Cedar Fair Corporate Development Discussion Thread (FUN)

[BuddyChrist]

"We've always got to be known for great thrills," Ouimet said in a recent interview. "It has served us well. But I also want to be known for great connections, and that this is where families come together."

This worked soooooo well for Mark Shapiro and Six Flags too...

 

THIS.

 

SIX FLAGS THE MATTRESS, AND SIX FLAGS THE FLAMETHROWER!!

 

Kids love this one. But in all seriousness, I'm a bit optimistic that he actually has a background in the industry unlike Shapiro who was straight business. Then again, there are limits to what you can do when you don't have those nice big Disney budgets to work with so I'm gonna just sit back and watch this unfold.

 

Maybe Dorney will finally get something that isn't recycled for once, though their Halloween Haunt this year was still miles ahead of Fright Fest at GAdv. Let's hope a play for more families doesn't mean cutting back on the scariness of those events.

[OISU8P]

Does anyone know if Kinzel owns the house and property next to Cedar Point or if that is owned by Cedar Fair? I am curious if he will still reside there or if it becomes Matt's as a company perk. I think it would be tough for him to be retired and have to look at his old stomping ground all the time at his main residence.

[Skycoastin Steve]

While I'm not of the thought that CP has to build a new coaster every other year, they definitely need to keep going back to their bread and butter that made them famous. I'm all for creating an all-around experience for guests, but CP is still a coaster park, so I hope Ouimet keeps that in mind.

[ginzo]

I'd like to see things that would make me want to hang around Cedar Point for 2-3 days as a resort. Like a decent table service restaurant. Sorry, but TGI McFunsters does not cut it.

[Thom25]

OH - I couldn't agree more given the price the onsite resorts charge a decent table serviced restaurant would rock, as well as free WI-fi.

[cal1br3tto]

^^I could hardly stay away from their Friday's last year. Then again, I'm partial to American food. But I do get the impression the chain is not highly regarded.

 

Tomo Hibachi was where the really great food was at, though...I daydream about hibachi sauce all the damn time now.

 

What I really can't stand are the in-park meals. I stopped eating there after my first nearly tasteless burger-in-a-bag.

[ginzo]

OH - I couldn't agree more given the price the onsite resorts charge a decent table serviced restaurant would rock, as well as free WI-fi.

 

This is my exact reasoning: They're charging resort room prices at Breakers, but you can't even get a good meal there. The breakfast option in the hotel was particularly disgusting. I don't care what kind of restaurant they install: Spanish, French, Italian, American, etc. It doesn't matter so long as it's good. I'm thinking something along the lines of a Michelin Bib Gourmand (the rating below Michelin 1-Star) level of food, but even something below that would be a huge improvement.

 

It's clear that CP is completely and utterly clueless about what constitutes decent food. They'd need to hire outside help. Maybe Michael Symon in Cleveland would be available to consult for them. Heck, if he could open one of his "B-Spot" hamburger restaurants, it would blow anything else at CP away.

[Thom25]

Couldn't agree more ginzo, but wouldn't go as far as a white table cloth restaurant, but a quality steak house for example would be a home run in my book. I used to stay at Breakers, but given the cost and total lack of expected "standard" amenities like free in-room coffee, I stay at Lighthouse Point. My last Breakers experience was finding out I had to go to the lobby for a free cup of coffee and then find out they provide the liquid extract Dowe Egbert - WTF.

 

I certainly would patronize a quality restaurant within the park if one exists.

[ginzo]

^Oh, I think a "fine" dining concept would be a horrible idea at Cedar Point. But there are plenty of unstuffy places serving higher end food now. That's a general trend since most people aren't comfortable in jackets-required type places.

[Meteornotes]

It's clear that CP is completely and utterly clueless about what constitutes decent food.

 

The same could be said about most theme park companies, outside of Disney. And of most Americans in general, sadly.

 

Parks should hire me as a food consultant. I know I could improve their offerings so much. Most park food in the US isn't fit to serve to prisoners.

 

dt

[cfc]

^At least prisoners don't have to pay ridiculous prices for their food. It says a lot about the quality of the food when the best place to dine at a park is Panda Express (which is OK for what it is).

[ginzo]

The same could be said about most theme park companies, outside of Disney.

 

Yes, but Cedar Point claims to be a resort with hotel prices to match. When you're charging $300-$400/night for many rooms, you should feature a better restaurant than TGI McFunsters. When you're hanging around for 3-4 days, you want something better than strip mall chain restaurant fare.

 

Stuff like this is why I just chuckle every year when Cedar Point wins the best park award yet again. Compared to some place like Europa where there is good food basically everywhere, it's a real joke.

 

But, back to the actual topic: Things like better food is just one example of how Ouimet could improve the parks/make them more family friend/whatever without having to spend millions of capital or pulling a Shapiro and installing a bunch of crappy wild mouse coasters and Stride Gum train wraps everywhere.

[kidcoaster 2]

^Oh, I think a "fine" dining concept would be a horrible idea at Cedar Point. But there are plenty of unstuffy places serving higher end food now. That's a general trend since most people aren't comfortable in jackets-required type places.

 

They do have fine dining, Bay Harbor by the marina.

[Geauga Dog]

Bay Harbor is not exactly convenient in relation to the park and most guests aren't going to go out of their way to get there for a meal.

[ginzo]

^^That does look like a big improvement over McFunsters. I'll check it out next time I'm up there. But that's not a "fine" dining joint, which would make little sense at Cedar Point.

 

Fine dining is something like this:

 

http://www.alain-ducasse.com/en/restaurant/le-louis-xv-%E2%80%93-alain-ducasse

[kidcoaster 2]

^ Cedar Fair will never reach that standard. But I have never stepped foot in the place I was just going by how the website describes it.

 

Enjoy casual fine dining on the shore of Sandusky Bay with breathtaking views of the waterfront. Enjoy cocktails and conversation in the lounge. Operating hours vary during the season. Visit Bay Harbor's website for full menu and hours. Located in the Cedar Point Marina. Hand-stamp required for re-entry into the park.

 

Serving fresh seafood, steaks, prime rib, salads, soups, alcoholic beverages, Pepsi beverages.

