[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 its second quarter ended June 30, 2013 and provided insight into attendance and revenue trends through this past Sunday, August 4, 2013.
Commenting on the Company's strong results through the second quarter and trends through August 4, 2013, Matt Ouimet, Cedar Fair's president and chief executive officer said, "Our strong performance in the first half of the year and into the peak summer vacation months reinforces our confidence in our ability to deliver a fourth consecutive year of record results in 2013. We continue to see guests respond favorably to our long-term 'FUNforward' growth initiatives which have helped to increase revenues across all aspects of our business. Through this past weekend, we have experienced an increase in guest spend -- both in admissions and in-park spending, and an increase in out-of-park revenues, driven largely by our resort accommodations. These results reflect our strong positioning which has allowed us to generate consistently solid results in both the short and long term.
"We know that delivering a great guest experience to every guest, every time they visit is critical to the success of our business," noted Ouimet. "While new rides, attractions and shows are important elements, the guest experience is largely defined by the quality of service our employees provide. I am very proud of our employees as they work diligently to serve our guests in a manner consistent with our cornerstones of Safety, Service, Courtesy, Cleanliness and Integrity."
Net revenues were $403.4 million for the six months ended June 30, 2013, an increase of $17.6 million, or 5%, compared with the six-month period ended July 1, 2012. Net loss during this period was $61.7 million, or $1.11 per diluted LP unit, versus a net loss of $28.8 million, or $0.52 per diluted LP unit, for the first six months of 2012.
The increase in net revenues was attributable to a 5%, or $1.93, increase in average in-park guest per capita spending to $42.17, and a 6%, or $2.8 million, increase in out-of-park revenues to $48.1 million, compared with the same period a year ago. These increases were slightly offset by a less than 1% decrease in attendance, or 52,000 visits, to 8.7 million visits compared with the prior year. Excluding Knott's Soak City - San Diego, which was sold in November 2012, attendance was comparable to the same period last year.
The larger net loss during the first six months of 2013 was primarily attributable to the write off of loan fees from our 2010 and 2011 financings as a result of our March 2013 refinancing as well as a $22.7 million increase in the unrealized and realized foreign currency losses. The write off of these loan fees resulted in a $34.6 million non-cash charge to earnings in the period. From an operational perspective, operating costs and expenses through the first six months of the year were up 1%, or $4.2 million, which is in line with expectations.
Adjusted EBITDA, which management believes is a meaningful measure of the Company's park-level operating results, increased $13.6 million, or 19%, to $86.8 million for the six months ended June 30, 2013. Adjusted EBITDA margins during this same period improved by approximately 250 basis points (bps) compared with the prior-year period. The increase in Adjusted EBITDA and Adjusted EBITDA margins is attributable to the solid net revenue growth in addition to the Company's continued focus on effectively managing its fixed-cost base. Through the second quarter of 2013, the Company reported a decrease in the cost of sales associated with food, merchandise and games revenues as well as a decrease in operating expenses as a percent of net revenues. These decreases were slightly offset by an increase in selling, general and administrative costs as a result of increased advertising fees and labor costs, largely related to full-time staffing levels.
The fiscal three-month period ended June 30, 2013, consisted of a 13-week period and included a total of 800 operating days compared with 14 weeks and 905 operating days for the fiscal three-month period ended July 1, 2012. In addition to being one week shorter, the second quarter of 2013 included two fewer admissions gates, due to the sale of the San Diego water park in November 2012 and the elimination of a separate-charge water park gate in Kansas City, Missouri. Oceans of Fun is now included in the admissions gate for the Company's Worlds of Fun amusement park for the 2013 operating season and is no longer counted as a separate gate.
For the quarter ended June 30, 2013, net revenues increased 1%, or $4.0 million, to $361.6 million from $357.6 million in the second quarter of 2012. This increase reflects a 5%, or $2.04, increase in average in-park guest per capita spending, and a 5%, or $1.7 million increase in out-of-park revenues, partially offset by a 4% decrease in attendance, or 353,000 visits. The decrease in attendance for the second quarter was the direct result of fewer operating days, the Easter holiday shift to the first quarter of 2013 and unfavorable short-term weather trends.
"In 2013 we have made additional investments to enhance the overall guest experience and our second quarter results have clearly benefited from this initiative," Ouimet added. "Improvements in the quality and variety of our food offerings, a solid 2013 capital plan and adding additional value to the overall guest visit by extending park hours, expanding live entertainment on our midways and increasing the number of special events at our parks have resonated well with our guests. This enhanced guest experience has resulted in increased revenues for the quarter despite fewer operating days."
Positive Impact from July Operations
Based on preliminary results, net revenues through August 4, 2013 were approximately $712 million, up 5%, or $36 million, compared with $676 million for the same period last year. The increase was a result of an approximate 5%, or $2.24, increase in average in-park guest per capita spending to a record $43.47, and an approximate 7%, or $5 million increase in out-of-park revenues to $78 million. These increases were slightly offset by a less than one percent, or 52,000-visit, decrease in attendance. Excluding the water park sold in 2012, attendance was up 1%, or 75,000 visits, to a record 15.0 million visits on a comparable park basis.
Cash Flow and Liquidity Remain Strong
As of June 30, 2013, the Company had $43.6 million in cash on hand, $628.4 million of variable-rate term debt (before giving consideration to fixed-rate interest rate swaps), $901.4 million of fixed-rate debt and $58.0 million borrowed under its revolving credit facilities. 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.
The Company announced today the declaration of a cash distribution of $0.625 per LP unit, consistent with its targeted annualized rate of $2.50 per LP unit for 2013. The distribution is payable on September 16, 2013 to unitholders of record as of September 5, 2013. "This quarter's distribution appropriately reflects Cedar Fair's strong performance to date and our confidence in our highly successful, long-term growth strategy -- 'FUNforward' -- which we expect to continue to help drive our success," added Ouimet.
Cedar Fair's new rides and attractions, including the record-breaking winged roller coaster, GateKeeper, at Cedar Point; the new Boardwalk area and ride refurbishments at Knott's Berry Farm; the combination and expansion of the Oceans of Fun water park with Worlds of Fun; and a world-class wooden roller coaster, Gold Striker, at California's Great America, are all receiving strong reviews from park guests. "Our strong capital line-up, coupled with the second year of our 'Thrills Connect' marketing campaign and new e-commerce platform, have resulted in record season pass sales for our 2013 operating season," added Ouimet. "We have also experienced steady growth in group sales this year, as we continue to add value to our offerings, improve catering facilities and have the second-year benefit of an incentivized sales force.
<"As we head into the peak vacation month of August and our Halloween period, we are encouraged by the positive momentum we have experienced through July and remain confident in our 2013 plan and growth strategy," said Ouimet. "While we have approximately one-third of the operating season still ahead of us, we expect 2013 to be another record year and are reiterating our expectations for full-year net revenues between $1.090 billion and $1.115 billion and Adjusted EBITDA between $400 million and $410 million."
Read the entire press release from Cedar Fair.