Cedar Fair revenue and attendance down slightly in 2023
Posted
From the press release:
SANDUSKY, Ohio--(BUSINESS WIRE)-- Cedar Fair Entertainment Company (NYSE: FUN), a leader in regional amusement parks, water parks and immersive entertainment, today announced its 2023 fourth-quarter and full-year results, ended Dec. 31, 2023.
2023 Fourth-Quarter Highlights
- Net revenues totaled a record $371 million, an increase of 1%, or $5 million, compared with Q4-2022.
- The Company recorded a net loss of $10 million compared with net income of $12 million in Q4-2022. The decrease was due primarily to $17 million of transaction costs related to the proposed merger with Six Flags.
- Adjusted EBITDA(1) totaled $89 million, an increase of 1%, or $1 million, compared with Q4-2022.
- Attendance totaled a record 5.8 million guests, an increase of 9%, or 466,000 guests compared with Q4-2022. The increase in attendance was primarily attributable to increased season pass visits resulting from the strong start to the 2024 sales program.
- In-park per capita spending(2) was $58.61, a decrease of 7% compared with Q4-2022. The decrease was primarily due to a shift in attendance mix to lower-priced ticketing channels and higher attendance levels.
- Out-of-park revenues(2) were a record $43 million, an increase of 7%, or $3 million, compared with Q4-2022.
2023 Full-Year Highlights
- Net revenues totaled $1.80 billion compared with $1.82 billion in 2022.
- Net income was $125 million, a decrease of $183 million from 2022, primarily the result of a $155 million prior year gain recognized on the sale of the land at California’s Great America and $22 million of transaction costs in 2023 related to the proposed merger with Six Flags.
- Adjusted EBITDA was $528 million compared with $552 million in 2022.
- Attendance totaled 26.7 million guests compared with 26.9 million guests in 2022.
- In-park per capita spending was $61.05, a decline of 1% compared with 2022.
- Out-of-park revenues were a record $223 million, an increase of $10 million, or 5% compared with 2022.
Balance Sheet and Capital Allocation Highlights
- On Dec. 31, 2023, net debt(3) totaled $2.2 billion, calculated as total debt before debt issuance costs of $2.3 billion less cash and cash equivalents of $65 million.
- Cedar Fair’s Board of Directors today declared a cash distribution of $0.30 per limited partner (LP) unit, payable on March 20, 2024, to unitholders of record on March 6, 2024.
CEO Commentary
“With the return to more normal operating conditions in the back half of 2023, the strength and resiliency of Cedar Fair’s business model was on full display,” said Cedar Fair CEO Richard Zimmerman. “We remained nimble and successfully adapted to an evolving marketplace to offset the effects of anomalous macro-factors, including weather, on demand during the first half of the year. In the second half of the year, in addition to more normalized operating conditions, we made mid-year adjustments to our marketing and pricing strategies that successfully drove increased demand while our park teams effectively implemented cost-saving measures to expand operating margins.”
“In addition to our outstanding performance over the second half of the year and record fourth quarter results, I’m encouraged by the pace of our long-lead indicators heading into the 2024 season, particularly sales of season passes and related all-season, add-on products,” added Zimmerman. “With unit sales of season passes through January up approximately 20% versus last year, we expect season pass sales to serve as a tailwind for attendance and revenues all season long.”
Commenting on the proposed merger with Six Flags, Zimmerman concluded, “Since announcing the proposed merger transaction in early November, we have been pleased by the strong support we have heard from unitholders and others in the investor community. We look forward to completing our combination with Six Flags and delivering on the compelling value creation opportunities ahead, which we believe are greater than what either company can achieve independently. Cedar Fair and Six Flags continue to work constructively with the DOJ in its review of the merger and continue to expect it will be completed in the first half of 2024. We look forward to capitalizing on the opportunities ahead for the combined company.”
2023 Full-Year Results
Operating days in 2023 totaled 2,365 compared to 2,302 in 2022.
For the year ended Dec. 31, 2023, net revenues totaled $1.80 billion on attendance of 26.7 million guests, compared with net revenues of $1.82 billion on attendance of 26.9 million guests in 2022. The decrease in net revenues reflects the impact of a 1%, or 247,000, decline in attendance and a 1%, or $0.60, decrease in in-park per capita spending, offset in part by a 5%, or $10 million, increase in out-of-park revenues. The decline in attendance was attributable to a year-over-year decrease in season pass sales and lower demand during the first half of the year due to inclement weather. The decrease in in-park per capita spending was attributable to a decrease in admissions spending, reflecting a mid-year reassessment of pricing strategy at several key parks, as well as the recovery of lower-priced attendance channels over the second half of the year. The decrease in admission spending was partially offset by higher levels of guest spending on food and beverage, as continued investments in food and beverage offerings led to increases in both the number of transactions per guest and the average transaction value. The increase in out-of-park revenues reflects the strong performance of the Company’s resort properties, highlighted by full-year operations of Castaway Bay Resort and Sawmill Creek Resort at Cedar Point following temporary closures for renovations during 2022.
