Vail Resorts Results

Vail Resorts Reports Fiscal 2016 Fourth Quarter and Full Year Results and Provides Fiscal 2017 Outlook

Net income attributable to Vail Resorts, Inc. was $149.8 million for fiscal 2016, an increase of 30.5% compared to fiscal 2015 or 46.6%, excluding the $12.6 million after-tax non-cash gain on the Park City litigation settlement in fiscal 2015.

Vail Resorts

Vail Resorts, Inc. (NYSE:   MTN) today reported results for its fourth quarter and fiscal year ended July 31, 2016 and provided its outlook for the fiscal year ending July 31, 2017.

Highlights

  • Net income attributable to Vail Resorts, Inc. was $149.8 million for fiscal 2016, an increase of 30.5% compared to fiscal 2015 or 46.6%, excluding the $12.6 million after-tax non-cash gain on the Park City litigation settlement in fiscal 2015. 
  • Resort Reported EBITDA was $452.6 million for fiscal 2016, an increase of 29.5%, excluding the $16.4 million non-cash gain on the Park City litigation settlement in fiscal 2015. 
  • Season pass sales through September 18, 2016 for the upcoming 2016/2017 U.S. ski season increased approximately 24% in units and 29% in sales dollars versus the comparable period in the prior year. 
  • On August 8, 2016, the Company announced that it signed an agreement to acquire all of the outstanding shares of Whistler Blackcomb Holdings Inc. The Company continues to expect the acquisition to close this fall pending Whistler Blackcomb shareholder and Canadian regulatory approval. 
  • The Company issued its fiscal 2017 guidance range and expects Resort Reported EBITDA to be between $480 million and $510 million, excluding results from Whistler Blackcomb and any transaction-related or integration costs.

Commenting on the Company's fiscal 2016 results, Rob Katz, Chief Executive Officer, said, "We achieved another year of record-breaking results with significant growth across our business. We are very pleased to complete the year with Resort Reported EBITDA of $452.6 million, which included $1.4 million of transaction expenses related to the pending Whistler Blackcomb acquisition. Our results were driven by the strength of our network and excellent results across all of our resort locations. Our season pass program continued to drive both growth and stability with season pass revenue increasing 21.5% compared to the prior year, including a full season of Perisher season pass revenue in fiscal 2016. We experienced another outstanding year in Colorado with visitation and guest spending outperforming last year's results. In Park City, we met our very high expectations following our capital transformation last summer that combined Park City and Canyons into the largest mountain resort in the U.S.  Tahoe results rebounded strongly as favorable weather conditions helped to reactivate visitation in the region. We officially launched Epic Discovery at Vail and Heavenly this summer, driving significant increases in visitation and revenue in the fourth quarter of fiscal 2016 compared to the prior year. Our summer business will continue to grow as we further build out activities at Vail and Heavenly and officially launch Epic Discovery at Breckenridge next summer. 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 28.7%, a 300 basis point expansion compared to fiscal 2015, excluding the non-cash gain on the Park City litigation settlement in fiscal 2015."

Katz added, "With a strong high-end U.S. consumer, we are continuing to leverage our growing network of resorts and sophisticated marketing strategies to drive higher visitation and yields across our Mountain segment. For fiscal 2016, total Mountain net revenue increased 18.2% to $1.3 billion. Total skier visits, including a full year of Perisher results, increased 18.5%, while total U.S. skier visits increased 13.2%. Total Effective Ticket Price ("ETP") increased 3.5%, driven by season pass and lift ticket price increases across our resorts, partially offset by higher visitation per pass. Our ancillary businesses also experienced growth with ski school, dining and retail/rental revenue, up 13.5%, 19.8% and 10.0%, respectively, compared to the prior year."

