Cedar Fair stock on upswing

SANDUSKY Even in cash-strapped times, Cedar Fair's attendance and revenue seem to be coasting uphill
Annie Zelm
May 24, 2010

SANDUSKY

Even in cash-strapped times, Cedar Fair's attendance and revenue seem to be coasting uphill.

Company officials reported better-than-expected results Tuesday for its second quarter.

Net revenues increased 8 percent, or $22.2 million, to $296.2 million, compared with $274 million during the same period last year.

But some analysts say the company's numbers are deceptively high because of an additional week added to the fiscal quarter -- meaning the actual results are relatively flat or even slightly down.

Officials say the restructuring of Geauga Lake also impacted results.

Though he concedes the results are not an apples-to-apples comparison with last year, Cedar Fair president and CEO Dick Kinzel said the parks still performed "reasonably well" in spite of a difficult economy.

"Through the end of the second quarter, our parks entertained 7.6 million visitors, average in-park guest per capita spending was $40.45, and out-of-park revenues totaled $40.5 million," Kinzel said in a news release. "This compares with attendance of 6.7 million, average in-park guest per capita spending of $40.68 and out-of-park revenues of $38.3 million through the second quarter of 2007."

Dennis Speigel, president of International Theme Park Services Inc., a worldwide amusement park consulting company, said that without the boost from extra days in late June -- traditionally a lucrative period for the industry -- both attendance and revenue for the company are "basically flat to down by 2 percent."

"That's not all bad when you consider the economic turndown we're in," said Speigel. "Being able to maintain the market share is certainly a benefit."

Overall, he said, the amusement industry is riding out a flat season -- though not as bad as projected.

"We're still not seeing a lot of encouraging news, but we are seeing oil prices relax a little bit, gasoline's going down, so I think people are starting to spend a little more," he said. "We're seeing a little more resilience in our industry than we anticipated."

Company officials pointed to other bright spots.

For the fiscal six-month period, Cedar Fair's adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) increased $12.4 million, or 31 percent, to $52 million compared with $39.6 million during the same period a year ago. Officials believe EBITDA figures are one of the best indicators of how the parks' operations are faring.

But when comparing both years on a same-park basis, taking into account the added days this year, the adjusted EBITDA would be down approximately $2 million to $4 million this year, said Stacy Frole, director of investor relations for Cedar Fair.

"(This is) due primarily to soft early-season attendance at two of our largest parks, Cedar Point and Knott's Berry Farm," Frole said.

Based on preliminary results for July and August, however, when attendance usually peaks, Frole said officials are pleased.

Preliminary results show revenues for the first seven months of the year are up 2 percent, or approximately $11 million, when compared with the same parks and operating periods last year.

The increase reflects an attendance boost of about 3 percent, or 359,000 more visits, through the end of July.

Stock analysts seem to agree those numbers are encouraging.

Dividend.com, a financial service that provides stock analysis, bumped Cedar Fair's stock rating to a "recommended" status after receiving the report.

"We previously had some worries about Cedar Fair, but this positive report has abated some of our concerns," the Web site stated. "Many families have been cutting back on discretionary spending, but the company has done a good job at keeping its local foot traffic consistent."

Hayley Wolff, an analyst for the Cedar Fair Partnership and equity researcher for Rochdale Securities in Stamford, Conn., said she believes the results show a "solid" performance overall.

"July is the season that matters," Wolff said. "I'm more encouraged by the momentum they're carrying in the heart of their season than by some sort of calendar quirks they're carrying."