Vail Resorts stock climbs from 2-year low following earnings release
Low staffing contributed to high profit margin
Lexi Christensen | Vail Daily archive
Vail Resorts’ stock climbed out of its lowest levels in more than two years on Wednesday following an announcement from the company detailing strong earnings in the company’s fiscal fourth quarter, which ended July 31.
The stock closed the day trading at $210 per share, up from Tuesday’s closing price of $203, which was the lowest price the stock had seen at the close of a trading day since the summer of 2020.
During after-hours trading, MTN continued to surge, jumping to $218 in the hours following the close of the market day.
In an earnings call following the announcement, Vail Resorts CEO Kirstin Lynch said the company’s performance improved significantly from the prior year due to record visitation at the company’s Australian ski resorts, and the continued recovery of summer operations at Vail Resorts’ North American resorts following the COVID-19 pandemic.
The strong demand Vail Resorts saw at Perisher ski resort in Australia followed two years of COVID-19-related disruptions, and was also a result of “continued momentum in advance commitment pass product sales following the addition of Hotham and Falls Creek in April 2019, and favorable early season conditions that continued throughout the quarter,” Lynch said.
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The company closed out the fiscal year in a stronger-than-expected position, Lynch said, despite early season challenges related to low snowfall, low staffing, and continued impacts of the COVID-19 pandemic.
Lynch expressed hope that Vail Resorts staffing challenges are now in the past, citing the company’s one-time capital investment of $175 million, aimed at making frontline talent a strategic priority.
Amid the low staffing, however, the company found high profit margins, reporting a 46.8% jump in Earnings before interest, taxes, depreciation and amortization.
Vail Resorts CFO Michael Barkin said the company’s profit margin was higher than forecast, “in part because we actually did not achieve the staffing levels that we wanted,” he said.
The company has not publicly disclosed just how short staffing levels were last season, but lifts were slow to open across many of the company’s ski areas, contributing to crowding on the lifts that were open. Not all of the lifts at Vail opened last season, with two of the seven legendary Back Bowls going without lift service due to Vail Mountain’s inability to open the Mongolia Platter (No. 22).
Barkin said the company is making efforts to return to full staffing in an effort to reach full operating capacity and focus on the guest experience.
However, “we’re also doing that in a way that’s very focused on the discipline across our (profit and loss statement), and how we’re going to drive the most revenue growth with that full operating capacity,” he added. “As we’ve shown over time, when you look at the long-term margin growth in this business, we’ve shown a strong ability, through price and growth and cost discipline, to expand margins over time. And we’ll absolutely continue to focus on that going forward.”
