Vail Resorts, Inc. reported a slightly narrower loss in its fiscal first quarter ended October 31, strong pass sales results for the upcoming 2021/22 North American ski season, and reaffirmed its guidance for Resort Reported EBITDA for fiscal 2022.

Highlights

  • Net loss attributable to Vail Resorts, Inc. was $139.3 million for the first quarter of fiscal 2022 compared to a net loss attributable to Vail Resorts, Inc. of $153.8 million in the same period in the prior year. Both periods continued to be negatively impacted by COVID-19 and related limitations and restrictions.
  • Resort Reported EBITDA loss was $108.4 million for the first quarter of fiscal 2022, compared to a Resort Reported EBITDA loss of $94.8 million for the first quarter of fiscal 2021. Both periods continued to be negatively impacted by COVID-19 and related limitations and restrictions. Additionally, the prior-year period included the recognition of $15.4 million of lift revenue associated with the expiration of the credit offers that were made to 2019/2020 pass product holders in connection with COVID-19 related closures.
  • Pass product sales through December 5, 2021 for the upcoming 2021/2022 North American ski season increased approximately 47 percent in units and approximately 21 percent in sales dollars as compared to the period in the prior year through December 6, 2020, without deducting for the value of any redeemed credits provided to certain North American pass product holders in the prior period. Pass product sales are adjusted to eliminate the impact of foreign currency by applying an exchange rate of $0.78 between the Canadian dollar and U.S. dollar in both periods for Whistler Blackcomb pass sales.
  • The company continues to maintain significant liquidity with $1.5 billion of cash on hand as of October 31, 2021, and $636.2 million of availability under our U.S. and Whistler Blackcomb revolving credit facilities. The company declared a cash dividend of $0.88 per share payable in January 2022 and exited the temporary waiver period under the Vail Holdings, Inc. revolving credit facility (the “VHI Credit Agreement”) effective October 31, 2021.
  • The company reaffirmed its guidance for fiscal year 2022 of $785 million to $835 million of Resort Reported EBITDA, including an estimated $2 million of acquisition-related expenses specific to Seven Springs.
  • On December 8, 2021, the company announced that it had entered into an agreement to acquire Seven Springs Mountain Resort, Hidden Valley Ski Resort and Laurel Mountain ski area. The company expects the acquisition to close this winter.

Commenting on the company’s fiscal 2022 first-quarter results, Kirsten Lynch, CEO, said, “Our first fiscal quarter historically operates at a loss, given that our North American mountain resorts are generally not open for ski season operations during the period. The quarter’s results are primarily driven by winter operating results from our Australian resorts and our North American resorts’ summer activities, dining, retail/rental and lodging operations, and administrative expenses. We are pleased with our results for the quarter, which exceeded our expectations. Performance at our Australian resorts during the first quarter was negatively impacted by COVID-19-related limitations and restrictions including stay-at-home orders and periodic resort closures throughout the quarter. We were able to reopen our Australian resorts for the last few weeks of the ski season, resulting in favorability relative to our expectations. Our Tahoe resorts were negatively impacted by the Caldor fire, which resulted in the early closure of our summer operations in the region. Aside from these unique challenges, we continued to see strong demand throughout the quarter, which we believe highlights our guests’ continued desire for outdoor experiences.”

Commenting on the company’s liquidity, Lynch stated, “We remain focused on our disciplined approach to capital allocation. Our liquidity position remains strong, and we are confident in the free cash flow generation and stability of our business model. Our total cash and revolver availability as of October 31, 2021 was approximately $2.1 billion, with $1.5 billion of cash on hand, $417 million of revolver availability under the VHI Credit Agreement, and $220 million of revolver availability under the Whistler Blackcomb Credit Agreement. As of October 31, 2021, our Net Debt was 2.6 times trailing twelve months Total Reported EBITDA, and we exited the temporary waiver period under the VHI Credit Agreement effective October 31, 2021. I am also pleased to announce that our Board of Directors has declared a cash dividend on Vail Resorts’ common stock. The dividend will be $0.88 per share of common stock and will be payable on January 11, 2022 to shareholders of record on December 28, 2021.”

