Release Date: February 24, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- EVT Ltd (ASX:EVT, Financial) reported a record first-half EBITDA for the hotels division, up 10.9% to $58.2 million, indicating strong performance and margin improvement.
- The company's Fewer Better cinema strategy led to record results in average admission price and merchandising spend per head, mitigating the revenue impact of reduced admissions.
- The hotels division achieved a record first-half revenue, with occupancy up 3.4 points to 79.6%, approaching pre-COVID levels.
- EVT Ltd (ASX:EVT) declared a fully franked interim dividend of $0.16 per share, reflecting a commitment to returning value to shareholders.
- The company has a strong property portfolio valued at around $2.3 billion, with plans to divest non-core properties to recycle capital into hotel growth initiatives.
Negative Points
- Revenue for the first half was $649.1 million, marginally down 1.5% on the prior year, indicating a slight decline in overall performance.
- The entertainment group revenue was down 3.7%, impacted by film supply disruption following the 2023 Hollywood strikes.
- Thredbo's revenue was down 1.9% due to adverse winter weather, with the resort closing four weeks earlier than planned.
- The entertainment group EBITDA was down 14.9%, reflecting challenges in maintaining profitability amidst fewer blockbuster film releases.
- In New Zealand, admissions were down 14.5%, revenue fell by 10.5%, and EBITDA resulted in a loss of $800,000, highlighting regional performance issues.
Q & A Highlights
Q: Can you explain the factors behind the 5% growth in EBITDA for the entertainment sector in December, despite a 30% drop in admissions?
A: Jane Hastings, CEO, explained that the growth was driven by EVT's premiumization strategy, merchandising strategies, and operational efficiencies, as well as the "Fewer Better" strategy, which focuses on investing in high-return sites.
Q: How did the R-16 rating for films like Wolverine impact New Zealand's performance compared to Australia?
A: Jane Hastings noted that the R-16 rating for films like Wolverine and Joker in New Zealand limited their audience, but other titles performed as expected.
Q: Regarding the sale of 525 George Street, what exactly is being sold, and can you share the book and fair value of these assets?
A: Jane Hastings confirmed that the entire 525 George Street property, including the George Street Cinemas, is being sold. However, she declined to disclose the book or fair value to ensure a competitive sale process.
Q: How does the "Fewer Better" cinema strategy affect EVT's leverage to blockbuster films?
A: Jane Hastings assured that the strategy does not diminish EVT's ability to maximize blockbuster films, as there are sufficient seats and demand drives yield strategies. The strategy is designed to optimize returns without limiting admissions.
Q: What are the plans for capital management if 525 George Street is sold, and how does EVT view the potential for a special dividend versus other options?
A: Jane Hastings stated that all options, including a special dividend, buyback, or capital return, will be considered by the Board upon a successful sale. The focus is on achieving the best return from the sale.
Q: Can you provide insights into the impact of poor weather on Thredbo's performance and expectations for normalized summer trading?
A: Jane Hastings explained that adverse weather, particularly strong winds, impacted mountain biking visitation in November and December, which was down 18.5%. However, conditions improved over the Christmas period, leading to growth.
Q: How does EVT plan to recycle proceeds from asset sales, and what is the status of the premiumization of the existing hotel portfolio?
A: Jane Hastings mentioned that EVT plans to use proceeds for hotel upgrades and expansion, with an estimated $140 million to $160 million needed for projects. The focus is on growth rather than reducing earnings.
Q: What is the benchmark for determining whether a blockbuster film is successful for EVT, and how does the current film slate compare to pre-COVID levels?
A: Jane Hastings indicated that a $15 million box office take is the benchmark for a successful blockbuster, though results can vary significantly. The current film slate is expected to normalize with more consistent blockbuster releases.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
