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Category: Stock Market and Vail Resorts
Date: 9 March 2020 Stock Price: $184.80 We take a look at the 2nd quarter earnings release of their 2020 fiscal year of Vail Resorts a leading global mountain resort operator operating 37 mountain resorts, with 7.2 million guests in the USA and Canada.
The stock has been hit extremely hard by fears of the Coronavirus and the impact the virus will have on their earnings in coming quarters. |
About Vail Resorts
Vail Resorts, Inc., through its subsidiaries, is the leading global mountain resort operator. Vail Resorts' subsidiaries operate 37 world-class mountain resorts and urban ski areas, including Vail, Beaver Creek, Breckenridge, Keystone and Crested Butte in Colorado; Park City in Utah; Heavenly, Northstar and Kirkwood in the Lake Tahoe area of California and Nevada; Whistler Blackcomb in British Columbia, Canada; Perisher, Falls Creek and Hotham in Australia; Stowe, Mount Snow, Okemo in Vermont; Hunter Mountain in New York; Mount Sunapee, Attitash, Wildcat and Crotched in New Hampshire; Stevens Pass in Washington; Liberty, Roundtop, Whitetail, Jack Frost and Big Boulder in Pennsylvania; Alpine Valley, Boston Mills, Brandywine and Mad River in Ohio; Hidden Valley and Snow Creek in Missouri; Wilmot in Wisconsin; Afton Alps in Minnesota; Mt. Brighton in Michigan; and Paoli Peaks in Indiana. Vail Resorts owns and/or manages a collection of casually elegant hotels under the RockResorts brand, as well as the Grand Teton Lodge Company in Jackson Hole, Wyoming. Vail Resorts Development Company is the real estate planning and development subsidiary of Vail Resorts, Inc. Vail Resorts is a publicly held company traded on the New York Stock Exchange (NYSE: MTN)
Overview of Vail Resorts' 2nd quarter 2020 earnings report
The data below refers to the latest quarter unless specified otherwise:
- Total net revenue: $924.432 million (up from $849.332 million from the same quarter of the previous year)
- Revenue increased by 8.84% over the last 12 months
- Resort operating expenses: $546.279 million (up from $491.500 million for the same quarter of the previous year)
- Resort operating expenses increased by 11.14% over the last 12 months
- Net income: $206.370 million (up from $206.349 million for the same quarter of the previous year)
- Diluted earnings per share: $5.04 (up from $5.02 for the same quarter of the previous year)
- Dividend declared: $1.76
- Dividend yield: 2.97%
- Diluted weighted-average shares outstanding: 40.941 million (down from 41.126 million for the same quarter of the previous year)
- Cash and cash equivalents: $126.793 million
- Cash and cash equivalents per share: $3.09
- Cash and cash equivalents makes up 1.68% of Vail Resorts' market capital
- Cash and cash equivalents makes up 2.47% of Vail Resorts total assets
- Inventories: $113.907 billion
- Inventories makes up 2.27% of Vail Resorts' total assets
- Stockholders equity of Vail Resorts: $1.650billion
- Stockholders equity per share: $40.30
- Vail Resorts is trading at 4.58 times its stockholders equity which is well outside the expected range of between 2 and 4 which most companies tend to trade at.
- Cash generated from operations (for the first 2 quarters of fiscal 2020): $537.689 million
- Cash generated from operations per share ( for the first 2 quarters of fiscal 2020): $13.13
Vail Resorts' management commentary on their 2nd quarter 2020 earnings report
BROOMFIELD, Colo., March 9, 2020 /PRNewswire/ -- Vail Resorts, Inc. (NYSE: MTN) today reported results for the second quarter of fiscal 2020 ended January 31, 2020, provided the Company's ski season-to-date metrics through March 1, 2020 and withdrew its guidance for fiscal 2020 due to the uncertain impact of coronavirus on results for the remainder of fiscal 2020.
Commenting on the Company's fiscal 2020 second quarter results, Rob Katz, Chief Executive Officer, said, "Overall we feel good about the season so far, but have had both areas of challenge and areas of strong performance. Our Pacific Northwest resorts (Whistler Blackcomb and Stevens Pass) experienced the lowest snowfall in over 30 years through December 31, 2019, resulting in very poor results through the early season and critical holiday period. Visitation at those resorts continued to be challenging and below our expectations in January, with Whistler Blackcomb experiencing a weaker than expected recovery in North American and international destination visitation. In total, visitation across our Pacific Northwest resorts was down 14% compared to the prior year for the second quarter. After a challenging start in the early season, destination guest visitation at our western U.S. resorts improved significantly during the holiday period and was in line with our expectations. The improvement continued through January though Colorado was modestly below our expectations for the post-holiday period, partially offset by strong performance at our Park City resort. Our Northeast resorts are off to a great start to the season, supported by the continued benefit from our expanded Northeast network which has been partially offset by challenging weather variability across the Midwest resorts.
