Killington: Centex bailed out

[Bubbartzky]

It's the "I" in that term that's painful for ASC.

Centex wasn't bringing money to the table for this deal- they're getting paid to do the design, and probably run the construction. This isn't a financial bump, but a timing one. ASC is now going with the firm that was originally supposed to get the deal, anyway.

Centex was advertised here as the folks with the money, that they'd act as their own bank. Hart Howerton, if mentioned at all, was considered the designer, not the builder or banker.

 

[Bubbartzky]

I won't go into specific numbers but EBITDA at Mount Snow hasn't been below 8 figures in over 10 years. They are second only to K-mart in that figure in asc east. For you non accounting people EBITDA is Earnings Before Interest, Taxes, Depriciation and Amoritization. A more accurate indication of worth of a company.

Please tell me you're joking.

EBITDA is a way to hide many things that have a real impact on a company. Didn't you learn anything from the dot.com bust?

BTW, word here at K is that EBITDA here is more than $20 million. If you believe EBITDA is an accurate indication of the worth of a company, ASC stock ought to be selling at far higher than the cents per share it's at today and you ought to be buying shares like crazy in this undervalued puppy.

 

[ctenidae]

Centex was advertised here as the folks with the money, that they'd act as their own bank. Hart Howerton, if mentioned at all, was considered the designer, not the builder or banker.

My understanding was that Centex would get the option to buy some of the land (cheap) as part of teh development deal. Centex builds stuff, while Hart Howerton is, true, mostly a designer. I guess you could say that Centex leans more towards being a construction comapny, while Hart is more of an architectural firm.

 

[ctenidae]

EBITDA is a useful number- especially since it's the basis for figuring free cash flow.. Liek I said earlier, it's the I in EBITDA that kils ASC.

 

[Bubbartzky]

EBITDA is a useful number- especially since it's the basis for figuring free cash flow.. Liek I said earlier, it's the I in EBITDA that kils ASC.

It's obviously a useful number and one, when looking at what each individual resort pumps out to ASC, a useful tool among several to evaluate the potential worth of an individual resort. However, the poster who said it's a more accurate indication of the worth of a company (which I took to mean ASC as opposed to any individual business unit) has to have slept through the past 10 years.

 

[ski_resort_observer]

As far as relevance to the health of a company EBITDA is normally a useful number. It's basically revenue minus cost of goods and services. As ctenidae points out, taking into account the debt repayment factor, which as we all know is huge, paying the interest on that dedt is a major cost therefore increasing the need to look past these numbers to get a better picture how ASC is doing.

As someone mentioned, this latest event, is just another sign that ASC is still on shaky ground....nothing new there. This project started 10 years ago and they still haven't even got to first base yet.

IMHO, PRwise it's a good thing to keep talking about it, appear to be making progress, downplay any problems...but I don't think ASC et al, has much interest in making the kind of resources and financial committment needed to build a project of this size at this time.

Let me know when they actually start building....lol

 

[ctenidae]

IMHO, PRwise it's a good thing to keep talking about it, appear to be making progress, downplay any problems...but I don't think ASC et al, has much interest in making the kind of resources and financial committment needed to build a project of this size at this time.

Substitute "ability" for "interest", and I'm 100% with you.

 

[tree_skier]

It's obviously a useful number and one, when looking at what each individual resort pumps out to ASC, a useful tool among several to evaluate the potential worth of an individual resort. However, the poster who said it's a more accurate indication of the worth of a company (which I took to mean ASC as opposed to any individual business unit) has to have slept through the past 10 years.

No I haven't slept through the past 10 years but I also don't believe you judge a company by it's stock price like alot of people did in the last 20 years. EBITDA is a true picture of earnings and a company is worth it's earnings, not stock price/revenue/debt load or other figure (although alot of fools think it is the stock price, note the last ten years). Each industry has it's own number but in general you buy a company for 7-10 times earnings. If you could buy say Mount Snow for 3 times earnings you should but if the owner will only sell at 15 it's no deal. Thus the bush sold for about 8 mil which was inline with the EBITDA at the time.

 

[ski_resort_observer]

BTW, according to a press release from ASC on June 14th, for this past ski season:

kmart 795,000 skier visits I am rounding up
the boat 1,046
Someday bigger 473
canyons 467
Mt snow 429

 

[SkiDog]

BTW, according to a press release from ASC on June 14th, for this past ski season:

kmart 795,000 skier visits I am rounding up
the boat 1,046
Someday bigger 473
canyons 467
Mt snow 429

So Kmart...hands down??? I dont understand the Boats numbers...did they have over a million last season???

M

 

[ctenidae]

Unaudited Skier Visits 2006 2005 % Change
---------------- ---------------- ----------
Attitash 186,693 211,301 (11.6%)
The Canyons 467,799 403,043 16.1%
Killington 795,400 985,962 (19.3%)
Mount Snow 429,822 523,698 (17.9%)
Sugarloaf/USA 310,583 366,382 (15.2%)
Sunday River 473,159 524,861 (9.9%)
Steamboat 1,046,650 971,770 7.7%
------------------------------------
Total Skier Visits 3,710,106 3,987,017 (6.9%)

No wonder they can get $50M for Steamboat...

