Cedar Point Analyst Day August 11, Cedar Fair is FUN

Transcription

1 Cedar Point Analyst Day August 11, 2015 Cedar Fair is FUN

2 Forward-Looking Statement Some slides and comments included here, particularly related to estimates, comments on expectations about future performance or business conditions, may contain forward-looking statements within the meaning of the federal securities laws which involve risks and uncertainties. You can identify forwardlooking statements because they contain words such as believes, project, might, expects, may, will, should, seeks, approximately, intends, plans, estimates or anticipates or similar expressions that concern our strategy, plans or intentions. These forward-looking statements are subject to risks and uncertainties that may change at any time, and could cause actual results to differ materially from those that we anticipate. While we believe that the expectations reflected in such forward-looking statements are reasonable, we caution that it is very difficult to predict the impact of unknown factors, and it is impossible for us to anticipate all factors that could affect our actual results. Important factors, including those listed under Item 1A in the Partnership s Form 10-K could adversely affect our future financial performance and cause actual results to differ materially from our expectations. 2

3 Introduction Matt Ouimet, President and Chief Executive Officer 3

4 Cedar Fair is FUN There is a difference. You see it. You feel it. You experience it. And when you re at a Cedar Fair park, you know it. 4

5 Strong, Experienced Management Team Proven expertise both at Cedar Fair and in the broader leisure and hospitality industry Name Position Years with Cedar Fair Years In Industry Matt A. Ouimet (57) President and Chief Executive Officer 4 25 Richard A. Zimmerman (54) Chief Operating Officer Brian C. Witherow (48) Kelley Semmelroth (50) Executive Vice President and Chief Financial Officer Executive Vice President and Chief Marketing Officer Duffield E. Milkie (50) Executive Vice President and General Counsel 7 7 H. Philip Bender (59) Executive Vice President David R. Hoffman (46) Senior Vice President and Chief Accounting Officer 9 9 Craig J. Freeman (61) Senior Vice President of Administration Robert A. Decker (55) Senior Vice President of Planning & Design

6 A FUN Business Cedar Fair is transforming the amusement park industry into a place to be to have FUN for everyone Leverage a portfolio of industry-leading, regional brands with compelling growth strategies Regionally loved, best-in-class parks drive high-repeat visitation and offer strong growth potential Transformative investments are driving results Transformative investments in the parks, the experience and our employees are manifesting through increased attendance and guest per capita spending Strong FCF generation and capital management driving value to unitholders through total return investment Strong FCF generation allows reinvestment in the business, in addition to healthy return of capital to unitholders 6

7 Key Differentiators Best-in-class parks with loyal, highrepeat customer base Industry-experienced management with history of delivering results History of strong Adjusted EBITDA margins FUNforward 2.0 provides next generation of growth Disciplined approach to balanced capital allocation Healthy, stable industry with significant barriers to entry 7

8 Diversified Cash Flow Diversified revenue and Adjusted EBITDA streams across the Company portfolio 8

9 Strong Cash Flow Generation Stable & diversified cash flows have allowed us to perform well during times of recession Financial Crisis $500 $ = (11.0%) 2010 = 13.2% $400 $350 Early 2000 s Recession ($ in millions) $300 $250 $200 Early 1990 s Recession 2001 = (6.1%) 2002 = 11.4% $150 $100 $50 $0 Adj. EBITDA (a) Acquisition of Knott s Berry Farm in December 1997 (b) Acquisition of Michigan s Adventure and Knott s Soak City Palm Springs in 2001 (c) Acquisition of Geauga Lake in 2004 (d) Acquisition of Kings Island, Canada s Wonderland, Kings Dominion, Carowinds and California s Great America in 2006 (e) See Appendix for reconciliation of Adjusted EBITDA 9

10 Continued Growth: FUNforward 2.0 Targeting Adjusted EBITDA of $500 million, or more, by 2018 Strategic Growth Drivers Drive strong price-value proposition through enhanced guest experience Encourage advance purchase commitments Embrace new opportunities with digital technology Constantly manage capital and expense productivity Complementary development adjacent to parks (a) See Appendix for reconciliation of Adjusted EBITDA 10

