Investor Presentation January 19, 2012 Exhibit 99.1 |
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 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. |
Investor Presentation January 19, 2012 |
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5 AGENDA Company Overview & Key Investment Considerations Matt Ouimet Park Review Richard Zimmerman Financial Review Brian Witherow Strategic Growth Opportunities Matt Ouimet Financial Goals Matt Ouimet Summary Matt Ouimet Q&A |
Net Revenue 2011E: ~$1,028 2011E Adj. EBITDA (a) ~$375 Market Capitalization (b) $1,283 ($ in millions) Headquartered in Sandusky, OH Full-Time Employees ~1,700 Seasonal/Part-Time Employees ~35,000 Facilities: 11 Best-in-Class Amusement Parks 1 Amusement Park Under Contract 6 Separately Gated Water Parks 5 Hotels (c) - ~1,700 Rooms 5 Campgrounds, including deluxe RV sites and cabins 2 Marinas 850+ rides and attractions 120+ roller coasters (a) As defined on slide 39 (b) Based on $23.18 unit price as of January 13, 2012 and 55.4 million units outstanding (c) One hotel with indoor water park We entertain more than 23 million guests annually, generating more than $1 billion in revenue Company Overview 6 |
7 People Have Choices… Entertainment of Choice • Deliver the “best-day-of-the-year” experience for our guests Employer of Choice • Respect, value and appreciate our employees Investment of Choice • Drive attractive total return Our Approach |
8 • Smooth leadership transition • Record year in 2011, on top of record 2010 • 2010 refinancing created significant financial flexibility • Restoration of meaningful unit distributions Building Positive Momentum |
9 Favorable Industry Dynamics • Significant barriers to entry • Compelling value compared with other forms of entertainment • Recession resilient • Loyal, high-repeat customer base (75%+ repeat visitation) • No comparable at-home digital experience • North American focus Key Investment Considerations |
10 Proven Ability to Deliver Results • 2010 and 2011 – Record attendance and Adjusted EBITDA • Decades-long, industry-leading Adjusted EBITDA margins • Stable and diversified cash flows • Experienced management team Key Investment Considerations |
11 Attractive Strategic Growth Opportunities Exist • Enhanced guest experience • Improved consumer messaging • Dynamic pricing and advance purchase commitments • Premium product offerings • Strategic alliance fees and promotional leverage • Capital and expense productivity Key Investment Considerations |
12 Total Return Investment • Anchored by attractive distribution yield • Unit price appreciation driven by earnings growth • Balanced approach to allocation of excess cash Key Investment Considerations |
Capital Costs Estimated cost of approximately $500+ million to construct a quality regional park • Limited visibility on return on capital at inception Real Estate Requirements Minimum requirement of 100-150 acres for park • Additional land generally required for construction of roads and local businesses that are complementary to the park (i.e., lodging and restaurants) • Transportation infrastructure in close proximity to the park Zoning Restrictions Local governments often believe the negative impact of increased traffic and environmental effects outweigh promise of increased tax revenue and job creation Long Development Times Generally requires approximately three years • One year used for planning process—feasibility analysis, public approval process, design development and financing • Two years used for construction—procuring and installing rides, show facilities and other equipment Few Viable Markets First mover advantage already taken in key domestic markets Favorable Industry Dynamics Significant Barriers to Entry 13 |
Industry-Leading Adjusted EBITDA Margins Adjusted EBITDA Margins The Company has some of the highest Adjusted EBITDA margins in the industry We maintain strict cost controls • Carefully manage seasonal staffing levels • Minimal corporate overhead Pricing integrity • Strategic use of marketable discounts to create urgency • Value-enhancing special events and offerings 14 (a) Source: SEC filings for 2007 – 2010 (b) Information not available for Six Flags (a) |
15 Historical Adjusted EBITDA Margin |
