Vail Resorts, Inc. announced Mountain revenue for the first quarter ended October 31, 2005 was $40.3 million, a $5.8 million, or 16.8%, increase from $34.5 million for the comparable period last year. Mountain expense increased $8.3 million, or 13.0%, to $72.3 million. Excluding stock-based compensation expense, Mountain expense increased $7.4 million, or 11.6%, to $71.3 million.
Lodging revenue for the quarter decreased $4.5 million, or 9.7%, to $41.8 million. Lodging expense decreased $5.9 million, or 13.6%, to $37.6 million. Excluding stock-based compensation expense, Lodging expense decreased $6.3 million, or 14.5%, to $37.2 million.
Resort revenue, the combination of Mountain and Lodging revenues, rose $1.3 million, or 1.6%, to $82.1 million. Resort expense increased $2.4 million, or 2.2%, to $109.9 million. Excluding stock-based compensation expense, Resort expense increased $1.1 million, or 1.1%, to $108.6 million.
Real Estate revenue for the quarter fell $13.7 million, or 80.1%, as expected, to $3.4 million. Real Estate expense decreased $4.0 million, or 39.6%, to $6.1 million. Excluding stock-based compensation expense, Real Estate expense decreased $4.3 million, or 43.0%, to $5.7 million for the quarter.
Total revenue decreased $12.5 million, or 12.8%, to $85.4 million. Total segment operating expense decreased $1.6 million, or 1.4%, to $116.0 million. Excluding stock-based compensation expense, total segment operating expense decreased $3.2 million, or 2.7%, to $114.3 million.
Loss from operations for the quarter increased $8.3 million, or 20.0%, to a loss of $49.9 million compared to a loss of $41.6 million for the same period last year.
Reported EBITDA for the Mountain segment decreased $2.5 million, or 8.7%, to a negative $31.2 million compared to a negative $28.7 million for the comparable period last year. Reported EBITDA excluding stock-based compensation for the Mountain segment decreased $1.6 million, or 5.6%, to a negative $30.2 million compared to a negative $28.6 million for the prior year fiscal quarter.
Reported EBITDA for the Lodging segment improved $3.3 million, or 412.5%, to $4.1 million in the current year first quarter. Reported EBITDA excluding stock-based compensation for the Lodging segment improved $3.7 million, or 462.5%, to $4.5 million compared to $0.8 million for the same period last year. In fiscal 2005 the company sold its 49% interest in the joint venture that owned the Ritz-Carlton, Bachelor Gulch (“BG Resort”), and the assets constituting the Vail Marriott Mountain Resort & Spa (“Vail Marriott”) and The Lodge at Rancho Mirage (“Rancho Mirage”); consequently the first quarter of fiscal 2006 results do not reflect the operations of the sold assets. For the first quarter of fiscal 2005, Lodging reported EBITDA includes revenue of $7.0 million, operating expense of $7.9 million and equity investment loss of $1.9 million related to these entities. The company retained management contracts for both the Vail Marriott and Rancho Mirage. Lodging Reported EBITDA includes incremental management fee revenue of $229,000 for the Vail Marriott and Rancho Mirage for the first quarter of fiscal 2006.
First quarter Resort Reported EBITDA improved $0.8 million, or 2.9%, to a negative $27.1 million from a negative $27.9 million in the comparable period last year. Resort Reported EBITDA excluding stock-based compensation was a negative $25.7 million, a $2.1 million, or 7.6%, improvement to a negative $27.8 million in the first fiscal quarter of last year.
Real Estate Reported EBITDA decreased $9.6 million, as expected, compared to the first fiscal quarter of last year due to the timing of real estate transactions. First quarter Real Estate Reported EBITDA excluding stock-based compensation fell $9.3 million, to a negative $2.2 million from a positive $7.0 million in the comparable period last year.
