New Stowe owner Vail reports 14.9% hike in net income

Vermont Business Magazine Vail Resorts, Inc(NYSE: MTN) today reported results for its third quarter endedApril 30, 2017, as well as the company's results of its early season pass sales for the 2017/2018 North American ski season.Net income attributable to Vail Resorts, Inc. was$181.1 millionfor the third quarter of fiscal 2017, an increase of 14.9% compared to net income attributable to Vail Resorts, Incof$157.6 millionfor the third fiscal quarter of 2016. Vail closed on its $41 million purchase of Stowe Mountain Resort on Wednesday. SEE STORY

Highlights

• Net income attributable to Vail Resorts, Inc. was$181.1 millionfor the third quarter of fiscal 2017, an increase of 14.9% compared to net income attributable to Vail Resorts, Inc. of$157.6 millionfor the third fiscal quarter of 2016. Included in net income for the third quarter of fiscal 2017, on a pre-tax basis, are charges for an increase in the Canyons contingent consideration of$14.5 million, foreign currency losses of$9.1 millionon the intercompany loan to Whistler Blackcomb and a future contribution toTown of Vailparking of$4.3 million.
• Resort Reported EBITDA was$392.0 millionfor the third fiscal quarter of 2017, which includes the operations of Whistler Blackcomb Holdings Inc. ("Whistler Blackcomb") and$2.3 millionof transaction, transition and integration costs associated with the Whistler Blackcomb and Stowe Mountain Resort ("Stowe") acquisitions. Excluding transaction, transition and integration costs and Whistler Blackcomb operations in the third quarter of fiscal 2017 and$3.5 millionof Lodging Reported EBITDA associated with the termination of the Company's management agreement with respect to the Half Moon Resort inJamaicain the third quarter of fiscal 2016, Resort Reported EBITDA in the third fiscal quarter increased 7.0% compared to the same period in the prior year.
• OnJune 7, 2017, the Company announced the closing of the acquisition ofStowe. The final purchase price, after adjustments, was approximately$41 million.Stowewill be included on the Epic Pass and other season pass products for the 2017/2018 ski season.
• Resort Reported EBITDA is expected to be between$591 million and $600 millionfor fiscal 2017, which includes approximately$10.0 millionof Whistler Blackcomb transaction and integration expenses, approximately$2.2 millionofStowetransaction and integration expenses, and$3.5 millionof expectedStoweoperating losses related to the period between closing and the end of the fiscal year. Excluding the expectedStoweoperating losses andStowetransaction and integration expenses, we expect our Resort Reported EBITDA to be between$597 million and $606 millionfor fiscal 2017.
• Season pass sales for the 2017/2018 North American ski season increased approximately 10% in units and approximately 16% in sales dollars throughMay 30, 2017compared with the prior year period endedMay 31, 2016, including Whistler Blackcomb pass sales at comparable exchange rates in both periods.

Commenting on the Company's fiscal 2017 third quarter results,Rob Katz, Chief Executive Officer said, "We are pleased with our performance in the quarter and for the entirety of the 2016/2017 North American ski season. Including results from Whistler Blackcomb, total lift revenue increased 25.3%, driven by a 26.0% growth in visitation partially offset by a 0.5% decrease in effective ticket price ("ETP") compared to the same period in the prior year. The ETP decline was driven by the inclusion of Whistler Blackcomb's ETP in results in fiscal 2017 which are lower on a U.S. dollar basis than the Company average. Excluding Whistler Blackcomb, ETP increased 7.5% in the third fiscal quarter compared to the prior year. Guest spending continues to be strong which, with the addition of Whistler Blackcomb, drove a 23.5% increase in ski school revenue, a 28.7% increase in food and beverage revenue and a 28.6% increase in retail and rental revenue, compared to the same period in the prior year."