11 Financial Overview Brian Witherow, Executive Vice President & Chief Financial Officer 11

12 Results Through Second Quarter 2015 Broad-based revenue growth combined with a continued focus on cost management drove a 6% increase in Adjusted EBITDA (in millions, except per capita amounts) Six Months Ended 06/28/15 Six Months Ended 06/29/14 % Change Net revenues $424 $403 5% Adjusted EBITDA $84 $79 6% Adjusted EBITDA margin 19.7% 19.6% 10 bps Attendance % Average in-park guest per capita spending $44.57 $ % Out-of-park revenues $50.5 $ % 12

13 Momentum Continues Through July Strong results support long-term strategy of enhancing the guest experience and investing in our parks Net revenues through Sunday, August 2, 2015, increased 7% on a constant-currency basis driven by: 3% increase in attendance 3% increase in average in-park guest per capita spending 8% increase in out-of-park revenues Number of unique visitors are UP Cedar Fair expects 2015 to be another record year in both net revenues and Adjusted EBITDA The Company is on track to achieve its longterm target of $500 million, or more, in Adjusted EBITDA by

14 Solid Balance Sheet Our improved leverage provides the financial flexibility to capitalize on future opportunities Consolidated Leverage Ratio at 3.6x Average cost of debt expected to be ~5.3%, or ~$85 million, annually o Majority of our variable-rate debt has been converted to a fixed-rate through the use of interest rate swap agreements $600 $400 ($ in millions) $588 $500 $450 Nominal maturities until our revolving credit facility matures in 2018 o Revolver capacity = $255 million $200 $0 $3 $6 $6 $6 $0 $0 Debt reduction and a large cushion under our debt covenants have significantly improved our credit profile since 2011 Scheduled Maturities 14

15 MLP Advantage MLP structure provides an efficient tax structure while maintaining optimal operational flexibility Strong cash flows exceed the need for organic growth and expansion is efficiently returned to unitholders through the MLP structure Structure is flexible to allow Cedar Fair to operate and manage its business and financial position without significant restrictions o o No restrictions on partnership from both owning and operating its assets (vs. REITs) Expansion into same lines (i.e. amusement parks, hotels/lodging, retail, etc.) of business does not jeopardize tax Avoid double-taxation of cash flow Good acquisition currency Our current hybrid structure, which includes corporate subsidiaries, is efficient with a 20% to 25% expected tax rate vs. 35% to 40% of a standard corporation 15

16 Strategic Capital Strategy Driving Growth in Both Near- and Long-Term Targeted ROI for capital investments is north of 15% Continued commitment to marketable new rides and attractions on an annual basis Additional focus on long-term development o o o Platforms that offer new revenue streams (i.e. FunTV, resort accommodations) Partnerships that offer customer sharing Embracing technology to drive operational efficiencies and enhance the guest experience 16

17 Capital Investment Strategy Reason to Ride Reason to Be / Placemaking 5-Year Capital Matrix Initiative Major thrill ride / coaster Mid-size thrill ride Coaster re-work Interactive dark ride / digital experience Kids' / "tween" attractions Water park product Entertainment / in-park experience F&B / merchandise centers Accommodations Infrastructure Ride removal 17

18 Business Development Initiatives Ideation Real estate development Development Self-order kiosks Chip and pin conversion Digital imaging Sports Force To be announced soon To be announced soon Virtual reality coaster pilot To be announced soon Mobile connectivity Mobile app/ digital imaging Running events In process All-season dining FUN-TV Amusement Dark Portfolio Virtual reality POV for ride announcement Continuous improvement Core innovation Speculative innovation Place to ride Place to be Expansion / Diversification 18

19 Long History of Paying Distributions A stable and growing distribution continues to be our top priority $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $ E Distribution 19

20 Investment of Excess Cash Flow Our disciplined approach affords us the flexibility to prioritize the sustainability and growth of the distribution while also opportunistically investing in the growth of our business Strong free cash flow from operations Stable, growing distribution AND Investment in future growth $3.00 per limited partner unit Yield of 5.6% (a) 28 consecutive years of distributions Incremental, new revenue streams (FunTV & resort accommodations) Transformational capital investments Immersive guest experience enhancements (a) Based on unit price as of August 7, 2015 of $

