Vail's recovery year is guided, at the midpoint, to earn less than FY25 did, on more revenue and fewer passes

A recovery year guided to earn less than FY25 did

Vail Resorts gave its first guidance for the next fiscal year on 28 September, and the number worth holding is $835M. That is the midpoint of the range it guided for Resort Reported EBITDA, the company's non-GAAP measure of profit for its mountain and lodging businesses, measured before interest, tax and depreciation. In the last full year before the bad winter the same measure came to $844.1M. By our arithmetic, the guide asks for 4.9% more resort revenue than that year in order to earn slightly less.

That is what a recovery looks like when guided costs are higher than in FY25: by our arithmetic, the guide implies resort costs about 7% above those of FY25. The company says it expects visitation to come back, but not all of it: US visitation, it now says, will not fully return to the earlier level.

The last guide was cut in March and June, then met

The record is why the number deserves care. In March the company cut its guide for the year just ended. On 8 June it cut again, to a range which the company put at about 14% below its original outlook at the midpoint. The year then came in almost exactly at that revised midpoint and well short of the original outlook.

In September the guide assumes US visitation will not fully return to FY25 levels, though the chief executive allowed that a normal winter could bring it back. A guide cut in March and again in June, then met, is a guide that was reset to something reachable. The question for the new one is whether it has been reset the same way.

Passes are still falling and the guide assumes no change

Season passes are the revenue booked before the snow falls. Through 18 September, units sold were down 12%, against 10% at the May deadline; the company says that, excluding auto-renew timing, the trend is unchanged. The chief financial officer said "we are not expecting an overall improvement during the rest of the selling season".

So the growth the guide needs has to come from lift tickets bought a day at a time and from spending on lessons, rentals and dining. Analysts asked how a pass base that is smaller in dollars turns into the resort revenue growth the guide implies by our arithmetic. The answers pointed to lift-ticket recapture and to how past winters went, and left the share coming from mix unquantified on the call.

The balance sheet is thinner than a year ago

Net debt is 3.9x trailing twelve-month Total Reported EBITDA against about 3.2x at the same date a year earlier by our arithmetic. Stockholders' equity is $240.5M, about 15% of what it was four fiscal years ago.

The dividend was held. By our arithmetic, declared dividends come to about $317M a year against free cash flow of $248.0M. The chief financial officer said the company expects positive free cash flow after its capital programme and dividends, even at the low end of guidance. Our rough test, before working capital, comes out short at that low end, so we cannot confirm it.

What would have to be true, and what we do not know

In our reading, for the guide to hold, lift-ticket buyers must refill the pass gap, ticket prices must hold, ancillary spending must grow, the weather must be normal, and the extra savings must outrun cost inflation. Nothing in that list is in hand today.

Management also has reason to show a credible plan. On the call it said it had received notices of intent to nominate directors, that the board was evaluating them, and that it would take no questions. The March and June calls had not mentioned a contest. The company said it had disclosed the notices in a release earlier in September, which we have not read; the call and the release give no names.

The evidence to watch arrives after the early-December pass deadline, with the final pass count, and in December with the 2027 capital plan. On this call, asked how the numbers add up, management answered with how past winters went. The pass count will settle it better than any recollection.