 

[tree_skier]

Unaudited Skier Visits 2006 2005 % Change
---------------- ---------------- ----------
Attitash 186,693 211,301 (11.6%)
The Canyons 467,799 403,043 16.1%
Killington 795,400 985,962 (19.3%)
Mount Snow 429,822 523,698 (17.9%)
Sugarloaf/USA 310,583 366,382 (15.2%)
Sunday River 473,159 524,861 (9.9%)
Steamboat 1,046,650 971,770 7.7%
------------------------------------
Total Skier Visits 3,710,106 3,987,017 (6.9%)

No wonder they can get $50M for Steamboat...

They will be looking for quite a bit more then 100 mil as they had more then that last time when they backed out of the deal with triple peaks. They were offered 50 mil for snow and flatly rejected it.

 

[SkiDork]

Did anyone else notice that the only increases were for western resorts? Does that say anything? Bubbartzky?

 

[Tin Woodsman]

I won't go into specific numbers but EBITDA at Mount Snow hasn't been below 8 figures in over 10 years. They are second only to K-mart in that figure in asc east. For you non accounting people EBITDA is Earnings Before Interest, Taxes, Depriciation and Amoritization. A more accurate indication of worth of a company.

Considering the signficant amount of debt overhang, the EBITDA figure is only one piece of the equation here. Free cash flow is likely much lower, and that's more important than EBITDA in this case.

No I haven't slept through the past 10 years but I also don't believe you judge a company by it's stock price like alot of people did in the last 20 years. EBITDA is a true picture of earnings and a company is worth it's earnings, not stock price/revenue/debt load or other figure (although alot of fools think it is the stock price, note the last ten years). Each industry has it's own number but in general you buy a company for 7-10 times earnings. If you could buy say Mount Snow for 3 times earnings you should but if the owner will only sell at 15 it's no deal. Thus the bush sold for about 8 mil which was inline with the EBITDA at the time.

While EBITDA is a good metric to measure the performance of a company's operating units, it is a lousy one in many other respects. As others have touched on, if you are producing this EBITDA by taking on lots of debt and pumping it into the business, your ROIC goes into the tank and your free cash for future investments evaporates under the weight of the interest payments. EBITDA is a good "quick and dirty" measure of value, but it leaves out a lot of important aspects of a company's performance.

Take your own example of the Bush. It sold for $8MM which was allegedly in line with it's EBITDA at the time. Guess what - Win Smith said he wouldn't sell the place for even $18MM recently on this very website. What EBITDA didn't tell ASC was the latent value of the already-permited and planned Grand Summit/Lodge at Lincoln Peak/Claybrook. It wasn't able to take into account the ability of mgmt to drive revenue growth through smart decisions and investments like the Mt. Ellen only pass, general rise in customer service, irrigation on the golf course, and the GMX chair.

Basically, EBITDA loses meaning as an analogue for business value when you are transferring ownership from a debt-laden firm with clueless mgmt to a well-capitalized one with a customer service touch and vision.

 

[Geoff]

Did anyone else notice that the only increases were for western resorts? Does that say anything? Bubbartzky?

Dork:
Were you in Vermont this winter? It was the worst skiing I can remember in my 25 years at Killington. Colorado had an excellent snow year as did Utah.

 

[Geoff]

Unaudited Skier Visits 2006 2005 % Change
---------------- ---------------- ----------
Attitash 186,693 211,301 (11.6%)
The Canyons 467,799 403,043 16.1%
Killington 795,400 985,962 (19.3%)
Mount Snow 429,822 523,698 (17.9%)
Sugarloaf/USA 310,583 366,382 (15.2%)
Sunday River 473,159 524,861 (9.9%)
Steamboat 1,046,650 971,770 7.7%
------------------------------------
Total Skier Visits 3,710,106 3,987,017 (6.9%)

No wonder they can get $50M for Steamboat...

The Mueller offer for Steamboat was a little north of $90 million. ASC would want more than that for Steamboat now.

 

[Tin Woodsman]

Did anyone else notice that the only increases were for western resorts? Does that say anything? Bubbartzky?

Yeah - it says that Steamboat and Utah had their best snow seasons in years. While it would be easy to ascribe the performance of the Eastern areas to poor weather, the fact that ASC's two VT ski areas accounted for all of the lost skier visits in the state belies that assumption.

 

[SkiDork]

Dork:
Were you in Vermont this winter? It was the worst skiing I can remember in my 25 years at Killington. Colorado had an excellent snow year as did Utah.

I figure that might be the reason. But with the "new math/new accounting" I thought maybe there were other reasons that only the auditors would understand...


Lets hope for a nasty dumpage season in the East for 06-07

 

[Tin Woodsman]

I figure that might be the reason. But with the "new math/new accounting" I thought maybe there were other reasons that only the auditors would understand...


Lets hope for a nasty dumpage season in the East for 06-07

I will continue repeating until I am blue in the face - this WASN'T JUST A WEATHER ISSUE. If it was, everyonein VT would have seen a decrease in skier visits. But they didn't. The entire state except for K-Mart and Mt. Sneaux was up slightly (a couple thousand skier days). It was only the ASC resorts who posted huge losses. That points to something specific to those resorts. I wonder what those two places have in common vs. every other resort in VT? Any guesses?

 

[ctenidae]

Sorry about teh $50 million ffor Steamboat slip- I knew it was Steamboat, and I knew $50M had been mentioned, but I didn't feel like going back to check my facts.

$50M is the offer I'd make using discounted cash flow analysis factoring in interest rate risks, beta to comparables, the predicted southern migration of the lesser laughing loon in 2009, and the color of lint in my belly button.