Moving on to season pass results, Lynch said, “Pass product sales for the North American ski season increased approximately 47 percent in units and approximately 21 percent in sales dollars through December 5, 2021 as compared to the period in the prior year through December 6, 2020, without deducting for the value of any redeemed credits provided to certain North American pass holders in the prior period. Pass product sales through December 5, 2021 for the 2021/2022 North American ski season increased approximately 76 percent in units and approximately 45 percent in sales dollars as compared to sales for the 2019/2020 North American ski season through December 8, 2019, with pass product sales adjusted to include Peak Resorts pass sales in both periods. Pass product sales are adjusted to eliminate the impact of foreign currency by applying an exchange rate of $0.78 between the Canadian dollar and U.S. dollar in all periods for Whistler Blackcomb pass sales.

“We are very pleased with the results of our season pass sales, which continue to demonstrate the strength of our data analytics capabilities and the compelling value proposition of our pass products, driven in part by the 20 percent reduction in pass prices for the 2021/2022 season. We expect that the total number of guests on all advance commitment products this year will exceed 2.1 million including all pass products for our North American and Australian resorts, an increase of approximately 0.7 million from last year and an increase of approximately 0.9 million from two years ago.

“For the full pass sales season, we saw strong unit growth from renewing pass holders and significantly stronger unit growth from 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 as well as guests who are completely new to our database. Our most significant unit growth was from our destination markets, particularly in the Northeast, and we also had very strong growth across all of our local markets. We have focused on growing our destination pass holder base as we have expanded our network, and over the course of the last two years, we have nearly doubled the number of advance commitment guests from those markets. Our absolute unit growth was led by our core Epic and Epic Local pass products, and we also saw very strong growth from our Epic Day Pass products, including strength in our new Epic Day Pass Limited products, which offer a lower price point for guests not planning to ski at select resorts. Compared to the period ended December 6, 2020, effective pass price decreased 17 percent despite the 20 percent price decrease we implemented this year and the significant growth of our lower-priced Epic Day Pass products, which continue to represent an increasing portion of our total advance commitment product sales. We significantly outperformed our original expectations for pass sales relative to the estimates we provided when we announced the 20 percent price decrease in our passes, which was driven by the significant increase in new pass holders and guests trading up to higher-value passes.”

Lynch continued, “We are encouraged by the indicators of demand heading into the 2021/2022 North American ski season with strong leisure travel demand indicators. Our strong pass sales provide visibility into the robust demand for guests to visit our resorts in the year ahead. Lodging bookings at our U.S. resorts for the upcoming season are trending ahead of pre-COVID-19 levels for the 2019/2020 season, while lodging bookings at Whistler Blackcomb are lagging 2019/2020 bookings, which we anticipate is due to the impact of travel restrictions on international visitors to the resort. Based on historical averages, around half of the bookings for the winter season have been made by this time, though it is important to note that our lodging bookings represent a small portion of the overall lodging inventory around our resorts. Our early season conditions have been challenging across the network, resulting in delayed openings and limited open terrain. Many of our resorts are very recently experiencing snowfall and colder temperatures that have been more conducive to snowmaking which we expect will allow us to expand our open terrain soon. Despite the challenging early season conditions, the success of our advance commitment strategy allows us to secure a significant amount of our demand and revenue ahead of the season which creates significant stability for our business.”

Seven Springs Acquisition
As previously announced on December 8, 2021, the company entered into an agreement to acquire Seven Springs Mountain Resort, Hidden Valley Ski Resort and Laurel Mountain ski area in the Pittsburgh, PA area (collectively “Seven Springs”) for a purchase price of approximately $125 million, subject to certain adjustments. It estimates that Seven Springs will generate incremental annual EBITDA in excess of $15 million in the company’s fiscal year ending July 31, 2023, which includes approximately $5 million for the 418-room Slopeside Hotel and associated conference facilities and lodging operations. The ongoing capital expenditures associated with the Seven Springs operations are expected to be approximately $3 million per year. We plan to add access to the three resorts to our Epic Pass products for the 2022/2023 North American ski season. The transaction is expected to close this winter.

Operating Results
A complete discussion of the company’s operating results can be found in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of the company’s Form 10-Q for the first fiscal quarter ended October 31, 2021, which was filed today with the Securities and Exchange Commission.

