Vail Resorts, Inc.

Good day and welcome to the Vale Resorts Second Quarter Fiscal 2020 Earnings Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Katz. Please go ahead, sir.

Thank you. Good afternoon, everyone. Welcome to our Second Quarter Fiscal 2020 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, and 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, March 9, 2020. 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 10-Q were filed this afternoon with the SEC and are also available on the Investor Relations of our website at www.valeresorts.com. So with that said, let's turn to our second quarter fiscal 2020 results. Overall, the season has had both areas of challenge and areas of strong performance. Whistler-Blackcomb and Stevens Pass are resorts in the Pacific Northwest, experienced the lowest snowfall in over 30 years through December 31, 2019, resulting in very poor results through the early season and critical holiday period. Visitation at those resorts continued to be challenging and below our expectations in January, with Whistler-Blackcomb experiencing a weaker than expected recovery in North American and international destination visitation. In total, visitation across our Pacific Northwest resorts was down 14% compared to the prior year for the second quarter. After a challenging start in the early season, destination guest visitation at our Western U.S. resorts improved significantly during the holiday period, and was in line with our expectations. The improvement continued through January, though Colorado was modestly below our expectations for the post-holiday period, partially offset by strong performance at our Park City Resort. Finally, our Northeast Resorts are off to a great start to the season, supported by the continued benefit from our expanded Northeast Network, which has been partially offset by challenging weather variability across the Midwest Resorts. Including results from peak resorts, total lift revenue increased 8.2%, driven by an 8.8% growth in skier visitation. Total effective ticket price decreased 0.5% in the second quarter compared to the prior year, with price increases in both our lift ticket and season pass products offset by the inclusion of results from peak resorts, which generates a lower effective ticket price. Excluding season pass holders and peak resorts, effective ticket price increased 4% compared to the prior year, Ski school dining and retail and rental revenues increased 11.4%, 15.8%, and 4.1% compared to the prior year respectively, primarily driven by the inclusion of Peak Resorts. Now, I would like to turn the call over to Michael to further discuss our financial results and our season-to-date metrics.

Thanks, Rob, and good afternoon. As Rob mentioned, the season has had areas of challenge and strong performance. In the second fiscal quarter, Resort net revenue was $924.4 million, an increase of 8.8% compared to the prior year. Resort reported EBITDA was $378.3 million, an increase of 5.7% compared to the prior year. Fiscal 2020 second quarter Resort reported EBITDA included $1.9 million of acquisition and integration-related expenses and approximately $1 million of favorability 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 income attributable to Vail Resorts was $206.4 million or $5.04 per diluted share for the second quarter of fiscal 2020 compared to net income of $206.3 million or $5.02 per diluted share for the same period in the prior year. Fiscal 2020 second quarter net income included the after-tax effect of acquisition and integration-related expenses of approximately $1.4 million. Our balance sheet remains very strong. We ended the second quarter with $126.8 million of cash on hand, and our net debt was 2.4 times trailing 12 months total reported EBITDA, though it is important to note that this ratio only includes peak Resorts results for the period between closing and quarter end, and we expect that ratio to decline as we incorporate a full year of results from peak resorts. Turning now to our season-to-date metrics for the period from the beginning of the ski season through Sunday, March 1, 2020 and for the prior year period through Sunday, March 3, 2019. The reported ski season metrics are for our North American destination mountain resorts and regional ski areas, including the results of peak resorts in both periods and excluding the results of our Australian ski areas in both periods. The reported ski season metrics include growth for season pass revenue based on estimated fiscal 2020 North American season pass revenue compared to fiscal 2019 North American season pass revenue, and the metrics are adjusted to eliminate the impact of foreign currency by applying current period exchange rates to the prior period for Whistler Blackhams results. This is interim period data and is subject to fiscal quarter end review and adjustments. Total lift revenue, including an allocated portion of season pass revenue for each applicable period, was up 0.8% compared to the prior year season-to-date period. Our ski school revenue increased 2.8%, dining revenue decreased 1.4%, and resort, retail, and rental revenue decreased 0.6%, all compared to the prior year season-to-date period. Total skier visits were down 5.2% compared to the prior year season-to-date period. Based on results through March 1, 2020 and indicators for the remainder of the year as of that date and excluding any identified impact from coronavirus, we estimate the resort reported EBITDA for fiscal 2020 was expected to be approximately $20 million below the midpoint of the guidance range previously issued on January 17, 2020. Driven primarily by the continuation of challenging visitation trends, at our Pacific Northwest Resorts throughout January and February, and secondarily from results at our Colorado Resorts that were modestly below our expectations in January and February, partially offset by strong performance at our Park City Resort. Given the uncertainty surrounding the impact of the coronavirus on the broader U.S. travel market and any specific impact to the performance of our company, we are not issuing guidance at this time for fiscal 2020. and are withdrawing our previous guidance issued on January 17, 2020. In the week ended March 8, 2020, we saw a marked negative change in performance from the prior week, with destination skier visits modestly below expectations, and we expect this trend to continue and potentially worsen in upcoming weeks. We intend to provide updated commentary on our results by March 18, 2020. I'll now turn the call back over to Rob.