Six Flags Entertainment Corporation (FUN) Q2 2013 Earnings Report, Transcript and Summary

Good day ladies and gentlemen, and thank you for standing by. Welcome to the Cedar Fair Second Quarter Earnings Conference Call. During today’s presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be opened for questions. [Operator Instructions]. This conference is being recorded today, Thursday, August 08, 2013. I would now like to turn the conference over to, Stacy Frole. Please go ahead, ma’am.

Thank you, Lara. Good morning, and welcome to our second quarter earnings conference call. I’m Stacy Frole, Cedar Fair’s Corporate Vice President of Investor Relations and Corporate Communication. Earlier today, we issued our 2013 second quarter earnings release. A copy of that release can be obtained on our corporate website at www.cedarfair.com, or by contacting our Investor Relations Offices at 419-627-2233. On the call this morning are, Matt Ouimet, our President and Chief Executive Officer; and Brian Witherow, our Executive Vice President and Chief Financial Officer. Richard Zimmerman, our Chief Operating Officer, is also with us today for the call. Before we begin, I need to caution 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 materially from those described in such statements. You may refer to filings by the company with the SEC for a more detailed discussion of these risks. In addition, in accordance with Regulation G, non-GAAP financial measures used on the conference call today are required to be reconciled to the most directly comparable GAAP measures. During today’s call, we will make reference to adjusted EBITDA, as defined in our earnings release. The required reconciliation of adjusted EBITDA is in the earnings release and is also available to investors on our website via the conference call access page. In compliance with SEC Regulation FD, this webcast is being made available to the media and the general public, as well as analyst and investors. Because the webcast is open to all constituents and prior notification has been widely and unselectively disseminated, all content of the call will be considered fully disclosed. Now I’ll turn the call over to Matt Ouimet.

