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Cedar Fair Entertainment Company (NYSE: FUN), today reported record results for its fourth quarter and year ended December 31, 2011 and announced the declaration of its first quarter distribution.
Highlights
- The Company reported record full-year net revenues of $1.028 billion, up 5.2% from 2010, reflecting strong growth across its parks; net income of $1.29 per diluted limited partner unit, up $1.86 from a year ago.
- Adjusted EBITDA for the full year was a record $375 million, up 4.3% from last year.
-Attendance at Cedar Fair's parks was a record 23.4 million guests, a 592,000-visit, or 2.6% increase from 2010.
Commenting on the Company's year-end results for 2011, Matt Ouimet, Cedar Fair's president and chief executive officer said, "Cedar Fair had another strong year in 2011 with solid increases in both attendance and average in-park guest per capita spending across the majority of our parks. The strength of our capital investments and the strategic marketing of our season pass programs resulted in record revenues and Adjusted EBITDA for the second year in a row, led by improved performance at Canada's Wonderland, California's Great America, Knott's Berry Farm and Kings Island ".
"WindSeeker and Dinosaurs Alive! were great additions to several of our parks in 2011 and we believe they will be popular with our guests at additional parks in 2012," continued Ouimet. "Our season pass programs were also an important piece to our improved results and will continue to be a focus for us going forward. As we mentioned in January during our FUNforward presentation with investors, dynamic pricing and advance purchase commitments are two of the key growth drivers in our business. Over the last month we have introduced a new e-commerce platform, which allows for season pass installment sales and intelligent up-sell opportunities to both benefit-oriented and value-oriented guests. While it is too early to determine the success of this new platform, initial response has been positive."
"Looking at our balance sheet, we are very satisfied with our liquidity and cash flow performance," added Ouimet. "We reduced our leverage in 2011 and anticipate additional measured debt reduction in the future. At the end of the year, our Consolidated Leverage Ratio was 4.2 times, which is down from 4.9 times as recently as two years ago, and we had no outstanding borrowings under our revolving credit facility .
"We believe Cedar Fair is a total-return investment, and we will continue to maintain a balanced approach to the deployment of our excess cash -- creating value for unitholders in both the short- and long-term through debt reduction, capital investment and distributions."
"Finally, with the strength of our 2011 results and our positive outlook for 2012, our board of directors has declared a 40-cent quarterly cash distribution payable on March 15, 2012. This represents an annualized distribution rate of $1.60 per limited partner unit and will be the 26th consecutive year Cedar Fair has paid a distribution to its unitholders," said Ouimet.
Full-Year 2011 Results
Cedar Fair's operations for the full-year 2011 generated record net revenues of $1.028 billion and net income of $72.2 million, or $1.29 per diluted LP unit. In 2010 the Company achieved net revenues of $977.6 million and reported a net loss of $31.6 million, or $0.57 per diluted LP unit.
The $50.9 million, or 5.2% increase in net revenues for 2011 is due to:
- a 2.6%, or 592,000-visit, increase in attendance;
- a 2.1%, or $0.82, increase in average in-park guest per capita spending to $40.03;
- an 8.1%, or $8.8 million, increase in out-of-park revenues to $117.6 million.
For the full-year 2011, operating costs and expenses increased $31.3 million, or 5.0%, to $663.3 million from $632.0 million in 2010, as a result of:
- a $5.4 million increase in cost of food, merchandise and games;
- a $19.4 million increase in operating expenses; and
- a $6.4 million increase in selling, general and administrative costs.
The year-over-year increase in costs, which were largely anticipated, is the result of the increase in attendance and higher wage costs, as well as several one-time items. The increase in wage costs, reported through the operating expense line item, is the result of increased seasonal labor hours related to the expanded park operating hours at several parks, additional attractions and guest services, and the overall effect of increased attendance. The increase in selling, general and administrative costs principally reflects the impact of legal and professional costs incurred during 2011, including litigation expenses and costs for SEC compliance matters related to Special Meeting requests, as well as contractual obligations associated with the relocation of a future ride and the transition to a new advertising agency. Excluding these non-recurring items, cash operating costs per attendee are up approximately 1% between years.
Adjusted EBITDA which management believes is a meaningful measure of the Company's park-level operating results, increased $15.4 million, or 4.3 percent, to $374.6 million, compared with $359.2 million last year. The increase in Adjusted EBITDA is primarily attributable to the strong revenue and attendance trends experienced by the parks in 2011. See the attached table for a reconciliation of net income to Adjusted EBITDA.
Cash Flow and Liquidity Remain Strong
As of December 31, 2011, the Company had $1.16 billion of variable-rate debt (before giving consideration to fixed-rate interest rate swaps), $400.3 million of fixed-rate debt, no outstanding borrowings under its revolving credit facilities and cash on hand of $35.5 million. The Company's credit facilities and cash flow from operations are expected to be sufficient to meet working capital needs, debt service, planned capital expenditures and distributions for the foreseeable future.
Brian Witherow, executive vice president and chief financial officer, said, "We are pleased with where we ended 2011 in terms of liquidity and cash flow. We continue to generate a significant amount of free cash flow and our capital structure provides us with substantial operating flexibility. Given our continued improvement with our Consolidated Leverage Ratio, which was 4.2 times at the end of 2011, we are well positioned for 2012 and beyond. We will continue to prudently manage our cash flows to maximize value for our unitholders. "
Distribution Declaration
The Company also announced today the declaration of a cash distribution of $0.40 per LP unit. The distribution will be paid on March 15, 2012, to unitholders of record as of March 5, 2012.
Outlook
For the 2012 season, the Company will be investing approximately $90 million in capital improvements across its properties, highlighted by Leviathan, a 306-foot-tall roller coaster at Canada's Wonderland near Toronto.
"We are focused on providing the best and highest value in family entertainment in all of our markets," said Ouimet. "Our 2012 capital menu includes a balanced mix of new family attractions and thrill rides, which we are confident will be well-received by our guests. We will also have a few surprises in store for our guests throughout the operating season and hope that each one of them feels they had the 'best-day-of-the-year' with their families and friends when they leave our parks."
According to Ouimet, the Company anticipates a 4% annual growth rate for Adjusted EBITDA over the next five years. "We will achieve this growth through our six strategic growth drivers: 1) enhanced guest experience; 2) improved customer messaging; 3) dynamic pricing and advance purchase commitments; 4) premium product offerings; 5) strategic alliance fees and promotional leverage; and 6) capital and expense productivity," said Ouimet. "Many of these initiatives are in place or will be ready when our parks begin opening for the 2012 operating season. We are optimistic about the future and expect positive trends to continue into 2012 and beyond."
Cedar Fair is a publicly traded partnership headquartered in Sandusky, Ohio, and one of the largest regional amusement-resort operators in the world. The Company owns and operates 11 amusement parks, six outdoor water parks, one indoor water park and five hotels. Its parks are located in Ohio, California, North Carolina, South Carolina, Virginia, Pennsylvania, Minnesota, Missouri, Michigan, and Toronto, Ontario. Cedar Fair also operates the Gilroy Gardens Family Theme Park in California under a management contract.
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NewsParcs will do a full coverage of the IAAPA Attractions Expo 2013 in Orlando to have a look at the latest trends and developments of the global theme park industry.
