Philpug

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BROOMFIELD, Colo., April 1, 2020 /PRNewswire/ -- Vail Resorts, Inc. (NYSE: MTN) today provided an update on its response to the evolving impact of COVID-19 on its business.

Rob Katz, Chief Executive Officer, said, "The circumstances surrounding COVID-19 are unprecedented and the financial impact to our Company and the broader travel industry has been significant. Following the difficult decision to close our North American mountain resorts, retail stores and lodging properties for the remainder of the 2019/2020 North American ski season, we have quickly transitioned to evaluating the longer-term impacts for our Company and our resort operations. While we will continue to assess our ability to reopen select resorts for late-season skiing, we are keenly aware that the current travel restrictions may stay in place beyond that timeframe and could ultimately impact the timing of our ability to open our North American resorts for their summer season and our Australian resorts for their winter season. And once we are able to reopen, we assume weaker travel demand may continue, impacting our fourth fiscal quarter of 2020 and our first fiscal quarter of 2021.

"The Company went into this challenging time period with a strong financial position and based on recent events, we are currently incorporating more challenging scenarios into our planning for our fourth fiscal quarter of 2020 and the first fiscal quarter of 2021. As mentioned in our March 18, 2020 press release, we are taking additional proactive steps to align our capital spending and return of capital approach to ensure that we remain positioned for long-term success. We are also taking steps to address our operating costs and the inability of many of our employees to perform their roles in the current environment.

"We are reducing our capital plan for calendar 2020 by approximately $80-$85 million, with the vast majority of these savings coming from the deferral of many of our discretionary capital projects. We are planning to defer all new chair lifts, terrain expansions and other mountain and base area improvements, while continuing with the vast majority of our maintenance capital spending.

"In this moment, we believe that maintaining liquidity is in the best long-term interests of the Company and our shareholders, and, as such, the Company's Board of Directors has made the decision to suspend our quarterly cash dividend for the next two quarters, preserving over $140 million of liquidity for our business. We remain committed to returning excess capital to shareholders and will re-evaluate decisions on capital allocation in December 2020. The Company's previously announced dividend payment occurring on April 9, 2020, is not affected by this suspension.

"To ensure we can navigate the financial challenges ahead and because of the reality of their inability to work at their locations, we have made the difficult decision to furlough the majority of our U.S. year-round hourly employees for at least a month, and potentially longer depending on when we are able to reopen our operations. We will be continuing healthcare coverage for these employees, including covering the entire cost of their healthcare premiums and hope to bring these employees back to work as soon as possible. Additionally, we will be implementing a six-month salary reduction for all U.S. salaried employees, with reductions beginning at 5% and rising to 25% for our top executives. As CEO, I will be foregoing my full salary for the next six months and our Board of Directors will also be foregoing 100% of their cash compensation during this period. We also may announce potential changes for our Canadian-based and Australian-based employees, but our approach will be based on the unique challenges faced by those resorts and any other local considerations.

"We have also communicated with our season pass holders and indicated that we have heard their frustration about the early closure to the 2019/2020 ski season and are committed to identifying an approach for them that acknowledges this past season and retains their loyalty for the future. We intend to share more details about our season pass plans with our guests by the end of April and are deferring all auto-renew charges and all spring deadlines for Buddy Tickets into May.

"This is one of the most challenging times many of us can remember, and it is disappointing to announce these changes, especially those impacting our employees. However, we also recognize that the impacts of the current crisis have certainly hit the travel industry and our Company quite hard. We believe that the actions we are announcing today will allow the Company to maintain cushion on our liquidity and financial covenants under our credit facilities through the upcoming quarters and position the Company for success in the future. I am evermore grateful for the commitment and loyalty of our employees, guests and community members during this challenging time."

About Vail Resorts, Inc. (NYSE: MTN)
Vail Resorts, Inc., through its subsidiaries, is the leading global mountain resort operator. Vail Resorts' subsidiaries operate 37 world-class mountain resorts and urban ski areas, including Vail, Beaver Creek, Breckenridge, Keystone and Crested Butte in Colorado; Park City in Utah; Heavenly, Northstar and Kirkwood in the Lake Tahoe area of California and Nevada; Whistler Blackcomb in British Columbia, Canada; Perisher, Falls Creek and Hotham in Australia; Stowe, Mount Snow, Okemo in Vermont; Hunter Mountain in New York; Mount Sunapee, Attitash, Wildcat and Crotched in New Hampshire; Stevens Pass in Washington; Liberty, Roundtop, Whitetail, Jack Frost and Big Boulder in Pennsylvania; Alpine Valley, Boston Mills, Brandywine and Mad River in Ohio; Hidden Valley and Snow Creek in Missouri; Wilmot in Wisconsin; Afton Alps in Minnesota; Mt. Brighton in Michigan; and Paoli Peaks in Indiana. Vail Resorts owns and/or manages a collection of casually elegant hotels under the RockResorts brand, as well as the Grand Teton Lodge Company in Jackson Hole, Wyo. Vail Resorts Development Company is the real estate planning and development subsidiary of Vail Resorts, Inc. Vail Resorts is a publicly held company traded on the New York Stock Exchange (NYSE: MTN). The Vail Resorts company website is www.vailresorts.comand consumer website is www.snow.com.

