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Cedar Fair Announces 2019 Second-Quarter Results and Reports Record Performance for First Seven Months

August 07, 2019
  • Declares quarterly cash distribution of $0.925 per LP unit payable September 17, 2019

SANDUSKY, Ohio--(BUSINESS WIRE)-- Cedar Fair Entertainment Company (NYSE: FUN), a leader in regional amusement parks, water parks and immersive entertainment, today announced results for the second quarter ended June 30, 2019, and year-to-date performance trends through August 4, 2019. The Company also announced the declaration of a quarterly cash distribution.

Due to a shift in this year’s fiscal calendar, the second quarter of 2019 included an additional 64 operating days (combined across all parks) when compared with the second quarter of 2018, significantly impacting the Company’s quarter-over-quarter comparisons. The 2019 second quarter ended June 30, 2019, while the 2018 second quarter ended June 24, 2018.

Highlights

  • For the second quarter ended June 30, 2019, Cedar Fair’s net revenues totaled $436 million, an increase of 15%, or $56 million, compared with the second quarter of 2018. The increase in net revenues was due in large part to a 10% increase in operating days in the period and reflects improvements in attendance, in-park per capita spending and out-of-park revenues, all of which were up meaningfully in the quarter.
  • Net income for the 2019 second quarter increased $44 million to $63 million and Adjusted EBITDA1 increased $36 million to $163 million, compared with the second quarter 2018. The improvements were largely due to the additional operating days in the 2019 period. On a comparable operating calendar basis, net income in the period increased 50%, or $21 million, and Adjusted EBITDA2 increased 5%, or $7 million.
  • Year-to-date preliminary net revenues through August 4, 2019, totaled approximately $877 million, an increase of $59 million, or 7%, when compared with the same period in 2018. On a same-park basis, excluding the Schlitterbahn water parks acquired on July 1, 2019, preliminary net revenues totaled a record $850 million, up $31 million or 4%.

__________________________
1For additional information regarding Adjusted EBITDA, including how the Company defines and uses Adjusted EBITDA, see the attached historical reconciliation table and related footnotes.
2Adjusted EBITDA for the three months ended July 1, 2018 was calculated as net income of $42.1 million plus interest expense of $21.3 million, provision for taxes of $13.7 million, depreciation and amortization expense of $57.4 million, net effect of swaps benefit of $0.9 million, non-cash foreign currency loss of $15.7 million, non-cash equity compensation expense of $3.2 million, and loss on impairment / retirement of fixed assets of $3.2 million.

Commenting on second-quarter results and the strong trends through August 4, 2019, Cedar Fair President and CEO Richard A. Zimmerman said, “We are very pleased with our year-to-date performance and the momentum built around the strategic initiatives that underscore our long-range plan. Our commitment to broaden the guest experience and invest in more immersive attractions is successfully expanding our audience and improving the value perception of our parks. Immersive attractions, such as Forbidden Frontier on Adventure Island at Cedar Point, and limited duration special events, such as Monster Jam Thunder Alley and Grand Carnivale, are just a few examples of how we are successfully encouraging guests to visit more often.

“We are pleased to see an upswing in attendance, particularly over the past month as weather conditions improved, and equally pleased to have generated meaningful revenue growth through increases in both in-park per capita spending and out-of-park revenues,” said Zimmerman. “As noted in our July 4th update, continued growth in in-park per capita spending (most notably as a result of our enhanced food and beverage options), combined with record sales of season passes and the all-season dining and beverage options, indicates the financial health of our consumer remains solid. It also gives us confidence our new attractions and other in-park entertainment initiatives will continue to drive incremental, long-term growth and profitability for our unitholders.”

Zimmerman concluded by stating, “We feel very good about how the year is tracking as we move into the month of August, followed by the increasingly important and very popular Halloween and winter holiday events. The strength of our core business, combined with the positive early returns we are seeing from the two recently acquired Schlitterbahn water parks, makes us confident that everything is in place this year for a strong finish.”

Second-Quarter Results

Net revenues for the 2019 second quarter increased $56 million, or 15%, to $436 million from $380 million in the second quarter last year. The increase in revenues reflects a 10%, or 802,000-visit, increase in attendance, a 4%, or $1.82, increase in in-park per capita spending, and a 14%, or $6 million, increase in out-of-park revenues. On a comparable operating calendar basis, net revenues in the second quarter of 2019 were up 3%, or $14 million, on a 4% increase in in-park per capita spending, a 4%, or $2 million, increase in out-of-park revenues, and a 47,000-visit, or less than 1%, decrease in attendance.

