Vail Resorts, Inc.

Please stand by, your program is about to begin. If you need any assistance during your conference today, please press star zero. Good morning and welcome to the Vail Resorts Fiscal 2023 First Quarter Earnings Conference Call. Currently, all callers have been placed in a listen-only mode, and following management's prepared remarks, the call will be open for your questions. If you would like to ask a question at that time, please press star 1 on your telephone keypad. If you need to remove yourself from the queue, press star 2. To get as many questions as time permits, we ask that you please limit yourself to one question and one follow-up. At any time, if you should need operator assistance, please press star 0. Please be advised, I will now turn the call over to Kirsten Lynch, Chief Executive Officer of Vail Resorts. You may begin.

Thank you. Good morning, everyone. During our earnings call yesterday, the conference call system vendor for the event experienced a significant technical outage disrupting the call. The vendor was unable to reestablish their systems yesterday evening. Therefore, we rescheduled the call for this morning. We apologize for the inconvenience this caused, and thank you for joining us this morning. Joining me on the call 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 yesterday afternoon along with our remarks on this call are made as of today, December 9, 2022, 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 the Form 10-Q were filed yesterday afternoon with the SEC and are also available on the investor relations section of our website at www.valeresorts.com. With that said, let's turn to our fiscal 2023 first quarter results. We are pleased with our results for the quarter with resort reported EBITDA improving compared to the prior year period, primarily driven by the strong demand and visitation at our Australian resorts. Australian resorts continued to experience record visitation driven by strong demand following two years of COVID-19 related disruptions and supported by continued momentum and advanced commitment past product sales following the addition of Hotham and Falls Creek in April of 2019. Our North American summer operations continued to recover following the COVID-19 pandemic. Turning now to our 2022-2023 North American season pass sales and early season indicators. We are pleased with the results of our season pass sales, which continue to demonstrate the strength of the guest experience, our network of mountain resorts, and commitment to continually investing in the guest experience. Past product sales for the North American ski season increased approximately 6% in units and approximately 6% in sales dollars through December 5, 2022, as compared to the period in the prior year through December 6, 2021, including sales for the Seven Springs Resorts in both periods and adjusted to eliminate the impact of foreign currency by applying an exchange rate of 74 cents between the Canadian dollar and U.S. dollar in both periods for Whistler Black Home sales. Advanced commitment is our core strategy, shifting lift ticket guests across all of our mountain resorts into a commitment before the season starts, driving stability for our company and long-term lifetime value. our North American season pass program has grown dramatically over the last three years. Season pass units have grown approximately 86% in units and approximately 53% in sales dollars compared to sales for the 2019 and 2020 season through December 9th, 2019. We expect to have approximately 2.3 million guests in advanced commitment products this year generating over $800 million of revenue in advance of the season and representing over 70% of all skier visits committed to our 40 North American and Australian resorts in advance of the season in a non-refundable pass, an increase of over 1.1 million guests in the program from the 2019-2020 season, including all pass products for our North American and Australian resorts. This substantial base of pre-committed local and destination guests, revenue, and visits also creates a strong foundation for in-season ancillary spending across our 40 mountain resorts in North America and Australia. For the full pass sales season, the business achieved strong unit growth from renewing pass holders, especially guests in destination and international markets. including strong renewals among those who were new to our past program last year. Our strongest growth occurred in destination markets, which represents the largest addressable market for conversion of guests into advanced commitment and is a particularly attractive guest segment given the higher ancillary attachment. Our Epic Day Pass continues to be our highest growth product segment, targeting the large market of lower frequency skiers into advanced commitment and particularly destination guests with valuable ancillary spend. Our local markets also grew over the prior year in excess of our expectations, remaining a critical foundation for our advanced commitment strategy and are the most developed and highly penetrated markets. Sales of Epic and Epic Local passes are consistent with our expectations and with the trend seen in our September results, with unit sales declining by 12% relative to the prior year and increasing 39% over the last two years and 55% over the last three years. This represents substantial growth in our highest-priced products and among our most penetrated high-frequency skier segment, and we expected this year's performance as a result of the significant growth after last year's price reset. we continue to expect that the majority of the future growth in advanced commitment will come from the large and attractive addressable market of destination guests, primarily through transitioning lower frequency lift ticket guests into Epic Day Pass products and transitioning guests at our local and regional resorts into advanced commitment. Pass sales dollars continue to benefit from the 7.5% initial price increase and subsequent incremental price increases relative to the 2021 and 2022 season, offset by the mixed impact from the growth of new pass holders purchasing Epic Day Pass products. This year, net migration among renewing pass holders is in line with our expectations of a 4% decline year-over-year following last year's positive 10% net migration that resulted from pass holders trading up to higher value products with more access following the price reset. We proactively use the breadth of our product line and our data to retain guests in the Advanced Commitment Program by offering and in certain cases encouraging them to purchase lower priced products to best suit their needs based on their behavior. We are pleased that over the last three years, we have maintained renewal rates among our unlimited pass holders, including Epic, Epic Local, and Unlimited Regional passes, while growing these pass holders almost 75% during that time period. As previously announced, we completed a multi-year extension of our pass partnership with Telluride Ski and Golf and are pleased to continue offering Epic Pass, are four to seven day EPIC day pass with all resort access and EPIC adaptive pass guests access to Telluride. Starting next winter for the 2023-2024 North American ski season, reservations will be required for pass holders skiing or riding at Telluride. Reservations will not be required for pass holders visiting Telluride in the 2022-2023 North American ski season and more details will be provided in advance of next season. Heading into the 2022-2023 North American ski season, we are pleased with our significant base of committed guests that provide meaningful stability for our company, especially during economic uncertainty. We have strong early season conditions at our resorts in the Rockies and West, and typical seasonal variability at our resorts in the East. While our mountain resorts have not yet completed hiring for the winter season, we are on track to have the staff needed to achieve full operation of lifts and mountain terrain and deliver normal operations of important guest experiences, such as our restaurants, lodging, ski and ride school, and rental and retail locations. Hiring is still ongoing and a top priority as our mountain resort teams focus on hiring for specific roles and continue hiring to manage staffing needs that occur throughout the season. Looking forward, we are pleased with lodging booking trends for the upcoming season, which are consistent with pre-COVID-19 levels. We are also seeing lodging bookings that indicate visitation patterns may shift this year from the December holiday period into January through April. We are pleased to welcome guests to all of our resorts as the 2022-2023 North American and European ski seasons kick off with significant investments in the guest experience, including 18 newer replacement lifts across 12 resorts, which will meaningfully increase lift capacity and reduce wait times at those lift locations. At Vail Mountain, this includes the installation of a new four-person high-speed lift in the Sundown Bowl and replacement of a four-person lift with a new six-person high-speed lift in the Game Creek Bowl. At Whistler Black Home, this includes the replacement of the four-person high-speed Big Red Express lift with a new six-person high-speed lift, and replacement of the six-person Creekside gondola with a new 10-person high-speed gondola. As discussed in prior announcements, This also includes the installation of new or replacement lifts at Breckenridge, Northstar, Heavenly, Stowe, Mount Snow, Attitash, Jack Frost, Big Boulder, Boston Mills, and Brandywine. Now I would like to turn the call over to Michael to further discuss our financial results and fiscal 2023 outlook.

