Cedar Fair reports first quarter with pass sales up $59 million over 2019

Posted Wednesday, May 4, 2022 9:33 AM | Contributed by Jeff

From the press release:

Cedar Fair Entertainment Company (NYSE: FUN), a leader in regional amusement parks, water parks and immersive entertainment, today announced results for its first quarter ended March 27, 2022, and provided preliminary results and operating trends through May 1, 2022. Historically, first-quarter results represent less than 5% of the Company’s full-year net revenues as most parks and facilities are closed during the first quarter. As a result, the Company typically operates at a loss during its first fiscal quarter.

Based on preliminary results for the four-month period ended May 1, 2022, Cedar Fair recorded record net revenues of $193 million driven by strong attendance trends, continued record levels of in-park per capita spending, and improved out-of-park revenues. These preliminary results represent a 33%, or approximately $48 million, increase in net revenues compared with the four-month period ended May 5, 2019, which is the most recent comparable period when parks operated without COVID-19 disruption.

“Due to our outstanding recent performance, we have accelerated our post-pandemic recovery and are on pace to outperform our 2019 operating results,” said Cedar Fair President and CEO Richard A. Zimmerman. “As we head into the most important stretch of the 2022 operating season, we are pleased that the momentum that fueled our record first quarter revenues continued through April. Furthermore, our entire team is excited to maximize the full potential of our portfolio as we prepare to entertain guests across our properties without restrictions for the first time since 2019. As a result of our team’s excellent performance and the resilience of our business model, we are advancing our strategic goals of reducing net leverage and reinstating a quarterly distribution to unitholders by the third quarter of this year, if not sooner.”

Zimmerman added, “We are emerging from the pandemic stronger than ever, and the strategic decisions made over the past year position us well to renew Cedar Fair’s long-term track record of growth and value creation for our unitholders.”

Results for First Quarter 2022 Compared to First Quarter 2021

In May 2021, the Company opened all of its U.S. properties for the 2021 operating season on a staggered basis with capacity restrictions, guest reservations, and other operating protocols in place. The Company’s Canadian property, Canada’s Wonderland, reopened in July 2021, and the park operated with capacity restrictions in place throughout 2021. By comparison, the Company currently anticipates that all of its parks will return to their full operating calendars for the 2022 season without any operating restrictions. Five of its 13 properties opened, as planned, for the 2022 operating season in the first quarter of 2022. Given the material impact the coronavirus pandemic had on park operations in 2020 and 2021, results for the 2022 first quarter are not directly comparable to the first quarters of the last two years.

Operating days in the first quarter of 2022 totaled 130, compared with zero operating days in the first quarter of 2021 due to the pandemic’s impact on operations.

For the first quarter ended March 27, 2022, net revenues totaled $99 million versus $10 million for the first quarter of 2021. The increase in net revenues is attributable to a 130-operating-day increase in the current-year period. Meanwhile, in-park per capita spending in the quarter totaled $58.86, which reflects the continuation of very strong levels of guest spending across all key revenue categories. Because amusement park operations were suspended in the first quarter of 2021, there was no comparative in-park per capita spending for the prior-year period. Out-of-park revenues for the first quarter totaled $16 million compared with $10 million for first quarter of 2021, which included prior-period revenues from a culinary festival hosted by Knott’s Berry Farm in March 2021.

The operating loss of $84 million for the quarter was in line with the Company’s expectations and compares to an operating loss of $92 million in the prior-year quarter. The decrease in the first-quarter operating loss reflects a $73 million increase in 2022 operating costs and expenses compared with the prior-year quarter, offset by the $89 million increase in first-quarter net revenues. The increase in operating costs and expenses in the current year was in line with the Company’s expectations and was largely attributable to the increase in operating days in the period.

Depreciation and amortization expense, which is recognized over planned operating days, totaled $10 million in the first quarter of 2022, up $8 million from the prior-year period due primarily to the increase in operating days in the current quarter. A loss on impairment/retirement of fixed assets of $2 million was recorded in both the current and prior-year periods, the result of retirement of assets in the normal course of business.

