Cedar Fair Signs Definitive Agreement to Acquire Two Iconic Texas Water Parks From Schlitterbahn

  • Company agrees to acquire Schlitterbahn Waterparks and Resorts in New
    Braunfels, Texas, and Galveston, Texas, along with the right to
    acquire an additional property in Kansas City, Kansas, for future
    development
  • Advances strategy to leverage the Company’s management expertise,
    increase presence in growing and attractive markets and further
    diversify portfolio

SANDUSKY, Ohio–(BUSINESS WIRE)–Cedar Fair Entertainment Company (NYSE: FUN), a leader in regional
amusement parks, water parks and immersive entertainment, today
announced that it has signed a definitive agreement to acquire two
iconic water parks and one resort in Texas – Schlitterbahn Waterpark and
Resort New Braunfels and Schlitterbahn Waterpark Galveston for a cash
purchase price of $261 million, subject to certain working capital
adjustments related to the timing of the closing. Additionally, Cedar
Fair has the right to acquire a property located in Kansas City, Kansas,
for a cash purchase price of $6 million.

“We are very excited about the opportunity to bring these two
award-winning Texas water parks into the Cedar Fair family,” said
Richard Zimmerman, Cedar Fair’s president and CEO. “These properties
represent new markets for us with attractive demographics in the growing
Central Texas region, and they align with our strategy to identify
compelling opportunities to accelerate our growth and profitability. The
investments we have made over the past five years to strengthen our
back-of-house and customer-facing systems will support a smooth
integration of these properties by ensuring a premium guest experience,
strong team collaboration and superior execution.”

Zimmerman continued, “Schlitterbahn employees are known throughout the
industry for their innovation and dedication to the quality of the guest
experience. Because of their work, the water park located in New
Braunfels has been recognized as the ‘Best Water Park in the World’ for
21 straight years, and Galveston has received recognition as the ‘Best
Indoor Water Park in the World’ for a decade. We look forward to adding
these parks to Cedar Fair’s industry-leading portfolio of regional
entertainment resorts.”

In 2018, Cedar Fair entertained 25.9 million guests, reported $1.35
billion in annual net revenues and generated Adjusted EBITDA1
of $468 million (35% Adjusted EBITDA margin1). The two Texas
water parks and the resort entertained 1.2 million guests in 2018 and
generated annual revenues of approximately $68 million. Cedar Fair
expects the two Texas locations to achieve an Adjusted EBITDA margin in
line with Cedar Fair’s standalone results as management implements a
number of growth and operational initiatives at the parks over the next
two years, reflecting an accretive EBITDA multiple post synergies.
Following this transaction, Cedar Fair’s portfolio will consist of 15
parks, resort accommodations totaling more than 2,000 rooms across six
parks, more than 600 luxury RV sites across four parks, and two marinas.

In addition to the two Texas properties, Cedar Fair has the right to
acquire a third site, located on approximately 40 acres in Kansas City,
Kansas, which previously operated as a Schlitterbahn water park, for a
cash purchase price of $6 million.

The transaction is subject to regulatory approval and other customary
terms and conditions, and is expected to close during the second quarter
of 2019 subject to those approvals and conditions. The Company intends
to finance the transaction through additional long-term borrowings.

Perella Weinberg Partners is serving as financial advisor to Cedar Fair,
and Squire Patton Boggs is providing legal counsel.

______________
1 For additional information regarding
Adjusted EBITDA and Adjusted EBITDA margin, including how the Company
defines and uses Adjusted EBITDA and Adjusted EBITDA margin, see the
attached historical reconciliation table and related footnotes. The
Company is not reconciling Adjusted EBITDA targets or 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 targets or 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.

Media Room Available

Additional press materials related to this announcement and Cedar Fair
Entertainment Company, including images, B-roll, maps and general
corporate information, are available in our Media Room under News on our
Investor website at https://ir.cedarfair.com/news/.

