Six Flags Entertainment Corp (FUN) 2019 Q1 法說會逐字稿

Good day, everyone, and welcome to the Cedar Fair First Quarter 2019 Earnings Conference Call.

Today's call is being recorded.

And at this time, I'd like to turn the conference over to Michael Russell.

Thank you, Vickie.

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

I'm Michael Russell, IR Manager for Cedar Fair.

Earlier this morning, we issued our 2019 first quarter earnings release.

A copy of the release is available on our IR website at ir.cedarfair.com under the News tab or by contacting our Investor Relations office at (419) 627-2233.

On the call 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 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'll turn the call over to Richard Zimmerman.

Richard?

Thank you, Michael, and thanks to all of you for joining us this morning.

I'm pleased to share that our company is off to a very strong start in 2019 with early-season revenues up 2% from this same time last year, primarily on solid momentum and guest spending and our out-of-park revenue channels.

More importantly, our positive results to date place us solidly on track to deliver our 10th consecutive year of record setting revenues with sales from advanced purchase commitments up more than $20 million at this point.

In a few minutes, I'll ask Brian to review the quarterly results.

First, however, let me recap the high points to date that support our early-season optimism.

I will conclude the call's prepared remarks with a review of projects and initiatives underway for 2019.

I am pleased to say that the strong momentum that helped produce our record performance over the second half of 2018 has continued.

To date, we have seen double-digit increases in the sale of advance purchase products, which are up in all major categories, including season passes and our All-Season Dining and All-Season Beverage programs.

We believe there are a number of factors contributing to this strength, but none more important than our customers' overall satisfaction with the quality of entertainment we provide.

And with the broader and successful introduction of WinterFest, the entertainment we provide is now enjoyed at many of our parks through the end of the year.

Many guests come for our world-class coasters and thrill rides, that's a given, but our parks today offer so much more by way of immersive entertainment, live performances, unique food and beverage offerings, special events and seasonal celebrations.

In fact, guests can enjoy an entire day at our parks and never step foot on a ride.

The breadth of entertainment we offer elevates the guests' perceived value and motivates them to return multiple times throughout the year.

Therefore, purchasing all-season passes and related products such as All-Season Dining and All-Season Beverage provides our guests with the added flexibility they desire and becomes their most affordable option for visiting frequently.

I should note that our team's targeted marketing activities have been quite effective and a big contributor to the strength we are experiencing in advance purchase commitments.

The increasingly popular events we are offering in the fourth quarter, including our Halloween and WinterFest celebrations, create ideal platforms from which to launch advance purchase marketing campaigns.

This past fall and winter, guests responded well to incentives designed to create urgency and drive early-season purchases.

I believe our positive year-to-date growth in advance purchases speaks to the meaningful impact those marketing initiatives are having on our results.

The beginning of spring is always an exciting time of year for Cedar Fair.

At the end of April, Knott's Berry Farm, our park located in Southern California and our only property open year around, wrapped up another successful multi-week Boysenberry Festival.

Several of our seasonal parks have also opened for the 2019 season, with primarily weekend operations to this point and the early response from guests has been outstanding.

Meanwhile, all of our parks are making final preparations for full 7-day per week operations, which will begin at various times throughout the month of May.

We are very pleased with our fast start and excited about introducing new rides and attractions and launching a number of new initiatives that will fuel our momentum into the busiest parts of the 2019 season.

I will come back in a few minutes to update you on our pipeline of activities for the upcoming season and our progress on some longer-term projects.

First, I'd like to turn it over to Brian to discuss the quarter's results in more detail.

Brian?

Thanks, Richard, and good morning, everyone.

Please note that due to the seasonal nature of our business, a majority of our revenue is realized during the 130 to 140-day period beginning in the second quarter, and in recent years supplemented with the growing amount of fourth quarter revenue stemming from our popular events and activities surrounding the Halloween season and more recently with our WinterFest celebrations.

As our first quarter represents less than 5% of full year revenues, results in the period are not indicative of performance for the remainder of the year.

Having said that, we are very encouraged by several positive early-season indicators.

Consolidated net revenues for the 3 months ended March 31, 2019, totaled $67 million, up $12 million from $55 million for the first quarter a year ago.

The increase in net revenues reflects increases in attendance, in-park per capita spending and out-of-park revenues in the current quarter.

Revenues in the period also benefited from an additional 9 operating days when compared with the fiscal quarter of the prior year, which ended on March 25, 2018.

