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For Immediate Release
Peak Resorts Reports Results for Second Quarter FY2017
Wildwood, Missouri, Dec. 8, 2016 – Peak Resorts, Inc. (NASDAQ: SKIS), a leading owner and operator of high-quality, individually branded ski resorts in the U.S., today reported results for its second quarter and six months ended October 31, 2016 of fiscal 2017.
Second Quarter 2017 (includes Hunter Mountain in the three and six months ended October 31, 2016):
| · | | Revenue was $8.5 million, compared to $6.2 million for the second quarter of fiscal 2016. |
| · | | Resort operating expenses were up $2.2 million over the second quarter of fiscal 2016. |
| · | | Net loss was $8.0 million, or $0.57 per share. |
| · | | Reported EBITDA* was ($6.9) million. |
* See Definitions of Non-GAAP Financial Measures
Timothy D. Boyd, president and chief executive officer, commented, “The company’s overall financial performance year to date is in line with our expectations, as the summer and fall seasons at our resorts are traditionally the time when we are gearing up for the winter ski season and only a handful of our resorts have regular off-season activities such as the zip line at Attitash or other seasonal outdoor events.
“We are very pleased with the recently announced successful completion of our $20 million cumulative convertible preferred stock private placement with CAP 1 LLC, an affiliate of Summer Road LLC, which closed subsequent to the quarter. This action significantly strengthens our balance sheet and provides funding for continued growth and general corporate purposes as we continue to anticipate the release of funds related to our United States Citizenship and Immigration Services EB-5 program at Mount Snow.”
Continued Boyd, “As we finalize preparations for the ski season we are very excited to report that, as of last weekend, four of our resorts were open including Mount Snow, Hunter Mountain, Wildcat and Big Boulder. The 2016/2017 ski season also marks the first full season with Hunter Mountain and the new multi-resort Peak Pass as parts of our portfolio. Offering our customers new resort properties, amenities and products that will enhance their skiing experience are continued areas of focus for our organization.”
| | | | | | | | | | |
| | | | | | | | | | |
(dollars in thousands except per share data) | | Three months ended October 31, | | | Six months ended October 31, |
| | 2016 | | | 2015 | | | 2016 | | 2015 |
| | | | | | | | | | |
Revenues | $ | 8,475 | | $ | 6,155 | | $ | 15,601 | $ | 11,587 |
Loss from operations | $ | (10,136) | | $ | (8,875) | | $ | (20,253) | $ | (17,838) |
Net Loss | $ | (7,982) | | $ | (6,888) | | $ | (15,886) | $ | (13,967) |
Loss per share (basic and diluted) | $ | (0.57) | | $ | (0.49) | | $ | (1.13) | $ | (1.00) |
Weighted average shares outstanding | | 13,982 | | | 13,982 | | | 13,982 | | 13,982 |
Reported EBITDA | $ | (6,920) | | $ | (6,410) | | $ | (13,820) | $ | (12,925) |
* See below for Definitions of Non-GAAP Measures
Second Quarter FY2017 Resort Operating Results
Peak Resorts, Inc.Page 2 of 6
Stephen J. Mueller, Peak Resorts’ chief financial officer, noted, “During the second quarter, we practiced general belt-tightening measures across our resorts to increase our overall operating efficiency, and these efforts were able to partially offset the increase in expenses primarily driven by the inclusion of Hunter Mountain in the Peak Resorts portfolio.”
