So the way the program works is you just have to ride it out and then make those adjustments for the next year. That’s a different story when it comes to single-day tickets that you can dynamically price up and down as the season progresses.
Steve Wieczynski: Okay. And Brian, real quick, can you give the operating days by quarter again? You broke up a little bit. I think I got the third and the fourth quarter, but I couldn’t hear the first and second quarters.
Brian Witherow: Yes, sure. It was 119 days in the first quarter, 803 in the second, 998 in the third and 333 in the fourth.
Steve Wieczynski: Okay, great. Thanks guys. Appreciate it.
Operator: Our next question comes from Thomas Yeh with Morgan Stanley. Please go ahead.
Thomas Yeh: Thanks so much. Good morning. I wanted to ask about the cost outlook on a stand-alone basis. Brian, you sounded pretty confident in the cost controls that you’ve been putting in place. And in the recent filing, you had identified $45 million of savings I think, baked into the stand-alone expectations. And I think implied that total company expenses would actually be down. Is it fair to say that fewer operating days are incorporated that view and that’s a net EBITDA positive contributor? And then maybe just beyond that on the core expenses, how you’re managing to that outlook.
Brian Witherow: Yes. Thomas, I think you hit it right on the head. A big part of our strategy and approach to getting more efficient is, as we said on the call, focusing more of our attendance into a shorter operating season, particularly at the mid-tier parks. It’s also about, as we’ve talked about in the past, reimagining how we program the parks, meaning what’s the — how do we program the parks, the entertainment of the parks that’s less dependent on seasonal labor, our largest single cost. And so you’re seeing some of that — you’ll see some of that play out and consistent with our comments on the call, where we’re taking those 112 operating days out of the system this year. That’s a big part of that. But it’s also, as we said on the call, the need to, in any given year, adjust and remain nimble, if I use that term, around variable operating costs to better mirror the demand levels.
So where we’re very effective, the teams were especially effective this past year, was adjusting our staffing levels, pulling some of those variable costs down when attendance wasn’t where we had expected because of the macro factors Richard mentioned. But it also cuts the other way, right? I mean, it means when attendance is strong, you need to make sure that you’re staffed well. One of the things that we pay very close attention to during the course of the year is how our seasonal labor dollars are translating to the in-park revenue channels. And there’s a direct correlation when our staffing levels are more challenged. And that’s often a natural challenge in the shoulder months before the kids are out of school in the summer, where staffing can be a little challenged.
And we see that weigh on per cap. So we have to be — our teams have to remain nimble on staffing up and staffing down. And then the more permanent changes are the things that we’ve talked about, which is adjusting those operating calendars, adjusting the programming of the parks to structurally lower the overhead costs.
Thomas Yeh: Great, makes sense. And then I wanted to revisit the bifurcation you were seeing earlier this year between Midwest strength and California weakness. And Richard, you talked about the recovery in Southern California in the second half. Is the postmortem on that and just some of the pricing strategies that you’ve enacted suggest that it was a weather-related problem primarily or more price sensitivity in some of the regions that where you saw the most impact? And as a follow-up to that, I think that the logic of trying to start the season pass sales at a lower price and stimulating demand would be that it would drive in-park spending strength. And I did notice that the food and bev per guest was also, I think, a little bit lower on a year-over-year basis. Any comments on how you’re seeing that play out, that would be great.
Richard Zimmerman: Yes. From our standpoint, as we looked at all of ’23, we saw what others in the industry and some adjacent industries saw, which was a little bit of consumer weakness out in California over the first half of the year. A lot of that was impacted by weather very early on. But once you got to the middle of the summer, we started to see the trends start to shift in terms of what consumers were doing with their time and their dollars. So yes, we always say — and you go back to ’07, the ’08, ’09, we first saw weakness in ’07 out in California. And that kind of bled through to the east. So I think what we saw was a firming up of the consumer marketplace in California. So as Brian mentioned, when we start and we spur a lot of volume, that puts people in the park.
