Why the Ardent Leisure (ASX:ALG) share price is climbing 5%

The Ardent Leisure Group Ltd (ASX: ALG) share price is up around 5% today following a trading performance update. We take a closer look.

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The Ardent Leisure Group Ltd (ASX: ALG) share price is on the move today following a trading performance update.

During late morning trade, the entertainment company’s shares are swapping hands for 86.5 cents, up 4.85%. In earlier trade, the Ardent Leisure share price climbed as high as 90 cents before retreating to its current level.

Let’s take a closer look at what the company announced.

Strong revenue momentum

Investors are fighting to get a hold of Ardent Leisure shares after the company revealed robust trading conditions.

According to its release, Ardent Leisure’s recent trading performance for Main Event Entertainment is continuing to recover.

For the first week of May (fiscal week ending 11 May), constant revenue increased by around 8%. The lift was attributed to strong, ongoing walk-in revenue, which partly offset the soft end-of-year school event business. The latter represented roughly 25% of the revenue mix from Ardent Leisure in the prior corresponding period.

Contributing to the strong result, 42 of the 44 centres operated by Ardent Leisure have re-opened. The remaining 2 locations are set to re-open their doors this month and in June, subject to COVID-19 restrictions.

Pleasingly, Main Event has generated positive earnings before interest, tax, depreciation and amortisation (EBITDA) throughout the second half of FY21. Ardent Leisure highlighted that the outcome is due to its efficient cost management policies within its centres and head office.

Segmented EBITDA (excluding specific items) for March and April recorded US$23.7 million. In comparison, this is 79% higher than the same time period in FY19 (US$13.2 million). However, when including the months of January and February, the variance between the two time periods diminishes. FY21 for the four months ending April, achieved EBITDA of US$29.4 million as opposed to US$26.2 million for FY19.

Ardent Leisure stated that the business has a high EBITDA cash conversation rate. Significant operating cash flows are generated before new centre capital spend and repayment of debt. New centre net capital spend came to US$4.1 million during the current second-half.

Available cash to its United States business stood at US$80.8 million, with outstanding debt totalling US$163.5 million.

About the Ardent Leisure share price

Over the last 12 months, the Ardent Leisure share price has accelerated to post a gain of close to 170%. This is a stark contrast from when the company’s shares nosedived to an all-time low in February last year.

Based on today’s prices, Ardent Leisure presides a market capitalisation of about $426 million, with approximately 479 million shares outstanding.

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