Cedar Fair flirts with $1 billion in revenue for 2008

I had to make the note about the per cap, because I think it's too important to leave out. I'm annoyed that they left it out.

You may be annoyed, but you shouldn't be surprised.

Anyone care to discuss which two of the Paramount Parks are now suffering Impairment?

That's a SURE sign that they overpaid for the Paramount assets.

Stock was as low as $9.11 in intraday trading this morning. I think the market is speaking.

Unless I missed something through my VERY QUICK read, it looks like they made next to no headway on the debt. My rough calculation is that they reduced debt by a total of $28MM. ($1.724B vs $1.752B)

That's with "Record EBITDA of $355M".

There is NO way that the Distribution survives at current levels.

I don't think the market is speaking nearly as loudly as you indicate, relative to the market in general.

Per cap spending was down slightly. Hopefully this is just the beginning of folks showing they want lower food prices.

CP wasn't even mentioned in the capital improvements for 2009. Yet, they continue hyping 'nothing' on the blog. Stupid.

New office furniture for Tony is not 'nothing' . . . ;)

It is funny how Dick and the gang have started moving the goal line around. For years they hung their hat on the "attendance down, per cap up" line. Now, attendance is up but per cap is down.

Ok, why is that? Could it be that your in park pricing is actually hurting you now?

wahoo skipper said:
It is funny how Dick and the gang have started moving the goal line around. For years they hung their hat on the "attendance down, per cap up" line. Now, attendance is up but per cap is down.

Ok, why is that?

Because common sense dictates emphasizing the good and pushing the bad to the background. If the suits suddenly sprouted hairy third arms from their foreheads and it benefited the bottom line somehow, the report would read like it was the plan all along.

Could it be that your in park pricing is actually hurting you now?

Nah, I still think you guys are overreacting to a slight drop. A 1% drop in the face of the worst economy in quite a while? Meh. Attendance grew 3%. That's the balancing game between attendance and per caps in action.

And an increase in attendance would seem to indicate a perception of value.

The high in-park approach might not be the best given the current consumer economic fears, but the hard truth is that the per cap is still 3.75% higher than in 2006 and is 13% higher than it was 5 years ago (35.48 in 2003)

Do you really think they could have grown attendance 13% in the last 5 years? Probably not even close. But they did drive per caps that far.

There's only two factors that determine revenue - how many people pay and how much they're paying. The problem seems to be that Cedar Fair has reached the ceiling on what they can do in both areas at many of their parks.

You can't look at it that one-dimensionally. If parking went up around 10% across the chain, and even that didn't prop up per cap, there's a pretty serious problem. And again, factor inflation in, and at the very least, assuming everything is constant, it should match that.

FUN closed up slightly, by the way. If the market was "speaking," it must have been saying it was indifferent.

Jeff said:

FUN closed up slightly, by the way. If the market was "speaking," it must have been saying it was indifferent.

As that was aimed at me, I'll take the bait. Yes, I couldn't resist the urge this morning to mention a one day, intra-day price movement. It was hard not to after the conference call and the Press Release. I should have known better. But temptation got the better of me. In fact, in prior posts I explicitly stated that this stock would be ripe for wild (%) fluctuations due to the (relative) low share price, and small average daily volume.

so at the end of the day, fun was up a tad over 1.5% when the broader averages were relatively flat., on higher than average daily volume.

However, does taking that shot make you feel better about sitting on units at $10.15?

I hope so, because in after market trading FUN is down another $0.50. That's a five percent drop. (after hours trading pricing can often be exaggerated by small volume/desperate traders, and is not necessarily indicative of next day opening price).

Not trying to pick a fight with you Jeff, I've just been trying to point out that FUN is a bad place to have your money.

Jeff said:
You can't look at it that one-dimensionally. If parking went up around 10% across the chain, and even that didn't prop up per cap, there's a pretty serious problem. And again, factor inflation in, and at the very least, assuming everything is constant, it should match that.

Jeff is exactly correct here. Parking price increases alone should have amounted to more than that (obviously parking is not paid by each turnstile click, as people arrive at the park by typically more than one per vehicle). Either way, Parking has increased dramatically over the last 5 years, and should have added substantially to the Per Cap spending increase. (I'm assuming that Parking is included in Per Caps, I've never known it to be otherwise).

However, if they were just able to raise Per Caps 13% over 5 years, then they didn't even stay relative to the CPI increases over the same time. Now, we all know that 2007-2008 were exceptional years, with the cost of fuel going up, and now down, but averaging the 5 years would have given a rough cumulative CPI increase of 19%. They missed "staying even" by +/-5PP. (now this is not an exact calc, but should point out that they've done miserable at increasing Per Caps relative to the rise in costs). I'm assuming that the numbers are weighted for the Paramount Parks over the whole term (although FUN has proven that they are willing to mislead when it comes to analyses overlapping the acquisition date).

here's the government link to the Social Security COLA page, which is based on the CPI changes for the preceding year (Q3-Q3):

http://www.ssa.gov/OACT/COLA/colaseries.html

So, either they were able to extract price increases at the Paramount Parks (increasing Per Caps for the subset), and if so, then that means that they haven't been able to increase Per Caps at the legacy FUN parks AT ALL, OR they haven't been able to extract meaningful Per Cap increases over the WHOLE CHAIN in five years. Either, way it's a sad story, and one that Dick would prefer you not ponder too closely.

