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Theme Parks Keep Rolling

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February 16, 2011

Cedar Fair may have a love-hate relationship with its investors, but it must've left its thrill-seeking owners smiling with yesterday's fourth-quarter report.

The regional amusement park operator posted a better-than-expected 23% spike in revenue to $129.7 million during the period. It did report a steep loss of $1.14 a share, but that included a $62.4 million one-time hit on the impairment and retirement of fixed assets. Absent the non-cash charge, Cedar Fair would have come through with an operating profit.

This is a rare feat for the seasonal operator. Most of its parks close after Halloween festivities die down in October. However, it was a fitting close to a record year at the company behind Cedar Point, Dorney Park, and several other regional attractions.

Attendance climbed 8% to 22.8 million guests last year. Cedar Fair credits its aggressive season pass sales for the surge. The flipside to pass-wielding repeat customers is that they don't spend as much as one-time visitors. Regulars don't load up on souvenirs and on-ride photos. They sometimes don't even eat at the park. Under this backdrop, it's actually surprising that per capita guest spending fell by just 1%. Out-of-park revenue -- stemming largely from the on-site resortsat its Ohio and California parks -- climbed a robust 6%.

Cedar Fair isn't the only park operator rolling these days. Rival Six Flags won't report until next week, but the thrill park specialist has been on fire since emerging from bankruptcy reorganization last year. The shares hit a new high last week. Indoor waterpark operator Great Wolf Resorts also won't report until next week, but its shares have nearly doubled since bottoming out five months ago.

Disney posted healthy growth at its theme parks last week. It was the family entertainment giant's cruise business that crimped operating margins. Fueled by the addition of a themed Harry Potter area, Blackstone's Universal Orlando posted a whopping 20% spike in attendance last year.

Cedar Fair will still have to win the trust of its unit holders. They're the ones that voted to strip CEO Dick Kinzel of his chairmanship and nearly voted to pass a proposal that would have forced the company to emphasize the restoring its once chunky yield over paying down its debt. Investors are still miffed at how Cedar Fair was willing to sell itself cheap in a thankfully botched buyout proposal last year.

However, now that Cedar Fair's units are gaining ground and the company is delivering recordperformance, it's about time for angry owners to cut management some slack and begin enjoying the turnaround.


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