Operating costs and expenses for the first quarter were $138 million, an increase of $14 million or 11% from the prior year quarter, and we're in line with our expectations.

Operating results for the first quarter include normal off-season operating, maintenance and administrative expenses at our seasonal parks and daily operations at Knott's Berry Farm and Castaway Bay.

The year-over-year increase in cost and expenses was primarily due to the incremental week in the period, which included 9 additional operating days.

Turning our attention to results for the first 4 months of the year, which normalizes the calendar shift associated with the later timing of Easter and spring break, net revenues were approximately $128 million, up 2% or $2 million when compared with results for the same period a year ago.

This year-over-year increase has been driven primarily by strength in in-park per capita spending and out-of-park revenues.

We're particularly pleased with the early-season strength in our in-park per capita spending, which is up roughly 3%.

As it relates to attendance through the end of April, with only 1 park in full operation, our ability to drive meaningful attendance growth this early in the season is limited.

Through the first 4 months of the year, attendance was down a modest 20,000 visits from the same time last year.

At the park level, Knott's Berry Farm has led the charge in the early going.

That park is off to an outstanding start and the strength of the growing popularity of its early-season special events, PEANUTS Celebration and Boysenberry Festival.

The excitement around these special events has again produced consistent year-over-year increases in revenues as well as steady growth in season pass sales.

Looking at long lead indicators for a moment, our advance purchase commitments, including season pass sales, the sale of all-season products such as All-Season Dining and All-Season Beverage and bookings at our resort properties are trending up nicely from the same time last year.

This positive momentum is reflected in our deferred revenues, which are up 12% or more than $20 million through the first 4 months of 2019.

This increase is more than double from where we were at the same time last year.

On the capital structure front, we ended the first quarter well positioned in terms of both liquidity and cash flow.

Today, we also announced the declaration of a quarterly cash distribution of $0.925 per limited partner unit, consistent with our targeted annualized distribution rate of $3.70 per limited partner unit for 2019.

We remain focused on optimizing the use of free cash flow to maximize unitholder value in both the near and long term, including strategically investing in our parks and growing our distributions, which currently stands at a very attractive 7% tax-advantaged yield.

Before I turn the call back to Richard, I want to mention 2 additional items of business.

First, we scheduled our 2019 Analyst Day for Friday, August 9, to be held at the Hotel Breakers at Cedar Point in Sandusky, Ohio.

Please watch your e-mail for an invitation with registration details.

And for modeling purpose, I want to again highlight that the additional week reported in our first quarter will be offset in the fiscal fourth quarter this year, where there will be 1 less week of operation when compared with the fourth quarter in 2008 (sic) [2018].

Also, as part of this year's calendar shift, approximately 60 operating days will move from the third quarter into the second quarter when compared with the prior year respective quarters.

For the full year, we anticipate the total number of operating days in 2019 to be comparable with 2018.

Overall, we are quite pleased with our strong start to the year as well as the healthy increase in early-season advance purchase commitments, including the important season pass channel.

This continues to be a key driver of our growth strategy as we work to build-out and test our guest loyalty program, which is the next evolution of our successful season pass program.

The positive trends we've seen in 2019 thus far put us on pace to deliver yet another record year for Cedar Fair, generated significant amount of free cash flow and keep us on track to achieve our $575 million EBITDA goal by 2023.

Now I'll turn the call back to Richard.

Thanks, Brian.

As I mentioned at the call's outset, this is an exciting time of year for us as most of our parks are just weeks away from ramping up to full 7-day operations.

This weekend, 2 more parks are opening for the 2019 season, including Cedar Point for its 149th season.

We cannot wait for park goers to experience Cedar Point's newest attraction, Forbidden Frontier on Adventure Island, an interactive and immersive real-life adventure.

The inspiration for Forbidden Frontier was born out of our success with Ghost Town Alive!, an authentic Wild West experience at Knott's Berry Farm that has captured the imagination of guests since its debut in 2016.

Practically speaking, there is no better example than Forbidden Frontier of how we intend to broaden the guest experience and no better place than at our flagship park to advance this strategy in a meaningful and tangible way.

Yet, Forbidden Frontier is just one of many new additions for this year.

As the season unfolds, the world-renowned Monster Jam Thunder Alley will be rolling into 3 of our parks this year, including Cedar Point, Kings Dominion and Dorney Park.

The immersive in-park attraction, a collaborative partnership between Cedar Fair and Feld Entertainment will allow guests to see the massive monster trucks up close, build their very own mini-monster jam truck and even take a ride in the real thing.

