Ladies and gentlemen, thank you for standing by, and welcome to the Cedar Fair Entertainment Company 2019 Fourth Quarter and Full Year Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session.

[Operator Instructions] Please be advised, that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to Mr. Michael Russell. Please go ahead..

Good morning, everyone. As Amy said, my name is Michael Russell, Corporate Director of Investor Relations for Cedar Fair. Welcome to our 2019 Fourth Quarter and Year-End Earnings Conference Call.

Earlier this morning, we distributed via wire service our earnings press release, a copy of which is available under the News tab of our Investors' website at ir.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 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 these risks, you may refer to the company's filings with the SEC. In compliance with the SEC's Reg 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. It's my pleasure now to turn the call over to our CEO, Richard Zimmerman.

Richard?.

Thank you, Michael and good morning everyone. On our last earnings call, I mentioned that 2019 results through October positioned Cedar Fair well to achieve its best year ever. Today, I'm pleased to report that indeed it was.

For the full year, we reported record results in net revenues and adjusted EBITDA, driven by new highs in attendance, in-park per capita spending and out-of-park, revenue reported on both a consolidated basis and a same-park basis, which excludes our two Schlitterbahn water parks.

Our 2019 capital programs and initiatives clearly resonated within our markets, including the addition of traditional attractions like the Yukon Striker roller coaster at Canada's Wonderland and new more immersive attractions like our Grand Carnivale and WinterFest events.

The continued expansion of the critical season pass channel, along with a partial year contribution from the newly acquired Schlitterbahn water parks, also combined to help deliver our record performance this year.

Over the past eight years, the evolution and success of our season pass program has served as a cornerstone of growth and stable recurring revenues. I'm pleased to report the continuation of that trend with the early season sales of 2020 season passes and all-season products, up by more than 40% combined across the portfolio.

While we're still only one-third of the way through our season pass sales cycle and have more work to do, few indicators reflect our guest appreciation and demand for the entertainment product we offer, more than seeing a 40%-plus ramp in the early sale of season passes.

The sustained growth of this program over the long-term has been fueled by our willingness to adapt to customer preferences and attract new guests, initially the day pass visitor, who over time, we work hard to convert into a season pass holder.

We measure that success via trends in unique visits, which were up a healthy 6% in 2019, following a 1% increase in 2018. This was another key performance metric that gives us confidence, our long-range plan initiatives are working well.

Our record performance was also fueled by the continued growth of our out-of-park revenue channel, including resort accommodations. In 2019, out-of-park revenues were up 11% and accounted for more than 10% of total net revenues.

Our investments in hotels and other adjacent resort entertainment offerings, represent a strategy, which we believe distinguishes us from other regional park operators.

Our resort properties, including hotels, cottages, cabins and luxury RV sites, create a sticky factor for our parks that boost -- that both boost attendance and extend length of stay on average to two nights and three days.

When staying at our resort properties, guests can enjoy our recreational amenities, restaurants and other conveniences, especially quick and easy access to our parks. Speaking of restaurants, food and beverage continues to be our fastest-growing revenue channel with same-park food and beverage per cap, up 5% and setting another new benchmark in 2019.

Offering chef-inspired food choices, unique culinary treats during special events and a more efficient and immersive dining facilities have dramatically enhanced the guest experience. We are pleased with how our food and beverage programs have become another hallmark for our parks.

Record results aside, 2019 proved to be a very important year for our company. We expanded our operational footprint to the Southwest through the strategic acquisition of two Schlitterbahn water parks, including the world's most highly acclaimed water park Schlitterbahn New Braunfels.

We opportunistically purchased two additional properties, the 112 acres beneath California's Great America, ending a lease agreement for the land with the city of Santa Clara and Sawmill Creek, a 236-room lake front resort and conference center within minutes of our flagship park Cedar Point, which will strengthen that park's appeal as an entertainment destination.

We opened a new year-around 130-room Springhill Suites Hotel in Charlotte, located just outside the gates of Carowinds.

We finished construction of the Cedar Point Sports Center in Sandusky, a world-class indoor sports facility that combined with the Sports Force outdoor complex opened in 2017, represents a model for how public partner -- public-private partnerships can work for the benefit of both the community and local businesses.

And we kicked off renovation projects at Knott's Berry Farm Hotel and Castaway Bay indoor water park and hotel at Cedar Point.

Both of these properties have been solid producers of revenue and adjusted EBITDA over the years and we're confident that their renovation will deliver similar returns to what we've seen from past projects like the refresh of Hotel Breakers at Cedar Point.

These strategic initiatives are very important to the near-term and long-term future of our business and are meaningful in our never-ending efforts to increase unitholder value. In that regard, I am quite proud of our team's commitment and dedication to bringing these important milestones to fruition.

Before I ask Brian to review our financial results in more detail, there are a few things of interest about last year I should touch on as we approach the 2020 season.

As we have shared before, our busiest days of the year typically occur in July, August and October, which collectively represent our peak periods for maximizing revenues and adjusted EBITDA.

This is especially true for our largest parks including Knott's Berry Farm, Cedar Point, Canada's Wonderland and Kings Island, all of which enjoyed record or near record performances in terms of attendance and/or revenues due in part to near optimal macro factors experienced during the peak of our 2019 season, most notably in two key areas.

One was the continued strength of the consumer, a trend we saw throughout the entire season and across our entire portfolio, as reflected by the improvement of our in-park per capita spending results.

Another came via favorable weather conditions when it matters most to the parks, starting just after schools led out in mid-June and extending through the month of October when Haunt typically produces our biggest crowds of the year, last year being no exception.