The following are segment highlights:

Mountain Segment

  • Mountain segment net revenue increased $9.8 million, or 9.9 percent, to $109.3 million for the three months ended October 31, 2021 as compared to the same period in the prior year, primarily due to fewer COVID-19 related limitations and restrictions as compared to the prior year, partially offset by the prior year recognition of $15.4 million of lift revenue associated with the expiration of the credit offers to 2019/2020 pass product holders.
  • Mountain Reported EBITDA loss was $111.0 million for the three months ended October 31, 2021, which represents an incremental loss of $25.8 million, or 30.3 percent, as compared to Mountain Reported EBITDA loss for the same period in the prior year, primarily due to the recognition of $15.4 million of lift revenue associated with the expiration of the credit offers to 2019/2020 pass product holders in the prior year as well as decreased results at our Australian ski areas, primarily due to periodic COVID-19 related closures at Perisher in the current year. Additionally, Mountain Reported EBITDA decreased due to increased general & administrative expenses primarily due to COVID-19 related cost management in the prior year. These decreases were partially offset by an increase in our North American summer operations as a result of fewer COVID-19 related limitations and restrictions as compared to the prior year.

Lodging Segment

  • Lodging Segment net revenue (excluding payroll cost reimbursements) increased $33.4 million, or 108.2 percent, to $64.2 million for the three months ended October 31, 2021 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 increased demand.
  • Lodging Reported EBITDA was $2.6 million for the three months ended October 31, 2021, which represents an increase of $12.2 million, or 126.5 percent, as compared to the Lodging Reported EBITDA loss for the same period in the prior year, primarily as a result of fewer COVID-19 capacity-related restrictions and limitations on our North American summer operations compared to the prior year as well as increased demand, partially offset by increased general & administrative expenses primarily due to COVID-19 related cost management in the prior year.

Resort
(combination mountain and lodging segments)

  • Resort net revenue was $175.3 million for the three months ended October 31, 2021, an increase of $43.7 million as compared to Resort net revenue of $131.5 million for the same period in the prior year.
  • Resort Reported EBITDA loss was $108.4 million for the three months ended October 31, 2021, a decrease of $13.6 million as compared to Resort Reported EBITDA loss of $94.8 million for the same period in the prior year.

Total Performance

  • Total net revenue increased $43.8 million, or 33.2 percent, to $175.6 million for the three months ended October 31, 2021 as compared to the same period in the prior year.
  • Net loss attributable to Vail Resorts, Inc. was $139.3 million, or a loss of $3.44 per diluted share, for the first quarter of fiscal 2022 compared to a net loss attributable to Vail Resorts, Inc. of $153.8 million, or a loss of $3.82 per diluted share, in the prior year.

Return of Capital
The company exited the temporary waiver period under the Vail Holdings Credit Agreement effective October 31, 2021 and declared a quarterly cash dividend of $0.88 per share of Vail Resorts common stock that will be payable on January 11, 2022 to shareholders of record on December 28, 2021. Additionally, a Canadian dollar equivalent dividend on the exchangeable shares of Whistler Blackcomb Holdings Inc. will be payable on January 11, 2022 to shareholders of record on December 28, 2021. The exchangeable shares were issued to certain Canadian persons in connection with our acquisition of Whistler Blackcomb Holdings Inc. This dividend payment equates to 50 percent of pre-pandemic levels, consistent with the company’s prior quarter cash dividend, and reflects our continued confidence in the strong free cash flow generation and stability of our business model despite the ongoing risks associated with COVID-19. Its Board of Directors will continue to closely monitor the economic and public health outlook on a quarterly basis to assess the level of our quarterly dividend going forward.

Capital Investments
Commenting on the company’s focus on the guest experience, Lynch said, “We remain dedicated to continuing to improve the guest experience, reduce wait times and communicate transparently with guests, especially given the excitement and demand for travel this coming season. As announced on November 16, we have taken additional steps to prioritize the on-mountain experience of pass holders this season, including limiting lift ticket sales during the three most popular holiday periods, deploying a new operating plan which includes significantly improving how efficiently we load lifts and gondolas, launching a new daily forecast of lift line wait times in the EpicMix app, and investing in new lifts and expanded terrain to reduce wait times to ensure skiers and riders have an Experience of a Lifetime at our resorts this season.

“We are thrilled to welcome guests to all of our resorts as the 2021/2022 North American ski season kicks off with several transformational enhancements to the guest experience. In Colorado, we completed a 250-acre lift-served terrain expansion in the signature McCoy Park area of Beaver Creek, further differentiating the resort’s high-end, family-focused experience. We also added a new four-person high speed lift at Breckenridge to serve the popular Peak 7, replaced the Peru lift at Keystone with a six-person high-speed chairlift, and replaced the Peachtree lift at Crested Butte with a new three-person fixed-grip lift. At Okemo, we completed a transformational investment including upgrading the Quantum lift to replace the Green Ridge three-person fixed-grip chairlift. In addition to these investments that will greatly improve uplift capacity, we have invested in company-wide technology enhancements, including a number of upgrades to bring a best-in-class approach to how we service our guests through our customer service channels.