Exclusively hosting these multi-week events presents us with a great opportunity to drive urgency to visit, while delivering a unique experience to our guests and introducing our great parks to Monster Jam's legion of worldwide fans.

Stepping back for a moment, as it relates to Monster Jam, what I'm most excited about is our opportunity to partner with another premier entertainment company to bring more world-class attractions to our park guests.

I'm confident that the Monster Jam experience is just the first installment of a strategic collaboration between our companies.

Working with great partners like Feld Entertainment will be an important part of our next phase of growth.

Also new at 4 of our parks this summer is Grand Carnivale, a one-of-a-kind immersive evening spectacular, highlighted by a high-spirited parade that features 9 Mardi Gras like floats and a nightly street party with authentic food, drink and live entertainment.

We believe offering immersive entertainment add-ons like Grand Carnivale and Monster Jam Thunder Alley on top of our legendary rides and attractions differentiates us from other entertainment options and will be a key driver of our growth going forward.

We are also excited about the scheduled opening of 2 development projects currently under construction on property near or adjacent to our parks.

The first is a 150,000 square-foot indoor sports facility located at the Cedar Point Sports Center in Sandusky slated to open in December this year.

Located next to our outdoor sports complex, which has had overwhelming success drawing athletes and their families from multiple states for tournament play, we believe the stage is set for the indoor facility to be equally successful.

To ensure that success, we partnered with Sports Facilities Management, a world-class developer and operator of sports and recreation complexes to manage the new indoor facility.

We are confident that they are the perfect partner to take our amateur sports complex to the next level.

Another development project set to debut later this year is a 129-room SpringHill Suites, which is located adjacent to Carowinds in Charlotte.

The addition of this hotel expands our accommodations portfolio, which has been a source of meaningful revenue growth over the past several years.

It also provides a convenient option for guests to extend their stay at Carowinds, while improving the park's position as a multi-day vacation destination.

Also in the fourth quarter, WinterFest is scheduled to debut at Canada's Wonderland, representing the seventh park in our portfolio to stay open and offer seasonal celebrations through December.

Individually and collectively, we believe our new events will create higher demand and encourage repeat visitation both earlier in the season as well as throughout the entire year.

These investments elevate the overall guest experience, create higher demand and provide us with pricing power for season passes.

They also open the door for marketing campaigns that aggressively target audiences outside of our core demographics.

Regarding our capital program's major projects for this year, guests have simply been thrilled with our newest roller coasters, which have been operating since opening day at 2 of our largest parks.

Canada's Wonderland located just outside of Toronto has introduced Yukon Striker, the longest, fastest and tallest dive coaster in the world.

And at Carowinds, Copperhead Strike has been whipping riders along the rails of the Carolina's only double launch coaster.

As has been Cedar Fair's cornerstone, we go the extra mile to build record-setting roller coasters unique by feature and scale and our 2019 additions to our coaster collection have carried on that highly regarded tradition.

Behind the scenes, the focus of our marketing teams is squarely on generating more attendance.

We will accomplish this by driving more visitation from unique visitors and through the effective evolution of our season pass program, the expansion of which will feature loyalty and reward benefits.

We will be testing and tweaking elements of our new loyalty program throughout the year at several parks with the goal of a broader 2020 rollout.

All of the activities I just reviewed advance the strategies that comprise our long-range plan.

As you can see, our game plan includes aggressively pursuing new growth by making investments through multiple channels.

For instance, we continue to invest in our core park operations as represented this year by the addition of new world-class roller coasters.

We continue to invest in attractions and events that broaden the guest experience represented by Forbidden Frontier, Monster Jam Thunder Alley, Grand Carnivale and WinterFest.

We continue to invest in the expansion of our season pass program, represented by our marketing team's focus on implementing a loyalty and rewards program that builds lifelong relationships with our season pass holders and provides them with additional benefits for frequenting our parks.

And we continue to invest in properties adjacent to our parks as represented by the planned openings later this year of the indoor sports facility in Sandusky and the SpringHill Suites Hotel in Charlotte.

Before we open the lines for Q&A, let me conclude my prepared remarks with a few additional thoughts.

Cedar Fair's long history of investing to scale provides a solid foundation for pursuing aggressive long-term growth opportunities.

Our guests have a loyal and emotional connection to our parks, producing more frequent visits.