It was a welcome period of persistent tailwinds, which also demonstrated the strength of our business model, meaning, when pushed to operate flat out our parks performed exceptionally well.

Not only am I pleased with the financial results we generated, I am also impressed with the incredible resiliency of our park teams and their ability to consistently deliver a high-quality guest experience.

This is how our business excels, by delivering on our guest expectations and providing them with the unmatched high-caliber entertainment experiences they have come to expect from our parks. We remain focused on building upon the momentum of this past season, as we provide our guests with reasons to come back for more.

Finally, I want to mention the Board's recent appointment of Dan Hanrahan as our new Board Chairman. Dan joined Cedar Fair's Board in 2012 and has served on various Board committees, most recently as Chair of the Compensation Committee.

Given his successful track record in executive leadership and deep experience in the hospitality, travel and retail sectors, Dan is an excellent choice to lead our Board going forward. As many of you know, Matt Ouimet served as Executive Chairman for the past two years and was CEO of Cedar Fair for the six years before that.

Matt remains a valued member of our Board and I want to take this opportunity to express my thanks to him for his many contributions, which when tallied up are immeasurable and invaluable. With that, I would like to turn the call over to Brian to review our financial results in more detail.

Brian?.

Attendance was up 8%, in-park per capita spending was up 1%, and out-of-park revenues finished the year up 11%. On a same-park basis, net revenues for the year totaled $1.43 billion, up 6% or $84 million, reflecting record performance across all three key revenue drivers.

This included a 5% or 1.3 million visit increase in attendance to 27.2 million guests, a 1% or $0.44 increase in in-park per capita spending to $48.13, and an 8% or $12 million increase in out-of-park revenues to $164 million. We're very pleased with the balanced growth we've again generated in 2019.

The increase in same-park attendance was a result of our strong capital programs highlighted by the combination of traditional world-class thrill rides like Yukon Striker and the introduction of more innovative special events and immersive entertainment for the entire family.

Our advanced purchase channels including season passes, again, produced the largest tenants increase. In 2019, season pass visits represented slightly more than 53% of our total tenants mix, up from a little more than 50% a year ago.

As Richard noted, we are equally pleased to report strong consumer response to our new attractions and events, helped produce a 6% increase in unique visits or just shy of one million visitor lift over the prior year.

While growing our season pass holder base and increasing total visits are important elements of our strategic plan, increasing our unique visitor count remains critical to the sustained long-term growth of the business. Turning to same-park in-park revenues.

The 1% lift in in-park per capita spending was driven by improved non-season pass admission pricing and growth in other in-park guest spending, reflecting the general financial health of our consumer. The increase in other in-park spending was led by a 5% per cap increase in food and beverage and an 8% per cap increase in extra-charge attractions.

We're pleased to see continued improvement in per caps, particularly given the meaningful growth in season pass visits which tend to put additional pressure on these metrics. As I mentioned, we drove 8% growth in same-park out-of-park revenues in 2019, largely attributable to an increase in transaction fees and revenues from Sawmill Creek.

As evidenced by the recent opening of the Springhill Suites Hotel and the acquisition of Sawmill Creek, we will continue to seek opportunities to grow and expand our resort offerings as part of our long-range strategic plan.

Moving on to the cost front, operating costs and expenses on a same-park basis and excluding $7 million of acquisition-related expenses, totaled $956 million for 2019, up 7% or $64 million between years.

This increase was driven primarily by planned wage and rate hikes and higher labor-related benefits all of which comprise nearly half of the total increase in same-park costs; incremental operating expenses associated with the new and expanded immersive events including Grand Carnivale Monster Jam and the inaugural year of WinterFest at Canada's Wonderland; higher variable operating costs directly attributable to the 1.3 million visit increase in attendance such as cost of goods sold and credit card transaction fees; and costs associated with other operating initiatives in the areas of marketing and IT and the grand openings of the Springhill Suites Hotel and the Cedar Point Sports Center.

Full year adjusted EBITDA, which we believe is a meaningful measure of park level operating results, totaled $505 million, up $37 million or 8% over the prior year including the contribution from the Schlitterbahn parks. On a same-park basis, adjusted EBITDA totaled $489 million, up $21 million or 5% year-over-year.

Meanwhile same-park adjusted EBITDA margin declined 60 basis points to 34.1% the result of planned increases in operating costs associated with the addition of more OpEx-heavy immersive events and entertainment.

Margins in 2019 were also pressured by the acquisition of lower-margin operations such as Sawmill Creek and the start-up costs previously mentioned. While these strategic initiatives put pressure on near-term margins, each is cash flow accretive and a key contributor to the long-term growth of the business.

We will continue to use adjusted EBITDA margin as an important metric for evaluating the efficiency of our parks and their adjacent operations. However, in the end, we will not be afraid to pursue lower margin development opportunities that are strategic to the business and cash flow accretive over the long-term.

Now let me turn to fourth quarter results. Recall that due to a fiscal calendar shift, our 2019 fourth quarter began on September 30 compared with a September 24 start for the fourth quarter of 2018. As such, the 2019 fiscal fourth quarter included 13 weeks versus 14 weeks in the fourth quarter of 2018.

Also the current quarter included the impact from operations and off-season costs at our two Schlitterbahn water parks. Because of these variations and for the most comparable results, my discussion of the fourth quarter will reference results on a same-park/same-week basis a 13-week period that excludes Schlitterbahn.

