Vail Resorts’ 4th Qtr 2022 Results | Closes Out the Year With $2.5 Billion Sales, Best Since 2009

Vail Resorts yesterday reported financial results for the fourth quarter of fiscal 2022 which ended July 31st, 2022.

• Net income was $347.9 million, compared to $127.9 million the previous year.
• The company recorded $836.9 million in earnings compared to $544.7 million the previous year.
• Lift revenue was $1.31bn for the three months to July 31st, an increase of $233.6 million, or 21.7%, over the same period last year.
• Ski school revenue increased by $79.4 million, or 55.1%
• Dining revenue increased by $71.5 million, or 77.6%
• Retail/rental revenue increased by $83.8 million, or 36.7%
• Has $1.1 billion cash on hand

The results were better than expected, significantly outperforming the prior year. This is in part due to the greater impact of covid-19-related limitations and restrictions in 2021 and was helped by strong demand and visitation at Australian resorts and the continued recovery at North American summer operations following the start of the covid-19 pandemic.

“Despite the challenging early season conditions through the holiday period, staffing challenges, and impacts related to covid-19, results exceeded our original expectations for the year driven by the stability from our advance commitment pass products, with approximately 72% of skier visitation at our North American resorts coming from pass product holders.”

– Vail Resorts CEO Kirstin Lynch on the company’s full year

The company’s profit margin for the year was higher than forecast due to the fact it struggled with staffing shortages at the beginning of the 2021/22 season. Many Vail Resorts’ ski areas had lifts and terrain that did not open or had limited openings last year due to staffing issues. With a recent focus on employees, Vail Resorts hopes that with a return to full staffing levels this season they should reach full operating capacity and be able to focus on the guest experience.

• Related: Your Phone Is Your Ticket to the Slopes: Vail Resorts Plans Hands-Free, Digital Access to Its North American Resorts

Regarding next season, Lynch said that North American ski season pass sales have increased approximately 6% in units and 7% in sales dollars compared to the same period in the prior year.

“Our pass sales growth was driven by renewing pass holders, with particular strength in renewing pass product holders that were new to advance commitment products last year, and we saw strong growth particularly in destination markets.”

– Kirstin Lynch

The company closed out its fiscal year with $2.5 billion in sales, above the $2.27 billion notched in 2019 and the highest sales figure since at least 2009.

The full press release is below:

BROOMFIELD, Colo., Sept. 28, 2022 /PRNewswire/ — Vail Resorts, Inc. (NYSE: MTN) today reported results for the fourth quarter and fiscal year ended July 31, 2022, which was negatively impacted by COVID-19 and related limitations and restrictions, and reported results of season-to-date season pass sales. Vail Resorts also provided its outlook for the fiscal year ending July 31, 2023, announced its calendar year 2023 capital plan, and declared a dividend payable in October 2022.

Highlights

• Net income attributable to Vail Resorts, Inc. was $347.9 million for fiscal 2022 compared to net income attributable to Vail Resorts, Inc. of $127.9 million for fiscal 2021. The increase is primarily due to the greater impact of COVID-19 and related limitations and restrictions on results in the prior year.
• Resort Reported EBITDA was $836.9 million for fiscal 2022, compared to Resort Reported EBITDA of $544.7 million for fiscal 2021. 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 September 23, 2022 for the upcoming 2022/2023 North American ski season increased approximately 6% in units and approximately 7% in sales dollars as compared to the period in the prior year through September 24, 2021. 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 both 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 provided its outlook for fiscal 2023 and expects Resort Reported EBITDA to be between $893 million and $947 million, including an estimated $4 million of acquisition and integration related expenses specific to the Seven Springs Resorts and Andermatt-Sedrun. Fiscal 2023 guidance, among other assumptions described below, assumes 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.
• The Company declared a quarterly cash dividend of $1.91 per share of Vail Resorts’ common stock that will be payable on October 24, 2022 to shareholders of record as of October 5, 2022.
• The Company announced details on its calendar year 2023 capital plan, which is expected to total approximately $180 million to $185 million, excluding $1 million of one-time investments related to integration activities and $10 million of deferred capital associated with the delayed Keystone and Park City lift projects. Including these one-time investments, the Company’s total capital plan for calendar year 2023 is expected to be approximately $191 million to $196 million and is primarily focused on new and replacement lifts to further increase uphill capacity and elevate the guest experience.
• On August 3, 2022, the Company closed on its purchase of a majority stake in Andermatt-Sedrun, marking the Company’s first strategic investment in, and opportunity to operate, a ski resort in Europe.

