Cedar Fair results show improvement, but still below 2019 attendance and revenue for 2021

Posted Wednesday, February 16, 2022 9:17 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 its 2021 fourth-quarter and full-year results, ended Dec. 31, 2021.

Highlights

(Note: To offer more informative comparisons, highlights for 2021 below are compared to 2019. During 2021, the Company’s parks had 1,765 operating days compared to 2,224 operating days in 2019.)

  • Net revenues for 2021 totaled $1.34 billion compared with $1.47 billion for 2019, driven by:
    • Attendance that approximated 70% of 2019 levels (85% on a comparable operating day basis);
    • Record in-park per capita spending of $62.03, representing a 28% increase over 2019 in-park per capita spending of $48.32, with double-digit increases across all key revenue categories; and
    • Out-of-park revenues of $168 million, which was comparable to 2019 levels.
  • Net loss and Adjusted EBITDA for 2021 totaled $49 million and $325 million, respectively, compared with net income of $172 million and Adjusted EBITDA of $505 million for 2019.
  • Through early February, sales of 2022 season passes and all-season products are pacing ahead of the then-record pace set for the sale of 2020 season pass products.

For additional information regarding statistics on a comparable same-day basis, including how the Company defines and uses these measures, see the attached Key Operational Measures table and related footnotes.

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

“We are extremely pleased with our 2021 results, particularly given the level of uncertainty with which we entered the year and the ongoing headwinds of the pandemic,” said Cedar Fair President and CEO Richard A. Zimmerman. “Our key strategic initiatives focused on broadening and enhancing the guest experience are clearly resonating with consumers. As a result, we produced revenues over the second half of 2021 that outpaced the record revenues of the comparable six-month period in 2019 by 14%, an increase of more than $130 million. Our outstanding performance is a testament to the agility and insight of our talented team as they overcame unprecedented challenges of 2021.”

“Our strong 2021 performance gives us the financial flexibility to continue rapidly deleveraging our balance sheet while investing in high-return organic initiatives,” continued Zimmerman. “In fact, with a strengthened balance sheet, we’re increasingly confident that Cedar Fair will be able to reinitiate a unitholder distribution by the third quarter of 2022, if not sooner. The Cedar Fair Board and management team are focused on extending our track-record of enhancing value for unitholders, and we are confident we are taking the right steps to achieve that objective.”

Results of Full-Year 2021 Compared to Full-Year 2020

The coronavirus pandemic had a material impact on park operations in both 2021 and 2020. All but one of Cedar Fair’s parks opened for the 2021 season on various dates in May. Canada’s Wonderland, which remained closed through the entire first half of the year due to local COVID-19 restrictions, reopened for the first time on July 5, 2021, under capacity limitations. In 2020, full-park operations of Knott’s Berry Farm, as well as abbreviated operations of the two Schlitterbahn water parks, had begun prior to the suspension of all park operations on March 14, 2020. The Company was able to resume partial operations at eight of its 13 properties beginning in mid-June 2020, while two additional parks reopened on weekends in November and December of 2020. Given the effects of the coronavirus pandemic and disruption of park operations during 2020, results for 2021 and 2020 are not directly comparable.

By direct comparison, operating days in 2021 totaled 1,765 compared to 487 operating days in 2020.

For the year ended Dec. 31, 2021, net revenues totaled $1.34 billion versus $182 million for 2020. The increase in net revenues was attributable to a 1,278 operating day increase in 2021, resulting in a 16.9 million-visit increase in attendance and a $101 million increase in out-of-park revenues, including our resort properties. In-park per capita spending in 2021 totaled a record $62.03, driven by increases in guest spending across all key revenue categories, particularly admissions, food and beverage, and extra-charge attractions.

Operating costs and expenses in 2021 totaled $1.03 billion, compared with $484 million for 2020. The $547 million increase was due primarily to an increase of operating days during 2021 versus 2020, and the related increase in variable operating costs. Depreciation and amortization expense, which is spread over planned operating days, was $149 million in 2021, down $9 million from last year due primarily to the run-out of depreciation expense on 15-year useful lived property and equipment from the Company’s 2006 acquisition of Paramount Parks. A loss on impairment of goodwill and intangibles of $104 million was recorded during 2020, which was triggered by the anticipated impacts of the COVID-19 pandemic. Including the items noted above, the Company’s operating income for 2021 totaled $148 million, compared with an operating loss of $572 million for 2020.