On a same-park/same-week basis net revenues for the 2019 fourth quarter totaled $256 million, up 13% or $30 million driven by a 16% or 686,000 visit increase in attendance to 5.1 million visits and a 17% or $4 million increase in out-of-park revenues to $28 million.

These gains were offset slightly by a 3% or $1.25 decrease in in-park per capita spending to $46.35. The 16% increase in attendance was primarily attributable to record attendance during our extremely popular Halloween-themed events in October and outstanding first year attendance for Winterfest at Canada's Wonderland.

These attendance gains were partially offset by soft attendance at our California parks in December as a result of very wet and unfavorable weather conditions. We're very pleased with the Toronto market's initial response to Winterfest at Canada's Wonderland, and we are excited about the prospects for further development of this event going forward.

Most surprising was that two-thirds of WinterFest guests at that park purchased single-day tickets presenting us with a great opportunity to introduce an incremental audience to the park and all it has to offer. We're excited about the potential to convert these new guests into season pass holders over the long-term.

After operating costs and expenses, which were up $25 million on a same-park/same-week basis, fourth quarter adjusted EBITDA totaled $62 million, up $4 million or 8% year-over-year.

The increase in fourth quarter cost was a result of incremental variable operating costs associated with the record attendance levels in the period as well as anticipated higher labor costs and operating expenses associated with the start-up of our new facilities and immersive events most notably WinterFest at Canada's Wonderland.

Turning to the balance sheet, overall our balance sheet remains healthy and in sound condition. We ended the year with $182 million in cash on hand, no outstanding borrowings under our revolving credit facility and a total leverage ratio of 4.3 times or 3.9 times on a net leverage basis.

The 4.3 times total leverage reflects the $500 million bond issuance in 2019, which was used to fund the strategic acquisitions we completed during the year.

As we noted on our last earnings call, our priority is to reduce total leverage back down inside 4 times as quickly as possible and re-establish balance sheet flexibility to pursue additional growth opportunities.

Based on our record performance in 2019 and our confidence heading into the 2020 season, we believe we are well positioned to deliver on that goal through EBITDA growth over the next 18 to 24 months. Looking at long lead indicators, the positive trends remain very strong.

Recall that last year on this call, we reported strong trends as well which for 2019 resulted in a record year across the board.

Along with record season pass sales in 2019, we also set new highs in the attachment rates of add-on products such as our all-season dining and all-season drink programs, most of which produced double-digit revenue increases this past year.

As Richard mentioned earlier, sales of advanced purchase commitments for the 2020 season are off to an even better start. Deferred revenues at the end of 2019 totaled $151 million, up more than $40 million or more than 40% when compared with the same time last year.

This year-over-year increase reflects the record sales of 2020 season passes fueled in large part by the hugely successful introduction of the Cedar Point Gold Pass.

While I must caution that as of this past Sunday, we are only a little more than one-third of the way through our season pass sales cycle, we are nevertheless very pleased with the record pace we are on to-date.

As Richard noted earlier, few indicators reflect the appreciation and demand for the entertainment product we provide better than seeing a 40%-plus ramp in the early season sale of season passes. In summary, we ended 2019 in very solid financial position.

We delivered on our goals of driving net revenue growth through improved attendance, while increasing per capita spending even with a higher percentage of season pass attendance.

We're well positioned heading into 2020 with deferred revenues at a record level, reflecting the early strength of our 2020 season pass and all-season dining and drink programs, and we have a capital program in place that positions us to deliver another outstanding year.

We continue to generate a significant amount of free cash flow and our capital structure provides us with the necessary flexibility to pursue attractive market opportunities as they arise.

We'll continue to prudently manage our cash flows to maximize value for our unitholders through a combination of cash distributions and organic growth opportunities both in the near and long term. With that, I'll turn the call back over to Richard.

Richard?.

Thanks, Brian. I am encouraged with how effectively our strategic initiatives performed in their first year, and I expect more of the same level of success as we move forward. The initiatives we implemented achieved our primary near-term goal of attracting an incremental audience and driving a meaningful lift in attendance.

Throughout the season, we created urgency to visit our parks and once inside our gates, guests enjoyed a variety of entertainment choices beyond our world-class thrill rides and attractions. Our team's performance was nothing short of outstanding last year and our associates should be very proud of what they accomplished.

With 2019 in the record books our challenge now is building upon that success for the upcoming season and beyond. In 2020, we plan to expand upon our strategy of offering limited-duration special events and experiential entertainment of scale with the rollout of additional immersive events like Grand Carnivale and Summer Nights.

At the same time, we'll continue to invest in the traditional rides and attractions, which have worked, so well for so long such as the new 300-foot coaster Orion at Kings Island, and expansions at several of our water parks.

We're also excited to see the first full year contributions of new assets like the Springhill Suites Hotel and Cedar Point Sports Center and the first full year contribution of recent acquisitions like our Schlitterbahn water parks.

With the early momentum, we've generated in the sale of season passes and the capital program and new initiatives, we have planned we're confident that we're well positioned to deliver another outstanding year in 2020.

As we previously stated, and as evidenced by our recent capital programs, we're focused heavily on broadening our park offerings with more immersive entertainment and special events; investments which tend to be more OpEx oriented and more CapEx efficient.

An important element of this strategy is lengthening the cadence between major thrill ride additions at any one park by at least a year or two. This shift in approach provides us with budget flexibility and frees up capital dollars so that we can add something new to every park every year.

It also allows us to efficiently reduce the run rate of our annual CapEx spend, while maintaining the standard of quality for which our parks are known.

