Six Flags Entertainment Corp (FUN) 2017 Q1 法說會逐字稿

Good day, and welcome to the Cedar Fair first quarter conference call.

Today's conference is being recorded.

At this time, I would like to turn the conference over to Stacy Frole.

Please go ahead.

Thank you, Cynthia.

Good morning, and welcome to our first quarter earnings conference call.

I'm Stacy Frole, Cedar Fair's Vice President of Investor Relations.

Earlier today, we issued our 2017 first quarter earnings release.

A copy of that release can be obtained on our website at www.cedarfair.com under the Investors tab, or by contacting our Investor Relations offices at (419) 627-2233.

On the call this morning are Matt Ouimet, our Chief Executive Officer; Richard Zimmerman, our President and Chief Operating Officer; and Brian Witherow, our Executive Vice President and Chief Financial Officer.

Before we begin, I need to remind you that comments made during this call will include forward-looking statements within the meaning of the federal securities law.

These statements may involve risks and uncertainties that could cause actual results to differ materially from those described in such statements.

For a more detailed discussion of these risks, you can refer to filings made by the company with the SEC.

In compliance with the SEC's Regulation FD, this webcast is being made available to the media and the general public, as well as analysts and investors.

Because the webcast is open to all constituents and prior notification has been widely and unselectively disseminated, all content of the call will be considered fully disclosed.

Now I will turn the call over to Matt Ouimet.

Thank you, Stacy, and thank you for joining us this morning.

As you would expect, our main focus during the first quarter is to prepare our seasonal parks for opening.

Knott's Berry Farm, our year-round park in Southern California, is our only park with meaningful first quarter operations.

And with summer fast approaching, as of today, we have 8 properties in operation, and our flagship park, Cedar Point, is set to open this weekend for its 148th operating season.

We will keep our prepared remarks brief this morning because as noted in our release, our first quarter operations represent less than 5% of our expected full year net revenues.

As such, we would caution that our results in the first quarter are not indicative of performance for the remainder of 2017.

Additionally, our first quarter results are not directly comparable with the prior year due to the later timing of the Easter and spring break holidays this year.

To normalize for this calendar shift, I will speak to attendance and revenue trends through the end of April, which will provide you with the better understanding of our early season trends.

Preliminary net revenues through the end of April achieved a new record high of $124 million, up 2% when compared with the first 4 months of last year.

During this time, guest spending is up 2%, while attendance was comparable with last year's record number of visits.

As I expect you anticipated, Knott Berry Farm's first quarter performance was below expectations due to the drought correcting rains in California.

However, the continued growth and popularity of Knott's Boysenberry Festival, and the return to more normal Southern California weather, resulted in record attendance, revenues and per caps in the April for Knott's.

Similarly, several of our early opening seasonal parks have gotten off to solid starts, helping to drive the strong April results.

Kings Dominion, our park in Richmond, Virginia, had its best April in years, while Carowinds in Charlotte, North Carolina, had its strongest single week first spring break in the park's history, continuing to validate our confidence in this park's long-term potential.

Meanwhile, our newest wooden coaster at Kings Island opened to rave reviews, with the park's season passholder event being the best-attended attraction opening in the park's history.

This great thrill ride, combined with an intriguing storyline and digital special effects, is clearly hitting the mark and positions the park for what should be another great year.

We recognize at this time of year our investors are looking for data points that may prove predictive of our annual results.

I would remind you that more than 2/3 of our attendance comes from advanced purchase commitments, including season pass sales, group bookings, resort reservations and purchases made on our e-commerce platform.

To date, approximately 50% of anticipated season pass sales have been made, while bookings for hotel rooms and group outings are a little earlier in the cycle.

Our top line message is that early-season trends and advanced purchase commitments continue to support our very positive outlook for 2017.

Season pass revenue is up 10%, with both unit prices and unit sales up nicely.

Also, every one of our all-season products, including food, beverage and photo, continue to grow in volume and penetration rates.

Meanwhile, team registrations at the new sports tourist park at Cedar Point are well ahead of our first year expectations.

We expect to build on this early-season momentum when 2 of our largest investment this year, the renovation and expansion of our separately gated water parks at Cedar Point and Knott's Berry Farm open at the end of May.

Cedar Fair's disciplined attention to detail will be obvious to our guests, as we have taken this opportunity to not only add new thrill slides, but also wet playgrounds, specifically designed for young families; new food facilities with shaded seating areas; new bars; hundreds of new chairs and umbrellas; and expanded amenities such as private cabanas.

These changes will drive near-term results and will serve us well for many years to come.

