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September 26, 2012
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Vail Resorts stock soars after earnings release

VAIL, Colorado - Despite a 12.1 percent drop in skier visitation during the 2011-12 ski season, Vail Resorts reported that mountain revenues rose by 1.9 percent during the 2012 fiscal year. The company's net income, however, was $16.5 million for fiscal 2012 - still profitable, yes, but down more than 50 percent from the $34.5 million reported in fiscal 2011.

The company held its fourth quarter earnings call for investors Tuesday morning, and while the quarter saw its typical losses, CEO Rob Katz said he was "pleased" with the company's overall performance both in the fourth quarter and in the fiscal year as a whole.

Investors seemed pleased, too, as stocks soared following the company's earnings release, posting a new 52-week high of $59.46 during Tuesday trading. The stock closed at $57.07, up 8.23 percent.

The 2012 fourth quarter, despite overall losses, saw gains compared to the fourth quarter of 2011, which Katz attributes to more summer guests across the company's resorts.

"For the full fiscal year, I am very proud of our results given that the 2011-12 ski season was the most challenging winter in the history of the United States ski industry and our performance demonstrated the resiliency of our business model," Katz said during the conference call, reading from a statement released earlier Tuesday morning. "In particular, the strength of our growing season pass business and the comprehensive and differentiated experience we provide at our resorts stabilized our revenues, in the face of very challenging weather."

The company's balance sheet remains in "great shape," according to investor notes released Tuesday by JMP Securities Managing Director William Marks, a Vail Resorts analyst. Marks noted the company's guidance for 2013 of $260 million to $270 million - a 27 to 32 percent increase over fiscal 2012 - is "much higher than we expected," with JMP Securities' model at $250 million.

Resort reported EBITDA (earnings before interest, taxes, depreciation and amortization) was $205.3 million, down $16.7 million, or 7.5 percent, compared to the same period last year. The decline was 3.8 percent when adjusted for so-called one time items, which include the timing of the Northstar, Kirkwood and Skiinfo acquisitions and a litigation settlement.

The $205.3 million was actually slightly better than the company's guidance for the fiscal year, which was below $205 million.

"We feel this modest decline is particularly noteworthy when considering that Fiscal 2011 was an all-time record snowfall year and Fiscal 2012 was the lowest snowfall season in our history," Katz said.

The optimism can be seen in season pass sales for 2012-13, which as of Sept. 23 the company had sold about 178,000 passes - an increase of about 17 percent in units and 21 percent in sales dollars, Katz said. The company typically has about 60 percent of its season passes sold by this time, he said.

Katz attributes a lot of the gains to growth in the Lake Tahoe market - a market that now has three resorts on the company's popular Epic Pass. With Vail Resorts purchase of Kirkwood earlier this year, the growth potential for pass sales in the Bay Area continues, particularly with the Tahoe Local Pass, a new pass product, he said.

Growth also continues from international markets, Katz said.

"We anticipate seeing continued strength in the Tahoe market and from Europe, particularly with the recently announced addition of three days of skiing at Verbier (Switzerland) to our Epic Pass," Katz said. "While we believe that a portion of the significant increase in sales to date is due to some timing shifts, we hope to maintain the vast majority of these absolute gains through the rest of the selling period, with a resulting moderation of the ultimate percentage increase in the program."

At the Ritz-Carlton Residences in Vail, three units are under contract, which is reason enough to think positively about the upcoming year in terms of real estate sales, Jones said. The company closed on four Ritz units in the fourth quarter, and 13 total units for fiscal 2012, with an average selling price per unit of $2.6 million.

In 2013, Vail Resorts estimates real estate EBITDA to be at negative $9 million to negative $17 million.

Jones reiterated that the company's real estate sales at its major projects - the Ritz-Carlton in Vail and One Ski Hill Place in Breckenridge - is a "multi-year process." He said the three units under contract at the Ritz during a typically low selling period gives the company some confidence.

"Our guidance for fiscal 2013 anticipates a return to more normal weather conditions and the continuation of a challenging, but stable economic environment," Katz said.


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Tahoe Daily Tribune Updated Sep 26, 2012 05:42PM Published Sep 26, 2012 05:41PM Copyright 2012 Tahoe Daily Tribune. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.