We have an impressive history of increasing revenues, profits and cash distributions, which we expect to continue for the foreseeable future.

Looking ahead, with advance purchases up more than 10% compared to this time last year, we expect 2019 to be another outstanding year.

We are executing on a long-term strategy and have set in motion a host of key initiatives aimed at reaching our long-term growth objectives.

And finally, we believe Cedar Fair provides investors with an attractive and tax-efficient investment opportunity, supported by our sustainable and growing distribution.

That prepares our -- that concludes our prepared remarks.

Vickie, please open the call for questions.

(Operator Instructions) And we will take our first question from Tim Conder with Wells Fargo Securities.

Just a couple here.

Richard or Brian, whoever wants to, maybe give us a little more color on where you are with your loyalty program?

You said again you're testing somethings this year and look for a broader rollout next year.

But maybe just some initial thoughts, color that you have there that you can share or willing to share if you can from a competitive perspective.

And then looking at the other things here, any things that you're seeing and any trends, indicators in Southern California for Knott's ahead of the Star Wars open here?

So are you seeing any impact whatsoever or not from that or not?

Tim, thanks for the question.

With regard to loyalty, as we said in our prepared remarks, we're very excited about the ongoing evolution of the season pass program, which has driven our growth over the last several years.

We really think the introduction of the new loyalty program will help our evolution from a transaction-based approach to one more that's relationship-based.

And we believe that loyalty and rewards will play a key part of that program.

We are deep in the development of that program and about to rollout some of the tests.

So I don't want to steal the thunder from our marketing teams because they will be very upset if I rolled it all right now or provided too much detail.

But I will say that I think it will be foundational, and I'm very excited about what I think it can -- the impact it can have on our business.

With regards to Knott's, Brian?

Yes, Tim, in terms of Southern California, as we said in our prepared remarks, Knott's is off to its best start ever and that's in spite of may be a little of a bumpy beginning to the year with a lot of rain in Southern California in February and early March.

So the month of April was very good.

And as we lead up to the opening of Star Wars and all the hype around that, we see nothing in terms of our long lead indicators at that park that would tell us that we're not going to have yet another outstanding year there.

Next question will come from Steven Wieczynski with Stifel.

This is actually Brad on for Steve.

I guess the first question is just around your 2023 sort of target for EBITDA.

Question we often get from investors is sort of how are you thinking about getting there with respect to some of the drivers -- underlying drivers in the business?

Don't expect you guys to sort of quantify it, but if you could kind of give us some flavor around how you're thinking through both growing revenues and then what sort of cost inflation expectations are embedded in sort of that projection to get to the 2023 EBITDA number?

Brad, good questions.

It's Richard.

I'll take it first and then turn it over to Brian.

As we think about that 2023 target and you look at the key strategies that we talked about on our February call, the first 3 of them really are targeting broadening the audience, expanding our season pass program and targeted marketing efforts, all really speak to growing the attendance over time.

We think we can broaden our appeal, broaden our attendance base.

I'll let Brian talk about the specifics of that.

But as you look at it, the demand that we saw over the last 6 months of the year last year from August through the end of December, 6% up on attendance, we think there's ways to drive some meaningful increases over time as we broaden our mix and continue to work with all the levers that we have within our business model.

We really like the resiliency of the business model for us and the industry.

And I think having all those levers to pull lets us really look at a lot of places to drive our revenues.

Brian, specifics?

Yes.

Brad, just to add on to Richard's comments, as we've talked about in the past, it really is an optimization of those top line metrics, attendance and per capita or pricing.

And so I think what you've heard from us over the last couple of years is that, and Richard just echoed it again, that where we're at right now we think volume or attendance is where we have a little bit more momentum and opportunity.

And so I think, at least for the beginning, a part of that long-range plan, it will be more volume weighted.

We also though as in Richard's comments in our prepared remarks, he commented on the strength of out-of-park revenues and the expansion we've seen in accommodations, we can't overlook that.

That's going to continue to play a role in the plan as well as we open new resort properties like the SpringHill Suites in Charlotte and the sports complex in Sandusky.

On the cost side, as we've talked about on prior calls, the challenge -- the biggest challenge we see there will continue to be around labor.

Seasonal labor, as we've talked about, represents about 40-plus percent of our overall cost structure.

And so that is a key area of focus for us.

But we've been very successful.

The operating teams have been very efficient in managing their other operating costs.

So I think overall our goal is to keep the broad trend in operating costs in line with or just barely out of inflation and that's with that pressure on labor.