These early-season reference points, along with the other new attractions that I will discuss later, allow us to remain confident that we will achieve our FUNforward 2.0 goal of $500 million of adjusted EBITDA by the end of 2017, a year earlier than planned.

Now I will turn the call over to Brian to discuss the first quarter results in detail.

Brian?

Thanks, Matt.

As Matt briefly touched on earlier, our first quarter represents less than 5% of our full year net revenues.

Given the seasonal nature of our business, the majority of our revenues are realized during 130- to 140-day time frame beginning in our second quarter.

Most of our revenue is concentrated in the peak vacation months of July and August.

And in recent years, that has been supplemented with a growing amount of revenue stemming from our popular activities surrounding the Halloween season, and more recently with our WinterFest celebrations.

Our first quarter results were slightly softer than our internal expectations due to the drought correcting rains in California.

However, with the success of our springtime events in April, we are now slightly ahead of where we expected to be for this time of year.

Net revenues for the 3 months ended March 26, 2017, were $48 million compared with $58 million in the first quarter a year ago.

The decrease was primarily driven by the timing shift of the Easter and spring break holidays, which occurred in the first quarter of 2016, as well as a decline in the first quarter attendance due to the record rainfall in Southern California.

To a lesser extent, 2017 also did not have the benefit of the Super Bowl events we hosted in January of 2016 at our California's Great America amusement park.

Looking at preliminary results through the end of April which, as Matt indicated, normalized at the calendar shift associated with the later timing of Easter and spring break, early-season net revenues were $124 million, up 2% or $3 million when compared with the same 4-month period last year.

We are pleased with the early season strength in our average in-park guest per capita spending, which is up 2%, while at the same time being able to maintain our record attendance levels we experienced during this time last year.

Looking at longer lead indicators for a moment, our advanced purchase commitments, including season pass sales, group event bookings and the sale of all-season products, such as all-season dining and all-season beverages, are trending up from the same time last year.

This positive momentum is reflected in our deferred revenues, which are up approximately 10% through the first 4 months of 2017 when compared with the same period last year.

Operating costs and expenses for the first quarter totaled $117 million, comparable with the prior year quarter and in line with our expectations.

I should note operating costs for the first quarter include normal off-season operating, maintenance and administrative expenses at our seasonal, amusement and water parks and daily operations at Knott's Berry Farm and Castaway Bay.

Before I turn the call back over to Matt, I would like to give a nod to our Corporate Finance and Corporate Legal teams who, along with our banking partners, helped solidify our capital structure for the next several years.

As many of you have seen, in the beginning of April, we announced the completion of a $1.5 billion refinancing, which included the issuance of $500 million in new 10-year senior unsecured notes, a new 7-year $750 million term loan and a new 5-year $275 million revolving credit facility.

We were very pleased with both the favorable rates and tenor we were able to secure which locks in historically low rates for a longer period of time.

Our average cost of debt going forward is expected to remain inside of 5.2%, with our nearest term maturity being our revolving credit facility in 2022.

For modeling purposes, cash interest costs are expected to be between $85 million and $90 million for the foreseeable future.

Overall, we are very pleased with our results for April and the early-season trends in our advance purchase commitments, which puts us on pace to deliver our eighth straight record year.

Last Friday, we celebrated 30 years of trading on the New York Stock Exchange.

Since going public in April of '87, our focus has been and always will be on optimizing the use of free cash flow to maximize unitholder value in both the short and long term.

This includes making strategic, high ROI capital investments at our parks and continuing to grow our distribution, which currently represents an attractive tax-advantaged yield of approximately 4.8%.

This strategy has allowed us to operate through several recessions while still delivering a 17% compound annual total return to investors over this 30-year period.

We believe we are well positioned to continue that success for the foreseeable future.

Now I'll turn the call back over to Matt.

Thank you, Brian.

As you have heard from us today, early trends and advance purchase commitments, guest spending and attendance through this past weekend, all support our positive outlook for the year and our confidence that we will achieve our $500 million adjusted EBITDA goal in 2017.

We also expect new investments will contribute to top line growth over the long term.

In 2017, you will see more examples of investments that will add to our bottom line in the current year and for the years to come.

Notably, this includes the recently opened amateur sports facility at Cedar Point.

Based on tournament registrations to date, we are forecasting the number of teams participating in this first year will easily exceed our first year expectations.

Equally important, the comments from the players, coaches and parents confirm this is absolutely one of the finest amateur sports experiences in the country, with teams already making plans to return in 2018.

Much of the credit for the successful launch of the sports complex goes to our operating partner, Sports Force.

They have delivered a world-class facility, and now have mapped it with uncompromised commitment to operating excellence.

When Cedar Point opens this weekend, we will also be opening our recently renovated, expanded and rebranded Cedar Point Express Hotel.

