Coast Entertainment Holdings Limited (CEH) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Ardent Leisure FY '20 Financial Results Conference Call. [Operator Instructions] I would now like to hand the conference over to Dr. Gary Weiss, Chairman of Ardent Leisure. Please go ahead, sir.

Thank you. Good morning, everybody, and welcome to the FY '20 Financial Results Presentation for Ardent Leisure Group. When Ardent Leisure reported its half year results on 21 February 2020, there were clear signs that the substantial efforts undertaken over the previous 2 years to fix Ardent were working and that a significant turnaround of both businesses was well underway. In relation to the Theme Parks division under the leadership of John Osborne and his new management team, we saw the division experienced attendance and revenue growth of 4.5% and 4.7%, respectively, a 56.4% improvement in EBITDA. SkyPoint was on its way to its best result ever under Ardent's ownership. Dreamworld saw the best crowds over the Christmas, New Year period since the 2016 tragedy. And attractions -- and Dreamworld had a pipeline of new IP and attractions including the Blue Fire coaster, one of the top 10 best roller coasters in the world, due for completion by the end of this year. In relation to Main Event, under the leadership of Chris Morris and his relatively recently recruited senior team, we saw sales trends in the business being the best in the previous 5 years with significant momentum in terms of like-for-like sales in Q2 and Q3 2020, up over 4% in both quarters. Guest experience metrics were at all-time highs. Team turnover was at a 4-year low. Guest traffic for the prior 12 months was up over 500 basis points, reversing the declining traffic trends over the previous 3 years. Three new center openings: Baton Rouge, Grand Prairie and Laredo, exceeding expectations; and the real estate pipeline built and ready to support 5 to 8 new center openings per year. As part of our half year results presentation, we announced the process to bring in a partner for Main Event to assist in accelerating the growth and expansion of Main Event. The Board's intent for this process was twofold: first, to find a partner to share the financial costs of an accelerated rollout of Main Event while also bringing relevant skills and relationships to support that process; and secondly, to release capital from Main Event to bring back to Australia to fund the rebuilding of Dreamworld and capital management initiatives. Regrettably, the advent of COVID-19 put an end to that plan. Instead, the focus over the last 6 months has been on business survival and establishing sources of liquidity to enable Ardent's businesses to get through the pandemic with the intent to resume the growth path and restoration of value as conditions improve. The Board has been successful in delivering significant financial support for both businesses without the need to call on shareholders to raise capital. In the case of Main Event, the partnership process initiated immediately prior to the pandemic saw the introduction of RedBird Capital as an investor into Main Event, and Chris will talk more about this in a few moments. In the case of our Theme Park division, we were successful in securing a significant financial assistance package from Queensland Treasury Corporation, and John will address this in his remarks. Both these initiatives have substantially strengthened Ardent's capital and liquidity position and will assist both businesses in navigating the current challenging climate. So with that introduction, I'll now pass to Darin.

