Brian Witherow: Yes. I’d say, as we said in our prepared remarks, the best long lead indicators we have at this point are looking at those season pass and related all-season product sales, which are extremely strong, as well as early bookings around group events and reservations at our hotels. And those are pacing in line with our expectations. So from a long lead indicator, those feel really good at this point in time. As it relates to California weather, we certainly didn’t want to see that week or so of extreme weather but a very different scenario to what we experienced last year. I’d say what we’ve seen so far through the first 1.5 months or so of ’24 is more comparable to typical California winter, which is you’ll get weaker rain, but it’s not anywhere near the extreme anomalistic weather patterns we saw in 2023.
Lizzie Dove: Okay, that’s helpful. Thanks so much.
Richard Zimmerman: Lizzie, I would say I’d echo Brian’s comments. And again, I’d just say on the days we’re open and the weather is the same year-over-year, I’m encouraged by what I see. If we were down percentage-wise to last year, I’d be discouraged, but I’m encouraged.
Lizzie Dove: Okay. Thank you.
Operator: We will go to our next question, Paul Golding with Macquarie Capital. Please go ahead.
Paul Golding: Thanks so much. Richard, Brian, just had a question around the F&B comment. You noted that transaction count and transaction value were up. And that was a bright spot in the per cap mix. I was wondering how much of that is being driven by greater penetration of mobile food ordering and how far along we are in the rollout of that in order to see continued tailwinds potentially to help per caps relative to attendance. And then my second question is on the selling part of SG&A. Just as you see your pass count rise, this impressive 20% that you noted, how nimble are you to roll back some marketing if you feel that it’s appropriate? Thank you so much.
Brian Witherow: Yes, I’ll start with your F&B question, Paul. We continue to experiment with different ways to optimize those efficiencies using mobile for food and beverage ordering and other aspects of the park as well, including most recently this past year, starting to test some mobile purchasing capabilities around something like Fast Lane. So the challenge with all those things always within the park, the ability to scale it to days where you might have 40,000 or 50,000 people in the park. So I think it’s helped in some of the parks on a modest level. But more of the benefit, I’d say, more of that lift in the average transaction count, the average transaction value is the outcome of the investments we’ve made to replace old, tired, inefficient facilities with higher throughput, better experienced facilities for our guests that we can scale our staffing levels up and down more easily within.
That’s what we’re driving more efficiencies at this point in time. Not giving up on making an impact more around the mobile side of things, and we are actually rolling out our new mobile app as we speak, as we get into the ’24 season at the various parks. I think Knott’s is maybe next up on the schedule, which will have more functionality around that. But the challenge is always just how do you operationalize at an effective level on those big attendance days. So that’s just a unique challenge to our business. As it relates to season pass, I’ll let Richard provide some color on that.
Richard Zimmerman: Yes. Paul, do you want to restate your question, so I make sure I got that on season pass?
Paul Golding: Sure. Well, you’ve seen this pop in season pass sales on a unit basis. And so I was just asking around how nimble you are with the marketing aspect of your SG&A in terms of your ability to throttle down if you find that to be useful from a cost savings perspective, given how much attendance you may have already sort of pulled forward or captured with the season pass sales.
Richard Zimmerman: I understand the question, Paul. And I put that in the broader bucket of it’s not just season pass advertising. When we advertise and we go out with season pass advertising, particularly in the spring, where we sell 50% of our — traditionally, it’s 50% of our units, that also tells people that the parks are open for business. So there’s a duality to all the advertising we have in the spring versus the early summer. I think one of the things that we monitor is the effectiveness of our spend. And we have been nimble. We dialed it up, we dialed it down. Coming out of the pandemic, we dialed it way down because we thought we had the ability to do that and there were different market conditions then. I’d say in every market, we’re trying to find that optimal level of spend that drives the demand we want.
And in each year, there are unique opportunities and unique challenges. This year, with TT2 coming on at Cedar Point, we want to make sure that we’ve got the program for advertising that will draw and extend the reach of Cedar Point. It’s a super-regional, it’s a destination of its own. So we want to make sure. There’s as much challenge in underspending in some markets when you’ve got opportunity as overspending and maybe trying to push too hard. It’s a constant tug of war. And we dial that down to the market-by-market opportunities each year.
