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Six Flags Entertainment Corporation (FUN)

Q2 2013 Earnings Call· Thu, Aug 8, 2013

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Transcript

Operator

Operator

Good day ladies and gentlemen, and thank you for standing by. 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 opened for questions. [Operator Instructions]. This conference is being recorded today, Thursday, August 08, 2013. I would now like to turn the conference over to, Stacy Frole. Please go ahead, ma’am.

Stacy Frole

Analyst

Thank you, Lara. Good morning, and welcome to our second quarter earnings conference call. I’m Stacy Frole, Cedar Fair’s Corporate Vice President of Investor Relations and Corporate Communication. Earlier today, we issued our 2013 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 analyst 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’ll turn the call over to Matt Ouimet.

Matthew Ouimet

Analyst · KeyBanc Capital Markets

Thank you, Stacy and good morning everyone. As we entered the final third of our operating season, I am pleased to report that our results remained strong and we are on track for our fourth consecutive year of record results. In the second year of our FUNforward initiatives, we continue to build on the momentum that began in 2012. On today’s call, I will discuss several of these initiatives which have been instrumental in driving our strong current year performance, and Brian will provide a more detailed review of the financial results for the second quarter ended June 30th. First, I would like to briefly discuss recent revenue and attendance trends through this past Sunday. Based on preliminary results through August 4th, net revenues have increased approximately 5% when compared with the same period a year ago. The increase in net revenues is a result of increases across all areas of our business, including a 5% increase in average in-park guest per capita spending to $43.47 and a 7% increase in out of park revenues. Attendance over the same period was down less than 1%. Excluding the San Diego water park that we sold in November of 2012, attendances were up 1% to a record 15.0 million visits on a comparable park basis. We are particularly pleased with our ability to achieve record attendance levels through July, especially considering that we eliminated a separate-charge water park gate at our park in Kansas City, Missouri. That water park, Oceans of Fun is now included in the admissions gate for our Worlds of Fun amusement park for the 2013 operating season and is no longer counted as a separate gate. In regards to our FUNforward strategy, we are increasingly confident in our ability to generate growth in both the short and long…

Brian Witherow

Analyst · Tim Conder with Well Fargo Securities

Thanks, Matt and good morning to everyone on the call. First, I want to remind you that virtually all of the revenues from our seasonal amusement parks, water parks and other resort facilities are realized during the 130 day to 140 day operating period, beginning in the second quarter with the majority of the revenues concentrated in the third quarter during the peak vacation month of July and August. Only Knott’s Berry Farm is open year round and the third quarter is also their highest level of attendance. I’ll also caution you it is always risky to jump to any conclusion about the full year results based on second quarter’s numbers alone. As Matt mentioned earlier, as of this past Sunday August 4th, approximately one third of our operating days are still to come. Also, as noted in our release, the fiscal three month period ended June 30, 2013, consisted of a 13 week period and included a total of 800 operating days, compared with 14 weeks and 905 operating days for the fiscal three month period ended July 01, 2012. Because the second quarter is not easily comparable with the prior year, I will focus my discussion on six months release which compared to 26 weeks periods. So moving on, as detailed on our earnings release this morning, which had a strong start to the first half of the year with meaningful increases in net revenues and adjusted EBITDA. Net revenues for the six months ended June 30, 2013 were 403.4 million, up 17.6 million or 5% from 385.8 million for the six month period a year ago. The solid revenue growth was a direct result of a 5% or $1.93 increase in average in-park guest per capita spending to $42.17, and a 6% or 2.8 million increase in…

