Vail Resorts slightly widened its loss in the first quarter ended October 31.

Highlights

  • Net loss attributable to Vail Resorts Inc. was $62.6 million for the first fiscal quarter of 2017 compared to $59.6 million in the same period in the prior year.
  • Resort reported EBITDA loss was $53.3 million for the first fiscal quarter of 2017, which includes $2.6 million of reported EBITDA loss related to Whistler Blackcomb operations and $2.8 million of transaction and integration costs, compared to a loss of $46.5 million in the same period in the prior year.
  • Season pass sales, excluding the Epic Australia Pass and Whistler Blackcomb season passes, through December 4, 2016 for the 2016/17 ski season were up approximately 16 percent in units and approximately 20 percent in sales dollars versus the comparable period in the prior year.
  • The company increased its overall fiscal 2017 guidance range and is now expecting resort reported EBITDA to be between $567 million and $597 million, including estimated operating results from Whistler Blackcomb as well as approximately $8 million of related transaction and integration costs. The company reiterated its guidance for fiscal 2017, excluding the results of Whistler Blackcomb.

Commenting on the company’s fiscal 2017 first-quarter results, Rob Katz, chief executive officer, said, “Our first fiscal quarter historically operates at a loss given that our North American mountain resorts are not open for ski operations during the period. The quarter’s results are primarily driven by our summer activities, dining, retail/rental and lodging operations, administrative expenses and winter operating results from Perisher. We were pleased with our results in the quarter, with strong summer visitation at our U.S. mountain resorts driving increased revenue and profitability with the official launch of Epic Discovery at Vail and Heavenly and continued strong summer results at Breckenridge and Park City. Additionally, we had strong results at Perisher where visitation was steady compared to the prior year and growth was driven by yield improvements across the business. Our lodging results for the first fiscal quarter were very encouraging with the average daily rate increasing 8.9 percent compared to the prior year. In particular, our properties in Colorado benefited from increased visitation to our resort communities and Grand Teton Lodge company benefited from increased park visitation. The Whistler Blackcomb transaction closed on October 17, 2016 and resulted in a $5.4 million Resort Reported EBITDA loss for the quarter, including a $2.6 million EBITDA loss from off-season operations and we incurred $2.8 million of transaction and integration related expenses during the quarter.”

Regarding real estate, Katz said, “As previously noted, we closed on the sale of a land parcel at the base of Peak 8 in Breckenridge for $9.3 million during the first fiscal quarter, which contributed $6.5 million to Real Estate Reported EBITDA. Real Estate Reported EBITDA was $5.1 million for the first fiscal quarter, as compared to $1.2 million in the same period the prior year. For the quarter, Net Real Estate Cash Flow totaled $6.6 million.”

Katz continued, “Our balance sheet at quarter end and after completing the Whistler Blackcomb acquisition remains very strong. We ended the quarter with $106.8 million of cash on hand and $1.3 billion of Net Debt. To fund the cash portion of the acquisition, we expanded our existing term loan facility by $509.4 million to $750 million and extended the maturity date of the facility to October 2021. Additionally, we assumed Whistler Blackcomb’s existing Canadian Dollar denominated revolver totaling CA$300 million, of which approximately CA$190.5 million ($142.1 million) was outstanding as of October 31, 2016, and extended the maturity date of the facility to November 2021. Our Net Debt was 2.9 times trailing twelve months Total Reported EBITDA at October 31, 2016, though it is important to note that this ratio only includes Whistler Blackcomb’s results for the two week period between closing and quarter end.”

Commenting on the company’s upcoming season, Katz said, “We closed on the acquisition of Whistler Blackcomb in October and are thrilled about this transformative addition to Vail Resorts. We are looking forward to the full integration of the resort into our network over the coming year and offering access to Whistler and our other resorts to pass holders for the 2017/18 ski season. In addition, we are excited for our Chicago area skiers to experience the transformed Wilmot Mountain which opens next week with new base area facilities and dramatically improved on mountain infrastructure. Our guests at Vail Mountain will have the opportunity to experience the enhanced lift service in the legendary Back Bowls with the new Sun Up chair and guests at Breckenridge will be able to enjoy our new restaurant at the top of Peak 7, providing additional dining capacity serving the Peak 6 terrain.”

