Vail Resorts Details Economic Hit from Closures
Vail Resorts, Inc. (NYSE: MTN) today provided updated commentary on its fiscal 2020 results and the evolving impact of COVID-19 on its business and results of operations.
Rob Katz, Chief Executive Officer, said, “Given the escalating concerns surrounding the global spread of COVID-19 and the potential impact that continuing to operate our resorts would have on our community medical systems, we made the difficult decision to suspend the operations at all of our North American mountain resorts and retail stores beginning Sunday, March 15, 2020. We determined yesterday that these resorts will remain closed through the remainder of the 2019/2020 North American ski season, and our lodging properties and transportation business will close as well. The Company will consider reopening Breckenridge Ski Resort in Colorado, Heavenly Mountain Resort in Lake Tahoe and Whistler Blackcomb in British Columbia in late April/early May, dependent on the situation with COVID-19 as well as weather conditions. We knew this decision would impact our employees, guests, and local communities and would also have a significant negative impact on our financial results. However, our top priority is the health and wellbeing of all our constituents and stakeholders, and we believe this decision was absolutely the right one.
“Given the closure of our operations as a result of COVID-19, we anticipate that our operating results for March and April will have a negative impact of $180 million to $200 million compared to the Resort Reported EBITDA expectation we had as of March 1, 2020. If we are able to reopen certain resorts before the end of the season, we believe such a decision will not have a material impact, positive or negative, on our results for Fiscal 2020. We are currently expecting to be fully operational for the North American summer and Australian ski season for all of our businesses, however that will remain subject to the ongoing situation with COVID-19. Additionally, even if we are fully operational, we expect that our results in the fourth quarter of fiscal 2020 will be negatively impacted by the current economic and travel environment, but we are not able to fully assess that impact at this time. Our primary revenue generating businesses in the fourth fiscal quarter are our three ski areas in Australia, the Grand Teton Lodge Company in Wyoming and our summer mountain and lodging operations at our North American resorts.
“The Company went into this challenging time period with a strong financial position with Net Debt of 2.4 times trailing twelve months Total Reported EBITDA at the end of the second quarter of fiscal 2020. We expect to have cushion on all of our financial covenants related to our Eighth Amended and Restated Credit Agreement throughout the remainder of fiscal 2020. We also have significant liquidity through our cash on hand, our $500 millionU.S. revolver and our C$300 million Canadian revolver associated with Whistler Blackcomb. While we entered this situation in a strong financial position, we believe the potentially challenging economic environment ahead requires us to review our previously announced calendar year 2020 capital plans and our plans for returning capital to shareholders and will provide updates on those plans as we finalize decisions.
“As we look further into the future, we believe the underlying strengths of our business position us very well with our outstanding network of destination, regional and local resorts, the stability, loyalty and value offered through our advanced commitment pass products and our new Epic Mountain Rewards program that provides additional value to our guests who purchase their pass products ahead of the season. Additionally, our data-driven marketing efforts provide the ability to target and personalize messages and value-based offers to our guests and our effort to centralize our corporate functions across our resorts allows us to be more sophisticated and efficient in how we support our resort operations. We are grateful for the commitment of our employees and community partners as we collectively work to contain the spread of COVID-19 with a focus on the health and safety of our employees, guests and communities. We are confident that we will all navigate through this challenging environment together.”
About Vail Resorts, Inc. (NYSE: MTN)
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). The Vail Resorts company website is www.vailresorts.com and consumer website is www.snow.com.