This investment will enhance the appeal of the park as a regional resort destination for many years to come, and the additional 69 rooms will take advantage of the demand from the new sports complex.

I've already mentioned the very successful opening Kings Island had with their new world-class wooden roller coaster, Mystic Timbers.

We are equally pleased with the guest response to Patriot, a new coaster experience at California's Great America.

Similar to Rougarou at Cedar Point in 2015, we took an older, less popular stand-up roller coaster and converted it to a floorless coaster.

This ride conversion is extremely cost-effective, adds capacity and is highly marketable.

We are excited about the potential it represents at Great America this year.

As I mentioned earlier, at our 2 largest parks, Cedar Point and Knott's Berry Farm, we are making sure the adjacent water parks deliver the same quality guest experience as their counterparts do.

We know that water parks have broad family appeal.

We designed the parks for all ages, and we have found over the years that whenever we invest in water parks, we see a direct correlation to the growth of our premium season passes.

Along with the expansion and renovation of our resort accommodations at Cedar Point, the water park allows us to further expand our geographic draw for those guests looking for a multiday vacation.

Given the large scale of these projects, we were able to incorporate elements specifically designed to encourage and accommodate expanded guest spending.

Most notably, our food and beverage facilities are now centrally located, are capable of high volumes and have expanded menus.

On another front, at Worlds of Fun, our park in Kansas City, Missouri, we have opened the latest of our modern catering facilities which service our growing group business.

We also took the opportunity to create a welcoming and efficient front-gate experience, with a nod to the park's history and unique brand.

In regards to our multi-week seasonal events, we've received an impressive response to our announced expansion of the operating season at 3 more parks this year: Kings Island, Carowinds and Worlds of Fun with WinterFest celebrations.

While difficult to isolate, we're confident the announcement of these events has served as a catalyst for our favorable season pass sales at these parks.

I'm proud of the decisions we made to drive our business in 2017, and we're confident this will be another record year for Cedar Fair.

While we are laser-focused on 2017, construction has already begun on multiple high-impact attractions that will come online in 2018.

As we look to build on Cedar Fair's history, we'll be adding to our collection of world-class coasters, including a completely new type of coaster, a dramatic transformation of 2 of our historical wooden coasters and a renewed relationship with a manufacturer, who we haven't worked with in recent history, that will add another coaster and deepen our pool of ride manufacturers.

It is this type of innovation that will allow us to continue to grow beyond our near-term goals.

In any given year, the 3 primary drivers of our top line performance are the appeal of new attractions, the products we offer in the parks that encourage incremental spending, and the effectiveness of our marketing and sales programs.

While we have talked in depth today about the first 2 drivers, I don't believe we're given enough credit to the impact of our multiyear marketing campaigns that have driven some much of our recent success.

We continue to move forward with our branding initiatives, where we have found that embracing the heritage of our unique brands and strategically operationalizing those brands lead to a guest experience unmatched by other generic amusement parks.

We have now completed an in-depth brand analysis at 6 of our 11 amusement parks.

As we have discussed in the past, this analysis directly informs our investment strategy, works across all departments and functions and supports strong consumer loyalty.

For example, our branding work at California's Great America is referenced on a daily basis as we move forward with our long-term strategy at this park, now that the rezoning has been approved.

We see many opportunities to position this park as the Bay Area's backyard, and a place where family and friends look to gather and connect on a regular basis during all times of the year.

Finally, as a result of our branding initiatives and as our e-commerce platform continues to grow, we are introducing new websites across all of our parks.

Most are already up and running with all park sites expected to be updated with the new format by the end of this month.

Our new park websites have a greater visual design, which we believe creates an impactful first impression and enhance guest engagement.

These new sites allow us to have targeted conversations, depending on the individual's interests and family dynamics.

This, in turn, allows our guest to quickly sort to the offers most relevant to them.

I encourage all of you to visit some of these sites yourself, including Cedar Point, Canada's Wonderland and Carowinds.

With that, we'd now open the call for questions.

(Operator Instructions) We'll take our first question from James Hardiman with Wedbush Securities.

So the 2% revenue growth, let's forget about the first quarter but focus on the first 4 months because that's a little bit more normalized of a number.

It still sounds like -- you think that number would have been better in the absence of some bad weather earlier in the quarter.

I guess, put another way, it kind of sounds like you expect that 2% to accelerate over the remainder of the year, or am I not looking at that the right way?

Yes, I think you're looking at it the right way, James.

We had a really strong April.

And so given what we saw in the first 3 months in California, which I appreciate the acknowledgment that it's only the Knott's park at that point.

I think that we were very pleased with what happened once the weather normalized and once -- and obviously, this is associated the calendar shift as well.

