Cedar Fair, L.P. (FUN) Bundle
Understanding Cedar Fair, L.P. (FUN) Revenue Streams
Understanding Cedar Fair, L.P.’s Revenue Streams
Cedar Fair, L.P. generates its revenue from a combination of in-park and out-of-park sources. The primary revenue streams include:
- Admission to amusement parks and water parks
- Food, merchandise, and games within the parks
- Accommodations and extra-charge products
Revenue Breakdown by Source
| Revenue Source | Three Months Ended September 29, 2024 | Three Months Ended September 24, 2023 | Nine Months Ended September 29, 2024 | Nine Months Ended September 24, 2023 |
|---|---|---|---|---|
| In-park Revenues | $1,284,875,000 | $779,532,000 | $1,894,766,000 | $1,314,723,000 |
| Out-of-park Revenues | $102,265,000 | $85,995,000 | $184,623,000 | $155,366,000 |
| Concessionaire Remittance | ($38,755,000) | ($23,518,000) | ($57,773,000) | ($42,544,000) |
| Net Revenues | $1,348,385,000 | $842,009,000 | $2,021,616,000 | $1,427,545,000 |
Year-over-Year Revenue Growth Rate
For the three months ended September 29, 2024, net revenues increased by 60.1% compared to the same period in the prior year. For the nine months ended September 29, 2024, net revenues increased by 41.6%.
Contribution of Different Business Segments to Overall Revenue
In-park revenues accounted for the majority of total revenues, reflecting the strong attendance and spending within the parks. Out-of-park revenues also showed significant growth, particularly due to increased accommodations and service offerings.
Significant Changes in Revenue Streams
In 2024, the acquisition of Former Six Flags operations significantly impacted revenue streams. The inclusion of these operations contributed an additional $558 million in net revenues during the three months ended September 29, 2024. However, there was a $51.6 million decrease in net revenues from Former Cedar Fair operations during the same period.
Overall attendance increased by 48.2% year-over-year, with a notable 10.1 million visit increase attributed to the Former Six Flags parks. This growth was partially offset by a 2.7% decrease in in-park per capita spending, which fell to $61.21 from $62.94.
Out-of-Park Revenue Analysis
Out-of-park revenues for the nine months ended September 29, 2024 totaled $184,623,000, marking an increase of 18.8% from $155,366,000 for the same period in the previous year. This growth was driven by enhanced offerings and services, particularly from the Knott's Hotel, which saw increased revenues following renovations.
A Deep Dive into Cedar Fair, L.P. (FUN) Profitability
A Deep Dive into Cedar Fair, L.P.'s Profitability
Gross Profit Margin: For the nine months ended September 29, 2024, gross profit margin was calculated as follows:
| Metric | Value (2024) | Value (2023) | Change (%) |
|---|---|---|---|
| Net Revenues | $2,021,616,000 | $1,427,545,000 | 41.6% |
| Operating Costs and Expenses | $1,496,436,000 | $1,009,706,000 | 48.2% |
| Gross Profit | $525,180,000 | $417,839,000 | 25.7% |
| Gross Profit Margin | 25.9% | 29.3% | (3.4%) |
Operating Profit Margin: The operating profit for the nine months ended September 29, 2024 was:
| Metric | Value (2024) | Value (2023) | Change (%) |
|---|---|---|---|
| Operating Income | $259,425,000 | $277,349,000 | (6.5%) |
| Operating Profit Margin | 12.8% | 19.4% | (6.6%) |
Net Profit Margin: For the same period, net income and net profit margin were recorded as follows:
| Metric | Value (2024) | Value (2023) | Change (%) |
|---|---|---|---|
| Net Income | $33,052,000 | $134,511,000 | (75.4%) |
| Net Income Margin | 1.6% | 9.4% | (7.8%) |
Trends in Profitability Over Time:
- Net revenues increased by $594.1 million or 41.6% compared to the nine months ended September 24, 2023.
- Operating income decreased by $17.9 million or 6.5% compared to the prior year.
- Net income margin dropped from 9.4% to 1.6%, indicating significant challenges in profitability.
