Vail Resorts Reports Fiscal 2024 First Quarter, Season Pass Sales Results, Announces 2024 Capital Plan

ail Resorts, Inc. (NYSE: MTN) today reported results for the first quarter of fiscal 2024 ended October 31, 2023, provided season pass sales results, reaffirmed its guidance for fiscal 2024, provided additional detail on its calendar year 2024 capital plan, declared a dividend payable in January 2024, and announced share repurchases completed during the first quarter.

Highlights

• Net loss attributable to Vail Resorts, Inc. was $175.5 million for the first quarter of fiscal 2024 compared to a net loss attributable to Vail Resorts, Inc. of $137.0 million in the same period in the prior year.
• Resort Reported EBITDA loss was $139.8 million for the first quarter of fiscal 2024, compared to a Resort Reported EBITDA loss of $96.5 million for the first quarter of fiscal 2023.
• Pass product sales through December 4, 2023 for the upcoming 2023/2024 North American ski season increased approximately 4% in units and approximately 11% in sales dollars as compared to the period in the prior year through December 5, 2022. Pass product sales are adjusted to eliminate the impact of changes in foreign currency exchange rates by applying current U.S. dollar exchange rates to both current period and prior period sales for Whistler Blackcomb.
• The Company reaffirmed its guidance for fiscal year 2024 of $316 million to $394 million of net income attributable to Vail Resorts, Inc. and $912 million to $968 million of Resort Reported EBITDA.
• The Company declared a quarterly cash dividend of $2.06 per share of Vail Resorts' common stock that will be payable on January 9, 2024 to shareholders of record as of December 26, 2023 and repurchased approximately 0.2 million shares during the quarter at an average price of approximately $211 for a total of $50 million.
• On November 30, 2023, the Company announced it had entered into an agreement to acquire Crans-Montana Mountain Resort in Switzerland, the Company's second ski resort in Europe. The Company expects the acquisition to close during the 2023/2024 ski and ride season.

Commenting on the Company's fiscal 2023 first quarter results, Kirsten Lynch, Chief Executive Officer, said, "Our first fiscal quarter historically operates at a loss, given that our North American and European mountain resorts are generally not open for ski season operations during the period. The quarter's results are primarily driven by winter operating results from our Australian resorts and our North American resorts' summer activities, dining, retail/rental and lodging operations, and administrative expenses.

"We are pleased with our results for the quarter, which exceeded our expectations due to the timing of expenses, primarily related to season ramp-up activities. As we expected, Resort Reported EBITDA declined compared to the prior year period primarily driven by cost inflation, including a $7 million impact of our fiscal 2023 employee investment which went into effect in October 2022, $14 million lower EBITDA from our Australian resorts due to normalized results following record demand and favorable conditions in the prior fiscal year as well as from current year weather related challenges that impacted terrain, $4 million lower EBITDA from our North America summer operations from lower demand for summer mountain travel and weather related challenges, and $4 million negative impact from foreign exchange rates."

Turning to season pass results, Lynch said, "We are pleased with the results of our season pass sales, which continue to demonstrate the compelling value proposition of our pass products, our network of mountain resorts, the strong guest experience created at each mountain resort and our commitment to continually invest in the guest experience. Pass product sales for the North American ski season increased approximately 4% in units and approximately 11% in sales dollars through December 4, 2023 as compared to the period in the prior year through December 5, 2022. Pass product sales are adjusted to eliminate the impact of foreign currency by applying an exchange rate of $0.74 between the Canadian dollar and U.S. dollar in both periods for Whistler Blackcomb pass sales. We expect to have approximately 2.4 million guests committed to our 41 North American, Australian, and European resorts in advance of the season in non-refundable advance commitment products this year, which are expected to generate over $900 million of revenue and over 73% of all skier visits (excluding complimentary visits).

"The results of our North American pass sales demonstrate strong loyalty among our pass holders, with particularly strong pass sales growth from renewing pass holders, and also from guests in our database who previously purchased passes but did not buy a pass in the prior season. The Company successfully grew units across destination, international and local geographies, with the largest unit growth in destination markets, including in the Northeast. The business also achieved growth in the Midwest and Mid-Atlantic, which after challenging conditions last season, highlights the stability of our advance commitment program, loyalty of our guests, and significant opportunity to drive pass penetration in the East. Pass sales grew across all major pass product segments, with the strongest product growth in regional pass products and Epic Day Pass products as lower frequency guests and local Northeast guests continue to be attracted by the strong value proposition of these products. The pass unit growth rate moderated relative to our September 2023 growth rate as we successfully moved purchasers earlier in the selling cycle, including guests who purchased our newer product offerings in the prior year period. Pass sales dollars benefited from the 8% price increase relative to the 2022/2023 season and new pass holders coming into the program in higher priced products relative to the sales results in the prior year period, partially offset by the mix impact from the growth of regional and Epic Day Pass products."

