Six Flags Entertainment Corporation (FUN) Q2 2020 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by and welcome to the Cedar Fair Entertainment Company’s 2020 Second Quarter Earnings Call. At this time, all lines have been placed on mute to prevent any background noise and after the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to turn the call over to Michael Russell, Corporate Director of Investor Relations. Please go ahead, sir.

Thank you, James and good morning, everybody. Welcome to our 2020 second quarter earnings conference call. Earlier this morning, we distributed via wire service our earnings news release, a copy of which is available under the News tab of our Investors website at ir.cedarfair.com. On the call with me this morning are Richard Zimmerman, Cedar Fair President and CEO; and Brian Witherow, our Executive Vice President and CFO. Before we begin, I need to remind you that comments made during this call will include forward-looking statements within the meaning of the federal securities laws. These statements may involve risks and uncertainties that could cause actual results to differ from those described in such statements. For a more detailed discussion of these risks, you may refer to the company’s filings with the SEC. In compliance with the SEC’s 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 on this call will be considered fully disclosed. With that, I would like to hand it over now to our CEO, Richard Zimmerman. Richard.

Thank you, Michael and thanks to everyone for joining us this morning. I want to start this call by wishing all of you well and I hope that you and your families are safe and adjusting to what fields like a new normal. We are now more than five-months into the pandemic and while none of us have a crystal ball where and when this will end. I could be proud or how our teams to come together and adapted to the challenges in hand. Seeing how we have responded over the past several months, gives me confidence that Cedar Fair will emerge from this crisis and even stronger company than before. On the call today, I will focus my remarks and provide more details on three specific areas. First, the progress we have made today, including the reopening of parks and the ability of our team to adapt to an uncertain environment and the shifting marketplace. Second, the learnings and insights we have gathered to date that will better position us to address the effects of the pandemic moving forward, including trends we are seeing in our business. And finally, our near-term outlook for the business including a discussion around the strategies and initiatives we are working on to ensure we emerge from this crisis stronger and better positioned for growth. Like others in our space and adjacent industries. Cedar Fair has managed through this unprecedented period with little visibility for what comes next. This has challenged our teams to react quickly and responsibly and to develop contingency plans under multiple scenarios. To put things in perspective and to acknowledge our team’s for their outstanding work. Recall that in January, we kicked off the year with a strategy to build upon the momentum and successes of a record 2019 season. That all changed before the close of the first quarter, when we found ourselves facing unforeseen challenges that although we were well equipped to handle quickly caused us to shift our focus from playing offense and executing our long-term growth initiatives to playing defend and implementing near-term countermeasures. These efforts included closing our suspending the opening of our parks on March 14th in response to the pandemic and government mandates. Immediately addressing liquidity and cash flow concerns, which we accomplished through our April bond financing and the implementation of extensive cost saving measures aimed at minimizing our cash burn rate. And most importantly, maintaining a strong connection to our guests during this period of disruption, including our highly valued season pass holders, which we successfully accomplished through ongoing proactive communication and the extension of 2020 season pass benefits and privileges through the 2021 season. These efforts have been successful in minimizing our cash burn rate from operations. After unwinding operations and a large portion of our capital projects in April. We have limited our average cash burn rate since May to approximately $35 million per month, in line with the average $30 million to $40 million per month that we projected on our last earnings call. Since our last earnings call in early May, our teams have identified and assessed the pandemic’s ongoing impact on our business, develop plans to reopen parks, where restrictions have been lifted, and provided guests in those markets with the best entertainment product possible within the recommended guidelines. We have worked closely with state and local officials, health experts and others in our industry to develop and implement best in class health and safety procedures and