Vail Resorts lowers earnings expectations beyond already low guidance

But resort reported earnings did increase 8% over same period of prior year

Snow comes down as guests make their way through the village March 6 in Vail.
Chris Dillmann/Vail Daily archive

Vail Resorts, in a call to investors on Monday, lowered its guidance beyond what it had issued in January, citing weather concerns at its North American ski resorts.

In January, the company told investors it expects earnings for fiscal 2024 to be “in the lower half of the guidance” it had issued in September. On Monday, CEO Kirsten Lynch said that due to the season-to-date underperformance, the company is lowering its guidance for fiscal 2024 and now expects net income attributable to Vail Resorts to be between $270 million and $325 million, and resort reported EBITDA for fiscal 2024 to be between $849 million and $885 million.

“While we are lowering guidance for the fiscal year, we know that the financial impact of the weather disruptions was greatly mitigated by our advance commitment products, which create stability for our company, our shareholders, and our communities in exchange for an incredible value to the guest,” Lynch said.

The news did not come as a surprise to investment banks, which had already begun downgrading ratings and lowering price targets on the stock before Monday’s remarks.

Bank of America, on Friday, downgraded its Vail Resorts stock rating from buy to neutral and set a price target of $250, down from $285, saying the company’s earnings goals could get more challenging in the future.

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Morgan Stanley, on Thursday, gave the company an equal weight rating and kept its price target nearly the same, going from $247 to $248.

Truist Securities maintained a buy rating in a note issued Monday but lowered its price target to $265 from $290, pointing out that Vail Resorts has cited disappointing weather in numerous forecasts in recent years.

“Following several consecutive years of weather-driven disappointments, we are going to begin 2025 financial expectations with a more conservative overall stance/base case,” wrote analyst Patrick Scholes, who covers Vail Resorts stock.

Scholes, during the question-and-answer portion of Monday’s call to investors, asked if the disappointing performance was coming from out-of-town visitors, in-state guests, or both.

“Both segments were impacted due to the snow conditions,” Lynch said. “Across the board, we saw impacts.”

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Lynch said all of the company’s North American resorts saw challenging snow conditions through January, saying this year saw 42% lower snowfall across the Western North American resorts compared to the same period in the prior year.

But during the prior year, Vail Resorts also cited weather for lowered earnings expectations. This came even though many areas of the country saw record snowfall during 2022-23, contributing to record visitation for ski resorts in North America.

In a similar call one year ago, in which the company also reduced its guidance, Chief Financial Officer Angela Korch said season-to-date results at the company’s eastern U.S. resorts were negatively impacted by periods of both unseasonably warm and extremely cold weather, which disrupted operating days.

In January 2023, while explaining to investors why season-to-date destination guest visitation at western U.S. resorts was below expectations, the company cited extreme weather that had caused resort closures and airline disruptions.

The volatility caused by unpredictable weather did result in a bright spot in the company’s projections issued Monday, however. Resort reported earnings before interest, taxes, depreciation, and amortization in the second quarter increased approximately 8% compared to the prior year. This, Lynch said, was primarily driven by the stability created by the company’s season pass sales, which increased 8.3% compared to the prior year.

“Given the unfavorable conditions across our North American resorts, we are pleased that our results for the quarter demonstrate the resiliency of our strategic business model and our network of resorts and loyal guests,” Lynch said.

Lynch also pointed out that while the Christmas and New Year’s holiday period may have been disappointing this season, by the Martin Luther King Jr. holiday, conditions had improved in Vail Resorts Rocky Mountain and Eastern resorts. By Jan. 15, Vail Mountain’s snowpack had swelled to 115% of the 30-year median. Snowpack on Vail Mountain is currently at 106% of the 30-year average.

The good snow conditions, however, have not resulted in an immediate improvement in visitation, Lynch said.

“We expect a portion of the lower visitation is related to the challenging conditions in the first half of the season as well as a shift in visitation patterns,” Lynch said. “Despite the decline in season-to-date visitation relative to the prior year period, we are pleased with lift revenue growth driven by the stability created from the season pass program, the strength in ancillary spending per skier visits across our ski school, dining, and rental businesses, and the improving trends as the season progresses.”

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