Thank you, Stacy and good morning everyone. As we entered the final third of our operating season, I am pleased to report that our results remained strong and we are on track for our fourth consecutive year of record results. In the second year of our FUNforward initiatives, we continue to build on the momentum that began in 2012. On today’s call, I will discuss several of these initiatives which have been instrumental in driving our strong current year performance, and Brian will provide a more detailed review of the financial results for the second quarter ended June 30th. First, I would like to briefly discuss recent revenue and attendance trends through this past Sunday. Based on preliminary results through August 4th, net revenues have increased approximately 5% when compared with the same period a year ago. The increase in net revenues is a result of increases across all areas of our business, including a 5% increase in average in-park guest per capita spending to $43.47 and a 7% increase in out of park revenues. Attendance over the same period was down less than 1%. Excluding the San Diego water park that we sold in November of 2012, attendances were up 1% to a record 15.0 million visits on a comparable park basis. We are particularly pleased with our ability to achieve record attendance levels through July, especially considering that we eliminated a separate-charge water park gate at our park in Kansas City, Missouri. That water park, Oceans of Fun is now included in the admissions gate for our Worlds of Fun amusement park for the 2013 operating season and is no longer counted as a separate gate. In regards to our FUNforward strategy, we are increasingly confident in our ability to generate growth in both the short and long term, as our initiatives continue to resonate with our guests. Importantly, as part of our strategy, we will continue to invest in enhancing the overall guest experience. We know that delivering a great experience to every guest, every time they visit, is critical to the success of our business. We believe our recent investments in this area have contributed significantly to the solid performance we are seeing in both attendance and average in-park guests per capita spending. One way we’ve enhanced the guest experience is by improving the quality and variety of our food and beverage offerings within our parks, to drive greater capture rate and support appropriate pricing. While we were successful with improving the overall quality in 2012, we sacrificed little on the way of margins. Over the past year, Phil Bender, our Executive Vice President of Operations and Craig Grimes, our Vice President of Foods, have focused on reengineering our food menus, to drive higher value perceptions and guest satisfaction. I’m pleased to report that thus far in 2013, we are providing higher quality food offering and driving increased profitability. Food revenues across all of our parks in our food, merchandise and game margins through June 30th, have improved by approximately 90 basis points year-over-year. We are also enhancing our guest experience through our 2013 capital plans. Our top performing parks this year including, Cedar Point, Knott’s Berry Farm, California’s Great America, Kings Dominion and Worlds of Fun were all recipients of significant new capital in 2013. As expected, we’re seeing solid attendance trends and strong revenue gain at each of these parks. The introduction of GateKeeper, our world of record breaking wing coaster at Cedar Point and the crown jewel of our 2013 capital plan has truly been transformative. It involves both riders and non-riders alike as it across the front gate. At Knott’s Berry Farm, we had a three family rides and in doing so created an entirely new Boardwalk area, which has been highly marketable and has garnered significant attention. This new area is a perfect example of place making and the type of capital spending that you can expect to see from us going forward, as we continue to invest to scale and refresh, reinvigorate and reengage specific areas of our park. Additionally, Goal Striker, a wooden roller coaster at California’s Great America, the introduction of the world’s largest PEANUTS themed children’s area, Kings Dominion and a major water park expansion at Worlds of Fun and Oceans of Fun have all been successful capital projects and strong contributors to our second quarter and year-to-date results. Beyond our marketable capital programs, we have also experienced in the guest experience by extending park hours, expanding live entertainment in our midways and increasing the number of park special events. Over the past two years, we have discussed our focus on advance purchase commitment and its importance in our business model. Advance purchases drive in-park spending elasticity and provides protection against visitation disruption events including time property and unfavorable weather trends. Our season pass program is a great example of advanced purchase commitments which have contributed nicely to our strong current year results. Through August 4th, season pass sales were up 17%, including a 8% increase in units sold, a nice improvement from the previous record results we achieved in 2012. These record sales are the direct result of the successful development and expansion of our e-commerce platform and installment payment program, combined with the compelling marketing message and the incredible value proposition of season pass offers our guest. With season pass expected to represent more than 40% of our attendants in 2013, we want to ensure we understand their needs, wants and tendencies within the park. This will enable us to unlock additional value from our season pass holder base and our customer relationship management platform, or CRM as we called it, has allowed us to take positive steps forward in this area. While we are still in the early stages of implementing this new platform, we have seen some good successes over the past two months as we have tested various offers in consumer messaging. What is important to take away here, is our ability to provide additional value to the company while also providing additional value to our guests. Our group sales business is another form of advanced purchase commitments and also has been a nice contributor to our success thus far. Year-over-year revenues in this category have increased more than 10%, as we continue to add value to our offerings, improve catering facilities and enhance menu options and we have the second year benefit of an incentivized sales force. It’s also important to note that our group bookings for the remainder of 2013 are trending ahead of the same time last year. Following better than expected success in 2012, our premium product offerings again had been a major contributor to our strong results this year. Our Fast Lane products entered its second season, the awareness and demand for the product has increased, allowing us to move Fast Lane into two tiered product Fast Lane and Fast Lane Plus at several of our parks. For additional $10 to $20 at five of our parks, guests can upgrade their Fast Lane Plus which allows access to the two most highly demanded rides at those parks. At Cedar Point for example, this would include our new GateKeeper rollercoaster and Top Thrill Dragster. The introduction of the tiered products allows us to increase the capacity of an already popular premium benefit. To-date, we’ve experienced meaningful experiences in both the number and the average pricing of the Fast Lane pass has sold, and we have plans to add additional seasonal feature to these premium benefit offerings in the near future. These and other FUN tour initiatives continue to gain traction and we feel very good about our current position. But we still have approximately one-third of our 2013 operating days ahead of us. We remain confident that we’re on track to meet our guidance of full year net revenues between 1.090 billion and 1.115 billion and adjusted EBITDA between 400 million and 410 million. Additionally, our 2016 target of 450 million or more of adjusted EBITDA is well within reach. Lastly, before I turn the call over to Brian, to go through our financial results in more detail, I wanted to thank our employees. While our new rides and attractions, premium advancement offerings and advanced purchase offerings are important elements to our business model, the guest experience is largely (inaudible) by the quality of service our employees provide. I’m very proud of our employees as they work diligently to serve our guests, in a manner consistent with our cornerstones of safety, service, courtesy, cleanliness and integrity. Now I will turn the call over to, Brian.