Regarding Lodging, Katz said, "Fiscal 2016 was another strong year for our Lodging segment with net revenue increasing 7.9% and Lodging Reported EBITDA increasing 30.0% compared to fiscal 2015, including $3.5 million of Lodging Reported EBITDA associated with the termination of the Company's management agreement with Half Moon Resort in Jamaica. These improvements were primarily driven by a 210 basis point improvement in occupancy and a 3.5% growth in average daily rate ("ADR"), resulting in an 8.8% improvement in revenue per available room ("RevPAR") compared to the prior year. Our Lodging segment benefited from increased visitation at our mountain resorts during the ski season as well as continued growth in summer visitation."

Turning to Real Estate, Katz commented, "We generated $22.0 million of Net Real Estate Cash Flow in fiscal 2016. For the full fiscal year, we closed on five units at Ritz-Carlton Residences, Vail, three Crystal Peak Lodge units in Breckenridge and two One Ski Hill Place units in Breckenridge. During the fourth quarter we closed on two units at Ritz-Carlton Residences, Vail and one unit at Crystal Peak Lodge. Subsequent to the end of fiscal 2016, we closed on the sale of a land parcel at the base of Breckenridge for $9.25 million. As of September 23, 2016, we have four units at Ritz-Carlton Residences, Vail and two units at One Ski Hill Place remaining to be sold and approximately $94.7 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 $67.9 million of cash on hand and $75.0 million of borrowings under the revolver portion of our senior credit facility. As of July 31, 2016, we had available borrowing capacity under the revolver component of our credit facility of $252.8 million. Our Net Debt was 1.4 times trailing twelve months Total Reported EBITDA, which includes $323.1 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 $0.81 per share of common stock and will be payable on October 25, 2016 to shareholders of record on October 7, 2016. Additionally, the Company repurchased 485,866 shares for a total of $53.8 million during fiscal 2016."

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, 2016 filed today with the Securities and Exchange Commission. The following are segment highlights:

Mountain Segment

  • Total skier visits for fiscal 2016 increased to approximately 10.0 million, an increase of 18.5% compared to the prior fiscal year. 
  • Season pass revenue increased $46.6 million, or 21.5%, compared to the prior fiscal year. 
  • U.S. ETP, excluding season pass holders, increased $8.49, or 9.8%, compared to the prior fiscal year. 
  • Mountain net revenue was $1,304.6 million for fiscal 2016, an increase of 18.2% compared to the prior fiscal year. 
  • Mountain Reported EBITDA for fiscal 2016 increased $96.7 million, or 29.5%, to $424.4 million, excluding the non-cash gain on the Park City litigation settlement in the prior fiscal year. 
  • Mountain Reported EBITDA includes $13.4 million and $11.8 million of stock-based compensation expense for fiscal 2016 and fiscal 2015, respectively. 

Lodging Segment

  • Lodging net revenue was $274.6 million for fiscal 2016, an increase of 7.9% compared to the prior fiscal year. 
  • Lodging net revenue (excluding payroll cost reimbursements) was $262.2 million for fiscal 2016 compared to $244.2 million for the prior fiscal year, a 7.4% increase. 
  • ADR increased 3.5% and RevPAR increased 8.8% in fiscal 2016 at the Company's owned hotels and managed condominiums, compared to the prior fiscal year. 
  • Lodging Reported EBITDA increased 30.0% to $28.2 million for fiscal 2016 compared to the prior fiscal year, which includes a $3.5 million termination fee (included in other revenue) associated with the termination of the management agreement with respect to the Half Moon Resort in Montego Bay, Jamaica. 
  • Lodging Reported EBITDA includes $3.1 million and $2.6 million of stock-based compensation expense for fiscal 2016 and fiscal 2015, respectively.

Resort - Combination of Mountain and Lodging Segments

  • Resort net revenue was $1,579.2 million for fiscal 2016, an increase of 16.2%, compared to the prior fiscal year. 
  • Resort Reported EBITDA increased 29.5% to $452.6 million for fiscal 2016, excluding the $16.4 million non-cash gain on the Park City litigation settlement in the prior fiscal year. 
  • Resort EBITDA Margin was 28.7% in fiscal 2016, an increase of 300 basis points from the prior fiscal year, excluding the $16.4 million non-cash gain on the Park City litigation settlement in the prior fiscal year.

