Leland Wykoff Posted January 19, 2012 Share Posted January 19, 2012 Gems from today's Analyst presentation in New York: 2012 Distribution will be $1.60, payable in four equal quarterly installments. 2013 Distribution guidance is still somewhat up in the air, however, it is expected to increase. Loan covenants are no longer an issue as FUN has outgrown the covenants and are free to award distributions as they see fit. FUN's goal is to continue increasing distributions across time. Distribution increases will be a function of increasing earnings following the next couple of years spent restoring the distribution to historic levels. Great America Deal--Brian and general council worked to rationalize a 35 year lease extension featuring a generous cash payment to offset disruption costs. Only park located on leased land. Had a great year, but not quite a record year. Water park expansions are profitable and quick. Coaster costs are not, generally, as productive a capital investment. To protect the base coaster investments are often required. Growth projected at 4% based upon industry trends. Yield management borrowed from the hotel industry will assist in achieving the growth. Refreshment of resorts will be a priority in order to maintain and grow the family market that stay on park longer and spend more money. This is a significant departure from Kinzel management. Lights and Fireworks are the method to keep people on park after dark. This is the only method successful in the Theme Park industry to extend stays. Thus you keep the guests for Dinner and increase on park revenues. Price increases at parks are expected to be in the neighborhood of inflation this coming season. Growth will be achieved by increasing earnings from on park sales, cementing the season pass holder relationship, exploring a subscription based model of passes, pre-selling more on park activities in order to increase day of visit spending (such as pre-pay parking and meals), entering partnerships and/or sponsorships, reducing ticketing costs and leakage by eliminating or restricting third party ticketing sales, and growing attendance. Less reliance on revenue sharing will be a hallmark. Revenue enhancements such as FastPass programs will expand after having been tested last season. Yield increases are expected to drop significant sums to the bottom line. The presentation featured graphs identifying individual park revenues/profitability and thus has increased transparency to a great extent. New measurement and evaluation metrics will be imported from the broader hospitality industry including ADR and yield management practices. Best practices will be implemented from the cruise industry. Best practices will be shared across the system from the individual parks. Incremental tuck-in acquisition opportunities will continue to potentially play a role in growth. However, at this time no specific acquisitions are under active consideration. Mr. Ouimett expressed an interest in the write-up of Carnival Cruise Line by one of the analysts. Ouimett stated "That is a lesson in do the right thing." This suggests Ouimett will invest the proper funds in maintenance and safety training. Capital investments in new attractions are expected to remain at the 9% of revenue peg. Maintenance investments/costs are also expected to remain in the 9% of revenue range. Sorry if this post is a bit disjointed—I have written it on the fly as the conference was taking place. Quote Link to comment Share on other sites More sharing options...
kingsrattler Posted January 19, 2012 Share Posted January 19, 2012 Thanks for the notes! Quote Link to comment Share on other sites More sharing options...
tommyh88 Posted January 19, 2012 Share Posted January 19, 2012 The presentation was a much welcome departure from the way Kinzel conducted such things. Ouimet knows what he is doing, for sure. A few other highlights: - In just a half season at Kings Island, Fast Lane generated nearly $1 million. Ouimet did mention that it is meant to be implemented to not disrupt the experience for those who did not purchase it. - They have set a 5-year capital plan, that includes about 9% of earnings each year. 9% will also go toward maintenance. It was said that there are plans for new attractions at Great America. - Ouimet mentioned that in the future, he hopes for and would consider a plan for season passes that includes a month to month payment plan. - Woodstock and Franklin characters are being introduced in 2012. - As stated above, there will be a renewed focus on better quality food and resorts. Ouimet said he differs from Kinzel in that area and that quality food is part of the overall experience. - Cedar Point is still the flagship, and the corporate headquarters will remain in Sandusky. There will be a brand new night show called "Luminosity - Ignite the Night" that will premiere at the park and eventually roll out to other parks. The way it was described sounded like a much better upgrade from the "Hot Summer Lights" shows at CP, with more lights, projectiobs, and fireworks, similar to Canada's Wonderland's Starlight Spectacualr. - Ouimet made the comment that he "will not be the manager Dick Kinzel was." He continued by saying Richard Zimmerman (COO) would take on such responsibilities and that he has faith in his management team. Basically, he won't micromanage the way Dick did. - During the Q&A, it was asked if Ouimet planned to implement "Disney touches" on the parks. He answered by saying he wants to create better quality experiences, inspired by Disney, but made it known that they aren't Disney. - Included in the presentation was a graph showing the revenue, margins, and attendance of each park. This is something that was never done publicly under Kinzel. Several attendees complimented the detailed and transparent presentation. If only I could get my hands on the report, I'd like to see the breakdown by park. 1 Quote Link to comment Share on other sites More sharing options...