Interest expense for the first quarter totaled $38 million, a decrease of $6 million from the prior-year first quarter due to the Company’s redemption of its 2024 senior notes in December 2021. The net effect of the Company’s swaps resulted in a $14 million benefit to earnings during the first quarter of 2022, compared with a $4 million benefit in the same period a year ago. The difference reflects the change in fair value in the Company’s swap portfolio. During the prior year first quarter, the Company also recognized a $6 million net benefit to earnings for foreign currency gains and losses related to the 2024 senior notes which were U.S.-dollar denominated notes recorded at a Canadian entity.

During the first three months of 2022, a benefit for taxes of $19 million was recorded to account for publicly traded partnership taxes and income taxes on the Company’s corporate subsidiaries, compared to a benefit for taxes of $16 million in the first quarter of 2021.

After the items above, the Company reported a first quarter net loss of $89 million, or $1.56 per diluted LP unit. This compares to a first quarter 2021 net loss of $110 million, or $1.95 per diluted LP unit. The smaller net loss in the most recent quarter was directly attributable to the Company’s ability to fully operate parks in the period and the related increases in attendance and revenues.

Adjusted EBITDA(1), which management believes is a meaningful measure of the Company’s park-level operating results, for the 2022 first quarter was a loss of $68 million, an improvement of $15 million, or 18%, when compared with an Adjusted EBITDA loss of $84 million for the first quarter of 2021. The smaller Adjusted EBITDA loss in the current-year first quarter when compared with the first quarter of 2021 reflects the impact of COVID-19-related park closures on 2021 first quarter results and the related improvement in attendance, in-park per capita spending, and out-of-park revenues in early 2022.

(1) For additional information regarding Adjusted EBITDA, including how the Company defines and uses Adjusted EBITDA, see the attached reconciliation table and related footnotes.

Balance Sheet and Liquidity Update

Deferred revenues as of March 27, 2022, including non-current deferred revenue, totaled $234 million, representing an increase of $36 million, or 18%, when compared to Dec. 31, 2021. As of March 27, 2022, the Company had cash on hand of $50 million and $234 million available under its revolving credit facility, net of $125 million of outstanding borrowings and $16 million of letters of credit, for total liquidity of $284 million. This total does not reflect receipt of outstanding U.S. federal tax refunds totaling approximately $80 million, which the Company expects to receive in 2022. The $284 million of total liquidity at the end of the first quarter compares to $420 million of total liquidity at the end of calendar year 2021. Net debt(2) as of March 27, 2022, totaled $2.6 billion.

(2) Net debt is calculated as total debt of $2.6 billion plus debt issuance costs of $42 million less cash on hand of $50 million. Management believes net debt is a meaningful measure used to monitor leverage.

2022 Outlook

By the end of May, the Company expects that all parks within its portfolio will have opened as planned, at full capacity, and without operating restrictions for the first time since the 2019 season. Meanwhile, the newly renovated Castaway Bay and Sawmill Creek resorts will reopen May 6 and June 13, respectively. Revenues in 2022 from both of these resort properties will be incremental to total out-of-park revenues reported last year.

As part of the Company’s planned 2022 capital investment program of $200-215 million, Cedar Fair expects to make improvements to every park in its portfolio. Of the total program, approximately $40 million is being used to renovate Castaway Bay and Sawmill Creek near Cedar Point, while $25 million will be allocated to complete a full renovation of the Knott’s Hotel over the next 12-15 months. Another $60 million of the 2022 capital program is being directed to expand or upgrade in-park culinary offerings and to improve food delivery systems. These high-priority updates are considered essential to meet evolving guest expectations and are designed to drive in-park guest spending in the near term, as well as continued organic growth over the long term. The balance of the capital program is earmarked for traditional investments in new rides, attractions and events designed to drive visitation, as well as technology and park infrastructure enhancements aimed at improving the overall guest experience.

Cedar Fair expects a strong 2022 season as it benefits from healthy long-lead indicators heading into the second quarter, including resort bookings which are trending well ahead of pre-pandemic levels, and strong sales of season pass and other advance-purchase products. Through the end of April, season pass sales were up $59 million versus comparable 2019 levels, while sales of all-season “add-on” products were collectively up $17 million. As the Company approaches its busiest part of the 2022 season, Cedar Fair’s business intelligence team continues to apply dynamic pricing strategies during periods of peak demand, while its park teams maintain disciplined cost management to mitigate inflationary pressure.

