Larkspur Bowl at Beaver Creek (file photo: Connor Walberg/Vail Resorts)

Real Estate Widens Vail Resorts Loss

Broomfield, CO – Ski resort operator Vail Resorts, Inc. on Friday reported fourth-quarter and fiscal year results ending July 31, 2013, showing a widening operating loss in the off-season driven by sagging real estate sales.

The publicly traded company, which operates Vail Mountain, Beaver Creek, Breckenridge and Keystone in Colorado; Canyons Resort in Utah; and Northstar, Heavenly and Kirkwood in Colorado, along with numerous warm-weather destinations, reported a quarterly loss of $59.9 million, or $1.67 a share, compared with a loss a year earlier of $53.8 million, or $1.50 a share. Revenue declined by 1.1% to $112.3 million.

Mountain Segment revenue, which is limited to ski area operations themselves, helped to salvage results, up an enviable 12% to $51.8 million in the fourth quarter, while lodging revenue was up 6.1% to $58.1 million. Neither, however, could offset the company’s 81% slide in fourth quarter real estate revenue to $2.4 million. During fiscal 2013, the company closed on 10 Ritz-Carlton Residence units, 12 One Ski Hill Place units and an $11.1 million sale of 2.1 acres of land at the base of Peak 8 in Breckenridge. Net Real Estate Cash Flow for fiscal 2013 was $27.5 million.

Larkspur Bowl at Beaver Creek (file photo: Connor Walberg/Vail Resorts)
Larkspur Bowl at Beaver Creek (file photo: Connor Walberg/Vail Resorts)

Despite the losses, results slightly outpaced analysts’ expectations.

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Brighter results occurred on the annual front. Vail Resorts reported an increase in annual net income by 129.4% to $37.7 million for fiscal 2013, Mountain Segment net revenue that increased by 9.3% for fiscal 2013, and encouraging signs for 2013-14 season pass sales, up approximately 19% in units and approximately 23% in sales dollars versus the comparable period in the prior year.

Vail Resorts CEO Rob Katz remained undeterred by the company’s fourth-quarter results. “We are very pleased with our performance this fiscal year.  We reported record resort revenue and Resort EBITDA that reflects higher overall visitation, improved pricing, increased average guest spend and strong pass sales,” Katz said. “We generated significant real estate net cash flow driven by the increasing strength in resort real estate markets.  We were successful in our acquisition strategy during fiscal 2013, completing our transaction for Canyons Resort in Park City, Utah and acquiring Afton Alps in Minnesota and Mount Brighton in Michigan.”

Katz added that Mountain Segment revenue increases were driven by a 13.6% increase in total skier visits and a 14.1%, increase in lift revenue compared to prior year.  Lift revenue, excluding season pass revenue, increased $36.4 million, or 17.6%, and season pass revenue increased $11.9 million, or 8.8% compared to prior year, Katz said.

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“Our ancillary businesses also performed well reflecting improvements in consumer spending that resulted in higher spending per guest.  Relative to prior year, fiscal 2013 dining revenue increased 18.7%, ski school revenue increased 13.0%, and retail/rental revenue increased 9.7%,” Katz added.

Turning to guidance for fiscal 2014, Katz commented, “We are excited about the upcoming ski season and expect to build upon the positive momentum from fiscal 2013 with several new initiatives in fiscal 2014 that we hope will continue to elevate the guest experience and financial results at our resorts.  As always, our visibility into the upcoming ski season is limited at this point in time.  Our guidance for fiscal 2014 anticipates normal weather conditions and a continuation of the current economic environment.”

In his only comments related to the pending litigation with Powdr Corp. over the land lease for Park City Mountain Resort, Katz stated, “We anticipate that integration and litigation related expenses in fiscal 2014, which are included in our Resort Reported EBITDA guidance, will be approximately $7.2 million, including an estimated $5.0 million in fees associated with the Park City Mountain Resort litigation.

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