Interest expense for 2021 totaled $184 million, up $33 million from last year due to incremental interest incurred on the Company’s 2025 senior notes issued in April 2020 and the Company’s 2028 senior unsecured notes issued in October 2020. The net effect of the Company’s swaps resulted in a $19 million benefit to earnings during 2021, compared with a $16 million charge to earnings in 2020. The difference reflects the change in fair market value movement in the Company’s swap portfolio. The Company recognized a loss on early debt extinguishment of $6 million in 2021 related to the full redemption of its 2024 senior notes, and it recognized a $2 million loss on early debt extinguishment in 2020 related to its 2020 refinancing events. During 2021, the Company also recognized a $6 million net charge to earnings for foreign currency gains and losses related to its U.S. dollar-denominated Canadian notes, compared with a $12 million net benefit to earnings for 2020.

For 2021, a $20 million provision for taxes was recorded to account for publicly traded partnership taxes and federal, state, local and foreign income taxes, compared to a benefit for taxes totaling $138 million for 2020. The difference in provision for taxes in 2021 was primarily attributable to the Company’s taxable subsidiaries’ pretax income in 2021 compared to a pretax loss in 2020. During 2022, the Company expects to receive a nearly $90 million refund of taxes related to the carryback to prior years of its pretax loss reported in 2020.

Accounting for the items above, the Company reported a net loss for 2021 totaling $49 million, or $0.86 per diluted L.P. unit, which compares with a net loss of $590 million, or $10.45 per LP diluted unit, in 2020.

Adjusted EBITDA, which management believes is a meaningful measure of the Company’s park-level operating results, totaled $325 million for 2021, compared to an Adjusted EBITDA loss of $302 million for 2020. The $627 million increase in Adjusted EBITDA reflects the impact of COVID-19-related park closures in 2020, and the related increases in attendance, in-park per capita spending, and out-of-park revenues from the reopening of parks in 2021.

Results of Full-Year 2021 Compared to Full-Year 2019

As previously noted, given the effects of the coronavirus pandemic and disruption of park operations in 2020, results for 2021 and 2020 are not directly comparable.

To provide more informative comparisons, the following information compares results for 2021 versus 2019. The parks had 1,765 total operating days in 2021 compared with 2,224 total operating days in 2019.

Net revenues for 2021 totaled $1.34 billion compared with $1.47 billion for 2019. The decrease in net revenues from 2019 levels was due to COVID-19-related park closures, operating calendar changes and capacity limitations at select parks, resulting in an 8.4-million-visit decrease in attendance for the year. The attendance shortfall was significantly offset by a 28%, or $13.71, increase in 2021 in-park per capita spending, driven by a meaningful lift across all key revenue channels. Out-of-park revenues for the year were comparable to 2019 levels, reflecting the impact of the delayed opening of the Company’s parks in 2021 until May 2021, as well as the temporary closure of two resort properties for renovations during 2021. For 2021, attendance totaled 19.5 million guests, or approximately 70% of reported 2019 levels, driven by season passholder and general admission attendance, offset in part by an expected slower recovery in group sales attendance, fewer operating days, and capacity limitations at certain parks, including Canada’s Wonderland.

Operating costs and expenses in 2021 increased to $1.03 billion, up $40 million from 2019. The increase was the result of a $56 million increase in operating expenses, offset by a $14 million decrease in costs of goods sold and a $3 million decrease in SG&A expense. The $56 million increase in operating expenses was largely attributable to higher seasonal labor costs resulting from rising wage rates, offset in part by a reduction in seasonal labor hours compared with 2019, as well as higher full-time wages due primarily to an increase in headcount. The decrease in cost of goods sold was attributable to fewer operating days in 2021. Cost of goods sold as a percentage of food, merchandise, and games revenue in 2021 was comparable to 2019. The decrease in SG&A expense was primarily due to lower advertising expense, the result of a more efficient marketing program and fewer operating days, offset by an increase in full-time wages, including higher incentive plan expense. Depreciation and amortization expense in 2021 decreased $22 million from 2019 due primarily to the run-out of depreciation expense on 15-year useful lived property and equipment from the Company’s 2006 acquisition of Paramount Parks, as well as the change in estimated useful life of certain park assets in 2019. Including the items noted above, the Company’s operating income for 2021 totaled $148 million, compared with operating income of $309 million for 2019.