protocols to protect the well being of our associates and our guests. We have also developed strategies have implemented new procedures to address COVID related risks, including the use of contactless, temperature and security screening, expanded use of mobile food ordering and cashless transactions, and the temporary use of a reservation system to manage initial demand issues upon reopening. While please we have been able to reopen seven of our 13 properties thus far, including two of our four largest parks, Cedar points and Kings Island. Late yesterday we announced four parks, California’s Great America, Carowinds, Kings Dominion and Valleyfair will remain closed for the 2020 season. We have previously announced that our separately gated waterpark, Cedar Point Shores and Knott’s Soak City would remain closed in 2020 as well. While disappointed that we have had to make the decisions, the lack of visibility into when restrictions would be lifted in those markets, combined with the diminishing number of potential operating days remaining, has eliminated our ability to reopen and profitably operate these four parks in 2020. We continue to monitor and evaluate conditions related to Canada’s Wonderland and Knott’s Berry Farm, or other major parks that with a little lock could be opened yet this year. Before I asked Brian to review second quarter results, I want to share briefly what we have seen and learned through this difficult period and how those takeaways will benefit us moving forward. First, while our parks were met with solid demand upon reopening the ongoing uncertainty around the pandemic in recent spikes and Corona Virus cases across the country has had a more negative impact on attendance than we originally anticipated. Forecasting future attendance is such a dynamic and uncertain environment is very difficult. However, based on current trends, we expect daily attendance to be approximately 20% to 25% of historical levels for the balance of the year. Because of that, we recently adjusted park operating calendars, reducing the number of operating days and hours over the balance of the season to be more consistent with those trends. These changes will help us more efficiently manage our seasonal labor costs and resources and remaining profitable all while ensuring a best day experience for our guests. Second, we have seen silver linings emerge from every business disruption we have ever dealt with. This one, which we continue to battle daily, has proved to be deeper and more multi dimensional and scope given them manner with which it has affected every aspect of our company. Consequently, our efforts to counteract those effects have been far more extensive as well. The disruption in our business has forced the detail review of our operating cost structure and organizational design that has already identified opportunities for efficiencies. Not only will we benefit over the long-term from the incremental cost savings and system efficiencies uncovered during our review, but our broad base examination in many areas of the business affirm the strength of our internal decision making processes. Although the effects of this pandemic may be felt for some time to come, but we have discovered during this disruption gives us confidence we will return to normalize operations stronger and better prepared for growth than before. And finally, our pre-COVID success demonstrated that we have the strongest team of professionals in the industry running this business. You have watching them manage through a crisis of this magnitude share a brighter light on just how talented they really are. Over the last two quarters, our teams do not only have demonstrated their competencies with analysis, foresight and planning, but they have maintained a long-term perspective on the business, while carrying out several difficult but necessary near-term decisions. While thinking a complete shutdown of our parks, our teams pursued opportunities to open our adjacent properties where possible, including hotel breakers, and our luxury RV park lighthouse points, both welcoming guests to Cedar Point beach, weeks before the gates opened, the gates open at Cedar Point itself. At Knott’s Berry Farm, we opened this California marketplace, including Mrs. Knotts chicken dinner restaurant, and introduced the taste of Calico a new limited time special outdoor food and merchandise event, which we extended after quickly selling out its originally scheduled calendar. New events like the tastes of Calico reflect how we are adapting to this changing market. Staying connected with our guests in new and creative ways is critical to the long-term success of the company, and also creates opportunities to further strengthen our regional brands. As CEO, I’m quite proud of our entire organization for its steadfast determination and dedication, especially since we are potentially facing a lengthy recovery. I will return in a few minutes to conclude my remarks. But first, I will ask Brian to review our financial results. Brian.

