Vail Resorts’ 1st Qtr 2023 Results | Made $137 Million Loss, Total Epic Pass Sales Down 12% on Last Season

SnowBrains |
Business man skiing, vail resorts
Man skiing in his finest business attire at a Vail Resorts ski area. Photo: Andrew Taylor. Skier: Christopher J Lee

Vail Resorts yesterday reported financial results for the first quarter of fiscal 2023, which ended October 31st, 2022.

Vail Resorts sold 2.3 million Epic Pass products for the 2022/23 season, which is down by 12% over last year. However, it is an increase of 6% on the same period last year and of 39% over the last two years and 55% over the last three years.

“Sales of Epic and Epic Local passes are consistent with our expectations and with the trend seen in our September results, with unit sales declining by 12% relative to the prior year and increasing 39% over the last two years and 55% over the last three years.”

  • Net revenue was $279.4 million, compared to $175.6 million for the same quarter last year.
  • Net loss was $137 million compared to $139.3 million the previous year.
  • Lift revenue was $59.5 million for the three months to July 31st, an increase 315.5% over the same period last year (due to favorable snow conditions in Australia and New Zealand.)
  • Ski school revenue was $8.9 million, an increase of 506%
  • Dining revenue was $19.4 million, an increase of 55.3%
  • Retail/rental revenue was $40.3 million, an increase of 42.2%
  • Has $1.2 billion cash on hand

The company traditionally posts a loss for the first fiscal quarter, and were pleased with this quarter’s results.

“Our first fiscal quarter historically operates at a loss, given that our North American and European 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.”

– Kirsten Lynch, CEO

Full Vail Resorts earnings report below:

Vail Resorts, Inc. (NYSE: MTN) today reported results for the first quarter of fiscal 2023 ended October 31, 2022, provided season pass sales results, reaffirmed its guidance for Resort Reported EBITDA for fiscal 2023, provided additional detail on its calendar year 2023 capital plan and declared a dividend payable in January 2023.

Highlights

  • Net loss attributable to Vail Resorts, Inc. was $137.0 million for the first quarter of fiscal 2023 compared to a net loss attributable to Vail Resorts, Inc. of $139.3 million in the same period in the prior year.
  • Resort Reported EBITDA loss was $96.5 million for the first quarter of fiscal 2023, compared to a Resort Reported EBITDA loss of $108.4 million for the first quarter of fiscal 2022. The increase is primarily due to the greater impact of COVID-19 and related limitations and restrictions on results in the prior year.
  • Pass product sales through December 5, 2022 for the upcoming 2022/2023 North American ski season increased approximately 6% in units and approximately 6% in sales dollars as compared to the period in the prior year through December 6, 2021. Compared to sales for the 2019/2020 North American ski season through December 9, 2019, pass product sales increased approximately 86% in units and approximately 53% in sales dollars. Pass product sales are adjusted to include pass sales for the recently acquired Seven Springs, Hidden Valley and Laurel Mountain resorts (together, the “Seven Springs Resorts”) in all periods and to eliminate the impact of changes in foreign currency exchange rates by applying current U.S. dollar exchange rates to both current period and prior period sales for Whistler Blackcomb.
  • The Company reaffirmed its guidance for fiscal year 2023 of $321 million to $396 million of net income attributable to Vail Resorts, Inc. and $893 million to $947 million of Resort Reported EBITDA.
  • The Company declared a quarterly cash dividend of $1.91 per share of Vail Resorts’ common stock that will be payable on January 10, 2023 to shareholders of record as of December 27, 2022.

Commenting on the Company’s fiscal 2023 first quarter results, Kirsten Lynch, Chief Executive Officer, said, “Our first fiscal quarter historically operates at a loss, given that our North American and European 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, with Resort Reported EBITDA improving compared to the prior year period primarily driven by the strong demand and visitation at our Australian resorts. Our Australian resorts continued to experience record visitation, driven by strong demand following two years of COVID-19 related disruptions and supported by continued momentum in advance commitment pass product sales following the addition of Hotham and Falls Creek in April 2019. Our North American summer operations continued to recover following the COVID-19 pandemic.”

Moving on to season pass results, Lynch said, “We are pleased with the results of our season pass sales, which continue to demonstrate the strength of the guest experience, our network of mountain resorts, and commitment to continually investing in the guest experience. Pass product sales for the North American ski season increased approximately 6% in units and approximately 6% in sales dollars through December 5, 2022 as compared to the period in the prior year through December 6, 2021, including sales for the Seven Springs Resorts in both periods, and adjusted to eliminate the impact of foreign currency by applying an exchange rate of $0.74 between the Canadian dollar and U.S. dollar in both periods for Whistler Blackcomb sales.

