Cedar Fair reports record attendance and EBITDA for 2010

I listened in on the Conference Call today. Amazing what difference a year (or even several months) can make. It was all gloom and doom leading to a potential sale of individual parks and even the company itself and now that we are in the new year they are "always keeping an eye out for new properties", are not putting any of their parks on the market and things are looking up for '11 and beyond.

It REALLY makes you wonder what more was going on behind the scenes last fall.

Windseekers are coming in at $5 million a piece ($20 million) and they are moving toward Camp Snoopy attractions in 3 parks. They also mentioned some Cap Ex in the accommodations area. So, I'm curious to know how all of that adds up to $80 million or so.

I found it interesting that Dick admitted that they learned some things from the Paramount season pass debacle (my word) and are actually taking some of those strategies into their "legacy" parks.

While attendance and out of park revenues were both up (8% and 6% respectively) they also noted the 1% decrease in in park per cap spending. I think what many of us continue to harp on has proven to be true. Park guests are not finding value in either pricing and/or quality of in park restaurants.

I thought the institutional investors might hammer them more on the whole merger and subsequent penalties that had a significant impact on 4th quarter earnings but they let that go. The one question regarding Dick's contract (and any cash payments for losing the Chairman gig) did yield what I thought was an interesting response. Dick, inessence, said there was no significant change and the Chairman has just been given some additional responsibilities. Interesting way of looking at it and makes you really question the "independence" of said Chairman.

The thing about improved results is that we can't credit them to senior management. If they believed these results were possible, they wouldn't have tried so hard to sell the company. This is all economy, and I think the decreasing per cap reinforces that.

I'm with you for the most part. But admitting failure and reversing course on the Season Pass issue is completely out of character for Kinzel but he did it anyway. And, it was pretty clear on the call that the return to 2009 levels on Season Passes and Group Sales was a major positive on the balance sheet. He had to do it...so common sense says that is no big deal. But, he did it...and Kinzel sense says that is a big deal.

I do think the declining per cap...even at -1% is a red flag indicator that shouldn't go without mention. They were asked to address inflation in food pricing that is expected this summer and he pretty matter-of-factly stated that it would be passed on to the consumer. Well, I think it has been pretty roundly agreed on that their pricing is too high WHILE the quality is too low and if they don't address that then I don't see the per cap getting any better. To take that a step futher, Dick said they were pretty much unaffected by rising gas prices (weather being the more influential issue) but I would suggest that if it costs me more money to get to a park then I'm likely to be more careful about what I spend while IN the park. I think the lower in park per cap pretty much discredits his whole argument that, "they have to eat".

That's what bothers me so much. If raising food prices still results in a loss of per cap, you've blown the price-value curve. You've exceeded the market's tolerance.

If you are going to aggressively charge for your counter service food, it has to exceed the norm. Cedar Fair's food is 'fair' at best. However, the food at my recent visit to Knott's was darn good. Not sure why they couldn't help struggling parks, like Dorney Park, for example, that clearly need some help.

Rick thinks we should cut Dick and friends some slack. I totally disagree. With a demonstrated lack of leadership, I don't think it's right to stop the activism now.

I couldn't agree with you more Jeff. These figures were achieved in spite of the leadership of Dick...certainly not as a result of it. If anything his moves can be flagged as direct reasons whey the earnings were not any better. Just imagine what would be if the unitholder revolt did not happen and the company had been sold.

I continue to hang on to my units largely because I know the potential of that company...and the many fine people who are doing their best under difficult circumstances. I liken it to Disney animators or Imagineers who are ready to do amazing things once their "leader" gets out of the way and a new visionary loosens the chains.

wahoo skipper said:
These figures were achieved in spite of the leadership of Dick...certainly not as a result of it.

Interesting.

How does one determine that? If you think the CEO is bad does that mean he can do NOTHING right? Were those results a result of Q Investments' putting 2 members on the board or "in spite" of it? Was CF's growth in the first 20 years of DK's tenue "in spite
of the leadership of Dick" as well?

I have no problems with the arguement that it's time for a change. However facts is facts: CF has had very good EBITDA growth throughout DK's tenure except for the recession years of 08 & 09. But, EBITDA was higher in 10 than it was before the Great Recession. That is BECAUSE of actions taken under DK.

One can argue--very persuasively--that things might have been better without DK. (I find the fact that percap declined showing they screwed up fairly convincing) However, if you want to argue that the increase was entirely due to the economy, why aren't the declines of 08 & 09 also entirely due to the economy, as well?

CF turned out good numbers--better than was expected even with the improved economy. Give DK his due--maybe he should have done better, but not everything he does is wrong.

Just imagine what would be if the unitholder revolt did not happen and the company had been sold.

The company would have been sold too cheaply, but EBITDA would have been the same. Actually, better because there would not have been a termination penalty. Again, DK was wrong to try to sell the parks, but not 100% wrong in how he ran them.

I disagree with many of DK's moves, but that doesn't mean he can't do ANYTHING right. The numbers prove that.