Ultimately, this results in incremental free cash flow and the flexibility to allocate capital more effectively, including rebuilding our balance sheet reserve to take advantage of attractive growth opportunities in the future.

While we are not committing to a hard line capital investment threshold or amount at this time, we are comfortable in saying that our targeted investments in marketable rides and attractions and park infrastructure needs will begin to migrate back towards a 9% of revenue level beginning with the 2021 season.

For 2020, we still estimate investing approximately $190 million in our parks and resort accommodations, which is in line with the level of capital investment in the past two years. Before we open the call up for questions, I would like to address a couple of other items that have been front and center during our recent meetings with investors.

Over the past year, we have been asked about the variability in the performance of companies in our space. Given this, I want to ground us all on why we feel so strongly about the health of the industry, and the potential of Cedar Fair going forward. First, the business model for the regional amusement park space is solid.

There are significant barriers to entry. History has shown the industry to be generally recession-resilient. And even after making appropriate capital investments the business generates significant free cash flow. Second Cedar Fair's approach to the business has proven to be best-in-class over multiple decades.

Through an abundance of surveys and market research, we have a deep understanding of our consumer. We always make decisions with consideration for what is best for the business long term and we have prioritized returning capital to our unitholders through a sustainable and growing distribution.

Cedar Fair has a long history of delivering attractive returns to investors. Since going public more than 30 years ago, our investors have enjoyed a compound rate of return of approximately 15% with distribution reinvestment.

Our long-term success has come from making significant investments that are designed to not only have immediate impact, but also serve to create value for many years to come.

The high-quality enhancements to our existing parks, the ongoing growth of the critical season pass channel, the continued development of our resort properties, and adjacent entertainment offerings, and the meaningful growth opportunities created by acquisitions like Schlitterbahn and Sawmill Creek provide us with the confidence that we will continue to grow Cedar Fair, well into the future.

We are well positioned to deliver another year of record results in 2020 and remain laser-focus on delivering attractive returns for our investors.

With excellent results in 2019, the positive traction produced from new strategic initiatives and the early read of 2020 long lead indicators, we have established a new strategic growth target of $600 million of adjusted EBITDA by 2024.

This goal implies an average growth rate of 3.5% over the next five years, which we believe is rational, yet appropriately aggressive, Especially given that several of our largest parks, delivered outstanding performances, in 2019.

It's important to stress that we do not anticipate growth to be linear over the 5-year target period, because of the potential impact, short-term macro factors can have on our operations, as well as the timing of returns from longer-term investments. Amy, that concludes our prepared remarks, and we are ready to take questions..

Question-and:.

[Operator Instructions] Your first question today, comes from the line of Steve Wieczynski of Stifel. Your line is open..

Yeah. Hi guys. Good morning..

Good morning, Steve..

So just want to dig into your 2024 EBITDA target that, you laid out there. And, maybe if you can help us think about, what's being embedded in that, at a very high level. I'm not trying to get into exact numbers here. But I assume, first of all, that target doesn't include any acquisitions.

But, maybe also how you're thinking about long-term attendance growth? And maybe what's embedded in there for, labor costs as well? Or I guess, another way to say it is, how are you thinking about, margin expansion possibilities?.

Yeah, Steve, it's Brian. So at a high level, as Richard said on the call, the growth over the next five years isn't necessarily going to be linear. And I would equate that also to, where that growth comes from.

I think right now we're in a window of time, for the last several years where the growth has been driven largely by volume, and modest increase in per cap. That's different than where it was maybe from 2012 to 2015. I think we see at least for the next several years, we're still in a little bit more of the volume game.

So if we're looking at top line growth, it probably leans a little bit more towards attendance, than it does per cap. We do continue to believe, we have pricing power. But, as we've talked about in the past, with such a bifurcated economy we have to be careful, not to leave too many folks behind at the lower end of the economic scale.

So we're sensitive to that. As it relates to cost, we've assumed that, at least for the foreseeable future, that we're going to be in a similar place to where we've been the last few years, which is pressures on labor costs, will continue. As you know it's our single largest cost line item, representing about half of our operating costs.

And so, we're going to build a lot -- as many contingencies and initiatives in there to try and keep those costs down. But I think the model reflects our target number. And the model behind it reflects that, the cost pressures are going to be similar going forward..

Okay, got you. Thanks for that, Brain. And then, I wanted to ask about your early season pass sales.

And when you look at those pass sales obviously which are pretty strong, I want to ask either, a, are you guys -- were you guys overly aggressive or have you been aggressive with promotions or marketing? And then b, are those pass, sales pretty evenly dispersed around the country? Or is, there one or two regions that you're seeing outsized growth? And I assume one of those might be around Cedar Point..

Steve, it's Richard, good question. One as you know, we watch our season pass program very closely, week-to-week, as we go through the sales cycle. When you look at whether or not we're aggressive Cedar Point. And we said this on our last call, was the last park where we implemented the Gold Pass program.

So it's now about the same three tiers, as the rest of our parks. So we saw a tremendous response. And that's been a significant driver of the growth. So we've called that out. And I would call that out again. However, taking Cedar Point out of the mix, we are still up double digits across the rest of the portfolio, at virtually every site.

We see that strength across the bigger parks and the mid-tier parks. So what we're really pleased with is the reaction we've seen to our long-range plan strategies being put in place, the reaction to the limited time duration events.

When you look at our expanding the calendar for WinterFest into December, if you go back several years, none of our parks were open in December. We've now got a very robust season pass sales window. And we saw that growth again over the month of December, in 2019.