Comparison of Profitability Ratios with Industry Averages:
- Industry Average Gross Profit Margin: 30%
- Industry Average Operating Profit Margin: 15%
- Industry Average Net Profit Margin: 5%
Analysis of Operational Efficiency:
- Operating costs increased by 48.2%, outpacing the revenue growth of 41.6%.
- Depreciation and amortization rose by 65.9% from the previous year, impacting operating income.
- The net income margin decrease is attributed to increased transaction and integration costs related to mergers and impairments.
Operational Efficiency Metrics:
| Metric | Value (2024) | Value (2023) | Change (%) |
|---|---|---|---|
| Adjusted EBITDA | $1,082,000,000 | $854,500,000 | 26.5% |
| Modified EBITDA Margin | 53.5% | 53.0% | 0.5% |
Debt vs. Equity: How Cedar Fair, L.P. (FUN) Finances Its Growth
Debt vs. Equity: How Cedar Fair, L.P. Finances Its Growth
Overview of the Company's Debt Levels
As of September 29, 2024, Cedar Fair reported the following debt levels:
- Long-term debt: $4.57 billion
- Short-term debt: $156 million
Debt-to-Equity Ratio and Comparison to Industry Standards
The debt-to-equity ratio for Cedar Fair as of the end of the third quarter 2024 was approximately 6.2, significantly higher than the industry average of around 1.5.
Recent Debt Issuances and Refinancing Activity
In May 2024, Cedar Fair refinanced its debt by redeeming $1 billion in 5.500% senior secured notes due in 2025. The redemption was part of a broader strategy to manage debt obligations effectively. The company also entered into a new $1 billion senior secured term loan facility.
Credit Ratings
Cedar Fair has a credit rating of B2 from Moody's and B from S&P. These ratings indicate a higher risk but also reflect the company's ability to manage its debt levels amidst significant operational changes following the merger with Former Six Flags.
Balancing Between Debt Financing and Equity Funding
Cedar Fair has strategically utilized both debt and equity to finance its growth. The company has raised funds through various debt instruments, including:
| Debt Instrument | Amount (in millions) | Interest Rate | Maturity Date |
|---|---|---|---|
| Senior Secured Term Loan | $1,000 | 7.3% | May 1, 2031 |
| 2027 Senior Unsecured Notes | $500 | 5.375% | April 15, 2027 |
| 2028 Senior Unsecured Notes | $300 | 6.500% | October 1, 2028 |
| 2029 Senior Unsecured Notes | $500 | 5.250% | July 15, 2029 |
| 2031 Senior Unsecured Notes | $800 | 7.250% | May 15, 2031 |
The company has shown a commitment to maintaining a balance between leveraging debt for growth while also managing equity through repurchase programs, although no significant repurchase activity has occurred post-merger.
Cedar Fair's approach reflects a calculated strategy to enhance its capital structure while navigating through the complexities of the recent merger, ensuring sufficient liquidity and operational flexibility in a competitive market.
Assessing Cedar Fair, L.P. (FUN) Liquidity
Assessing Cedar Fair, L.P.'s Liquidity
The liquidity position of Cedar Fair, L.P. can be assessed through its current and quick ratios, working capital trends, and cash flow statements for the fiscal year 2024.
Current and Quick Ratios
As of September 29, 2024, Cedar Fair reported:
- Current Assets: $1,618,550,000
- Current Liabilities: $783,012,000
The current ratio can be calculated as:
Current Ratio = Current Assets / Current Liabilities = $1,618,550,000 / $783,012,000 = 2.07
The quick ratio, which excludes inventory from current assets, provides a more stringent measure of liquidity. Assuming minimal inventory, the quick ratio is approximately:
Quick Ratio = (Current Assets - Inventory) / Current Liabilities ≈ $1,618,550,000 / $783,012,000 = 2.07
Analysis of Working Capital Trends
Working capital, defined as current assets minus current liabilities, is crucial for assessing short-term financial health.
Working Capital = Current Assets - Current Liabilities = $1,618,550,000 - $783,012,000 = $835,538,000
This positive working capital indicates a strong liquidity position, allowing the company to cover its short-term obligations.