So I think that's basically -- without getting into the actual specifics, that's generally how we're thinking about it.

Okay.

Helpful.

And then just with respect to costs obviously as we're a bit closer to all the parks launching for the season, are your expectations around the wage cost inflation and kind of similar to where you previously talked about for the year?

Yes.

I think similar to what we've seen.

Brad, the last couple of years, labor costs have been trending up mid-single digits.

I think as we said on our year-end earnings call, we made a lot of market adjustments, not necessarily mandated or required adjustments last year, but market adjustments to get more competitive at each of our parks.

We believe that we're going to bear fruit and benefit from those efforts in 2019.

But undoubtedly, the continued pressure on availability will influence that a little bit.

So our expectation, we're going in sort of with a plan for the worst and then manage to a better outcome.

And that is something similar to the last couple of years in terms of the overall increase being in that mid-single digits.

Okay.

Helpful.

And then lastly, Richard, always like to hear your take just on sort of the health of the core consumer and what you're seeing out there with respect to the consumer on sort of non-weather affected days?

And obviously, I appreciate that you only had 1 park open and several others have kind of launched on a weekend-only basis.

But just curious to hear your thoughts there?

And that's all from me.

Brad, we get that question a lot.

There's a lot of try and read through both our results and other folks' results in terms of the health of the consumer.

We haven't seen any meaningful change in the health of the consumer or the consumer mindset since last year.

The momentum we saw as I referenced in my remarks before, we continue to see.

In my conversations with those across our landscape, most people are seeing the same thing, which is the consumer is in a good place.

The best description that I've heard and we heard this several months ago is a few years ago, Main Street was worried and Wall Street was doing fine.

Now Wall Street is a little worried, but Main Street is doing fine.

And I think the consumer is feeling good about themselves.

So we don't see any meaningful change in that right now.

And I think as you look across our portfolio, when we have good weather days, you've heard me say this before and I'll say it again, more people are coming.

They're staying longer and they're spending more.

We see real strength on days where we've got a good read of this year versus last year when we look at the momentum of the consumer, so...

Next is Eric Wold with B. Riley.

Two questions from me.

One, thinking about the 60 operating days moving from Q3 to Q2 of this year, anything significant to think about those days in terms of major events in your parks, some parks being impacted kind of more than others?

Or should we assume those 60 operating days are going to be fairly average days moving?

Yes.

Eric, this is Brian.

Well, definitely not every operating day is created equally as we've talked about in the past.

And so within those 60 days there, each one of those days isn't going to be the same.

There will be some meaningful days that shift in there.

But the call out in our prepared remarks was to really just bring that to light that as we look at where our fiscal second quarter and third quarters this year are going to be compared to last year.

You should see a meaningful shift in some revenue and EBITDA between quarters.

Now given the way that we tend to report and try and be as transparent as possible, when second quarter numbers come out, we're going to start talking.

We'll also provide an update through the end of July.

So we'll try and normalize for that as best as we can, but it could definitely move some material or meaningful revenue and EBITDA from Q3 to Q2.

Perfect.

And then last question.

Looking at the deferred revenue growth of 12% and kind of around season passes, kind of the All-Season food and beverage passes, can you give us a sense of the mix between the growth you're seeing from prior season pass holders or food and beverage holders versus first-time buyers?

And kind of the -- what you're doing to drive one versus the other?

Key part of our program is continuing to see higher renewal rates on season passes in particular, which are -- and right now, as we said, deferred revenue is up 12%, our season pass sales are mirroring that, approximating up the same percentage.

As we look through it, the loyalty program that we've referenced is really going to focus on that renewal rate.

I've always said, it's healthy and getting healthier.

But we do have a focus on both bringing in new -- acquiring new customers, but keeping our existing customers as well.

When we look at the growth of that deferred revenue, which as Brian said in his prepared remarks, is double the rate of growth we were at the same time last year.

This is several years in a row.

We keep climbing a higher mountain and keep driving the season pass program with season passes representing over 50% of our attendance.

It's meaningful and to be up significantly in that large program, I think.

Both does paint a picture of the health of the consumer, is our best leading indicator and I think underscores our optimism for the year.

And we'll go to Brett Andress with KeyBanc Capital Markets.

Wondering if you can comment on whether it's been a little choppy lately, at least here in the Midwest as you guys know.

But I'm wondering if that's having any impact on park openings or expected park openings over the next few weeks or any that are coming up?

