Tuesday, February 20, 2018

Heard On... Cedar Fair's 4th Quarter and 2017 Year End Conference Call



Last week Cedar Fair announced their 2017 full year and 4th Quarter earnings, showing another positive year of results.  For the year revenues were up 3% to $1.32 billion, with attendance of 25.7 million, up 2%.  Full year EBITDA was down less than 1% to $479 million and overall in park spending hit a record $47.30, up 1%.  The company had a conference call to discuss the details, and here are some notes from that:

•  Through the end of 2017, advance purchase revenues are up 10% from the sales of season passes and other season long benefits, like dining programs.  Advance reservations at the company's various hotels and resorts are currently up 15% from prior year levels.

•  The 4th quarter saw total attendance of 4.4 million guests, and was the first one with a handful of new WinterFest events running.  The quarter's revenues were $228 million, up $36 million from the prior year, and 4th quarter EBITDA was $61 million, up $8 million.

© Cedar Fair
•  Early signs of success of Knott's Peanuts Celebration festival already has the operator looking at ways to bring the event to other parks to possibly extend their season on the front end, and draw visitors during a traditionally slow time of the year.

•  The company is continuing to push multi-week special events at the parks to give a reason for season pass holders, and other guests, to return throughout the year.  They aim to have three to four of these events at each park each season.

•  Recent tax reform laws will benefit the company, they estimate that they will pay between $10 and $15 million less per year in taxes as a result.  Cedar Fair plans to reinvest that savings into the business to address "seasonal labor pressures" they felt in 2017.  They are looking at adding dormitories at additional parks to have more international workers during the season.

© Cedar Fair
•  Carowinds' newly announced hotel, along with more fancy RV sites at Cedar Point show they want to keep expanding resorts at the parks.  They see the opportunity for more resort growth at Cedar Point and are entering the final stages of a hotel plan for Canada's Wonderland, hopefully announcing that by next quarter's call.

•  A total of five parks will see upgraded restaurant or catering operations for 2018.  This continues a trend the company has had for several years, and helps to support group sales along with the all-season dining passes.

• Cedar Point began a new marketing program in 2017 to help position the park as a regional resort destination.  Cedar Fair wants to appeal to more guests who are looking for a true vacation, focusing on the park, beach, entertainment and food as well as the renovated Hotel Breakers.  This push will continue in 2018 as they move into new markets.

© Cedar Fair
•  WinterFest opening at three more parks in 2017 weighed heavily on the cost side of operations, which didn't help the bottom line.  However, they point out that at California's Great America the event had its second year, which saw larger crowds and revenues, and a bottom line that is more in line with expectations.  So it sounds like the start up costs of these events are big, but even out over future years.  The event at all parks had very high satisfaction and intent to return scores.

•  Roughly 10% of revenues are still being spent in marketable capital expenditures per year, so around $130 to $140 million per year.  They will spend another $20 to $30 million this year on business developments, like Carowinds' new hotel, above and beyond that.

•  Future capital most likely won't include a year with four new roller coasters for some times as the parks focus on being not just a place for thrills but a place to have fun.  This means expect capital to be used more broadly, not only on rides but also on special events, dining improvements and the like.  Especially with a new CEO now on board, it will be interesting to see what new attractions opens in 2019 and 2020.


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