Paul Golding: That’s great color Thanks so much.
Richard Zimmerman: Thanks Paul.
Operator: Our next question comes from Ian Zaffino with Oppenheimer. Please go ahead.
Ian Zaffino: Hi. Thank you very much. Just wanted to ask a question on the CapEx, I know you said, I think, $210 million to $220 million. Can you maybe give us an idea of the components of that as far as rides? Is there any intention to increase F&B spend? I know you’ve done that in the past. And any other kind of components you could give us would be helpful. Thanks.
Richard Zimmerman: Yes, Ian, I would say the profile this year, as I said in my earlier remarks, we’re getting back to our more traditional profile. We had an opportunity to dial down during — coming out of COVID on rides and attractions. We’ve dialed that back up. We continue to invest in food and beverage. And I think what you’ll see this year is a little more spend on our rides and attractions, continued investment under food and beverage but also other guest amenities throughout the park. So I think the profile is very similar to what you saw this year, when we spent close to $220 million. But again, part of that $220 million in ’23 was attached to the Knott’s Hotel, so a little more investment in the hotel and resort business but nothing to the level.
Knott’s was really one of the last renovations in terms of our existing hotel portfolio. We’ve got some work on the calendar coming up not this year but in future years down at Schlitterbahn to make sure that we touch their resort component. That was one of the things that we were very excited about in that acquisition all the way back in ’19 was there was a resort component. But we want to make sure that we’re investing appropriately to drive demand, number one; two, continue to instill the guest amenities, both in food and beverage and elsewhere; and third, increasingly, you’re going to see us, and kind of ties back to our last answer, invest in technology to make sure we’re infusing technology into our parks. We’re not only rolling out the mobile apps at all of our large parks through the spring, but we’re also domino-ing new Wi-Fi at all of our parks.
So we continue to prioritize those initiatives that our guests tell you — that the guests tell us that they put a lot of value in.
Ian Zaffino: All right, great. Thank you very much.
Richard Zimmerman: Thanks Ian.
Operator: Our next question comes from Robert Aurand with KeyBanc Capital Markets.
Robert Aurand: Hi, thank you. I wanted to ask about EBITDA margins. You talked in the past about being able to get back to the mid- to high 33s when you got attendance back to 2019 levels. And you’re talking pretty positively about the attendance ramp here this morning. I guess, if I look at the deal filings, some of the stand-alone projections, the margins don’t quite get back to those levels. So I’m just trying to understand some of the puts and takes, kind of your long-term margin outlook and kind of the ramp from here.
Brian Witherow: Yes, Robert, it’s Brian. As we said in our prepared remarks, I mean, driving margin expansion is a core priority and remains that. As it relates to the model in the S-4 that was filed, I would say, again that’s a working model that was reviewed with our Board back in the summer of 2023, not necessarily reflective of where we stand today on the plan that we have built for 2024. As we said, our greatest opportunity for margin expansion is in the second half of the year. And we’ve built a plan for 2024 that if we see the kind of weather that we would expect and that translates into the demand levels we would expect, we would certainly expect to see a margin expansion from where we’re at right now. Getting all the way back to pre-pandemic levels is going to be a function of, ultimately, those attendance levels. And in this new cost environment, it’s critical to get back to that 27-plus million attendance level to get there.
Robert Aurand: Thank you. Just a quick one on group, I know coming into the year, you were missing 1.4 million group visits versus 2019. Any way you could frame up kind of where we exited the year and what you think you can get further back in 2024?
Richard Zimmerman: Yes, Robert, it’s Richard. We’re very encouraged by what we saw over the last six months. We saw a strengthening in the group channels. And now as we look forward, while we — as we said in our prepared remarks, group is in line with expectations, we’re seeing what we would expect to see our expectations another year out from the pandemic. If you go all the way back to 2008, 2009, it took us about three years to recoup the group. They’re the slowest channel to come back. But we saw companies booking, we saw youth group bookings in the second half, looking really good. And we’re still seeing that trend as we would expect to see coming out of a macro disruption. So I’ve got — I’m very encouraged by what we’re seeing with our group channel, understanding that we did filter out some of the lower-priced, more demand-oriented channels through groups.
