Vail Resorts, Inc. — Form 10-Q Summary
Reporting period: Fiscal third quarter and nine months ended April 30, 2022; filed June 9, 2022. Amounts are in U.S. dollars. Vail Resorts operates Mountain, Lodging and Real Estate businesses, with results strongly affected by ski-season timing.
Financial performance
| Metric | Three months ended April 30, 2022 | Year-over-year | Nine months ended April 30, 2022 | Year-over-year |
|---|---|---|---|---|
| Total revenue | $1,176.7 million | Up 32.3% | $2,258.8 million | Up 32.4% |
| Operating income | $540.4 million | Up from $387.7 million | $699.8 million | Up from $431.5 million |
| Net income attributable to Vail Resorts | $372.6 million | Up from $274.6 million | $456.6 million | Up from $268.7 million |
| Diluted EPS | $9.16 | Up from $6.72 | $11.20 | Up from $6.58 |
| Total Reported EBITDA (non-GAAP) | $609.2 million | Up from $461.2 million | $897.2 million | Up from $640.0 million |
- Segment results: Third-quarter Mountain Reported EBITDA was $596.0 million, up 30.4%; Lodging was $14.5 million, up from $5.3 million. For the nine months, Mountain EBITDA was $873.5 million, up 33.5%, while Lodging EBITDA improved to $26.5 million from a $10.8 million loss. Real Estate EBITDA remained negative: $1.3 million for the quarter and $2.8 million year to date.
- Cash flow: Operating cash flow for the nine months was $773.0 million, compared with $551.1 million. Investing used $255.6 million, including $161.8 million of capital expenditures and the Seven Springs acquisition. Financing used $352.7 million, including dividends, debt repayments and share repurchases.
- Liquidity and debt: Cash and cash equivalents were $1.401 billion at April 30. Total debt principal was $2.830 billion; debt net of cash was $1.350 billion, compared with $1.509 billion a year earlier. The company reported $417.3 million available on its U.S. revolver and $211.8 million on Whistler’s revolver. It was compliant with debt covenants.
- Shareholder returns: The company paid $3.67 per share in dividends during the nine months, totaling $148.9 million, and repurchased 144,875 shares for $37.5 million. A further $1.91-per-share dividend was approved for payment in July 2022.
Changes versus the prior comparable period
- Revenue and earnings increased substantially as North American operations faced fewer COVID-related restrictions than in the prior year. Management also cited strong pass sales and higher visitation, particularly after a difficult early-season and holiday period.
- Mountain skier visits rose 21.1% for the quarter and 14.7% for the nine months; effective ticket price increased 2.2% and 4.7%, respectively.
- Lodging benefited from improved occupancy and higher room rates. Combined hotel and managed-condominium RevPAR increased 50.6% for the quarter and 72.2% for the nine months.
- Operating expenses increased with higher activity, staffing and labor costs, hourly-worker bonuses, and the prior-year comparison against COVID-related cost reductions and restrictions. Segment comparisons were retrospectively adjusted for a change in the allocation of certain dining and golf operations.
- Comparability also reflects the Seven Springs resorts, acquired December 31, 2021, whose results are included from the acquisition date.
Outlook, commentary and risks
- The filing does not provide a clear full-year earnings or revenue guidance figure. Management said 2022/2023 North American pass sales through May 31 were up approximately 9% in units and 11% in sales dollars versus the comparable prior-year sales period; it cautioned that the trend may not continue.
- Management planned calendar-year 2022 resort capital expenditures of $315–$325 million, excluding certain one-time items; including integration and real-estate projects, the total plan was approximately $327–$337 million. The plan includes lift upgrades and a Keystone terrain expansion.
- The company expects its cash, revolver availability and operating cash flow to meet near-term liquidity needs. It also agreed to invest CHF 149 million for a planned 55% stake in Andermatt-Sedrun, subject to third-party consents and expected to close later in calendar 2022.
- Key uncertainties include COVID-19 and travel demand, snowfall and weather, inflation and economic conditions, staffing and labor costs, capacity constraints, foreign exchange, and the seasonal concentration of operations. Approximately $0.8 billion of debt was variable-rate; a 100-basis-point rate change would alter annual interest payments by about $7.7 million.
- Unusual items included a $21.6 million year-to-date loss from remeasurement of contingent consideration, primarily reflecting estimated Park City lease payments, and a $16.2 million net gain on disposal of fixed assets and other items, including an administrative building sale and an NPS-related payment.
Important facts for investors to verify
- Whether pass-sales growth and stronger destination visitation persist into the 2022/2023 season, and how weather, travel conditions and staffing affect demand and operations.
- Delivery and funding of the planned capital program, including the lift projects and Keystone expansion, alongside the Andermatt-Sedrun transaction.
- Debt maturities, variable-rate exposure and covenant headroom; the filing reports covenant compliance but notes that future compliance cannot be assured.
- The impact of contingent-consideration estimates, foreign-currency movements and acquisition integration on future earnings and cash flow.
- Reported EBITDA is a non-GAAP measure; review its reconciliation to GAAP net income and the seasonal nature of interim results.