Cedar Fair Corporate Development Discussion Thread (FUN)

[Mrlittle]

I know it is unlikely to happen, but if Cedar Fair could obtain the rights to manage Moody Gardens (in Galveston) under a similar set-up as Gilroy Gardens that would make for a nice foothold in the area. It might not significantly increase attendance at either but could drive people to purchase season passes.

 

It'd probably be a good idea not to get any more involved in Galveston than they already are, things are a bit shady out there.

 

What are you talking about? Galveston is a great city. Every city has its areas that aren’t the nicest but Galveston has really cleaned up a lot over the years. Two things have helped the city: charging for parking on the sea wall and the last hurricane destroyed some of the older buildings that needed to go.

 

I like the idea of Cedar Fair taking over Moody Gardens. They own a lot of land next to Schlitterbahn Galveston that could be developed. I always thought it was odd they built Schlitterbahn so close to Moody gardens since they also have a (small) water park.

[Intamin_coyote]

Net revenue is up (so far), thanks to higher per capita spending, both in and out of park, albeit flat attendance...

 

https://www.businesswire.com/news/home/20190710005143/en/Cedar-Fair-Reports-3-Incr

 

Cedar Fair Reports 3% Increase in Net Revenues Through the July 4th Holiday Weekend

 

Investments in broadening the guest experience support strong underlying consumer demand

 

July 10, 2019 06:00 AM Eastern Daylight Time

SANDUSKY, Ohio--(BUSINESS WIRE)--Cedar Fair Entertainment Company (NYSE: FUN), a leader in regional amusement parks, water parks and immersive entertainment, today reported preliminary net revenues through July 7, 2019, of approximately $579 million, an increase of $16 million, or 3%, when compared with the same fiscal period a year ago. This period traditionally represents approximately 40% of the Company’s full-year net revenues.

 

The increase in net revenues was driven by a 3% increase in in-park guest per capita spending, a 3% or $2 million increase in out-of-park revenues, including resort hotels, and flat attendance, compared to the same prior-year period These favorable results benefitted from only one week of operations from the newly acquired Schlitterbahn water parks in New Braunfels and Galveston, Texas.

 

“Our commitment to enhancing and broadening the guest experience has led to strong underlying consumer demand when weather conditions are favorable, a positive and welcome indicator as we approach the busiest and most profitable stretch of the season,” said Richard A. Zimmerman, president and chief executive officer. “Our strategy heading into this year was to provide highly immersive experiences which would encourage our guests to visit early and visit often. This included the addition of traditional attractions such as two record-setting roller coasters at Canada’s Wonderland and Carowinds, and the introduction of new immersive attractions such as Forbidden Frontier on Adventure Island at Cedar Point, Monster Jam® Thunder AlleyTM and Grand Carnivale.”

 

Zimmerman reported that Cedar Fair has generated record season pass sales across its parks, as well as record sales of its all-season dining and all-season beverage programs. He also noted that booking trends on group events and at the Company’s resort properties remain strong, reflecting the success of investments made in both areas over the past several years.

 

“In addition to the strength around advance purchase commitments, we’re pleased with the growth of in-park guest per capita where we are seeing year-over-year increases in spending on admissions, food and beverage, merchandise and extra-charge attractions,” added Zimmerman. “The growth in both advance purchase commitments and guest spending gives us confidence our consumer is healthy, and that our new initiatives and guest services levels are resonating well with guests.”

 

Commenting on the impact of weather on operations over the first half of the year, Zimmerman added, “Much like the first half of 2018, extreme weather conditions through early June, including record rainfall in many of our key markets, adversely impacted attendance in many of our parks’ first full month of operations. As conditions improved, however, we have seen a significant improvement in attendance trends, which is more illustrative of the record results we generated over the last five months of 2018. For the three-week period ended July 7, 2019, same-park attendance was up 6%, or more than 200,000 visits, versus the comparable three-week period a year ago. While encouraged by the strength in recent attendance trends, we remain focused on executing against the strategic initiatives we have in place, as these short-period results by themselves may not be indicative of performance over the balance of the year.”