 

Edited January 19, 2012 by kidcoaster 2

[Thom25]

I appreciate the marina suggestion and will certainly check it out my next visit. Having been to CP more than 20+ times, I've never even considered going to the marina, but will for sure now.

[coasternut]

While I'm not of the thought that CP has to build a new coaster every other year, they definitely need to keep going back to their bread and butter that made them famous. I'm all for creating an all-around experience for guests, but CP is still a coaster park, so I hope Ouimet keeps that in mind.

 

Amen brother!! They are long overdue for a great coaster...

[jedimaster1227]

http://www.cedarfair.com/ir/press_releases/index.cfm?current_root=15&mode=story&story_id=334

 

Cedar Fair (NYSE: FUN), a leader in regional amusement parks, water parks and active entertainment, announced today that attendance at its 17 locations totaled 23.4 million guests in 2011, up 2.6%, or approximately 590,000 visits, from the Company's record attendance of 22.8 million in 2010.

 

"2011 was another strong year for Cedar Fair," said Matt Ouimet, president and chief executive officer. "Our employees did an excellent job providing our guests with the quality experience that they have come to expect from Cedar Fair. The strength of our season pass programs and commitment to premier new rides, attractions and special events also supported the record attendance we experienced this year."

 

Ouimet added, "Our guests clearly recognize the great entertainment value that is provided by Cedar Fair's parks and resorts. In this difficult economic environment, it is particularly satisfying to see people make Cedar Fair parks their entertainment of choice.

 

"As we look ahead to 2012, we remain committed to providing a 'best-day-of-the-year experience' for families and friends at all of our parks. In the coming year we will introduce even more exciting rides, expand our night time entertainment offerings and continue to add to our successful Halloween programs."

 

The Company will be hosting an investor meeting in New York, NY on Thursday, January 19, 2012 from 9:00 to 11:00 a.m. ET. The two hour session will be hosted by the Company's president and chief executive officer, Matt Ouimet, and other senior executives of the Company, and will include a business overview and question and answer session. The session will be webcast live from the Company's web site at http://www.cedarfair.com.

[154bmag]

While I'm not of the thought that CP has to build a new coaster every other year, they definitely need to keep going back to their bread and butter that made them famous. I'm all for creating an all-around experience for guests, but CP is still a coaster park, so I hope Ouimet keeps that in mind.

 

Amen brother!! They are long overdue for a great coaster...

I think CGA needs a coaster a bit more CP

[larrygator]

25 months ago this thread was started when Dick Kinzel and the board said that selling out to Apollo Group at $11.50 a share was in the best interest of shareholders.

 

As the share price is now $24 I would have to say they were wrong.

[jedimaster1227]

http://www.marketwatch.com/story/new-ceo-outlines-cedar-fairs-long-term-growth-strategy-and-financial-goals-at-company-sponsored-investor-meeting-2012-01-19

 

Cedar Fair Entertainment Company /quotes/zigman/1472828/quotes/nls/fun FUN +2.59% , a leader in regional amusement parks, water parks and active entertainment, hosted an investor meeting in New York City today at which its president and newly named chief executive officer, Matt Ouimet, outlined his long-term growth strategy - known as "FUNforward" - and the corresponding financial goals for the Company.

 

"This is truly an exciting time for Cedar Fair," said Ouimet. "Given our favorable industry dynamics - including significant barriers to entry and a loyal, high-repeat customer base - as well as the significant momentum we have created for the Company over the past two record-setting years, we see several attractive strategic growth opportunities in both the near and long term. We believe there are many compelling reasons for investors to choose Cedar Fair, and we are committed to rewarding them for their confidence in us with meaningful and sustainable value creation through a balanced approach of distributions, growth investments, debt reduction and unit repurchases."

 

Ouimet cited Cedar Fair's high-quality, well-maintained parks, its recognized stature within the industry as an innovation leader and its strong brand positioning as the core drivers of the Company's financial and operational momentum.

 

"We are very proud of our properties and the men and women who ensure families and thrill-seekers alike have the 'best-day-of-the-year' experience they expect when they visit one of our parks," Ouimet said. "It's not an accident that we enjoyed our second straight year of record attendance - 23.4 million guests - at our 17 locations across North America in 2011."

 

Cedar Fair's award-winning parks - including Cedar Point, which was named the number-one amusement park in the world for the 14th consecutive year, and Kings Island, which was voted "Best Kids' Area in the World" for the 11th straight year - are home to four of the top 11 steel coasters in the world and top-rated Halloween events.

 

"We believe we offer our guests compelling value by providing wholesome, exciting, quality experiences with the greatest thrill rides and family attractions, which is an especially strong entertainment proposition in today's discerning consumer market," Ouimet added. "Likewise, our goal is to continue to be a total return investment for our unitholders. Our recession-resistant business continues to generate strong free cash flow, which has allowed us to further strengthen our financial flexibility and make meaningful distributions to our unitholders while at the same time experiencing appreciation in our unit price."

 

Components of the FUNforward strategy include:

 

Enhanced guest experience - Maintaining an unwavering focus on delivering compelling value for the price paid, at every park on every day. In the near term, the Company will continue to add new rides and attractions while at the same time expanding evening event activities to provide enhanced value and extend the length of each visit.

 

Improved consumer messaging and relationship management - Modernizing the marketing and sales strategy and execution to ensure the Company is most effectively segmenting its customer base and speaking to each audience with messages that "break through the noise" and create the proper emotional connection that drives action within the operating season.

 

Dynamic pricing and advance purchase commitments - Incorporating a new e-commerce platform common to other industry players. The new platform will provide real-time data and dynamic pricing modification, while supporting incremental programs such as season pass installment sales and up-sell of benefits and value.

 

Premium product offerings - Expansion of premium experience offerings for benefit-oriented guests. Examples of this will include premium parking and dining experiences, "fast lanes" at various high-demand attractions and "Fright Lanes" during Halloween events, among other things.

 

Strategic alliance fees and promotional leverage - Industry benchmarking indicates an opportunity for the Company to expand its strategic alliances while still protecting the integrity of the guest experience.