Thank you, Gary, and good morning, everyone. I'll point you to Slide 2. Let me start by reminding you that the FY '20 statutory results include the impact of the new lease accounting standard, which significantly impacted our results for the year due to a portion of lease expenses now being reported below EBITDA as well as higher overall costs being recognized under the new standard. I refer you to Appendix 1 on Slide 30 where we provide both the balance sheet and P&L impact of the new lease accounting standard. As a result and impact of this new standard, we've provided both a reported and a pro forma presentation of our P&L within this presentation. Additionally, FY '20 was a 53-week year versus a 52-week year in the prior year. This extra week was contained in the first half results ending the 31st of December 2019. As Gary mentioned, our overall results for the second half of FY '20 were significantly impacted by the temporary but extended closure of our businesses in the U.S. and Australia due to COVID-19. As a result of these closures, total consolidated revenue for FY '20 declined $85 million to $398.3 million. While Main Event was able to gradually reopen 38 of its 43 centers by the end of June 2020, all of the Theme Park venues were closed on the 23rd of March 2020 and remained closed for the balance of FY '20 and into FY '21. This decline in revenue due to the closures resulted in total group EBITDA, excluding specific items, of $5.7 million, a decline of $48.5 million over the prior year. That said, the performance of our businesses prior to the onset of COVID-19 reflected the momentum and strength of both Main Event and Theme Parks and the success both teams were having in growing the business. Prior to COVID-19, as Gary mentioned, Main Event constant center revenue growth was up 1.9% on a 35-week like-for-like basis, and divisional EBITDA for Main Event was up over 5% from the prior year. Furthermore, Theme Park revenue increased nearly 5% on a 35-week like-for-like basis, and divisional EBITDA for Theme parks improved over 56% for the prior year. Partially offsetting some of our EBITDA decline year-over-year was a decrease in our corporate costs for the group, which reduced by $9.4 million or 62% on a pro forma basis as compared to FY '19. Moving to Slide 3. As we highlight key components of our liquidity and capital structure, it's important to note the highly disciplined approach the management teams at both Main Event and Theme Parks had in terms of managing our liquidity during this unprecedented time. The team is focused on short-term and permanent cost reductions, tight working capital management, stoppage of all discretionary operating and capital spend and extensive negotiations with key business partners. At the same time, the team has managed our liquidity in a way that provided for flexibility in reopening, ensuring safety for our team members and guests and maximizing our ability to return to profitability as quickly as possible. Lastly, as Gary mentioned, we significantly improved our capital structure in order to support the recovery of the businesses and position both for growth. Through the USD 80 million investment from RedBird Capital for 24.2% of Main Event and the AUD 69.9 million financial assistance package from the Queensland Government for the Australian business. As of the 30th of June 2020, the group had over AUD 161 million of cash, which excludes the financial assistance from the Queensland Government. Moving to Slide 4. We are presenting our group revenue and EBITDA performance both for the full year FY '20 as well as on a year-to-date basis through week 35 in order to provide color on our performance pre-COVID. As noted, revenue performance post-COVID was challenged due to the closure of all of our businesses, and in the case of Main Events, much softer consumer demand post reopening. However, pre-COVID, our consolidated revenue was up over $30 million or 10% versus the prior year. Similarly, our pre-COVID EBITDA, excluding specific items, was up over $10 million from the prior year, representing 35% growth. Let's go to Slide 5. As mentioned earlier, our current year results were significantly impacted by the adoption of the new lease accounting standard, which results in a significant portion of lease expenses primarily for Main Event now being reported below EBITDA as amortization of lease assets and lease interest expense as well as higher overall costs being recognized under the new standard. We're providing this pro forma adjustment in order to improve comparability with the prior period. Furthermore, while FY '20 includes 53 weeks, given the significant closures of our Main Event and Theme Park businesses due to COVID-19, we have not removed the extra week as it would not result in a meaningful impact. Turning to Slide 6. I'll touch on a few highlights. Overall, consolidated revenue declined 17.6% or $85 million driven by the closure of the Main Event centers and Theme Parks in mid- to late March 2020. This led to a $48.5 million decline in EBITDA, excluding specific items, versus the prior year. As noted earlier, we also benefited from a $9.4 million reduction in corporate costs, partially offsetting some of the business unit decline. The increase in depreciation and amortization reflects new Main Event centers that opened as well as a change in useful life of certain assets. The increase in borrowing costs reflects more indebtedness in FY '20 versus the prior year due to the stand-alone Main Event credit facility in April 2019 as well as higher rate spreads. Lastly, we reported income tax expense of $4.7 million, which reflects the derecognition of deferred tax assets, partially offset by underlying tax benefits associated with current year losses. On Slide 7, here, we provide a breakdown of the specific items impacting the results in the current and prior year. In addition to the aforementioned impact of the new lease accounting standard, we also recognized certain noncash valuation and impairment charges on property, plant and equipment associated with both Theme Parks and Main Event. These losses were primarily associated with the impact of COVID-19 on the recent trading performance and near-term outlook of the businesses. Furthermore, there was -- there has been a significant reduction in Dreamworld incident costs as well as restructuring and other nonrecurring items. I'll refer you to Appendix 2 for a breakdown of specific items by business unit. Next, let's turn our attention briefly to the performance of Main Event, and then I'll hand it over to Chris Morris. Moving to Slide 9. Main Event revenue declined over USD 64 million or nearly 22% from the prior year due to the impacts of COVID-19 and the associated closure of all of our centers on March 17. Constant center revenue declined 24.3% for FY '20. This decline was partially offset by 3 new center openings during FY '20, one in the first half and 2 in the second half. These 3 centers were all performing well above expectations in terms of revenue and profit prior to their closure due to COVID-19. We also closed 2 previously impaired locations, Pittsburgh and Indianapolis, during the second half of FY '20. These were 2 cash flow negative locations that we were able to successfully negotiate and exit from, helping us improve the overall health of our portfolio. Accounting for the new center openings and the closed locations, we ended June 2020 with 43 centers. We opened 1 additional center in the month of July in the Tampa Bay market that Chris will discuss here shortly, bringing our total to 44 centers. While we began progressively reopening centers in May and June, consumers remained cautious, resulting in anticipated top line challenges during the fourth quarter. This revenue decline resulted in an EBITDA decrease, excluding specific items, of $39.3 million or 74% from the prior year. Prior to the onset of COVID-19, Main Event's EBITDA for the 8 months ended the 3rd of March 2020 was $52.9 million. Moving to Slide 10. I'll note again that Main Event's constant center revenue growth through the end of period 8 prior to COVID was up 1.9%, reflecting nearly 2 consecutive quarters of over 4% constant center growth. This increase reflected the work we performed around our promotional offers, strategic growth in our late night business, strong event performance and growth in our games venue (sic) [ revenue ]. Furthermore, as Gary noted, we achieved this growth primarily through improved traffic, which reflected over a 500 basis point improvement versus the traffic trends of the past few years. With that, I'll now turn the call over to Chris Morris.

