Cedar Fair (NYSE: FUN) INVESTOR PRESENTATION September 2017

Transcription

1 Cedar Fair (NYSE: FUN) INVESTOR PRESENTATION September 2017

2 FORWARD-LOOKING STATEMENTS 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 forward-looking 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 anytime, 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 C E D A R F A I R T O D A Y 3

4 C E D A R F A I R T O D A Y KEY STATISTICS Entertains more than 25 million visitors annually 850+ rides and attractions 120+ roller coasters More than 1,600 hotel rooms 4

5 ( $ i n m i l l i o n s ) ( $ i n m i l l i o n s ) C E D A R F A I R T O D A Y SEVEN CONSECUTIVE YEARS OF RECORD RESULTS 1,350 1,200 1, T O T AL R E V E N U E $1,135 $1,068 $1,028 $973 $1,160 $1,236 $1, AD J U S T E D E B I T D A $425 $391 $375 $359 $431 $459 $ R E V E N U E B Y P AR K 2016 AD J U S T E D E B I T D A B Y P AR K Cedar Point Knott s Berry Farm Canada s Wonderland Kings Island Dorney Park Kings Dominion Carowinds California s Great America Valleyfair Worlds of Fun/ Oceans of Fun Michigan s Adventure 5

6 Why Invest in FUN? 6

7 W H Y I N V E S T I N F U N? GREAT PARKS, GREAT PEOPLE, GREAT BUSINESS High-quality assets with high barriers to entry Well-run parks with a focus on operating excellence Combination of world-class thrill rides and unique, family-oriented attractions appeal to a diverse customer base Value proposition creates loyal and repeat customers Stable, recession-resistant business with proven strategy driving organic growth MLP structure allows for tax-efficient return of capital to unitholders History of impressive total returns Balanced approach to capital allocation FUNforward 2.0 provides the next generation of growth 7

8 W H Y I N V E S T I N F U N? SUPERIOR TRACK RECORD, FOUNDATION FOR GROWTH History of success through multiple economic cycles Revenues increased in 19 of past 20 years EBITDA growth of 4% CAGR since 2007 and 5% CAGR since 2011 Strong, consistent cash flow Six consecutive years of record average in-park guest per capita spending Increasing attendance trends $2.3 billion total distributions paid to unitholders over 30-year period Compound annual total return to investors of 17% since going public 30 years ago in

9 ($ in millions) W H Y I N V E S T I N F U N? SUPERIOR TRACK RECORD Strong Long-Term Grow th and Recession Resilience $600 $500 Financial Crisis 2009 = (11.0%) 2010 = 13.2% $400 $300 $200 Early 1990 s Recession Early 2000 s Recession 2001 = (6.1%) 2002 = 11.4% $100 $0 (e) (a) Adj. EBITDA Acquisition of Knott s Berry Farm in December 1997 (b) Acquisition of Michigan s Adventure (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 FUNforward

11 F U N F O R W A R D 2. 0 EXPECTS TO ACHIEVE $500 MILLION OR MORE IN ADJUSTED EBITDA BY ORIGINAL TARGET DATE OF 2018 Clear strategic focus 2017 Adjusted EBITDA expected to be between $480 million and $490 million Disciplined approach to achieve full potential of our core business On track to meet FUNforward 2.0 target by its original 2018 projection Adjusted EBITDA (a) Growth (in millions) $481 $500+ $459 $425 $431 $375 $ (a) See appendix for Adjusted EBITDA reconciliation

12 F U N F O R W A R D 2. 0 IMPROVING THE GUEST EXPERIENCE Our ability to drive pricing relies upon the delivery of a quality guest experience, including rides and attractions, live entertainment offerings and exceptional guest service all of which drive repeat visits. Highly marketable new rides and attractions built to scale Expanded entertainment and special event offerings Best Day experience for guests Opportunities to extend length-of-stay and drive higher guest spending levels Season-extending special events 12

13 F U N F O R W A R D 2. 0 IMPROVING THE GUEST EXPERIENCE Ghost Town Alive! Water Park Expansion Seasons of FUN Our extremely popular interactive experience at Knott s Berry Farm, has returned for a second year in 2017 with new characters and even more interactive old west fun as bandits and cowboys battle for control of the West. With the expansion of our water parks we are able to solve food and beverage capacity constraints which heretofore have limited our revenue opportunities. And, a company-wide, water park initiative to add shade, lounge-style seating and dining tables will help to improve the overall experience and length-of-stay. 13 The addition of limited-time, special events at all of our parks has proven a successful device in driving urgency, enhancing the value proposition of a season pass and tapping into an incremental audience, who isn t a thrill seeker. This includes springtime festivals, immersive summer entertainment, Halloween frights and WinterFest holiday celebrations.