And then we can react to that demand once people get through the gates and make sure that we’re staffed appropriately to grab the food and beverage, do more transactions per hour. When you do a significant increase in attendance as we saw, it will put a little pressure on the per caps because your park has a lot more folks in it. But that’s a challenge — that’s a type A problem, that’s the challenge we like to have. And I think all of the investments we’ve made over the past several years really support us being able to drive higher per capitas once people get in the park. And then lastly, I’ll say when we now look at ’24, I talked about the really compelling capital investment lineup we’ve got this year. When you put in things like Top Thrill 2, that drives not only a lot of people to the park, but it also drives things like premium charges, our front-of-line Fast Lane program.
So we’re really excited by what I think we can do this year because we’re more back to a traditional lineup. When I look at ’21, ’22 and ’23, the investments we made were very disrupted by the pandemic, ’20 and ’21 and how we came out of that. So this is the year that we’re now back to what I would call our more traditional playbook of really using world-class investments to drive not just the attendance and the demand, which gives us a little bit of pricing power at the gate, but also driving what happens once people get through the gates.
Thomas Yeh: Got it. Last one for me, I might have missed it. But knowing things might change after the pending merger, do you have a sense of the CapEx outlook on a stand-alone basis just for modeling purposes?
Brian Witherow: Thomas, for next year, we are planning $210 million to $220 million of capital.
Thomas Yeh: And for ’23, what was the number for the full year?
Brian Witherow: The high end of that is right around – right at $220 million.
Thomas Yeh: Okay, perfect. Thank you.
Brian Witherow: Thanks Thomas.
Operator: Our next question comes from Michael Swartz with Truist Securities. Please go ahead.
Michael Swartz: Hi guys, good morning. I think I just wanted to kind of focus in on the first question on some of the commentary around channel mix. And as I recall, coming out of the pandemic, you guys have kind of had cut back on some of the lower-value channel business. And it sounds like you brought some of that back. So how should we think about that going forward? Are we just kind of back to status quo pre COVID? Or is that still a focus to limit some of that lower-value stuff going forward?
Brian Witherow: I would say, Mike, that the approach is still to limit that. It’s — I wouldn’t say we’ve pivoted all the way back. But in some markets, I think you always have to pay attention to and analyze the results and make adjustments where appropriate. So we have, in some of the shoulder months, where demand is naturally, structurally just a little bit lower because maybe school is still in session, things like that, weather isn’t as nice as July or August, we’ve allowed a few of those programs on a market-by-market basis to come back into our marketing strategy. But I wouldn’t say it’s a wholesale pivot all the way back to where we were pre pandemic.
Michael Swartz: Okay, great. And just from a cost standpoint, I mean, you’ve talked about some of the variable costs you removed in the back half of the year, I guess, partially in reaction to the softer attendance we saw in the first half of the year. But I guess, as we go into ’24 and with season pass sales where they are, with some of the momentum you talked about going into the year, I guess, how does that translate to how you think about some of the costs at least in the first half of the year? Are you adding back costs? Or do you think some of the changes you made in the second half of the year should be sustainable into the first part of ’24?
Brian Witherow: Yes. I think there are — it’s a little bit of a mixed bag, right? There’s certainly some cost savings that we mined this past year that, as I said just a little bit earlier, are the direct response to us adjusting variable cost to the demand levels. And if we could go back and have higher demand levels, we’d allow those costs back in to make sure we’re delivering not only the guest experience that our guests want, but also that we’re driving the revenues that we know we can get when the attendance levels were higher. But there are also permanent savings in there. And I think we’ll start to see more of those coming in related to the adjustments that we’re making to the park operating calendars as well as to how we program the parks.
I think what’s important to note though is the difference between the first half of the year for us and the second half of the year, and with even more of a concentration in Q3, that’s where the lion’s share of our variable cost sit. And that’s where we can have the biggest impact. Our first quarter especially and a little bit of our second quarter is a much more fixed cost base, particularly at the park level, where if we overreach and try and take cost too aggressive in trying to take cost out of the system, we run the risk of not being prepared to open the parks in spring, that April, May time frame that they normally open. So we run a pretty thin, I’ll call it, sort of that fixed off-season cost base at the park level in the fourth quarter for some parks, like Cedar Point, which closed down at the end of October or in the first quarter for the lion’s share of our seasonal parks that aren’t open year-round.