Lynch continued, "Heading into the 2023/2024 North American and European ski season, we are pleased with our significant base of committed guests that provide meaningful stability for our Company, especially during economic uncertainty. Our Rockies resorts and Whistler Blackcomb have opened with typical conditions for this time of year, and Andermatt-Sedrun has had particularly strong conditions to start the season. Tahoe's early season has been more challenging with limited snowfall and warm temperatures to date, and our resorts in the East have experienced typical seasonal variability for this point in the season. Lodging booking trends for the upcoming season are generally consistent with prior year levels, though it is important to note that our lodging bookings represent a small portion of the overall lodging inventory around our resorts. While our mountain resorts are continuing to hire for the winter season, we are on track with our staffing plans and encouraged by the strong return rate of employees from the prior season."

Crans-Montana Acquisition

As previously announced on November 30, 2023, the Company entered into an agreement to acquire a majority stake in Crans-Montana Mountain Resort ("Crans-Montana") in Switzerland, the Company's second ski resort in Europe. Crans-Montana is an iconic ski destination in the heart of the Swiss Alps, with a unique heritage, incredible terrain, passionate team, and a community dedicated to the success of the region. This acquisition aligns to the Company's growth strategy of expanding its resort network in Europe, creating even more value for pass holders and guests around the world. Much like Andermatt-Sedrun, the Company believes Crans-Montana has a unique opportunity for future growth.

Upon the closing of the acquisition, the Company will acquire an 84% ownership stake in Remontées Mécaniques Crans Montana Aminona SA, which controls and operates all the resort's lifts and supporting mountain operations, an 80% ownership stake in SportLife AG, which operates one of the ski schools located at the resort, and 100% of 11 restaurants located on and around the mountain. Subject to closing adjustments, the enterprise value of the resort operations is expected to be CHF 118.5 million, including approximately CHF 7 million of debt that will remain in place. The Company expects to fund the purchase price for the acquired ownership interest of the resort operations through cash on hand. Vail Resorts anticipates that the resort will generate approximately CHF 5 million of EBITDA in its fiscal year ending July 31, 2025, the first full year of operations following the expected closing later in fiscal 2024. Vail Resorts anticipates EBITDA growth over time from the inclusion of the resort on the Epic Pass products and investments in the guest experience. Subject to the timing of capital project approvals and completion, Vail Resorts is planning to invest approximately CHF 30 million over the next five years in one-time capital spending to elevate the guest experience, and the resort is expected to generate over CHF 15 million of annual EBITDA following these investments and including the impact from incremental Epic Pass sales. This initial phase of growth of the resort is expected to be primarily driven by operating and marketing initiatives along with capital investments focused on maximizing gastronomy efficiencies and improving and expanding snowmaking capabilities.

After closing the transaction, normal annual maintenance capital expenditures for Crans-Montana Mountain Resort are expected to be approximately CHF 3 million. The transaction is expected to close during the 2023/2024 ski and ride season, subject to certain third-party consents. Operations at Crans-Montana Mountain Resort for the 2023/2024 winter season will continue in the ordinary course of business. Vail Resorts plans to include access to Crans-Montana Mountain Resort on select Epic Pass products for the 2024/2025 ski and ride season. Crans-Montana Mountain Resort will not be included on the Epic Pass for any remaining part of the 2023/2024 ski and ride season after the deal closes.

Operating Results

A more complete discussion of our operating results can be found within the Management's Discussion and Analysis of Financial Condition and Results of Operations section of the Company's Form 10-Q for the first fiscal quarter ended October 31, 2023, which was filed today with the Securities and Exchange Commission. The following are segment highlights:

Mountain Segment

• Mountain segment net revenue decreased $29.3 million, or 14.5%, to $172.5 million for the three months ended October 31, 2023 as compared to the same period in the prior year, primarily driven by our Australian ski areas, which experienced weather-related challenges that impacted terrain in the current year, compared to record visitation and favorable snow conditions in the prior year.
• Mountain Reported EBITDA loss was $139.5 million for the three months ended October 31, 2023, which represents a decrease of $47.4 million, or 51.4%, as compared to Mountain Reported EBITDA loss for the same period in the prior year, primarily driven by decreases in Mountain segment net revenue, as well as increases in expenses at our North American resorts, including increased labor costs and general and administrative expenses (which includes the incremental impact of our prior year investments in employee wages), increases in repairs and maintenance expense and professional services expense (including costs associated with our workforce management planning tools implementation), and the impacts of inflation.