Thanks, Richard and good morning, everyone. I will start with our results for the second quarter before addressing other observations about the business. First, I need to remind you that due to the effects of the Corona Virus pandemic and the company’s operations second quarter results ended June 28, 2020 include the partial operation of only three parks, Worlds of Fun Kansas City, Missouri, and our two Schlitterbahn Waterparks in Texas. As search results for the period are not directly comparable to results for the 2019 second quarter, which ended June 30, 2019. This included the full operation of legacy parks, but excluded the two Schlitterbahn Waterparks acquired on July 1, 2019. Due to park closures in mid-March, the 2020 second quarter had a total of 39 operating days, 687 fewer operating days when compared to the second quarter last year, and 788 fewer operating days than what was budgeted in our 2020 second quarter operating plan. For our second quarter ended June 28, 2020, net revenues totaled $7 million versus $436 million for the 2019 second quarter. The decrease in revenues was the direct result of the COVID-19 related park closures and reflects an eight million visit decrease in attendance and a $44 million decrease in out-of-park revenues. In park guests per capita spending in the quarter was not meaningfully comparable between years due to the mix of parks open in the period and the small number of operating days. I will provide an update on more recent guests and trends in a moment. On the cost side, operating costs and expenses for the second quarter totaled $93 million, compared with $277 million for the second quarter of 2019. Fewer operating days combined with cost savings measures implemented in response to suspended park operations in the period less than a year-over-year decline. These cost savings were partially offset by costly and perjury open and operate parks beginning in mid-June, including costs associated with new health and safety protocols. For the second quarter, we reported an operating loss of $142 million, compared with operating income of $102 million in the second quarter of 2019. The operating loss was the result of the 98% decline in net revenues offset by the $185 million year-over-year decrease in operating costs and expenses. Adjusted EBITDA for the period was a loss of $85 million, compared with adjusted EBITDA of $163 million in the prior year period. As Richard mentioned, we now have seven of our 13 properties opened, including two of our largest parks. These seven parks, which reopened in mid-June through mid-July has historically represented approximately 40% of our full-year attendance and revenues. Over the last two weeks, we are averaging between 20% to 25% of historical attendance of parks that are opened or roughly 15% of theoretical capacity. In spite of the soft attendance levels and other limitations on operations, including for fewer operating hours, guest spending trends have been encouraging. Since reopening guest spending on F&B merchandise and games at are legacy parks is up 5% year-over-year. Offsetting these gains, with a declining guest spending an extra charge attractions, including Fast Lane which were only offering unlimited capacity in certain parts this year due to social distancing concerns. For the entire portfolio through this past Sunday year-to-date in park per capita spending, including admissions per cap was down 8% or $3.59 compared to the same time last year. As Richard mentioned, to account for the lower demand levels, we have made changes to our park operating calendars for the balance of the year. The changes designed to optimize operations and maximize profitability. To put things into perspective, our parks are able to generate cash flows in access of their variable costs at attendance levels that are significantly less than 25% of their theoretical capacity. Although that is not a model we would prefer over the long-term. Looking at deferred revenues from moment as of the end of the second quarter, deferred revenues total $201 million down 11% compared to $227 million at the end of the second quarter last year. The year-over-year decline reflects the broad base impact COVID-19 had on park operations and the sale of all season products after mid March. On a positive note the reopening of parks has for the sale of season passes and related all season products. Over the last eight weeks, we have generated more than $11 million in sales and such products while also reactivating billings under our installment sales program at the reopen parks. Looking ahead, our decision to extend the use privileges of our season passes and all season products through the 2021 season means the revenue recognition of our deferred balance will be split between the second half of 2020 and fiscal year 2021. Based on current year attendance trends for the parks that are open and our current expectations for season pass visitation next year, of the 201 million of total deferred revenue on the books at the end of the quarter. We expect to recognize approximately $42 million over the second half of 2020 and approximately 150 million in fiscal year 2021. The remaining deferred balance of $9 million relates to prepaid payments on a long-term lease arrangement that will be amortized into revenue over the life of the lease. Turning to our outlook around liquidity, at the end of the second quarter, our balance sheet was solid with $301 million in cash on hand, and $360 million available under our revolving credit facility. Total liquidity at the end of the quarter was approximately 661 million, providing us with ample liquidity to meet our cash obligations through the end of 2021, even if another pandemic related shutdown should occur. With our limited number of parks open and abbreviated operating calendars, we continue to take actions to manage our cash burn rate, which we anticipate will average $30 million to $40 million per month over the balance of 2020. This includes all operating expenses, capital expenditures and interest payments. As we mentioned on our last call, the flexibility of our business model affords us the opportunity to quickly reduce expenditures across the board when needed, including costs we generally considered to be fixed during normal operations. This includes the focus on identifying additional opportunities to reduce operating costs, and defer or eliminate capital expenditures as we head into 2021. As we noted on our last earnings call, we took proactive measures to reduce 2020 capital spending by approximately $75 million to $100 million, which was a near-term initiative to improve our financial flexibility while all of our parks were shutdown. As we begin to plan for next season, we are reactivating certain capital projects to ensure the properties that should be fully operational for the 2021 season are prepared and ready to maximize revenue opportunities. We will be better positioned to provide more visibility into these plans, as well as our outlook around the 2021 capital program later in the year. Regardless of our park operating model next year, we will continue to explore ways to reduce cash outflows and enhance our liquidity position going forward. As we indicated in our first quarter call, we have withdrawn financial guidance through the uncertainty of the pandemic. As we look to the long-term we see little to no value for our investors in revisiting financial guidance until market visibility improves. And we have clear line of sight into the reopening of our entire portfolio parks. In the meantime, our focus will be on delivering to our guests the safe, value oriented experience they expect and deserve while being efficient with our resources and prudent with our use of cash flows. Our near-term capital allocation strategy is now focused on reestablishing growth from the core business and paying down debt to return our net leverage ratio back inside of five times adjusted EBITDA as quickly and responsibly as possible. With that, I will turn the call back over to Richard.

