Vail Resorts Results

Vail Resorts Q1 2016 Lodging Segment Net Revenue Up 9.5%

Lodging Reported EBITDA increased $2.1 million to $2.8 million for the three months ended October 31, 2015 as compared to the same period in the prior year.

Vail Resorts

Vail Resorts, Inc. (NYSE:  MTN) today reported results for the first quarter of fiscal 2016 ended October 31, 2015, as well as certain early ski season indicators.

Highlights

  • Resort Reported EBITDA loss was $46.5 million for the first fiscal quarter of 2016 including results from Perisher. This compares to a loss of $70.5 million in the same period in the prior year, excluding the $16.4 million non-cash gain on the Park City litigation settlement. 
  • Net loss attributable to Vail Resorts, Inc. was $59.6 million for the first fiscal quarter of 2016 compared to a net loss of $64.3 millionin the same period in the prior year. 
  • Sales of season passes through December 5, 2015 for the 2015/2016 ski season were up approximately 13% in units and approximately 19% in sales dollars versus the comparable period in the prior year, excluding Perisher Freedom Pass and Epic Australia Pass sales in both periods. 
  • The Company reaffirmed its guidance for fiscal year 2016 of $405 million to $430 million of Resort Reported EBITDA.

Commenting on the Company's fiscal 2016 first quarter results, Rob Katz, Chief Executive Officer, said, "Our first fiscal quarter historically operates at a loss given that our U.S. based mountain resorts are not open for winter 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, for the first time, the operating results from Perisher.  We were very pleased with our results in the quarter, with strong summer visitation to our U.S. mountain resorts driving increases in all of our key lines of business bolstered by the investments we have made in new summer activities.  Additionally, we are very pleased with the results from Perisher's first season under our ownership.  Perisher's results exceeded the expectations we had when we completed the acquisition due to strong visitation, in part driven by strong season pass sales following the announcement of our transaction, and strong yield growth.  Our lodging results for the fiscal quarter were very encouraging with both occupancy and rate increases compared to the prior year. In particular, our properties at Grand Teton Lodge Company experienced strong visitation and spending as the park reached near record visitation levels this summer."

Regarding Real Estate, Katz said, "We continue to see positive momentum in our resort real estate markets.  In the first fiscal quarter, we closed on sales of two units at Ritz-Carlton Residences, Vail and two units at One Ski Hill Place, as well as the sale of a land parcel.  Real Estate Reported EBITDA was $1.2 million for the first fiscal quarter, as compared to a loss of $2.2 million in the first fiscal quarter last year.  For the quarter, Net Real Estate Cash Flow totaled $10.0 million."

Katz continued, "Our balance sheet remains very strong.  We ended the quarter with $39.6 million of cash on hand, and $197.5 millionof outstanding borrowings under the revolver portion of our senior credit facility, primarily as a result of funding the Perisher acquisition. Our Net Debt (including our capitalized Canyons lease obligation) was 2.1 times trailing twelve months Total Reported EBITDA.  Given our strong financial position, robust operating cash flow generation and confidence in the future growth of our business, we will continue to be more aggressive in returning capital to our shareholders while continuing to reinvest in our business.  Toward this end, during the quarter we repurchased 377,830 shares of our common stock at a weighted average price of $105.85 per share, requiring total funding of $40 million.  In addition, our Board of Directors has increased our authorization for share repurchases by 1.5 million shares to approximately 2.2 million shares and we intend to maintain an opportunistic, but methodical, approach to share repurchases. I am also pleased to announce that our Board of Directors has declared a quarterly cash dividend on Vail Resorts' common stock of $0.6225 per share of common stock.  We believe that a combination of quarterly dividends and share repurchases are an effective strategy to return capital to our investors while maintaining the flexibility to continue investing in the strategic and internal growth of our business."

Regarding the upcoming ski season, Katz said, "Our 2015/2016 ski season is just underway and we are excited to officially open the new Park City which is now the largest ski resort in the United States.  Our $50 million investment to combine and transform Park Cityand Canyons is complete, including the new Quicksilver gondola, upgraded King Con and Motherlode chairlifts with increased capacity, and new and improved dining facilities with the addition of the 500 seat Miner's Camp restaurant at the base of the Quicksilver gondola, the 250 seat expansion of the Red Pine Lodge and the renovated Summit House. Together, these improvements will dramatically improve the guest experience this season and for years to come.  In addition to the transformation of Park City, we have also upgraded the Avanti chairlift at Vail Mountain with a new high-speed six-passenger chairlift to increase lift capacity by 30% at an important mid-mountain location. We are very pleased that all of our resorts have had strong openings, with excellent conditions in Colorado, Utah and Tahoe."