Over $50 Million in impairment charges had to be recorded this year (and weren't mentioned in any press release before now). I believe that is just the start of the impairment issues to be dealt with. Impairment issues are Accounting Speak for you've got assets on your books (Paramount Parks) that aren't worth what you paid for them (with borrowed money that you haven't repaid yet). That's the piece of this equation that I am frankly more concerned with.

Jesus, man, let it go. You make it out like I have my life savings wrapped up in FUN units. That's not the case.

"Much of our success this year can be directly attributed to the strong performance of Canada's Wonderland."

Dick Kinzel on the Conference Call.

Jeff said:
You can't look at it that one-dimensionally. If parking went up around 10% across the chain, and even that didn't prop up per cap, there's a pretty serious problem.

Seems to me parking is a very small portion of that per cap number. Just the fact that it's divided by multiple guests and passholders aren't paying it. What percentage of visitors are passholders? How many people visit per car? If the numbers are what I suspect they are, that $10 parking fee gets broken down pretty small, pretty quick.

According to the 2007 numbers, 'Accommodations and Other' amount to 7.6% of the revenue. I'm assuming this includes parking...as just a bit...of this already small percentage.

Parking isn't that big a chunk of the big picture. They could probably raise it 100% to modest effect on the bottom line.

CreditWh0re said:
Parking price increases alone should have amounted to more than that (obviously parking is not paid by each turnstile click, as people arrive at the park by typically more than one per vehicle). Either way, Parking has increased dramatically over the last 5 years, and should have added substantially to the Per Cap spending increase. (I'm assuming that Parking is included in Per Caps, I've never known it to be otherwise).

Well, if you consider $2 dramatic, then sure. And yes, you can be scary and call it a 25% increase, but the fact remains that it's just $2 extra per car paying it. Seriously, we're talking 30, 40, maaayyybe 50 cents per guest. And I'm being generous.

That 25% parking increase translates to a 1 to 1.5 % increase in per cap over the 2003 number.

They missed "staying even" by +/-5PP. (now this is not an exact calc, but should point out that they've done miserable at increasing Per Caps relative to the rise in costs).

Great, but that has nothing to do with our little back and forth - we want to know why per caps suffer...not that they do or don't. We all know they went down this year and now you've given us a nice look at how far off the mark they are.

Now tell us why. :)

So, either they were able to extract price increases at the Paramount Parks (increasing Per Caps for the subset), and if so, then that means that they haven't been able to increase Per Caps at the legacy FUN parks AT ALL, OR they haven't been able to extract meaningful Per Cap increases over the WHOLE CHAIN in five years. Either, way it's a sad story, and one that Dick would prefer you not ponder too closely.

Interesting. But it's still not the 'why' that we're talking about. And combined with the previous quoted bit, I can tell you exactly where they're leaving money on the table...

...the gate.

Admission is woefully underpriced at the CF parks and they've tried to make it up everywhere else. It's not going to happen.

In-park pricing is about as high as it can go. I'm of the mindset that attendance can't grow much more. Parking is alongside the top tier of industry pricing. There only one place to make and real continuous revenue growth - get the gate price up where it should have been all along. That's been the missing ingredient.

You're getting too stuck on parking. Like I said, at the very least, per cap has to keep pace with inflation or it's essentially down. It's like not getting a raise from year to year, because the value of everything else goes up, and your pay stays the same.

Although did we finally have a negative number for January, or do we not know? I remember that December was almost completely negligible.

I get that and you're right.

I just don't think the in-park pricing is the issue. Just like I was saying in the previous post, I don't think we disgree that it doesn't look good, but we disagree on what's making it be not good.

By the way, did you get a walk down on Superman that one time, Jeff?

Cash Flow (EBITDA) is up. No one in the financial community is overly concerned if that is due to percap or to attendance. $$$ is $$$.

BTW, CF said they would have cash flow in 2008 in excess of $340m. They easily hit that mark ($355.9m)--despite many people claiming the fact they had a paper loss in 07 spelled gloom and doom.

Captain Hawkeye said:
No one in the financial community is overly concerned if that is due to percap or to attendance. $$$ is $$$.

Luckily, as one who doesn't hold stock in the company or care how high or low their stock goes, I'm not concerned as one of the financial community.

I'm concerned as an enthusiast with an interest in the business side of the industry and a slant towards consumer trends and tolerances - more park GM than financial analyst.

In other words, I don't give a crap about EBITDA. However, I find the question of whether the average park guest will pay $5 for fries or $15 to park their car to be very interesting. :)