Surge in theme park demand sees Ardent Leisure revenue rebound

Ardent Leisure (ASX: ALG) has seen revenue for the December half more than double year-on-year to hit $43.76 million as consumers flock to its Dreamworld, WhiteWater World and Skypoint attractions on the Gold Coast.

The result comes eight months after the group sold off Main Event to US-based restaurant and entertainment group Dave & Buster’s for US$835 million (AUD$1.2 billion) – a decision which contributed 97 per cent ($649.5 million) to net profit for the half.

The company also reported earnings from continuing operations hit $32.2 million, bouncing back from a $15.9 million loss on the prior year and marking the group's first positive gain in the half after six years. Theme park attendance also grew by 67.4 per cent year-on-year, reaching 617,200 visitors.

“A return to positive EBITDA in the half for the first time in six years is a meaningful milestone in the recovery of this iconic business,” Ardent Leisure CEO Greg Yong said.

“Our strategy to focus on safety, be disciplined on costs to fund our priorities and to deliver an exceptional guest experience through brilliance at basics and providing memorable in-park interactions is yielding results.

“Economic headwinds remain front of mind, and it is prudent for us to regularly contemplate how to appropriately position the business to deal with these challenges.”

The earnings result was impacted by several significant one-off specific items, including an unrealised derivative gain of $32.9 million on hedging of Main Event sale proceeds, Dreamworld incident-related costs of $1 million, and $100,000 in lease payments no longer recognised in EBITDA under AASB 16 Leases.

Adjusting for these items, earnings from continuing operations reached $300,000 for the period - up $16.7 million versus a $16.4 million loss in 1H22, primarily driven by a solid recovery in the theme parks and attractions business.

Event programmes such as globe riders, aerial acts, comedy acts, and hydro stunts in the Dreamworld Pond proved to be popular with guests for the half, with the division recording an EBITDA of $3.3 million in 1H23 - representing its first positive earnings result since 1H17.

The result compares to a loss of $11.8 million year-on-year despite the prior period benefitting from a $2 million injection from the government’s Major Tourism Experiences Hardship Grant.

“In what has been a long recovery journey for Ardent, exacerbated by the COVID-19 pandemic, the significantly improved trading performance demonstrates the resilience of our theme parks and attractions business particularly during the recent challenging times,” Ardent Lesiure chairman Dr Gary Weiss said.

“The group now has ample cash to fund its investment in the theme parks & attractions business, and with no debt and unencumbered assets, has a solid financial foundation moving forward.

“We are encouraged by the growth trajectory experienced in the second half of FY22 which has continued into the first half of FY23, and we believe the business is well placed to benefit further from the gradual return of international visitors and steady recovery of the tourism industry.”

Ardent Leisure added it was well capitalised to fund its recovery and future investments, which include pumping more than $50 million into new rides, as well upgrading current ones.

This includes a new Wave Swinger ride, as well as a new ‘Rivertown’ precinct offering a vintage cars attraction and a new major family rollercoaster. Anticipated to cost $35 million, the new ‘Jungle Rush’ coaster will feature the world’s first inclined turntable, and include 12 airtime elements in addition to the ability to run both forwards and backwards.

Following the Main Event sale in June 2022, all debt facilities were fully extinguished, along with an amount payable to the Australian Taxation Office (ATO) of $11 million.

Shares in ALG are up 6.6 per cent at 73 cents each at 11:49am AEDT.