The group is divided into five main divisions:
>> Health Clubs
>> Main Event Entertainment
>> Theme Parks
3Q trading update
The group’s 3Q13 trading update showed solid improvement when compared to the same nine months in FY12. AAD’s group revenue was $336.7 million, a 13.2% increase.
Revenue for Theme Parks was 4.2% higher than the prior corresponding period, at $79.9 million. EBITDA grew 0.9% to $27.6 million. The Bowling Division continues to be a drag on earnings with EBITDA for the nine months declining 16.1% to $10.2 million.
Goodlife Health Clubs EBITDA increased 42.8% to $21.6 million, assisted by the acquisitions of the Fenix and Fitness First businesses in 1H13. Main Event continues to impress with revenue expanding 28.1% to US$53.1 million and EBITDA rising 38.1% to US$12.8 million.
Main Event is a family entertainment concept with broad appeal to any age group, as well as the corporate market with its cafe, conference and bar facilities.
There are currently 12 Main Events located in Texas, U.S.A., with activities that include:
>> Ten pin bowling – with state of the art lanes
>> Laser tag
>> Games arcade – over 100 of the latest video games
>> Rock climbing
>> Glow golf
The group is planning to expand the number of complexes in the US to 19 by FY15, with construction commencing on a thirteenth Main Event site in Phoenix.
We really like the group’s expansion plans, particularly the metrics of site selection, which focuses on highly dense, greater affluence and high growth areas.
The yield play
AAD offers a healthy distribution yield for a company considered to be in a growth phase. The group is listed as a trust, which requires it to distribute all excess earnings on a yearly basis to unit holders.
AAD is forecasted to pay a distribution of 12 cents a security for FY13, which equates to a healthy yield of 7.0% based on current prices. AAD has maintained or increased its distribution over the last six payments, with annual operating cash flow being stable at $60 million over the period.
AAD’s third quarter trading update showed solid growth for all but the Bowling division. We think that a recent change of management should see the Bowling division return to growth in the June or September quarter.
We also believe the Main Event division will be a main source of growth in coming years, particularly as it expands into higher growth areas of the US.