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Good day, and welcome to the Cedar Fair 2019 Second Quarter Conference Call. Today's conference is being recorded. At this time, I would like turn the conference over to Michael Russell, Corporate Director of Investor Relations. Please go ahead, sir.
Thank you, April. Good morning, and welcome to our second quarter earnings conference call. I'm Michael Russell, Corporate Director of Investor Relations for Cedar Fair. Earlier this morning, we issued our 2019 second quarter earnings release. A copy of that release is available on our Investor Relations website at ir.cedarfair.com, under the News tab or by contacting our Investor Relations office at 419-627-2233.
On the call this morning are Richard Zimmerman, Cedar Fair President and CEO; and Brian Witherow, our Executive Vice President and CFO.
Before we begin, I need to remind you that comments made during this call will include forward-looking statements within the meaning of the federal securities laws. These statements may involve risks and uncertainties that could cause actual results to differ materially from those described in such statements. For more detailed discussion of these risks, you can refer to filings made by the company with the SEC.
In compliance with the SEC's Regulation FD, this webcast is being made available to the media and the general public as well as analysts and investors. Because the webcast is open to all constituents and prior notification has been widely and unselectively disseminated, all content of the call will be considered fully disclosed.
Now I'll turn the call over to Richard Zimmerman. Richard?
Thank you, Michael, and good morning, everyone. As we enter the final five months of the year, I'm pleased to report that results remain strong and our outlook for the full year remains positive. The strong results for the second quarter created momentum that is carried through this past Sunday, August 4, producing higher levels of attendance in net revenues when compared with the same 7-month period last year.
In addition to the increased attendance levels, our results were driven by strong in-park guest spending and out-of-park revenues, which we attribute to the improvements we've made in our parks over the past several years, including immersive interactions and limited duration special events, expanded and enhanced food and beverage options and additional resort accommodations.
At the same time, our Park teams have done a very good job of actively managing operating costs, allowing us to drive margin expansion. Through July, we are in a much stronger position when compared to the first seven months of last year, putting us solidly on track to deliver record levels results for 2019.
As our parks were reaching full throttle operationally, the second quarter was a highly productive period for us strategically as well. So before I ask Brian to review our second quarter and year-to-date financial results in more detail, I want to recap the series of transactions we have undertaken since our last call.
In late June, we completed a $500 million bond offering with proceeds being used to finance three strategic acquisitions. On June 28, we purchased 112 acres of land underneath California's Great America, our Park in Santa Clara, California. On July 1st, we completed the acquisition of two iconic Texas water parks from Schlitterbahn, including Schlitterbahn Waterpark and Resort New Braunfels, and Schlitterbahn Waterpark Galveston. This transaction also gave us the right to purchase an additional property in Kansas City, Kansas, where a third Schlitterbahn Waterpark once operated. And finally, on July 3rd, we acquired Sawmill Creek resort, a 236-room Lakefront resort and conference center located within minutes of our flagship park, Cedar Point.
These transactions will have a lasting impact as they complement our organic growth and provide incremental revenues and free cash flow, expand the geographic and operational reach of our existing portfolio of properties, leverage the extensive industry expertise of our seasoned leadership team and continue to grow unitholder value over the long term.
Regarding Schlitterbahn, we're very excited about adding these iconic Texas water parks to our portfolio. This acquisition, which felt like a perfect fit throughout the process, consistently met the criteria and standards by which we evaluate the long-term potential of M&A opportunities. Specifically, the Schlitterbahn parks in New Braunfels and Galveston are well-regarded entertainment properties in their respective communities and offer a heritage rarely found in acquisition candidates.
Each park features high-quality assets operating under a highly recognized enabled regional brand and in attractive geographic markets. In fact, Central Texas is currently one of the nation's fastest-growing economic regions where Cedar Fair had no existing operations.
We are eager to invest in these parts and resort accommodations in an effort to bring them up to their ideal operating condition, a process we expect to complete over the next two to three years at an estimated total investment of between $10 million and $15 million.
While maintaining a business as usual approach for the balance of the 2019 season, our integration team is hard at work behind the scene. As the current season's calendar winds down for our Schlitterbahn parks, we will be introducing a number of strategies and initiatives aimed at activating cost and revenue synergies for many years to come, thereby producing the growth and efficiencies we expect to enjoy for the long term.