Real Estate Segment

  • Real Estate net revenue decreased $19.2 million, or 46.5%, as compared to the same period in the prior year. 
  • Net Real Estate Cash Flow was $22.0 million, a decrease of $6.9 million compared to the prior fiscal year. 
  • Real Estate Reported EBITDA was $2.8 million, a 140.3% improvement as compared to the prior fiscal year. 
  • Real Estate Reported EBITDA includes $0.5 million of stock-based compensation as compared to $1.3 million in the same period in the prior fiscal year.

Total Performance

  • Total net revenue increased $201.4 million, or 14.4%, to $1,601.3 million as compared to the prior fiscal year. 
  • Net income attributable to Vail Resorts, Inc. was $149.8 million, or $4.01 per diluted share compared to $114.8 million, or $3.07 per diluted share, in the prior fiscal year. 

Season Pass Sales

Commenting on season pass sales, Katz said, "We are extremely pleased with our season pass sales to date. Through September 18, 2016, U.S. ski season pass sales increased approximately 24% in units and 29% in sales dollars, compared to the prior year period ended September 20, 2015. Our growth continues to be driven by our increasingly sophisticated and targeted marketing efforts to move destination guests into our season pass products, with this segment representing over half of this year's growth. As always, we do expect our season pass growth rates to decline through the end of our selling season, given that some of the increase is driven by our efforts to encourage guests to purchase their passes earlier in the year. Last year at this point in the year, we had sold approximately 60% of our season passes for the upcoming ski season, though we believe that figure may be higher this year, given the aforementioned efforts to move purchases earlier in the selling cycle."

Guidance

Commenting on guidance for fiscal 2017, Katz said, "We estimate Resort Reported EBITDA for fiscal 2017 will be between $480 million and $510 million. We expect Resort EBITDA Margin to be approximately 29.7% in fiscal 2017, using the midpoint of the guidance range. This is an estimated 100 basis point increase over fiscal 2016. We estimate fiscal 2017 Real Estate Reported EBITDA to be between $2 million and $8 million. Net Real Estate Cash Flow is expected to be between $10 million and $20 million. Net income attributable to Vail Resorts, Inc. is expected to be between $165.5 million and $194.5 million in fiscal 2017. All of these estimates are predicated on an exchange rate of $0.77 between the Australian Dollar and U.S. Dollar, related to the operations of Perisher in Australia. In addition, all of these estimates exclude any operating results from the pending acquisition of Whistler Blackcomb, including associated transaction-related and integration costs."

The following table reflects the forecasted guidance range for the Company's fiscal year ending July 31, 2017, 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 2017.

 

 

Fiscal 2017 Guidance

(In thousands)

For the Year Ending

July 31, 2017

Low End

Range

High End

Range

Mountain Reported EBITDA (1)

$

452,000

$

478,000

Lodging Reported EBITDA (2)

25,000

35,000

Resort Reported EBITDA (3)

480,000

510,000

Real Estate Reported EBITDA

2,000

8,000

Total Reported EBITDA

482,000

518,000

Depreciation and amortization

(167,000)

(161,000)

Loss on disposal of fixed assets and other, net

(1,700)

(500)

Change in fair value of contingent consideration (4)

Investment income, net

700

1,100

Interest expense

(44,000)

(41,000)

Income before provision for income taxes

270,000

316,600

Provision for income taxes

(104,600)

(122,400)

Net income

$

165,400

$

194,200

Net loss attributable to noncontrolling interests

100

300

Net income attributable to Vail Resorts, Inc.

$

165,500

$

194,500

 

(1) Mountain Reported EBITDA includes approximately $15 million of stock-based compensation.

(2) Lodging Reported EBITDA includes approximately $3 million of stock-based compensation.

(3) The Company provides Reported EBITDA ranges for the Mountain and Lodging segments, as well as for the two combined. The low and high of the expected ranges provided for the Mountain and Lodging segments, while possible, do not sum to the high or low end of the Resort Reported EBITDA range provided because we do not expect or assume that we will hit the low or high end of both ranges.