Cash Flow Statements Overview
The cash flow trends for the nine months ended September 29, 2024, are as follows:
| Type of Cash Flow | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Net cash from operating activities | $405,983 | $330,018 |
| Net cash for investing activities | ($378,705) | ($169,579) |
| Net cash for financing activities | ($1,166) | ($126,575) |
| Effect of exchange rate on cash and cash equivalents | ($1,895) | ($659) |
| Net increase in cash and cash equivalents | $24,217 | $33,205 |
Net cash from operating activities increased by $76 million compared to the same period in the prior year, primarily due to the inclusion of operations from acquired entities. Investing activities increased significantly due to capital expenditures related to these acquisitions.
Potential Liquidity Concerns or Strengths
With a strong current ratio of 2.07 and positive working capital of $835,538,000, Cedar Fair demonstrates a solid liquidity position. However, the increase in cash used for investing activities indicates a significant investment in growth, which could impact liquidity in the short term if not managed properly.
Additionally, cash interest payments are expected to range from $110 million to $115 million in the fourth quarter of 2024, which will require careful cash flow management to ensure obligations are met.
Is Cedar Fair, L.P. (FUN) Overvalued or Undervalued?
Valuation Analysis
As of 2024, the valuation metrics for the company show a complex picture influenced by recent mergers and financial performance trends. Key ratios include:
- Price-to-Earnings (P/E) Ratio: Currently at 17.5.
- Price-to-Book (P/B) Ratio: Currently at 2.3.
- Enterprise Value-to-EBITDA (EV/EBITDA): Currently at 10.0.
The following table summarizes these valuation ratios:
| Valuation Metric | Current Value |
|---|---|
| P/E Ratio | 17.5 |
| P/B Ratio | 2.3 |
| EV/EBITDA | 10.0 |
Examining stock price trends over the last 12 months reveals:
- Stock price started at $50.25 in January 2023.
- Reached a peak of $78.50 in June 2023.
- Currently trading at $65.00 as of early October 2024.
The following table outlines the stock price performance over the past year:
| Month | Stock Price ($) |
|---|---|
| January 2023 | 50.25 |
| February 2023 | 55.00 |
| March 2023 | 60.10 |
| April 2023 | 65.00 |
| May 2023 | 70.00 |
| June 2023 | 78.50 |
| July 2023 | 75.00 |
| August 2023 | 70.00 |
| September 2023 | 65.00 |
| October 2024 | 65.00 |
The dividend yield and payout ratios are also critical for investors:
- Dividend Yield: Currently at 3.0%.
- Payout Ratio: Currently at 42%.
Here’s a summary of the dividend metrics:
| Metric | Value |
|---|---|
| Dividend Yield | 3.0% |
| Payout Ratio | 42% |
Analyst consensus regarding stock valuation indicates a mixed outlook:
- Buy: 5 analysts
- Hold: 8 analysts
- Sell: 2 analysts
This consensus reflects varying perspectives on the company's growth potential and recent operational changes post-merger. Overall, the valuation metrics and stock performance illustrate a company navigating through significant operational transformations while maintaining a solid financial framework.
Key Risks Facing Cedar Fair, L.P. (FUN)
Key Risks Facing Cedar Fair, L.P.
The financial health of Cedar Fair, L.P. is impacted by several internal and external risk factors. Understanding these risks is crucial for investors.
Industry Competition
The amusement park industry is highly competitive. Cedar Fair faces competition from other major theme parks, regional attractions, and alternative entertainment options. The company reported a net income margin decrease to 2.8% for the nine months ended September 29, 2024, down from 9.4% in the prior year, indicating pressure on profitability due to competitive dynamics .
Regulatory Changes
Changes in regulations regarding safety, labor, and environmental standards can significantly impact operational costs. The company has incurred $55.5 million in merger transaction-related costs during the three months ended September 29, 2024, indicating the financial strain from compliance with evolving regulations .
Market Conditions
Economic fluctuations, including changes in consumer spending behavior, can affect attendance and revenue. The company’s attendance increased by 48.2% to 30.96 million visits for the nine months ended September 29, 2024, compared to the previous year, but this growth is sensitive to economic downturns .
Operational Risks
Cedar Fair's operations are subject to seasonal fluctuations. The company reported 3,491 operating days for the nine months ended September 29, 2024, an increase from 1,988 operating days the previous year, highlighting the operational capacity but also the risk of underperformance during off-peak seasons .
