Peak Resorts Reports Results

The investment community is well aware of the pressure that snoloco can exert when terrain pods are not served by high speed lifts. This information is already priced in.  Some have speculated that sno is actually planning to short the dead cat bounce.

snoloco wrote

I think you're wrong.  Positive contributions to cash flow means that they made money off of it instead of losing money.  Hunter is probably one of the only ski areas in the east that made money this year.

Fair enough.  Positive cash flow doesn't always mean profit (cash flow doesn't account for things like depreciation, which will be significant for Hunter), but it's a solid start.  I still don't think I'd want to own any ski area this winter, including Hunter.

EVVDave wrote

Their earnings release hints at possibly reducing/suspending their dividend, which likely plays into the drop in the stock price today.  Also some worry about uncertainty around cash they have tied up in some Mount Snow projects.  Lots of things up in the air right now, hoping the picture becomes clearer soon.

Absolutely.  The dividend is unsustainable.  Even in a good winter with decent profits, it would be a high dividend.

This is Otten 2.0

Hunter increased revenue but not profit

The are not raising EB5 funds as fast as they predicted so they are in a pinch where they can't move ahead with thier Mt Snow real estate project and can't raise any funds other wise.  There only way out of this mess is to sell lots of season passes this spring.  Thier next quarterly report will be critical.  This stock could be under a buck by the end Iof May.

Circling the toilet.  Time to flush!

The Slotsky children must be chuckling about all of this.

pretty much any ski area south of Albany will be toast in the next decade.  

ScottyJack wrote

pretty much any ski area south of Albany will be toast in the next decade.  

And Manhattan will be under water !

Sometimes companies will sacrifice profits and run up debts in favor of growth.  Name another ski area company in the east that has been investing the way Peak Resorts has in the past 10 years.  5 new lift installations, 2 of which opened new terrain.  Huge snowmaking upgrades at all their mountains.  They pretty much rebuilt the snowmaking systems at Mount Snow and Wildcat.  They've also bought 5 new ski areas in that time.  Obviously they're going to run up debts doing that.  Then it will level off and they'll keep going.  Even if they do go under and sell off everything, they will have left all their mountains in a better position than when they bought them.

snoloco wrote

Sometimes companies will sacrifice profits and run up debts in favor of growth.  Name another ski area company in the east that has been investing the way Peak Resorts has in the past 10 years.  5 new lift installations, 2 of which opened new terrain.  Huge snowmaking upgrades at all their mountains.  They pretty much rebuilt the snowmaking systems at Mount Snow and Wildcat.  They've also bought 5 new ski areas in that time.  Obviously they're going to run up debts doing that.  Then it will level off and they'll keep going.  Even if they do go under and sell off everything, they will have left all their mountains in a better position than when they bought them.

You would have been a great salesperson of real estate backed securities and CDOs pre 2008.

Peaks did a great job at Hunter this year, they didn't skimp on the snowmaking. They also really  turned Mount Snow around. I hope they make it.

Coach Z wrote

This is Otten 2.0

Don't even mention that name. I was a proud American Skiing Company shareholder. Les was a master at creating debt. Ugh!

I don't understand the financials well enough to know if the amount of debt that Peak is carry is truly precarious. I do know that companies can go for YEARS under burdensome debt if the economy and confidence in general stay strong. When the shit hits it, things can go down fast. Hard to believe that that kind of thing would leave the mountains better off.  Seems like Peak is making aggressive play for bigger slice of a shrinking pie.  They aren't the only company doing it, but they may not be as strong as some of the others.

snoloco wrote

Name another ski area company in the east that has been investing the way Peak Resorts has in the past 10 years.  

ORDA

Harvey wrote

When the shit hits it, things can go down fast. Hard to believe that that kind of thing would leave the mountains better off.  

That's it in a nutshell.  Peak was getting crushed by debt pre-IPO.  So they had the public offering, swapped out debt for equity financing, and now they're just going down the same path of taking on more and more debt (the Hunter acquisition was 100% debt financed).  Maybe in a strong winter they'd be OK, but they're getting crushed this year.  

Another thing that you touch on is that being publicly traded opens the company up to all sorts of external shareholder pressure for bottom line results year-in, year-out.  When times are tough (even when times are good) that creates a lot of incentive to cut corners and defer maintenance in order to maintain a bottom line.  Hard to beleive in that scenario the mountain is better off.  A privately owned, non-leveraged mountain has none of that pressure.  Well, much less of that pressure anyhow.  The owners still have to eat.

We see this in our business all the time. Companies use cheap tricks to make the bottom line look good NOW, sacrificing the future. It takes owners with vision and money to play for the long run. And they are rare.

