Vail Resorts, Inc. significantly outperformed results from the prior year in its third-quarter ended April 30 primarily due to the greater impact of COVID-19 in the year-ago quarter. Pass product sales through May 31, 2022 for the upcoming 2022/2023 North American ski season increased approximately 9 percent in units and approximately 11 percent in sales dollars.

Highlights

  • Net income attributable to Vail Resorts, Inc. was $372.6 million for the third fiscal quarter of 2022 compared to net income attributable to Vail Resorts, Inc. of $274.6 million in the same period in the prior year. The increase is primarily due to the greater impact of COVID-19 and related limitations and restrictions on results in the prior year.
  • Resort Reported EBITDA was $610.5 million for the third fiscal quarter of 2022, compared to Resort Reported EBITDA of $462.2 million for the third fiscal quarter of 2021. The increase is primarily due to the greater impact of COVID-19 and related limitations and restrictions on results in the prior year.
  • The company updated its fiscal 2022 guidance range and is now expecting Resort Reported EBITDA to be between $828 million and $842 million. The guidance range includes an estimated $16 million of Resort Reported EBITDA from the recently acquired operations of Seven Springs, Hidden Valley and Laurel Mountain resorts (together, the “Seven Springs Resorts”) for the period from the transaction closing on December 31, 2021 through the end of the fiscal year, partially offset by $7 million of acquisition and integration related expenses associated with the Seven Springs Resorts transaction and the expected acquisition of Andermatt-Sedrun Sport AG (“Andermatt-Sedrun”).
  • Pass product sales through May 31, 2022 for the upcoming 2022/2023 North American ski season increased approximately 9 percent in units and approximately 11 percent in sales dollars as compared to the period in the prior year through June 1, 2021. Pass product sales are adjusted to include pass sales for the Seven Springs Resorts in both periods and to eliminate the impact of foreign currency by applying an exchange rate of $0.79 between the Canadian dollar and U.S. dollar in both periods for Whistler Blackcomb pass sales.
  • The company declared a quarterly cash dividend of $1.91 per share of Vail Resorts common stock that will be payable on July 12, 2022 to shareholders of record as of June 27, 2022 and repurchased 303,143 shares at an average price of $246.33 for a total of approximately $74.7 million from the beginning of the company’s third quarter of fiscal 2022 through June 8, 2022.

Commenting on the company’s fiscal 2022 third-quarter results, Kirsten Lynch, CEO, said, “We are pleased with our overall results for the quarter and for the 2021/2022 North American ski season. As expected, results for the quarter significantly outperformed results from the prior year primarily due to the greater impact of COVID-19 and related limitations and restrictions on results in the prior-year period.

“This year, challenging early-season conditions persisted through the holiday period, but our results were strong from January through the remainder of the season. Our strong season pass sales heading into the 2021/22 season are the foundation of our advance commitment strategy, creating stability for the company through variable weather and other challenges. This past season, approximately 72 percent of all Vail Resorts 2021/22 North American skier visitation was on a pass product, excluding employee and complimentary visitation, which compares to approximately 60 percent and approximately 51 percent for the 2018/2019 and 2014/2015 North American ski seasons, respectively. We had particularly strong destination visitation this year, which was further supported by lift ticket sales at our Colorado and Utah resorts that exceeded our expectations through the spring. Our recent results at Whistler Blackcomb were also stronger than expected due to the easing of travel restrictions in Canada in late February. Recent performance at our eastern U.S. ski areas was in-line with our expectations while our Tahoe resorts were impacted by challenging spring conditions, resulting in performance below our expectations. Throughout the season, our ancillary businesses continued to be capacity constrained by staffing, and in the case of dining, by operational restrictions associated with COVID-19. Overall, our results throughout the 2021/2022 North American ski season highlight the stability resulting from our advance commitment pass products in a season with challenging early season conditions, staffing challenges and COVID-19 impacts, and demonstrate our strong operational execution following the holiday period through the end of the season. We are very pleased to see the growth in visitation this season, and in particular that it primarily occurred during off-peak periods. The trend toward off-peak visitation growth continued throughout the ski season this year. For the season-to-date period ended April 30, 2022, compared to the season-to-date period ended May 5, 2019, visitation on weekday and non-holiday periods increased approximately 8 percent while visitation on weekend and holiday periods decreased approximately 3 percent, excluding Peak Resorts visitation in both periods. We believe this trend is driven by the growth in pass sales as pass holders tend to spread their visitation more across the season, and, with the increase in flexible and remote work, we expect this trend to continue. Further, the growth in non-peak periods was broad-based across our resorts. Despite the growth in overall visits this past season, very few of our resorts even approached their historical maximum daily visitation, as our resorts averaged only 1 day this season exceeding 95 percent of their historical peak daily visitation and only 6 resorts had more than 1 day above that level, excluding the recently acquired Seven Springs Resorts. All of this highlights that there is considerable opportunity to continue to grow the overall industry and skier visits outside of peak periods and that it is critical that we continue to invest in people and infrastructure to continue to improve the employee and guest experience throughout the season.