Matthew Ouimet

Analyst · KeyBanc Capital Markets

Thank you, Brian. Before we open the call for questions, I would like to briefly comment on our upcoming Halloween events. Halloween continues to be an increasingly important part of our operating season. In fact, weekends in October are often the highest volume and most profitable weekends of the year. As such, our Chief Operating Officer, Richard Zimmerman and the general managers remain focused on ensuring that we continue to deliver on ads of the high quality experience our guests have come to expect from our notorious thought. This year our Halloween Haunt will have 23 new themed mazes, seven brand new scare zones, expanded dining options and alive or (inaudible) as the case may be entertainment. In addition, we have expanded our marketing programs as well as our very successful public relations activity to draw considerable media attention. By providing a strong value proposition and an excellent experience, the Haunt drives high visitations, supports our pricing strategy and stimulates per capita spending. And beyond the Halloween period, we are actively launching our new 2014 new rides and attractions. Our first big announcement happens tonight at Kings Island in Cincinnati Ohio. While social media sites have been speculating for months as to what this announcement will be and our local public relations team has enjoyed providing the occasional misleading clue, I can assure our loyal guest that they will be able to proudly report another record breaking addition to the Cedar Fair portfolio. Over the next several months, the other new product additions will be announced but this includes extended family rides at several of our parks and innovative interactive dark ride that will set a new industry standard, water park expansions, reinvigorations of some of the most legacy attractions as we did this year with our Timber Mountain Log Ride at Knott’s Berry Farm along with an expansive collection of new entertainment shows. In closing, I’d just like to remind everyone that the foundation for our future success remains providing a great experience, add a strong value for our guests. As long as we remain committed to this principle, we will continue to create loyalty from our guests and value for our unit holders. And with that, I will turn it back over to Stacy. Stacy?

Stacy Frole

Analyst

I think at this point in time we are ready for questions.

Operator

Operator

Thank you, ma’am. We will now begin the question and answer session. [Operator Instructions]. And our first question comes from the line of Scott Hamann with KeyBanc Capital Markets. Please go ahead. Scott Hamann – KeyBanc Capital Markets: Good morning everyone. I know the weather trends were a little bit sketchy throughout the course of the quarter and even in the July. Can you talk about some of the regional variations that you saw? And if there is any evidence based on the booking or ticket sales trend that might indicate that some of these visits were simply deferred into later periods versus actually just lost?

Matthew Ouimet

Analyst · KeyBanc Capital Markets

Yes Scott happy to talk about it Richard and Brian knows not happy to talk about weather. But a couple of things I’d say to you, one is I think what we’re seeing is the benefit of a geographic first portfolio. Clearly we benefited this year from having parks in southern and northern California in the early part of the season here. The other is that our July results I think start to demonstrate the recapture that’s available when you have unfavorable conditions in the first part of the year. What I would say more broadly is every industry has uncontrollable factors. Our job is to mitigate those uncontrollable factors and I would say the advanced purchase commitment particularly season pass program, our group sales programs, and in our case the resorts we have are all examples of things that help mitigate when weather may be isn’t as funny as you’d like it to be. Scott Hamann – KeyBanc Capital Markets: Okay, sounds good. And then just a follow up, it seems like there is a lot of activity going on in San Francisco area around the new stadium. And just curious if you had any thoughts about potential opportunities out that way given what looks like is going to be a big increase in kind of attendance and visitations to that area around your park?

Matthew Ouimet

Analyst · KeyBanc Capital Markets

Yeah I think it’s a great question I appreciate it Scott. Was just there last week myself visiting with the city and talking with the 49ers and touring the park with the general manager. Richard Zimmerman has been there couple of times this year as have our development people. So for those who don’t track as directly, the NFL has a brand new stadium the 49ner stadium. It will begin in the 2014 season and is immediately adjacent to our parking lot and our park there. Beyond the anticipated promotional – cross promotional activities we will have with the 49ers organization particularly, we are looking at what type of activities particularly catering the special events we can do to extend our operating season there. And I think you’ll see some of our investments in the future things that we could not have contemplated as recently as two or three years ago before the stadium was announced. So we’re excited about that opportunity. I don’t know another regional amusement park that’s adjacent to NFL stadium. And so it’s not just the NFL games I should make clear, it’s all the concerts and other events that happen at that stadium that should benefit us as well. Scott Hamann – KeyBanc Capital Markets: Thank you.

Matthew Ouimet

Analyst · KeyBanc Capital Markets

Thank you, Scott.

