Here's our initial take on Vail Resorts' (MTN -2.98%) fiscal 2025 third-quarter financial report.
Key Metrics
| Metric | Q3 FY 2024 | Q3 FY 2025 | Change | vs. Expectations |
|---|---|---|---|---|
| Total revenue | $1.283 billion | $1.295 billion | +1% | Missed |
| Adjusted earnings per share | $9.54 | $10.54 | +10% | Beat |
| Total skier visits | 8.94 million | 8.61 million | -3.7% | n/a |
| Total lift revenue | $745.7 million | $770.3 million | +3.3% | n/a |
Welcoming Back an Old Friend
Vail Resorts' financial results for the fiscal third quarter that ended April 30 presented investors with a combination of good and bad news. On one hand, earnings topped expectations by a considerable margin, rising 10% year over year. However, overall sales inched higher by just 1%, as Vail had to deal with a significant decline in the number of skier visits during the period.
Rob Katz had just been brought back to serve once again as CEO after the leader who replaced him in 2021, Kirsten Lynch, was abruptly replaced last week. Katz's views made it clear that he wanted to accentuate positive elements of the report. The new CEO lauded Vail's Epic Pass program for keeping revenue constant even in a tough macroeconomic environment. That proved particularly important in March and April, when visitation from season passholders recovered even as day-pass buyer visits fell. Katz also pointed to favorable guest satisfaction scores everywhere but Park City Mountain, where the company had faced a worker strike earlier in the season.
Looking more closely at the numbers, lift revenue managed to post a solid 3% year-over-year gain, which helped to offset weakness in ski school, equipment rental, and retail sales. However, lodging revenue was down 4.3%, pushing reported earnings before interest, taxes, depreciation, and amortization down 22% for the segment.
Unfortunately, Katz gave some reasons to worry about the 2025-26 season. Pass product sales were down 1% in unit volume and up just 2% in dollar volume. That reflects a 7% increase in prices. The CEO was quick to note that it's still early in the pass-selling season.
Immediate Market Reaction
Vail Resorts shares had only a small reaction to the news, falling 1% in the first 30 minutes of after-hours trading following the release of the financial report. That's not too surprising, given that investors already had a good idea of what Vail could expect thanks to some commentary that accompanied news of Lynch's departure and Katz's return. Nevertheless, with the stock down by more than half from 2021's highs, Vail has a lot of work to do to restore investor confidence fully.
What to Watch
New guidance stemming from reduced lift ticket visits called for Vail to earn between $264 million and $298 million in net income for the fiscal year ending July 31. Given that the late spring and early summer is generally a slower time for most of Vail's ski resort network, it's reasonable to expect Vail to have fairly strong conviction in how things will work out.
Clearly, the most important thing to look for from Vail Resorts right now is how Katz will change the vision that Kirsten Lynch had put in place in recent years. It's unlikely that the newly returned CEO will be any less reliant on season pass sales, and it wasn't immediately evident from Katz's remarks when he took back the top job what his strategic priorities would be. Investors should keep a close eye on what Vail and Katz do in the coming months as the ski resort operator gets ready for the 2025-26 season, particularly when further updates are provided on how season pass sales are going.
