A huge jump in real estate sales propelled Vail Resorts, Inc. to record revenue, EBITDA and net income in the year ended July 31, 2008. Epic late snow, a boom in foreign tourism and higher ticket prices also helped. But the nation’s largest operator of ski resorts forecast its resort revenues for the upcoming season will decline between 4.6% and 13.3%, while resort profits could fall by 26-42% due to uncertain economic times.


MTN said net income rose a whopping 48.2% to $91 million for the year ended July 31, 2008, excluding a favorable one time legal settlement. Revenues rose 22.5% to $1.15 billion. Earnings from real estate operations, which swang from a negative EBITDA of $2.5 million in 2007 to EBITDA of $45.9 million in 2008, drove most of the gains. But resort operations also fared well thanks to epic snow after Christmas at the company’s ski resorts in Colorado, California and Wyoming.

 

“We set new records for our fiscal 2008 Mountain, Resort and Real Estate revenue; Mountain, Resort and Real Estate Reported EBITDA and net income,” said CEO Robert Katz. “Our total skier visits were down 0.4% for the season; however, excluding the early season period from the beginning of the ski season until December 23, 2007, our total skier visits were up 4.1%.”

Katz said a 26% increase in international guest visitation, a 5.5% increase in effective ticket price and a 7.7% increase in season pass revenues countered weak economic conditions. Lodging revenue was up 8.3%.


The favorable trends that boosted 2008 performance, however, are likely to reverse this season, said Katz.

 

“Given the early season indicators and the unprecedented uncertainty of the future economic climate, we think it is prudent at this time to forecast a decline in our fiscal 2009 guidance as compared to the record results we reported for fiscal 2008,” Katz said.

 

MTN is projecting full year Resort Reported EBITDA, the combination of its Mountain and Lodging segments that best reflects outdoor recreation driven toursim spending, to range from $200 million to $220 million, compared to $230.8 million in FY 2008. Net income is forecast to range from $60 million to $76 million, compared to $102.9 million,  

 

MTN’s stock slid by nearly $3.50 per share, or 8.6%, by 11 a.m. on the news.

 

                                        Vail Resorts, Inc.
               Consolidated Condensed Statements of Operations
                   (In thousands, except per share amounts)
                                           (Unaudited)

                                                              Twelve Months Ended
                                                                       July 31,
                                                                2008          2007
    Net revenue:
      Mountain                                      $685,533       $665,377
      Lodging                                          170,057        162,451
      Real estate                                     296,566        112,708
        Total net revenue                        1,152,156        940,536
    Segment operating expense:
      Mountain                                       470,362        462,708
      Lodging                                         159,832        144,252
      Real estate                                    251,338        115,190
        Total segment operating expense   881,532        722,150
    Other operating income (expense):
      Gain on sale of real property                  709             —
      Depreciation and amortization           (93,794)       (87,664)
      Relocation and separation charges              —         (1,433)
      Loss on disposal of fixed assets, net   (1,534)        (1,083)
    Income from operations                       176,005        128,206
      Mountain equity investment income,

       net                                                     5,390          5,059
      Investment income, net                         8,285         12,403
      Interest expense, net                          (30,667)       (32,625)
      Loss on sale of businesses, net                     —           (639)
      Contract dispute credit (charges), net     11,920         (4,642)
      Gain on put options, net                            —                 690
      Minority interest in income of consolidated
       subsidiaries, net                                   (4,920)        (7,801)
    Income before provision for income taxes 166,013        100,651
      Provision for income taxes                     (63,086)       (39,254)
    Net income                                          $102,927        $61,397
    Per share amounts:
      Basic net income per share                       $2.67          $1.58
      Diluted net income per share                     $2.64          $1.56

    Other Data:
    Mountain Reported EBITDA                    $220,561       $207,728
    Mountain Reported EBITDA excluding stock-based
     compensation                                      $224,395       $211,552
    Lodging Reported EBITDA                       $10,225        $18,199
    Lodging Reported EBITDA excluding stock-based
     compensation                                       $11,519        $19,290
    Resort Reported EBITDA                       $230,786       $225,927
    Resort Reported EBITDA excluding stock-based
     compensation                                      $235,914       $230,842
    Real Estate Reported EBITDA                  $45,937        $(2,482)
    Real Estate Reported EBITDA excluding
     stock-based compensation                     $49,073          $(399)

 

                                       Vail Resorts, Inc.
               Resort Revenue by Business Line and Skier Visits
                                      (In thousands)
                                       (Unaudited)

                         Three                       Twelve
                       Months Ended  Percentage   Months Ended      Percentage
                              July 31,           Increase            July 31,            Increase
                              2008      2007  (Decrease)   2008       2007       (Decrease)
    Business Line
    Lift tickets      $123       $–           n/a         $301,914  $286,997     5.2%
    Ski school          —        —      —  %                 81,384    78,848     3.2%
    Dining           4,504     4,675      (3.7)%           62,506    59,653     4.8%
    Retail/rental   18,921    19,332    (2.1)%        168,765   160,542     5.1%
    Other           14,001    14,468     (3.2)%          70,964    79,337   (10.6)%
    Total Mountain
     Revenue       $37,549   $38,475 (2.4)%       $685,533  $665,377    3.0%

    Total Lodging
     Revenue       $48,323   $45,604  6.0%        $170,057  $162,451    4.7%

    Total Resort
     Revenue       $85,872   $84,079  2.1%        $855,590  $827,828     3.4%


                                Three                                         Twelve
                       Months Ended  Percentage     Months Ended   Percentage
                         July 31,         Increase         July 31,              Increase
                      2008      2007  (Decrease)    2008       2007      (Decrease)
    Skier Visits
    Vail                —        —           –%          1,570     1,608         (2.4)%
    Breckenridge        —        —      –%         1,630      1,650         (1.2)%
    Keystone            —        —       –%         1,129      1,171         (3.6)%
    Heavenly               5        —      n/a           948         900           5.3%
    Beaver Creek        —        —      –%           918         890           3.1%
    Total Skier Visits   5        —      n/a        6,195       6,219          (0.4)%

    Effective Ticket
     Price               $24.60    $–    n/a       $48.74       $46.15           5.6%