Resorts and attendance drive record results for Cedar Fair

Also, Cedar Fair had different weather than Six Flags, obvs.

Was thinking the same thing when I read the headline Jeff. I'm not getting how SF is blaming weather.

My daughter plays travel softball. This past summer we were in Michigan, Columbus 3 times, Wheeling, Myrtle Beach and 2 local tournaments (Western PA). That's 8 weekends from Memorial Day through first week of August. Not one tournament got rained out or even delayed due to weather. Compare that to last year where 6 out of 7 tournaments incurred some kind of delay (games pushed back/shortened/eliminated) with one tourney being canceled altogether, again in the Ohio/Western PA area and one in Hershey. Now I realize that is just a small area of the country, but was it that much different everywhere else?

Couple thoughts about weather. I'll give Six Flags the benefit of the doubt that weather had an actual impact.

• There are four locations where two parks are within 90 minutes of a competitor (SFMM & Knotts, SFDK & CGA, SFGADV & Dorney, SFA-Dominion). In other words, the majority of the properties do not overlap and would have their own unique weather conditions.
• In those overlapping markets, the parks are impacted differently from weather. Knott's is open every day and has more tourists (with pre-planned trips) compared to Magic Mountain which draws more regionally. Bad weather at Dorney and bad weather at Great Adventure mean different things for sure. Great Adventure is one of the company's busiest parks, obviously not the case at Dorney.
• Timing plays a role. Supposing you had 8 rainy days all year, but those 8 days were all Saturdays during your season, that would cause a disparate impact than if those rain days had been during the week. Not all rainy days are equally bad.
• Forecasts make a difference. Regional parks are susceptible to unfavorable forecasts of rain, whether or not rain actually occurs. Again, a forecast of rain on a weekend can drive down attendance, even if rain never hits.

So if anything, I think Six Flags is guilty of not elaborating on why weather played an impact, and usually that is because they don't want to talk about specific parks under-performing.

I think more than ever folks are looking for an overall experience that includes good guest service, a "well rounded" guest experience and a perception of feeling money is well spent. Cedar Fair continues to strengthen their delivery of that kind of experience with each passing year as the new leadership regime has settled into a nice rhythm. Six Flags still gives, well, the Six Flags experience.

IMO CF charges more on admissions and Season Passes than Six Flags does, so you see CF getting much more revenue than SF. Also Six Flags gives away way too many Bring a Friend Free Admissions, at Six Flags over Georgia they have a weekly bring a friend free day for Season Pass holders. It does bring people into the gates at Six Flags by the troves, but they are getting no revenue on those free admissions. Also people like myself tends to stay away from the park on those days. When I get an email stating Bring a Friend Free is going on a day I want to go. I avoid the park at all costs.

When Cedar Fair does Bring a Friend at my home park Worlds of Fun, they generally gives us a very nice discounted price, sometimes as low as $9.95, but usually $19.95 and $24.95 during the Haunt. The only exception to this Bring a Friend is they do 1 free admission to the Haunt for a Friend when I renewal (or bring yourself if you got a new pass) and you can only use it once. However that is still not as much as Six Flags does it and not all Cedar Fair Parks does it. In fact I don't think all Six Flags Parks does it either but most of them do and when they do, they do it too much.

Jeff said:

Also, Cedar Fair had different weather than Six Flags, obvs.

What's your deal with Six Flags?

Did you read the press release or the financials.... of either company?

Through 9/30, Six Flags revenue is up 3% and EBITDA is up 3% (4% on constant-currency basis)

Through 9/30, Cedar Fair revenue is up 3% and EBITDA is flat.

My "deal?" I almost never think about Six Flags, because there isn't one even remotely close to me. So thanks for playing. I was merely pointing out that while CF grows revenue and attendance, Six Flags did the opposite and blamed the weather. And honestly, EBITDA strikes me as a silly thing to watch with a capital intensive business like theme parks. It sure didn't measure Cedar Fair accurately under the previous leadership.

Jeff said:

My "deal?" I almost never think about Six Flags, because there isn't one even remotely close to me. So thanks for playing. I was merely pointing out that while CF grows revenue and attendance, Six Flags did the opposite and blamed the weather. And honestly, EBITDA strikes me as a silly thing to watch with a capital intensive business like theme parks. It sure didn't measure Cedar Fair accurately under the previous leadership.

Huh?

Cedar Fair revenue increased 3%, Six Flags revenue increased 3%. That's pretty simple fact.

And EBITDA, which Cedar Fair calls "a meaningful measure of park-level operating results" increased 3% for Six Flags and was flat for Cedar Fair. Another pretty simple fact.

Both companies are doing very well right now with stock at record-highs, yet what you are saying about CF "growing revenues" and Six Flags "doing the opposite" just is demonstrably not true.

Chicago07 said:

Six Flags revenue increased 3%. That's pretty simple fact.

Huh?

From the nasdaq link:

Revenue fell 3% to $557.6 million.

Revenue from admissions fell 4.4%, and total guest spending also declined.

