Vail Resorts, Inc. announced Mountain revenue for the second quarter of fiscal 2003 ended January 31, 2003 was $189.2 million, a 29.6% increase from $146.0 million for the comparable period last year. Lodging revenue for the second quarter increased $2.5 million, or 7.6%, to $35.0 million, and total resort revenue, the combination of the mountain and lodging segments, grew 25.6% to $224.1 million. Real estate revenue for the second quarter fell to $22.6 million from $35.0 million. Total revenue for the quarter was $246.8 million compared to $213.5 million in the same period in 2002, an increase of 15.6%.
Excluding the May 2002 acquisition of the Heavenly Ski Resort, second quarter “same-store” mountain revenue grew 11.2%. Excluding the fiscal 2002 acquisitions of the Vail Marriott and the Lodge at Rancho Mirage hotels and a majority interest in RockResorts, “same-store” lodging revenue grew 8.1% for the quarter.
Mountain earnings before interest, income taxes, depreciation and amortization (“EBITDA”) increased $12.8 million, or 24.2%, to $65.5 million. Included in mountain EBITDA for the quarter is a $1.2 million severance charge associated with the previously announced management restructuring. Excluding this severance charge, mountain EBITDA grew 26.5% to $66.7 million. Excluding the fiscal 2002 acquisitions and the fiscal 2003 o a negative EBITDA of $4.2 million. The Company’s lodging acquisitions in fiscal 2002 are the major reasons for the lodging EBITDA decline, namely: (a) $1.4 million in reduced EBITDA at the Vail Marriott and the Lodge at Rancho Mirage in the second fiscal quarter this year versus the same period last year, due in part to owning both hotels for the full quarter this year compared to a partial quarter last year during a seasonally slow period; (b) $1.0 million of additional marketing and management expense in the quarter to build the RockResorts brand, from which the Company expects long-term benefit over time; and (c) the Company’s $2.0 million share of startup expenses and net losses associated with the newly opened Ritz-Carlton, Bachelor Gulch (in accordance with the Company’s equity income treatment of minority interest joint ventures, lodging EBITDA for the second quarter includes $1.0 million of depreciation and interest expense related to the Ritz-Carlton for the three months ended January 31, 2003). Excluding the fiscal 2002 acquisitions and the Ritz-Carlton joint venture, “same store” lodging EBITDA decreased only $1.5 million.
Total resort EBITDA for the quarter, excluding real estate, increased $6.8 million, or 12.6%, to $61.3 million. Excluding severance, resort EBITDA increased 14.8% to $62.5 million. Excluding the fiscal 2002 acquisitions and the fiscal 2003 second quarter severance charge, total resort EBITDA increased $3.0 million, or 5.8%, to $55.4 million.
Real estate EBITDA fell $7.2 million to $1.1 million, as expected, due to the timing of lot sales.
Net income for the quarter decreased 22.6% to $16.8 million, or $0.48 per diluted share, compared to $21.7 million, or $0.62 per diluted share, for the comparable period last year.
Mountain revenue for the six months ended January 31, 2003 was $223.6 million, a 27.5% increase from $175.4 million for the comparable period last year. Lodging revenue for the six months increased $13.9 million, or 22.8%, to $75.0 million, and total resort revenue grew 26.3% to $298.6 million. Real estate revenue for the six-month period rose to $62.0 million from $50.0 million, an increase of 23.9%. Total revenue for the first half of the fiscal year was $360.6 million compared to $286.5 million in the same period in 2002, an increase of 25.9%.
Excluding the fiscal 2002 acquisitions, “same-store” mountain revenue grew 10.5% while “same-store” lodging revenue grew 11.5% for the six months ended January 31, 2003.
Mountain EBITDA increased $7.0 million, or 24.3%, to $35.5 million. Included in mountain EBITDA is a $2.5 million severance charge associated with the previously announced management restructuring. Excluding this severance charge, mountain EBITDA grew 33.0% to $38.0 million. Excluding the fiscal 2002 acquisitions and severance, mountain EBITDA increased $3.8 million, or 13.2%.
Lodging EBITDA decreased $5.5 million to a negative EBITDA of $4.2 million. Among other factors previously described, included in lodging EBITDA is the Company’s $3.3 million proportionate share of the loss from hotel operations related to the Ritz-Carlton, Bachelor Gulch, which includes $1.0 million of depreciation and interest expense for the six months ended January 31, 2003. Excluding the fiscal 2002 acquisitions, “same store” lodging EBITDA increased $1.2 million.
Total resort EBITDA, excluding real estate, increased $1.5 million, or 5.0%, to $31.3 million. Excluding severance, resort EBITDA increased 13.3% to $33.8 million. Excluding the fiscal 2002 acquisitions and the fiscal 2003 severance charge, total resort EBITDA increased $4.9 million, or 17.9%, to $32.6 million.
Real estate EBITDA rose $1.3 million, or 9.2%, to $16.0 million.
Net loss for the six month period increased to a loss of $8.0 million, or $0.23 per diluted share, compared to a loss of $4.4 million, or $0.13 per diluted share, for the comparable period last year.
