Good morning. My name is Chantel and I will be your conference operator today. At this time, I would like to welcome everyone to the Cedar Fair Entertainment Company 2021 Fourth Quarter Earnings Call. All lines have been being placed on mute to prevent any background noise. And after the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. Michael Russell, you may begin your conference.

Thank you, Shantel, and good morning to everyone. My name is Michael Russell, Corporate Director of Investor Relations for Cedar Fair. Welcome to today’s earnings call for the review of our fourth quarter and full year results ended December 31, 2021. Earlier this morning, we distributed via wired service our earnings press 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's 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 introduce you to our CEO, Richard Zimmerman. Richard?

Thank you, Michael and good morning to everyone on the call. We appreciate you taking the time to be with us this morning and hope you are all staying well. Before we get into our 2021 operating results and our outlook for the upcoming season – 2022 season I would like to address one specific topic. As we announced on February 1st and as confirmed in SeaWorld’s statement yesterday evening, SeaWorld did make an unsolicited non-binding proposal to acquire Cedar Fair. The original proposal was for $60 per unit, which they subsequently and informally increased to $63 per unit. Consistent with its fiduciary responsibilities, our Board, together with its external advisors carefully evaluated the proposal and determined it was not in the best interest of the company and its unitholders. As we will discuss this morning, the Board and management have a high degree of confidence in our long range strategic plan. We look forward to reinstating a sustainable distribution to our unitholders and we are confident that continued successful execution of our plan will result in meaningful per unit value creation. That said, the Board is open minded and always committed to acting in the best interest of unitholders. They will continue to consider any opportunities to create value for our unitholders. With regard to the SeaWorld proposal, we will have no further comment at this time. Turning now to our results for the fourth quarter and full year 2021, our opening remarks today will address three primary areas. First, an overview of our strong operating performance from this past season, as well as the strategies we will deploy as we carry that momentum into the 2022 season, our first full operating calendar since 2019. Second, Brian will provide additional details around our 2021 performance, as well as the…

Thanks, Richard and good morning, everyone. I'll start by discussing full year 2021 results before reviewing results for the fourth quarter and then providing an update on the balance sheet and our outlook around capital allocation priorities going forward. But first, I need to remind you that the pandemic had a material impact on park operations in both 2020 and 2021. Because we suspended park operations in mid-March of 2020, and had only limited operation that season, results for the past two years are not directly comparable. For those reasons, I will provide more relevant comparisons between 2021 and 2019. In 2021, operating days totaled 1,765, or roughly 20% fewer compared to 2,224 total operating days in 2019. As reported in our earnings release this morning, net revenues for 2021 totaled $1.34 billion, compared with $1.47 billion in 2019. The decrease in revenues was due to COVID-19 relate park closures, operating calendar changes, and capacity limitations at select parks, all of which led to an $84 million visit decrease in attendance for 2021. The attendance shortfall was significantly offset by a 28% or $13.71 increase in 2021 in-park per capita spending. For the full year, 2021 attendance totaled 19.5 million guests or approximately 70% of reported 2019 levels driven by strength in the season pass and general admission channels. Solid momentum in these two channels was offset in part by the 20% decrease in operating days and expected slower recovery in group sales attendance and capacity limitations at certain parks including one of our four largest parks, Canada's Wonderland. Meanwhile, record in-park per capita spending of $62.03 for the year was driven by meaningful lift in guest spending levels across all key revenue channels. The improved per caps also reflect the successful outcome of strategic price increases and higher transaction…