All right. Thank you, Darin. Good morning, everybody. Let's start on Slide 11. Listen, 2020 was certainly a year with significant challenges but also a year, by many accounts, very, very successful. I could not be prouder of the work done by our teams throughout the year. We made meaningful progress in all areas of the business. You can see that here on Slide 11. Brand and strategy, we launched a new brand identity, refreshed creative across all channels. We replaced our entire marketing team, internal and external, brought in brand-new partners and made a meaningful improvement just in building brand awareness and improving our brand identity in line with our consumer positioning. On guest experience, Gary mentioned at the outset that we achieved historical highs in our guest experience measures as a result of all the great work done by our operating teams and our continued commitment to deliver an unparalleled guest experience. As we've built our culture and continue to build a people-first culture and to communicate the vision and to bring our team members along the journey, we saw significant improvement in our turnover both at the hourly level and the management level. And our hourly turnover was the lowest level it had been in the previous 4 years. On innovation, we are a company that leads through innovation, and we've implemented several new forms of entertainment. We walked you through all of those. We built out a brand-new VR platform with 15 different experiences. We developed very important partnerships to help us deliver proprietary content in the future. We sourced a brand-new VP of Entertainment to help lead this effort, and we now have a solid pipeline of innovation to deploy as we move forward. On the real estate and development side, Gary mentioned, we opened 3 new centers. All centers were underbudget, ahead of schedule and all outperforming our expectations. We had a robust pipeline of new centers to support openings of 5 to 8 centers per year. We optimized our portfolio and exited 2 underperforming units. As Darin mentioned, 2 negative cash flow units, we were able to successfully exit those leases, Pittsburgh and Indianapolis. All of that work led to significant improvement in our financial performance. Our sales, the best performance in sales in the last 5 years, improved traffic by 500 basis points. And we positioned the company for the COVID-19 pandemic. Slide 12. As COVID happens, we -- our teams acted very quickly. We made a very difficult decision to close our centers on March 17 nationwide. We made that decision based on putting safety and sanitization at the forefront of all of our decisions. The health and safety of our team members are always our first priority, followed only by the health and safety of our guests. We immediately went into action to address the financial side of the business. We furloughed over 4,000 team members. All team members who were not furloughed took a pay cut, a very significant pay cut. Every single person and employee took a pay cut, from the top, all the way down. We created a COVID-19 task force which met daily and developed detailed response plans so we could be nimble and address things in an ever-changing environment. We immediately drew down on our revolver, given us ample liquidity to navigate the pandemic. We began to very tightly manage liquidity. We immediately implemented cost savings measures and immediately had very healthy conversations with all of our vendors and deferred nearly $20 million of payments. We amended our credit agreement with our lenders, obtaining 4 quarters of covenant waivers and conducted significant lease negotiations with our landlords. We implemented around $8 million of cost-cutting into the business. And as Gary mentioned, we found a great partner, RedBird Capital, to provide additional capital at a time when we really needed it, to not only navigate through the pandemic, but to ensure that we're able to continue to fund the most important strategic initiatives so we can return to growth at the right time and as quickly as possible. Today, we have 41 of our 44 centers open. For the centers that have reopened, our revenue is at least 30% of prior year levels. Since reopening, I have a chart in a few minutes I'll walk you through, but since reopening, we have seen steady improvement week-to-week. And the last couple of weeks, we have been down 30% from pre-COVID levels. Beyond all of this, we implemented, in our minds, the gold standard of safety and standardization standards in our industry. Our operating teams rose to the occasion, and we redefined our entire service model from the entry into the front door, all the way to the exit. Every single aspect of a Main Event experience has been redefined with health and safety at the forefront so we could continue to deliver a high-quality guest experience and make our guests feel comfortable coming into Main Event. And as I said earlier, I could not be prouder of our teams here at the support center and out in the field for all the hard work, the commitment to excellence throughout all of this. It has certainly made a difference and we believe is a big reason why we are seeing steady improvement in our sales. Slide 13, you can see the steady improvement. On the right-hand side, week-after-week, our sales continue to improve. I mentioned in the last couple of weeks we've been around 30% of where we were pre-COVID. In the last week, the week we just closed, week 8, our sales were down 25% compared to where we were prior to COVID. Let's move on to Slide 14, spend a few minutes talking about how we're managing the business this fiscal year during these unique challenges. Number one, we're very focused on staying true to managing through this pandemic. We continue to deliver on industry-leading safety for our guests and team members. We're continuing to focus on rebuilding event sales. Corporate events have been hit harder than any area of our business as corporations are still slow to return their employees back to the office and have gone through significant budgetary constraints. We're in the process of implementing several creative ways of being able to deliver an event-related experience that matches today's needs of our consumers. We're looking for ways of driving traffic and diversifying revenue in this unusual period of time. Continue to adapt and being nimble is how we believe we're going to work our way out of this. We're very focused on having -- being disciplined on liquidity management. I mentioned we've already implemented over $8 million of cost savings to shore up the financial side of the business to give us more ability to generate cash flow. We -- in the process of keeping our pipeline warm, so we have put all of our new unit development on pause during this period of time, but we have not turned off our conversations entirely. We're keeping our conversations with real estate developers warm, letting them know at the right time, we fully intend to return to growth, but we will not return to growth until we believe that we're beyond the pandemic, the business has returned and we have predictable cash flow. We believe that -- with the steady improvement we're seeing in our sales trends, we believe that we will be in a position to engage in conversations with developers as early as the second half of this year. So being very disciplined but at the same time not losing sight, we have an incredible opportunity to continue to grow this brand across the nation once market conditions improve. And so we don't want to find ourselves behind, but we don't want to get ahead of the curve as well. We're staying flexible, and we're positioning the brand for growth post recovery. It's a delicate balance between tight liquidity management as well as flexibility to pivot up and down. So we are managing this business day-by-day, week-by-week and making sure that we are not getting ahead of ourselves, but also ensuring that we continue the journey that we are on pre-COVID when conditions improve. Slide 15. A big part of this is having the capital structure and the support that we need from our sponsorship, and so we feel absolutely blessed to have a great partner at RedBird Capital. After going through an extensive process looking for the right minority partner, we believe that we found that in RedBird Capital. They are brand -- they're category believers. They're brand believers. They bring more than just capital to the equation. They bring a very significant understanding of our business and very important strategic relationships to help us continue to deliver curated content unique to Main Event that's consistent with our core brand positioning so we can continue to forge our difference in the marketplace and continue to build out Main Event in a way that's consistent with our brand promise. So we're absolutely pleased with this transaction. It was very well timed. And as I said, $80 million gives us the capital and liquidity necessary to not only navigate through the pandemic, but also to fund important strategic initiatives and to return our business to growth as quickly as possible. Slide 16 on new unit development. It's paused but we're ready to start at the right time. We opened Wesley Chapel in Tampa this fiscal year. It opened in July -- mid-July. And I'm pleased to say, even in today's environment, Wesley Chapel is performing exceptionally well and exceeding our targets at the time we made the investment -- or we signed off an investment to go into Wesley Chapel. So performing very well, we're quite pleased and we're very proud of the team that we've built there. And our operating team is -- continues to execute and take great care of our guests. And we cannot be happier about being in that market and look forward to continuing to deliver great guest experience for many years to come. F '22, as we look out through the year, even though we are prepared to ramp growth back up, we -- there's a very significant lead time to get our centers open given just the size and the complexity of the unit. So typically, it takes 18 months to 2 years from the time we sign off on a site until we're able to get it open. So that means as we're on pause and waiting for conditions to improve, that really means that it's possible F '22, we'll only have one new center opening and that's going to be Chesterfield, Missouri. So that's a site that was already approved and well underway to being developed. Beyond that, we're looking at F '23. So keeping the pipeline active, we're ready to move quickly at the right time, having ongoing conversations with developers. And as we move forward, once we decide to start, to ramp back up, we believe that we're going to be in a position to be very selective with real estate, and we believe there's going to be more inventory available than even pre-COVID. So with that, that summarizes our overview for Main Event. I'll now turn it over to John Osborne to cover Theme Parks.

