Cedar Fair reports record performance through 10 months as company grows through acquisition

Posted | 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 the third quarter ended September 29, 2019, and record year-to-date performance trends through November 3, 2019. The Company also announced an increase in its quarterly cash distribution rate.

Results for the third quarter of 2019 are not directly comparable with the third quarter of 2018, as the current period includes results from the operations of the recently acquired Schlitterbahn water parks since the July 1, 2019 acquisition date. Year-over-year, third-quarter comparisons are also affected by 53 fewer operating days (combined across the legacy Cedar Fair parks) in the third quarter of 2019, due to a shift in this year’s fiscal calendar. For purposes of the same-park/same-week basis discussions, the current period excludes the results of the Schlitterbahn water parks and the prior period is the 13-week period ended September 30, 2018.


  • Net revenues for the third quarter ended September 29, 2019, totaled a record $715 million, an increase of 8%, or $51 million, compared with the third quarter of 2018. The increase in net revenues reflects increases in attendance, in-park per capita spending and out-of-park revenues, all of which were up meaningfully in the quarter.
  • On a same-park/same-week basis, net revenues in the third quarter were up 7%, or $43 million.
  • Net income for the 2019 third quarter decreased $23 million to $190 million and Adjusted EBITDA1 increased $17 million to $355 million, compared with the third quarter 2018. On a same-park/same-week basis, net income in the period decreased 13%, or $25 million, and Adjusted EBITDA2 increased 5%, or $17 million.
  • Year-to-date preliminary net revenues through November 3, 2019, totaled a record $1.37 billion, an increase of $113 million, or 9%, when compared with the same period ended November 4, 2018. On a same-park basis, preliminary net revenues totaled a record $1.33 billion, up $71 million or 6%.

”I am very pleased to say that our year-to-date results have us well on our way to making 2019 the best year in Cedar Fair’s history,” said Cedar Fair President and CEO Richard A. Zimmerman. “While the industry has benefited from favorable weather conditions throughout key portions of the 2019 season, our strong results to date have been driven by solid growth in in-park per capita spending while entertaining a record number of guests, particularly during our peak summer months. This strong consumer demand reflects the quality of our business model and our long-range plan that focuses on broadening the guest experience through more immersive attractions and entertainment. The early impact of our strategic initiatives has been at the center of our Company’s success this year and we expect them to be a cornerstone driver of growth well into the future,” said Zimmerman.

“Continuing the momentum we’ve established during the 2019 season, our 2020 season pass sales program, which began in August, is off to its best start ever, with sales of season passes and related all-season products up across the board,” added Zimmerman. “To support the growing consumer demand, next year we plan to build upon the successful programs we implemented in 2019 that drove higher attendance and guest spending levels. For instance, our tremendously successful Grand Carnivale will turn midways into evening street parties at two additional parks in 2020, while Monster Jam Thunder Alley will fire up its engines at three different parks. Limited-duration special events like these, as well as our Haunt and WinterFest celebrations, inspire our guests to visit our parks multiple times each season and makes the decision to purchase a season pass much more compelling. The recent strength of our season pass program also sets the stage for the upcoming launch of PassPerks, our new season pass loyalty program, designed to encourage passholders to visit more often as well as provide rewards that promote higher renewal and retention rates,” said Zimmerman.

Zimmerman added 2020 promises to be a very exciting year for the Company. “When our gates open next spring, guests can expect new rides or attractions at all of our parks. At Kings Island, near Cincinnati, anticipation continues to build around the introduction of Orion, our newest world-class giga coaster. In Texas, improvements are already underway at our Schlitterbahn water parks in New Braunfels and Galveston, while our new indoor sports center near Cedar Point, in Sandusky, Ohio, will be hosting tournament play beginning in the first quarter. Nearby to Cedar Point, renovations have begun at Sawmill Creek Resort and Conference Center, which will return to full operations mid-year with a brand-new look and feel. Finally, Cedar Point and Knott’s Berry Farm have plenty of fun in store as they celebrate their big anniversaries -- 150 and 100 years, respectively,” concluded Zimmerman.

