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Good show: Village Roadshow shares bounce 11% on earnings growth

The Village Roadshow Ltd (ASX: VRL) share price is on the rise today after the company reported its results for the 2019 financial year (FY19) this morning. Village Roadshow shares opened at $2.46 this morning but have since risen by 11.98% and are sitting at $2.71 at the time of writing.

What did Village Roadshow report this morning?

It was a strong year for Village Roadshow, with earnings (EBITDA) coming in at $124.9 million – a 37% rise compared to FY18’s $90.9 million. Operating cash flow also increased – up 285% from $21.4 million in FY18 to $82.4 million in FY19.

Village Roadshow was returned to profitability in FY19 – posting net profits after tax (NPAT) of $20.6 million, rising from FY18’s loss of $7.3 million. As such, the company has announced a fully franked final dividend of 5 cents per share, to be paid on 11 October.

The company’s bottom line has been boosted by the implementation of a cost reduction program, which has delivered annualised savings of over $10 million. In addition, the sale of Wet ‘n’ Wild Sydney as well as the sale and leaseback of the Coburg drive-in has enabled refinancing of a $340 million debt facility and leaves Village Roadshow with a net debt to EBITDA ratio of 1.76x for FY19.

The Theme Parks division was a standout performer for Village Roadshow, with total income rising to $$334.6 million (up from $305.3 million) and total earnings up 100% to $76.5 million. This was underpinned by ticket yields rising 25% as more consumers purchase (the more profitable) annual and multi-day passes. Meanwhile, the Film distribution division continues to be hampered by falls in DVD and Blu-Ray sales (as to be expected in the modern age of streaming).

The company has noted that the outlook for the Theme Parks division remains strong for FY20, with July attendance rates up 12.5% compared to the same period last year.

Outlook for Village Roadshow

Village Roadshow has not released any quantitative guidance for FY20, but Director Graham Burke stated:

It is anticipated that the VRL group will produce improved operating profits in FY2020. The Group’s brands are well recognised and respected, and all of the Group’s businesses are focused on ensuring that their customers have an enjoyable entertainment experience to encourage repeat visitation.  The company is committed to generating sustainable improved operating earnings and cash flows and maintaining an acceptable dividend return to shareholders.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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