Like most industries that primarily sell experiences rather than physical products, the ski resort business hasn't exactly thrived since the COVID-19 pandemic hit. But if Vail Resorts' (NYSE: MTN) latest results and forecast are any indication, this could be about to change in a big way. Here's a look at Vail's latest results and just how much of a rebound it sees as we head into the 2021/22 ski season.
Vail Resorts latest results
In its 2021 fiscal year (which ended July 31), Vail Resorts reported net income of $127.9 million, which was 29% higher than the previous year but was still heavily impacted by the COVID-19 pandemic. EBITDA for the year was up about 8% from the 2020 fiscal year, but these comps aren't the best.
Keep in mind that since Vail's fiscal year runs from August through July, both the 2020 and 2021 fiscal years were heavily impacted by the pandemic. So, while I don't exactly want to say that the year-over-year growth is meaningless, it should be taken in context, and it's worth pointing out that Vail's business is still significantly lower than pre-COVID times. For example, in the 2019 fiscal year, Vail's net income was $301.2 million -- 135% higher than it was in the 2021 fiscal year. The point is that Vail's business is still far from normalized at this time.
Here's what Vail Resorts thinks will happen this ski season
With all of the above in mind, there's reason to be very optimistic about the upcoming ski season and Vail Resorts' 2022 fiscal year.
For one thing, Vail just reported that through September 17, pass sales were up by 45% in dollar volume over pre-pandemic levels from the 2019 fiscal year. Vail has leaned heavily on its season pass products, and it's definitely starting to show.
The company expects EBITDA for the 2022 fiscal year to be in the $785 million - $835 million range. This is 49% higher than it reported for 2021 and is significantly higher than the $707 million it reported for its last full pre-pandemic year. And it's worth mentioning that this impressive range includes a negative impact of as much as $118 million due to various COVID-19 closures. Plus, the company's guidance range for net income (earnings) would surpass 2019 levels at the midpoint as well.
In Vail's latest earnings call, CFO Michael Barkin said "We're encouraged by the robust demand from our guests, the strength of our advanced commitment product sales, and our continued focus on enhancing the guest experience while maintaining our cost discipline." And given the strong forecast for the upcoming season, as well as the $1.2 billion in cash on hand Vail has, the company was confident enough to reinstate a dividend earlier than many investors had expected.
It's also worth noting that the ongoing COVID-19 pandemic is still somewhat of a question mark. The company has already announced vaccination and indoor mask requirements and has said that COVID will have an effect on the business for the "foreseeable future." It's just unclear how much of an effect it will end up being.
The Millionacres bottom line
The fact that Vail is expecting earnings from the 2021/2022 ski season to exceed pre-pandemic levels shows just the industry's resilience and the efficacy of Vail's strategy of focusing on its innovative pass program. If Vail can meet or exceed its optimistic forecasts for the 2022 fiscal year, it could be a great sign for long-term investors in the business.