Commenting on fiscal 2022 guidance, Lynch said, “Based on the strong finish to the season, particularly driven by destination guest visitation and lift ticket sales in Colorado, Utah and Whistler Blackcomb that exceeded our expectations, we now expect net income attributable to Vail Resorts, Inc. for fiscal 2022 to be between $314 million and $348 million, and Resort Reported EBITDA for fiscal 2022 to be between $828 million and $842 million. The guidance range includes an estimated $16 million of Resort Reported EBITDA for the Seven Springs Resorts for the period from the transaction closing on December 31, 2021 through the end of the fiscal year, partially offset by $7 million of acquisition and integration-related expenses associated with the Seven Springs Resorts transaction and the expected acquisition of Andermatt-Sedrun.”

As previously announced on March 28, 2022, the company entered into an agreement to purchase a majority stake in Andermatt-Sedrun from Andermatt Swiss Alps AG (“ASA”), marking the company’s first strategic investment in, and opportunity to operate, a ski resort in Europe. Andermatt-Sedrun is a renowned destination ski resort in Central Switzerland, located less than 90 minutes from three of Switzerland’s major metropolitan areas (Zurich, Lucerne and Lugano) and approximately two hours from Milan, Italy. Upon the closing of the acquisition, the company will acquire a 55 percent ownership stake in Andermatt-Sedrun, which controls and operates all of the resort’s mountain and ski-related assets, including lifts, most of the restaurants and a ski school operation. ASA will retain a 40 percent ownership stake in Andermatt-Sedrun, with a group of existing shareholders comprising the remaining 5 percent ownership. Vail Resorts’ CHF 149 million investment is comprised of a CHF 110 million investment into Andermatt-Sedrun for use in capital investments to enhance the guest experience on the mountain and CHF 39 million, which will be paid to ASA and fully reinvested into the real estate developments in the base area. Vail Resorts will assume operating and marketing responsibility for Andermatt-Sedrun, with ASA and local stakeholders continuing as key members of the board of directors.

The transaction is expected to close prior to the 2022/2023 ski season, subject to certain third-party consents. Vail Resorts plans to include unlimited and unrestricted access to Andermatt-Sedrun on the 2022/2023 Epic Pass. Epic Day Pass holders with All Resorts Access will be able to use any of their days at Andermatt-Sedrun, and Epic Local Pass holders will receive five days of unrestricted access to the resort. All pass access is subject to the timing of the transaction closing.

Operating Results
Mountain Segment

Total lift revenue increased $137.0 million, or 23.7 percent, compared to the same period in the prior year, to $714.7 million for the three months ended April 30, 2022, primarily due to increased pass product sales for the 2021/2022 North American ski season, as well as an increase in non-pass lift ticket purchases.

Ski school revenue increased $40.5 million, or 50.4 percent, dining revenue increased $33.8 million, or 73.6 percent and retail/rental revenue increased $35.2 million, or 38.6 percent, each primarily due to fewer COVID-19 related limitations and restrictions on our North American winter operations as compared to the prior year, as well as an increase in demand over the prior year.

Operating expense increased $115.0 million, or 30.7 percent, which was primarily attributable to increased variable expenses associated with increases in revenue, and the impact of cost discipline efforts in the prior year associated with lower levels of operations, including limitations, restrictions and closures resulting from COVID-19.