Thanks, Brian. Last quarter, I reminded everyone of our pledge to emerge from the COVID-19 disruption stronger than when it began. The initiatives that drove our recovery over the second half of 2021 demonstrated our commitment to that pledge and it’s safe to say that we are closer to achieving our goal than we originally thought possible in such a short period of time. In closing, let me summarize why we have plenty of reasons to be optimistic about our business. First, based on the robust demand we drove in the second half of 2021, and the strong early start in our 2022 season pass campaign, we believe our parks are well positioned to return to 2019 attendance levels in the upcoming season. Second, high levels of guest spending at our properties are correlated with our strategic investments to elevate the guest experience beyond our world-class throw rides and we have yet to maximize returns on many of those initiatives. Third, heading into 2022, both our recruiting efforts and returning seasonal associate base looks strong, while the number of applicants through this year J1 Visa program is again approaching historical levels. Fourth, we are preparing for our first full year of operations at our Schlitterbahn parks after the pandemic disrupted our first two years of operations and prevented us from realizing the full value we envisioned when we acquired those parks. Fifth, we have two fully renovated hotel properties reopening this spring that will further strengthen the revenue performance of our resort channel, a primary differentiator for us in the regional attraction space. And finally, our rapid recovery from the pandemic has allowed us to progress more swiftly towards the pursuit of our top strategic priorities, that of deleveraging our balance sheet and reinstating a distribution for our unitholders. As we prepare our seasonal parks over the next few months for their spring time opening, I am excited for our associates who have overcome nearly two years of uncertainty, but now have an opportunity to prepare our parks and resort properties for a full season of operations and programming, free of closures and delays. We greatly appreciate their commitment, patience and fortitude, the perseverance through market conditions as difficult as any we have faced in our lifetimes. With the disruptions from the pandemic becoming seemingly smaller in the rearview mirror every day, I am confident Cedar Fair’s best seasons remain ahead. Shantel, at this point, could you open up the call for questions?

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

Hey guys. Good morning.

Good morning, Steve.

So, it seems the reinstatement of the distribution is probably on pace for a quicker return than what you guys had previously suggested. So, I guess, the question is here, how should we think about the level of distribution in the current environment and maybe relative to where the distribution was before it was suspended? I guess, what we were trying to figure out here is how you think about the payout level going forward relative to historical levels?

Yes, Steve. There is some technical aspects on it relative to the distribution. We got to work out through our credit agreement, but in our conversations with the Board, we want to make sure that we step back in at a level that commensurate with what we see in the business with the cash flow we are generating, but then also reinstated at a sustainable and growing level.

Okay. Understood. And then, second question is probably going to be a bigger picture question and you’ll probably figure out around this, but I guess, what we are trying to figure out here is, how you guys or the Board view Cedar Fair’s long-term growth prospects? And maybe what you think the market or investors are currently misunderstanding with your business and I hope that makes sense, but I think what we are trying to do here is figure out what you guys’ or the Board’s view as being the most underappreciated piece of your story?

I think, when I think about what we’ve got in place and what we said it’s in our prepared remarks, I’ve got real confidence as the Board does in our long range plans, I think post-pandemic the world does look different, but there are different opportunities and different challenges. As you saw from our record last six months of the year, we’ve been able to tap something that maybe weren’t available to us prior the pandemic. So as we look forward, it’s all about leaning into the recovery, making sure we are reinvesting in the business. This business has – this business model has been very attractive for many decades. It generates significant amount of free cash flow over an extended period of time. And from our case, the Board’s, we regularly review the MLP structure with the Board, but it’s been a very tax efficient structure for us in over the last – since we went public in 1987, we’ve distributed almost $2.9 billion in distributions to our unitholders. So, we think we’ve got ability, we got plans that will continue to leverage that business model. But as we build out the new capabilities like business intelligence, make sure we are capturing where the opportunities are and leaning into what’s available to us now that wasn’t available to us pre-pandemic.

Understood. That’s good color. Thanks guys. Appreciate it.

Thanks, Steve.

Our next question comes from James Hardiman with Citi. Your line is open.

Hey, good morning. So, I know, you don’t really want to comment on the deal or the proposed deal. But I guess, just from a big picture perspective, I mean, if you are going to turn down a deal that was worth $3.4 billion, $3.6 billion at the end of the day. It seems it’s like it’s implicitly saying you think your company is worth like more than that. But just hopeful where but not too distant future, is that a fair assessment?