In much the same way, Saw Mill Creek represents an opportunity to take a unique regional asset and restored to its original glory. The resorts hotel already books the second most room night accommodation globally for teams playing in tournament at the Cedar Point's sports centers outdoor facility. Year around guest volume should grow substantially once our indoor center opens in January of next year.
Moreover, a fully renovated Saw Mill Creek resort, conference center and Tom Fazio-designed 18-hole golf course positioned on Lake Erie Waterfront will further strengthen Cedar Point's appeal as a unique vacation destination. Rounding now our series of acquisitions was a purchase of 112 acres of land upon which California's Great America operates.
When presented with the opportunity, we exercised our Right of First Refusal to purchase the land, thereby ending our lease with the City of Santa Clara. This investment represented once-in-a-generation opportunity to purchase valuable property in the heart of Silicon Valley.
In just a moment, I will conclude my prepared remarks. But first, I'd like to turn the call over to Brian who will review our financial results in more detail. Brian?
Thanks, Richard, and good morning. Before I dive into the second quarter numbers, I want to caution you that its always difficult to extrapolate partial season performance into full year results. As of this past Sunday, August 4th, approximately 40% of our forecasted attendance in some of our most profitable operating days are still to come.
Also, as part of this year's fiscal calendar shift, our 2019 second quarter results are not directly comparable to the prior year as 64 operating days were moved from the third quarter into the second quarter when compared with the prior year respective quarters. Specifically, when comparing results, it's important to keep in mind that the 2019 second quarter ended on June 30th, while the 2018 second quarter ended on June 24th. Because of material differences in our fiscal operating results are partly due to the additional operating dates in the period, I'll also discuss operating results on a comparable operating calendar.
I'll begin by briefly discussing our results for the second quarter before moving on to more current revenue and attendance grants. As Richard mentioned at the beginning of the call and as detailed in our earnings release this morning, we delivered an outstanding quarter with meaningful increases across all key performance metrics.
For the second quarter of 2019, we reported net revenues of $436 million, up $56 million or 15% from $380 million a year ago, with the portion of the increase attributable to the 10% increase in operating days in the current quarter.
On a comparable operating calendar basis, net revenues in the second quarter of 2019 were up $14 million or 3%, on a 4% increase guest per capita spending, a 4% or $2 million increase in out-of-park revenues and a less than 1% decrease in total attendance. The largest increase in second quarter guest per caps was in our food and beverage category, up 9% on a comparable operating calendar basis, followed by a 6% increase in spending on premium products and merchandise.
The strength in food and beverage was largely attributable to the meaningful investments we made in expanding and enhancing the food and beverage locations and offerings at our parks, as well as the continued growth of our All-Season Dining and Beverage programs. Admissions per capita for the second quarter was up 2% on a comparable operating calendar basis, reflecting the integrity within our pricing structure and the successful efforts of our revenue and yield management initiatives.
On to the cost front, operating cost and expenses in the second quarter increased 8% or $21 million to $277 million, which was generally in line with our expectations and largely due to the effect of the fiscal calendar year shift.
On a comparable operating calendar basis, operating cost and expenses in the period were up 3% or only $8 million. The 3% increase in cost was attributable to higher labor cost in the quarter due to wage rate increases as well as the need for incremental labor in operating supplies related to our new immersive events.
Meanwhile, adjusted EBITDA, which we believe is a meaningful measure of park level operating results, increased $36 million to $163 million for the second quarter of 2019 from $127 million a year ago. On a comparable operating calendar basis, adjusted EBITDA for the period was up $7 million or 5%, and adjusted EBITDA margin improved by 50 basis points to 37.4%. The margin expansion and the increase in adjusted EBITDA were primarily attributable to the strong in-park per capita spending generated by our parks in the second quarter.
Turning our attention to results for the first seven months of the year. The positive revenue and attendance trends have continued through July. Since our July 4th midseason update, same park attendance was up 7% or more than 330,000 visits. Over that same four-week period, same park revenues were up 8% or more than $20 million.
