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Vail Resorts (MTN) Q1 Earnings Beat Estimates, Revenues Lag

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Vail Resorts, Inc. (MTN - Free Report) reported mixed first-quarter fiscal 2022 results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. The top and the bottom line increased on a year-over-year basis.

Following the results, the company’s shares declined 4.8% in the after-hour trading session on Dec 9. Negative investor sentiments were witnessed as the company stated concerns regarding the delayed openings and limited open terrain across many of its resorts, leading to a potential negative impact on the North American ski season. Also, it emphasized the uncertainty revolving around the COVID-19 norms and regulations coupled with its associated changes in travel and consumer behavior.

The company remains optimistic on the back of strong leisure travel demand and unit growth in terms of renewing pass holders. Also, it stated that lodging bookings at its U.S. resorts for the upcoming season are trending ahead of pre-COVID-19 levels.

Kirsten Lynch, chief executive officer, Vail Resorts, stated, “Despite the challenging early season conditions, the success of our advance commitment strategy allows us to secure a significant amount of our demand and revenue ahead of the season, which creates significant stability for our business.”

Earnings & Revenues

Vail Resorts, Inc. Price, Consensus and EPS Surprise

 

Vail Resorts, Inc. Price, Consensus and EPS Surprise

Vail Resorts, Inc. price-consensus-eps-surprise-chart | Vail Resorts, Inc. Quote

 

In the quarter under review, the company reported a loss of $3.44 per share, narrower than the Zacks Consensus Estimate of a loss of $3.65. In the prior-year quarter, the company had reported a loss of $3.82 per share.

Quarterly revenues were $175.6 million, missing the consensus mark of $195 million by 10%. The top line rose 33.2% on a year-over-year basis. The upside was due to robust performance by the Mountain and Lodging segments. The company stated that high demand across its North American summer activities, dining, retail/rental and lodging operations during the fiscal first quarter surpassed the company’s expectation.

Segment Results

Vail Resorts reports through two segments — Mountain and Lodging.

The Mountain segment generated revenues of $109.3 million in the quarter under review, up 9.9% year over year. The upside was mainly driven by fewer COVID-19 related limitations and restrictions compared with the prior-year period’s levels. This was partially offset by a decline in lift revenues (primarily associated with the expiration of the credit offers to 2019/2020 pass product holders).

During the quarter, revenues from dining and retail/rental rose 308.1% and 27.2%, respectively, year over year. However, revenues from lift and Ski school plunged 56.7% and 27.9% year over year to $14.3 million and $1.5 million, respectively.

The segment’s EBITDA amounted to ($111) million in the fiscal first quarter compared with ($85.2) million reported in the prior-year quarter. Operating expenses in the Mountain segment totaled $221.8 million, up 17.6% year over year.

Lodging net revenues in the reported quarter were $66 million, up 105.8% year over year primarily due to robust dining revenues. The segment’s EBITDA increased to $2.6 million from the prior-year quarter’s figure of ($9.6) million.

During the quarter, operating expenses in the Lodging segment increased 52.2% year over year to $63.4 million.

Operating Results

Vail Resorts reported adjusted EBITDA of ($109.5) million in the quarter compared with ($96) million reported in the prior-year quarter. Total segment operating expense totaled $286.7 million, up 23.7% year over year.
Balance Sheet

Cash and cash equivalents as of Oct 31, 2021, totaled $1,468.4 million, up from $462.2 million in the year-ago period.

Net long-term debt amounted to $2,704.6 million at the end of the quarter, up from $2,387.9 million at the end of the prior-year quarter.

As of Oct 31, 2021, the company had total cash and revolver availability of approximately $2.1 billion. This includes $1.5-billion cash in hand, $417 million of U.S. revolver availability under the Vail Holdings Credit Agreement and $220 million of revolver availability under the Whistler Credit Agreement.

The company’s board of directors announced a dividend of 88 cents per common share. The dividend will be payable on Jan 11, 2022, to shareholders of record as of Dec 28, 2021.

