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Vail Resorts (MTN) Incurs Narrower-Than-Expected Loss in Q4

Zacks Equity Research

Vail Resorts, Inc. MTN reported better-than-expected results in fourth-quarter fiscal 2019. Following the results, shares of the company increased 4.2% in after-hours trading on Sep 26. So far this year, the stock has gained 9.3% compared with the industry’s 3.9% growth.

In the quarter under review, the company incurred an adjusted loss of $2.22 per share, narrower than the Zacks Consensus Estimate of a loss of $2.58. In the year-ago quarter, Vail Resorts had incurred an adjusted loss of $2.07 per share.

Quarterly revenues came in at $244 million, outpacing the consensus mark of $241 million and increased 15.3% on a year-over-year basis. Total revenues were driven by growth in each segment. The company’s results also benefited from a robust performance at Whistler Blackcomb, which overshadowed slow start to the Epic Discovery season in Colorado.

Segment Results

Vail Resorts generates revenues from two segments — Resort (99.9% of net revenues in fourth-quarter fiscal 2019) and Real Estate (0.03%). Under the Resort segment, the company has Mountain and Lodging services, and other (constituting 72.1% of net revenues in the fiscal fourth quarter), and Mountain and Lodging retail and dining (27.8%).

Meanwhile, Vail Resorts has two reporting segments — Mountain and Lodging.

The Mountain segment reported revenues of $157.2 million in the quarter under review, up 19.7% year over year. The metric was mainly driven by higher sales from North America pass sales growth, and increased lift, ski and rental revenues. Sales were also driven by non-pass skier visitation at the company’s western U.S. resorts as well as incremental revenues from the Acquired Resorts.

The segment’s EBITDA came in at negative $65.3 million compared with a negative $64.5 million in the prior-year quarter. Operating expenses at the Mountain segment totaled $222.9 million, up 13.6% year over year.

Lodging net revenues in the reported quarter were $86.7 million, up 8.1% year over year on an increase in managed condominium rooms, golf and dining sales.

Under the segment, EBITDA decreased 10.6% to $5.8 million from the prior-year quarter. Operating expenses at the Lodging segment rose 9.7% year over year to $80.8 million.

Operating Results

Vail Resorts reported EBITDA was a negative $59.5 million in the quarter under review compared with a negative $58 million a year ago.

Operating expenses totaled $303.8 million, up 12.5% year over year. Total segmental operating expenses increased 12.6% year over year to $305.3 million.

Vail Resorts, Inc. Price, Consensus and EPS Surprise

Vail Resorts, Inc. Price, Consensus and EPS Surprise

Vail Resorts, Inc. price-consensus-eps-surprise-chart | Vail Resorts, Inc. Quote

Balance Sheet

Cash and cash equivalents as of July 31, 2019, were $108.9 million. Net long-term debt as of Jul 31, 2019, was $1,527.7 million.

Vail Resorts approved a quarterly cash dividend of $1.76 per share of common stock, which is payable Oct 25, 2019, to its shareholders of record as of Oct 8, 2019.

Fiscal 2020 Guidance

For fiscal 2020, the company’s total EBIDTA is estimated at $776-$822 million. Net income is projected to be $293-$353 million.

Other Development

Vail Resorts has completed the acquisition of Peak Resorts, Inc. (SKIS) for $11 per share. With the completion of this buyout, the company added 17 U.S. ski areas to its portfolio. The newly acquired resorts are located in the Northeast, Mid-Atlantic and the Midwest. Currently, the company has 37 owned and operated resorts worldwide.

In a bid to enhance the guest experience at the newly acquired resorts, the company plans to invest nearly $15 million over the next two years. Per Vail Resorts, its annual ongoing capital expenditures are likely to increase by nearly $10 million owing to these latest buyouts.

Zacks Rank & Stocks to Consider

Vail Resorts currently carries a Zacks Rank #3 (Hold). Better-ranked stocks worth considering in the same space include SeaWorld Entertainment, Inc. SEAS, Cedar Fair, L.P. FUN and Studio City International Holdings Limited MSC. While SeaWorld Entertainment sports a Zacks Rank #1 (Strong Buy), Cedar Fair and Studio City International carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

SeaWorld Entertainment’s earnings have surpassed the Zacks Consensus Estimate in the trailing four quarters, the average being 34.9%.

Cedar Fair reported better-than-expected earnings in three of the trailing four quarters, the average beat being 3.8%.

Studio City International Holdings earnings have outpaced the consensus estimate in each of the trailing three quarters.

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