Thanks, Brian. As I mentioned in my opening remarks, our goal is to emerge from this crisis an even stronger company than before. To effectively plan for what’s ahead, we must acknowledge the headwinds we are up against. First, over the last six months the world has fundamentally changed. It will require us to adapt to a changing marketplace, adjust our approach to running parts of our business and renew our commitment to generating revenue and free cash flow in new and imaginative ways. Second, our parks implementation of health and safety protocols, as recommended by the CDC and state and local officials have been very well received. But they help improve consumer confidence only to a certain point. And third, consumer confidence may not improve measurably, until there is broad availability and distribution of a vaccine or treatments to reduce the spread or effects of the Corona Virus. This may prove to be an attendance headwind for the foreseeable future, and something we must account for. Collectively as a team, we are much smarter today than we were a few months ago. And we are putting that knowledge to work each and every day our parks are open. It provides us with field tested experience that will drive the specifics of next year’s plan configured to the unique characteristics of each property with the overarching goal of generating positive free cash flow. What we do know from decades of experience is that our product has high consumer appeal, and that people will always seek opportunities to socialize with others at venues of entertainment. We also know from experience that our business model is highly resilient surviving map disruptions of various magnitudes over the years. Although this pandemic presents unique challenges versus economic disruptions of the past. Overtime, we believe guests will return to our parks as concerns around the Corona Virus are addressed and minimized. Meanwhile, we must redouble our efforts to enhance the strong regional brands of our parks and reinforce our positioning as the preferred choice for safe, family, friendly entertainment. To accomplish these goals. We have began a process of reviewing all aspects of our business with the ultimate goal of reestablishing the top-line momentum we had coming out in 2019. While identifying incremental operating efficiencies and adding new capabilities, aimed at capitalizing on emerging shifts in consumer preferences. Our efforts can be bucketed into several core elements. First, it is critically important that we stay closely engaged with our customers. This is particularly important in our markets parks were unable to open in 2020. That requires us to refresh our marketing approach and embrace our guests as pseudo insiders, offering them regular updates and progress reports on such things as new rise attractions and dining options, as well as technology based improvements designed to enhance park safety and guest service. We must proactively seek guest feedback and welcoming while developing interactive programming that seeks new levels of communication and engagement. It is fair to say that the disruption of COVID-19 has provided us the motivation opportunity to rethink our overall approach to marketing, including where we advertise and how we engage with the consumer. The second element of our business review process is organizational design. Our efforts here is focused on identifying ways to centralize functionality, minor incremental cost efficiencies, eliminate redundancies across the portfolio, and ensure that we have the right resources and capabilities in place to deliver on our strategies and growth targets. Third is operational efficiency. Going forward is vitally important that we look to maintain and improve our discipline around cash burn, including the search for incremental cost savings and system wide efficiencies that will drive expenses lower. Standardizing processes and systems both guest facing and back of house has been one of our priorities for several years now. Coming into this year, we had several system standardization initiatives well underway that we elected to pause once the pandemic hit. We have already reactivated several of these projects, including staffing related system initiatives designed to capture cost savings and improve on-boarding procedures. Finally, our future investments, operating strategies and entertainment programming must factor in the new normal as part our decision making process. This includes using our experiences and observations from this year’s COVID impacted park operations as a baseline for improving the guests experience for the 2021 season. The momentum we had coming out of 2019 and through the first few months of this year, tells us that our emphasis on events and more experiential entertainment truly resonates with our guests. While we believe this will remain a true differentiator for our parks. We are using this time to reevaluate how this strategy must adjust to account for new operating and safety protocols, and how we can use scalable technology based solutions to enhance the guests experience and respond to changes in consumer preferences. With so much uncertainty in the marketplace, we must not lose sight of why people come to our parks in the first place, to engage in something out of the ordinary. That is at the heart of our value proposition, offering guests an extraordinary place to go with friends and family to have fun that is carefree, thrilling and memorable. Regardless of the hurdles, we must clear to get there, it remains our job to deliver on that experience. That concludes our prepared remarks. James, please open the call for questions.