 

Capital and expense productivity - Prioritizing capital to the highest return-on-invested-capital opportunities across the Company's portfolio, encouraging manufacturers to innovate at lower costs and remaining disciplined in the management of costs. The Company will also look to utilize its undeveloped land to drive additional park admissions through activities and investments that leverage its installed asset base.

 

"It's important to have a balanced mix between thrill rides and family attractions," said Ouimet. "We are investing approximately $90 million across all of our properties and have a very strong rides and attractions menu for the 2012 operating season."

 

OUTLOOK

 

According to Ouimet, the Company's preliminary results project 2011 net revenues to be approximately $1.028 billion, and project Adjusted EBITDA of approximately $375 million. Both projected net revenues and Adjusted EBITDA are at the high-end of the Company's most recent guidance of net revenues between $1.015 billion and $1.025 billion and Adjusted EBITDA between $365 million and $375 million.

 

"By 2016, we believe Adjusted EBITDA will be in excess of $450 million," he said.

 

The Company anticipates a 2012 annual distribution rate of $1.60 per unit, to be paid in $0.40 per unit cash installments, and a record 2013 annual distribution rate of more than $2.00 per unit. "As this record-setting 2013 target distribution would suggest, we are very excited about the future of Cedar Fair," said Ouimet.

 

REPLAY INFORMATION

To listen to a replay of the Company's investor day presentations, as well as download the materials from the Company-sponsored event, please visit http://www.cedarfair.com.

[bgroodog]

Cedar Fair's CEO Hosts Investor Presentation (Transcript)

http://seekingalpha.com/article/320634-cedar-fair-s-ceo-hosts-investor-presentation-transcript

 

Operator

 

Good morning and thank you for joining us today. Before we get started, I just want to speak to you real quick. I am Stacy Frole, the Director of Investor Relations and before we begin I need to caution you that comments made during the meeting today will include forward-looking statements within the meaning of the Federal Securities laws. These statements may involve risks and uncertainties that could cause actual results to differ materially from those described in such statements. While we believe that the expectation reflected in such forward-looking statements are reasonable, we caution that it is very difficult to predict the impact of unknown factors. And it is important for us to anticipate all in factors that could affect our actual results. Important factors including those listed under Item 1A in the company’s Form 10-K could adversely affect our future financial performance and cause actual results to differ materially from our expectations.

 

You may refer to our SEC filings for a more detailed discussion of these risks. Also in compliance with SEC Regulation FD this meeting is being webcast and made available to the media and the general public as well as analysts and investors. Because the webcast is open to all constituents and prior notification has been widely and unselectively disseminated, all content of this meeting will be considered fully disclosed.

 

Now, I’d like to introduce you to our New President and CEO Matt Ouimet.

 

Matt Ouimet

 

Thanks, Stacy. I’ll give you time to get your clicker. So first of all, good morning and welcome. Over the next 60 minutes or so, I would like to take you through what I consider a combination of basic understanding of Cedar Fair and the Cedar Fair business model as well as what we call FUNforward, which is how we think about this company over the next several years. But before I do that, I would like to introduce the management team I have with me today. And so a couple of them, you’ll hear from very directly. To my right here Richard Zimmerman, our Chief Operating Officer and Brain Witherow, our Chief Financial Officer.

 

Also here today if you will just raise your hands, are Philip Bender, our EVP of Operations; David Hoffman, our Chief Accounting Officer. In the back there, Roger Allen, our Corporate Treasurer; Duff Milkie our General Counsel and Bob Wagner, our Corporate VP of Strategic Alliances.

 

So starting first with the company overview. We are one of the largest amusement park companies in the world entertaining more than 23 million guests annually and generating roughly a billion dollars in revenue. Our key assets are as you saw in the video, 11 best-in-class amusement parks and six separately gated water parks, five hotels, marinas and 120 roller coasters along with countless shows and attractions.

 

And I hope the introductory video gave you some sense for the high quality and large scale of these parks. I have been familiar with Cedar Fair for more than two decades as I worked for the Walt Disney company for most of the time and continuously studied, as long ago as two decades I studied two things about Cedar Fair. The quality of their parks, how they were able to do it and then importantly you will see later and I never cracked this code for Disney, how they could generate the high operating margin on a consistent basis.

 

And for those of you who track us particularly closely, you will note some updated guidance in revenue and EBITDA numbers, favorable updated guidance and Brian is going to address these more in a little depth.

 

So our approach to running the company is centered on the fact that people have choices. And we believe this perspective provides greater discipline in our decision-making process and generates an appropriate restlessness. The consumer makes choices on a daily basis as to where to spend their entertainment dollars. Keeping our cash motivated translates directly into how well they treat our guests. And although we run our parks for our guests, we manage the company for our unit holders. The last two years have been particularly good to us and the changes that have occurred over the time have created a solid platform for future performance. I have been personally extremely pleased with the seamless leadership transition and take particularly pride in seeing a second year of records accomplished during this transition.

 

As Brian will discuss later, the refinancing has given us the financial flexibility we need to drive value to our unit holders and we’re back on track for what investors expect from Cedar Fair, meaningful unit distributions.

 

So as backdrop, there are really four key investing considerations when you look at FUN. First, we operate in an industry with favorable dynamics that apply not only to us, but to the industry as a whole. There are real and structural barriers to entry and I’ll go through some details in a moment. We provide a compelling value compared to any other form of entertainment. The industry has proven to be particularly recession-resilient as tested over the last few years. There is a great base of repeat attendees that we can talk to very directly. Not easy to replicate this experience and hasn’t proven possible to replicate, a 420-foot roller coaster yet digitally. And we’re substantially insulated from global economic changes.

 

You know, as a side note here, one of the things I believe is that since we have very little market overlap, the successful performance of other companies in the space support a positive brand reputation of the industry and we all benefit from discipline decision-making that ensure that we deliver a strong bright value to our consumers, but also ensures that we deliver strong returns to our investors.

 

The second investment consideration is our proven ability to deliver results. As the new CEO, I am particularly proud to stand here to say that we have back-to-back record years. We have a strong record of delivering industry-leading margins as I touched on briefly earlier and stable cash flows and all this is made possible by our deeply experienced management team.