Thank you, Chris, and good morning to everybody listening today. At the end of February, which was the last full year prior to our venues being temporarily closed, we experienced attendance and revenue growth of 4.5% and 4.7%, respectively, and the EBITDA was 56.4% better than prior year, demonstrating that the transformation plan was delivering on its objectives. Commencing in February -- commencing in mid-February commensurate with the start of the COVID-19 outbreak, attendance started to decline and continued to do so until Dreamworld, WhiteWater World and SkyPoint were required to close on the 23rd of March. There was no trading in quarter 4 due to the pandemic, and this caused an overall decline in FY '20 attendance and revenue of 21% and 19%, respectively, compared to FY '19. Despite the sharp decline in revenue, the EBITDA loss, excluding specific items, improved by 22% compared to FY '19, which again highlights the strong trading performance prior to the closure. As a result of the closure, we had to make the difficult decision to stand down 91% of our team members, with the balance being -- with the balance retained to carry out essential duties, such as caring for our animal collection. During the closure period, the management team focused on the preservation and generation of cash, reducing the underlying cost base, refinancing and preparation for a successful post-pandemic recovery. When we closed, cash available to the Australian business was approximately $33 million, and as of the date of this report, this amount is largely unchanged. The minimal cash burn was made possible by: ceasing all nonessential operating and capital expenditure; the sale of a small parcel of surplus land for $2.5 million, which was 250% of the pre-COVID book value; strong trading by the Dreamworld LEGO store, which was the only outlet to remain open during the closure period; a $3 million grant from the Queensland Government; and the federal government's JobKeeper scheme provided approximately $6 million of direct support to our stood down team members. Discussions with the Queensland Government about financial assistance for the theme park industry commenced in March, culminating in an announcement on the 7th of August that Ardent had received financial assistance for its Theme Park division under the Queensland Government's COVID-19 industry support package. The financial assistance package is for a 3-year term totaling $69.9 million, comprising a secured loan of $66.9 million, which includes capitalized interest and fees, and a ground of $3 million, both of which can be used to fund working capital and improve capital expenditure for Dreamworld, WhiteWater World and SkyPoint. The Queensland Government's decision shows its strong recognition of the important role the theme park industry plays in the economic development of Queensland and the broader tourism industry in Australia, and it will allow us to continue to provide direct and indirect employment for thousands of people. As of the date of this report, the Australian business has approximately $100 million of funding available to it, made up of cash and the undrawn Queensland Government loan. COVID Safe plans for all venues have been approved by Queensland Health, enabling both Dreamworld and WhiteWater World to reopen with numbers not to exceed 50% of their historical capacity. Following the relaxation of government restrictions, SkyPoint Observation Deck and Climb reopened on the 10th of July, and trading since has been cash neutral, including the support from the JobKeeper scheme. This is a pleasing result given this venue reopened in the middle of winter without access to international and interstate markets. Subject to any new COVID-related restrictions being imposed, both Dreamworld and WhiteWater World will reopen on the 16th of September prior to the commencement of the school holidays. The cost base for the division has been reduced by between $10 million and $12 million per annum compared to normalized FY '20 levels, providing scope to ease price in the short term to drive volume and local market share. Given that international markets may not return for approximately 2 years and interstate markets are likely to be restricted for some time, the only market we can confidently target is the local Southeast Queensland drive market. The reopening product for our venues will therefore be tailored to meet the needs of this market. All slides at the recently refurbished and improved WhiteWater World are expected to be available from the reopening date. Based on extremely low historical demand in the cooler months, WhiteWater World will move to a seasonal trading model. Construction of the new $32 million world-class roller coaster -- launch roller coaster is currently planned to commence in October, and it is expected to open in the second half of calendar year 2021. Based on the very positive feedback we have received from guests, we are confident this ride will be a great success. Several iconic attractions, such as the SideWinder roller coaster and popular Pipeline Plunge water slide complex are currently being extensively refurbished and rebranded. These works are nearing completion and will add to the many improvements made to our venues over the past 2 years. Areas and attractions within our Dreamworld Corroboree precinct will be temporarily closed pending the return of international and interstate markets, and we will work with our indigenous partners to ensure the cultural heritage that we are privileged to showcase is protected while this precinct remains closed. With the remaining ride count at Dreamworld being comparable to its closest competitor, a new world-class roller coaster on its way, the Gold Coast most up-to-date range of new and refurbished slides at WhiteWater World, a diverse range of native and exotic animal exhibits and regular special events, we are confident that our product presents a great option for kids, families and thrill seekers alike. This puts us in a good position to take advantage of the much anticipated post-COVID domestic tourism boom. We are currently facing the toughest set of business conditions in decades, meaning that uncertainty is likely to prevail for some time. We believe we have put ourselves in a good position to accept this challenge head on and have demonstrated that we are prepared to adjust quickly as conditions evolve. Finally, I would like to publicly acknowledge and thank our fantastic team for their dedication, resilience and hard work and support over the past 6 months. Thank you, all, and I'll now hand back to Darin.

