Cedar Fair breaks $1B barrier in revenues

Matt Ouimet. Enlarge

Bolstered by record attendance last year that raised per-customer spending and out-of-park revenues, Cedar Fair LP on Tuesday reported record revenues that rose 5.2 percent to $1.028 billion for 2011, along with a profit of $72.2 million.

The company, which owns seven water parks and 11 amusement parks, including Cedar Point in Sandusky, said its $72.2 million profit equated to $1.29 a share. That compared with a loss of $31.6 million, or 57 cents a share, in 2010, when its revenues were $977.6 million, reduced by rising operating costs including $10.3 million spent on a failed acquisition attempt by Apollo Global Management.

Cedar Fair said a strong fourth quarter driven by the company's popular Halloween Haunt events at its various parks aided its 2011 turnaround. Cedar Fair, based in Sandusky, had record fourth-quarter revenues of $144.8 million and a loss of just $546,000, or 1 cent a share.

Typically, the fourth quarter is the weakest for Cedar Fair, with losses usually in the millions. In the same period in 2010, the company had a $63.2 million loss, or $1.14 a share, on revenues of $129.7 million.

"There's no question 2011 was a solid year for the company. We look forward to building on this positive momentum and creating a steadily increasing and sustained value for our unit holders as we move forward," Matt Ouimet, company president and chief executive officer, said Tuesday during a conference call with analysts after Cedar Fair released its earnings.

Cedar Fair's stock closed at $28.81 Tuesday, up 82 cents, on the New York Stock Exchange.

Mr. Ouimet said the company was pleased by 2011 attendance: a record 23.4 million, up 2.6 percent from 2010.

Average per-customer spending in its parks increased 2.1 percent to $40.03, while out-of-park spending at hotels and restaurants increased 8.1 percent and totaled $117.6 million.

The company's season pass and group business sales rose, but front-gate attendance slightly decreased because of Cedar Fair efforts to sell more season passes, Mr. Ouimet said.

Brian Witherow, the company's chief financial officer, said Cedar Fair reduced the cost of its debt by more than 3 percent in 2011, and as a result it expects to increase its free cash flow by $50 million a year.

The company has reduced its debt-to-equity ratio to 4.2, from 4.9 just two years ago, he added.

Reducing its debt allowed Cedar Fair in 2011 to return to paying dividends, which it calls distributions, and the company remains on pace to pay a 2012 dividend of $1.60 a share and a 2013 dividend of $2 or more.

After releasing its earnings, Cedar Fair declared a 40-cent quarterly cash dividend payable March 15 to shareholders of record as of March 5.

During his talk with analysts, Mr. Witherow said no loan restrictions prevent Cedar Fair from paying more than $1.60 this year, but its ability to increase its 2012 dividend beyond $1.60 will be dictated by the company's cash flow and 2012 financial results.

On that score, Mr. Ouimet said that heading into the 2012 season, which begins in May for most of its parks, Cedar Fair is positioned for a good year. "I'm confident in the fundamentals of our business model and the relative growth opportunities," he said.

Over the last few weeks the company has rolled out new ecommerce Web sites for its parks with new season pass and regular ticket pricing options.

While it remains too early to determine the program's potential for success, the initial response has been promising, Mr. Ouimet said.

Additionally, the company's new chief marketing officer, Kelly Semmelroth, has been working on a parks-wide marketing plan that will be rolled out soon, and new rides and attractions slated to debut this spring at Cedar Fair's parks are "in place, on time, and on budget," Mr. Ouimet said.

One potential concern is the effect rising gas prices -- which some economists have predicted could reach $5 a gallon this summer -- might have on attendance and revenues.

But Mr. Ouimet said the amusement park chain has looked at the problem and is not too concerned.

Consumers whose discretionary income is affected by higher gas prices undoubtedly will moderate their spending on entertainment. "But what seems to have benefitted us in the past is they still like to come to our parks and they pass on the movie experience," Mr. Ouimet said.

Most Cedar Fair parks draw from a 150 to 200-mile radius, he added. "That's not an excessive tank of gas to come to our parks," Mr. Ouimet said.

Contact Jon Chavez at: jchavez@theblade.com or 419-724-6128.