| | | | | | | | | | |
(dollars in thousands) | | Three months ended October 31, | | | Six months ended October 31, |
| | 2016 | | | 2015 | | | 2016 | | 2015 |
| | | | | | | | | | |
Revenues | | | | | | | | | | |
Food and beverage | $ | 2,728 | | $ | 1,619 | | $ | 5,215 | $ | 2,941 |
Hotel/lodging | $ | 2,052 | | $ | 1,314 | | $ | 3,860 | $ | 2,774 |
Retail | $ | 273 | | $ | 297 | | $ | 422 | $ | 456 |
Summer activities | $ | 2,727 | | $ | 2,381 | | $ | 4,748 | $ | 4,304 |
Other | $ | 695 | | $ | 544 | | $ | 1,356 | $ | 1,112 |
Total | $ | 8,475 | | $ | 6,155 | | $ | 15,601 | $ | 11,587 |
| | | | | | | | | | | |
(dollars in thousands) | | Three months ended October 31, | | | Six months ended October 31, |
| | 2016 | | | 2015 | | | 2016 | | | 2015 |
| | | | | | | | | | | |
Resort operating expenses | | | | | | | | | | | |
Labor and labor related expenses | $ | 7,810 | | $ | 6,322 | | $ | 15,517 | | $ | 12,553 |
Retail and food and beverage cost of sales | $ | 912 | | $ | 751 | | $ | 1,673 | | $ | 1,267 |
Power and utilities | $ | 843 | | $ | 664 | | $ | 1,431 | | $ | 1,247 |
Other | $ | 3,450 | | $ | 3,046 | | $ | 6,158 | | $ | 5,923 |
Total | $ | 13,015 | | $ | 10,783 | | $ | 24,779 | | $ | 20,990 |
“Our stated goal of increasing revenue per skier is expected to be positively impacted in the 2016/2017 ski season by modest price increases, anticipated operating efficiencies and skier amenities. A great example of this is the new lodge at our Mad River property in Ohio that will provide skiers with a 46,000 square foot structure that boasts a new loft area, live music stage, slope-side deck with impressive view of the mountain, and dining capacity for more than 1,000 skiers and snowboarders,” added Mueller.
Financial Position
Mueller continued, “During the quarter, we received funding from short term borrowings including $2.75 million from our total $20 million line of credit with Royal Banks and a $5.5 million bridge loan with EPR. After the quarter ended, we completed our $20 million cumulative convertible preferred stock offering, and paid off the $5.5 million bridge loan with EPR. We believe we now have a long-term solid financial foundation to drive organic growth across our resort portfolio and that we are also well positioned to take advantage of opportunistic and strategic acquisition opportunities.”
Boyd concluded, “We remain committed to providing value for our shareholders, and we see the 2016/2017 season as the catalyst that will drive our future performance. As we continue to reiterate, our Board anticipates revisiting the ability to issue a dividend once the EB-5 funds are released from escrow and financial covenants are met.”
Richard K. Deutsch, vice president, business and real estate development, and president of Mt. Snow, Ltd., added, “Although the United States Citizenship and Immigration Services approved our EB-5 program earlier this year, we are still waiting for the first Petition to be approved. The program remains fully subscribed and we anticipate that the escrowed funds will be released once the first Petition is approved. We look forward to moving the Mount Snow projects forward and further investing in this keystone property in our portfolio.”
Peak Resorts, Inc.Page 3 of 6
Quarterly Investor Call and Webcast
Peak Resorts will hold its second quarter investor conference call/webcast on Thursday, December 8, 2016, at 11 a.m. ET.
The call/webcast will be available via:
Webcast:ir.peakresorts.com on the Events page
Conference Call:877-292-0959 (domestic) or 412-542-4158 (international)
A replay will be available on the Peak Resorts investor relations website (ir.peakresorts.com) after the call concludes.
Definitions 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, investment income, other income or expense and other non-recurring items. The following table includes a reconciliation of reported EBITDA to the GAAP related measure of net loss:
| | | | | | | | | |
| | | | | | | | | |
(dollars in thousands) | | Three months ended October 31, | | | Six months ended October 31, |
| 2016 | 2015 | | 2016 | 2015 |
Net earnings (loss) | $ | (7,982) | $ | (6,888) | | $ | (15,886) | $ | (13,967) |
Income tax expense (benefit) | $ | (5,226) | $ | (4,459) | | $ | (10,402) | $ | (8,979) |
Interest expense, net | $ | 3,156 | $ | 2,557 | | $ | 6,204 | $ | 5,278 |
Depreciation and amortization | $ | 3,216 | $ | 2,465 | | $ | 6,433 | $ | 4,913 |
Investment income | $ | (1) | $ | (2) | | $ | (3) | $ | (4) |
Gain on sale/leaseback | $ | (83) | $ | (83) | | $ | (166) | $ | (166) |
Reported EBITDA | $ | (6,920) | $ | (6,410) | | $ | (13,820) | $ | (12,925) |
We have chosen to specifically include reported EBITDA as a measurement of our results of operations because we consider this measurement to be a significant indication of our financial performance and available capital resources. Because of large depreciation and other charges relating to our ski resorts, it is difficult for management to fully and accurately evaluate our financial results and available capital resources using net income. Management believes that by providing investors with reported EBITDA, investors will have a clearer understanding of our financial performance and cash flow 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, which can vary by company primarily based upon the structure or existence of their financing; (ii) helps investors to more meaningfully evaluate and compare the results of our operations from period to period by removing the effect of our capital structure and asset base from our operating structure; and (iii) is used by our management for various purposes, including as a measure of performance of our operating entities and as a basis for planning.