Operating income for the 2019 second quarter totaled $102 million, up $34 million, or 50%, compared with $68 million for the second quarter last year. The increase in operating income was the result of the 15% increase in net revenues noted above, offset by an 8%, or $21 million, increase in operating costs and expenses compared with the second quarter of 2018. The increase in operating costs and expenses in the quarter was in line with the Company's expectations and was largely the result of the additional operating days. On a comparable operating calendar basis, operating costs and expenses in the period were up $8 million, or 3%, with the increase primarily due to higher labor costs driven by wage-rate increases and incremental operating costs associated with the Company’s new immersive events.

The net effect of the Company’s interest rate swaps resulted in $12 million of additional expense for the quarter ended June 30, 2019, reflecting the change in fair market value movements in the Company’s swap portfolio. During the current period, the Company also recognized a $9 million net benefit to earnings for foreign currency compared with a $15 million net charge to earnings in 2018, both amounts primarily representing the re-measurement of the U.S.-dollar-denominated debt held at our Canadian property.

After these non-cash items, depreciation and amortization, interest expense and provision for taxes, net income for the second quarter totaled $63 million, or $1.11 per diluted LP unit. This compares with net income of $19 million, or $0.34 per diluted LP unit, for the 2018 second quarter. On a comparable operating calendar basis, net income for the period totaled $42 million, up 50%, or $21 million.

Adjusted EBITDA, which management believes is a meaningful measure of the Company's park-level operating results, increased 28%, or $36 million, to $163 million for the 2019 second quarter, compared with $127 million in 2018. On a comparable operating calendar basis, Adjusted EBITDA was up 5%, or $7 million, compared with the second quarter of 2018. The 5% lift in Adjusted EBITDA was the result of the increases in in-park per capita spending and out-of-park revenues during the quarter, offset, in part, by the planned increases in operating costs and expenses. See the attached table for a reconciliation of net income to Adjusted EBITDA.

Seven-Month Results

Including the results from the Schlitterbahn parks since their acquisition on July 1, 2019, preliminary net revenues for the seven-month period ended August 4, 2019 totaled $877 million. Over this same period, combined attendance totaled 16.5 million visits, in-park per capita spending was $48.59, and out-of-park revenues totaled $104 million.

On a same-park basis (excluding the results from the Schlitterbahn parks), combined attendance was up 1%, or 213,000 visits, from the comparable seven-month period ended August 5, 2018. Over this same period and on a same-park basis, in-park per capita spending was up 3% and out-of-park revenues were up 4%, or $4 million. Overall, preliminary net revenues through the first seven months of the year increased 4%, or $31 million, to $850 million in 2019 from $819 million through the first seven months of 2018, on a same-park basis.

Distribution Declaration

The Company also announced the declaration of a cash distribution of $0.925 per LP unit, which is consistent with its targeted annualized distribution rate of $3.70 per LP unit. The distribution will be paid on September 17, 2019, to unitholders of record as of September 4, 2019.

Conference Call

The Company will host a conference call with analysts starting at 10 a.m. EDT on August 7, 2019. Investors and all other interested parties can access a live, listen-only webcast via Cedar Fair’s investor site https://ir.cedarfair.com under the tabs Investor Information / Events and Presentations / Upcoming Events. Those unable to listen to the live webcast can access a recorded version of the call on the Company’s investor site https://ir.cedarfair.com under Investor Information / Events and Presentations / Past Events, available shortly after the live call’s conclusion. To access a replay of the earnings call by telephone, please dial (844) 512-2921 followed by the access pin code 3847439. The telephone replay will be available through August 21, 2019.

About Cedar Fair

Cedar Fair Entertainment Company (NYSE: FUN), one of the largest regional amusement-resort operators in the world, is a publicly traded partnership headquartered in Sandusky, Ohio. Focused on its mission to make people happy by providing fun, immersive and memorable experiences, the Company owns and operates 11 amusement parks, four outdoor water parks, an indoor water park and resort accommodations totaling more than 2,300 rooms and more than 600 luxury RV sites. Cedar Fair’s parks are located in Ohio, California, North Carolina, South Carolina, Virginia, Pennsylvania, Minnesota, Missouri, Michigan, Texas and Toronto, Ontario. It also operates an additional theme park in California under a management contract.

