Vail Resorts, Inc. — Form 10-Q Summary
Reporting period: Fiscal first quarter ended October 31, 2021; comparable period ended October 31, 2020. The quarter is seasonally weak because most North American ski operations had not yet opened. Amounts below are U.S. dollars.
Financial performance and position
| Metric | Q1 FY2022 | Q1 FY2021 | Change |
|---|---|---|---|
| Revenue | $175.6 million | $131.8 million | +33.2% |
| Net loss attributable to Vail Resorts | $139.3 million | $153.8 million | Loss narrowed $14.4 million |
| Basic and diluted loss per share | $3.44 | $3.82 | Improved $0.38 |
| Total Reported EBITDA (non-GAAP) | $(109.5) million | $(96.0) million | Loss widened $13.6 million |
| Cash provided by operating activities | $349.0 million | $112.0 million | Increased $237.0 million |
| Capital expenditures | $50.1 million | $30.2 million | Increased $20.0 million |
| Interest expense, net | $39.5 million | $35.4 million | Increased $4.1 million |
Revenue growth reflected improved summer activity and fewer COVID-related limitations than in the prior year. Mountain revenue rose 9.9% to $109.3 million, while Mountain Reported EBITDA deteriorated to $(111.0) million from $(85.2) million. Lodging revenue rose 105.8% to $66.0 million; Lodging Reported EBITDA improved to $2.6 million from $(9.6) million. Real Estate revenue was $0.3 million, with Reported EBITDA of $(1.1) million; there were no significant real estate closings in either period.
Cash flow benefited substantially from higher pass sales and related receivable collections, including the timing effects of the prior-year COVID disruption. Deferred revenue was $743.8 million at quarter-end, up from $456.5 million at July 31, 2021, largely reflecting advance sales. Net loss improved, but total Reported EBITDA worsened, in part because the prior-year quarter included $15.4 million of revenue from expired, unredeemed pass credits.
At October 31, 2021, cash and cash equivalents were $1.468 billion, total debt including current maturities was $2.819 billion, and Net Debt (company-defined, non-GAAP) was $1.351 billion, down from $1.989 billion a year earlier. Current assets were $1.778 billion and current liabilities were $1.268 billion. The company reported $416.6 million available under its Vail Holdings revolver and $219.6 million available under the Whistler revolver. About $0.8 billion of debt was variable-rate; a 100-basis-point rate change would alter annual interest payments by about $8.0 million.
Material changes and notable items
- Mountain skier visits fell 24.0% to 218,000 and effective ticket price fell 43.0% to $65.73, primarily reflecting the prior-year credit-expiration revenue and lower current-year Australian activity.
- Lodging’s improvement reflected fewer pandemic-related restrictions and increased demand. Combined owned-hotel and managed-condominium RevPAR increased 124.1% to $78.43, although the comparison was affected by prior-year operating restrictions.
- Operating cash flow rose sharply year over year, while financing cash use increased to $84.7 million, primarily due to $35.6 million of dividends and higher net repayments on the Whistler revolver.
- The company received an $8.9 million net gain on disposal of fixed assets and other, primarily from an NPS payment related to fully depreciated Grand Teton Lodge Company leasehold assets.
- Interest expense increased, largely from amortization of the debt discount on the $575 million 0.0% Convertible Notes issued in December 2020.
Outlook, risks and contingencies
- Operating outlook: Management said cash, credit availability and anticipated operating cash flow should fund near-term needs. It did not provide a full-year earnings or revenue forecast in this filing. North American pass sales through December 5, 2021 were up approximately 47% in units and 21% in sales dollars versus the comparable prior-year period, before adjusting for prior-period redeemed credits; these sales do not determine ultimate lift revenue or effective ticket price.
- Capital plan: Estimated calendar-year 2021 resort capital expenditures were $115–$120 million, excluding specified one-time and reimbursable items; total planned capital was approximately $135–$140 million. Calendar-year 2022 capital spending was expected at $315–$325 million, excluding approximately $3 million of real-estate-related one-time items.
- COVID-19 and weather: Pandemic-related restrictions and closures continued to affect Australian and summer operations. Management cited uncertainty around travel demand, pass refunds under Epic Coverage, snowfall, inflation, labor availability and broader economic conditions.
- Debt covenants: The company exited a temporary financial-covenant waiver effective October 31, 2021 and stated it was in compliance with its debt covenants at quarter-end. It said it expected to meet covenants over the next 12 months but cautioned that compliance is not assured; failure could require a waiver or amendment and affect liquidity.
- Other risks and commitments: Exposure includes variable interest rates, foreign-exchange movements, seasonal operations, resort permits and capital requirements, and potential legal claims. The filing reports ordinary-course lawsuits, with accruals not material, and letters of credit of $77.7 million and surety bonds of $13.2 million.
- Subsequent event: On December 8, 2021, the company agreed to acquire Seven Springs, Hidden Valley and Laurel Mountain in Pennsylvania for approximately $125 million in cash, subject to adjustments, expected to be funded from cash on hand. The board also approved a $0.88-per-share dividend payable January 11, 2022.
Most important facts for investors to verify
- Whether stronger advance pass sales convert into visitation and revenue, and how Epic Coverage refunds affect recognized pass revenue.
- How performance develops once the North American ski season is underway, particularly skier visits, ticket pricing, labor costs and Mountain segment margins.
- Whether the company sustains covenant compliance and preserves liquidity while executing its elevated 2022 capital plan and Pennsylvania resort acquisition.
- The sustainability of operating cash flow, given the significant contribution from pass-sale timing, receivable collections and deferred revenue.
- The effects of interest rates, foreign exchange, weather and continuing pandemic-related disruptions on results and debt service.