Cedar Fair (NYSE:FUN) reported fourth-quarter financial results on Feb. 13. New entertainment offerings at its parks and resorts helped to drive solid increases in the master limited partnership's sales and profits, and management issued an ambitious new five-year earnings target. 

Cedar Fair results: The raw numbers

Metric

Q4 2018

Q4 2017

Year-Over-Year Change

Net revenue

$249.784 million

$228.162 million

9%

Adjusted EBITDA

$68.122 million

$61.121 million

11%

Data source: Cedar Fair Q4 2018 earnings press release. EBITDA = earnings before interest, taxes, depreciation, and amortization. 

What happened with Cedar Fair this quarter?

Net revenue rose 9% year over year to $250 million, driven by the strong performance of Cedar Fair's popular Halloween events, as well as the expansion of its winter festivities.

This performance helped drive an 11% rise in EBITDA -- adjusted to exclude the impact of certain items such as debt extinguishment, interest-rate swaps, and foreign exchange -- to $68 million. Cedar Fair believes adjusted EBITDA is a useful measure of its park-level operating performance. 

"We ended the year strongly, achieving new highs in attendance and net revenues for both the fourth quarter and full year," CEO Richard Zimmerman said in a press release. "Guests of all ages continue to delight in our immersive entertainment offerings, including our Halloween Haunt and WinterFest celebrations."

A light show during WinterFest at Cedar Fair's Kings Island amusement park.

WinterFest at Cedar Fair's Kings Island amusement park. Image source: Cedar Fair.

For the full year, Cedar Fair's revenue inched up 2% to $1.35 billion. The increase was driven by a 1% rise in attendance, to a record 25.9 million guests, and a 1% improvement in average in-park guest spending, to $47.69. A 6% rise in out-of-park revenue, to $152 million, also contributed to the gains.

However, full-year operating costs increased by 3% to $892 million, primarily because of higher labor costs. In turn, Cedar Fair's 2018 adjusted EBITDA fell 2% to $468 million.

Looking forward

Cedar Fair is off to a solid start in 2019. Early sales of season passes and other advance purchase commitments are up more than 25% from the same period in 2018.

"As we look to the future, we remain committed to providing a compelling entertainment experience throughout the year for guests of all ages, and we are confident we will entertain a record number of visitors again in 2019," Zimmerman said.

Cedar Fair also announced a new long-term financial goal. The company believes it can achieve adjusted EBITDA of $575 million by 2023, which would represent annualized growth of 4% over the next five years.

To do so, management outlined four key growth drivers, including:

  • Broadening the guest experience through immersive new entertainment offerings.
  • Expanding the season pass program with a focus on affordability, customer retention, and increased visitation.
  • Growing the company's visitor base through targeted, data-driven marketing.
  • Expanding out of park revenue by developing land adjacent to Cedar Fair's parks.

"Our new long-term strategy will drive continued value creation through a balanced approach of investing in our business and returning capital to our unitholders through an attractive and growing distribution," Zimmerman said.