Thanks, Matt and good morning to everyone on the call. First, I want to remind you that virtually all of the revenues from our seasonal amusement parks, water parks and other resort facilities are realized during the 130 day to 140 day operating period, beginning in the second quarter with the majority of the revenues concentrated in the third quarter during the peak vacation month of July and August. Only Knott’s Berry Farm is open year round and the third quarter is also their highest level of attendance. I’ll also caution you it is always risky to jump to any conclusion about the full year results based on second quarter’s numbers alone. As Matt mentioned earlier, as of this past Sunday August 4th, approximately one third of our operating days are still to come. Also, as noted in our release, the fiscal three month period ended June 30, 2013, consisted of a 13 week period and included a total of 800 operating days, compared with 14 weeks and 905 operating days for the fiscal three month period ended July 01, 2012. Because the second quarter is not easily comparable with the prior year, I will focus my discussion on six months release which compared to 26 weeks periods. So moving on, as detailed on our earnings release this morning, which had a strong start to the first half of the year with meaningful increases in net revenues and adjusted EBITDA. Net revenues for the six months ended June 30, 2013 were 403.4 million, up 17.6 million or 5% from 385.8 million for the six month period a year ago. The solid revenue growth was a direct result of a 5% or $1.93 increase in average in-park guest per capita spending to $42.17, and a 6% or 2.8 million increase in out of park revenues to 48.1 million. These increases were slightly offset by a less than 1% or 52,000 visit decrease in attendance to 8.7 million visits compared with prior year. Excluding the results of the San Diego water park which we sold last November, attendance was comparable between years for the first six months of the year. It’s important to note that in-park guest per capita spending represents the amount spent per attendee to gain admission to our parks plus all amount spend while inside the park gates. Out of park revenues primarily represents the sale of hotel room, food, merchandise and complementary activities outside of the park gates and those revenues are excluded from our guest per capita figures. The 6% or 2.8 million in out-of park revenues is been primarily driven by the strong performance of our resort properties at Cedar Point and Knott’s Berry Farm. The success of our capital programs at both of those parks has not only driven higher attendance at the parks, but has also allowed us to drive higher ADRs at our resort properties, while maintaining or growing our occupancy rates, alternately producing meaningful revenue gains at all of our hotel and resort properties. The strong growth in guest per capita spending for the six month period came from a 4% increase in admissions per capital spending and a 5% increase in pure in-park spending. As Matt mentioned earlier, we’re extremely pleased with the gains in both areas, particularly given the success of our season pass initiatives and growth in season pass visitation which would naturally put pressure in average guest per capita spending as the season pass holders typically spend less with each incremental visit. As a result of record season pass sales, deferred revenue at the end of the quarter totaled $132.4 million, compared with $108.5 million for the second quarter of 2012, representing an increase of $23.9 million. All of this deferred revenue will ultimately be recognized in the third and fourth quarters of this year. On the cost front, operating cost and expenses for the first six months of the year totaled $320.8 million, representing an increase of $4.2 million or 1% from the first six months of 2012. This modest increase in operating expenses was largely attributable to an increase in selling, general and administrative costs in the period. SG&A costs were up primarily as a result of higher labor costs, largely related to full time staffing levels and increased advertising costs during the first six months of the year. Adjusted EBITDA, which we believe is a meaningful measure of park level operating results, increased $13.6 million or 19% to $86.8 million for the six months ended June 30, 2013. Adjusted EBITDA margins during the same six month period, improved by approximately 250 basis points compared with the prior year period. The increase in adjusted EBITDA and adjusted EBITDA margins is attributable to the solid net revenue growth, in addition to our continued focus on effectively managing our fixed cost base. Through the second quarter, we reported a decrease in the cost of sales associated with food, merchandise and games revenues, as well as the decrease in operating expenses as a percent of net revenues. These decreases were slightly offset by the increase in SG&A cost that I just mentioned. On an overall basis, operating costs and expenses are in line with our expectations through the first half of the year. Adjusted EBITDA on a trailing 12 month basis totaled 404.6 million, in line with our current year adjusted EBITDA guidance of 400 million to 410 million. As we discussed in our first quarter call, we completed a refinancing of our previous senior secured credit facilities in the first quarter of 2013, with new senior secured credit facilities along with new senior unsecured notes. This refinancing enabled us to take advantage of historically low rates and significantly improve our financial flexibility. As a result of the March 2013 refinancing, we recognized the $34.6 million non-cash charge earnings to account for the write off of loan fees from our 2010 and 2011 financings. This non-cash charge along with the $23.8 million unrealized and realized foreign currency loss were only partially offset by the increased revenue for the period. As a result, we reported a larger net loss for the first six months of 2013 compared with the first six months of 2012. Net loss as of June 30, 2013, totaled $61.7 million or $1.11 per diluted limited partner unit versus the net loss of $28.8 million or $0.52 per diluted limited partner unit for the same period in 2012. Turning our attention to the results for the five week period after the second quarter and through August 4th, positive revenue trends have continued in the month of July with net revenues of $19 million or 6% year over year. For the five week period, average in-park guest per capita spending at our parks was up 6% or $2.65, on the continued strength of admission per caps and in-park revenue initiatives. Out-of park revenues during the same period were up 7% or approximately $2 million and attendance was comparable with a year ago. Excluding the water park sold in 2012, attendance for the five week period was up a little more than 1%. On a year-to-date basis, preliminary net revenues through August 4th were approximately $712 million up 5%, or $36 million compared with 676 million generated for the same period last year. This increase was a result of an approximate 5% or $2.24 increase in average in-park guest spending to $43.47, and an approximate 7% or $5 million increase in out-of park revenues to $78 million. These increases were slightly offset by less than 1% or 52,000 visit decrease in attendance. Again, excluding the sale of the water park in 2012, attendance was up 1% or 75,000 visits to a record 15 million visits on a comparable park basis. Now let me shift focus on our balance sheet for just a moment. With respect to both liquidity and capital resources, we ended the second quarter in sound condition. Our receivables and inventories are at acceptable seasonal levels, and we have credit facilities in place to fund current liabilities, capital expenditures and operating expenses as needed. At the end of the second quarter, we had $43.6 million in cash on hand and $628.4 million of variable rate term debt all of which has been converted to fixed rates through several swap agreements which run through December 2015. We also had $901.4 million of fixed rate bonds and $58 million in borrowings under our revolving credit facilities. I’ll note that our revolver was fully repaid as of July 17th and we now have more than $115 million in cash on hand as of yesterday August 7th. To conclude, we’re very pleased with our results through the first week and of August. Our initiatives have gained momentum, our business continues to generate significant free cash flow and our balance sheet is strong, enabling flexibility into the future. While we still have approximately one-third of our operating season ahead of us, we will remain very upbeat about the duration of the 2013 season and our long-term strategy. With that, I’ll pass the call back over to Matt for concluding remarks.