Thanks, John. I'll quickly hit the highlights on the next few slides, and then we'll open up the line to Q&A. On Slide 26, I'll draw your attention to the ending cash balance of $161.6 million and net debt of $78.4 million. The $9 million decrease in net debt primarily reflects the infusion of capital from RedBird partially offset by capital investments, which are summarized on Slide 35. Moving to Slide 27. We highlight some key components of our capital structure. Total indebtedness under the Main Event credit facility was USD 164.7 million, reflecting the drawdown of $15 million under the delayed draw term loan as well as a full drawdown of our revolving credit facility in March 2020 of $25 million. There is currently no additional capacity under either a delayed draw feature or the revolving credit facility. Furthermore, the issuance of preferred shares of Main Event to RedBird Capital brought in USD 80 million of capital to Main Event. At the 30th of June 2020, Main Event had available cash of AUD 129 million, and the Australian business had available $32.6 million for a total of $161.6 million of cash. Note, the cash at each respective business as well as the debt at Main Event is subject to separate ring-fencing provisions whereby each business cannot access cash or debt facilities held by the other. Further note, the Australian business received a financial package that John walked through. And as noted earlier, the results of this funding and cash on hand, the Australian business has approximately $100 million of liquidity available and Main Event had $129 million of available cash on hand at the 30th of June. Lastly, on Slide 28, we highlight our corporate costs for FY '20, and note that there has been a significant reduction in spend due to prudent rationalization of the cost structure as well as a reduction in nonrecurring items. With that, I'll turn the call back over to the operator for Q&A.