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 13% in units and 19% in sales dollars through December 5, 2015 compared to the prior year period ending December 6, 2014 (excluding Perisher Freedom Pass and Epic Australia Pass sales in both periods). We are seeing very solid sales growth in our Colorado and Utah markets and results in Northern Californiaare in line with last year.  However, our strong overall results are being driven by sales to destination guests who were responsible for more than three-quarters of our total growth and now represent approximately 44% of our total pass holders.  Further, for the 2015/2016 season, we expect to sell over 500,000 season passes, including all of our pass products from around the world, which is an incredible accomplishment that speaks to the loyalty and engagement our Company has created with our guests.  As we head into the season in the U.S., we are seeing lodging bookings across our resorts largely trending ahead of this time last year.  Consistent with our last update, international bookings are soft, particularly from Canada, the U.K. and Brazil, given the strong U.S. dollar, but these trends are more than offset by strength in domestic bookings and we don't expect currency challenges to have a material impact on our results relative to our guidance.  Australia is currently our best performing international market and we are seeing a number of signs that our acquisition of Perisher will allow us to outperform broader industry trends.  Based on historical averages, less than 50% of the bookings for the winter season have been made by this time."

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-Q for the first fiscal quarter of 2016 ended October 31, 2015 filed today with the Securities and Exchange Commission.  The following are segment highlights:

Mountain Segment

  • Mountain segment net revenue increased $40.6 million, or 67.1%, to $100.9 million for the three months ended October 31, 2015as compared to the same period in the prior year. 
  • Mountain Reported EBITDA loss was $49.4 million for the three months ended October 31, 2015 which represents an improvement of $21.9 million, or 30.7%, compared to the Mountain Reported EBITDA loss for same period in prior year (excluding the $16.4 million non-cash gain on the Park City litigation settlement). Mountain Reported EBITDA includes a full quarter of peak Perisher operations in the current period. 
  • Mountain Reported EBITDA includes $3.4 million of stock-based compensation expense for the three months ended October 31, 2015 as compared to $3.2 million in the same period in the prior year.

Lodging Segment

  • Lodging segment net revenue (excluding payroll cost reimbursements) for the three months ended October 31, 2015 increased $5.3 million, or 9.5%, as compared to the same period in the prior year. 
  • Lodging Reported EBITDA increased $2.1 million to $2.8 million for the three months ended October 31, 2015 as compared to the same period in the prior year. 
  • Lodging Reported EBITDA includes $0.7 million of stock-based compensation expense for the three months ended October 31, 2015 as compared to $0.6 million in the same period in the prior year.

Resort - Combination of Mountain and Lodging Segments

  • Resort net revenue increased $46.3 million, or 39.0%, to $165.2 million for the three months ended October 31, 2015 as compared to the same period in the prior year. 
  • Resort Reported EBITDA loss was $46.5 million for the first fiscal quarter of 2016 including results from Perisher. This compares to a loss of $70.5 million in the same period in the prior year, excluding the $16.4 million non-cash gain on the Park City litigation settlement. 

Real Estate Segment

  • Real Estate segment net revenue for the three months ended October 31, 2015 was flat as compared to the same period in the prior year. 
  • Net Real Estate Cash Flow was $10.0 million for the three months ended October 31, 2015, an increase of $5.0 million from the same period in the prior year. 
  • Real Estate Reported EBITDA improved by $3.4 million, to $1.2 million for the three months ended October 31, 2015 as compared to the same period in the prior year. 
  • Real Estate Reported EBITDA includes zero and $0.4 million of stock-based compensation expense for the three months ended October 31, 2015 and 2014, respectively.

Total Performance

  • Total net revenue increased $46.3 million, or 36.1%, to $174.6 million for the three months ended October 31, 2015 as compared to the same period in the prior year. 
  • Net loss attributable to Vail Resorts, Inc. was $59.6 million, or a loss of $1.63 per diluted share, for the first quarter of fiscal 2016 compared to net loss attributable to Vail Resorts, Inc. of $64.3 million, or a loss of $1.77 per diluted share, in the first quarter of the prior year.