“Our North American season pass program has grown dramatically over the past three years as we have focused on our core strategy of shifting guests from lift tickets into advance commitment to drive stability and long-term value for the business. Season pass units have grown approximately 86% in units and approximately 53% in sales dollars compared to sales for the 2019/2020 season through December 9, 2019, including sales for the Seven Springs Resorts in both periods and adjusted to eliminate the impact of foreign currency by applying an exchange rate of $0.74 between the Canadian dollar and U.S. dollar in both periods for Whistler Blackcomb sales. We expect to have approximately 2.3 million guests in advance commitment products this year, generating over $800 million of revenue and representing over 70% of all skier visits committed to our 40 North American and Australian resorts in advance of the season in a non-refundable pass, an increase of over 1.1 million guests in the program from the 2019/2020 season, including all pass products for our North American and Australian resorts.

“For the full pass sales season, the business achieved strong unit growth from renewing pass holders, especially guests in destination and international markets, including strong renewals among those that were new to our pass program last year. Our strongest growth occurred in destination markets, which represents the largest addressable market for conversion of guests into advance commitment and is a particularly attractive guest segment given the higher ancillary attachment. Our Epic Day Pass continues to be our highest growth product segment targeting the large market of lower frequency skiers into advance commitment and particularly destination guests with valuable ancillary spend. Our local markets also grew over the prior year in excess of our expectations and remain a critical foundation for our advance commitment strategy and are our most developed and highly penetrated markets. Sales of Epic and Epic Local passes are consistent with our expectations and with the trend seen in our September results, with unit sales declining by 12% relative to the prior year and increasing 39% over the last two years and 55% over the last three years. This represents substantial growth in our highest priced products and among our most penetrated high frequency skier segment, and we expected this year’s performance as a result of the significant growth after last year’s price reset. We continue to expect that the majority of the future growth in advance commitment will come from the large and attractive addressable market of destination guests, primarily through transitioning lower frequency lift ticket guests into Epic Day Pass products, and transitioning guests at our local and regional resorts into advance commitment.

“Pass sales dollars continue to benefit from the 7.5% initial price increase and subsequent incremental price increases relative to the 2021/2022 season, offset by the mix impact from the growth of new pass holders purchasing Epic Day Pass products. This year, net migration among renewing pass holders is in line with our expectations of a 4% decline year-over-year following last year’s positive 10% net migration that resulted from pass holders trading up to higher value products with more access following the price reset. We proactively use the breadth of our product line and our data to retain guests in the advance commitment program by offering and, in certain cases, encouraging them to purchase lower priced products to best suit their needs based on their prior behavior. We are very pleased that over the last three years we have maintained renewal rates among our unlimited pass holders, including Epic, Epic Local and unlimited regional passes, while growing these pass holders almost 75% during that time period.

“As previously announced, we completed a multi-year extension of our pass partnership with Telluride Ski & Golf and are pleased to continue offering Epic Pass, Epic 4-7 Day Pass(with All Resort Access) and Epic Adaptive Pass guests access to Telluride. Starting next winter for the 2023/2024 North American ski season, reservations will be required for pass holders skiing or riding at Telluride. Reservations will not be required for pass holders visiting Telluride in the 2022/2023 North American ski season, and more details will be provided in advance of next season.”

Lynch continued, “Heading into the 2022/2023 North American ski season, we are pleased with our significant base of committed guests that provide meaningful stability for our Company, especially during economic uncertainty. We have strong early season conditions at our resorts in the Rockies and West and typical seasonal variability at our resorts in the East. While our mountain resorts have not yet completed hiring for the winter season, we are on track to have the staff needed to achieve full operation of lifts and mountain terrain and deliver normal operations of important guest experiences such as our restaurants, lodging, ski and ride school, and rental and retail locations. Hiring is still ongoing and a top priority as our mountain resort teams focus on hiring for specific roles and continue hiring to manage staffing needs that occur throughout the season. Looking forward, we are pleased with lodging booking trends for the upcoming season, which are consistent with pre-COVID-19 levels. We are also seeing lodging bookings that indicate visitation patterns may shift this year from the December holiday period into January through April.”

Operating Results

A more complete discussion of our operating results can be found within 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, 2022, which was filed today with the Securities and Exchange Commission. The following are segment highlights:

Mountain Segment

  • Mountain segment net revenue increased $92.4 million, or 84.6%, to $201.7 million for the three months ended October 31, 2022 as compared to the same period in the prior year, primarily driven by our Australian ski areas, which experienced record visitation and favorable snow conditions in the current year following periodic COVID-19 related closures and restrictions in the prior year.
  • Mountain Reported EBITDA loss was $92.1 million for the three months ended October 31, 2022, which represents an increase of $18.8 million, or 17.0%, as compared to Mountain Reported EBITDA loss for the same period in the prior year, primarily driven by our Australian operations, which experienced record visitation and favorable snow conditions in the current year following periodic COVID-19 related closures and restrictions in the prior year. Additionally, Mountain segment results include $2.6 million and $0.6 million of acquisition and integration related expenses for the three months ended October 31, 2022 and 2021, respectively.