Beast1979 Posted January 19, 2012 Share Posted January 19, 2012 Here is the media used during the presentation: http://cf.wddnsweb2.wddonline.net/_upload/pressreleases/final%20funforward%20presentation%20-%20with%20ebitda%20reconciliation.pdf Page 19 includes pie charts with revenue divided by park. Cedar Point takes #1 with a firm lead, Knotts Berry Farm a sizable second, Kings Island and Canada's Wonderland about tied for third, Kings Dominion and Carowinds in fourth and fifth, and Dorney, Valleyfair, Worlds of Fun and Great America about tied for last. Page 28 lists us as one of four parks at the top with over 3 million guests per year, with Knotts, Cedar Point and Canada's Wonderland. Page 39 says that total attendance across the chain was 23.4 million people, and average in-park spending is about $40, up 2% from past years. Page 40 has a pie chart with attendance by group....Season Pass holders and front gate / advance ticket sales are about even with a bit over a third each. Business group is a smaller third. Don't know how much of this we'd known before, just some interesting highlights. Quote Link to comment Share on other sites More sharing options...
TTD-120-420 Posted January 19, 2012 Share Posted January 19, 2012 A lot of this is information that Dick used to keep private. Quote Link to comment Share on other sites More sharing options...
Vortex Posted January 19, 2012 Share Posted January 19, 2012 I hope the price increases are not to much. Quote Link to comment Share on other sites More sharing options...
The Interpreter Posted January 19, 2012 Share Posted January 19, 2012 The only thing I would add to the above notes is that it was mentioned FUN will incur $11 million in expenses associated with the retirement of the former CEO. From what I read and saw today, that is money well spent. Interpret that however you will. Well, that and the fact the major FUN burger locations will be selling fresh, never frozen burgers this year. Quote Link to comment Share on other sites More sharing options...
CoastersRZ Posted January 20, 2012 Share Posted January 20, 2012 Definitely seems like Cedar Fair is on the right track under Ouimet. Nice to see an emphasis on the resorts. I wonder how long before we see some new hotels springing up in parks that currently do not have an on site hotel? Also nice to see the transparency that has been created. Quote Link to comment Share on other sites More sharing options...
The Interpreter Posted January 20, 2012 Share Posted January 20, 2012 During the conference, it was noted that there is already enough hotel capacity around the parks. I should also perhaps add Franklin and Woodstock are coming! Quote Link to comment Share on other sites More sharing options...
CoastersRZ Posted January 20, 2012 Share Posted January 20, 2012 While there may be enough hotel capacity around the parks, some parks do not have on property hotels. Wasn`t the point of having on property hotels mentioned as a way to entice visitors to stay longer? I know they mentioned having more night time events as a way to extend the length of stay and in turn boost the amount of in park spending that families would do in the parks. Quote Link to comment Share on other sites More sharing options...
Captain Picard Posted January 20, 2012 Share Posted January 20, 2012 All the charts bring back memories of Ross Perot. Quote Link to comment Share on other sites More sharing options...
