Vail Resorts Investor Presentation July 2013

Transcription

1 Vail Resorts Investor Presentation July 2013 Rob Katz, Chairman and CEO Michael Barkin, CFO

2 CAUTION ON FORWARD LOOKING STATEMENTS Statements in this presentation, other than statements of historical information, are forward looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 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 affects on the overall travel and leisure related industries; unfavorable weather conditions or natural disasters; adverse events that occur during our peak operating periods combined with the seasonality of our business; competition in our mountain and lodging businesses; our ability to grow our resort and real estate operations; our ability to successfully initiate, complete, and sell, new real estate development projects and achieve the anticipated financial benefits from such projects; further adverse changes in real estate markets; continued volatility in credit markets; our ability to obtain financing on terms acceptable to us to finance our real estate development, capital expenditures and growth strategy; our reliance on government permits or approvals for our use of Federal land or to make operational and capital improvements; demand for planned summer activities and our ability to successfully obtain necessary approvals and construct the planned improvements; adverse consequences of current or future legal claims; our ability to hire and retain a sufficient seasonal workforce; willingness of our guests to travel due to terrorism, the uncertainty of military conflicts or outbreaks of contagious diseases, and the cost and availability of travel options; negative publicity which diminishes the value of our brands; our ability to integrate and successfully realize anticipated benefits from the lease of Canyons Resort operations or future acquisitions; the outcome of pending litigation regarding the ski terrain of Park City Mountain Resort; adverse consequences on lease payment obligations for Canyons Resort due to increases in CPI; implications arising from new Financial Accounting Standards Board ( FASB )/governmental legislation, rulings or interpretations; 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 ended July 31, 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 forecasts and forward-looking statements in this presentation 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. 2

3 NON-GAAP FINANCIAL MEASURES We use the terms Reported EBITDA and Net Debt when reporting financial results in accordance with Securities and Exchange Commission rules regarding the use of non-gaap financial measures. We define Reported EBITDA as segment net revenue less segment operating expense plus or minus segment equity investment income or loss and for the Real Estate segment plus gain on sale of real property. We define Net Debt as long-term debt plus long-term debt due within one year less cash and cash equivalents. In addition, for the Real Estate segment we define Net Real Estate Cash Flow (which is not a measure of financial performance under GAAP) as Real Estate Reported EBITDA, plus non-cash real estate cost of sales, plus non-cash stock-based compensation expense, plus change in real estate deposits less investment in real estate, which we use as a cash flow indicator for our Real Estate segment. For the Lodging segment we primarily focus on Lodging net revenue excluding payroll cost reimbursement and Lodging operating expense excluding reimbursed payroll costs (which are not measures of financial performance under GAAP) as the reimbursements are made based upon the costs incurred with no added margin, as such the revenue and corresponding expense have no effect on our Lodging Reported EBITDA which we use to evaluate Lodging segment performance. A reconciliation of non-gaap measures referred to in this presentation is provided in the tables at the conclusion of this presentation and at 3

4 LEADING MOUNTAIN RESORT OPERATOR 4

5 STRONG BUSINESS MODEL World class resorts Reinvest in the business High-end worldwide guests Return capital to shareholders Sophisticated business approach Strong free cash flow generation Premium pricing High margins and flow through 5

6 SOPHISTICATED BUSINESS APPROACH Season passes Data-based marketing Canyons Urban ski areas Summer 6

7 SEASON PASSES 300,000 loyal passholders 50 states and 78 countries represented 35% - 40% of Lift Ticket revenue 7

8 EPIC PASS Colorado Tahoe Utah Vail Beaver Creek Arapahoe Basin Heavenly Northstar Canyons Breckenridge Keystone Eldora Kirkwood Midwest Austria (5 days) Switzerland (5 days) Afton Alps St. Anton Lech Verbier Mt Brighton Stuben St. Christoph Zuers 8

9 Annual Season Pass Sales SEASON PASS GROWTH $150M $100M +13% $50M 0 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 Over the past 8 years, season pass sales have grown at +13% (CAGR), and nearly doubled in the past 6 years Mitigates exposure to most weather sensitive guest Drives strong customer loyalty 9

10 DATA-BASED MARKETING Industry leading database Continued improvements in data capture & analytics Each acquisition expands reach EpicMix creates unique digital connection to guests 10

11 CANYONS RESORT World Class Destination Resort 4,000 skiable acres Top 10 ranking in Ski and Outside magazines Attractive Park City location $75 million of recent improvements Close proximity to Salt Lake City International Airport Extensive Growth Opportunities Only 450,000 skier visits 4 million square feet of real estate development density Significant incremental marketing opportunities 11

