Tuesday, October 5, 2010

Heard On... Cedar Fair Long-Term Goals Conference Call

Cedar Fair held a special conference call today to discuss the long-term financial goals of the company, a part of which includes reinstating the distribution to unit holders each year.  The release is available on the company's website.  The distribution is what the financial community will be pleased about - the $0.25 that will be paid to each unit allows the company to have had a continuous distribution for 24 years.

The company also put out a plan of action to grow over the next five years.  There are details in the release, some of which I will cover below and some not, so check it out if you're hungry for number-talk.

As I love to do, here's some notes I found interesting:

•  2010 is shaping up to be a good year for Cedar Fair.  As of 9/5/10 overall revenues are up 4%, attendance is up 5%, Per-caps are down 1%, and out of park spending is up 10%.

•  Looking at attendance in 2010, higher season pass sales resulted in $16 million more in revenues.  Season Pass visits are up 870k in total, Group Sales up 365k, and Front Gate admissions down 395k.  In 2010, Cedar Fair picked up 900k of the 1.6 million that they were down in 2009.

•  Specifically by region the Southern Parks are up 9% in revenues, and 440k in visits.  Northern Parks are up 3% in revenues, and 83k in visits.  The Western Region is up 3% in revenues on an increase of 378k in attendance.

•  Planet Snoopy has been deemed a success at the parks it debuted at in '10, which makes sense as three more are coming in '11.

•  Capital Expenditures in 2010 will total $85 million.  In 2011 they plan on spending $75-80 million, and then $80-90 million annually after that.

•  Quick math:  Announced capital for 2011 totals $44 million so far.  No news yet from Kings Dominion, Michigan's Adventure, Great America, or the water parks. So even if they spend on the low side of the 2011 estimate, $75 million, that leaves $31 million unaccounted for.  Interesting, no?

•  Future capital will be spent similarly as the past.  World class rides, family attractions, and live shows were mentioned.  The company is looking to develop resort facilities at Kings Dominion and Carowinds, but that's at least a few years off.  As of now they would develop the hotels on their own, not in partnership with a chain operator.

•  An $80-90 million capital year lets them build two big rides while still adding capital at the other parks.  For the smaller parks, a big ride every 3-4 years will still be the formula going forward.

•  Per loan agreements, the more that debt is paid down the more they will be able to disburse as a distribution.  The hope is to have it up to between $1.25 and $1.75 by 2015.  Excess cash flow will be used to pay down debt when possible.

•  No plan for acquiring or selling parks is in the works now, but as always the company will evaluate any opportunities that may come up. (Personally, I think they would sell California's Great America in a heartbeat)

•  The Season Pass program has picked up significantly since they started marketing them as they did at the former Paramount Parks.  Applying those tactics to the legacy parks has had positive results.  Season Pass and Group Attendance accounts for around 50% of overall attendance each year.

•  The WindSeeker attractions for 2011 will be marketed as a major attraction, although the individual price tags are much less than a big coaster.  The company believes they could have a great effect at the gate, and could be a sleeper hit.

The company sounds like it's getting back on track after a rough year or two.  Naturally so much of this plan depends on the operating results each year, but if nothing else the reinstatement of the distribution should help build momentum going forward.

Now how about that unaccounted for $31 million for 2011?