From our friends at Liftblog...
 
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Tricia

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This is huge.
 

TheArchitect

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The article mentions the bubble chair that was going to be installed at Okemo and it got me thinking. Who in this new world we're suddenly living in is going to want to ride with the bubble down, trapping all those germs?
 

BS Slarver

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OOouchhhh !
We've been waiting for a decision from management here at big Sky on season pass costs and price deadlines.
A big factor for us will be waiting to see if the new base lift / swift current 6 goes as planed before pulling the trigger on which pass to buy.
Current swift current hasn’t been so swift over the last few years and replacement was to be started at the end of April. Report I got was that the recent RC 8 lift was set up as long term lease, a bit easier to deal with over time and the ups and downs in volatile times. Hoping it’s baby brothers SC6 deal was structured the same way
 

Brad J

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A friend of mine just moved to Denver to take a job with Vail, I hope that decision works out???
 

raytseng

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I don't think it's just about the money or financials cost considerations.
I think there are also logistical considerations that given the current situation, there are huge threats to be able to execute and complete the projects successfully over this summer. So the increased risks made the postponement a no-brainer.

There is looming threat that there will be a Order to cease non-essential construction are going to come down in those project states.
Plus the availability of having all the same contractors and subcontractors and suppliers to be available to work versus those firms voluntarily shutting down.
Finally the optics of a company asking people to work on a non-essential project in a state of national emergency is not good.

The rest of the CEO's letter though on all the other financial changes to conserve money are quite telling though.
 
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Brad J

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RC 8 lift was set up as long term lease
When I was there at the Gathering I heard that the Ramcharger was supposed to go to Sochi but something happened and BS got a good deal on it??? Any truth to that ??? The # I heard it was 33 million lift, seams like a crazy number, 10-12 million maybe. I can't see leasing a lift, but some airlines lease the engines on the planes, anything is possible. Does BS have a BS only , midweek, blackout days and full season pass ???
 

BS Slarver

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@Brad J - BS over simplified their pass structure with now just 3 offerings for 20/21

Gold at $1699 and you get everything, parking discounted tix, hell I think they are including a puppy or some other crap not related to skiing and a IKON base.

Black at $1099, no parking or puppy, All days but only 7 tram days, you can add more at a cost

Blue at $? and limited skiing, no holidays bare bones, might as well be weekday only.
After this season, some locals are feeling black and blue for sure.

edit: I’ve heard a wide range of costs on the RC8, none of which could I confirm but the lease deal came from a reliable source
 

Bad Bob

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Would expect to see a lot of projects put on hold this year. With the uncertainty raised with the pandemic capital expansion will be a real crap shoot, cheap money or not.
Don't ignore the pretty much total collapse of the oil business either, the trickle down from that will be massive.
 

ScotsSkier

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I don't think it's just about the money or financials cost considerations.
I think there are also logistical considerations that given the current situation, there are huge threats to be able to execute and complete the projects successfully over this summer. So the increased risks made the postponement a no-brainer.

There is looming threat that there will be a Order to cease non-essential construction are going to come down in those project states.
Plus the availability of having all the same contractors and subcontractors and suppliers to be available to work versus those firms voluntarily shutting down.
Finally the optics of a company asking people to work on a non-essential project in a state of national emergency is not good.

The rest of the CEO's letter though on all the other financial changes to conserve money are quite telling though.
Yup, the chances of getting projects started and completed is low. And if you are replacing an existing lift, any delays could mean you dont have a lift next season, so an easy and common sense decision.

Plus from a cash-flow perspective without early season pass sales, borrowings and cost - would shoot up. So a very smart management decision.

Also from a cash flow management perspective look at the other moves:

Other steps revealed today include the furlough of nearly all year-round hourly employees, suspension of the company’s shareholder dividend, salary reductions for non-hourly employees and elimination of cash compensation for the CEO and board of directors.

So, sharing pain all round. TBH I can not fault them for all these moves. Very much in line with what I would have recommended. Conserve cash, stay solvent and basically put everything on hold for a year till the picture becomes clearer. Smart moves!
 

KevinF

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I've been wondering how this affects Saddleback (Maine) and their planned re-opening this coming winter. They had plans to replace a chairlift and other maintenance projects from several years of neglect.
 

Brad J

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I guess we all are going to feel the economic, physical and emotional effects for a very long time as the depression did to my grand parents
 

Marker

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And Killington has put a hold on the construction of the new K1 Lodge, which puts it in doubt for the Women's WC races over Thanksgiving weekend. If those still come off as scheduled...
 

ScotsSkier

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I would expect every major project to be pushed back..at least a year.
That would be my expectation Phil, Vail have just been first out of teh gate. And, TBH, as skiers we should actually be pleased that the industry is taking this action. It indicates that they are serious about controlling costs and being in position to open next year, all else being equal. A much better outcome the if they had started some of these projects and then had to close up shop
 

Bad Bob

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Wonder what the fallout will be for the lift, snow making, and groomer manufacturers? Could be some screaming deals for the few areas that are flush in cash on infrastructure hardware. Suspect there will be more than a few deposits lost.
 
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