Listen, I think, as I just said with Steve, James, I think it’s a fair question. Our industry and our business model is very attractive and it lets us really create value in a lot of different ways over an extended period of time. We’ve got some things, our core strategy rests at Cedar Fair always rest in guest and engagement with our customer, making sure that we understand what drives our guest behavior. You’ve heard me talk time and time again about lifetime customers and people coming to us over the generations of their lifetime. We really started to see the impact of that and we think about what’s possible going forward and how we can leverage that connection to our communities and our customers. The challenge for our management team, we are excited about this how we leverage that into really creating value going forward and continue to drive performance and that’s what we are focused on.

Makes sense. And maybe, digging a little bit more of your – and I guess, forget about SeaWorld as a potential – but SeaWorld is a potential competitor. Obviously, they’ve done a great job in terms of expanding their margins over the last couple of years really going from worst to first in the theme park industry and I don’t doubt for a second that that was a big part of the rationale as they look at you and say there is a big market opportunity here. Historically, you guys have not put margin expansion out there as a big part of the story. But I guess, what they’ve been able to accomplish or what they are seeing and you guys, either of those things inspire you to lean into that part of the model a little bit more or do you think this, how you’ve been doing it all along is the correct course of action, I guess, particularly on the staffing level side. It seems like that’s the lever they pulled most significantly. Do you see a big opportunity to lower those hours much more significantly than you have thus far?

Yes, James, this is Brian. It’s difficult to comment on others margins. What we’ve always said is it’s – margin – park operating margin is a critical metric for us in evaluating the performance of our parks and our teams. And certainly there has been pressure on margin over the last couple of years. Some of it related to inflation, particularly around labor rates. Some of it related to the fact that we’ve expanded the business through acquisitions of lower margin businesses like the Schlitterbahn parks which as Richard noted we haven’t have the opportunity to fully integrate because of the disruption of the pandemic right on the heels of that acquisition. But also the expansion of our resort side of the business, which we view as a differentiator. It’s certainly not as high a margin line of business as our theme parks but still a very profitable one. So, while we expect near-term pressure, due to the challenges of the tight labor market and inflationary environment, we are going to continue to deploy initiatives to better manage against those pressures and focus on pushing margins back to pre-pandemic levels. Where we go long-term? We’ll be, it’s yet to be seen. But as we’ve always said and this goes back even to Matt Ouimet’s leadership. We can go get your margin tomorrow if you want. But I am not sure you are going to want to own the stock two or three years from now because the guest experience is going to erode. So, it’s a balancing equation as we think about it.

Okay. That makes sense. And just to clarify. It sounds like what you are saying pre-pandemic was a pretty good number. We should not be underwriting significant sort of pre to post margin expansion. That’s not a big part of where you think is starting on?

I wouldn’t necessarily say that pre – just right before the pandemic, 2009, like I said was still impacted by the drag of margins from the acquisitions of Sawmill Creek and the Schlitterbahn property, the opening of the new hotel in Charlotte all of which those initiatives, those projects, those acquisitions got disrupted right after basically coming online. And so, I know, I think you can look back towards, 2016, 2017, when park operating margins were higher and certainly our ability to price in today’s environment gives us the ability to potentially get back to historical levels. But it will take time as we’ve seen. The cost pressures are immediate. The pricing power sometimes takes a little bit of time. But we will continue to look for ways to expand margin, it’s not, this will say we are not focused on.

That’s really good color. Thanks Brian.

Sure.

Our next question comes from the line of Ben Chaiken with Credit Suisse. Your line is open.

Hey, how is it going?

Good morning, Ben.

Good morning, Ben.

Hey. Good morning. How of your 2022 season pass goal, if that’s an appropriate way to express it have you already sold? And then secondly, has the momentum and pricing seen in 2021 on the single day side translated to the passes being sold for 2022. I am kind of referring to the fact that a lot of your pass reads you released in 2021 was priced in 2020. So I am just trying to see you again if the single day momentum has translated to the passes that you are selling, I guess, at the end of 2021 and into 2022. That didn’t make sense I can tell you?

