Vail Resorts, Inc. — FY2022 Form 10-K
Business context and reporting period. This is an annual report for the fiscal year ended July 31, 2022, not a standalone fourth-quarter filing. Vail Resorts operates mountain resorts and related services, lodging businesses, and real estate operations. Mountain, Lodging, and Real Estate contributed approximately 88%, 12%, and 0% of FY2022 net revenue, respectively. The business is highly seasonal; about 83% of combined Mountain and Lodging revenue (excluding payroll reimbursements) was earned in the second and third fiscal quarters.
Financial performance
| Metric | FY2022 | FY2021 |
|---|---|---|
| Total net revenue | $2.526 billion | $1.910 billion |
| Income from operations | $601.7 million | $261.0 million |
| Net income attributable to Vail Resorts | $347.9 million | $127.9 million |
| Diluted EPS | $8.55 | $3.13 |
| Operating cash flow | $710.5 million | $525.3 million |
| Capital expenditures | $192.8 million | $115.1 million |
| Total Reported EBITDA (non-GAAP) | $833.0 million | $540.1 million |
| Net Debt (company-defined non-GAAP) | $1.627 billion | $1.606 billion |
Revenue rose 32.3%; net income and diluted EPS also increased substantially. The filing attributes the improvement chiefly to stronger pass sales and visitation and fewer COVID-related operating restrictions than in the prior year. Resort Reported EBITDA, a non-GAAP measure, was $836.9 million, up from $544.7 million. The reported effective tax rate was 19.4%, versus 0.6% in FY2021.
- Mountain: Revenue was $2.213 billion, up 30.0%; Reported EBITDA was $811.2 million, up 46.8%. Skier visits increased 16.5% to 17.3 million; effective ticket price (ETP) rose 4.5% to $75.74.
- Lodging: Revenue was $312.1 million, up 52.1%; Reported EBITDA improved to $25.7 million from a loss of $8.1 million. Owned hotel ADR was $309.78 and RevPAR was $170.84.
- Real Estate: Revenue was $0.7 million and Reported EBITDA was a loss of $3.9 million; no significant real estate transactions closed during FY2022.
Cash and cash equivalents were $1.107 billion at year-end, down from $1.244 billion. The company reported $417.4 million available on its Vail Holdings revolver and C$281.6 million (about $220 million) available on the Whistler revolver. Total debt was $2.807 billion and net debt was $1.627 billion. Interest expense was $148.2 million. Approximately $0.7 billion of net variable-rate debt remained after interest-rate swaps; a 100-basis-point rate change was estimated to affect annual interest payments by about $7.4 million.
Material changes and notable items
- Mountain revenue increased across lift tickets, ski school, dining, and retail/rental as visitation recovered and COVID-related capacity constraints eased. Early-season conditions and staffing limitations moderated results in some operations.
- Operating cash flow increased by $185.2 million year over year. Investing cash use included the Seven Springs acquisition and a $114.4 million deposit for Andermatt-Sedrun, as well as higher capital spending.
- FY2022 included $44.0 million of net gains on disposal of fixed assets and other items, primarily the sale of the DoubleTree at Breckenridge, NPS payments related to GTLC assets, and the sale of an Avon administrative building. It also included a $20.3 million loss from remeasurement of contingent consideration, primarily related to Park City.
- The company acquired the Seven Springs Resorts on December 31, 2021, for approximately $116.5 million. It acquired a 55% controlling interest in Andermatt-Sedrun on August 3, 2022, after year-end, for approximately CHF149.3 million ($155.7 million); that resort’s operating results are not included in FY2022.
- The company paid $5.58 per share in FY2022 dividends ($225.8 million total) and repurchased $75.0 million of shares. The board approved a subsequent $1.91-per-share dividend payable in October 2022.
Outlook, risks, and contingencies
- Management expected calendar-year 2022 resort capital expenditures of approximately $323–$333 million, including $105–$115 million of maintenance spending. About $87 million had been spent by July 31, 2022.
- For the 2022/2023 North American season, the company raised minimum seasonal frontline pay to $20 per hour and planned staffing and HR investments. Management estimated these changes, together with a return to normal staffing, would increase FY2023 labor expense by approximately $175 million versus FY2022.
- Pass sales through September 23, 2022 were up approximately 6% in units and 7% in sales dollars year over year, on a basis adjusted for Seven Springs and currency. Management cautioned that sales trends and the effect on season revenue remained uncertain.
- Key risks include weather and snowfall variability, climate change and water availability, inflation and travel costs, labor availability and housing, COVID-19 and other travel disruptions, seasonality and high fixed costs, cyber and data-security incidents, foreign-exchange exposure, and dependence on government permits, leases, and concession agreements.
- Epic Coverage may require refunds for qualifying personal circumstances or resort closures; refund estimates are uncertain. The company reported a $42.4 million liability for Park City contingent consideration. A $13.2 million accrual for employment-related wage-and-hour litigation remained at year-end; the court approved a proposed settlement in August 2022.
- The company was in compliance with its debt covenants at July 31, 2022 and expected to remain compliant through FY2023, while noting no assurance. Its credit agreement was amended after year-end to extend maturity to September 2026 and transition the reference rate from LIBOR to SOFR.
Important facts for investors to verify
- Whether pass sales, skier visits, pricing, and ancillary spending sustain momentum after the FY2022 recovery.
- How the projected $175 million increase in FY2023 labor expense affects margins, staffing, and guest service.
- Whether planned capital spending, the Andermatt-Sedrun investment, dividends, and repurchases are supportable from operating cash flow and available liquidity.
- Debt maturities, variable-rate exposure, covenant headroom, and the effect of the SOFR transition.
- Potential variability in Epic Coverage refunds, Park City contingent consideration, and the outcome and cost of the employment litigation settlement.
- Integration and performance of Seven Springs and Andermatt-Sedrun; Andermatt-Sedrun’s acquisition accounting was incomplete when the filing was issued.