Cedar Fair Entertainment Company (NYSE: FUN) has reported its fourth-quarter and full-year 2023 results, with the company highlighting its strong performance in the second half of the year. The company recorded a net loss of $10 million for the fourth quarter, compared with a net income of $12 million in the same period in 2022. However, the company's adjusted EBITDA totaled $89 million, representing a 1% increase compared with the fourth quarter of 2022. Notably, attendance in the fourth quarter reached a record 5.8 million guests, a 9% increase compared with the same period in 2022.
For the full year, Cedar Fair reported net revenues of $1.80 billion, a decrease from $1.82 billion in 2022. The company's net income was $125 million, down from $308 million in 2022, primarily due to a $155 million prior year gain recognized on the sale of the land at California’s Great America and $22 million of transaction costs related to the proposed merger with Six Flags. The company's adjusted EBITDA for the full year was $528 million compared with $552 million in 2022.
Richard Zimmerman, CEO of Cedar Fair, emphasized the company's resilience and adaptability, stating, "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." Zimmerman also expressed optimism about the company's prospects, citing strong long-lead indicators, particularly sales of season passes and related all-season add-on products, which were up approximately 20% versus last year.
Regarding the proposed merger with Six Flags, Zimmerman commented, "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."
In terms of financials, net debt as of December 31, 2023, totaled $2.2 billion, and the company's board of directors declared a quarterly cash distribution of $0.30 per limited partner (LP) unit, payable on March 20, 2024, to unitholders of record on March 6, 2024.
The company's shares have moved 1.1% and are currently trading at a price of $41.79.
The full 8-K submission from Cedar Fair Entertainment Company is available here.
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $1,349 | $1,475 | $182 | $1,338 | $1,817 | $1,794 |
| Operating Margins | 22% | 21% | -315% | 11% | 28% | 18% |
| Net Margins | 9% | 12% | -325% | -4% | 17% | 8% |
| Net Income (M) | $127 | $172 | -$590 | -$49 | $308 | $147 |
| Net Interest Expense (M) | -$84 | -$98 | $151 | $184 | $152 | $142 |
| Depreciation & Amort. (M) | $156 | $170 | $158 | $149 | $153 | $155 |
| Diluted Shares (M) | 57 | 57 | 56 | 57 | 56 | 51 |
| Earnings Per Share | $2.23 | $3.03 | -$10.45 | -$0.86 | $5.45 | $2.87 |
| EPS Growth | n/a | 35.87% | -444.88% | 91.77% | 733.72% | -47.34% |
| Avg. Price | $50.99 | $49.06 | $32.18 | $44.94 | $49.42 | $42.005 |
| P/E Ratio | 22.66 | 16.09 | -3.09 | -52.26 | 9.13 | 14.84 |
| Free Cash Flow (M) | $161 | $72 | -$546 | $142 | $224 | $110 |
| EV / EBITDA | 13.64 | 9.89 | -10.62 | 16.85 | 7.39 | 8.97 |
| Total Debt (M) | $3,315 | $2,153 | $2,954 | $2,519 | $2,268 | $2,273 |
| Net Debt / EBITDA | 7.2 | 4.11 | -6.22 | 8.27 | 3.22 | 4.44 |
| Current Ratio | 0.85 | 0.91 | 1.85 | 0.69 | 0.61 | 0.68 |
Based on the current market conditions, the stock of Cedar Fair is likely fairly valued at a price of $41.79 per share. The company's strong revenue growth rate of 4.9% and consistent growth in earnings per share at an annualized rate of 4.3% over the last 6 years are positive indicators. However, the decreasing capital expenditures at a rate of -3.8% and the high PEG ratio of 1.9 suggest that the market may be overvaluing the firm's growth potential.
In terms of value, Cedar Fair faces challenges with its current assets not being enough to cover its current liabilities, indicated by a low current ratio of 0.68. Additionally, the company has a highly leveraged balance sheet, with a current Net Debt / EBITDA ratio of 4.44 and an average of 3.5 over the last 5 years. While the firm's free cash flows have shown an average of $27.4 million over the last 5 years, the compounded average growth rate over this period is -1.1%, with a high year-on-year growth variability coefficient of 307.83%.
It's important to note that this analysis is not personalized financial advice, and individuals should conduct their own research or consult with a financial advisor before making any investment decisions.