So, I really like what I'm seeing in all of our markets and think – again, I think it speaks to the fact that we feel we've got the right strategies to drive that top line growth going forward..

Okay got you.

And then one real quick one, Brian, anything we need to be thinking about this year, just in terms of calendar shifts or stuff like that? And how the quarters might kind of play out?.

Yeah, after this year that's a great question, Steve because I know this year was a little difficult in a lot of the messaging and how it was for modeling. From a fiscal perspective, the quarters -- the fiscal quarters are going to be comparable to 2019, so nothing to note there.

That will be good from a modeling and definitely good for us from a reporting perspective. As it relates to the operating calendar, unlike, the past few years where we've been introducing a new WinterFest event. We don't have a new WinterFest event, targeted for the 2020 season.

So there won't be any incremental operating days, because of something along those lines. We're still tweaking some of the operating calendars. So you could see an extra day or two here or there, across the system from park-to-park.

Maybe the most notable thing I would call out, this doesn't change anything necessarily, in terms of as I said, fiscal close. But it is a late Labor Day this year. And so for the industry, that's a good thing, with summer extending a little bit longer.

So for those parks in our portfolio that have, daily operations all the way through Labor Day which include a couple of big parks like Cedar Point and Canada's Wonderland that will mean, an extra week of operations, so that hopefully bodes well for us for the summer season..

Okay, great guys. I really appreciate it. Thanks a lot..

Thanks, Steve..

Thanks, Steve..

Your next question comes from the line of Tim Conder of Wells Fargo Securities. Your line is open..

Gentlemen, congrats to you and the team on the great execution this year, with a lot of moving parts, so a couple of things here, maybe a little specifics on the 6% unique guests growth. I know you talked about the sports complex, being able to feed in some new contacts, via that.

But if you maybe just drill into that a little bit what was driving that? And how you -- what you anticipate going forward? And then just maybe from a metrics perspective you referenced that the dining beverage pass penetration kind of set all-time highs.

Any percentage reference points or ranges you can kind of talk about there? And then just an update on your guest visitation frequency in 2019? And then I do have one or two others..

All right. Tim, let me take the first question about unique visitors. We really started to see the unique visitor number trend up as we got into the meat of the summer and we really rolled out our events.

So back to tying it to our strategic initiatives Grand Carnivale, Monster Jam and the other things that we rolled out last year on a more limited basis will be more extensive basis this year really started and seemed to be the catalyst when we got into the summer time.

Then you go into the acceleration through October the continued reaction to our strong attendance in October to Halloween Haunt.

And then lastly with the new WinterFest up in Canada combined with the existing WinterFest events one of the things we're really encouraged by and Brian called it out in his remarks was the amount of single day tickets that we sold to -- in the Toronto marketplace where the weather was very conducive, but we saw great guest reaction.

So there was a lot of demand we tapped into that. So as we look at unique visitors it is a metric that's very important to us. We want to grow our tenants overall but we want to grow our unique visitation as well as our duplicated visitation.

So Brian you want to take the other two?.

Yes. Tim, as it relates to the dining and beverage programs we don't disclose specifics around the penetration or attachment rates to those. We look at them on a household basis. I think we've talked about that in the past. And they have been improving every year since the programs were introduced.

And it marries up with other initiatives we have in place right? Richard talked a little bit about the strength of the food and beverage channel from a per cap perspective, the investments we're continuing to make in that channel I think as Richard said something that's very much become a hallmark for Cedar Fair parks and a differentiator for us.

As we continue to add more capacity at higher quality locations and offerings around food and beverage that seems to translate well into also pushing those penetration or attachment rates higher on the dining and drink programs. In terms of average season pass visitation, pretty comparable between years.

As we continue to grow the season pass base it's probably reasonable to expect that you're not always going to acquire the -- or you are going to acquire maybe more casual users. So the fact that we're holding that in 2019 was well-received given the big step function in total season passes sold.

And as we look to 2020 we would expect to see something similar. One thing that I think we should remind everybody Pass Perks our loyalty program we tested in 2019 at four parks. That's being rolled out broadly across the system Sans the Schlitterbahn parks for 2020. Those parks will come on in 2021 most likely.

But the big part of the Pass Perks program is not only to drive retention of season pass holders but also to encourage and drive more visitation. So having that tool in the tool belt for our park marketing teams will go a long way towards hopefully pushing those visitation numbers up going forward..

Okay, okay. Very helpful gentlemen. Wanted to circle back here. It seems like if I interpreted things right and correct me if I'm wrong here but we probably should not expect to see the EBITDA margin growth but or should we start to see a little bit of growth with the flow-through.

And just maybe work through I guess the math or dynamics of that? Because I know you were talking about in August about concentrating on EBITDA flow-through improving and then also of course the deleveraging that you've already mentioned.

And then on the CapEx moderation, Richard I think you said that that would start moderating in 2021 and going -- targeting towards 9%, but obviously that I would think would be a multiyear type of a gradual slope down to that 9% of revenue rate..

Yes, Tim. It's Brian. As it relates to the margin question. As we said in our remarks, I mean it's a key metric for us right? I mean it really is a core metric for evaluating the efficiencies of our operations both the core parks and their adjacent offerings.

The challenge we have is balancing, driving higher margins with the addition of some of these lower-margin lines of business. And as I said in my prepared remarks provided that we can add EBITDA and find accretive opportunities to add to free cash flow going forward even a lower margins we'll continue to pursue that.

So as I look out to 2020 and I think back over the last couple of years what have been some of the things that have put pressure on margins in some cases it's been the addition of events like WinterFest. And so those are lower-margin businesses pretty heavy OpEx in the fourth quarter.

