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[tab title=”Introduction”]
InPark presents the 4th quarter and full year 2018 financial results for the seven largest publicly traded theme park operators. Each of the seven is also included in the AECOM/TEA 2016 Theme Index’s list of the top 10 theme park groups worldwide. Click on the tabs for detailed financial information and a direct link to each company’s 10Q filing with the SEC. Results are for global theme park operations for each company and fourth quarter results are for the approximate period October 1 – December 31, 2018. Click on the hyperlinks on each report to access detailed data.
NOTE: Disney’s fiscal year begins October 1. Results are for the company’s 1st quarter, which runs October 1 – December 31.
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[tab title=”Disney”]
On February 5, The Walt Disney Company (NYSE: DIS) reported quarterly earnings for its first fiscal quarter ended December 29, 2018. Diluted earnings per share (EPS) for the quarter decreased 36% to $1.86 from $2.91 in the prior-year quarter. Excluding certain items affecting comparability, EPS for the quarter decreased 3% to $1.84 from $1.89 in the prior-year quarter.
“After a solid first quarter, with diluted EPS of $1.86, we look forward to the transformative year ahead, including the successful completion of our 21st Century Fox acquisition and the launch of our Disney+ streaming service,” said Robert A. Iger, Chairman and Chief Executive Officer, The Walt Disney Company. “Building a robust direct-to-consumer business is our top priority, and we continue to invest in exceptional content and innovative technology to drive our success in this space.”
Parks, Experiences, & Consumer Products revenues for the quarter increased 5% to $6.8 billion and segment operating income increased 10% to $2.2 billion. Operating income growth for the quarter was due to an increase at domestic theme parks and resorts, partially offset by a decrease from licensing activities.
Operating income growth at domestic theme parks and resorts was due to increased guest spending and higher occupied room nights. Guest spending growth was due to higher average ticket prices, an increase in food, beverage and merchandise spending and higher average hotel room rates.
Operating income at international parks and resorts was down modestly compared to the prior-year quarter as lower results at Shanghai Disney Resort and Disneyland Paris were largely offset by an increase at Hong Kong Disneyland Resort. Lower operating income at Shanghai Disney Resort was primarily due to lower attendance and higher costs, partially offset by increased guest spending. Lower operating income at Disneyland Paris was due to increased costs, partially offset by higher average ticket prices. At Hong Kong Disneyland Resort, the increase in operating income was driven by increased guest spending and higher occupied room nights.
Lower income from licensing activities was driven by a decrease in revenue from products based on Star Wars and Cars and higher third-party royalty expense, partially offset by an increase from minimum guarantee shortfall recognition, higher revenues from products based on Spider-Man and an increase in licensee settlements. Higher minimum guarantee shortfall recognition was due to an impact from the adoption of ASC 606.
At the beginning of fiscal 2019, the Company adopted a new revenue recognition accounting standard (ASC 606). Results for fiscal 2019 are presented under ASC 606, while prior period amounts continue to be reported in accordance with our historic accounting.
The current quarter includes a $115 million favorable impact on segment operating income from the ASC 606 adoption. The most significant benefits were $56 million at Media Networks and $34 million at Parks, Experiences & Consumer Products, both of which reflected a change in the timing of revenue recognition on contracts with minimum guarantees.[/tab]
[tab title=”Merlin Entertainments”]
On February 28, Merlin Entertainments, Europe’s leading and the world’s second-largest visitor attraction operator, reported results for the year ended 29 December 2018.
Nick Varney, Chief Executive Officer, said:
“We have reported further growth in 2018, with underlying EBITDA increasing by 6.2%, as we welcomed a record 67 million visitors and continued to deliver strong levels of guest satisfaction.
“2018 saw improved momentum across most of our businesses reflecting the strength of our diversified portfolio and geographic spread. Resort Theme Parks benefited from successful product investment such as ‘Wicker Man’ at Alton Towers; LEGOLAND Parks growth was driven by record levels of accommodation openings; and, in addition to the contribution of seven new attractions, Midway saw improving trends in London.
“We continue to seek to mitigate ongoing external cost pressures and expect to deliver up to £35 million of annualised savings by 2022 through a number of initiatives. Not only will this help underpin our financial outlook, it will better enable our people to deliver what matters most to our guests: fantastic memorable experiences. Around the world, leisure spend continues to grow as disposable incomes rise and ever greater value is placed on good quality, shared experiences with friends and family. Our continued investment, new market opportunities and our evolving position as a unique, multi-format international operator of strongly branded and IP-led location based entertainment, give us the confidence that we are well placed to deliver long term growth and returns.
“Merlin made further good strategic progress during 2018, delivering organic growth in underlying EBITDA of 6.2% and underlying operating profit of 3.4%. We welcomed a record 67 million visitors whilst continuing to report strong guest KPIs, including a three percentage point increase in our ‘Net Promoter’ score, to 57%. We have further strengthened our pipeline of attractive opportunities alongside investing in our existing brands, underpinning our platform for continued growth.
“Growth in the year was driven primarily by our New Business Development programme, which saw us open a record 644 accommodation rooms and seven new Midway attractions – the majority of which were either new brands or attractions in new markets. The pilot openings of our two new brands – ‘Peppa Pig World of Play’ and ‘The Bear Grylls Adventure’, in Shanghai and the UK respectively, have already received encouraging guest feedback. These openings represent an entry into exciting new market categories for Merlin and underscore our focus in strengthening our position as an operator of location based entertainment partnering with leading owners of Intellectual Property.
“2018 trading saw an improvement in trends across a number of our businesses. Midway London, which had been adversely impacted by the 2017 terrorist attacks, returned to growth in the second half of the year; and Resort Theme Parks saw exceptionally strong like for like growth, benefiting from successful product investment and very favourable weather. This performance was partially offset by the cost headwinds we have been highlighting for several reporting periods, as well as a quieter year for ‘new news’ in our LEGOLAND parks.
“Since the year end we have announced our intention to open a LEGOLAND park in South Korea, having reached an agreement with the local province regarding funding. This is important for the continued development of the LEGOLAND estate, and the planned opening by 2022 will maintain our LEGOLAND Parks momentum, following the targeted opening of LEGOLAND New York in 2020.
