Cedar Fair Entertainment Company (NYSE: FUN), a leader in
regional amusement parks, water parks and immersive entertainment,
today announced its financial results for the quarter ended June
25, 2023. In addition, the Company announced the declaration of a
cash distribution of $0.30 per limited partner (LP) unit payable on
September 20, 2023, to unitholders of record as of September 6,
2023, consistent with Cedar Fair’s current annualized distribution
rate of $1.20 per LP unit.
Second Quarter 2023
Highlights
- Net revenues totaled $501 million, a decrease of $9 million, or
2%, from the second quarter of 2022.
- Net income was $54 million, an increase of $3 million, or 5%,
from the second quarter of 2022. Net income per diluted LP unit
increased to $1.04, up 17%, or $0.15, from the second quarter of
2022.
- Adjusted EBITDA(1) totaled $151 million, a decrease of $19
million, or 11%, from the second quarter of 2022.
- Attendance totaled 7.4 million guests, a decrease of 6%, or 0.4
million guests, from the second quarter of 2022.
- In-park per capita spending(2) was $61.46, a 3% increase from
the second quarter of 2022, driven by higher levels of guest
spending on admissions and food and beverage.
- Out-of-park revenues(2) totaled $62 million, representing a $3
million, or 5%, increase from the second quarter of 2022.
July 2023 Highlights
- For the five-week period ended July 30, 2023, preliminary net
revenues totaled $414 million, down 2% compared with the same
five-week period in 2022.
- Attendance for the month of July totaled 5.9 million guests, a
decrease of 4%, or 219,000 guests, from July of 2022.
- In-park per capita spending(2) for the month of July was
$63.82, a 2% increase from July of 2022.
- Out-of-park revenues(2) for the five-week period totaled $48
million, consistent with the comparable period in 2022.
CEO Commentary
"The investments we have made in our parks for the 2023 season,
as well as those made over the past several years, have improved
the guest experience, helped us achieve record guest satisfaction
ratings, driven increased guest spending, and positioned Cedar Fair
to continue delivering strong economic returns for investors,”
commented Richard Zimmerman, Cedar Fair’s president and CEO.
“Unfortunately, anomalous weather patterns – including
unprecedented rainfall in California and wildfires in Canada – have
significantly disrupted year-to-date attendance, as well as sales
of 2023 season passes, creating a headwind on demand. To better
adapt to changing market dynamics, we have expanded our research
efforts to further isolate the impact of macro factors on specific
markets.”
Zimmerman added, “Macro-related headwinds have disrupted demand
and season pass sales at our California parks, contributing to a
17% decline in combined attendance at those parks during the
quarter. Meanwhile, combined attendance at our six parks located in
the Midwest, which have been least affected by weather, was up 7%
during the quarter, which includes two of our largest parks, Cedar
Point and Kings Island, both located in Ohio. We have also
continued to drive improvements in other key areas of performance,
including guest spending levels and booking trends within our
resort and group channels. In-park per capita spending was up 3%
over the second quarter of 2022, led once again by increased guest
spending on food and beverage, reflecting growth in both
transaction counts per guest and average transaction value. The
solid performance at our parks operating under normal conditions,
and notable improvements in several key financial performance
metrics, underscore the resilience of our business model and the
benefit of our strategic initiatives over the last two years.”
“Several initiatives are underway to spur demand and maximize
profits over the balance of the year,” added Zimmerman. “We have
increased our marketing outreach activities at our largest parks
and are testing limited-duration pricing for single-day tickets,
with the goal of driving incremental demand and creating urgency to
visit our parks over the balance of our summer operating calendar
and into the important fall season. Our operating trends in July
demonstrate that our marketing initiatives led to an initial lift
in attendance, aided by a return of more normal operating
conditions at several parks previously impacted by extreme weather.
The early success of these initiatives, combined with anticipated
demand for our popular Halloween and WinterFest events, the
continued strength of our group and resort bookings, and the
catch-up impact we expect to see as our 2024 season pass sales
kickoff in early August, give us confidence in a more robust
outlook over the balance of the year.”
Zimmerman concluded, “In addition to strategic marketing
initiatives, we are laser-focused on reducing fixed operating costs
and expenses and implementing other measures to reduce variable
operating costs per operating day. We believe these cost saving
initiatives, combined with a return to pre-pandemic attendance
levels of 27 million to 28 million guests while maintaining current
guest spending levels, would boost annual margin performance back
to our most recent pre-pandemic levels and maximize annual cash
flow.”