"Results from Whistler Blackcomb in the third quarter of fiscal 2017 continued to be exceptionally strong with the resort completing the season with significant growth above its record prior year. The resort benefited from excellent conditions throughout the season, a low Canadian dollar versus U.S. dollar exchange rate driving significant destination growth from U.S. and other international guests and the outstanding experience the resort provides. Excluding Whistler Blackcomb operations, total lift revenue increased 5.6%.Park Citycontinued to deliver the strongest growth among our U.S. resorts driven by growing destination visitation and yield improvements in our second season following the transformational investments to combinePark Cityand Canyons. The Tahoe resorts benefited from excellent conditions following the storms in January and achieved record revenue levels in all key business lines. InColorado, strong guest spending drove results that were in-line with last year's record performance despite weaker snowfall later in the season. Third quarter U.S. destination visitation to our U.S. resorts remained robust, despite significant growth in the number of U.S. destination visitors going to Whistler Blackcomb. The strength in U.S. destination visitation to our U.S. resorts was partially offset by a decline in international visitation to our U.S. resorts from bothMexicoandCanada, a trend that significantly benefited Whistler Blackcomb."

Katz continued, "Our year-to-date results highlight the continued success of our season pass and guest-focused marketing efforts, the importance of geographic and currency diversification in our resort network and the outstanding experience we provide at our resorts. Our growth in season pass sales continues to be driven by sales to both local and destination guests who increasingly appreciate our network of resorts and the compelling value proposition our season pass products offer for their ski vacations. We also continue to benefit from our improved ability to segment and personalize our marketing messages to guests resulting from the significant investments we have made in data capture and analytics over the past several years."

Regarding Lodging, Katz said, "Our Lodging results for the third fiscal quarter were impacted by the variable late season conditions inColorado(which comprise a disproportionate amount of our Lodging portfolio versus our properties inUtah,Californiaand Whistler) and the sale of the Inn atKeystoneinNovember 2016. Revenue (excluding payroll cost reimbursements) decreased 6.3% and revenue per available room ("RevPAR") increased 0.3% compared to the same period in the prior year, which included the receipt of a one-time$3.5 milliontermination fee for Half Moon Resort inJamaica."

Katz continued, "Resort Reported EBITDA was$392.0 millionfor the fiscal quarter, an increase of 27.9% over the same period in the prior year, primarily as a result of the acquisition of Whistler Blackcomb. Resort EBITDA Margin for the quarter was 49.6%, an increase of 210 basis points."

Regarding Real Estate, Katz said, "During the fiscal quarter, we closed on two condominium units at Ritz-Carlton Residences,Vail. Net Real Estate Cash Flow for the third quarter of fiscal 2017 was$2.8 million. SinceApril 30, 2017, we have closed on the last remaining condominium unit at Ritz-Carlton Residences,Vail. We are now sold-out of our One Ski Hill Place and Ritz-Carlton Residences,Vailresidential condominium projects. Real Estate EBITDA for the third quarter of fiscal 2017 includes a$4.3 millionone-time charge related to our expected contribution to a new, to be constructed,Town of Vailowned 160 space public parking structure, in a project that was recently identified by the Town. The creation of this new public parking and our related contribution has been under consideration for over a decade and will be a great enhancement to the guest experience asVailcontinues to grow."

Katz continued, "Our balance sheet remains strong and the business continues to generate robust cash flow. We ended the quarter with$195.8 millionof cash on hand and our Net Debt, including the capitalized Canyons obligation, was 1.7 times trailing twelve months Total Reported EBITDA, which includes our outstanding debt of$1.2 billionas ofApril 30, 2017. I am also very pleased to announce that our Board of Directors has declared a quarterly cash dividend onVail Resorts'common stock. The quarterly dividend will be$1.053per share of common stock and will be payable onJuly 13, 2017 to shareholders of record onJune 28, 2017."