Third-Quarter Results

Net revenues for the 2019 third quarter increased $51 million, or 8%, to $715 million from $664 million in the third quarter last year. The increase in revenues reflects a 7%, or 818,000-visit, increase in attendance, a 1%, or $0.47, increase in in-park per capita spending, and a 9%, or $6 million, increase in out-of-park revenues. On a same-park/same-week basis, net revenues in the third quarter of 2019 were up 7%, or $43 million, on a 732,000-visit, or 6%, increase in attendance, a less than 1% increase in in-park per capita spending, and a 9%, or $6 million, increase in out-of-park revenues.

Operating income for the 2019 third quarter totaled $275 million, up $17 million, or 6%, compared with $259 million for the third quarter last year. The increase in operating income was the result of the 8% increase in net revenues noted above, offset by a 13%, or $42 million, increase in operating costs and expenses compared with the third quarter of 2018. On a same-park/same-week basis, and excluding $6 million of acquisition-related costs, operating costs and expenses in the period were up $28 million, or 8%, with the increase due to incremental variable operating costs, in particular cost of goods sold and transaction fees, associated with the record attendance levels, higher labor costs driven by wage-rate increases and incremental operating costs associated with the Company’s new facilities and immersive events.

During the current period, the Company recognized a $6 million net charge to earnings for foreign currency compared with a $13 million net benefit to earnings in 2018, both amounts primarily representing the re-measurement of the U.S.-dollar-denominated debt held at our Canadian property. In addition, the provision for taxes increased $10 million in the current period compared to the prior period due to an increase in pre-tax income from our taxable subsidiaries.

After these items above, and after depreciation and amortization, interest expense and the net effect of swaps, net income for the third quarter totaled $190 million, or $3.34 per diluted LP unit. This compares with net income of $213 million, or $3.76 per diluted LP unit, for the 2018 third quarter. On a same-park/same-week basis, net income for the period totaled $170 million, down 13%, or $25 million.

Adjusted EBITDA, which management believes is a meaningful measure of the Company's park-level operating results, increased 5%, or $17 million, to $355 million for the 2019 third quarter compared with $338 million in 2018. On a same-park/same-week basis, Adjusted EBITDA was also up 5%, or $17 million, compared with the third quarter of 2018. The increase in Adjusted EBITDA was largely the result of improved revenues during the quarter. The higher revenues are attributable to increases in attendance, in-park per capita spending and out-of-park revenues, offset, in part, by planned increases in labor and operating supply costs and variable costs associated with higher attendance. See the attached table for a reconciliation of net income to Adjusted EBITDA.

Year-to-Date Operating Results

Including results from the two Schlitterbahn water parks since their acquisition by Cedar Fair on July 1, 2019, preliminary net revenues year-to-date ended November 3, 2019, totaled $1.37 billion. Over this same period, combined attendance totaled 25.8 million visits, in-park per capita spending was $48.73, and out-of-park revenues totaled $155 million.

Overall, preliminary net revenues on a same-park basis (excluding the results from the Schlitterbahn parks) year-to-date through November 3, 2019, increased 6%, or $71 million, to $1.33 billion in 2019 from $1.26 billion through the year-to-date period ended November 4, 2018. On a same-park basis, attendance was up 4%, or 1 million visits, from the year-to-date period ended November 4, 2018. Over this same period and on a same-park basis, in-park per capita spending was up 1%, or $0.57, and out-of-park revenues were up 7%, or $10 million.

Distribution Declaration

Today, the Company also announced the declaration of a quarterly cash distribution of $0.935 per LP unit, to be paid on December 17, 2019, to unitholders of record on December 4, 2019.

“Consistent with our recent comments, we are committed to the sustainability of our distribution while moderating its growth rate in the near term as we seek to reduce our debt to Adjusted EBITDA leverage ratio to inside 4-times in the near term,” said Executive Vice President and CFO Brian Witherow. “We remain confident in our business model, the consistency of our cash flow and the strength of our balance sheet, which provides us the ability to continue to grow our distribution while still having the flexibility to invest in the projects and initiatives that support our long-range strategic plan.”

Read the entire press release from Cedar Fair.

