Vail Resorts, Inc.

Will you stand by? Good day and welcome to the Vail Resorts first quarter fiscal 2020 earnings conference call. Today's conference is being recorded. At this time, I turn the conference over to Mr. Katz. Please go ahead, sir.

Thank you. Good afternoon, everyone. Welcome to our fiscal 2020 first quarter earnings conference call. Joining me on the call this afternoon is Michael Barkin, our chief financial officer. Before we begin, let me remind you that some information provided during this call may include forward-looking statements that are based on certain assumptions and are subject to a number of risks and uncertainties. As described in our SEC filings, the actual future results may vary materially. Forward-looking statements in our press release issued this afternoon along with our remarks on this call are made as of today, December 9, 2019, and we undertake no duty to update them as actual events unfold. Today's remarks also include certain non-GAAP financial measures. Reconciliations of these measures are provided in the tables included with our press release. which along with our quarterly report on Form 10Q were filed this afternoon with the SEC and are also available on the investor relations section of our website, www.failresorts.com. So with that said, let's turn to our fiscal 2020 first quarter results. Overall, we are pleased with our results in the first fiscal quarter. Our Australian resorts delivered a strong performance with another record year at Parisher on an Australian dollar basis and very strong results in our first year of operations at Falls Creek in Hotham. Our strong EPIC Australia Pass sales, good conditions, and the addition of the Leichhardt chairlift at Parisher supported our continued momentum in the Australian market. Our consolidated results from Parisher were negatively impacted by the strong U.S. dollar, which created an approximate $2 million resort-reported EBITDA headwind from currency translation in the quarter relative to the prior year results. Whistler Blackhomes Summer Business performed very well with strong performance in its world-class mountain biking operations and sightseeing, supported by the addition of the new CloudRaker SkyBridge. Our U.S. Epic Discovery business continues to grow and generate strong financial returns. Our lodging business experienced mixed results, with continued success from our properties at Grand Teton Lodge Company, partially offset by softer results at our Colorado properties, in part due to weaker group demand in comparison to the prior year period. Turning now to our 2019-2020 North American past sales for our resorts and early season indicators. As we approach the end of our selling period, season past sales for the North American ski season are up approximately 17% in sales dollars and approximately 22% in units through December 2, 2019, compared to the prior year period ended December 3, 2018. The results include military pass sales and peak resorts pass sales in both periods and are adjusted to eliminate the impact of foreign currency by applying an exchange rate of 75 cents between the Canadian dollar and U.S. dollar in both periods for Whistler Black Home pass sales. Excluding sales of military passes, season pass sales increased approximately 16% in sales dollars and approximately 22% in units over the comparable prior year period. As we expected, growth in sales dollars was lower than our unit growth, primarily from the inclusion of our Epic Day Pass products. We are very pleased to see the strong sales growth in our Season Pass program that exceeded our expectations. We continue to see very strong growth in our Northeast markets, which are benefiting from the first full year of pass sales with unlimited access of Stowe, Okemo, and Mount Sunapee, the recent addition of Peak Resorts, and the improved impact of the expanded guest data and insight we now have in that region. Our destination markets outside of the Northeast also saw very strong growth and continue to perform well through our enhanced ability to reach destination guests with our data-driven marketing and the introduction of the Epic Day Pass. Our local markets continue to show solid overall growth driven by favorable results among our local guests in the Whistler-Blackcomb region with particular strength in Seattle from the first full pass sales season with access to Stevens Pass. We were also seeing strong results from our Northern California and Utah guests. Sales in our Colorado local market were softer with solid results in our Epic products offset with declines in certain regional products which was expected without Arapahoe Basin on those passes. Those declines will be more than offset by lower partnership payments. The majority of our sales growth came from our Epic and Epic Local products, where we saw solid growth in new pass holders and renewing pass holders, with less trade down to Epic Day Pass than we were expecting. Epic Day Pass was a strong success in its first year with an expanded product offering and was a significant contributor to our overall growth and exceeded our expectations, particularly in the Epic two and three day products. We believe this bodes very well for the long-term opportunity of Epic Day Pass as we begin to highlight the incredible value to lower frequency guests. Importantly, the vast majority of Epic Day Pass sales came from new pass holders with particular success in destination markets. Our military program delivered strong growth with the program continuing to generate strong renewal rates while also adding new pass holders. We expect that the total number of guests on all Advanced Purchase Passes this year will exceed 1.2 million including all US, Canadian, and Australian passes and Epic Day Pass representing an incredible group of highly loyal and passionate guests. Overall, lodging bookings for the season are largely in line with prior year bookings. Based on historical averages, around half of the bookings for the winter season have been made by this time. though it is important to note that our lodging bookings represent a small portion of the overall lodging inventory around our resorts. The early season experience at our resorts has been encouraging with strong conditions across our Colorado, Tahoe, and Northeastern resorts. Both Keystone and Vail have benefited from early snow and our recent snowmaking investments which allowed Keystone to open on October 12th and Vail to open on October 15th and deliver a much improved experience to guests over Thanksgiving. Our resorts in Tahoe and Utah have opened with typical conditions for this time of year, and our Northeast resorts have started strong with certain resorts opening weeks earlier than in prior years. We are thrilled to welcome guests to all of our resorts as the 2019-2020 North American ski season kicks off with several transformational enhancements to the guest experience at our resorts. In Colorado, we have made significant investments in our snowmaking systems that have transformed The early season terrain experience at Vail, Keystone, and Beaver Creek. As a result of these investments, Keystone experienced its earliest opening in more than 20 years, and Vail opened earlier than usual with an improved terrain offering available at opening, elevating the experience for our guests. At Park City, we transformed the Tombstone Express area with a new permanent Tombstone BBQ restaurant and the new four-person over-and-out lift that provides a quicker, more direct route for skiers and riders to access Canyons Village from the center of the resort. In addition, we completed a full renovation of the Beaver Creek Children's Ski School facilities and improvements to the Peak 8 base area at Breckenridge with new ski school and childcare facilities, as well as an improved ticket and retail and rental experience. We remain highly focused on investments that will substantially improve the guest experience across our resorts and implemented a new mobile lift ticket fulfillment technology that eliminates the ticket window for guests who purchase their tickets in advance. We also completed one of the final stages of our point-of-sale modernization project and invested in technology to automate our data-driven marketing efforts. We completed significant one-time investments across the acquired resorts of Crested Butte, Okemo and Stevens Pass, which included replacing and upgrading the Daisy and Brooks lifts at Stevens Pass and the Teocali lift at Crested Butte. as well as On Mountain Restaurant upgrades at Okemo. Now I would like to turn the call over to Michael to further discuss our financial results and our fiscal 2020 outlook.

