Cedar Fair reinstates distribution, announces long-term financial plans

Posted Tuesday, October 5, 2010 11:55 AM | Contributed by Jeff

[Ed. note: The following is a partial, but unedited press release. -J]

Cedar Fair Entertainment Company (NYSE: FUN), a leader in regional amusement parks, water parks and active entertainment, today announced the declaration of a cash distribution of $0.25 per limited-partner unit. The Company also announced that it has established the following long-term financial goals upon the completion of its strategic planning process with management and its board of directors:

  • Grow revenues by 10% to 14% by 2015 (~2.3% CAGR)
  • Grow Adjusted EBITDA by 10% to 14% by 2015 (~2.3% CAGR)
  • Achieve free cash flows of $120 million to $140 million on an annual basis during 2012 to 2015
  • Reduce its Consolidated Leverage Ratio to 4.0x in 2013
  • Provide for a sustainable and growing distribution to unitholders – between $1.25 to $1.75 per limited partner unit by 2015

As part of this planning process, the Company also reaffirmed its previous 2010 outlook of revenues between $940 million and $965 million and Adjusted EBITDA, excluding one-time costs, between $320 million and $340 million. In 2010, the Company also expects cash interest of approximately $130 million, cash taxes between $20 million and $23 million, and capital expenditures of $85 million.

“Building on the positive value-creating momentum we have cultivated through the successful refinancing of our debt, coupled with our strong performance through the summer operating season, we have developed a comprehensive five-year plan to position us for consistent, steadily increasing growth going forward while returning an attractive income stream to our investors through a sustainable distribution policy,” said Dick Kinzel, chairman, president and chief executive officer.

The Company plans to achieve these goals by steadily growing its attendance and revenues through continued investment in trend-setting new rides and attractions along with new targeted marketing programs. The Company will also continue to maintain strict controls over operating costs while maintaining its “best-in-class” visitor experience. Finally, further opportunistic reduction of debt through the prudent use of free cash flows will position Cedar Fair with the balance sheet flexibility it needs to take advantage of future growth opportunities.

“Cedar Fair is a recognized leader in the regional amusement park industry with a business model that has generated healthy revenues and strong cash flows in all economic climates over many years,” added Kinzel. “I am confident that the expertise and proven success of our management team will keep us focused on executing our strategy, and delivering maximum long-term value creation for our unitholders.” The $0.25 per limited partner unit distribution will be paid on December 15, 2010 to holders of record December 3, 2010. This is the 24th consecutive year in which Cedar Fair has paid a distribution to its unitholders.

Read the entire press release from Cedar Fair.

Tuesday, October 5, 2010 11:59 AM

Me likey distribution.

Apparently so do others. Price is up $0,40 or nearly 3 percent so far today.

Last edited by RatherGoodBear, Tuesday, October 5, 2010 12:01 PM
Tuesday, October 5, 2010 12:08 PM
Rick_UK's avatar

Jeff, can you get the conference calls to play on your mac?

Nothing to see here. Move along.

Tuesday, October 5, 2010 1:55 PM

Some good news here. Strong attendance for Halloween related operating days can only help them.

Tuesday, October 5, 2010 4:07 PM
Jeff's avatar

The market didn't really react to the news. The whole market was up today.

I rather someone else distill the conference calls than listen to them myself. That, and I'm at work, where as you might suspect, I am not on a Mac.

Jeff - Editor - CoasterBuzz.com - My Blog - Silly Nonsense

Tuesday, October 5, 2010 4:45 PM

You're not? You should look into that... :)

So does the reinstatement of the distribution simply make the whole "the sky is falling/we're dead in the water/we can't get credit/we gotta sell ourselves now and for short cash" thing look that much more silly/stupid/suspicious?

Admittedly, restoring the distribution is pretty important for tax reasons. But I thought there was no chance of the distribution coming back "for the foreseeable future"... :)

--Dave Althoff, Jr.

    /X\        _      *** Respect rides. They do not respect you. ***
/XXX\ /X\ /X\_ _ /X\__ _ _ _____

Tuesday, October 5, 2010 5:50 PM
Jeff's avatar

Yes, I'd say that reinstating the distribution that we all wanted to see does in fact reinforce the fact that the executives have no idea what the hell they're doing. How's that for irony?