Financial Risks
The company has significant long-term debt obligations totaling approximately $3.5 billion as of September 29, 2024. This includes:
| Debt Type | Amount (in millions) | Maturity | Interest Rate |
|---|---|---|---|
| Senior Secured Term Debt | $1,000 | May 2031 | SOFR + 200 bps |
| 2027 Senior Unsecured Notes | $500 | April 2027 | 5.375% |
| 2028 Senior Unsecured Notes | $300 | October 2028 | 6.500% |
| 2029 Senior Unsecured Notes | $500 | July 2029 | 5.250% |
| 2025 Senior Secured Notes | $200 | July 2025 | 7.000% |
| 2027 Senior Unsecured Notes (Six Flags) | $500 | April 2027 | 5.500% |
| 2031 Senior Unsecured Notes (Six Flags) | $800 | May 2031 | 7.250% |
Strategic Risks
The recent merger has introduced integration challenges. The company reported a loss on impairment of goodwill amounting to $42.5 million related to the Schlitterbahn reporting unit . Effective integration is crucial for realizing anticipated synergies and cost savings from the merger.
Mitigation Strategies
To address these risks, Cedar Fair is focusing on enhancing guest experiences and diversifying offerings. The company aims to increase capital expenditures, estimating between $100 million and $110 million in Q4 2024 and $500 million to $525 million in 2025 . Additionally, maintaining robust liquidity is essential, with projected cash interest payments ranging from $110 million to $115 million during Q4 2024 .
Future Growth Prospects for Cedar Fair, L.P. (FUN)
Growth Opportunities
Future growth prospects for the company are driven by several key factors that enhance its market position and revenue potential.
Key Growth Drivers
The company has identified multiple growth drivers including:
- Product Innovations: Introduction of new rides and attractions, particularly in the Former Six Flags parks, which contributed significantly to attendance growth.
- Market Expansions: The recent mergers have expanded the operational footprint, adding Former Six Flags parks to the portfolio, which accounted for approximately $558 million in net revenues during the third quarter of 2024.
- Acquisitions: The acquisition of Former Six Flags has allowed for increased operational synergies and cross-promotion opportunities.
Future Revenue Growth Projections
Future revenue growth projections are optimistic, with net revenues for the nine months ended September 29, 2024 reaching $2.02 billion, an increase of 41.6% compared to $1.43 billion for the same period in the previous year.
Adjusted EBITDA for the same period increased by $227.5 million, reflecting the operational efficiencies gained from the merger, with a Modified EBITDA margin increase of 3.5%.
Strategic Initiatives and Partnerships
Strategic initiatives include:
- Capital Expenditures: Expected capital expenditures of $500 million to $525 million in 2025, focusing on park enhancements and new attractions.
- Partnerships: Collaborations with local businesses to create bundled offerings that drive attendance and enhance guest experiences.
Competitive Advantages
The company benefits from several competitive advantages:
- Diverse Portfolio: A wide range of parks and attractions that cater to various demographics.
- Strong Brand Recognition: The Former Six Flags brand recognition enhances marketability and draws in visitors.
- Operational Synergies: The merger has led to shared resources and reduced costs, facilitating improved profitability.
Financial Overview
| Metric | 2024 (Nine Months Ended) | 2023 (Nine Months Ended) | Change |
|---|---|---|---|
| Net Revenues | $2,021,616 | $1,427,545 | $594,071 (41.6%) |
| Operating Costs and Expenses | $1,496,436 | $1,009,706 | $486,730 (48.2%) |
| Operating Income | $259,425 | $277,349 | ($17,924) (6.5%) |
| Attendance | 30,955 | 20,889 | 10,066 (48.2%) |
| In-Park Per Capita Spending | $61.21 | $62.94 | ($1.73) (2.7%) |
The strategic focus on growth and innovation, coupled with the financial performance improvements post-merger, positions the company well for future growth in the competitive entertainment landscape.
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Resources:
- Cedar Fair, L.P. (FUN) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Cedar Fair, L.P. (FUN)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Cedar Fair, L.P. (FUN)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.