 

We believe there are a number of attractive strategic growth opportunities and we are focused on building of a significant momentum that we have at this time. At the very highest level, they can be categorized as outlined on this slide. And I am going to touch on them just briefly here and then in more detail later in the presentation.

 

So certainly enhancing the guest experience helps us drive new and repeat visitation as well as extend both the length and time people spend in our parks and the number of days they visit. Improved consumer messaging, changing the message as well as delivering through mediums that are more contemporary is clearly part of our plan. One of the things that I feel particularly strong about is the dynamic pricing and advanced purchase commitment initiatives I will take you through later.

 

We are stepping up our game with a new e-commerce platform and more focused revenue management practices. Strategic alliances from a fee basis and promotional leverage, we are extracting value from that out-of-home marketing impression that our large audience represents and we are going to remain very disciplined about how we spend our capital and how we manage our expenses. We are a total return investment and you will hear that phrase repeated throughout the presentation.

 

So this key consideration I would like to highlight is that this is anchored. The return is anchored if you will by a strong distribution yield and the other important component of our total return is the significant potential for unit price appreciation driven by earnings growth. And finally as you would expect, we will continue to have a balanced approach to allocation our excess capital.

 

I mentioned barriers to entry earlier. They are real and evidenced by decades in this case. There hasn't been a successful new theme park, regional theme park built in this country in the last three decades. The one attempt in Myrtle Beach, I believe its Hard Rock Park that closed before the first season ended. Its simply too costly, it takes too much land, hard to get it entitled, too long and the markets that are available are just a peripheral markets at best.

 

Industry leading margins; that’s my predecessor Dick Kinzel who is standing here, he particularly smiled at this board. He was particularly good at this. This chart shows you that we delivered industry leading margins for the prior five years and when we get to the next five, you will see its been true for decades.

 

On the cost side we've been able to maintain strict cost controls, particularly to discipline management of labor and G&A cost and on the pricing front we worked hard to protect the integrity of our pricing. As you can see here, our EBITDA margin has been consistent for a very long time, which steeps to the strength of our business model and the disciplined execution against our business plan.

 

Another point to note is that our margins were slightly higher before the first dotted line here. This was before the acquisition of Knotts, which is our only year-around park, which has a higher fixed cost base. Now I know this chart maybe difficult to read from your seats but the point I would like to make is how stable our cash flows have been historically and we've broken the chart into three colors to distinguish three time periods in the company's history.

 

In yellow you see the period before the acquisition, that's in 1997. In green you see 1998 through 2005 before the Paramount Parks acquisition and in blue you see the period from 2006 to today, which reflects the company's performance with the existing asset base. Whichever you look at, the key takeaway is that FUN has delivered consistent revenue and cash flow over long periods of time.

 

This is another chart that shows the stability of our cash flow for the last 25 years. The key point here is the resilience of our performance during the three recessions in that timeframe. If you look at the shaded area in the far right, it depicts the severed recession during the 2008, 2009 financial crisis. As you can see in fact our EBITDA did drop in 2009 by 11% but rebounded by more than 13% in 2010.

 

Looking at this map you’ll see that we have a meaningful presence on the East Coast, in the mid-west and on the West Coast, and this national footprint mitigates regional economic and weather risk and serves to further diversify our cash flow.

 

Another way to look at it, this pie chart here shows revenue and EBITDA contributions by Park and again demonstrates that we have a well diversified asset portfolio and they are not dependent upon any one Park or a region.

 

Before I turn it over to Richard for a review of our Park’s I would like to spend just a minute talking about the deeply experience management team we have. It’s because this management team we are able to deliver the consistent financial results I’ve mentioned earlier. The senior management team has on average 22 years in the industry and 18 years with Cedar Fair. And I believe this is one characteristic that sets us apart in the industry. Richard?

 

Richard Zimmerman

 

 

Thanks, Matt. Good morning everybody. While I go through a review of our Park portfolio, I would like to take a couple of minutes and talk about some of the unique attributes of our operations.

 

We as management think about Cedar Fair, what we do, everything starts with our guest. We want our guests to have fun or fun intent. Our management is committed to providing our guest with a visit of unquestioned value. We strive to make their visit with us the very best day of the year. As I said where it all starts for us is with the guest.

 

Now, let me only touch on core strengths. First and foremost, we are the leading operator of high quality, well maintained parks. Our operating strength has been the foundation of our success literally for decades. Another one of our core strengths is we provide a balanced mix of entertainment that appeals to both families and to visitors. When someone visits our park there is literally something for every member of the family to do when they visit each one of our parks.

 

Though we have been innovational leader throughout a long history, Cedar Fair has always been known for its signature ride. As we often say our rides are our stars and they are one of the primary reason our guest comeback year after year. And finally we have a seasoned management team running our park operations. As Matt emphasized our experienced team is the reason we can deliver for our guest and for our investors.

 

On a tie approach starts with what we call our cornerstones; safety, service, courtesy, cleanliness all held together by integrity. We emphasize it during all of our training and we use them to guide our decision making. It may sound simple but when you hire over 35,000 seasoned employees every year, I can assure it’s also very effective.

 

As Matt mentioned earlier, delivering a superior guest experience is critical to our success. We are able to deliver this experience because we maintain a high quality environment for our guest and our associates. An environment filled with industry leading rides and attractions.

 

Our signature thrill rides drive attendance for years because we create them internally, there are minimal ongoing IP payments. We spend approximately 9% of our net revenues on growth capital to add unique new rides and attractions to drive attendance every year. In addition, annual maintenance expenses also average about 9% of the net revenue. So in total we spent approximately 18% of our net revenues to maintain and enhance the quality of our facilities.

 

Cedar Fair has over 25 years of history as an innovation leader, and we have successfully created and dominated entire categories of new rides and attractions. We introduced the world’s first 200-foot, the world’s first 300-foot and world’s first 400-foot coaster. They are all in this picture and it is good as that picture looks. I have to tell you it’s impressive on the picture. It’s stunning in person when you see Magnum, Millennium Force in top throughout all seating in the beautiful setting that look at the shores of Lake Erie, next to the beach in our resorts.

