speaker
Chris
Conference Operator

Good morning. My name is Chris, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Cedar Fair Entertainment Company 2022 third quarter earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. To withdraw your question, please press star one again. Thank you. I'll now turn it over to Cedar Fair.

speaker
Michael Russell
Corporate Director of Investor Relations, Cedar Fair

Thank you, Chris, and good morning to everyone. My name is Michael Russell, Corporate Director of Investor Relations for Cedar Fair. Welcome to today's earnings call to review our 2022 third quarter results, and it's September 25th, as well as trends we are seeing through this past Sunday, October 30th. 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.com. On the call with me this morning are Richard Zimmerman, Cedar Fair's president and CEO, and Brian Witherow, our executive vice president and CFO. Before we begin, I need to remind you the 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 described 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 Regulation 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'd like to introduce our CEO, Richard Zimmerman. Richard.

speaker
Richard Zimmerman
President and CEO

Thank you, Michael, and good morning, everyone. Earlier this morning, we announced record results for the third quarter and for the first 10 months of 2022. As you all know, the third quarter of the year is our biggest and most important quarter, and I'm extremely proud of what our team accomplished over the last few months and since we reopened our parks. There's no better group of professionals in the business. Together, We have quickly and effectively addressed the effects of the pandemic on our business and put Cedar Fair back on course to drive significant growth. Our strong recovery and record performance this year has allowed us to deliver on our capital allocation priorities of reducing leverage and returning capital to unit holders. Brian will provide more detail on the state of our balance sheet in just a moment. but I am extremely proud of the fact that we have already reduced net leverage back inside four times adjusted EBITDA in line with pre-pandemic levels. This morning, we also announced that the board has authorized a fourth quarter cash distribution of 30 cents per limited partner unit, which is in line with our third quarter distribution. In addition to our quarterly cash distribution, We are returning capital to unit holders through our $250 million unit repurchase program, which was initiated in August. In just a few short months, we have repurchased approximately 2.8 million units, or 5% of Cedar Fair's outstanding units, at an aggregate cost of approximately $115 million. We believe that a combination of quarterly cash distribution payments and buying back units is the most effective and value-enhancing path to return capital to our unit holders in the current environment, and we will continue to execute on our capital return plans as we head into 2023. Before I turn the call over to Brian to review our financial results in more detail, let me highlight some of the key measures that underlie our outstanding year-to-date performance. First, we set a record for third-quarter net revenues improving on last year's third quarter by 12%. Second, we established a new high in the third quarter for adjusted EBITDA, beating last year's third quarter performance by 9%. Third, our trailing 12-month adjusted EBITDA at the end of the quarter totaled $537 million, which was 6% better than the adjusted EBITDA of $505 million we delivered in fiscal 2019. Fourth, Preliminary net revenues year-to-date through October 30th were $1.68 billion, a record for the 10-month period despite attendance remaining below historical levels. And finally, trends in our long lead indicators through October, including our season pass products, reservation at our resort properties, and group bookings, looked solid heading into next year. Looking at more recent results, Our Halloween and fall events, which kicked off in mid-September, once again have produced some of our most profitable days of the season, despite ongoing economic uncertainty and mounting financial pressures on consumers. During the month of October, revenues were up approximately 4% to October of last year, driven by higher attendance and continued growth in out-of-park revenues. In-park per capita spending during the month remained in line with October of last year, despite a sizable increase in our season pass mix this year. The strength of our recent results and our excellent top line performance through the first 10 months of the year sets the stage for us to deliver the best year in the company's history. Most importantly, our year-to-date results demonstrate our ability to generate record revenues despite attendance remaining below pre-pandemic levels. As we've previously noted, Demand levels this year have been impacted by a number of factors, including the anticipated slower recovery of our group channel and inclement weather during key periods of the summer season. Helping offset our demand levels has been the solid trends in guest spending inside our parks, as well as at our resorts and adjacent properties. Guest spending on food and beverage has again led the way, validating the significant investments we've made this year and over the past several years to expand and enhance our in-park offerings. Although price increases have played a part in delivering per-cap growth, higher guest spending reflects the success of our investments to deliver higher quality offerings in a more efficient manner, driving increases in transaction counts and average transaction values. With more room for improvement, we will continue to invest behind our F&B strategy in the future. from our resort properties, which we consider a differentiator of our business model from others, have also helped offset the demand headwinds. Our hotels, cottages, and campgrounds quietly generate steady and reliable cash flow, and they play a valuable role in the ecosystem of our parks. Our resort properties extend the stay of our guests to multiple days, create flexibility for our guests to visit our parks multiple times, and represent a sticky demand channel for attendance. We are extremely pleased with the early guest response from our recently completed resort renovations and believe the renovations currently underway at the Knott's Berry Farm Hotel will be a game changer for that property as well. In spite of the pressures on demand we've dealt with this year, we've remained true to our revenue and yield management approach, maintaining the integrity of our pricing structures, looking ahead We are optimistic that we can recover a meaningful portion of the shortfall to historical attendance levels as early as next season, led in part by the improving momentum we are seeing around group bookings. With that, I would like to turn the call over to Brian to review our financial results in more detail. 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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