Cedar Fair (FUN +0.00%) excels at turning rollercoaster-fueled fun into cash for its investors. It was more of the same in the third quarter, and with its business already off to a strong start in the fourth quarter, the amusement park master limited partnership decided to reward its unitholders with a larger cash payout.
Cedar Fair results: The raw numbers
|
Metric |
Q3 2017 |
Q3 2016 |
Year-Over-Year Change |
|---|---|---|---|
|
Net revenue |
$652.689 million |
$650.283 million |
0.4% |
|
Adjusted EBITDA |
$333.642 million |
$336.015 million |
(0.7%) |
|
Net income per unit |
$3.38 |
$3.10 |
9% |
Data source: Cedar Fair Q3 2017 earnings press release.
What happened with Cedar Fair this quarter?
Net revenue inched up 0.4% year over year to $653 million, mostly due to a 2% increase in average in-park guest spending that was partially offset by a less than 1% decrease in attendance and lower out-of-park revenue. Excluding the impact of a water park that was closed in September 2016, attendance on a same-park basis increased 1%.
Still, with operating costs and expenses rising 3% to $327 million -- primarily due to higher labor costs brought about by increases in minimum wage rates -- operating income fell 4% to $95 million.
Meanwhile, net income, which benefited from a $29 million gain from foreign currency translation, rose 9% to $191 million, or $3.38 per limited partner unit.
Cedar Fair also reports an adjusted EBITDA metric, which it believes serves as a meaningful measure of park-level operating results. It excludes the impact of debt extinguishment, interest rate swaps, foreign exchange, stock-based compensation, and certain other charges. All told, adjusted EBITDA declined less than 1% to $334 million.
Distribution increase
Image source: Getty Images.
Cedar Fair announced a quarterly cash distribution of $0.89 per unit, to be paid on Dec. 15 to unitholders of record as of Dec. 4.
"In recognition of our current-year performance, positive outlook and strong balance sheet, our Board has declared a 4% increase in our fourth-quarter distribution," CEO Matt Ouimet said in a press release. "This reflects our confidence that cash flow will be more than sufficient to maintain and grow the distribution amount going forward while also allowing us to strategically invest in our business to support long-term growth."
Looking forward
Early fourth-quarter results appear promising, with same-park net revenues up 7% since the end of the third quarter, fueled by a 5% rise in attendance and a 4% increase in average in-park guest per capita spending. Based on these results and its expectations for the remainder of 2017, Cedar Fair reconfirmed its full-year adjusted EBITDA forecast of $480 million to $490 million.
Going forward, Cedar Fair plans to spend approximately 10% of its annual revenue on new rides, attractions, and park infrastructure.
"Over the long term, and when financially warranted, we also plan to invest incremental capital dollars in the development of land adjacent to our parks," said incoming CEO Richard Zimmerman. "The primary focus will be to drive additional park admissions and wholly incremental revenue streams through activities that leverage our installed asset base."
These investments should allow Cedar Fair to continue to reward its investors with a rising cash payout.
"We remain committed to steadily increasing our distribution to unitholders on an annual basis consistent with our expected 4% annual growth rate in adjusted EBITDA," added Zimmerman. "We are very excited to be a leader in an industry with the potential to grow and will continue to do everything necessary to be an attractive total return investment for our unitholders for many years to come."
