Vail Resorts, Inc. announced that, based on its third quarter performance to date, the Company anticipates its financial results will fall below consensus analyst estimates for the quarter ending April 30, 2003 as well as for the 2003 fiscal year.
The Company announced that with the completion of the 2002/2003 ski season, fiscal 2003 year-end income from operations is expected to range between $47 million and $56 million. The Company is also reducing its formerly announced resort EBITDA range for fiscal 2003 to $108 million to $118 million, including all severance payouts, as well as the previously expected $4 million to $7 million loss associated with the start-up and first year operations of the Ritz Carlton, Bachelor Gulch. At the end of the fiscal second quarter, the Company had given a guidance range for resort EBITDA of $128 million to $138 million, before severance payouts of approximately $2.5 million, for the fiscal year. Therefore, the resort EBITDA guidance range is being reduced by $17.5 million. Real estate is expected to perform in the range as previously announced.
In commenting on fiscal third quarter projected results, Adam Aron, Chairman and Chief Executive Officer, commented, “Heightened public debate about the prospects of impending war, followed by the actual outbreak of hostilities, in what would normally be the busiest time during Vail Resorts year, had a profound impact on our resort revenues and profitability in our fiscal third quarter. This was especially true for the month of March. For example, lift ticket revenues, which had been running approximately 30% ahead of last year season-to-date through the end of February, were actually 1% behind last year in the month of March. This war related fall-off in March revenues was seen in just about every aspect of the company’s resort business activities.”
Aron further added, “Back in the fall of 2002, Vail Resorts anticipated that the possibility of war could make fiscal 2003 challenging. Accordingly, a significant cost reduction effort was implemented at that time. While the cost cuts were fully implemented, the revenue fall-off as a result of war in the Middle East was severe. Even though Vail Resorts continues to outperform a broad array of other companies in the US travel industry, we are nonetheless disappointed by this outcome. Looking ahead, the company is assessing significant additional cost reductions, while maintaining its commitment to offering an excellent guest service experience, to generate increased profitability in fiscal 2004 and beyond.”