Operator

Operator

Our next question comes from the line of Tim Conder with Well Fargo Securities. Please go ahead. Tim Conder – Wells Fargo Securities: Thank you and Matt congrats to the whole team on the good year to date so far and the execution here. Just a couple let’s go first to may be one of the obvious here, your adjusted EBITDA Brian you called out you’re up 19% year-to-date and now you’re at 404 million on a trailing 12 but the trajectory is good given what you’re seeing as far as your advanced ticket sales, your group business commenced through August 4. And let’s face it I know you don’t like to talk weather but in a good sense here the first half of August also has easy comparisons from very hot period last year. So I guess why no change to the guidance here? And do you expect those EBITDA margins for what different regions may be to compress over the back half of the year?

Matthew Ouimet

Analyst · Tim Conder with Well Fargo Securities

Thanks, Tim. First I’ll take the first half of that as far as the from the guidance side of things as you said, very strong numbers through the first half of the year and trends – top-line trends through the week ended August 4th and we’re very pleased by that back. With that said, we still do have a third of our operating season in front of us and as we’ve seen in prior years, a turn in October can work against you. So at this point in time, we’re still very comfortable with that we’re pacing well towards our 400 to 410 EBITDA guidance and don’t feel the need to adjust that at this point in time given we still have so much of the season in front of us. As far as margin goes, I think the one thing we take great pride in is that we are great cost managers and that discipline will always remain. With that said we have talked about reinvesting in the park you’ve seen us doing that over the last year and a half as we continue to try and drive guest service levels, as a means of adding value for the parks. We think ultimately that gives us more pricing power. So while we’re up 250 basis points through the first six months of the year – year-over-year, I wouldn’t be surprised if we saw a little bit of compression on that as our cost get a little bit more comparable. If you remember last year we were very heavily loaded in the first quarter of 2012 compared to 2013. So I’d see potentially some compression between now and the end of the year however, we did add 20 basis points last year to margin and I would expect that you’d see some margin expansion this year may be just not at that 250 basis points for full year. Tim Conder – Wells Fargo Securities: Okay, okay. And more of housekeeping item here, thank you for the color on the attendance down 52,000 year-to-date all in, up 75 if you exclude the sale of Soak City San Diego. Can you – Does that 75 I just want to clarify that plus 75 on an adjusted basis, are you normalizing also the combination of the water park and the theme park gate in Kansas City?

Brian Witherow

Analyst · Tim Conder with Well Fargo Securities

We are not Tim. Our belief there was that was a strategic decision. We went into it eyes wide open that there was some attendance risk however, when you compare it really back to how much for the full year attendance was exposed potentially, those folks that weren’t already buying a ticket or a pass that had dual purpose use, it was maybe about 150,000-ish visits roughly speaking for the full year. We believe that we could fully make that up through the combination of a draw of the two parts one price messaging and we’re seeing strong results as Matt said. We’re not only getting better per caps but we’re getting it on the attendance front as well. So we haven’t made any adjustments for that. Tim Conder – Wells Fargo Securities: If you would, what would that be Brian or do you have that handy?

Brian Witherow

Analyst · Tim Conder with Well Fargo Securities

I would say it’s tough mid-season to really say where it’s at Tim, I would tell you if we looked at it for the full year if we took that roughly 150,000 number I spoke to, the exposure for the full year would be somewhere between about 0.5% to a 1% of attendance. Tim Conder – Wells Fargo Securities: Okay, okay. So maybe we could add another 75,000 on a year-to-date that would be a rough guestimate to get to 150?

Brian Witherow

Analyst · Tim Conder with Well Fargo Securities

It’s really hard to say based when you’re mid-season based on the visitation pattern. So I think we’re not happy as on a same park basis attendance is up essentially a 1% year to date August 4th, and the decision in Kansas City is one that we’re very pleased with the results that we’re getting. Tim Conder – Wells Fargo Securities: Okay. And then final question Matt, you called out specifically what Phil and Craig were doing on the food front and how that’s enhanced your margins is one of the drives of margins. Can you talk about what you have done or potentially are considering to do as far as food packages? I know a competitors offered an all season dining pass just may be different things that you may be considering now that you’ve done some major changes on how you approach food?