The company reported a first quarter net loss of $34.3 million, or 93 cents per diluted share, compared to a net loss of $31.5 million, or 89 cents per diluted share, for the same period last year. Excluding stock-based compensation expense required to be recorded pursuant to the adoption of FAS 123R in fiscal 2006, the company's net loss for the first quarter of fiscal 2006 would have been $33.3 million, or 90 cents per diluted share compared to a net loss of $31.4 million excluding stock-based compensation expense recorded pursuant to APB 25, or 89 cents per diluted share, for the same period last year.
Adam Aron, chairman and CEO, commented, “Vail Resorts had many positive developments in the first quarter of fiscal 2006. In our Mountain and Lodging businesses, we were pleased by increased late summer visitation (which was up 10% compared to the same period last year, despite significant increases in fuel prices this summer), higher contributions from our golf operations and improved Reported EBITDA margins(1) in each of our Mountain and Lodging segments. Reported EBITDA for our Resort segment in total improved by $2.1 million or 7.6% year-over-year for the quarter (excluding the impact of stock-based compensation).”
Aron said, “While it is certainly good and encouraging news that Vail Resorts' fiscal 2006 first quarter results were modestly ahead of expectations, it is commonly understood that the August/September/October quarter is a seasonally weak one for Vail Resorts. Our world-class winter- peaking resorts traditionally do not open for skiing and snowboarding until November, and it is logical that our lodging properties at the base of these resorts would also have seasonally low revenues. Therefore, rather than dwelling on first quarter financials, we believe the true measure of first quarter events for Vail Resorts is the degree to which we set the table for the ski season immediately to come. On this score, the news for Vail Resorts is bright indeed, and we believe Vail Resorts is solidly on track for fiscal 2006.”
Commenting on the current 2005-2006 ski season, Aron said, “We are excited by the momentum we have recently established for the 2005-2006 ski season. Our ski areas in Colorado especially have received fabulous early season snowfall and attendant publicity. Vail has had record early season snowfall, cumulatively totaling more than eleven feet so far this season, the best snowfall Vail has received at this point in the season in Vail's 43 year history. Beaver Creek is still basking in the blizzards of snow that were showcased in global television/print exposure arising from the World Cup ski races held at Beaver Creek this past weekend. Breckenridge has already opened a month ahead of schedule its new Imperial Express Lift, the highest in North America terminating at 12,840 feet and providing lift access for the first time ever to some 400 acres of sensational bowl ski terrain. And Keystone has some 2500 acres of terrain open for skiing and snowboarding, the most terrain open at this time of year in Keystone's 35 year history, while Heavenly got three to five feet of snow at various points across the mountain in a single day last week.”
Aron added, “The various metrics for the 2005-2006 ski season at our disposal are telling, and where we need them to be at this point. Season pass sales in dollars are up approximately 7% compared to record setting levels of last year at the same point in time. Vacation revenue in dollars booked through our central reservation system is approximately 2% ahead of last year at this time, but those same bookings are up over 6% in the past four weeks since the snow has started to fly. Transient room night revenue bookings at our owned and managed hotel and condominium properties in Colorado are up 5%. Airline bookings into Eagle County airport are up 5% compared to this time last season, and up 12% over this same time two years ago. Ski school advance reservations are quite strong. And we can confirm that as of this writing, Christmas and New Year's bookings across the board are robust. Finally, we are also announcing today our single-day lift ticket pricing, which will go into effect at our ticket windows later this month — Vail and Beaver Creek will increase $4 or 5.2 % year-over-year to $81, Breckenridge and Keystone will increase $4 or 5.6% to $75, and Heavenly will rise by $5 or 7.4% to $73.”
Aron noted, “With abundant snowfall and other uplifting leading indicators, needless to say, we are encouraged. And there is still more good news on the horizon. Our real estate and lodging groups jointly are actively pursuing intriguing projects across each and all of our mountain resorts. We are announcing today that, effective December 1, we secured a management agreement to run the Austria Haus Hotel, a small but very high end lodging property in Vail, that will be managed as additional luxury inventory by The Lodge at Vail, one of our RockResorts properties.”