About the Schlitterbahn Waterpark Resorts

Voted the “Best Water Park in the World” by Amusement Today for
21 consecutive years, Schlitterbahn Waterpark New Braunfels is located
on the banks of the spring-fed Comal River in New Braunfels, Texas. A
Texas icon of summer, the park features more than 50 attractions and 221
rooms across a wide array of accommodations on more than 70 acres. The
park is home to many award-winning rides and innovations, including the
world’s first inland surfing ride, the Boogie Bahn, the first wave
river, the Torrent, and the six-story Master Blaster Uphill Water
Coaster, voted the “Best Water Park Ride in the World” repeatedly.

Schlitterbahn Waterpark Galveston is located just outside of Houston on
historic Galveston Island. The park features more than 30 attractions,
including the award-winning World’s Tallest Water Coaster, MASSIV, and
the next generation, award-winning Transportainment river system that
combines three unique rivers into one endless floating adventure. The
Wasserfest area of Schlitterbahn Galveston Waterpark, voted the “World’s
Best Indoor Water Park” for years, creates an indoor water park retreat
for guests year-round. The 70,000 square-foot indoor water park offers
more than a dozen heated water adventures. In addition to being an
excellent and thrilling destination for summer fun, this park opens
early for Spring Break and the indoor water park stays open through the
New Year.

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
make people happy by providing fun, immersive and memorable experiences,
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,
goals 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, that the Company will
realize the anticipated benefits of the transactions, or that the
Company’s growth and operational strategies will achieve the target
results. Important factors that could affect the completion of the
transactions contemplated by the agreement include the risk that any
conditions to the transactions are not satisfied, which could cause
parties to abandon the transaction in whole or in part. 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, the Company’s ability to successfully
achieve integration 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.

(Table follows)

 
CEDAR FAIR, L.P.
RECONCILIATION OF ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN

(In thousands, except percentages)

 
For the year ended
December 31, 2018
Net income $ 126,653
Interest expense 85,687
Interest income (1,515 )
Provision for taxes 34,743
Depreciation and amortization 155,529  
EBITDA 401,097
Loss on early debt extinguishment 1,073
Net effect of swaps 7,442
Non-cash foreign currency loss 36,294
Non-cash equity compensation expense 11,243
Loss on impairment/retirement of fixed assets, net 10,178
Gain on sale of other assets (112 )
Other (1) 558  
Adjusted EBITDA (2) $ 467,773  
Adjusted EBITDA margin (3) 34.7

%

(1)   Consists of certain costs as defined in the Company’s Amended 2017
Credit Agreement and prior credit agreements. These items are
excluded in the calculation of Adjusted EBITDA and have included
certain legal expenses, costs associated with certain ride
abandonment or relocation expenses, and severance expenses. This
balance also includes unrealized gains and losses on short-term
investments.
 
(2) Adjusted EBITDA represents earnings before interest, taxes,
depreciation, amortization, other non-cash items, and adjustments as
defined in the Amended 2017 Credit Agreement and prior credit
agreements. The Company believes Adjusted EBITDA is a meaningful
measure as it is widely used by analysts, investors and comparable
companies in our industry to evaluate our operating performance on a
consistent basis, as well as more easily compare our results with
those of other companies in our industry. Further, management
believes Adjusted EBITDA is a meaningful measure of park-level
operating profitability and we use it for measuring returns on
capital investments, evaluating potential acquisitions, determining
awards under incentive compensation plans, and calculating
compliance with certain loan covenants. Adjusted EBITDA is provided
as a supplemental measure of our operating results and is not
intended to be a substitute for operating income, net income or cash
flows from operating activities as defined under generally accepted
accounting principles. In addition, Adjusted EBITDA may not be
comparable to similarly titled measures of other companies.
 
(3) Adjusted EBITDA margin (Adjusted EBITDA divided by net revenues) is
not a measurement computed in accordance with generally accepted
accounting principles (“GAAP”) or a substitute for measures computed
in accordance with GAAP and may not be comparable to similarly
titled measures of other companies. We provide Adjusted EBITDA
margin because we believe the measure provides a meaningful metric
of operating profitability.
 

Contacts

Investor Relations
Michael Russell, 419.627.2233
https://ir.cedarfair.com

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