It’s Brian, I’ll try and answer at this way you tell me if I hit what you are looking for. So, you are exactly right, coming into 2021, we had very little pricing power around season passes because we were carrying over used privileges from a big chunk of those past it’s from 2020 in the disrupted year. And so, we certainly are very focused on - in this environment, in this inflationary environment taking price around season passes as we get into 2022. As we noted on the call, to-date those price increases have averaged about 8% across the system. Certainly there are parks that are well north of that and others that are inside that as we are running different strategies at different parks. Our goal is to see that number push towards double-digits and so we are pacing well. Keep in mind, fall is usually where we take as we are pushing renewals we tend to take the least increase and then that gradually matriculates up as we get into spring and summer. Around the year end we are usually and it varies year-to-year, but let’s say about 30% through a pull program. The big chunk as we mentioned on the call is the upcoming spring sales program which that represent as much as maybe 40% to 50% just depending on the year. So, we are moving into a critical period in that sales cycle and are very encouraged by the momentum that we have right now. Always ways to make it better and as I mentioned the team is laser focused on building on the early momentum. As it relates to season, our single day tickets, we definitely used our business intelligence teams and their capabilities to dynamically price last year. I would say it really wasn’t until the fourth quarter that we got maybe more aggressive around pricing. So we still believe that there is meaningful opportunity to get pricing on single day tickets as well as we get into 2022. But again, that was a little different than the season pass program. It’s much more dynamic. We will push the price when demand is high. We will lean into the value-orient consumer when demand is a little bit lower as a means to provide an opportunity for everybody to visit our parks.

That makes sense. Appreciated. And then the 8% comment was on the – just to confirm that’s on passes and is that versus 2021 or is that versus 2019?

The 8% lift is a lift over the – what would have been the 2020, going into the 2021 season since the price of the – it’s a 2020 price pass, but that’s what basically carried over for 2021. So you can almost look at it as both years.

Okay. Thank you.

Okay.

[Operator Instructions] Our next question comes from Mike Swartz with Truist. Your line is open.

Hey, good morning guys.

Good morning, Mike.

Wanted to follow-up on the comments in the prior question. Just trying to get a sense of the season pass. I think you said or deferred revenue is up 23%, I think you said pricing is up, relative to the 2021. Just give us this I know there is some carryover revenue for used privileges into 2022 as well. So, give us a sense of maybe how much season pass is up right now in terms of units?

Yes. So, Mike, let me try it this way. The majority of the lift that we are seeing right now out of season pass revenue is pricing related. In that deferred number that we meant, that I mentioned, we do have some carryover – two properties that are carrying over used privileges Knott’s Berry Farm through about the end of April and Canada’s Wonderland much longer through basically at the end of the summer, I think Labor Day kind of timing. There is a roughly – and we said this I think on the third quarter call as well of $30 million carryover of revenues related to those continued used privileges into 2022. So, when we look at units, I will tell you the - there the expectation was around renewals at those two parks, we’d see a little bit of headwinds because of the carryover of those used privileges more so, mitigate Canada than Knott’s as we hit the spring sales cycle, the Knott’s used privileges are going to start to unwind and so we believe that we’ll see demand start to pick up around renewals or new purchases as we get into the spring. So, what’s driving the deferred revenue balance up is you do have the carryover but you also have increased penetration rates around the add-on products as I mentioned driving that lift as well.

Okay. Great. That’s helpful. And then, maybe, just trying to parse out any impact in the quarter and maybe the first quarter at Knott’s from omicron. I think you said, during the third quarter call that October attendance like-for-like was up about 8%. It looks like you then ended the quarter down maybe a bit. So, did you see any impact in the month of December and maybe any commentary on what you’ve seen thus far in the first quarter?

Yes, Mike. What we saw was again, really good strength heading into our winter fest and our holidays at Knott’s Berry Farm. We saw some weakening due to omicron in the second half of December and that carried into January slightly, but honestly, we also saw things little bit of weather in Southern California, particularly little weather at some of our other sites. So, we’ve kind of parsed through it. But as we gotten deeper into this year and again the first quarter is not meaningful on good weather days we’ve seen what we would expect to see out of Knott’s in their performance, particularly such a large season passholder base with lots of season passes already sold and as Brian said, some of that carryover effect.