14 F U N F O R W A R D 2. 0 ENCOURAGING ADVANCE SALES By getting guests to purchase items ahead of time, we are able to improve our visibility into market trends and enhance revenue management capabilities; build a buffer against traditional barriers to visitation, such as weather and alternate entertainment options; and gain favorable in-park spending elasticity. Steady expansion of season passes and special offers All-season dining and beverage plans FunPix, a new digital imaging platform Installment payment programs Professional group sales teams and continued investment in improved catering facilities 14

15 F U N F O R W A R D 2. 0 ENCOURAGING ADVANCE SALES Strong Season Pass Sales Group Catering Facilities Advance Purchase Commitments Installment payment programs have been highly effective in growing season passes, our most valuable advance purchase offering. Introducing state-of-the-art catering facilities has allowed us to grow our group event revenues. These facilities include modern kitchen amenities, free Wi-Fi and self-service refreshment centers. The addition of executive chefs also allows us to provide customized experiences, driving higher guest spending levels through premium food offerings. 15 Our advance purchase channels make up more than two thirds of our overall attendance and continue to be the largest area of growth for FUN. We attribute this success to the Seasons of FUN that we have established at Knott s and are beginning to establish at our other parks, including the introduction of WinterFest at three parks in 2017.

16 F U N F O R W A R D 2. 0 EMBRACING DIGITAL TECHNOLOGY Applying digital innovations in all aspects of our business can enhance the overall guest experience, promote sharing and socialization and provide greater capital efficiencies through content and storyline updates. New mobile apps + free park-wide Wi-Fi Consumer self-service advantages Historical guest data from our CRM platform, now in its sixth year Developing new, innovative and interchangeable attractions and ride experiences 16

17 F U N F O R W A R D 2. 0 EMBRACING DIGITAL TECHNOLOGY Mobile App CRM Platform Techtainment Our new mobile app solution enhances the inpark experience by providing guests with information they value, creating two-way conversation with guests to drive increased inpark spending and capturing valuable guest data for CRM applications. The assembly of multi-year consumer data under one, cohesive system, not previously available to us, will improve the effectiveness of guest communications efforts going forward. 17 As we determine the sweet spot, you will see us continue to expand in the area of techtainment the merger of technology and entertainment. Virtual reality, augmented reality and emerging technologies give us more tools to create a compelling guest experience.

18 F U N F O R W A R D 2. 0 MANAGING CAPITAL AND PRODUCTIVITY We will continue to be disciplined around the prioritization of capital and operating initiatives as we look to realize the full market potential at each of our parks Multi-year strategic plan to protect the base and support new reasons to visit Continued evaluation of fixed-cost base to remove inefficient capacity Industry-leading roller coasters that provide decades of entertainment Placemaking approach to investments to exceed guest expectations and improve overall experience Additional spending decisions based on the requirement of >15% returns 18

19 F U N F O R W A R D 2. 0 MANAGING CAPITAL AND PRODUCTIVITY Carowinds Multi-Year Expansion Unique Regional Brands Cedar Point Charlotte is a vibrant market and we are moving forward aggressively to implement our planned multi-year investments in Carowinds. We have found that embracing the heritage of our unique brands and strategically operationalizing those brands, leads to a guest experience unmatched by other generic parks. The in-depth analysis we are performing at each of our parks directly informs our investment strategy, works across all departments and functions, and supports strong consumer loyalty. 19 Cedar Point will increase its hotel room count by ~20% over the next few years. This includes 69 more rooms at Cedar Point Express hotel in 2017 and a new 158-room tower at The Hotel Breakers in Resort offerings enhance the park s super-regional appeal and allow us to lean into our marketing efforts in outer markets more aggressively.

20 F U N F O R W A R D 2. 0 DEVELOPING LAND ADJACENT TO PARKS Approximately 1,400 acres of undeveloped land adjacent to our parks (a) Hotels, cabins to expand accommodation services for guests Amateur sports facilities to drive incremental attendance Complementary commercial development opportunities in retail, dining and entertainment (a) See Appendix for detailed listing of undeveloped land by park. 20

21 F U N F O R W A R D 2. 0 DEVELOPING LAND ADJACENT TO PARKS Amateur Sports Facilities Resort Expansion California s Great America Rezoning A new multi-million dollar amateur sports facility located across the bay from Cedar Point amusement park began hosting tournaments in March The new facility is bringing an incremental customer base to the region. There are multiple opportunities to expand our resort accommodations which will help to drive incremental attendance and create a consistent new revenue stream. This park s favorable location in Santa Clara, CA, adjacent to the new San Francisco 49ers stadium, provides us the ability to consider complementary commercial development such as retail, dining and entertainment now that our rezoning application has been approved. 21