We don't have a new one of those coming on so that should work in our favor. But we do have coming online some -- working against us some lower-margin operations like the SpringHill Suites Hotel first full year of operations there; the indoor sports complex in Sandusky; Sawmill Creek, which will reopen later this year.

So there'll be a little bit of pressure. Longer term is there opportunity for us to expand margins most definitely. At the park level as we've said in the past our parks most of them operate north of 40% with some pushing as high as 50% to low 50s in record years or years where they're entertaining record numbers of guests.

And so the opportunities for some of the parks to go above that is pretty challenging. But we definitely have some parks in the system where we can continue to improve our margins and you can bet we'll be focused on doing that to the best we can..

Yes. And then Tim, your second question back to the CapEx. Yes, what I said is we'd migrate towards that 9% level starting in 2021. We think we'll be close to that. And as you look at 2021 and get into 2022 a lot of our more significant investments in the renovations of our resort accommodations will start to be behind us.

We'll also be working our way through our initial investment in the Schlitterbahn parks to bring them up to our standard and prepare them for some of the revenue-generating ideas we've got for them.

So as you look at 2021 and to 2022 we're really starting to generate a significant amount of free cash flow and then we'll turn around and look at how we can best use that.

Obviously maintaining the -- and growing the distribution is one of our priorities, but we also look at how we can invest that free cash flow we generate to continue that growth well into the future. You've seen us take those steps in the last couple of years.

If there were opportunities that came on the market on the M&A front, we certainly would be interested. Before this past year, the last major acquisition by Cedar Fair was the Paramount Parks in 2006.

So those opportunities don't come along, but we're obviously working hard as Brian said in his remarks to make sure our balance sheet is well preserved and that we've got opportunity to jump on those opportunities when they become available..

Thank you gentlemen..

Thanks, Tim..

Thanks, Tim..

Your next question comes from the line of James Hardiman of Wedbush Securities. Your line is open..

Hey, good morning..

Hi, James..

Thanks for taking my call. Good morning. So just wanted to clarify because I think there was obviously some confusion around the operating calendar. When we last spoke, you talked about October same-park same-calendar essentially attendance being up 15% and revenues being up 12%.

Now we're basically saying for the quarter same-park same-calendar 16% growth in attendance, 13% growth in revenue.

So I guess is it safe to sort of summarize this as if anything since we last spoke things accelerated on a same-park basis a little bit? And then as I just think about the delta versus the reported numbers, the 4% attendance growth and the 2% revenue growth if that was just the week in September that you had last year that essentially you didn't have this year?.

Yes, I think you're thinking about it correctly James. As we look at fourth quarter, October was without a doubt an extremely strong month record attendance across the system. As we look towards November, December, some good and bad.

So to your point on accelerating some of that acceleration in going from up 15-ish percent to 16%, 17% was the performance of the first year event -- WinterFest event at Canada's Wonderland. So you could say in one hand that's not really quite a same park.

We think of same park just as Canada's Wonderland was in the system, it's in the system, but there clearly were incremental operating days and incremental attendance associated with those days. Some of that lift by the first year event there was offset as I said by soft attendance in December at a few parks.

Most pronounced impact was felt in California where it was a very wet and rainy December and Knott's had a rough go of it in December as did Great America up in the Santa Clara market. We had a little bit of weather impact across the system.

Otherwise, if I strip Canada's Wonderland out, you're looking at WinterFest events in terms of attendance being flattish sans the incremental attendance that we got from Canada's Wonderland. And so fourth quarter though overall very pleased with where things shook out..

Got it. That's really helpful. And then I wanted to sort of peel back the layers on the long-term guide here a little bit. So a year ago you targeted $575 million by 2023 that was about -- it was a little bit north of a 4% CAGR. You just finished the banner year obviously EBITDA grew 8%.

You acquired some parks, which presumably add to that long-term EBITDA target. Now it's more like a 3.5% CAGR. I guess what I'm getting at here obviously you had a great year, but the implication here is that the organic growth rate is a little bit slower beyond 2019.

Is that just conservatism? I know you talked about conditions being near optimal this past year.

But how should we process all of that?.

Well James great question. It's one that we always talk about internally. When we think about the growth rate going forward, first there is growth. So we're in an industry as we said and as I highlighted in my remarks that has a tremendous foundation of success and a lot of resiliency.

We got to -- it's just the first year of our long-term strategies and we saw great traction. So we're just really getting started on a number of them. So when you look going forward, we think there is continued growth, but it will be choppy over time. We got some of that growth earlier.

But when you look at the ability to pair both the growth rate on the EBITDA line with how we can manage our capital more efficiently, I think what we're focused on is the free cash flow generation and making sure that we absolutely deliver on our commitment.

But also find -- give ourselves an opportunity to go chase growth opportunities when they come available. So Brian emphasized in his remarks, we always try and balance delivering in the short-term, while continuing to invest in things that will take a few years to pay off. Some of the initiatives we've got in play will still take two to three years.

So when we start to look at what -- where we are now and then ultimately investing to drive growth beyond the next two to three years, we'll be making those investments as you get into 2022 and 2023, but the payoff will be a little bit longer term..

And just the comment about sort of the near perfect or near optimal macro conditions. Obviously, you had a great year and weather probably helped.

I guess can we interpret that to mean that if anything those conditions are likely to be headwinds in 2020? How should we think about that?.

