Moody’s Investors Service assigned ratings for Powdr Corp. including a B2 Corporate Family Rating (CFR) and a B2-PD Probability of Default Rating. Concurrently, Moody’s assigned a B1 rating to the company’s proposed $300 million senior secured notes due 2025. The outlook is negative.

Proceeds from the $300 million senior secured notes will be used to repay current revolver borrowings with the remaining amount held as cash on the balance sheet for general corporate purposes.


  • Corporate Family Rating, Assigned B2
  • Probability of Default Rating, Assigned B2-PD
  • Proposed $300 million senior secured notes, Assigned B1 (LGD3)

Outlook Actions:

  • Outlook, Assigned Negative

Ratings Rationale
Moody’s said in a statement, “Powdr’s B2 CFR reflects its high financial leverage with Moody’s lease-adjusted debt/EBITDA expected to temporarily spike to about 9.0x by fiscal year-end September 2020 from 7.0x at March 31, 2020 (pro forma for the $300 million notes offering). Powdr’s operating results were negatively impacted by the early closure of its resorts in mid-March 2020 due to the coronavirus pandemic. Moody’s projects debt/EBITDA will start to improve in FY2021 with leverage expected to decline to the high 7.0x range by September 2021 (FY2021) if resorts open for the majority of the 2020/21 ski season. However, Moody’s expects skier visits, effective ticket prices and ancillary revenue to be below normal levels in FY2021. In addition, social distancing measures will negatively affect resort operations and efficiency for this upcoming season. Moody’s expects earnings will continue to recover in FY2022 and projects debt-to-EBITDA leverage to decline and approach 6.5x by September 2022.

“The rating also reflects Powdr’s small scale with PF revenue of about $328 million for the LTM period ended March 31, 2020, revenue concentration as the top three resorts generated roughly 69 percent of the LTM revenue, as well as a lower EBITDA margin than rated peers in the same industry. In addition, Powdr’s operating results are highly seasonal, exposed to varying weather conditions as well as subject to discretionary consumer spending that is tied to general economic conditions. Environmental considerations in addition to exposure to adverse weather include the need to access large quantities of water, which may be challenging following periods of severe drought, and the vast amounts of forest land the company is responsible to properly operate and protect.

“However, the rating benefits from Powdr’s position as one of the leading operators in the United States ski industry, operating thirteen properties and ten mountain resorts. The company has properties in multiple states and Canada and generates roughly 14 percent of its revenue from non-winter skiing activities including summer activities such as camps, and mountain biking, and Woodward action sports. These revenues help to somewhat mitigate the company’s exposure to weather and operating seasonality. The rating is also supported by the relatively stable long-term fundamentals for the North American snowsports industry, characterized by high barriers to entry and resiliency even during weak economic periods, including the 2007/09 recession. Powdr is also coming off a heavy investment period of roughly $200 million over the last two fiscal years and Moody’s expects capital expenditures to be much lower over the next two years. The investments provide meaningful infrastructure upgrades to lifts, mountain terrain, and facilities that should support good visitation over the next three years, as well as the construction of the Woodward Park City action sports venue.

“The company’s very good liquidity reflects the cash balance of about $103 million (post the transaction) and access to an undrawn $50 million revolver facility due 2025. This liquidity will provide the company with the financial flexibility to fund operations through temporary operating weakness including any mandated temporary closure of its resorts in 2020/21 and the high operating seasonality.

“The rapid spread of the coronavirus outbreak, deteriorating global economic outlook, low oil prices, and high asset price volatility have created an unprecedented credit shock across a range of sectors and regions. Moody’s regards the coronavirus outbreak as a social risk under our ESG framework, given the substantial implications for public health and safety. Today’s action reflects the impact on Powdr, given its exposure to mandated stay at home orders, increased social distancing measures and discretionary consumer spending, which have left it vulnerable to shifts in market demand and sentiment in these unprecedented operating conditions.

“Powdr is owned by the Cumming family, which also holds a majority interest in Snowbird that is not part of Powdr’s asset portfolio. The company has historically maintained modest leverage, and Moody’s expects the company to focus on long-term value through reinvestment that will allow leverage to decline over time as earnings normalize. Moody’s believes there is event risk related to future acquisitions including a potential combination of Snowbird into Powdr that would likely only be pursued when the company has lower leverage and more financial flexibility.

“The negative outlook reflects the unprecedented nature of the downturn caused by the coronavirus pandemic and that social distancing practices in areas such as lift lines, restaurants, and lodges will lead to less visitation and facility utilization until vaccines or other effective coronavirus countermeasures are in place, the timing of which is highly uncertain. These factors could prolong earnings weakness and elevated leverage while leading to a cash burn that increases debt.”

Photo courtesy Powdr