Thanks, Kirsten, and good morning. As Kirsten mentioned, we're pleased with our first fiscal quarter performance. Net loss attributable to Vail Resorts was $137 million for the first quarter of fiscal 2023 compared to a net loss attributable to Vail Resorts of $139.3 million in the prior year. Resort reported EBITDA was a loss of $96.5 million in the first quarter of fiscal 2023 compared to resort reported EBITDA loss of $108.4 million in the prior year. This increase is primarily due to the greater impact of COVID-19 and related limitations and restrictions on results in the prior year. Our balance sheet and liquidity position remains strong. Our total cash and revolver availability as of October 31, 2022, was approximately $1.8 billion, with $1.2 billion of cash on hand, $417 million of U.S. revolver availability under the Vale Holdings Credit Agreement, and $207 million of Revolver availability under the Whistler Credit Agreement. As of October 31st, 2022, our net debt was two times trailing 12 months total reported EBITDA. The company declared a quarterly cash dividend of $1.91 per share of Vail Resorts common stock that will be payable on January 10th, 2023 to shareholders of record on December 27th, 2022. We will continue to be disciplined stewards of our capital and remain committed to continuous investment in our people, strategic high return capital projects, strategic acquisition opportunities, and returning capital to our shareholders through our quarterly dividend and share repurchase program. Moving now to our fiscal 2023 outlook. We are encouraged by the strength of our past sales, the strong early season conditions for our mountain resorts in the Rockies and the West, and staffing levels, which are on track to deliver an outstanding guest experience. We are reaffirming our fiscal 2023 guidance for net income attributable to Vail Resorts of $321 million to $396 million and resort reported EBITDA guidance of $893 million to $947 million that was included in our September earnings release. Assuming a continuation of the current economic environment normal weather conditions, and no material impacts associated with COVID-19 for the 2022-2023 North American and European ski season or the 2023 Australian ski season. It is important to note that there continues to be uncertainty around the economic outlook and the impact that may have on travel and consumer behavior as we head into our primary operating season. Our guidance includes an estimated $4 million of acquisition and integration-related expenses in fiscal year 2023 associated with the acquisitions of the Seven Springs Resorts and our majority ownership in Andermatt-Sedroon. Foreign exchange rates have experienced recent volatility. The guidance assumes the foreign currency exchange rates as of our original September 2022 guidance. Relative to the fiscal 2023 guidance, if the exchange rates as of Wednesday, December 7, 2022, of 73 cents between the Canadian dollar and U.S. dollar related to the operations of Whistler Blackcomb in Canada, 67 cents between the Australian dollar and U.S. dollar related to the operations of Parisher, Falls Creek, and Hotham in Australia, and $1.06 between the Swiss franc and U.S. dollar related to the operations of Andermatt Cedroon in Switzerland were to continue for the remainder of the fiscal year We expect this would have an impact on fiscal 2023 guidance of approximately negative $6 million for resort reported EBITDA. I'll now turn the call back over to Kirsten.