“Merlin operates in an attractive marketplace, benefiting from underlying growth characteristics and favourable dynamics. At its heart is increasing disposable income in both developed and emerging economies, and the ever greater value being placed upon time together with friends and family.
“Firstly, we continue to see the long term growth opportunity through international tourism, benefiting our Gateway city attractions such as those in London, New York and Hong Kong. Globally, there were 1.3 billion tourist arrivals in 2017 – over half of which were travelling for leisure or recreation – representing a 3.8% CAGR over the past decade. This has been driven in part by the continued growth in emerging markets, with increasing levels of wealth in countries such as China and India set to continue over the coming years. We therefore remain confident that the market opportunity for our Gateway city attractions remains significant.
“Secondly, the increase in short breaks, in addition to fuelling international travel, sees more and more people take ‘staycations’. Short breaks in the UK have grown at twice the rate of longer holidays over the past 20 years. We are increasingly well positioned to meet this demand through our growing offering of themed, on-site accommodation and ‘second gate’ attractions to extend dwell time. Furthermore, the relatively lower cost to the guest of ‘staycations’ has historically provided balance to Merlin’s portfolio during more challenging economic conditions.
“Finally, Merlin is uniquely placed, given its global reach and multi-format expertise, to exploit the growing opportunities to partner with leading owners of Intellectual Property content. These partnerships provide Merlin with additional ways in which to deliver memorable experiences, whilst offering those partners opportunities to increase engagement with their customers. Merlin has long enjoyed success through flagship partnerships such as that with LEGO, and was pleased to launch two new IP-based brands in 2018. We see opportunities to develop further relationships with more IP or content owners over the coming years, building on the success of existing relationships.
“In addition to these existing market drivers, we continue to carefully monitor broader consumer tastes and trends, particularly with regards to new concepts. The exponential growth in formats such as ‘pop-ups’ and Escape Rooms is of increasing interest, and we have already begun trialling some of these as part of offerings within our existing attractions, with Escape Rooms now in Madame Tussauds San Francisco and The Bear Grylls Adventure in Birmingham, UK.
“With this attractive market backdrop, Merlin’s purpose is about creating truly memorable experiences for our guests; creating memories to be shared at the school gates, on social media or simply on the journey home.
“Since the creation of Merlin in 1999, our strategic vision has been to create a high growth, high return, family entertainment business naturally balanced against external factors. Specifically, we aim to continue to diversify our portfolio, by geography, brand and customer, ensuring a balance of indoor and outdoor attractions and international and domestic visitation.
“In pursuit of this, Merlin has consistently focused on its six strategic growth drivers. Progress against these in 2018 has been as follows:
“1. Existing estate capex – investment in the existing estate helps to maintain and grow visitation and guest satisfaction. In addition to the major capex investments in 2018, such as the ‘Wicker Man’ roller coaster at Alton Towers and ‘LEGO City: Deep Sea Adventure’ at LEGOLAND California, new innovations included immersive ‘build and play’ features in our LEGOLAND Discovery centres, and Madame Tussauds’ first ‘intelligent’ wax figure in Shanghai. Following our decision in Q3 2017 to re-balance our capital allocation more towards new business opportunities, Midway Attractions and Resort Theme Parks existing estate capex spend was carefully reduced in 2018. At the same time the team retained a clear focus on maintaining our levels of guest satisfaction. This capital discipline has resulted in Group existing estate capex reducing to 9% of revenue, remaining within our target range of 8% to 10%.
“2. Strategic synergies – we continue to leverage the growing scale of the Group through areas such as procurement, promotional activity and technology. The roll out of the accesso® e-commerce platform is substantially complete, whilst our 2019 focus will be upon further developing the digital guest journey and the launch of the first Merlin Annual Pass membership programme.
“3. Short break positioning – the success of our accelerated investment in on-site themed accommodation and developing our theme parks into short break resorts remains compelling. Accommodation revenue grew by 28% in 2018 on a constant currency basis and has doubled over the past five years, now representing 21% of revenue across our theme park Operating Groups compared to 13% in 2013. Accommodation continues to drive improved levels of guest satisfaction and increases in advanced bookings. In 2018 we opened 644 rooms across three LEGOLAND parks, and anticipate opening 372 rooms across a range of formats in 2019.
“4. Midway roll out – we continue to see the opportunity to open new Midway attractions globally, based on both our existing and new brands. We opened seven new attractions in 2018, including pilots of our three new brands – ‘Little BIG City’ (the first pilot attraction of which was launched in Berlin in 2017), ‘Peppa Pig World of Play’ and ‘The Bear Grylls Adventure’. Our pipeline continues to comprise a mixture of new brands or attractions in new markets, as well as the core brands in established markets. Over time, these will broadly balance out, though 201718 reflected proportionally more emerging market and new brand openings. In 2019, we target opening ten attractions.
“5. Opening new LEGOLAND parks – 2018 represented the first full year of trading of LEGOLAND Japan, and the resort was enhanced further through the addition of a SEA LIFE centre and 252 bedroom hotel. We made encouraging progress during the year towards the opening of LEGOLAND New York, scheduled to open in 2020, and we have subsequently announced our intention to open a park in South Korea by 2022. We remain in active discussions, some of which are advanced, with a number of potential partners to develop several LEGOLAND parks in China. The current investment phase for LEGOLAND parks will continue to have the effect of reducing near term, reported Group ROCE given the projects’ gestation period and funding structures, but we are confident in the long term opportunity and returns outlook.
“6. Strategic acquisitions – whilst we remain active in assessing inorganic opportunities against our clear investment criteria, we made no acquisitions during 2018.
“The health, safety and security of our guests and employees remains our number one priority and we will continue to invest time and resource in improving our already high standards. In 2018, we developed further global partnerships with third party organisations related to matters of health, safety and security with the aim of mutually sharing any learnings, and launched a number of internal initiatives including the Company’s HSS magazine called The Shield and a new series of line manager-led briefings.