Lodging Segment

• Lodging segment net revenue (excluding payroll cost reimbursements) increased $4.4 million, or 6.0%, to $78.4 million for the three months ended October 31, 2023 as compared to the same period in the prior year, primarily driven by positive weather conditions in the Grand Teton region, which enabled increased room pricing and drove increases in owned hotel rooms revenue and ancillary product sales.
• Lodging Reported EBITDA loss was $0.2 million for the three months ended October 31, 2023, which represents an increase of $4.1 million, or 94.6%, as compared to Lodging Reported EBITDA for the same period in the prior year, primarily as a result of increases in Lodging segment net revenue.

Resort - Combination of Mountain and Lodging Segments

• Resort net revenue was $254.3 million for the three months ended October 31, 2023, a decrease of $25.0 million as compared to Resort net revenue of $279.3 million for the same period in the prior year.
• Resort Reported EBITDA loss was $139.8 million for the three months ended October 31, 2023, a decrease of $43.3 million as compared to Resort Reported EBITDA loss of $96.5 million for the same period in the prior year.

Total Performance

• Total net revenue decreased $20.9 million, or 7.5%, to $258.6 million for the three months ended October 31, 2023 as compared to the same period in the prior year.
• Net loss attributable to Vail Resorts, Inc. was $175.5 million, or a loss of $4.60 per diluted share, for the first quarter of fiscal 2024 compared to a net loss attributable to Vail Resorts, Inc. of $137.0 million, or a loss of $3.40 per diluted share, in the prior year.

Return of Capital

Commenting on capital allocation, Lynch said, "Our balance sheet remains strong, and the business continues to generate robust cash flow. Our total cash and revolver availability as of October 31, 2023 was approximately $1.4 billion, with $729 million of cash on hand, $420 million of U.S. revolver availability under the Vail Holdings Credit Agreement and $214 million of revolver availability under the Whistler Credit Agreement. As of October 31, 2023, our Net Debt was 2.6 times trailing twelve months Total Reported EBITDA. The Company declared a quarterly cash dividend of $2.06 per share of Vail Resorts' common stock that will be payable on January 9, 2024 to shareholders of record on December 26, 2023. During the quarter, the Company repurchased approximately 0.2 million shares of common stock at an average price of approximately $211 for a total of $50.0 million. We remain committed to returning capital to shareholders and intend to maintain an opportunistic approach to future share repurchases. We will continue to be disciplined stewards of our capital and remain committed to prioritizing investments in our guest and employee experience, high-return capital projects, strategic acquisition opportunities, and returning capital to our shareholders through our quarterly dividend and share repurchase program."

Capital Investments

Commenting on the Company's capital investments for the 2023/2024 North American ski season, Lynch said, "We are pleased to welcome guests to all of our resorts as the 2023/2024 North American and European ski seasons kick off with significant investments in the guest experience. At Keystone, this includes the transformational lift-served terrain expansion project in Bergman Bowl, increasing lift-served terrain by 555 acres with the addition of a new six-person high speed lift. At Breckenridge, this includes the upgrades to the Peak 8 base area, enhancing the beginner and children's experience and increasing uphill capacity from this popular base area, including a new four-person high speed 5-Chair to replace the existing two-person fixed-grip lift, new teaching terrain, and a transport carpet from the base, to make the beginner experience more accessible. At Whistler Blackcomb, this includes the replacement of the four-person high speed Fitzsimmons lift with a new eight-person high speed lift. At Stevens Pass, this includes replacing the two-person fixed-grip Kehr's Chair lift with a new four-person lift, which is designed to improve out-of-base capacity and guest experience. At Attitash, this includes the replacement of the three-person fixed-grip Summit Triple lift with a new four-person high speed lift to increase uphill capacity and reduce guests' time on the longest lift at the resort.