(4) Our guidance excludes any change in the fair value of contingent consideration which is based upon, among other things, financial projections including long-term growth rates for Park City, which such change may be material.

 

Whistler Blackcomb Acquisition Update

As previously announced on August 8, 2016, the Company entered into an agreement to acquire 100% of the stock of Whistler Blackcomb Holdings Inc., which operates North America's largest and most visited mountain resort. We are pleased to report that the Canadian Competition Bureau has issued a no-action letter for the transaction and we continue to expect that the deal will close this fall pending Whistler Blackcomb shareholder and remaining Canadian regulatory approvals. The Company intends to share additional detail on its expectations from the Whistler Blackcomb acquisition during its December earnings conference call.

Vail Resorts, Inc.

Consolidated Condensed Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

Three Months Ended July 31,

Twelve Months Ended July 31,

2016

2015

2016

2015

Net revenue:

Mountain

97,994

81,061

$

1,304,604

$

1,104,029

Lodging

74,528

69,373

274,554

254,553

Real estate

7,362

11,648

22,128

41,342

Total net revenue

179,884

162,082

1,601,286

1,399,924

Segment operating expense:

Mountain

152,090

131,554

881,472

777,147

Lodging

70,215

66,470

246,385

232,877

Real estate

7,596

12,895

24,639

48,408

Total segment operating expense

229,901

210,919

1,152,496

1,058,432

Other operating (expense) income:

Depreciation and amortization

(40,775)

(37,536)

(161,488)

(149,123)

Gain on sale of real property

3,485

5,295

151

Gain on litigation settlement

16,400

Change in fair value of contingent consideration

(4,200)

(900)

(4,200)

3,650

Loss on disposal of fixed assets and other, net

(2,269)

(1,205)

(5,418)

(2,057)

(Loss) income from operations

(93,776)

(88,478)

282,979

210,513

Mountain equity investment income, net

291

426

1,283

822

Investment income, net

214

91

723

246

Interest expense

(10,461)

(10,131)

(42,366)

(51,241)

Loss on extinguishment of debt

(11,012)

(11,012)

(Loss) income before provision for income taxes

(103,732)

(109,104)

242,619

149,328

Benefit (provision) for income taxes

38,448

38,936

(93,165)

(34,718)

Net (loss) income

$

(65,284)

$

(70,168)

$

149,454

$

114,610

Net loss attributable to noncontrolling interests

11

26

300

144

Net (loss) income attributable to Vail Resorts, Inc.

$

(65,273)

$

(70,142)

$

149,754

$

114,754

Per share amounts:

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

$

(1.80)

$

(1.92)

$

4.13

$

3.16

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

$

(1.80)

$

(1.92)

$

4.01

$

3.07

Cash dividends declared per share

$

0.8100

$

0.6225

$

2.8650

$

2.0750

Weighted average shares outstanding:

Basic

36,170

36,438

36,276

36,342

Diluted

36,170

36,438

37,312

37,406

Other Data:

Mountain Reported EBITDA

$

(53,805)

$

(50,067)

$

424,415

$

344,104

Lodging Reported EBITDA

4,313

2,903

28,169

21,676

Resort Reported EBITDA

(49,492)

(47,164)

452,584

365,780

Real Estate Reported EBITDA

3,251

(1,247)

2,784

(6,915)

Total Reported EBITDA

$

(46,241)

$

(48,411)

$

455,368

$

358,865

Mountain stock-based compensation

$

3,374

$

2,995

$

13,404

$

11,841

Lodging stock-based compensation

794

709

3,094

2,621

Resort stock-based compensation

4,168

3,704

16,498

14,462

Real Estate stock-based compensation

192

331

527

1,291

Total stock-based compensation

$

4,360

$

4,035

$

17,025

$

15,753

 

 

Vail Resorts, Inc.

