Sunday, November 17, 2019

Heard On... Cedar Fair's 3rd Quarter 2019 Earnings Call

© Cedar Fair
Cedar Fair's 3rd Quarter 2019 earnings announcement was filled with good financial news.  Often when chains purchase new parks they do not break out the "legacy" parks, however Cedar Fair has done that for us to make things easier to compare in the growth department.  Here are some highlights from the earnings call, along with some of the most interesting slides from their most recent investor presentation:

• For the 3rd quarter alone net revenues were up $51 million, attendance was up 818k, per capita spending was up $0.47 and out of park revenues were up $6 million.  That is for all parks, including the two Schlitterbahn parks.  Excluding them revenues ere up $43 million, attendance was up 732k, per caps were up less than 1% and out of park revenues were up $6 million.  EBITDA, which the investment community is after, was up $17 million including Schlitterbahn, and up the same with out them. (due to calendar shifts, not their performance)

• Year to date (through November 3rd) including the Schlitterbahn parks, net revenues were $1.37 billion with attendance of 25.8 million visitors.  Excluding the parks revenues were up $71 million with attendance up 1 million guests over 2018.

© Cedar Fair
• Season pass sales are off to their best start ever, causing deferred revenues to be up $40 million over the same time in 2018.  That also translates to an increase of 350,000 units sold (probably most at Cedar Point!).

• Grand Carnivale will come back to all existing parks and debut at two new parks in 2020, and Monster Jam Thunder Alley will switch to three new parks next year.

• Company continues to be committed to a "long range plan" that includes "more immersive entertainment offerings" - this was something mentioned several times.  These offerings led to a second season in a row of growing the number of unique visitors to the parks, which they want to use in their CRM database.

© Cedar Fair
 • When asked more about the shift in capital spending, the chain noted that they are seeing a similar boost to value perception from large events as they've seen from big coasters in the past.

• Knott's Berry Farm is continuing to produce huge numbers.  They had a very slow start to 2019 but have come back and are on the path again to make 2019 the best year ever for the park.  They are kicking off a new "targeted marketing" project at Knott's in the 4th quarter.  Also, this past Halloween Haunt was their best ever.

• The two Schlitterbahn parks contributed $23 million of EBITDA during the 3rd quarter after they were purchased.  Cedar Fair is spending heavily on them in the 4th quarter to make improvements, which will bring their EBITDA contribution down to $12 - $14 million in EBITDA.

© Cedar Fair
• More on Schlitterbahn, they see much room for improvement in the two parks' revenues and attendance.  Most system changes to link the parks to the chain will happen in 2020, meaning 2021 will be the first big season for them as a part of Cedar Fair.

• The 4th quarter events of Halloween and Winterfest and Knott's Merry Farm now account for 15% of the company's annual attendance, and that is growing.

• On the hotel front, Carowinds' new Springhill Suites is opening in a couple weeks.  The company has also started renovations projects at Castaway Bay, the Knott's Hotel and the Sawmill Creek Resort.  The Hyatt hotel by Canada's Wonderland is moving slowly, but they hope to open it in 18 to 24 months.  Over the next three years, including the Canadian hotel, they will spend $70 million on hotel renovations and additions.

© Cedar Fair

• The new indoor section of the Cedar Point Sports Center will open in early 2020 and bookings are running slightly ahead of Cedar Fair's budget.  They expect the facility to create incremental demand for room stays at Cedar Point's hotel properties.

• To better accommodate guests (due to increasing attendance) the chain will also focus on improving parking facilities, ingress/egress to the parks, more food and beverage capacity and expanded restrooms.

• The company declined to comment on the Six Flags purchase rumors, noting that they plan for the future of the company's success on its own.

© Cedar Fair
• Cedar Point's new Gold Pass has gone bonkers in sales, and is drawing a ton of new guests - at a ration of 7 new for each 1 renewal.

• Pass Perks will roll out chain-wide in 2020.  They tested at 4 parks this year and were working to see what offers would get guests to show up for an additional visit.  They found that the most motivating offer was anything food and beverage related.