Commenting on the Company's fiscal 2020 second quarter results, Rob Katz, Chief Executive Officer, said, "Overall we feel good about the season so far, but have had both areas of challenge and areas of strong performance. Our Pacific Northwest resorts (Whistler Blackcomb and Stevens Pass) experienced the lowest snowfall in over 30 years through December 31, 2019, resulting in very poor results through the early season and critical holiday period. Visitation at those resorts continued to be challenging and below our expectations in January, with Whistler Blackcomb experiencing a weaker than expected recovery in North American and international destination visitation. In total, visitation across our Pacific Northwest resorts was down 14% compared to the prior year for the second quarter. After a challenging start in the early season, destination guest visitation at our western U.S. resorts improved significantly during the holiday period and was in line with our expectations. The improvement continued through January though Colorado was modestly below our expectations for the post-holiday period, partially offset by strong performance at our Park City resort. Our Northeast resorts are off to a great start to the season, supported by the continued benefit from our expanded Northeast network which has been partially offset by challenging weather variability across the Midwest resorts.
"Including results from Peak Resorts, total lift revenue increased 8.2%, driven by an 8.8% growth in skier visitation. Total effective ticket price ("ETP") decreased 0.5% in the second quarter compared to the prior year, with price increases in both our lift ticket and season pass products offset by the inclusion of results from Peak Resorts which generates lower ETP. Excluding season pass holders and Peak Resorts, ETP increased 4.0% compared to the prior year. Ski school, dining and retail/rental revenues increased 11.4%, 15.8% and 4.1% compared to the prior year, respectively, primarily driven by the inclusion of Peak Resorts."
Regarding the Company's Lodging segment, Katz said, "Our lodging business experienced mixed results during the quarter, with revenue (excluding payroll cost reimbursements) increasing 8.4% compared to the prior year, primarily due to the incremental operations of Peak Resorts, partially offset by softer results at our Colorado properties, in part due to weaker group demand in comparison to the prior year period."
Regarding the Company's outlook, Katz said, "Given the uncertainty surrounding the impact of the coronavirus on the broader U.S. travel market and any specific impact to the performance of our Company, we are not issuing guidance at this time for fiscal 2020 and are withdrawing our previous guidance issued on January 17, 2020. In the week ended March 8, 2020, we saw a marked negative change in performance from the prior week, with destination skier visits modestly below expectations. We expect this trend to continue and potentially worsen in upcoming weeks."
Regarding capital allocation, Katz said, "We remain confident in the strong cash flow generation and stability of our business model. We will continue to be disciplined stewards of our capital and remain committed to strategic, high-return capital projects, continuous investment in our people, strategic acquisition opportunities and returning capital to our shareholders through our quarterly dividend and share repurchase programs. We are pleased to announce that the Board of Directors declared a quarterly cash dividend on Vail Resorts' common stock of $1.76 per share, payable on April 9, 2020 to shareholders of record on March 26, 2020. Given the current market instability caused by the coronavirus, we are deferring our decision on a dividend increase until June." Katz added, "Our balance sheet remains very strong. We ended the second quarter with $126.8 million of cash on hand and our Net Debt was 2.4 times trailing twelve months Total Reported EBITDA, though it is important to note that this ratio only includes Peak Resorts' results for the period between closing and quarter end, and we expect that ratio to decline as we incorporate a full year of results from Peak Resorts."
Regarding calendar year 2020 capital expenditures, Katz said, "We remain committed to reinvesting in our resorts, creating an experience of a lifetime for our guests and generating strong returns for our shareholders. The Company expects to invest approximately $155 million to $160 million, excluding one-time items associated with integrations, the one-time Triple Peaks and Stevens Pass transformation plan, one-time Peak Resorts capital improvements, real estate related capital and $4 million of reimbursable investments associated with insurance recoveries that we had originally expected to occur in calendar 2019.
