Vail Resorts (NYSE:MTN) Reports Sales Below Analyst Estimates In Q1 Earnings, Stock Drops

Radek Strnad /
2024/06/06 4:17 pm EDT

Luxury ski resort company Vail Resorts (NYSE:MTN) missed analysts' expectations in Q1 CY2024, with revenue up 3.6% year on year to $1.28 billion. It made a GAAP profit of $9.54 per share, improving from its profit of $8.18 per share in the same quarter last year.

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Vail Resorts (MTN) Q1 CY2024 Highlights:

  • Revenue: $1.28 billion vs analyst estimates of $1.30 billion (1.5% miss)
  • Gross Margin (GAAP): 58.3%, up from 57.4% in the same quarter last year
  • Skier Visits: 8.94 million, down 299,000 year on year
  • Market Capitalization: $7.32 billion

Commenting on the Company's fiscal 2024 third quarter results, Kirsten Lynch, Chief Executive Officer, said, "Given the unfavorable conditions across our North American resorts for a large portion of the 2023/2024 North American ski season, we were pleased to see improved results in March and April, with visitation across our western North American resorts in particular benefiting from improved conditions. While pass product visitation returned as expected, as we communicated in April, lift ticket visitation did not return to typical historical guest behavior for the spring, primarily at Whistler Blackcomb, which was down significantly relative to the prior year period. Despite these challenges, the Company grew resort net revenue and Resort Reported EBITDA to record levels in the third quarter, supported by the stability created from our advance commitment strategy, operations executional excellence, and continued strong growth in ancillary spending per skier visit across our ski school, dining, and rental businesses at our resorts.

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 Facilities

Leisure 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 Growth

Examining a company's long-term performance can provide clues about its business quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, Vail Resorts grew its sales at a weak 5.2% compounded annual growth rate. This shows it failed to expand its business in any major way. Vail Resorts Total Revenue

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 8.3% 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.

We can better understand the company's revenue dynamics by analyzing its number of skier visits, which reached 8.94 million in the latest quarter. Over the last two years, Vail Resorts's skier visits averaged 45.5% 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. Vail Resorts Skier Visits

This quarter, Vail Resorts's revenue grew 3.6% year on year to $1.28 billion, falling short of Wall Street's estimates. Looking ahead, Wall Street expects sales to grow 7.4% over the next 12 months, an acceleration from this quarter.

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Operating Margin

Vail Resorts has been an efficient company over the last two years. It demonstrated it can be one of the more profitable businesses in the consumer discretionary sector, boasting an average operating margin of 19%.

Vail Resorts Operating Margin (GAAP)

This quarter, Vail Resorts generated an operating profit margin of 42.6%, up 2.2 percentage points year on year. Looking ahead, Wall Street expects Vail Resorts to become more profitable. Analysts are expecting the company’s trailing 12 month operating margin of 18.3% to rise to 21.9% in the coming year.

Key Takeaways from Vail Resorts's Q1 Results

We struggled to find many strong positives in these results. Its EPS missed and its revenue fell short of Wall Street's estimates. Overall, this was a bad quarter for Vail Resorts. The company is down 5.7% on the results and currently trades at $182.97 per share.

Vail Resorts may have had a tough quarter, but does that actually create an opportunity to invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.