Mountain Reported EBITDA increased $139.1 million, or 30.4 percent, for the third quarter compared to the same period in the prior year, which includes $5.1 million of stock-based compensation expenses for both the three months ended April 30, 2022 and 2021.

Lodging Segment
Lodging segment net revenue (excluding payroll cost reimbursements) for the three months ended April 30, 2022 increased $30.8 million, or 54.6 percent, as compared to the same period in the prior year, primarily as a result of fewer COVID-19 related limitations and restrictions as compared to the prior year, as well as an increase in demand and average daily rates compared to the prior year.

Lodging Reported EBITDA for the three months ended April 30, 2022 increased $9.2 million, or 173.1 percent, for the third quarter compared to the same period in the prior year, which includes $0.9 million and $1.0 million of stock-based compensation expense for the three months ended April 30, 2022 and 2021, respectively.

Resort | Combination of Mountain and Lodging Segments
Resort net revenue increased $288.3 million, or 32.5 percent, compared to the same period in the prior year, to $1,176.5 million for the three months ended April 30, 2022.

Resort Reported EBITDA was $610.5 million for the three months ended April 30, 2022, an increase of $148.3 million, or 32.1 percent, compared to the same period in the prior year, which includes acquisition and integration-related expenses, as well as expenses associated with the expected acquisition of Andermatt-Sedrun, of $1.0 million, which are both recorded within Mountain other operating expense.

Total Performance
Total net revenue increased $287.6 million, or 32.3 percent, compared to the same period in the prior year, to $1,176.7 million for the three months ended April 30, 2022.

Net income attributable to Vail Resorts, Inc. was $372.6 million, or $9.16 per diluted share, for the third quarter of fiscal 2022 compared to net income attributable to Vail Resorts, Inc. of $274.6 million, or $6.72 per diluted share, in the third fiscal quarter of the prior year. Additionally, fiscal 2022 third-quarter net income included the after-tax effect of acquisition and integration-related expenses, as well as costs associated with the expected acquisition of Andermatt-Sedrun, which combined, were approximately $0.8 million.

Return Of Capital
Commenting on capital allocation, Lynch said, “Our balance sheet and liquidity position remain strong. Our total cash and revolver availability as of April 30, 2022 was approximately $2.0 billion, with $1.4 billion of cash on hand, $417 million of U.S. revolver availability under the Vail Holdings Credit Agreement and $212 million of revolver availability under the Whistler Credit Agreement. As of April 30, 2022, our Net Debt was 1.7 times trailing twelve months Total Reported EBITDA. The company declared a quarterly cash dividend of $1.91 per share of Vail Resorts’ common stock that will be payable on July 12, 2022 to shareholders of record as of June 27, 2022. A Canadian dollar equivalent dividend on the exchangeable shares of Whistler Blackcomb Holdings Inc. will be payable on July 12, 2022 to shareholders of record as of June 27, 2022. The exchangeable shares were issued to certain Canadian persons in connection with our acquisition of Whistler Blackcomb Holdings Inc. Additionally, from the beginning of the company’s third quarter of fiscal 2022 through June 8, 2022, the company repurchased 303,143 shares at an average price of $246.33 for a total of approximately $74.7 million. We intend to maintain an opportunistic approach to share repurchases. We will continue to be disciplined stewards of our capital and remain committed to continuous investment in our people, strategic, high-return capital projects, strategic acquisition opportunities and returning capital to our shareholders through our quarterly dividend and share repurchase programs.”

Commitment To Employees And Guests
Commenting on the company’s investments for the 2022/223 ski season, Lynch said, “As we turn our attention to the 2022/2023 ski season and beyond, the company is making its largest-ever investment in both its employees and its resorts, to ensure we continue to deliver our company mission of an Experience of a Lifetime. The experience of our employees and guests is the core of our business model, and the company intends to use its financial resources and the stability it has created through its pass program to continue to aggressively reinvest to deliver that experience. We believe our business model allows us to make these investments and achieve our short and long-term financial growth objectives.

