something we have tested and will likely, you know, continue to look for ways like that to continue to drive more demand for the season pass product.

Okay, very good. Thanks, guys.

All right, our next question comes from Eric Wold with the Riley Security. Please go ahead.

Thanks. Good morning with you. I guess, kind of taking the season pass question kind of to a longer term kind of broader sense, you talked in the fresh release that, you know, the 20% increase in in unit sales will be a nice tailwind for this year all season long, maybe kind of beyond that. Can you, do you have the data that kind of, or at least you can share what unit sales are now versus what they were pre-pandemic? Any sense of how that demographic buyer has shifted back then and then maybe even, you know, what the average distance is from a park versus back then? Try to get a sense of, you know, what's changed in terms of maybe the TAM or kind of the reach around these parks that could have a much more broader long-term benefit versus, you know, kind of short-term pricing fluctuations for a given season?

Yeah, Eric, it's Brian. I'd start with this in terms of the demo of the season pass holder. We haven't seen significant change in that area. We have seen that that radius around the park, the product continue to maybe inch outward a little bit further over time. Maybe that's been exaggerated, you know, post pandemic. You know, we've seen a lot of regional business models where, you know, folks are more willing to drive from a little further out as opposed to getting on a plane, you know, which is more expensive, more complicated. And so we are seeing our season pass penetration maybe reaching a little bit further out. I don't know yet that it's a material shift, but it is moving in that direction. And, you know, lastly, in terms of, you know, the pre-pandemic versus post-pandemic volume, we are still, even 2023 in spite of it being a shortfall of a couple hundred thousand units to the 22 record level, that pass program was still above our 2019 season pass program in total units sold. So we have, you know, we set a new bar and are continuing to try and work our way, you know, north from there. Helpful.

Thank you very much. Thanks, Eric.

All right. Our next question comes from Liz Dove with Goldman Sachs. Please go ahead.

Hi there. Good morning. Thanks for taking the question. I just wanted to dig a bit more into attendance on per caps. Like, as I look to what you talked about in 3Q for October trends, you talked about a 2% increase in attendance and a 3% decrease in impact spending. So it feels like there was a meaningful step down in November and December to kind of end up where you did for the full quarter, especially as I would have thought October was 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.

Yeah, Liz, it's Brian. It really dovetails back to my early comment that it's a little bit of mix and the parks that are operating, particularly still in November and December, you're losing, you know, maybe one of your top two parks in terms of ticket pricing in Cedar Point as it shuts down at the end of October. NOS is the other one, so one too, typically in terms of pricing point on tickets and season passes, et cetera. And NOS is the one park where we did roll prices back pretty significantly for that fall renewal because of how we felt the market had moved from where our 23 pricing was originally set. So because NOS is a little bit more a piece of that pie, it's really just a function of the mix play and the seasonality of our business. You know, I think the other thing is, you know, as it relates to the end park spend, you know, that's where a Cedar Point or even the Schlitterbahn water parks come into play, not being present in as much in those four quarter numbers. Those are two of your biggest and your highest overall per cap parks. They have the longest length of stay of any parks in our system. So as they come out of the numbers, those variances get swung a little bit more mathematically, if I could say that, than overall. Now that's not to say that, you know, the pricing strategy or the pricing program that's in play right now is not going to have an impact on emissions per cap going into 24. There's certainly going to be some mathematical impact on pricing as we go into 24 on a park by park basis. So NOS's admission per cap 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 that's 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 maximizing either one of them independently.

And Lizzie, I'll go back to my comments, which were, you know, in November and December, Winterfest is a much shorter length of stay, particularly on the East Coast. We were pleased with the attendance. Toronto had a very strong Winterfest program. And there, when you look at U.S. reported, you lose on the foreign exchange piece of it. So if you're driving a lot of volume up in Canada with a slow length of stay, there's just a mathematical impact on your per cap.

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 the season pass, which had previously been extended and was not in 2023. So I guess any kind of early reads on what you're seeing so far in January and early February. I know it's a much lower volume quarter, but I see California has had some kind of weather issues. So just kind of any early reads there of what you're seeing.

Yeah, I'd say, you know, as we said in our prepared remarks, the best long lead indicators we have at this point are looking at those season pass and related all season product sales, which are extremely strong, as well as early bookings around group events and reservations at our hotels. And those are pacing in line with our expectations. So from a long lead indicator, those feel really good at this point in time. As it relates to California weather, we certainly didn't want to see that week or so of extreme weather, but a very different scenario to what we experienced last year. I'd say what we've seen so far through the first month and a half or so of 2024 is more comparable to typical California winter, which is you'll get a week of rain, but it's not anywhere near the extreme, anomalistic weather patterns we saw in 2023.

Okay, that's helpful. Thank you so much.

Lizzie, I would say I'd echo Brian's comments. And again, I just say on the days we're open and the weather is the same year over year, I'm encouraged by what I see. If we were down percentage-wise the last year, I'd be discouraged, but I'm encouraged.

Okay, thank you.

All right, we will go to our next question. Paul Golding with Macquarie Capital. Please go ahead.