16 (d) Acquisition of Geauga Lake in 2004 (e) Acquisition of Kings Island, Canada’s Wonderland, Kings Dominion, Carowinds and California’s Great America in 2006 (f) As defined on slide 39 Note: 2007 to 2011E Adjusted EBITDA represents Consolidated EBITDA as defined in the 2010 Credit *Agreement (a) Includes attendance for amusement parks and separately-gated outdoor water parks (b) Acquisition of Knott’s Berry Farm in December 1997 (c) Acquisition of Michigan’s Adventure and Knott’s Soak City – Palm Springs in 2001 Stable and Diversified Cash Flows We generate consistent revenue and cash flow |
Stable and Diversified Cash Flows 17 Resilient performance during recessions (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) As defined on slide 39 |
Stable and Diversified Cash Flows The Company has a national footprint that mitigates regional economic and weather risk 18 |
Stable and Diversified Cash Flows We are not dependent on any one park or region 19 |
Experienced Management Team Management team with proven experience both with Cedar Fair and in the leisure and hospitality industry Name Position Years with Cedar Fair Years In Industry Matt A. Ouimet (53) President and Chief Executive Officer 6 mos 22 Richard A. Zimmerman (51) Chief Operating Officer 21 25 Brian C. Witherow (45) Executive Vice President and Chief Financial Officer 17 17 H. Philip Bender (56) Executive Vice President 33 40 David R. Hoffman (43) Senior Vice President and Chief Accounting Officer 6 6 Craig J. Freeman (58) Corporate Vice President of Administration 32 32 Duffield E. Milkie (46) Corporate Vice President and General Counsel 4 4 Robert A. (51) Corporate Vice President of Planning & Design 13 23 Lee A. Alexakos (55) Corporate Vice President of Marketing 33 33 20 |
21 AGENDA Company Overview & Key Investment Considerations Matt Ouimet Park Review Richard Zimmerman Financial Review Brian Witherow Strategic Growth Opportunities Matt Ouimet Financial Goals Matt Ouimet Summary Matt Ouimet Q&A |
Leading operator of high-quality, well-maintained parks Balanced mix of families and thrill seekers Innovation leader Seasoned, dedicated management 22 Our Core Strengths |
23 Our Cornerstones |
Industry-leading attractions with long useful lives • Thrill rides are unique content that drive attendance • Family rides appeal to all generations • Minimal IP royalty payments Capital investments average 9% of net revenues • Excludes annual maintenance expense (included in operating expense on income statement) • Combined, capital expenditures and maintenance represent approximately 18% of revenue spent annually to maintain and improve asset base High-Quality, Well-Maintained Parks 24 |
Innovation Leader 25+ years of record-breaking rides • Introduced the world’s first 200-foot, 300-foot and 400-foot-tall coasters • Introduced the world’s first corkscrew element and magnetic launched coasters First Halloween Haunt event • Successfully rolled out to other parks within our portfolio Develop new attraction concepts • Low-cost laboratory • Dinosaurs Alive! • Wind Seeker – 300-foot-tall swing ride 25 Create and dominate entire categories of new rides and attractions |
Provide the best and highest value family entertainment in each market • Strong regional identity • Multi-generational appeal • Lifetime guests • Extensive presence of classic and timeless PEANUTS characters • High guest satisfaction and repeat visitation Balanced Mix of Families and Thrill Seekers 26 |
Seasoned, Dedicated Management Our park General Managers have an average of 25 years of experience with Cedar Fair and 27 years within the industry 27 Name Park Years with Cedar Fair Years In Industry H. John Hildebrandt (62) Cedar Point 38 38 Raffi Kaprelyan (49) Knott’s Berry Farm 33 33 Norm Pirtovshek (57) Canada’s Wonderland 32 32 Greg Scheid (48) Kings Island 23 24 Bart Kinzel (45) Carowinds 21 21 Pat Jones (50) Kings Dominion 32 32 Jason McClure (41) Dorney Park 11 11 Raul Rehnborg (42) California’s Great America 25 25 Larry MacKenzie (55) Valleyfair 34 34 Frank Wilburn (46) Worlds of Fun 17 21 Camille Jourden-Mark (45) Michigan’s Adventure 11 24 |
Parks that entertain ~3.0+ million guests on an annual basis include: • Cedar Point – Sandusky, OH • Knott’s Berry Farm – Buena Park, CA • Canada’s Wonderland – Toronto, ON • Kings Island – Cincinnati, OH 28 Our Parks |