Lodging Segment

  • Lodging Segment net revenue (excluding payroll cost reimbursements) increased $9.7 million, or 15.1%, to $73.9 million for the three months ended October 31, 2022 as compared to the same period in the prior year, primarily as a result of incremental revenue from the Seven Springs Resorts, as well as fewer COVID-19 related limitations and restrictions as compared to the prior year.
  • Lodging Reported EBITDA loss was $4.4 million for the three months ended October 31, 2022, which represents an incremental loss of $6.9 million, or 270.8%, as compared to Lodging Reported EBITDA for the same period in the prior year, primarily as a result of increased labor expense and related benefits to support the return to normal operations at our mountain resort properties and GTLC.

Resort – Combination of Mountain and Lodging Segments

  • Resort net revenue was $279.3 million for the three months ended October 31, 2022, an increase of $104.1 million as compared to Resort net revenue of $175.3 million for the same period in the prior year.
  • Resort Reported EBITDA loss was $96.5 million for the three months ended October 31, 2022, an increase of $11.9 million as compared to Resort Reported EBITDA of $108.4 million for the same period in the prior year.

Total Performance

  • Total net revenue increased $103.9 million, or 59.2%, to $279.4 million for the three months ended October 31, 2022 as compared to the same period in the prior year.
  • Net loss attributable to Vail Resorts, Inc. was $137.0 million, or a loss of $3.40 per diluted share, for the first quarter of fiscal 2023 compared to a net loss attributable to Vail Resorts, Inc. of $139.3 million, or a loss of $3.44 per diluted share, in the prior year.

Capital Structure and Return of Capital

Commenting on capital allocation, Lynch said, “Our balance sheet and liquidity position remain strong. Our total cash and revolver availability as of October 31, 2022 was approximately $1.8 billion, with $1.2 billion of cash on hand, $417 million of U.S. revolver availability under the Vail Holdings Credit Agreement and $207 million of revolver availability under the Whistler Credit Agreement. As of October 31, 2022, our Net Debt was 2.0 times trailing twelve months Total Reported EBITDA. The Company declared a quarterly cash dividend of $1.91 per share of Vail Resorts’ common stock that will be payable on January 10, 2023 to shareholders of record on December 27, 2022. We will continue to be disciplined stewards of our capital and remain committed to continuous investment in our people, strategic, high-return capital projects, strategic acquisition opportunities, and returning capital to our shareholders through our quarterly dividend and share repurchase program.”

Capital Investments

Commenting on the Company’s capital investments for the 2022/2023 North American ski season, Lynch said, “We are pleased to welcome guests to all of our resorts as the 2022/2023 North American and European ski seasons kick off with significant investments in the guest experience including 18 new or replacement lifts across 12 resorts, which will meaningfully increase lift capacity and reduce wait times at those lift locations. At Vail Mountain, this includes the installation of a new four-person high speed lift in the Sun Down Bowl and replacement of a four-person lift with a new six-person high speed lift in the Game Creek Bowl. At Whistler Blackcomb, this includes the replacement of the four-person high speed Big Red Express lift with a new six-person high speed lift and replacement of the six-person Creekside Gondola with a new 10-person high speed gondola. As discussed in prior announcements, this also includes the installation of new or replacement lifts at Breckenridge, Northstar, Heavenly, Stowe, Mount Snow, Attitash, Jack Frost, Big Boulder, Boston Mills and Brandywine.”

Regarding calendar year 2023 capital expenditures, Lynch said, “We remain dedicated to delivering an exceptional guest experience and will continue to prioritize reinvesting in the experience at our resorts including consistently increasing capacity through lift, terrain and food and beverage expansion projects. As announced in September, the Company expects to invest approximately $180 million to $185 million, excluding one-time investments related to integration activities, deferred capital associated with the Keystone and Park City projects, and $13 million of growth capital investments at Andermatt-Sedrun.

“At Keystone, we plan to complete the transformational lift-served terrain expansion project in Bergman Bowl, increasing lift-served terrain by 555 acres with the addition of a new six-person high speed lift. At Whistler Blackcomb, we plan to replace the four-person high speed Jersey Cream lift with a new six-person high speed lift and replace the four-person high speed Fitzsimmons lift with a new eight-person high speed lift. At Breckenridge, we plan to upgrade the Peak 8 base area to enhance the beginner and children’s experience and increase uphill capacity from this popular base area. The investment plan includes a new four-person high speed 5-Chair to replace the existing two-person fixed-grip lift as well as significant improvements, including new teaching terrain and a transport carpet from the base, to make the beginner experience more accessible. At Stevens Pass, we are planning to replace the two-person fixed-grip Kehr’s Chair lift with a new four-person lift, which is designed to improve out-of-base capacity and guest experience. At Attitash, we plan to replace the three-person fixed-grip Summit Triple lift with a new four-person high speed lift to increase uphill capacity and reduce guests’ time on the longest lift at the resort. These lift projects are subject to regulatory approvals and are currently planned to be completed in time for the 2023/2024 North American winter season. Additionally, the Company plans to expand parking across 4 resorts by more than 500 spaces, to improve the guest experience.

