Tuesday, August 11, 2020

Heard On... SeaWorld Entertainment's 2nd Quarter 2020 Earnings Call

© SeaWorld Entertainment

This week it was SeaWorld Entertainment's turn to report their 2nd quarter 2020 earnings, their full press release is available at this link.  It seemed like the market was anticipating these results even more than Six Flags or Cedar Fair, as they (along with Disney and Universal) give some insight to what's been happening in the all-important Orlando market.  The 2nd quarter still had very limited operations for SeaWorld Entertainment, with more 'guts' to be found in the 3rd quarter announcement this fall, but here are some notes from their earnings call:


• Attendance April through June was 300,000, 6.2 million visitors lower than last year.  Revenue was $18 million, down from $388 million last year.  The company's net loss was $131 million, and EBITDA for the quarter was a loss of $53.8 million.  Per capita spending was up 5.5% and in park per capita spending was up 10%.


• Deferred revenue from passes and other products was down almost 16% from a year ago.  The total pass base is down 31%.  However, parks that have been open in the quarter the pass base grew more than 10%.

SeaWorld San Diego

• As we saw with the other operators cash burn is a hot topic here too, and SeaWorld spent about $12 million a month in the quarter when all was said and done.


• As of the date of the earnings release they have reopened 9 of their 12 parks, with only SeaWorld San Diego, Aquatica San Diego and Water Country USA in Virginia not open (and those two water parks will not open at all in 2020 they confirmed).  In the second quarter they only got to have 7 parks open, and those parks had only 98 operating days total compared to last year with 12 parks and 861 operating days.

• Right now they are seeing positive cash flow at their operating parks.  They also are seeing positive trends as they reintroduce events and entertainment to draw visitors.  They are even adding more operating days and longer park hours at some properties.  There is also some small growth in season pass sales, and Discovery Cove bookings for 2021 are up over this time last year (quite a bit, 176% higher).


• More on increasing attendance - for parks that have been open at least 30 days so far they are seeing around a 15% increase in attendance from the week ended June 28th to the week ended August 2nd.  Both Sesame Place and Busch Gardens Williamsburg have had high demand since they reopened (both at the end of July) and are both adding more operating days.  It sounds like Busch Gardens Williamsburg will continue to do special events this year to keep the gates open, even with very limited capacity.


© Busch Gardens Tampa

• For operating parks overall they have been seeing attendance vary from 10-15% of last year's attendance on some days, all the way up to 50% on others.


• The company plans to hold both Halloween and winter Holiday events this year as they have in the past.  The events will be different to address safety concerns around COVID-19, but they are confident they and operate the events profitably.


• Due to selling notes and receiving a large sum from them, SeaWorld Parks & Entertainment appears to be on the lookout for parks that will be for sale due to their operators not being able to withstand these tough times.  What they're looking at are things like water parks, hotels or other small parks that could be converted into a Sesame Place.


• It was also noted that they believe they need to hit a out 40% of last year's revenue figures in order to be profitable overall for the year.


• Regarding capital expenditures.  They are about 87% complete with all the new rides that were supposed to be for 2020 but did not open, all of which have been pushed to 2021.  It will take another $15 million to finish those rides, but they still owe another $40 to $50 million on them as well - still to be paid.  No update was given on the conversion of Aquatica San Diego into Sesame Place San Diego.

Sunday, August 9, 2020

Several Prominent Ride Manufacturers to Cancel Exhibition at IAAPA 2020

More tough decisions for 2020 have had to be made, this time in relation to several prominent U.S. ride manufacturers which have decided to cancel their appearances at this year's IAAPA Expo.

As of right now the 2020 IAAPA Expo is still scheduled to be held in Orlando, Florida from November 17th through November 20th, 2020.  That may change however, as many events across all industries have been pushing back a year or going virtual.

One thing is for sure, Premier Rides, Great Coasters International, Chance Rides and Larson International will not be at the Expo if it does take place in person.

The below letter spells out the thought process wonderfully, and also note that these great companies are taking the opportunity to make donations to wonderful charities at a time when they're no doubt hurting themselves.  Bravo!


August 6, 2020

To our Valued Customers,

The IAAPA Expo in Orlando is the most important annual gathering of amusement industry professionals and enthusiasts and is truly the epicenter of attractions innovation and business.  In 2019, a record-setting 42,000 attendees including CEOs, global leaders, visionary designers, sales people, and technical experts gathered to conduct business, educate, and network at the industry’s gold standard conference and trade show.  The 2019 show was a confirmation of the strength of the attractions industry which this past year set all-time records globally for attendance.  Business had never been better.

