Vail Resorts Inc. (MTN, Financial) is a premiere mountain resort company and a leader in luxury, destination-based travel at iconic locations. The company operates in three segments: Mountain, Lodging and Real Estate Development. The Mountain segment owns and operates 11 premiere resorts in Colorado, the Lake Tahoe area of California and Nevada, Utah, Â Minnesota and Michigan. The Real Estate segment, Vail Resorts Development Company, holds, develops, buys and sells real estate in and around its resort communities.
Vail Resorts Hospitality owns and manages a portfolio of luxury hotels under the RockResorts brand, a number of hotels and condominiums located in proximity to their ski resorts, three destination resorts at Grand Teton National Park and several award-winning golf courses.
The company’s fourth quarter results witnessed significant growth across all the businesses and marked another year of record-breaking results. Excellent results were marked across all of the resort locations. The company’s newly launched Epic Discovery at Vail contributed to the significant increases in visitation and revenue in the fourth quarter of fiscal 2016 compared to the prior year.
Strong fourth quarter
Net consolidate revenue during the quarter was $179,884, compared to  $162,082 a year ago.
Total segment operating expense during the quarter was $229,901, compared to $210,919 in the same quarter a year ago.
Net income attributable to Vail Resorts Inc. was $149.8 million, or $4.01 per diluted share, which was $114.8 million, or $3.07 per diluted share, in the prior year quarter.
Segment results
Mountain segment
Total skier visits for fiscal 2016 increased to approximately 10.0 million, which marked an increase of 18.5% from the prior year period.
Season pass revenue increased by $46.6 million, or 21.5% from the prior year quarter.
Mountain net revenue was $1,304.6 million for fiscal 2016, which marked an increase of 18.2% from the prior year period.
Mountain reported EBITDA for fiscal 2016 increased by $96.7 million, or 29.5%, and was $424.4 million.
Lodging segment
Lodging net revenue was $274.6 million for fiscal 2016, which marked an increase of 7.9% from the prior year period.
Lodging net revenue (excluding payroll cost reimbursements) was $262.2 million for fiscal 2016, compared to $244.2 million for the prior year period.
Lodging reported EBITDA increased by 30.0% and was $28.2 million for fiscal 2016.
Resort - Combination of Mountain and Lodging segments
Resort net revenue was $1,579.2 million for fiscal 2016, which marked an increase of 16.2% from the prior year period.
Resort reported EBITDA increased by 29.5% and was $452.6 million for fiscal 2016.
Resort EBITDA margin was 28.7% in fiscal 2016, which marked an increase of 300 basis points from the prior fiscal year.
Real Estate Segment
Real Estate net revenue decreased by $19.2 million, or 46.5% from the prior year period.
Net Real Estate cash flow was $22.0 million, which marked a decrease of $6.9 million from the prior year period.
Real Estate reported EBITDA was $2.8 million, which marked a 140.3% improvement from the prior year period.
Expectations for fiscal 2017
| Â | Range |
| Reported Resort EBITDA for fiscal 2017 | To be between $480 million-$510 million |
| Resort EBITDA Margin | To be around 29.7% |
| Real Estate Reported EBITDA | To be between $2 million-$8 million |
| Net Real Estate Cash Flow | To be between $10 million-$20 million |
| Net income attributable to Vail Resorts | To be between$165.5 million-$194.5 million |
Management
After Vail Resorts acquired Whistler Blackcomb Holdings Inc., Michele Romanow was appointed to the company's board of directors. Romanow is the co-founder of various technology start-up companies. She served as a senior marketing executive for Groupon from June 2014 to March 2016. Romanow served on the board of directors of Whistler Blackcomb Holdings Inc. (Source: Company’s Website)
Focus
- Disciplined cost management.
- The company is leveraging its growing network of resorts.
- Rolling out sophisticated marketing strategies to drive higher visitation.
Conclusion
Fiscal 2016 was another strong year for the company. Due to its strong balance sheet, the company has confidence in the future growth of the business. It will continue to be more aggressive in returning capital to the shareholders and will continue to reinvest in the business. The combination of quarterly dividends and share repurchases are an effective strategy to return capital to investors while maintaining the flexibility to continue investing in the strategic and internal growth of the business. I think adding this company will reap shareholder returns.
Disclosure:Â I do not hold any position in the company.
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