Forward-Looking Statements

Some of the statements contained in this news release constitute "forward-looking statements" within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995, including statements as to the Company's expectations, beliefs and strategies regarding the future. You can identify forward-looking statements because they contain words such as "believes," "project," "might," "expects," "could," "propose," "would," "may," "will," "should," "seeks," "approximately," "intends," "plans," "estimates," or "anticipates" or similar expressions that concern our strategy, plans or intentions. These forward-looking statements are subject to risks and uncertainties that may change at any time and, therefore, our actual results may differ materially from those that we expected. While we believe that the expectations reflected in such forward-looking statements are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. Important factors that could cause actual results to differ materially from our expectations are disclosed in our Annual Report on Form 10-K for the year ended December 31, 2018, and in the filings of the Company made from time to time with the SEC. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

This news release and prior releases are available online at http://ir.cedarfair.com

(financial tables follow)

CEDAR FAIR, L.P.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per unit amounts)

 

Three months ended

 

Six months ended

 

June 30, 2019

 

June 24, 2018

 

June 30, 2019

 

June 24, 2018

Net revenues:

 

 

 

 

 

 

 

Admissions

$

229,722

 

 

$

204,447

 

 

$

262,939

 

 

$

231,168

 

Food, merchandise and games

150,377

 

 

129,947

 

 

175,081

 

 

151,002

 

Accommodations, extra-charge products and other

56,091

 

 

45,922

 

 

65,147

 

 

52,873

 

 

436,190

 

 

380,316

 

 

503,167

 

 

435,043

 

Costs and expenses:

 

 

 

 

 

 

 

Cost of food, merchandise, and games revenues

39,808

 

 

35,018

 

 

47,457

 

 

41,021

 

Operating expenses

177,771

 

 

167,417

 

 

275,976

 

 

256,245

 

Selling, general and administrative

59,781

 

 

54,041

 

 

91,447

 

 

82,723

 

Depreciation and amortization

55,904

 

 

52,219

 

 

69,493

 

 

57,740

 

Loss on impairment / retirement of fixed assets, net

682

 

 

3,372

 

 

2,106

 

 

4,712

 

Gain on sale of investment

 

 

 

 

(617

)

 

 

 

333,946

 

 

312,067

 

 

485,862

 

 

442,441

 

Operating income (loss)

102,244

 

 

68,249

 

 

17,305

 

 

(7,398

)

Interest expense

22,927

 

 

21,337

 

 

43,847

 

 

41,099

 

Net effect of swaps

10,779

 

 

(906

)

 

17,158

 

 

(4,534

)

Loss on early debt extinguishment

 

 

 

 

 

 

1,073

 

(Gain) loss on foreign currency

(9,472

)

 

14,984

 

 

(18,141

)

 

25,078

 

Other expense (income)

36

 

 

(139

)

 

125

 

 

(488

)

Income (loss) before taxes

77,974

 

 

32,973

 

 

(25,684

)

 

(69,626

)

Provision (benefit) for taxes

14,676

 

 

13,730

 

 

(5,309

)

 

(5,469

)

Net income (loss)

63,298

 

 

19,243

 

 

(20,375

)

 

(64,157

)

Net income (loss) allocated to general partner

1

 

 

 

 

 

 

(1

)

Net income (loss) allocated to limited partners

$

63,297

 

 

$

19,243

 

 

$

(20,375

)

 

$

(64,156

)

 

 

 

 

 

 

 

 

Basic income (loss) per limited partner unit:

 

 

 

 

 

 

 

Weighted average limited partner units outstanding

56,474

 

 

56,231

 

 

56,334

 

 

56,192

 

Net income (loss) per limited partner unit

$

1.12

 

 

$

0.34

 

 

$

(0.36

)

 

$

(1.14

)

Diluted income (loss) per limited partner unit:

 

 

 

 

 

 

 

Weighted average limited partner units outstanding

56,886

 

 

56,727

 

 

56,334

 

 

56,192

 

Net income (loss) per limited partner unit

$

1.11

 

 

$

0.34

 

 

$

(0.36

)

 

$

(1.14

)

CEDAR FAIR, L.P.
UNAUDITED BALANCE SHEET DATA
(In thousands)

 

June 30, 2019

 

June 24, 2018

Cash and cash equivalents

$

324,742

 

 

$

60,119

 

Total assets

$

2,532,806

 

 

$

2,079,216

 

Long-term debt, including current maturities:

Revolving credit loans

$

 

 

$

25,000

 

Term debt

724,328

 

 

724,061

 

Notes

1,431,047

 

 

937,146

 

 

$

2,155,375

 

 

$

1,686,207

 

Total partners' equity

$

(100,200

)

 

$

(70,071

)

CEDAR FAIR, L.P.
KEY OPERATIONAL MEASURES
(In thousands, except per capita amounts)

 

Three months ended

 

Six months ended

 

June 30, 2019

 

June 24, 2018

 

June 30, 2019

 

June 24, 2018

Attendance

8,500

 

 

7,698

 

 

9,675

 

 

8,655

 

In-park per capita spending (1)

$

47.22

 

 

$

45.40

 

 

$

47.09

 

 

$

45.42

 

Out-of-park revenues (1)

$

49,344

 

 

$

43,491

 

 

$

64,105

 

 

$

56,177

 

 (1.)  