21 Operational Overview Richard Zimmerman, Chief Operating Officer 21

22 Strong Core Operations with Upside We have a strong plan in place and we are executing on that plan Best-in-class, geographically diverse parks with strong regional brands Attractive, high-repeat customer base Dedicated management with lengthy industry and adjacent-industry experience Significant operational growth opportunities exist o Ability to transform the park experience through: Strategic introduction of innovative rides and attractions Enhancement and addition of experiential entertainment Investment in technology into our existing asset base to promote sharing and socialization Transformational capital Placemaking Complimentary development adjacent to our parks 22

23 Best-in-Class Parks National, geographically dispersed footprint that mitigates regional economic and weather risk 23

24 Strong Regional Brands Get Rave Reviews Cedar Point has orchestrated a masterful transformation of its historic resort, Hotel Breakers. With this renovation, Hotel Breakers easily becomes the top family resort in Ohio, and perhaps the best within hundreds of miles in any direction. -Susan Glaser, The Plain Dealer Will I go back to Carowinds to ride Fury 325 again? Certainly. Will I expect the crowds at Carowinds to increase this year because Fury 325 adds a whole other level of thrill to the theme park? Absolutely. And I ll gladly stand in line with those thrill seekers, assuring them it s worth the wait. -Rachel Southmayd, The Herald A lot of people will compare this ride to Midway Mania at Disney, which is a superb ride. Knott s has found a different way to do it that s even better and on a lower budget. -Bob Gurr, legendary Disney Imagineer, discussing Voyage to the Iron Reef 24

25 Attractive, High- Repeat Customer Base Our parks have a multi-generational appeal providing us with an optimal mix of families and thrill seekers 9 out of 10 guests are repeat visitors (genetic vacation behavior) Located in attractive and growing DMAs Strong Net Promoter Scores Majority of guests live within a 150 mile radius o Cedar Point draws from outside this radius Since the introduction of FUNforward in 2012, in-park guest per capita spending has increased 14% (~4% CAGR) 25

26 Seasoned, Dedicated Management Deep functional expertise provides for the application of best practices across the portfolio Name Park Years with Cedar Fair Years In Industry Jason McClure (45) Cedar Point Raffi Kaprelyan (53) Knott s Berry Farm Norm Pirtovshek (61) Canada s Wonderland Greg Scheid (52) Kings Island Pat Jones (51) Kings Dominion Mike Fehnel (37) Carowinds Brad Marcy (39) Dorney Park Raul Rehnborg (45) California s Great America Dave Frazier (50) Valleyfair Frank Wilburn (49) Worlds of Fun Camille Jourden-Mark (49) Michigan s Adventure

27 Seasoned, Dedicated Management Deep functional expertise provides for the application of best practices across the portfolio Name Corporate Position Years with Cedar Fair Years In Industry Brent Barr (55) Corporate Director, Entertainment Carrie Boldman (54) Corporate Vice President, Merchandise & Games 2 30 Nancy Hamlin (48) Corporate Vice President, Food Service 1 32 Jack Highsmith (65) Corporate Vice President, Resort Operations Monty Jasper (59) Corporate Vice President, Safety & Engineering Tony Johnson (65) Corporate Director, Operations Matt Shafer (41) Corporate Vice President, Strategic Alliances Scott Tanner (60) Corporate Vice President, Sales

28 Elevating Our Best-in-Class Parks Deep operational and strategic focus on taking the Cedar Fair Best Day experience to the next level in every way we interact with our guests New Rides and Attractions Experiential Entertainment Transformational Capital 28

29 New rides and attractions Areas of capital investment are meeting and/or exceeding our expectations Highlights of the 2015 capital program include: o o o o Fury 325, the world s tallest and fastest giga coaster, at Carowinds Voyage to the Iron Reef, a spectacular new 4-D interactive ride at Knott s Berry Farm Cedar Point, The Roller Coaster Capital of the World!, introduced Rougarou, a new roller coaster experience, and a refreshed historic Hotel Breakers on its mile-long sandy beach New water park rides, family attractions and state-of-the-art catering facilities were also part of our 2015 capital program 29

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31 Experiential Entertainment Opportunity to add additional entertainment offerings, ensuring FUN for everyone and allowing us to maintain our strong price: value proposition Strong price:value proposition with amusement and water parks under one admission Expanded spontaneous midway entertainment Sweet Spot, a premium candy and confections store New and enhanced live performance offerings Socially and regionally-relevant events and festivals 31

