Peak Resorts, Inc. reported financial results for its fiscal 2019 fourth quarter and full year.
Timothy D. Boyd, President and Chief Executive Officer, commented, “Fiscal 2019 was a record year for Peak Resorts as we completed several transformational initiatives that drove robust year over year growth. We generated record revenue and Reported EBITDA of $184.4 million and $49.8 million, respectively, thanks to our successful Snow Time acquisition and the fantastic execution of our resort operating teams who provided our guests with great conditions throughout a season of variable weather. We also delivered double-digit growth across our season pass offerings, saw continued strength across key revenue streams including food and beverage, ski school and retail, and benefited from our geographic and market diversification and ongoing customer outreach initiatives.
“Revenue and Reported EBITDA grew 53% and 72% year over year in the fiscal 2019 fourth quarter, respectively, as we generated organic revenue and Reported EBITDA growth of a respective 11% and 14%. Many of our resorts benefited from our continued strategic investments, including at Mount Snow where we saw the benefit of the new Carinthia Base Lodge and at Hunter where we debuted a significant terrain expansion, contributing to increased visitation of 6% and 12%, respectively, at these resorts. In addition, consistent investments in snowmaking capacity and efficiency allowed us to ensure that our growing visitor base was able to access more terrain and more often throughout the season, even when challenged by variable weather.
“As expected, the Snow Time portfolio delivered strong results in the fiscal 2019 fourth quarter and throughout the season despite nearly 20 fewer operating days during the season. The initial implementation of our operating strategies at Liberty, Whitetail and Roundtop allowed us to more than offset the shorter season at each of the three resorts as we drove a significant improvement in profitability across the portfolio. Given that we completed the acquisition of Snow Time right before the start of the 2018-19 season, we expect to see added benefits going forward as we further refine operations at these resorts.
“As announced in early May, 2019-20 season pass sales were very strong through the discounted sales window and we expect this momentum to continue. Sales of season passes, including our Peak Pass, which allows for unlimited access to 14 of our resorts across the Northeast, Mid-Atlantic and Midwest, were up 20.8% on a unit basis and 19.8% on a dollar basis over the prior year, inclusive of Snow Time pass sales in both periods. Pass sales momentum has continued and we are well positioned heading into what we believe will be yet another great winter season in 2019-20. We see clear signs that our season pass offerings have become the leading choice for skiers and riders who make the East Coast their home.
“With a strong finish to the 2018-19 season and strong season pass sales for the upcoming 2019-20 season, Peak Resorts is positioned for further growth in fiscal 2020. We are already working on roughly $3.5 million in snowmaking upgrades at Liberty, Whitetail and Roundtop, and expect to see a full year of benefit from our recently awarded liquor license at Whitetail and our continued efforts to enhance our food and beverage operations. We also expect to see further benefits from investments in our resorts, including at Mount Snow, Hunter and more recently at Hidden Valley. Looking at the summer and fall seasons, we expect to benefit from a packed event schedule that will leverage our amazing resorts to generate revenue during our seasonally slow periods, including food and beer festivals, concerts, outdoor entertainment events and on-mountain activities such as zip lining and mountain biking.”
Fiscal Fourth Quarter Results Review
Fiscal 2019 fourth quarter revenue increased 52.5% year over year to $85.5 million as the Company benefited from the addition of Snow Time for the full quarter as well as organic revenue growth of roughly 11.1% over the prior year period. For the quarter, the Company recorded an 81.1% increase in ski instruction revenue, a 34.4% rise in food and beverage revenue and 57.8% growth in lift ticket and tubing revenues.