Matthew Ouimet

Analyst · Tim Conder with Well Fargo Securities

And I think Tim the foundation for that actually is going to be a little bit back ended for you which is our new CRM system combined with our point of sale system is going to let us better understand what our season pass holders are doing today in terms of purchase behavior as well as all guests. So I think what you’ll see – I’m not ready to resort to a particular bell or whistle on this I think that we will continue to drive food per cap. I think we’ll drive it in several different ways but part of – the foundation will be a much more about intellectual understanding how to segment guest in terms of the food preferences, in terms of their spending habits, on visits etcetera. So I’m not ready to go into details on that. And the other thing to think about is the regional amusement park business because the season is relatively condensed, you can only set successfully execute it against a specific number of initiatives and I want to make sure we stay on the initiatives that we believe have the most impact and that we execute well against them and that’s a reminder Richard gives to me each and every day. So I wouldn’t expect us to see go down that path immediately, but you can expect us to continue to drive that important source of revenue. Tim Conder – Wells Fargo Securities: Okay. Thank you for the answers and the focus.

Matthew Ouimet

Analyst · Tim Conder with Well Fargo Securities

Thanks, Tim.

Brian Witherow

Analyst · Tim Conder with Well Fargo Securities

Thanks.

Operator

Operator

Our next question comes from the line of James Hardiman with Longbow Research. Please go ahead. James Hardiman – Longbow Research: Good morning. Thanks for taking my call. Just real quick housekeeping here Brian, help us with the calendar in the third quarter I thought and maybe I’m wrong I thought that last year’s third quarter that the calendar was a negative or shift out of 2Q into 3Q. But sounds like what you’re saying earlier that the shift was more first quarter and second quarter a year ago is it – even operating calendar this year third quarter versus last year?

Brian Witherow

Analyst · James Hardiman with Longbow Research

Yeah James. So most of the meaningful impact as far as the operating calendar is concerned was first second quarter with the timing of the Easter break as well as the second quarter. So when we look at this year’s third quarter and fourth quarter, any change in operating days is really more so tied to just like shifts in the actual operating calendar as opposed to any fiscal calendar. We were projecting six less operating day this third quarter versus last year’s third quarter so not really much of a different. James Hardiman – Longbow Research: Okay, perfect. And then I guess a little bit of a feedback on Tim’s question I sort of get the point about margins coming back to earth a little bit based on some investments. But would you call out anything in the back half of the year that would suggest that sales would decelerate in any way? And I guess may be split that into two separate questions on the attendance side, re-jog our memories weather was a pretty significant negative for you, not only in August of last year but I think during the weekend’s time. And then I guess separately on the per cap side, obviously you’ve got some whole lot of initiatives going on are we laughing some of those initiatives meaningful from a year ago such that maybe the per cap decelerates here in the back half of the year how should we think about that?

Matthew Ouimet

Analyst · James Hardiman with Longbow Research

James I’ll take that and then Brian I don’t know if you want to add anything to it. But even though we had, I would say unfavorable comparisons 2012 versus 2011 on a weather basis for August and into October, we still had a second most successful fall period that we’ve ever had. And so I think James that we’re optimistic about the fall for a number of reasons the most being the quality of our product we’re going to provide and kind of our new sales and marketing programs. So we remain optimistic about the fall. But last year even despite those challenges it was our second best fall we’ve ever had. I don’t know if you’ll see a deceleration on any of our initiatives. We will be rolling over the latter part of Fast Lane which was I would say more well installed by the time we got to the end of the last season, but still think we have running room there as well. James Hardiman – Longbow Research: Okay, that’s very helpful. And I guess last clarification I thought you guys made a brief reference to seasonal features of Fast Lane, what is that? How should I think about that?

Matthew Ouimet

Analyst · James Hardiman with Longbow Research

James you were listening closely. And we did make that reference and you’ll hear more about that from our media team as we get toward the next couple of weeks. James Hardiman – Longbow Research: Got it. Thanks guys.

Operator

Operator

Our next question comes from the line of Steve Altebrando with Sidoti and Company. Please go ahead. Steve Altebrando – Sidoti & Company: Good morning. The 5% increase in revenue through August 4th is that on a comparable operating days basis?