Parks that entertain ~1.5+ million guests on an annual basis include: • Carowinds – Charlotte, NC • Kings Dominion – Richmond, VA • Dorney Park – Allentown, PA • California’s Great America – Santa Clara, CA 29 Our Parks |
Parks that entertain ~1.0 million or fewer guests on an annual basis include: • Valleyfair – Shakopee, MN • Worlds of Fun – Kansas City, MO • Michigan’s Adventure – Muskegon, MI 30 Our Parks |
Cedar Point 31 Sandusky, Ohio Super regional draw – largest seasonal amusement park in the U.S. Named the “Best Amusement Park in the World” for 14 consecutive years (a) Features five of the top 25 steel roller coasters in the world (a) , four hotels, two marinas and an upscale campsite Serves a six-state region in the Midwest that is home to approximately 26 million people (a) Source: Amusement Today, September 2011 |
Orange County, California 32 Year-round park with renowned seasonal events including one of the top-rated Halloween events in the country (a) Includes three separately gated water parks in California and an adjacent 320-room, full-service hotel Located in Southern California serving a market of approximately 20 million people with a large tourism industry (a) Source: Amusement Today, September 2011 |
33 One of the largest seasonal amusement parks in the U.S. Features a children’s area named “Best Kids’ Area in the World” for eleven consecutive years (a) Local market includes approximately 15 million people Cincinnati, Ohio (a) Source: Amusement Today, September 2011 |
34 Toronto, Canada Largest amusement park in Canada Hosts several cultural festivals per year in the park Serves diverse Toronto metropolitan market of approximately nine million people One of the “Top Three” destinations in the world for coaster quantity |
Broad and compelling rides, attractions and events Investing ~$90 million across all of our properties Leviathan – 306-foot-tall, 92-mph roller coaster at Canada’s Wonderland • One of the tallest and fastest roller coasters in the world Stinger – 138-foot-tall inverted shuttle coaster at Dorney Park WindSeeker – 300-foot-tall thrill ride providing guests with panoramic views at Carowinds and Kings Dominion New Fun For 2012 35 |
Focus on balancing family attractions and thrill rides Dinosaurs Alive! – coming to Cedar Point, Canada’s Wonderland, Dorney Park and Kings Dominion Soak City Water Park – rebranding and expansion of water park at Kings Island, including the addition of a new wave pool “Luminosity - Ignite the Night!” – a new night time celebration at Cedar Point More than 25 new live entertainment shows General infrastructure improvements and upgrades include resort refreshment, new point-of-sale system, and premium guest experiences 36 New Fun For 2012 |
37 New Fun for 2012 Leviathan Video |
38 AGENDA Company Overview & Key Investment Considerations Matt Ouimet Park Review Richard Zimmerman Financial Review Brian Witherow Strategic Growth Opportunities Matt Ouimet Financial Goals Matt Ouimet Summary Matt Ouimet Q&A |
39 Updated Guidance • Preliminary results project Net Revenues of ~$1.028 billion • Preliminary results project Adjusted EBITDA(a) of ~$375 million • Both net revenues and Adjusted EBITDA at the high end of previous guidance Highlights • Entertained a record 23.4 million guests – up 3% year-over-year • Average in-park guest per capita spending increased to $40.03 – up 2% year-over-year • Costs in line with our expectations 2011 Financial Highlights (a) Adjusted EBITDA represents earnings before interest, taxes, depreciation, amortization, other non-cash items, and adjustments as defined in the Amended 2010 Credit Agreement. |
2011 Financial Highlights Year-over-year record attendance trends Season pass visits up significantly • High perceived value • Strong “influence factor” Group business improving Successfully converted some front gate admissions into season passes 40 Attendance Breakdown |
Cash Flow Outlook 41 Cash Flow Outlook Capital Expenditures • ~$75 million in 2011 • ~$90 million in 2012 • ~9% of net revenues going forward for organic growth Cash Interest Costs • ~$150 million in 2011 • ~$100 million in 2012 and beyond |
42 Cash Flow Outlook Cash Taxes • ~$10 million in 2011 • Modest increases through 2014 as revenues and income increase • Approaching ~$35 million in 2015 as NOLs are exhausted One-Time Items • ~$50 million for the termination of a Canadian swap (February 2012) • ~$11 million in retirement costs (mid-year 2012) |