Check out the Woodstock Inn in VT.  Seems like the owners love the place and can easily afford a few crappy seasons.

Rj1972 wrote

Coach Z wrote

This is Otten 2.0

Don't even mention that name. I was a proud American Skiing Company shareholder. Les was a master at creating debt. Ugh!

Red Sox fan? He's a part owner. Go  Yankees!

Hate to beat a dead horse, but at least Peak actually used the lifts they installed, because ORDA has barely 3 of the 4 most recent lifts, rendering them, and the terrain they serve useless.  Of the 4 ORDA lifts installed in the past 10 years, 2 have not opened to the public at all this year (Hudson and Lookout), 1 has run for a month (Burnt Ridge), and only one has run consistently on a full time basis (Adirondack Express).  Mount Snow's Bluebird Express probably has more hours on it now than all of the 4 most current ORDA lifts combined.  Peak has installed 4 lifts in the past 10 years, all are major lifts at the mountains they are located at and are used consistently throughout the season.  The Bluebird Express even runs in the summer.

Bluebird Express @ Mount Snow:  2011 Poma 6-pack bubble, new install.  7,300 feet long, 1,550 vertical, top drive, 1,100 fpm.

The Rocket @ Crotched Mountain:  2000 CTEC HSQ, first installed at Ascutney, installed at Crotched in 2012.  3,300 feet long, 1,000 vertical, bottom drive, 1,070 fpm.

West Mountain Quad @ Hidden Valley:  1989 Riblet FGQ, first installed at Ski Cherokee WV, installed at Crotched in 2003, installed at Hidden Valley in 2012.  1,200 feet long, 300 vertical, bottom drive, 450 fpm.

Tannenbaum @ Big Boulder:  1988 Borvig double, first installed at Shawnee Peak, ME, installed at Big Boulder in 2014.  Don't know the length and vertical, but it's bottom drive and can run 500 fpm.

Peak has run these lifts consistently every year they have existed.  For the lifts that opened new terrain (Rocket and West Mountain Quad) they blew snow on those trails and opened them, it's not rocket science.  They did not thrown up their arms and said "we're waiting for mother nature to allow them to open".  They've also put ORDA to shame when it comes to snowmaking upgrades.  They pretty much completely rebuilt the systems at Wildcat and Mount Snow and upgraded it extensively at Attitash.  Give Mount Snow 2 weeks of cold weather and they'll get all their snowmaking terrain open, guaranteed.  That takes more like 2 months at Gore.

Adk Jeff wrote

Harvey wrote

When the shit hits it, things can go down fast. Hard to believe that that kind of thing would leave the mountains better off.  

That's it in a nutshell.  Peak was getting crushed by debt pre-IPO.  So they had the public offering, swapped out debt for equity financing, and now they're just going down the same path of taking on more and more debt (the Hunter acquisition was 100% debt financed).  Maybe in a strong winter they'd be OK, but they're getting crushed this year.  

Another thing that you touch on is that being publicly traded opens the company up to all sorts of external shareholder pressure for bottom line results year-in, year-out.  When times are tough (even when times are good) that creates a lot of incentive to cut corners and defer maintenance in order to maintain a bottom line.  Hard to beleive in that scenario the mountain is better off.  A privately owned, non-leveraged mountain has none of that pressure.  Well, much less of that pressure anyhow.  The owners still have to eat.

Mount Snow has had quite a few rope evacs in recent years.  2 on Challenger, 1 on Grand Summit, 1 on Ego Alley, and 1 on Bluebird.  Maybe that's some deferred maintenance, or that 3 of the lifts are quite old (1982, 1987, 1984 respectively).  Bluebird Express evac was on Poma for a faulty drive shaft that broke while the lift was running.  Lift was only 2 years old when it happened.  Grand Summit Express got to be the main lift again for a week.

IMO Peak has done a better job at Hunter than the previous administration did.  Annapurna actually opened, even if only for a short time.  West Side was kept in good condition and many more people skied it.  

A mountain is better off under a publicly traded company than a family that is sick of running the place and wants out.

snoloco wrote

IMO Peak has done a better job at Hunter than the previous administration did.  Annapurna actually opened, even if only for a short time.  West Side was kept in good condition and many more people skied it.  

A mountain is better off under a publicly traded company than a family that is sick of running the place and wants out.

What happened with Annapurna? Sounds like blew a bunch of snow on it and it opened for a few days?

Don't confuse what skiers want with short term or long term financial results.  They are different.

Holy crap. They actually opened Annapurna?! This year, of all years?! Sell that stock now.