Interest expense for 2021 increased $84 million from 2019, due to incremental interest incurred on the Company’s 2025 and 2028 senior notes issued in 2020. The net effect of the Company’s swaps resulted in a $19 million benefit to earnings during 2021, compared with a $17 million charge to earnings in 2019. The difference reflects the change in fair market value movement in the Company’s swap portfolio. The Company recognized a loss on early debt extinguishment of $6 million in 2021 related to the full redemption of its 2024 senior notes. During 2021, the Company also recognized a $6 million net charge to earnings for foreign currency gains and losses related to its U.S. dollar-denominated Canadian notes, compared with a $21 million net benefit to earnings in 2019.

For 2021, a $20 million provision for taxes was recorded to account for publicly traded partnership taxes and federal, state, local and foreign income taxes, compared to a provision for taxes of $43 million in 2019. The difference in provision for taxes in the current year was attributable to a decrease in pretax income from the Company’s taxable subsidiaries during 2021.

Accounting for the items above, net loss for 2021 totaled $49 million, or $0.86 per diluted L.P. unit, compared with net income of $172 million, or $3.03 per diluted LP unit, for 2019.

Adjusted EBITDA for 2021 totaled $325 million compared with $505 million for 2019. The $180 million decrease was the result of an 8.4-million-visit decrease in attendance due to the postponed opening of the Company’s parks for the 2021 operating season, other COVID-19-related operating calendar changes, mandated capacity restrictions at Canada’s Wonderland in the second half of the year, and significantly higher labor costs in 2021.

Balance Sheet and Liquidity Update

Deferred revenues as of Dec. 31, 2021, including non-current deferred revenue, totaled $198 million, representing an increase of $37 million, or 23%, when compared to deferred revenues at Dec. 31, 2019. As of Dec. 31, 2021, the Company had cash on hand of $61 million and $359 million available under its revolving credit facility, net of $16 million of letters of credit, for total liquidity of $420 million. This compares to $442 million of total liquidity at the end of 2019. Net debt at as of Dec. 31, 2021, calculated as total debt of $2.564 billion less cash and cash equivalents of $61 million, was $2.503 billion. This total factors in the early redemption of the Company’s outstanding 5.375% notes due in June 2024, which had an aggregate principal amount of $450 million.

Outlook

“After successfully maneuvering through the most unpredictable environment in the Company’s history, I have never been more confident in the team’s ability to continue to successfully execute regardless of the challenges we face,” said Zimmerman. “While we anticipate the labor market will remain challenging for the foreseeable future, the intelligent pricing and labor rate management strategies we activated position us to mitigate these headwinds and continue delivering unforgettable experiences for our guests.”

Zimmerman added, “We are focused on continuing to advance our strategic initiatives in 2022, including investing more than $200 million in new attractions and entertainment offerings, as well as the completion of several resort renovation projects that were delayed over the last two years. With a strong balance sheet, we also maintain the flexibility to continue to expand our park offerings and develop new revenue centers, and technology enhancements, such as cashless parks, touch-free transactions, and labor management tools, all aimed at improving the guest experience and creating a more nimble, efficient, and cost-effective operating model. We are confident that we have a strong foundation for the future and are well positioned to deliver exceptional performance for our team, guests and unitholders in 2022.”

Read more from Cedar Fair.

Wednesday, February 16, 2022 9:35 AM
Jeff's avatar

No mention of SeaWorld at all. You can bet that's the first question on the analyst call.

Operating costs were crazy high, on a per capita basis, which is not surprising given the increase in starting wages. Apparently they're trying to roll that back, at Cedar Point at least for new hires, which I'm convinced will absolutely not work. The labor market isn't any better, and if anything, people taking service jobs seem to be more empowered not to settle.

Good on them for hitting those per cap numbers, but to get a repeat on that, I think people who spent it last year will need to see value in it to do it again. The feel over on PointBuzz is pretty mixed about season-long upgrades like food and Fastlane, so I wonder if they'll be able to keep that up. I still think the gate is too low.


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

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Wednesday, February 16, 2022 11:45 AM

I joined the call about 10 minutes after it started. But they presumably made some comment about SeaWorld offer toward the beginning of their prepared remarks because at one point someone started a question with something to the effect of "I know you have said you don't want to discuss it but...." There were a couple generic acquisition questions and some about the impact of master limited partnership on acquisitions and possible unit buybacks rather than dividends.

There were also a couple questions about labor costs and seasons passes (including effect at Knotts and Canada with respect to carryforward of passes to parts of the 2022 season).

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Wednesday, February 16, 2022 12:00 PM
LostKause's avatar

Maybe Cedar Point management are expecting more foreign employees to work this year, and they don't need to attract more U.S. workers, and that's why they feel they can lower the wage? Even though working there takes a lot away from the work/life balance, $15 an hour is still pretty good, and it adds up to a really good paycheck when taking into account how many hours an employee works per week.

