From the Sandusky Register


The amusement park industry’s roller coaster ride is on the upswing, an analyst says.

Theme park revenues fell in 2009, but revenues in the industry should rise 1.7 percent in 2010, predicts Nima Samadi, an industry analyst at IBISWorld, a market research company based in Los Angeles.

Samadi said Friday his forecast of an upswing definitely applies to Cedar Fair.

“It’s a company that’s been a real cash flow generator in the past,” he said. “It’s definitely a company that has the potential to remain profitable in the future.”

Samadi said his forecast for an amusement park revival assumes the travel business will get better and the economy will recover.

Stacy Frole, director of investor relations for Cedar Fair, Cedar Point’s parent company, said Cedar Fair also is expecting better days ahead. She pointed to forecasts in the proxy statement the company issued earlier this year.

Cedar Fair reported on Feb. 11 that it had a rough year in 2009, with net revenues of $916.1 million, down from $996.2 million in 2008.

EBITDA — earnings before interest, taxes, depreciation and amortization, the company’s favorite metric — fell 15.7 percent, from $355.9 million to $299.9 million.

Cedar Fair didn’t provide guidance to analysts last year and hasn’t announced plans to do so this year.

But in its definitive proxy statement, filed Feb. 10 to make its case for the sale to Apollo Global Management, Cedar Fair revealed the four-year financial forecast it shared last year with Apollo officials.

The company projected revenues of $966.6 million in 2010, $988.2 million in 2011, $1,012.2 million in 2012 and $1,036 million in 2013. EBITDA also will steadily rise, the company forecast on page 58 of the proxy statement.

Samadi remarked that major amusement park chains have been acquisition targets. He noted that Apollo Global Management is trying to acquire Cedar Fair and that Apollo reportedly also is interested in buying the bankrupt Six Flags chain.

It might make sense for Apollo to buy both amusement park chains and achieve economies of scale by merging the two, Samadi said.

A special meeting to decide whether to approve Apollo’s takeover of Cedar Fair has been rescheduled for April 8.

The Blackstone Group, a private equity company similar to Apollo, bought Busch Entertainment Corp. and Comcast bought NBC Universal.

“Industry players have been a prime private equity target due to the massive amount of debt the industry had acquired over the last decade,” Samadi said.

“Major players have overpaid in the past to acquire regional players and increase their market share. But despite the cyclical downturn in revenue, private equity firms can still reap the benefits from these relatively stable cash producers in the long-term.”

Cedar Fair executives have explained that Apollo’s acquisition with the company will help Cedar Fair deal with about $1.6 billion of debt. Cedar Fair acquired much of that debt in 2006, when the company bought the Paramount theme parks chain.