 

We also introduced in our history the world’s first corkscrew element in a coaster and debut the world’s first magnetic launched coasters. So we have always been an innovative leader. Our innovation has extended well beyond thrill rides. We were the first to create a Halloween Haunt event, an event that has been tremendously successful across our portfolio and extended our season.

 

This is a category that we dominate today. Given our collection of regional parks, we can use a single park as a low-cost laboratory to test new rides and concepts and then tweak them and then roll them out across our entire portfolio. This is a great risk management tool for us. Recent examples of successful new attractions concepts we’ve developed include Dinosaurs Alive, which debut at King’s Island in 2011 as the world’s largest animatronics, dinosaur exhibit and well received.

 

The 300 foot tall swing-drive which debut in our four largest parks. Each of our parks has a strong regional identity and we use this identity to provide the best family value entertainment in each park we operate in, we are known it. Our parks are well known, respected and we are great leaders in our community who give back to communities.

 

Our parks have multi generation appeal. You walk our midways you’ll see grandparents, parents and children all walking in together. We cultivate customers who spend time with us throughout all phases of their lives. Guest come with their parents as children, they come back with their friends as teens and young adults and then they bring their own children back to our parks and the cycle starts all over again.

 

As you probably know you can see from the picture here our brand is synonymous with the classic and timeless PEANUTS characters. SNOOPY, Charlie Brown and friends walk the midways and greet our guests everyday we are open. In 2012 we will add [Franklin and Wood-saw] to our cast of characters.

 

Our high guest satisfaction repeat visitation is proof of FUNS favorable brand perception across all customer demographics. Our customers know us and they love us and come back often. Matt touched earlier on how our experienced corporate management team sets us apart within the industry. Similarly from an operations standpoint Phil Bender and I have been fortunate to work with the most talented group of general managers in the industry. With an average of 25 years of experience within Cedar Fair and over 27 years of experience within the industry. They are passionate about the business and are committed to delivering a high quality guest experience on every operating day. They are also critical in maintaining or understanding of the knowledge of the markets we operate in.

 

When we think about our parks, we really break them into three groups. First, Cedar Point, Knott’s Berry Farm, Canada’s Wonderland and Kings Island are the largest parks which each entertain over 3 million guests annually.

 

Next, Carowinds, Kings Dominion, Dorney Park and California’s Great America each annually entertain over 1.5 million guests.

 

The third group includes Valleyfair and Worlds of Fun which entertain approximately 1 million guests annually. Michigan’s Adventure does somewhat less than that, but it’s highly profitable and has a high profit margin comparable to our larger parks.

 

We maintain our quality standards at all of our parks, but let me touch on the four biggest parks. First; Cedar Point our flagship park located in Sandusky, Ohio. It’s always been a super regional draw. It serves six Mid-Western states that are home to approximately 26 million people and is the largest seasonal amusement park in United States.

 

The quality and broad appeal of this park is probably best captured by the fact that it has been named Best Amusement Park in the World for 14 consecutive years by Amusement Today. And it has won the award every year it’s been given. Cedar Point features five of the top 25 steel roller coasters in the world, plus four hotels, two marinas and an upscale campsite.

 

Knott’s Berry Farm in Southern California is our only year-round park and so is the market of approximately 20 million people. Knott’s is well known for its seasonal event including its Halloween Haunt event. In 2012, Knott’s Halloween Haunt will celebrate its 40th anniversary. We also have three separately gated water parks and an adjacent 320 room full service hotel.

 

Kings Island located in Cincinnati, Ohio serves the Mid-Western market of approximately 15 million people. Kings Island is one of the largest seasonal amusement parks in the U.S. and has been named -- features a particular area and has been named the Best Kids Area in the World by Amusement Today for 11 straight years.

 

Canada’s Wonderland serves the rapidly growing Toronto metropolitan area that’s home to approximately 9 million people and is the largest amusement park in Canada. As an example of how we customize our guest experience to the markets we operate in, we host more than 20 cultural festivals per year in Canada’s Wonderland to target the diverse ethnic population there. It is one of the most attended regional amusement parks in North America and we anticipate it will beat out once again in 2012.

 

And speaking of 2012, let’s talk about the New Fun in 2012. We had a great year in 2011 as Matt has referenced and Brain will tell you more about, we’re even more excited about 2012; we’ve got a great line up coming 2012. We’re planning to invest approximately $90 million across all our properties to maintain our industry leading reputation for new rides and attractions.

 

Let me take a moment and talk about how we think about capital. When we think about it, capital investing in our parks, we always start with a comprehensive master plan. We look at many factors at each park, such as how our guest spend their time, what the product mix looks like, ridership, customer demographics and competitive set within each region, among other items. We balance our investment across the system to keep all of our parks fresh and keep the guest coming back year-after-year.

 

Thrill rides have been extremely important to our success and in 2012 we will add the latest in the long-line of signature coaster across our system. Leviathan will debut at Canada’s Wonderland, 306 feet tall, 92 miles an hour; it will be one of the tallest and fastest coasters in the world and will solidify Canada’s Wonderland reputation as one of the top three coaster destinations in the world.

 

Stinger, featured on the top right picture there. It’s a 138 foot tall inverted shuttle coaster which will debut at Dorney Park in Pennsylvania. WindSeeker featured on the bottom right, with an excellent light package, WindSeeker 5 and WindSeeker 6 will debut at Carowinds and Kings Dominion this year; again, a great example of how we take a concept and roll it out across our entire portfolio.

 

As we have said a couple of times today, we are focused on balancing thrill rides and family attractions to maintain our broad consumer appeal. I want to touch briefly on three of the new initiatives we plan for 2012 to further this objective.

 

As we saw at Kings Island in 2011, Dinosaurs Alive! broadened our appeals to families and in particularly brought up lots of grandparents and grandchildren. Dinosaurs Alive! will be introduced this year at Cedar Point, Canada’s Wonderland, Dorney Park and Kings Dominion and we anticipate a similar positive response from all these markets.

 

In our product mix, the water parks provide compelling value along with great appeal to our core market customers particularly when the summer heats up. At Kings Island, our water park would be rebranded at Soak City in a major expansion which will increase both the size of the water park and the number of attraction, including second wave pool along with additional guest amenities.