Return of Capital

The Company declared a quarterly cash dividend of $0.6225 per share of common stock that will be payable on January 12, 2016 to shareholders of record on December 28, 2015.

In the first quarter of fiscal 2016, the Company repurchased 377,830 shares at an average price of $105.85 for a total of $40 million. The Company's Board of Directors also approved an increase of 1.5 million authorized shares in the repurchase program, bringing the total shares available for repurchase to approximately 2.2 million under the current authorization.

Outlook

Commenting on fiscal 2016 guidance, Katz continued, "Given our first quarter results and the indicators we are seeing for the upcoming season, we are even more confident in our outlook for fiscal 2016.  That said, the ski season has just begun (in the U.S.), with our primary earnings period still in front of us, and we are reiterating our Resort Reported EBITDA guidance for fiscal 2016 that was included in our September earnings release."

Regarding calendar year 2016 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 2016 in March 2016, we are pleased to announce two signature projects that we intend to construct in 2016 for the 2016/2017 ski season.  The first project is the addition of a new 500 seat restaurant at the top of the Peak 7 chairlift at Breckenridge.  Already one of the most popular resorts in North America, the new restaurant will dramatically improve the dining experience on the mountain, particularly given its location directly adjacent to our new Peak 6 terrain.  The second project is the upgrade of the Sun Up chairlift at Vail Mountain (Chair 17), from a fixed grip triple to a high-speed four-passenger chairlift.  This new chairlift will significantly improve the ski experience in Sun Up Bowl and more quickly move skiers and riders to and from the Back Bowls and Blue Sky Basin.  With this new addition, every major chairlift on Vail Mountain will be a high-speed chairlift.  Both of these projects are subject to regulatory approvals.  We expect our total resort capital plan for calendar 2016, including these two projects but excluding investments in summer activities, will total approximately $100 million which is consistent with our long-term capital guidance."

 

About Vail Resorts, Inc. (NYSE:  MTN)

Vail Resorts, Inc., through its subsidiaries, is the leading global mountain resort operator. The Company's subsidiaries operate nine world-class mountain resorts and two urban ski areas, including Vail, Beaver Creek, Breckenridge and Keystone in Colorado; Park Cityin Utah; Heavenly, Northstar and Kirkwood in the Lake Tahoe area of California and Nevada; Perisher in New South Wales, Australia; Afton Alps in Minnesota and Mt. Brighton in Michigan. The Company owns and/or manages a collection of casually elegant hotels under the RockResort brand, as well as the Grand Teton Lodge Company in Jackson Hole, Wyoming. Vail Resorts Development Company is the real estate planning and development subsidiary of Vail Resorts, Inc. Vail Resorts is a publicly held company traded on the New York Stock Exchange (NYSE:  MTN). 

Vail Resorts, Inc.

Consolidated Condensed Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

Three Months Ended

October 31,

2015

2014

Net revenue:

Mountain

$

100,933

$

60,386

Lodging

64,286

58,493

Real estate

9,348

9,383

Total net revenue

174,567

128,262

Segment operating expense:

Mountain

151,158

131,952

Lodging

61,437

57,754

Real estate

9,341

11,614

Total segment operating expense

221,936

201,320

Other operating (expense) income:

Depreciation and amortization

(38,700)

(35,969)

Gain on sale of real property

1,159

Gain on litigation settlement

16,400

Change in fair value of contingent consideration

4,550

Loss on disposal of fixed assets and other, net

(1,779)

(755)

Loss from operations

(86,689)

(88,832)

Mountain equity investment income, net

842

325

Investment income (loss), net

198

(26)

Interest expense

(10,595)

(13,568)

Loss before benefit from income taxes

(96,244)

(102,101)

Benefit from income taxes

36,574

37,777

Net loss

(59,670)

(64,324)

Net loss attributable to noncontrolling interests

83

48

Net loss attributable to Vail Resorts, Inc.

$

(59,587)

$

(64,276)

Per share amounts:

Basic net loss per share attributable to Vail Resorts, Inc.

$

(1.63)

$

(1.77)

Diluted net loss per share attributable to Vail Resorts, Inc.