[Operator Instructions] Our first question comes from the line of Steve Wieczynski with Stifel.

So you talked about visitation trends, they have been below what you would have expected and you are now expecting I think you said visitation to be kind of at 20% to 25% of historical levels. I guess the question is going to be twofold here. I guess first, can you maybe help us think about where you thought visitation would be and I guess, just trying to get a handle on how disappointing visitation has been? And then can you help us think about EBITDA breakeven, free cash flow breakeven metrics with visitation in that range? And I think Brian, you said, you could be profitable with visitation below that range. I’m not sure, if that is, if you are referring to your real visitation or theoretical capacity? Hope all that makes sense.

David, it is Brian. Good morning. Let me try to answer it this way. I will just shoot it, but we are not going to get into specifics, I think, coming into in terms of what our models were coming, because I think there were such uncertainty around the way. I can tell you is all the discussions that we had in each of our jurisdictions with state, local officials was modeling back to capacity limitations that were 50% of those theoretical numbers. So as I said, I think on the last call for some of our big hearts, theoretical past years, 50 plus thousand guests. And so keeping that cap somewhere in the mid-20s was where the capacity limitations were going to be. I think we felt coming in to getting parse reopen. We would see an initial rush based on pent up demand and then that would sort of fall back into its new normal. I will say, as we said on the call that the reality has been that those numbers are definitely inside of those capacity limits. And so, while disappointing, we are encouraged by the fact that it hasn’t fallen off, it is sort of just found its new level. And it is remain pretty steady. The visitation trends have been very consistent what we have seen historically, guests resorting to the weekends are they always have Saturdays with a big demand days, Fridays and Sundays sort of sitting very close behind and then weekdays or it is a little bit harder to drive volume. And as I said, I will be consistent with historical levels or historical performance. The levels of attendance that we are at, we are still able to operate profitably. That is a little bit easier as a larger park, where there is more leverage based on not only the size of the park, but also the revenue channels available. So parks like Kings Island and Cedar Point have more levers to pull than some of our smaller mid-tier parks. And that is why we made the changes to the operating calendar as Richard said on the call, adjusting the operating calendars to more mirror the current demand trends we are seeing was important in order to stay above those breakeven levels that you are asking about. Our parks, as I said on the call can be profitable and cover their variable cost numbers well inside of 25% of theoretical capacity. And so we have made the necessary changes to the operating plan to try and maximize those profitability numbers. And while disappointed, the trends are a little bit softer than it we would like, we are encouraged by the fact that folks are still coming out to the park once they got reopen.

Okay. Got you. And the second question would be just around the parks that have been open for the last whatever four, six weeks. So you want to look at it, but if we look at attendance mix. Wondering if you have seen any kind of changes in who is coming to the parks. I mean, I guess I’m trying to get out here. Are you starting to see more unique visitors? Are you seeing an uptick in single day ticket sales?

Steve. Good morning, it is Richard. Let me take that one. What we are seeing Brian referenced the initial reopening we saw a good surge in season pass holders. As we get deeper into the parks have been opening and we see what the crowd looks like. Everything is kind of sorting to what we had seen pre-COVID, whether that was the single day versus season pass mix, whether that is how people spend time in the park even on reduced capacities. We are starting to see the, I will put it this way, we are starting to see our business metrics start to revert to the norm that we would expect to see just on a lower level of demand.

Okay. got you. thanks guys. I really appreciate it.

Thanks Steve.

Our next question comes from the line of James Hardiman with Wedbush Securities. Go ahead please, your line is open.

Hey, thanks for taking my call. Just a quick clarification on this idea that daily attendance will be 20% to 25% of historical levels going forward, just to be clear. Obviously that is only the parks that are open, but also is that only the parks, on only the days that they are open meaning, as you have now adjusted the calendars to be closed on certain days of the week. Do I also need to adjust that for the percentage of time that they are actually open to get to an actual attendance, overall sort of corporate attendance number?

Yes James, good morning it is Brian. I think that the comment of attendance trends continuing along the path that we have seen to this point 20% to 5% is comparable to prior year on days open. The effort to compress the operating calendar as those parts where we have gone from seven days down to four or down to five is about trying to compress and push that attendance into fewer days and maybe push that percentage up. But we are talking about numbers that are so small that it still sort of really fits into that range. What I will say is just to be a little clear, that is been in the average. We have without a doubt, certainly some weeks that we have been open and definitely uncertain days particularly in our larger parts to your point things Island seen attendance performance be in the 30 plus in that 30% to 40% range. But the same kind of macro factors like weather and whatnot to play in that maybe push other days down, when you put it all together it is in that 20% to 25% range. We are definitely seeing some outperformance in certain weeks based on favorable weather and other macro factors.

And then a bigger question is sort of what needs to happen for you to get back to breakeven EBITDA? And, and I guess, sort of the sub question there. I guess A, you have now said that you are closing for park. Does that bring or that you are not going to open those parts for the rest of the year, does that bring sort of your base line operating expenses down meaningfully as we look to the back half of the year? And I guess, is there a scenario in which the parks going to currently open if you don’t get anything else opened up, that we could get back to breakeven EBITDA? Or is that free vaccine is that sort of a pipe dream here?

James it is Richard. As we look at the rest of the year, we have got an ability, as we said, in our last call on, Brian, as we said in our prepared remarks to operate profitably at these sites that were open during the profile, how we have configured our operations. So as we think about what needs to happen over and above that, I would say that certainly and this is what we said last fall, we maintain some parks in the state of readiness, that is where Canada’s Wonderland and Knott’s Berry Farm are. As we put more of our parks in the deep hibernation, we have got an ability to mine some cost efficiencies and to make sure we are being as disciplined as possible around the cash, we are spending. But all of that, we have factored in as we think about that $30 million to $40 million cash burn rate on average. Brian, anything you want to add to that?