Operating Results

A complete Management's Discussion and Analysis of Financial Condition and Results of Operations can be found in the Company's Form 10-Q for the third quarter endedApril 30, 2017filed today with the Securities and Exchange Commission. The following are segment highlights for the three month period endedApril 30, 2017:

Mountain Segment

• Total lift revenue increased$84.9 million, or 25.3%, compared to the same period in the prior year, to$419.6 million, primarily due to incremental revenue fromWhistler Blackcomb. ExcludingWhistler Blackcomb, total lift revenue increased 5.6% compared to the same period in the prior year.
• Ski school revenue increased$17.4 million, or 23.5%,compared to the same period in the prior year, primarily as a result of incrementalWhistler Blackcombrevenue. ExcludingWhistler Blackcomb, ski school revenue increased 2.9% compared to the same period in the prior year.
• Dining revenue increased$14.6 million, or 28.7%, compared to the same period in the prior year, primarily due to incremental revenue fromWhistler Blackcomb. ExcludingWhistler Blackcomb, dining revenue increased 0.6%.
• Retail/rental revenue increased$22.7 million, or 28.6%,compared to the same period in the prior year, primarily due to incremental retail sales and rental revenue fromWhistler Blackcomb. ExcludingWhistler Blackcomb, retail/rental revenue increased 3.4%.
• Operating expense increased$58.4 million, or 20.7%, compared to the same period in the prior year, primarily due to the inclusion of operating expenses fromWhistler Blackcomband$2.3 millionof transaction, transition and integration expenses associated with theWhistler BlackcombandStoweacquisitions.
• Mountain Reported EBITDA increased$90.2 million, or 31.0%, compared to the same period in the prior year. Excluding transaction, transition and integration expenses related to the Whistler Blackcomb andStoweacquisitions of$2.3 million and Whistler Blackcomboperations, Mountain Reported EBITDA increased 7.9%.
• Mountain Reported EBITDA includes$3.6 millionof stock-based compensation expense for the three months endedApril 30, 2017compared to$3.3 millionin the same period in the prior year.

Lodging Segment

• Lodging segment net revenue (excluding payroll cost reimbursements) decreased$4.4 million, or 6.3%, as compared to the same period in the prior year, primarily due to the$3.5 millionHalf Moon termination fee received in the prior year, variable late season conditions inColoradoduring the current fiscal quarter and the sale of the Inn atKeystoneinNovember 2016.
• Occupancy decreased 3.9 percentage points and Average Daily Rate ("ADR") increased 8.5% at the Company's owned hotels and managed condominiums compared to the same period in the prior year.
• Lodging Reported EBITDA decreased$4.8 million, or 31.0%, compared to the same period in the prior year, primarily due to the$3.5 millionHalf Moon termination fee received in the prior year, variable late season conditions inColoradoduring the current fiscal quarter and the sale of the Inn atKeystoneinNovember 2016.
• Lodging Reported EBITDA includes$0.8 millionof stock-based compensation expense for both the three months endedApril 30, 2017and 2016.

Resort - Combination of Mountain and Lodging Segments

• Resort net revenue increased$144.0 million, or 22.3%, to$789.8 millioncompared to the same period in the prior year, primarily attributable to revenue fromWhistler Blackcomb.
• Resort Reported EBITDA was$392.0 million, an increase of$85.4 million, or 27.9%, compared to the same period in the prior year. Excluding transaction, transition and integration costs and Whistler Blackcomb operations in the third quarter of fiscal 2017 and$3.5 millionof Lodging Reported EBITDA associated with the termination of the Company's management agreement with respect to the Half Moon Resort inJamaicain the third quarter of fiscal 2016, Resort Reported EBITDA in the third fiscal quarter increased 7.0% compared to the same period in the prior year.

Real Estate Segment

• Real Estate segment net revenue increased$3.1 million as compared to the same period in the prior year.
• Net Real Estate Cash Flow was$2.8 million, an increase of$2.2 millionfrom the same period in the prior year.
• Real Estate Reported EBITDA decreased by$3.6 million, to a loss of$4.9 million,compared to the same period in the prior year, including the$4.3 millionone-time charge related to the resolution of our financial contribution to the newTown of Vailpublic parking structure.

