Vail Resorts Inc. reported flat earnings in the second quarter ended January 31 and said it was withdrawing its guidance for fiscal 2020 due to the uncertain impact of coronavirus for the rest of the year.
Highlights
- Net income attributable to Vail Resorts, Inc. was $206.4 million for the second fiscal quarter of 2020 compared to net income attributable to Vail Resorts, Inc. of $206.3 million in the same period in the prior year. Fiscal 2020 second-quarter net income included the after-tax effect of acquisition and integration-related expenses of approximately $1.4 million. Fiscal 2019 second-quarter net income included the after-tax effect of acquisition and integration-related expenses of approximately $2.2 million.
- Resort Reported EBITDA was $378.3 million for the second fiscal quarter of 2020, which included $1.9 million of acquisition and integration-related expenses and approximately $1 million of favorable foreign exchange as a result of the U.S. dollar weakening over the prior year compared to the Canadian dollar. In the same period in the prior year, Resort Reported EBITDA was $358.0 million, which included $2.9 million of acquisition and integration-related expenses.
- Based on results through March 1, 2020, and indicators for the remainder of the year as of that date, and excluding any identified impact from coronavirus, the company estimated that Resort Reported EBITDA for fiscal 2020 was expected to be approximately $20 million below the midpoint of the guidance range previously issued on January 17, 2020.
- Given the uncertainty surrounding the impact of the coronavirus on the broader U.S. travel market and any specific impact on the performance of the company, the company is not issuing guidance at this time for fiscal 2020 and is withdrawing its previous guidance issued on January 17, 2020. In the week ended March 8, 2020, the company saw a marked negative change in performance from the prior week, with destination skier visits modestly below expectations. The company expects this trend to continue and potentially worsen in the upcoming weeks. The company intends to provide updated commentary on its results by March 18, 2020.
Commentary on results for the three months ended January 31, 2020, includes a full quarter of results from recent acquisitions of Peak Resorts (acquired in September 2019 ) and Falls Creek and Hotham (acquired in April 2019 ).
Commenting on the company’s fiscal 2020 second-quarter results, Rob Katz, chief executive officer, said, “Overall we feel good about the season so far, but have had both areas of challenge and areas of strong performance. Our Pacific Northwest resorts (Whistler Blackcomb and Stevens Pass) experienced the lowest snowfall in over 30 years through December 31, 2019, resulting in very poor results through the early season and critical holiday period. Visitation at those resorts continued to be challenging and below our expectations in January, with Whistler Blackcomb experiencing a weaker than expected recovery in North American and international destination visitation. In total, visitation across our Pacific Northwest resorts was down 14 percent compared to the prior year for the second quarter. After a challenging start in the early season, destination guest visitation at our western U.S. resorts improved significantly during the holiday period and was in line with our expectations. The improvement continued through January though Colorado was modestly below our expectations for the post-holiday period, partially offset by strong performance at our Park City resort. Our Northeast resorts are off to a great start to the season, supported by the continued benefit from our expanded Northeast network which has been partially offset by challenging weather variability across the Midwest resorts.
“Including results from Peak Resorts, total lift revenue increased 8.2 percent, driven by an 8.8 percent growth in skier visitation. Total effective ticket price (“ETP”) decreased 0.5 percent in the second quarter compared to the prior year, with price increases in both our lift ticket and season pass products offset by the inclusion of results from Peak Resorts which generates lower ETP. Excluding season pass holders and Peak Resorts, ETP increased 4.0 percent compared to the prior year. Ski school, dining and retail/rental revenues increased 11.4 percent, 15.8 percent and 4.1 percent compared to the prior year, respectively, primarily driven by the inclusion of Peak Resorts.”
Regarding the company’s Lodging segment, Katz said, “Our lodging business experienced mixed results during the quarter, with revenue (excluding payroll cost reimbursements) increasing 8.4 percent compared to the prior year, primarily due to the incremental operations of Peak Resorts, partially offset by softer results at our Colorado properties, in part due to weaker group demand in comparison to the prior-year period.”
Regarding the company’s outlook, Katz said, “Given the uncertainty surrounding the impact of the coronavirus on the broader U.S. travel market and any specific impact to the performance of our company, we are not issuing guidance at this time for fiscal 2020 and are withdrawing our previous guidance issued on January 17, 2020. In the week ended March 8, 2020, we saw a marked negative change in performance from the prior week, with destination skier visits modestly below expectations. We expect this trend to continue and potentially worsen in the upcoming weeks.”
Regarding capital allocation, Katz said, “We remain confident in the strong cash flow generation and stability of our business model. We will continue to be disciplined stewards of our capital and remain committed to strategic, high-return capital projects, continuous investment in our people, strategic acquisition opportunities and returning capital to our shareholders through our quarterly dividend and share repurchase programs. We are pleased to announce that the Board of Directors declared a quarterly cash dividend on Vail Resorts’ common stock of $1.76 per share, payable on April 9, 2020, to shareholders of record on March 26, 2020. Given the current market instability caused by the coronavirus, we are deferring our decision on a dividend increase until June.”
Katz added, “Our balance sheet remains very strong. We ended the second quarter with $126.8 million of cash on hand and our Net Debt was 2.4 times trailing twelve months Total Reported EBITDA, though it is important to note that this ratio only includes Peak Resorts’ results for the period between closing and quarter-end, and we expect that ratio to decline as we incorporate a full year of results from Peak Resorts.”
Season-to-Date Metrics Through March 1, 2020, And Interim Results Commentary
The company announced ski season-to-date metrics for the comparative periods from the beginning of the ski season through Sunday, March 1, 2020, and for the prior-year period through Sunday, March 3, 2019. The reported ski season metrics are for its North American destination mountain resorts and regional ski areas, including the results of Peak Resorts in both periods and excluding the results of its Australian ski areas in both periods. The reported ski season metrics include growth for season pass revenue based on estimated fiscal 2020 North American season pass revenue compared to fiscal 2019 North American season pass revenue, and the metrics are adjusted to eliminate the impact of foreign currency by applying current period exchange rates to the prior period for Whistler Blackcomb’s results. The data mentioned in this release is interim period data and is subject to fiscal quarter end review and adjustments.
- Season-to-date total lift ticket revenue, including an allocated portion of season pass revenue for each applicable period, was up 0.8 percent compared to the prior year season-to-date period.
- Season-to-date ski school revenue was up 2.8 percent and dining revenue was down 1.4 percent compared to the prior year season-to-date period. Retail/rental revenue for North American resort and ski area store locations was down 0.6 percent compared to the prior year season-to-date period.
- Season-to-date total skier visits were down 5.2 percent compared to the prior year season-to-date period.
Based on results through March 1, 2020, and indicators for the remainder of the year as of that date, and excluding any identified impact from coronavirus, the company estimated that Resort Reported EBITDA for fiscal 2020 was expected to be approximately $20 million below the midpoint of the guidance range previously issued on January 17, 2020, driven primarily by the continuation of challenging visitation trends at its Pacific Northwest resorts throughout January and February and secondarily from results at its Colorado resorts that were modestly below its expectations in January and February, partially offset by strong performance at its Park City resort.
Photo courtesy Vail Resorts