Commenting on the Company’s fiscal 2022 results, Kirsten Lynch, Chief Executive Officer, said, “We are pleased with our overall results for the year which highlight the stability and strength of our business model. As expected, results for the year significantly outperformed results from the prior year primarily due to the greater impact of COVID-19 and related limitations and restrictions on results in the prior year.

“Despite the challenging early season conditions through the holiday period, staffing challenges, and impacts related to COVID-19, results exceeded our original expectations for the year driven by the stability from our advance commitment pass products with approximately 72% of skier visitation at our North American resorts coming from pass product holders, strong destination guest visitation including demand for lift tickets, and an improved guest experience from January through the remainder of the season, demonstrating strong underlying demand for the experience at our resorts. We had particularly strong destination visitation this year, and growth in visitation primarily occurred during off peak periods. Throughout the North American ski season, our ancillary businesses continued to be capacity constrained by staffing, and in the case of dining, by operational restrictions associated with COVID-19.”

Regarding the Company’s fiscal 2022 fourth quarter results, Lynch said, “Performance in the fourth quarter of fiscal year 2022 improved significantly from the prior year driven by strong demand and visitation at our Australian resorts and the continued recovery in our North American summer operations following the start of the COVID-19 pandemic. Our Australian resorts experienced record visitation, driven by strong demand following two years of COVID-19 related disruptions, continued momentum in advance commitment pass product sales following the addition of Hotham and Falls Creek in April 2019, and favorable early season conditions that continued throughout the quarter.”

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-K for the fiscal year ended July 31, 2022, which was filed today with the Securities and Exchange Commission. The discussion of operating results below compares the results for the fiscal year ended July 31, 2022 to the fiscal year ended July 31, 2021, unless otherwise noted. The following are segment highlights:

Mountain Segment

• Total lift revenue increased $233.6 million, or 21.7%, to $1,310.2 million primarily due to increased pass product sales for the 2021/2022 North American ski season, as well as an increase in non-pass lift ticket purchases.
• Ski school revenue increased $79.4 million, or 55.1%, dining revenue increased $71.5 million, or 77.6%, and retail/rental revenue increased $83.8 million, 36.7%, each primarily due to fewer COVID-19 related limitations and restrictions on our North American winter operations as compared to the prior year, as well as an increase in demand over the prior year.
• Operating expense increased $247.8 million, or 21.4%, which was primarily attributable to increased variable expenses associated with increases in revenue, and the impact of cost discipline efforts in the prior year associated with lower levels of operations, including limitations, restrictions and closures resulting from COVID-19.
• Mountain Reported EBITDA increased $258.4 million, or 46.8%, which includes $20.9 million of stock-based compensation for fiscal 2022 compared to $20.3 million in the prior year.

Lodging Segment

• Lodging segment net revenue (excluding payroll cost reimbursements) increased $101.8 million, or 51.2%, primarily as a result of fewer COVID-19 related limitations and restrictions as compared to the prior year, as well as an increase in demand and average daily rates compared to the prior year and incremental revenue from the Seven Springs Resorts of $18.7 million.
• Lodging Reported EBITDA increased $33.8 million, or 418.0%, which includes $3.7 million of stock-based compensation expense in fiscal 2022 compared to $3.8 million in the prior year.