“Merlin has successfully mitigated significant cost pressures in recent years, resulting from legislative changes such as the UK National Living Wage, and significant increases in utilities and business rates. We are also increasingly seeing the impact of tighter labour markets in many parts of the world such as Southern California, Bavaria and the South East of England. To date this cost mitigation has been achieved largely through attraction-level savings and tactical efficiency improvements.
“Mindful of these continuing cost pressures, we have been focused on our Productivity Agenda which seeks to consolidate a number of initiatives to provide long term, sustainable savings across the Group. As a result, we have identified annualised savings of up to £35 million which we expect to deliver by 2022, incurring overall one-off operating costs related to the implementation of this programme of approximately £35 million. These cost savings will be delivered through back office savings, such as our ‘Finance 21’ project, operational efficiencies by evolving our business model, the application of continuous improvement principles in our attractions, and in many cases through better use of technology and automation. In addition to delivering financial savings, our programme seeks to improve productivity, better enabling our attraction staff and general managers to focus upon what truly delivers memorable experiences for our guests.
“Our ongoing product investment and innovation, and relentless focus on creating memorable experiences for our guests throughout 2018 have resulted in continued strong levels of guest satisfaction. Guest feedback is monitored daily through the touchscreens at our attractions, generating over one million reviews each year. In 2018 we delivered an overall guest satisfaction score across the Group of 95%, and ‘Net Promoter’ score of 57%, which increased by three percentage points.
“We know that the better engaged our employees are, the better our guests’ experiences will be. We are therefore pleased to report that our annual employee survey – ‘The Wizard Wants to Know’ – which was completed by 95% of our employees, shows that 94% enjoy working at Merlin. Employee engagement at Merlin remains significantly above global benchmarks. We’re not stopping there though. In 2018 we developed a new employer brand and value proposition; ‘Love your Work. Work your Magic’, as we seek to attract, recruit and retain the very best people, and work is underway to encourage even greater diversity and inclusivity within the workplace through a number of new people initiatives.
“Our team of 28,000 employees should be proud of what we have achieved this year, and I would like to thank them for their continued dedication and for delivering another year of fun, safe, and memorable experiences for our millions of guests around the world.
“Midway reported organic revenue growth of 1.1% driven by the continued roll out of new attractions and a broadly flat like for like performance.
“Our Midway roll out programme can be segmented into two different types of investment: our existing brands opening in developed markets, and those attractions representing either pilots of new brands, or attractions opening in developing markets or in markets in which Merlin is less established. The two categories have significantly different profiles, with the latter typically generating lower short term returns and seeing greater fluctuations in visitor numbers as we build the brand or establish our presence in the new market. They are, however, a key part of our pipeline as they provide the platform for longer term growth and improving returns.
“In 2018, we opened seven attractions which, combined with those opened in 2017, contributed an additional £11 million to revenue growth in 2018. Attractions opened in 2018 comprised LDC Birmingham, the Shanghai Dungeon, LDC Columbus, Peppa Pig World of Play Shanghai, The Bear Grylls Adventure Birmingham and Little BIG City Beijing. SEA LIFE Nagoya is accounted for in the LEGOLAND Parks Operating Group.
“Overall, revenue grew by 0.1% on a like for like basis. The improvement in trends was driven primarily by London which returned to growth in the second half of the year, following the 2017 terrorist attacks. Our portfolio of attractions outside of Gateway cities, which comprises predominantly LEGOLAND Discovery Centres and SEA LIFE Centres saw continued growth, albeit impacted by the hot summer weather in Northern Europe which resulted in challenging trading conditions for a number of our attractions. We expect the non-Gateway city Midway attractions to deliver inflationary growth over time.
“Underlying EBITDA declined by 3.0% on a constant currency basis and resulted in a margin of 32.3% (31.0% including the effect of IFRS 15). The decline in margin was driven predominantly by the greater proportion of investment in openings of new brands or attractions in new markets, together with a number of non-recurring factors. These included the temporary closure of the LEGOLAND Discovery Centre in Shanghai due to the refurbishment of the shopping centre within which it is located and the non-recurrence of a sales tax rebate received in 2017. Otherwise, the margin was largely unchanged.
“Existing estate capex of £50 million was down slightly from 2017 despite the increased size of the estate, reflecting the capital allocation decision communicated in October 2017. This resulted in strong operating free cash flow conversion of 76% (2017: 77%).
“LEGOLAND Parks reported organic revenue growth of 6.4% in 2018 as the roll out of new accommodation offset a broadly flat like for like performance.
“A total of 644 new accommodation rooms were opened in 2018, comprising the 142 room Pirate Island Hotel at LEGOLAND Deutschland, the 252 room hotel at LEGOLAND Japan and the 250 room LEGOLAND California Castle Hotel. Combined with the rooms opened in 2017, this resulted in accommodation revenue growth of 39.7% on a constant currency basis.
“On a like for like basis, revenue declined by 0.3%, following several years of very strong growth which were driven by both well-targeted product investments and support from LEGO movie releases. Conversely, 2018 saw limited ‘new news’ reflecting a low point in our capital investment cycle and no LEGO movies.
“LEGOLAND Japan, which opened in April 2017, saw improved profitability in 2018. This was due to the non-recurrence of pre-opening costs, the effect of which more than offset a slight decline in attendance which is typical for new theme parks, following their opening year. Including the benefit of the new hotel and SEA LIFE, the resort saw growth in revenue compared to 2017.
“Underlying EBITDA grew by 7.7% on a constant currency basis and resulted in a margin of 38.2% (38.1% including the effect of IFRS 15). The slight improvement in margin, despite the like for like revenue decline and underlying cost inflation, is due largely to the uplift related to LEGOLAND Japan following its opening in April 2017.
“Depreciation increased by £9 million primarily relating to LEGOLAND Japan.
“Operating free cash flow conversion improved to 81% (2017: 80%) with existing estate capex of £45 million (2017: £45 million).
“Resort Theme Parks reported an improved performance in 2018, with organic revenue growth of 9.1%.
