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JPMorgan analyst Omer… JPMorgan analyst Omer Sander lowered the firm's price target on Vail Resorts to $314 from $345 and keeps a Neutral rating on the shares. The analyst expects the shares to be range-bound until the company's 2022/2023 pass pricing strategy is unveiled, presumably in March. Longer term, he likes Vail's shift towards a more advance commitment model, which he says helps "derisk" the ski season and supports sustainable mid-single-digit EBITDA growth. | ||||
Vail Resorts reported… Vail Resorts reported certain ski season metrics for the period from the beginning of the ski season through January 2, 2022, compared to each of the two prior year periods through January 3, 2021 and January 5, 2020, respectively. Given the significant impacts of COVID-19 in the prior year period, the company is also providing metrics relative to the comparable fiscal year 2020 season-to-date period. The company stated, "The reported ski season metrics are for our North American destination mountain resorts and regional ski areas, and exclude the results of our recently acquired Seven Springs, Hidden Valley and Laurel Mountain resorts and our Australian ski areas in all periods. The data mentioned in this release is interim period data and is subject to fiscal quarter end review and adjustments. Season-to-date total skier visits were down 1.7% compared to the prior year season-to-date period and down 18.3% compared to the fiscal year 2020 season-to-date period. Season-to-date total lift ticket revenue, including an allocated portion of season pass revenue for each applicable period, was up 25.9% compared to the prior year season-to-date period and down 4.6% compared to the fiscal year 2020 season-to-date period. As a result of delayed openings at certain resorts, some pass product revenue will be recognized in the third quarter of fiscal year 2022 that would have otherwise been recognized in the second quarter of fiscal year 2022. Excluding this impact, season-to-date lift ticket revenue was down 0.6% compared to the fiscal year 2020 season-to-date period. Season-to-date ski school revenue was up 59.1% and dining revenue was up 64.7% compared to the prior year season-to-date period. Relative to the comparable period in fiscal year 2020, ski school revenue and dining revenue were down 25.2% and down 45.1%, respectively. Retail/rental revenue for North American resort and ski area store locations was up 36.3% compared to the prior year season-to-date period, and down 19.5% versus the comparable season-to-date period in fiscal year 2020." Commenting on the ski season to date, Kirsten Lynch, CEO said, "As expected, season-to-date 2021/2022 North American ski season results are significantly outperforming results from the prior year, due to the greater impact of COVID-19 and related limitations and restrictions on results from the 2020/2021 season. Relative to the 2019/2020 North American ski season, the 2021/2022 North American ski season got off to a slow start with challenging early season conditions that were worse than our expectations, resulting in delayed openings and limited open terrain that persisted into the first week of the holidays ending December 26, 2021. Relative to the comparable periods in both fiscal year 2021 and fiscal year 2020, results across our destination resorts improved following Christmas as conditions improved between Christmas and New Year's Day. The storms during the holiday period created disruptions on certain key peak days that negatively impacted our results, particularly at our Tahoe resorts, which were each fully closed between one and three days during the peak holiday period. Whistler Blackcomb has experienced favorable conditions to date but, as expected, continues to be disproportionately negatively impacted by COVID-19 related travel restrictions on international visitors. Conditions at our Eastern U.S. ski areas were challenged and inconsistent through the holiday period with limited natural snow and variable temperatures that reduced our snowmaking activity. Although overall visitation was negatively impacted by the poor conditions, particularly among our local guests, our season pass sales results significantly mitigated the impact of the challenging start to the season on lift revenue and highlighted the stability created by our advance commitment strategy. In addition to the impacts associated with the challenging conditions, we believe that the significant acceleration of COVID-19 cases associated with the Omicron variant has negatively impacted our results along with the broader travel sector as we expect certain guests reconsidered travel plans and were impacted by related flight cancellations. The impact of COVID-19 cases amongst our employees and the related employee exclusions from work resulted in further challenges in an already difficult staffing environment. Relative to the comparable season-to-date period in fiscal year 2020, our ancillary lines of business have experienced revenue declines in excess of the declines in visitation, particularly in food and beverage, which has experienced an outsized impact related to numerous operational restrictions. Given the challenging staffing environment, exacerbated by COVID-19 related work exclusions, we implemented both a holiday and end of season bonus for our employees, the cost of which we estimate at $20 million, and which we believe will positively impact staffing through the rest of the season in conjunction with expected declines in COVID-19 work exclusions." Lynch continued, "While the challenging season-to-date conditions and COVID-19 related dynamics put downward pressure on overall results, we anticipate that the stability created by our season pass business, the relative strength of our destination visitation over the holidays, and recently improved conditions and results will lead to improving results for the remainder of the season. As a result, we continue to expect that Resort Reported EBITDA for fiscal year 2022 will be within the guidance range issued on December 9, 2021, including the estimated $20 million impact from the bonus programs and an estimated $10 million in Resort Reported EBITDA from the operations of Seven Springs for the period from the transaction closing on December 31, 2021 through the end of the fiscal year, neither of which were anticipated in our original guidance. The company's guidance excludes any estimates for integration expenses associated with the Seven Springs acquisition. The guidance assumes normal conditions and operations across our resorts for the remainder of the ski season, no incremental travel or operating restrictions associated with COVID-19 that could negatively impact our results and the same foreign currency rates as when the guidance was originally issued." | ||||