 

Cedar Point will be introducing “Luminosity - Ignite the Night!, a new night time, over the top night time spectacular which will light up the skies over Cedar Point throughout the summer. It will help extend average length of stay and drive incremental revenue.

 

In addition to these three initiatives, we have 25 new live entertainment shows; we’ll be adding resort refreshment, new point-of-sale systems and adding premium guest experience that Matt will touch on a little later.

 

Now let me show you Leviathan.

 

[Commercial]

 

There you have it; and I have to say on a personal note, one of the great things about my job is I get to ride all our rides and I do; and I usually get to ride them first and I can’t wait to get up to Toronto and ride Leviathan.

 

So with that, let me turn it over to Brian Witherow, our Chief Financial Officer.

 

Brian Witherow

 

Thanks Richard, and good morning. I think as Richard said, we are all very excited about 2012 and think that video gives you just a small glimpse as to why we are so excited about the upcoming season. It’s going to be a great ride for Canada’s Wonderland and it’s going to be a great summer for fun.

 

But we’re also very pleased with our results this past year. So along those lines, I would like to start by providing you updated guidance for 2011, after which I will review some of the highlights that drove the record performance of this past year.

 

For 2011, our preliminary results projected net revenues of $1.028 billion and adjusted EBITDA of approximately $375 million. Both of these were at the high point of our previous guidance and they represent year-over-year growth of 5%.

 

For those of you who haven’t followed us regularly, we consider adjusted EBITDA a good proxy of our operating cash flow and it’s a metric that mirrors define terms within our credit agreement. You can find reconciliations of adjusted EBITDA to net income in all of our SEC filings.

 

During 2011, we entertained a record 23.4 million guests representing an increase of 3% over the 22.8 million guests we entertained in 2010. Average in-park guest per capita spending in 2011 also improved increasing 2% over the 2010 level and we hit total level for 2011 of $40.03 per guest. Meanwhile, our operating costs in 2011 were inline with our full year expectations.

 

As I mentioned, we achieved another attendance record in 2011 on top of the record previously set in 2010. Our attendance in 2011 was split evenly between front gate or advanced sales, season pass visits and group business with each segment making up essentially one-third of our total attendance.

 

We went into the year with an increased focus on converting front gate sales into season passes at a number of our properties; not only the season pass are highest priced ticket, but to perceive value among our guest is extremely high within our season pass base.

 

In addition, season pass holders represent some of our parks best goodwill ambassadors making a strong influence factors for other incremental attendance. Our efforts in season pass initiatives proved highly successful in both season pass sales and season pass visits were up significantly between years.

 

Another key trend I would like to point out is the continued improvement in attendance from our group business at many of the properties. While this segment has been the slowest to recover from the depressed levels of 2009, we've begun to see improvement over the past few years as regional economies have recovered slowly. This will continue to be an area of focus at our parks going forward.

 

I would now like to take a couple of minutes to walk you through our cash flow outlook. In 2011, we spent approximately $75 million on capital investments and approximately $150 million in cash interest costs. As Richard previously mentioned, we expect capital investments to total roughly $90 million in 2012 and going forward we are targeting closer to 9% of net revenues on capital investments aimed at driving organic growth. The actual amount of CapEx spent may shift from year-to-year somewhat.

 

However we believe the average of 9% of revenues over the long-term will prevail. Meanwhile cash interest costs are expected to decrease from the $150 million this past year to approximately $100 million in 2012 and beyond. As many of you know, we pay minimal entity level taxes due to our MLP structure as well as the tax effective nature of our corporate entities. In 2011 we paid approximately $10 million in cash taxes and we expect modest increases in cash taxes through 2014 as revenues and income increase over the next several years.

 

Assuming no new tax planning strategies are implemented, cash taxes will approach roughly $35 million in 2015 as NOLs are exhausted over the next several years. There are a couple of one-time cash flow items we expect to incur in 2012 that I would also like to point out. We will make a $50 million payment for the termination of our Canadian swap liability in February.

 

Essentially that amount is said to be paid in the next several weeks. In addition, an $11 million payment for retirement costs associated with the CEO succession are on tap for mid-year of 2012. Here you see a summary of our debt profile as of December 31st. Total long-term debt at year-end total approximately $1.56 billion consisting of $1.6 billion in terms loans and $400 million of senior unsecured notes.

 

We had no debt outstanding on our revolving credit facility at the end of the year. This level of total debt translates into a total leverage ratio of approximately 4.2 times and a senior secured leverage ratio of approximately 3.1 times based on the preliminary 2011 adjusted EBITDA of 375 that I mentioned earlier.

 

It also important to note that we ended the year with approximately $35 million in cash on hand which compares with 2010 when we were already $23 million into our revolver by year end. Taking a closer note at the debt profile, a couple of items I’d like to highlight. First with $800 million of our term debt currently swapped to fix rates and our fixed rate bonds in place, we have fixed approximately 80% of our total long-term debt providing us with very predictable financing cost for the next several years.

 

Our 2010 refinancing provide us with efficiently staggered debt maturities, the earliest maturities is our $260 million revolving credit facility which matures in 2015. After that our term debt matures in 2017 and the bonds in 2018. One key point I’d like to leave you with on this slide is that we expect our cost of debt to decrease by more than 300 basis points in 2012, down from roughly 9.5% in 2011 to approximately 6.3% this coming year. This is primarily due to the expiration of several interest rate swaps.

 

There are two key financial considerations when you think about FUN financial profile. One, we generate a significant amount of free cash flow. As I discussed we delivered record attendance and financial results in 2011. Following of then record 2010 this has established a base for us to build from.

 

And as you will continue to hear from Matt today, we are confident that there are additional revenue and cash flow growth opportunities in 2012 and beyond. Lastly, we are projecting that free cash flow will additionally increase by approximately $50 million, beginning in 2013 as the result of the reduction in our debt service cost.

 

The second key consideration is that our capital structure provides a substantial operating and financial flexibility for several reasons. First, we are no longer constrained by our credit agreement. In fact after two straight years of record operating results, we have essentially outgrown all of our key covenants.