I think the non-internet discounted gate $75 price is too high, but that's probably just a psychological trick to get people to pre-purchase their tickets. The $45 online price is reasonable.

I am really happy they didn't sell to Sea World.


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Wednesday, February 16, 2022 12:29 PM

They mentioned that the J-1 visa program is back this year and noted that apps to date are near historical levels.

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Wednesday, February 16, 2022 2:02 PM

The parks are packed in Q4 but they post a loss

They are just regurgitating the same low spending season passholders. Who don’t make many if any in park purchases in the extended season.

The parks were overcrowded and didn’t offer a quality experience Which will lead to reduced pass and ticket sales

2022 isn’t going to be much better. They have the same low price season pass strategy and the cabin fever boom is over.

It’s a shame because they are the better mgmt co over SEAS and SIX

Last edited by super7*, Wednesday, February 16, 2022 2:03 PM
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Wednesday, February 16, 2022 2:47 PM

Being "packed" in Q4 isn't that interesting, because there are very few chain-wide operating days between Oct 1 and Dec 31. They certainly aren't just regurgitating low-spending passholders, because the per-capita spending in 21Q4 was north of $60, vs. below $50 in 20Q4 and 19Q4.


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Wednesday, February 16, 2022 3:52 PM

I was looking at reservations for Camp Sandusky and noticed they have a Work/Camp program where you work at the campground in exchange for your site. Any hours worked over the 20hr/week minimum pays $7.30/hr. I would say CP is right-priced if other summer jobs are paying federal minimum wage.


But then again, what do I know?

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Wednesday, February 16, 2022 4:13 PM
Lord Gonchar's avatar

The minimum wage in Ohio is $9.30


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Wednesday, February 16, 2022 4:44 PM

super7* said:

The parks are packed in Q4 but they post a loss

They are just regurgitating the same low spending season passholders. Who don’t make many if any in park purchases in the extended season.

The parks were overcrowded and didn’t offer a quality experience Which will lead to reduced pass and ticket sales

2022 isn’t going to be much better. They have the same low price season pass strategy and the cabin fever boom is over.

It’s a shame because they are the better mgmt co over SEAS and SIX

The above is simply not true. Comparing FUN's Q4 of 2021 to Q4 of 2019:

Revenue up 36%.... EBITDA up 34%.... Operating income up 73%

And that comparison is against a then-record 2019 - and it's with Castaway Bay offline all of 2021 for renovations.

I still think FUN is pricing it's all-season products almost criminally too low - it's absurd to think it costs more just to walk in the gate for 1 day at SeaWorld Orlando than what it costs for an entire season (no blockout dates) for Cedar Point, Cedar Point Shores, parking and a slew of benefits/discounts. It makes zero sense - let's just hope it turns out better than what Tim Fisher did with Village Roadshow.

But this notion that the parks aren't producing results at historic levels over the second half of 2021 once they got their parks opened (especially during Q4) is just not aligned with reality.

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Wednesday, February 16, 2022 6:35 PM

Transcript of the earnings call:

https://www.fool.com/earnings/call-transcripts/2022/02/16/cedar-fai...ranscript/

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Wednesday, February 16, 2022 8:54 PM
Jeff's avatar

A few armchair observations... I love the question about growth, because I feel like pivoting to the point about the distribution was to say, "We're not a growth stock, we're an income stock." Certainly that's why I held units back in the day.

I was also taken by the comment on the belief that consumers are anxious to spend money on outdoor experiences. Cool, so why are you letting them in so inexpensively? On the bright side, it was good to see Witherow point out to the analyst that each market is different.


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

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Thursday, February 17, 2022 10:27 AM
Fun's avatar

Also interesting to hear them say this on the call, in response to the question about why they don't have as high margins as Sea World and Six Flags. Certainly implies that a guest experience philosophy is a consideration when evaluating M&A.

But as we've always said, and this is this goes back even to Matt Ouimet's leadership, we can go get your margin tomorrow, if you want, but I'm not sure you're going to want to own the stock two or three years from now because of the guest experience is going to erode.

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Thursday, February 17, 2022 11:27 AM

That's a pretty rare sentiment among corporate officers during a quarterly earnings call. I wonder if seeing yourself as an income stock (vs. growth) makes things like that easier to say.


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Thursday, February 17, 2022 11:57 AM

Isn't that literally what they were/are doing though with the Cedar Point Gold Pass strategy?

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