Peak Resorts Reports Second Quarter Fiscal 2018 Results

Peak Resorts Reports Second Quarter Fiscal 2018 Results

WILDWOOD,  Mo.,  Dec.  07,  2017  (GLOBE  NEWSWIRE)  --  Peak  Resorts,   Inc. 
(NASDAQ:SKIS) (“Peak”  or the  “Company”),  a leading  owner and  operator  of 
high-quality, individually branded U.S. ski resorts, today reported  financial 
results for its fiscal 2018 second quarter as summarized below:

                                                                     
(in thousands, except    Three months ended            Six months ended
per share data)          October  31,                  October  31,
                         2017           2016           2017         2016      
                                                                     
Revenues               $  8,838       $  8,475       $  16,358    $  15,601   
Resort operating costs $  15,121      $  13,015      $  28,660    $  24,779   
Loss from operations   $  (11,776 )   $  (10,136 )   $  (23,225 ) $  (20,253 )
Net loss               $  (8,914  )   $  (7,982  )   $  (17,509 ) $  (15,886 )
Loss per share (basic  $  (0.66   )   $  (0.57   )   $  (1.30   ) $  (1.13   )
and diluted)
Weighted average          13,982         13,982         13,982       13,982   
shares outstanding
Vested restricted         60             29             55           34       
stock units
Reported EBITDA*       $  (8,622  )   $  (6,920  )   $  (16,926 ) $  (13,820 )
*See page 3 for Definitions of Non-GAAP Financial Measures
 

Timothy D.  Boyd, President  and Chief  Executive Officer,  commented, “As  we 
closed out the first half of fiscal 2018, which is the seasonally slowest part
of our fiscal year, Peak Resorts delivered second quarter revenue growth of 4%
and overall results consistent with our expectations. In fiscal 2018  to-date, 
we have  succeeded  with  our  expense  management  and  strategic  investment 
initiatives to  position  the Company  for  what we  believe  will be  a  very 
successful ski season and  a strong second  half of our  2018 fiscal year.  In 
particular, Peak Pass sales were running approximately 9% higher on a unit and
revenue basis over the prior year through mid-October and we have seen further
strength in  sales  through November,  including  increased interest  for  the 
Drifter pass for young adults,  which remains available at pre-season  pricing 
through mid-December.

“More recently, the completion of our EB-5 funded West Lake snowmaking project
enabled  Mount  Snow  to  open  for  the  2017/2018  season  on  November  11, 
representing one of the earliest openings  on record for our flagship  resort. 
The powerful new snowmaking infrastructure in place at Mount Snow allowed  our 
team to welcome  skiers with  the most skiable  terrain in  the Northeast  and 
build on that initial  opening capacity with more  than 180 skiable acres  for 
the Thanksgiving holiday weekend. Skier interest  at Mount Snow has been  very 
strong, as has early visitation at  Hunter Mountain, Wildcat and Big  Boulder, 
which represents  a  very  favorable start  to  the  new ski  season  for  our 
Northeast resorts.

“Furthermore, we expect customer excitement at Mount Snow to build  throughout 
the season as  skiers and snowboarders  experience the power  of our  expanded 
snowmaking capacity to create  great conditions and they  see the progress  we 
are making on the Carinthia Ski Lodge,  which remains on schedule to open  for 
the 2018/2019 ski season.  Both the West Lake  and Carinthia base  development 
projects highlight Peak’s ability to  structure, finance and execute  facility 
enhancement projects  that  are  expected to  drive  increased  patronage  and 
revenue growth as well as provide an attractive ROI.

“The recent  federal approval  of the  Great North  Regional Center,  our  new 
privately-managed regional center,  positions Peak to  leverage this new  EB-5 
investment sponsor for additional Northeast region development projects. As  a 
central component of our  long-term organic growth  strategy, the Great  North 
Regional Center provides us with  enhanced oversight and improved  flexibility 
for future EB-5 projects, including the  upcoming phase two of our Mount  Snow 
development plan,  which will  include  104 ski-in/ski-out  residential  units 
centered on the Carinthia base.”