Recent Acquisition

On Dec 8, 2021, the company entered into a definitive agreement with Seven Springs Mountain Resort, Inc. to acquire Seven Springs Mountain Resort and its sister resorts — Hidden Valley and Laurel Mountain. Quoted at approximately $125 million, the deal includes the acquisition of all assets related to the mountain operations of the resorts, related base area lodging, conference center and amenities. The company anticipates the acquisition to generate incremental annual EBITDA in excess of $15 million for the fiscal year ended Jul 31, 2023. This includes incremental annual EBITDA of approximately $5 million associated with the 418-room Slopeside Hotel and associated conference facilities and lodging operations at Seven Springs Mountain Resort. Capital expenditures are expected to increase approximately $3 million to support the addition of these resorts, subject to the closing of the transaction. Vail Resorts stated that it intends to add access to the three resorts to select Epic Pass products for the 2022-23 North American ski and ride season.

Other Information

During the quarter, the company announced the completion of several transformational enhancements to boost the guest experience. In Colorado, the company announced the completion of a 250-acres lift-served terrain expansion in the McCoy Park area of Beaver Creek. It also added a four-person high-speed lift at Breckenridge to serve the popular Peak 7. It replaced the Peru lift at Keystone with a six-person high-speed chairlift and the Peachtree lift at Crested Butte with a new three-person fixed-grip lift. Vail Resorts also completed a transformational investment at Okemo with respect to the upgrade of the Quantum lift.

For fiscal 2022, the company has set aside approximately $318-$328 million to provide increased lift capacity and enhance the guest experience. The plan includes the installation of 21 new or replacement lifts across 14 of its resorts. It also includes two incremental replacement lifts at Jack Frost and Big Boulder in Pennsylvania and a transformational lift-served terrain expansion at Keystone. The company believes that the initiative will boost lift capacity by more than 60% in the locations. However, Vail Resorts stated that developments are subject to regulatory approvals.

Apart from lift upgrade and terrain expansion projects, the company remains focused on developing and leveraging its data-driven approach to operate the business. This includes investments in network-wide scalable technology (to enhance analytics, e-commerce and guest engagement) and self-service capabilities (to improve guests’ online experience).

Fiscal 2022 Guidance

The company reaffirmed its guidance for fiscal 2022 based on the assumption of normal weather conditions and no impact from travel or operating restrictions associated with COVID-19.

In fiscal 2022, the company anticipates net income in the range of $278-$349 million. Resorts reported EBITDA is expected in the range of $785-$835 million.

Zacks Rank and Stocks to Consider

Currently, Vail Resorts carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Some better-ranked stocks in the Consumer Discretionary sector include Hilton Grand Vacations Inc. (HGV - Free Report) , Bluegreen Vacations Holding Corporation (BVH - Free Report) and Camping World Holdings, Inc. (CWH - Free Report) .

Hilton Grand Vacations sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 411.1%, on average. Shares of the company have increased 62.2% so far this year.

The Zacks Consensus Estimate for Hilton Grand Vacations’ current financial-year sales and earnings per share (EPS) suggests growth of 189.5% and 158.1%, respectively, from the year-ago period’s levels.

Bluegreen Vacations flaunts a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 695%, on average. Shares of the company have surged 144.2% so far this year.

The Zacks Consensus Estimate for Bluegreen Vacations’ current financial-year sales and EPS indicates a rise of 27.5% and 199.3%, respectively, from the year-ago period’s levels.

Camping World carries a Zacks Rank #2 (Buy). The company benefits from the launch of a fresh peer-to-peer RV rental marketplace and a mobile service marketplace. It has been investing heavily in product development.

Camping World has a trailing four-quarter earnings surprise of 70.9%, on average. Shares of the company have appreciated 54.2% so far this year. The Zacks Consensus Estimate for CWH’s financial-year sales and EPS suggests growth of 25.9% and 77.6%, respectively, from the year-ago period’s levels.