Moving on to early ski season indicators, Katz said, “Our sales of season passes continue to deliver outstanding results. As we approach the end of our selling period, season pass sales are up approximately 16 percent in units and approximately 20 percent in sales dollars through December 4, 2016 compared to the prior year period ending December 6, 2015 (excluding the Epic Australia Pass and Whistler Blackcomb pass sales in both periods). This year, we have continued to drive significant growth in our destination markets which represent nearly three quarters of our sales increase and now represent approximately 48 percent of our total pass holders. In Chicago, one of our most important destination markets, we have seen pass sales growth that is well ahead of other U.S. destination markets due to our acquisition of Wilmot Mountain and subsequent transformational investment at the resort. Additionally, we have seen continued growth in Colorado and benefited from a strong rebound in Northern California. We are very pleased with the sales of season pass and frequency card products at Whistler Blackcomb, which are trending well ahead of the prior year. We expect our total season pass holders will exceed 650,000, including Whistler Blackcomb products and the Epic Australia Pass, representing an incredible group of highly loyal and passionate guests.”

Katz continued, “Lodging bookings for the rest of the season are trending slightly ahead of last year at our U.S. resorts. Based on historical averages, less than 50 percent of the bookings for the winter season have been made by this time. While November was a fairly warm month for our U.S. resorts, colder temperatures and snowfall returned during Thanksgiving and all of our destination resorts are now offering a terrific early season experience. At Whistler Blackcomb, lodging bookings are trending well ahead of last year, with the resort benefiting from strong momentum from last season, outstanding early season conditions and an attractive Canadian dollar exchange rate relative to the U.S. dollar.”

Operating Results

Mountain Segment

  • Mountain segment net revenue increased $9.8 million, or 9.7 percent, to $110.8 million for the three months ended October 31, 2016 as compared to the same period in the prior year.
  • Mountain reported EBITDA loss was $56.7 million for the three months ended October 31, 2016, which represents an incremental loss of $7.3 million, or 14.7 percent, including approximately $5.4 million of reported EBITDA loss resulting from the acquisition of Whistler Blackcomb as compared to the Mountain Reported EBITDA loss for same period in the prior year.

Lodging Segment

  • Lodging segment net revenue (excluding payroll cost reimbursements) for the three months ended October 31, 2016 increased $2.7 million, or 4.4 percent, as compared to the same period in the prior year.
  • Lodging reported EBITDA increased $0.5 million, or 16.6 percent, to $3.3 million for the three months ended October 31, 2016 as compared to the same period in the prior year.

Resort – Combination Of Mountain And Lodging Segments

  • Resort net revenue increased $13 million, or 7.8 percent, to $178.2 million for the three months ended October 31, 2016 as compared to the same period in the prior year.
  • Resort reported EBITDA loss was $53.3 million for the first fiscal quarter of 2017, including approximately $5.4 million of reported EBITDA loss resulting from the acquisition of Whistler Blackcomb. This compares to a resort reported EBITDA loss of $46.5 million in the same period in the prior year.

Real Estate Segment

  • Real estate segment net revenue for the three months ended October 31, 2016 decreased $9.3 million compared to the same period in the prior year as a result of there being no condominium unit sales during the quarter.
  • Net real estate cash flow was $6.6 million for the three months ended October 31, 2016, a decrease of $3.4 million from the same period in the prior year.
  • Real estate reported EBITDA increased by $3.9 million, or 335.4 percent, to $5.1 million for the three months ended October 31, 2016 as compared to the same period in the prior year, and included a gain on sale of real property of $6.5 million for a land parcel at the base of Peak 8 in Breckenridge which sold for $9.3 million.