Got it.

And then, obviously, you guys don't give guidance in most years, but we've essentially got guidance with this $500 million number.

Yes, we kind of defaulted to that at this point, I understand.

Exactly.

So I guess I was wondering, as I think about at least, call it, 4% growth in that adjusted EBITDA number for this year, it seems very doable.

But how should I think about the various components?

Anything you can tell us, attendance versus per cap versus margin expansion?

I know some years you have to call an audible based on what you see as the season develops.

But sort of high-level, how do you think about those various levers this year?

James, I think I would say to you that our expectation is probably very similar to where we ended last year.

I think we're working really hard to be able to grow attendance at the same time that you grow per caps and squeeze a little bit of margin out as well.

As you know, the margin is important to us but we tend to reinvest substantially in the guest experience to continue to drive our premium per cap.

But I'd say, if I elevated all the way up this year, I think our expectations would be similar to what we saw last year.

Got it.

And then lastly from me.

It's hard enough to figure out the revenue impact of the Easter shift.

Maybe help us a little bit with the cost impact.

I'm assuming that most of the parks, you still have to have the operating expenses in place, even if Easter is getting pushed out.

I guess I ask more with respect to trying to figure out how to model 2Q and the margins, and maybe there is a benefit in 2Q whereas it was a headwind in 1Q.

Any way to think about how all that flows through?

Yes, James, this is Brian.

I think you hit on it a little bit there.

With the calendar shift, clearly, there are some variable costs that are associated with the attendance that moved along with that calendar shift.

That said, the majority of the parks are in there, as we said on the call, sort of in there preparing for the upcoming season.

So the dollars -- those dollars sort of reside where they reside, there is not a lot of shift associated with that.

As we -- as I mentioned on the call, we didn't host Super Bowl events this year like we did last year.

So there was a little bit of a hit to the revenue line related to that.

But at the same time, some cost savings at Great America.

Now offsetting that, however, were some costs associated with taking down the WinterFest events, if you will, at Great America as we prepared for that park's opening late first quarter.

So all in all, I'd say (inaudible) the operating cost.

A little bit of savings related to the loss of attendance at Knott's Berry Farm because of the weather and some of the calendar shift, but most of your downtime costs are going to stay where they reside irrespective of the calendar.

But is it safe to say that margins were hurt in 1Q and will benefit somewhat in 2Q from the Easter shift?

Yes.

The dollars are so small, I wouldn't say it really had any meaningful impact one way or the other on -- as it related to margins.

(Operator Instructions) We'll take our next question from Christopher Prykull with Goldman Sachs.

I just had a couple related to some of the longer-term initiatives they you've outlined, maybe starting with the sports complex up at Cedar Point.

And understanding it's still early given the park itself isn't open, but can you give us any details in terms of what you've seen around turnout at the new sports complex; average number of teams, the number of players and then the guests that they actually bring along with them?

And then any expectations for, sort of, hotel and park attachment once Cedar Point opens?

Yes, Chris this is Matt.

Look, I'll give you some broad kind of feedback on that, but it's so early yet, we really don't have any metrics that we'd be comfortable, kind of, giving you to model.

But look, we're very encouraged by what we've seen.

The awareness and demand for the complex are ramping -- is ramping up a lot faster than we anticipated.

We got a lot to learn, as I referenced, and so we're not going to talk about attendance and hotel forecast.

What I can tell you is Sports Force released publicly recently that they're forecasting more than 1,000 teams in the initial year.

And keep in mind the majority of these teams come from outside Ohio, and we believe that the associated attendance from the teams, as well as their entourage is largely incremental as if they weren't at this complex, they'd probably be playing ball at some other complex.

So we're out of the gates good.

What I'd also add is that we're in active -- I would almost characterize them as late-stage negotiations on other complexes.

Unlike this, they are public-financing supported and so therefore, they take a longer time to put together and they have a little uncertainty associated with them.

But we've got a couple of others that we're looking at hard.

And we just launched feasibility study at 2 of our other parks relative to this.

So I think you can read through to that, that our early season indication is that this is going to be a successful venture for us.

We'll have a lot more for you as we get into the peak playing periods of July and August.

Great.

That's really helpful.

And then the next one I just had on group catering.

I know you've expanded this at certain parks.

Can you just remind us what group represents as a percentage of either annual attendance or revenue?

And then can you give us any read on the impact from the expansions to group bookings for 2017?

Yes, sure, Chris.

This is Brian.

As it relates -- as we said on the call, when you put together season pass, group bookings that are date or time window-specific and then the advance purchases on the web through our e-commerce portal, we're looking at more than 2/3 of our attendance as prebooked or advance purchase commitment associated.