“The Operating Group enjoyed strong trading throughout the peak summer season and the Halloween period which is now one of the most important trading periods of the year due to successful product offerings such as ‘Scarefest’ at Alton Towers, resulting in like for like revenue growth of 8.6%. Our major capex investment at Alton Towers – the ‘Wicker Man’ roller coaster – drove growth in visitation and revenue per capita, whilst the introduction of Peppa Pig Lands at Heide Park and Gardaland proved similarly successful, supporting significant growth in the young family and pre-school markets. Additionally, very favourable weather in both the UK and Continental Europe allowed for a more positive market backdrop following the difficult conditions which adversely impacted 2017 performance.
“Accommodation revenue grew by 7.3% on a constant currency basis. This reflected the full period benefit of the 76 room CBeebies Hotel which opened in 2017, and continued growth in our existing accommodation.
“Underlying EBITDA grew by 23.1% on a constant currency basis and resulted in a margin of 24.5% (24.0% including the effect of IFRS 15). The margin increase is a result of continued tight cost control and strong like for like revenue growth.
“Operating free cash flow conversion improved to 59% (2017: 39%) due to growth in EBITDA and an £8 million reduction in existing estate capex.
“Merlin has the longer term aim of sourcing revenues equally from Europe, the Americas and Asia Pacific regions. 2018 performance against this is as follows:
“Europe (56% of revenue, 2017: 55%) saw organic revenue growth of 5.0%, driven by strong trading in the Resort Theme Parks attractions which are all in Europe.
“The Americas (27% of revenue, 2017: 27%) saw organic revenue growth of 6.6% driven by new Midway attractions and the opening of the 250 room LEGOLAND California Castle Hotel.
“Asia Pacific (17% of revenue, 2017: 18%) grew 3.8% on an organic basis. This is predominantly due to the opening of new Midway attractions in the region and the 252 room hotel at LEGOLAND Japan.”
[/tab][tab title=”Universal”]
On January 23, Comcast Corporation (NASDAQ: CMCSA) reported results for the quarter and year ended December 31, 2018.
Brian L. Roberts, Chairman and Chief Executive Officer of Comcast Corporation, said, “2018 was a successful and pivotal year for Comcast. I’m pleased with the strong operational and financial results that we delivered across the company. Highlighting a few of our accomplishments during the past year, Comcast Cable’s customer relationship growth accelerated, driven by our 13th consecutive year of over 1 million broadband net additions. 2018 Cable EBITDA growth was the highest in seven years, underscoring the financially attractive transition of our business to connectivity. NBCUniversal had a great year, fueled by double-digit growth in our TV businesses, reflecting our terrific broadcasts of big events like the NFL’s Super Bowl LII, the 2018 Olympics, and the FIFA World CupTM, and overall robust demand for our leading sports, news and entertainment content. We truly became a global company with our acquisition of Sky, and are excited about its future and the potential of our combined company in 2019 and beyond. Comcast’s track record of consistent financial performance and our confidence in our outlook for continued, profitable growth is what underpins our announcement of a 10% increase in our dividend in 2019, our 11th consecutive annual increase.”
Consolidated results for 2018 include Sky results from October 9, 2018 through December 31, 2018.
Consolidated Revenue for the fourth quarter of 2018 increased 26.1% to $27.8 billion. Consolidated Net Income Attributable to Comcast decreased 83.3% to $2.5 billion. Consolidated Adjusted Net Income Attributable to Comcast increased 31.8% to $2.9 billion. Consolidated Adjusted EBITDA increased 21.6% to $8.2 billion.
For the twelve months ended December 31, 2018, consolidated revenue increased 11.1% to $94.5 billion compared to 2017. Consolidated net income attributable to Comcast decreased 48.4% to $11.7 billion. Consolidated adjusted net income attributable to Comcast increased 22.0% to $11.8 billion. Consolidated Adjusted EBITDA increased 7.9% to $30.2 billion.
Earnings per Share (EPS) for the fourth quarter of 2018 was $0.55, a decrease of 82.6% compared to the fourth quarter of 2017. Excluding $12.7 billion of net income tax benefits primarily associated with a reduction of our net deferred income tax liabilities as a result of the 2017 tax reform legislation in the fourth quarter of 2017, as well as other adjustments in the fourth quarters of 2017 and 2018, EPS increased 36.2% to $0.64.
For the twelve months ended December 31, 2018, EPS was $2.53, a 46.7% decrease compared to the prior year. Excluding $12.7 billion of net income tax benefits primarily associated with a reduction of our net deferred income tax liabilities as a result of the 2017 tax reform legislation in the fourth quarter of 2017, as well as other adjustments in 2017 and 2018, EPS increased 25.6% to $2.55.
Capital Expenditures increased 16.8% to $3.2 billion in the fourth quarter of 2018. Cable Communications’ capital expenditures increased 7.6% to $2.3 billion in the fourth quarter of 2018, reflecting higher spending on scalable infrastructure, customer premise equipment and line extensions, partially offset by decreased investment in support capital. Cable capital expenditures represented 16.4% of Cable revenue in the fourth quarter of 2018 compared to 16.0% in last year’s fourth quarter. NBCUniversal’s capital expenditures of $595 million increased 13.5%, reflecting the timing of spending on facilities, as well as continued investment at Theme Parks. Sky had capital expenditures of $222 million, reflecting continued deployment of Sky Q.
For the twelve months ended December 31, 2018, capital expenditures increased 2.3% to $9.8 billion compared to 2017. Cable Communications’ capital expenditures decreased 3.0% to $7.7 billion, reflecting decreased spending on customer premise equipment and support capital, partially offset by higher investment in scalable infrastructure and line extensions. For the year, Cable capital expenditures represented 14.0% of Cable revenue compared to 15.0% in 2017. NBCUniversal’s capital expenditures increased 15.2% to $1.7 billion in 2018, primarily reflecting investment at Theme Parks.
Net Cash Provided by Operating Activities was $5.8 billion in the fourth quarter of 2018. Free Cash Flow was $2.1 billion.
For the twelve months ended December 31, 2018, net cash provided by operating activities was $24.3 billion. Free cash flow was $12.6 billion.
Dividends and Share Repurchases. During the fourth quarter of 2018, Comcast paid dividends totaling $865 million and repurchased 27.2 million of its common shares for $1.0 billion. For the full year, Comcast made four cash dividend payments totaling $3.4 billion and repurchased 139.7 million of its common shares for $5.0 billion, resulting in a total return of capital to shareholders of $8.4 billion.
