speaker
Amy
Conference Call Operator

Ladies and gentlemen, thank you for standing by. And welcome to the Cedar Fair Entertainment Company's 2020 third quarter earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this time, you will need to press star then 1 on your telephone keypad. If you require any further assistance, please press star then 0. I would now like to hand the conference over to Mr. Michael Russell, Corporate Director for Investor Relations. Please go ahead.

speaker
Michael Russell
Corporate Director, Investor Relations

Thanks, Amy, and good morning, everyone. Welcome to our 2020 Third Quarter Earnings Conference Call. Earlier this morning, we distributed via wire service our earnings press release, a copy of which is available under the News tab of our investors' website at ir.cedarfair.com. On the call with me this morning are Richard Zimmerman, Cedar Fair President and CEO, and Brian Witherow, our Executive Vice President and CFO. Before we begin, I need to remind you that comments made during this call will include forward-looking statements within the meaning of the federal securities laws. These statements may involve risks and uncertainties that could cause actual results to differ from those distributed in such statements. For a more detailed discussion of these risks, you may refer to the company's filings with the SEC. In compliance with the SEC's Reg FD, this webcast is being made available to the media and the general public, as well as analysts and investors. Because the webcast is open to all constituents and prior notification has been widely and unselectively disseminated, all content on this call will be considered fully disclosed. With that, I would like to introduce our CEO, Richard Zimmerman. Richard?

speaker
Richard Zimmerman
President & CEO

Thank you, Michael, and thanks to everyone for joining us this morning. Let me take just a minute here at the outset of our call to wish you and your family all the best as we approach the holidays. I hope you are all staying safe and finding ways to navigate through this uncertain and challenging time. Before Brian gets into the details behind our third quarter results, I want to begin this morning's call by stressing this point. Having the opportunity to open and operate seven of our 13 properties after the March shutdown was very important and extremely valuable for our team and our company. While it felt humbling at times not having all our parks up and running, not to mention the impact it has had on our results, nothing can replace the experience and learnings we gained by interacting with our guests and associates under this season's unique set of circumstances. Our parks did a great job adjusting their operations to provide our guests with the best possible experience within the necessary health and safety guidelines. Importantly, we are using what we tested and learned this year to help us improve our operating plans for next season, including the programming elements of our extremely popular event calendars. It's equally important to note that all parks that reopened this year generated positive cash flow, with revenues covering variable operating costs. Furthermore, I want to take a moment and thank our team. I could not be prouder of what they've achieved this season in such an unusual and dynamic environment. Their level of dedication, professionalism, and accomplishment during the pandemic has been nothing short of exceptional, especially given the difficult circumstances and the level of uncertainty under which they were asked to operate. Our team recently received well-deserved recognition and high praise for its development and implementation of COVID-19 safety protocols when the state of Ohio contacted us for counsel on how best to manage the long lines at the polls for yesterday's election. This is one of many examples of the culture of excellence that drives our company's long-term success. I would also like to emphasize that we have done everything possible this season to open every park in our portfolio when it was appropriate to do so. We vigorously pursued permission to reopen from state and local authorities in each of our markets and, once granted that approval, assessed the financial feasibility of opening our parks within the required restrictions. Kings Dominion in Richmond, Virginia, is an example where initially it did not make economic sense to open, given the state's in-park limitation of 1,000 guests. We continue to maintain an active dialogue in that market with the hope of reopening the park, even on a limited basis, yet this year. Meanwhile, just last week, we announced that Carowinds will open later this month to host an updated version of its Winterfest event called Taste of the Season, which will run through the end of December. Having a chance to welcome guests back to our Charlotte Park is something we've been actively working on since we were forced to close the park back in March. Along the same lines, we remain diligent in our efforts to reopen Canada's Wonderland, two of our largest parks. Both jurisdictions governing these major parks continue to maintain a very conservative posture towards amusement parks in general. Nevertheless, as we await permission to fully reopen Knott's Berry Farm, the park has successfully hosted a growing number of outdoor, family-friendly dining and retail experiences, such as Taste of Knott's, Taste of Falloween, and the upcoming Taste of Merry Farm, where guests enjoy specialty food and beverage selections created by the park's executive chef and culinary staff. Looking ahead, we believe that Knott's sold-out series of nontraditional events which have generated some of our highest guest satisfaction ratings ever, offer a strategy that can be successfully rolled out at other parks in the future. While few businesses in our sector have escaped the pandemic's impact on demand, our company's ability to rebound from past disruptions gives us confidence that a recovery is a matter of when, not if. Our business model has withstood the test of time, regardless of disruptive macro factors, which underscores our confidence in an eventual recovery. In the meantime, our team has taken full advantage during park closures to ensure we emerge from the disruption with a leaner, more efficient, and lower cost infrastructure. While our review of the business continues, we believe the improvements we have made thus far plus other cost savings initiatives we are working on will reset our consolidated spending to lower levels for major OPEX and SG&A cost categories, such as labor, advertising, and general procurement. These cost savings should have a positive impact on gross margins over the long term, something we will be prepared to outline in more detail over the coming quarters. Before I ask Brian to review our third quarter results, I want to review the purpose and reasoning of our recent bond offering and how it fits within our current strategy. As you know, in early October, we completed the issuance of $300 million of senior unsecured notes at 6.5%. We believed it was a sensible option to further strengthen our liquidity position as a reasonably priced insurance policy against the possibility of the disruption lasting longer than anticipated. With limited market clarity heading into 2021, our long-tenured bank group fully understood and supported our strategy to further strengthen our capital structure. And we are grateful for their continued confidence in our business. Ultimately, reestablishing the record momentum we worked so hard to achieve in 2019 will require renewed broad-based consumer confidence and a return of demand. That is why the value of operating during this year's abbreviated summer and fall seasons cannot be overstated. Nor can our guest experience of safely visiting our parks during a worldwide pandemic. In hindsight, we better understand why many guests opted out this year, many of the reasons confirmed by our own research. Yet, as our guests shared with others that they enjoyed their park visits, attendance levels consistently increased. even topping 50% of last year's levels on a number of days, and more recently, reaching capacity limits at Cedar Point and Kings Island. These are encouraging signs as we build out our operating plans and prepare for the 2021 season. I'll pause here to allow Brian to review our third quarter results. Brian?

Disclaimer

This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.

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