Reported EBITDA is not a measure of performance defined by GAAP. Items excluded from reported EBITDA are significant components in understanding and assessing financial performance or liquidity. Reported EBITDA should not be considered in isolation or as alternative to, or substitute for, the GAAP related measure of net income, net change in cash and cash equivalents or other financial statement data presented in the consolidated financial statements as indicators of financial performance or liquidity. Because reported EBITDA is not a measurement determined in accordance with GAAP and is susceptible to varying calculations, reported EBITDA as presented may not be comparable to other similarly titled measures of other companies.
About Peak Resorts
Headquartered in Missouri, Peak Resorts, Inc. is a leading owner and operator of high-quality, individually branded ski resorts in the U.S. The company now operates 14 ski resorts primarily located in the Northeast and Midwest, 13 of which are company owned, including Hunter Mountain, the Catskills’ premier winter resort destination.
Peak Resorts, Inc.Page 4 of 6
The majority of the resorts are located within 100 miles of major metropolitan markets, including New York, Boston, Philadelphia, Cleveland and St. Louis, enabling day and overnight drive accessibility. The resorts under the company’s umbrella offer a breadth of activities, services and amenities, including skiing, snowboarding, terrain parks, tubing, dining, lodging, equipment rentals and sales, ski and snowboard instruction and mountain biking and other summer activities. To learn more, visit the company’s website at ir.PeakResorts.com, or follow Peak Resorts on Facebook (https://www.facebook.com/skipeakresorts) for resort updates.
Forward-Looking Statements
This news release contains forward-looking statements including statements regarding the future outlook and performance of Peak Resorts, Inc., and other statements based on current management expectations, estimates and projections. These statements are subject to a variety of risks and uncertainties, are not guarantees and are inherently subject to various risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. These risks and uncertainties include, without limitation, those discussed under the caption “Risk Factors” in the company’s Annual Report on Form 10-K for the year ended April 30, 2016, filed with the Securities and Exchange Commission, and as updated from time to time in the company’s filings with the SEC. The forward-looking statements included in this news release are only made as of the date of this release, and Peak Resorts disclaims any obligation to publicly update any forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
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Peak Resorts, Inc.Page 5 of 6
Consolidated Income Statements
(in thousands, except share and per share data)
| | | | | | | | | | | | |
| | | (Unaudited) | | | (Unaudited) |
| | | Three months ended
October 31, | | | Six months ended
October 31, |
| | | 2016 | | | 2015 | | | 2016 | | | 2015 |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Revenues | | $ | 8,475 | | $ | 6,155 | | $ | 15,601 | | $ | 11,587 |
| | | | | | | | | | | | |
Costs and Expenses | | | | | | | | | | | | |
Resort operating expenses | | | 13,015 | | | 10,783 | | | 24,779 | | | 20,990 |
Depreciation and amortization | | | 3,216 | | | 2,465 | | | 6,433 | | | 4,913 |
General and administrative expenses | | | 1,517 | | | 1,029 | | | 2,889 | | | 1,965 |
