The Ardent Leisure Group Ltd (ASX: ALG) share price has dropped this morning after the theme park operator revealed a $136 million loss thanks to the impacts of COVID-19. The theme park operator was forced to close its venues in response to coronavirus, blowing a hole in its bottom line.
Ardent operates the popular Dreamworld theme park, as well as Whitewater World, Sky Point, and Main Event centres in the United States.
What did Ardent Leisure Group report?
Ardent reported group revenue of $398.3 million for FY20, down from $483.3 million in FY19. The $85 million reduction was due to the temporary closure of venues in response to social distancing and other measures to stop the spread of COVID-19. This was partially offset by a 1.9% increase in Main Event constant centre revenue. Encouraging signs of recovery were observed prior to the onset of COVID-19. But focus quickly turned to capital management and securing capital for the business as the pandemic escalated.
Main Event revenue declined 21.7% due to the temporary closure of centres, partially offset by new centres openings and revenue growth in existing centres prior to closures. Centres have been progressively reopened in May and June with 38 centres reopened at 30 June 2020. Post opening trading results have been soft as consumers remain cautious of the pandemic.
The theme parks division reported trading revenue of $54.5 million for the year, down 18.8%. The division incurred an earnings before interest, taxes, depreciation and amortisation (EBITDA) loss of approximately $24 million, compared to an EBITDA loss of $19.8 million in FY19. Ardent received $5.9 million in government support in the form of the JobKeeper subsidy. Overall, Ardent reported an EBITDA loss of $22.8 million after accounting for AASB16 lease adjustments.
Ardent reported a net loss after tax of $136.6 million, which comes on top of a $60.9 million loss in FY19. Unsurprisingly, no dividend was declared. RedBird Capital recently invested in the US business, giving it $129 million of available cash. The theme parks division has approximately $100 million of funding available to it consisting of cash and a recent $66.9 million Queensland Government loan.
What is the outlook for Ardent Leisure Group?
Uncertain and challenging conditions are expected to continue in FY21, but Ardent believes demand for out-of-home family entertainment will be stronger than ever once the pandemic subsides. The funding from RedBird and the government has ensured Ardent is well positioned for future growth once market conditions start to improve.
At the time of writing, the Ardent Leisure share price is down 3.30% to 44 cents per share.
