Vail Resorts, Inc. — FY2021 Form 10-K
Business context and reporting period. This annual filing covers the fiscal year ended July 31, 2021, not a standalone fourth quarter. Vail Resorts operates 37 mountain resorts and ski areas, with Mountain, Lodging and Real Estate representing approximately 89%, 11% and 0% of FY2021 revenue, respectively. Results remained significantly affected by COVID-19, travel restrictions, capacity limits and resort closures.
Financial performance and key metrics
| Metric | FY2021 | FY2020 |
|---|---|---|
| Total net revenue | $1.910 billion | $1.964 billion |
| Net income attributable to Vail Resorts | $127.9 million | $98.8 million |
| Diluted earnings per share | $3.13 | $2.42 |
| Total Reported EBITDA (non-GAAP) | $540.1 million | $499.2 million |
| Cash from operating activities | $525.3 million | $395.0 million |
| Capital expenditures | $115.1 million | $172.3 million |
| Cash and cash equivalents, at year-end | $1.244 billion | $391.0 million |
| Total debt, net carrying amount | $2.850 billion | $2.451 billion |
| Net Debt (non-GAAP) | $1.606 billion | $2.060 billion |
Mountain Reported EBITDA rose 10.1% to $550.4 million, while Mountain revenue declined 1.2% to $1.690 billion. Lift revenue increased 17.9%, aided by the full 2020/2021 season and recognition of pass revenue deferred from FY2020; ski school, dining and retail/rental revenue declined. Lodging Reported EBITDA fell to a loss of $5.7 million from income of $3.3 million, on lower occupancy and pandemic-related restrictions. Real Estate Reported EBITDA was a loss of $4.6 million; no significant real estate transactions closed in FY2021.
The filing does not present a single consolidated operating-margin figure. FY2021 income from operations was $261.0 million, compared with $223.4 million in FY2020. Interest expense increased 41.9% to $151.4 million. The income tax provision was $0.7 million; the low effective rate reflected, among other items, excess tax benefits from employee share awards.
For the fourth quarter specifically, revenue was $204.2 million and net loss attributable to Vail Resorts was $140.8 million, or $3.49 per diluted share. The business is highly seasonal: approximately 82% of combined Mountain and Lodging revenue, excluding payroll reimbursements, was earned in fiscal Q2 and Q3.
Changes versus the prior comparable period
- Total revenue decreased 2.7% year over year, while net income attributable to the company increased to $127.9 million from $98.8 million.
- Comparisons are affected by the FY2020 early resort closures and the deferral of approximately $120.9 million of 2019/2020 pass revenue, recognized primarily in FY2021. FY2021 Mountain EBITDA growth therefore should not be read as purely underlying growth.
- Skier visits rose 10.2% to 14.852 million from 13.483 million, but remained below FY2019’s 14.998 million. FY2021 pass product revenue benefited from strong pass sales and deferred revenue recognition.
- Operating cash flow increased by $130.3 million. Cash and cash equivalents rose substantially, contributing to a $453.5 million decrease in Net Debt, despite higher gross debt.
Outlook, management commentary and risks
- Management said COVID-19 could continue to materially affect FY2022 operations through travel restrictions, capacity limits, resort closures and changes in guest demand. Whistler Blackcomb was especially affected by the Canadian border closure and closed early in March 2021; Australian resorts also faced closures and restrictions.
- For the 2021/2022 North American season, pass prices were reduced 20%. Through September 17, 2021, pass sales were up approximately 42% in units and 17% in sales dollars versus the comparable prior-year sales period; versus the 2019 comparison period, adjusted sales were up approximately 67% in units and 45% in dollars. Management cautioned that the trend might not continue.
- Management expected calendar-year 2021 resort capital expenditures of $115–$120 million, plus $5 million of integration costs and approximately $12 million of reimbursable investments, for a total capital plan of approximately $135–$140 million. Planned projects included lift upgrades and a Beaver Creek terrain expansion.
- At July 31, 2021, the company reported $1.244 billion of cash, $417.7 million available under its Vail Holdings revolver, and $194.9 million available under Whistler Blackcomb’s revolver. It said these resources, operating cash flow and credit facilities were expected to meet near-term liquidity needs.
- Financial maintenance covenant waivers under the Vail Holdings Credit Agreement ran through January 31, 2022, with covenant compliance expected to resume starting with the quarter ending April 30, 2022, unless the waiver period ended earlier. A monthly minimum liquidity test and restrictions on dividends, repurchases and certain investments applied during the waiver period. The company reported covenant compliance at fiscal year-end.
- Key exposures include COVID-19 and Epic Coverage refund estimates; weather variability, climate change, drought and wildfire; seasonal operations and high fixed costs; labor availability and wage inflation; reliance on permits, leases and government approvals; cybersecurity; foreign currency; and substantial debt and interest-rate exposure. A 100-basis-point LIBOR change was estimated to affect annual interest payments by about $8.4 million on net variable-rate debt.
- Unusual items included a $13.2 million charge for proposed settlement of employment-related wage-and-hour litigation, pending court approval, and a $14.4 million loss from remeasurement of Park City contingent consideration. The contingent consideration liability was $29.6 million at year-end. The filing says ordinary-course legal claims were not expected to have a material adverse effect, but outcomes remain uncertain.
- The board approved a $0.88-per-share dividend on September 22, 2021, payable in October, subject to credit-agreement restrictions. No cash dividends were paid in FY2021.
Most important facts for investors to verify
- How much FY2021 revenue and Mountain EBITDA reflected the $120.9 million pass-revenue deferral, and how pass sales and redemptions translate into FY2022 recognized revenue.
- Whether reported pass-sales growth through September 17, 2021 persisted through the full sales campaign, and the effect of the 20% price reduction on sales dollars and margins.
- COVID-19 operating conditions, including destination visitation, border and capacity restrictions, Epic Coverage refunds, and staffing availability.
- Debt service, available revolver capacity and liquidity covenant compliance as financial maintenance covenants resume; also monitor variable interest rates and upcoming maturities.
- The final cost and approval status of the employment-litigation settlement, and changes in Park City contingent consideration estimates.
- Progress and actual spending against the calendar-year 2021 capital plan, including deferred projects.