Thank you, Brian. Before we open the call for questions, I would like to briefly comment on our upcoming Halloween events. Halloween continues to be an increasingly important part of our operating season. In fact, weekends in October are often the highest volume and most profitable weekends of the year. As such, our Chief Operating Officer, Richard Zimmerman and the general managers remain focused on ensuring that we continue to deliver on ads of the high quality experience our guests have come to expect from our notorious thought. This year our Halloween Haunt will have 23 new themed mazes, seven brand new scare zones, expanded dining options and alive or (inaudible) as the case may be entertainment. In addition, we have expanded our marketing programs as well as our very successful public relations activity to draw considerable media attention. By providing a strong value proposition and an excellent experience, the Haunt drives high visitations, supports our pricing strategy and stimulates per capita spending. And beyond the Halloween period, we are actively launching our new 2014 new rides and attractions. Our first big announcement happens tonight at Kings Island in Cincinnati Ohio. While social media sites have been speculating for months as to what this announcement will be and our local public relations team has enjoyed providing the occasional misleading clue, I can assure our loyal guest that they will be able to proudly report another record breaking addition to the Cedar Fair portfolio. Over the next several months, the other new product additions will be announced but this includes extended family rides at several of our parks and innovative interactive dark ride that will set a new industry standard, water park expansions, reinvigorations of some of the most legacy attractions as we did this year with our Timber Mountain Log Ride at Knott’s Berry Farm along with an expansive collection of new entertainment shows. In closing, I’d just like to remind everyone that the foundation for our future success remains providing a great experience, add a strong value for our guests. As long as we remain committed to this principle, we will continue to create loyalty from our guests and value for our unit holders. And with that, I will turn it back over to Stacy. Stacy?

I think at this point in time we are ready for questions.