 

Looking ahead, Zimmerman added, “We believe the positive guest response to our broad array of attractions and immersive events, as emphasized by this year’s high guest satisfaction ratings, combined with the strong growth in our advance purchase commitment channels, has us well positioned as we head into the second half of the year. In addition, we are very excited about the attractive upside potential presented by our recent acquisitions of the two iconic Schlitterbahn water parks in Texas and the Sawmill Creek Resort near Cedar Point in Sandusky, Ohio. While their contributions to our 2019 operating results will be modest given the timing of the acquisitions, both transactions underscore our commitment to driving long-term growth in the business.”

 

The Company will provide additional information regarding net revenues, operating costs and cash flows when it announces its second-quarter results on Wednesday, August 7, 2019.

Edited July 13, 2019 by Intamin_coyote

[Jew]

The increase in net revenues was driven by a 3% increase in in-park guest per capita spending, a 3% or $2 million [twitter][/twitter]increase in out-of-park revenues, including resort hotels, and flat attendance, compared to the same prior-year period

 

In case you guys were wondering if Disney is freaking out about what appears to be lower attendance post Star Wars...here is your answer why they are probably not freaking out too much. Creating revenue inside (and outside if you own hotels) is what matters most. Ticket revenue isn't really a profit driver except for premium products like front of line and VIP tours.

 

10 years ago Cedar Fair was WAY behind on this, now they appear to have caught up!

Edited July 11, 2019 by Jew

[DirkFunk]

The increase in net revenues was driven by a 3% increase in in-park guest per capita spending, a 3% or $2 million [twitter][/twitter]increase in out-of-park revenues, including resort hotels, and flat attendance, compared to the same prior-year period

 

In case you guys were wondering if Disney is freaking out about what appears to be lower attendance post Star Wars...here is your answer why they are probably not freaking out too much. Creating revenue inside (and outside if you own hotels) is what matters most. Ticket revenue isn't really a profit driver except for premium products like front of line and VIP tours.

 

10 years ago Cedar Fair was WAY behind on this, now they appear to have caught up!

 

1) Cedar Fair's share price is down from 72.10 in July 2017 to $48.56 today. Clearly Wall Street isn't nearly as impressed with the "replacement" in net revenue.

 

2) Disney only has three hotels in California. Their primary guest base are passholders, most of whom are blacked out of the park and not attending. I don't know what the occupancy rate is at Disney's hotels, but most classes of room are available this weekend when I search (suggesting it isn't in the 90s percentage wise). I wouldn't classify Disney as "panicking" but clearly they're throwing money at stuff or having discounts to try and get people to go now.

[Intamin_coyote]

1) Cedar Fair's share price is down from 72.10 in July 2017 to $48.56 today. Clearly Wall Street isn't nearly as impressed with the "replacement" in net revenue.

 

To be fair, it jumped $1.54 per share today (to $50.10 atm), most likely in light of the recent good news.

[Jew]

2) Disney only has three hotels in California. Their primary guest base are passholders, most of whom are blacked out of the park and not attending. I don't know what the occupancy rate is at Disney's hotels, but most classes of room are available this weekend when I search (suggesting it isn't in the 90s percentage wise). I wouldn't classify Disney as "panicking" but clearly they're throwing money at stuff or having discounts to try and get people to go now.

 

Their primary base is passholders on cheap passes whom I would guess for the most part just come to the park to hang out and don't spend that much money. As long as they have a store (Savi's Workshop) generating $3,000 in revenue every 30 minutes, I'm guessing the TDA suits aren't freaking out TOO much. It's obvious they aren't hitting their attendance goals, but I would guess they are fine from a revenue standpoint. The cheapest hotel for next Saturday is Paradise Pier @ $412/night. If they were truly hurting, I would guess the rates would be far lower than that...

 

But anyways, back to the topic. Attendance, IMO, is a lazy way to look at results. Parks can easily inflate that number through promotions and comps. How much a guest spends in total is what matters most.

[DirkFunk]

Their primary base is passholders on cheap passes whom I would guess for the most part just come to the park to hang out and don't spend that much money. As long as they have a store (Savi's Workshop) generating $3,000 in revenue every 30 minutes, I'm guessing the TDA suits aren't freaking out TOO much. It's obvious they aren't hitting their attendance goals, but I would guess they are fine from a revenue standpoint. The cheapest hotel for next Saturday is Paradise Pier @ $412/night. If they were truly hurting, I would guess the rates would be far lower than that...

