Whistler Blackcomb is on the market.
A story in the Globe and Mail today confirms that Fortress has filed an Initial Public Offering (IPO) for the company. A portion of the company will still belong to Intrawest and another portion will get a public listing on the Toronto Stock Exchange.
The documents filed with the IPO give a picture into the company’s profits over the last few years. The company doesn’t look to have experienced much growth, with net income in the past three years at $51.9 million, $60.7 million and $52.4 million.
The story doesn’t seem to make much note of assets that give the resort some potential for growth, like the Peak to Peak Gondola and the rising appeal of mountain biking.
Whistler IPO looks like yield play
Boyd Erman, The Globe and Mail
Posted on Tuesday, October 12, 2010 11:23AM EDT
It’s official, Whistler Blackcomb Holdings Inc. plans to go public.
The initial public offering (as reported in The Globe and Mail last week) is
designed to capitalize on the success of the Olympics at the site.
Intrawest, the parent company of Whistler, will continue to own a stake in the resort, while a slice will be sold to the public via a listing on the TSX. The documents filed with regulators don’t give a size for the offering, but they do provide plenty of interesting numbers that give a look inside the ski business.
The success of the Olympics are a big part of the pitch in the documents. “According to 29 surveys conducted by Tourism Whistler, top of mind awareness grew from 19 per cent to 42 per cent in Germany, from 48 per cent to 62 per cent in Australia and from 32 per cent to 45 per cent in the United Kingdom following the Olympic Winter Games,” the documents say.Also a big part of the pitch are the improvements to infrastructure that Whistler can benefit from, such as the money spent on Vancouver’s airport and on the highway from the city to Whistler.
However, for investors, the reality is in the numbers.
The first item of note is that prior to the Olympics, there isn’t much growth.
The resort generated revenue of $218.7-million for the fiscal year ended Sept. 30, 2009, according to the filings. That’s down from $223.9-million the year
before, and in line with the $219.5-million in revenue the year before that.
The bottom line is similar — steady but no discernible growth. Net income in the past three full years is $51.9-million, $60.7 million and $52.4-million. In the first nine months of the current fiscal year, a period that included the
Olympics, net income was $52.1-million.
That’s likely most of the year’s earnings, given that the business is still heavily winter dependent.
In fiscal 2009, just under half of total revenue, or $104.3-million coming from lift operations. An additional $20.6 million came in from from ski school operations. About 90 per cent of lift operations sales were ski lift tickets, with the remainder coming from summer activities.
Skiier visits also don’t show much growth. In fact, last season, the Olympics caused a drop to the lowest level since Whistler and Blackcomb mountains combined. The company attributed the decline to access restrictions.
So how much will investors pay for this operation, a leader in what the
owners call a “stable, mature industry” in a wary IPO market?
The key is likely to be the dividend. In a yield-hungry market, Whistler plans to pay on and estimates that it could in fact pump out most of the earnings it generates. The company estimates it generated about $38-million to pay dividends in the year up to June 30.