Thank you, ma’am. We will now begin the question and answer session. [Operator Instructions]. And our first question comes from the line of Scott Hamann with KeyBanc Capital Markets. Please go ahead. Scott Hamann – KeyBanc Capital Markets: Good morning everyone. I know the weather trends were a little bit sketchy throughout the course of the quarter and even in the July. Can you talk about some of the regional variations that you saw? And if there is any evidence based on the booking or ticket sales trend that might indicate that some of these visits were simply deferred into later periods versus actually just lost?

Yes Scott happy to talk about it Richard and Brian knows not happy to talk about weather. But a couple of things I’d say to you, one is I think what we’re seeing is the benefit of a geographic first portfolio. Clearly we benefited this year from having parks in southern and northern California in the early part of the season here. The other is that our July results I think start to demonstrate the recapture that’s available when you have unfavorable conditions in the first part of the year. What I would say more broadly is every industry has uncontrollable factors. Our job is to mitigate those uncontrollable factors and I would say the advanced purchase commitment particularly season pass program, our group sales programs, and in our case the resorts we have are all examples of things that help mitigate when weather may be isn’t as funny as you’d like it to be. Scott Hamann – KeyBanc Capital Markets: Okay, sounds good. And then just a follow up, it seems like there is a lot of activity going on in San Francisco area around the new stadium. And just curious if you had any thoughts about potential opportunities out that way given what looks like is going to be a big increase in kind of attendance and visitations to that area around your park?

Yeah I think it’s a great question I appreciate it Scott. Was just there last week myself visiting with the city and talking with the 49ers and touring the park with the general manager. Richard Zimmerman has been there couple of times this year as have our development people. So for those who don’t track as directly, the NFL has a brand new stadium the 49ner stadium. It will begin in the 2014 season and is immediately adjacent to our parking lot and our park there. Beyond the anticipated promotional – cross promotional activities we will have with the 49ers organization particularly, we are looking at what type of activities particularly catering the special events we can do to extend our operating season there. And I think you’ll see some of our investments in the future things that we could not have contemplated as recently as two or three years ago before the stadium was announced. So we’re excited about that opportunity. I don’t know another regional amusement park that’s adjacent to NFL stadium. And so it’s not just the NFL games I should make clear, it’s all the concerts and other events that happen at that stadium that should benefit us as well. Scott Hamann – KeyBanc Capital Markets: Thank you.

Thank you, Scott.

Our next question comes from the line of Tim Conder with Well Fargo Securities. Please go ahead. Tim Conder – Wells Fargo Securities: Thank you and Matt congrats to the whole team on the good year to date so far and the execution here. Just a couple let’s go first to may be one of the obvious here, your adjusted EBITDA Brian you called out you’re up 19% year-to-date and now you’re at 404 million on a trailing 12 but the trajectory is good given what you’re seeing as far as your advanced ticket sales, your group business commenced through August 4. And let’s face it I know you don’t like to talk weather but in a good sense here the first half of August also has easy comparisons from very hot period last year. So I guess why no change to the guidance here? And do you expect those EBITDA margins for what different regions may be to compress over the back half of the year?

Thanks, Tim. First I’ll take the first half of that as far as the from the guidance side of things as you said, very strong numbers through the first half of the year and trends – top-line trends through the week ended August 4th and we’re very pleased by that back. With that said, we still do have a third of our operating season in front of us and as we’ve seen in prior years, a turn in October can work against you. So at this point in time, we’re still very comfortable with that we’re pacing well towards our 400 to 410 EBITDA guidance and don’t feel the need to adjust that at this point in time given we still have so much of the season in front of us. As far as margin goes, I think the one thing we take great pride in is that we are great cost managers and that discipline will always remain. With that said we have talked about reinvesting in the park you’ve seen us doing that over the last year and a half as we continue to try and drive guest service levels, as a means of adding value for the parks. We think ultimately that gives us more pricing power. So while we’re up 250 basis points through the first six months of the year – year-over-year, I wouldn’t be surprised if we saw a little bit of compression on that as our cost get a little bit more comparable. If you remember last year we were very heavily loaded in the first quarter of 2012 compared to 2013. So I’d see potentially some compression between now and the end of the year however, we did add 20 basis points last year to margin and I would expect that you’d see some margin expansion this year may be just not at that 250 basis points for full year. Tim Conder – Wells Fargo Securities: Okay, okay. And more of housekeeping item here, thank you for the color on the attendance down 52,000 year-to-date all in, up 75 if you exclude the sale of Soak City San Diego. Can you – Does that 75 I just want to clarify that plus 75 on an adjusted basis, are you normalizing also the combination of the water park and the theme park gate in Kansas City?

