Every year, businesses that focus on winter sports have to do their best to get through the slow summer season. For Vail Resorts (NYSE: MTN), investors are always prepared for losses during the company's fiscal fourth quarter, and even the addition of properties in the Southern Hemisphere hasn't changed that dynamic too much. Yet coming into Monday's fiscal fourth-quarter financial report, what Vail Resorts investors really wanted to see were signs that the coming ski season will be successful. What Vail said on that front was extremely encouraging, especially in light of its progress on a key acquisition that could be another game changer for the company.
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Let's take a closer look at Vail Resorts and how it has fared lately.
Image source: Vail Resorts.
Vail Resorts glides across the fiscal-year finish line
Vail Resorts' fiscal fourth-quarter results were predictably ugly, with mixed performance compared to what most investors were looking to see. Overall revenue posted gains of 11% to $179.9 million, nearly doubling the 6% growth rate that represented the consensus among those following the stock. Vail lost more than expected, and although it narrowed its red ink compared to last year's fourth quarter to $65.3 million, the resulting net loss of $1.80 per share was $0.13 below what shareholders expected.
Looking more closely at Vail Resorts' performance, the biggest issues during the quarter were tied to the mountain segment. Revenue from mountain operations rose an impressive 21%, producing the lion's share of Vail's overall top-line gains for the quarter. Yet although operating expenses rose at a slower pace of 16%, they grew by a larger amount in dollar terms than Vail's revenue, weighing on the bottom line.
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Still, Vail didn't waste much time talking about the quarter's results, instead focusing on the just-ended fiscal year as a whole. For the year, total skier visits hit the 10 million mark, climbing more than 18% from the previous year. Season pass revenue jumped by more than a fifth, and gains in ticket prices also helped lift overall results. At the same time, lodging-related revenue climbed 8%, with similar gains in revenue per available room helping to drive profitable performance in that segment as well. Only the real-estate segment showed large declines for the year, with overall activity levels falling by roughly half compared to fiscal 2015.
CEO Rob Katz couldn't say enough about Vail's strong results. "With a strong high-end U.S. consumer," Katz said, "we are continuing to leverage our growing network of resorts and sophisticated marketing strategies to drive higher visitation and yields across our mountain segment." The CEO noted how efforts to drive season pass sales and encouraging ancillary services like ski schools, dining, and retail are paying off for Vail.
For Vail, winter is coming
Vail Resorts is even more excited about its future. On one hand, the August announcement of the pending acquisition of Whistler Blackcomb would add a premier property to the Vail lineup, and the regulatory process to approve the deal has thus far gone smoothly. At the same time, sales of season passes for the coming season are extremely strong, with sales through Sept. 18 up by nearly a quarter in terms of number sold, and nearly 30% higher in dollar terms compared to this time last year.
Vail also sees summer potentially being a growing time for the company. Its launch of Epic Discovery at Vail and Heavenly this summer led to increased visits, and further build-outs of activities should happen as the company launches the program in Breckenridge next year.
Because of all of these positives, Vail Resorts gave favorable guidance for fiscal 2017. The resort operator sees total EBITDA coming in between $482 million and $518 million, producing net income of between $165.5 million and $194.5 million. Those figures represent growth of between 10% and 30%, which is clearly a wide range but leaves Vail Resorts with plenty of room to outperform if things go well this winter.
Vail Resorts stock has continued to climb to all-time highs, especially in the wake of the announcement of the Whistler acquisition, and these results shouldn't come as a big surprise to investors. Coming into the ski season, Vail is well positioned to take full advantage of winter conditions when they come.
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