Cedar Fair reports net revenue in August up 6% over last year, driven by 5% increase in attendance, 7% boost in out-of-park spending

Posted Thursday, September 6, 2018 8:55 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 that preliminary results for the five weeks ended Monday, September 3, 2018, represented record revenues for the fiscal month of August.

For the five weeks, preliminary net revenues were $288 million, up 6%, or $17 million, when compared with the same period in 2017. This was the result of a 5%, or 255,000-visit, increase in attendance, a 1%, or $0.52, increase in average in-park per capita spending and a 7%, or $2 million, increase in out-of-park revenues, including resort accommodations.

"Over the past five weeks we have experienced strong growth across all aspects of our business, reaffirming our confidence in the resiliency of our business model and the outlook for growth in the business for the long term," said Richard Zimmerman, Cedar Fair's president and CEO. "During this time, we successfully executed on a number of initiatives designed to drive guest urgency while at the same time maintaining integrity in our pricing structure. These efforts resulted in a solid lift in attendance and increased guest spending inside our parks during the period. We also saw robust demand for our hotel and resort accommodations, an asset class we are actively developing in an effort to generate additional and attractive returns over the longer term. Looking ahead, we believe these strong results reflect the positive response from consumers for the compelling entertainment experiences we provide to our guests of all ages, and we expect that to continue for the balance of the year."

Year-to-date preliminary net revenues through Labor Day, September 3, 2018, were $1.04 billion, up slightly when compared with the similar period through Labor Day, September 4, 2017. The 2018 results compared with 2017 reflect increases of 1%, or $0.38, in average in-park per capita spending to $47.46 and 5%, or $5 million, in out-of-park revenues, including resort accommodations, to $120 million. These increases were offset by a 1%, or 225,000-visit, decrease in attendance to 20.0 million guest visits.

"For the remainder of the year, we are focused on building upon the momentum we have established over the past five weeks," continued Zimmerman. "Our near-term strategy includes fully maximizing the potential of our very popular seasonal celebrations including Halloween Haunt, The Great Pumpkin Fest and WinterFest. Our fourth quarter has become a meaningful period of operations, particularly as we leverage our highly popular fall events to jump-start sales of our 2019 season pass and all-season products, which are off to a strong start."

Zimmerman noted that the strong August results were not enough to entirely overcome the challenges the Company faced through the first seven months of the year. Based on the year-to-date results and outlook for the rest of the year, the Company now expects 2018 full-year net revenues to be in the range of $1.32 billion to $1.34 billion, and full-year Adjusted EBITDA1 to be in the range of $460 million to $470 million. Zimmerman also reiterated the Company's commitment to delivering a steady 4% annual increase in the cash distribution to unitholders while continuing to invest in the business at a responsible level.

Turning to 2019, Zimmerman added the Company has generated strong early-season increases in its advance purchase channels, including season pass sales and all-season products. Driving the strong early-season sales is the introduction of a 12-month payment program and unlimited visits for the remainder of 2018 at a number of parks, combined with a unique and diverse array of new attractions and offerings within the Company's 2019 capital program.

Read the entire press release from Cedar Fair.

Thursday, September 6, 2018 9:01 AM

The part about how it doesn't make up for the weaker first half of the year is interesting, because there was a time when the entire company's business model was to make a killing in August. In that sense, they've actually done a good thing, because they've diversified enough to make other parts of the year interesting.

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Thursday, September 6, 2018 9:54 AM

Sure, attendance is up, but at what cost? I mean, I've never seen them run so many concurrent deals leading up to Labor Day. If the season pass holder base is a large as previously stated, and even 25% of those people came, and brought free friends, there's no gate revenue there. Then you take into account all the Groupons, BOGO, and Kids' Price promotions, plus the people who renewed their Platinum Pass and got a free visit, either for themselves or a friend. (I'm speaking specifically in the CP market here because that's where I live and it's what I see the most, but it's likely the same elsewhere)

It almost makes sense that it doesn't make up for the weaker first half, because they got people in the gates, but didn't make as much money from them.

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Thursday, September 6, 2018 10:06 AM

Net revenues and out of park spending are up from last August. And as a percentage they are up more than the percentage increase in attendance. So someone is spending money at the parks.

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Thursday, September 6, 2018 10:26 AM

I believe I remember seeing attendance was down 3% on the report for the first part of the summer. If August attendance was up 5%, I'd still consider the overall summer season to be a success.

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Thursday, September 6, 2018 10:57 AM

At least it shows they know they have a focus area to work on. The glob of promotions going on do make the people who bought earlier feel irritated but it gets people in the gate to whet their appetites. Hopefully it results in some longer term attendance bumps.

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Thursday, September 6, 2018 11:02 AM

Whatever the cost is, it still resulted in a net increase of 6%. Clearly they're making more money. I think their long term challenge is not to get all Six Flags and blow away their gate integrity. I still think SF vastly undervalues admission.

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Thursday, September 6, 2018 11:42 AM

Raven-Phile said:

Sure, attendance is up, but at what cost?

According to the press release, at a "cost" of an increase in per-capita guest spending. IIRC, that number includes gate receipts (amortized, in the case of passholders). That's what I think they mean when they say "maintaining integrity in our pricing structure."

Last edited by Brian Noble, Thursday, September 6, 2018 3:13 PM
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Thursday, September 6, 2018 11:44 AM

You should see Six Flags bogo days. (Scratch that; don’t.) They had one at SFA during Coaster Con this year and it took people more than hour to get through the gate in the middle of the afternoon.

