Vail Resorts(MTN) - 2021 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) Presents Vail Resorts, Inc.'s unaudited consolidated financial statements for the quarter ended January 31, 2021, covering balance sheets, operations, cash flows, and notes Consolidated Condensed Balance Sheets Total assets reached $6.17 billion by January 31, 2021, driven by cash, with liabilities at $4.48 billion from debt Consolidated Condensed Balance Sheet Highlights (in thousands) | Metric | Jan 31, 2021 | Jan 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $1,301,003 | $126,793 | | Total current assets | $1,573,451 | $413,802 | | Total assets | $6,165,833 | $5,113,679 | | Liabilities & Equity | | | | Total current liabilities | $982,452 | $918,378 | | Long-term debt, net | $2,768,015 | $1,817,058 | | Total liabilities | $4,479,387 | $3,463,481 | | Total stockholders' equity | $1,686,446 | $1,650,198 | Consolidated Condensed Statements of Operations Total net revenue decreased to $684.6 million for the three months ended January 31, 2021, leading to a net income of $147.8 million Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended Jan 31, 2021 | Three Months Ended Jan 31, 2020 | | :--- | :--- | :--- | | Total net revenue | $684,644 | $924,638 | | Income from operations | $207,716 | $310,733 | | Net income attributable to Vail Resorts, Inc. | $147,798 | $206,370 | | Diluted net income per share | $3.62 | $5.04 | | Cash dividends declared per share | $— | $1.76 | Consolidated Condensed Statements of Cash Flows Net cash from operating activities decreased to $459.1 million, while financing activities provided $513.3 million, significantly increasing cash Cash Flow Summary for Six Months Ended January 31 (in thousands) | Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $459,069 | $537,689 | | Net cash used in investing activities | $(65,730) | $(445,746) | | Net cash provided by (used in) financing activities | $513,287 | $(69,836) | | Net increase in cash | $909,918 | $22,059 | Notes to Consolidated Condensed Financial Statements Detailed notes cover accounting policies, COVID-19 revenue impact, financing activities, and the Peak Resorts acquisition - Due to early resort closures from COVID-19 in the 2019/2020 season, the company offered a credit to pass holders, resulting in the deferral of approximately $120.9 million of pass product revenue into fiscal 2021[36] - In December 2020, the company completed a private placement of $575.0 million in 0.0% Convertible Senior Notes due 2026. The liability component was valued at $465.3 million at issuance[54][60] - On December 18, 2020, the company amended its Vail Holdings Credit Agreement to obtain a waiver from key financial covenants through January 31, 2022, providing financial flexibility during the pandemic[51] - The company acquired Peak Resorts on September 24, 2019, for a total purchase price of approximately $334.7 million, which included the repayment of Peak Resorts' debt[66] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses COVID-19's adverse impact on Q2 FY2021 results, including reduced visitation, operational limits, and a 24% drop in Mountain EBITDA Results of Operations Operating results were significantly impacted by COVID-19, with Mountain Reported EBITDA decreasing 24.0% to $283.6 million and ancillary revenues sharply declining Mountain Segment Performance - Three Months Ended Jan 31, 2021 vs 2020 | Metric | 2021 | 2020 | % Change | | :--- | :--- | :--- | :--- | | Total Mountain net revenue | $641.5M | $845.5M | (24.1)% | | Lift revenue | $430.8M | $484.3M | (11.1)% | | Ski school revenue | $56.4M | $102.7M | (45.1)% | | Dining revenue | $31.8M | $75.7M | (58.0)% | | Mountain Reported EBITDA | $283.6M | $373.0M | (24.0)% | Lodging Segment Performance - Three Months Ended Jan 31, 2021 vs 2020 | Metric | 2021 | 2020 | % Change | | :--- | :--- | :--- | :--- | | Total Lodging net revenue | $42.9M | $78.9M | (45.7)% | | Lodging Reported EBITDA | $(7.5)M | $5.3M | (242.2)% | | Combined RevPAR | $88.98 | $144.56 | (38.4)% | - Interest expense increased by 44.8% for the quarter and 50.0% for the six months year-over-year, primarily due to borrowings under the new 6.25% Notes and non-cash interest from the 0.0% Convertible Notes[146][148] Liquidity and Capital Resources Strong liquidity with $1.3 billion cash, bolstered by new debt and covenant waivers, with $135-$140 million in planned capital expenditures - As of January 31, 2021, the company had $1.3 billion of cash and cash equivalents, plus $418.6 million available under its Vail Holdings revolver and C$222.1 million ($173.8 million) under its Whistler revolver[109][159] - The company secured a 'Financial Covenants Temporary Waiver Period' through January 31, 2022, exempting it from leverage and interest coverage ratio tests but limiting dividends and share repurchases to $38.2 million per quarter under certain liquidity conditions[163][176] - Planned resort capital expenditures for calendar year 2021 are estimated to be $115 million to $120 million, with a total capital plan of $135 million to $140 million including one-time integration and real estate items[161] - Dividends were suspended in April 2020 and remain so, with payments restricted under the terms of the Fourth Amendment to the credit agreement[176] Item 3. Quantitative and Qualitative Disclosures About Market Risk Primary market risks are interest rate fluctuations on variable-rate debt, impacting annual interest by $8.8 million per 100-basis point change, and foreign currency exchange rates - The company is exposed to interest rate risk on approximately $0.9 billion of variable-rate debt. A 100-basis point change in borrowing rates would change annual interest payments by approximately $8.8 million[187] - The company has foreign currency exchange risk from translating the results of its Canadian (Whistler Blackcomb) and Australian resorts into U.S. dollars, and from an intercompany loan to its Canadian entity[188] Item 4. Controls and Procedures The CEO and CFO concluded that disclosure controls and procedures are effective, with no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period[192] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal controls[194] PART II OTHER INFORMATION Item 1. Legal Proceedings The company is involved in various lawsuits, but management expects no material adverse impact on its financial position, results, or cash flows - The company is a party to various lawsuits arising in the ordinary course of business but does not expect them to have a material adverse impact on its financial position[195] Item 1A. Risk Factors The COVID-19 pandemic remains a significant risk, with potential for continued negative impacts on financial condition, operations, and pass product refunds - The COVID-19 outbreak has had, and is expected to continue to have, a significant negative impact on the company's financial condition and operations due to travel restrictions, economic disruptions, and operational limits[197][198] - Specific risks include the ability to keep resorts open, attract guests amid public health concerns, manage capacity restrictions, and the potential for significant refunds to pass holders under the Epic Coverage program if resorts are forced to close[199][200] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section discloses information about Exchangeco Shares issued during the 2016 Whistler Blackcomb acquisition, with 34,612 shares unexchanged as of January 31, 2021 - As of January 31, 2021, 34,612 Exchangeco Shares, issued during the Whistler Blackcomb acquisition, remained outstanding and exchangeable into Vail Resorts common stock[203] Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including the Indenture for 0.0% Convertible Senior Notes and the Fourth Amendment to the credit agreement - Key exhibits filed include the Indenture for the 0.0% Convertible Notes and the Fourth Amendment to the Eighth Amended and Restated Credit Agreement, both dated December 18, 2020[210]