[Operator Instructions] Your first question comes from Sam Teeger of Citi.

Maybe if I can just start with Main Event. In terms of the capacity restrictions you have on the business over there, we've seen that some states have indoor seating capacities, are you having to turn people away at the door? Or do you just find people were just a bit reluctant to go out now because they want to reduce the chance of getting COVID?

Okay, Sam, great question. This is Chris. Hope you're doing well. We are -- so first, we're managing our center openings on an asset-by-asset basis. So all the local authorities -- we're following the guidelines from every single local authority, and so we have disparate guidelines that we're following. But what I'll say generally speaking is it's -- we're not turning people away. The reason we're lower than where we were pre-COVID has more to do with consumers' willingness to get out. For the most part, our capacity limitation is 50% of our total capacity. That's the most prevailing limit that we have on our business. Because the size of our assets are so big, 50,000 square feet, and our total capacity is so big, even with 50% capacity limitation, we can still support sales volumes commensurate with pre-COVID. So for the most part, we're not -- the capacity limitation hasn't really put a damper on our business. It has more to do just with consumer sentiment. And so we believe that's one of the reasons why we continue to see slow and steady progress as we move forward as, first, our particular consumers are getting more comfortable with our safety standards in our center and that message is starting to get out. And then secondly, overall, we think that consumers are just getting -- their tolerance level for this is starting to improve, and they're just getting more comfortable getting out in the market and trading. I think the -- having the mandate to wear mask in -- across the country, in most states, we're required -- all -- everyone's required to wear a mask. That has really helped people get comfortable coming into our centers, knowing that everyone has a mask on.