Jeff - Editor - CoasterBuzz.com - My Blog - Silly Nonsense

Tuesday, October 5, 2010 6:36 PM

Actually CF had 4 times its normal trading volume today. And it opened $0.39 above yesterday's close, so I would say the dividend reinstatement had at least something to do with that.

Tuesday, October 5, 2010 7:03 PM
Jeff's avatar

I still don't feel it means anything, as it's a low trading stock in the first place. It didn't outpace the market in a significant way.

Jeff - Editor - CoasterBuzz.com - My Blog - Silly Nonsense

Wednesday, October 6, 2010 12:38 AM

Using SIX as a comparison, it also went up 3.2%, but only ~50% additional volume vs. 3month average. Looks like CF did mostly ride the market, but the announcement may have contributed to the volume spike. Heck, maybe some others agree the execs are clueless and sold? :)

Wednesday, October 6, 2010 1:18 AM

CF only gained $0.03 from opening (9:30) to close (4:00). It hit its high at $14,00 just after opening. That wasn't exactly mirroring what the market as a whole did.

Wednesday, October 6, 2010 1:25 AM
Jeff's avatar

Well of course there were no dramatic movements in the overall market, because the indexes are all based on averages and enormous volume of trading. Cedar Fair has dramatic swings every day, when there isn't any news.

Jeff - Editor - CoasterBuzz.com - My Blog - Silly Nonsense

Wednesday, October 6, 2010 8:32 AM

They are going to grow revenues by building new rides and cut costs which keeping customers happy thereby increasing profits. And take some of that extra cash and pay down debt, further reducing our costs and allowing them to grow revenues further by buying more parks. And I am sure they had some really nice color slides for the presentation showing all of that. How can the market not be happy with that?

Wednesday, October 6, 2010 8:33 AM

I listened in on the call because I'm just goofy that way. Some highlights I captured:

Revenue is up 4% on a 5% attendance increase while out of park revenue is up 6% (take note of that).

The southern parks are up 444k visits and the northern parks are up 83k visits. Western parks are up 378k visits.

With 15% of the season remaining they have made up 900k of the 1.6 million visitors they lost last year.

To me this tells me that they realized the huge mistake they made with the Paramount Parks in uprooting their season pass program and their decision to go back played a huge part in the "recovery". Season pass and group sales make up 50% of the attendance at all parks.

While their main focus is going to be on reducing debt they see some long term strategies of adding hotels to parks such as Carowinds and Kings Dominion.

Perhaps the most telling moment of the call, in my mind was when an investment manager asked Dick up succession planning. Dick sort of danced around the issue, telling the listeners that succession planning is always on the minds of the Board. The questioner stated, "it is on the minds of investors as well." Now, I want go so far as to say the questioner said that in a derogatory manner but I think the message was both delivered, and heard.

Of course, Dick touted the many years of experience within the management group, particularly with his Regional VPs and the General Managers. That tells me that he believes his successor will come from within the company. I'm still not convinced that is the avenue to take.

Either way, I suspect we are going to be hearing more about Dick's future, and that of the future leader, in the next 12 months or so.

Wednesday, October 6, 2010 1:27 PM
Jeff's avatar

No mention of the departure and non-replacement of the COO, eh?

Jeff - Editor - CoasterBuzz.com - My Blog - Silly Nonsense

Wednesday, October 6, 2010 1:40 PM

Can they legally get away with doing that? Seems to me being a publicly held corporation there ought to be some sort of reporting requirement about firing/hiring officers and high officials. Then again, I'm not an attorney.

My author website: mgrantroberts.com

Wednesday, October 6, 2010 1:46 PM
Jeff's avatar

There is, and there was. It was a nondescript filing with the SEC that said virtually nothing.

Jeff - Editor - CoasterBuzz.com - My Blog - Silly Nonsense

Wednesday, October 6, 2010 8:26 PM

All of these financial goals seem very nice and very achievable, assuming the economy (continues to?) recover. If we do go into a double dip, I think they have trouble achieving even these moderate goals. They didn't talk about anything particularly innovative with regard to new ways to get peoples money. Some of these things have been talked about on these boards for years and implemented by other companies to the point where they can no longer even be considered innovative.

They invested big bucks on new rides in two of their better weather spots this year and had some nice results, but it will be difficult to even maintain those results next year at those parks. Not sure how Halloweekends have been going at CP, but the weather has looked less that stellar on a couple of Saturdays so far. That can turn an 83k increase into "flat" pretty quickly.

That's pretty awesome about the guy asking about succession plans though. :)



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