Jeff's avatar

There's a lot to unpack here, but my general feeling is that there is some good to report here in the short-term, but reasons for caution long-term.

  • Regarding distribution: “Consistent with our recent comments, we are committed to the sustainability of our distribution while moderating its growth rate in the near term as we seek to reduce our debt to Adjusted EBITDA leverage ratio to inside 4-times in the near term." This is a weird thing to declare, because they just incurred more debt to buy the Schlitterbahn parks. They went from $1.6 billion last year to $2.1 billion in a year. If EBITDA is flat next year (and with some leading indicators suggesting at best a market correction, at worse a recession), getting to that ratio means reducing debt to $1.4 billion. Even if you eliminated the distribution, you wouldn't make a dent in that ratio. Right now they're at 6x.
  • Net income for the quarter is actually down, with additional parks. Per capita spending was also flat in the quarter.
  • How are they recognizing the multi-season pass revenue?
  • I'd love to see NPS or some similar metric included, especially with the generally poor feedback about crowding and operational capacity at Cedar Point this fall. In the absence of acquisition, even sustaining attendance and revenue requires people to come back.

I'm not down on the company, but everything they highlight feels like short-term wins, not like they're building something sustainable. "Loyalty" programs, I'm not convinced they work in the long run, and don't really make sense in most markets where there are no competitors. Does a program like that compel you to visit the park instead of Studio Movie Grill or your local FEC?

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

Jeff all great points. I always find the challenge with earnings (every public traded company) is trying to sort out all of the short wins vs what is actually sustainable.

With Wall Street it is always what have you done for me lately and what is the expected outcome. I don't see the debt being reduced to 1.4, especially if there is any drop off with guest spend.

There is no such thing as a terrible Coaster just ones that haven't been taken care of

cleveland.com has a write-up of a question asked by an analyst about the Gold Passes and overcrowding at Cedar Point.

Brian Witherow, Cedar Fair’s executive vice president and chief financial officer, said there are no plans to stop selling the popular pass.

“We’re going to continue to try and sell as many passes as we can,” he said, acknowledging that season-pass sales would likely affect single-day admissions.
“We’ll take that as a trade-off,” he said. Cedar Point closed for the season Oct. 27.

Leverage ratio includes all of the debt used to pay for Schlitterbahn but only 4 months of its EBITDA. Next year will include a full year of its EBITDA. Debt presumably will be paid down somewhat. Even if EBITDA remains flat, Debt to EBITDA ratio decreases as a result of principal payments on debt. Cedar Fair said the goal is to get to less than 4x leverage in "near term," which doesn't mean next year.

Operating income increased for year to date and 3rd quarter. Net income can include timing differences. About $19 million delta over last year related to foreign currency fluctuations. There were differences related to swap charges. Movements in interest rates affect swaps which often have little to do with operations.

Witherow comments appear to indicate that they are not expecting people to use gold passes a huge number of times. Effectively changing single day tickets for passes without necessarily increasing the number of visits significantly. No doubt there are people who will power attend the Cedar Point next year. but I think the number of people who will do that (and the average number of visits of gold pass users) will be less than what many on coaster sites think (in part because people who are on coaster sites tend to be people who power attend parks or go as many times as possible). If you find people who are not necessarily bargain hunters (cheapskates and "scum" -- used on PB), you find people who find value at $99 who didn't otherwise find value at higher prices. That can work. Whether it actually does on balance remains to be seen.

Season pass sales are up over 50% for CP. They love the gold pass phenomenon! Their solution - improve access to parking and improve restrooms so they can better handle being packed with people. 2020 will truly be an epic year at CP. Epic lines at least

I'm glad that I renewed my platinum pass earlier this year so I can get more bathroom action in 2020.

Joking aside, I'd love to know what they have in mind for improving the parking situation. Short of building more lots in the back, what more can be done? They're out of space for parking in the main lot. They'd have to spend a ton on infrastructure if they plan on having something like off-site parking with shuttles.

Last edited by PhantomTails,
Jeff's avatar

Wall Street was not impressed or deterred. The stock is down just slightly after two days, while the market overall was essentially flat.

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

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