We are not Tim. Our belief there was that was a strategic decision. We went into it eyes wide open that there was some attendance risk however, when you compare it really back to how much for the full year attendance was exposed potentially, those folks that weren’t already buying a ticket or a pass that had dual purpose use, it was maybe about 150,000-ish visits roughly speaking for the full year. We believe that we could fully make that up through the combination of a draw of the two parts one price messaging and we’re seeing strong results as Matt said. We’re not only getting better per caps but we’re getting it on the attendance front as well. So we haven’t made any adjustments for that. Tim Conder – Wells Fargo Securities: If you would, what would that be Brian or do you have that handy?

I would say it’s tough mid-season to really say where it’s at Tim, I would tell you if we looked at it for the full year if we took that roughly 150,000 number I spoke to, the exposure for the full year would be somewhere between about 0.5% to a 1% of attendance. Tim Conder – Wells Fargo Securities: Okay, okay. So maybe we could add another 75,000 on a year-to-date that would be a rough guestimate to get to 150?

It’s really hard to say based when you’re mid-season based on the visitation pattern. So I think we’re not happy as on a same park basis attendance is up essentially a 1% year to date August 4th, and the decision in Kansas City is one that we’re very pleased with the results that we’re getting. Tim Conder – Wells Fargo Securities: Okay. And then final question Matt, you called out specifically what Phil and Craig were doing on the food front and how that’s enhanced your margins is one of the drives of margins. Can you talk about what you have done or potentially are considering to do as far as food packages? I know a competitors offered an all season dining pass just may be different things that you may be considering now that you’ve done some major changes on how you approach food?

And I think Tim the foundation for that actually is going to be a little bit back ended for you which is our new CRM system combined with our point of sale system is going to let us better understand what our season pass holders are doing today in terms of purchase behavior as well as all guests. So I think what you’ll see – I’m not ready to resort to a particular bell or whistle on this I think that we will continue to drive food per cap. I think we’ll drive it in several different ways but part of – the foundation will be a much more about intellectual understanding how to segment guest in terms of the food preferences, in terms of their spending habits, on visits etcetera. So I’m not ready to go into details on that. And the other thing to think about is the regional amusement park business because the season is relatively condensed, you can only set successfully execute it against a specific number of initiatives and I want to make sure we stay on the initiatives that we believe have the most impact and that we execute well against them and that’s a reminder Richard gives to me each and every day. So I wouldn’t expect us to see go down that path immediately, but you can expect us to continue to drive that important source of revenue. Tim Conder – Wells Fargo Securities: Okay. Thank you for the answers and the focus.

Thanks, Tim.

Thanks.

Our next question comes from the line of James Hardiman with Longbow Research. Please go ahead. James Hardiman – Longbow Research: Good morning. Thanks for taking my call. Just real quick housekeeping here Brian, help us with the calendar in the third quarter I thought and maybe I’m wrong I thought that last year’s third quarter that the calendar was a negative or shift out of 2Q into 3Q. But sounds like what you’re saying earlier that the shift was more first quarter and second quarter a year ago is it – even operating calendar this year third quarter versus last year?

Yeah James. So most of the meaningful impact as far as the operating calendar is concerned was first second quarter with the timing of the Easter break as well as the second quarter. So when we look at this year’s third quarter and fourth quarter, any change in operating days is really more so tied to just like shifts in the actual operating calendar as opposed to any fiscal calendar. We were projecting six less operating day this third quarter versus last year’s third quarter so not really much of a different. James Hardiman – Longbow Research: Okay, perfect. And then I guess a little bit of a feedback on Tim’s question I sort of get the point about margins coming back to earth a little bit based on some investments. But would you call out anything in the back half of the year that would suggest that sales would decelerate in any way? And I guess may be split that into two separate questions on the attendance side, re-jog our memories weather was a pretty significant negative for you, not only in August of last year but I think during the weekend’s time. And then I guess separately on the per cap side, obviously you’ve got some whole lot of initiatives going on are we laughing some of those initiatives meaningful from a year ago such that maybe the per cap decelerates here in the back half of the year how should we think about that?

