Posted Thursday, February 19, 2015 9:45 AM | Contributed by Jeff
[Ed note: The following is an excerpt of a press release. -J]
Cedar Fair Entertainment Company (NYSE: FUN), a leader in regional amusement parks, water parks and active entertainment, reported record financial results for the year ended December 31, 2014.
The Company reported record full-year net revenues of $1.16 billion, up 2% from 2013; net income of $104 million, or $1.86 per diluted limited partner (LP) unit, was down $4 million from a year ago. Adjusted EBITDA for the full year was a record $431 million, up 1% from the prior year, on increases in average in-park guest per capita spending and out-of-park revenues, while comparable-park attendance was consistent with last year's record results.
The Company maintained its Consolidated Leverage ratio at 3.6 times debt to Adjusted EBITDA, while reducing its average cost of debt going forward to approximately 5.3%, down from 6.3% a year ago. The Company remains confident in the strength of its strategy and business model and is on track to achieve its FUNforward long-term growth goal of $450 million, or more, in Adjusted EBITDA by 2016.
"We are pleased to report a very strong finish to 2014, allowing us to achieve our fifth consecutive year of record results," said Matt Ouimet , Cedar Fair's president and chief executive officer. "More importantly, we were able to advance important long-term initiatives that support our ability to continue to grow our business in the years to come. Examples of longer-term initiatives that we will launch, or ramp up, in 2015 include: the complete renovation of our beachfront hotel and group catering pavilions at our flagship park, Cedar Point; the second phase of a multi-year investment in Carowinds, a park we are growing to meet the demands of an expanding Charlotte market; the portfolio-wide rollout of our all-season dining program; the continued development of FunTV, our in-park television network that provides programming and a sponsorship activation platform in all of our parks; and the enhanced data-analytics capabilities which are increasingly valuable as we look to compare consumer behavior over multiple years."
2014 Full-Year Results
For the full year ended December 31, 2014, Cedar Fair generated record net revenues of $1.16 billion and net income of $104 million, or $1.86 per diluted LP unit, compared with net revenues of $1.13 billion and net income of $108 million, or $1.94 per diluted LP unit, in 2013.
Driving the $25 million, or 2%, increase in net revenues was a 3%, or $1.39, increase in average in-park guest per capita spending to a record $45.54 and a 2%, or $3 million, increase in out-of-park revenues to $127 million. This was somewhat offset by a 1% decrease in attendance to 23.3 million visitors. Excluding a non-core, stand-alone water park sold in August 2013, attendance on a comparable-park basis was similar to last year's record results.
Operating costs and expenses for 2014 were $748 million, up $32 million, or 4%, from the prior year. The increase in costs for the year was largely the result of budgeted increases in operating expenses, which included: 1) an increase in both seasonal labor hours and rates, along with standard merit increases for full-time employees; 2) initiatives focused on enhancing the overall guest experience, including the introduction of more midway entertainment throughout the parks; and 3) the advancement of certain long-term strategic initiatives including the Company's FunTV and Customer Relationship Management platforms.
Adjusted EBITDA, which management believes is a meaningful measure of the Company's park-level operating results, increased 1%, or $6 million, to $431 million. Adjusted EBITDA margin decreased by 30 basis points to 37.2%, a direct result of attendance growth at lower margin properties coupled with the tough comparison to last year's record performance at the Company's highest margin property. See the attached table for a reconciliation of net income to Adjusted EBITDA.
Cash Flow and Liquidity Remain Strong
Brian Witherow , Cedar Fair's executive vice president and chief financial officer, said, "Our liquidity and cash flow remain strong. We have an attractive capital structure in place, further solidified in 2014 by the placement of a 10-year unsecured bond, which we expect will result in annual cash interest savings of approximately $13 million going forward. Our capital structure is also supported by the strength of our unit price, which is backed by a growing distribution. We believe this places us in a strong position to capitalize on a variety of opportunities, ultimately creating added value for our unitholders over the long term."
As of December 31, 2014, Cedar Fair had $609 million of variable-rate debt (before giving consideration to fixed-rate interest rate swaps), $950 million of fixed-rate debt, no outstanding borrowings under its revolving credit facilities and cash on hand of $132 million. The Company's cash flows from operations and credit facilities are expected to be sufficient to meet working capital needs, debt service, planned capital expenditures and distributions for the foreseeable future.
"For the 2015 season, we are confident our guests will find even more reasons to visit our parks and share a day with family and friends filled with laughter and memories that last a lifetime," said Ouimet. "Our marketable capital projects are scheduled to open on time and on budget, including Fury325, the world's tallest and fastest giga coaster, at Carowinds, and Voyage to the Iron Reef at Knott's Berry Farm, a thrilling, family-friendly interactive 4-D dark ride and the second edition of our amusement dark portfolio. Additionally, our capital plans include the introduction of Rougarou, a new coaster experience, at Cedar Point and the debut of our newly renovated historic Hotel Breakers, located on the park's mile-long beach in Sandusky, Ohio."
Ouimet concluded by saying, "I am proud of what our leadership team and employees were able to accomplish this year -- producing strong results in the near-term while remaining respectful of what we need to do to protect and grow our business going forward. We remain confident in our ability to achieve our FUNforward long-term growth goal of $450 million, or more, in Adjusted EBITDA by 2016."
Read the entire press release from Cedar Fair.
One question I had (I'm just curious) is how much of that $1.24 Billion loan they used to buy the Paramount Park have they paid off?
Not sure there is really a way to determine how much of the Paramount acquisition debt is still outstanding because Cedar Fair has refinanced all or parts of its debt several times since. But on its 2006 annual report, long term debt as of the end of 2005 was listed at about $450 million. At the end of 2006, it was listed at about $1.76 billion. So they took on about $1.3 billion in connection with the acquisition. 2013 annual report lists about $1.52 billion in long term debt at the end of 2013. So CF's long term debt was about $210 million less at the end of 2013 than it was at the end of 2006.
In that time, they incurred other debt (refinancing existing debt) and spent money on capital projects. Whether they used cash flows from operations to pay for those capital projects and kept existing debt outstanding or used cash flow from operations to repay debt and financed the capital projects doesn't matter to Cedar Fair. So its difficult to say how much of the Paramount acquisition debt is still outstanding.
But leverage (debt) isn't necessarily a bad thing for businesses. If the return on the assets you purchased with debt is greater than your interest costs, it makes sense. Being able to pay down principal of the debt allows opportunities for more leverage in the future for future growth.
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