Vail Resorts reported earnings rose 40.6 percent in its fiscal year ended July 31 as total revenues rose 16.3 percent.

Highlights

  • Net income attributable to Vail Resorts, Inc. was $210.6 million for fiscal 2017, an increase of 40.6 percent compared to fiscal 2016. Included in net income for fiscal 2017, on a pre-tax basis, are charges for an increase in the Canyons contingent consideration of $16.3 million and a future contribution to Town of Vail parking of $4.3 million, as well as a foreign currency gain of $15.3 million on the inter company loan to Whistler Blackcomb Holdings Inc.
  • Resort Reported EBITDA was $593.4 million for fiscal 2017, an increase of 31.1 percent compared to fiscal 2016. Fiscal 2017 Resort Reported EBITDA includes the operations of Whistler Blackcomb and Stowe Mountain Resort prospectively from their respective acquisition closing dates and $10.8 million of acquisition and integration related expenses.
  • Season pass sales through September 24, 2017 for the upcoming 2017/2018 North American ski season increased approximately 17 percent in units and 23 percent in sales dollars as compared to the period in the prior year through September 25, 2016, including Whistler Blackcomb and Stowe pass sales in both periods, adjusted to eliminate the impact of foreign currency by applying current period exchange rates to the prior period.
  • The company issued its fiscal 2018 guidance range and expects Resort Reported EBITDA to be between $652 million and $682 million, including an estimated $2.6 million of integration related expenses.

Commenting on the company’s fiscal 2017 results, Rob Katz, Chief Executive Officer, said, “We achieved another year of record-breaking results with strong growth across our business. We are very pleased to complete the year with Resort Reported EBITDA of $593.4 million, which included $10.8 million of acquisition and integration related expenses. Our results were driven by our world-class network, the acquisition of Whistler Blackcomb and strong results across our resort locations. Our season pass program continued to drive both growth and stability with season pass revenue increasing 32.9 percent compared to the prior year, including Whistler Blackcomb results in fiscal 2017. Resort Reported EBITDA in fiscal 2017 increased $41.1 million, or 9.1 percent, compared to the prior year, excluding acquisition and integration related expenses and results from the Inn at Keystone in both periods, Whistler Blackcomb and Stowe operations in fiscal 2017, and the one-time $3.5 million fee associated with the termination of the management agreement for Half Moon Resort in Jamaica (the “Half Moon termination fee”) in fiscal 2016.

“This year’s results highlight the positive impact of our expanding geographic diversification, the stability provided by our growing pass program and the success of our guest-focused marketing efforts. Our U.S. resorts delivered another year of strong performance. In Park City, we experienced a double-digit EBITDA growth rate as our investment to create the largest ski resort in the U.S. continues to generate excitement among skiers and drive strong yield growth. Our Colorado resorts achieved incremental revenue and EBITDA growth over the record prior year, despite less favorable conditions that impacted visitation, particularly in the early part of the season, and the late timing of the Easter holiday. Tahoe also experienced significant growth, achieving record revenues in all lines of business as the region benefited from another year of good conditions. In its first year as part of Vail Resorts, Whistler Blackcomb delivered outstanding results that were well above our expectations, benefiting from excellent conditions throughout the season and a low Canadian dollar relative to the U.S. dollar driving significant destination growth from U.S. and other international guests. Our U.S. summer business continued to grow with the launch of Epic Discovery at Breckenridge this summer although results in the fourth quarter of fiscal 2017 were below expectations, primarily as a result of a delayed opening for Breckenridge’s new activities due to late snowfall and the Heavenly Coaster being closed this summer due to damage from the significant snowfall in Tahoe this past winter. As our summer business continues to mature, we expect to continue improving and developing our operational consistency and our pricing and promotion to make the most of the already existing summer visitation at our resorts. At Perisher, fiscal 2017 results were in line with expectations as the current ski season got off to a slower start in June due to poor conditions but rebounded in July, supported by continued strong pass sales and growth in guest spending. Finally, we continue to execute our strategy with a focus on disciplined cost management, which played a critical part in achieving Resort EBITDA Margin for the year of 31.4 percent, a 270 basis point expansion compared to fiscal 2016.”