2020 will not be the same.  The companies listed below represent well over 100 years of continuous exhibiting at the IAAPA Expo.  We are competitors, yet we work together closely to ensure amusement ride safety.  We put our heart and soul into this industry with the like goal of creating lifetime memories for millions of people around the globe.  And we all look forward to the opportunity each year to gather in Orlando and to be with colleagues and friends from nearly every country in the globe.  There are no better words to describe the show environment than “one big family”.  With that in mind, we are deeply saddened to share the news with you that we will not be exhibiting at the 2020 IAAPA Expo.  We know this news will come as a great disappointment to many of you, and we have made this hard decision with great angst and with significant consideration of several factors.  

First, the industry is hurting on all levels.  Even with a global effort lead by IAAPA to establish very safe facility operations, our guests have not come back to the parks in the numbers for which we had all hoped.  As suppliers to the industry, we know that successful business for us requires successful business for our valued clients.  We get it.  We understand there is a right time to sell and this is not the right time.  Parks and attractions need to focus all their attention on keeping their facilities healthy and well-maintained so they can open strong in 2021.  We are here to help you in any way possible, whether it be service or technical support and we will be here when the time is right to talk about new innovative attractions. 

Additionally, and understandably, the ability to travel from both a global and a domestic standpoint has been so greatly diminished to the point it is impractical.  Each day the news brings additional quarantines and restrictions.  Flying from around the globe to Florida is almost impossible, and even in the US with its myriad of quarantine rules it would presently require 28 days of quarantine to visit the show from New York.  Again, impractical.

And finally, and most importantly, we need to prioritize the health of our employees who have dedicated themselves to making our companies successful and who are what make visiting our booths so great and so welcoming.  We understand all the precautions that are being taken for the IAAPA Expo, and we are grateful for that significant effort.  There is indeed hope for the near future with rapid global achievements in the medical field.  But for this show, with just over three months to go, the clock has run out.
We have each reached out to our valued clients around the globe and also here in the United States.  The message has been the same.  For all the reasons above, “we can’t come” is what we are being told.  We understand and respect the situation and for the same reasons we will not be at the show either.  We will dearly miss you.

The show is a major investment and we have already spent significantly on the show; funds that can never be recovered.  We will use the savings from not exhibiting to maintain our company’s operations in order to be ready when you are.  In addition, our industry is known for giving and we are all making some generous donations with part of our savings.

We will be giving to:
- Give Kids The World to help make up for the annual IAAPA Expo Harley Davidson fundraiser.  https://www.gktw.org/
- Doctors Without Borders in recognition that we are indeed a global industry that positively impacts people arounds the world.  https://www.doctorswithoutborders.org/
- Heart of Florida United Way because we care deeply about the people of Orlando, the home of IAAPA and the IAAPA Expo.  https://www.hfuw.org/

We encourage everyone who reads this to also consider contributing to one of more of these organizations, even if the amount is small.

We work in an industry that is extremely resilient.  Through wars, through recessions, and yes, even through pandemics, our industry has survived.  People have a basic need to smile, to have fun.  And in tough times, amusement parks are a place where families can enjoy themselves.

The show must go on and will go on!  Just not this year.

We will see you again in 2021.  And yes, we will once again smile.

Thank you for your understanding.

Saturday, August 8, 2020

Heard On... Cedar Fair's 2nd Quarter 2020 Earnings Call

Cedar Fair had their 2nd quarter 2020 earnings release and subsequent call last week, just after Six Flags Entertainment released theirs.  As was found in Six Flags' numbers, things weren't especially great for Cedar Fair - all of which is expected in these troubled times.  Here are some of our notes from the call:

• 2nd Quarter results include only Worlds of Fun and the two Schlitterbahn parks in Texas.  Net revenues were $7 million, which comes from a decrease in attendance of 8 million and a $44 million decrease in out of park revenues.  The operating loss for the quarter was $142 million, and the EBITDA loss was $85 million.

• With regard to liquidity, Cedar Fair is using about $30-$40 million per month through the end of 2020.  They also reaffirmed that they have enough liquidity to last until the end of 2021 even if all parks are forced to close until then.

© Kings Island

• The company is trying to keep its brand reputation strong by staying engaged with visitors and employees, using this season to base future investment decisions, operating strategies and park programming in the future, revising marketing to be as efficient as possible, using scalable technology based initiatives to improve safety, maintaining a disciplined approach to cash use and investing in new capabilities to capitalize on changes in consumer behavior and preferences.

• Overall season pass sales for the year are down more than 30% or 900,000 passes.