We always hope to get through one of these calls and not comment on weather, which is the one big macro factor that we certainly have no control over.

I've got to go back to our long-held belief that over time weather's going to average out.

That's typically what we see.

You saw it in 2018 with the tale of 2 halves, first versus -- the first half versus the second half.

But as -- with regards to planned opening, our plans are set in the year before.

So we don't adjust operating calendars and take days out based upon what we think the weather will be.

We create a plan that's going to optimize each of our respective sites.

And as we look at this year, we had the opportunity to do that.

What we have seen is it's been very choppy, notably, and everybody is aware there was a lot of rain in January, February at Southern California.

But I will tell you, as we said, Knott's is off to its best ever start, so they recovered.

It has been choppy elsewhere, but that's what we see.

And when we -- Brian referenced the modest 20,000 decrease in attendance through the first 4 months, we've got some of our parks that have only been open a weekend or 2 and any particular macro factor like the weather impact is just more significant when you got fewer operating days.

So we don't read anything into that.

What I will say, back to my earlier remarks, we've seen what we wanted to see and what we expected to see in terms of market reactions to whether it's the new coasters or the other product we're rolling out on days where the weather has been good.

Understood.

Yes.

And I hate to be the guy to bring up weather, but -- my last question and really kind of going back to Tim's question around Star Wars.

Can you just provide maybe some historical context for Knott's in the L.A. market when large competitive openings has occurred.

Just any historical examples of how it's impacted the park, I mean, either for good or bad?

If I go back to when Universal opened Harry Potter, Knott's had an outstanding year in that year.

We were prepared for it.

But when I say we were prepared for it, we go into each year and Knott's is the best example.

We are a house of brands and we respect those brands.

We understand the heritage that those brands have in the marketplace.

And Knott's is our best example in Southern California, really going back and really leveraging the brand that exists in that market.

So we've seen significant growth since that time, but the year that the major expansion happened at Universal, Knott's had a tremendous year.

When you look at the tourism market in Southern California, we've referenced on our call in February, that's 49 million tourists coming in each year.

Anything that brings more people to the market we think is good for Knott's, and we're excited to have more tourists come to the Southern California marketplace.

Knott's is coming off a year where they did over -- just over 6 million people last year, tremendously healthy franchise.

We're really proud of Jon Storbeck and his team and the guest experience they give out there.

So we like the momentum, and we think there's opportunity.

We'll go to James Hardiman with Wedbush Securities.

So a couple of points of clarification here.

So Brian, you talked in I think the answer to Brad's question that the early stages of this 2023 plan would probably be more about volume than pricing.

But I guess if I look at last year, I think you got -- obviously, it wasn't what you expected in terms of total revenues, but it seemed like it was more about per cap's than attendance and that was certainly the case here through the first 4 months of the year.

I guess what gives you confidence that, that volume will start to come in here as we work our way through this year and beyond?

Yes.

James, so if we go back and we look at '18, and I think we said this or commented on it this way on the year-end earnings call that '18 really was a tale of 2 seasons.

The overall volume for the year was definitely influenced by the shortfalls in the first 7 months of the year.

But when we look at August 1, basically through December 31, and there were a lot of initiatives designed to drive volume in the latter half of the year, everything from the traditional high demand period, periods of August and October with Haunt to the continued growth and introduction of more WinterFest events.

But over those last 5 months, attendance was up 6%.

And so undoubtedly, there is a little bit of pent-up demand in there.

But I think the way we looked at 2018 was that latter half was more reflective once the -- once those -- that macro factor of weather just normalized.

It really wasn't outstanding by any means in many markets, but it was just normal.

As we look at '19, as we said in the prepared remarks, hard to see any real attendance lift or significant lift in the first 4 months of the year just given the fact that we only have 1 park of any meaningful operation, Knott's Berry Farm.

And it performed well.

Definitely, as Richard said, choppy beginning with the heavy rainfall in the first couple of months of the year, but an outstanding second half of March and month of April.

And so I think as we go into '19, our expectation was always that the real opportunity for growth in attendance in '19 and the initiatives that we have in place to drive that is more situated in the months of June and July and August and beyond.

Makes sense.

And then help me understand the extra operating days.

I guess, particularly in the first quarter, but then how I should think about that in the remainder of the year.

Obviously, it's a top line benefit, but it doesn't seem like much of that flowed through to the bottom line in the first quarter.

The first quarter is obviously a quarter where you lose money on the EBITDA line.