“We expect compelling revenue growth in 2022 as we build on our previously announced initiatives to drive strong attendance and in-park purchases, price into demand, and create a more flexible, resilient Cedar Fair,” said Zimmerman. “We expect to continue increasing margins with revenue growth outpacing operating costs and expenses, even as we further improve our parks and maintain staffing levels. Our foresight last year to quickly act on the structural shift within the labor market has greatly improved our ability to attract and retain seasonal associates and moderate seasonal labor rates. We are also very pleased with the continued strength of our advance-purchase products, including our season pass programs, which drive more than 50% of our annual attendance and have always been a reliable long-lead indicator of consumer demand and revenue growth for the upcoming season.”

Zimmerman continued, “2022 is poised to be a watershed year for Cedar Fair as well as the entire industry. As millions of guests return to Cedar Fair’s parks to enjoy our wholesome brand of family friendly entertainment, I am confident we have made the right decisions, taken the appropriate steps and positioned the Company the right way to reestablish our historical record of growth and consistent unitholder returns over the long term.”

Read the entire press release from Cedar Fair.

Wednesday, May 4, 2022 12:25 PM
Jeff's avatar

The shift in revenue shows a pretty clear direction in their strategy, relying on passes.


Jeff - Editor - CoasterBuzz.com - My Blog - Phrazy

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Wednesday, May 4, 2022 12:57 PM

The questions I ask are:

  • Will you deliver an experience good enough to get this large passholder base to renew long term?
  • Will you find enough creative ways to get them to continue in park spending?
  • Will the experience be good enough to get a strong renewal rate should they opt to do a considerable price increase?

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Wednesday, May 4, 2022 1:15 PM
Jeff's avatar

I just can't understand why with such high demand they're charging so little to get in.


Jeff - Editor - CoasterBuzz.com - My Blog - Phrazy

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Wednesday, May 4, 2022 1:59 PM
Raven-Phile's avatar

Well, I mean, it worked out *really* well for Six Flags about 20 years ago, so there's that.

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Wednesday, May 4, 2022 1:59 PM

$59 million over 2019 levels?? When were the first CP Gold passes sold? After April 2019 if I remember correctly - like August/Sept 2019. If so, $59 million doesn't sound like that great of an increase over 2019 given how many of those we know they sold. They may even be selling less of them this year as compared to the offseason leading up to 2020, but by comparing April to April, things look rosy. BrettV's questions are key and we might already be seeing answers.


-Matt

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Wednesday, May 4, 2022 3:25 PM

Some threads have links to parks related to them. Can we add a link to any Cedar Fair earnings release to any of the 50 discussions we have had on pass pricing at Cedar Fair parks (and really I think its just Cedar Point)?

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Wednesday, May 4, 2022 9:19 PM

I think they are all underpriced. A year of Kings Island and the waterpark is worth far more than the $120 currently being advertised. A year of Carowinds is $130 and includes the waterpark. Obviously the $99 CP Gold Pass is a crazy low price.

I feel like our family pass to the community pool 30 years ago cost more than these Cedar Fair Gold Passes do now. And like we've said before, you would think they would have learned from early 2000s Six Flags that this is not a good long term strategy.

I also feel like you didn't hear about so many operational issues at Cedar Point as you have for the last few years.

Last edited by BrettV, Wednesday, May 4, 2022 9:20 PM
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Wednesday, May 4, 2022 10:01 PM
Raven-Phile's avatar

Our YMCA membership is $63 a month, after tax. That includes use of facilities and the the indoor pool, but not outdoors. The outdoor pool costs another $180 or something like that per half season - and that’s with us being members. Non-members pay much more.

Season passes at parks are an absolute steal.

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Thursday, May 5, 2022 2:24 AM

MDOmnis said:

$59 million over 2019 levels?? When were the first CP Gold passes sold? After April 2019 if I remember correctly - like August/Sept 2019. If so, $59 million doesn't sound like that great of an increase over 2019 given how many of those we know they sold. They may even be selling less of them this year as compared to the offseason leading up to 2020, but by comparing April to April, things look rosy. BrettV's questions are key and we might already be seeing answers.

CF is comparing 2022 season pass sales at this point in the calendar (end of April '22) to 2019 season pass sales at this point in the calendar (end of April '19). Cedar Point gold passes were not sold for the 2019 season.

