Wednesday, November 11, 2020

Heard On... Cedar Fair's 3rd Quarter 2020 Earnings Call

© Cedar Fair
Cedar Fair recently announced their earnings results for the 3rd quarter of 2020.  The results were somewhat in line with what was expected, given the pandemic that continues.  The operator released the full earnings on their website and also had their usual conference call.  Here are some notes from both.

• They had 7 parks open during the quarter, bringing in a total of $87 million in revenues, down from $715 last year.  Attendance was 1.3 million, which is down 11.7 million.  Out of park revenues were down $47 million.

• Operating costs declined during the quarter to match decreased attendance levels.  There were also $16 million in goodwill impairment charges for the Schlitterbahn parks and Dorney Park, plus on the Schlitterbahn brand name.  Operating loss for the quarter was $137 million, down from a positive $275 million last year.  There was an EBITDA loss of $51 million compared to a positive $355 million last year.  While a loss is not good, Cedar Fair estimates that the loss would have been $30 million worse if they hadn't opened the parks.


• Similar to Six Flags, Cedar Fair saw initial attendance levels at 20-25% of previous levels when the parks reopened, increasing to 35-40% in the past three months.  As the season ended some parks even hit 50%, and in the fall both Cedar Point and Kings Island had instances of hitting their maximum capacities.

© Cedar Fair
• During the 3rd quarter the attendance was made up of 55% season pass holders, up from 46% last year.  Per capital revenue was down 5%, largely on decreased admissions and the lack of in park spending on premium offerings like fast lane.

• Cedar Fair saw an increase of 90,000 season passes during the quarter, creating $10 million in sales.  They have 1.8 million season passes outstanding that are valid for the rest of 2020 and in 2021.

• They had $225 million in the bank at the end of the quarter, and total liquidity is $877 million.  They estimate they can stay satisfy obligations and stay within loan covenants until the end of 2021.  The quarter's cash burn was about $25 million a month.  As for breaking event, to have zero EBITDA they need 45-55% of 2019 attendance in 2021, and for cash flow break even they need 70-75% of 2019 attendance.

• They suspended their largest capital projects in March and year to date have spent $120 million on capital.  They estimate spending at most $5 million in the 4th quarter.  In total that will have cut $60 - $65 million from planned capital in 2020.

© Cedar Fair
• For 2021 they acknowledge there is not much visibility around the pandemic, so they are allowing parks to be flexible in their offerings to bring back guests.  They are adding back many immersive attractions along with Knott's and Cedar Point's large anniversary celebrations.

• The company is current on payables for capital project and have "no material long term commitments for new attractions" which gives them flexibility for what they will add in 2021 and 2022.  Those years will depend on the speed of the recovery from the pandemic.  Many 2020 capital projects did not even get to be used by guests.  So for 2021 capital will focus on finishing those projects, and doing necessary compliant and infrastructure work.  Still, they will not estimate capital spend for 2021 yet due to lack of clarity on the pandemic.

• To date the company has restricted back filling jobs that are open due to people leaving for other work.  That along with removing some positions through streamlining has reduced 10% of the full time work force.  However, they are still reviewing other options for the future.

• They also utilized cheaper social media marketing this year to spread the word that parks were reopening, which they found to be a success.  They plan to rely on this more in the future to save money on more traditional avenues of advertising.

• Looking at 2021, they are preparing to operating based off of lessons learned in 2020.  This could include delaying park openings or adjusting park hours if they feel the market demand won't make it profitable.  It also sounds like if California continues to not allow parks to open into next year they will look at holding food festivals at California's Great America, similar to what Knott's has done.