Fiscal Second Quarter Results Review
Fiscal 2018  second quarter  revenue increased  4.3% year  over year  to  $8.8 
million as the Company benefited from an increase in other revenue. While  the 
fiscal second quarter is traditionally the Company’s slowest seasonal  period, 
results in the quarter were roughly in-line with expectations.

Resort operating expenses in  the fiscal 2018 second  quarter rose 16.2%  year 
over  year  to  $15.1  million  as  the  Company’s  operating  expense  levels 
normalized versus the prior year. Peak significantly reduced variable expenses
in the  prior  year period  through  employee furloughs  and  strict  spending 
controls to  mitigate  ongoing liquidity  restraints  driven by  the  negative 
impact from  unusually warm  winter weather  during the  2015/2016 ski  season 
which led to lower overall  visitation levels. The liquidity restraints  which 
impacted the prior year period were also related to the delay in the Company’s
EB-5 escrow reimbursement. General  and administrative expenses remained  flat 
at $1.5 million.

Reported EBITDA for  the second  fiscal quarter  of 2018  was a  loss of  $8.6 
million, compared to a loss of $6.9 million in the year-ago quarter.

Balance Sheet Update
As of October 31,  2017, the Company  had cash and  cash equivalents of  $13.0 
million and total outstanding debt of $182.2 million, including $12.4  million 
drawn against  its revolving  line  of credit  and  long-term debt  of  $164.9 
million. During  the  2018 fiscal  second  quarter, the  Company  renewed  its 
acquisition line of credit and entered into a new revolving line of credit.

Christopher J. Bub, Chief Financial Officer, added, “Our fiscal second quarter
historically operates at a loss as our resorts are not open for ski operations
during the  period.  However,  the  fiscal 2018  second  quarter  was  a  very 
productive period for Peak Resorts and  we are positioned for solid growth  in 
the second half of this fiscal year, dependent of course on the expectation of
normal seasonal weather.

“Capital spending of $9.5 million in the quarter included $3.0 million of West
Lake snowmaking project expenditures  and $2.7 million  for the Carinthia  Ski 
Lodge project, both of which were  EB-5 funded. The remaining $3.8 million  of 
capital spending included the widening of  the Long John trail at Mount  Snow, 
initial  spending  on  the  Hunter  Mountain  expansion  project  and   normal 
maintenance capital spending to prepare  our resorts for the upcoming  season. 
These capital projects are in keeping with our long-term strategy of investing
in  our  resorts  to  further  improve  the  guest  experience  and  operating 
performance, which we  believe will  result in yield  improvements across  our 
business and enhance our resorts for the 2017/2018 ski season.

“More recently, we  bolstered our  liquidity position,  closing on  a new  $10 
million revolving line of credit and renewing our $15 million acquisition line
of credit  with  Royal  Banks  of Missouri.  In  all,  Peak  Resorts’  capital 
structure positions  the Company  to pursue  return-focused expansion  at  our 
existing resorts and growth in our mountain portfolio while returning  capital 
to shareholders  through our  regular quarterly  cash dividend  and  enhancing 
long-term shareholder value.”

Investor Conference Call and Webcast
The Company will host an investor  conference call and webcast to discuss  its 
fiscal 2018 second quarter results today  at 4:30 p.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 9696728.  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 following table includes a reconciliation  of Reported EBITDA to the  GAAP 
related measure of net loss:

                                                                     
(dollars in thousands)     Three months ended        Six months ended
                           October 31,               October 31,
                           2017        2016          2017         2016
Net loss                   $  (8,914 ) $  (7,982 )   $  (17,509 ) $  (15,886 )
Income tax benefit         $  (5,941 ) $  (5,226 )   $  (11,668 ) $  (10,402 )
Interest expense, net      $  3,196    $  3,156      $  6,207     $  6,204    
Depreciation and           $  3,154    $  3,216      $  6,299     $  6,433    
amortization
Investment income          $  (34    ) $  (1     )   $  (89     ) $  (3      )
Gain on sale/leaseback     $  (83    ) $  (83    )   $  (166    ) $  (166    )
Reported EBITDA*           $  (8,622 ) $  (6,920 )   $  (16,926 ) $  (13,820 )
                                                                              

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.