Land and building rent | | | 326 | | | 338 | | | 653 | | | 676 |
Real estate and other taxes | | | 537 | | | 415 | | | 1,100 | | | 881 |
| | | 18,611 | | | 15,030 | | | 35,854 | | | 29,425 |
| | | | | | | | | | | | |
Loss from Operations | | | (10,136) | | | (8,875) | | | (20,253) | | | (17,838) |
| | | | | | | | | | | | |
Other Income (Expense) | | | | | | | | | | | | |
Interest, net of interest capitalized of $398 and $782 in 2016 and $91 and $196 in 2015, respectively | | | (3,156) | | | (2,557) | | | (6,204) | | | (5,278) |
Gain on sale/leaseback | | | 83 | | | 83 | | | 166 | | | 166 |
Investment income | | | 1 | | | 2 | | | 3 | | | 4 |
| | | (3,072) | | | (2,472) | | | (6,035) | | | (5,108) |
| | | | | | | | | | | | |
Loss before Income Tax Benefit | | | (13,208) | | | (11,347) | | | (26,288) | | | (22,946) |
Income Tax Benefit | | | (5,226) | | | (4,459) | | | (10,402) | | | (8,979) |
Net Loss | | $ | (7,982) | | $ | (6,888) | | $ | (15,886) | | $ | (13,967) |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Basic and diluted loss per share | | $ | (0.57) | | $ | (0.49) | | $ | (1.13) | | $ | (1.00) |
| | | | | | | | | | | | |
Cash dividends declared per common share | | $ | - | | $ | 0.1375 | | $ | - | | $ | 0.2750 |
Peak Resorts, Inc.Page 6 of 6
Consolidated Balance Sheets
(dollars in thousands, except share and per share data)
| | | | | | | |
| | | (Unaudited) | | | | |
| | | October 31, | | | April 30, | |
| | | 2016 | | | 2016 | |
Assets | | | | | | | |
Current assets | | | | | | | |
Cash and cash equivalents | | $ | 3,732 | | $ | 5,396 | |
Restricted cash balances | | | 54,461 | | | 61,099 | |
Income tax receivable | | | 10,402 | | | - | |
Accounts receivable | | | 1,184 | | | 4,772 | |
Inventory | | | 3,510 | | | 2,730 | |
Deferred income taxes | | | 1,092 | | | 1,092 | |
Prepaid expenses and deposits | | | 2,683 | | | 2,680 | |
| | | 77,064 | | | 77,769 | |
Property and equipment-net | | | 188,563 | | | 192,178 | |
Land held for development | | | 37,559 | | | 37,542 | |
Intangible assets, net | | | 817 | | | 846 | |
Goodwill | | | 5,009 | | | 5,009 | |
Other assets | | | 625 | | | 619 | |
| | $ | 309,637 | | $ | 313,963 | |
Liabilities and Stockholders' Equity | | | | | | | |
Current liabilities | | | | | | | |
Acquisition line of credit | | $ | 20,000 | | $ | 15,500 | |
Bridge loan | | | 5,500 | | | - | |
Accounts payable and accrued expenses | | | 16,164 | | | 18,696 | |
Accrued salaries, wages and related taxes and benefits | | | 1,205 | | | 919 | |
Unearned revenue | | | 17,848 | | | 13,233 | |
EB-5 investor funds in escrow | | | 52,004 | | | 52,004 | |
Current portion of deferred gain on sale/leaseback | | | 333 | | | 333 | |
Current portion of long-term debt and capitalized lease obligation | | | 2,611 | | | 2,456 | |
| | | 115,665 | | | 103,141 | |
Long-term debt | | | 118,114 | | | 118,343 | |
Capitalized lease obligation | | | 3,793 | | | 4,419 | |
Deferred gain on sale/leaseback | | | 3,012 | | | 3,178 | |
Deferred income taxes | | | 12,672 | | | 12,672 | |
Other liabilities | | | 558 | | | 576 | |
Commitments and contingencies | | | | | | | |
Stockholders' Equity | | | | | | | |
Common stock, $.01 par value, 20,000,000 shares authorized, 13,982,400 shares issued | | | 140 | | | 140 | |
Additional paid-in capital | | | 82,803 | | | 82,728 | |
Accumulated Deficit | | | (27,120) | | | (11,234) | |
| | | 55,823 | | | 71,634 | |
| | $ | 309,637 | | $ | 313,963 | |