Yes. And just to be clear, James. I want to make sure, as we think about breaking even. I would separate, where we are at here in 2020. Given the disruption and the ability to open up more than 50% of our gates, right. We have got seven of the 15 gates currently open. And we are not going to get them all open as we just disclosed yesterday. So breaking even in 2020 is really off the table right now, we are evaluating for parks. The decision to either close parks or reopen parks is really around that breakeven number or as close to it as possible. On a park level basis, our goal is to see that we can cover the variable costs. Clearly, without the full portfolio open, it is very challenging to cover the corporate overhead costs that sit on top of the park operations. And that is only made more challenging by the fact that two of our four largest parks, including our largest revenue, and EBITDA contributing park, Knott’s Berry Farm, the other being Canada’s Wonderland still remain closed. So now as we look towards 2021, I think it is a different discussion. And as we said, we are not going to forecast right now, because of all the uncertainty around COVID. And the outlook for 2021 could change dramatically in a very short period of time. But we have more of, the difference between 2020 we have been reacting in the moment and 2021 when we get the plan allows us a lot more runway as we work towards being the North of that breakeven point.

And James the last thing that I would also add and we touched on our prepared remarks. Again, we are confident in our liquidity. And we have made sure that we have all the resources, we need to work through this and then be ready and poised for growth on the other side.

Great. One last question, if I could slip it in and I apologize. You sort of open the door that with a little bit of luck. Maybe Canada’s Wonderland and maybe more notably Knotts could open back up this year. Knotts specifically, you have taken great America off the table. So help me understand why one parking California might open up and the other one won’t. Obviously, there is different operating calendars there. But what would need to happen for really any parking in California to open up but specifically Knotts?

But I would say first, James, it is a good question. We evaluate HR parks on a market-by-market basis. And even out in California there was a market difference between northern California and Southern California. As we got into the Corona Virus pandemic, some of the counties around in the Bay Area were among the first in the country to shutdown things and locked down. So part of the answer lies in the unique conditions surrounding our parks. Secondly, if you look at Knotts, we have got an opportunity, because the weather is favorable to run events like taste of Calico, now morphing into the taste of Knotts. So to the extent that we have had an opportunity to create new ways to both stay engaged with our customers, strengthen our brand and that is create whether it is food events, experiential events that let us get some level of activity at our parks. We think that is extremely beneficial to us. So I would say from a Northern, Southern California is clearly the conditions in the marketplace and the economic potential and the size difference of the two parks factors in that as well.

Got it. Perfect. Thanks guys.

Thanks James.

Our next question comes from the line of Brett Andress with KeyBanc Capital Markets. Go ahead please, your line is open.

Hey good morning. So you answered part of this already, but can you help us with the variability of attendance depending on I guess the COVID status in that region. I’m just trying to find a percent of last year number that is normalized for COVID spikes, I guess if there is such a thing?

Yes Brett it is Brian. I would say that the experience that we have seen for the seven parks that are open has been relatively consistent. And again, the two big parks to your point Kings Island, very, very loyal, guess base, big season past bases probably help those two parks as well. And so from that standpoint, if there have been parks in the portfolio that maybe have outperformed the others a little bit, it would be those two parks. But broadly speaking the trends have been pretty comparable, of our seven parks that are open four of them existing are located in two states, Ohio and Texas, both of which are spice base, I guess as we think about it, or we are hearing reference. And so we don’t have a really - unfortunately, we don’t have parks operating all across the country in a variety of states where we see a big distinction between space where COVID cases are higher than others. It has really been, I think, more a function of the season pass base besides the season pass base, and the loyalty of the guests base at each of those parks.

Got it. It makes sense. And the last one he give us some color on what a fall festival replacement means for the fourth quarter at Cedar Point Kings Island? I guess I’m just trying to think about how to model same party attendance as we kind of comp the events that you would normally do?

You know, I think if you think of something that is more family friendly than our traditional Halloween event, think of something that is got a lot more food elements like we have seen in Tastes of Knotts and Tastes of Calico you know, really be something that draws out and is more family oriented than we have done in the past. But one of the learnings we have got out of all of our events in the record year we had we referenced the 2019 is that food and beverage plays a really important part in the appeal of our product, and then we will adapt that with some entertainment that is focused on the family.

Thank you.

Our next question comes from the line of Tim Conder with Wells Fargo Securities. Go ahead please, your line is open.

Thank you and good morning gentlemen. Wanted to follow-up on ongoing line of questioning here a little bit. One, so just to be clear, you didn’t really see any changes in visitation trends. I know again, you had a Cedar Point and Kings Island open in July, but with the spikes in COVID, and then maybe in some other states other than Ohio, those may be leveling off. You haven’t really seen any discernible difference with the news flow there?

No, at this point, again, we are trending towards what I would put is, is the type of visitation per season passes that we would have expected pre-COVID as Brian mentioned in his earlier remarks. When we opened up we had a few days some few lessons Cedar points in Kings Islands that were season pass holder only, we knew we had a big season pass base out there. So that would be initial launch. And then now that we have opened it up, it is really settled into a pattern that looks very similar to what we had pre-COVID so.