Operating costs and expenses for 2023 totaled $1.32 billion compared with $1.29 billion for 2022. The approximate $27 million year-over-year increase was primarily attributable to $22 million of transaction costs related to the proposed merger with Six Flags, which are classified as SG&A expenses. Excluding the merger-related costs, operating costs and expenses for the year increased $5 million, or less than 1%, the result of a $14 million increase in SG&A expenses partially offset by a $4 million decrease in cost of goods sold and a $4 million decrease in operating expenses. The decrease in operating expenses was primarily due to cost savings initiatives resulting in a reduction in seasonal labor hours and less in-park entertainment costs. These cost-savings were somewhat offset by six incremental months of land lease costs at California's Great America, higher early-season maintenance wage costs at several parks, and increased insurance claims and related costs. Excluding the merger-related costs, the increase in SG&A expenses was primarily attributable to higher planned advertising costs in 2023.
Depreciation and amortization expense in 2023 totaled $158 million, up $5 million over the prior year, due to the reduction of the estimated useful lives of the long-lived assets at California's Great America following the sale-leaseback of the land at California's Great America. During 2023, the Company also reported a loss on impairment/retirement of fixed assets of approximately $18 million, compared with a $10 million loss in the prior year.
After the items noted above and a $155 million gain on the sale of the land at California's Great America in 2022, operating income for 2023 totaled $306 million, compared to operating income of $520 million for 2022.
Interest expense for 2023 totaled $142 million, a decrease of $10 million compared with 2022, the result of the repayment of the Company’s senior secured term loan facility and related termination of interest rate swap agreements during 2022. The reduction in interest expense was partially offset by interest on additional borrowings on the Company’s revolving credit facility in 2023. Prior to the termination of the Company’s interest rate swaps, the net effect of the swaps resulted in a $26 million net benefit to earnings for 2022. Finally, during 2023, Cedar Fair recognized a $6 million net benefit to earnings for foreign currency gains and losses compared with a $24 million net charge to earnings for 2022. Both amounts primarily represented the remeasurement of U.S.-dollar denominated notes to the functional currency of the Company’s Canadian entity.
Accounting for the items above, and after a $16 million decrease in the provision for taxes driven by the sale of the land at California’s Great America, net income for 2023 totaled $125 million, or $2.42 per diluted L.P. unit. This compares with net income of $308 million, or $5.45 per diluted LP unit, for 2022.
Adjusted EBITDA, which management believes is a meaningful measure of the Company’s park-level operating results, totaled $528 million in 2023, compared to Adjusted EBITDA of $552 million for 2022. The $24 million decrease in Adjusted EBITDA was primarily attributable to a decrease in net revenues driven by a decline in attendance caused by extreme weather during the first six months of 2023, and to a lesser extent by higher advertising, land lease and insurance related costs.
See the attached table for a reconciliation of net income to Adjusted EBITDA.
Balance Sheet and Liquidity Highlights
Deferred revenues on Dec. 31, 2023, including non-current deferred revenue, totaled $192 million, compared with $173 million of deferred revenues on Dec. 31, 2022. The $19 million increase was due to strong sales of advance purchase products, including season passes and related all-season add-on products.
As of Dec. 31, 2023, the Company had cash on hand of $65 million and $280 million available under its revolving credit facility, for total liquidity of $345 million. This compares to $381 million of total liquidity at the end of 2022. Net debt on Dec. 31, 2023, calculated as total debt of $2.3 billion (before debt issuance costs) less cash and cash equivalents of $65 million, was $2.2 billion.
Distribution and Unit Repurchases
Today the Company announced the Cedar Fair Board of Directors has approved a quarterly cash distribution of $0.30 per LP unit, to be paid on March 20, 2024, to unitholders of record on March 6, 2024.
During 2023, the Company repurchased approximately 1.7 million limited partnership units at a total cost of approximately $75 million – representing approximately 3% of its total units outstanding at the beginning of 2023.
Walt S:
I have to also wonder if some of the shift is also due to summer being shorter for the areas where Cedar Fair parks are at. Ohio schools now start in Mid August. Same for most Virginia schools and schools in NC. But, at least with Cedar Point, I'm not seeing the shift to the park being fully up and ready earlier.
This is a direct result of their business plan that largely targets the school age demographic of customer. They have made their business vulnerable to changes in school schedules.
Cutting live entertainment further chases away a demographic of customer that isn’t in school and could support the park on school days.