Total Performance

• Total net revenue increased$147.2 million, or 22.7%, to$794.6 millionas compared to the same period in the prior year.
• Net income attributable toVail Resorts, Inc.was$181.1 million, or$4.40per diluted share compared to net income attributable toVail Resorts, Inc.of$157.6 million, or$4.23per diluted share, in the same period of the prior year. Included in net income for the third quarter of fiscal 2017, on a pre-tax basis, are charges for an increase in the Canyons contingent consideration of$14.5 million, foreign currency losses of$9.1 millionon the intercompany loan to Whistler Blackcomb and a future contribution toTown of Vailparking of$4.3 million.

Return of Capital

The Company declared a quarterly cash dividend of$1.053per share of Vail Resorts common stock that will be payable onJuly 13, 2017to shareholders of record onJune 28, 2017. Additionally, a Canadian dollar equivalent dividend on the exchangeable shares of Whistler Blackcomb will be payable onJuly 13, 2017to exchangeable shareholders of record onJune 28, 2017. The exchangeable shares were issued to certain Canadian persons in connection with our acquisition of Whistler Blackcomb.

Stowe Mountain Resort

OnJune 7, 2017, the Company announced the closing of theStoweacquisition. The final purchase price, after adjustments, including a reduction in the price by the amount that the resort's EBITDA exceeded capital expenditures for the period fromNovember 1, 2016through closing, was approximately$41 million.Stoweis now included on the Epic Pass and other season pass products for the 2017/2018 ski season, though full integration will not occur until after the 2017/2018 ski season.

Season Pass Sales

Commenting on the Company's season pass sales for the upcoming 2017/2018 North American ski season, Katz said, "We are very pleased with the results for our season pass sales to date. Pass sales throughMay 30, 2017for the upcoming 2017/2018 North American ski season increased approximately 10% in units and approximately 16% in sales dollars, as compared to the prior year period throughMay 31, 2016. This represents continued significant growth over our record unit performance last spring (up 29% over spring 2015) and in the spring of 2015 (up 12% over spring 2014). Our spring pass sales included strong growth from our destination guests and particular strength in ourNorthern Californiaand Pacific Northwest local markets following great conditions in the 2016/2017 ski season and the full inclusion of Whistler Blackcomb on the Epic Pass for next season. Whistler Blackcomb pass products are included in both current and prior year periods at comparable exchange rates with the exception of one and three day EDGE cards, the vast majority of which were sold after the beginning of the ski season and will not be offered for the 2017/2018 ski season. While in the past two years we have seen a material deceleration of our pass sales growth rate from spring results to fall results, we expect the growth rate this year to be more stable between the two time periods."

Katz continued, "We look forward to being able to fully includeStowein our season pass marketing efforts this fall and incorporating the guest information they have into our data-based, CRM efforts. Further, we look forward to beginning our more comprehensive guest information collection effort at Whistler Blackcomb for the upcoming season. Historically, Whistler Blackcomb has had information on only approximately 20% of their non-season pass guests, dramatically lower than our U.S. resorts' data capture of approximately 96%. We have found that this information and the ability to better segment and personalize our communications to our guests has been one of the largest drivers of our season pass growth in past years, setting us up very well for continued pass sales growth for fiscal 2019 and beyond."

Regarding Epic Australia Pass sales, Katz commented, "Perisher's 2017 ski season kicked off one week earlier than scheduled onJune 3, and we are very pleased with sales of the Epic Australia Pass, which end onJune 12, 2017and are up 21% in units throughJune 4, 2017, as compared to the prior year period throughJune 5, 2016, benefiting from the addition of Whistler Blackcomb to the resort network, which is one of the top North American ski destinations of choice for Australians."

Epic Discovery Update

Commenting on the launch of Epic Discovery atBreckenridgethis summer, Katz said, "We are very excited to welcome visitors to the first year of Epic Discovery atBreckenridge, which will officially open this weekend along with our second full years atVailand Heavenly. Our summer guests will have the opportunity to enjoy a great lineup of activities for the whole family, including ropes courses, zip lines, summer tubing and alpine coasters, along with incredible opportunities for experiential learning in a high alpine environment."