So did those extra operating days actually help profitability in the first quarter?

And then as we work our way through the year, I'm assuming that as we're starting to put together our models that top line benefits will also end up being EBITDA benefits based on those shifts?

Yes.

James, so as related to Q1, I would say if we looked at the specific parks where those 9 operating days were coming from and largely that's Knott's Berry Farm, the answer is yes.

It definitely flowed through.

The reason you don't see it as much is because you've got all of those other parks with an extra week of calendar, maybe not operating days, but there's clearly just carrying costs, right, reflected with that extra week.

So that's what's sort of diluting that incremental lift in the revenue associated with the extra operating days in Q1.

I think what you can expect is as we go into Q2, given that the lift or the incremental operating days are pretty much going to be across the board, you can expect majority of that revenue to definitely start flowing through or at least the relative -- the normalized relative percentage of that from a margin perspective flowing through in Q2.

And then a little bit of an offset in Q3, right, because you're going to be taking days out of Q3.

Sure.

And it sounds like from what you said earlier, Brian, that by the end of July that Q2 to Q3 delta will normalize.

Is that right?

It will be partially normalized.

It's not going to be entirely normalized.

The more of that will -- ultimately, we've got -- essentially, the way the calendar falls this year, the way our fiscal calendar and the operating calendars fall, we won't really be fully normalized until the end of the year, as I said.

In terms of the meaningful operating days though, I'd be thinking about more around Labor Day is when that normalization is going to happen in terms of the Q3, Q2 shift.

That's helpful.

And then lastly from me.

You talked about some of the cost pressures you've seen in the last couple of years.

You couple that with maybe not the best revenue performance and the margins have eroded a bit in the last 2 years.

Let's say you have a good year, at least a normal year this year, is there an opportunity to maybe see expanding margins this year or even stable margins?

How should we think about margins for 2019?

Yes.

James, Brian again.

As we've always said, margin expansion is definitely something that we hold our GMs to, but understand that there've been a lot of initiatives and directives and strategies we've put in place that have put a little bit of pressures on those margins.

In terms of the overall margin, ultimately, as we think about '19, if we get the kind of attendance lift that we would expect and we see a return of visits to key months like July, which is a high margin month, that's going to help and that should drive margin expansion.

Ultimately, the overall number comes down to a lot of that, that where is the attendance coming from or the attendance lift and when is it happening.

And so to the extent that our largest -- our highest margin parks like Cedar Point, Kings Island, Canada's Wonderland, Knott's, et cetera, are having good years in 2019, that will definitely create a beneficial mix when it comes to the overall margin.

(Operator Instructions) And we will now go to Michael Swartz with SunTrust.

Just wanted to touch on the announcement during the quarter of the land purchase at Great America.

Just -- I guess I'm interested to hear more about maybe how that changes your plans around development, maybe the speed at which you can put some capital into that park both near and longer term?

We remain excited about the opportunity at Great America and the Santa Clara market.

I'll take you back.

We've got rezoning approved a couple of years ago.

That was the first step in a more aggressive development program.

And we're actively deploying that strategy and will announce more of those plans as we get through the meat of this year.

But from my perspective, acquiring the land underneath Great America was really once-in-a-generation opportunity that was too good to pass up.

Great America is the only site where we didn't own the land underneath our operation.

We've got, as you know, big plans for Great America.

And as we rollout the investment, we want full benefit of that investment.

So owning the land gives us an opportunity to do that.

I'll also say when you look at where Great America sits, it's extremely valuable land, significant acreage, right in the middle of Silicon Valley, a vibrant consumer market for us, certainly the center of high tech and a really good business market for us.

So from a cash flow perspective, it was relatively neutral.

From my perspective, it's really more a strategic proposition, controlling -- marrying our operation and controlling land underneath it and now being able to really get full benefit of our investment going forward.

Okay.

That's great.

And then just a follow-up question, I think, to the operating calendar.

I think, Brian, you had mentioned that you expect operating days to be similar to 2018.

I know there's a lot of shifts going on in this year between quarters.

But with the addition of Canada's Wonderland -- I wonder if that's the Canada's Wonderland this year, wouldn't that be a positive to the operating calendar?

I guess, are there offsets that I'm not thinking about?

No.

Michael, your question is a good one and you are thinking about it correctly.

Canada's Wonderland WinterFest much like the other ones we've introduced typically would add 20 to 25 operating days just based on the timing of other events around the calendar later Easter, later spring break and then just some operational decisions we make on early-season.