James I’ll take that and then Brian I don’t know if you want to add anything to it. But even though we had, I would say unfavorable comparisons 2012 versus 2011 on a weather basis for August and into October, we still had a second most successful fall period that we’ve ever had. And so I think James that we’re optimistic about the fall for a number of reasons the most being the quality of our product we’re going to provide and kind of our new sales and marketing programs. So we remain optimistic about the fall. But last year even despite those challenges it was our second best fall we’ve ever had. I don’t know if you’ll see a deceleration on any of our initiatives. We will be rolling over the latter part of Fast Lane which was I would say more well installed by the time we got to the end of the last season, but still think we have running room there as well. James Hardiman – Longbow Research: Okay, that’s very helpful. And I guess last clarification I thought you guys made a brief reference to seasonal features of Fast Lane, what is that? How should I think about that?

James you were listening closely. And we did make that reference and you’ll hear more about that from our media team as we get toward the next couple of weeks. James Hardiman – Longbow Research: Got it. Thanks guys.

Our next question comes from the line of Steve Altebrando with Sidoti and Company. Please go ahead. Steve Altebrando – Sidoti & Company: Good morning. The 5% increase in revenue through August 4th is that on a comparable operating days basis?

Yes it is, Steve. Steve Altebrando – Sidoti & Company: Okay. And then in terms of FastPay, is there any color you could provide how that testing is going and if you’re planning to proceed to roll that out across the portfolio in ‘14?

Yeah and glad you touched on that. So FastPay is a pilot program we’re running at Dorney Park this year where basically there is an RFID wristband you buy as you enter the park. And basically have it preloaded cash on you risk dispended throughout the park but most particularly the water park. We are very pleased with the results we see there. I would expect you would see that in multiple parks next year on a somewhat of a modified basis. But we’re a big believer that, that over time will become a standard for us I just think the adoption rate will be slower because it’s a product it isn’t widely available throughout the industry and we’ve got a little bit of the training consumer but so far we’re very pleased with those results. Steve Altebrando – Sidoti & Company: Okay thanks. And if you could touch on accommodations, I know it’s a fairly small part of the business, but pretty significant increase is – are you suspect economic tailwinds or the payment plans that’s boosting up?

Well it’s interesting it’s probably a combination of things but I would say the number one thing that’s boosting is the quality it experience at Cedar Point and Knott’s. The new capital investments in those parts as Brian touched on drive not only attendance but overnight stays and two day visits as well and our team has done a really good job there. Along with and applying some revenue management practices that are typical for hotels and we run pretty high occupancies. So we’ve been pushing ADRs and been able to still able to sustain or grow our occupancies but fundamentally a day at the park is great two days is better. Steve Altebrando – Sidoti & Company: Okay. Thank you.

[Operator Instructions]. Our next question comes from the line of Afua Ahwoi with Goldman Sachs. Please go ahead. Afua Ahwoi – Goldman Sachs: Hi good morning. Just two questions for me first of all, have you seen any impact to your attendance number or any feedback from guests based on may be some of the recent incident that happened competitor’s parks? And secondly on the I know you touched on this multiple ways, but as we think about the operating expense line on the variable side is there anything you’re doing that helping you be very nimble to adapt sort of declining attendance trends especially when it’s temporary and may be weather (inaudible) shift driven that I think that is definitely one of the things that has surprised to the outside for both you and your competitor in the face of decline in revenues you were able to show good flow through and show good margins? Thanks.

I’ll take the first one and give Brian the second one. There are no discernible impacts to our business from the incidents in Texas. Brian?

Yeah as far as the operating expenses are concerned, as I said before cost discipline and being the best cost mangers in the industry remains a focus for us and part of that is Richard and his team of general managers on a daily basis who are managing their seasonal labor which is probably the most controllable and largest variable cost that we have. On days when we do have weather and weather will happen from time to time that general managers do an excellent job of dialing their seasonal staffing levels back accordingly. So I think that’s probably been the thing they’ve been most active on and we’ll continue to stay focused on.