22 The FUN Continues 22

23 T H E F U N C O N T I N U E S 2018 CAPITAL EXPENDITURES FOUR new roller coaster experiences RailBlazer Steel Vengeance - A record-breaking hybrid coaster at Cedar Point, has had both guests and the media alike talking about its massive steel and wooden structure for months. Twisted Timbers - Steel and wood combine forces to bring guests a first of its kind in the mid-atlantic hybrid coaster at Kings Dominion. RailBlazer - At California s Great America, RailBlazer will lift riders to a height of 106 feet before plunging them face down at a 90- degree angle. Steel Vengeance HangTime - At 150 feet, HangTime will tower over the Knott s Berry Farm Boardwalk area, showcasing gravity-defying inversions, midair suspensions and twisting dive tracks. 23

24 T H E F U N C O N T I N U E S ALSO NEW IN 2018 Expanded family attractions, high capacity dining venues and increased resort offerings Carowinds kids area will be completely transformed into an all-new Camp Snoopy Hotel Breakers at Cedar Point will open its second tower that will add an additional 158 rooms to the beachfront property Two new family rides and expanded play and splash area will open at Canada s Wonderland Valleyfair will introduce Delirious, a seven-story 360-degree loop thrill ride Nordic Chaser, a family ride aboard mini ships, will open at Worlds of Fun And more 24

25 Appendix

26 A P P E N D I X MANAGEMENT TEAM Name Position Years with Cedar Fair Years In Industry Matt A. Ouimet (59) Chief Executive Officer 6 27 Richard A. Zimmerman (56) President and Chief Operating Officer Brian C. Witherow (50) Executive Vice President and Chief Financial Officer Kelley Semmelroth (52) Executive Vice President and Chief Marketing Officer 5 12 Duffield E. Milkie (51) Executive Vice President and General Counsel 9 9 H. Philip Bender (61) Executive Vice President David R. Hoffman (48) Senior Vice President and Chief Accounting Officer Craig Heckman (53) Senior Vice President of Human Resources Robert A. Decker (56) Senior Vice President of Planning & Design

27 A P P E N D I X Significant Real Estate Holdings T h e Company o w n s m o r e t h a n 4, a c r e s o f d e ve l o p e d a n d d e ve l o p a b l e r e a l e s t a t e Location Sandusky, OH Buena Park, CA Allentown, PA Kansas City, MO Shakopee, MN Muskegon, MI Cincinnati, OH Toronto, Ontario Richmond, VA Charlotte, NC Santa Clara, CA Date Opened Date FUN Acquired N/A Acreage (developed/ developable) 515 / / / / / / / / / / / - (a) (a) Great America land is leased; all other land is owned by the Company 28

28 (in millions) A P P E N D I X Strong Balance Sheet Ample financial flexibility to capitalize on future growth opportunities 2016 Consolidated Leverage Ratio was 3.2x Average cost of debt expected to be ~5.3%, or ~$85 million annually Cash on hand as of 12/31/16 was ~$123 million Debt Maturities $587.5 $500.0 $450.0 $ % Bonds 5.25% Bonds Revolver Term Debt 29

29 A P P E N D I X NON-GAAP RECONCILIATIONS (in thousands) Net income $ 177,688 $ 112,222 Interest expense 83,863 86,849 Interest income (177) (64) Provision for taxes 71,418 22,192 Depreciation and amortization 131, ,631 EBITDA 464, ,830 Net effect of swaps (1,197) (6,884) Unrealized foreign currency (gain) loss (14,345) 80,946 Equity-based compensation 18,496 15,470 Loss on impairment/retirement of fixed assets, net 12,587 20,873 Class action settlement costs Other (a) 1,039 1,744 Adjusted EBITDA (b) 481, ,238 (a) Consists of certain costs as defined in the Company's 2013 Credit Agreement and prior credit agreements. These items are excluded in the calculation of Adjusted EBITDA and have included certain legal expenses, costs assocated with certain ride abandonment or relocation expenses, contract termination costs and severance expenses. (b) Adjusted EBITDA represents earnings before interest, taxes, depreciation, amortization, other non- cash items, and adjustments as defined in the 2013 Credit Agreement. Adjusted EBITDA is not a measurement of operating performance computed in accordance with GAAP and should not be considered asa substitute for operating income, net income orcash flows from operating activities computed in accordance with GAAP. The Company believes Adjusted EBITDA is a meaningful measure as it is widely used byanalysts, investors and comparable companies in our industry to evaluate our operating performance on a consistent basis, as well as more easily compare our results with those of other companies in our industry. Further, management believes Adjusted EBITDA is a meaningful measure of parklevel operating profitability and uses it for measuring returns on capital investments, evaluating potential acquisitions, determining awards under incentive compensation plans and calculating compliance with certain loan covenants. Adjusted EBITDA may not be comparable to similarly titled measures of other companies. 30