Tuesday, May 14, 2019

Heard On... Cedar Fair's 1st Quarter 2019 Earnings Call


© Cedar Fair
Last week was the earnings call for Cedar Fair Entertainment Company's first quarter 2019 results.  There wasn't a ton of super exciting news, but a lot of updates about the health of the company... which seems strong.  Here are some notes:

• During the 1st quarter revenues increased $12 million, based off of increases in per-capitas, attendance and out of park revenues.  However, there was an extra calendar week of park operations in 2019 versus 2018, so a lot of the increase probably comes from that.  The operating loss for the quarter increased to $85 million, up from a loss of $76 million last year, due to the extra operating days.  They also saw a bump in depreciation and amortization costs, to $14 million up from $8 million, due to a change in the "estimated useful life" of a long lived park asset.  Maybe that was Volcano at Kings Dominion?

• They also released results through the end of April, which puts this and last year more comparable due to Easter timing shift.  At that point revenues were up 2% or $2 million, primarily due to strong in park spending and out of park revenues.  Attendance was down around 20,000 visits over last year.

• Also through the end of April deferred revenues were up 12% or $20 million, which represent sales of season passes, dining plans, fast lane, etc.  Sales of passes and of all season food plans are both up over last year.

© Knott's Berry Farm
• Generally speaking it sounds like Knott's Berry Farm is continuing to do extremely well, having their strongest-ever start to the 2019 season with their Peanuts Celebration and Boysenberry events.  They are continually booking year over year revenue increases, and the same with their season pass program.  They said again that the park surpassed 6 million visitors last year (not clear if that's the park AND water park or just the theme park).

• The rewards program for season pass holders is still going to be in a test phase for 2019, through I'm not sure at which parks.  After testing and tweaking the program with what they learn this year, it will roll out to a larger audience in 2020.  The loyalty program aims to make lifelong relationships with customers, giving them benefits for visiting often and also to keep passes being renewed.

© Cedar Point
• No change to the company's long term goal of hitting $575 million in EBITDA by 2023.  They still plan to get there by "enhancing guest experience, expanding the season pass program, increasing market penetration through targeted marketing and pursuing developing land adjacent to the parks."

• The company has several additional revenue generators scheduled to debut later this year, including a new hotel at Carowinds, the opening of the giant indoor sports center adjacent to Cedar Point, and the first Winterfest at Canada's Wonderland.

© Cedar Fair
• The 2019 capital has a heavy mix of entertainment and experience in it, but also big roller coasters at Carowinds and Canada's Wonderland.  The Grand Carnivale and Monster Jam Thunder Alley events feel like they were created from a push right from the CEO's office. (they again say that the partnership with Monster Jam is the "first installment of a strategic collaboration between the companies)  They're also excited to generate the excitement felt at Knott's Ghost Town Alive at Cedar Point's Forbidden Frontier this year.

• The purchase of the land under California's Great America was a "once in a generation" opportunity so the company jumped on it.  They said the rezoning two years ago was the first step in a "more aggressive development program" and they are "actively deploying that strategy" and will announce more later in the year.  The big plans for the park had seemed to have stalled completely, but are they back on now?  It sounds like it is, now that they fully own it.  I still have to wonder if they played hard ball on the big expansions in order to get the ability to purchase the land.


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