Cedar Fair has record first half of 2016

Posted | Contributed by Jeff

From the press release:

SANDUSKY, Ohio, Aug. 3, 2016 /PRNewswire/ -- Cedar Fair Entertainment Company (NYSE: FUN), a leader in regional amusement parks, water parks and active entertainment, today announced record results for the second quarter ended June 26, 2016, discussed attendance and guest spending trends through July and declared a quarterly cash distribution.

Highlights

• Cedar Fair reported record net revenues of $446 million for the six months ended June 26, 2016. This $22 million increase over the same period last year reflects the Company's continued success in all areas of its business, including attendance, guest spending and out-of-park revenues.
• Cedar Fair is on track for a seventh consecutive year of record results. Net revenues through this past Sunday, July 31, 2016, increased 2%, on a 1% increase in attendance, a 1% increase in average in-park guest per capita spending and a 4% increase in out-of-park revenues compared with the same period last year.
• The Company declared a quarterly cash distribution of $0.825 per Limited Partner (LP) unit payable September 15, 2016, consistent with its annualized rate of $3.30 per LP unit. This distribution represents an attractive 5.6% yield.
• Cedar Fair remains confident in its long-term business strategy and its ability to reach its long-term Adjusted EBITDA goal of $500 million earlier than its original target of 2018.

Commenting on the Company's strong second quarter and results through July 31, 2016, Matt Ouimet, Cedar Fair's president and chief executive officer, said, "Our record performance in the second quarter and through the first seven months of the year reinforces our confidence in our ability to deliver a seventh consecutive year of record results in 2016 and to continue this record-setting trend into future years.  Our commitment to the quality of the guest experience and our investments in transformative capital projects are expanding our audience, enhancing repeatability and improving value perceptions, resulting in growth across all aspects of our business.

"In the month of July we did experience a pullback in results when compared with last year's record performance, however, we do not believe this is indicative of a broader trend but instead, directly related to weather during the last two weeks of the month," continued Ouimet.  "Based on the nature of July attendance patterns, which showed solid year-over-year growth when weather was good, and the strength of our advance purchase commitments, such as our record season pass sales, and our trends in group bookings and hotel reservations, we continue to believe the underlying demand for our business remains strong."

As consumers continue to prioritize experiences over possessions, the Company has focused its investments in areas that will fully immerse guests in the park experience and highlight the heritage of its unique individual brands.  "This is especially true of early-season, multi-week special events, as well as our upcoming Halloween events, which continue to be an important part of our operating season," added Ouimet.  "We are also expanding our operating season with the introduction of WinterFest, a new holiday experience, at Great America.  In fact, we are extremely excited about the potential WinterFest represents for extending the operating season and expanding the entertainment offerings to guests at a number of our parks over the next several years."

Ouimet concluded by stating, "We remain on track to achieve our long-term Adjusted EBITDA goal of $500 million earlier than our original target of 2018.  Our top priorities continue to be distribution growth while investing in our business to create greater value.  We are a total return investment with an extremely attractive tax advantaged 5.6% yield and valuation growth opportunities when compared with our closest peers."

Second-Quarter Results

For the quarter ended June 26, 2016, net revenues increased 3%, or $11 million, to a record $388 million compared with $377 million in 2015.  This increase reflects a 2%, or 146,000-visit, increase in attendance, a 1%, or $0.45, increase in average in-park guest per capita spending, and a 4%, or $2 million, increase in out-of-park revenues, compared with the second quarter of 2015.

The Company attributes the increase in attendance to its strong capital program, including the introduction of innovative new rides and attractions in 2016, the expansion of its early-season, multi-week special events and its continued focus on advance purchase commitments.  Guest spending has been strong across all categories of the business, including admissions and in-park spending.  The year-over-year growth in guest spending is the direct result of the Company's continued focus on enhancing the overall guest experience.  This includes the second year of the all-season dining program, the introduction of an all-season beverage program and the expansion of its early-season, multi-week special events.

Operating costs and expenses for the 2016 second quarter were $243 million, an increase of $7 million compared with 2015.  The increase was primarily attributable to an increase in the cost of goods sold due to the higher attendance and in-park guest spending levels; and, an increase in labor costs due to higher market/minimum-wage rates and normal merit increases.

Six-Month Results

Net revenues were $446 million for the six months ended June 26, 2016, an increase of $22 million, or 5%, compared with the six-month period ended June 28, 2015.  The increase in revenues was the result of a 4% increase, or 337,000-visit, increase in attendance to 9.0 million guests, a 1%, or $0.59, increase in average in-park guest per capita spending to $45.16, and a 7%, or $3 million, increase in out-of-park revenues to $54 million.

Operating costs and expenses through the first six months of 2016 were $360 million, representing a 4%, or $14 million, increase compared with the same period a year ago. The increased costs for the period are in line with Company expectations and reflect higher costs associated with the increased attendance and guest spending through the first six months of the year, higher labor costs due to normal merit increases and market/minimum-wage rate increases, and higher operating and maintenance supplies and expenses as the Company continues to support investments made in the infrastructure of its parks.

After giving affect for all costs and expenses, net income for the six-month period was $9 million, or $0.17 per diluted LP unit, versus a net loss of $26 million, or $0.47 per diluted LP unit, for the first six months of 2015.

Adjusted EBITDA, which management believes is a meaningful measure of the Company's park-level operating results, increased 10%, or $8 million, to $92 million for the first half of 2016, compared with 2015. Adjusted EBITDA margins during this same period improved by approximately 90 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 the Company's continued focus on effectively managing its fixed-cost base. See the attached table for a reconciliation of net income to Adjusted EBITDA.

July Operations

Based on preliminary results, net revenues through July 31, 2016, were approximately $769 million, up 2%, or $16 million, compared with $753 million for the same period last year.  The increase was the result of an approximate 1%, or 138,000-visit, increase in attendance, to 15.2 million guests, a 1%, or $0.51, increase in average in-park guest per capita spending to $46.39, and a 4%, or $4 million, increase in out-of-park revenues to $86 million, compared with 2015.

Distribution Declaration

Today, the Company also announced the declaration of a cash distribution of $0.825 per LP unit, which is consistent with its targeted annualized distribution rate of $3.30 per LP unit.  The distribution will be paid on September 15, 2016 to unitholders of record as of September 6, 2016.

Ouimet concluded, "A sustainable and growing distribution remains our highest priority.  We are proud of our 30-year history of paying distributions to our unitholders, and we believe we are well-positioned with a solid balance sheet, appropriate liquidity reserve and a positive earnings outlook to continue growing the distribution well into the future.  Our current distribution yield, which is north of 5.5%, and our continued investment in growth, should provide an attractive total return for our investors."

Read the entire press release from Cedar Fair.