Vail Resorts reports net loss of 44% for first quarter of fiscal year 2021
Effect of coronavirus pandemic apparent in company’s bottom line
The COVID-19 pandemic has taken a toll on Vail Resorts’ bottom line.
On Thursday, the global ski resort giant reported a net loss of $153.8 million for the first quarter of fiscal 2021 that ended Oct. 31, 2020, a decrease of 44.4% compared to the first quarter of 2020.
In its release, Vail Resorts stated its business has been challenged by COVID-19 related limitations, restrictions and closures, and provided season pass sales results.
Vail Resorts reported an EBITDA loss of $94.8 million for the first quarter, compared to a loss of $76.7 million for the first quarter of 2020. In its release, the company said its COVID-19 losses were partially offset by disciplined cost management and $15.4 million of lift revenue recognized in the first quarter of 2021 associated with the expiration of the credit offers to 2019/2020 pass product holders.
Season pass sales through Dec. 6 of this year for the upcoming North American ski season increased approximately 20% in units and were flat in sales dollars as compared to the period in the prior year through Dec. 8, 2019, with sales dollars for this year reduced by the value of the redeemed credits provided to 2019/2020 North American pass holders.
Without deducting for the value of the redeemed credits, sales dollars increased approximately 19% compared to the prior year.
The company, in its release, said it continues to maintain significant liquidity with $614 million of cash on hand as of Nov. 30 and $587 million of availability under its U.S. and Whistler Blackcomb revolving credit facilities.
“Our first fiscal quarter historically operates at a loss, given that our North American mountain resorts are generally not open for ski season operations during the period,“ said Vail Resorts CEO Rob Katz. ”The quarter’s results are primarily driven by winter operating results from our Australian resorts and our North American resorts’ summer activities, dining, retail/rental and lodging operations, and administrative expenses. Our results for the first quarter continued to be negatively impacted by COVID-19.“
Katz cited shutdowns at two of its Australian resorts, Hotham and Falls Creek, after the Victorian government issued stay-at-home orders on July 8.
At Perisher, Katz said visitation trends improved relative to July 2020 as available terrain increased, but results continued to be negatively impacted by COVID-19 and related capacity constraints.
“In North America, our U.S. resorts experienced improved demand from leisure travelers throughout the quarter relative to the fourth quarter of fiscal 2020, but summer visitation remained well below historical levels,” Katz said. “At Whistler Blackcomb, demand remained significantly below prior year levels due in part to travel restrictions, with the Canadian border remaining closed the entire quarter to international guests, including guests from the U.S.”
Katz said the company, in light of the challenges brought on by the global pandemic, “continued to maintain disciplined and rigorous cost controls throughout the quarter to partially mitigate the reduced revenue levels.”
Resort net revenue for the first quarter declined $132.1 million compared to the prior year while Resort reported EBITDA declined only $18.1 million over the same time period, reflecting cost reductions driven by a combination of reduced seasonal labor and expenses as well as significant overhead cost saving actions.
First quarter resort net revenue includes the recognition of approximately $15.4 million of lift revenue related to the September 17, 2020 expiration of unredeemed credits offered to 2019/2020 North American pass holders, for which Vail Resorts deferred a total of $120.9 million of revenue from its prior year pass sales and which would have otherwise been recognized during fiscal 2020.
“Our total cash and revolver availability as of Nov. 30, 2020 was approximately $1.2 billion, with $614 million of cash on hand, $419 million of U.S. revolver availability under the Vail Holdings Credit Agreement and $169 million of revolver availability under the Whistler Credit Agreement,“ Katz said. ”As of Oct. 31, 2020, our net debt was 4.1 times trailing twelve months Total Reported EBITDA. We continue to expect to have sufficient liquidity to fund operations through at least the 2021/2022 ski season, even in the event of extended resort shutdowns.”
Moving on to season pass results, Katz said, “Pass sales are reduced by the amount of Epic Coverage refund requests processed through Dec. 6, 2020, but do not include any estimated reductions for future Epic Coverage refunds.“
“We are very pleased with the growth in our season pass program, particularly given the challenging circumstances surrounding the impacts of COVID-19,“Katz added. ”We expect that the total number of guests on all advanced purchase passes this year will exceed 1.4 million including all passes for our North American and Australian resorts, demonstrating the significant loyalty of our guest base and the strong demand for our mountain resorts. Since September, pass sales exceeded our expectations primarily driven by continued strong demand from destination guests and significant growth in pass sales to guests who were not previously in our database, particularly in lower frequency Epic Day Pass products.”
Commenting on the Company’s outlook for the 2020/2021 North American ski season, Katz said, “Given the uncertainty COVID-19 has created for travel demand, operating restrictions and the ultimate visitation to and spending at our resorts, the Company will not be providing full year guidance for fiscal 2021 at this time. That said, we are very pleased with the results of our season pass sales and the strong foundation of visitation and revenue that creates heading into the season. Given the challenging dynamics associated with COVID-19, we continue to expect material declines in visitation to our resorts and associated revenue declines in fiscal 2021 relative to our original expectations for fiscal 2020, primarily as a result of expected declines in visitation from non-pass, lift ticket purchases due to reduced destination visitation, with more material declines specifically among international guests. While we expect that mandated capacity limitations will have a negative impact on our visitation during peak periods, we expect the primary driver of visitation declines for the North American ski season to be a result of reduced travel demand. We expect additional negative impacts to visitation in select regions where heightened restrictions exist, including Whistler Blackcomb, given Canadian border closures and domestic travel guidance, and Vermont as a result of the quarantine policy for out-of-state travelers. We also expect significant negative financial impacts on our ancillary lines of business, materially in excess of the decline in visitation, as a result of significant COVID-19 limitations and restrictions, particularly in food and beverage and ski school. In food and beverage, we have recently reduced capacity at our restaurants and have limited many of our on-mountain restaurants to grab-and-go options. In ski school, we have reduced group sizes and at many resorts eliminated full day and other select lesson types in response to COVID-19 limitations and restrictions.
“Since the start of COVID-19, disciplined cost management has been a primary focus, with significant actions taken to date to tightly manage our costs with reduced revenue expectations. We have implemented operating plans that actively manage our expenses, while maintaining a high-quality experience for our guests, and we remain confident in our ability to deliver against the cost structure variability previously outlined in our September 2020 earnings release.”
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