12 CANYONS & VAIL RESORTS Complementary focus on high-end destination guests Significant opportunities by adding Canyons to Epic Pass products Compelling proposition for destination guests interested in multiple resorts Attractive value for Utah skiers Particular focus on appealing to Southern California guests Leverage Vail Resorts expertise Sophisticated marketing with broad guest database and targeted CRM efforts Improve guest experience with Vail Resorts industry leading customer service, technology and EpicMix 12

13 TRANSACTION OVERVIEW 50 year lease with six 50 year renewal options Full operational and management control of all resort operations $25 million annual payment increased by CPI less 1% with 2% floor Expect to record lease obligation to balance sheet as $305 million in long-term debt obligations Contingent payments based on 42% of EBITDA above a threshold $35 million initial threshold increased by CPI less 1% with 2% floor and 10% of all investments made at the resort Lease may include the land under the ski terrain of Park City Mountain Resort (PCMR) that is adjacent to Canyons with no additional consideration Land under PCMR is subject to pending litigation Forecast EBITDA contribution before lease expense of $15 million (1) in FY 2014 and expected to increase to $25 million by FY 2017 Expect FY 2014 impact to be cash flow positive after cash tax benefits (1) EBITDA forecast before integration, transaction and legal costs associated with litigation and does not include any potential benefit the Company may receive from the Park City Mountain Resort land which is subject to ongoing litigation. 13

14 URBAN SKI AREAS Create connection between key skier markets and our destination resorts Drive season pass sales Capture guest data Package and promote destination trips Leverage our operational expertise and resources to energize local ski areas Enhance terrain park and racing experience Animate and modernize base areas Introduce world-class coaching and instruction Focus on customer service culture Target high potential markets Proximity to major cities with attractive demographics Cold climate to sustain snowmaking 14

15 33 miles from Minneapolis/ St. Paul 150,000+ skiers & riders in Minneapolis / St. Paul Largest ski area near a major city in the Midwest 48 trails on 300 acres 15

16 43 miles from Detroit & 22 miles from Ann Arbor 300,000 + skiers & riders in the Detroit, Lansing and Ann Arbor metro areas 26 trails on 130 acres 16

17 URBAN SKI AREAS INVESTMENT Snowmaking Modernize Facilities Terrain Parks EpicMix & CRM Tools Lift Upgrades $10M Capital investment at each area 17

18 EPIC DISCOVERY A New Summer Mountain Adventure Experience Capture existing summer tourism Comprehensive and immersive eco-educational experience Leverage existing infrastructure Zip Lines Canopy Tours Forest Flyers TM Tubing Biking Hiking Climbing Wall Learning Centers 18

19 EPIC DISCOVERY FINANCIAL IMPACT Vail Summer Impact Cap-Ex: $25M for all phases Incremental Visits: 350,000 at project maturity Guest spend:$50-60 per visitor Incremental summer Mountain Reported EBITDA of $15 million at maturity Similar estimates would be likely for Breckenridge and Heavenly with lesser amounts at our other resorts Current Status Launched initial construction this summer at six resorts: Vail, Breckenridge, Heavenly, Beaver Creek, Keystone and Northstar Expect these activities, in total, to generate approximately $7 million of incremental Mountain Reported EBITDA in their first full summer of operation Projects are in different stages of approval 19

20 CY13 CAPITAL IMPROVEMENTS CY 13 Cap Ex ($M) 1 $130-$140M Urban Ski Areas ~$20M Epic Discovery ~$25M Discretionary $38-$43M Significant Peak 6 terrain expansion at Breckenridge New Red Tail Camp restaurant at Beaver Creek New six-person lift to replace Chair 4 at Vail Fourth generation of EpicMix with EpicMix Academy Maintenance $47-$52M (1) CY 13 Capital Expenditures as announced on March 6 th,2013 *Net of reimbursements from external funding, including Martis Camp funds and FIS World Championship spending 20

21 PEAK 6 23% expansion to the resort s skiable acreage Five new trails across 543 additional acres Two new chairlifts Two warming huts and public restrooms New intermediate bowl skiing experience 21