"As previously announced, the calendar year 2020 capital plan includes a rare opportunity to expand with a 250 acre lift-served terrain expansion in the signature McCoy Park area of Beaver Creek, further differentiating the resort's high-end, family focused experience. We also plan to add a new four-person high speed lift at Breckenridge to serve the popular Peak 7, a replacement of the Peru lift at Keystone, subject to governmental approvals, with a six-person high speed chairlift, and a significant 250 seat increase in the seating capacity at the Rendezvous Lodge Restaurant on Blackcomb Mountain. We remain highly focused on investments that will further our company-wide data driven approach, including the second phase of implementing our automated digital marketing platform that will allow us to aggregate a more holistic view of the guest that will drive improvements in personalization and engagement across all lines of business, including ski school and rentals. We are also planning to completely revamp and upgrade our digital ski rental online platforms and our EpicMix mobile app, which will offer new functionality and an improved user experience. We plan to continue to invest in corporate infrastructure and technology to improve our scalability and efficiency, including the first phase of implementation of an automated workforce planning system to optimize our labor scheduling and improved financial systems to enhance business analytics.
"We are planning to complete the $3 million initial phase of a two-year, $15 million investment program across Peak Resorts. We are also planning to complete the second and final phase of a two-year, $35 million investment program for Crested Butte, Okemo and Stevens Pass and planning to spend approximately $24 million on integration activities primarily related to Peak Resorts.
"Including one-time items associated with integrations, the one-time Triple Peaks and Stevens Pass transformation plan, one-time Peak Resorts capital improvements, real estate related capital and $4 million of reimbursable investments associated with insurance recoveries that we had originally expected to occur in calendar 2019, we expect our total capital plan to be approximately $210 million to $215 million."
Regarding the Company's Lodging segment, Katz said, "Our lodging business experienced mixed results during the quarter, with revenue (excluding payroll cost reimbursements) increasing 8.4% compared to the prior year, primarily due to the incremental operations of Peak Resorts, partially offset by softer results at our Colorado properties, in part due to weaker group demand in comparison to the prior year period."
Regarding the Company's outlook, Katz said, "Given the uncertainty surrounding the impact of the coronavirus on the broader U.S. travel market and any specific impact to the performance of our Company, we are not issuing guidance at this time for fiscal 2020 and are withdrawing our previous guidance issued on January 17, 2020. In the week ended March 8, 2020, we saw a marked negative change in performance from the prior week, with destination skier visits modestly below expectations. We expect this trend to continue and potentially worsen in upcoming weeks."
Regarding capital allocation, Katz said, "We remain confident in the strong cash flow generation and stability of our business model. We will continue to be disciplined stewards of our capital and remain committed to strategic, high-return capital projects, continuous investment in our people, strategic acquisition opportunities and returning capital to our shareholders through our quarterly dividend and share repurchase programs. We are pleased to announce that the Board of Directors declared a quarterly cash dividend on Vail Resorts' common stock of $1.76 per share, payable on April 9, 2020 to shareholders of record on March 26, 2020. Given the current market instability caused by the coronavirus, we are deferring our decision on a dividend increase until June." Katz added, "Our balance sheet remains very strong. We ended the second quarter with $126.8 million of cash on hand and our Net Debt was 2.4 times trailing twelve months Total Reported EBITDA, though it is important to note that this ratio only includes Peak Resorts' results for the period between closing and quarter end, and we expect that ratio to decline as we incorporate a full year of results from Peak Resorts."
Regarding calendar year 2020 capital expenditures, Katz said, "We remain committed to reinvesting in our resorts, creating an experience of a lifetime for our guests and generating strong returns for our shareholders. The Company expects to invest approximately $155 million to $160 million, excluding one-time items associated with integrations, the one-time Triple Peaks and Stevens Pass transformation plan, one-time Peak Resorts capital improvements, real estate related capital and $4 million of reimbursable investments associated with insurance recoveries that we had originally expected to occur in calendar 2019.
"As previously announced, the calendar year 2020 capital plan includes a rare opportunity to expand with a 250 acre lift-served terrain expansion in the signature McCoy Park area of Beaver Creek, further differentiating the resort's high-end, family focused experience. We also plan to add a new four-person high speed lift at Breckenridge to serve the popular Peak 7, a replacement of the Peru lift at Keystone, subject to governmental approvals, with a six-person high speed chairlift, and a significant 250 seat increase in the seating capacity at the Rendezvous Lodge Restaurant on Blackcomb Mountain. We remain highly focused on investments that will further our company-wide data driven approach, including the second phase of implementing our automated digital marketing platform that will allow us to aggregate a more holistic view of the guest that will drive improvements in personalization and engagement across all lines of business, including ski school and rentals. We are also planning to completely revamp and upgrade our digital ski rental online platforms and our EpicMix mobile app, which will offer new functionality and an improved user experience. We plan to continue to invest in corporate infrastructure and technology to improve our scalability and efficiency, including the first phase of implementation of an automated workforce planning system to optimize our labor scheduling and improved financial systems to enhance business analytics.