32 Refreshed Catering Facilities Premium, updated catering facilities allow us to expand capacity and provide an enhanced guest experience for our catered event customers High-end meeting and catering facility at Great America, adjacent to the new Levi s Stadium, has provided us with expanded business opportunities o Strong regional economic growth o Incremental revenue stream beyond our core operating season Refurbished, modernized facilities at many of our parks enhance our group sales initiative, enabling us to target a broader base of catered events 32

33 Transformational Capital Transforming areas within our parks into iconic, comfortable, lasting places to be for guests of all ages Create a sense of place a strong visual statement Refreshing iconic elements Cohesive areas throughout our parks Comfortable, equipped plazas near rides to accommodate non-riders 33

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41 Complementary Development Synergistic use of adjacent property to drive incremental attendance and create a consistent revenue stream Expand overnight accommodations Amateur sports facilities Commercial development such as retail, hotel, dining and entertainment 41

42 Marketing Overview Kelley Semmelroth, Executive Vice President & Chief Marketing Officer 42

43 Knott s continues to Deliver on Brand Promise 2012 brand work led to positioning where FUN comes easy 43

44 Carowinds New 2015 Brand Positioning The entertainment destination that celebrates Carolina culture and pride by taking it to new heights 44

45 Cedar Point Brand is Well-Established and Still Relevant It is THE Roller Coaster Capital of the World and that s just the beginning 45

46 There is a Greater Thirst for the Experiential Commitment-Phobes Value of experience > ownership 70% of Millennials experience FOMO Digital and social media allow them to hedge social commitments for better-dealing 46

47 Making People Feel like They re Missing Something Valuable Social FOMO helps with Group Alignment 47

48 Giving Consumer More Reasons to Visit Early and Often Park Events Drive Urgency 48

49 CRM Evolution Launch year for CRM baseline demographics applied to known data Household and transaction information resulting in greater insights Data hygiene processes implemented to improve data quality to Merkle Robust pre-arrival welcome experience with upsell Refined testing by channels/targets Implemented return path for improved deliverability and efficiencies Launch Resorts CRM Re-tool newsletter communications with more relevant content and mobile design Greater leverage of Merkle relationship for Connected CRM Season pass segmentation targeting Channel testing expanding in social direct response Season pass portal goes live Launch resorts prearrival experience Expand data capture intersections mobile, web, social, - to replenish CRM database 49

50 CRM Creative Execution: / Social Retooled newsletter, optimized for mobile Pre-arrival welcome with upsell Social DR - Mobile 50

51 CRM Creative Execution Direct Mail: Household Segmentation Household with small children present Household with no children present 51

52 Transforming the Digital Vision into Reality Current App Refresh Test App Development System Integration WEB MOBILE SOCIAL PARKING IN-PARK Park Connectivity Awareness & Promotion Reporting & Analytics 52

53 Best Day Experience Through Team Integration Planning and Design Human Resources Marketing Best Day Experience Finance Information Technology Operations 53

54 Cedar Point Update Jason McClure, Vice President & General Manager, Cedar Point 54

55 Cedar Point Sandusky, Ohio The Roller Coaster Capital of the World! America s only super-regional amusement park o Resort lodging compliments seasonal operations o More than 50% of the nation s population within a day s drive Largest seasonal amusement park in the world o Home to Millennium Force, the #1 Steel Coaster in the World (a) Highest margins and in-park guest spend in our portfolio Highest length of stay (a) Source: Amusement Today, September

56 A World-Class Entertainment Mecca 72 rides, including 17 world-class roller coasters, spectacular live shows and countless hours of FUN at Cedar Point Soak City, an 18-acre separatelygated water park, with many family-friendly attractions 1,285 rooms, including the newly renovated historic Hotel Breakers, situated on a mile-long beach, plus cottages, cabins, RV campsites and marinas More than 15 out-of-park dining and entertainment offerings 56

57 Transforming the Best Amusement Park in the World Luminosity Dinosaurs Alive!

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60 Transforming the Best Amusement Park in the World Luminosity Dinosaurs Alive! Gatekeeper Front-Gate 60