Results for Second Quarter
2023
During the 2023 second quarter, the Company’s parks had 736
total operating days compared with 708 total operating days in the
2022 second quarter.
For the second quarter ended June 25, 2023, net revenues totaled
$501 million on attendance of 7.4 million guests, compared with net
revenues of $509 million on attendance of 7.8 million guests for
the quarter ended June 26, 2022. The decrease in net revenues
reflected the impact of a 6%, or 0.4 million-visit, decrease in
attendance, offset in part by a 3% increase in in-park per capita
spending to $61.46 and a 5%, or $3 million, increase in out-of-park
revenues. While operating days in the second quarter increased, the
incremental attendance on those additional days was not enough to
offset the attendance shortfall caused by a combination of factors,
including a 9% decrease in season pass units sold for the 2023
season, largely at the Company’s California parks; extreme weather
conditions affecting several key amusement parks and the Company’s
four stand-alone water parks; and air quality issues caused by
smoke from wildfires in Canada.
The increase in in-park per capita spending in the second
quarter was primarily attributable to higher levels of guest
spending on food and beverage and admissions. The increase in food
and beverage spending was driven by increases in both the average
number of transactions per guest and the average transaction value.
The increase in admissions spending was driven by an increase in
revenue recognized per season pass visit, reflecting higher pricing
on season passes, as well as the impact of a lower season pass mix
on attendance. The increase in out-of-park revenues during the
period was attributable to the reopening of Castaway Bay Resort and
Sawmill Creek Resort at Cedar Point following temporary closures
for renovations through most of last year’s second quarter, offset
in part by a decrease in out-of-park revenues at the hotel at
Knott’s Berry Farm due to ongoing renovations.
The Company reported 2023 second quarter operating income of $94
million compared with $112 million in the prior year’s second
quarter. The decline in operating income reflects the 2% decrease
in net revenues and a 1% increase in operating costs and expenses,
when compared with the second quarter of 2022. The increase in
operating costs and expenses reflects the impact of 28 incremental
operating days during the period and was driven by a $4 million
increase in operating expenses and a $1 million increase in
SG&A expenses, offset in part by a $0.5 million decrease in
cost of goods sold. The higher operating costs and expenses were
primarily due to anticipated increases in land lease and property
tax expenses related to the sale-leaseback of land at California’s
Great America. The increase in SG&A expenses was attributable
to higher advertising and technology-related expenses, offset in
part by a decline in the anticipated payout of outstanding
equity-based compensation plans. Despite total operating costs and
expenses increasing as compared to last year’s second quarter, on a
per operating day basis, operating costs and expenses were down 2%,
driven by a reduction in variable operating costs, including a 3%
decrease in total seasonal labor hours, or a 6% decrease in
seasonal labor hours per operating day.
Depreciation and amortization expense for the second quarter
decreased $1 million from the comparable period in 2022, reflecting
the full depreciation of certain assets that more than offset
additional depreciation recorded due to the reduction of the
estimated useful lives of long-lived assets at California’s Great
America following the sale-leaseback of the land at the park. A
loss on impairment/retirement of fixed assets of approximately $7
million was recorded in the second quarter of 2023 compared with a
$1 million loss in the prior-year period, the result of the
retirement of a specific asset.
Interest expense for the second quarter decreased $3 million
compared to the second quarter of 2022 as a result of the repayment
of the Company’s senior secured term loan facility and related
termination of its interest rate swap agreements during the third
quarter of 2022. The reduction in interest expense was partially
offset by interest on higher borrowings from the Company’s
revolving credit facility in the second quarter of 2023. Prior to
the termination of the Company’s interest rate swaps, the change in
fair value of the swap portfolio resulted in an $8 million benefit
to earnings for the three months ended June 26, 2022. During the
second quarter of 2023, the Company recognized an $11 million net
benefit to earnings for foreign currency gains and losses related
to the remeasurement of U.S. dollar denominated notes to the
Canadian entity’s functional currency, compared with a $10 million
net charge to earnings in the comparable period in 2022.
For the quarter ended June 25, 2023, a provision for taxes of
$14 million was recorded to account for publicly traded partnership
taxes and federal, state, local and foreign income taxes, compared
to a provision for taxes of $19 million in the second quarter of
2022. The difference in provision for taxes in the second quarter
was primarily attributable to lower pretax income from the
Company’s taxable subsidiaries versus the comparable period in
2022.
Accounting for the items above, net income for the second
quarter totaled $54 million, or $1.04 per diluted LP unit, which
compares with net income of $51 million, or $0.89 per diluted LP
unit, for the comparable period last year.
