Vail Resorts(US:MTN)2021-03-12 05:06Financial Data and Key Metrics Changes - For Q2 fiscal 2021, net income attributable to Vail Resorts was $147.8 million, or $3.62 per diluted share, compared to $206.4 million, or $5.04 per diluted share in the prior year [17] - Resort reported EBITDA was $276.1 million, down from $378.3 million in the same period last year, primarily due to COVID-19 impacts [18] - Resort reported EBITDA margin for Q2 was 40.3%, slightly down from 40.9% in the prior year [15] Business Line Data and Key Metrics Changes - Total visitation across North American resorts was down approximately 5% compared to the same period last year, with local visitation up slightly and destination visitation more stable than expected [7][9] - Season pass unit sales grew by 20% for fiscal year 2021, with 71% of visitation coming from season pass-holders compared to 59% in the prior year [12][13] - Ancillary business lines, including ski school and dining, were significantly impacted, with ski school revenues down 43.2% and dining revenue down 56.9% compared to the prior year [24] Market Data and Key Metrics Changes - International visitation decreased significantly due to COVID-19 travel restrictions, with destination guests comprising 53% of U.S. destination mountain resorts skier visits, down from 57% in the prior year [10] - Whistler Blackcomb was disproportionately affected, with destination guests declining to 15% of visits, down from 48% in the prior year [11] Company Strategy and Development Direction - The company plans to maintain a disciplined approach to capital investments, with an increased core capital plan of approximately $115 million to $120 million for 2021 [35] - The focus remains on moving lift ticket purchases into the Pass program and providing value to skiers who purchase in advance [14] - The company is committed to strategic acquisitions and maintaining liquidity, with total cash and revolver availability of approximately $2 billion as of February 28, 2021 [29][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong cash flow generation and stability of the business model, despite ongoing uncertainty due to COVID-19 [30] - The company expects net income for the 9-month period ending April 30, 2021, to be between $204 million and $247 million, with Resort Reported EBITDA expected between $560 million and $600 million [27] - Management noted that while visitation trends improved, ancillary lines of business continue to be negatively impacted by COVID-19-related capacity constraints [26] Other Important Information - The company raised $575 million of 0% convertible notes in December 2020 to pursue high-impact acquisitions and reinvest in the resort portfolio [30] - A one-time end-of-season bonus totaling approximately $15 million was implemented to thank over 28,000 employees for their dedication during the challenging season [41] Q&A Session All Questions and Answers Question: Can you elaborate on the cost side and any specific reductions? - Management indicated that they prepared for a challenging environment and managed expenses effectively without adding significant costs, which contributed to better-than-expected revenue outcomes [45][46] Question: What insights have you gained about new pass-holders? - Management noted that there are two types of new pass-holders: those previously in the database and truly new customers. The conversion from ticket buyers to pass-holders has been positive, indicating a shift in customer behavior towards season-long engagement [52][56] Question: How do you view pricing in the context of potential pent-up travel demand? - Management emphasized a consistent approach to pricing, focusing on providing value in advanced commitment products rather than driving prices up significantly [61][64] Question: What are the thoughts on the Peak Resorts acquisition? - Management expressed confidence in the contributions from Peak Resorts, noting the opportunity to convert lift ticket buyers into pass-holders and the positive impact on results despite the pandemic [68][69] Question: How do you assess the potential for acquisitions in the current market? - Management remains interested in strategic acquisitions, emphasizing the importance of discipline and the potential for opportunities as the market stabilizes post-pandemic [75][76] Question: How has the pandemic affected labor costs and availability? - Management noted a unique labor environment this year, with challenges in accessing international labor but also an increase in local interest due to closures in other sectors [97][100] Question: How has the early Easter impacted visitation? - Management indicated that an earlier Easter is generally positive for engagement in skiing, although the overall impact remains uncertain due to various factors [102] Question: How has the Epic Mountain Rewards program performed this year? - Management acknowledged engagement with the program but noted that capacity challenges limited its effectiveness in driving business this season [108][110]