Group fits in -- season pass is the biggest chunk of that.

We've probably stated that last year that ended somewhere around mid-40% so -- 45-or-so percent.

Group slots in lower than that, but it's probably on average across the system, going to be in the mid-teens, maybe at some of the parks as high as 20% of our attendance.

We're pleased, as Matt said on the call, season pass were about 50% through the full year sales cycle.

On hotel reservations and group bookings, we're a little bit earlier in their cycles.

But the early trends on group bookings to date are ahead of last year, which was a strong year for us.

So we're encouraged by where we're at, at this point.

Chris, the other thing is the investment in the catering facilities and the hiring of executive chefs have allowed us to drive up the per cap that we get from that business, and that's one of the reasons you see us being able to continue to grow per cap.

That's really helpful.

And if I can squeeze just one more in.

Can you give us an update on the potential opportunity and sort of what the planned investment might be at Santa Clara?

But then how quickly you plan to move on the opportunity?

I know it's still early though.

No, I appreciate the acknowledgment that it's early.

It doesn't feel early in our offices, and Richard would acknowledge that.

We're meeting almost daily on Great America.

So actively and aggressively working on our plan.

What I can tell you is, I would expect to be able to have more specifics for this audience when we produce our new long-term plan either later this year or early next year.

So at this point, we still -- we're dug in hard on it.

We need to develop the plan, we need to develop the phased plan and all of the things that go with it.

It's a very complicated site which in the ends makes it very valuable.

And so I think you can expect more out of us when you see the new long-term plan either later this fall or early next year.

And we'll take our next question from Steven Wieczynski with Stifel.

So I wanted to go back to the rain impact as you talked about it at Knott's in the first quarter.

And I'm not sure if you have this number or you have an estimate, but do you know what the actual impact was on attendance at Knott's?

And then I guess the second part to that is -- and I'm not sure if you said this or not, but have you seen announce -- a nice bounce back in attendance at Knott's in April once weather essentially normalized?

Yes.

So we won't give you a number for rain because that would be -- I think that would a little bit more like speculation at this point.

And by the way, I'm not talking about weather this year unless I have to.

What I will tell you is I did have it in my prepared comments, Knott's had a record April: a record April in attendance, a record April in revenue, a record April on per caps.

And so there was no doubt in my mind, anyway, that once the dust cleared, that park is still performing extremely well.

And the -- it's unusual for us to give you as much data as we did about April, but you can go back and see the acceleration in April if you look at the numbers from the first quarter versus the 4-month numbers we gave you.

Okay, got you.

And then second part, I think you've talked about the in-park caps were up about 2% through April, if I heard you right.

And I was wondering if you could break that down a little bit more in terms of what folks are actually spending on?

I guess a better way to ask that is, has there been any surprise in terms of what folks are spending on this year relative to last year?

Steve, this is Brian.

We're not going to give specific detail around the per cap.

What I will tell you is that we're pleased with the trending that we're seeing across the channels, not only at the admission line but also through the in-park spend F&B, merch, et cetera.

One of the things that is driving some of the admission per cap increases is the pricing increases that we've taken at the front gate that we continue to believe we've got tailwinds, as well as the deepening penetration rates on some of the all-season programs.

And quite honestly, a migration to up in product selection by the guest.

Matt mentioned the introduction of, or the renovation and expansion of our water parks at 2 of our largest parks, Cedar Point and Knott's Berry Farm.

That is a big driver for people migrating up from what we call regular passes to either platinum or gold, so you get access to those water parks.

So everything is working on that front and we're pleased with the per cap numbers in each one of the channels, but it's very early, it's a small sample size.

And our next question will come from Tim Conder with Wells Fargo Securities.

A couple here.

Brian, just more of a housekeeping item.

Any quantification you can give us on the Super Bowl benefit to Q1 of '16, just from comparable perspective?

Tim, as we said last year, it -- while it was exciting to host those things and have the folks see the park and be part of the Super Bowl 50, it was not a meaningful or material number.

We said at the time it was in the low single digits in terms of its contribution at the revenue and EBITDA lines.

Okay.

Fair enough.

And Matt, again, I appreciate from the earlier question that it's still early as far as post of the rezoning in Santa Clara, but -- and appreciate also the uniqueness of that park with a lot of, we think, significant infrastructure-related planning.

Where should we see -- should we see something late this year, early next year as far as literal construction and changes starting at Santa Clara?

I know, again, you'll give more details when you get the long-term outlook, but...

No, yes, you will actually see activity this year.

In fact, there's some -- I know it for a fact there's some constructions stakes already in the ground out there.

So you'll see that start to ramp up later this year, Tim.