Its a matter of looking at different time periods. For the quarter ending September 30 (3 month period), Six Flags revenues were down 3%. For the 9 months ending September 30 (year to date), SF revenues were up 3%.

EBITDA is a commonly used measurement of cash flow generated from a company's operations (including those in capital intensive industries). You can argue EBIT would be better but that comes with its own issues if depreciation and capital expenditures do not track with each other. You can also get there is you look at EBITDA and projected capital expenditures (though outside management, that is typically a guess). EBITDA is also the basis for valuing companies (multiple of EBITDA) and as a component of financial covenants in credit/debt documents. To say its a silly thing to watch EBITDA with capital intensive businesses is quite frankly, silly.

Lord Gonchar said:

Chicago07 said:

Six Flags revenue increased 3%. That's pretty simple fact.

Huh?

From the nasdaq link:

Revenue fell 3% to $557.6 million.

Revenue from admissions fell 4.4%, and total guest spending also declined.

Yea, I am using year-to-date for both Six Flags and Cedar Fair 1/1/16 through 9/30/16 (end of Q3)

Revenue for both up 3% with EBITDA up 3% at Six Flags and flat at Cedar Fair

Well, I believe the discussion prior was third quarter results of both companies based on latest reports. At least that's what both news articles in question refer to.

I don't think Jeff's take is really out of line in context and a SF blaming the weather is a long running joke around here.

Let the record show that YTD, SF is doing just as well as CF, but during the peak summer quarter they sucked balls...because weather.

#wronglyentitledballs?

GoBucks89 said:

To say its a silly thing to watch EBITDA with capital intensive businesses is quite frankly, silly.

Is it though? Not also paying attention to debt, or the debt to EBITDA ratio, is like pretending that everything is awesome because you can run the business and not talk about what you owe. And with regard to cap ex, how do you not talk about depreciation and amortization when you have to spend tens of millions of dollars in each park (except Michigan's Adventure ;)) year after year?

Sawblade5 said:

A bunch of stuff about pricing

Now maybe Six Flags really is that dumb, but they've maintained their pricing structure (and pass pricing in particular) at nearly constant levels for as long as I've paid attention (15 years) and through multiple leadership changes. I have to assume that they know something we don't or they see themselves fundamentally differently from CF. In particular, I can't imagine that their financial issues can be boiled down to "we forgot to charge more money."

So its silly to track EBITDA because debt also matters? Who said it didn't? How do you calculate a debt to EBITDA ratio without tracking EBITDA? Revenues, net income and attendance also do not take into account debt. Presumably its not silly to track those?

Looking at debt to EBITDA ratio, what ratio is good? Or too high? I recall that Cedar Fair's credit docs include debt to EBITDA ratio covenant which I believes steps down over time. That gives you an idea where the company's lenders want to see leverage. May not be whats best for the company itself (particularly in the long run).

As I noted, EBIT could be a better cash flow measurement with capital intensive companies. But what happens when annual depreciation is $10 million and annual capex is $30 million (made up numbers) if you look at EBIT (not adding depreciation back to income to calculate cash flow)? Or when capex does varies from year to year but depreciation does not?

Looking at EBITDA and projected capex (or historical capex which is available to the public) takes into account those issues.

EBITDA isn't the only factor when looking at the financial health of a company. But it is part of the total picture.

My point is that the press releases always emphasize EBITDA in a vacuum, and you have to dig deeper to get a bigger sense of what's going on. All the way up through Six Flags' bankruptcy and Cedar Fair's almost-sale, they would tout it quarter after quarter. Give three cheers for EBITDA strikes me as dishonest.

Would striking the EBITDA discussion make the earnings release more honest? Revenue, net income and attendance figures are stated in a vacuum too (at least relative to debt and/or capital expenditures). Though in reality, none of that info (including EBITDA) is given in a vacuum. There is other info available in the earnings release and in other info the company provides investors/analysts. Might not fit easily in a text box but its there.

If someone wanted to calculate the debt to EBITDA ratio they would only need to scroll down the earnings release to get to the balance sheet summary for debt. Had they breached the covenant in their credit agreement, the earnings release would have mentioned that (or they would have made a separate disclosure).

I don't remember Six Flags or Cedar Fair EBITDA disclosures leading up to and through SF's bankruptcy or CF's almost sale. But I do recall the financial meltdown (and financial institutions not wanting/being unable to lend money as a result thereof) were significant causes of both events. SF may not have filed bankruptcy had they been able to refinance their debt. May have been more likely they just would have been able to delay the filing though. I don't see the CF proposed sale ever coming up for a unitholder vote had CF been able to refinance its debt (I recall them giving that as the reason for the sale -- without refinancing there were going concern issues).

Without that financial markets collapse (which next to no one saw coming) seems clear CF would have been fine. Not as clear with respect to SF. May well just have delayed some type of restructuring (in or out of a bankruptcy). What disclosures/discussions would you expect companies to make for such an unlikely event (other than in the list of risk factors which I suspect few people actually read)?

Context, man... slide back up the thread. This was all in response to the other dude's post who suggested that I was a Six Flags hater.