Cedar Fair, L.P. (FUN) Six Flags Mergers of Equals Conference (Transcript)

Summary of Cedar Fair and Six Flags Merger Conference Call Industry and Companies Involved - Industry: Amusement Park and Entertainment - Companies: Cedar Fair, L.P. (NYSE:FUN) and Six Flags Core Points and Arguments 1. Merger Announcement: Cedar Fair and Six Flags announced a proposed merger of equals, aiming to create a leading amusement park operator [3][4] 2. Financial Results Overview: - Cedar Fair reported a 7% increase in third-quarter adjusted EBITDA to a record $388 million, with a margin increase to 46.1% [7] - Six Flags reported a 16% increase in attendance to 9.3 million guests and an 8% revenue increase to $547 million [14] 3. Attendance and Revenue Trends: - Cedar Fair entertained 12.4 million guests in Q3 2023, generating net revenues of $842 million, slightly down from 2022 [7] - Six Flags experienced a decrease in guest spending per capita but saw strong growth in food and beverage sales [15] 4. Cost Management: Cedar Fair reduced operating expenses by $22 million, while Six Flags' cash operating and SG&A expenses increased by 20% due to investments in guest experience [8][16] 5. Future Growth Strategy: - The merger is expected to unlock annual synergies of $200 million, with $120 million in cost savings and $80 million in incremental EBITDA [22][27] - The combined company will operate 42 amusement and water parks and 9 resort properties, targeting a more diversified experience for guests [30] 6. Cultural Fit: Both companies emphasize a guest-obsessed culture, with a focus on enhancing visitor experiences and operational efficiencies [20][21] 7. Financial Structure: The new company will be structured as a C Corp, which is expected to unlock more value for shareholders compared to the previous MLP structure [64][66] 8. Season Pass Strategy: The merger will enhance the value proposition for season pass holders, allowing for greater access to multiple parks [60][70] Important but Potentially Overlooked Content 1. Deferred Revenue Growth: Cedar Fair's deferred revenue increased by 11% to $208 million, indicating strong early sales for 2024 season passes [10] 2. Weather Impact: Poor weather conditions negatively affected attendance and revenue for both companies, particularly in the Northeast and Mid-Atlantic regions [13][16] 3. Integration Planning: A comprehensive integration plan is a priority to ensure long-term success post-merger [43] 4. Cash Flow Generation: The combined company expects to generate nearly $800 million in free cash flow, with a focus on deleveraging and strategic investments [42] 5. Guest Experience Focus: The merger aims to create a more engaging and immersive experience for guests, leveraging both companies' strengths [29][40] This summary encapsulates the key points discussed during the conference call regarding the merger between Cedar Fair and Six Flags, highlighting financial performance, strategic goals, and operational synergies.