As bad as SEAS is with penny pinching they at least have figured out how to draw customers at BGW to have a significant amount more of operating days than Cedar Fair.
super7*:
Well closing any ride anytime saves operating costs. That’s their number 1 business priority……
When the sixification progresses will they get those ride not operating boards out at the gate with a handful of rides shuttered each day?
super7*:
As bad as SEAS is with penny pinching they at least have figured out how to draw customers at BGW to have a significant amount more of operating days than Cedar Fair.
That's what Cedar Fair should be doing at their larger destination parks as well - especially in areas with good weather year round. Dollywood and Silver Dollar City have also been very successful appealing to demographics other than thrillseekers and school kids. Heck - many of the target demographics need their parents to bring them to the park. If there's nothing that appeals to them, they might not bring their kids.
Cedar Point was doing so well after the Breakers remodel, the added beach events, the added seasonal events, festivals, etc and then they seemingly threw it all out the window to "standardize" with other parks in the chain. Cedar Point should be treated as a bit of a unicorn with pricing and investment because it isn't directly next to a large population. A large chunk of the customer base is going for multiple days and a hotel stay so they don't want to invest in all of that if the park is going to be a Six Flags type experience.
I continue to be concerned about the future of our beloved parks with Zimmerman and Fisher in charge. Now throw in Salim Bassoul and my feelings get worse.
-Matt
The thrill seekers are the demo that's least likely to spend money. You'll get the broke-ass teens and 20-somethings, cool. You'd think that these old men would appreciate that they're far more capable of spending more with age. I was talking with a coworker today about this, that we used to find the cheapest fare on the worst airline, now it's the shortest flight in the best seat I can afford. Which customer do you want most in the park? Me at 22 or me at 50?
Jeff - Editor - CoasterBuzz.com - My Blog
MDOmnis:
That's what Cedar Fair should be doing at their larger destination parks as well - especially in areas with good weather year round. Dollywood and Silver Dollar City have also been very successful appealing to demographics other than thrillseekers and school kids. Heck - many of the target demographics need their parents to bring them to the park. If there's nothing that appeals to them, they might not bring their kids.
a
At a Herschend . It’s obvious about half the customers they are not Thrillseekers they they are there for the shows. Dollywood has been able to expand their schedule to almost daily operation from March until the end of December because they have such a base of that customer.
One thing I’m a little surprised at when I go to those parks is their lack of attractions for that demographic other than the train. I would think they would invest in a few more slow moving attractions for these customers. But their strong entertainment schedule works well to bring these customers in.
I have friends that are non-Thrillseekers and I would never take them to most Cedar Fair parks. There’s nothing for them to do. Cedar Point was the exception it had a very strong entertainment lineup, despite its lack of entertainment venues plus the slow, moving transport rides there. But if the rumor is true that they are cutting their live entertainment as well I will skip that park when I am going with my non-thrillseeking friends, and choose Dollywood or Busch Gardens, Williamsburg instead
Super7, it’s probably very far away from you but the LiveE unicorn in the CF chain is Knotts Berry Farm, Cedar Point (and Kings Island) have had very strong LiveE as of late, but Knotts has even more.
2022 Trips: WDW, Sea World San Diego & Orlando, CP, KI, BGW, Bay Beach, Canobie Lake, Universal Orlando
MDOmnis:
then they seemingly threw it all out the window to "standardize" with other parks in the chain. Cedar Point should be treated as a bit of a unicorn ...
This is what worries me most about the consolidation of Six Flags and Cedar Fair - not so much what the overall philosophy will be. It seems unlikely that a single company can manage 27 amusement parks well, but almost certainly the trend will be more to one-size-fits-all management. Which both strikes me as a bad business decision in the long term, and leads me to think the parks will be less appealing.
(I also suspect we will see lower performing parks jettisoned over time, and given Cedar Fair's history I don't think that will mean selling them to other operators.)
Touchdown:
but Knotts has even more.
To me, it makes sense that Knott's would have great Live E. They have great weather year round, and they're competing with Disney there.
I think someone said it before in this thread, but trying to cut their way to prosperity is like someone trying to lose weight by cutting off an arm or a leg. Sure you get lighter immediately, but you damage your ability to be able to burn calories by exercising in the future. CF might see a one year boost to the bottom line based on their cuts, but once word is out that the park experience isn't what it used to be, a certain group of people quit coming back and their top line also starts falling. I'm all for being efficient in ways that doesn't kill the guest experience - things like kiosk or mobile ordering, better technology in ride restraints and systems so maybe a crew of two could do visually what a crew of six does currentlyin a physical manner, more self scan toll booths, etc.
Jeff's point about the 22 year old vs. the 50 year old makes sense too and I agree it's strange that these execs don't seem to be seeing that right now.