As previously announced, Comcast will pause its common stock repurchase program in 2019 to accelerate the reduction of indebtedness it incurred in connection with its acquisition of Sky.
Today Comcast announced that it increased its dividend by 10% to $0.84 per share on an annualized basis for 2019. In accordance with the increase, the Board of Directors declared a quarterly cash dividend of $0.21 a share on the company’s stock, payable April 24, 2019 to shareholders of record as of the close of business on April 3, 2019.
Consolidated Pro Forma Financial Results
Pro forma results are presented as if the Sky transaction occurred on January 1, 2017. The pro forma amounts are primarily based on historical results of operations, adjusted for the allocation of purchase price and excluding costs directly related to the transaction. These amounts are not necessarily indicative of what our results would have been had we operated Sky since January 1, 2017, and are subject to change as our acquisition accounting is finalized.
Consolidated Pro Forma Revenue for the fourth quarter of 2018 increased 5.2% to $28.3 billion. Consolidated Pro Forma Adjusted EBITDA increased 11.1% to $8.3 billion.
For the twelve months ended December 31, 2018, consolidated pro forma revenue increased 6.4% to $109.5 billion compared to 2017. Consolidated Pro Forma Adjusted EBITDA increased 4.8% to $32.4 billion.
Revenue for NBCUniversal increased 7.1% to $9.4 billion in the fourth quarter of 2018. Adjusted EBITDA increased 12.3% to $2.1 billion, primarily reflecting increases at Broadcast Television and Cable Networks, partially offset by a decrease at Filmed Entertainment.
For the twelve months ended December 31, 2018, NBCUniversal revenue increased 8.9% to $35.8 billion compared to 2017. Adjusted EBITDA increased 4.6% to $8.6 billion, reflecting increases at Broadcast Television, Cable Networks, and Theme Parks, partially offset by a decline at Filmed Entertainment.
Theme Parks revenue increased 3.5% to $1.5 billion in the fourth quarter of 2018, reflecting higher attendance and per capita spending. Adjusted EBITDA increased 0.7% to $666 million in the fourth quarter of 2018, reflecting an increase in revenue, partially offset by higher operating expenses.
For the twelve months ended December 31, 2018, revenue from the Theme Parks segment increased 4.4% to $5.7 billion compared to 2017, reflecting higher per capita spending. Adjusted EBITDA increased 3.0% to $2.5 billion compared to 2017, due to higher revenue, partially offset by an increase in operating expenses.
[/tab][tab title=”Six Flags”]
On February 14, Six Flags Entertainment Corporation (NYSE: SIX), the world’s largest regional theme park company and the largest operator of waterparks in North America, announced that 2018 represented its ninth consecutive record year as revenue increased $105 million or 8 percent to $1.5 billion. The full-year revenue growth was primarily driven by a 5 percent increase in attendance; a 2 percent increase in guest spending per capita, driven by a 4 percent admissions per capita increase due to improved pricing on all admissions products and sales of memberships with premium tiers; and a 7 percent increase in sponsorship, international agreements and accommodations revenue. Attendance at the company’s parks grew to 32.0 million guests in 2018, primarily driven by five domestic parks acquired in June 2018, the benefit of 365-day operations at Six Flags Magic Mountain, strong growth in Mexico, and growth at the company’s waterparks.
Net income for the year ended December 31, 2018, increased $2 million or 1 percent, driven by the growth in the business described above and a reversal of stock-based compensation expense related to the company’s Project 600 target not being achieved, partially offset by the positive cumulative effect of tax reform realized in the fourth quarter of 2017. Diluted earnings per share for 2018 was $3.23, representing an increase of $0.14 or 5 percent compared to 2017. Adjusted EBITDA for 2018 increased to a new high of $554 million, up $34 million or 7 percent compared to prior year, and Modified EBITDA for the year was $594 million. The company’s 2018 Modified EBITDA margin of 40.5 percent continues to lead the theme park industry. Foreign currency translatio had a negative impact on full-year 2018 Adjusted EBITDA of $2 million.
“I am very proud that we have achieved our ninth consecutive record year,” said Jim Reid-Anderson, Chairman, President and CEO. “Our exceptional operating performance in the fourth quarter demonstrates the strength of our pricing power, membership strategy, and in-park spending programs, all of which, together with our domestic and international park expansion initiatives, will provide a strong platform for growth for many years to come.”
Record fourth quarter 2018 revenue of $270 million grew $13 million or 5 percent compared to the fourth quarter of 2017. The strong revenue growth was primarily driven by a 6 percent increase in guest spending per capita and a 3 percent increase in attendance. This growth was offset by an unfavorable revenue adjustment of $15 million related to the company’s international agreements due to delays in the expected opening dates of some of the parks in China caused by a challenging macroeconomic environment. This resulted in a 38 percent decline in sponsorship, international agreements and accommodations revenue compared to the fourth quarter of 2017.
Guest spending per capita for the fourth quarter increased $2.35, with admissions per capita increasing $1.74 or 8 percent and in-park spending per capita increasing $0.61 or 4 percent relative to the same period in 2017. Net income for the fourth quarter of 2018 was $79 million, a decrease of $19 million from the same period in 2017 due to the favorable impact of tax reform that was realized in the fourth quarter of 2017, offset by the 2018 reversal of stock-based compensation expense related to the Project 600 award and continued operating earnings growth. Adjusted EBITDA of $95 million represented an increase of $8 million or 9 percent compared to the fourth quarter of 2017.
Guest spending per capita in 2018 was $42.58, an improvement of $0.97 or 2 percent compared to 2017, primarily due to sales of premium membership tiers, ticket price increases and higher in-park spending driven by members and by sales of all season dining passes, partially offset by lower guest spending per capita in the five newly acquired parks. Admissions per capita increased $0.93 to $25.30, and in-park spending per capita increased $0.04 to $17.28.