Based on preliminary results through this past Sunday, August 4, year-to-date net revenues on a same park basis totaled $850 million, up $31 million or 4% from the comparable seven-month period last year. Also on a same-park basis, attendance was up 1% or 213,000 visits, in-park guest per capita spending was up 3% and out-of-park revenues were up 4% or $4 million from the comparable seven-month period in 2018.
The growth in same-park attendance through the first seven months of the year is very encouraging, particularly given the slow start to the season. We continue to see great demand from the season pass channel, which is trending in line with prior year in terms of mix of total attendance. And today, we've also seen a solid growth in a number of unique visitors.
Including results from the two Schlitterbahn water parks we acquired on July 1, combined net revenues through August four totaled approximately $877 million, up 7%. Over this period, combined attendance totaled 16.5 million visits, up 4%; in-park guest per capita spending was $48.59, up 3%; and out-of-park revenues totaled $104 million, up 7%.
Looking at long-lead indicators for a moment. Our advanced purchase commitments, including season pass sales, group even bookings, hotel reservations and the sale of all-season products, such as All-Season Dining and All-Season Beverage are collectively up when compared with the same period last year. This positive momentum is reflected in our deferred revenues, which were up more than $15 million or more than 15% at the end of July when compared with the same period last year.
Now let me shift focus to the balance sheet and some free cash flow items. At the end of the second quarter, our balance sheet remains healthy and in sound condition with $325 million of cash on hand and approximately $2.2 billion of debt, the majority of which is fixed through long-term notes or interest rate swaps. Of our debt outstanding, we have no significant maturities before 2024, with our nearest term maturity being our revolver in April of 2022.
At the end of the second quarter, our total leverage ratio stood at 4.4 times debt to adjusted EBITDA. And based on our current outlook, we anticipate our total leverage ratio will be in the same relative range at the end of the year. While we were comfortable levering up in the near term to complete the strategic acquisitions of the Schlitterbahn properties, the land in Santa Clara and the Sawmill Creek resort, our priority is to reduce leverage back down inside four times as quickly as possible. Regarding cash payments for interest and taxes for the full year, we expect to pay approximately $98 million in cash interest cost and $45 million in cash taxes.
As I hope you can tell, we are very pleased with our operating results for the first seven months of the year, and we remain confident in our long-term strategy. We'll continue to take advantage of market conditions to maintain a strong balance sheet, while at the same time having a flexibility to invest in future strategic growth opportunities.
With that, I'd like to turn the call back over to Richard.
Thank you, Brian. As my opening remarks suggested, this year's first half was a very busy and productive period strategically for Cedar Fair. It's exciting when our team can share news of transactions that constitute new milestones in our company's history, and it's especially rewarding when we're confident those strategic actions present attractive opportunities to drive incremental long-term growth and profitability for our unitholders.
As we take advantage of marketplace opportunities, it is imperative to maintain our nonstop focus on enhancing the strength and resiliency of our core operations. Doing so means continually improving all aspects of our business, none more important than offering unique immersive entertainment options our guests enjoy and will return to experience multiple times throughout each season.
With that objective in mind, our team built a long-range plan that included broadening the guest experience as a major strategic focus. Here are a couple of examples of how that strategy has already begun to take shape.
When the gates opened this year for Cedar Point's 149th season, guest packed our new staging areas for chance to experience Monster Jam Thunder Alley. Through our partnership with Feld Entertainment, guest by the tens of thousands stroll through Thunder Alley's interactive display areas on their way to climb aboard, authentic monster truck favorites, grave digger and Megalodon.
Once safely strapped in, riders experienced an unforgettable thrill ride through a custom-designed action-packed obstacle course. While guests inside the park were drawn to attraction by the monster trucks roars, our marketing team was busy rolling out targeted advertising and social media campaign, urging unique visitors and park veterans are like to take advantage of the limited time immersive entertainment experience. After earning excellent Net Promoter Scores at Cedar Point, the six-week attraction rolled onto Kings Dominion for the summer and will wrap things up later this fall at Dorney Park.
Grand Carnivale is another new immersive activity that has dazzled guest this year. Firstly, Kings Island and Kings Dominion, and then at Worlds of Fun in Dorney Park. The tree surrounding the Spectacle of Color Parades and street parties has energized crowds with Marty Grants inspired clothes, electrifying music, professional street performances and unique food offerings.