For the second quarter, Adjusted EBITDA, which management
believes is a meaningful measure of the Company’s park-level
operating results, totaled $151 million compared with $171 million
for the second quarter of 2022. The decrease in Adjusted EBITDA was
due primarily to the attendance-driven decline in revenue combined
with anticipated higher operating costs in the quarter associated
with the expanded operating calendar, a larger advertising program,
and the incremental land lease and property taxes associated with
the sale-leaseback at California’s Great America. See the attached
table for a reconciliation of net income to Adjusted EBITDA.
Preliminary Results for Five Weeks
Ended July 30, 2023
Based on preliminary results, net revenues for the five-week
period ended July 30, 2023, were approximately $414 million, which
was down 2% compared with net revenues for the same five-week
period last year. The July revenues reflect a 2% increase in
in-park guest per capita spending, flat out-of-park revenues, and a
4%, or 219,000-visit, decrease in attendance. In total, the Company
entertained 5.9 million guests over the five-week period. Operating
days for the comparable five-week periods in 2023 and 2022 totaled
525 days and 524 days, respectively.
Balance Sheet and Liquidity
Highlights
As of June 25, 2023, the Company’s deferred revenue balance,
including non-current deferred revenue, totaled $283 million. This
compares to $307 million of deferred revenue at the end of the
second quarter last year, which included approximately $9 million
of COVID-related product extensions at Canada’s Wonderland into
2022. The decline in the deferred revenue balance was largely due
to fewer season passes sold for the 2023 season compared to the
2022 program and, to a lesser extent, a change in timing of
sponsorship revenue billed. As of June 25, 2023, the Company had
sold a total of 2.7 million passes, down 9% from the same time last
year. The decline in season pass units sold was offset in part by
the revenue benefit of a 6% increase in the average season pass
price.
On June 25, 2023, the Company had cash on hand of $49 million
and $123 million available under its revolving credit facility, for
total liquidity of $172 million. This compares to $319 million of
total liquidity on June 26, 2022. Net debt(3) as of June 25, 2023,
was $2.41 billion, calculated as total debt before debt issuance
costs of $2.46 billion less cash and cash equivalents of $49
million.
Distribution and Unit
Repurchases
On May 4, 2023, Cedar Fair announced its Board of Directors had
authorized additional unit repurchases, permitting the Company to
buy back units in the open market, or through privately negotiated
transactions, up to $250 million. This authorization followed the
exhaustion of the previous $250 million unit repurchase program
under which the Company bought back six million limited partnership
units, or approximately 10% of total units that were outstanding at
the beginning of 2022.
From May 4, 2023 through July 31, 2023, the Company repurchased
approximately 280,000 limited partnership units under the current
repurchase program at a total cost of approximately $11
million.
Under the new unit repurchase program, the Company plans to buy
units of Cedar Fair opportunistically using free cash flow from
operations and does not intend to increase leverage to buy back
units. Repurchases may be made from time to time in accordance with
all applicable securities and other laws and regulations. The
extent and timing to which the Company repurchases units will
depend upon a variety of factors, including liquidity, capital
needs of the business, market conditions, regulatory requirements,
and other business considerations. No limit is placed on the
duration of the new program, and the program does not obligate the
Company to repurchase a minimum dollar amount or number of
units.
Also today, the Company announced the Cedar Fair Board of
Directors approved a quarterly cash distribution of $0.30 per LP
unit, to be paid on Sept. 20, 2023, to unitholders of record on
Sept. 6, 2023.
Conference Call
As previously announced, the Company will host a conference call
with analysts starting at 10 a.m. ET today, Aug. 3, 2023, to
further discuss its recent financial performance. Participants on
the call will include Cedar Fair President and CEO Richard
Zimmerman, Executive Vice President and CFO Brian Witherow and
Corporate Director of Investor Relations Michael Russell.
Investors and all other interested parties can access a live,
listen-only audio webcast of the call on the Cedar Fair Investors
website at https://ir.cedarfair.com under the tabs Investor
Information / Events & Presentations / Upcoming Events. Those
unable to listen to the live webcast can access a recorded version
of the call on the Cedar Fair Investors website at
https://ir.cedarfair.com under Investor Information / Events and
Presentations / Past Events, shortly after the live call’s
conclusion.
A replay of the call is also available by phone starting at
approximately 1 p.m. ET on Thursday Aug. 3, 2023, until 11:59 p.m.