Okay.

And then on other initiatives here.

Hotels, you all talked before about Charlotte, Toronto as being potentially some top targets here working with potential flagged partners.

Just an update as to where that stands at this point and potential timing as when we could hear some announcements on those.

Yes.

So Brian is helping to lead this, but I'll tell you we're in the red zone.

We're at the final stage of the development committees that approve these deals for the brands.

And so I would hope by the next time we got together, we would have the announcements for you.

They can always -- there's something that can always be a delay, but we're in the red zone as Cleveland football players like to see, I guess -- football fans like to say.

So the next time we get together, we should have an announcement on that, Tim.

Augmented reality, some in-park opportunities there that you talked about before.

Just an update, augmented reality versus VR and you need to evaluate both the tender.

It sounds like to be leaning a little more towards augmented based on some prior comments.

Yes.

So augmented will be in place again at Cedar Point this year, it's expanded.

We found a way to gamify it to a greater level.

And so I've got -- I think we're going to have even more guests enjoying it this year, and it got very high ratings last year.

And we've also introduced it, I believe, at Kings Dominion, right?

So at Kings Dominion, we also have introduced it and we'll experiment it over the course of year and refine it.

So I'm a big fan of augmented reality because it has literally unlimited capacity for utilization and has the ability to make the park experience more fun.

I will tell you the most impressive thing I've seen with digital technology this year is what we did with Mystic Timbers.

The idea that you can take a high-capacity ride, that's highly marketable, that has broad appeal and add a bell and whistle at the end of that ride that was extremely marketable.

We got our video posted -- the first time we posted the video on opening day or I guess it was media day on Facebook, it got 2 million hits.

And a lot of that was because of the intriguing storyline and the bell and whistle associated with the technology at the end.

So you'll continue to see us play in what we call techtainment.

But right now, I'm excited about high-capacity rides that just give a little bit of a bell and a whistle.

And our next question will come from Tyler Batory with Janney Capital Markets (sic) [Janney Montgomery Scott]

So Matt, I want to go back to a comment I think you made earlier.

I think you said season pass revenue was up 10%.

So did I get that correctly?

And then can you talk about how season pass sales have compared to your expectations and what's driving that strength?

So season -- I did say 10%, a combination of units and prices.

It is -- I can tell you it's pacing ahead of where we planned for.

The one thing that also I think you have to take into consideration is -- and I know somebody commented on it this morning in one of the reports.

The water parks tend -- we tend to see another spike in season pass sales after the water parks open.

So those people who are waiting for kind of the catalyst of the message around water parks are another opportunity for us from a season pass standpoint, but you did pick up on the metric correctly.

Okay, great.

And then maybe just a follow-up.

I do have a few questions for you on the water park expansions at Knott's and Cedar Point.

How does the return outlook or maybe the potential growth expectations for those expansions compare to a new coaster?

I know you -- can you remind us the per capita margin difference between a water park and a theme park?

And maybe last, just talk about how those expansions can potentially drive attendance just as we look into '17 year.

So I'll ask Brian to build on what I say.

But generally, the water -- we've found, and we've done this several times at this point, Richard has been advocate for this, that water parks, I said in my comments, have broad appeals.

The nice thing about a water park is that any age of family can experience the water park and enjoy the water park, number one.

Number two is people tend to see themselves using the water park almost more than they use the hard dried park, so it drives season pass disproportionately.

And in order to get access to the Knott's water park and the Cedar Point water park, you have to buy the gold pass, which we are actually seeing a nice shift in people to more premium passes.

So that's kind of the catalyst for it.

And that, candidly, it was a little bit about adding capacity because the peak summer months there have been so successful for us.

But Brian, you want to talk about what traditionally was true about per caps in water parks and what we've done to try to address that?

Yes, sure.

Tyler, I mean, you hit on a big part of the motivation behind the upgrades we've been making to our water parks including these 2 big expansions at Cedar Point, Knott's Berry Farm.

Traditionally, water parks have lower per cap spend than an amusement park.

And it's really a combination of a couple of things.

One, I mean, you don't -- it's not easy that you're wandering around with your wallet for buying while you're at the water park, but maybe more importantly, as length of stay tends to be a little bit shorter.

And so I think what you find often is that -- and we were guilty of this, is that a number of our water parks, you sort of anticipate that you're going to have a low per cap spend.

And then the facilities including F&B, merch, et cetera, you sort of build accordingly and it's a self-fulfilling prophecy.

Well, we've gone in as a big part of these expansions, has gone back into the water park and try to put back in place more soft areas for folks to sit, more shade, more umbrellas, more cabanas, more revenue centers.