Deferred revenue of $146 million, a year-end record high, increased by $4 million or 3 percent compared to December 31, 2017, primarily due to incremental sales and higher prices of memberships and all season dining passes. The Active Pass Base, which represents the total number of guests who are enrolled in the company’s membership program or have a season pass, increased 8 percent year-over-year as a result of the company’s continued success in upselling guests from single day tickets to memberships and season passes. The mix of memberships in the Active Pass Base increased significantly as a result of the company’s early 2018 roll-out of a new membership program with premium tiers. Members are the company’s most loyal and valuable guests, with higher retention rates and higher revenue—especially from the premium membership tiers—compared to traditional season passes. As the company is successful in growing memberships, it expects cash receipts to be delayed due to members making payments monthly versus traditional season pass holders, who pay for the entire season in advance. In addition, as these members are retained beyond the initial twelve-month compulsory period, the company expects deferred revenue growth to be muted as revenue is recognized monthly.
In 2018, the company generated $293 million of Adjusted Free Cash Flow. The company invested $133 million in new capital projects and $23 million, less net working capital and other customary adjustments, to acquire the lease rights to five new parks; paid $267 million in dividends, or $3.16 per share for the year; and repurchased $111 million of its common stock. The authorized amount available for additional share repurchases as of December 31, 2018, was $232 million. Net Debt as of December 31, 2018, calculated as total reported debt of $2,107 million less cash and cash equivalents of $45 million, was $2,062 million, representing a net leverage ratio of 3.7 times Adjusted EBITDA.
[/tab][tab title=”Cedar Fair”]
On February 13, Cedar Fair Entertainment Company (NYSE: FUN), a leader in regional amusement parks, water parks and immersive entertainment, reported record net revenues for its full-year and fourth-quarter 2018 results. The Company also announced a new long-term Adjusted EBITDA growth target.
Cedar Fair President and CEO Richard A. Zimmerman said, “I am proud of our exceptional team and all that we accomplished in 2018. In particular, we ended the year strongly, achieving new highs in attendance and net revenues for both the fourth quarter and full year. Guests of all ages continue to delight in our immersive entertainment offerings including our Halloween Haunt and WinterFest celebrations. The success and expansion of these events has created momentum heading into 2019 as we are seeing strong sales activity in our advance purchase channels across all categories and all parks.
“As we look to the future, we remain committed to providing a compelling entertainment experience throughout the year for guests of all ages and we are confident we will entertain a record number of visitors again in 2019,” continued Zimmerman. “The FUNdamentals of our strategy are to broaden the guest experience through immersive new entertainment offerings that create urgency to visit our parks throughout the year; expand our season pass platform into a long-term relationship-based program to increase lifetime value for, and from, our guests; increase market penetration, particularly among the most attractive and growing audience segments within our markets; and pursue value-enhancing development opportunities adjacent to our parks. These initiatives will help us to achieve our new long-term Adjusted EBITDA goal of $575 million by 2023, and serve as the foundation for future growth well beyond the next five years.”
For the full year ended Dec. 31, 2018 , Cedar Fair generated record net revenues of $1.35 billion , an increase of $27 million , or 2%, compared with the prior year. Driving this increase was a 1%, or 189,000-visit increase in attendance to a record 25.9 million visits; a 1%, or $0.39 , increase in average in-park guest per capita spending to a record $47.69 ; and a 6%, or $8 million , increase in out-of-park revenues to a record $152 million .
The Company attributes the increase in 2018 attendance to its strong second-half performance, including its successful Halloween Haunt and WinterFest events. Six of Cedar Fair’s 11 amusement parks remained open in November and December of 2018, and Canada’s Wonderland near Toronto will add WinterFest to its 2019 calendar of events.
Average in-park guest per capita spending improved as a result of increases in both pure in-park spending and non-season pass admissions pricing. The food and beverage category again led the increase in pure in-park spending driven by the continued growth and popularity of the parks’ all-season dining and beverage programs. This is a reflection of the Company’s focus on offering its guests a variety of culinary choices ranging from grab-and-go street fare to more uniquely branded menu items created by each park’s executive chef.
The 6% increase in out-of-park revenues was driven primarily from the Company’s resort accommodations. The increased revenues were the result of higher occupancy rates and average daily room rates, combined with a 158-room expansion to the historic Hotel Breakers located on Cedar Point’s mile-long beach. These gains more than offset the revenue lost with the removal of the 187-room Sandcastle Suites hotel at Cedar Point after the 2017 season.
Operating income for 2018 was $291 million , down 2% when compared with 2017. The 2% increase in revenues was offset by an increase of $30 million , or 3%, in operating costs to $892 million and an increase of $2 million , or 2%, in depreciation and amortization to $156 million . The increase in operating costs, which the Company anticipated, was largely attributable to increased labor costs due to increases in market and minimum wages and, to a lesser extent, increases in operating supplies for personnel-related costs and for the new WinterFest event at the Company’s Kings Dominion park in Virginia .
Interest expense for 2018 was comparable with the prior year. The net effect of swaps resulted in a $7 million charge to earnings for 2018 compared with an immaterial impact to earnings in 2017. The difference reflects changes in fair market value for these swaps. During 2018, the Company recognized a $1.1 million loss on early debt extinguishment in connection with amending its 2017 Credit Agreement, as compared with a$23.1 million loss on early debt extinguishment related to its debt refinancing in the first half of 2017. The Company also recognized a $36 million net charge to earnings for foreign currency losses compared with a $29 million net benefit to earnings for 2017. Both amounts primarily represent the re-measurement of the U.S. -dollar denominated debt held at the Company’s Canadian property from the applicable currency to the legal entity’s functional currency.
A $35 million provision for taxes was recorded for 2018 to account for the tax attributes of the Company’s corporate subsidiaries and publicly traded partnership taxes, compared with a $1 million provision for taxes in 2017. The increase in the 2018 tax provision relates primarily to the prior-year implementation of the 2017 Tax Cuts and Jobs Act.
Net income for full-year 2018 totaled $127 million , or $2.23 per diluted limited partner (LP) unit, compared with net income of $215 million , or $3.79per diluted LP unit, in 2017.
