Earnings Labs

Six Flags Entertainment Corporation (FUN)

Q2 2016 Earnings Call· Wed, Aug 3, 2016

$18.22

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Transcript

Presentation

Management

Operator

Operator

Good day everyone, and welcome to today's Cedar Fair Second Quarter Conference Call. Today's conference is being recorded and at this time, I would like to turn the call over to Stacy Frole. Please go ahead.

Stacy Frole

Management

Thank you Lisa. Good morning, and welcome to our second quarter earnings conference call. I’m Stacy Frole, Cedar Fair's Vice President of Investor Relations. Earlier today, we issued our 2016 second quarter earnings release. A copy of that release can be obtained on our website at www.cedarfair.com under the investors tab or by contacting our investor relation offices at 419-627-2233. On the call this morning are Matthew Ouimet, our President and Chief Executive Officer; and Brian Witherow, our Executive Vice President and Chief Financial Officer. Before we begin, I need to remind 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. For a more detailed discussion of these risks you can refer to filings made by the company with the SEC. In addition in accordance with Regulation G, non GAAP financial measures used on the conference call today are required to be required to the most directly comparable GAAP measures. During today’s call we’ll make reference to adjusted as to find in our earnings releases. It required reconciliation of adjusted EBITDA is in the earnings release and it’s also available to investors on our website be as a conference call at that page. In compliance with the SECs 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.

Matthew Ouimet

President

Thank you Stacey and good morning everyone. As you read in this morning’s earning release, we expect 2016 to be another record year and we remain on-track to achieve our long-term adjusted EBITDA goal of $500 million earlier than our original target of 2018. It is important to note our confidence is supported by certain data points, including preliminary year-to-date revenues through July 31, which were up 2%, season pass sales are up 15% and second quarter differed deferred revenues are up $25 million or 17% over the prior year. The growth in top-line revenue is the result of increases across all areas of our business, including record levels of attendance and guest spending. Out-of-park revenues including resort accommodations are also up and room reservations for the reminder of the year are trending ahead of the same period a year ago. In a moment Brian will address many of the details you need to update your financial models, but first, I want to proactively address what we experienced in July. We know our investors value having visibility into not just the previous quarter, but the most recent results as well. The shallow side of this transparency is the risk that smaller periods of time are not representative of what we expect for the full-year. We knew coming into this July, we would have tough year-over-year comps. In 2015, the July weather was nearly perfect. This year was different with extended heat wave and related storms negatively impacting many of our parks towards the end of the month. Even though we experienced the pull back in revenues during the month, we have the second best July in our history and as I said earlier we remained firmly on track to deliver record results again this year. To complete the transparency there…

Brian Witherow

Management

Thanks Matt and good morning everyone. Before I begin and following with Matt’s earlier comments, I want to remind everyone on the call that it’s always difficult to extrapolate partial season performance into full-year results. Essentially, 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 a vast majority of revenues concentrated in the third quarter, during the peak vacation month of July and August. Only Knott’s Berry Farm is opened year-round and the third quarter is also their highest level of attendance. As of this past Sunday, July 31, approximately 40% of our operating results are still to come. First, I would like to briefly discuss our results through the second quarter before moving on to more current revenue and attendance trends. As noted in our earnings release issued earlier this morning, the 2016 season is off to a strong start with meaningful increases in both revenues and adjusted EBITDA. Net revenues for the second quarter months ended June 26, 2016 were $446 million up 5% or $22 million when compared with the same six-month period a year ago. Our revenue growth over this period was largely driven by a 4% or 337,000 visit increase in attendance to 9 million guests and a 1% or $0.59 increase in-park guest per capita spending to $45.16. Over the same period, out-of-park revenues increased 7% or $3 million to $54 million when excluding the impact of changes in foreign currency exchange rates, guest per capita spending will be up 2% year-over-year. This revenue growth we've produced over the first half of the year is balanced across all areas of our business. The 4% growth in attendance is largely attributable to…