 

My point is that even they have to care about attendance targets. They're a publicly traded company. There's no long term gain from this drop of attendance to spin to shareholders. And we're seeing them throwing together parades and hustling Soarin Over California back into service as part of that service.

 

But anyways, back to the topic. Attendance, IMO, is a lazy way to look at results. Parks can easily inflate that number through promotions and comps. How much a guest spends in total is what matters most.

 

The relevance here is that of course Cedar Fair's revenue, much like Six Flags, is heavily dependent on very cheap season passholder return visitation over the often vaunted/desired high per cap spending.

[Jew]

My point is that even they have to care about attendance targets. They're a publicly traded company. There's no long term gain from this drop of attendance to spin to shareholders. And we're seeing them throwing together parades and hustling Soarin Over California back into service as part of that service.

 

Of course they do. I'm not suggesting otherwise. I'm just saying a healthy theme park business is not based solely on attendance. I am sure that Disneyland has to be experiencing the highest per cap spending in the history of the park and I would also guess that their guest satisfaction is pretty high as well. Would not be surprised at all in the next Disney earnings call to hear theme park revenue is through the roof.

 

 

The relevance here is that of course Cedar Fair's revenue, much like Six Flags, is heavily dependent on very cheap season passholder return visitation over the often vaunted/desired high per cap spending.

 

Well clearly Cedar Fair has figured something out if they have squeezed 3% more money out of the same amount of guests. They need those cheap season pass holders spending money too, or otherwise the quarterly release would probably say "attendance up, revenue down."

 

Obviously more people=more chances to make extra money, so people look at attendance as a "holy grail" for theme parks. But high attendance without high per cap spending can be awful for a park, since in theory you still have to staff the park to the higher attendance level without the cash those people should be bringing in...

[larrygator]

The relevance here is that of course Cedar Fair's revenue, much like Six Flags, is heavily dependent on very cheap season passholder return visitation over the often vaunted/desired high per cap spending.

 

To Cedar Fair's credit, they made the difficult decision years ago to double the price of those cheap season passes if you want to use them at all parks.

 

The 48% loss of share price over two years in troubling, but that followed a 800% return of the prior 8 years of great growth. The stock price fluctuates over time and stand about where is did 5 years ago but there is additional value in the $3.70 per share dividend.

[DirkFunk]

The relevance here is that of course Cedar Fair's revenue, much like Six Flags, is heavily dependent on very cheap season passholder return visitation over the often vaunted/desired high per cap spending.

 

To Cedar Fair's credit, they made the difficult decision years ago to double the price of those cheap season passes if you want to use them at all parks.

 

Both chains have premium pass products now that are multiples that of the base pass most people likely buy. I don't know that I necessarily "credit" Cedar Fair for that decision given that it seems to exist solely to prevent Kings Island or Michigan's Adventure season pass holders from not paying for entry to Cedar Point (a park that saw an attendance decline last year in spite of building Steel Vengeance). If you ascribe to the idea that attendance is secondary to in park spending because you can't have them spend unless they come in the park first, then you're already behind the 8 ball with this.

[larrygator]

Well you certainly can not credit Six Flags with the decision that Cedar Fair made.

 

For about $100 you can buy a pass that allows entry into every Six Flags park, the same can not be said for Cedar Fair. SF is not willing to bite that bullet but does get credit for their various upcharges in membership options.

Edited December 27, 2019 by larrygator

[DirkFunk]

Well you certainly can not credit Six Flags with the decision that Cedar Fair made.

 

I wouldn't want to give Six Flags credit there since I think it probably loses Cedar Fair more money than they make with the uniform pricing of Platinum passes. Certainly though there's not much argument that Six Flags was ahead of the curve when it came to advance pricing things like meal/drink/photo plans and that everyone else has followed. Certainly you'd agree there.

[ESRLoop]

Of course they do. I'm not suggesting otherwise. I'm just saying a healthy theme park business is not based solely on attendance. I am sure that Disneyland has to be experiencing the highest per cap spending in the history of the park and I would also guess that their guest satisfaction is pretty high as well. Would not be surprised at all in the next Disney earnings call to hear theme park revenue is through the roof.

