Release Date: September 26, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Despite a 9.5% decline in skier visitation, Vail Resorts Inc (MTN, Financial) maintained consistent resort reported EBITDA, excluding the impact of the Crans-Montana acquisition.
- Strong growth in ancillary spending per visit across ski school, dining, and rental businesses supported overall performance.
- The company achieved 15% revenue growth in its North American summer mountain business compared to the prior year.
- Vail Resorts Inc (MTN) is implementing a two-year resource efficiency transformation plan expected to achieve $100 million in annualized cost efficiencies by the end of fiscal 2026.
- The company declared a quarterly cash dividend of $2.22 per share and repurchased approximately $150 million worth of shares in fiscal 2024.
Negative Points
- Skier visitation declined by 9.5% compared to the prior year, driven by unfavorable weather conditions and industry normalization post-COVID.
- Fourth quarter resort reported EBITDA declined due to underperformance in the Australian winter business, with snowfall down 28% from the prior year.
- Net income attributable to Vail Resorts Inc (MTN) decreased to $230.4 million from $268.1 million in the previous fiscal year, primarily due to increased income taxes, interest expenses, and depreciation.
- Pass product sales for the upcoming 2024-2025 North American ski season decreased approximately 3% in units.
- The company expects a $10 million decline in resort reported EBITDA for the first quarter of fiscal 2025 due to record low snowfall and a shortened season in Australia.
Q & A Highlights
Q: Could you help us understand the difference between last year's guidance and this fiscal year's outlook, considering factors like weather normalization and cost inflation?
A: (Angela Korch, CFO) Starting from this year's results, we had two major factors: weather conditions and industry normalization impacting demand. For next year's guidance, we assume a return to normal weather conditions, offset by normal operating costs and continued industry normalization. Additionally, the severe conditions in Australia are expected to result in a $10 million decline in EBITDA for Q1 FY25.
Q: Can you elaborate on the resource efficiency transformation plan and its expected impact?
A: (Kirsten Lynch, CEO) The plan focuses on three pillars: scaled operations, a global shared services model, and expanded workforce management. Scaled operations represent the largest part of the transformation, aiming to reduce administrative burdens and improve guest experience. The global shared services will handle high-volume recurring processes, and expanded workforce management will optimize labor across departments. The plan aims to achieve $100 million in annualized cost efficiencies by FY26.
Q: How do you see the normalization of the ski industry impacting your business?
A: (Kirsten Lynch, CEO) The last few years have been volatile due to COVID-19 and other factors. For FY25, we are grounding our business in what we believe is a normalized industry in terms of participation and frequency. We expect our business to align with this normalized behavior.
Q: How are you addressing the decline in new pass holders and lift ticket sales?
A: (Kirsten Lynch, CEO) New pass holders come from various sources, including prospects, lift ticket buyers, and lapsed guests. While we see growth in lapsed guests, the addressable audience for lift tickets has decreased. We remain committed to our advanced commitment strategy, focusing on providing the best guest experience and maintaining a portfolio of resorts that attract a wide variety of guests.
Q: Can you provide more details on the corporate workforce reductions and their impact?
A: (Kirsten Lynch, CEO) The corporate workforce reduction is part of our global shared services model, impacting less than 2% of our total workforce and 14% of our corporate workforce. Functions like accounts receivable, payroll, and IT support will be consolidated and outsourced to create a scalable model for future growth.
Q: How do you define "normal weather" in your forecasts?
A: (Kirsten Lynch, CEO) Normal weather includes variability like good days, bad days, windy days, and icy days. We cannot forecast extreme weather events, so our normal weather assumptions do not account for significant or extreme conditions.
Q: How does the recent weather impact in Australia affect your M&A strategy?
A: (Kirsten Lynch, CEO) Geographic diversification has always been part of our M&A strategy. We factor in weather and climate change impacts when considering acquisitions. Our focus remains on executing with excellence and looking for opportunities to expand in Europe and potentially Japan.
Q: Have you been contacted by the FTC or DoJ regarding the Arapahoe Basin matter?
A: (Kirsten Lynch, CEO) We cannot comment on that at this time. However, we are not aware of any actions that would limit our ability to own existing resorts or pursue new acquisitions in the U.S.
Q: Can you provide more details on the updated forest service master plan and potential timing?
A: (Kirsten Lynch, CEO) We are always looking to invest in improving the guest experience, but we are not announcing any specific plans at this time. Our full capital plan will be announced in December.
Q: How are you addressing the importance of single-day customers for future pass sales?
A: (Kirsten Lynch, CEO) Single-day customers are important, but our strategy remains focused on advanced commitment. We believe in the value of locking in revenue and commitment in advance of the season. Our portfolio strategy includes local resorts where lift ticket prices are more affordable, helping to bring new people into the sport.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