Outlook

• Fiscal 2017 Resort Reported EBITDA is expected to be between$591 millionand$600 million, which includes approximately$10.0 millionof Whistler Blackcomb transaction and integration expenses, approximately$2.2 millionofStowetransaction and integration expenses, and$3.5 millionof expectedStoweoperating losses related to the period between closing and the end of the fiscal year. Excluding the expectedStoweoperating losses andStowetransaction and integration expenses, we expect our Resort Reported EBITDA to be between$597 million and $606 millionfor fiscal 2017. Resort EBITDA Margin (defined as Resort Reported EBITDA divided by Resort net revenue) is expected to be approximately 31.4% in fiscal 2017, at the midpoint of our guidance range.
• Fiscal 2017 Real Estate Reported EBITDA is now expected to be betweennegative$2millionand$0 million, including the$4.3 millioncontribution to theTown of Vailparking garage.
• Net income attributable toVail Resorts, Inc.is expected to be between$183 millionand$201 millionin fiscal 2017.

The following table reflects the forecasted guidance range for the Company's fiscal year endingJuly 31, 2017, for Reported EBITDA (after stock-based compensation expense) and reconciles such Reported EBITDA guidance to net income attributable to Vail Resorts, Inc. guidance for fiscal 2017.

Earnings Conference Call

The Company will conduct a conference call today at11:30 a.m. eastern timeto discuss the financial results. The call will be webcast and can be accessed atwww.vailresorts.comin the Investor Relations section, or dial (888) 466-4462 (U.S. andCanada) or (719) 325-2348 (international). A replay of the conference call will be available two hours following the conclusion of the conference call throughJune 22, 2017, at12:30 p.m. eastern time. To access the replay, dial (888) 203-1112 (U.S. andCanada) or (719) 457-0820 (international), pass code 1497844. The conference call also will be archived atwww.vailresorts.com.

About Vail Resorts, Inc. (NYSE: MTN)

Vail Resorts, Inc., through its subsidiaries, is the leading global mountain resort operator. The Company's subsidiaries operate eleven world-class mountain resorts and three urban ski areas, includingVail,Beaver Creek,BreckenridgeandKeystoneinColorado;Park CityinUtah; Heavenly,NorthstarandKirkwoodin theLake Tahoearea ofCaliforniaandNevada; Whistler Blackcomb inBritish Columbia, Canada;StoweinVermont; Perisher inNew South Wales, Australia;Wilmot MountaininWisconsin; Afton Alps inMinnesotaand Mt.BrightoninMichigan. Vail Resorts owns and/or manages a collection of casually elegant hotels under the RockResorts brand, as well as the Grand Teton Lodge Company inJackson 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). The Vail Resorts company website iswww.vailresorts.comand consumer website iswww.snow.com.

