Vail Resorts (NYSE:MTN) had plenty of good news for investors in its fourth-quarter earnings report. While the three months that end in July constitute a seasonally weak period for the ski resort operator, executives celebrated the fact that they met their wider targets for the fiscal year, both in terms of resort revenue and adjusted earnings.
CEO Rob Katz and his team held a conference call with analysts to put those results in the context of Vail's ambitions to lead the global ski resort industry. They also detailed why they are so optimistic about the upcoming fiscal year.
Let's look at a few highlights from management's fourth-quarter presentation.
Picking up speed
After the challenging early season period for destination visitation, our results for the remainder of the year were largely in line with our original expectations. Our results throughout fiscal 2019 highlight the growth and stability, resulting from our season pass, the benefit of our geographic diversification, the investments we make in our resorts, and the success of our sophisticated data-driven marketing efforts.
Vail's fourth-quarter performance lifted adjusted earnings to $707 million for the full 2019 year, marking a 15% improvement year over year. That translated into a margin of 31.1% of sales.
Those figures were both just slightly shy of the outlook that executives issued at the beginning of the year calling for earnings between $718 million and $750 million and a 31.5% margin. They constituted positive results, though, given the slow start to the year that the consumer discretionary stock endured due to poor weather conditions in the fall. The rest of the year went as planned, management said, with skier visits jumping 22% thanks to the addition of new resorts like Triple Peaks and Stevens Pass.
Cash position is strong
Our balance sheet remains strong and the business continues to generate robust cash flow. We ended the fiscal year with $108.9 million of cash on hand and our net debt was 2.1 times fiscal 2019 [adjusted earnings].
-- CFO Michael Barkin
Vail deployed cash aggressively during the year, both in acquiring new properties like the 17 ski resorts under the Peak Resorts brand and in upgrading existing assets.
Thanks to robust profit generation, those initiatives didn't materially worsen the company's financial position. Cash on hand ended up at $109 million compared to $178 million a year ago, and Vail's leverage ratio edged up to 2.1 times adjusted earnings from 1.8 times last year.
Gearing up for a record season
We are very pleased with the performance of our pass sales effort to date, especially given the increased size and scale of the program.
Season pass sales are looking strong heading into the final weeks of the annual program, with volume up 14% and prices lifting overall revenue higher by about 15%. Those numbers imply Vail's wider resort footprint is delivering another key value to the business besides the diversification aspect. Specifically, its marketing team is finding it easier to sell annual pass packages that include more resorts. The upgraded lifts and lodging options, meanwhile, are allowing for higher prices.
That season pass strength gave executives confidence to predict another year of double-digit earnings growth ahead. And, while much of that performance will depend on ski conditions during the winter months in North America, this year's early season will be the first to benefit from the company's new snow manufacturing machines. As a result, Vail is likely to enter the peak winter period with even stronger momentum than it saw at the start of 2019's record run.