A big part of the expansion at both Cedar Point and Knott's is about adding more F&B and revenue-generating centers to drive better per cap.

So when you combine that with, as Matt alluded to, clearly, there was going to be an uptick in daily tickets, but a big part of the season pass play is getting guests to migrate, as I said earlier, from regular passes to gold or platinum, those premium passes to get access to the water parks.

And so you put that together with the parks like Cedar Point, where there are so many hotel rooms, over 1,600 hotel rooms, you're looking at also added length of stay, it's a whole second day visit.

And so that's where the returns really get generated at -- on these projects.

Tyler, I'll just build a little bit.

We've, for a while now, wanted to expand the geographic reach, particularly at Cedar Point, and the renovation of our hotels, along with the dramatic expansion of the water park, give Kelley, our CMO, the right kind of assets to build into our marketing messages.

So if you live a little further away from Cedar Point, you're going to start to see some marketing messages that we think are going to be productive for us.

Next, we'll hear from Barton Crockett with FBR.

I wanted, to use a bad pun, dive into the water park thing a little bit more.

In particular, it's kind of percolated into a bigger issue, I guess, for the group, and partly that's what you guys are doing and partly Six Flags has been talking about trying to roll up some water parks adjacent to their theme parks in some of the major metros where they operate, and they've done one thing in the Northern, kind of, Bay area, a couple of hours north where your -- north of your California great adventure park.

And I was curious that you guys are doing something that's really kind of working on a water park attached to your theme parks at Knott's Berry and Cedar Point.

What do you think about the opportunity to add water parks that are separate from your theme parks, maybe within an hour or so and maybe have more than one water park in a metro area?

Do you see an opportunity there?

What do you think about that?

Not an area of focus for us.

Okay.

And you sounded -- I was curious about why.

Six Flags has professed some interest in it and you just don't think it's an attractive return or...

Barton, why don't you ask them?

Because I think we've got a little different playbooks.

We've been very successful.

And where we've been successful is acquiring parks that are family-owned, where we are able to go in and use our units as the MLP units work very productively.

So any M&A in our front would be -- if any of these parks -- and there's only a handful left that would meet our brand standards, if they became available, obviously, we would be attracted to that side of it.

Okay.

All right.

And then switching gears a little bit.

You guys have called out a little bit about April, which is great, but since we're kind of parsing, I need to be a bit more careful.

I wanted to understand the Easter impact a little bit better.

I mean, we were estimating that, that could have been 125,000 attendees.

And I was wondering if you comment on whether that seems like a reasonable estimate.

And then if you do the math on what you guys said, your April was up 20%, but if we normalize through Easter, what was kind of the core trend there do you think?

Yes, Barton, this is Brian.

We're not going to give specifics around attendance numbers related to Easter or the Q1 shift.

What makes it a little bit more challenging to get a peer read-through is the fact that the one park with meaningful first quarter operations, Knott's Berry Farm, was so negatively impacted by the record rainfall in Southern California to start the year.

That said, I would characterize the way the season has developed, as we said in our prepared remarks, by the time we get to the end of April and things are normalized in terms of calendar shift, and we were a little bit ahead of where we thought we'd be, we feel really good about that.

Still have a little bit of work ahead of us.

When it comes to things like season pass sales, we're only 50% through, but we feel really good about where we sit at the end of April.

And so whatever calendar shift existed, whether it be Easter or the spring break holidays, that's all behind us and we are in a good place heading into the core season.

Okay.

And then just a little bit on the -- more on the bookkeeping side.

But can you give us an attendance figure for the first quarter?

And can you also kind of parse, it looks like your effective guest spending per cap was up about 2% through April.

What -- whether the attendance was flattish, whether the per cap spending was -- the trend was similar for admissions revenue in food and beverage or whether there was some difference there?

Because it's a small sample size, Barton, we're not going to give the attendance or break down the per cap.

It just -- the only part that's really active of note up to April is Knott's.

And so we just -- we, traditionally, haven't done that.

And as it relates to the per cap part, as we said earlier, pleased with what we're seeing across all of the core spend areas.

Admissions per cap doing well out of the chute, but as is F&B spend and merch spend as 2 other examples.

So we feel really good about where we're at.

But again, as Matt said, small sample size, a lot of work ahead of us.

(Operator Instructions) We'll take our next question from Michael Swartz with SunTrust.

I just wanted to touch on WinterFest, and you have 3 new programs launching this year.

So maybe you can help us just understand the typical ramp of those festivals.

And maybe just the associated intensity, I guess, of marketing spend, at least in the first year, and maybe how that evolved as you look down the road 2 to 3 years out.

Yes.

Probably less detailed than you'd like, but let me tell you how we're thinking about it because, quite honestly, we only have the experience of one WinterFest so far, right?

