Vail sold fewer lift tickets and kept less of the money.
For the twelve months ended July 31, revenue fell 4.3% to $2.8 billion, but operating income dropped 24.9% to $420.5 million. Net income fell 47.3% to $147.5 million, pulling diluted EPS down to 4.12 from 7.53.
The immediate culprit was physical, not mysterious: record-low snowfall and historically warm temperatures across the western U.S. cut paid lift revenue 17.5%. Vail's operating margin fell to 14.8% from 18.9%, so a smaller season translated into a much larger earnings decline.
Management put the demand hit plainly:
"Lift revenue decreased $52.1 million, or 3.5%, primarily due to a decrease in paid lift revenue of 17.5%, driven by a decrease in both Destination and Local skier visitation, which was impacted by record low snowfall and historically warm temperatures across the western U.S., which drove lower demand and negatively impacted spending throughout the season."
Vail Resorts, 10-K, Sept. 28, 2026
That explains the top line and much of the pressure below it. Lodging EBITDA also fell $6.5 million, with lower skier visitation affecting hotel, condominium, dining, and transportation revenue.
Vail did trim some variable costs as revenue fell. Other expense declined $9.8 million, including lower dining costs, fuel, pass-partnership expense, and one-time costs. But general and administrative expense still rose $5.7 million, partly because Vail spent more on marketing and sales to drive pass demand. Depreciation also increased because of resort projects completed in the prior year.
The cash picture adds another layer. Operating cash flow fell 13.6% to $479.6 million, while capex was nearly flat at $231.6 million. Capital spending therefore consumed a larger share of revenue, and free-cash-flow margin declined by 2 percentage points. Inventory rose 14.9% even as sales fell, though accounts receivable declined 7.1%.
Cash on hand dropped to $231.3 million from $440.3 million. That was not simply an operating cash leak: Vail invested $37.1 million in short-term certificates of deposit, and repaid the remaining $525.0 million of its 0.0% convertible notes at maturity.
The financing shift was substantial:
"Net cash used in financing activities increased by $178.4 million during Fiscal 2026 compared to Fiscal 2025, primarily driven by the repayment upon maturity of the remaining $525.0 million aggregate principal amount of the 0.0% Convertible Notes, partially offset by an increase in proceeds received from borrowings under the Vail Holdings Credit Agreement of $319.1 million primarily driven by additional borrowings of $275.0 million in December 2025 which was subsequently used to repay the 0.0% Convertible Notes."
Vail Resorts, 10-K, Sept. 28, 2026
In plain English, Vail replaced one financing source with another while operating cash generation weakened. Cash conversion improved to 3.25 times from 1.98 times because net income shrank faster than operating cash flow, an accounting ratio with a slightly unfortunate denominator.
Vail has long described resort capital spending as a continuing use of cash, subject to operating performance. Its own annual history also shows how exposed margins are to volume: operating margin was 23.8% in 2022, 17.5% in 2023, 16.9% in 2024, and 18.9% in 2025 before this year's decline.
Vail's next report will clarify whether the 14.9% inventory increase reverses alongside skier visitation, or remains elevated while capital spending continues. The unresolved tension is simple: weather cut demand, but Vail still carries a capital-heavy cost base.
Source: Vail Resorts' 2026 10-K filed Sept. 28, 2026.