OREANDA-NEWS. 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 first quarter ended July 31, 2016 of fiscal 2017.

First-Quarter 2017:

  • Revenue was $7.1 million, up $1.7 million from the first quarter of fiscal 2016.
  • Net loss was $7.9 million, or $0.56 per share.
  • Reported EBITDA* was ($6.9) million.
  • Resort operating expenses were up $1.6 million over the first quarter of fiscal 2016.
  • The next deadline for 2016/2017 season pass sales occurs in mid-October; management expects season pass sales to continue to be strong, especially the new, multi-resort Peak Pass product.

* See Definitions of Non-GAAP Financial Measures

Timothy D. Boyd, president and chief executive officer, commented, “During the first quarter, we made substantial progress in our strategic plan for the long-term, financial stability of Peak Resorts, which includes a purposeful effort to strengthen our balance sheet and capital structure. On August 22, we were pleased to announce our agreement with CAP 1 LLC (an affiliate of Summer Road) for a $20 million cumulative convertible preferred stock offering. We believe that, with the proceeds of this transaction, we will be on more solid financial footing and be well-positioned to grow the geographic footprint of our ski resort portfolio, as well as our overall market share in the regions that we serve.

Boyd added, “Summer is routinely our slowest season, and as the weather normalized over the past couple of months, our summer operations performed in line with expectations. Our various resorts hosted a robust schedule of events, including music festivals and art shows, as well as an array of family-friendly outdoor activities like zip-lines.

“We look forward to the upcoming ski season, which will include a full season with both Hunter Mountain and our new lodge at Mad River,” continued Boyd. “Further, we expect the sales of our season passes to continue to be strong during the remainder of the selling season through December.”

           
(dollars in thousands except per share data)   Three months ended July 31,
      2016         2015  
           
Revenues $    7,126     $    5,432  
Loss from operations $    (10,117 )   $    (8,963 )
Net loss $    (7,904 )   $    (7,079 )
Loss per share (basic and diluted) $    (0.56 )   $    (0.51 )
Weighted average shares outstanding      13,982          13,982  
Vested restricted stock units      39          -  
Reported EBITDA $    (6,900 )   $    (6,515 )

* See below for Definitions of Non-GAAP Measures

First-Quarter FY2017 Resort Operating Results

Stephen J. Mueller, Peak Resorts’ chief financial officer, noted, “Total revenue and operating expenses increased during the first quarter primarily driven by the impact of the Hunter Mountain acquisition.”

           
(dollars in thousands)   Three months ended July 31,
    2016     2015
           
Revenues          
 Food and beverage $  2,487   $  1,322  
 Hotel/lodging $  1,808   $  1,460  
 Retail $  149   $  159  
 Summer activities $  1,864   $  1,923  
 Other $  818   $  568  
 Total $  7,126   $  5,432  
(dollars in thousands)   Three months ended July 31,
    2016     2015
           
Resort operating expenses          
 Labor and labor related expenses $  7,707   $  6,231  
 Retail and food and beverage cost of sales $  761   $  516  
 Power and utilities $  588   $  583  
 Other $  2,708   $  2,877  
 Total $  11,764   $  10,207  
           

“We are looking forward to this upcoming ski season, with indicators like the positive response to our new Peak Pass product,” added Mueller. “We are also excited about the debut of our new base lodge at our Mad River property, which will stand at 46,000-square-feet, about twice the size of the previous building. The two-level structure will feature a more spacious upper loft area, with elevator access, a live-music stage, and a slope-side deck with views of the mountain, as well as seating for more than 300 skiers and snowboarders. Also, the dining area will contain more than 800 seats, almost double the available seating of the previous facility.”

Financial Position
Mueller continued, “As we noted during our recent fourth-quarter conference call, we have been diligently exploring long-term sources of financing to fund our future working capital needs.

“As such, we were glad to announce our agreement with CAP 1  LLC (an affiliate of Summer Road) for the preferred stock offering,” stated Mueller. “This investment is expected to provide us with increased financial flexibility, as well as ensure that we are well-positioned to execute on our strategy to grow our company, both organically and through strategic acquisition.”

The transaction is expected to be completed in early November, subject to the approval of the company’s shareholders and fulfillment of certain conditions.

