Vail Resorts (MTN -1.41%), the owner of numerous world-renowned mountain resorts, reported fiscal 2024 fourth-quarter earnings on Thursday that were mixed compared to analyst estimates but were overall quite disappointing. An earnings per share (EPS) loss of $4.67 came in as a substantial miss to the expected loss of $4.23. Revenue for the quarter came in just ahead of expectations but was down year over year.
Overall, the quarter presented challenges for Vail Resorts, marked by a decline in skier visits and lower-than-expected financial performance.
| Metric | Q4 Fiscal 2024 | Analysts' Expectations | Q4 Fiscal 2023 | Change (YOY) |
|---|---|---|---|---|
| EPS | ($4.67) | ($4.23) | ($3.35) | NA |
| Revenue | $265.4 million | $264.8 million | $269.8 million | (1.6%) |
| Net income (loss) | ($175.4 million) | NA | ($128.6 million) | NA |
Source: Vail Resorts. Analysts consensus estimates provided by FactSet. YOY = Year over year.
Overview of Vail Resorts
Vail Resorts specializes in owning and operating several premier mountain resorts in various locations worldwide. Its primary revenue streams are lift tickets, ski school, dining, retail/rental operations, and pass products. The mountain segment is the main revenue contributor, followed by its lodging segment. The company is working to stabilize revenue through its advance commitment strategy, primarily via season pass sales like the Epic Pass.
Significant investments in resort infrastructure, including high-speed ski lifts and snowmaking systems, have been crucial for improving the guest experience and maintaining competitive positioning.
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Key Data Points
Quarterly Performance Analysis
The quarter presented some major setbacks primarily attributed to unfavorable weather conditions and underperformance in the Australian ski segment. Here's a detailed look at the financial and operational performance of the items and events that shaped the quarter:
Mountain Segment: Revenue of $175.9 million declined 2.8% year over year. Operating expenses of $292.9 million increased by 7.6%. Consequently, EBITDA for the mountain segment dropped by nearly 29% to $117.3 million.
Lodging Segment: Revenue for this segment saw a slight increase of 0.9% to $89.4 million. However, EBITDA fell 35.4% to $2.8 million, attributable to higher operational costs. Notably, revenue from owned hotel rooms grew by 8.1% year over year, signaling some positive momentum within specific revenue streams.
Real Estate Segment: The real estate segment had minimal impact on overall financials, reporting a small decrease in EBITDA resulting in negative $1.313 million.
Season Pass Strategy: Sales of season passes through Sept. 20 revealed a 3% decrease in units but a simultaneous 3% increase in dollar sales, attributed to an 8% price hike. This strategy continues to stabilize revenue but raises concerns due to declining new pass sales amidst increased loyalty from renewing customers.
Operational Challenges: The company's Australian resorts faced significant hurdles with skier visitation plummeting 18% in the fourth quarter. This, combined with a 28% reduction in snowfall compared to the previous year and 44% below the 10-year average, negatively impacted EBITDA in the mountain segment.
Expense Analysis: Operating expenses rose due to increased general and administrative expenses, property taxes, and repairs and maintenance costs. The net income suffered a downturn, decreasing by $37.7 million from the previous year to $230.4 million.
Capital Investments: Vail Resorts announced substantial capital investment plans focusing on high-speed lifts and technological enhancements like My Epic Gear and My Epic App. The company also launched a $100 million multi-year resource efficiency transformation plan aimed at achieving $27 million in fiscal 2025 savings before one-time costs of $15 million.
Management’s Outlook and Future Plans
With a new fiscal year now underway, Vail Resorts provided fiscal 2025 guidance for the year ending July 31, 2025, expecting net income to range between $224 million and $300 million. The Resort Reported EBITDA projection stands between $838 million and $894 million. These estimates rely on the assumption of normal weather conditions and a stable economic environment while anticipating continued challenges in the Australian segment.
Going forward, Vail Resorts will remain focused on stabilizing revenue through advance commitment strategies and capital investments to enhance infrastructure. Key areas to watch include the impact of planned infrastructure upgrades and the effectiveness of the new My Epic Gear and My Epic App offerings. Investors should also pay attention to any changes in the forward guidance and the performance of the Australian resorts in the upcoming ski season.