$

(1.63)

$

(1.77)

Cash dividends declared per share

$

0.6225

$

0.4150

Weighted average shares outstanding:

Basic

36,471

36,249

Diluted

36,471

36,249

Other Data:

Mountain Reported EBITDA

$

(49,383)

$

(54,841)

Lodging Reported EBITDA

$

2,849

$

739

Resort Reported EBITDA

$

(46,534)

$

(54,102)

Real Estate Reported EBITDA

$

1,166

$

(2,231)

Total Reported EBITDA

$

(45,368)

$

(56,333)

Mountain stock-based compensation

$

3,380

$

3,243

Lodging stock-based compensation

$

747

$

602

Resort stock-based compensation

$

4,127

$

3,845

Real Estate stock-based compensation

$

(37)

$

356

Total stock-based compensation

$

4,090

$

4,201

 

Vail Resorts, Inc.

Mountain Segment Operating Results

(In thousands, except ETP)

(Unaudited)

Three Months Ended

Percentage

October 31,

Increase

2015

2014

(Decrease)

Net Mountain revenue:

Lift

$

20,153

$

nm

Ski school

3,384

nm

Dining

12,355

8,039

53.7%

Retail/rental

32,389

29,473

9.9%

Other

32,652

22,874

42.7%

Total Mountain net revenue

$

100,933

$

60,386

67.1%

Mountain operating expense:

Labor and labor-related benefits

$

51,799

$

43,005

20.4%

Retail cost of sales

16,479

16,790

(1.9)%

General and administrative

37,214

32,016

16.2%

Other

45,666

40,141

13.8%

Total Mountain operating expense

$

151,158

$

131,952

14.6%

Gain on litigation settlement

16,400

(100.0)%

Mountain equity investment income, net

842

325

159.1%

Mountain Reported EBITDA

$

(49,383)

$

(54,841)

10.0%

Less: gain on litigation settlement

(16,400)

(100.0)%

Mountain Reported EBITDA excluding gain on litigation settlement

$

(49,383)

$

(71,241)

30.7%

Total skier visits

435

nm

ETP

$

46.33

$

nm

 

Vail Resorts, Inc.

Lodging Operating Results

(In thousands, except ADR and RevPAR)

(Unaudited)

Three Months Ended

Percentage

October 31,

Increase

2015

2014

(Decrease)

Lodging net revenue:

Owned hotel rooms

$

17,306

$

14,918

16.0%

Managed condominium rooms

8,247

8,111

1.7%

Dining

15,041

13,538

11.1%

Transportation

2,320

2,317

0.1%

Golf

8,247

7,549

9.2%

Other

10,425

9,818

6.2%

61,586

56,251

9.5%

Payroll cost reimbursements

2,700

2,242

20.4%

Total Lodging net revenue

$

64,286

$

58,493

9.9%

Lodging operating expense:

Labor and labor-related benefits

$

28,695

$

27,375

4.8%

General and administrative

7,969

7,517

6.0%

Other

22,073

20,620

7.0%

58,737

55,512

5.8%

Reimbursed payroll costs

2,700

2,242

20.4%

Total Lodging operating expense

$

61,437

$

57,754

6.4

Lodging Reported EBITDA

$

2,849

$

739

285.5%

Owned hotel statistics:

ADR

$

199.41

$

189.50

5.2%

RevPAR

$

133.14

$

118.37

12.5%

Managed condominium statistics:

ADR

$

177.76

$

176.22

0.9%

RevPAR

$

43.92

$

41.44

6.0%

Owned hotel and managed condominium statistics (combined):

ADR

$

190.35

$

183.76

3.6%

RevPAR

$

74.20

$

66.91

10.9%

 

Key Balance Sheet Data

(In thousands)

(Unaudited)

As of October 31,

2015

2014

Real estate held for sale and investment

$

120,769

$

157,182

Total Vail Resorts, Inc. stockholders' equity

742,684

744,725

Long-term debt

817,058

819,238

Long-term debt due within one year

13,319

1,022

Total debt

830,377

820,260

Less: cash and cash equivalents

39,606

29,840

Net debt

$

790,771

$

790,420

Reconciliation of Non-GAAP Financial Measures

Reported EBITDA, Reported EBITDA excluding the non-cash gain on the Park City litigation settlement, Net Debt, and Net Real Estate Cash Flow are not measures of financial performance under GAAP, and they might not be comparable to similarly titled measures of other companies. Reported EBITDA, Reported EBITDA excluding the non-cash gain on the Park City litigation settlement, Net Debt, and Net Real Estate Cash Flow should not be considered in isolation or as an alternative to, or substitute for, measures of financial performance or liquidity prepared in accordance with GAAP including net income (loss), net change in cash and cash equivalents or other financial statement data.