Katz added, “With a strong high-end consumer, we are continuing to leverage our growing network of resorts and sophisticated marketing strategies to drive guest spending across our Mountain segment. For fiscal 2017, total Mountain net revenue increased 23.5 percent to $1.6 billion. Total skier visits, including a full season of Whistler Blackcomb results, increased 20.1 percent, while total visitation at our U.S. resorts declined 5.4 percent, primarily as a result of the poor early season conditions in Colorado and the late timing of the Easter holiday. Total Effective Ticket Price (“ETP”) increased 3.6 percent, driven by season pass and lift ticket price increases across our resorts and lower visitation per pass but partially offset by the inclusion of Whistler Blackcomb’s ETP in results in fiscal 2017 which is lower on a U.S. dollar basis than the company-wide average. Total ETP, excluding Whistler Blackcomb, increased 11.4 percent. Our ancillary businesses also experienced growth with ski school, dining and retail/rental revenue, up 24.1 percent, 24.4 percent and 21.7 percent, respectively, compared to the prior year. Excluding results from Whistler Blackcomb, ski school, dining and retail/rental revenues were up 2.7 percent, 0.6 percent and 1.6 percent, respectively, as yield growth was largely offset by the decline in U.S. resort visitation.”

Regarding Lodging, Katz said, “Fiscal 2017 Lodging results were impacted by less favorable conditions in Colorado during the ski season compared to the prior year, as well as the sale of the Inn at Keystone in November 2016. Revenue (excluding payroll cost reimbursements) increased 0.8 percent and revenue per available room (“RevPAR”) increased 4.4 percent compared to the prior year, while Lodging Reported EBITDA declined 3.8 percent compared to fiscal 2016. Excluding the results from the Inn at Keystone in both periods, the Half Moon termination fee in the prior year and Lodging results from Whistler Blackcomb in fiscal 2017, Lodging Reported EBITDA grew 9.2 percent, compared to the prior year.”

Turning to Real Estate, Katz commented, “We generated $18.5 million of Net Real Estate Cash Flow in fiscal 2017. During fiscal 2017, we closed on the sale of a land parcel at the base of Breckenridge for $9.3 million as well as four units at Ritz-Carlton Residences, Vail, and two units at One Ski Hill Place in Breckenridge, representing the last of our condominium inventory. As of July 31, 2017, we had approximately $103.4 million of real estate held for sale and investment associated with land parcels at our resorts.”

Katz continued, “Our balance sheet continues to be very strong. We ended the fiscal year with $117.4 million of cash on hand, $50.0 million of borrowings under the revolver portion of our senior credit facility and total long-term debt, net (including long-term debt due within one year) of $1,272.4 million. As of July 31, 2017, we had available borrowing capacity under the revolver component of our Vail Holdings, Inc. credit facility of $280.2 million. In addition, we had $126.7 million available under the revolver component of our Whistler Blackcomb credit facility. Our Net Debt was 1.9 times trailing twelve months Total Reported EBITDA, which includes $328.8 million of long-term capital lease obligations associated with the Canyons transaction. I am also very pleased to announce that our Board of Directors has declared a quarterly cash dividend on Vail Resorts’ common stock. The quarterly dividend will be $1.053 per share of common stock and will be payable on October 27, 2017 to shareholders of record on October 10, 2017.”

Operating Results

A complete Management’s Discussion and Analysis of Financial Condition and Results of Operations can be found in the company’s Form 10-K for the fiscal year ended July 31, 2017 filed today with the Securities and Exchange Commission. The following are segment highlights:

Mountain Segment

  • Total skier visits for fiscal 2017 increased to approximately 12.0 million, an increase of 20.1 percent compared to the prior fiscal year, which includes incremental skier visits from Whistler Blackcomb. Total visitation at our U.S. resorts declined 5.4 percent, primarily as a result of the poor early season conditions in Colorado and the late timing of the Easter holiday.
  • Total lift revenue increased $160.3 million, or 24.4 percent, compared to the prior fiscal year, primarily due to incremental lift revenue from Whistler Blackcomb. Excluding Whistler Blackcomb, total lift revenue increased 6.4 percent compared to the prior fiscal year.
  • Ski school revenue increased $34.5 million, or 24.1 percent, compared to the prior fiscal year, primarily as a result of incremental Whistler Blackcomb ski school revenue. Excluding Whistler Blackcomb, ski school revenue increased 2.7 percent compared to the prior fiscal year.
  • Dining revenue increased $29.6 million, or 24.4 percent, compared to the prior fiscal year, primarily due to incremental revenue from Whistler Blackcomb. Excluding Whistler Blackcomb, dining revenue increased 0.6 percent.
  • Retail/rental revenue increased $52.3 million, or 21.7 percent, compared to the prior fiscal year, primarily due to incremental retail sales and rental revenue from Whistler Blackcomb. Excluding Whistler Blackcomb, retail revenue increased 2.1 percent and rental revenue increased 0.8 percent.
  • Operating expense increased $165.9 million, or 18.8 percent, compared to the prior fiscal year, primarily due to the inclusion of operating expenses from Whistler Blackcomb and $10.8 million of acquisition and integration related expenses. Excluding acquisition and integration related expenses in both periods and incremental operating expenses of Whistler Blackcomb and Stowe for fiscal 2017, operating expense increased 1.7 percent.
  • Mountain Reported EBITDA increased $141.9 million, or 33.4 percent, compared to the prior fiscal year, which includes acquisition and integration related expenses in both periods and Whistler Blackcomb and Stowe operations for fiscal 2017. Excluding acquisition and integration related expenses in both periods and Whistler Blackcomb and Stowe operations for fiscal 2017, Mountain Reported EBITDA for fiscal 2017 increased 9.1 percent compared to fiscal 2016.
    Mountain Reported EBITDA includes $15.0 million of stock-based compensation expense for fiscal 2017 compared to $13.4 million for fiscal 2016.

Lodging Segment

  • Lodging segment net revenue (excluding payroll cost reimbursements) was $264.3 million for fiscal 2017, an increase of $2.1 million, or 0.8 percent, as compared to fiscal 2016, primarily due to the inclusion of Whistler Blackcomb revenue and an increase in revenue from our concessionaire properties operated by the Grand Teton Lodge company, partially offset by the Half Moon termination fee received in the prior fiscal year and the sale of the Inn at Keystone in November 2016.
  • Occupancy decreased 1.4 percentage points and Average Daily Rate (“ADR”) increased 8.0 percent at the company’s owned hotels and managed condominiums compared to the prior fiscal year.
  • Lodging Reported EBITDA decreased $1.1 million, or 3.8 percent, compared to the prior fiscal year, primarily due to the Half Moon termination fee received in the prior fiscal year and the sale of the Inn at Keystone in November 2016. Excluding results from the Inn at Keystone in both periods, Whistler Blackcomb lodging operations for fiscal 2017 and $3.5 million of Lodging Reported EBITDA associated with the Half Moon termination fee for fiscal 2016, Lodging Reported EBITDA for fiscal 2017 increased 9.2 percent compared to fiscal 2016.
  • Lodging Reported EBITDA includes $3.2 million and $3.1 million of stock-based compensation expense for fiscal 2017 and fiscal 2016, respectively.

Resort – Combination of Mountain and Lodging Segments

  • Resort net revenue was $1,890.3 million for fiscal 2017, an increase of $311.1 million, or 19.7 percent, compared to fiscal 2016, primarily attributable to revenue from Whistler Blackcomb.
  • Resort Reported EBITDA was $593.4 million for fiscal 2017, an increase of $140.8 million, or 31.1 percent, compared to fiscal 2016. Excluding acquisition and integration related expenses and results from the Inn at Keystone in both periods, Whistler Blackcomb and Stowe operations for fiscal 2017 and $3.5 million of Lodging Reported EBITDA associated with the Half Moon termination fee for fiscal 2016, Resort Reported EBITDA for fiscal 2017 increased 9.1 percent compared to fiscal 2016.

Real Estate Segment

  • Real Estate segment net revenue decreased $5.2 million, or 23.5 percent, as compared to the prior fiscal year.
  • Net Real Estate Cash Flow was $18.5 million, a decrease of $3.6 million compared to the prior fiscal year.
  • Real Estate Reported EBITDA was a loss of $0.4 million, a decrease of $3.2 million, compared to the prior fiscal year, including the $4.3 million one-time charge related to the resolution of our financial contribution to the new Town of Vail public parking structure.