Adam Aron, Chairman and Chief Executive Officer, commented, “Vail Resorts record resort EBITDA performance in the second quarter would be impressive under any circumstance, but given the current political and economic environment it is particularly gratifying. Our mountain segment had an exceptionally strong performance, growing skier days, revenues and EBITDA compared to last year. Heavenly responded beyond our greatest expectations to Vail Resorts initial management, marketing and product improvements with a 21% year-over-year increase in paid skier days by January 31; and Beaver Creek is poised to have a record year, in great part due to the opening of the Ritz-Carlton, Bachelor Gulch. In light of the current depressed state of the U.S. lodging industry, our lodging segment performed as expected during the quarter. With the travel industry in a prolonged slump for more than a year, we are pleased with Vail Resorts success — especially at our premier ski resorts — in the first half of fiscal 2003.”
Commenting on the remainder of fiscal 2003 and the 2002-2003 ski season, Aron said, “While the mountain segment performed quite well in the second quarter for Vail Resorts, since then we have seen a slowing down in visitation at our ski resorts even though ski conditions continue to be excellent. And we have seen no significant rebound in our lodging business as of yet. As of today, we have completed more than half of our fiscal year and over 75% of the 2002-2003 ski season. We are still contending with the very distinct possibility of war, a weak national economy, and the impacts of the challenges in the U.S. airline industry. While we continue to both create exceptional guest experiences and tightly manage our expenses, the repeated uncertainties that we and every other American face, namely the ever-present threat of war and its aftermath, cause us to be concerned about our performance in the current quarter and for the remainder of the fiscal year.”
Aron added further, “We continue to project without change that mountain EBITDA for fiscal 2003 will range from $117 million to $127 million before severance payouts. However, whereas in December we might have hoped to exceed that range, the imminence of war and the dampening effect it is likely to have on travel now have us believe mountain EBITDA could be closer to the lower end of the range. Additionally, we are reducing our fiscal 2003 estimate of lodging EBITDA to a range of $5 million to $13 million. Similarly, we originally gave a range for fiscal 2003 for total resort EBITDA — mountain and lodging segments combined — of $132 million to $142 million. We are now reducing that range to $128 million to $138 million before severance payouts; still a very healthy increase over the $107 million of resort EBITDA actually recorded in fiscal 2002. The estimated range of real estate EBITDA remains unchanged at $15 million to $17 million. It is important to note that these guidance ranges may be less than certain depending upon if, and under what circumstances, the United States finds itself at war.”
Vail Resorts, Inc
Consolidated Financial Statements
(in thousands except per share amounts)
Three Months Ended Six Months Ended
January 31, January 31,
2003 2002 2003 2002
Net revenue:
22,623 35,037 61,978 50,031
Total net revenue 246,767 213,514 360,620 286,533
Operating expense:
Mountain 123,825 93,985 189,287 148,001
Lodging 37,188 30,817 75,935 59,896
Real Estate 22,274 28,292 49,805 37,831
Depreciation & amortization 19,885 16,066 37,870 31,428
Total operating expense 203,172 169,160 352,897 277,156
Income from operations 43,595 44,354 7,723 9,377
Other income (expense):
Mountain equity
income (loss) 162 758 1,223 1,208
Lodging equity
income (loss) (2,021) -- (3,332) --
Real estate equity income 771 1,614 3,841 2,470
Interest income 146 243 405 955
Interest expense (12,782) (10,364) (24,746) (18,226)
Gain (loss) on investment 1,371 -- 1,371 --
Gain (loss) on disposal
of fixed assets (3) (179) (19) (127)
Other Income & Expense (9) (18) 21 (50)
Minority interest in income
of consolidated
joint venture (2,062) (2,297) (39) 43
Income before income taxes -- -- (0.05)
Net income (loss) $0.48 $0.62 $(0.23) $(0.13)
Per share amounts (diluted):
Income (loss) before
cumulative effect
of change in accounting
principle $0.48 $0.62 $(0.23) $(0.08)
Cumulative effect of
change in accounting
principle, net of
income taxes -- -- -- (0.05)
Net income (loss) $0.48 $0.62 $(0.23) $(0.13)
Other Data:
Mountain EBITDA $65,500 $52,733 $35,539 $28,585
Lodging EBITDA (4,228) 1,700 (4,228) 1,228
Resort EBITDA 61,272 54,433 31,311 29,813
Real estate EBITDA $1,120 $8,359 $16,014 $14,670
Vail Resorts, Inc.
Mountain Revenue by Line of Business and Skier Days
(in thousands)
Three Months Ended Six Months Ended
January 31, January 31,
2003 2002 % Change 2003 2002 % Change
Business Line
Lift Tickets $91,028 $66,490 36.9% $90,915 $66,697 36.3%
Ski School 23,894 17,541 36.2% 23,965 17,596 36.2%
Dining 19,026 14,873 27.9% 23,656 19,447 21.6%
Retail/Rental 41,297 34,792 18.7% 57,627 49,433 16.6%
Other 13,918 12,264 13.5% 27,440 22,205 23.6%
Total Mountain
Revenue $189,163 $145,960 29.6% $223,603 $175,378 27.5%
Three Months Ended Six Months Ended
January 31, January 31,
2003 2002 % Change 2003 2002 % Change
Skier Days
Vail 736 672 9.5% 736 672 9.5%
Breckenridge 658 660 -0.3% 658 660 -0.3%
Keystone 517 527 -1.8% 517 537 -3.7%
Heavenly 382 -- 382 --
Beaver Creek 314 263 19.3% 314 263 19.3%