Okay. Thank you.

Our next question comes from Paul Golding with Macquarie Capital. Your line is open.

Thanks so much. So, I wanted to ask about – that seems like the dynamic pricing opportunity by going through your ecommerce channel has been a great tailwind in reducing the third-party reliance. I was wondering if you could give some color on how you are thinking about SG&A, just generally the marketing operation going forward. Is there – do you think it might be more reliant? It seems like you found efficiencies and cost this past year. So, just trying to see how you are thinking about that going forward now that it’s going through your channel mostly?

Yes. Paul, it’s Brian. Yes, we are certainly pleased with the progress we made and the improved efficiency around the shift, both broad based marketing as we commented this past year, the pivots are more digital and so media away from mainstream a lot more flexible, less expensive approach. And so, we are going to continue to explore the opportunities there I am not sure that we fully identified what the total potential is there. But the marketing team is going to continue to look for more cost efficiencies on that front. And then as it relates to, excuse me, the unplugging of the third-party distribution channels, I think as we look back at the disruption from the pandemic certainly one of the silver linings was needing to shutdown all ticket sales and as we realized when I was trying to put those back in place there were a number of them that were pretty rigid in terms of our ability to move price, adjust price and we also weren’t capturing data on lot of those folks. So, as we look at opportunities to continue to go going forward, there may be a handful of those third-party distribution channels and partnerships that have value for other reasons, maybe hitting a certain market segment that we don’t penetrate well in through our own ecommerce site. But for the most part, I think the plan is to continue to look for more efficiencies around marketing broadly and to continue to push ticket sales through those ecommerce sites as a means of – as you said, identifying more SG&A efficiencies on the cost front.

Great. Thanks, Brian. And then on - just thinking about liquidity, you redeemed a $450 million in principal on your note, your notes, you’ve got $210 million, $215 million CapEx plan for 2022, the distribution. How are you thinking about liquidity in light of sort of the - you are alluding to staying flexible or vigilant in terms of just further disruption if it were to happen? What’s sort of the liquidity framework that you are working in terms of a minimum or just any color on how you view it?

Well, we feel very good as we said on the call about where we stand right now and it was one of the motivations behind the early redemption on the 2024 bonds. Our goal as we’ve set for the past few quarters is to get net debt back down into that $2 billion or less range. And we think well on our way with the steps we’ve just recently taken. Currently under the credit agreement, we have a minimum liquidity requirement of a $125 million and that’s actually measured on a daily basis. So, that in the near-term remains our core focus as we look out our projected view of 2022 and how the season will build with parks coming online in their more traditional April, May timeframe than the last couple of years, we think we are well positioned to meet those requirements. Longer term, as Richard said, we see great upside to our free cash flow generating abilities, which is one of the reasons why we are motivated and optimistic about getting the distribution back in place by the third quarter if not earlier. And again at a sustainable level that shows growth as the business continues to grow.

Yes, Paul, if I can jump in here, either Brian gets his remarks, really got three strategic priorities reinvesting responsibly in the business to fuel the growth, delever the balance sheet and then ultimately reinforce the – reinstate the distribution. So our capital allocation priorities are clearly spelled out.

Great. Thanks.

Thanks, Paul.

Our next question comes from Brett Andress with KeyBanc. Your line is open.

Hey, good morning guys.

Good morning, Brett.

Some news, morning, there was some news this week I think the starting way is it Cedar pointed earning from $20 to $15 and I know there is a lot of park specific factors that were there last year, but are there any other downward labor trends forming anywhere else in the portfolio? And then the second part of that question is, is there any way to maybe put in dollar terms the benefit you expect to see from J1 labor coming back?