Mueller continued, “In order to meet our current liquidity needs, the Company borrowed additional funds from its existing lenders. During the quarter, we borrowed an additional $1.75 million, and subsequent to the quarter, we pulled the remaining $2.75 million of the $20 million line of credit with Royal Banks of Missouri for working capital purposes. In addition, we have also, subsequent to the quarter, borrowed $4.0 million from the $5.5 million currently available under our new bridge loan with EPR, one of our primary lenders. These short term borrowings will help to ensure that we have the liquidity necessary to manage through our slower season until the 2016/2017 ski season begins.” 

Boyd concluded, “We remain committed to providing value for our shareholders. However, as we’ve discussed previously, our Board continues to believe that it is not prudent to consider the issuance of a dividend while the EB-5 funds remain in escrow.”

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 (USCIS) approved our EB-5 program this past May, we are still waiting for the first Petition to be approved. As we’ve noted, the escrowed funds will be released once the first Petition is approved; however, we still have no direct insight into the government’s approval timeline during this final stage of the process.”

 

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:

      Three months ended  
      July 31  
        2016         2015    
               
Net loss   $    (7,904 )   $    (7,079 )  
Income tax benefit        (5,176 )        (4,520 )  
Interest expense, net        3,048          2,721    
Depreciation and amortization        3,217          2,448    
Investment income        (2 )        (2 )  
Gain on sale/leaseback        (83 )        (83 )  
    $    (6,900 )   $    (6,515 )  
                       

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.

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 for resort updates.

 

 Consolidated Income Statements
(in thousands, except share and per share data)
 
        (Unaudited)
        Three months ended
July 31,
          2016         2015  
               
               
Revenues     $    7,126     $    5,432  
               
Costs and Expenses              
Resort operating expenses          11,764          10,207  
Depreciation and amortization          3,217          2,448  
General and administrative expenses          1,372          936  
Land and building rent          327          338  
Real estate and other taxes          563          466  
           17,243          14,395  
Loss from Operations          (10,117 )        (8,963 )
               
Other Income (Expense)              
Interest, net of interest capitalized of $384 and $91 in 2016 and 2015, respectively          (3,048 )        (2,721 )
Gain on sale/leaseback          83          83  
Investment income          2          2  
           (2,963 )        (2,636 )
               
Loss before Income Tax Benefit          (13,080 )        (11,599 )
Income Tax Benefit          (5,176 )        (4,520 )
Net Loss     $    (7,904 )   $    (7,079 )
               
               
Basic and diluted loss per share     $    (0.56 )   $    (0.51 )
               
Cash dividends declared per common share     $    -     $    0.1375  
 Consolidated Balance Sheets
(dollars in thousands, except share and per share data)		  
   
      (Unaudited)        
      July 31,     April 30,  
        2016         2016    
Assets              
Current assets              
Cash and cash equivalents   $    2,437     $    5,396    
Restricted cash balances        55,946          61,099    
Income tax receivable        5,176          -    
Accounts receivable        1,896          4,772    
Inventory        2,801          2,730    
Deferred income taxes        1,092          1,092    
Prepaid expenses and deposits        2,636          2,680    
         71,984          77,769    
Property and equipment, net        190,425          192,178    
Land held for development        37,550          37,542    
Intangible assets, net        832          846    
Goodwill        5,009          5,009    
Other assets        619          619    
    $    306,419     $    313,963    
Liabilities and Stockholders' Equity              
Current liabilities              
Acquisition line of credit   $    17,250     $    15,500    
Accounts payable and accrued expenses        18,149          18,696    
Accrued salaries, wages and related taxes and benefits        1,060          919    
Unearned revenue        14,074          13,233    
EB-5 investor funds in escrow        50,504          52,004    
Current portion of deferred gain on sale/leaseback        333          333    
Current portion of long-term debt and capitalized lease obligation        2,598          2,456    
         103,968          103,141    
Long-term debt        118,238          118,343    
Capitalized lease obligation        4,102          4,419    
Deferred gain on sale/leaseback        3,095          3,178    
Deferred income taxes        12,672          12,672    
Other liabilities        567          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        82,775          82,728    
Accumulated Deficit        (19,138 )        (11,234 )  
         63,777          71,634    
    $    306,419     $    313,963