Resort – Combination of Mountain and Lodging Segments

• Resort net revenue was $2,525.2 million for fiscal 2022, an increase of $617.3 million, or 32.4%, compared to resort net revenue of $1,907.9 million for fiscal 2021.
• Resort Reported EBITDA was $836.9 million for fiscal 2022, an increase of $292.3 million, or 53.7%, compared to fiscal 2021, and includes acquisition and integration related expenses, including expenses associated with the acquisition of Andermatt-Sedrun, of $7.7 million, which are recorded within Mountain other operating expense.

Total Performance

• Total net revenue increased $616.2 million, or 32.3%, to $2,525.9 million.
• Net income attributable to Vail Resorts, Inc. was $347.9 million, or $8.55 per diluted share, for fiscal 2022 compared to net income attributable to Vail Resorts, Inc. of $127.9 million, or $3.13 per diluted share, in fiscal 2021. Net income attributable to Vail Resorts, Inc. for fiscal 2022 and fiscal 2021 included tax benefits of approximately $16.4 millionand $17.9 million, respectively, related to employee exercises of equity awards (primarily related to the former CEO’s exercise of SARs). Additionally, fiscal 2022 net income included the after-tax effect of acquisition and integration related expenses, as well as costs associated with the expected acquisition of Andermatt-Sedrun, which combined were approximately $5.8 million.

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 July 31, 2022 was approximately $1.7 billion, with $1.1 billion of cash on hand, $417.4 million of U.S. revolver availability under the Vail Holdings Credit Agreement and $220.0 million of revolver availability under the Whistler Credit Agreement. As of July 31, 2022, our Net Debt was 2.0 times trailing twelve months Total Reported EBITDA. On August 31, 2022, the Company entered into an amendment of the Vail Holdings Credit Agreement, to extend the maturity date by two years to September 2026. The Company declared a quarterly cash dividend of $1.91 per share of Vail Resorts’ common stock that will be payable on October 24, 2022 to shareholders of record as of October 5, 2022. Including shares repurchased during the fourth quarter, for the year ended July 31, 2022, the Company repurchased 304,567 shares of common stock at an average price of $246.27 for a total of approximately $75.0 million. We intend to maintain an opportunistic approach to share repurchases. 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 such as the recent additions of Andermatt-Sedrun and the Seven Springs Resorts, and returning capital to our shareholders through our quarterly dividend and share repurchase program.”

Season Pass Sales

Commenting on the Company’s season pass sales for the upcoming 2022/2023 North American ski season, Lynch said, “Advance commitment continues to be the foundation of our strategy, shifting guests from short term refundable lift ticket purchases to nonrefundable pass commitment before the season starts, in exchange for value. We are very pleased with the results for our season pass sales to date, which demonstrate the strength of the guest experience, our network of mountains resorts, and commitment to continually investing in the guest experience. Through September 23, 2022, North American ski season pass sales increased approximately 6% in units and 7% in sales dollars as compared to the period in the prior year through September 24, 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 $0.76 between the Canadian dollar and U.S. dollar in both periods for Whistler Blackcomb pass sales. These results are particularly strong considering the Company achieved growth of approximately 42% in units and 17% in sales dollars last year through September 17, 2021 compared to the prior year through September 18, 2020, excluding sales for the Seven Springs Resorts in both periods.

“Our pass sales growth was driven by renewing pass holders, with particular strength in renewing pass product holders that were new to advance commitment products last year, and we saw strong growth particularly in destination markets. The strongest product growth was from Epic Day Pass products, attracting lower frequency guests into advance commitment products including the new tier of products launched in 2022/2023 with access to select regional and local resorts. Pass sales dollars continue to benefit from the 7.5% initial price increase and subsequent incremental price increases relative to the 2021/2022 season, largely offset by the mix impact of the growth of new pass holders into Epic Day Pass products, including our new lower priced Epic Day Pass offerings. Following the strong trade-up results last year, we are pleased that net migration among renewing pass product holders remains near neutral, with minimal degradation relative to our spring pass sales. As we enter the final period for season pass sales, we expect our December 2022growth rates to be relatively consistent with our September 2022 growth rates.”

