Vail Resorts Inc. reported improved results in its third quarter ended April 1 as the year ago was impacted by widespread resort closures. The company reported favorable trends in season pass sales to date driven, in part, by its reducing all pass prices for the upcoming season by 20 percent.

The company also provided its outlook for the fiscal year ending July 31, 2021.

Highlights

  • Net income attributable to Vail Resorts, Inc. was $274.6 million for the third fiscal quarter of 2021, an increase of 80.0 percent compared to its third fiscal quarter of 2020. The prior-year period was primarily impacted by the early closure of its North American destination mountain resorts and regional ski areas on March 15, 2020, due COVID-19.
  • Resort Reported EBITDA was $462.2 million for its third fiscal quarter 2021, compared to a Resort Reported EBITDA of $304.4 million for its third fiscal quarter of 2020. The prior-year period was primarily impacted by resort closures, which included the resulting deferral of approximately $120.9 million of pass product revenue and $2.9 million of related deferred costs from its third fiscal quarter 2020 to fiscal 2021 as a result of pass holder credits offered to 2019/20 North American pass holders.
  • The company issued full-year guidance for fiscal 2021 and expects Resort Reported EBITDA to be between $530 million and $570 million, which assumes all of its operations are open and aligned with current health and safety protocols and capacity restrictions, current demand trends continue, normal weather conditions throughout the Australian ski season and North American summer season, and there is no impact from COVID-19-related shutdowns or lockdowns.
  • Pass product sales through June 1, 2021 for the upcoming 2021/22 North American ski season increased as compared to sales through June 2, 2020 for its 2020/21 North American ski season, due to the lack of spring sales deadlines in 2020 as a result of COVID-19, making the year-over-year comparison to its spring 2020 results not relevant for performance trends.
  • Compared to sales for the 2019/20 North American ski season through June 4, 2019, pass product sales for the 2021/22 season through June 1, 2021 increased approximately 50 percent in units and 33 percent in sales dollars. Pass product sales include Peak Resorts pass sales in both periods and are adjusted to eliminate the impact of foreign currency by applying an exchange rate of $0.83 between the Canadian dollar and U.S. dollar in both periods for Whistler Blackcomb pass sales. Pass product sales for the full selling season through December 6, 2020, as compared to the full selling season through December 8, 2019, increased approximately 20 percent in units and approximately 19 percent in sales dollars.
  • Vail Resorts continues to maintain liquidity with $1.3 billion of cash-on-hand as of April 30, 2021 and $621 million of availability under its U.S. and Whistler Blackcomb revolving credit facilities.

Commenting on the company’s fiscal 2021 third-quarter results, Rob Katz, CEO, said, “Given the continued challenging operating environment as a result of COVID-19, we are very pleased with our overall results for the quarter and for the full 2020/21 North American ski season. Results continued to improve as the season progressed, primarily as a result of stronger destination visitation at our Colorado and Utah resorts, including improved lift ticket purchases relative to fiscal 2021 second-quarter results. Excluding Peak Resorts, total visitation at our U.S. destination mountain resorts and regional ski areas for the third quarter was only down three percent compared to the third quarter of fiscal 2019. Whistler Blackcomb’s performance continued to be negatively impacted due to the continued closure of the Canadian border to international guests, including guests from the U.S. and was further impacted by the resort closing earlier than expected on March 30, 2021 following a provincial health order issued by the government of British Columbia. Whistler Blackcomb’s total visitation for the third quarter declined nearly 60 percent compared to the third quarter of fiscal 2019.

“While visitation and lift revenue trends improved throughout the quarter, our ancillary lines of business continued to be more significantly and negatively impacted by COVID-19-related capacity constraints and limitations, particularly in food and beverage and ski school. We maintained disciplined cost controls throughout the quarter and continued operating our ancillary lines of business at reduced capacity. Resort Reported EBITDA margin for the third quarter was 52.0 percent, exceeding both the prior-year period of 43.9 percent and fiscal 2019 third quarter of 50.2 percent. These results reflect our rigorous approach to cost management, as well as a higher proportion of lift revenue relative to ancillary lines of business compared to prior periods.”