Well I'd take a step back and even -- I know your question relates to 2019 James. But I'll just take back a little bit further. And I highlighted in my remarks. So I got to go back to the late 1990s to look at a time period where I thought the consumer felt as good as they feel now.

So we saw because of the weather because of the health of the consumer, a lot of demand in the marketplace. We were able to capture a lot of that because of the things that we do on our side, the immersive experiences, our strategies, the quality of the guest experience that we deliver we're able to capture a lot of those.

You go back to any – in any given year, how much of that demand do we – are able to capture? As much as we can, given that we generate it and then want to have the time frame and deal with time poverty and the things that are challenges.

So as we think about it from a historical context, 2019 seems to rank up there in terms of our ability to both generate the demand and capture the demand. And we're not saying we can't do that going forward.

We think we've got all the levers we can to go create that demand and capture it, but how much of that demand that we generate and capture ultimately depends on macro factors. We are late in the economic cycle. So one thing I would say, we've talked a lot about, we like what we're seeing in terms of the health of the consumer.

We don't think that's going to change certainly through 2020 into 2021. But we're at a point in the economic cycle, where it's getting very, very late. So as we think about 2024 and beyond we're late in the economic cycle. We're not saying it can't continue but we're just saying we've got to factor that in..

Makes lot of sense. Thanks guys and good luck..

Thanks, James..

Your next question comes from the line of Michael Swartz of SunTrust Robinson Humphrey. Your line is open..

Hey, good morning, guys..

Good morning..

Just wanted to follow-up on some of the commentary you made to a previous question regarding, I believe it was labor inflation. And I think you had made some commentary back on the third quarter call that you expected maybe the pace of labor inflation to start to moderate going forward. But it sounds like in your 2024 targets that may not be the case.

Has something changed in the past couple of months? Or maybe a little more quantification or clarity you can provide there?.

No Michael, it's Brian. I don't think anything has really changed. We definitely have seen a slowing of pace in terms of the pressure on rate.

If I look back to 2018 and the comments that we made at that point in time some of the market adjustments we took in addition to the statutory increases that we were facing, we saw pressures in the high single-digits in terms of rate. That's pared back into more into the mid-single digits 4%, 5% range this past year.

And I think that's what our expectation is for at least for the near future. A little bit what's difficult with these labor rates and the minimum wage hikes is you only know what you know right now. Clearly there are markets we operate in that we know will be under continued pressure. California, Toronto just to name two.

And so where we see maybe a little bit more of the pressure is things that are in our control, right? The events that we're adding are much more labor-intensive and OpEx-intensive than they are CapEx intensive. We added a parade to our WinterFest event at Carowinds this past year. We'll be rolling out more of those at two more parks next year.

Those tend to be a little bit more labor heavy. So I think the pressure at least for the next couple of years is going to be a little bit more hour driven than it is rate driven. But again, it all is part of enhancing the guest experience.

And as Richard said, those things, we entertain more people, we have to have more employees in order to maintain service levels, particularly around food and beverage and other places where lines aren't accepted and are clearly guest dissatisfiers.

So some of the labor pressures are because of the success we're having and some of them are because of the initiatives we're implementing but we still feel pretty confident that the model can support those higher costs..

Okay. Thank you. That's very helpful. Next question just on Schlitterbahn. And I think we've got six months to the year before that is fully calendarized.

Could you maybe give us a sense of how much you anticipate that contributing maybe more importantly, the cadence of that in the first and the second quarter?.

Yes Michael, it's Brian again. We're very pleased with the partial year contribution of Schlitterbahn in 2019, not only on its operating performance in the abbreviated year, but also in our ability to monetize some of the cost synergies. As we look to 2020, you're right, the first half of the year is going to be new for us.

And there's a lot of investment going into that park both in terms of CapEx dollars as well as some early operating costs that we don't expect to recur going forward. Some of it is cleanup painting of things, et cetera as we bring it up to our standards and really try and get it to ultimately the next level.

As we said at the time of the acquisition, it's going to take a couple of years to mine some of the revenue synergies. And so I don't think we'll – we don't expect by 2020 or 2021 that it's going to be at its peak performance. But we're very pleased with the early traction that we've gotten..

Okay. But in terms of just the contribution how to think about it. I just want to make sure the modeling is correct is the first quarter another loss from that business and then the second quarter we start to see the profitability ramp up again.

Is that – is there any parameters you can provide there?.

Yes that's the way to think about it. Being heavily water park based you're looking at – similar to the pressure put on Q4 results, Q1 will be similar with very little operating days of significance. Q2 starts to ramp up but I wouldn't think of Q2 in the same vein as what it contributed in Q3.

Q3 is its peak operating and revenue and EBITDA contribution quarter similar to our other water parks and regional properties..

Okay. Great. Thank you..

Thanks, Mike..

Your next question comes from the line of Brett Andress of KeyBanc Capital Markets. Your line is open..

Thanks. Good morning. So just thinking about the 2020 capital plan this year with Orion going into Kings Island. You don't see those kinds of meaningful investments that often.

So can you just provide some context on what kind of sales or attendance lift that these giga coasters have provided in the past when you put them in?.

Good morning, Brett, great question. And by the way I was down last week and saw Orion. And I think it's going to do extremely well. I think Mike Koontz and the team down at Kings Island have a real winner on their hands.

So when we've seen it in the past, I'll let Brian comment on the specific numbers, what we've seen is increase in attendance but also a new – significant new product like this gives us an ability to also take price. So we generate a lot of demand. We price into it.

