Business context and reporting period
Vail Resorts, Inc. operates Mountain, Lodging and Real Estate businesses. This Form 10-Q covers the fiscal quarter and six months ended January 31, 2022; the quarter is the company’s second fiscal quarter and includes the peak North American ski season. Results are seasonal and include the Seven Springs Resorts only from their December 31, 2021 acquisition date.
Key financial results
Amounts below are in millions of dollars, except per-share data. Comparisons are with the corresponding 2021 periods.
| Metric | Three months | Six months |
|---|---|---|
| Revenue | $906.5; up 32.4% | $1,082.1; up 32.5% |
| Income from operations | $325.1 vs. $207.7 | $159.5 vs. $43.8 |
| Net income attributable to Vail Resorts | $223.4 vs. $147.8 | $84.1 vs. a $6.0 loss |
| Diluted EPS | $5.47 vs. $3.62 | $2.06 vs. a $0.15 loss |
| Total Reported EBITDA | $397.5 vs. $274.8 | $287.9 vs. $178.8 |
| Cash provided by operating activities | Not separately presented | $611.3 vs. $459.1 |
| Capital expenditures | Not separately presented | $128.9 vs. $67.3 |
Reported EBITDA is a company-defined non-GAAP measure. Its ratio to revenue was approximately 43.8% for the quarter (prior year 40.1%) and 26.6% for the six-month period (prior year 21.9%). The six-month result includes seasonally weaker first-quarter operations.
Financial position, liquidity and debt
At January 31, 2022, cash and cash equivalents were $1.407 billion, total debt was $2.845 billion and Net Debt, as defined by the company, was $1.352 billion, down from $1.580 billion a year earlier. Current assets were $1.767 billion and current liabilities were $1.155 billion. Cash, cash equivalents and restricted cash totaled $1.423 billion.
The company reported $416.6 million available on its Vail Holdings revolver and $214.1 million available on the Whistler facility. It was in compliance with debt covenants and exited its temporary financial-covenant waiver period on October 31, 2021. Approximately $0.8 billion of debt was variable-rate; management estimated a 100-basis-point rate increase would raise annual interest expense by about $7.8 million.
Material changes versus the prior period
- Mountain Reported EBITDA rose 37.5% for the quarter and 40.6% for six months, supported by pass sales, higher visitation and fewer COVID-related operating restrictions. Quarterly skier visits increased 9.6% and effective ticket price increased 10.5%.
- Lodging Reported EBITDA improved to $9.4 million for the quarter from a $6.5 million loss, and to $11.9 million for six months from a $16.1 million loss. Improved occupancy and pricing contributed; combined lodging RevPAR rose 86.0% for the quarter and 98.9% for six months.
- Seven Springs, Hidden Valley and Laurel Mountain were acquired for approximately $118.3 million in cash. The purchase-price allocation remains preliminary; $2.8 million of acquisition-related expense was recorded for the six-month period.
- Cash from operations increased, while investing cash use rose to $225.5 million, largely reflecting the acquisition and higher capital spending. Financing cash use was $220.7 million, versus $513.3 million of financing inflows in the prior period, which included proceeds from the convertible-note issuance.
- Gross debt declined from $2.992 billion at January 31, 2021 to $2.845 billion. The company paid $71.3 million of dividends during the six months; none were paid in the comparable prior-year period.
Outlook, management commentary and risks
- Management expected approximately $33 million of pass revenue to shift into the third fiscal quarter because delayed resort openings and early-season conditions reduced skiable days in the second quarter. The filing does not provide a clear full-year earnings or revenue guidance figure.
- Calendar 2022 resort capital expenditures were estimated at $315–$325 million, excluding specified one-time integration, employee-housing and real-estate items; including those items, the total plan was approximately $327–$337 million. The plan includes about $180 million for lift projects and terrain expansion, and $105–$115 million of maintenance spending.
- Management said existing cash, available credit and expected operating cash flows should meet near-term liquidity needs, while noting that actual results remain uncertain. It expected Seven Springs to contribute positively to annual results but could not predict the ultimate impact.
- Key risks include COVID-19 and travel restrictions, weather and snowfall, staffing shortages and wage inflation, constrained employee housing, pass-refund exposure under Epic Coverage, foreign-exchange movements, interest rates, seasonality, and the ability to meet debt covenants and integrate Seven Springs. The company also disclosed that its control assessment did not include certain acquired-resort controls.
- Unusual items included an $18.8 million six-month loss from remeasurement of Park City contingent consideration, $2.0 million of foreign-currency losses on intercompany loans, and gains on disposal of fixed assets and other items of $16.2 million. The contingent-consideration liability was $40.9 million at period-end.
Important facts for investors to verify
- Whether the expected $33 million pass-revenue shift was realized in the third quarter and how season-end snowfall, visitation and resort openings affected results.
- Whether COVID-related travel, staffing and operating constraints, wage inflation and pass refunds materially changed demand, costs or margins.
- Actual 2022 capital spending against the stated plan, and the operational and financial contribution and integration costs of Seven Springs.
- Cash generation, dividend commitments, debt maturities and covenant compliance, particularly as variable interest rates change.
- The final purchase-price allocation for Seven Springs and changes in the estimated Park City contingent-consideration liability.