Brett, let me jump in here, it’s Richard. On the labor front, you – and we sketched this in our prepared remarks, Brian touched on it, getting J1s back having a returner base challenge going into 2021 with many of our parks open in 2020 on limited schedule. We didn’t have that base of returners. So it would not be unusual if you go back into our history for us to have a first year rate to second year rate those types of things. I will say, we feel really good about the rates and where we are positioned in each market and we went to market-leading rates in each that make sure we get the level of applicants we needed but as we look at configuring whether it’s our wage rate structure or – it is market-by-market on the wage rates. It gives us an opportunity to watch what we're getting, monitor in real-time, like we do on the pricing front and adjust as we need to. I think this is something that we monitor, certainly weekly, if not daily. And as we think about making sure we're monitoring the applicant flow. The key is when you add all the various channels up, that we've got what we need to open our parks and give our guests the quality of experience they'd expected to come from Cedar Point. Brian, anything from you?

Yeah, I guess the only thing I would add birches as a pilot to [50:20] comments is much like you saw last year at the parks, the focus for us is on the – these – the staffing levels, getting to those adequate staffing levels, so that we can generate the per capita levels, we were successful – we successfully generated last year. And so we'll do whatever is necessary when it comes to seasonal labor rates. But we do feel, as we've said in a prepared remarks and Richard just reiterated, we do feel like there are tailwinds that are going to benefit us a round rate compared to where we were at the same time last year.

Got it. Okay. And then maybe I missed this, but on the OpEx line in the quarter, is there any way to break out a little bit more how much of the increase in OpEx dollars versus 2019 was maybe some of that labor inflation-related? And were there any, maybe one-off items in there in the quarters as well?

I would say, in terms of the labor similar to the number, I think we commented close to two-thirds of our full year OpEx lift was labor-related. You're in that neighborhood, I believe, as it relates - as it would relate to the fourth quarter as well. Maintenance expense was up, that's the one that we called out in our prepared remarks, a couple of factors, contributing factors to that. One, you're playing a little bit of catch up with after a year of disruption. And as a reminder, right, we really pulled the flaps in around all cash spent in 2020. So certainly, not painting some rides that we might normally have in the cycle and things – examples like that, maybe more cosmetic things that in – in the fourth quarter of 2021, as the seasonal parks went into hibernation, we started to have the opportunity to reactivate some of those things. And we also tried to get ahead of the game a little bit in advance of 2022 to the extent that we had nice weather in parks to get a head start on some of their prep work for the 2022 season, in anticipation of more normal operating calendar, always good to get ahead of some spend in advance of what you don't know, might happen in terms of winter weather in the spring in some of our markets. So a little bit of that contributing some of those maintenance dollars I mentioned being up in the fourth quarter.

All right. Thanks, guys.

Thanks, Brett.

Our next question comes from Barton Crockett with DCF. Your line is open.

Hi, thank you for taking the question. I wanted to use the opportunity of the M&A discussion to ask kind of a little bit of a particular question to Cedar Fair, not really this transaction, but just your structure as a master limited partnership, which is very unique. And I was curious if you could tell us in the instance of potentially a merger like if we were to contemplate a scenario where Cedar Fair could be bought by someone else, should it be a base assumption that the master limited partnership structure that you have at Cedar Fair, would cease to exist? I mean, is there any way that could reasonably survive an acquisition of the company? And then on the other side, you guys have been an active acquirer in the past smaller kind of parks Schlitterbahn, Paramount Parks before that, you've been able to acquire but retain your MLP structure. What are the limits on that? I mean, how much could you acquire and remain in MLP? So if you talk about how that kind of survived through merger scenarios, that would be interesting? Thank you.

Yeah, Barton, I'll jump in here, and then Brian can weigh in. From – difficult for me to speculate on hypothetical what would happen any potential scenario. What I can tell you to the second part – to the first part of your question very difficult to think about what – how you would structure a transaction each would be unique to the circumstances. But to your second point, we've always been – this company has been built through M&A all the way back to when the first parks put together Cedar Point Valley Fair over the course of a couple of decades, smaller acquisitions, like a Michigan's Adventure; larger acquisitions, like the Paramount PARKS Chain 1.3 – almost $1.3 billion. So it's been a robust structure that's had a unique attractiveness to some of the folks that we've transacted with. We still have members of the knots family that still have their units from that acquisition back in the late 90s. So very attractive structure, a, we've used it effectively to be able to build a portfolio, but as you know and Brian can elaborate, we're a bit of a hybrid. There's – most of our parks exist on the MLP. We do have a couple of C-Corp entities as a result of the Paramount Parks acquisition. But, Brian, anything you want to add?