And I know the times are pretty unusual at the moment, but since RedBird has become a partner, can you talk about maybe an example or 2 of some support they provided to the business?

Well, we're still very early into the relationship. We've had one Board meeting with RedBird. So the first thing I'll say is just they're just great partners in terms of providing advice and counsel and just being good sounding board -- being a sounding board for us as we look to kind of navigate through this. They bring, just collectively, bring years of experience to the table, and we're finding that invaluable. In terms of helping us on the strategic direction of the company, they have -- they're long-standing investors in sports and entertainment businesses. They've already made introductions to us to their other portfolio companies where there's some overlap in what we do, and we're well into conversations with them to figure out how we can work together in a mutually beneficial way. So I continue to be very optimistic that that's going to materialize in something that could be very significant for both of us. But more -- the most value that they're bringing to the table is just their business acumen and just their strategic insight into our strategic plan as we move forward.

Got it. And just want to make sure I took away this message correctly. So you're saying maybe one new site in FY '22 but no openings in FY '21?

That's correct. We had -- we opened Wesley Chapel in July, but there will be no other openings in F '21. And we're hopeful that Chesterfield will be able to open in F '22.

Got it. Makes sense. And just on Dreamworld, keen to understand what's the expectation internally as to how the park will trade when you open in September. Conscious that, I think, Buzz Saw is closed, SideWinder is closed, 2 of your major rides, I imagine it's primarily just the locals there given the domestic interstate and international tourists won't be able to get there. But given those 2 major rides are closed, and I think Flowrider and Big Red Car ride is closed permanently, how do you see the local's demand for the pie?

Yes. Sam, it's John, obviously. Maybe if I can just unpack your question there a little bit. The Flowrider is a pay-as-you-go type of ride and has been relatively unpopular for a long period of time. And it's also a water ride, which to some extent is duplicated in the water park. So we don't think the closure of that ride will have any impact at all. Big Red Car is lower capacity and similarly, has not been as popular as it once was in sort of the last -- since I've been at Dreamworld at least anyway. So the closure of those 2 rides, given that we've got lots of other rides and attractions in the park that essentially do the same thing, we don't think will have much impact at all, if any. And you're quite right, the target market is the local market because that's the only one that we can confidently target, as I mentioned, in the coverage. The SideWinder ride, all things being equal, will be available for use again in October. That's the current plan, and as we sit here today, we're on target to achieve that. So we'll go for roughly a month or so after the reopening without that ride. That's not ideal. But you might recall, we started the rebranding of that prior to COVID, and we ceased it as part of the challenge that we had to make sure that we retained as much cash as possible. But it will be open certainly before Christmas and not that long after the park reopens. And Buzz Saw, once again, will be reopened before Christmas. A lot of people think that Buzz Saw is a popular ride. It's one of the least popular rides in the park. It's quite visual, and it's a ride we obviously want to continue with at least until we built the new roller coaster which we'll open in the second half of next year. And the reason that we can't reopen Buzz Saw is that we're waiting for a component from Europe, and the supply chain challenges of getting bits and pieces at the moment from around the world, I think, are obvious to everybody on the call. So that's sort of a detailed explanation, if you like, on the decisions. In terms of the usage, how long is a piece of string. I guess I can draw a couple of parallels. SkyPoint, which is obviously different but we understand intimately, is trading at sort of on average about 30% of last year. But locals are, for that business, far higher-yielding customers. So I mentioned in the report earlier that on a cash basis, it's basically cash neutral. And I don't know what the results are for our competitors. But anecdotally, I think their numbers are probably sort of totally focused on local. So we think we've got our cost base right, and this was a major focus for us while we're closed. So we think our cost base is right. And we think that we've probably got as good a chance as any of, particularly with the ongoing support of JobKeeper, to weather the storm and get through to the end of this. So I don't know how many people will come. It will be a local market focus. I don't think we'd be the only one with some challenges with ride availability at the moment either. And the 2 rides that you mentioned will be back online well and truly before Christmas.

Yes, I guess the local market probably knows your product a lot more than your 2 tourist markets, and I think -- I'm just concerned with the ride closures, some temporary, some permanent. Also, when you combine that with WhiteWater World moving to weekend-only from late January to the end of March, you're kind of refurbishing the SideWinder but that's still an old ride, [ it takes -- it comes from within ] the park, I'm just wondering, are you going to have a compelling enough offer to really activate that local market?