Regarding calendar year 2022 capital expenditures, Lynch said, “As announced in September, we are excited to be proceeding with our ambitious capital investment plan for the calendar year 2022 of approximately $318 million to $328 million across our resorts to significantly increase lift capacity and enhance the guest experience as we drive increased loyalty from our guests and continuously improve the value proposition of our advance commitment products. The plan includes the installation of 21 new or replacement lifts across 14 of our resorts that collectively will increase lift capacity in those lift locations by more than 60 percent and a transformational lift-served terrain expansion at Keystone. The updated lift upgrade plan includes two incremental replacement lifts at Jack Frost and Big Boulder in Pennsylvania to provide increased capacity and improved guest experience at the resorts. All of the projects in the plan are subject to regulatory approvals.

“In addition to these lift upgrade and terrain expansion projects, we are excited to announce additional details on our investment plans not previously highlighted in our September announcement. We continue to remain highly focused on developing and leveraging our data-driven approach to marketing and operating the business. Our planned investments include network-wide scalable technology that will enhance our analytics, e-commerce and guest engagement tools to improve our ability to target our guest outreach, personalize messages and improve conversion. We will also be investing in broader self-service capabilities to improve guests’ online experience and engagement. In addition, we are excited to announce a $3.6 million capital investment plan in Vail Resorts’ Commitment to Zero initiative, including targeted investments in high-efficiency snowmaking, heating and cooling infrastructure and lighting to further improve our energy efficiency and make meaningful progress toward our 2030 goal.

“We expect our capital plan for the calendar year 2022 to be approximately $315 million to $325 million, excluding approximately $3 million of one-time items associated with real estate-related capital, and excluding any capital expenditures associated with the Seven Springs acquisition, which remains subject to closing. This is approximately $150 million above our typical annual capital plan, based on inflation and previous additions for acquisitions, and includes approximately $20 million of incremental spending to complete the one-time capital plans associated with the Peak Resorts and Triple Peaks acquisitions. Including one-time real estate-related capital, our total capital plan is expected to be approximately $318 million to $328 million. We will be providing further detail on our calendar year 2022 capital plan in March 2022.”

Outlook
Commenting on fiscal 2022 guidance, Lynch said, “Given our first-quarter results and the indicators we are seeing for the upcoming season, we are reaffirming our Resort Reported EBITDA guidance for fiscal 2022 of $785 million to $835 million that was included in our September earnings release based on the assumptions incorporated at that time, including foreign currency exchange rates. Our guidance includes an estimated $2 million of acquisition-related expenses specific to Seven Springs but does not include any estimate for the closing costs, operating results, or integration expense associated with the Seven Springs acquisition, which is expected to close this winter.

“We are encouraged by our very strong pass sales heading into the season, our favorable first-quarter results and the strong demand we are seeing across leisure travel and in our U.S. booking trends. It is important to note that our growth in pass sales is expected to be partially offset by reduced lift ticket sales as we continue to successfully convert guests from lift tickets to pass products. Additionally, we anticipate modest offsets from limiting lift ticket sales during the three most popular holiday periods across our North American resorts to prioritize access for pass holders. Early season conditions have been challenging, resulting in delayed openings and limited terrain across many of our resorts, and we anticipate that these conditions will have a negative impact on our results leading up to the holidays but the North American ski season has just begun with our primary earnings period still in front of us. There continues to be uncertainty regarding the ultimate impact of COVID-19 on our business results in fiscal year 2022, including any response to changing COVID-19 guidance and regulations by the various governmental bodies that regulate our operations and resort communities, as well as changes in travel and consumer behavior resulting from COVID-19. Our guidance for fiscal year 2022 assumes normal weather and conditions from the holiday period onward and no impact from incremental travel or operating restrictions associated with COVID-19 that could negatively impact our results.

“The company revised its segment reporting to move certain dining and golf operations from the Lodging segment to the Mountain segment, consistent with how these operations are managed. The expected result of this reporting revision is a shift of approximately $6 million from Lodging Reported EBITDA to Mountain Reported EBITDA for our fiscal 2022 guidance relative to our guidance that was included in our September earnings release. This shift has no impact on expected Net Income Attributable to Vail Resorts, Inc. or Resort Reported EBITDA.”

Photo courtesy Seven Springs