Full-year Adjusted EBITDA, which management believes is a meaningful measure of the Company’s park-level operating results, was $468 million , down 2%, or $11 million , when compared with last year. Adjusted EBITDA declined as attendance growth was more than offset by higher operating costs and expenses primarily attributable to planned seasonal labor rate increases. Although the Company reported record attendance in 2018, attendance growth was lower than anticipated due to disruptive weather patterns during the first half of the year and into the peak vacation month of July. This lower-than-anticipated attendance growth was partially offset by a record August and strong growth in the fourth quarter. See the attached table for a reconciliation of net income to Adjusted EBITDA.
Introducing the Company’s new long-term strategy Zimmerman stated, “Our mission is simple: To make people happy by providing fun, immersive and memorable experiences. Behind the scenes, our employees are dedicated to creating an experience so extraordinary that our guests want to return again and again, driving sustainable and highly profitable growth. This commitment is fundamental to our culture and will continue to be the foundation of our success.”
The Company is targeting $575 million in Adjusted EBITDA by 2023, which implies a 4% compound annual growth rate over the next five years. To achieve the Adjusted EBITDA target, Cedar Fair will focus on the four most compelling opportunities to accelerate its growth and profitability:
Broadening the guest experience – Leverage the Company’s management expertise and assets to offer a broader entertainment experience at a quality and scale no other regional entertainment venue can match.
Expanding the season pass program – Promote advance purchase commitments that create more consistent visitation patterns and reduce the impact of disruptive events such as bad weather. The Company’s season pass program will continue to evolve with a focus on affordability, retention and increased visitation.
Increasing market penetration through targeted marketing efforts– Utilize consumer and market research and data analytics to identify the most attractive and growing audience segments within its markets and determine the best communication and distribution channels for which to reach them.
Pursuing adjacent development – Expand the Company’s out-of-park revenue streams and maximize the value of its existing portfolio through further development adjacent to its parks.
“I am excited about our direction, optimistic about our growth potential and confident in our strategy. Our new long-term strategy will drive continued value creation through a balanced approach of investing in our business and returning capital to our unitholders through an attractive and growing distribution,” said Zimmerman.
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On February 28, SeaWorld Entertainment, Inc. (NYSE: SEAS), a leading theme park and entertainment company, reported its financial results for the fourth quarter and fiscal year 2018.
“We are pleased with our strong fourth quarter and full year financial performance,” said John Reilly, Chief Operating Officer of SeaWorld Entertainment, Inc. “Throughout the fourth quarter and fiscal year, we have been focused on improving our execution with more effective pricing strategies, enhanced marketing and communications initiatives and the introduction of more compelling new rides, attractions and events. These efforts have led to strong attendance and revenue growth on a quarterly and annual basis. Throughout the year, we have also increased our focus and efforts to identify and execute on cost savings initiatives and efficiencies that have contributed to improved margins and increased profitability. We believe there are significant additional opportunities to further improve and enhance our execution and to identify and execute on additional cost savings and efficiencies that will drive strong revenue and profitability in 2019.”
“We have an exciting line-up of new rides, attractions and events across our parks planned for 2019,” continued Reilly. “I believe this is our best line up ever with a new ride, attraction or event in almost every one of our 12 parks. We are also enthusiastic about our new season pass program which we introduced in October. Our new season pass structure and pricing options make enjoying our parks more affordable than ever before with increased flexibility, more variety and some of the best and most valuable benefits we have ever offered. We are encouraged by our season-pass sales so far in 2019 which are showing double-digit increases over the prior year.”
“I am thrilled to have joined this team at such an exciting time for our Company as we close out a strong year and enter into 2019,” said Gus Antorcha, Chief Executive Officer of SeaWorld Entertainment, Inc. “While we delivered stronger financial results in 2018, we continue to believe there remains significant additional opportunity for improvement. We will continue to focus on improving our pricing strategies and our marketing and communication initiatives, introducing more compelling new rides, attractions and events across our park portfolio each year and reducing unnecessary costs and improving efficiencies across our park portfolio and in the park support center. Our team is committed to continue to drive top-line and bottom-line results and to operating more efficiently than ever before. We remain confident in our ability to achieve our 2020 goal of delivering $475 million to $500 million of Adjusted EBITDA. We are excited about the future and our ability to continue to deliver meaningful operational and financial improvement that should lead to meaningful increased shareholder value.”
In the fourth quarter of 2018, the Company hosted approximately 4.6 million guests, generated total revenues of $280.0 million, incurred a net loss of $11.1 million and reported Adjusted EBITDA of $64.6 million. Net loss includes approximately $8.2 million of pre-tax expenses associated with a loss on extinguishment of debt and write-off of discount and debt issuance costs, $2.5 million related to disposals associated with certain rides and equipment which were removed from service and $1.0 million related to separation-related costs. Net loss in the fourth quarter of 2017 includes approximately $0.1 million of pre-tax expenses associated with a restructuring program.
The Company believes the improved attendance results from a combination of factors including the Company’s new pricing strategies, new marketing and communications initiatives and the positive reception of new rides, attractions and events. Attendance in the fourth quarter also benefited from the popularity and expansion of special event days for the Company’s Christmas events at some of its parks. Revenue was positively impacted by the strong increases in attendance and improved in-park per capita spending (defined as food, merchandise and other revenue divided by total attendance) partially offset by lower admission per capita (defined as admissions revenue divided by total attendance). The decline in admission per capita primarily results from the impact of new pricing strategies and visitation mix. Adjusted EBITDA was positively impacted by increases in attendance and the impact of an increased focus on cost efficiencies and the realization of cost savings initiatives.
In 2018, the Company hosted approximately 22.6 million guests and generated total revenues of $1.37 billion, net income of $44.8 million and Adjusted EBITDA of $401.3 million. Net income includes approximately $54.0 million of pre-tax expenses associated with the following: (i) $17.4 million related to restructuring and other separation-related costs; (ii) $12.1 million related to legal settlements; (iii) $10.9 million related to disposals associated with certain rides and equipment which were removed from service; (iv) $8.2 million related to a loss on extinguishment of debt and write-off of discounts and debt issuance costs; and (v) $5.5 million related to non-cash equity compensation associated with certain executives which separated from the Company. Net loss in 2017 includes approximately $301.4 million of pre-tax expenses associated with the following: (i) $269.3 million related to a non-cash goodwill impairment charge, (ii) $8.4 million related to non-cash equity compensation expense with respect to performance awards which vested in the second quarter of 2017, (iii) $8.1 million related to a loss on early extinguishment of debt and write-off of discounts and debt issuance costs, (iv) $7.8 million related to a loss caused by an amended agreement; (v) $5.2 million associated with a restructuring program, and (vi) $2.5 million related to a legal settlement accrual.
