Cedar Fair(FUN) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For Q3 2024, the company generated net revenues of $1.35 billion with attendance of 21 million visits, including$558 million from legacy Six Flags operations [12][24] - Adjusted EBITDA for the third quarter totaled $558 million, which included$206 million from legacy Six Flags operations [24] - Operating costs and expenses totaled $894 million, with$368 million from legacy Six Flags operations [18][21] Business Line Data and Key Metrics Changes - Legacy Cedar Fair revenues decreased by $52 million compared to the previous year, primarily due to 660,000 fewer visits [12] - In-park capital spending per capita was$61.27, a decrease of 2% compared to the previous year [16] - Out-of-park revenues totaled $102 million, with$21 million from legacy Six Flags operations [15] Market Data and Key Metrics Changes - Attendance across the combined portfolio was slightly up, excluding three weeks impacted by extreme weather events [14] - Over the past five weeks, attendance increased by 20%, with 6.5 million guests entertained [26] - Deferred revenues increased to $359 million from$208 million year-over-year, reflecting strong sales of advanced purchase products [29] Company Strategy and Development Direction - The company aims to achieve $120 million in merger-related cost synergies by the end of 2025, with$50 million expected by the end of 2024 [23][41] - A disciplined capital allocation strategy is in place, targeting $500 million to$525 million in capital expenditures annually for 2025 and 2026 [31][48] - The focus is on driving attendance growth, with a target of 55 million guests by 2027, which would imply an average growth rate of over 10% [55] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the business model and the health of the consumer, noting strong demand during favorable weather conditions [73] - The integration process post-merger is progressing smoothly, with early positive results from operational changes [40] - The company is focused on enhancing guest satisfaction, which is vital for sustainable long-term growth [39] Other Important Information - The company plans to host an Analyst Day in the first quarter of next year to provide more specifics around core strategies and growth outlook [56] - The balance sheet remains solid, with $90 million in cash and$4.8 billion in gross debt, of which 80% is fixed [28] Q&A Session All Questions and Answers Question: Can you help us think about the cadence of attendance growth towards the 55 million target by 2027? - Management acknowledged that growth is not linear and emphasized the importance of capital investments in driving attendance growth beyond historical rates [61][62] Question: How do you view the $800 million unlevered free cash flow target by 2027 in relation to adjusted EBITDA? - Management clarified that the primary focus is on driving revenue growth through attendance, which may not directly correlate with per capita spending [66] Question: What has been surprising regarding the level of investment needed for the Six Flags parks? - Management noted that the appeal of the product remains strong, and they are focused on reinvesting capital to drive growth across the combined portfolio [70][75] Question: Can you elaborate on the fourth quarter guidance and the rationale behind it? - Management provided guidance of$205 million to $215 million for fourth quarter adjusted EBITDA, citing strong October performance but cautioning about macro factors affecting November and December [97] Question: What are the expectations for cost savings and operational efficiencies moving forward? - Management indicated that they have already realized some cost savings and are focused on activating additional synergies as they move into the fourth quarter [100][102]