Vail Resorts (NYSE:MTN) has reported strong growth in North American ski season visitation and spending in its fiscal 2023 fourth-quarter earnings, despite challenges from below-average snowfall and limited terrain availability in Australia. The company's fiscal 2024 outlook indicates expected meaningful growth, supported by continued strong pass sales, acquisitions, and record visitation and resort revenue. Vail Resorts plans substantial investments in its resorts and a new membership program, while maintaining a healthy cash flow position.
Key takeaways from the call:
- Vail Resorts achieved growth through strong pass sales, acquisitions, and record visitation and resort revenue in March and April.
- Despite a challenging Australian winter season, the company's fiscal 2024 outlook expects meaningful growth, supported by strong resort EBITDA margins.
- The company plans to invest approximately $180-185 million in 2023 for lift, terrain, and other expansion projects at its resorts.
- Vail Resorts will pilot a new membership program called My Epic Gear at select resorts during the 2023-2024 ski season.
- The company had approximately $1.2 billion in total cash and revolver availability as of July 31, 2023.
- It declared a quarterly cash dividend of $2.06 per share and repurchased approximately 400,000 shares of common stock during the quarter.
- Vail Resorts is planning to introduce new technology for the 2023/2024 ski season that allows guests to store their pass or lift ticket on their phone.
- The company expects strong growth in its ancillary businesses, particularly in food and beverage, despite the $46 million impact on Q1 results driven by cost inflation and the Australia winter conditions impact.
- Vail Resorts aims to diversify geographically, secure advance commitments from guests, invest in snowmaking, and prioritize sustainability actions.
- The company anticipates a strong winter season based on robust season pass sales, which indicate positive demand.
- Vail Resorts is investing in employee wages and affordable housing to attract and retain top talent.
The company's robust business model and ability to generate cash flow were emphasized during the call. As of July 31, 2023, the company had approximately $1.2 billion in total cash and revolver availability. It declared a quarterly cash dividend of $2.06 per share and repurchased approximately 400,000 shares of common stock during the quarter.
Vail Resorts is planning considerable investments in the calendar year 2023, focusing on lift and terrain expansions at various resorts. This includes the launch of My Epic Gear, a new membership program that offers gear rentals and personalized recommendations. The company is also planning to introduce new technology for the 2023/2024 ski season that allows guests to store their pass or lift ticket on their phone.
Despite the challenges posed by cost inflation and a decrease in demand due to different travel behavior compared to the previous year, the company expects the demand to return to normal over time. The company attributes this decrease in demand to the pent-up demand in Australia last year, which has now normalized, and changing North American travel patterns.
Vail Resorts discussed its business model and plans for mitigating the impacts of various factors. The company aims to diversify geographically, secure advance commitments from guests, invest in snowmaking, and prioritize sustainability actions. It expects strong growth in ancillary businesses, particularly in food and beverage (F&B), with the hope that awareness of unique offerings and loyalty benefits will help mitigate inflationary prices.
Looking ahead, Vail Resorts anticipates a strong winter season based on robust season pass sales, which indicate positive demand. The company expects a 31% margin for FY '24, with opportunities for resource efficiencies, guest self-service, and automation. While Q1 expenses may pose headwinds, Vail Resorts is confident in its ability to absorb cost pressures.
Lastly, the company acknowledges challenges in affordable housing but remains committed to making investments in this area. The company also mentioned that the demand patterns have shifted due to COVID-19, but they expect it to normalize over time. The earnings call concluded with closing remarks from Kirsten Lynch.
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