In-park per capita spending is calculated as revenues generated within our amusement parks and separately gated outdoor water parks along with related tolls and parking revenues (in-park revenues), divided by total attendance.  Out-of-park revenues are defined as revenues from resort, marina, sponsorship, online transaction fees charged to customers and all other out-of-park operations.  A reconciliation of these measures to net revenues for the periods presented is as follows:

(In thousands)

 

Three months ended

 

Six months ended

 

 

June 30, 2019

 

June 24, 2018

 

June 30, 2019

 

June 24, 2018

In-park revenues

 

$

401,383

 

 

$

349,525

 

 

$

455,596

 

 

$

393,135

 

Out-of-park revenues

 

49,344

 

 

43,491

 

 

64,105

 

 

56,177

 

Concessionaire remittance

 

(14,537

)

 

(12,700

)

 

(16,534

)

 

(14,269

)

Net revenues

 

$

436,190

 

 

$

380,316

 

 

$

503,167

 

 

$

435,043

 

CEDAR FAIR, L.P.
RECONCILIATION OF ADJUSTED EBITDA
(In thousands)

 

Three months ended

 

Six months ended

 

June 30, 2019

 

June 24, 2018

 

June 30, 2019

 

June 24, 2018

Net income (loss)

$

63,298

 

 

$

19,243

 

 

$

(20,375

)

 

$

(64,157

)

Interest expense

22,927

 

 

21,337

 

 

43,847

 

 

41,099

 

Interest income

(81

)

 

(55

)

 

(314

)

 

(281

)

Provision (benefit) for taxes

14,676

 

 

13,730

 

 

(5,309

)

 

(5,469

)

Depreciation and amortization

55,904

 

 

52,219

 

 

69,493

 

 

57,740

 

EBITDA

156,724

 

 

106,474

 

 

87,342

 

 

28,932

 

Loss on early debt extinguishment

 

 

 

 

 

 

1,073

 

Net effect of swaps

10,779

 

 

(906

)

 

17,158

 

 

(4,534

)

Non-cash foreign currency (gain) loss

(9,481

)

 

14,992

 

 

(18,145

)

 

25,090

 

Non-cash equity compensation expense

3,287

 

 

3,180

 

 

5,830

 

 

6,148

 

Loss on impairment / retirement of fixed assets, net

682

 

 

3,372

 

 

2,106

 

 

4,712

 

Gain on sale of investment

 

 

 

 

(617

)

 

 

Acquisition-related costs

946

 

 

 

 

946

 

 

 

Other (1)

124

 

 

(76

)

 

283

 

 

93

 

Adjusted EBITDA (2)

$

163,061

 

 

$

127,036

 

 

$

94,903

 

 

$

61,514

 

 (1)  

Consists of certain costs as defined in the Company's Amended 2017 Credit Agreement and prior credit agreements.  These items are excluded from the calculation of Adjusted EBITDA and have included certain legal expenses and severance expenses.  This balance also includes unrealized gains and losses on short-term investments.

   

       

(2)  

Adjusted EBITDA represents earnings before interest, taxes, depreciation, amortization, other non-cash items, and adjustments as defined in the Amended 2017 Credit Agreement and prior credit agreements.  The Company believes Adjusted EBITDA is a meaningful measure as it is widely used by analysts, investors and comparable companies in our industry to evaluate our operating performance on a consistent basis, as well as more easily compare our results with those of other companies in our industry.  Further, management believes Adjusted EBITDA is a meaningful measure of park-level operating profitability and we use it for measuring returns on capital investments, evaluating potential acquisitions, determining awards under incentive compensation plans, and calculating compliance with certain loan covenants.  Adjusted EBITDA is provided as a supplemental measure of our operating results and is not intended to be a substitute for operating income, net income or cash flows from operating activities as defined under generally accepted accounting principles.  In addition, Adjusted EBITDA may not be comparable to similarly titled measures of other companies.

 

Michael Russell
419.627.2233

Source: Cedar Fair Entertainment Company

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