Total Performance

  • Total net revenue increased $3.7 million, or 2.1 percent, to $178.3 million for the three months ended October 31, 2016 as compared to the same period in the prior year.
  • Net loss attributable to Vail Resorts Inc. was $62.6 million, or a loss of $1.70 per diluted share, for the first quarter of fiscal 2017 compared to a net loss attributable to Vail Resorts Inc. of $59.6 million, or a loss of $1.63 per diluted share, in the first quarter of the prior year.

Return of Capital
The company declared a quarterly cash dividend of 81 cents per share of Vail Resorts common stock that will be payable on January 12, 2017 to shareholders of record on December 28, 2016. Additionally, a Canadian dollar equivalent dividend on the exchangeable shares of Whistler Blackcomb Holdings Inc. will be payable on January 12, 2017 to shareholders of record on December 28, 2016. The exchangeable shares were issued to certain Canadian persons in connection with our acquisition of Whistler Blackcomb Holdings Inc.

Outlook
Commenting on guidance for fiscal 2017, Katz said, “While November results at our U.S. resorts were below expectations, they represent a relatively small portion of our revenue for the ski season and based on improved conditions during December we are reiterating our guidance for fiscal 2017, excluding the results and impact of Whistler Blackcomb. Including the results and impact of Whistler Blackcomb, we now estimate Resort Reported EBITDA for fiscal 2017 will be between $567 million and $597 million. Our updated estimate for fiscal 2017 Resort Reported EBITDA incorporates $87 million of estimated incremental Resort Reported EBITDA from the impact of the Whistler Blackcomb transaction. This assumes full year Whistler Blackcomb Resort EBITDA of $91 million (CA$121 million), with $95 million (CA$126 million) estimated from October 17, 2016 (the date of closing of the transaction) through the remainder of fiscal 2017. This also assumes $8 million of estimated transaction and integration related costs in fiscal 2017. The expectations for Whistler Blackcomb’s full year operating results are in line with the resort’s performance in fiscal 2016. We now expect Resort EBITDA Margin to be approximately 30.5 percent in fiscal 2017, using the midpoint of the guidance range. All of these estimates are predicated on an exchange rate of 75 cents between the Canadian Dollar and U.S. Dollar, related to the operations of Whistler Blackcomb in Canada and an exchange rate of 77 cents between the Australian Dollar and U.S. Dollar, related to the operations of Perisher in Australia. These estimates are also predicated on normal conditions at our resorts and a continuation of the current economic environment.”

Regarding calendar year 2017 capital expenditures, Katz said, “We remain committed to reinvesting in our resorts, creating an experience of a lifetime for our guests and generating strong returns for our shareholders. While we will announce our complete capital plan for calendar year 2017 in March 2017, we are pleased to announce several signature projects that we intend to construct in 2017 for the 2017/2018 ski season. At Vail Mountain, we will continue to improve lift capacity at one of the resort’s busiest chairlifts by upgrading the Northwoods high speed four person chair (#11) with a new high speed six person chairlift. At Breckenridge, we will be upgrading the Peak 10 Falcon Chair from a four person high speed chair to a six person high speed chair, allowing more guests to experience some of the best intermediate and advanced terrain on the mountain. At Keystone, we will be investing significant capital to continue to enhance the experience at this outstanding family focused resort. We will be upgrading the four person Montezuma chair to a six person high speed chair to improve circulation on the front side of the mountain, and we will be renovating and expanding Labonte’s restaurant by 150 indoor seats to increase mountain dining capacity at the fourth most visited resort in the U.S. All of these projects are subject to regulatory approval.”

Katz concluded, “Consistent with our long-term capital guidance, we expect our calendar year 2017 capital plan will total approximately $103 million, excluding investments in summer activities and Whistler Blackcomb. Including Whistler Blackcomb, we will be increasing our long-term capital guidance by approximately CA$25 million ($19 million), excluding certain non-mountain components of the Renaissance project (such as the Watershed) and any integration capital associated with the transaction. We will be providing further detail on our calendar year 2017 capital plan, including expected summer investments and integration capital associated with Whistler Blackcomb, in March 2017.”