I don't disagree with what you're saying, and I've yet to see anyone that says the man can't do ANYTHING right...but having said that, those numbers don't necessarily prove that he did something right (or wrong) at this point, as far as I can see.

Maybe it was a result of what Dick did. Maybe it was a result of people going out and spending money and the economy 'getting back to normal' or whatever (other than gas prices, my economy never changed so I can't really comment there).

I don't think the numbers prove either way.

I didn't say Dick could do nothing right nor have I ever implied it. And, I've likely said more good things than bad about him over the last 15 years. But, over the last 3-5 years I can't really say that.

I think the turmoil, created by Dick (and the powers that be) certainly resulted in many people selling off their units at a loss and I feel for those folks. I don't think there is any question that Dick's "Cedar Point Way" mentality is what hurt the Paramount Parks when it came to season passes and group sales and it was only after he relented that those numbers started to bounce back as evidence by their own reporting this year.

The quote that you went off on Hawkeye was specifically addressing this past fiscal year. Just as Eisner (and Wells) succeeded for the first decade and a half to bring unprecedented growth to Disney...so too did Dick with Cedar Fair.

And, just as Eisner stayed on too long to the point that his legacy is tarnished so too is Kinzel. I would rather remember Kinzel for Magnum and Raptor, the resort expansion, the Knott's aquisition, etc but I'm beginning to believe he will be remembered for nearly selling out, nepotism, and staunch micromangement that is defining the end of his career right now.

I sold my units at a loss. I basically had enough and got tired of waiting. I probably should have waited a little longer, but decided to bail in the previous tax year for a number of reasons.

There is no correlation to any particular actions of senior management to the results. If you look around the industry, you can see that even in a dark economy, it's possible to succeed or mitigate the problems. On a small scale, Holiday World continued to produce record growth every year. On a huge scale, Disney minimized the hurt by adjusting their product pricing mix and kept up their attendance and occupancy. Cedar Fair did neither, and it got so bad that they decided they should sell the company.

As an investor, do you want someone with that track record in charge? What made the situation worse was over-paying for Paramount Parks and buying a doomed park before that (Geauga Lake). Take these big fundamental failures, combine them with an HR bleed and a pricing strategy (one already solved by the previous owners), and ask yourself if this is what you want when the next challenge comes around. I think the answer is obvious.

Ok, but if you can't prove the positive results are tied to Dick Kinzel's leadership, how can you prove the negative results were? It sounds like a one-sided perspective.

Positive results aren't magical. If people are going to the parks, then something must be happening that is right.

Aside from the poor decision to sell at a ridiculous price, I'm not sure there's anything definitive to suggest poor leadership is tanking the company.

I think by example of the rest of the industry during the duration of the recession, that's proof enough. Trying to sell the company is more proof.

The positive results frankly fall in line with consumer spending in general, so that's no surprise.

No one suggested that the company is tanking, only that it has gone through years of mismanagement (for the reasons already stated, many of them concrete, financial reasons) when it didn't have to. That's reason enough for regime change.

I don't think his leadership is tanking the company. (If I did I would have sold my units too.) But, I do think some of the many examples of what I think is his poor leadership is a drag on the company.

Hasn't already been determined that he's leaving? The search for a new CEO is underway.

Jeff said:
The positive results frankly fall in line with consumer spending in general, so that's no surprise.

I can't get behind that logic. Amusement park spending is not essential; it's discretionary with many competing options. If something (other than what some folks know from the "inside") was being mismanaged, people would more than likely be spending their dollars elsewhere.

Unless you are suggesting that operations are so phenomenal they are countering the impact of the other financial hardships brought on by mismanagement. But, I'm sorry, I don't buy that, either.

The course was off. It seems to be "righted" now. Perhaps it's time to move on from the lynching.

I don't view it as a lynching. Plenty of good people on the inside of that company are either now gone or have been handcuffed by Dick for well over a decade. His ego has cost money which has affected unitholder value. The day he resigns and finally walks away for good doesn't end the fallout of some of his questionable decisions over the past 5 years or so.

I look at it more as you don't reward failure. We've talked about the scope of those failures for a long time now.

Holiday spending is discretionary, too, and it was up last year. There's plenty of consumer behavior to correlate there to amusement park spending. But even that metric shows people out in number, but not spending at the level they used to (as indicated by the lower per cap).

Carrie M. said:
Amusement park spending is not essential; it's discretionary with many competing options.

Jeff said:
There's plenty of consumer behavior to correlate there to amusement park spending.

Indeed.

Retail sales rose 0.6 percent in December and 6.6 percent for the full year, representing strong annual growth and the sixth consecutive monthly gain. December’s increase was slightly below private-sector expectations of a 0.8-percent gain. Excluding automobiles, retail sales grew 0.5 percent in December and a strong 5.9 percent for the full year of 2010.

Retail sales statistics are generally good indicators of discretionary spending habits. Cedar Fair's numbers seem to pretty much fall in line with US spending habits outlined by the Department of Commerce (ignoring CF's continually-falling per cap, of course).