TTD-120-420 Posted January 20, 2012 Share Posted January 20, 2012 Who is Franklin? All I can think of is the turtle. Quote Link to comment Share on other sites More sharing options...
bkroz Posted January 20, 2012 Share Posted January 20, 2012 ^ Franklin was the first African American character in the Peanuts strip. Too bad they didn't introduce him to the park earlier... Would've made the transformation of Little Bill's Giggle Coaster a lot simpler... While there may be enough hotel capacity around the parks, some parks do not have on property hotels. Wasn`t the point of having on property hotels mentioned as a way to entice visitors to stay longer? I know they mentioned having more night time events as a way to extend the length of stay and in turn boost the amount of in park spending that families would do in the parks. You mean, like Kings Island? Ouimet is a smart man and helped transform Disneyland Park into Disneyland Resort. To do that, he helped oversee the integration of Disney California Adventure Park, Downtown Disney, and two new resort hotels. Parks like Kings Island and Cedar Point can certainly be multi-day destinations for some people, but like Disneyland Park when it was all by its lonesome, even that has its limits. You also have to consider what people stay in "official, on-site" hotels for. At Disney World, it's convenience. It's a 30,000 acre resort, and staying at an on-site hotel offers ease of transportation, pure and simple. At Disneyland, where some off-property hotels are a shorter walk than the on-property ones, guests who stay in official hotels want to be part of the magic and the charm. There are also benefits, like early admission, exclusive entrances, Disney dining plans, Fast Passes upon check-in, airport transportation, bags that "appear" in rooms while you check in, and "Disney magic" that brings the experience of the parks into the hotel room. As I see it, an on-property, "official" hotel at Kings Island would provide no more services than an off-property one, and would cost quite a bit more. A "Kings Resort" if you will would probably jack up the price and offer customer service and amenities comparable to the Super 8 across the street. Besides that, Kings Island is a park that caters to locals to a great extent. Disneyland wasn't nearly as much of an "international destination" until the second gate came along, and the existence of only one hotel until 2001 demonstrates that. Quote Link to comment Share on other sites More sharing options...
westcoaster Posted January 20, 2012 Share Posted January 20, 2012 Sounds like Cedar Fair has a plan for sure. Wonderful character additions, and wow for Great America 4 attractions. Seems these meetings are much more open on the information. Hope the family attractions come to happen at the parks. Quote Link to comment Share on other sites More sharing options...
markr Posted January 20, 2012 Share Posted January 20, 2012 The only thing I would add to the above notes is that it was mentioned FUN will incur $11 million in expenses associated with the retirement of the former CEO. From what I read and saw today, that is money well spent. Interpret that however you will. Well, that and the fact the major FUN burger locations will be selling fresh, never frozen burgers this year. They should make the burgers at all their parks like they do at Dorney Park-their burgers are to die for. Quote Link to comment Share on other sites More sharing options...
The Interpreter Posted January 21, 2012 Share Posted January 21, 2012 http://m.toledoblade.com/business/2012/01/20/Cedar-Fair-foresees-growth.html Quote Link to comment Share on other sites More sharing options...
jzarley Posted January 23, 2012 Share Posted January 23, 2012 I found the investor presentation to be very interesting...I can see why those in attendance were impressed with the detail presented. The revenue by park doesn't present any major surprises...my assumption is that the CP numbers also include all "resort" revenue (hotels, the marina, etc.) not just park-generated revenue. It makes sense that KBF would be #2 (considering its huge So. Cal. market, and the fact that it has nearly year-round operation), and it makes sense that KI and CW would be tied for 3rd. It is interesting to note that the Paramount Parks acquisition gave CF 50% of their four highest grossing properties...so, maybe it was ultimately worth the money Kinzel paid for it. One other thing I thought was interesting was the mention of the "Accesso" e-commerce system for dynamic pricing...the concept reminds me a lot of the "yield management" practices the airlines and many hotels have done for years. Back when I was working in the hotel industry, I was very involved with a yield management implementation at a chain...our mantra was "the right room, at the right time, to the right guest, at the right price" which seems very similar to the mention in the presentation of the "right price to the consumer." It will be interesting to see how they implement this...in a hotel or an airline you're using the service for a specific date. Historically, theme park tickets have always been available for purchase for any date you wish to use them...so, it will be interesting to see how this concept of "yield management" is presented here. Quote Link to comment Share on other sites More sharing options...
The Interpreter Posted January 29, 2012 Share Posted January 29, 2012 Who is Franklin? All I can think of is the turtle. Franklin enters at 24 seconds in: Quote Link to comment Share on other sites More sharing options...
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