“For our employees, we are investing approximately $175 million in incremental expected labor expense, including inflationary adjustments, in fiscal 2023 compared to fiscal 2022 to support our employees and return our resorts to normal staffing levels. The investment includes increasing the minimum hourly wage offered across all 37 of our North American resorts to $20 per hour for all U.S. employees and C$20 per hour for all Canadian employees, and increases for hourly employees with adjustments for leadership and career stage differentials. Roles that have specific experiences or certification as prerequisites, such as entry-level patrol, commercial drivers, and maintenance technicians will start at $21 per hour. Tipped employees will be guaranteed a minimum of $20 per hour. The wage investment represents an average wage increase of nearly 30 percent across hourly employees in North America. Additionally, the company will be launching a new seasonal frontline leadership development program with the goal of supporting our seasonal frontline team members’ leadership development and ability to build a career at Vail Resorts. The company will be assessing targeted increases, beyond inflation, for our salaried employees and will be making a significant investment in our human resource department to ensure the right level of employee support, development and recruiting. We believe talent is our most important asset and our employees are our strategic priority at all levels of the company, and our employee investments are intended to help us achieve normal staffing levels that, in turn, deliver an outstanding guest experience. Additional information on the employee investments and anticipated financial impacts are available in our March 2022 investor presentation available on our Investor Relations website.

“In addition, Vail Resorts has made a commitment to affordable housing in our mountain communities. Affordable housing is a national and a mountain community crisis. As previously announced, we are investing in four projects to provide accessible and affordable housing for our employees at Park City Mountain in Utah, Whistler Blackcomb in British Columbia, Vail Mountain in Colorado, and Okemo Mountain Resort in Vermont. Collectively, the four investments would provide new affordable housing to more than 875 Vail Resorts employees, marking a more than 10 percent increase in affordable employee housing offered by the company across its resorts. We believe it is time for us, and our communities, to make affordable housing a top priority and accelerate the processes to ensure we bring these affordable housing opportunities to fruition.”

Regarding the calendar year 2022 capital expenditures, Lynch said, “We remain dedicated to delivering an exceptional guest experience and will continue to prioritize reinvesting in the experience at our resorts. We are committed to consistently increasing capacity through lift, terrain, food and beverage expansion projects and are making a significant one-time incremental investment this year to accelerate that strategy with our ambitious capital investment plan for the calendar year 2022 of approximately $315 million to $325 million across our resorts, excluding one-time investments related to integration activities, employee housing development projects and real estate related projects. The plan includes approximately $180 million for the installation of 21 new or replacement lifts across 14 of our resorts and a transformational lift-served terrain expansion at Keystone. In addition to the two brand new lift configurations at Vail and Keystone, the replacement lifts will collectively increase lift capacity at those lift locations by more than 45 percent. Projects in the plan are subject to regulatory approvals and, assuming timely approvals, are currently expected to be completed in time for the 2022/2023 North American winter season.

“The core capital plan is approximately $150 million above our typical annual capital plan, based on inflation and previous additions for acquisitions. We plan to spend approximately $9 million on integration activities related to the recently acquired Seven Springs Resorts. Including one-time investments related to integration activities and $3 million associated with real estate-related projects, our total capital plan is expected to be approximately $327 million to $337 million. Including our calendar year 2022 capital plan, Vail Resorts will have invested over $2 billion in capital since launching the Epic Pass, increasing capacity, improving the guest experience and creating an integrated resort network.”

Regarding calendar year 2023 capital expenditures, Lynch said, “In addition to this year’s significant capacity expanding investments, planning is already underway for our calendar year 2023 capital plan, and we are pleased to announce the first projects from that plan, with additional calendar year 2023 investments and upgrades to be announced in the coming quarters. At Breckenridge, we plan to upgrade the Peak 8 base area to enhance the beginner and children’s experience and increase uphill capacity from this popular base area. The investment plan will include a new four-person high-speed 5-Chair to replace the existing two-person fixed-grip lift and will include significant improvements, including new teaching terrain and a transport carpet from the base, to make the beginner experience more accessible. At Stevens Pass, we are planning to replace the two-person fixed-grip Kehr’s Chair lift with a new four-person lift, which will improve out-of-base capacity and guest experience. At Attitash, we plan to replace the three-person fixed-grip Summit Triple lift with a new four-person high-speed lift, increasing uphill capacity and reducing guests’ time on the longest lift at the resort. These lift projects are subject to regulatory approvals and are currently expected to be completed in time for the 2023/2024 North American winter season.”