Towards evening, the festivities rollout on our midways as a joyous internationally themed celebration, offering something for everyone and creating larger-than-life memories for our guests. While Monster Jam and Grant Carnival are great examples of how we're executing on our strategy to broaden the guest experience, we're also making great progress with our other major growth strategies within our long-range plan.
For instance, we're market testing of our season pass royalty program is going well at four parks, with the portfolio-wide rollout program still planned for the 2020 season. Our pursuit of adjacent development near our parks is also in full swing, with our newly constructed SpringHill Suites Hotel scheduled to open near Carowinds in the next few months.
I'm also pleased to report our plans to build the highest branded hotel New Canada's Wonderland, recently cleared a difficult design challenge with groundbreaking now within reach. And set to open in January 2020 near Cedar Point is our indoor sports center, which will create increased demand for hotel rooms at our Cedar Point resort properties, including the newly acquired Sawmill Creek Resort.
And finally, our targeted marketing initiative focused on improving penetration rates within underserved markets and sales channels kicked off early this year with an updated market sizing study across all of our parks. Our teams are working through analyzing the information obtained from that study and anticipate that these initiatives will meaningfully ramp up once we finalize that analysis and begin to build our marketing plans for the 2020 season.
Before we take your questions, let me address guidance. We will not be announcing updated guidance today nor at our Analyst Day event this week. Let me explain the reasoning behind our decision. Stepping back for a moment, we entered 2019 with renewed momentum, having finished 2018 with a very strong fourth quarter resulting in a record year for both revenues and attendance.
We achieved those new highs after experiencing a difficult and uncertain first seven months of the year. Our year-end rebound reinforced our confidence in the business model, and we follow that up with the company's best season ever in advance sales of season passes and all-season products.
With that strong momentum, we set new long-term guidance with an adjusted EBITDA target of $575 million by 2023. That was less than six months ago. Now fast forward today. While market concerns around an economic slowdown persists, we remain very pleased with how our businesses has performed today and believe the companies in a strong position to achieve record results on a same-park basis.
As I mentioned a few minutes ago, we're also very excited about the additions of the two Schlitterbahn parks in Texas. We believe these properties will be meaningfully accretive to adjusted EBITDA in 2021 and beyond, once post acquisition synergies are realized and our planned capital investments over the next two to three years have a chance to positively affect the guest experience and drive growth.
Having closed on our recent acquisition less than six weeks ago and also watching the current macroeconomic environment closely, we're not yet ready to update our long-term guidance. However, we'll be in a better position to do so later this year when we announced our 2019 full year results.
As we work through the task of integrating our newly acquired properties as efficiently and seamlessly as possible, our priority is reducing our debt to adjusted EBITDA leverage ratio to inside four times as quickly as possible. We're also committed to ensuring confidence in the sustainability of our distribution and are planning to moderate growth in the distribution in the near term.
This is a direct result of prioritizing deleveraging as we absorb the recent acquisition and believing that at the current yield, market is discounting the quality of the distribution. As we have previously stated, we do not anticipate making a final decision on our 2020 distribution rate until after our important fall season is complete and our board has better visibility on our 2019 full year results.
From a capital allocation perspective, we're committed to reassessing the appropriate level of marketable and infrastructure capital necessary to produce the attendance and revenue growth we're targeting. Our team is currently evaluating the required level of capital investment in the core going forward.
As evidenced by the level of capital we've invested in our property over the past several years, our parks have gone through major expansions and transformation. And I want to make sure that we extract full value from these investments.
This critical review of capital expenditures combined with our move towards more CapEx wide initiatives, such as events and experiential attraction, should provide meaningful capital investment efficiencies going forward. In turn, this will provide us with increased flexibility with respect to use of free cash flow and allow us to achieve our objectives around reducing leverage and ensuring confidence in the distribution.
Before we wrap, I want to reiterate how pleased I am with the strength and resiliency our company is demonstrated over the past year. This resiliency of our business model has proven itself during challenging economic cycle such as 2009 as well as during challenging weather year, such as last year.