ET, Thursday Aug. 10, 2023. To access the phone replay, please dial
(800) 770-2030 or (647) 362-9199, followed by the Conference ID:
3720518.
(1)
Adjusted EBITDA is not a measurement
computed in accordance with generally accepted accounting
principles (GAAP). For additional information regarding Adjusted
EBITDA, including how the Company defines and uses Adjusted EBITDA,
see the attached reconciliation table and related footnotes.
(2)
In-park per capita spending and
out-of-park revenues are non-GAAP financial measures. See the
attached reconciliation table and related footnote for the
calculation of in-park per capita spending and out-of-park
revenues. These metrics are used by management as major factors in
significant operational decisions as they are primary drivers of
our financial and operational performance, measuring demand,
pricing, and consumer behavior.
(3)
Net debt is a non-GAAP financial measure.
See the attached reconciliation table and related footnote for the
calculation of net debt. Management uses net debt to monitor
leverage and believes it is a meaningful measure for this
purpose.
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 13 properties,
consisting of 11 amusement parks, four separately gated outdoor
water parks, 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.
Qualified Notice
This release is intended to be a qualified notice under Treasury
Regulation Section 1.1446-4(b). Brokers and nominees should treat
one hundred percent (100.0 percent) of Cedar Fair, L.P.’s
distributions to non-U.S. investors as being attributable to income
that is effectively connected with a United States trade or
business. Accordingly, Cedar Fair’s distributions to non-U.S.
investors are subject to federal income tax withholding at the
highest applicable effective tax rate.
Forward-Looking
Statements
Some of the statements contained in this news release that are
not historical in nature constitute “forward-looking statements”
within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934, including
statements as to the Company's expectations, beliefs, goals, and
strategies regarding the future. These forward-looking statements
may involve risks and uncertainties that are difficult to predict,
may be beyond our control and could cause actual results to differ
materially from those described in such statements. Although the
Company believes that the expectations reflected in such
forward-looking statements are reasonable, it can give no assurance
that such expectations will prove to be correct or that the
Company's growth strategies will achieve the target results.
Important factors, including general economic conditions, the
impacts of public health concerns, adverse weather conditions,
competition for consumer leisure time and spending, unanticipated
construction delays, changes in the Company’s capital investment
plans and projects and other factors discussed from time to time by
the Company in its reports filed with the Securities and Exchange
Commission (the “SEC”) could affect attendance at the Company’s
parks and the Company's growth strategies, and cause actual results
to differ materially from the Company's expectations or otherwise
to fluctuate or decrease. Additional information on risk factors
that may affect the business and financial results of the Company
can be found in the Company's Annual Report on Form 10-K and in the
filings of the Company made from time to time with the SEC. The
Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether a result of new information,
future events, information, circumstances or otherwise that arise
after the publication of this document.
This news release and prior releases are
available under the News tab at http://ir.cedarfair.com
(financial tables follow)
CEDAR FAIR, L.P.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands)
Three months ended
Six months ended
June 25, 2023
June 26, 2022
June 25, 2023
June 26, 2022
Net revenues:
Admissions
$
242,549
$
253,494
$
282,078
$
302,930
Food, merchandise and games
179,664
177,153
211,728
213,868
Accommodations, extra-charge products and
other
78,769
78,844
91,730
91,528
500,982
509,491
585,536
608,326
Costs and expenses:
Cost of food, merchandise, and games
revenues
48,632
49,162
59,013
59,986
Operating expenses
236,410
232,421
369,750
352,271
Selling, general and administrative
67,048
65,601
113,513
106,387
Depreciation and amortization
48,094
49,037
61,775
58,636
Loss on impairment / retirement of fixed
assets, net
7,125
1,199
10,761
2,747
407,309
397,420
614,812
580,027
Operating income (loss)
93,673
112,071
(29,276
)
28,299
Interest expense
37,366
40,214
69,495
78,337
Net effect of swaps
—
(7,739
)
—
(21,941
)
(Gain) loss on foreign currency
(10,683
)
9,845
(6,684
)
9,860
Other income
(237
)
(394
)
(678
)
(443
)
Income (loss) before taxes
67,227
70,145
(91,409
)
(37,514
)
Provision (benefit) for taxes
13,663
19,373
(10,427
)
223
Net income (loss)
53,564
50,772
(80,982
)
(37,737
)
Net income (loss) allocated to general
partner
—
1
(1
)
—
Net income (loss) allocated to limited
partners
$
53,564
$
50,771
$
(80,981
)
$
(37,737
)
CEDAR FAIR, L.P.