About Peak Resorts
Headquartered in Missouri,  Peak Resorts is  a leading owner  and operator  of 
high-quality, individually  branded  ski  resorts  in  the  U.S.  The  Company 
operates 14 ski resorts primarily located in the Northeast and Midwest, 13  of 
which are Company owned.
The majority of the resorts are located within 100 miles of major metropolitan
markets, including  New York  City, 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 for resort updates.
For further information, or to receive future Peak Resorts news  announcements 
via e-mail, please contact JCIR, at 212-835-8500 or skis@jcir.com. 

Forward Looking Statements
This news  release contains  forward-looking statements  regarding the  future 
outlook and  performance of  Peak Resorts,  Inc., within  the meaning  of  the 
Private Securities Litigation Reform Act of 1995. These statements are subject
to a variety  of risks and  uncertainties that could  cause actual results  to 
differ materially from current expectations. These risks and uncertainties are
discussed under the caption “Risk Factors”  in the Company’s Annual Report  on 
Form 10-K for the  year ended April  30, 2017, filed  with the Securities  and 
Exchange Commission  (the “SEC”),  and as  updated from  time to  time in  the 
Company’s filings  with the  SEC.  Peak  Resorts undertakes  no obligation  to 
release  publicly  the  result  of  any  revisions  to  these  forward-looking 
statements that may be made to reflect events or circumstances after the  date 
hereof or to reflect the occurrence of unanticipated events.

Investor Contact:
Norberto Aja, Jim Leahy, Joseph Jaffoni
JCIR
212-835-8500 or skis@jcir.com

 
Consolidated Statements of Operations
(in thousands, except share and per share amounts)
(Unaudited)
                                                                     
                                                      
                       Three months ended            Six months ended
                       October 31,                   October 31,
                       2017           2016           2017           2016      
                                                                     
                                                                     
Net revenue          $  8,838       $  8,475       $  16,358      $  15,601   
                                                                     
Operating                                                            
expenses:
Resort operating        15,121         13,015         28,660         24,779   
costs
Depreciation and        3,154          3,216          6,299          6,433    
amortization
General and             1,529          1,517          2,777          2,889    
administrative
Real estate and
other non-income        471            537            1,155          1,100    
taxes
Land and building       339            326            692            653      
rent
                        20,614         18,611         39,583         35,854   
Loss from               (11,776 )      (10,136 )      (23,225 )      (20,253 )
operations
                                                                     
Other (expense)                                                      
income:
Interest, net of
amounts
capitalized of
$514 and $945 in        (3,196  )      (3,156  )      (6,207  )      (6,204  )
2017 and $398 and
$782 in 2016,
respectively
Gain on                 83             83             166            166      
sale/leaseback
Other income            34             1              89             3        
                        (3,079  )      (3,072  )      (5,952  )      (6,035  )
                                                                     
Loss before income      (14,855 )      (13,208 )      (29,177 )      (26,288 )
taxes
Income tax benefit      (5,941  )      (5,226  )      (11,668 )      (10,402 )
Net loss             $ (8,914   )   $  (7,982  )   $  (17,509 )   $  (15,886 )
                                                                     
                                                                     
Less declaration
and accretion of        (400    )      -              (800    )      -        
Series A preferred
stock dividends
Net loss
attributable to      $ (9,314   )   $ (7,982   )   $ (18,309  )   $ (15,886  )
common
shareholders
                                                                     
                                                                     
                                                                     