Coming out of 2018, I'm very proud of what our team has accomplished so far this year. Guest responses been extremely positive for our new rides and attraction, including the new coasters at Canada's Wonderland and Carowinds, and the new immersive attractions, such as Grand Carnivale, Monster Jam and Forbidden Frontier.
In-park spending and out-of-park revenues are also on the rise and our season passholders base at a record level and continues to grow. Fundamentals such as these give us confidence that our strategies are working and that the financial health of our consumer remains solid.
We remain dedicated to our mission to make people happy and look forward to ensuring that they have better opportunity through our busiest days ahead. During the fourth quarter, Halloween weekends produced some of our biggest today's, and seven of our parks will be open this year for wintertime festivities, including a first-time WinterFest at Canada's Wonderland. Everything is in place for a strong finish this year, and we look forward to keeping you priced of our progress. April, that concludes our remarks, and we're ready to answer questions.
[Operator Instructions] We'll take our first question from Brett Andress with KeyBanc Capital Markets. Please go ahead.
Hey, good morning.
Good morning, Brett.
Good morning, Brett.
So really good strength that you guys are seeing or saw in July, I think bucking some of the trends that some of your other peers were seeing. But can you may be give us some more detail on what parks or regions drove that? It seems like July acceleration. Or was it more broad-based strength across the broader portfolio?
Brett, one of the things that we saw last year, as we went through first difficult seven months is that, the impact was widespread. I will tell you what we've seen this year is equally the rebound is very broad-based. So not only in good weather days, but as we go week through week, we've seen strength across all regions of our parks, not just in California, but on the East Coast as well. So it was very broad-based.
Thank you. And just to make sure, Brian, I'm thinking about the third quarter right. I'm assuming we just take the 64-day shift out, but can you remind us of any other things considered the kind of model 3Q and 4Q, again?
Yes, Brett. For the most part, I would say that's correct. Right now, we're forecasting roughly 60 less operating days in Q3, so essentially your analysis is pretty spot on. As we look over the balance of the year, Richard mentioned an additional WinterFest this year, Canada's Wonderland, those have traditionally offered up an incremental 20 to 25 operating days. When we sort through everything by the end of the year, all the various changes in the calendar operating seasons throughout the year and across the system, we'll end this year probably with something around 10 to 15 extra operating days net by the end of the year.
Got it. And one last one, and maybe I'm prep running something you're going to talk about on Friday. But if you think, about improving the capital efficiency, are there any updated capital spend targets, whether it's on a dollar or percent of sales basis? And then I guess, what timeframe are you expecting to hit those targets?
Brett, as we've stated on previous calls, the planned investments within the core properties in terms of infrastructure and marketable new attractions for 2019 was roughly $140 million, with an additional $30 million to $40 million this year related to the business development projects that Richard alluded to at Charlotte Hotel, indoor sports complex in Sandusky to also additional employee housing facilities at several parks that we're in the process of constructing.
As we look forward to activating those efficiencies, the 2020 plan is fairly baked. So, I would say, looking at in a comparable to 2019, although we haven't given a specific number year for 2020, I think that's the range that I content. The real ability to impact those efficiencies begins in 2021, just based on the lead times around most of the big projects.
Understood. Thank you.
Thanks, Brett.
Thanks, Brett.
We'll take out next question from James Hardiman with Wedbush Securities. Please go ahead.
Good morning. Thanks for taking my call. Obviously, no matter how we cut this, but the last month plus has been really nice for you guys. But maybe just some quick math, Brian. I know you don't love when asked you to do the math, but I guess about 6% increase in revenues on may be 2% increase in attendance over the last four weeks since your post July 4 release. I guess, A, is that math right? And B, is that math comparable just given all the moving parts?
Yes, James. Good morning. As it relates to -- as you said, since the middle of June, the trend -- the macro trends definitely shifted in our favor and the attendance trends have followed. Over the last four weeks, so basically looking since our July 4 midseason update, which I think actually took us through the Sunday July 7. So if we look at July 8, basically through this past Sunday, August 4, attendance up about 7% or north of 330,000 visits and revenues up in the north of $20 million range or 8%.