"We are planning to complete the $3 million initial phase of a two-year, $15 million investment program across Peak Resorts. We are also planning to complete the second and final phase of a two-year, $35 million investment program for Crested Butte, Okemo and Stevens Pass and planning to spend approximately $24 million on integration activities primarily related to Peak Resorts.
"Including one-time items associated with integrations, the one-time Triple Peaks and Stevens Pass transformation plan, one-time Peak Resorts capital improvements, real estate related capital and $4 million of reimbursable investments associated with insurance recoveries that we had originally expected to occur in calendar 2019, we expect our total capital plan to be approximately $210 million to $215 million."
Vail Resorts (NYSE: MTN) stock price history
The image below, obtained from Google, shows the stock price history of Vail Resorts (NYSE: MTN) over the last 5 years. And it's been a very good time for Vail Resorts (NAYSE: MTN) stockholders over the last 5 years (even with the sharp decline in its stock price due to the impact of the Coronavirus). 5 years ago the stock was trading at around $96.90 and its currently trading at $184.80. That's a impressive return of 90.7% over the last 5 years.
The stock of Vail Resorts is trading at a lot closer to its 52 week low of $180.05 than it is to its 52 week high of $255.37 which to us is a clear indication that the short term sentiment and momentum of Vail Resorts stock is very negative at this point in time, thanks to the Coronavirus.
The stock of Vail Resorts is trading at a lot closer to its 52 week low of $180.05 than it is to its 52 week high of $255.37 which to us is a clear indication that the short term sentiment and momentum of Vail Resorts stock is very negative at this point in time, thanks to the Coronavirus.
Recent coverage of Vail Resorts
The extract below discusses the impact of Coronavirus on various travel and leisure stocks listed as obtained from Forbes.com
The markets have reacted strongly to the increase in cases of the novel coronavirus outside of China and hotel stocks have taken a meaningful hit, considering the impact that the outbreak could have on hotel occupancy rates and the broader global travel industry. Marriott International (NASDAQ: MAR) stock has fallen by close to 20% over the last two weeks, as over 15% of Marriott’s total rooms are located in the Asia Pacific region, which has been the worst impacted by the outbreak. In this analysis, we take a look at how the company’s stock reacted to the H1N1 epidemic of 2009 to understand whether it could go lower from here or if it might be time to get in.
View our interactive dashboard analysis Coronavirus Knocked -14.9% From Marriott International Stock, Time To Buy?
Read the full article here
The markets have reacted strongly to the increase in cases of the novel coronavirus outside of China and hotel stocks have taken a meaningful hit, considering the impact that the outbreak could have on hotel occupancy rates and the broader global travel industry. Marriott International (NASDAQ: MAR) stock has fallen by close to 20% over the last two weeks, as over 15% of Marriott’s total rooms are located in the Asia Pacific region, which has been the worst impacted by the outbreak. In this analysis, we take a look at how the company’s stock reacted to the H1N1 epidemic of 2009 to understand whether it could go lower from here or if it might be time to get in.
View our interactive dashboard analysis Coronavirus Knocked -14.9% From Marriott International Stock, Time To Buy?
- On Jan 31, the WHO declared the outbreak a global health emergency. Feb 25 is when the Center for Disease Control raised alarm about the broader worldwide spread and in US communities.
- In comparison, Vail Resorts Stock has decreased by 14.2% since the end of Jan and the S&P 500 is down by under 5% over the same period. (related analysis: Coronavirus Knocked -13.3% From Vail Resorts Stock, Time To Buy?)
Read the full article here
Vail Resorts (NYSE:MTN) latest stock valuation
So based on the latest earnings report and the withdrawal of their previous guidance provided by Vail Resorts (ENYS: MTN) due to the Coronavirus and the difficulties in assessing the impact it will have on Vail Resorts future earnings what do we value Vail Resorts (MTN) stock at? It is extremely hard to value Vail Resorts after such a strong quarter they reported on but with significant dark clouds hanging over them and the whole tourism industry due to the Coronavirus. But based on Vail Resorts earnings report and our estimate of the loss in earnings they are likely to suffer due to Coronavirus our valuation models sets a target (full value) price of $154.20. (down significantly from our last valuation of Vail Resorts).
We therefore believe the stock of Vail Resorts is overvalued.
We would not advise long term fundamental or value investors buy into the stock of Vail at its current price levels and with the Coronavirus fears around. At this point we rate Vail Resorts as Avoid.
We therefore believe the stock of Vail Resorts is overvalued.
We would not advise long term fundamental or value investors buy into the stock of Vail at its current price levels and with the Coronavirus fears around. At this point we rate Vail Resorts as Avoid.
Next earnings release of Vail Resorts
It is expected that Vail Resorts Q3 2019 earnings release in early June 2020