Thanks, Rob, and good afternoon, everyone. As Rob mentioned, we are pleased with our first quarter performance. ResortNet revenue was $263.6 million in the first fiscal quarter, an increase of $43.7 million compared to the prior year. Resort reported EBITDA was a loss of $76.7 million in the first fiscal quarter, which compares to a Resort reported EBITDA loss of $72.5 million in the same period in the prior year. Fiscal 2020 first quarter Resort reported EBITDA included $9 million of acquisition and integration related expenses and approximately $2 million of unfavorability from currency translation, which the company calculated on a constant currency basis by applying current period foreign exchange rates to the prior period results. Net loss attributable to Vail Resorts was $106.5 million for the first quarter of fiscal 2020, or a loss of $2.64 per diluted share, as compared to a net loss of $107.8 million, or a loss of $2.66 per diluted share for the same period in the prior year. The net loss for the first quarter of fiscal 2020 included the after-tax effect of acquisition and integration related expenses of $6.8 million and approximately $1 million of unfavorability from currency translation, which the company calculated on a constant currency basis by applying current period foreign exchange rates to the prior period results. Our balance sheet at quarter end remains strong. We ended the quarter with $136.3 million of cash on hand and $1.9 billion of net debt. As part of the Peak Resorts acquisition, we expanded our existing term loan facility by approximately $336 million and assumed a portion of Peak Resorts debt. Our net debt was 2.8 times trailing 12 months total reported EBITDA, though it is important to note that this ratio only includes Peak Resorts results for the loss period between closing and quarter end, and we do expect that ratio to decline as we incorporate the full season of Peak Resorts results. I am also very pleased to announce that our Board of Directors has declared a quarterly cash dividend on Vail Resorts common stock of $1.76 per share, payable on January 9, 2020 to shareholders of record on December 26, 2019. Additionally, the company repurchased approximately $21.4 million of stock during the quarter at an average price of $224.28. Now turning to our outlook for fiscal 2020. Given our first quarter results and the indicators we are seeing for the upcoming season, we are reiterating our resort reported EBITDA guidance for fiscal 2020 that was included in our September earnings release. which is based on the assumptions incorporated at that time including foreign currency exchange rates. While past sales results to date have been encouraging, it is important to remember that the North American ski season has just begun with our primary earnings period still in front of us. As always, the upcoming holiday period is a key period of the ski season and we plan to publicly report certain season to date ski season metrics on January 17, 2020. I'll now turn the call back to Rob.