Operating Results
A more complete discussion of its operating results is found in the company’s Management’s Discussion and Analysis of Financial Condition and Results of Operations section of its Form 10-Q for the third fiscal quarter ended April 30, 2021, which was filed today with the Securities and Exchange Commission. The following are segment highlights:

Mountain Segment
For the three months ended April 30, 2021, total lift revenue increased $202.9 million, or 54.1 percent, compared to the same period in the prior year, to $577.7 million. The increase was primarily due to North American pass sales growth for the 2020/21 ski season, including the deferral impact of the pass-holder credits offered to 2019/20 North American pass product holders from fiscal 2020 to fiscal 2021 as a result of resort closures and improved non-pass visitation due to its operating for the full U.S. ski season in the current year, with demand at its Colorado and Utah destination resorts.

Ski school revenue increased $3.8 million, or 5.0 percent, and retail/rental revenue increased $13.2 million, or 16.8 percent, compared to the same period in the prior year, as a result of its operating for the full U.S. ski season in the current year as compared to the impact of resort closures in the prior year, partially offset by COVID-19-related capacity limitations and restrictions in the current year.

Dining revenue decreased $16.3 million, or 26.5 percent, compared to the same period in the prior year, due to capacity-related limitations and restrictions associated with COVID-19 in the current year, which disproportionately impacted its results at the company’s dining outlets. The declines in dining were partially offset by the benefit of operating for the full U.S. ski season in the current year as compared to the impact of the resort closures in the prior year.

Operating expense increased $38.4 million, or 11.5 percent, which was primarily attributable to it operating for the full U.S. ski season in the current year as compared to the impact of the resort closures in the prior year, partially offset by cost discipline efforts in the current year associated with reduced levels of operations and limitations and restrictions on its North American winter operations resulting from COVID-19.

Mountain reported EBITDA increased $156.6 million, or 51.9 percent, for the third quarter compared to the same period in the prior year, which includes $5.1 million of stock-based compensation expense for the three months ended April 30, 2021, compared to $4.4 million in the same period in the prior year.

Lodging Segment
Lodging segment net revenue, excluding payroll cost reimbursements, for the three months ended April 30, 2021, increased $1.7 million, or 3.1 percent, as compared to the same period in the prior year, primarily due to the company operating for the full U.S. ski season in the current year as compared to the impact of the prior year resort closures, partially offset by operational restrictions and limitations of its North American lodging properties in the current year as a result of the ongoing impacts of COVID-19.

Lodging reported EBITDA for the three months ended April 30, 2021, increased $1.3 million, or 44.7 percent, for the third quarter compared to the same period in the prior year, which includes $1.0 million of stock-based compensation expense for the three months ended April 30, 2021, compared to $0.8 million in the same period in the prior year.

Resort—Combination of Mountain and Lodging Segments
Resort net revenue was $888.3 million for the three months ended April 30, 2021, an increase of $194.6 million as compared to resort net revenue of $693.7 million for the same period in the prior year. The resort reported EBITDA was $462.2 million for the three months ended April 30, 2021, an increase of $157.9 million, or 51.9 percent, compared to the same period in the prior year.

Total Performance
Total net revenue increased $195.0 million, or 28.1 percent, to $889.1 million for the three months ended April 30, 2021, as compared to the same period in the prior year. Net income attributable to Vail Resorts, Inc. was $274.6 million, or $6.72 per diluted share, for the third quarter of fiscal 2021 compared to net income attributable to Vail Resorts, Inc. of $152.5 million, or $3.74 per diluted share, in the third fiscal quarter of the prior year.

Liquidity
The company continues to maintain liquidity. Its total cash and revolver availability, as of April 30, 2021, was approximately $2.0 billion, with $1.3 billion of cash-on-hand, $419 million of U.S. revolver availability under the Vail Holdings Credit Agreement and $203 million of revolver availability under the Whistler Credit Agreement.