22 Quarterly Dividend Amount RETURN CAPITAL TO SHAREHOLDERS Since commencement of a regular dividend in June 2011, we have increased our quarterly dividend twice and distributed a total of $58.1 million as of July 9, DECLARED QUARTERLY DIVIDEND % +10% 0.00 Jun 7, 2011 Mar 5, 2012 Mar 4, 2013 Stock Buyback Program Since inception of our stock repurchase program through April 30, 2013, we have repurchased 4,949,111 shares at a cost of approximately $193.2 million. As of April 30, 2013, 1,050,889 shares remained available to repurchase under the existing repurchase authorization. 22

23 RESULTS AND SKI SEASON METRICS 23

24 YEAR-TO-DATE HIGHLIGHTS (4/30/13) Resort Revenue Growth Same-store revenue growth across all lines of business (1) : Lift Revenue (2) up +13% Dining up +12% Ski School up +11% Retail / Rental up +7% Strong Resort EBITDA Growth Resort Reported EBITDA increased $41.5M, or +17%, to $290.8M Momentum in Real Estate Sales Closed on 10 Ritz-Carlton, Vail residences and 10 One Ski Hill Place units YTD Net Real Estate Cash Flow of $20.4M Robust Spring Pass Sales (1) Amounts exclude Kirkwood& Urban Ski Areas (2) Excludes season pass holders Spring season pass sales for the 2013/2014 ski season were up approximately 18% in units and approximately 24% in sales dollars through May 28, 2013 compared with the prior year period 24

25 RESORT REPORTED EBITDA Resort Reported EBITDA +14% +17% $177.6M $202.7M $249.3M $290.8M Q3 FY13, Resort Reported EBITDA growth of 14% exceeded revenue growth of 12% Year-to-date, Resort Reported EBITDA growth of 17% exceeded revenue growth of 11% Q3 FY12 Q3 FY13 YTD 4/30/12 YTD 4/30/13 Note: These are actual results for all periods and FY13 includes Kirkwood and Urban Ski Areas. The impact of these acquisitions was $4.4M in Q3 FY13 and $6.5M YTD

26 SEASON-TO-DATE METRICS PROGRESSION Season-to-date Metrics % increase from prior year period 1/13/2013 4/14/2013 Total Skier Visits 2.0% 5.5% Total Lift Ticket Revenue 4.3% 10.2% Dining Revenue 9.0% 13.1% Ski School Revenue 2.9% 11.6% Retail/Rental Revenue 7.7% 8.9% Note: All numbers include Kirkwood & exclude Urban Ski Areas 26

27 Q3 REAL ESTATE SEGMENT HIGHLIGHTS 27

28 STRONG CAPITALIZATION Quarter end cash totaled $237.7 million No borrowings under our $400 million credit facility Vast majority of principal repayments due in 2019 and beyond Net debt at only 1.1x trailing twelve month EBITDA Pro-forma for Canyons debt, net debt would be 2.4x (1) Commitment to investor return evidenced in dividend growth and share repurchase program (1) Pro-forma for the $305 million of estimated debt and does not include any adjustments to EBITDA for expected earnings from Canyons 28

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30 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Resort, Mountain and Lodging, and Real Estate Reported EBITDA have been presented herein as measures of the Company's financial operating performance. Reported EBITDA and Net Debt are not measures of financial performance or liquidity under accounting principles generally accepted in the United States of America ( GAAP ), and they might not be comparable to similarly titled measures of other companies. Reported EBITDA and Net Debt 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 including net income (loss), net change in cash and cash equivalents or other financial statement data. 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 companies in the resort and lodging industries. The Company primarily uses Reported EBITDA based targets in evaluating performance. The Company believes that Net Debt is an important measurement as it is an indicator of the Company's ability to obtain additional capital resources for its future cash needs. In addition, the Company also uses the term Net Real Estate Cash Flow, which is not a measure of financial performance or liquidity under GAAP, as the Company believes it is important as a cash flow indicator for our Real Estate segment. 30

31 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Presented below is a reconciliation of Total Reported EBITDA to net income attributable to Vail Resorts, Inc. calculated in accordance with GAAP for the three and nine months ended April 30, 2013 and

32 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES 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 ended April 30,

33 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES The following table reconciles Net Debt to long-term debt and the calculation of Net Debt to Total Reported EBITDA for the twelve months ended April 30, The following table reconciles Real Estate Reported EBITDA to Net Real Estate Cash Flow for the three and nine months ended April 30,

34 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Presented below is a reconciliation of Total Reported EBITDA to net income attributable to Vail Resorts, Inc. calculated in accordance with GAAP for Fiscal 2012, Fiscal 2011, Fiscal 2010 and Fiscal 2009 (in thousands): 34

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