The Impact of Low Snowfall on Vail Resorts: A Closer Look at Q3 Results

Key Takeaways

• Vail Resorts blamed a lack of snowfall as its third-quarter profit and revenue missed analysts’ forecasts.
• The company also cut its full-year guidance.
• The news sent shares of Vail Resorts to their lowest level since the early part of the COVID-19 outbreak.

Shares of Vail Resorts (MTN) headed downhill Friday, a day after the operator of ski resorts posted worse-than-expected results and cut its guidance as a lack of snowfall reduced demand. The company reported third-quarter fiscal 2024 earnings per share (EPS) of $9.54, with revenue increasing 3.6% year-over-year to $1.28 billion. Both were short of analysts’ estimates compiled by Visible Alpha.

Vail CEO Notes ‘Unfavorable Conditions’ During Ski Season

Chief Executive Officer (CEO) Kirsten Lynch said Vail faced “unfavorable conditions across our North American resorts for a large portion of the 2023/2024 North American ski season.” She noted year-over-year snowfall totals were about 28% lower for the full winter season across the company’s western North American resorts, and there were variable temperatures and limited natural snow at its Midwest, Mid-Atlantic, and Northeast operations.

She added that for the 2023/2024 ski season in both North America and Europe, year-over-year skier visits dropped 7.7%, and skier visitation from lift ticket guests slumped 17%. Lynch attributed the decline to a combination of unfavorable conditions and “broader industry normalization post-COVID following record visitation in the U.S. during the 2022/2023 ski season.”

Vail now sees full-year net income attributable to the company in a range of $224 million to $256 million, down from the previous outlook of $270 million to $325 million. The company noted that the costs related to the acquisition of Crans-Montana resort in Switzerland will reduce earnings before interest, taxes, depreciation, and amortization (EBITDA) by $12 million, three times its previous estimate.

Vail Resorts shares traded down 13.5% at of 10:15 a.m. ET Friday to $167.89, their lowest point since the early part of the COVID-19 pandemic in 2020.

The Impact of Low Snowfall on Vail Resorts

The recent financial results from Vail Resorts have shed light on the significant impact that low snowfall can have on the company’s operations. With unfavorable conditions across its North American resorts during a large portion of the ski season, Vail faced challenges in attracting visitors and generating revenue.

The decrease in year-over-year snowfall totals by 28% at the company’s western North American resorts significantly impacted the skiing experience for guests. Additionally, variable temperatures and limited natural snow at its Midwest, Mid-Atlantic, and Northeast operations further exacerbated the situation.

As a result of these challenges, Vail Resorts saw a decline in skier visits during the 2023/2024 ski season in both North America and Europe. Skier visitation from lift ticket guests slumped by 17%, reflecting the overall decrease in demand due to unfavorable conditions and industry normalization post-COVID.

Adjusting Full-Year Guidance

In response to the challenging operating environment, Vail Resorts has adjusted its full-year guidance for net income attributable to the company. The revised range of $224 million to $256 million is lower than the previous outlook of $270 million to $325 million, indicating the financial impact of the lackluster ski season.

Furthermore, the costs associated with the acquisition of Crans-Montana resort in Switzerland will have a significant impact on earnings before interest, taxes, depreciation, and amortization (EBITDA). The $12 million reduction in EBITDA is three times higher than the initial estimate, highlighting the financial strain caused by external factors such as low snowfall.

Conclusion

The recent financial results from Vail Resorts underscore the importance of favorable weather conditions for the company’s operations. With low snowfall impacting skier visits and revenue generation, Vail has been forced to adjust its full-year guidance to reflect the challenging operating environment.

As Vail Resorts navigates through these difficulties, it remains to be seen how the company will adapt to changing market conditions and weather patterns in the future. By closely monitoring industry trends and implementing strategic initiatives, Vail can position itself for long-term success despite short-term challenges.

Overall, the impact of low snowfall on Vail Resorts serves as a reminder of the unpredictable nature of the ski industry and the importance of resilience in the face of adversity.