Okay. So I'm glad you asked me to do the math obviously mine was a little bit like there. Okay. That is really encouraging. And then, I found the commentary around margins to be really helpful. Obviously, margins are way up year-to-date, but there is some calendar affect there. I think you said 50 basis points of expansion on a comparable basis in the second quarter. I guess, do you have a comparable number for the year-to-date period?
And then how should we think about the third quarter? I'm assuming given the negative calendar, should we assume that there's some deleverage and that margins will contract in the third quarter?
Yes. James, again. Good question. In terms of margins, as you heard us talk about in the past, key metric for us that we continue to focus on, but not necessarily the almighty last decision. Otherwise, we probably wouldn't be doing some of the incremental events that, as we said in prepared remarks, a little bit more OpEx heavy, a little bit more labor heavy than some other things that we have done. So the 50 bps increase in the quarter was on a comparable basis, as comparable as any two years can be. I mean, macro factors of weathers of course and things like that always playing a role.
Again, as we talked about in the past, margin is in large part often driven, when we talk about it, on an average process system by the performance of the individual parks within the system. And so when we see our largest parks, three of which are concentrated here in the Great Lakes region, between Cedar Point, Kings Island, Canada's Wonderland doing well, that helps out a lot. And so the 50 basis points, as I said, up on a comparable basis.
As we go forward, we talked about last year, right, results from August 1 on, the comparisons get a little bit more challenging, and so that will make some of the margin upside be a little bit more challenging. Doesn't mean that it can't be beat against those mix of performance parks will play into that. But there's no doubt that the margin lift at -- for the quarter was helped dramatically by the strong performance over the last part of June at those big parks.
But just to clarify. Once we do our, sort of, top line adjustments for the calendar in the third quarter. I'm assuming we should somehow figure out how to also adjust the leverage fees, right? In other words, the margin has results of the changing calendar will also be under some pressure?
Yes. We're looking at things more on a fiscal competitive like, what you'll see in the second queue and then try and take script that out of Q3. That's exactly how you look at it. What we would intend to do is, when we get to third quarter results, much like we just didn't given results update through end of July provide results through on more of a comparable basis to try and normalize for those calendar -- those fiscal calendar shifts. But the way you're describing it is a fair approach.
Okay. Great. And then just last quick question for me. We've seen really good per cap, I think, across the industry. Attendance has been, I think, more mixed. Is there something from a macro perspective that you think is driving that dynamic?
James, this is Richard. When we look at the financial health of the consumer, we think it is -- that the consumer is feeling good. They're looking for places to come where they can spend time with family and friends. And we've seen -- as we always said, and you heard me say this before, with good weather, more people are coming, they're staying longer and they're spending more.
So, I think as we continue to do more research and focus on what the consumers are looking for, we can continue to program the things that really they're looking for. And one of the things that comes through, and Brian called out in his remarks, food and beverage up 9%.
Food and beverage and the quality and the ability to serve food and beverage in an immersive environment, we've made significant investments in our facilities. We've programmed to put in executive chefs and culinary talent all of our parks.
As we continue to do that over the last few years, we really now reaping the benefit of this whole new approach to something that the consumers tell us is critically important in their experience, but also critically important to their decision of whether or not to visit. So we think the food and beverage quality, the ability to do more transactions per hour, all those things fold into really important piece of the in-park per capita spending.
Excellent. Great work guys. And good luck for rest of the way.
Thanks James.
Thanks James.
We'll take our next question from Tim Conder with Wells Fargo. Please go ahead.
Thank you. And Brian, if you could, the question related to the advanced purchase commitments and deferred. I'm sorry, your commentary is that Schlitterbahn and Sawmill Creek?
In terms of the advanced purchase commitments through the end of July, yes, the Sawmill really nor Schlitterbahn really moving that materially, up -- north of $15 million in cash and up north of 15% is really an apples-to-apples comparison.
Okay. Great, great. And then in response to how things have gone last month here, again. Just to make sure that's on a comparable basis, ex acquisition last four weeks the attendance jump of 330,000 and so forth. Are you including Schlitterbahn in that also?
They are in -- those numbers pushing those up a bit.
Okay. And I guess any color you can give us on Schlitterbahn? What you expect the contribution here in 2019 to be, a part of the seasons off-season? Just any color you can give us as far as may be revenue or attendance or adjusted EBITDA related to Schlitterbahn kind of to help in the modeling?