 

I don't know how to over emphasize this point for people. The biggest "problem" with attendance at DLR right now is the PR spin, not revenue. Attendance, while important, is NOT DLR's primary driver of revenue, assuming a healthy minimum base of attendance exists (which I promise does). It's everything else (F&B, Merch, Hotels) that really drives revenue. And THAT revenue is directly influenced by in-park experience and Guest mix (Intl Tourist/Domestic Tourist/Local/AP/Non-Revenue).

 

The satisfaction of Guests directly drives their spending at the Resort and it's further amplified by the Guest mix (For example, Intl Tourists when happy spend WAY more than non-revenue Guests). While this metric can over simplify things, DLR's key metric in this area has been "rides per cap (RPC)," or number of rides each Guest experienced. RPC tends to directly align with in-park spending and is closely watched, predicated, and used to drive park operations. When the RPC hits a certain number, you see spending per cap start to spike and whatever revenue did or didn't come through the gate no longer matters as long as your baseline attendance is decent.

 

We always made WAY more money on summer days when everyone was blocked out but the attendance was ~35k and we surpassed our RPC goal than we did on days when no one was blocked out and attendance was 60k+ but we couldn't come close to our RPC goal due to crowding and lack of hours in the day. As a bonus, the park infrastructure was taxed way less on those ~35k days too, which wasn't something we objectively quantified back then but understood to be a factor.

 

You can, literally, spend semesters of college courses studying this but TL:DR:

 

Attendance is not DLR's primary revenue driver.

[larrygator]

Cedar Fair Announces 2019 Second-Quarter Results and Reports Record Performance for First Seven Months

Business Wire•August 7, 2019

SANDUSKY, Ohio

 

Declares quarterly cash distribution of $0.925 per LP unit payable September 17, 2019

 

Cedar Fair Entertainment Company (FUN), a leader in regional amusement parks, water parks and immersive entertainment, today announced results for the second quarter ended June 30, 2019, and year-to-date performance trends through August 4, 2019. The Company also announced the declaration of a quarterly cash distribution.

 

Due to a shift in this year’s fiscal calendar, the second quarter of 2019 included an additional 64 operating days (combined across all parks) when compared with the second quarter of 2018, significantly impacting the Company’s quarter-over-quarter comparisons. The 2019 second quarter ended June 30, 2019, while the 2018 second quarter ended June 24, 2018.

 

Highlights

 

For the second quarter ended June 30, 2019, Cedar Fair’s net revenues totaled $436 million, an increase of 15%, or $56 million, compared with the second quarter of 2018. The increase in net revenues was due in large part to a 10% increase in operating days in the period and reflects improvements in attendance, in-park per capita spending and out-of-park revenues, all of which were up meaningfully in the quarter.

Net income for the 2019 second quarter increased $44 million to $63 million and Adjusted EBITDA1 increased $36 million to $163 million, compared with the second quarter 2018. The improvements were largely due to the additional operating days in the 2019 period. On a comparable operating calendar basis, net income in the period increased 50%, or $21 million, and Adjusted EBITDA2 increased 5%, or $7 million.

Year-to-date preliminary net revenues through August 4, 2019, totaled approximately $877 million, an increase of $59 million, or 7%, when compared with the same period in 2018. On a same-park basis, excluding the Schlitterbahn water parks acquired on July 1, 2019, preliminary net revenues totaled a record $850 million, up $31 million or 4%.

 

1For additional information regarding Adjusted EBITDA, including how the Company defines and uses Adjusted EBITDA, see the attached historical reconciliation table and related footnotes.

2Adjusted EBITDA for the three months ended July 1, 2018 was calculated as net income of $42.1 million plus interest expense of $21.3 million, provision for taxes of $13.7 million, depreciation and amortization expense of $57.4 million, net effect of swaps benefit of $0.9 million, non-cash foreign currency loss of $15.7 million, non-cash equity compensation expense of $3.2 million, and loss on impairment / retirement of fixed assets of $3.2 million.