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Thursday, September 6, 2018 12:23 PM

way to bury the lede:

Zimmerman noted that the strong August results were not enough to entirely overcome the challenges the Company faced through the first seven months of the year.

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Thursday, September 6, 2018 12:38 PM

Jeff said:

I think their long term challenge is not to get all Six Flags and blow away their gate integrity. I still think SF vastly undervalues admission.

The Six Flags Flash sale put the base season pass for a full year park at essentially $82 which includes free parking and admission to the separately gated water park during season.

That is stupidly cheap. When you look at the Flash Sale prices for "membership" instead of passes, Dining and QBot (Flash Lane) it's even more of a steal. They've totally blown gate integrity.

Last edited by Jeff, Thursday, September 6, 2018 1:47 PM
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Thursday, September 6, 2018 9:01 PM

Brian Noble said:

According to the press release, at a "cost" of an increase in per-capita guest spending. IIRC, that number includes gate receipts (amortized, in the case of passholders). That's what I think they mean when they say "maintaining integrity in our pricing structure."

It just seems so unlike Cedar Point to give away the gate like they have been the last month, and when they do, I hate to say that it shows - but it shows. There was a lot of interesting people watching this weekend. I will have to say that it was nice to see most of the food stands open, but the food trucks really help to ease some of the crowds at feeding time. I can't wait to see what fall brings us - and we'll see if the trend in crowds shifting to fall continues, or if once the promos are over, the crowds recede again. I'm hoping for some real, cold fall weather this year, but I'm not holding my breath at this point.

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Friday, September 7, 2018 6:44 AM

How enthralling. I would love to hear your rationalization of how YOU can determine who either paid for a season pass or entered the park based off a discount or promotion.

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Friday, September 7, 2018 7:53 AM

Oh. Ok.

Never said anything about telling who paid what. I just said interesting people watching, but, cool.

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Friday, September 7, 2018 8:45 AM

sxcymike said:
How enthralling. I would love to hear your rationalization of how YOU can determine who either paid for a season pass or entered the park based off a discount or promotion.

We can tell by the same way you apparently looked in the mirror and determined you were sexy, Mike.

Last edited by Tekwardo, Friday, September 7, 2018 9:07 AM
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Friday, September 7, 2018 9:23 AM

If everyone’s armchair analysis is correct and attendance is down because people are doing longer trips because they have the cash to do so then the trend shouldn’t continue into the fall.

Due to school just starting most families do not take the kids out of school for longer vacations, but people love them some Halloween. If the slump carries over into what has been their largest growth season in the last few years it’s something else. However midnight syndicate is returning so I don’t think the later is likely.

Also looking at other CF parks, Knott’s has been transcendent in the LA area as they have been adding more immersive mazes and HHN Hollywood has been stagnant in quality but with massive price increases. Couple this with WB starting their own event and now IP is being split between two events, with Stranger Things, Poltergeist, and Halloween at Universal and It, Freddy & Jason and Batman villains at WB diluting HHN’s draw, and I can see how Knott’s may become the most popular event this year.

HHN is really expensive, WB’s horror made here has no other attractions besides the maze, and here comes Knott’s which has had good buzz the last few years and has a collection of really unique mazes this year (A Lovecraft inspired aquatic monster in a cave maze, an alien space virus let loose in a space station, an abandoned dark ride with carnies, a ghost samurai maze, a dark fairytale maze, a flashlight maze and a zombie shooting maze.)

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Friday, September 7, 2018 9:26 AM

WB = Warner Brothers? Where is that?

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Friday, September 7, 2018 9:34 AM

Their studio in Burbank.

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Friday, September 7, 2018 11:41 AM

Jeff said:

Whatever the cost is, it still resulted in a net increase of 6%. Clearly they're making more money. I think their long term challenge is not to get all Six Flags and blow away their gate integrity. I still think SF vastly undervalues admission.

At Six Flags, one gets what they pay for. Coasters and rides and that's about it. Poor landscaping with weeds growing in the parks, slow operations little or no live shows, little care about theming or cohesiveness (everything is a superhero theme anymore and the "theming" is basically just the name. I personally would not pay more to go to a Six Flags park than what they are charging now.

Cedar Fair is superior in all of those areas (currently they are really theming at their theme parks). I think Cedar Fair is underselling a little, especially on their season pass dining and drinks since that was previously a source of revenue with season pass holders. Right now you can buy a 2019 platinum pass with all season dining and drinks for around $330.

I guess they have enough data on season pass holders to know the pricing point where they turn more profit on these season passes over individual sales. I guess the season pass dining also gets people to eat at the parks that used to hold out until leaving or leave the parks in the middle of the day for lower price, higher qualify food. But $330 is an extreme bargain for a season that now lasts from April to New Years at many parks.

Cedar Fairs Winterfests were incredible events last year with great attendance. This is a great potential source for revenue increase. Christmastown at Busch used to be pretty laid back, but now its so crowded its miserable. (increasing crowd despite increasing ticket prices) I haven't been to Dollywoods event in a couple of years, so not sure how the crowds have increased or decreased there. But at least at Busch, the Christmas event was still growing through last year.

I think do think that Kings Dominion will cut into Busch this year. Most Cedar Fair parks can handle crowds better than Busch and Dollywood because of their wider midways and it will be much more pleasant to walk around KD than Busch with its narrow walkways.

I may have gotten a little sidetracked but I think Cedar Fair with the direction it has taken lately to entertain more than just coaster riders should help feed their revenue stream.

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Thursday, September 13, 2018 12:41 PM

At least in my market (Bay Area) SFDK is a comparable or superior park in most respects to CGA, save proximity to my house. It has better rides, theming, and the animals and comparable staff, waits and food.

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