Cedar Fair expects to reach cashflow goals a year early

Posted | Contributed by Jeff

From the press release:

Cedar Fair Entertainment Company (NYSE: FUN), a leader in regional amusement parks, water parks and active entertainment, today announced results for the first quarter ended March 26, 2017 and, due to the later timing of the Easter and spring break holidays, the Company provided an update on attendance and revenue trends through the end of April. Historically, first-quarter results represent less than 5% of the Company's full-year net revenues as the majority of its parks and facilities are closed during this quarter. As a result, the Company typically operates at a loss during this period.

"We are pleased with our early-season trends through the end of April, which for the most part normalizes for the spring break calendar shift associated with a later Easter holiday," said Matt Ouimet, Cedar Fair's chief executive officer. "Net revenues through April are up 2% over the same four-month period last year. While it is too early to predict definitive full-year trends at this point in the year, we are encouraged by the early-season strength in all of our advance purchase channels, including early-season trends in season pass sales, all-season dining and beverage sales, and group event bookings. At the parks that are currently open, average in-park guest per capita spending has also been trending higher than at this time last year. Based on the momentum coming out of our record performance in 2016 and the strong early-season trends in long-lead indicators this year, we remain confident in our ability to execute on our long-term strategy and expect 2017 to be another record year for Cedar Fair."

First-Quarter Results

For the first quarter ended March 26, 2017, Cedar Fair's net revenues decreased to $48 million, compared with $58 million in the first quarter ended March 27, 2016. The decrease was primarily driven by: (1) the timing shift of the Easter and spring break holidays which occurred in the second quarter of 2017 compared with a meaningful portion of these events that occurred in the first quarter of 2016; and (2) a decline in first-quarter attendance due to drought-correcting rains in California.

Operating costs and expenses for the first quarter of 2017 were $117 million, comparable with the prior-year quarter, and were also in line with the Company's expectations. The net loss for the quarter totaled $65 million, or $1.16 per diluted LP unit, compared with a net loss of $48 million, or $0.87 per diluted LP unit, for the first quarter a year ago.

Cash Flow and Liquidity Remain Strong

As of March 26, 2017, the Company had $598 million of variable-rate term debt (before giving consideration to fixed-rate interest rate swaps), $940 million of fixed-rate debt, $85 million of borrowings under its revolving credit facilities and $34 million of cash on hand. The Company believes its credit facilities are sufficient to meet working capital needs, debt service, planned capital expenditures and distributions for the foreseeable future.

As previously announced in April, the Company successfully completed a refinancing of its existing senior secured credit facilities with new senior secured credit facilities consisting of a seven-year, $750 million term loan and a five-year, $275 million revolving credit facility. In connection with this refinancing, it simultaneously completed an offering of 10-year, $500 million senior unsecured notes. "This refinancing not only enables us to take advantage of historically low rates and extend our maturities, but also improves our financial flexibility so that we are better positioned to capitalize on opportunities in the future," said Brian Witherow, Cedar Fair's executive vice president and chief financial officer.

Taking into consideration the second quarter refinancing of its credit facilities, the Company expects to pay cash interest costs of approximately $85 million to $90 million for fiscal 2017 and going forward.

Distribution Declaration

The Company also announced today the declaration of a cash distribution of $0.855 per LP unit. The distribution will be paid on June 15, 2017, to unitholders of record as of June 5, 2017. This distribution reflects the Company's strong performance and growth strategy and is consistent with its targeted annualized distribution rate of $3.42 per LP unit for 2017.

Outlook

"Following the record year of 2016, we remain confident in our current-year operating plan and our long-term growth strategy," added Ouimet. "We expect another record year in 2017 as our growth strategy positions us to maximize value this year and beyond.

"Our investment in world-class rides, family entertainment and overall guest experiences will continue to be key drivers of our success," said Ouimet. "Mystic Timbers, a new world-class wooden roller coaster at Kings Island, has had a strong opening to-date. It is every bit as exciting of a ride as we had hoped it would be and we expect it will be a strong contributor this year. We fully expect to see similar responses to the debuts of our water park expansion projects at Cedar Point and Knott's Berry Farm, which come on line in late May. In addition, our new Cedar Point Sports Center has been hosting amateur tournaments for almost two months and based on team registrations to date, we are forecasting the number of teams participating this first year will easily exceed our expectations. We have also received an impressive response to our announced expansion of the operating season at three more parks this year - Kings Island, Carowinds and Worlds of Fun - with WinterFest celebrations."

Ouimet concluded by stating, "We continue to move forward on other long-term projects, such as the expansion of our resort facilities and development of our approximately 1,400 acres of undeveloped land adjacent to our parks. We are confident these transformative long-term investments will provide guests with a greater overall experience at our parks, as well as produce very attractive returns to our investors for many years to come."

Read the entire press release from Cedar Fair.