"The Company is also piloting My Epic Gear at Vail, Beaver Creek, Breckenridge, and Keystone for a limited number of pass holders during the 2023/2024 North American ski season, which will introduce a new gear membership program that provides the best benefits of gear ownership but with more choice, lower cost, and no hassle. My Epic Gear provides its members with the ability to choose the gear they want, for the full season or for the day, from a selection of the most popular and latest ski and snowboard models, and have it delivered to them when and where they want it, including slopeside pick up and drop off every day. In addition to offering the best skis and snowboards, My Epic Gear will also offer name brand, high-quality ski and snowboard boots with customized insoles and boot fit scanning technology. The entire My Epic Gear membership, from gear selection to boot fit to personalized recommendations to delivery, will be at the members' fingertips through the new My Epic app. My Epic Gear is expected to officially launch for the 2024/2025 winter season at Vail, Beaver Creek, Breckenridge, Keystone, Whistler Blackcomb, Park City, Crested Butte, Heavenly, Northstar, Stowe, Okemo, and Mount Snow, and further expansions are expected in future years.

"The Company is also introducing new technology for the 2023/2024 ski season at its U.S. resorts that will allow guests to store their pass product or lift ticket directly on their phone and scan at lifts hands-free, eliminating the need for carrying plastic cards, visiting the ticket window or waiting to receive a pass or lift ticket in the mail. Once loaded on their phones, guests can store their phone in their pocket, and get scanned hands free in the lift line using Bluetooth® Low Energy technology, which is designed for low energy usage to minimize the impact on a phone's battery life. In addition to the significant enhancement of the guest experience, this technology will also ultimately reduce waste of printing plastic cards for pass products and lift tickets, and RFID chips, as a part of the Company's sustainability efforts and Commitment to Zero. For the first year of launch, to ensure a smooth transition, the Company will provide plastic cards for passes and lift tickets to all guests, and in future years plastic cards will be available to any guests who cannot or do not want to use their phone to store their pass product or lift ticket. We are also excited to announce the launch of our new My Epic app, which includes Mobile Pass and Mobile Lift Tickets, interactive trail maps, real-time and predictive lift line wait times, personalized stats, My Epic Gear, and other relevant information to support the guest experience. The Company is also investing in network-wide scalable technology that will enhance our analytics, e-commerce and guest engagement tools to improve our ability to target our guest outreach, personalize messages and improve conversion."

Regarding calendar year 2024 capital expenditures, Lynch said, "In addition to this year's significant investments across new lifts, expanded terrain and enhanced guest-facing technology, we are pleased to announce additional details of our calendar year 2024 capital plan, which support the Company's strategies to grow the subscription model, unlock ancillary growth, drive resource efficiency, and further differentiate the guest experience. We expect our capital plan for calendar year 2024 to be approximately $189 million to $194 million, excluding $13 million of incremental capital investments in premium fleet and fulfillment infrastructure to support the official launch of My Epic Gear for the 2024/2025 winter season at 12 destination and regional resorts across North America, $11 million of growth capital investments at Andermatt-Sedrun and $1 million of reimbursable capital. Including My Epic Gear premium fleet and fulfillment infrastructure capital and one-time investments, our total capital plan for calendar year 2024 is expected to be approximately $214 million to $219 million. This excludes any capital expenditures associated with the Crans-Montana acquisition, which remains subject to closing.

"As announced in September, at Whistler Blackcomb, the Company plans to replace the four-person high speed Jersey Cream lift with a new six-person high speed lift. This lift is expected to provide a meaningful increase to uphill capacity and better distribute guests at a central part of the resort. At Hunter Mountain, we plan to replace the four-person fixed-grip Broadway lift with a new six-person high speed lift and plan to relocate the existing Broadway lift to replace the two-person fixed-grip E lift, providing a meaningful increase in uphill capacity and improved access to terrain that is key to the progressive learning experience for our guests. At Park City, we are in the planning process to support the replacement of the Sunrise lift with a new 10-person gondola in partnership with the Canyons Village Management Association in calendar year 2025, which will provide improved access and enhanced guest experience for existing and future developments within Canyons Village. These projects remain subject to approvals.

"In addition to the projects announced in September, at Park City and Hunter Mountain beyond the planned lift investments we plan to enhance snowmaking systems to improve the experience for key terrain, increase early season terrain consistency, and improve the efficiency through the installation of automated and energy-efficient snowguns. We also plan to further support the Company's Commitment to Zero by investing in waste reduction projects across our resorts to achieve the goal of zero waste to landfill by 2030. At Afton Alps, we plan to install a 10-lane tubing experience and renovate the existing Alpine Building to create a 200 seat restaurant to further enhance the guest experience. At Seven Springs, we plan to add 390 new parking spaces to increase capacity for peak demand periods. At Perisher, in advance of the 2025 winter season in Australia, we plan to replace the Mt Perisher Double and Triple Chairs with a new six person high speed lift, with capital spending commencing in calendar year 2024 and continuing into calendar year 2025. These projects remain subject to approvals.

