Cedar Fair's CEO Discusses Q2 2012 Results - Earnings Call Transcript

Cedar Fair L. P. (FUN)

Q2 2012 Earnings Call

August 09, 2012 10:00 a.m. ET


Stacy Frole – Director, IR

Matthew Ouimet – President & CEO

Brian Witherow – EVP & CFO

Richard Zimmerman – COO


Paul Patterson – Glenrock Associates

Ali Agha - SunTrust Robinson Humphrey

Ashar Khan - Visium Asset Management

Michael Jin – Epoch Investment Partners

Steven Gambuzza - Millennium Partners

Sri Raja – Deutsche Bank

Michael Walsh – Wells Fargo



Ladies and gentlemen, thank you for standing by and welcome to the Cedar Fair Second Quarter Earnings Conference Call. During today’s presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. [Operator Instructions] This conference is being recorded today, Thursday, August 09, 2012.

I would now like to turn the conference over to Stacy Frole, Director of Investor Relations. Please go ahead.

Stacy Frole

Thank you Fudayo [ph]. Good morning, and welcome to our second quarter earnings conference call. I’m Stacy Frole, Cedar Fair’s Director of Investor Relations. Earlier this morning, we issued our 2012 second quarter earnings release.

A copy of that release can be obtained on our corporate website at www.cedarfair.com or by contacting our Investor Relations Offices at 419-627-2233. On the call this morning are Matt Ouimet , our President and Chief Executive Officer; and Brian Witherow , our Executive Vice President and Chief Financial Officer. Richard Zimmerman, our Chief Operating Officer, is also with us today for the call.

Before we begin, I need to caution you that comments made during this call 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. You may refer to filings by the company with the SEC for a more detailed discussion of these risks. In addition, in accordance with Regulation G, non-GAAP financial measures used on the conference call today are required to be reconciled to the most directly comparable GAAP measures.

During today’s call we will make reference to adjusted EBITDA as defined in our earnings release. The required reconciliation of adjusted EBITDA is in the earnings release and is also available to investors on our website via the conference call access page. In compliance with SEC Regulation FD, this webcast is being 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 the call will be considered fully disclosed.

Now I will turn the call over to Matt Ouimet .

Matt Ouimet

Thank you Stacy, and good morning, everyone. As we enter the final third of our operating season, I am pleased to report that results remain strong and our outlook positive. Based on our year-to-date results through this past weekend we are on target for another record year in 2012. This would be our third consecutive year of record-setting performance.

Brian will review the details behind the results through the second quarter in just a bit, but first I would like to briefly comment on our performance to-date. Based on preliminary results through this past Sunday, August 5th, year-to-date revenues have increased 3% or $21 million when compared with Sunday August 7, 2011. This increase reflects a 4% or $1.46 increase in average in-park guest per capita spending and a 2% or $1 million increase in the out of park revenues.

Year-to-date, attendants at our parks through this past weekend was comparable to the record setting performance of a year ago. While we are pleased with the strength of our revenue growth as a result of our increased per capita spending, I would first like to address our recent attendance trends.

Performance in July 2011 was unusually strong, presenting difficult year-over-year comparisons. While this was largely anticipated, we were further impacted by the extended heat and accompanying storms in the east and mid-west. The combination of these factors explains why our year-to-date attendance is now flat to the high bar we set in the prior year.

While we believe our unit holders appreciate performance updates throughout our operating season, it is important to remember that such abbreviated snapshots cannot be readily extrapolated to the full year. History has shown us that extreme weather conditions typically average out over the course of the full operating season and as we have seen a return to more normal weather patterns over the past couple of weeks we have seen attendance begin to normalize as well.

While this year’s attendance through August 5th is essentially flat compared with the record attendance of the prior year, our new initiatives have allowed us to drive strong guest per capita spending levels and to grow our revenues. We remain positive that we are on track to meet our guidance of full year to net revenues between $1.055 billion and $1.075 billion and adjusted EBITDA between $385 million and $395 million.

A little over six months ago we unveiled to investors our FUN forward long term growth strategy which included six key growth initiatives. Through these key initiatives we expect to grow adjusted EBITDA to $450 million by 2016. While we are only a little more than three months into the operational execution of this plan, we remain confident in our ability to meet these expectations.

One of these initiatives in enhanced guest experience focuses on delivering a compelling value for the price paid at every park every day. We believe one of the best metrics in determining its success with this initiative is a Net Promoter Score or NPS. For those of you not familiar with NPS, it is a customer relationship metric based on the fundamental perspective that every company’s customers can be divided into three categories: promoters, passive and detractors.

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