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64 Transforming the Best Amusement Park in the World Luminosity Dinosaurs Alive! Gemini Midway Gatekeeper Front-Gate 64

65 Before Gemini Midway 65

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68 Transforming the Best Amusement Park in the World Luminosity Dinosaurs Alive! Gemini Midway Gatekeeper Front-Gate Hotel Breakers Rougarou 68

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81 Best-in-Class Parks Receive Rave Reviews All major metrics up at Hotel Breakers including occupancy, ADR and guest satisfaction, including overwhelmingly positive feedback on trip advisor Luxury Hotel Laura B, Oak Forest, IL The New and Improved Breakers Hotel Marty S, Columbus, OH The newly remodeled Hotel Breakers was a big improvement over past trips. We have been coming here for 40 years. We loved the remodeled rooms and friendly staff. The outdoor activities on the beach were a big hit with our extended family of 17 people. From the entertaining kiddie pool, to the beach activities, from volleyball to giant chess and Jenga to lake night movies on the beach to the band and a magician performing in the evenings, to late night burgers on the beach, there was something for everyone. Best of all, those activities were free! Everyone had a great time we will be back next year! Beautiful hotel and worth every penny! Something for everyone and right on the beautiful beach! What more could you ask for? A great place to relax on the beach or by one of the three pools and hot tubs or you can get wild and crazy and ride the coasters or get your splash on at the water park. So Glad I Found It! Ashley H, Birmingham, AL Growing up in NW Ohio we always just went home after a day at CP. Now I drive up with teenagers to visit. I always wished there was a ride for parents. Namely an air conditioned lounge with a bar to wait out the heat while the kids play. Years of visits later, we finally stayed at the Breakers. Why did I wait until now?!? The place is great, rooms excellent, service perfect. Nice pool, beach, restaurants and bar. They were so accommodating. I would rent a room just to stay there while the rest go to the park! But I could also see staying for a day at the park, a day at the water park and a day at the beach! 81

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85 Before Cedar Point Catering Facilities

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87 Catering Facility Before and After at Cedar Point 87

88 Experiential Entertainment Spontaneous performances Midway personalities Sweet Spot Trail Tavern Re-energized Frontier Trail Activated beach area including Beach Blast Brew & BBQ 88

89 Transforming the Best Amusement Park in the World Luminosity Dinosaurs Alive! Gemini Midway News coming August 18th 150 th Anniversary Gatekeeper Front-Gate Hotel Breakers Rougarou 150 th Operating Season 89

90 What s Next for Cedar Point? 90

91 What s Next for Cedar Point? Attendance o Attract unique visitors from outer markets o Attract value-oriented visitors during shoulder seasons o Extend length of stay o Advance purchase commitments In-park spend o Additional premium product offerings o Increase capture rates on merchandise and F&B offerings Capital expenditures o Place-making 145 year old park has areas that could be refreshed o Under-utilized assets (i.e. beach, waterfront property) o Resort hotels expand good, better, best experience 91

92 Appendix 92

93 EBITDA Adjustments ($ in millions) 12/31/ /31/2013 EBITDA $334.5 $353.9 Plus: loss on the early extinguishment of debt Plus: net effect of swaps (2.1) 6.9 Plus: unrealized foreign currency loss Plus: equity based compensation Plus: loss on impairment / retirement of fixed assets, net Plus: gain on the sale of other assets (0.9) (8.7) Plus: Class action settlement costs Plus: other non-recurring costs (a) Total Adjusted EBITDA (b) $431.3 $425.4 (a) (b) As permitted by and defined in the 2013 Credit Agreement. Adjusted EBITDA represents earnings before interest, taxes, depreciation, amortization, other non-cash items, and adjustments as defined in the 2013 Credit Agreement. The Company believes Adjusted EBITDA is a meaningful measure of park-level operating profitability. Adjusted EBITDA is not a measurement of operating performance computed in accordance with generally accepted accounting principles and is not intended to be a substitute for operating income, net income, or cash flow from operating activities, as defined under generally accepted accounting principles. In addition, Adjusted EBITDA may not be comparable to similarly titled measure of other companies. Note: For years prior to 2013, a reconciliation of Adjusted EBITDA to net income (loss) can be found in our Annual Report on Form 10-K for that year. 93