Yeah, just really quick. The – as you said, Richard, the MLP structure has never been a barrier for Cedar Fair on the M&A front. In fact, in a number of instances, it's been an asset in some of those tuck-in family park acquisitions. In terms of the limits of – to your last question, yet, there's no real limits around the MLP structure beyond in this sort of a general comment. We – the MLP structure can continue to exist provided that we're acquiring assets that were in the lines of business that we were in at the time, we formed as an MLP. So that's a little broad for us. When you think about our business, its theme parks, its water parks, certainly, we had hotels under management at the time. So as long as we're staying in our space, or maybe adjacent around the fringes, the MLP structure is not an issue.

Okay. So there's no size constraint there. Was it kind of tax considerations for why the Paramount Parks came in as a C-Corp?

Yeah, ultimately, the structure that we use that time, as Richard alluded to it doubles always in the detail, and it's – there's two parties involved, that was the outcome, that was the most tax efficient for both the seller and the buyer, Cedar Fair in this case. And that's how it ended up in the structure that it did.

Okay. And then if I could step back a little bit, there really has not – there's been a fair amount of tuck-ins you guys have been kind of a leader in that. But there hasn't been a lot of big theme park company kind of combinations in this industry. And I was wondering if you could talk about that as an idea? Is that – is there synergy – meaningful synergy potential from combinations of big theme park complexes, in your view? Some industries, there's a lot of synergy value from being different companies together, or maybe less so on theme parks, and then maybe some other industries? How do you think about big consolidation, the value of that pros and cons?

Barton, I think back to the M&A question, there's always been, and we get this question all the time, interested in industry consolidation. What I would say is, I think each player in the space has what they need to be successful. We all pursue slightly different strategies, but it's a very attractive business model. So I think our focus and the focus of me and my team is on what we can do to drive the operating performance and make sure that we're able to grow – grow over time that free cash flow we generate, and then decide what's the best use of our capital allocation strategy, which we've clearly laid out at this point to generate and create value for unitholder. So, from my perspective, I think it's an attractive industry. I understand the interest in the intrigue, but that's all because it has been so successful for so long for so many companies.

Okay, I'll leave it there. Thank you so much for entertaining the questions. I appreciate it.

Thanks, Barton.

Thanks, Barton.

Our next question comes from Stephen Grambling with Goldman Sachs. Your line is open.

Hi, thanks. Maybe another one that's somewhat related to the tax structure in M&A. I mean, given the deal was rejected at I guess, looks like $60, $63. Are there any limitations on how you might take advantage of the dislocation that you see in the public market through buyback rather than dividend given the MLP structure?

Yes, Stephen. This is Richard. We've never had a large-scale unit buyback program in place. There was a very small and put in place 20 years ago in the early 2000s. We've always thought the most tax efficient way is returning to the distribution to that sustainable level. So that's our focus and right now, I'll go back to the other priority we laid out, which is get our leverage back down. We referenced our 2019 acquisition of Schlitterbahn, also the land underneath California's Great America. That took our leverage up from mid to high-3s up to low-4s, low to mid-4s, depending on how you calculate it. So, it was always our intent as we headed in the pandemic and I'll remind you the record year in 2019 really strong performance in 2020. It was always our intent to digest that acquisition and then get our levels back down to that three to four times where we are more comfortable. So, our priority right now is really as we laid out getting the debt back down and reinstating the distribution. But over time, what the Board and management consider other capital allocations, once we got to the point where we wanted to be I think that’s the question. But first, we have very clearly laid out what our aiming point is and we are going to pursue that.