The Company believes the improved attendance results from a combination of factors including the Company’s new pricing strategies, new marketing and communications initiatives and the anticipation and reception of new rides, attractions and events. Revenue was positively impacted by the strong increases in attendance and in-park per capita spending partially offset by lower admission per capita. The decline in admission per capita primarily results from new pricing strategies. Adjusted EBITDA was positively impacted by increases in attendance and the impact of an increased focus on cost efficiencies and the realization of cost savings initiatives.
2019 New Rides, Attraction and Event Line Up
Busch Gardens Tampa Bay: Tigris, Florida’s tallest launch coaster is a triple launch steel coaster that will catapult riders through an exhilarating array of looping twists with forward and backward motion, breath-taking drops, a 150-foot skyward surge, and an inverted heartline roll, all at more than 60 miles per hour and the 60th Anniversary Celebration commemorating 60-years of fun with 52-weeks of events including a year-round free beer promotion for guests over 21 years of age.
SeaWorld Orlando: Sesame Street at SeaWorld Orlando, an immersive new land that will feature exciting rides, wet and dry play areas and interactive experiences designed to entertain the entire family including a daily party on Sesame Street and SeaWorld Orlando’s first-ever parade. Guests can explore the iconic neighborhood and walk through Abby Cadabby’s garden, visit Mr. Hooper’s store, stop by Big Bird’s nest, sit on the famous 123 stoop and meet everyone’s favorite friends from Sesame Street including Elmo, Cookie Monster and Big Bird.
Aquatica Orlando: KareKare Curl, a first-of-its-kind in Orlando, this family clover-tube ride sends guests soaring on a high-adrenaline, weightless adventure as they climb a vertical wave wall.
SeaWorld San Diego: Tidal Twister, a first-of-its-kind dueling roller coaster that accelerates riders as they twist and bank just as if they are riding the tide along a tight figure-8 track that includes a dynamic roll at the center.
SeaWorld San Antonio: Turtle Reef, a one-of-a-kind interactive sea turtle attraction that will give guests an up-close look at live threatened and endangered sea turtles. Populated with non-releasable sea turtles – turtles that are unable to survive in the wild on their own – the attraction will encourage guests to be more conscious about human impact on the oceans and environment. Sea Swinger, one of the tallest, fastest and most thrilling swing rides in the entire state of Texas – swinging riders 180-degrees in both directions while twisting them in a circle. And, Riptide Rescue, will provide younger guests and families an opportunity to board a rescue boat and set out on their own sea turtle rescue mission.
Aquatica San Antonio: Ihu’s Breakaway Falls, a one-of-a-kind, multi-drop tower slide, the steepest in Texas where riders will drop feet-first through spiraling tubes until they reach the splash pool finale.
Busch Gardens Williamsburg: Finnegan’s Flyer, Virginia’s first Screamin’ Swing that will take riders up more than 80 feet at speeds reaching 45 miles per hour.
Water Country USA: Cutback Water Coaster the first Rocket BLAST coaster on the East Coast and Virginia’s first hybrid water coaster will propel riders through tunnels, up and down steep hills and speed onto the wide-open space of massive saucer-shaped features on over 850 feet of water slide.
Sesame Place: An all-new Sesame Street Neighborhood where the iconic street will be updated to reflect the reimagined, vibrant set now seen on Sesame Street with brand-new storefronts including an updated Mr. Hooper’s Store and the iconic 123 stoop. Guests can take a stroll through Abby Cadabby’s Garden and pose for a photo in Big Bird’s Nest. And, introducing the newest (and biggest!) neighbor to Sesame Place – Mr. Snuffleupagus! Guests will be able to meet and take photos with Snuffy and Big Bird throughout the spring and summer at Abby’s Paradise Theater.
Share Repurchases
During the fourth quarter of 2018, the Company repurchased approximately 3.65 million shares of common stock at a total cost of approximately $98.0 million. All of the repurchased common stock were held as treasury shares at December 31, 2018. As of December 31, 2018, the Company had approximately $92.0 million available for future repurchases under a previously authorized share repurchase program. On February 22, 2019, the Company’s Board of Directors approved a replenishment to its share repurchase program of $158.0 million, bringing the total authorized repurchase amount to $250.0 million. The number of shares to be purchased and the timing of purchases will be based on the Company’s trading windows and available liquidity, general business and market conditions and other factors including legal requirements and alternative opportunities.
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On February 27, Parques Reunidos announced it had closed the period October-December 2018 with revenue of 73 million Euros. This represents a like-for-like increase of 6.4% compared with the same period of the previous year.
The results of three months benefit from commercial actions such as the increase of season passes (+13%), which improve earnings visibility for the remaining season and off-season events such as Halloween and Christmas campaigns. The total number of visitors reached 2.8 million, growing at +4.2% rate on a like-for-like basis.
Parques Reunidos’ business seasonality –high season is concentrated between June and September— means that the October-December quarter represents only 12% of the total annual revenue. This explains an EBITDA of -2.8 million Euro, in comparison with the -2.5 million for the same period of the previous year, due to the mix of parks opened given our business seasonality and a calendar effect in the US.
José Díaz, recently appointed as CEO, is leading the development of a New Strategic Plan that will be presented to the market in the coming months. This plan will focus on delivering organic growth, integrating and achieving the expected returns on Tropical Islands acquisition and a smart capex investment.
Expansion capex under development currently amounts to 70 million Euro investment and includes Ducati World at Mirabilandia (Italy), Steelers Country at Kennywood (USA), Cartoon Network Hotel at Dutch Wonderland (USA) and Living Shores Aquarium at Story Land (USA).
Lastly Parques Reunidos will follow, from now onwards, the custom of most quoted companies and adopt the calendar year, therefore next fiscal year will end in December 2019, as opposed to September.
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