Lynch continued, “We continue to prioritize advance commitment as the best way for guests to access our resorts. Similar to last year, lift ticket sales will be limited during the 2022/2023 season in order to prioritize guests committing in advance and to preserve the guest experience at each resort. We expect these lift ticket limitations will further support our resorts and communities on peak days, and we do not anticipate that the limitations will have a significant impact on our financial results.”

Investments

Commenting on the Company’s investments for the 2022/2023 North American ski season, Lynch said, “The experience of our employees and guests is the core of our business model, and the Company is using its financial resources and the stability it has created through its advance commitment pass program to aggressively reinvest and deliver on our Company mission of providing an Experience of a Lifetime. As previously announced, the Company is making its largest ever investment in both its employees and its resorts. The Company is investing approximately $175 million in our employees, making our frontline talent a strategic advantage, including an industry-leading minimum wage plus career and leadership differentials across all 37 of our North American resorts, leadership development for frontline talent to build their careers at Vail Resorts, investments in affordable housing for our employees, and expanding our human resources department to better serve our employees. The Company achieved full staffing levels for summer in North America and across our three Australian resorts for winter. While is it very early in our hiring process for North America winter season staffing, our hiring is currently on track for full staffing levels.

“We remain dedicated to delivering an exceptional guest experience and will continue to prioritize reinvesting in the experience at our resorts. We are committed to consistently increasing capacity through lift, terrain and food and beverage expansion projects and are on track to complete 18 new or replacement lifts across 12 resorts in advance of the 2022/2023 North American ski season as part of our one-time incremental investment this year to accelerate that strategy, which will meaningfully increase lift capacity 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 the 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 the replacement of the six-person Creekside Gondola with a new 10-person high speed gondola. As discussed in prior announcements, we are also installing new or replacement lifts at Breckenridge, Northstar, Heavenly, Stowe, Mount Snow, Attitash, Jack Frost, Big Boulder, Boston Mills and Brandywine.

“While 18 lift projects are on track for the 2022/2023 season, three lift projects have been delayed and are expected to be completed in calendar year 2023, subject to approvals. In Park City, the Park City Planning Department approved a permit to upgrade the Eagle and Silverlode lifts at Park City Mountain in April 2022, and the Planning Commissionsubsequently revoked that permit in June 2022. While the Company is committed to resolving our permit to upgrade the Eagle and Silverlode lifts in Park City, the Company intends to install the two previously-purchased lifts at Whistler Blackcomb in calendar year 2023, replacing the four-person high speed Jersey Cream lift with a new six-person high speed lift and replacing the four-person high speed Fitzsimmons lift with a new eight-person high speed lift. The Whistler Blackcomb lift installations remain subject to approvals. The lift-served terrain expansion project in Bergman Bowl at Keystone is delayed due to a previously disclosed construction issue impacting an area where minimal construction was permitted. While Keystone’s Bergman Bowl is planned to be open to guests for the 2022/2023 ski season, the lift installation is delayed with the goal for completion in advance of the 2023/2024 ski season.

“Our capital plan for calendar year 2022 was previously expected to be approximately $327 million to $337 million. Due to the delays for the Park City and Keystone lift projects, we will be deferring approximately $10 million of capital from calendar year 2022 to calendar year 2023. We now expect our capital plan for calendar year 2022 to be approximately $323 million to $333 million, including one-time investments in real estate related projects, $4 million related to the addition of Andermatt-Sedrun, and integration activities associated with the Seven Springs Resorts. In addition to the $10 million of cost deferred from calendar year 2022, the Company expects to incur approximately $20 million in additional costs related to the Park City and Keystone lift projects, which is included in our calendar year 2023 capital plan.”