-Matt
Oh I agree, this 40 something makes it a point to see LiveE at most parks he visits, and parks that have poor LiveE gets less visits from me.
2022 Trips: WDW, Sea World San Diego & Orlando, CP, KI, BGW, Bay Beach, Canobie Lake, Universal Orlando
Knott’s is in LA. It should be no surprise that their LiveE is above par, there are literally thousands of performers, musicians, technicians and directors in the area. Enough to staff not only Knott’s, but Disney and Universal as well and there are still many looking for work.
I’d agree that shows are and should always be a big part of the amusement park experience, but some places are better equipped than others. Back in the 60’s Cedar Point and Six Flags built their brand partly on providing “Broadway Style” shows to attract visitors but as pointed out those activities have takes a back seat. It’s almost as if they say “if we can’t do a media/advertising blitz for it it’s not going to put people through the gate.” The original roots are the key. Dollywood is an entertainment park with rides. Opryland was the same, and Fiesta continues that tradition. Sea World is an animal park first, a ride park second. Busch is a beautiful gardens with animals. So there’s a real emphasis on shows and along with that goes a demographic whose interests extend beyond thrills.
Maybe it’s not as important in Richmond, Santa Clara, and Kansas City, and they also don’t gave near the talent pool. But I feel Cedar Point is shooting itself in the foot by reducing Live E. That park in particular stands to attract more families and oldsters by virtue of the fact that there are resort hotels and a marina.
I don’t think that a park has to be in an area like Los Angeles or New York to obtain great talent for life entertainment.
First of all the entertainment industry is very competitive and up-and-coming entertainers are willing to go where the contractor requires. Additionally, there is great local talent at just about location. Some of the best talent I’ve seen at Kings Island have been local performers.
Another important reason to have live entertainment in a theme park is that it is something to do with no waiting Most of the entertainment venues have a good capacity and don’t require coming early to get a seat. It’s important for parks to have attractions with no wait to give a good experience on busy days. It’s the same philosophy for the reason that they should have transportation rides and dark rides as well.
I can think of numerous days that I have went to a park that was too busy and just decided to watch the shows that day or rode the train
Something not talked about: SIX has 2.4 billion of debt, FUN has around 2.1 billion. How does this merger even begin to deal with 4.5 billion dollars of combined debt when neither company separately could? It’s going to mean selling parks, but which ones? It’s going to mean deep cost cutting, but where beyond live entertainment?
Not all debt is bad, though. I don't know the nuances of the financial profiles of either corporation to know what that debt entails, but just because it's there doesn't mean it's terrible.
Promoter of fog.
I understand how there are times where he seems out of touch on things, but my wife and I have followed a number of his principles and it’s been exceptionally helpful to our finances.
I think it’s also important to remember that he probably has to come off as inflexible and unflinching on his show because if he doesn’t, lots of people would think they’re exceptions when they really aren’t.
If you boil down his rhetoric to the basic principle of “Don’t spend money you don’t have,” I think it’s pretty sound advice.
13 Boomerang, 9 SLC, and 8 B-TR clones
Given the reports you read about the lack of retirement savings for a large number of people, amount of credit card debt and the number of people who cannot cover a $500 emergency expense, I wouldn't view Dave's 7 basic steps as being so out of line as to be totally unhelpful:
Save $1,000 for Your Starter Emergency Fund
Pay Off All Debt (Except the House) Using the Debt Snowball
Save 3–6 Months of Expenses in a Fully Funded Emergency Fund
Invest 15% of Your Household Income in Retirement
Save for Your Children’s College Fund
Pay Off Your Home Early
Build Wealth and Give
I don't agree with everything Dave says but I do agree with a lot of it. And think following at least some of what he says would be beneficial for a lot of people.
There are other approaches that can work too. But not if you don't follow them (true of Dave's as well). Years ago, I heard a dentist say when asked which was the best toothpaste for kids: the one they will use. Some of what Dave says is based on human nature more so than pure economics.
That was kind of my point, how much of that is just rational adult stuff? Does a guy really have to be on TV to reach those conclusions? Obviously a lot of people don't do it, I get that, but it seems like pretty common sense stuff to me. (Although paying off your house early when rates were stupid low is a terrible idea.)
Jeff - Editor - CoasterBuzz.com - My Blog
I think I read that half of all Americans have no retirement savings. I think one of the glaring holes in our education system is the lack of personal finance classes in high school...or even earlier. Here in Florida there is talk about requiring Communism to be taught, in some form, as early as Kindergarten. Why not spend that energy instead on teaching kids the basis of balancing a checkbook, the advantages and disadvantages to credit (and credit cards), and the value of saving?
"You can dream, create, design, and build the most wonderful place in the world...but it requires people to make the dreams a reality." -Walt Disney
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