And I will add though that I think it’s important to make sure that we meet our guest expectations when they show up. And so is an important balance in that equation. The weather should not affect the experience people have decide to get a little wetter. Afua Ahwoi – Goldman Sachs: Understood. And actually I figured it would probably be on the seasonal labor fund is there anything may be is there any technology or enhancements that has made it even better to sort of balance those moving parts now than may be a few years ago? I know sometimes you talk about tools that give the park manager more real time attendance update or real time get a better sense on real time attendance trends that make these decisions even more efficient and may be historically?

We’ve always had as far from attendance standpoint systems in place that allow our general managers to monitor the park on a very tight interval inside 15 minutes. But they are monitoring – their front line staffs are monitoring that and making adjustments as Matt said maintaining guest service levels. So it’s going both ways. It’s coming back on days where weather is against us and it’s ramping up where the attendance is pacing ahead. That said, we are and do have initiatives in place, some that were rolled out this year on time and attendance systems going into account platform. We’ll be continuing to roll those out of our system so we think we’ll have even more opportunity, more efficiencies built in over the course of next several years. But the parks are doing an excellent job working with what they have from a tool perspective at this point. Afua Ahwoi – Goldman Sachs: Okay, thank you.

And our next question comes from the line of Jeffrey Thomison with Hilliard Lyons. Please go head. Jeffrey Thomison – Hilliard Lyons: Thank you. First of all good job on year-to-date performance to the whole team there. Two operations related questions one, why does combining a water park gate and an amusement park gate into one ticket purchase work at some locations but not at others? And why was the change in Worlds and Oceans of Fun not a good idea now but not earlier? And then the second question following up on your comments on the Halloween events Matt, do you expect the Halloween season this year to be similar to last year in terms of companywide number of operating days and just as importantly collective budget?

I’ll take the Halloween one. It is essentially the same number of operating day plus or minus a day here or there and our expectations for Haunt continue to be strong. Again I would just challenge some of it would be attendance but a lot of it will be pricing. We believe that we’ve got a product that we can get behind and we want to make sure that we don’t chase volume at the risk of losing some profitability. But I would – and to give an honest response both from Halloween Haunt this year. As it relates to the water park, this is an idea that’s been out in this company for a long time considered over the years and I think specifically this was – we’ve got Cedar Point and we’ve got Knott’s Berry Farm where we still maintain separate water parks and separate amusement park gates. Those two have unique characteristics that I’m not going to go into today, which make us think that sustaining that current structure is the appropriate ticketing strategy for those two parts. Worlds of Fun, if you set those aside, Worlds of Fun was our last park it didn’t take advantage of two parks for one price which is an incredibly compelling consumer messaging and we’ve seen exactly that happen at World of Park as we had anticipated. It’s also a strongly defensible position against water park – standalone water parks because the value proposition is great for the consumer. And then the third thing is water parks play a disproportionate role in driving season pass sales because people see themselves going into the water park more times than they go to the amusement parks. And so all of that came together and I’m very proud of Phil Bender who championed us for us in this organization and we took a little bit of risk and we’re seeing almost the same attendance with very strong per cap growth. Jeffrey Thomison – Hilliard Lyons: Great. Good luck the rest of the way

Thanks Jeff. Appreciate it.

And I’m showing no further questions at this time. Please continue.

So on behalf of the entire management team, I would like to sincerely thank you for your time this morning and your continued interest and support to Cedar Fair. To summarize, we feel very good about our long-term strategy and our progress thus far in the 2013 season, which I truly believe is attributable to our loyal, dedicated and committed employees. Following my third operating season I’m continuing to be proud of the potential of all of our parks. We have the right people in the place at the right time, a portfolio of quality assets and our guest facing initiatives are beginning to gain traction. We continue to drive maximum value to our unit holders by executing against our strategy which we believe will optimize our value in both the near term and long term. Finally, for those of you who haven’t had the change to visit, I strongly recommend that you visit to one of our parks this summer to experience the unmatched quality of our parks and employees. Thank you for your time today. Stacy?

Thank you everyone for joining us on the call today. Should you have any follow up questions feel free to give me a call at 419-627-2227 or Lisa Broussard at 419-609-5929. We look forward to speaking with you again in about three months to discuss our third quarter results.

Ladies and gentlemen, this concludes the Cedar Fair second quarter earnings conference call. Thank you for your participation. You may now disconnect.