Services Sector News

Active Stock to Observe: Cedar Fair, L.P. (NYSE: FUN)

On Thursday, Cedar Fair, L.P. (NYSE: FUN) has shown upward/downward move of -1.33% and ended the last trade at $54.70. The trading volume was recorded to 180,761 shares as compared to average traded volume of 260,146 shares.

Cedar Fair Entertainment Company (FUN) recently reported results for the second quarter ended June 24, 2018, together with revenue trends for the month of July and the declaration of a quarterly cash distribution for unit holders.

Six-Month Results

Net revenues were $435M for the six months ended June 24, 2018, a decrease of $6M, or 1%, contrast with the six-month period ended June 25, 2017.  The decrease was attributable to a 2%, or 211,000-visit, decrease in attendance to 8.7M guests.  This was partially offset by a 1%, or $0.27, raise in average in-park per capita spending to $45.42, and a 2%, or $1M, raise in out-of-park revenues to $56M when contrast with the prior-year period.

Short-term factors, such as inclement weather in the Mid-Atlantic region and a delayed ride opening at California’s Great America, combined with a decrease in the number of season passes sold at Kings Island, negatively influenced early-season attendance at the Company’s seasonal amusement parks.  This was somewhat offset by raised attendance at Knott’s Berry Farm, the Company’s only year-round park.  The raise in average in-park per capita spending through the first half of the year was driven by raised spending on food and beverage, merchandise and extra charge attractions.  These raises were partially offset by a small decrease in admissions revenue per capita attributable to a higher season pass mix, the introduction of a free pre-K season pass at three more parks in 2018 and the recognition of season pass revenue over a longer period of time at a fifth park that will be hosting a new WinterFest celebration in November and December this year.

The raise in out-of-park revenues is the result of higher occupancy rates and average daily room rates at the Company’s resort hotels, including the new 158-room tower at Cedar Point’s historic beachfront Hotel Breakers.

The operating loss for the six-month period was $7M contrast with operating income of $19M for the six-month period in 2017.  The decline in operating income is the result of the 1% decrease in net revenues noted above, combined with a 4%, or $16M, raise in operating costs and expenses, which totaled $380M for the first half of 2018.  The raise in operating costs and expenses was in-line with the Company’s expectations and reflects higher labor costs Because of market/minimum-wage rate raises, higher operating and maintenance supplies, and additional expenses as the Company continues to invest in technology and the overall guest experience.  Depreciation and amortization was up $2MBecause of growth in capital improvements over the past several years.  Loss on impairment/retirement of fixed assets was up $3M, reflecting the retirement of assets in the normal course of business at several of the Company’s properties.

Interest expense for the first six months of 2018 was comparable to the same period in the previousyear.  We recognized a $1M loss on early debt extinguishment during the first quarter of 2018 in connection with amending our 2017 Credit Contract, as contrast to a $23M loss on early debt extinguishment related to our refinancing in the first half of 2017.  The net effect of our swaps resulted in a benefit to earnings of $5M for the first six months of 2018 contrast with a $5M charge to earnings for the comparable period in 2017.  The difference reflects the change in fair market value movements in our swap portfolio offset by the amortization of amounts in OCI for our de-designated swaps.  During the current period, we also recognized a $25M net charge to earnings for foreign currency gains and losses contrast with a $6M net benefit to earnings for the comparable period in 2017.  Both amounts primarily represent re-measurement of the U.S.-dollar denominated debt held at our Canadian property from the applicable currency to the legal entity’s functional currency.

A benefit for taxes of $5M was recorded during the first half of 2018 to account for the tax attributes of the Company’s corporate subsidiaries and publicly traded joint venture taxes, contrast with a benefit of $10M in the same period a year ago.

The net loss through June 24, 2018, totaled $64M, or $1.14 per diluted LP unit.  This compares with a net loss of $33M, or $0.60 per diluted LP unit, for the same period a year ago.  The raise in net loss is primarily a result of the 1% decrease in net revenues, combined with planned raises in operating costs and expenses.

Adjusted EBITDA, which management believes is a meaningful measure of the Company’s park-level operating results, for the six months ended June 24, 2018, was $62M, down $23M when contrast with the six months ended June 25, 2017.  This is the result of the attendance shortfall through the first six months of 2018, combined with planned raises in operating costs and expenses.  See the attached table for a reconciliation of net income to Adjusted EBITDA.

July Operations

Based on preliminary July results, net revenues through the seven-month period ended July 29, 2018, were about $752M, down $15M, or 2%, when contrast with the similar period last year.  The decrease in revenues is attributable to a 3%, or 480,000-visit, decrease in attendance to 14.6M guests.  This was somewhat offset by a 1% raise in average in-park guest per capita spending and a 4%, or $3M, raise in out-of-park revenues contrast with the similar period last year.

The company has PEG ratio of 4.01 and price to cash ratio of 51.13. The stock price switched up 2.08% 20-Days Simple Moving Average, added 2.68% from 50-Days Simple Moving Average and fell -11.24% from 200 Days Simple Moving Average.


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