Vail Resorts lays out plans to investors as shares climb from year-to-date low
Vail Resorts on Tuesday released projections to stock analysts who have been tasked with following the company at its annual Investor Day presentation.
The presentation comes roughly halfway through Vail Resorts’ fiscal 2022 third quarter, a quarter in which analysts were mostly supportive, despite challenges following the bad press the company received for understaffing at several of its North American ski resorts during the 2021-22 season. Staff challenges contributed to customer dissatisfactiongranted Vail Resorts.
The company’s (NYSE:MTN) stock plunged on the negative attention, hitting a one-year low of $221 per share on March 7 after the stock hit $376 at one point in November. .
MTN has rebounded somewhat in recent days, closing at $263 on Tuesday; a March 15 announcement detailing how the company plans to recruit staff for next season, as well as the Launch of Vail Resorts Epic Pass for next season, is good news for investors.
At Tuesday’s Investor Day, analysts were briefed on the company’s future plans, including what Vail Resorts calls its subscription strategy of obtaining a pre-commitment of pre-purchased passes, as well as the company’s commitment to reinvest in its business model.
Patrick Scholes of Truist Securities released a report following the event, in which he noted that Vail Resorts is now much more aware of the challenges it will face in running its resorts at full capacity ahead of next season.
“Having listened to (Tuesday’s) presentation, it seems more clear to us that MTN was partly a victim of its own success as they noted that 2021-22 pass sales greatly exceeded their own expectations and were then taken to task. unprepared when it came to maintaining them. additional pass holders,” Scholes wrote. “The good news for MTN is that they have eight months to work towards being properly staffed for the next ski season and, unlike a year ago, they are obviously much more aware of the challenges associated with the staff.”
Abilities and Abilities
Fiscal 2022 demonstrated the strength of Vail Resorts’ business model by securing pre-commitment through pre-purchased passes, the company told investors.
This business model has caused “changes in guest behavior,” according to Vail Resorts.
With the majority of the ski season made up of off-peak days, “significant excess capacity exists at our resorts during these off-peak days,” according to Vail Resorts’ presentation. “Most of our resorts utilized excess capacity in FY22, increasing visits Monday through Friday and non-holidays.”
In Vail, parking lots often filled up on weekdays in January and February, a trend that was again common Friday through Sunday. On two separate Mondays, a Wednesday and two Thursdays in February, the City of Vail was forced to allow free parking on South Frontage Road to allow excess vehicles into town.
But while the City of Vail has found ways to accommodate excess vehicles, not all roads surrounding Vail Resorts properties are as capable in this regard.
Scholes said those issues remained unresolved on Tuesday.
“Infrastructure issues such as long traffic jams to get to some MTN stations and lack of parking have really not been resolved,” Scholes wrote. “These and other issues have attracted the attention of the media (both mainstream and social). It can be said that although MTN can only control so much…in relation to the access roads to the mountain Congested and other travel times (traffic jams) contribute to the overall skier experience.We would like MTN to more proactively address these infrastructure issues.
Acquisitions and insurance
Vail Resorts’ commitment to reinvest in its business model not only includes a capital plan larger than usual to install elevators, it also includes a commitment to invest in its workforce, which company executives said was lacking in 2021-22.
In addition to these expenses, Vail Resorts will also increase its quarterly cash dividend to $1.91 per share, the highest ever. (Before the pandemic, Vail Resorts’ dividend was $1.76 per share, which was the previous record high.)
In the company’s March 15 earnings report, Deutsche Bank’s Chris Woronka asked if there were any further plans for the company’s excess cash.
“You have put in place a nice dividend increase this quarter, you have given us your capital plan, which is above your historical average, but we believe that you are still going to generate a lot of cash and have liquidity on the balance sheet”, Woronka pointed out, asking Vail Resorts officials for future plans.
Vail Resorts acquired three properties with the purchase of Pennsylvania’s Seven Springs, Hidden Valley and Laurel Mountain ski areas in December 2021, and Vail Resorts chief operating officer Michael Barkin said the company will continue to focus its capital allocation where it has done in the past, including more acquisitions.
Barkin said the acquisitions are part of an ongoing strategy for the company, which is always interested in “finding opportunities to continue to expand the network.”
In Vail Resorts’ presentation, the company said it would target “high-impact destination resorts and highly selective regional ski areas that improve the network for guests.”
Specific criteria Vail Resorts reviews to target new resorts include “location/accessibility, brand, network connectivity, guest demographics, guest experience, absolute price, and purchase multiple.” , preference for operational control, use of selected transit partnerships that add to our network. according to Tuesday’s presentation.
In a February advisory, Truist Securities said that before Vail Resorts begins acquiring more resorts, “we would like to see it address operational issues, particularly at its more recently acquired resorts.”
Scholes on Tuesday said investors would take a wait-and-see approach for next season when it comes to personnel.
“In reality, despite MTN’s assurances today, it’s not until early mid-December, once the ski season kicks off, that we’ll have a good indication if MTN’s resorts will be properly staffed. personal,” Scholes wrote.
This story comes from VailDaily.com.