As an example, I'll tell you, Cedar Point opening 1 week later in 2019 and '18 just based on the -- what we've experienced last few years in that market from a weather perspective.

All of those things net out.

Not the entirety of those 20 to 25 operating days, when I say, will be comparable to '18, we maybe up about a half dozen operating days in '19 depending on how the year goes with weather and everything.

But there's enough days coming out of the calendar that offset the majority of those Canada's Wonderland WinterFest days.

And we'll go to Chris Prykull with Goldman Sachs.

Just 1 for me on the Grand Carnivale events.

I guess how are you thinking about the impact to revenue and/or margins from adding those events?

But maybe more importantly, I guess, why did you select the parks that you did to test those and maybe the months that you did?

Are you targeting a new customer or existing customer?

Just a little bit more color there would help.

Chris, from our perspective, we think we've got the opportunity to drive both unique visitors, but also season pass visitation.

When you look at Grand Carnivale, it's going to be taking place in the evening.

So it's also an opportunity to put a little juice into the day part, the after-4, after-5 visitor may be come out after work, bring the family out after the heat of the day is done.

So we think there's a lot of opportunity on multiple fronts.

We picked those parks in part by looking at the calendars, by looking at who had other attractions that they could leverage.

So as we think about Seasons of FUN and the best example we have is Knott's Berry Farm with the way their calendar has laid out, PEANUTS Celebration, Boysenberry in the first quarter, Ghost Town Alive!

and the Waterpark opening in the summer, Haunt in the fall, WinterFest in the winter in the months of November, December, you're going to see us take that Seasons of FUN approach everywhere.

So the 4 parks we picked gave us an opportunity to program either the early part of the summer or the later part of the summer depending on what was going on.

And when you look at the opportunity that we talked about for the last several months, when we looked at the June quarter, the second quarter, and try and drive earlier visits, both -- create reasons -- both the urgency behind visiting earlier in the season, activating our season pass holders earlier or selling season passes, we really want to rollout events as something that creates a lot of noise in the market.

And again, I'd point to Boysenberry Festival as the best example we have because it has done both, drive unique visitors and drive season pass visitation.

And that's the model we're starting to play out.

But it falls under the broader Seasons of FUN umbrella.

Great.

That's helpful and makes sense.

You mentioned 1 customer that I found intriguing.

Maybe you wanted to come out later in the day just for the Grand Carnivale event itself.

Would you offer sort of a reduced fare or a different type of ticket for folks that wanted to do that?

We do have a twilight ticket, a late day ticket and after 4 price ticket that's out there.

And we have married that with other offers in the past.

So we've seen a good traction on that that's always been out there.

But programs like this can reinvigorate and get people to focus on that type of program where maybe they didn't focus quite so much on in years past.

Got it.

And then just on accommodations revenues.

Nice growth in the quarter.

I don't know if there was any impact there from the operating dayshift at Knott's.

But more importantly, when I think about fiscal '20, how should we model the lift there from some of the new hotels coming online?

Chris, this is Brian.

So the SpringHill Suites property and Charlotte comes online later this year.

It's most likely going to have a very modest fourth quarter impact and will really have its full benefit to us in 2020.

So we're not going to get into specifics in terms of what our revenue or EBITDA are for that property.

But you can expect a full year out of that.

And then, I mean, we haven't announced anything else yet for 2020, but you can be -- you can rest assure that we're working on other plans for continuing to expand our resort portfolio over the next several years as well.

Got it.

I mean, is there any reason to think that the revenue or EBITDA from your hotels would be different than just the average chain scale that, that hotel has?

No.

I think that's a very fair way to look at it in terms of operating ADR.

Clearly, we will be packaging tickets in, and so that's maybe a little bit of a difference.

But we -- I would say that we would expect the same kind of returns as a similar hotel operator under that brand.

And there are no other questions.

So I'd like to turn it back to Richard Zimmerman for any additional or closing remarks.

Thank you, Vickie.

Thank you all for your interest and ongoing support of Cedar Fair.

I hope all of you will have a chance to get out and visit our parks this summer to experience firsthand what makes us unique.

As I mentioned, the stage is set for another great year at Cedar Fair, and I look forward to keeping you apprised of our progress.

Michael?

Thanks, Richard.

Thanks for joining our call today.

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

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

Vickie, that's the end of our call.

Thank you very much.

That concludes our conference for today.

I'd like to thank everyone for your participation, and you may now disconnect.