Thursday, May 7, 2020

Heard On... Cedar Fair's 1st Quarter 2020 Earnings Call

© Cedar Fair
Cedar Fair has held their 1st quarter of 2020 earnings conference call, just like we saw from Six Flags this past week.  The company's call is more focused on the pandemic and Cedar Fair's reaction to it, and as usual what follows are some notes from the call.

• Revenues for the quarter were $54 million, down from $67 million last year.  Attendance was down 239k from last year, and out of park revenues were also down $3 million.  This of course is because of the parks closing in the middle of March.

Before the parks, which was really just Knott's Berry Farm, closed in mid-March attendance was up 149k visits or 19%, and revenues were up $8 million - a really record strong start to the season.  During the last two weeks of March with no parks open Cedar Fair estimates it lost 388k in visits and $20 million in revenues.

© Knott's Berry Farm
 • At the end of the 1st quarter season pass sales were still up 30% over the prior period, even considering the pandemic.  Deferred revenues were $195 million at the end of the quarter, up $33 million over last year.

• After a recent bond sale and expanded revolving credit lines, Cedar Fair has liquidity is around $821 million, with a monthly cash burn rate of $30 - $40 million.  However if the parks stay closed a long time they will reduce more monthly expenses.  Specifically that is if the parks can't open at all in 2020.

• As far as the Cedar Fair parks reopening, the CEO had a somber take on things: “We continue to work closely with local and state health authorities to monitor the COVID-19 pandemic. Based on the best information we have currently, we do not anticipate resuming operations at any of our parks in the near term. This projection remains fluid and subject to change as the situation evolves, including if state and local guidelines are modified.” 

• More on reopening.  They understand that due to their seasonal nature, "it is important that we’re able to restart the parks with a reasonable number of operating days remaining in the year."  They will need two to three weeks to open a park once they are given the go ahead.
© Cedar Fair

• When parks reopen there will be employee wellness checks, increased sanitizing and disinfecting on all surfaces, social distancing on rides and in all food and retail locations, extra hand washing stations for guests and expanded use of mobile apps to create contactless transactions.  I did not see anything about face masks.

• Similar to Six Flags, the Cedar Fair parks will also use a reservation system to limit daily attendance.  They potentially will also utilize virtual queues and a broader rollout of food and beverage ordering through the park's app.  Most of the parks operate normally at about 50% of theoretical capacity, even when Cedar Point does 50k guests a day that isn't full theoretical capacity.  This will allow them to operate parks at dramatically less than theoretical capacity and still be operationally profitable.

• They were asked which parks might open first, but didn't really give a specific answer.  Just that each park will be different, probably at a different time, and all depends on local officials and their plans.

© Cedar Fair
 • They were asked about the big 2020 celebrations of Knott's 100th and Cedar Point's 150th, if they would be pushed to next year, and Cedar Fair said they're still studying that and waiting to see when the parks can open.  They did however say that they already "announced" that some of the limited time events like Grand Carnivale won't take place this summer.  No parks were mentioned specifically, but after a light search I did notice that Grand Carnivale is no longer on Dorney Park and Kings Dominion's special events page.

• As stated previously, the company has deferred or eliminated $75 - $100 million in capital expenditures for 2020 and 2021.  The call mentioned that in 2020 they will spend $85 - $100 million on capital expenditures and note that the majority of that will be spent by the end of the 2nd quarter.  To me, that means a very lean 2021 roster of new items in the parks.