Reported EBITDA and Net Real Estate Cash Flow have been presented herein as measures of the Company's performance. The Company believes that Reported EBITDA is an indicative measurement of the Company's operating performance, and is similar to performance metrics generally used by investors to evaluate other companies in the resort and lodging industries. The Company primarily uses Reported EBITDA based targets in evaluating performance. In this release, the Company also separately presents Reported EBITDA excluding the non-cash gain on the Park City litigation settlement. The Company believes that Net Debt is an important measurement of liquidity as it is an indicator of the Company's ability to obtain additional capital resources for its future cash needs. Additionally, the Company believes Net Real Estate Cash Flow is important as a cash flow indicator for its Real Estate segment.

Presented below is a reconciliation of Reported EBITDA to net loss attributable to Vail Resorts, Inc. calculated in accordance with GAAP for the three months ended October 31, 2015 and 2014.

(In thousands)

(Unaudited)

Three Months Ended

October 31,

2015

2014

Mountain Reported EBITDA excluding gain on litigation settlement

$

(49,383)

$

(71,241)

Lodging Reported EBITDA

2,849

739

Resort Reported EBITDA excluding gain on litigation settlement*

(46,534)

(70,502)

Gain on litigation settlement

16,400

Resort Reported EBITDA*

(46,534)

(54,102)

Real Estate Reported EBITDA

1,166

(2,231)

Total Reported EBITDA

(45,368)

(56,333)

Depreciation and amortization

(38,700)

(35,969)

Loss on disposal of fixed assets and other, net

(1,779)

(755)

Change in fair value of contingent consideration

4,550

Investment income (loss), net

198

(26)

Interest expense

(10,595)

(13,568)

Loss before benefit from income taxes

(96,244)

(102,101)

Benefit from income taxes

36,574

37,777

Net loss

$

(59,670)

$

(64,324)

Net loss attributable to noncontrolling interests

83

48

Net loss attributable to Vail Resorts, Inc.

$

(59,587)

$

(64,276)

*

Resort represents the sum of Mountain and Lodging

Presented below is a reconciliation of Total Reported EBITDA to net income attributable to Vail Resorts, Inc. calculated in accordance with GAAP for the twelve months ended October 31, 2015.

(In thousands)

(unaudited)

Twelve Months Ended 

October 31, 2015

Mountain Reported EBITDA

$

349,562

Lodging Reported EBITDA

23,786

Resort Reported EBITDA*

373,348

Real Estate Reported EBITDA

(3,518)

Total Reported EBITDA

369,830

Depreciation and amortization

(151,854)

Loss on disposal of fixed assets and other, net

(3,081)

Change in fair value of contingent consideration

(900)

Investment income, net

470

Interest expense

(48,268)

Loss on extinguishment of debt

(11,012)

Income before provision for income taxes

155,185

Provision for income taxes

(35,921)

Net income

$

119,264

Net loss attributable to noncontrolling interests

179

Net income attributable to Vail Resorts, Inc.

$

119,443

*

Resort represents the sum of Mountain and Lodging

The following table reconciles Net Debt to long-term debt and the calculation of Net Debt to Total Reported EBITDA for the twelve months ended October 31, 2015.

(In thousands)

(Unaudited)

As of October 31, 2015

Long-term debt

$

817,058

Long-term debt due within one year

13,319

Total debt

830,377

Less: cash and cash equivalents

39,606

Net debt

$

790,771

Net debt to Total Reported EBITDA

2.1

x

The following table reconciles Real Estate Reported EBITDA to Net Real Estate Cash Flow for the three months ended October 31, 2015 and 2014.

(In thousands)

(Unaudited) 

 

Three Months Ended

October 31,

2015

2014

Real Estate Reported EBITDA

$

1,166

$

(2,231)

Non-cash real estate cost of sales

6,940

7,015

Non-cash real estate stock-based compensation

(37)

356

Change in real estate deposits and recovery of previously incurred project costs/land basis less investments in real estate

1,924

(150)

Net Real Estate Cash Flow

$

9,993

$

4,990

 

 

 



Logos, product and company names mentioned are the property of their respective owners.