 

And as I previously mentioned, our debt maturities are appropriately staggered with the earliest maturity being in 2015. And lastly our finance cost are predictable due to the fixed nature of the majority of our long-term debt. With that, I would like to wrap up by telling you that we will provide more detail regarding the 2011 financial results as well as providing guidance for 2012 on our February 21st earnings call and with that I will turn things back to Matt for a review of strategic growth opportunities going forward.

 

Matt Ouimet

 

Thank you, Brian. Thanks nice job. So let me get us through the last third of the deck and open it up for Q&A. But as I mentioned earlier, we believe there are substantial growth opportunities available to us. And I am going to address each of these individually over the next few pages. A couple of macro points. You will note that I haven’t addressed anything beyond organic growth.

 

In fact there may be opportunistic tuck-in as we call them of existing parks such we have done before Knott's, Dorney, Worlds of Fun and Michigan’s adventure. But those are not required to hit the growth targets I am going to talk about. It is also worth addressing here that most everything I am going to talk about are essentially best practices already applied at another amusement parks or another consumer-driven businesses.

 

We will like the term New Fun and we have identified a number of opportunities to enhance the guest experience for our visitors and drive growth. As I said before, we deliver a compelling price value for the price paid at every park, every day and New Fun is a big part of that. Our ability to offer new rides, attraction and events is how we sustain our large repeat audience.

 

As Richard had touched on, in our case it’s particularly important to continue to balance family friendly with thrill offerings to protect the quality audience mix we have today. We’re also directly addressing the quality of our food offerings to ensure that there is real value for price paid. And this one small example, our major burger locations will serve fresh, never-frozen burgers next season.

 

Richard touched on it as well. We’re giving our resorts extra attention over the next few years, making sure that we protect and grow our RevPAR. Resort guests are some of our most profitable guests and protecting and growing this audience is very important to us.

 

In particular, we’re going to focus on extending the length of stay in the park which is also highly profitable and while we touched on this opportunity over the past year in Canada and at Carowinds, we’re taking it to a new level with Luminosity - Ignite the Night.

 

It will provide a highly marketable broad audience appeal event. It will be reprogrammable to drive written visitation both throughout the season and annually and it will support our ongoing park maintenance upgrades by modernizing our light and sound infrastructure systems. I have great hopes with this experiment and I hope we see it at all of our parks overtime.

 

Improved consumer messaging and relationship management, we have a number of initiatives underway in this area that will help strengthen our connection with our consumers and create a sense of urgency driving visitation within our operating season. What we have decided is we simply must become as good at marketing, sales and revenue management as we are at operations. So we are adding the necessary resources to accomplish this objective.

 

We have hired a new ad agency of record that brings a true combination of strategy, creativity and effective media placement. We are selectively adding internal resources to support best practice transfer and rapid response to the consumer insights we identify. And we are in the process of implementing an incentive compensation system for our sales force rewarding truly incremental behavior.

 

The headline on this [fuller] point should be Emotion over Promotion. Our new messaging and I will show you examples in just a minute, leverages off the existing strong emotional attachment and multi-generational memories that exist in our large audience. What we are calling the Thrills Connect campaign created by Cramer-Krasselt combines the excitement of thrills with the fun of creating new memories together.

 

We believe this particular campaign will be very successful and will also encourage larger party sizes. As I mentioned CK is also continuing to help us to migrate our media mix to those channels that are most effective today.

 

Here are three concept boards. Sometimes finding common ground happen ten stories above. This one is a little too close to home for me. They may not hug you anymore, but they will squeeze your hand for dear life. And Stacy reminds of her son here. At a 120 miles per hour, they can’t roll their eyes at you. I think we have an opportunity to remind guest to come now and not put off a visit and promotion is particularly effective at driving urgency, but I also think we have an opportunity to reinforce the price-value equation by reminding them that the total value that they get to come as a family.

 

Another big initiative for us is dynamic pricing and advanced purchase commitments. Our objective as it should be is to offer the consumer the right price and nothing less to drive truly incremental behavior. And one of the foundations for this growth is the new e-commerce platform and the capabilities it adds. You see it “accesso” up there; they are our e-commerce vendor platform.

 

By choosing a platform shared by others in the industry we get the leverage of scale and new functionality that will be costly to develop on our own. With 23.4 million ticket transactions, having real time data and the ability to adjust our prices on a daily basis creates real value. It will also allow us to offer new programs such as installment sales for seasonal passes, which we introduced just this week.

 

As a side bar and I believe this could happen over time or should happen over time, one of the most impactful changes the industry could make to help the consumers embed entertainment into their routine and budget for it more easily is a subscription base model, essentially paying one-twelfth every month like you do with your cable bill. For us such a model would improve cash flow, reduce annual insurance, reduce our marketing costs for seasonal passes particularly where we spend a good chunk of our marketing money and most probably increase the seasonal pass holders spending when they do visit.

 

And one other point I would like to make before we leave this slide is that the accesso platform let's us reduce our reliance on ticket intermediaries who are not aligned with our objectives. We want to train the consumer to know the best ticket value is on our website.

 

Continuing on the accesso platform; the data capture from accesso allows us to improve the effectiveness of our customer relationship management. We will have access to data we simply have not had before.

 

Advance purchase commitments. It’s also where we are focusing for a moment on the impact that advance purchase commitments have and again it’s reported directly by this platform. Two very intangible impacts; the first is what we call visitation, disruption, protection. I am sure we will have an acronym before we are done. But once you buy the ticket, once you told your family and once you buy the ticket, you are committed to visit even if the weather looks iffy or if you get a better option.

 

And second and I’ve learned this from my experience in the cruise industry. Anything you pay for ahead of time increases the spending that will last on your visit. And the simplest example I give people is if you don’t have to give your first $13, you can buy parking ahead of time, you don’t have to give your first $13 to the parking attendant, you still spend that $13. And we believe that we have a real opportunity to continue to increase the volume of advance purchase commitments, which protect us again visitation disruption and increases spending that will last just in our park.

 

The other thing we are going to do is introduce premium product offerings. We tested some of these this year and I will reference them. Benefit oriented consumers will buy premium products. Here I listed just a few, Fast Lane and our Halloween offering Freight Lane. Fast Lane was tested at just one park for half of the season and it now will be rolled out to all of our parks.

