Sunday, November 11, 2018

Heard On... Cedar Fair's 3rd Quarter 2018 Conference Call

Better late than never, let's take a look at Cedar Fair's 3rd Quarter 2018 earnings details and conference call.  Under the headline of posting record 3rd quarter revenues, the company released earnings that showed improvements from where they stood at the end of the 2nd quarter.  The market didn't necessarily love the results, however, so let's dig in and see what was noteworthy.

• For the 3rd quarter revenues were up to $664 million, up 2% over the prior year.  Out of park revenues increased $5 million or 8% and in park spending was up 2% to $49.47.  Attendance was down less than 1%, or 57,000 visits to 12.4 million.  In the end, EBITDA was up 1% or $4 million, to $338 million.  The company has also increased the annual dividend by 4%.

•  Looking at year-to-date results through the end of October, when most of the chain's parks are closed for the season, revenues were up $9 million or 1%.  The in-park per capita spending stayed up 1%, out of park revenues were up 5% or $6 million and attendance was down 1%, or 185,000 visits.

© Cedar Fair
•  With continued success from Winterfest, the company hopes to post record attendance, making up the 1% they were down at the end of October.  This year will be the first season for Kings Dominion's event, joining four existing parks.  The company has already seen their test park, California's Great America, grow each year since the event started.

•  Cedar Fair has been trying to mitigate bad weather (they noted this year has had plenty of it) by working with groups to reschedule events.  Kings Dominion, for instance, rescheduled two park buy outs when Hurricane Florence closed the park for an entire weekend.  They also saw pent up demand from especially bad weather in July which led to some increases in August and September.

•  Focusing on costs has helped lead to the quarter's results.  The parks have hit higher "net promoter score" ratings while keeping costs below budget during the bad weather periods.  Cedar Fair is currently working on a new workforce management system to more efficiently utilize labor during the year.  That will first roll out at Knott's Berry Farm and California's Great America.

•  Season pass sales continue to be up for Cedar Fair.  At the end of the 3r quarter deferred revenue was up 20% from last year, to $102 million - every park is ahead in season pass sales versus last year.  In the past 5 years the percentage of overall company visits by pass holders has gone up from one third to over one half currently.

© Cedar Fair
•  The 2019 capital plan seems nearly fully announced at this point, with the star attractions being roller coasters at Carowinds and Canada's Wonderland.  Other additions include "more immersive, multi-week special events, including nighttime spectacular celebrations in the first-half of the year."  I have not seen details of that type of event released yet for any park, should be interesting to hear more.  Winterfest will also open in 2019 at Canada's Wonderland.

•  Cedar Fair still has 1,400 developable acres of land adjacent to its parks.  It is still working to develop more of that, with three projects opening in 2019/2020: the indoor sports center near Cedar Point, and hotels adjacent to Carowinds and Canada's Wonderland.

•  This is the first year some parks (only a handful) are offering a 12 months payment period for season passes.  The response is significant, and they're looking at it closely as the passes potentially move to a membership plan like Six Flags does.