We're still watching how that develops. I'll say, as Richard said in the prepared remarks, we're pleased with the initial results we're seeing out of them over the first several weeks since the acquisition closed on July 1st. So as we said, at the time of the announcement, the Schlitterbahn properties did between $65 million to $70 million in revenue, a little north of 1 million, almost 1.2 million in total attendance.
We acquired July 1, so you gone on for two of the key months, about half of the year. So I don't think too far off if you think of things in terms of may be a little bit better than half of those numbers just based on the fact that we have will be under our ownership for the two big summer months of July and August.
Okay. Okay. And then gentlemen, whether here on the call or the next couple of days here. Can you talk about organic margins? And again, the 50 basis points the nice spring down here, the incremental margins, but can you talk about how the progress or your plans for that and enhance that on a go-forward basis here? And any goals for this year, next year from that perspective? Is that, as you've alluded to earlier, that feeds into the deleveraging side of the focus also?
Yes, it does, Tim. I think, as I said earlier, a bit of that answer lies a somewhat in the performance of the individual properties. We often find ourselves talking about things in sort of on these calls. But clearly, our discussions inside the walls here, when reviewing the performance, is much more at a park level. There is no doubt that over the last couple of years, in addition to the pressure, that we've seen on attendance because of macro factors, like the weather particularly in the first seven months of 2018 put pressure on margins.
As you know, the volume -- the fall of in volume or shortfalls in volume definitely have a meaningful impact on margin. But the first couple of years of the investments we've made in the more experiential attraction. Adding WinterFest and Grand Carnival’s and things of that nature put pressure on our operating margin, but we believe benefit us long-term significantly. I think we're already seeing that play out in the strength we're seeing in advanced purchase commitments, particularly in the season pass sales.
I will say one of the things we've been most pleased with here in 2019 and we hadn't commented on it a directly, but I would say now is that of the sale of season pass typically wanes by about the end of June, we've continued to see strong demand even through the month of July for season pass sales for the 2019 season, because there are so much still to do at the parts in the fall and winter. And so those advanced while little bit margin heavy early on are going to benefit us significantly going forward.
With that in mind, it is fair and we've seen it with events like Haunts and WinterFest that when you get into year two or three, those margins begin to improve because a lot of the ramp-up costs are now behind you and lot of those startup costs don't persist. And so I think, we'll start seeing a lot of benefits paying off relative to some of the pain that we have taken in 2017 and 2018. But ultimately, margin is no doubt driven by the performance of the individual parks and the big parks performing well goes a long way.
Okay. Thanks for the color, gentlemen. We’ll see tomorrow evening.
Thanks Tim.
Thanks Tim.
[Operator Instructions] We'll move on to our next question from Michael Swartz with SunTrust. Please go ahead.
Hey, good morning, guys. Just a little more expansion on Schlitterbahn. I think you gave some good color on how much that adds on an annualized basis. But may be just in terms of the synergies, maybe talk about some of the things from a very high level, what you're doing there to kind of integrated that in the broader Cedar Fair portfolio? And then as it relates to those parks, from an attendance mix standpoint, how much of their attendance is on pass -- season pass? And how much of the visitation is more of a local guest versus a domestic traveling guest?
Good morning, Michael. It's Richard. I'll take the second part first, and I'll let Brian talk about the synergy. When I looked at Schlitterbahn and got closer to it, I got more excited the closer we got to, Cedar Fair is a house of brands, and these brands are really well established. The Schlitterbahn brand is so iconic in Texas. We keep using that word to what it is, I would tell you, it's probably the park that we've looked at that we did known the most reminds me of Knott's, and the heritage we have a Knott's Berry Farm.
So when we looked at that and so to gets to your question, it penetrates throughout that whole Central Texas region really, really well. And it does it has got a nice profile within the market. But also, when we looked at it and this gets to your synergy question, they were probably where we were in terms of evolution season pass program, probably a decade or so ago. We haven't had the -- and they haven't had the opportunity to roll out installment payments, which you know has been a big driver behind our season pass program.
So our ability to go in there, polish up a really strong brand, bringing our capabilities and competencies particularly those we built over the last several years, our robust CRM platform, our e-commerce capability, our revenue management capability.