So first, I would say that we're going to take these events to scale, which means that we are spending a fair amount of capital and operating cost to make sure that the first year experience is what you might typically find in year 3 or year 4. And that worked extremely well for us at Great America.

So that's number one.

Number two is, we do assume that the first year the margins are somewhat suppressed because of the marketing awareness launch that will have to happen, associated with it.

But as -- so then if you build off that, we think we'd moderate that over time and we'd grow our attendance over time.

And so our expectations for the first year are good.

I would say our expectations for the third year are very substantial.

Okay.

That's helpful.

And then just with the sports center, it sounds like attendance and registration trends are better than what you would have anticipated.

And I think, previously, you had indicated that you didn't expect a lot of benefit this year from a financial standpoint.

So maybe you can update your thoughts around just how this could impact attendance, profitability in 2017?

This is a hard one for us, Michael, because we try to be the guys that produce the results and then talk about it.

So I'm a little nervous here because I'm excited about it.

I got to be honest with you.

The community's rallied behind it, the organization Sports Force has really overdelivered for us.

I can't give you any numbers yet.

The only one I said that was publicly out there was at least 1,000 teams, and you can try to do some math around that.

And I want to see how well we do at capturing these people and how many times they visit and what their per caps are and where they stay in the hotels, et cetera.

So I don't mean to frustrate you, but I think we'll have a lot more to talk about by the time we get to our second or third quarter call.

And our next question will come from Tim Conder with Wells Fargo Securities.

Just a quick follow-up here.

Brian, I don't know if you were just saying that you've still got a lot ahead of you, but you said a little more work to do on season passes.

So did you see any deferral out of Q1 and even maybe just because of the overall timing shift and weather?

Or is that fully normalized as far as the season pass bookings and then the F&B passes and so forth?

Yes, sure, Tim.

It's a good question.

I think when you look at deferred revenues at the end of Q1, you'll see exactly what you just alluded to.

From a timing perspective, the shift of the Easter and spring breaks not only pushed attendance into the second quarter, it also pushed some of our marketing, our CRM efforts out of Q1 into Q2.

There's no point in hitting the consumer when they're not ready to be buyers.

In a large part, some of the spring sales around season pass and the related season pass products like all-season dining and all-season beverage are specifically tied to that first visit.

So there is no doubt that the Q1 numbers are going to reflect a little bit of that timing shift.

And then we're back to -- and that's why we spoke specifically about where we were in terms of deferred revenues being up 10% at the end of April through that first 4 months because we believe we've normalized.

Matt did allude to, and I think it's something that to just reemphasize, that with the big capital at Cedar Point and Knott's Berry Farm geared around waterpark expansions.

There's definitely marketing effort, CRM efforts that will be specifically tied to pushing pass sales that have yet to hit because we're not going to hit consumers in April for a product that doesn't open until Memorial Day at the end of May.

So you can expect -- we will expect to see another little bit of surge of sales around those passes at those 2 particular parks as we get closer to the product coming online.

And Tim, you didn't ask this, but building on that, although there are several factors in play, some of the largest growth in season pass on a percentage basis are the 3 parks that we're now introducing in WinterFest.

Okay.

And related to all that too, just a clarification.

So 50% of your season pass tickets are sold, and those are up roughly 10% you said.

The F&B part you said was tracking up year-over-year.

Should we think of that as tracking in line with the ticket season pass related?

I would tell you that it's greater than that.

And I'll leave it at that.

And you would anticipate acceleration also when the water parks open there?

Yes, yes.

I think what's really encouraging is that our all-season products continue as we -- as more and more people get exposed to them.

As we change the programs a little bit, we're seeing, most importantly, an increase in penetration.

So season passes are going up.

That's a volume issue.

If penetration is going up, you get a multiple effect as it relates to the all-season products.

And it appears there are no further questions at this time.

Now I'd like to turn the conference back to you for any additional or closing remarks.

So first of all, thanks, as always, for your interest and ongoing support of Cedar Fair.

In closing, it's always important for me to acknowledge our leadership team and our associates.

I like to say I not only get to work with a lot of really smart, dedicated people, but these same people have instinctively high self-imposed standards.

And it's a privilege for me to work with them.

Importantly, I encourage all of you to visit our parks this summer and experience firsthand what differentiates Cedar Fair parks from the other entertainment offerings.

Stacy?

Thank you, everyone, for joining us on the call today.

Should you have any follow-up question, please feel free to contact our Investor Relations department at (419) 627-2233.

We look forward to speaking with you again in about 3 months to discuss our second quarter results.

That concludes today's conference.

Thank you all for your participation.

You may now disconnect.