                                                                     
Basic and diluted
loss per common      $  (0.66   )   $  (0.57   )   $  (1.30   )   $  (1.13   )
share
                                                                     
Cash dividends
declared per         $  0.07        $  -           $  0.14        $  -        
common share
                                                                     
Cash dividends
declared per         $  20.00       $  -           $  20.00       $  -        
preferred share

 
Consolidated Balance Sheets
(dollars in thousands, except share and per share amounts)
 
                                                                     
                                                    October 31,     April 30,
                                                    2017            2017
Assets                                              (Unaudited)      
                                                                     
Current assets:                                                      
Cash and cash equivalents                         $  12,962       $  33,665   
Restricted cash                                      1,339           11,113   
Income tax receivable                                11,668          -        
Accounts receivable                                  712             5,083    
Inventory                                            2,630           2,215    
Deferred income taxes                                591             591      
Prepaid expenses and deposits                        6,926           2,183    
Total current assets                                 36,828          54,850   
                                                                     
Property and equipment, net                          199,970         188,143  
Land held for development                            37,601          37,583   
Restricted cash, construction                        19,539          33,700   
Goodwill                                             4,825           4,825    
Intangible assets, net                               755             788      
Other assets                                         676             648      
Total assets                                      $  300,194      $  320,537  
                                                                     
Liabilities and Stockholders' Equity                                 
                                                                     
Current liabilities:                                                 
Revolving lines of credit                         $  12,375       $  4,500    
Accounts payable and accrued expenses                11,120          12,371   
Accrued salaries, wages and related taxes and        1,045           1,035    
benefits
Unearned revenue                                     18,753          14,092   
EB-5 investor funds in escrow                        -               500      
Current portion of deferred gain on                  333             333      
sale/leaseback
Current portion of long-term debt and                2,838           3,592    
capitalized lease obligation
Total current liabilities                            46,464          36,423   
                                                                     
Long-term debt                                       164,881         174,785  
Capitalized lease obligations                        2,148           2,708    
Deferred gain on sale/leaseback                      2,679           2,845    
Deferred income taxes                                12,474          12,474   
Other liabilities                                    522             540      
Total liabilities                                    229,168         229,775  
                                                                     
Series A preferred stock, $0.01 par value per
share, $1,000 liquidation preference per share,      17,401          17,001   
40,000 shares authorized, 20,000 shares issued
and outstanding
                                                                     
Commitments and contingencies                                        
                                                                     
Stockholders' equity:                                                
Common stock, $0.01 par value per share,
20,000,000 shares authorized, 13,982,400 shares      140             140      
issued and outstanding
Additional paid-in capital                           86,529          86,372   
Accumulated deficit                                  (33,044  )      (12,751 )
Total stockholders' equity                           53,625          73,761   
Total liabilities and stockholders' equity        $  300,194      $  320,537  

 
Supplemental Operating Data
(dollars in thousands)
(Unaudited)
                                                                        
                                   Three months ended      Six months ended
                                   October 31,             October 31,
                                     2017        2016        2017      2016
                                                                        
Revenues:                                                               
Food and beverage                  $  2,735    $  2,728    $  5,565  $  5,215
Hotel/lodging                      $  2,014    $  2,052    $  3,855  $  3,860
Retail                             $  429      $  430      $  670    $  621
Summer activities                  $  2,578    $  2,570    $  4,459  $  4,549
Other                              $  1,082    $  695      $  1,809  $  1,356
Total                              $  8,838    $  8,475    $  16,358 $  15,601
                                                                        
Resort operating expenses:                                              
Labor and labor related expenses   $  8,999    $  7,810    $  17,610 $  15,517
Retail and food and beverage cost  $  1,118    $  912      $  1,870  $  1,673
of sales
Power and utilities                $  800      $  843      $  1,589  $  1,431
Other                              $  4,204    $  3,450    $  7,591  $  6,158
Total                              $  15,121   $  13,015   $  28,660 $  24,779

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