• For the rest of the season that the parks are open the company expects them to have 20% - 25% of historical attendance (which translates to 15% of theoretical capacity).  On some good days some of the bigger parks have seen attendance hit closer to 40% of historical attendance.  These rates have been affected by COVID-19 case spikes in markets.  The 7 parks that have been able to open so far this year represent 40% of historical attendance and revenues.

• The company has proceeded to "defer or eliminate" 2020 capital expenditures as they move into 2021.  They reduced 2020 capital expansion by $75 to $100 million.  While the call did not say this, I think a big part of that was cancelling many special limit time entertainment events and festivals.

• Regarding 2021 capital expenditures, the company is "reactivating certain capital projects to ensure the properties that should be fully operational for the 2021 season are prepared and ready to maximize revenue opportunities."  They promise to provide more visibility into those plans and their outlook on the 2021 capital program later in the year.  This sounds encouraging.  They also mention that they still believe strongly in experience based additions, like Grand Carnivale and other similar attractions that will help differentiate the parks from the competition.

© Canada's Wonderland

• There is still a chance that we could see Winterfest celebrations this year, but if so they will be at Knott's Berry Farm and Canada's Wonderland... if those parks are able to open.  Those are the two most profitable parks during winter so if they are able to open it sounds like Cedar Fair might jump at the chance to operate this winter.

• Operators are dedicated to keeping parks that couldn't open this year in the minds of visitors, including the use of social media and getting feedback on a variety of topics.  They want to continue to grow the consumer loyalty while they can't open.

Friday, August 7, 2020

Knoebels to Offer Joy Through The Grove Drive-Through Christmas Experience This Winter

© Knoebels

Knoebels has served up some nice news during this challenging summer - the park will host a new event this winter called Joy Through The Grove.  A drive-through Christmas light display, the new event will begin on November 27th.

These types of attractions are already popular in many towns, but the Knoebels version will take guests right through the center of the classic amusement park.  Joy Through The Grove will "begin near Impulse roller coaster, travel down the park’s main boulevard, and throughout much of the campground.  There will be over 15 miles of string lights, and over 400 light up pieces."

A lot of the details of the event are not yet finalized, but it sounds like it will be a great way to get to enjoy Knoebels during a festive time of the year.  

Right now the park plans to open the display nightly and its run will conclude the first week of January, 2021.  Keep a watch out on the park's official website for more details as they are decided.

Wednesday, August 5, 2020

Cedar Fair Updates on 2020 Operations + Looking Ahead at 2021

© Cedar Fair
Cedar Fair has given an update on their parks with regard to 2020 operations, clearing up which parks will remain open, which will close, and when the season will end for others.  The impact that COVID-19 has had on the industry is obvious, and the operator is having to make hard decisions on the rest of this year.

Of the seven parks that Cedar Fair has been able to reopen in 2020, 5 of them will close after Labor Day weekend on Monday September 7th.  That includes Worlds of Fun, Dorney Park, the two Schlitterbahn parks in Texas and Michigan's Adventure.  The remaining two, Cedar Point and Kings Islands, will continue to operate until November 1st.  They will not hold a traditional Halloween Haunt event, instead having a Tricks and Treats Fall Fest.  No parks will hold Winterfest this year.

At the same time of the announcement, Cedar Fair also clarified that Valleyfair, Kings Dominion, Carowinds, California's Great America and Gilroy Gardens (which they manage, not own) will not open in 2020.  The parks that will not open will give existing season passholders a Pass Perks Loyalty Reward to be used next year (sounds like more details to come on that one).

Canada's Wonderland is still in talks about possibly opening this year, so no final decision has been made there yet.  Knott's Berry Farm is opening again soon for a special food and retail event, and waiting on guidance for the future.

Each park has also posted an individual update, which has some more details worth sharing:

© Cedar Point

• Cedar Point's new Tricks and Treats Fall Fest will features special food tastings, special merchandise, family friendly activities and more - all based around the park's stringent COVID-19 safety measures.  The park is still planning on having their 150th celebration next year, with all the additions originally planned for 2020.

• Kings Island will also hold Tricks and Treats Fall Fest, and is expecting to bring back special events like Grand Carnivale in 2021.

• Valleyfair's update still lists the changes they prepared for 2020 such as restroom renovations, a new event space and Corn Feast, and also lists the Peanuts Celebration for 2021.  Gone are mentions of Grand Carnivale and Monster Jam Thunder Alley, which were to be new this year.

• Carowinds is listing Grand Carnivale as opening in 2021, along with their new Boogie Board Racer waterslide.  The park did not mention Carolina Summer Nights or Monster Jam Thunder Alley for 2021.

• California's Great America will open their newly renovated water park, South Bay Shores in 2021, but no longer mentions Monster Jam Thunder Alley.