Regarding calendar year 2023 capital expenditures, Lynch said, “In addition to this year’s significant capacity-expanding investments, we are excited to announce details of our calendar year 2023 capital plan. We expect our capital plan for calendar year 2023 to be approximately $180 million to $185 million, including $2 million of maintenance capital for Andermatt-Sedrun and excluding $1 million of one-time investments related to integration activities and $10 million of deferred capital associated with the Keystone and Park City projects. Including these one-time investments, our total capital plan for calendar year 2023 is expected to be approximately $191 million to $196 million. This calendar year 2023 capital plan currently excludes growth capital investments at Andermatt-Sedrun, which we expect to announce along with further details on our calendar year 2023 capital plan in December 2022.

“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, 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.”

Andermatt-Sedrun

As previously announced, on August 3, 2022 the Company closed on its purchase of a majority stake in Andermatt-Sedrun, marking the Company’s first strategic investment in, and opportunity to operate, a ski resort in Europe. Andermatt-Sedrun is a renowned destination ski resort in Central Switzerland, located less than 90 minutes from three of Switzerland’smajor metropolitan areas (Zurich, Lucerne and Lugano) and approximately two hours from Milan, Italy. The Company acquired a 55% ownership stake in Andermatt-Sedrun, which controls and operates all of the resort’s mountain and ski-related assets, including lifts, most of the restaurants and a ski school operation. Vail Resorts’ CHF 149 million investment is comprised of a CHF 110 million investment into Andermatt-Sedrun for use in capital investments to enhance the guest experience on the mountain and CHF 39 million paid to Andermatt Swiss Alps AG, which will be fully reinvested into the real estate developments in the base area. For the 2022/2023 season, Epic Pass holders will receive unlimited and unrestricted access to Andermatt-Sedrun (without Matterhorn Gotthard Bahn access). Epic Local Pass holders receive five days at the resort, and Epic Day Pass holders with All Resorts Access will be able to visit during any of their days.

Guidance

Commenting on guidance, Lynch said, “As we head into fiscal year 2023, we are encouraged by the strength in advance commitment product sales and our continued focus on enhancing the guest and employee experience while maintaining cost discipline. Our employee investment of approximately $175 million to return to full staffing levels and operational footprints, along with our expected capital investment of over $300 million in calendar year 2022, are expected to further elevate the guest experience this season and increase the capacity of our resorts.

“Despite facing broad cost inflation and after incorporating our industry-leading wage investment, we expect meaningful growth for fiscal 2023 relative to fiscal 2022 and strong Resort EBITDA margin. Our guidance for net income attributable to Vail Resorts, Inc. is estimated to be between $321 million and $396 million for fiscal 2023. We estimate Resort Reported EBITDA for fiscal 2023 will be between $893 million and $947 million. We expect the operations of the Seven Springs Resorts and Andermatt-Sedrun to contribute approximately $22 million of Resort Reported EBITDA in fiscal year 2023, which is an incremental $4 million of Resort Reported EBITDA compared to fiscal year 2022, excluding acquisition and integration related expenses. Acquisition and integration related expenses are expected to be an estimated $4 million in fiscal year 2023 associated with the resort acquisitions. We estimate Resort EBITDA Margin for fiscal 2023 to be approximately 31.0% using the midpoint of the guidance range.

The guidance assumes 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 2022 and 2023 Australian ski seasons. The guidance also assumes a return to full staffing levels and operational footprints consistent with the expectations shared in the Company’s March 2022 Investor Conference Presentation. The guidance assumes an exchange rate of $0.77 between the Canadian Dollar and U.S.Dollar related to the operations of Whistler Blackcomb in Canada, an exchange rate of $0.70 between the Australian Dollar and U.S. Dollar related to the operations of Perisher, Falls Creek and Hotham in Australia, and an exchange rate of $1.02 between the Swiss Franc and U.S. Dollar related to the operations of Andermatt-Sedrun in Switzerland.”