Vail Resorts, Inc reported strong season pass sales were up 29% from the same time last year, but said advance bookings at its mountain resorts were off 23% and that if they did not improve it would have to lower its guidance for the current fiscal year.
In addition, retail/rental revenue fell 4.7% to $22.43 million due to lower sales volumes primarily in the Colorado Front Range. The Mountain segment first fiscal quarter contains non- seasonal, predominantly fixed expenses and allocated corporate expenses, which increased in the current year fiscal quarter.
The company disclosed the numbers with it financial results for the first quarter ended Oct. 31. Total revenue rose to $152.8 million, compared to $97.9 million in the first quarter of fiscal 2008, driven by a quintuupling of real estate revenues. Net loss was $34.5 million, or $0.93 per diluted share, compared to a net loss of $24.6 million, or $0.63 per diluted share, in the year earlier quarter due to bigger losses in both mountain and lodging operations.
“This reflects a similar trend that others have seen in the travel and leisure sector,” said CEO Rob Katz. “Clearly, many consumers are, at a minimum, delaying their travel decisions, while some are apparently choosing not to travel at all this year; a trend that makes us grateful for the significant season pass and 'drive to' business that we have.”
Revenues from Vail Resorts Mountain Segment were $40.8 million, down 4.% from $42.5 million in the first quarter of fiscal 2008. Mountain operations generated negative EBITDA of $39.4 million in the first quarter of fiscal 2009, compared to a loss of $36.4 million in the year earlier period first quarter of fiscal 2008, a decline of 8.2%.
Summer mountain operations were negatively impacted by the temporary closures of Keystone on-mountain dining facilities due to the construction of the new Keystone gondola and other revenue was also negatively impacted by the temporary closure of the summer on-mountain activities in Breckenridge, including the alpine slide, due to real estate construction activities at Peak 8.
“The Company's results for the first quarter cover a seasonally low period in which we historically incur a substantial loss and the results were generally consistent with our expectations,” Katz said of the quarter.
Vail Resorts said its Lodging Segment generated revenue of $45.3 million in the first quarter, up 4.5% from $43.3 million in the first quarter of fiscal 2008. Lodging Reported EBITDA was $0.4 million in the first quarter of fiscal 2009 compared to $2.1 million in the first quarter of fiscal 2008. The results were driven by the summer mountain and lodging business, including the Grand Teton Lodge Company (“GTLC”) operations, golf operations and the timing of real estate closings. The results were also impacted by normal increases in fixed, non-ski season related expenses, which expenses drive the historical first quarter net loss each year.
Commenting on the Company's season pass sales, Katz said, “I am also very pleased with the sales of our season passes for the 2008/2009 ski season, especially considering the overall economic climate. We gained momentum and strong sales as we neared the end of the season pass selling period combined with the favorable impact of the introduction of the Epic Season Pass for this season, which substantially boosted the number of units sold and average season pass price. For the 2008/2009 season, we have sold to date approximately 204,000 total season passes including Epic Season Passes, for total sales of $90.9 million as compared to approximately 173,000 passes and $70.5 million in sales dollars in the prior year same time period, an increase of 18.0% and 28.8%, respectively.
“The current year includes total Epic Season Pass sales of approximately 59,100 passes and $32.5 million in sales dollars. The number of Colorado and Summit season passes sold for the 2008/2009 season are down 2.6% in units as compared to the number of passes sold in the prior season, when including Epic Season Passes sold to former Colorado/Summit season pass holders in the current year; including sales of Heavenly season passes to date, the decline is 4.7%. Our season pass program continues to be a fundamental and growing part of our operating model, offering stability from economic and weather related concerns, by locking in a significant amount of our lift revenue before the winter ski season even begins. Historically, season pass revenue has represented approximately 26% of lift ticket revenue with this percentage expected to increase due to the success of the Epic Season Pass.”
Turning to our lodging bookings, Katz added, “We have certainly seen the impact of the challenging economic environment on our bookings trends. It is critical to remember that bookings to date represent approximately 50% of the ultimate total room nights for the season we historically have booked through these channels. Given our limited visibility on bookings in this environment, it remains too early to discern how much of the decrease is a result of guests delaying their purchases or to estimate the magnitude of an absolute visitation decline for the 2008/2009 ski season.”