Mountain Segment Operating Results

(In thousands, except ETP)

(Unaudited)

Three Months Ended July 31,

Percentage

Increase

Twelve Months Ended July 31,

Percentage 

Increase

2016

2015

(Decrease)

2016

2015

(Decrease)

Net Mountain revenue:

Lift

$

15,420

$

11,921

29.4%

$

658,047

$

536,458

22.7%

Ski school

3,546

2,695

31.6%

143,249

126,206

13.5%

Dining

12,915

10,349

24.8%

121,008

101,010

19.8%

Retail/rental

26,386

23,590

11.9%

241,134

219,153

10.0%

Other

39,727

32,506

22.2%

141,166

121,202

16.5%

Total Mountain net revenue

$

97,994

$

81,061

20.9%

$

1,304,604

$

1,104,029

18.2%

Mountain operating expense:

Labor and labor-related benefits

$

54,898

$

46,181

18.9%

$

338,250

$

291,582

16.0%

Retail cost of sales

13,082

11,961

9.4%

93,946

87,817

7.0%

Resort related fees

2,417

1,911

26.5%

68,890

59,685

15.4%

General and administrative

36,578

31,159

17.4%

167,480

143,772

16.5%

Other

45,115

40,342

11.8%

212,906

194,291

9.6%

Total Mountain operating expense

$

152,090

$

131,554

15.6%

$

881,472

$

777,147

13.4%

Gain on litigation settlement

—%

16,400

(100.0)%

Mountain equity investment income, net

291

426

(31.7)%

1,283

822

56.1%

Mountain Reported EBITDA

$

(53,805)

$

(50,067)

(7.5)%

$

424,415

$

344,104

23.3%

Total skier visits

327

277

18.1%

10,032

8,466

18.5%

ETP

$

47.16

$

43.04

9.6%

$

65.59

$

63.37

3.5%

 

 

Vail Resorts, Inc.

Lodging Operating Results

(In thousands, except Average Daily Rate ("ADR") and RevPAR)

(Unaudited)

Three Months Ended July 31,

Percentage

Increase

Twelve Months Ended July 31,

Percentage 

Increase

2016

2015

(Decrease)

2016

2015

(Decrease)

Lodging net revenue:

Owned hotel rooms

$

20,356

$

18,568

9.6%

$

63,520

$

57,916

9.7%

Managed condominium rooms

9,514

9,273

2.6%

61,934

58,936

5.1%

Dining

15,176

14,671

3.4%

49,225

46,209

6.5%

Transportation

2,765

2,575

7.4%

22,205

23,079

(3.8)%

Golf

8,797

8,535

3.1%

17,519

16,340

7.2%

Other

14,824

12,949

14.5%

47,833

41,760

14.5%

71,432

66,571

7.3%

262,236

244,240

7.4%

Payroll cost reimbursements

3,096

2,802

10.5%

12,318

10,313

19.4%

Total Lodging net revenue

$

74,528

$

69,373

7.4%

$

274,554

$

254,553

7.9%

Lodging operating expense:

Labor and labor-related benefits

$

31,875

$

30,385

4.9%

$

114,404

$

110,168

3.8%

General and administrative

8,315

7,379

12.7%

35,351

32,481

8.8%

Other

26,929

25,904

4.0%

84,312

79,915

5.5%

67,119

63,668

5.4%

234,067

222,564

5.2%

Reimbursed payroll costs

3,096

2,802

10.5%

12,318

10,313

19.4%

Total Lodging operating expense

$

70,215

$

66,470

5.6%

$

246,385

$

232,877

5.8%

Lodging Reported EBITDA

$

4,313

$

2,903

48.6%

$

28,169

$

21,676

30.0%

Owned hotel statistics:

ADR

$

216.28

$

201.08

7.6%

$

227.27

$

216.76

4.8%

RevPAR

$

146.83

$

133.77

9.8%

$

153.13

$

140.28

9.2%

Managed condominium statistics:

ADR

$

204.46

$

188.28

8.6%

$

325.38

$

316.32

2.9%

RevPAR

$

52.18

$

48.94

6.6%

$

109.68

$

101.19

8.4%

Owned hotel and managed condominium statistics (combined):