So we're able to drive significant top line growth and then carry that through the next season. That's what we modeled in our ROI. We look at it over several seasons. But you get the spike in attendance, you also get to pass through a little bit more on the price increase side. So very revenue friendly.

The other thing I'd point out is to put in – and this is – how we try and manage on the OpEx side as well. To put in Orion, we actually took out a different coaster and then took out another coaster this year. So as we have more efficient capacity is the way I would put it when we add big rides like this.

Brian anything you want to add?.

Yes, I mean, I would just say for parks like Kings Island, a little bit more towards what I would call mature in our portfolio, sometimes the attendance lift is a little bit different for a ride like Orion at Kings Island than maybe it would be at a park that is earlier in its growth cycle like some of the tenants bumps we've seen out of big new coasters at – like Fury at Carowinds.

Where it does definitely benefit us at a park like Kings Island is in the season pass sales and then in terms of in-park spend Fast Lane the front-of-line product.

And so I would expect Brett that we'd see this attraction benefiting really each one of those sort of core metrics both the bump in attendance, driving per cap not only through the price increases that it allows as Richard said, but also the Fast Lane lift.

Bottom line, I would -- we would expect a ride like this to generate mid to high teens returns on a year one cash-on-cash provided the macro factors like weather don't conspire against us..

Very helpful. Appreciate that. And just one kind of quick question on the PassPerks program.

Can you maybe quantify any anecdotal lifts in visitation frequency that you saw as you've started to test that product in 2019 just how successful was that test?.

It's interesting. It's a fair question. Given the time of the year that we implemented and how we were piloting it Brett, our test was more about trying to sort to what worked we definitely -- by using a variety of different offerings at different parks to see what resonated most, what did change behavior and motivate visitation.

So I wouldn't say that there was anything that was a stark huge benefiter for us necessarily in 2019 in terms of impacting results, but definitely gave us visibility into what worked and what didn't work.

So, I mean, we were definitely able to through certain rewards move people to visit at a time of the week or a time of the summer that they normally wouldn't visit based on historic visitation patterns. And so that's what we'll lean into.

And I think it definitely has the ability to be more meaningfully impactful when it's rolled out across the entire system for the 2020 season..

Thank you..

Thanks. Brett..

[Operator Instructions] And you have a question from the line of Tim Conder of Wells Fargo Securities. Your line is open..

Yes, gentlemen, I know it's probably not that repeatable obviously, but can you give any color as to any benefits that you saw during Q1 here from -- or any at all from the catering with the 49ers NFL playoffs out of the Santa Clara facility?.

Yes, Tim. I mean, as it relates to Q1 I guess I'd maybe take it a level up and talk about it a little bit more broadly tying it back to something that James asked earlier about in terms of 2019 and the weather.

We definitely have started 2020 very strong for factors like having operations in Red Zone Rally running, while the 49ers were in the playoffs that definitely helped. It's not material to the overall results, but what has really been a big plus as we look to start of 2020 is the strong outstanding start that's Knott's Berry Farm is off to.

When we look at back to last year and the whole weather macro factor, while summer July as Richard said, July through October was very much some tailwinds, there were headwinds that we faced early in the year most notably that was Knott's Berry Farm. So, January and February in 2019 very wet and rainy. This year it's been the exact opposite.

So we're off to a great start there. Let's hope that those weather patterns continue as we get into the spring, because last year spring was pretty wet for us for those early opening parks in our system and Great America was one of those..

Okay. Great. Thank you..

Thanks, Tim..

Your next question comes from the line of Michael Swartz of SunTrust Robinson Humphrey..

Hey, guys. Quick follow-up for me. I think you had mentioned in terms of WinterFest in Toronto that a lot of the visitation you saw was single day tickets.

Could you provide us maybe some context of what you've seen historically maybe in year two in terms of the shift from single day to season pass? Is there anything you can provide us?.

Yeah. Michael. Actually, Canada's Wonderland is maybe a little bit of anomaly in the system from what we've seen broadly for WinterFest to this point.

WinterFest and I think we've talked about this in previous calls, while as I mentioned season pass was a little north of 53% of our overall attendance for the year the WinterFest events have typically been whether it be their first year, their third year in one case the fourth year have typically been well north of 60% of total attendance somewhere in that 60% to 70% range is where the rest of WinterFest parks tend to average, except for Canada's Wonderland.

Canada's Wonderland was only about a-third a little more than a-third of its attendance was season pass driven. So it's first year. So we – I don't know that that will continue for 2020, but it was a little bit of an anomaly.

So it's hard for me to really say that – what to expect from Canada's Wonderland because it's been the one that was the most heavily weighted towards single day tickets..

Okay. Great. Thank you..

And there are no further questions in queue at this time. I turn the call back to the presenters for any closing remarks..

Thanks, Amy. And thank you all for your interest in Cedar Fair and your time. As I hope you can tell from our comments today, we're excited about the future including the 2020 season, which we certainly expect to be another outstanding year for Cedar Fair and our investors.

We are fortunate to have a business model that has demonstrated resiliency and strength in varying economic and market conditions. We are extremely proud of our parks and remain committed to broadening our offerings and continually enhancing the guest experience.

Our high-quality assets, well-run parks and constant focus on operating excellence continue to differentiate Cedar Fair. And I encourage all of you to visit our parks this summer to experience this firsthand for yourselves.

Michael?.

Thanks, Richard. I appreciate everyone for joining us on the call today. If you have any follow-up questions please contact our IR department at 419-627-2233. Join us for our next call in early May when we will report our 2020 first quarter results. Amy that concludes our call today. Thank you very much..

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect..