Cedar Fair Reports Record Third-Quarter Revenues; Increases Quarterly Cash Distribution By 4%

Third-Quarter Results

Cedar Fair's net revenues increased to $664 million for the third quarter, up $11 million, or 2%, compared with the third quarter ended September 24, 2017. The increase in revenues was the result of a 2%, or $0.74, increase in average in-park guest per capita spending to $49.47, as well as a $5 million, or 8%, increase in out-of-park revenues to $70 million compared with the same period a year ago. These increases were slightly offset by a less than 1%, or 57,000-visit, decrease in attendance to 12.4 million visits compared with the third quarter of 2017.

The increase in average in-park guest per capita spending was driven by a 4% increase in pure in-park spending, while admissions per capita was comparable with the third quarter last year. Excluding the free pre-K season pass program, admissions per capita would have been up 1% compared with the same period last year. The food and beverage category led the increase in pure in-park spending, supported by the increasing popularity of the all-season dining and beverage programs. The increase in out-of-park revenues resulted from higher occupancy rates and average daily room rates at the Company's resort hotels, including the new 158-room tower at Cedar Point's historic beachfront Hotel Breakers.

Although attendance increased in August and the post-Labor Day period, overall attendance during the quarter declined modestly due to inclement weather. Disruptive weather patterns across most of the country throughout July and the impact of Hurricane Florence, which forced the closure of two parks in the Mid-Atlantic for a weekend in September, contributed to the slight decline in attendance for the quarter.

Operating income for the third quarter of 2018 was $259 million, up 1% when compared with the prior-year third quarter, due to the 2% increase in net revenues. The increase in net revenues was partially offset by an increase in depreciation and amortization expense primarily due to a change in the estimated useful life of an asset at one of the Company's parks, as well as an increase in loss on impairment/retirement of fixed assets in the third quarter of 2018. Operating costs and expenses, which totaled $328 million for the third quarter of 2018, were comparable with the same period a year ago.

Interest expense and net effect of swaps for the third quarter were both comparable to the same period in the prior year.  During the third quarter, the Company recognized a $13 million net benefit to earnings for foreign currency gains compared with a $29 million net benefit to earnings for the comparable period in 2017. Both amounts primarily represent re-measurement of the US-dollar denominated debt held at the Company's Canadian property from the applicable currency to the legal entity's functional currency.

A $39 million provision for taxes was recorded for the quarter to account for the tax attributes of the Company's corporate subsidiaries and publicly traded partnership taxes, compared with a $74 million provision for taxes in the same period a year ago. This decrease in provision for taxes relates to the decrease in the federal statutory income tax rate resulting from the implementation of the 2017 Tax Cuts and Jobs Act and the decrease in pretax income from the Company's corporate subsidiaries.

Net income for the third quarter of 2018 totaled $213 million, or $3.76 per diluted LP unit, an increase of $22 million, or 11%, when compared with the same period a year ago.

Adjusted EBITDA, which management believes is a meaningful measure of the Company's park-level operating results, was $338 million in the third quarter, up 1%, or $4 million, from the third quarter of last year. See the attached table for a reconciliation of net income to Adjusted EBITDA.

October Operations

Based on preliminary results through October 28, 2018, net revenues were up $9 million, or 1%, to $1.25 billion when compared with the 10-month period a year ago. The year-to-date increase was driven by a 1% increase in average in-park guest per capita spending and a 5% increase in out-of-park revenues, offset slightly by a 1% decrease in attendance.

Distribution Declaration

Today, the Company also announced the declaration of a quarterly cash distribution of $0.925 per LP unit, representing a 4% increase from the previous distribution. The distribution will be paid on December 17, 2018, to unitholders of record on December 4, 2018.

"One of our primary financial objectives has been to further bolster the strength of our balance sheet," said Executive Vice President and CFO Brian Witherow.  "The foundational strength created by our actions over the last seven years, combined with our ability to consistently generate positive free cash flow, gives our board the confidence to maintain our distribution's 4% growth trajectory for 2019 and beyond.  Our strong balance sheet and free cash flow generation also provide us with the financial flexibility to responsibly invest in the long-term growth of the business."

Outlook

Based on its performance to date and expectations through the end of the year, the Company is reaffirming its previously announced full-year net revenue forecast of $1.32 billion to $1.34 billion and full-year Adjusted EBITDA forecast of $460 million to $470 million in 2018.

The Company's 2019 marketing programs, which included unlimited visits in 2018 for new 2019 season pass purchases and a new affordable 12-month payment program, are well underway and trending favorably with this same time last year. Notably, next year's program will be highlighted by two thrill-packed roller coasters in unique themed areas of Canada's Wonderland and Carowinds. Additionally, Cedar Point will introduce a new interactive adventure where guests of all ages will be challenged, questioned and pushed to the limits in both brain and brute power.

Looking ahead, the Company will continue to seek new ways to broaden the guest experience, expand its  season pass platform, and pursue the development of land adjacent to its parks.  "While focused on wrapping up a strong finish to 2018, we're even more excited about the opportunities ahead of us in 2019 and beyond. We remain solidly committed to providing the best entertainment value for our guests and the best long-term investment value in our industry," Zimmerman concluded.

Conference Call

The Company will host a conference call with analysts today, October 30, 2018, at 10:00 a.m. ET, which will be webcast live in "listen only" mode via the Cedar Fair website (ir.cedarfair.com). It will also be available for replay starting at approximately 1:00 p.m. ET, Tuesday, October 30, 2018, until 11:59 p.m. ET, Tuesday, November 13, 2018. In order to access the replay of the earnings call, please dial (844) 512-2921 followed by the access code 7628007.

About Cedar Fair

Cedar Fair Entertainment Company (NYSE: FUN), one of the largest regional amusement-resort operators in the world, is a publicly traded partnership headquartered in Sandusky, Ohio.  Focused on its mission to become "THE place to be for FUN," the Company owns and operates 11 amusement parks, including its flagship park, Cedar Point, along with two outdoor water parks, one indoor water park and four hotels. It also operates an additional theme park under a management contract. Its parks are located in Ohio, California, North Carolina, South Carolina, Virginia, Pennsylvania, Minnesota, Missouri, Michigan and Toronto, Ontario.

Forward-Looking Statements

Some of the statements contained in this news release constitute "forward-looking statements" within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995, including statements as to the Company's expectations, beliefs and strategies regarding the future. These statements may involve risks and uncertainties that could cause actual results to differ materially from those described in such statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Important factors, including general economic conditions, adverse weather conditions, competition for consumer leisure time and spending, unanticipated construction delays, changes in the Company's capital investment plans and projects and other factors discussed from time to time by the Company in reports filed with the Securities and Exchange Commission (the "SEC") could affect attendance at the Company's parks and cause actual results to differ materially from the Company's expectations. Additional information on risk factors that may affect the business and financial results of the Company can be found in the Company's Annual Report on Form 10-K and in the filings of the Company made from time to time with the SEC. The Company undertakes no obligation to correct or update any forward-looking statements, whether as a result of new information, future events or otherwise.

¹For additional information regarding Adjusted EBITDA, including how the Company defines and uses Adjusted EBITDA, see the attached historical reconciliation table and related footnotes.  The Company is not reconciling Adjusted EBITDA guidance to Net Income, in reliance on the unreasonable efforts exception provided under Item 10(e)(1)(i)(B) of Regulation S-K.  The Company is unable, without unreasonable efforts, to forecast certain individual items required to reconcile Adjusted EBITDA guidance with the most directly comparable GAAP financial measure (Net Income).  These items include the net effect of swaps, non-cash foreign currency (gain) loss, as well as other non-cash and unusual items and other adjustments as defined under the Company's debt agreements, which are difficult to predict in advance in order to include in a GAAP estimate.

This news release and prior releases are available online at www.cedarfair.com.

CEDAR FAIR, L.P. UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (In thousands, except per unit amounts)
	Three months ended								Nine months ended
	9/23/2018				9/24/2017				9/23/2018				9/24/2017
Net revenues:
Admissions	$	358,923			$	361,279			$	590,091			$	598,723
Food, merchandise and games	210,426				205,137				361,428				356,512
Accommodations, extra-charge products and other	94,354				86,273				147,227				138,570
	663,703				652,689				1,098,746				1,093,805
Costs and expenses:
Cost of food, merchandise, and games revenues	53,891				52,647				94,912				92,376
Operating expenses	206,505				202,710				462,750				447,379
Selling, general and administrative	67,114				71,663				149,837				151,142
Depreciation and amortization	74,374				70,060				132,114				126,237
Loss on impairment / retirement of fixed assets, net	3,247				1,347				7,959				3,057
Gain on sale of investment	—				(1,877)				—				(1,877)
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