43 (in millions) 12/31/2011 Revolving Credit Loans (due 2015) $ – Term Debt: Term loan averaging 4.0% (due 2017) 1,156 Notes: 9.125% senior unsecured notes (due 2018) 400 Less Current Portion – Total Long-Term Debt $ 1,556 Total Leverage Ratio ~4.2x Senior Secured Leverage Ratio ~3.1x Debt Profile |
Debt Profile 44 Debt Profile • ~$800 million of outstanding term debt has been converted to a fixed-rate through the use of several interest rate swap agreements • No debt maturities until our revolving credit facility matures in 2015 Revolver capacity = $260 million • Cost of debt is expected to be ~6.3% in 2012 down from 9.5% in 2011 |
Key Financial Considerations We generate a significant amount of free cash flow (FCF) • Record guest attendance and financial results in 2011 • Additional revenue and FCF growth opportunities in 2012 and beyond • Additional FCF from ~$50 million reduction of debt service costs beginning in 2013 Capital structure provides substantial operating flexibility • No longer constrained by credit agreements • Staggered debt maturities • Predictable financing costs 45 Year-end earnings conference call on February 21, 2012 at 10:00 am ET |
46 AGENDA Company Overview & Key Investment Considerations Matt Ouimet Park Review Richard Zimmerman Financial Review Brian Witherow Strategic Growth Opportunities Matt Ouimet Financial Goals Matt Ouimet Summary Matt Ouimet Q&A |
Strategic Growth Opportunities 47 There are six key growth drivers in our business 1. Enhanced guest experience 2. Improved consumer messaging 3. Dynamic pricing and advanced 4. Premium product offerings 5. Strategic alliance fees and 6. Capital and expense productivity purchase commitments promotional leverage |
Enhanced Guest Experience We deliver compelling value for the price paid, at every park on every day 48 “New Fun” – Compelling new rides, shows and events at rational capital levels • Balancing of thrill and family-friendly offerings to sustain valuable family : teen audience mix Quality enhancements in food and resorts to drive greater capture and support pricing premiums Extending length-of-stay through evening events • “Luminosity – Ignite the Night!” at Cedar Point in 2012 • Highly marketable, reprogrammable seasonally/annually We deliver compelling value for the price paid, at every park, every day |
Improved Consumer Messaging and Relationship Management 49 Added resources and capabilities to modernize our marketing and sales strategy and execution • New agency of record – Cramer-Krasselt • Internal resources added selectively to support best practice transfer and enhanced consumer insights • Incentive compensation program implemented for sales force We speak to consumers with messages that break through the noise and create action within our operating season (i.e., urgency) |
Improved Consumer Messaging and Relationship Management 50 Improve messaging to drive greater emotional response • Leverages off existing, strong emotional attachment and multi- generation memories • Supports pricing growth in difficult economy and re-invigorates lapsed users • “Thrills Connect” underpinning designed to encourage larger party sizes Adapt media mix to evolving consumer channels We speak to consumers with messages that break through the noise and create action within our operating season (i.e., urgency) |
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Dynamic Pricing and Advance Purchase Commitments 54 We offer all consumers the right price (and no less), focused on true incremental behavior New “accesso” e-commerce platform installed • Common to other industry players • Provides real-time data and dynamic pricing modification • Supports incremental programs Season pass installment sales and intelligent up-sell of benefits and value • Reduces reliance on non-aligned intermediaries Multi-year migration to “Best Value Guarantee” on our site |
Dynamic Pricing and Advance Purchase Commitments 55 New “accesso” e-commerce platform installed (cont.) • Data capture supports customer relationship management Advance purchase commitments provide protection against visitation disruption events and drives in-park spending elasticity We offer all consumers the right price (and no less), focused on true incremental behavior |
