Vail Resorts(MTN) - 2022 Q1 - Quarterly Report

PART I FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) This section presents Vail Resorts' unaudited Consolidated Condensed Financial Statements for the three months ended October 31, 2021 Consolidated Condensed Balance Sheets Total assets reached $6.29 billion, driven by a significant increase in cash to $1.47 billion, while total liabilities rose to $4.62 billion Consolidated Condensed Balance Sheet Highlights (in thousands) | Account | Oct 31, 2021 | July 31, 2021 | Oct 31, 2020 | | :--- | :--- | :--- | :--- | | Assets | | | | | Cash and cash equivalents | $1,468,380 | $1,243,962 | $462,212 | | Total current assets | $1,777,854 | $1,745,586 | $841,615 | | Total assets | $6,290,551 | $6,251,056 | $5,390,524 | | Liabilities & Equity | | | | | Total current liabilities | $1,267,824 | $978,401 | $950,230 | | Long-term debt, net | $2,704,583 | $2,736,175 | $2,387,861 | | Total liabilities | $4,624,091 | $4,421,988 | $4,014,797 | | Total stockholders' equity | $1,666,460 | $1,829,068 | $1,375,727 | Consolidated Condensed Statements of Operations Net loss attributable to Vail Resorts improved to $(139.3) million, with total net revenue increasing 33.2% to $175.6 million Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended Oct 31, 2021 | Three Months Ended Oct 31, 2020 | | :--- | :--- | :--- | | Total net revenue | $175,576 | $131,786 | | Loss from operations | $(165,673) | $(163,961) | | Net loss | $(142,521) | $(157,021) | | Net loss attributable to Vail Resorts, Inc. | $(139,332) | $(153,766) | | Diluted net loss per share | $(3.44) | $(3.82) | Consolidated Condensed Statements of Cash Flows Operating cash flow significantly increased to $349.0 million, primarily due to higher deferred revenue from pass sales Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended Oct 31, 2021 | Three Months Ended Oct 31, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $349,021 | $111,993 | | Net cash used in investing activities | $(39,857) | $(29,274) | | Net cash used in financing activities | $(84,734) | $(12,684) | | Net increase in cash | $224,288 | $70,289 | Notes to Consolidated Condensed Financial Statements Detailed notes cover accounting policies, segment information, long-term debt, and the acquisition of three Pennsylvania ski resorts - The company operates in three business segments: Mountain, Lodging, and Real Estate. The Mountain segment includes 37 destination mountain resorts and regional ski areas[23] - Total long-term debt, net of current maturities, was $2.70 billion as of October 31, 2021, up from $2.39 billion as of October 31, 2020[41] - On December 8, 2021, the company entered into an agreement to acquire Seven Springs Mountain Resort, Hidden Valley Ski Resort, and Laurel Mountain ski area in Pennsylvania for approximately $125.0 million in cash[68] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 FY2022 financial results, highlighting seasonal losses, segment performance, and strong liquidity - Pass product sales for the 2021/2022 North American ski season increased approximately 47% in units and 21% in sales dollars through December 5, 2021, compared to the prior year[80] - As of October 31, 2021, the company had $1.5 billion of cash and cash equivalents and $416.6 million available under the Vail Holdings Credit Agreement revolver[80] - The company exited the Financial Covenants Temporary Waiver Period under its credit agreement effective October 31, 2021, and is now required to comply with standard financial maintenance covenants[81] Results of Operations Resort Reported EBITDA loss widened to $(108.4) million, impacted by Australian closures and prior year pass credit recognition Reported EBITDA by Segment (in thousands) | Segment | Three Months Ended Oct 31, 2021 | Three Months Ended Oct 31, 2020 | | :--- | :--- | :--- | | Mountain Reported EBITDA | $(110,964) | $(85,160) | | Lodging Reported EBITDA | $2,551 | $(9,620) | | Resort Reported EBITDA | $(108,413) | $(94,780) | | Real Estate Reported EBITDA | $(1,124) | $(1,196) | - Mountain Reported EBITDA decreased by $25.8 million, primarily due to the prior year's recognition of $15.4 million in revenue from expired pass credits and decreased results from Australian ski areas due to COVID-19 closures[88] - Lodging Reported EBITDA increased by $12.2 million, driven by fewer COVID-19 capacity-related restrictions and limitations on North American summer operations compared to the prior year[96] Liquidity and Capital Resources Liquidity strengthened with $1.47 billion in cash and a surge in operating cash flow, supporting significant future capital expenditures Cash Flow Summary (in thousands) | Metric | Three Months Ended Oct 31, 2021 | Three Months Ended Oct 31, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $349,021 | $111,993 | | Net cash used in investing activities | $(39,857) | $(29,274) | | Net cash used in financing activities | $(84,734) | $(12,684) | - The increase in operating cash flow was primarily due to a rise in pass product sales and associated collections, which were impacted by delays and credits in the prior year due to COVID-19[111] - The capital plan for calendar year 2022 is expected to be approximately $315 million to $325 million, which is about $150 million above the typical annual plan[119] Quantitative and Qualitative Disclosures About Market Risk The company faces interest rate risk on variable-rate debt and foreign currency exchange rate risk from international operations - As of October 31, 2021, the company had approximately $0.8 billion of variable-rate debt. A 100-basis point change in borrowing rates would change annual interest payments by approximately $8.0 million[133] - The company is exposed to foreign currency translation risk from its operations in Canada and Australia. For the three months ended October 31, 2021, foreign currency translation adjustments resulted in a gain of $15.1 million[134][136] Controls and Procedures Management concluded disclosure controls were effective, with no material changes to internal control over financial reporting - The CEO and CFO concluded that as of the end of the quarter, the company's disclosure controls and procedures were effective in providing reasonable assurance that required information is recorded, processed, and reported in a timely manner[138] - No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[140] PART II OTHER INFORMATION Legal Proceedings The company is involved in various lawsuits but does not anticipate a material adverse impact on its financial position - The company is a party to various lawsuits from the ordinary course of business but does not expect them to have a material adverse impact on its financial condition or results of operations[142] Risk Factors No material changes to previously disclosed risk factors were reported in the company's latest Form 10-K - No material changes to the risk factors disclosed in the company's most recent Form 10-K were reported[143] Unregistered Sales of Equity Securities and Use of Proceeds This section details outstanding Exchangeco Shares from the Whistler Blackcomb acquisition, exchangeable for common stock - As of October 31, 2021, 33,697 Exchangeco Shares, issued during the Whistler Blackcomb acquisition, remained outstanding and exchangeable into Vail Resorts common stock[144] Exhibits Exhibits include management incentive plans, employment agreements, and required CEO/CFO certifications - Exhibits filed include the Vail Resorts, Inc. Management Incentive Plan, an executive employment agreement, and CEO/CFO certifications pursuant to Sarbanes-Oxley Sections 302 and 906[151]