• Worlds of Fun will open Riptide Raceway next year, but no longer makes mention of Grand Carnivale and Summer Nights as special events.

• Dorney Park did not get to open Seaside Splashworks in their water park this year, so it will debut next year.  No mention of the return of Grand Carnival or their Summer Nights promotion.

• Kings Dominon will open their new water park expansion, Coconut Shores, in 2021 and does mention Grand Carnivale returning as well.

• Last but not least, Knott's Berry Farm will not hold their popular Haunt event this year.  Their adjacent hotel will open toward the end of this month as well.

In summary it looks like as with Six Flags and SeaWorld Entertainment, 2020 attractions will become 2021 attractions across the board.  It's probably too early to tell if more special events could take place, as much of that is depending on the progression of the pandemic between now and then.

Sunday, August 2, 2020

Heard On... Six Flags Entertainment's 2nd Quarter 2020 Earnings Call

Six Flags Entertainment has released their 2nd quarter 2020 earnings, and as everyone expected they weren't good.  Here is the full press release detailing their numbers.  But that doesn't mean that all the news that they shared was bad.  As always, the company had their earnings call and here are some notes worth highlighting.

• Revenue in the quarter was $19 million, with attendance of 433,000 - both a decrease of 96% over 2019.  That led to a net loss in the quarter of $137 million, a decrease of $216 million over 2019.  EBITDA was a loss of $96 million, a decrease of $276 million from 2019. Guest spending was also down 15% over 2019 levels - but half of the attendance in this period came from the drive through safari at Great Adventure, which skewed things quite a bit.

© Six Flags
• Part of many companies survival these days depends on how much cash they have to spend each month.  Six Flags is proud to report that they have reduced their monthly cash spend to $25 million, down from the $30 to $35 million they estimated when the pandemic began.  Six Flags feels they have "adequate liquidity" to survive to the end of 2021 even if they have to close all the parks for some reason.

• Six Flags is currently testing a new virtual queue system that will allow visitors to reserve a spot on a ride from their phone, and not have to stand in a line.  This is a plus not only in terms of social distancing, but also to remove something that visitors always hated even during normal operations.  If the test is a success they will roll it out to all parks.

• When parks started to reopen they saw very strong demand for visits, however in recent days/weeks with COVID-19 cases increasing in many States they are starting to see softer demand.  The company expects to see daily attendance at 25-30% of previous levels for the "foreseeable future."  To further adapt, Six Flags has limited operating days and hours at its parks.

• The only international development that Six Flags still has on the books and earns revenue from is the park in Saudi Arabia. 

• Right now Six Flags has 14 of their 26 parks open.  Those 14 parks accounted for more than 50% of overall attendance in 2019.  In July those parks are seeing around 30% of 2019 daily attendance levels.  Parks in areas where COVID0-19 cases are not increasing are doing better than those where cases are high.  There is no way to know if they will be able to open any additional parks this year that are still closed.

• Some more details on attendance, in areas where the virus is not surging like New Jersey, they're seeing some days where they 45%+ of 2019 attendance levels.  They specifically mention Great Adventure and St. Louis.

© Six Flags
• The Active Pass hoder base was down 38% at the end of the quarter to 2.1 million people, they had 2.6 million at the end of calendar 2019.

• They have further reduced capital expenditure amounts for 2020 - they have pushed off or eliminated $50-$60 million of additions for this year so far.  They now expect to have 2020 capital expenditures come in between $80 and $90 million, $10 million lower than they first said.  Going forward they will be conservative with capital expenditures, adding only attractions with a "good return on investment."

• Six Flags has embarked on a mission to make themselves "a more agile, commercially driven and technology-savvy organization."  This will improve guest experience, help is growing the pass base and reduce operating costs.

• Changes include continuing to go after single-day visitors, redesign their websites to make them more user friendly, create better value in food and beverage offerings, restructure the company to make sure there are no duplicated efforts in the corporate office and at the parks but also reduce costs without reducing staffing.  They are also making a diversity and inclusion council within the company to guide things as training, addressing biases, building a diverse team and community outreach.

© Six Flags
• The company's COVID-19 changes are sitting very well with guests in regard to getting in the park quickly and easily.  They plan to keep many changes in the long run, such as advanced ticket sales and paying for parking ahead of time.  The reservation system is being monitored and it is not clear if they would keep it post-pandemic.

• Regarding Fright Fest and Holiday in the Park, both events are being planned but they are questioning best safety practices, how to make sure they are cash flow positive, and how to protect the Fright Fest image if they can't put on a traditional event... not to tarnish its reputation.  While they didn't go into details, social distancing does not work well with haunted houses, so things will have to be very different this Halloween.