All five of the country's leading theme-park and regional amusement-park operators now have posted their financial updates for this earnings season, and investors can finally exhale. The three-month period ending in June could've been brutal for Six Flags (SIX +0.00%), Cedar Fair (FUN +0.00%), SeaWorld Entertainment (SEAS +0.61%), Disney (DIS 0.81%) and Universal Studios' parent Comcast (CMCSA +0.49%), as tailwinds in the first quarter became headwinds this time around. It didn't play out that way.
The performances weren't perfect, but only one of the five operators chimed in with a year-over-year decline in revenue. Comparisons were going to be rough, as all five chains posted double-digit percentage growth during the first calendar quarter of this year, growing their top lines by at least 13% to as much as nearly 30%. Also, the timing of the Easter holiday found many grade schools shifting their spring breaks from April in 2017 to March in 2018, providing a boost to the first quarter at the expense of the subsequent period. Crummy weather and some delays in new ride openings could've also tripped up the operators this time around, but that generally wasn't the case.
Image source: Six Flags.
Tailgating for the summer
Disney became the fifth and final operator to post results after Tuesday's market close. The theme-park giant's parks and resorts' revenue and segment operating income rose 6% and 15%, respectively. An increase in ticket prices and higher in-park spending helped fuel the ascent.
Earlier in the week, we saw SeaWorld Entertainment stock hit its highest level in nearly four years after posting better-than-expected financial results. SeaWorld surprised the market with an increase in both attendance and revenue per capita. SeaWorld would go on to announce some layoffs on Tuesday, but these are seen as mostly fine-tuning its cost structure rather than the chain bracing for a slowdown.
Late last month, Comcast checked in with modest growth. Its Universal theme-parks division came through with a 3.6% uptick in revenue. Adjusted EBITDA kept up with the pace, rising 3.4% in the process.
The regional amusement-park operators had a mixed showing. Six Flags nailed it, as revenue rose 5% on growing attendance, as well as guest spending. Net income grew even faster, though there were one-time factors inflating the 43% surge on the bottom line.
Cedar Fair is the only chain to post a decline in revenue for the period. The company behind Cedar Point, Knott's Berry Farm, and other regional attractions experienced a 3% slide on the top line, as inclement weather and delayed ride openings weighed on attendance. A modest operating loss reversed a small year-ago profit, as higher operating costs in light of minimum-wage rate hikes compounded the problem of softer turnstile clicks.
"Investors will need to be realistic," I concluded after the industry's blowout first quarter. "None of the five operators is likely to repeat the feat of double-digit revenue growth for the current quarter."
Things played out that way, with four of the five players posting mid-single-digit growth and Cedar Fair retreating. However, if we span our view to cover the first six months of the year, we see strong growth across all of the operators as we smooth out the impact of the Easter holiday timing.
Roller coasters remain a good fit in your portfolio, and now we have to see how the telltale summer season shapes up this quarter.