Now, as Brian will tell you, when you put some systems in to get those things going and as part of our plan, but we think there is meaningful and significant upside in the performance of these parks, both on the revenue side and then on the cost sides. So with that, let me hand it over to Brian.
Yes. Michael, as it relates to the synergies, it dovetailing off of Richards comments. The revenue synergies, because of that the time is going to take to fully integrate the platforms and the systems. I think the revenue synergies build a little bit slower than the cost synergies, but it will be our intention to have those parks fully integrated onto our systems and platforms by the 2021 season, will take the next 12 to 18 months to accomplish that. And that's when -- in the interim, I think will start mining some synergies in the revenue side. It just will take us a little bit longer to build up.
The cost synergies that will be available are the one thing typical think about and are little bit more easily realized, the ability to tuck them up underneath some of the corporate overhead functions that already exists your Cedar Fair that wouldn't necessarily need to be duplicated down there. And so we should be able to mind most of those the synergies by 2020.
And so it's going to take a couple of years to fully realize the revenue synergies, but we're really excited, as we said in our prepared remarks, about where the opportunity goes, I think we've talked about publicly that there's three to four we believe there are several hundred, maybe 300 to 500 basis room in terms of margin expansion from where they've traditionally been. But we need to get in there and do some work in order to capture that upside.
Okay. That's fantastic color. And then Brian, just quick follow-up, I think you said, you gave some numbers for cash tax and cash interest expense this year. What do you see as far as annualized, I think that there is partial years with some of the new debt, and I don't really know the tax structure of some of the acquisitions?
You should see the cash taxes. We've said, publicly before that we think those are probably in that $45 million to $55 million range for the next several years, a little bit dependent on how business grows and then where's the growth in the business. The related properties versus the partnership properties. Interest cost -- cash payments on interest, I would imagine will be a little bit closer to that $100 million, $105 million range at least for the next couple of years.
Okay, great. Look forward to seeing you guys tomorrow.
Thanks Michael.
Thanks Michael.
We'll move on to the next question from Steven Wieczynski with Stifel. Please go ahead.
Hey, guys. Good morning.
Good morning.
Might be thinking about this just a little bit too much better probably a different type of customer. But when you look at Knott's Berry Farm, and I think you guys are, I don't know, 10 miles away from Disneyland. Have you seen any pressure on you guys there as Star Wars has been rolled out?
Steve, Knott's Berry Farm sits five miles away from Disneyland. And as we said earlier, in the year, and I can reiterate now, through the first seven months, Knott's is off to its best start ever in spite of what was really a choppy January and February because of little bit of weather, but Knott's is performing extremely well. So best start ever.
Okay. Good to hear. And then second question would just be around the indoor sports complex. And may be give us some kind of update in terms of how that's working out so far?
Yes. Steve, it's Brian. In terms of the indoor, first let me say, we're extremely pleased with the booking trends on the outdoor. As we've said, this is year three and they've been pacing up each year over these first three years.
And as we said, at the tail end of last year we already sort of passed that year four, year five milestone in terms of original pro forma only the second year. The first big sets of tournaments starts in mid-January. The facility will have a soft opening late this year or early next year.
The first big tournaments start in mid-January. We're pleased with the early bookings. Again, the indoor is going to be focused on the basketball, volleyball. And we're excited about what that offers and are seeing good early-season trends on the booking curves there, but try not to get too excited because we haven't even opened the front doors yet.
Okay. Got you. Thanks guys. Appreciated.
Thanks Steve.
It appears there are no further questions at this time. Mr. Zimmerman, I'd like to turn the conference back to you for any additional or closing remarks.
Thank you, April. And thank you for your interest and ongoing support at Cedar Fair. I know many of you've had an opportunity to visit Cedar Fair Park. But those of you who haven't, I encourage you to take the time to visit us and experience what differentiates the Cedar Fair park from the pack. Michael?
Thanks, Richard. We look forward to speaking with many of you over the next few days at our Analyst Day event being held at our Flagship Park at Cedar Point. With that, April, that concludes our call. Thank you.
Ladies and gentlemen, this does conclude today's presentation. We thank you for your participation. You may now disconnect.