CF announces 3Q results

[PhantomTheater]

http://www.cedarfair.com/ir/press_releases...mp;story_id=209

[RailRider]

Not a huge surprise that attendance was down this year. The economy and the poor weather, especially at the start of the seasson and then the rainy weather during October definately did not help. I am somewhat impressed with how much they were able to pay debts down, but that is also suffocating the company. Big reasson they are susspending dividend payments starting next year. Big sell off today because of this news and some have downgraded the stock to sell. Hey good time to buy if you have the loose change laying around.

[The Interpreter]

The earnings call transcript:

http://seekingalpha.com/article/170967-ced...call-transcript

Some notes:

Focus from now on is on debt reduction.

The two coasters at Kings Dominion and Carowinds were ordered two years ago. The company tried to get out of taking delivery on them, but was not able to.

Light shows will be added to certain parks not receiving kids' area revamps.

Cedar Point's flume was originally ordered for delivery this year, but the company was able to defer delivery until next year.

The company intends to further reduce costs and operate even thinner labor wise next year than this.

This year alone, FUN cut:

* more than $10 million in salaries and wages (and there were layoffs, especially at the former Paramount Parks...the company sees it as unlikely that most will ever be called back)

* $5 million in operational supplies and expenses

* $2 million in utilities.

The weather, the economy and the breakdown in the credit markets combined to create the near perfect storm, devastating otherwise expected results.

Valleyfair! and Worlds of Fun had been on the market in order to try to avoid cutting out the distribution. Now that that is virtually impossible, the company will re-evaluate whether these assets will be sold. A recommendation has been made to the board to keep those assets if at all possible.

Refinancing of the revolver can be expected next year, and in late 2010/early 2011, the company will attempt to refinance its long term debt, which otherwise begins becoming due and payable in February and August of 2012.

The City of Santa Clara will be in to discuss the stadium situation next week.

For the first time in Mr. Kinzel's career, merchandise, food and games were all down consistently across all the parks. Group sales, in particular, were dramatically down.

[TH13TEEN]

Hey Terpy would you mind breaking down the CF press release a little? I'm not very good with all this stuff, I try though.

[The Interpreter]

Essentially, had it not been for the Canadian land sale, things would have been even worse. And, because they did not do as well as expected this year, the debt covenants require they suspend the distributions to unitholders next calendar year, unless they make a ton more money this quarter than they expect, which is very unlikely, given that only Knott's Berry Farm even operates the rest of this quarter.

[Captain Picard]

What made me want to buy? Simple, insanely cheap price about a week ago when it was hovering between $12 to $13 and they have been trending a 3% attendance increase this year. Also early reports from Michigans Adventure recorded record attendance this year. Looked to me that FUN stock was severly undervalued and by this time next year I see it being in the mid to high 20's

Not a huge surprise that attendance was down this year. The economy and the poor weather, especially at the start of the seasson and then the rainy weather during October definately did not help. I am somewhat impressed with how much they were able to pay debts down, but that is also suffocating the company. Big reasson they are susspending dividend payments starting next year. Big sell off today because of this news and some have downgraded the stock to sell. Hey good time to buy if you have the loose change laying around.

Well it's next year and you still seem to be optimistic. Looks like you are going to recommend it all the way to 0.

[The Interpreter]

Hmmm...in at $12 to $13...closed today at $6.99. So, if you bought $10,000 at $12 (trying to be kind) a bit over a year ago, today you have...$5825. A loss, so far, of $4175 on your $10k investment. Hold on for more? You will either gain your loss back, though it will take a 71.6 percent gain to get there....or you could lose every dime (See, for instance, Six Flags, which, though not zero yet, is darn close. And wait til after Thursday on that particular ...uh...beagle?)

[The Interpreter]

Here is a layperson's interpretation of the earnings release:

http://www.tradingmarkets.com/.site/news/S...20News/2623025/

[windshawne]

I see nothing optimistic about this at all. Eliminating those jobs permanently is a bad move-which is going to detract from the overall experience at the park. It's the same all over.

[The Interpreter]

The local Sandusky Register take:

...Revenues plunged and the company is being forced to take an unprecedented step. Next year, it will not make any cash distributions to the owners who hold unit shares in the company....