Matthew Ouimet

Analyst · Steve Altebrando with Sidoti and Company

Yes it is, Steve. Steve Altebrando – Sidoti & Company: Okay. And then in terms of FastPay, is there any color you could provide how that testing is going and if you’re planning to proceed to roll that out across the portfolio in ‘14?

Matthew Ouimet

Analyst · Steve Altebrando with Sidoti and Company

Yeah and glad you touched on that. So FastPay is a pilot program we’re running at Dorney Park this year where basically there is an RFID wristband you buy as you enter the park. And basically have it preloaded cash on you risk dispended throughout the park but most particularly the water park. We are very pleased with the results we see there. I would expect you would see that in multiple parks next year on a somewhat of a modified basis. But we’re a big believer that, that over time will become a standard for us I just think the adoption rate will be slower because it’s a product it isn’t widely available throughout the industry and we’ve got a little bit of the training consumer but so far we’re very pleased with those results. Steve Altebrando – Sidoti & Company: Okay thanks. And if you could touch on accommodations, I know it’s a fairly small part of the business, but pretty significant increase is – are you suspect economic tailwinds or the payment plans that’s boosting up?

Matthew Ouimet

Analyst · Steve Altebrando with Sidoti and Company

Well it’s interesting it’s probably a combination of things but I would say the number one thing that’s boosting is the quality it experience at Cedar Point and Knott’s. The new capital investments in those parts as Brian touched on drive not only attendance but overnight stays and two day visits as well and our team has done a really good job there. Along with and applying some revenue management practices that are typical for hotels and we run pretty high occupancies. So we’ve been pushing ADRs and been able to still able to sustain or grow our occupancies but fundamentally a day at the park is great two days is better. Steve Altebrando – Sidoti & Company: Okay. Thank you.

Operator

Operator

[Operator Instructions]. Our next question comes from the line of Afua Ahwoi with Goldman Sachs. Please go ahead. Afua Ahwoi – Goldman Sachs: Hi good morning. Just two questions for me first of all, have you seen any impact to your attendance number or any feedback from guests based on may be some of the recent incident that happened competitor’s parks? And secondly on the I know you touched on this multiple ways, but as we think about the operating expense line on the variable side is there anything you’re doing that helping you be very nimble to adapt sort of declining attendance trends especially when it’s temporary and may be weather (inaudible) shift driven that I think that is definitely one of the things that has surprised to the outside for both you and your competitor in the face of decline in revenues you were able to show good flow through and show good margins? Thanks.

Matthew Ouimet

Analyst · Afua Ahwoi with Goldman Sachs

I’ll take the first one and give Brian the second one. There are no discernible impacts to our business from the incidents in Texas. Brian?

Brian Witherow

Analyst · Afua Ahwoi with Goldman Sachs

Yeah as far as the operating expenses are concerned, as I said before cost discipline and being the best cost mangers in the industry remains a focus for us and part of that is Richard and his team of general managers on a daily basis who are managing their seasonal labor which is probably the most controllable and largest variable cost that we have. On days when we do have weather and weather will happen from time to time that general managers do an excellent job of dialing their seasonal staffing levels back accordingly. So I think that’s probably been the thing they’ve been most active on and we’ll continue to stay focused on.

Matthew Ouimet

Analyst · Afua Ahwoi with Goldman Sachs

And I will add though that I think it’s important to make sure that we meet our guest expectations when they show up. And so is an important balance in that equation. The weather should not affect the experience people have decide to get a little wetter. Afua Ahwoi – Goldman Sachs: Understood. And actually I figured it would probably be on the seasonal labor fund is there anything may be is there any technology or enhancements that has made it even better to sort of balance those moving parts now than may be a few years ago? I know sometimes you talk about tools that give the park manager more real time attendance update or real time get a better sense on real time attendance trends that make these decisions even more efficient and may be historically?