56 Fast Lane to be launched in all parks; Fright Lane at Halloween Early entry for resort guests and strategic partners Premium parking and dining experiences Others under development Premium Product Offerings We will continue to expand our premium offerings to benefit- oriented consumers |
57 • Experienced business development executive added to drive appropriate relationships • Develops over multiple years Strategic Alliance Fees and Promotional Leverage Industry benchmarking indicates an opportunity to expand our strategic alliances while still protecting the integrity of the guest experience |
Capital and Expense Productivity 58 • Multi-year strategic plan for capital that protects the base and supports new reasons to visit Encouraging manufacturers to innovate at lower costs • Avoiding creep in the fixed cost base through removal of inefficient capacity • IT system investments to reduce costs and drive revenue : labor management, POS, financial reporting • Undeveloped land reserved for activities and investments that leverage the installed asset base “Strategic Admission Drivers” We apply disciplined metrics to the prioritization of capital and management of expenses |
59 AGENDA Company Overview & Key Investment Considerations Matt Ouimet Park Review Richard Zimmerman Financial Review Brian Witherow Strategic Growth Opportunities Matt Ouimet Financial Goals Matt Ouimet Summary Matt Ouimet Q&A |
60 • Disciplined execution of our business plan • Solid balance sheet FUN is a Total Return Investment Total Return 1. Quality Distribution 2. Unit Price Appreciation Reliable and Growing Sustainable Earnings Growth Achieved by Driving • An attractive distribution yield in a low yield environment • Record distribution target for 2013 |
Financial Performance Objectives • Target $450+ million in Adjusted EBITDA by 2016 ~4% CAGR • Sustain margin discipline • Target total leverage ratio of <4.0x Repayment of $25 million term debt in 2012 Opportunistic prepayments beyond 2012 61 |
Financial Performance Objectives 62 Adjusted EBITDA (a) Growth • Enhanced guest experience • Improved consumer messaging • Dynamic pricing and advance purchase commitments • Premium product offerings • Strategic alliance fees and promotional leverage • Capital and expense productivity ($ in millions) Strategic Growth Drivers (a) As defined on slide 39 |
Distribution Outlook • Anticipate 2012 annual distribution of $1.60 per LP unit Pay out in $0.40 quarterly cash installments Implied yield of ~7% at $23 unit price • Target record distribution in excess of $2.00 per LP unit in 2013 • Considerations for future distribution growth Growth of FCF Investment opportunities Capital structure opportunities Distribution yield / unit price 63 |
Distribution Outlook 64 $1.29 $1.43 $1.53 $1.60 $1.66 $1.76 $1.80 $1.84 $1.87 $1.90 $1.92 $1.23 $0.25 $1.00 $1.60 More than $2.00 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Restoring historical distribution commitment |
65 AGENDA Company Overview & Key Investment Considerations Matt Ouimet Park Review Richard Zimmerman Financial Review Brian Witherow Strategic Growth Opportunities Matt Ouimet Financial Goals Matt Ouimet Summary Matt Ouimet Q&A |
66 Favorable industry dynamics Proven ability to deliver results Attractive strategic growth opportunities exist Total Return Investment • Anchored by attractive distribution yield • Unit price appreciation driven by earnings growth • Balanced approach to allocation of excess cash Key Investment Considerations |
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APPENDIX |
EBITDA Adjustments EBITDA Adjustments ($ in millions) 12/31/10 12/31/09 EBITDA $247.6 $307.8 Plus: loss on early extinguishment of debt 35.3 -- Plus: net effect of swaps 18.2 9.2 Plus: unrealized foreign exchange (gain) on Note (17.5) -- Plus: equity-based compensation (0.1) (0.0) Plus: loss on impairment of goodwill and other intangibles 2.3 4.5 Plus: loss on impairment / retirement of fixed assets, net 62.8 0.2 Plus: (gain) on sale of other assets -- (23.1) Plus: terminated merger costs 10.4 5.6 Plus: refinancing costs -- 0.8 Plus: licensing dispute settlement costs -- 2.0 Plus: class action settlement costs 0.3 9.5 Adjusted EBITDA $359.2 $316.5 For years prior to 2009, a reconciliation of Adjusted EBITDA to net income (loss) can be found in our Annual Report on Form 10-K for that year. |