Season Pass Sales
Commenting on the company’s season pass sales for the upcoming 2022/23 North American ski season, Lynch said, “Following a rapid acceleration of growth in our advance commitment strategy over the last two years that nearly doubled the number of our guests in advance commitment products, we are very pleased with the results for our spring season pass sales to date with strong unit growth over the record pass sales results we saw last spring, validating the compelling network of resorts, guest experience and value provided for our guests. Pass product sales through May 31, 2022 for the upcoming 2022/23 North American ski season increased approximately 9 percent in units and approximately 11 percent in sales dollars as compared to the period in the prior year through June 1, 2021. Pass product sales are adjusted to include pass sales for the Seven Springs Resorts in both periods and to eliminate the impact of foreign currency by applying an exchange rate of $0.79 between the Canadian dollar and U.S. dollar in both periods for Whistler Blackcomb pass sales.”

Lynch continued, “Relative to season to date pass product sales for the 2021/2022 season through June 1, 2021, we saw strong unit growth with our renewing pass holders. Our strongest unit growth was in our destination markets as travel continues to rebound following the impacts of COVID-19, and we saw more moderated unit sales across our local markets where pass penetration is already higher. Our Epic Day Pass products continue to drive our strongest product growth as we attract lower frequency guests into advance commitment products as first-time pass holders and with the 2022/23 launch of a new tier of products with access to select regional and local resorts. Pass sales dollars are benefiting from the 7.5 percent price increase relative to the 2021/2022 season, largely offset by the impact of the growth of Epic Day Pass products, including our new lower-priced Epic Day Pass offerings. Following the strong trade-up results last year, we are pleased that we achieved neutral net migration among renewing pass holders in our spring pass sales. We have the majority of our pass selling season ahead of us, and, as more guests purchase passes in the spring, we believe the full-year unit and sales growth rate will be lower than our spring growth rate. We will provide more information about our pass sales results in our September 2022 earnings release.”

Regarding Epic Australia Pass sales, Lynch commented, “We are very pleased with ongoing sales of the Epic Australia Pass, which end on June 15, 2022. Unit sales are up approximately 28 percent through May 31, 2022, as compared to the comparable period through June 1, 2021, as we continue to benefit from the acquisition of Falls Creek and Hotham in 2019.”

Updated Outlook

  • Net income attributable to Vail Resorts, Inc. is expected to be between $314 million and $348 million for fiscal 2022; 
  • Resort Reported EBITDA is expected to be between $828 million and $842 million for fiscal 2022, which includes an estimated $16 million of Resort Reported EBITDA for the Seven Springs Resorts for the period from the transaction closing on December 31, 2021 through the end of the fiscal year, partially offset by $7 million of acquisition and integration-related expenses associated with the Seven Springs Resorts transaction and the expected acquisition of Andermatt-Sedrun. The guidance includes estimated acquisition-related expenses specific to the expected acquisition of Andermatt-Sedrun but does not include any estimate for the closing costs, operating results or integration expense associated with the Andermatt-Sedrun acquisition, which is expected to close later in calendar year 2022;
  • Resort EBITDA Margin is expected to be approximately 33.0 percent in fiscal 2022 at the midpoint of its guidance range; and
  • In addition to the above, the updated outlook for fiscal year 2022 assumes normal conditions and operations throughout the Australian ski season and North American summer season, both of which begin in its fourth quarter, and no incremental travel or operating restrictions associated with COVID-19 that could negatively impact its results. The guidance also assumes an exchange rate of $0.79 between the Canadian Dollar and U.S. Dollar related to the operations of Whistler Blackcomb in Canada and an exchange rate of $0.74 between the Australian Dollar and U.S. Dollar related to the operations of Perisher, Falls Creek and Hotham in Australia.

Photo courtesy Vail Resorts