Cedar Fair prepares for merger with Six Flags (2024)

SANDUSKY, OHIO – For Cedar Fair Entertainment Company, the parent of Dorney Park and Wild Water Kingdom, 2023 looked a lot like 2022 but with slightly worse results. Sales were down slightly for the year and the fourth quarter and so were earnings, although earnings would have been positive in the quarter if it weren’t for transaction costs related to the proposed merger with Six Flags that was announced in November.

Wall Street yawned – the stock was up 12 cents at noon.

Cedar Fair CEO, Richard Zimmerman, had a few things to report about the proposed merger. Commenting in a statement, Zimmerman said, “Since announcing the proposed merger transaction in early November, we have been pleased by the strong support we have heard from unitholders and others in the investor community. We look forward to completing our combination with Six Flags and delivering on the compelling value creation opportunities ahead, which we believe are greater than what either company can achieve independently.”

He also stated that Cedar Fair and Six Flags continue to work constructively with the Department of Justice in its review of the merger and continue to expect it will be completed in the first half of 2024.

2023 Full-Year Results

“With the return to more normal operating conditions in the back half of 2023, the strength and resiliency of Cedar Fair’s business model was on full display,” said Zimmerman. “We remained nimble and successfully adapted to an evolving marketplace to offset the effects of anomalous macro-factors, including weather, on demand during the first half of the year.”

He noted that in the second half of the year, in addition to more normalized operating conditions, Cedar Fair made mid-year adjustments to its marketing and pricing strategies that successfully drove increased demand while park teams effectively implemented cost-saving measures to expand operating margins.

Operating days in 2023 totaled 2,365 compared to 2,302 in 2022. Operating income for 2023 totaled $306 million, compared to operating income of $520 million for 2022.

Net revenues totaled $1.80 billion on attendance of 26.7 million guests, compared with net revenues of $1.82 billion on attendance of 26.9 million guests in 2022. The decrease in net revenues reflects the impact of a 1%, or 247,000, decline in attendance and a 1%, or $0.60, decrease in in-park per capita spending, offset in part by a 5%, or $10 million, increase in out-of-park revenues.

The decline in attendance, according to Cedar Fair, was attributable to a year-over-year decrease in season pass sales and lower demand during the first half of the year due to inclement weather. The decrease in in-park per capita spending was attributable to a decrease in admissions spending, reflecting a mid-year reassessment of pricing strategy at several key parks.

The decrease in admission spending was partially offset by higher levels of guest spending on food and beverage, as continued investments in food and beverage offerings led to increases in both the number of transactions per guest and the average transaction value, the company said.

The increase in out-of-park revenues reflects the strong performance of the company’s resort properties, highlighted by full-year operations of Castaway Bay Resort and Sawmill Creek Resort at Cedar Point following temporary closures for renovations during 2022.

Cedar Fair reported operating costs and expenses for 2023 totaled $1.32 billion compared with $1.29 billion for 2022. The approximate $27 million year-over-year increase was primarily attributable to $22 million of transaction costs related to the proposed merger with Six Flags.

Excluding the merger-related costs, operating costs and expenses for the year increased $5 million, or less than 1%, the result of a $14 million increase in Selling, General & Administrative expenses partially offset by a $4 million decrease in cost of goods sold and a $4 million decrease in operating expenses.

According to Cedar Fair, the decrease in operating expenses was primarily due to cost savings initiatives resulting in a reduction in seasonal labor hours and less in-park entertainment costs. These cost-savings were somewhat offset by six incremental months of land lease costs at California's Great America, higher early-season maintenance wage costs at several parks, and increased insurance claims and related costs.

Finally, during 2023, Cedar Fair recognized a $6 million net benefit to earnings for foreign currency gains and losses compared with a $24 million net charge to earnings for 2022. Both amounts primarily represented the remeasurement of U.S.-dollar denominated notes to the functional currency of the Company’s Canadian entity.

Net income for 2023 totaled $125 million, or $2.42 per diluted Limited Partner unit. This compares with net income of $308 million, or $5.45 per diluted LP unit, for 2022.

Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization), which management believes is a meaningful measure of the company’s park-level operating results, totaled $528 million in 2023, compared to adjusted EBITDA of $552 million for 2022. The $24 million decrease in adjusted EBITDA, Cedar Fair claims, was primarily attributable to a decrease in net revenues driven by a decline in attendance caused by extreme weather during the first six months of 2023, and to a lesser extent by higher advertising, land lease and insurance-related costs.

Balance Sheet and Liquidity Highlights

As of Dec. 31, 2023, the company claimed it had cash on hand of $65 million and $280 million available under its revolving credit facility, for total liquidity of $345 million. This compares to $381 million of total liquidity at the end of 2022. Net debt on Dec. 31, 2023, calculated as total debt of $2.3 billion (before debt issuance costs) less cash and cash equivalents of $65 million, was $2.2 billion.

CEO Expectations

“In addition to our outstanding performance over the second half of the year and record fourth quarter results, I’m encouraged by the pace of our long-lead indicators heading into the 2024 season, particularly sales of season passes and related all-season, add-on products,” added Zimmerman. “With unit sales of season passes through January up approximately 20% versus last year, we expect season pass sales to serve as a tailwind for attendance and revenues all season long.”

About Cedar Fair

Cedar Fair Entertainment Company (NYSE: FUN), is one of the largest regional amusem*nt-resort operators in the world. The company owns and operates 13 properties, consisting of 11 amusem*nt parks, four separately gated outdoor water parks, and resort accommodations totaling more than 2,300 rooms and more than 600 luxury RV sites. Cedar Fair’s parks are located in Ohio, California, North Carolina, South Carolina, Virginia, Pennsylvania, Minnesota, Missouri, Michigan, Texas and Toronto, Ontario.