Okay. And on the season passes, again, parks weren’t open, so makes it difficult to sell those. A couple things there, could you sort of say where the units are at the end of Q2 on a year-over-year basis. And then maybe break that down between what has been extended versus had been new purchases for the season?

Yes Tim it is Brian. So as it relates to season passes, just to reset, say as we said, on the first quarter call. Sales were more than 30% at the end of Q1. We missed unfortunately, because of the disruption from COVID, a very big, probably the largest three months, single three month window of sales volume, typically a little more than 40% of our sales volume happening in Q2 between April and June and so, that definitely was a big blow. As I said, in my prepared remarks, pleased by the fact that of a park, driven by the parks that got reopened. Over the last eight weeks, we have generated more than $11 million in sales of all season products, including season passes. And so that has definitely helped. When we look at where we are at year to date, I will take it beyond Q2. I will take it basically through the end of July. Year-to-date season pass units because of missing out on that big window went from being more than 30%. Now to being down a little more than 30% or roughly 900,000 units behind where we were at the same time last year. So, definitely disappointing that we lost very strong momentum coming out of Q1, because of COVID. But that is the world we find ourselves.

Okay. And Brian, I guess it would be fair to say that what you still have on the books, a pretty significant percentage of those are the extensions. Is that correct?

Yes. Actually Tim all of the season passes and the related products, all season products that have been sold to date are our products that have the extensive privileges and benefits through the 2021 season. The four parks that we just announced would not be opening in 2020. Their 2020 products have come down and we will not be selling any more of those products. We will go on sale later this year with 2021 passes and 2021 products at the sort of in the normal cadence. And so everything that I just referred to in terms of where the volumes are and the dollars we talked about in our prepared remarks around deferred revenue that all of those dollars and products will have benefits in 2021.

Okay. And then lastly, again you talked about the large four parks being Cedar Point, Kings Island and Toronto. Can you just remind us to collectively or an individual part basis what those represented in 2019 of your revenue and EBITDA?

Yes. The four big parks in the system, are North of 80% of the combined company, whether we are talking about revenue or EBITDA. And so having two of those parts open is definitely or reopen has been beneficial. Getting Canada and Knotts open would be that much more beneficial even for an abbreviated fall calendar.

Okay. Thank you.

Our next question comes from the line of Michael Swartz with [SunTrust] (Ph) Securities. Go ahead please, your line is open.

Good morning guys. May be to Brian just given the fluidity of the situation and some of the measures you have taken to condense operations of advance. Can you maybe give us a sense of, what your expectations are in terms of operating days and in the back half of the year whether that is 3Q or 4Q everyone looking at?

Mike, it is a challenging one, given the ever dynamic nature of the COVID. I hate to throw a number out there at this point in time, just based on the fact that at any point in time parks like Cedar Point, Kings Island, Governor DeWine in Ohio decided that even like wait cases were trending that we would get closed down. I think it is fair to say I mean, based on the announcements we made yesterday, we are shuttering all parks beyond those two properties after Labor Day. And so you are looking at weekend operations, really, those two parks for, let’s call it, broad strokes about eight weeks. And I can’t make any speculation really on where Canada will sort to and if we will be able to get Knotts open up, as Richard said a little bit earlier on in response to one of the questions. So it is really a very dynamic situation, it is hard to put a specific number on it.

Okay. That is fair. Second questions, just obviously, we will be having WinterFest in the parks this year. Can you give us a sense of the expenses that is typically associated with those events are there [indiscernible] basis or I guess overall?

Yes so WinterFest, at this point if that is going to be a decision yet to be made it really is going to come down to where were we sort out with Knotts and Canada’s Wonderland, those are two of our most profitable parks when it comes to the winter or holiday event being hosted. The answer to the question in terms of the cost on your varies park-by-park but on average across the system, in a normal year when we are hosting the event. The annual operating costs of that may be somewhere in the mid to high single-digits from an OpEx perspective. And so those dollars of course are going to go away if we are not operating those events, but at the same time, so is the attendance and revenue. So the event has been very profitable for us at a number of our parks, so disappointing that we won’t be able to hosted it, parks like [Caravans] (Ph) and then Great America to name a couple again this year. But that is just again that sort of the circumstances we find ourselves in.

Great. Thank you.

Our next question comes from the line of Sarah-Marie with Credit Suisse. Go ahead please, your line is open.

Hey, guys, this is Sarah on for Ben. You guys have insinuated some potential future cost savings as you recalibrate the business. I know it is early, but can you guys ballpark how you think about the magnitude of those savings? And if not, should we expect more formal guidance at any point?

