Vail Resorts Inc. reported Retail/Rental revenue increased $9.3 million, or 10.8 percent, for the three months ended Jan. 31, 2015 compared to the same period in the prior year, due primarily to increases in retail sales and rental revenue in Colorado and Utah and the addition of Park City.
The results contributed to an 18.2 percent increase in revenue at the company's Mountain segment.
“Our results were very strong in the second quarter of fiscal 2015, with Mountain revenue increasing 18.2 percent compared to the prior year,” said CEO Rob Katz. “Total lift revenue increased 22.5 percent, primarily driven by a 15.9 percent growth in visitation and a 5.7 percent increase in effective ticket price (“ETP”) compared to the prior year. We continue to see robust spending trends that drove a 22.1 percent increase in ski school revenue and an 18.5 percent increase in food and beverage revenue compared to the prior year. We benefited from strong pass sales, increased ancillary yields across our resorts and good conditions at our Colorado resorts. Our mountain performance includes the results of Park City in the second quarter of fiscal 2015, which were in line with our previous public estimates. Excluding Park City, lift revenue excluding season pass revenue increased 12.7 percent for the fiscal quarter compared to the prior year, with commensurate growth in our ancillary revenues.
- Total lift revenue increased $43.9 million, or 22.5 percent, compared to the same period in the prior year, to $239.3 million for the three months ended January 31, 2015, driven largely by a $25.2 million, or 23.9 percent, increase in lift revenue excluding season pass revenue, attributable to increased visitation at our Colorado resorts, as well as incremental revenue of $11.8 million from the addition of Park City. Season pass revenue increased $18.7 million, or 20.9 percent.
- Ski school revenue increased by $10.4 million, or 22.1 percent, and dining revenue increased $6.0 million, or 18.5 percent, for the three months ended January 31, 2015 compared to the same period in the prior year, driven by increases in visitation and yields as well as the addition of Park City.
- Retail/rental revenue increased $9.3 million, or 10.8 percent, for the three months ended January 31, 2015 compared to the same period in the prior year, due primarily to increases in retail sales and rental revenue in Colorado and Utah and the addition of Park City.
- Operating expense increased $25.5 million, or 10.5 percent, for the three months ended January 31, 2015 compared to the three months ended January 31, 2014, primarily due to incremental expenses of $14.1 million from the addition of Park City (including current year Park City integration costs of $0.6 million). Operating expense in the prior year included $3.0 million of Canyons integration and Park City litigation related expenses.
- Mountain Reported EBITDA increased $46.1 million, or 31.1 percent, for the fiscal quarter compared to the same period in the prior year.
- Mountain Reported EBITDA includes $3.0 million of stock-based compensation expense for the three months ended January 31, 2015 compared to $2.5 million in the same period in the prior year.
Season-to-Date Metrics through March 8, 2015
The company announced ski season-to-date metrics for the comparative periods from the beginning of the ski season through Sunday, March 8, 2015, and for the similar prior year period through Sunday, March 9, 2014, adjusted as if Park City, which was acquired in September 2014, was owned in both periods. The reported ski season metrics do not include the results of Afton Alps and Mt. Brighton in either period. The following data is interim period data and subject to fiscal quarter end review and adjustments.
- Season-to-date total lift revenue at the company's nine mountain resorts, including an allocated portion of season pass revenue for each applicable period, was up 8.0 percent compared to the prior year season-to-date period.
- Season-to-date ancillary spending outpaced skier visitation, with ski school revenue up 2.1 percent and dining revenue up 4.8 percent at the company's nine mountain resorts compared to the prior year season-to-date period. Additionally, retail/rental revenue for resort store locations was up 2.9 percent.
- Season-to-date total skier visits for the company's nine mountain resorts were down 0.3 percent compared to the prior year season-to-date period.
Mr. Katz continued, “Our results in February and early March continued the trends we saw in our fiscal second quarter with strength in Colorado offset by shortfalls to our expectations in Tahoe. In addition, in early February, Vail and Beaver Creek had the honor of hosting the 2015 World Alpine Ski Championships. The event was an extraordinary showcase of both resorts, with outstanding attendance and terrific television and online media coverage both in the United States and around the world. However, the Championships did depress skier visits and financial performance at both resorts in February compared to the prior year, which was largely in line with our original expectations. Our overall performance through March 8, 2015 has been incorporated in our updated guidance for fiscal 2015.”
Capital spending plans
The company also provided additional details of its 2015 capital plan, including expected spending on summer activities for Epic Discovery. Consistent with prior estimates provided in December 2014, the company expects to spend approximately $50 million to complete its transformative capital plan to connect the Park City and Canyons resorts, creating the largest ski resort in the United States by skiable acreage. The remaining capital plan consists of $60 million to $65 million of investments in maintenance spending and prioritized discretionary spending, including
- upgrading Vail Mountain's Avanti Chair (Chair 2) to a six-person high-speed chairlift,
- expanding the “refreshing” snowmaking system at Beaver Creek,
- adding new snowmaking on our recently opened Peak 6 terrain at Breckenridge,
- renovating rooms at the Keystone Lodge and (v) investing in technology and marketing systems to drive increased yields and data capture across our resorts in our ski school and rental ancillary services.
The company is also announcing its plan to spend approximately $10 million in calendar year 2015 for the first major construction efforts for Epic Discovery summer activities. The summer capital will be focused on a mountain coaster, canopy tours and summer tubing at Vail for which the company has received the necessary US Forest Service approvals. In addition, the capital will be used to construct kids' activities on private land at Breckenridge and for significant planning investments for the next phase of construction in 2016 at Vail, Breckenridge and Heavenly.
“Our 2015 capital plan reflects our goal to target high return investments that support a premium experience for our guests while generating significant cash flow,” said Katz. “Our investment in Utah will be one of the most transformative ever undertaken in the ski industry and we are pleased with the progress of the local approval processes for those projects. We believe Epic Discovery, our summer initiative, is an incredible opportunity to leverage our existing infrastructure and capitalize on the large number of guests already visiting certain resort destinations during the summer months. We are excited to begin implementation of this initiative with a significant investment this summer at Vail and begin to invest at Breckenridge and Heavenly.”