Thanks so much, Richard. Brian just had a question around the S&B comment. You noted that transaction count and 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 greater penetration of mobile food ordering and how far along we are in the rollout of that in order to see continued tailwinds potentially to help per caps relative to attendance. And then my second question is on 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.

Yes, I'll start with your F&B question, Paul. We continue to experiment with different ways to optimize those efficiencies using mobile for food and beverage ordering and other aspects of the test, some mobile purchasing capabilities around something like Fastlane. The challenge with all those things is within the park, the ability to scale it to days where you might have 40,000 or 50,000 people in the park. I think it's helped in some of the parks on a modest level, but more of the benefit, I'd say more of that lift in the average transaction count, 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 efficiencies at this point in time. Not giving up on making an impact more around the mobile side of things, and we are actually rolling out our new mobile app as we speak as we get into the 24th season at the various parks. I think NAZ is maybe next up on the schedule, which will have more functionality around that. But the challenge is always just how do you operationalize at an effective level on those big attendance days. That's just a unique challenge to our business. As it relates to the season pass, I'll let Richard provide some color on that.

Yeah, Paul, you want to restate your question so I make sure I got that on season pass?

Sure. Well, you've seen this pop in season pass sales on a unit basis. 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 pulled 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 advertising, particularly in the spring where we sell traditionally 50% of our units, that also tells people that the park's open for business. So there's a duality to all the advertising we have in the spring versus the early summer. I think one of the things that we monitor is the effectiveness of our spend. And we have been nimble. We've dialed it up, we've dialed it down. Coming out of the pandemic, we've dialed it way down because we thought we had the ability to do that and there were different market conditions then. I'd 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 TT2 coming on at Cedar Point, we want to make sure that we've got the program for advertising that'll draw and extend the reach of Cedar Point. It's a super regional, it's a destination of its own. So we are not spending in some markets when you've got opportunity as overspending and maybe trying to push too hard. It's a constant tug of war. And we dial that down to the market by market opportunities each year.

That's great, Collin. Thanks so much. Thanks, Paul. All right. Our next question comes from Ian Zafino

with Oppenheimer. Please go ahead.

All right. Thank you very much. Just wanted to ask a question on the cap-backs. I know you said, I think, 210 to 220. Can you maybe give us an idea of the components of that as far as rides? Is there any intention to increase F&B spend? I know you've done that in the past. And any other kind of components you could give us would be helpful.

Thanks. Yeah, 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 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 you'll 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 $220 million. I'm sorry. But again, part of that $220 in 23 was attached to the Knott's Hotel. So a little more investment in the hotel and resort business, but nothing to the level. Knott's was really one of the last renovations in terms of our existing hotel portfolio. We've got some work on the calendar coming up, not this year, but in future years down at Schlitterbahn to make sure that we touch their resort component. That was one of the things that we were very excited about in 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. Two, continue to instill the guest amenities, both in food and beverage and elsewhere. And third, increasingly, you're going to see us, and kind of ties back to our last answer, invest in technology to make sure we're infusing technology into our parks. We're not only rolling out the mobile apps at all of our large parks through the spring, but we're also dominoing 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 put a lot of value in.

All right, great. Thank you very much. All right, our next question

comes from Robert Orange with KeyBank Capital Market.

Hi, thank you. I wanted to ask about EBITDA margins. You talked in the past about being able to get back to the mid to high 33s when you got attendance back to 2019 levels. And you're talking pretty positively about the attendance ramp here this morning. I guess if I look at the deal findings from the standalone 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.

Yeah, Robert, it's Brian. As we said in our prepared remarks, driving margin expansion is a core priority. It remains that. As it relates to the model in the S4 that was filed, I would say, again, that's a working model that was reviewed with our board back in the summer of 2023, not necessarily reflective of where we stand today and the plan that we have built for 2024. As we said, our greatest opportunity for margin expansion from the second half of the year. And we've built a plan for 2024 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 expect to see a 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's critical to get back to that 27 plus million attendance level to get there.

Thank you. Just a quick one on group. I know coming into the year you were missing 1.4 million group visits for 2019. Any way you can frame up kind of where we exited the year and what you think you can get further back in 2024?

Yeah, Robert and Richard, we're 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, while 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 2008, 2009, it took us about three years to recoup the groups. They're the slowest channel to come back. But we saw companies booking, we saw youth group bookings in the second half looking really good. And we're still seeing that trend as we would expect to see coming out of a macro disruption. So I'm very encouraged by what we're seeing without our group channels. Understanding that we did 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.

All right, that does conclude today's

Q&A. I'll turn the call back over to Richard Zimmerman for closing remarks.

Thanks to everybody for joining us and your continued interest in Cedar Fair. We hope you have a chance to visit one of our parks this season as we keep your prize of our progress on the 2024 season. Michael.

Thanks again, everybody. With additional questions, I invite you to contact our Investor Relations Department at -833-9000. 627-2233. Our next call will be in early May after we release our 2024 first quarter results. Annika, that concludes our call today. Thanks, everyone.

Thank you all for joining. You may now

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