2022 season pass sales at this point are up 22% in units sold and up 10% in average price compared to 2019 season pass sales at this point in the calendar - for a total dollar increase of $59 million

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Thursday, May 5, 2022 9:16 AM
Jeff's avatar

We paid $100 extra, each, for the water park and mini-golf upgrade to our WDW passes this year. That's a hundred bucks for those venues alone, not a full amusement park, and I think they might be a little underpriced. That was on top of the ~$700 with taxes for the park passes that include blackout dates the weeks of Thanksgiving, Christmas an New Year's. I know people hate to compare regional parks to Disney, and I'm not suggesting Cedar Point is worth $700 a year, but I would think it's worth no less than $200.


Jeff - Editor - CoasterBuzz.com - My Blog - Phrazy

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Thursday, May 5, 2022 10:55 AM
ApolloAndy's avatar

I wonder how much of their pass sales is based on the (possibly misguided) idea that if you have someone at the park for a "one time" visit, you should try to upsell to a pass by making it "just a couple bucks more."


Hobbes: "What's the point of attaching a number to everything you do?"
Calvin: "If your numbers go up, it means you're having more fun."

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Thursday, May 5, 2022 11:56 AM

Agreed, Jeff. Cedar Point and Kings Island are woefully underpriced season pass-wise. Cedar Fair is leaving money on the table. I recall posting this last fall... but Knott's Haunt event - for 6 hours - was $79, I believe - whether you are a season passholder or not and no parking. Why Cedar Fair believes 6 hours of Haunt at Knott's is worth $79 but an entire season (6 months) for Cedar Point, Cedar Point Shores and parking is worth only $20 more at $99 (granted I think they are selling for $130 now but that was the early bird price again this year).

They are still clearly delivering results with units sold up 22% and average price up 10% - but I'd think they could take the average price up even more.

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Thursday, May 5, 2022 12:07 PM

Another $60 million of the 2022 capital program is being directed to expand or upgrade in-park culinary offerings and to improve food delivery systems.

$60M for food and food system upgrades? I know the food aspect of these parks is not good but that is a lot of money. It will be interesting to see what tangible improvements there are.

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Thursday, May 5, 2022 12:25 PM
Jeff's avatar

They keep showing some intent to deliver a food product that is higher end than what you'd expect (hopefully putting Kinzel's "people gotta eat" nonsense to bed). And I think they want that not for smiles, but because it absolutely raises the per capita spending. If you've been to Epcot, SeaWorld or Busch Gardens for food festivals, you know this is true. What those parks have perfected though is operationalizing the production of high-end food. You can charge $7.25 for a small plate of seared scallops, green beans, butter potatoes, brown butter vinaigrette, and applewood-smoked bacon, but it better be damn good for that little portion (Diana says it most certainly is), and you can't make people wait for it. All that to say, I doubt the parks are equipped to do that sort of thing today.


Jeff - Editor - CoasterBuzz.com - My Blog - Phrazy

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Thursday, May 5, 2022 12:46 PM
Raven-Phile's avatar

Those EPCOT scallops are amazing. They were the best this year during Christmas time (Festival of the Holidays) with the hazelnut crumble, though.

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Thursday, May 5, 2022 1:56 PM

So how many scallops do you get for $7.25? I ask because I paid $24 for 3 scallops at a restaurant in Cleveland a couple of weeks ago. Was bummed that they did not taste good. The sauce that they put on them was not my thing.

Last edited by Shades, Thursday, May 5, 2022 1:59 PM
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Thursday, May 5, 2022 2:16 PM
Jeff's avatar

See for yourself: https://www.disneyfoodblog.com/2021-epcot-flower-and-garden-festiva...ern-bloom/


Jeff - Editor - CoasterBuzz.com - My Blog - Phrazy

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Thursday, May 5, 2022 3:18 PM

That is a bargain!

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Thursday, May 5, 2022 4:26 PM
Jeff's avatar

My bad, that was last year's. Here's this year, which looks a little different: https://www.disneyfoodblog.com/2022-epcot-flower-and-garden-festiva...ern-bloom/

I'm pretty obsessed with the chicken kebab, which they tell me will be a year-round offering at all of the festivals. But look at the presentation and such, because it's fantastic.


Jeff - Editor - CoasterBuzz.com - My Blog - Phrazy

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