Resort operating expenses in the fiscal 2019 fourth quarter rose 33.6% year over year to $42.7 million due to the addition of Snow Time in the quarter as the Company managed its labor and other expenses in-line with its expectations. Power and utilities expenses were up 21.1% year over year on the addition of Snow Time as well as increased snowmaking activity. Other operating expenses increased during the quarter due to the inclusion of the Snow Time resorts and organic spending on IT projects, repairs and maintenance and insurance costs. General and administrative expenses were up 184.3% to $4.7 million driven primarily by increased compensation expense as a result of the Company’s strong fiscal 2019 fourth quarter performance and additional professional service fees associated with the Snow Time acquisition.
Reported EBITDA for the fourth fiscal quarter of 2019 was $36.9 million, compared to $21.5 million in the year-ago quarter. The 71.5% year over year increase in Reported EBITDA was driven primarily by the inclusion of a full quarter of operations from Snow Time as well as organic growth of roughly 14.3% over the prior year period.
Balance Sheet Update
As of April 30, 2019, the Company had cash and cash equivalents of $30.2 million and total outstanding debt of $229.8 million, including $12.4 million drawn against its revolving line of credit and short and long-term debt of $217.4 million.
Christopher J. Bub, Chief Financial Officer, added, “Peak Resorts exited fiscal 2019 positioned for further growth as we continue to integrate the Snow Time resorts and benefit from improved operations and greater scale across our resort portfolio. Our operating teams remain focused on managing costs and driving increased efficiency and enhanced profitability across each area of our business even as we maintain our commitment of providing the highest level of guest service possible.
“As our attention turns to fiscal 2020 and beyond, we believe we have the needed financial flexibility to continue to improve existing operations while also exploring opportunities to drive cash flow and improve our capital structure. With our focus on the continued improvement across the entirety of our business, we are excited by what the future holds and for the opportunities ahead.”
Investor Conference Call and Webcast
The Company will host an investor conference call and webcast to discuss its fiscal 2019 fourth quarter and full year results today at 10:00 a.m. ET. Interested parties can access the conference call by dialing (844) 526-1518 or, for international callers, by dialing (647) 253-8644; the conference ID number is 8294865. A webcast of the conference call can also be accessed live at ir.peakresorts.com (select “Event Calendar”). Following the completion of the call, an archived webcast will be available for replay at the same location.
Definitions and Reconciliations of Non-GAAP Financial Measures
Reported EBITDA is not a measure of financial performance under U.S. generally accepted accounting principles (“GAAP”). The Company defines Reported EBITDA as net income before interest, income taxes, depreciation and amortization, gain on sale/leaseback, other income or expense and other non-recurring items.
The Company has specifically chosen to include Reported EBITDA as a measurement of its results of operations because it considers this measurement to be a significant indication of its financial performance and available capital resources. Because of large depreciation and other charges relating to the Company’s ski resorts operations, it is difficult for management to fully and accurately evaluate financial performance and available capital resources using net income alone. In addition, the use of this non-U.S. GAAP measure provides an indication of the Company’s ability to service debt, and management considers it an appropriate measure to use because of the Company’s highly leveraged position. Management believes that by providing investors with Reported EBITDA, they will have a clearer understanding of the Company’s financial performance and cash flows because Reported EBITDA: (i) is widely used in the ski industry to measure a company’s operating performance without regard to items excluded from the calculation of such measure; (ii) helps investors to more meaningfully evaluate and compare the results of the Company’s operations from period to period by removing the effect of its capital structure and asset base from operating results; and (iii) is used by the Board of Directors, management and lenders for various purposes, including as a measure of the Company’s operating performance and as a basis for planning.
The items excluded from net income to arrive at Reported EBITDA are significant components for understanding and assessing the Company’s financial performance and liquidity. Reported EBITDA should not be considered in isolation or as an alternative to, or substitute for, net income, net change in cash and cash equivalents or other financial statement data presented in the Company’s condensed consolidated financial statements as indicators of financial performance or liquidity. Because Reported EBITDA is not a measurement determined in accordance with U.S. GAAP and is susceptible to varying calculations, Reported EBITDA as presented may not be comparable to other similarly titled measures of other companies, limiting its usefulness as a comparative measure.