Aron continued, “As for our Real Estate business, we continue to expect as we have said before that it will produce a much larger contribution starting in fiscal years 2007 and 2008, while its contribution to fiscal year 2006 will be relatively modest, even compared to prior years. So far this year, construction of the sold-out Arrabelle and Gore Creek Place projects are well underway, and we continue to make good progress in securing the necessary governmental approvals for our proposed Vail Front Door and Ritz-Carlton Residences, Vail projects. As we consistently have been saying, we believe that all of these projects will be lucrative for us in the foreseeable future. Although difficult to precisely forecast, our construction costs have been rising of late, and we believe they may continue to do so, which appears to be similarly true for construction costs in the United States generally. As such, these cost escalations may cause us to fall somewhat below our previously anticipated income range estimates for the Arrabelle and Gore Creek projects taken together. Even so, with the magnitude of development opportunities ahead of us, especially in the strong Vail market which would appear to benefit from considerable pent-up demand, we are highly confident in the fundamental inherent and underlying value of our real estate holdings.”
Aron concluded, “We would also point out that investors should consider our adopting effective August 1, 2005 the fair value recognition provisions of SFAS 123R, related to the expensing of stock-based compensation. When we disclosed our fiscal 2006 guidance in our fiscal 2005 fourth quarter earnings release, we promised to update guidance after evaluating the total impact of adopting SFAS 123R. Based on our current estimates, the pre-tax stock-based compensation expense for fiscal 2006 will be $6.9 million in total, with an expense of $3.8 million, $1.6 million, $5.4 million and $1.5 million included in the Mountain, Lodging, Resort and Real Estate segments, respectively. With estimated stock-based compensation expense included, we expect that Mountain Reported EBITDA for fiscal 2006 will range from $161 million to $171 million, that Lodging Reported EBITDA will range from $6 to $13 million, and that total Resort Reported EBITDA is projected to be between $170 and $180 million. Real Estate Reported EBITDA should range from $4 to $9 million for fiscal 2006. And finally, we are projecting net income in fiscal 2006 to range from $30 million to $39 million. The only changes in our guidance stem from the inclusion of stock-based compensation expense. Other than that, and excluding stock-based compensation, our guidance for full year 2006 results remains unchanged from that disclosed and discussed on October 5. Reiterating that call, and excluding the impact of stock-based compensation expense, Mountain Reported EBITDA is expected to range between $165 and $175 million, Lodging Reported EBITDA is expected to range between $8 and $15 million, Resort Reported EBITDA is expected to range between $175 and $185 million, Real Estate Reported EBITDA is expected to range between $5 and $10 million, and net income is expected to range between $34 and $43 million.”
Vail Resorts, Inc.
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
October 31,
2005 2004
Net revenue:
Mountain $40,277 $34,493
Lodging 41,750 46,275
Real estate 3,393 17,115
Total net revenue 85,420 97,883
Segment operating expense:
Mountain 72,291 63,961
Lodging 37,641 43,548
Real estate 6,069 10,061
Total segment operating expense 116,001 117,570
Other operating expense:
Depreciation and amortization (18,923) (21,076)
Asset impairment charge (136) --
Loss on disposal of fixed assets, net (240) (858)
Loss from operations (49,880) (41,621)
Mountain equity investment income, net 850 794
Lodging equity investment loss, net -- (1,918)
Real estate equity investment income (loss), net 69 (35)
Investment income, net 1,188 128
Interest expense (9,437) (10,576)
(Loss) gain on put options, net (992) 213
Other expense, net -- (33)
Minority interest in income of consolidated
subsidiaries, net 1,926 1,900
Loss before benefit from income taxes (56,276) (51,148)
Benefit from income taxes 21,947 19,692
Net loss $(34,329) $(31,456)
Per share amounts:
Basic net loss per share $(0.93) $(0.89)
Diluted net loss per share $(0.93) $(0.89)