We think we will. Yes, we think we will. And I think you're probably forgetting about Sky Voyager, which opened last year and is the only one of its kind in Australia and certainly, by definition, in theme parks in -- on the Gold Coast. And we've got some plans to sort of change up the film in that particular ride as well to reinvigorate it and add some more interest to it. So we still got that ride. We do have a roller coaster, the Motocoaster, and as I -- at the risk of repeating myself, SideWinder will be open not that long after when we -- after we reopen the park.

Your next question comes from Nick Caley of E.L. & C. Baillieu.

Just a couple of questions. Sorry, I might have missed it. But have you seen any sort of change in demographics or spending patterns through Main Event in the sort of reopening phase?

Nick, no, nothing significant. There's been no significant shift.

Okay. And I don't want to be -- after all you've been through, have you had to board up for Hurricane Laura?

Yes, no, another great question. 2020 has certainly been a challenging year. We're not boarded up. We -- in our Houston market, we've closed our centers today at 4:00 p.m., and we plan to reopen those centers at 7:00 p.m. tomorrow. So just -- we're not boarding up anything. Don't expect there to be any material damage. But just for the health and safety of our team members and just to protect our business, we made that decision.

Your next question comes from Brian Han from Morningstar.

So John, on your restructured cost base for the Theme Parks ahead of the reopening, can you please share with us at what level of attendance do you think those theme parks can break even given your current thinking on ticket pricing?

Yes, we haven't disclosed that, Brian. So I'm reluctant to sort of go chapter and verse on that, but certainly, it's far lower than it was. The cost base reductions are in the range of $10 million to $12 million, and we think over the next year or so could be a little bit better than that. And I think it puts us in a great position to be able to add cost to the business if attendance improves. The other thing we've done and in the process of doing now and we'll be ready before we reopen is moving more of our sales to the online platform. So like a lot of these businesses on the Gold Coast, there's been a reliance -- or not a reliance, but probably more than we would have liked, reliance on resellers. So we're moving away from that, which will increase the margin on each ticket sale as well. So the fact that we've reduced the cost base, I think, puts us in a really good position to break even on a lower ticket price and lower numbers, and we can also ramp back up if what we hope will happen. And this time next year, the domestic tourism booms alive and well, and we'll be off and running. And at that point in time, we'll have the new coaster coming and hopefully some announcements about other rides and attractions that we will have in the pipeline.

Okay. John, but SkyPoint currently is cash breakeven at 30% capacity. That's what you said before?

Including the -- yes, and I think it's important to note that, that includes the JobKeeper subsidy.

Right. Yes. Yes. Okay. And John, while you're there, the $70 million loan package from the Queensland Government for the Theme Parks business, is there anything that Ardent Leisure can't do with that money?

No, not sort of in a -- not really. We obviously can't pay dividends and those sorts of things through using that money but -- as would be the case with any sort of loan. But essentially, as long as we use it for operating expenditure and capital that's included in our budgets, we're fine. So it's no different to sort of what you'd expect from a traditional lender.

Right. But I'm thinking more along the categories of, say, senior executive bonuses, redundancies, paying investment bankers to do capital raising and things like that.

None of that's sort of contemplated at the moment. So we would obviously talk to our lenders about all those things as we would with any lender.

[Operator Instructions] Your next question comes from Sam Teeger from Citi.

Sorry, a few results out this morning, so I might have missed it. Did you guys provide an update for the Dreamworld master plan?

No, Sam. No, we didn't provide any further update. And we sort of parked the project when COVID hit, being focused on the things that I mentioned in the report. And once we reopen and really gauge what the market's doing, we'll dust that off and continue with the discussions and so on that we were having prior to COVID. But the immediate focus is successfully reopening the parks and implementing the, particularly, the new roller coaster project that we've got on foot.

Your next question comes from [ Mark Whelan from Mackenzie ].

What can you tell us about the results of the landlord negotiations at Main Event?

Well, I can tell you that they're well underway. We're having -- we've been having conversations with our landlords for the past several months in a variety of different capacities. So all I can tell you is that they're well underway. We've made -- we're very pleased with our progress. We've been able to successfully get out of Indianapolis. That was a big win. We've been able to defer significant payments across the fleet. And in some cases, we're working hard to negotiate improved lease terms where it makes sense for both parties.

[Operator Instructions] There are no further questions at this time. That does conclude our conference for today. Thank you for participating. You may now disconnect.