Record Attendance Drives Cedar Fair, L.P. Earnings Higher

Cedar Fair, L.P. (FUN -0.47%) reported full-year results on Feb. 15. The country's third-largest amusement park operator enjoyed record sales and profits as its rides and attractions delighted millions of thrill-seekers.

Cedar Fair results: The raw numbers

Data source: Cedar Fair Q4 2016 earnings press release.

Image source: Cedar Fair.

What happened with Cedar Fair this year?

• Full-year attendance rose 3% year over year to a record 25.1 million visits, while average in-park guest per-capita spending increased 2% to $46.90.

• Out-of-park revenues also hit a new all-time high, rising 6% to $146 million, driven by higher occupancy rates and average daily room rates at Cedar Fair's resort properties.

• Together, that drove a 4% increase in full-year net revenue to $1.29 billion.

• Operating costs and expenses for 2016 totaled $827 million, up 4% from the prior year, due mainly to higher costs to support the increased attendance and higher labor costs brought about by minimum wage rate increases and merit raises.

• EBITDA (earnings before interest, taxes, depreciation, and amortization) -- adjusted to exclude the impact of foreign currency movements, stock-based compensation, asset impairment charges, and certain other items -- increased 5% to a record $481 million, as adjusted EBITDA margin improved by 10 basis points to 37.3%.

What management had to say

In a press release, CEO Matt Ouimet touted Cedar Fair's record operational and financial results:

I am particularly pleased we, once again, achieved solid growth across our three core revenue metrics of attendance, in-park guest per capita spending and out-of-park revenues, including our resort accommodations. We credit this achievement to our unique regional brands and the positive responses we have received for our special events programming and immersive entertainment offerings. These individual park brands allow us to provide our guests an experience unmatched by other generic amusement parks. This in turn has resulted in strong guest loyalty within the regions we operate and decades of record growth across all revenue channels.

This solid value creation should continue to flow through to unit holders, as it appears unlikely that Cedar Fair will need to issue equity -- and therefore dilute the ownership stakes of its unit holders -- anytime soon. The company said it expects its operating cash flow and current credit facilities to be sufficient to meet its working capital needs, debt service, capital expenditures, and distributions for the foreseeable future.

"Our liquidity, cash flow and capital structure remain strong, and we continue to have great financial flexibility heading into 2017, which positions us well to capitalize on our opportunities to drive additional long-term value for our unit holders," said CFO Brian Witherow.

Looking forward

Ouimet noted that Cedar Fair's new rides and attractions for 2017 are scheduled to open "on time and on budget," and that season pass sales are trending "well ahead" of 2016's record levels. This, combined with the company's strong 2016 results, gives management the confidence that Cedar Fair can hit its long-term EBITDA goal sooner than expected.

"The talented teams at all of our parks, the popularity of our innovative attractions and the ongoing success of our marketing programs combined to produce our seventh consecutive year of record results," said Ouimet. "Based on our 2016 performance and our expectations for the coming year, we are on track to achieve our long-term Adjusted EBITDA target of $500 million by the end of 2017, a full year earlier than our original forecast."

Looking even further ahead, Ouimet is optimistic regarding the future of Cedar Fair and its ability to deliver value to customers and investors alike.

"The success of our operations, combined with many long-term initiatives coming on line, gives us great confidence in our ability to continue our record-setting trends for years to come."