Kinzel said the company had to struggle to continue the cash distributions this year, taking steps that included layoffs of park employees.

Although company officials generally avoided talking about individual parks, Kinzel discussed a decline in occupancy in company hotels at Cedar Point.

He said hotel room occupancy historically at Cedar Point had been in the 90 to 95 percent range but fell into the low 80s this year.

http://www.sanduskyregister.com/articles/2...0b308292624.txt

See also:

http://ocresort.freedomblogging.com/2009/1...visitors/24205/

That article indicates Knott's has said this year's Haunt had flat attendance...

[RailRider]

I will admit that the debt load is killing any chance of positive results right now for CF. As they continue to carry the large debt load from the PParks addition they will either figure out how to opperate more efficiently with it or they will go under. Next year will be a very important year for the parks and attendance and guest spending. CF needs to act swiftly to incentivise guests to visit more and spend more inside the park. This years prices and options inside the parks did not to help in park spending.

I am still a firm believer that CF stock whether last year or this years price is a good buy and I think it will rebound long term. Then again thats how I invest, I do not look short term, so I expect fluctuations from year to year. I would also expect the stock to recover some from yesterdays sharp sell off. Should be interesting to see where it sits Friday.

[LaShatelle Fountaine]

"Cedar Point's flume was originally ordered for delivery this year, but the company was able to defer delivery until next year"

I haven't been paying much attention to the updates about "Shoot the Rapids", but does this mean the proposed attraction wont be opening in 2010, or does it mean construction wont start until 2010? Thanks!

[PhantomTheater]

STR was to be built for the 2009 season, however it was delayed till now and is scheduled to open on opening day in may 2010. It is an Intamin however...

[LaShatelle Fountaine]

Thanks for the clarification. I was under the assumption it was announced this past summer, and was slated to open for 2010. I never knew it was originally a project for 2009. Thanks!

[pkimike]

This may be really stupid but I have looked over the report several times and I can't find the answer to some of my questions.

Based on this statement in the press release:

"Based on preliminary October results, revenues for the first ten months of the year, on a same-park basis (excluding the impact of Star Trek: The Experience which closed in September 2008), were $912.7 million compared with $983.2 million for the same period a year ago, on 28 more operating days."

All I ever see is the comparison of last year to this year. According to the statement above CF made $912.7 million through October this year. So they are down $70.5 million through October this year compared to last. What were their expenditures for 2009? How much money did they lose or make for the 2009 year? Last year I remember them making a small profit. I would like to know what the bottom line was for this year.

[The Interpreter]

From that same press release:

Net revenues for the nine months ended September 27, 2009, which included 25 additional operating days compared with 2008, decreased $66.5 million to $810.5 million from $877.0 million a year ago. Net income for the first nine months of 2009 decreased $0.8 million to $61.7 million, or $1.10 per diluted limited partner unit, from net income of $62.5 million, or $1.12 per diluted limited partner unit, for the same period in 2008.

So net income this year for the first nine months was $61.7 million dollars, compared to last years $62.5 million.

2009 isn't over yet.

Expenditures? Again from that same press release, for nine months:

Excluding depreciation, amortization and other non-cash costs, operating costs and expenses for the nine months decreased 5%, or $28.6 million, to $513.8 million compared with $542.4 million for the same period a year ago. “The decrease in operating costs is the direct result of the successful implementation of numerous cost savings initiatives across our parks, as a proactive step to partially offset the impact of the negative attendance trends, and to a lesser extent the closing of Star Trek in late 2008,” said Kinzel.

[pkimike]

Thanks - Man your fast!

Still a little confused - Not used to the language they use.

This is what you posted:

"So net income this year for the first nine months was $61.7 million dollars, compared to last years $62.5 million."

So they have made money? $61.7 million dollars?

[The Interpreter]

The way they define things, yes. Cedar Fair likes to use the term EBITDA...earnings BEFORE interest, taxes, depreciation, amortization and "other non-cash items." It is a non-standard way of accounting that others in the park industry also use. Under that:

Adjusted EBITDA for the nine months ended September 27, 2009, which management believes is a meaningful measure of the Company's park-level operating results, decreased $37.9 million to $296.7 million from $334.6 million for the same period a year ago.

Interestingly, this time the EBITDA looks worse than the usual, standard measure. That's VERY unusual.