Brian Witherow

Analyst · Afua Ahwoi with Goldman Sachs

We’ve always had as far from attendance standpoint systems in place that allow our general managers to monitor the park on a very tight interval inside 15 minutes. But they are monitoring – their front line staffs are monitoring that and making adjustments as Matt said maintaining guest service levels. So it’s going both ways. It’s coming back on days where weather is against us and it’s ramping up where the attendance is pacing ahead. That said, we are and do have initiatives in place, some that were rolled out this year on time and attendance systems going into account platform. We’ll be continuing to roll those out of our system so we think we’ll have even more opportunity, more efficiencies built in over the course of next several years. But the parks are doing an excellent job working with what they have from a tool perspective at this point. Afua Ahwoi – Goldman Sachs: Okay, thank you.

Operator

Operator

And our next question comes from the line of Jeffrey Thomison with Hilliard Lyons. Please go head. Jeffrey Thomison – Hilliard Lyons: Thank you. First of all good job on year-to-date performance to the whole team there. Two operations related questions one, why does combining a water park gate and an amusement park gate into one ticket purchase work at some locations but not at others? And why was the change in Worlds and Oceans of Fun not a good idea now but not earlier? And then the second question following up on your comments on the Halloween events Matt, do you expect the Halloween season this year to be similar to last year in terms of companywide number of operating days and just as importantly collective budget?

Matthew Ouimet

Analyst · Jeffrey Thomison with Hilliard Lyons

I’ll take the Halloween one. It is essentially the same number of operating day plus or minus a day here or there and our expectations for Haunt continue to be strong. Again I would just challenge some of it would be attendance but a lot of it will be pricing. We believe that we’ve got a product that we can get behind and we want to make sure that we don’t chase volume at the risk of losing some profitability. But I would – and to give an honest response both from Halloween Haunt this year. As it relates to the water park, this is an idea that’s been out in this company for a long time considered over the years and I think specifically this was – we’ve got Cedar Point and we’ve got Knott’s Berry Farm where we still maintain separate water parks and separate amusement park gates. Those two have unique characteristics that I’m not going to go into today, which make us think that sustaining that current structure is the appropriate ticketing strategy for those two parts. Worlds of Fun, if you set those aside, Worlds of Fun was our last park it didn’t take advantage of two parks for one price which is an incredibly compelling consumer messaging and we’ve seen exactly that happen at World of Park as we had anticipated. It’s also a strongly defensible position against water park – standalone water parks because the value proposition is great for the consumer. And then the third thing is water parks play a disproportionate role in driving season pass sales because people see themselves going into the water park more times than they go to the amusement parks. And so all of that came together and I’m very proud of Phil Bender who championed us for us in this organization and we took a little bit of risk and we’re seeing almost the same attendance with very strong per cap growth. Jeffrey Thomison – Hilliard Lyons: Great. Good luck the rest of the way

Matthew Ouimet

Analyst · Jeffrey Thomison with Hilliard Lyons

Thanks Jeff. Appreciate it.

Operator

Operator

And I’m showing no further questions at this time. Please continue.

Matthew Ouimet

Analyst · KeyBanc Capital Markets

So on behalf of the entire management team, I would like to sincerely thank you for your time this morning and your continued interest and support to Cedar Fair. To summarize, we feel very good about our long-term strategy and our progress thus far in the 2013 season, which I truly believe is attributable to our loyal, dedicated and committed employees. Following my third operating season I’m continuing to be proud of the potential of all of our parks. We have the right people in the place at the right time, a portfolio of quality assets and our guest facing initiatives are beginning to gain traction. We continue to drive maximum value to our unit holders by executing against our strategy which we believe will optimize our value in both the near term and long term. Finally, for those of you who haven’t had the change to visit, I strongly recommend that you visit to one of our parks this summer to experience the unmatched quality of our parks and employees. Thank you for your time today. Stacy?

Stacy Frole

Analyst

Thank you everyone for joining us on the call today. Should you have any follow up questions feel free to give me a call at 419-627-2227 or Lisa Broussard at 419-609-5929. We look forward to speaking with you again in about three months to discuss our third quarter results.

Operator

Operator

Ladies and gentlemen, this concludes the Cedar Fair second quarter earnings conference call. Thank you for your participation. You may now disconnect.