Deutsche Bank analyst… Deutsche Bank analyst Chris Woronka placed a "Catalyst Call: Buy" on shares of Vail Resorts as a short-term investment idea. The analyst keeps a Hold rating on the shares with a $331 price target. The analyst sees the expected upcoming early season update from Vail "as a potential clearing event/catalyst." Near-term sentiment on the stock has "tilted in a direction that we view to be overly negative in light of the more favorable macro backdrop that we think is driving record visitation to its resorts," Woronka tells investors in a research note. | ||||
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In a regulatory filing,… In a regulatory filing, Vail Resorts director Hilary Schneider disclosed the sale of 4,000 common shares of the company on December 16 at a price of $318.22 per share. | ||||
Deutsche Bank analyst… Deutsche Bank analyst Chris Woronka raised the firm's price target on Vail Resorts to $331 from $310 and keeps a Hold rating on the shares. The company surprised with a further acceleration in pass sales just one quarter after reporting what were viewed by many, at the time, to be "unsurpassable results," Woronka tells investors in a research note. The analyst keeps a Hold rating on the shares due to valuation. | ||||
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Commenting on fiscal 2022… Commenting on fiscal 2022 guidance, Lynch said, "Given our first quarter results and the indicators we are seeing for the upcoming season, we are reaffirming our Resort Reported EBITDA guidance for fiscal 2022 of $785 million to $835 million that was included in our September earnings release based on the assumptions incorporated at that time, including foreign currency exchange rates. Our guidance includes an estimated $2 million of acquisition related expenses specific to Seven Springs, but does not include any estimate for the closing costs, operating results or integration expense associated with the Seven Springs acquisition, which is expected to close this winter. We are encouraged by our very strong pass sales heading into the season, our favorable first quarter results and the strong demand we are seeing across leisure travel and in our U.S. booking trends. 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. Additionally, we anticipate modest offsets from limiting lift ticket sales during the three most popular holiday periods across our North American resorts to prioritize access for pass holders. Early season conditions have been challenging, resulting in delayed openings and limited terrain across many of our resorts, and we anticipate that these conditions will have a negative impact on our results leading up to the holidays but the North American ski season has just begun with our primary earnings period still in front of us. There continues to be uncertainty regarding the ultimate impact of COVID-19 on our business results in fiscal year 2022, including any response to changing COVID-19 guidance and regulations by the various governmental bodies that regulate our operations and resort communities, as well as changes in travel and consumer behavior resulting from COVID-19. Our guidance for fiscal year 2022 assumes normal weather and conditions from the holiday period onward and no impact from incremental travel or operating restrictions associated with COVID-19 that could negatively impact our results." | |
Reports Q1 revenue… Reports Q1 revenue $175.6M, consensus $192.53M. | |
Pre-earnings options… Pre-earnings options volume in Vail Resorts is 4.0x normal with puts leading calls 10:3. Implied volatility suggests the market is anticipating a move near 5.2%, or $17.41, after results are released. Median move over the past eight quarters is 2.7%. | |
Vail Resorts announced… Vail Resorts announced that it has entered into an agreement to purchase Seven Springs Mountain Resort in Pennsylvania from Seven Springs Mountain Resort, Inc. As a part of the acquisition, Vail Resorts will also acquire Hidden Valley Resort and the operations of Laurel Mountain Ski Area. The purchase price for the ski areas, plus a hotel, conference center and other related operations, is approximately $125M, subject to certain adjustments. Vail Resorts is acquiring all of the assets related to the mountain operations of the resorts and related base area lodging, conference center and amenities. Seven Springs Mountain Resort, Inc. is retaining select neighboring operations, including Highlands Market, Sporting Clays at Seven Springs, Seven Springs Golf Course and Hidden Valley Golf Club, Highlands Resort Realty and certain real estate owned and held for potential future development. The transaction is expected to close this winter, however, operations at the three resorts for the 2021-22 winter season will continue in the ordinary course of business. Vail Resorts plans to add access to the three resorts to select Epic Pass products for the 2022-23 North American ski and ride season. The acquisition is expected to generate incremental annual EBITDA in excess of $15M in Vail Resorts' fiscal year ending July 31, 2023. This expected impact includes an estimated incremental annual EBITDA of approximately $5M associated with the 418-room Slopeside Hotel and associated conference facilities and lodging operations at Seven Springs Mountain Resort. After closing the transaction, annual ongoing capital expenditures are expected to increase by approximately $3M to support the addition of these resorts. Vail Resorts will, subject to receipt of consent from the Commonwealth of Pennsylvania, assume the state land lease for Laurel Mountain. Upon closing, Vail Resorts plans to retain the vast majority of each resort's employees and will be working with the local leadership teams in the coming months to determine the right long-term management structure for the resorts. |