Total Performance

  • Total net revenue increased $305.9 million, or 19.1 percent, to $1,907.2 million as compared to the prior fiscal year.
  • Net income attributable to Vail Resorts, Inc. was $210.6 million, or $5.22 per diluted share, compared to $149.8 million, or $4.01 per diluted share, in the prior fiscal year. Included in net income for fiscal 2017, on a pre-tax basis, are charges for an increase in the Canyons contingent consideration of $16.3 million and a future contribution to Town of Vail parking of $4.3 million as well as a foreign currency gain of $15.3 million on the inter company loan to Whistler Blackcomb.

Season Pass Sales

Commenting on season pass sales, Katz said, “We are extremely pleased with our season pass sales to date. Through September 24, 2017, North American ski season pass sales increased approximately 17 percent in units and 23 percent in sales dollars, compared to the prior year period ended September 25, 2016. We saw a significant acceleration in our season pass sales (excluding Whistler Blackcomb only pass products) across our destination and local products through our important Labor Day deadline. We believe this growth continues to be driven by our increasingly sophisticated and targeted marketing efforts to move destination guests into our season pass products, the full inclusion of Whistler Blackcomb and Stowe on the Epic Pass and Epic Local Pass for the 2017/2018 ski season, as well as strong results from guests in Northern California and the Pacific Northwest following great conditions in the 2016/2017 ski season. We also believe we are continuing to move people to purchase their season pass earlier in the selling period. Additionally, we saw a significant increase in Whistler Blackcomb pass products, in large part due to an earlier price deadline than Whistler Blackcomb has had in the past. With the significant growth already achieved, we do expect our percentage growth rate for the remainder of the selling period to be more modest, resulting in a lower overall percentage growth rate for the year. Whistler Blackcomb and Stowe pass products are included in both current and prior year periods, with the exception of Whistler Blackcomb one and three day EDGE cards, the vast majority of which were sold after the beginning of the ski season and will not be offered for the 2017/2018 ski season. Whistler Blackcomb pass sales are adjusted to eliminate the impact of foreign currency by applying the current period exchange rates to the prior period.”

Guidance

Commenting on guidance for fiscal 2018, Katz said, “Net income attributable to Vail Resorts, Inc. is expected to be between $234 million and $272 million in fiscal 2018. We estimate Resort Reported EBITDA for fiscal 2018 will be between $652 million and $682 million. Our Resort Reported EBITDA guidance includes the first full fiscal year of operating results for Whistler Blackcomb and Stowe and also includes an estimated $2.6 million of anticipated integration related expenses. Given the very strong performance at Whistler Blackcomb in fiscal 2017, we expect the resort’s fiscal 2018 contribution will exceed our initial expectations but the year-over-year growth will be slower due to the outperformance in fiscal 2017. We do expect to see a rebound in our performance in Colorado, assuming more normal early season conditions, an earlier Easter holiday and more available lodging inventory in both Vail and Breckenridge. We expect Stowe’s fiscal 2018 results to be in line with our previously issued expectations. We expect Resort EBITDA Margin to be approximately 31.9 percent in fiscal 2018, using the midpoint of the guidance range. This is an estimated 50 basis point increase over fiscal 2017. We estimate fiscal 2018 Real Estate Reported EBITDA to be between negative $8 million and negative $2 million. Net Real Estate Cash Flow is expected to be between $0 million and $10 million, excluding our expected $4.3 million contribution to the Town of Vail parking structure. All of these estimates are predicated on an exchange rate of $0.81 between the Canadian Dollar and U.S. Dollar, related to the operations of Whistler Blackcomb in Canada and an exchange rate of $0.80 between the Australian Dollar and U.S. Dollar, related to the operations of Perisher in Australia.”

The following table reflects the forecasted guidance range for the company’s fiscal year ending July 31, 2018, for Reported EBITDA (after stock-based compensation expense) and reconciles such Reported EBITDA guidance to net income attributable to Vail Resorts, Inc. guidance for fiscal 2018.

Photo courtesy Vail Resorts