Matthew Ouimet

President

Thank you, Brian. As Brian just mentioned we continue to have great confidence in the resilience of our business model, the value of our strategic plan and our ability to successfully implement it. We also have a great degree of confidence in the quality of our total entertainment package and the value proposition is provides. This includes our upcoming following the events, which continued to be an important part of our operating season. In fact, weekends in October are often the highest volume and most profitable weekends of the year. We remain focused on ensuring, we continue to deliver and add to the high quality experience, our guests have come to expect from our notorious haunt events. This year, we will have new skeleton key rooms, which are actor driven experiences included with the purchase of fright line, new themes for many of our mazes, new parades and more family day experiences around the 50th anniversary of it’s The Great pumpkin Charlie Brown. Also, we will be testing a new upon virtual reality attraction in several of our parks. This is just another example of our broad approach or testing VR in our parks, as we look for finding the operational and commercial sweet spot for tech payment offerings that will appeal to the consumers. More details around our Halloween events will be release in the near future. Beyond Halloween period, we will expanding Great Americas’ operating schedule with the addition of Winterfest and new holiday experience at the park. During Winterfest ,guests will be able to ice-skate in front of the parks iconic double-decor carousel, enjoy magnificent light display, view spectacular live holiday shows and enjoy a wide variety of food and beverage offerings specifically tailored to the event. While Knott's Berry Farm is been a huge success Knott…

Operator

Operator

[Operator Instructions] We will take our first question from Tim Conder with Wells Fargo Securities.

Timothy Conder

Analyst · Wells Fargo Securities

Matthew Ouimet

President

Timothy Conder

Analyst · Wells Fargo Securities

Matthew Ouimet

President

Timothy Conder

Analyst · Wells Fargo Securities

Brian Witherow

Management

Timothy Conder

Analyst · Wells Fargo Securities

Operator

Operator

Our next question comes from James Hardiman with Wedbush Securities.

James Hardiman

Analyst · Wedbush Securities

Matthew Ouimet

President

James Hardiman

Analyst · Wedbush Securities

Brian Witherow

Management

Matthew Ouimet

President

James Hardiman

Analyst · Wedbush Securities

Brian Witherow

Management

James Hardiman

Analyst · Wedbush Securities

Matthew Ouimet

President

James Hardiman

Analyst · Wedbush Securities

Brian Witherow

Management

James Hardiman

Analyst · Wedbush Securities

Matthew Ouimet

President

Operator

Operator

Our next question comes from Ben Chaiken with Credit Suisse.

Benjamin Chaiken

Analyst · Credit Suisse

Matthew Ouimet

President

Benjamin Chaiken

Analyst · Credit Suisse

Brian Witherow

Management

Matthew Ouimet

President

Benjamin Chaiken

Analyst · Credit Suisse

Brian Witherow

Management

Benjamin Chaiken

Analyst · Credit Suisse

Matthew Ouimet

President

Benjamin Chaiken

Analyst · Credit Suisse

Matthew Ouimet

President

Operator

Operator

Our next question comes from Barton Crockett with FBR Capital Markets.

Barton Crockett

Analyst · FBR Capital Markets

Matthew Ouimet

President

Barton Crockett

Analyst · FBR Capital Markets

Brian Witherow

Management

Barton Crockett

Analyst · FBR Capital Markets

Brian Witherow

Management

Barton Crockett

Analyst · FBR Capital Markets

Brian Witherow

Management

Barton Crockett

Analyst · FBR Capital Markets

Brian Witherow

Management

Barton Crockett

Analyst · FBR Capital Markets

Brian Witherow

Management

Barton Crockett

Analyst · FBR Capital Markets

Matthew Ouimet

President

Operator

Operator

Our next question comes from Joel Edelstein with Stephens Inc.

Joel Edelstein

Analyst · Stephens Inc

Brian Witherow

Management

Matthew Ouimet

President

Joel Edelstein

Analyst · Stephens Inc

Matthew Ouimet

President

Joel Edelstein

Analyst · Stephens Inc

Matthew Ouimet

President

Joel Edelstein

Analyst · Stephens Inc

Matthew Ouimet

President

Operator

Operator

[Operator Instructions] Our next question comes from Michael Bunyaner with TLF Capital.

Michael Bunyaner

Analyst · TLF Capital

Brian Witherow

Management

Michael Bunyaner

Analyst · TLF Capital

Matthew Ouimet

President

Operator

Operator

And that does conclude today’s question-and-answer session. I would like to turn the conference back over to Matt Ouimet for any additional or closing remarks.

Matthew Ouimet

President

Thank you Lisa and thank you all for your interest and ongoing support of Cedar Fair. I know many of you on this call have got an opportunity to visit the Cedar care part this summer. For those of you that haven’t, I strongly encourage you to take the time to visit one or more of our parks to really understand what differentiates Cedar Fair. So with that, I’ll turn it back over to Stacy.

Stacy Frole

Management

Thank you. Thank you, everyone, for joining us on the call today. Should you have any follow-up questions, please feel free to contact me our Investor Relations department at 419-627-2233. We look forward to speaking with you again in about three months to discuss our third quarter results.

Operator

Operator

And that does conclude today’s presentation. Thank you all for your participation and you may now disconnect.