The table at the end of this PDF file is VERY helpful:

http://www.cedarfair.com/_upload/pressrele...ngs-release.pdf

[The Interpreter]

An interesting perspective, including this:

..."We are definitely going through a change in investor base with this announcement," said spokeswoman Stacy Frole. "We had investors who invested because of that distribution. Now, we're seeing interest from value investors who see an opportunity."

Frole said she couldn't predict whether the distribution would be brought back. But she said debt reducing measures should produce better total return for investors.

"We believe it's going to make us a stronger company in the end," she said.

http://www.cleveland.com/business/index.ss...cut_its_di.html

That article may well deserve your reading in its entirety...

[The Interpreter]

Cedar Fair has made a big deal out of the fact that it is currently changing investors, given its announcement that distributions to unitholders are being curtailed. The market has responded negatively, and continued to do so today. In a generally up market, FUN closed at $6.10 per unit, down 20 cents, or 3.17%. The six dollar level may soon be tested, or investors may rush in to buy at a perceived bargain price. Time will tell.

[jzarley]

..."We are definitely going through a change in investor base with this announcement," said spokeswoman Stacy Frole. "We had investors who invested because of that distribution. Now, we're seeing interest from value investors who see an opportunity."

Interesting spin: "see, it's good we're not paying a dividend anymore because now we'll get shareholders who really care about the company, instead of all these greedy divdend-grubbers."

[The Interpreter]

Especially given how much no less than Dick Kinzel himself used to rhasodize during conference calls about the importance of that dividend to the unitholders. Interesting it was Stacy, and not Dick, who was delegated the duty to spin that one. I guess given a choice of protecting the dividend and protecting one's own hide, management chose to save its hide.

For now.

[jzarley]

^ especially considering that they extended their debt load specifically to be able to continue the dividends.

[The Interpreter]

To be fair, I think one or more of the debt covenants would have been violated had the distributions not been suspended. And quite a bit of the questioning hinged around questions about whether this and management's other actions would be enough to keep from triggering other covenants. I do find it rather astounding that so far no one on an investor call has questioned management's pricing and capex strategy. Then again, over at that place that numbers its flags, no one during such a call seems to have questioned keeping Mr. Snyder in control, even with his what seems to be apparent self-dealing, about which:

http://www.washingtoncitypaper.com/blogs/c...s-stockholders/

[Diamondback FOF]

I just want to make sure it is true and it isn't many typos by many people on this website:

Cedar Fair did try to cancel both Intimidator coasters, but they were not able to do so, correct? I was on kdfansite.com talking about Intimidator 305 and brought up CF trying to cancel both Intimidators, and no one believes it.

I'm guessing

Our capital is pretty well dictated a couple of years ahead of time, too cautious that we are putting it next year, actually we ordered two years ago. So, consequently, we had to stick with those and not only we try to stay between $80 and $90 million, we are in that range, unfortunately, up this time last year when the banks were having their problems, we sort of anticipated it was going to be a soft year.

So we really postponed that the $10 million flume that we are putting at Cedar Point this year, we ask our ride manufacturer to put that off for a year. So, consequently, that took us a little bit over what we wanted to do this year in capital, but looking forward, hopefully while the economy is going to start turning around in the first quarter of next year, but again the major emphasis was that we really have those rights ordered.

We really could not get out of them (speaking of Intimidator's), but hindsight I think it’s going to be a great ride and I think next year could be a very promising year for us.

is referring to cancelling those two coasters?

[Diamondback FOF]

Sorry to double post. Can someone please answer my two above questions?

[The Interpreter]

Yes, someone can and will. Your assumption is correct. The transcript isn't quite as clear as the tone of voice, words and inflection Mr. Kinzel himself used during the call.

[74Gibson]

DbFOF, I was in that thread too and getting quite annoyed. I really haven't been impressed with the quality of post there or the attitudes of those who do. I thought you were more than kind in your response. Had I remembered my login I would have replied ahead of you, in your defense.

[Diamondback FOF]

Thanks. I definitely have noticed over the last couple of months there seems to have been TONS of arguing. And many people are unaccepting to other peoples' ideas. I think I'll stick to posting mainly here.

[74Gibson]

Your welcome.

Unfortunately (but also a kudos to KICentral) I've made that decision for several sites.