Cedar Fair expecting record year after first quarter results

Posted | Contributed by Jeff

[Ed. note: The following is an excerpt of a press release. -J]

Cedar Fair Entertainment Company (NYSE: FUN), a leader in regional amusement parks, water parks and active entertainment, today announced results for the first quarter ended March 31, 2013. Historically, first quarter results represent less than 5% of the Company's full-year revenues as the vast majority of its world-renowned parks and facilities are closed during this quarter. As a result, the Company typically operates at a loss during this period.


  • First quarter net revenues increased to $41.8 million, up $13.6 million from the first quarter ended March 25, 2012.
  • Season pass sales and hotel and group bookings experienced positive early-season trends.
  • Operating costs are in line with the Company's expectations.
  • Quarterly cash distribution of $0.625 per limited partner ("LP") unit declared payable June 17, 2013, consistent with the Company's annualized distribution rate of $2.50 per LP unit.
  • Company expects full-year 2013 net revenues in the range of $1.090 billion to $1.115 billion and Adjusted EBITDA in the range of $400 million to $410 million.

Commenting on the Company's first quarter results, Matt Ouimet, Cedar Fair's president and chief executive officer said, "We are pleased with our solid first-quarter net revenues and encouraged by the positive momentum in season pass sales and hotel and group business bookings. While it is too early to see definitive trends at this point in the year, we anticipate that 2013 will mark our fourth consecutive year of record results. We expect our strong capital plan, combined with the benefit of our 'Thrills Connect' marketing campaign and new e-commerce platform, to be among the primary drivers for a strong 2013."

First Quarter Results

Cedar Fair's net revenues increased to $41.8 million for the first quarter ended March 31, 2013, up $13.6 million compared with $28.2 million in the first quarter ended March 25, 2012. The increase was primarily due to the strong attendance and in-park guest per capita spending at Knott's Berry Farm, the Company's only year-round property. The improved results at Knott's Berry Farm are attributable to recent investments the park has made over the past year to revitalize the park and enhance the overall guest experience.

The 2013 first-quarter results also were positively impacted by an additional 21 operating days due to a combination of the fiscal first quarter ending later than in the previous year and a shift in the Easter and Spring Break holidays which occurred in the first quarter of 2013 compared with the second quarter of 2012.

Operating costs and expenses for the 2013 first quarter were $108.1 million, an increase of $10.6 million from the prior-year quarter, and were in line with Company expectations. The increased costs were largely attributable to the additional operating days in the first quarter of 2013 when compared with the first quarter of 2012.

The net loss for the quarter totaled $109.1 million, or $1.95 per diluted LP unit, compared with a net loss of $65.4 million, or $1.18 per diluted LP unit, for the first quarter a year ago. The larger net loss for the period is primarily due to a $34.6 million non-cash charge related to the early extinguishment of debt, a $10.2 million unfavorable change in the net effect of swaps and a $17.2 million unfavorable change in the unrealized/realized foreign currency exchange between years. These losses were offset somewhat by the increased first-quarter revenues.

Cash Flow and Liquidity Remain Strong

As of March 31, 2013, the Company had $630.0 million of variable-rate term debt (before giving consideration to fixed-rate interest rate swaps), $901.3 million of fixed-rate debt, $96.0 million borrowed under its revolving credit facilities and $10.0 million in cash on hand. The Company believes its credit facilities and cash flows are sufficient to meet working capital needs, debt service, planned capital expenditures and distributions for the foreseeable future.

"As previously announced, we successfully completed a refinancing of our existing senior secured credit facilities in the first quarter of 2013 with new senior secured credit facilities, along with new senior unsecured notes," said Brian Witherow, Cedar Fair's executive vice president and chief financial officer. "This refinancing not only enables us to take advantage of historically low rates, but also significantly improves our financial flexibility so that we are better positioned to capitalize on opportunities in the future."

Taking into consideration the first quarter refinancing of its senior secured credit facilities, the Company expects to pay cash interest costs of approximately $100 million for fiscal 2013.

Distribution Declaration

The Company also announced today the declaration of a cash distribution of $0.625 per LP unit. The distribution will be paid on June 17, 2013, to unitholders of record as of June 5, 2013. This distribution reflects the Company's strong performance and growth strategy and is consistent with its targeted record annualized distribution rate of $2.50 per LP unit for 2013.

2013 Operating Season and Outlook

"Following the record year of 2012, we remain confident in our 2013 operating plan and our long-term 'FUNforward' growth strategy," Ouimet said. "We expect another record year in 2013 as our growth strategy positions us to maximize value this year and beyond."

The Company currently anticipates net revenues for the full-year 2013 to be in the range of $1.090 billion to $1.115 billion, and Adjusted EBITDA is anticipated to be in the range of $400 million to $410 million.

"Our investment in world-class rides, family entertainment and premium guest experiences will continue to be key drivers of our success," added Ouimet. "GateKeeper, a new world-record-breaking wing coaster at Cedar Point, is set to open this weekend and has already received a tremendous amount of publicity. I assure you it is every bit as exciting to ride as we hoped it would be and will be a strong contributor this year. We will continue to make investments in each of our parks to ensure a 'best-day-of-summer' experience for all of our guests. We believe we are well-positioned to reach our target for Adjusted EBITDA of $450 million or more by 2016."

Restatement of Depreciation Expense and Loss on Asset Retirements in Prior Periods

In its 2012 Form 10-K, the Company announced plans to move off the composite depreciation method of accounting beginning in 2013. In the process of changing accounting methods and responding to an open SEC comment letter, the Company determined that its accounting treatment under the composite depreciation method for the retirement of a ride at one of its parks in 2011 was in error. In particular, the discrete charge related to that retirement (totaling $8.8 million on a pre-tax basis) should have been recorded to the income statement in 2011 rather than being deferred and recorded in the composite pool as was disclosed in the 2011 Form 10-K as originally filed. The correction of this error results in adjustments to the financial statements that will decrease pre-tax earnings in 2011 by $8.8 million, increase pre-tax earnings in 2012 by $1.0 million, and have an immaterial impact on the comparative balance sheets. The resulting adjustments do not affect the ongoing park operations of the Company or its historical or future cash flows.

Read the entire press release from Cedar Fair.

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