"In addition, we are continuing to invest in innovative technology to enhance the guest experience. In the coming year, we are investing in new functionality for the My Epic App to better communicate with and personalize the experience for our guests. Across our resorts, we plan to pilot new technologies at select restaurants to make it both easier and faster for guests to dine at our resorts. In addition, in order to support the launch of My Epic Gear, we plan to invest in logistics and technology infrastructure to help deliver a transformational improvement to the gear rental experience for our guests.

"The Company is planning to launch My Epic Gear for the 2024/2025 winter season at 12 destination and regional resorts across North America, including kids gear, and we will be limiting membership to 60,000 to 80,000 members. To support the initial year of this new business, in calendar year 2024 the Company plans to invest $13 million beyond our typical annual capital plan in incremental premium gear fleet and fulfillment infrastructure to support the anticipated growth of this business. We plan to provide additional updates on My Epic Gear and the on-going capital needs of the business after the year one launch.

"At Andermatt-Sedrun, we are pleased to announce plans to invest approximately $11 million in high-impact growth capital projects as part of a multi-year strategic growth investment plan to enhance the guest experience on the mountain, which will be funded by the CHF 110 million capital that was invested as part of the purchase of our majority stake in Andermatt-Sedrun. As part of the calendar year 2024 investments, we are planning to upgrade and replace snowmaking infrastructure at the Sedrun-Milez area on the eastern side of the resort to enhance the guest experience for key beginner and intermediate terrain and significantly improve energy efficiency. In addition, we plan to invest in the on-mountain dining experience with improvements to the Milez and Natschen restaurants. These investments are expected to be completed ahead of the 2024/2025 European ski season and remain subject to regulatory approvals."

Sustainability Update

Commenting on the Company's industry leading sustainability efforts, Lynch said, "In 2017 Vail Resorts announced an ambitious plan to take action to address our direct impact on the environment with a commitment to achieve zero net operating footprint by 2030, including zero net emissions, zero waste to landfill, and zero net operating impact on forests and habitat. We continue to be on track to achieve a zero net operating footprint by 2030. In fiscal 2023, we achieved 100% renewable electricity across North American operations for the second year in a row, and we achieved our 15% energy efficiency goal early, driven by over $10 million in energy-savings investments since fiscal 2018. Additionally, we achieved a 36% overall reduction in waste to landfill, diverting nearly 12 million pounds of waste from landfills. With this progress, the Company is ahead of schedule to meet its emissions goals, and is on track to reach zero waste to landfill and zero net operating impact on forests and habitats to achieve a zero net operating footprint by 2030.

"In addition to protecting the environment, we continue to expand our youth access program and promote diversity, equity and inclusion. During the 2022/2023 winter season, Vail Resorts hosted more than 11,000 youth through our multi-day Epic for Everyone youth access program, which aims to remove barriers to entry and create a more inclusive sport by providing gear, lessons, mentorship, and access for youth around our resorts. We remain dedicated to doing our part as responsible stewards of the great outdoors and the future of the ski industry, and committed partners to our communities. More information about our Commitment to Zero and efforts towards sustainability can be found at EpicPromise.com, and we expect our fiscal 2023 progress report to be released in the coming weeks."

Outlook

Commenting on fiscal 2024 guidance, Lynch said, "Given the indicators for the upcoming season, we are reaffirming our fiscal 2024 net income attributable to Vail Resorts, Inc. guidance of $316 million to $394 million and Resort Reported EBITDA guidance of $912 million to $968 million that was included in our September earnings release based on the assumptions incorporated at that time, including foreign currency exchange rates, a continuation of the current economic environment and normal weather conditions for the 2023/2024 North American and European ski season and the 2024 Australian ski season.  Our fiscal 2024 guidance excludes the impact associated with Crans-Montana, which remains subject to closing. Heading into the 2023/2024 North American and European ski season, we are encouraged by staffing levels on track to deliver an outstanding guest experience and the strength of our pass sales, though it is important to note that our growth in pass sales is expected to be partially offset by reduced lift ticket sales as we continue to successfully convert guests from lift tickets to pass products. In addition, there continues to be uncertainty around the economic outlook and the impact that may have on travel and consumer behavior as we head into our primary operating season."