 

Commenting on second-quarter results and the strong trends through August 4, 2019, Cedar Fair President and CEO Richard A. Zimmerman said, “We are very pleased with our year-to-date performance and the momentum built around the strategic initiatives that underscore our long-range plan. Our commitment to broaden the guest experience and invest in more immersive attractions is successfully expanding our audience and improving the value perception of our parks. Immersive attractions, such as Forbidden Frontier on Adventure Island at Cedar Point, and limited duration special events, such as Monster Jam Thunder Alley and Grand Carnivale, are just a few examples of how we are successfully encouraging guests to visit more often.

 

“We are pleased to see an upswing in attendance, particularly over the past month as weather conditions improved, and equally pleased to have generated meaningful revenue growth through increases in both in-park per capita spending and out-of-park revenues,” said Zimmerman. “As noted in our July 4th update, continued growth in in-park per capita spending (most notably as a result of our enhanced food and beverage options), combined with record sales of season passes and the all-season dining and beverage options, indicates the financial health of our consumer remains solid. It also gives us confidence our new attractions and other in-park entertainment initiatives will continue to drive incremental, long-term growth and profitability for our unitholders.”

 

Zimmerman concluded by stating, “We feel very good about how the year is tracking as we move into the month of August, followed by the increasingly important and very popular Halloween and winter holiday events. The strength of our core business, combined with the positive early returns we are seeing from the two recently acquired Schlitterbahn water parks, makes us confident that everything is in place this year for a strong finish.”

 

Second-Quarter Results

 

Net revenues for the 2019 second quarter increased $56 million, or 15%, to $436 million from $380 million in the second quarter last year. The increase in revenues reflects a 10%, or 802,000-visit, increase in attendance, a 4%, or $1.82, increase in in-park per capita spending, and a 14%, or $6 million, increase in out-of-park revenues. On a comparable operating calendar basis, net revenues in the second quarter of 2019 were up 3%, or $14 million, on a 4% increase in in-park per capita spending, a 4%, or $2 million, increase in out-of-park revenues, and a 47,000-visit, or less than 1%, decrease in attendance.

 

Operating income for the 2019 second quarter totaled $102 million, up $34 million, or 50%, compared with $68 million for the second quarter last year. The increase in operating income was the result of the 15% increase in net revenues noted above, offset by an 8%, or $21 million, increase in operating costs and expenses compared with the second quarter of 2018. The increase in operating costs and expenses in the quarter was in line with the Company's expectations and was largely the result of the additional operating days. On a comparable operating calendar basis, operating costs and expenses in the period were up $8 million, or 3%, with the increase primarily due to higher labor costs driven by wage-rate increases and incremental operating costs associated with the Company’s new immersive events.

 

The net effect of the Company’s interest rate swaps resulted in $12 million of additional expense for the quarter ended June 30, 2019, reflecting the change in fair market value movements in the Company’s swap portfolio. During the current period, the Company also recognized a $9 million net benefit to earnings for foreign currency compared with a $15 million net charge to earnings in 2018, both amounts primarily representing the re-measurement of the U.S.-dollar-denominated debt held at our Canadian property.

 

After these non-cash items, depreciation and amortization, interest expense and provision for taxes, net income for the second quarter totaled $63 million, or $1.11 per diluted LP unit. This compares with net income of $19 million, or $0.34 per diluted LP unit, for the 2018 second quarter. On a comparable operating calendar basis, net income for the period totaled $42 million, up 50%, or $21 million.

 

Adjusted EBITDA, which management believes is a meaningful measure of the Company's park-level operating results, increased 28%, or $36 million, to $163 million for the 2019 second quarter, compared with $127 million in 2018. On a comparable operating calendar basis, Adjusted EBITDA was up 5%, or $7 million, compared with the second quarter of 2018. The 5% lift in Adjusted EBITDA was the result of the increases in in-park per capita spending and out-of-park revenues during the quarter, offset, in part, by the planned increases in operating costs and expenses. See the attached table for a reconciliation of net income to Adjusted EBITDA.

 

Seven-Month Results

 

Including the results from the Schlitterbahn parks since their acquisition on July 1, 2019, preliminary net revenues for the seven-month period ended August 4, 2019 totaled $877 million. Over this same period, combined attendance totaled 16.5 million visits, in-park per capita spending was $48.59, and out-of-park revenues totaled $104 million.

