Vail Resorts Inc "Can EBITDA Recover Back to '25A Levels?" (Neutral) Kocharyan

Research evidence excerpt

Vail Resorts Inc "Can EBITDA Recover Back to '25A Levels?" (Neutral) Kocharyan

s have

moved lower for Q3 EBITDA, and sentiment remains negative as investors feared

downward revision to '27E consensus expectations.

Vail flags weaker pass sales in weather impacted markets such as Colorado, Utah,

and Lake Tahoe and destination resorts in Rockies vs. stronger pass sales in the East

and Whistler. Management says Young Adults pass product as well as Unlimited

passes are outperforming frequency products, which could mean some favorable

mix shift, overall pass sales weaker than expected. Vail says their spring pass sales

are meaningfully outperforming others in the industry, and that a challenging ski

season this past year has delayed purchase decisions, implying opportunity to

improve pass sales in the fall and through lift tickets. Assuming pass sales remain

down in that -5% range, lift business has to be up +10-13% YOY for overall pass

+lift ticket revenues to come in flattish YOY.

Management says historically U.S. ski market data indicates that visitation typically

fully recovers following a season with poor conditions, if subsequent season has

normal conditions. And we note consensus is already modeling that recovery.

Vail says new marketing strategy and lift ticket products have shown positive

results and lift ticket visitation is meaningfully outperforming the industry based

on preliminary data, including Rockies.

For the past season, industry wide visitation declined -24% in the Rockies. And this

compares to down -8% in 2012. Rockies snowfall was down -55% vs. 30 year

average.

With 50% discount for Epic friend tickets, Vail's benefit tickets increased 10%,

while overall lift visitation was down -10%. Vail also introduced super advanced