 

Another good example here is early entry. The early entry program in our resorts is very effective at driving RevPAR premiums.

 

On the other end of the spectrum are value oriented consumers and as an example there, on our new website, e-commerce platform but it’s not about the website it’s about the commerce that is done on it and so I refer it as e-commerce platform. If you come in and you look like a value oriented customer by what you are purchasing, examples are you will be offered advanced purchase for lunch and dinner tickets, which are value meals for your children.

 

Continuing strategic alliances and this is I think some of you have asked me about this overtime. So industry benchmarking along with conversations with potential partners lead us to believe that we can expand beyond the limited relationships we have today. Simply put market executives want to talk to our 23 million attendees.

 

And as you know these relationships generate fees as well as promotional leverage to stretch our marketing dollars. It is important that we do this in a manner, which doesn’t negatively impact the guest perception of our parks and it is an economic positive after considering activation cost and product purchase commitments. Overtime, we hope to build a solid portfolio of strategic relationships.

 

Richard touched on this but we have a very disciplined approach to capital and expense management. We have used this approach to develop a multi-year strategic plan for capital that protects the base and supports new reasons to visit. I would also callout here that we are working aggressively with manufacturers to encourage innovations at lower cost. As Parks has reached critical mass and many of ours are there already, you have to be disciplined in terms of exiting underutilized capacity. Absent this, you will see fixed cost creep into cost base. We are continuing to invest in IT systems that help us to manage our largest cost and support the analytics that help us increase revenue.

 

Finally, people are always curious as to what we’re going to do with the undeveloped land that surrounds our parks. To be very clear, the role of these parcels is to generate additional ticket sales that accrue to the benefit of our large installed asset base. Today, these things include such as sports competition like the Triathlon that we do at Cedar Point, or firefighter competitions that we do in many other parks today, in relatively low investments like luxury camp grounds, which have our longest length of stay. But to be clear, we have no plans at this point to build new hotels. There is plenty of hotels capacity in our markets and we’re happy to partner with those hotels to drive ticket sales.

 

I know you’ve read the book already but let me tell you the story. So, FUN is a total return investment. Our primary goal is to deliver an attractive total return to our unit holder. There are two components to the return. A quality unit distribution and a unit price appreciation. And our objective is to deliver a reliable and growing unit distribution as well as sustainable earnings growth that will drive unit price appreciation. We will achieve this objective by disciplined execution of our business plan and prudent management of our balance sheet.

 

We are confident that we can continue to deliver an attractive distribution yield in today’s low yield environment and are on course for a record distribution in 2013. Driven by our current momentum and the growth initiatives I discussed earlier, we’re targeting adjusted EBITDA of over 450 million in 2016. This represents a 4% CAGR from 2011 and is roughly double what we’ve seen over the last five years.

 

Along the way, it’s our intent to sustain our margin discipline. In many cases, the new additions are high margin delivering off our fixed cost base and our targeted leverage ratio is below four times. We are planning on repaying $25 million of term debts in 2012 and we will continue to make opportunistic prepayments in future years helping to protect the distribution, the quality of the distribution against the unanticipated rainy day.

 

This slide just shows graphically you the targeted growth and summarizes the key growth drivers that I touched on previously. Distribution outlook; as many of you know we previously provided guidance on our expected distribution for 2012 and 2013 and I will like to provide you with an update today.

 

For 2012 we anticipate a $1.60 unit distribution paid in four equal quarterly installments of $0.40 beginning in the middle of March of this year. This is at the high end of our prior guidance. Also this implies a 7% distribution yield based upon a $23 unit price, I didn’t have the chance to update this for the last couple of days, which is clearly attractive in this yield start of the market.

 

As for 2013 we are targeting a record distribution in excess of $2 a unit and as you would expect future distributions will depend on growth of free cash flow, investment opportunities, capital structure opportunities and the relationship between our distribution and the unit price. Essentially it’s a market is giving us credit in the distribution.

 

Here is a long term look at our unit distribution trajectory and as you can see we are well in on our way to restoring our historical commitment to distributions and are on course for a record distribution of more than $2 in 2013.

 

Okay, as I wrap it up and before we do the Q&A, I would like to just summarize the key investment considerations. We benefit from favorable industry dynamics. The company has a proven track record of delivering results against disciplined plans. We are actively pursuing a number of what I would call industry validated attractive strategic growth opportunities. And FUN is a total return investment. Returns to unit holders are anchored by an attractive distribution yield. We will drive unit price appreciation through earnings growth and we will maintain a balanced approach to the allocation of excess cash. Thanks for your time this morning and we’ll now open it up for questions and this is my favorite slide.

 

Yeah okay, so I get to ask the first question right. So many of you have asked me overtime why we’re not more precise on our 2013 distribution, okay. So, what I want to do is just give you the framework for this, right; so Cedar Fair as we said today is a total return investment. I know that people in this room understand this and in this context, our objective is to offer unit holders sustainable and growing distributions over the long-term, right.

 

And so the key drivers are what I touched on just five minutes ago right in terms of our distribution policy. The rate of cash flow growth and we’re in an unusual window because we paid $1 this year, we are saying we are paying a $1.60 next year and then we’re going to record distribution after that. But at some point that flattens out and you basically grow the distribution at the rate that you grow cash flow.

 

Investment opportunities is the ability for us to have financial flexibility to take advantage of attractive investment opportunities; capital structure opportunities when the market present those to us and obviously the relationship of the dividend yield to the unit price. And so what I would expect the Board to do is to continue as we get closer to 2013, as we get deep into our operating season and even in the fourth quarter of next year, we’ll have much better visibility to those considerations and be able to talk more precisely about 2013.

 

So with that, I’ll open it up for questions.

[triggernel]

Yay for Fast Lane at all parks! Little interested as to how they are going to do it at parks like Michigans Adventure and Valleyfair!

[cal1br3tto]

Interesting read. I hope they're serious about improving food quality.

 

Glad to hear they're planning to roll out Fast Lane chain-wide (assuming it works at least as well as it did at Kings Island last year). I'm not saying I'd always use it, but I feel more comfortable knowing it's an option.