As of April 30, 2021, its net debt was 2.8 times trailing twelve months total reported EBITDA. The company is confident in its cash flow generation and stability of its business model and intends to continue to be “disciplined stewards of its capital with a focus on high-return capital projects, continuous investment in our people and strategic acquisition opportunities. While we are not reinstating the dividend this quarter, we remain committed to returning capital to shareholders, and our Board of Directors will continue to closely monitor the economic and public health outlook on a quarterly basis to assess the appropriate time to reinstate the dividend.”

Season Pass Sales
Commenting on the company’s season pass sales for its upcoming 2021/22 North American ski season, Katz said, “We are very pleased with the results for our season pass sales to date, with guests showing strong enthusiasm for the enhanced value proposition of our pass products, driven in part by the 20 percent reduction in all pass prices for the upcoming season. Pass product sales through June 1, 2021 for the upcoming 2021/22 North American ski season increased very significantly as compared to sales through June 2, 2020 for the 2020/21 North American ski season, due to the lack of any spring sales deadlines in 2020 as a result of COVID-19, making the year-over-year comparison to the spring 2020 results not relevant for performance trends. Compared to sales for the 2019/20 North American ski season through June 4, 2019, pass product sales for the 2021/22 season through June 1, 2021 increased approximately 50 percent in units and 33 percent in sales dollars. Pass product sales are adjusted to include Peak Resorts pass sales in both periods and eliminate the impact of foreign currency by applying an exchange rate of $0.83 between the Canadian dollar and U.S. dollar in both periods for Whistler Blackcomb. As a reminder, pass product sales for the full selling season through December 6, 2020, as compared to the full selling season through December 8, 2019, increased approximately 20 percent in units and approximately 19 percent in sales dollars.

“Relative to season-to-date pass product sales for the 2019/20 season through June 4, 2019, we saw very strong unit growth with our renewing pass holders and even stronger unit growth in new pass holders, which include guests in our database who previously purchased lift tickets or passes but did not buy a pass in the previous season and guests who are completely new to our database. We saw our strongest unit growth in our destination markets, particularly in the Northeast, and also had very strong growth across our local markets. Compared to the period ended June 4, 2019, effective pass price decreased 10 percent, as compared to the 20 percent price decrease we implemented this year. We believe this highlights how our lower pricing has increased the propensity of pass holders to spend a portion of the new discount to purchase higher valued pass products. The pass results to date exceeded our original expectations for the impact of the 20 percent price reduction; however, we still have the majority of our pass selling season ahead of us and it is not yet clear if these trends will continue through the fall. We will provide more information about our pass sales results, including comparisons to pass sales results for the 2020/21 North American ski season, in our September 2021 earnings release.

“We are very pleased with ongoing sales of the Epic Australia Pass, which ends on June 15, 2021, and are up approximately 43 percent in units through June 1, 2021, as compared to the comparable period through June 4, 2019, representing significant growth following the acquisition of Falls Creek and Hotham in April 2019. Given the recent COVID-19 related lockdowns in Victoria, Australia, we will be monitoring any impacts on Epic Australia pass sales.”

Outlook
Commenting on the outlook for fiscal 2021, Katz said, “Net income attributable to Vail Resorts, Inc. is expected to be between $93 million and $139 million for fiscal 2021. We expect that Resort Reported EBITDA for fiscal 2021 will be between $530 million and $570 million, and we expect that Resort Reported EBITDA Margin for fiscal 2021 will be approximately 28.9 percent, using the midpoint of the guidance range. Our guidance assumes all of our operations are open and aligned with current health and safety protocols and capacity restrictions, current demand trends continue, we experience normal weather conditions throughout the Australian ski season and North American summer season, and there is no impact from potential COVID-19-related shutdowns or lockdowns. The guidance specifically assumes no impact from potential demand or operational disruptions associated with the current lockdowns in Victoria, Australia. The outlook for fiscal year 2021 is predicated on current Canadian and Australian foreign exchange rates of $0.82 and $0.78, respectively, for each currency to the U.S. dollar for the remainder of the fiscal year.”

Photo courtesy Vail Resorts