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Luxury ski resort company Vail Resorts (NYSE:MTN) met Wall Street’s revenue expectations in Q2 CY2024, but sales fell 1.6% year on year to $265.4 million. Its GAAP loss of $4.67 per share was 10.2% below analysts’ consensus estimates.
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Vail Resorts (MTN) Q2 CY2024 Highlights:
- Revenue: $265.4 million vs analyst estimates of $264.9 million (in line)
- EPS: -$4.67 vs analyst expectations of -$4.24 (10.2% miss)
- EBITDA guidance for the upcoming financial year 2025 is $858 million at the midpoint, below analyst estimates of $880.3 million
- Gross Margin (GAAP): -7.2%, down from 16.4% in the same quarter last year
- EBITDA Margin: -43.7%, down from -32.6% in the same quarter last year
- Skier Visits: 699,000, down 168,000 year on year
- Market Capitalization: $6.88 billion
Company Overview
Founded by two Aspen, Colorado ski patrol guides, Vail Resorts (NYSE:MTN) is a mountain resort company offering luxury experiences in over 30 locations across the globe.
Leisure FacilitiesLeisure facilities companies often sell experiences rather than tangible products, and in the last decade-plus, consumers have slowly shifted their spending from "things" to "experiences". Leisure facilities seek to benefit but must innovate to do so because of the industry's high competition and capital intensity.
Sales GrowthA company’s long-term performance can give signals about its business quality. Even a bad business can shine for one or two quarters, but a top-tier one tends to grow for years. Unfortunately, Vail Resorts’s 4.9% annualized revenue growth over the last five years was sluggish. This shows it failed to expand in any major way and is a rough starting point for our analysis.
Long-term growth is the most important, but within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends and consumer preferences. Vail Resorts’s annualized revenue growth of 6.9% over the last two years is above its five-year trend, but we were still disappointed by the results. Note that COVID hurt Vail Resorts’s business in 2020 and part of 2021, and it bounced back in a big way thereafter.
Vail Resorts also discloses its number of skier visits, which reached 699,000 in the latest quarter. Over the last two years, Vail Resorts’s skier visits averaged 36.3% year-on-year growth. Because this number is higher than its revenue growth during the same period, we can see the company’s monetization has fallen.
This quarter, Vail Resorts reported a rather uninspiring 1.6% year-on-year revenue decline to $265.4 million of revenue, in line with Wall Street’s estimates. Looking ahead, Wall Street expects sales to grow 4.1% over the next 12 months, a slight deceleration versus the last two years.
Cash Is KingAlthough earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.
Vail Resorts has shown impressive cash profitability, giving it the option to reinvest or return capital to investors. The company’s free cash flow margin averaged 15.4% over the last two years, better than the broader consumer discretionary sector.
Key Takeaways from Vail Resorts’s Q2 Results We struggled to find many strong positives in these results. Its number of skier visits unfortunately missed and its EPS fell short of Wall Street’s estimates. Overall, this was a weaker quarter, but the market was likely pricing in a worse result. The stock traded up 3% to $193.30 immediately following the results.