ADR

$

211.45

$

195.69

8.1%

$

280.38

$

270.84

3.5%

RevPAR

$

85.51

$

78.57

8.8%

$

122.61

$

112.67

8.8%

 

 

Key Balance Sheet Data

(In thousands)

(Unaudited)

As of July 31,

2016

2015

Real estate held for sale and investment

$

111,088

$

129,825

Total Vail Resorts, Inc. stockholders' equity

874,540

866,568

Long-term debt

686,909

804,347

Long-term debt due within one year

13,354

10,154

Total debt

700,263

814,501

Less: cash and cash equivalents

67,897

35,459

Net debt

$

632,366

$

779,042

 

Reconciliation of Measures of Segment Profitability and Non-GAAP Financial Measures

Presented below is a reconciliation of Reported EBITDA to net (loss) income attributable to Vail Resorts, Inc. for the three and twelve months ended July 31, 2016 and 2015.

 

 

(In thousands) 

(Unaudited)

(In thousands) 

(Unaudited)

Three Months Ended July 31,

Twelve Months Ended July 31,

2016

2015

2016

2015

Mountain Reported EBITDA

$

(53,805)

$

(50,067)

$

424,415

$

344,104

Lodging Reported EBITDA

4,313

2,903

28,169

21,676

Resort Reported EBITDA*

(49,492)

(47,164)

452,584

365,780

Real Estate Reported EBITDA

3,251

(1,247)

2,784

(6,915)

Total Reported EBITDA

(46,241)

(48,411)

455,368

358,865

Depreciation and amortization

(40,775)

(37,536)

(161,488)

(149,123)

Loss on disposal of fixed assets and other, net

(2,269)

(1,205)

(5,418)

(2,057)

Change in fair value of contingent consideration

(4,200)

(900)

(4,200)

3,650

Investment income, net

214

91

723

246

Interest expense

(10,461)

(10,131)

(42,366)

(51,241)

Loss on extinguishment of debt

(11,012)

(11,012)

(Loss) income before provision for income taxes

(103,732)

(109,104)

242,619

149,328

Benefit (provision) for income taxes

38,448

38,936

(93,165)

(34,718)

Net (loss) income

$

(65,284)

$

(70,168)

$

149,454

$

114,610

Net loss attributable to noncontrolling interests

11

26

300

144

Net (loss) income attributable to Vail Resorts, Inc.

$

(65,273)

$

(70,142)

$

149,754

$

114,754

 

* 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 July 31, 2016.

 

(In thousands)

(Unaudited)

As of July 31, 2016

Long-term debt

$

686,909

Long-term debt due within one year

13,354

Total debt

700,263

Less: cash and cash equivalents

67,897

Net debt

$

632,366

Net debt to Total Trailing 12 Month Reported EBITDA

1.4

x

 

The following table reconciles Real Estate Reported EBITDA to Net Real Estate Cash Flow for the three and twelve months ended July 31, 2016 and 2015.

 

(In thousands) 

(Unaudited) 

Three Months Ended 

July 31,

(In thousands) 

(Unaudited) 

Three Months Ended 

July 31,

2016

2015

2016

2015

Real Estate Reported EBITDA

$

3,251

$

(1,247)

$

2,784

$

(6,915)

Non-cash real estate cost of sales

5,216

9,132

15,724

32,190

Non-cash real estate stock-based compensation

193

331

527

1,291

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

628

(1,291)

2,991

2,348

Net Real Estate Cash Flow

$

9,288

$

6,925

$

22,026

$

28,914

 

The following table reconciles Resort net revenue to Resort EBITDA Margin for fiscal 2017 guidance and fiscal 2016.

 

 

(In thousands) 

(Unaudited) 

Fiscal 2017 

Guidance (2)

(In thousands) 

(Unaudited) 

Fiscal Year Ended 

July 31, 2016

Resort net revenue (1)

$    1,663,900

$    1,579,158

Resort Reported EBITDA (1)

$       495,000

$       452,584

Resort EBITDA margin

29.7%

28.7%

 

(1) Resort represents the sum of Mountain and Lodging

(2) Represents the mid-point range of Guidance

 



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