Got it and then does the tax basis of unitholders influence how you think about the underlying value of the shares and does buyback trigger any kind of a taxable event that people have either reinvest the dividends instead on capital gains, is there is any way to set how the taxable basis of unitholders has maybe evolved over the past couple of years with the pandemic dividend cut?

Well, as an MLP, Stephen, the tax basis of our investors is – vary different investor-to-investor. And so, we can’t – and don’t worry ourselves about what each individual investors’ tax basis is. Certainly if we did a buyback program on the open market any sale is going to trigger a tax event for an investor. But our focus is on what’s in the best interest as Richard said of creating value for all unitholders individual tax situations are ultimately the focus of the individual investor.

Helpful. Thank you.

Thanks, Stephen.

And our final question comes from Eric Wold with B. Riley Securities. Your line is open.

Thanks. Good morning. As you think about the stronger season pass demand pacing that you referenced and kind of what you saw last year, can you give us some color into what you think of that driving this? Are you seeing the TAM of reach kind of around the parks get wider and wider? Or you just penetrating the prior kind of range better so to speak? I know you are not have much data on daily pass buyers. How much they kind of convert, but any sense there as well if they are reaching wider?

Well, what I would say, broadly, I think it applies to both. Typically, season pass holders, Eric would come from closer into the park. They use the park more often. It’s not a monolith, but typically they would live a little bit closer. The reach of each of our regional is the reach and the penetration range of each of our parks is different park-by-park. But what we have seen and it correlates I think with the research that's out there. During the pandemic, all the research said that people were going – were getting their cars and driving further for experiences they want. So I think that what we've seen in the data correlates to that. So we've been able to expand our reach. What I'm really watching closely as we get into this year is does that continue to sustain itself? Are people still driving further for the things they want to do? We think we're well positioned as an experience. People have bought a lot of goods, and they – while they're cooped up, we’re able to buy lots of things. Now they're going to go out and look for things that they can experience and things they can do. So as we have believed for a long time, we think we're really well positioned as an outdoor entertainment venue, as we – COVID and the pandemic and the effects of that gets in the rearview mirror. So I think our appeal is broadening, particularly as we get into the event strategy. And what we've seen is different, be able to target different demographic with each of our respective events part by part. So I think, we're going to watch that this year. But I do think there's been a broadening of the reach. And I – I'd be surprised if that didn't continue.

Yeah. And then just a follow-up on that. Obviously, the main driver is closeness to the park to drive visitation and season pass. Any color on what you're seeing for the average visitation, number of times per passholder? Is that increasing? Or if you get further away from the parks, is – you will drive further for more experiences? Will that kind of average come down to this week?

The – it's – the answer, probably, Eric, varies park to park, and certainly the last two years have sort of disrupted a lot of the averages, the historical averages, I should say. 2021 while we got our parks reopened, truncated seasons, still with capacity limitations, so it influenced a lot of the metrics. We'll continue to watch. I think it's fair to believe that for folks that are closer in markets, the visitation is naturally a little bit higher, out of our convenience. And those folks that are a little bit farther, maybe a bit lower. But for some of our parks, we have – take Cedar Point as an example, it's a throw Park Mecca. We have folks that have season passes that are two or three hours away that, that come quite often because of their – the draw of the coasters and the other thrill rides. So it tends to vary. I think one of the things that we're going to be paying close attention to, as Richard said, is as we come out of this pandemic, how do some of those historical metrics change and how do we need to change our ways of motivating visitation and driving repeat visitation as consumer expectations and preferences change.

Very helpful. Thank you, both.

Thanks, Eric.

At this time, I'd like to turn the call back over to Richard Zimmerman for closing remarks.

Thank you, Chantal. I'd like to thank everybody for their participation in today's call and for your continued, especially for your investment and continued interest in Cedar Fair. We look forward to seeing you all at an upcoming conference either in person or via video. Michael? Michael Thanks, Richard. Should you have any additional questions, please feel free to contact our Investor Relations Department. That number is 419-627-2233 and we look forward to speaking with you again in May after releasing our 2022 first quarter earnings report, Chantal that ends our call today. Thank you.

This concludes today's conference call. You may now disconnect.