Yes it is Brian. We will be working through that analysis, a lot of it is going to depend on what our outlook is for the 2021 season. But I think it is fair to expect that will provide more guidance says, as we get towards third quarter or even towards the end of the year and have better visibility. Right now, as Richard said earlier in our 30 million to 40 million, we have estimated where we think those dollars may be and that is reflected in there. But clearly with more runway behind us, more visibility into the upcoming season. Those assumptions and estimates get refined, so we will provide more clarity around that either with the third quarter of the year and earnings call.

Got it. That is really helpful. Thank you.

[Operator Instructions]. Our next question comes from the line of Steven Grambling with Goldman Sachs. Go ahead please, your line is open.

Good morning. Thanks for taking the question. You touched on this in your intro, but I clearly, there is been mixed leader trends by sub sectors, some areas are coming back pretty strong, whereas uniformly it seems parks have seen a little bit of a challenged environment. So as you reduce operating days, in many ways, gear up for next year in the downtime. What are consumers telling you, do they want to see? You do to feel more comfortable coming back and how are you preparing for the possibility of a vaccine or treatment not acting as a panacea to the pandemic next year?

You know Steve, it is great question. As we think about what, when we try and listen to what our consumers are telling us. Clearly, there is the pandemic on the Corona Virus overhang on broader consumer sentiment. What they are telling us is it is less about us and more about the broader society. I can’t give you any specifics in terms of whether or not or how you know, the ramp up will happen, what the recovery look like, whether that will be like a light bulb that it turns on or whether or not people dip their toe in the water and come back out. What I can tell you is that we are trying to plan for, as we have this year planned for a very dynamic situation. We want to feel good about is we have seen an ability to flex our model up and flex our model down. Both chase opportunities with events like taste of Calico, as we said or opening some of our hotels, it is to your point to maximize the beach. Or carve up the operating calendars, we have to make sure that we condense the demand and make sure we are operating profitably. So regardless of what the consumers will see, we are prepared to react to the environment. As Brian said planned for we got a little bit more time to plan rather than just react.

The other things Steven that I would just add to Richard’s comment. Our research, which is ongoing and I think this is pretty consistent with what we are hearing, in our conversations with our other industry partners and other operators in the industry. The top two concerns for the guests are around health and sanitization in the parks and social distancing. And so as I said earlier, 2020 we have all had to be very reactive, and try and respond to that. What the opportunity is for us as we go into 2021 is to be a little bit more proactive and try and address those concerns. Assuming that they say top of mind for the consumer, which based on what we know today, I think that has to be the assumption. And so I think as we said in our prepared remarks, a lot of the initiatives we have whether the technology base or other programmatic initiatives for the 2021 season. They will be focused on, again, trying to address those top of mind concerns for the consumer based on the research that we are getting.

As a quick follow-up, I mean, is there an opportunity to effectively rather than waiting and seeing in some ways how the consumer reacts and how the virus evolves. Can you change the narrative in any way? Or I think you referenced some marketing initiatives. Is there an opportunity there? Is there any expectation that you can ramp up marketing or otherwise to kind of tell a story of where parks sitting from a hygiene cleanliness et cetera standpoint?

Yes. Steve, it is a great question. We have been heavily focused on engaging our customers through digital and social media channels. We have been very active in the communication. And clearly as we look ahead, that is something that we are going to lean hard into as we get into 2021, it allows us to be a little more nimble, a little more front foot leaning in a very dynamic environment. So we have got the in-house capability to manage a lot of that, we have built a state of the art CRM system. So particular we have see the pass holders, we have been very active and it really is a two way dialogue. So as we think about the things that we can put out there to make sure that the guests are comfortable. Those are coming and Brian hit on this are giving us high marks for the experience we have, the procedures we have put in place. Many of things that we are doing events, the state and local officials have taken what we have put together as protocols and procedures and laying them over other industries. So, I think the consumer feedback we are getting is that our guests really liked the experience and are giving us credit for those things already.

Got it. Thanks so much. Best of luck.

Thanks Steve.

There are no further questions in queue at this time. I would like to turn the call back over to Richard Zimmerman for some closing remarks.

Thank you, everybody for joining us on the call today. And for your interest in ongoing support at Cedar Fair. We will continue to focus on taking the steps necessary to emerge from this current crisis, a stronger and better positioned company. We look forward to keeping you apprised of that progress on upcoming calls. And in the meantime, please take care and stay safe. Thank you again. Michael.

Thanks for joining us, everyone. Should you have any follow-up questions, please give me a call at 419-627-2233 and we look forward to speaking with you again about three months from now to discuss our third quarter results. James that is the end of our call today. Thank you.

Ladies and gentlemen, that does conclude today’s conference call. We thank you for your participation. You may now disconnect.