 

On a same-park basis (excluding the results from the Schlitterbahn parks), combined attendance was up 1%, or 213,000 visits, from the comparable seven-month period ended August 5, 2018. Over this same period and on a same-park basis, in-park per capita spending was up 3% and out-of-park revenues were up 4%, or $4 million. Overall, preliminary net revenues through the first seven months of the year increased 4%, or $31 million, to $850 million in 2019 from $819 million through the first seven months of 2018, on a same-park basis.

 

Distribution Declaration

 

The Company also announced the declaration of a cash distribution of $0.925 per LP unit, which is consistent with its targeted annualized distribution rate of $3.70 per LP unit. The distribution will be paid on September 17, 2019, to unitholders of record as of September 4, 2019.

[DirkFunk]

Let me take a big swig of coffee. What news could there be today?

 

https://nationalpost.com/pmn/technology-pmn/six-flags-in-bid-to-acquire-cedar-fair-sources

 

Six Flags in bid to acquire Cedar Fair-sources

Reuters

Reuters

October 2, 2019

11:59 AM EDT

 

Last Updated

October 2, 2019

11:59 AM EDT

 

Cedar Fair is considering Six Flags’ cash-and-stock offer, and there is no certainty that a deal will be reached, the sources said. Details of the offer could not be learned.

 

The sources asked not to be identified because the matter is confidential. The companies did not immediately respond to requests for comment.

 

(Reporting by Greg Roumeliotis in New York; Editing by Bernadette Baum)

[SharkTums]

Well, that's something.

[coasterbill]

Potential downsides: Everything

 

Potential upsides: We can ride Fury, Orion and Leviathan during Winterfest... so there's that.

Edited October 2, 2019 by coasterbill

[DirkFunk]

Potential downsides: Everything

 

Potential upsides: We can ride Fury, Orion and Leviathan during Winterfest... so there's that.

 

I honestly like Six Flags more now than ever. I can see how this makes sense by allowing the Six Flags power vacuum to clear out with Zimmerman coming in as the combined CEO in the deal. But Six Flags is the bigger company and the one making the acquisition. I don't know how their managers would deal with Cedar Fair style management. I don't know who would win the battle of liability questions between Six Flags and Cedar Fair. I don't know if Cedar Fair would convince the chain to go upmarket in terms of maintenance or if it would take everything back down below even Kinzel levels of "Just buy trashcans." Most of all, I want parks that look and feel different.

[tndank]

I can't imagine any of that would be good for the consumer.

[DirkFunk]

I can't imagine any of that would be good for the consumer.

 

Or supplier.

[Zand]

Millennium Force: Ride of Steel.

 

Batman's Vengeance

 

Six Flags Cedar Point just has a weird feel to it.

 

 

 

Sorry... BATMAN Vengeance

[SixFlagsAstroworld]

Yeah, nothing to see here.

[operative_me]

Well... I'm trying to avoid a knee-jerk, emotional reaction right now, as I don't know if this even has a chance of happening...

But it's safe to say that my productivity for the rest of the work day is pretty much flat lined as I am now scouring the internet for any shred of news about this.

[coasterbill]

Most of all, I want parks that look and feel different.

 

This is exactly how I feel. I hate the idea of a park like Knott's with great theming and an incredible haunt event being run by Six Flags where both of those things would go to sh*t quickly but I also hate the idea of a park like Great Adventure being run like a Cedar Fair park, potentially opening in May like Dorney and losing everything that's cool about their Holiday event if they actually adopted the Cedar Fair style of management (which is probably less likely to be fair).

 

Both of those things suck. I agree that I feel better about Six Flags now than I have in years but I appreciate different things about each company.

Edited October 2, 2019 by coasterbill

[WolfBobs]

Six Flags would quickly ruin everything Ouimet and crew have built up in the last decade or so since taking over for Kinzel. This would be very very bad for the CF parks and the quality would go to s**t quick. Gone would be unique coasters and attractions and in would be a ton of 4D Freespin clones. I would hate this, hate it very much.