Forward-Looking Statements

Certain statements discussed in this press release and on the conference call, other than statements of historical information, are forward-looking statements within the meaning of the federal securities laws, including our expectations regardingStoweoperating losses for the remainder of fiscal 2017, the anticipated integration ofStoweinto the Company, including on the Epic Pass, our pass sales growth rate, our expected contribution to theTown of Vailparking structure and capital expenditures planned for summer 2017 as well as our fiscal 2017 performance, including our expected Resort Reported EBITDA, Resort EBITDA margin, Real Estate Reported EBITDA and net income attributable to Vail Resorts, Inc. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. All forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. Such risks and uncertainties include but are not limited to prolonged weakness in general economic conditions, including adverse effects on the overall travel and leisure related industries; unfavorable weather conditions or natural disasters; willingness of our guests to travel due to terrorism, the uncertainty of military conflicts or outbreaks of contagious diseases, the cost and availability of travel options and changing consumer preferences; the seasonality of our business combined with adverse events that occur during our peak operating periods; competition in our mountain and lodging businesses; high fixed cost structure of our business; our ability to fund resort capital expenditures; our reliance on government permits or approvals for our use of public land or to make operational and capital improvements; risks related to a disruption in our water supply that would impact our snowmaking capabilities; risks related to federal, state, local and foreign government laws, rules and regulations; risks related to our reliance on information technology, including our failure to maintain the integrity of our customer or employee data; adverse consequences of current or future legal claims; a deterioration in the quality or reputation of our brands, including our ability to protect our intellectual property and the risk of accidents at our mountain resorts; our ability to hire and retain a sufficient seasonal workforce; risks related to our workforce, including increased labor costs; loss of key personnel; our ability to successfully integrate acquired businesses or that acquired businesses may fail to perform in accordance with expectations, including Whistler Blackcomb andStoweor future acquisitions; our ability to realize anticipated financial benefits fromPark City; our ability to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, with respect to acquired businesses; risks associated with international operations; fluctuations in foreign currency exchange rates, particularly the Canadian dollar and Australian dollar; changes in accounting estimates and judgments, accounting principles, policies or guidelines; a materially adverse change in our financial condition; and other risks detailed in the Company's filings with the Securities and Exchange Commission, including the "Risk Factors" section of the Company's Annual Report on Form 10-K for the fiscal year endedJuly 31, 2016, which was filed onSeptember 26, 2016and the Company's Quarterly Report on Form 10-Q for the quarter endedOctober 31, 2016, which was filed onDecember 9, 2016.

All forward-looking statements attributable to us or any persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. All guidance and forward-looking statements in this press release are made as of the date hereof and we do not undertake any obligation to update any forecast or forward-looking statements whether as a result of new information, future events or otherwise, except as may be required by law.

Statement Concerning Non-GAAP Financial Measures

When reporting financial results, we use the terms Reported EBITDA, Resort EBITDA Margin, Net Debt and Net Real Estate Cash Flow, which are not financial measures under accounting principles generally accepted inthe United States of America("GAAP"). Reported EBITDA, Resort EBITDA Margin, Net Debt and Net Real Estate Cash Flow should not be considered in isolation or as an alternative to, or substitute for, measures of financial performance or liquidity prepared in accordance with GAAP. Accordingly, these measures may not be comparable to similarly-titled measures of other companies.

Reported EBITDA has been presented herein as a measure of the Company's performance. The Company believes that Reported EBITDA is an indicative measurement of the Company's operating performance, and is similar to performance metrics generally used by investors to evaluate other companies in the resort and lodging industries. The Company defines Resort EBITDA Margin as Resort Reported EBITDA divided by Resort net revenue. The Company believes Resort EBITDA Margin is an important measurement of operating performance. The Company believes that Net Debt is an important measurement of liquidity as it is an indicator of the Company's ability to obtain additional capital resources for its future cash needs. Additionally, the Company believes Net Real Estate Cash Flow is important as a cash flow indicator for its Real Estate segment. See the tables provided in this release for reconciliations of our measures of segment profitability and non-GAAP financial measures to the most directly comparable GAAP financial measures.

Reconciliation of Measures of Segment Profitability and Non-GAAP Financial Measures

Presented below is a reconciliation of Reported EBITDA to net income attributable to Vail Resorts, Inc. for the three and nine months endedApril 30, 2017and 2016.

The following table reconciles Resort Net Revenue to Resort EBITDA Margin for the three months endedApril 30, 2017and 2016.

Presented below is a reconciliation of Total Reported EBITDA to net income attributable to Vail Resorts, Inc. calculated in accordance with GAAP for the twelve months endedApril 30, 2017.

The following table reconciles Net Debt to long-term debt and the calculation of Net Debt to Total Reported EBITDA for the twelve months endedApril 30, 2017.

The following table reconciles Real Estate Reported EBITDA to Net Real Estate Cash Flow for the three and nine months endedApril 30, 2017and 2016.

The following table reconciles Resort net revenue to Resort EBITDA Margin for fiscal 2017 guidance.

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SOURCE Vail Resorts, Inc.http://www.snow.com