“The Company is planning to introduce new technology for the 2023/2024 North American ski season that will allow guests to store their pass product or lift ticket directly on their phone and scan at lifts hands-free, eliminating the need for carrying plastic cards, visiting the ticket window or waiting to receive a pass or lift ticket in the mail. Once loaded on their phones, guests can store their phone in their pocket, and get scanned hands free in the lift line using Bluetooth® Low Energy technology. In addition to the significant enhancement of the guest experience, this technology will also reduce waste of printing plastic cards for pass products and lift tickets, and RFID chips, as a part of the Company’s Commitment to Zero. Even after launch, the Company will continue to make plastic cards available to any guests who cannot or do not want to use their phone to store their pass product or lift ticket. The Company is also investing in 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.

“In addition to these investments, we are pleased to announce plans to invest approximately $13 million at Andermatt-Sedrun in high-impact growth capital projects as an initial step in a multi-year strategic growth investment plan to enhance the guest experience on the mountain, which will be funded by the CHF 110 million capital that was invested as part of the purchase of our majority stake in Andermatt-Sedrun. As part of the calendar year 2023 investments, we are planning to upgrade and expand Sedrun’s snowmaking to enhance the experience for key intermediate terrain. In addition, we plan to enhance the on-mountain dining experience with renovations to the Milez and Natschen restaurants and replacement of the Valtgeva restaurant. These investments are expected to be completed ahead of the 2023/2024 European ski season and remain subject to regulatory approvals.

“Including $1 million of one-time investments related to integration activities, $10 million of deferred capital associated with the Keystone and Park City projects, and $13 million of growth capital investments at Andermatt-Sedrun, our total capital plan for calendar year 2023 is expected to be approximately $204 million to $209 million. We will provide further detail on our calendar year 2023 capital plan in March 2023.”

Sustainability Update

Commenting on the Company’s industry leading sustainability efforts, Lynch said, “In 2017 Vail Resorts announced an ambitious plan to take action to address our direct impact with a commitment to achieve zero net operating footprint by 2030, including zero net emissions, zero waste to landfill, and zero net operating impact on forests and habitat. As recently announced in our EpicPromise Progress Report, we are pleased to be on track to achieve a zero net operating footprint by 2030 and have achieved 100% renewable electricity across our North American mountain resorts within the past fiscal year. The Company is ahead of schedule to meet its emissions goals, and is on track to reach zero waste to landfill and zero net operating impact on forests and habitats to achieve a zero net operating footprint by 2030. We remain dedicated to doing our part as responsible stewards of the great outdoors and committed partners to our communities. More information about our Commitment to Zero and efforts towards sustainability can be found at EpicPromise.com.”

Outlook

Commenting on fiscal 2023 guidance, Lynch said, “We are encouraged by the strength of our pass sales, the strong early season conditions at our mountain resorts in the Rockies and West and staffing levels on track to deliver an outstanding guest experience. We are reaffirming our fiscal 2023 net income attributable to Vail Resorts, Inc. guidance of $321 million to $396 million and Resort Reported EBITDA guidance of $893 million to $947 million that was included in our September earnings release assuming a continuation of the current economic environment, normal weather conditions, and no material impacts associated with COVID-19 for the 2022/2023 North American and European ski season or the 2023 Australian ski season. It is important to note that there continues to be uncertainty around the economic outlook and the impact that may have on travel and consumer behavior as we head into our primary operating season. Our guidance includes an estimated $4 million of acquisition and integration related expenses in fiscal year 2023 associated with the acquisitions of the Seven Springs Resorts and our majority ownership in Andermatt-Sedrun.

“Foreign currency exchange rates have experienced recent volatility. The guidance assumes the foreign currency exchange rates as of our original September 2022 guidance. Relative to the fiscal 2023 guidance, if the currency exchange rates as of yesterday, December 7, 2022 of $0.73 between the Canadian Dollar and U.S. Dollar related to the operations of Whistler Blackcomb in Canada, $0.67 between the Australian Dollar and U.S. Dollar related to the operations of Perisher, Falls Creek and Hotham in Australia, and $1.06 between the Swiss Franc and U.S. Dollar related to the operations of Andermatt-Sedrun in Switzerland were to continue for the remainder of the fiscal year, we expect this would have an impact on fiscal 2023 guidance of approximately negative $6 million for Resort Reported EBITDA.”


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