Commenting on the fiscal 2009 outlook for the Company, Katz continued, “There is no doubt that the travel and leisure sector is being, and will continue to be, negatively impacted in the short-term; and while we have many attributes that differentiate us from other options guests may have, we are not immune to these negative trends. Since issuing our fiscal 2009 guidance in late September 2008, we have seen a further deterioration in the overall economic fundamentals. In addition, while our season pass sales have been relatively strong, our advanced lodging bookings have not improved. We have just begun our 2008/2009 ski season and still have limited near-term visibility; therefore, we believe that it is too early to formally adjust our fiscal 2009 guidance. However, if booking trends do not improve from their current level, we almost certainly will fall below the low end of our guidance range.”
At October 31, 2008, Vail Resorts had cash and cash equivalents on hand of $102.7 million, net debt of 1.38 times trailing twelve months total reported EBITDA and a $400.0 million credit facility, which matures in 2012. The company has only $3.2 million of principal maturities due in total over the next five years.
“We are very pleased that in this unprecedented period of disarray in the global economy and capital markets, our balance sheet remains very strong, even after two consecutive seasonally low quarters with virtually no ski operations,” said Katz. “Additionally, we saw promising signs of the resiliency of the Vail Resorts guests, as season pass sales strengthened over the prior year during our fall selling period both in Colorado and through the introduction of the Epic Season Pass, bringing a whole new group of guests into our season pass programs.”
Vail Resorts, Inc subsidiaries operate the mountain resort properties at the Vail, Beaver Creek, Breckenridge and Keystone mountain resorts in Colorado, the Heavenly Ski Resort in the Lake Tahoe area of California and Nevada and the Grand Teton Lodge Company in Jackson Hole, Wyoming. The Company's subsidiary, RockResorts, a luxury resort hotel company, manages properties across the United States and the Caribbean. Vail Resorts Development Company is the real estate planning, development and construction subsidiary of Vail Resorts, Inc.
Vail Resorts, Inc.
Consolidated Condensed Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
October 31,
2008 2007
Net revenue:
Mountain $40,778 $42,536
Lodging 45,253 43,317
Real estate 66,750 12,034
Total net revenue 152,781 97,887
Segment operating expense:
Mountain 81,223 80,947
Lodging 44,898 41,236
Real estate 51,377 6,913
Total segment operating expense 177,498 129,096
Other operating expense:
Depreciation and amortization (25,078) (20,761)
Loss on disposal of fixed assets, net (180) (234)
Loss from operations (49,975) (52,204)
Mountain equity investment income, net 1,015 1,969
Investment income 643 3,218
Interest expense, net (7,947) (7,644)
Contract dispute credit, net — 11,920
Minority interest in loss of consolidated
subsidiaries, net 2,351 2,063
Loss before benefit from income taxes (53,913) (40,678)
Benefit from income taxes 19,409 16,068
Net loss $(34,504) $(24,610)
Per share amounts:
Basic net loss per share $(0.93) $(0.63)
Diluted net loss per share $(0.93) $(0.63)
Weighted average shares outstanding:
Basic 36,922 38,892
Diluted 36,922 38,892
Other Data:
Mountain Reported EBITDA $(39,430) $(36,442)
Lodging Reported EBITDA $355 $2,081
Resort Reported EBITDA $(39,075) $(34,361)
Real Estate Reported EBITDA $15,373 $5,121
Total Reported EBITDA $(23,702) $(29,240)
Mountain stock-based compensation $1,193 $1,144
Lodging stock-based compensation $429 $261
Resort stock-based compensation $1,622 $1,405
Real Estate stock-based compensation $945 $568
Total stock-based compensation $2,567 $1,973
Vail Resorts, Inc.
Resort Revenue by Business Line
(In thousands)
(Unaudited)
Three Months Ended Percentage
October 31, Increase
2008 2007 (Decrease)
Lift tickets $– $– — %
Ski school — — — %
Dining 3,929 4,762 (17.5)%
Retail/rental 22,426 23,540 (4.7)%
Other 14,423 14,234 1.3 %
Total Mountain net revenue 40,778 42,536 (4.1)%
Total Lodging net revenue 45,253 43,317 4.5 %
Total Resort net revenue $86,031 $85,853 0.2 %