UNAUDITED BALANCE SHEET
DATA
(In thousands)
June 25, 2023
June 26, 2022
Cash and cash equivalents
$
49,179
$
124,929
Total assets
$
2,316,418
$
2,416,997
Long-term debt, including current
maturities:
Revolving credit loans
$
157,000
$
90,000
Term debt
—
190,920
Notes
2,270,586
2,265,114
$
2,427,586
$
2,546,034
Total partners' deficit
$
(762,658
)
$
(725,782
)
CEDAR FAIR, L.P.
RECONCILIATION OF ADJUSTED
EBITDA
(In thousands)
Three months ended
Six months ended
June 25, 2023
June 26, 2022
June 25, 2023
June 26, 2022
Net income (loss)
$
53,564
$
50,772
$
(80,982
)
$
(37,737
)
Interest expense
37,366
40,214
69,495
78,337
Interest income
(178
)
(509
)
(692
)
(551
)
Provision (benefit) for taxes
13,663
19,373
(10,427
)
223
Depreciation and amortization
48,094
49,037
61,775
58,636
EBITDA
152,509
158,887
39,169
98,908
Net effect of swaps
—
(7,739
)
—
(21,941
)
Non-cash foreign currency (gain) loss
(10,837
)
9,834
(7,134
)
9,848
Non-cash equity compensation expense
2,567
8,225
7,620
11,883
Loss on impairment / retirement of fixed
assets, net
7,125
1,199
10,761
2,747
Other (1)
15
147
(101
)
692
Adjusted EBITDA (2)
$
151,379
$
170,553
$
50,315
$
102,137
(1)
Consists of certain costs as defined in
the Company's current and prior credit agreements. These items are
excluded from the calculation of Adjusted EBITDA and have included
certain legal expenses and severance and related benefits. 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 Company's current 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 the industry to evaluate operating
performance on a consistent basis, as well as more easily compare
the Company's results with those of other companies in the
industry. Further, management believes Adjusted EBITDA is a
meaningful measure of park-level operating profitability and uses
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.
CEDAR FAIR, L.P.
CALCULATION OF NET
DEBT
(In thousands)
June 25, 2023
Long-term debt, including current
maturities
$
2,427,586
Plus: Debt issuance costs and original
issue discount
29,414
Less: Cash and cash equivalents
(49,179
)
Net Debt (1)
$
2,407,821
(1)
Net Debt is a non-GAAP financial measure
used by the Company and investors to monitor leverage. The measure
may not be comparable to similarly titled measures of other
companies.
CEDAR FAIR, L.P.
KEY OPERATIONAL
MEASURES
(In thousands, except per capita
and operating day amounts)
Three months ended
Six months ended
June 25, 2023
June 26, 2022
June 25, 2023
June 26, 2022
Attendance
7,397
7,846
8,456
9,299
In-park per capita spending (1)
$
61.46
$
59.52
$
61.84
$
59.42
Out-of-park revenues (1)
$
62,483
$
59,622
$
81,708
$
76,114
Operating days
736
708
897
838
(1)
In-park per capita spending is calculated
as revenues generated within our amusement parks and separately
gated outdoor water parks along with related parking revenues
(in-park revenues), divided by total attendance. Out-of-park
revenues are defined as revenues from resort, out-of-park food and
retail locations, online transaction fees charged to customers,
sponsorships and all other out-of-park operations. In-park
revenues, in-park per capita spending and out-of-park revenues are
non-GAAP measures. These metrics are used by management as major
factors in significant operational decisions as they are primary
drivers of our financial and operational performance, measuring
demand, pricing, and consumer behavior. A reconciliation of in-park
revenues and out-of-park revenues to net revenues for the periods
presented is as follows:
Three months ended
Six months ended
(In thousands)
June 25, 2023
June 26, 2022
June 25, 2023
June 26, 2022
In-park revenues
$
454,551
$
466,987
$
522,854
$
552,523
Out-of-park revenues
62,483
59,622
81,708
76,114
Concessionaire remittance
(16,052
)
(17,118
)
(19,026
)
(20,311
)
Net revenues
$
500,982
$
509,491
$
585,536
$
608,326
For the five week periods ended July 30,
2023 and July 31, 2022, preliminary concessionaire remittance
totaled approximately $11 million and $12 million,
respectively.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230803815189/en/
Investor Contact: Michael Russell, 419.627.2233 Media
Contact: Gary Rhodes, 704.249.6119
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