Vail Resorts, Inc.

Good afternoon, and welcome to the Vail Resorts Fiscal Second Quarter 2024 Earnings Call. Today's conference is being recorded. Currently, all callers have been placed in a listen-only mode, and following management's prepared remarks, the call will be opened up 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 to 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 need operator assistance, press star zero. I would now like to turn the call over to Kirsten Lynch, Chief Executive Officer of Vail Resort. Please go ahead, ma'am.

Thank you. Good afternoon, everyone. Welcome to our fiscal 2024 second quarter earnings conference call. Joining me on the call this afternoon is Angela Korch, 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 filing, 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 11, 2024, 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 at www.valeresorts.com. Let's turn now to our fiscal 2020 quarter results. Given the unfavorable conditions across our North American resorts, we are pleased that our results for the quarter demonstrate the resiliency of our strategic business model and our network of resorts and loyal guests. The results for the second quarter were negatively impacted by challenging conditions at all of our North American resorts through January, with approximately 42% lower snowfall across our western North American resorts compared to the same period in the prior year, and limited natural snow and variable temperatures at our eastern U.S. resorts, which comprise our Midwest, Mid-Atlantic, and Northeast resorts. Despite the impacts of conditions, resort-reported EBITDA for the second quarter increased approximately 8% compared to the prior year, primarily driven by the stability created by our season pass results. Resort EBITDA margin also improved 3.3 points in the second quarter compared to the prior year, driven by disciplined cost management. While visitation declined, our ancillary businesses performed well. In particular, our ski and ride school, dining, and rental businesses experienced strong growth in spending per visit compared to the prior year. We are pleased with the strong execution across our mountain resorts, as well as the impact of the company's investments in our employees, technology, and on-mountain experience. Now I would like to turn the call over to Angela to further discuss our financial results season-to-date metrics, and fiscal 2024 outlook.

Thanks, Kirsten, and good afternoon, everyone. As Kirsten mentioned, the results for the second quarter were negatively impacted by unfavorable conditions across our North American resorts. Net income attributable to Vail Resorts was $219.3 million, or $5.76 per diluted share, for the second quarter of fiscal 2024, compared to net income attributable to Vail Resorts of $208.7 million, or $5.16 per diluted share in the prior year. Resort reported EBITDA was $425 million in the second fiscal quarter, which compares to Resort reported EBITDA of $394.8 million in the same period in the prior year. Turning to our season to date metrics, the reported ski season metrics are for the period from the beginning of the ski season through Sunday, March 3, 2024, compared to the prior year period through March 5, 2023, and are for our company's North American destination mountain resorts and regional ski areas, excluding the results of the Australian ski areas in Andermatt and Cedroon in both periods. The data mentioned in this release is interim period data and is subject to fiscal quarter-end review and adjustments. Unfavorable conditions negatively impacted season-to-date visitation. which was down 9.7% compared to the fiscal year 2023 season-to-date period. Season-to-date total lift ticket revenue, including an allocated portion of season pass revenue for each applicable period, was up 2.6% compared to the fiscal year 2023 season-to-date period. For our employer business results, season-to-date ski school revenue was up 5.5%, dining revenue was down 0.5%, and combined retail and rental revenue for North American resort and ski area locations was down 9.3% compared to the prior year period. Across our North American resorts, unfavorable conditions negatively impacted season-to-date visitation, which was below both prior year levels and our expectations, based on the number of guests visiting and their frequency. Following the Martin Luther King Jr. holiday weekend, challenging conditions persisted until early March at Whistler-Blackcomb and our Tahoe resorts. And while conditions improved at our Rockies and Eastern resorts, visitation did not improve as quickly as expected. We expect a portion of the lower visitation as related to the challenging conditions in the first half of the season, as well as a shift in visitation patterns. Despite the decline in season-to-date visitation relative to the prior year period, we are pleased with lift revenue growth driven by the stability created from our season pass program, the strength in our ancillary spending per skier visit across our ski school, dining, and rental businesses, and the improving trends as the season progresses. Now turning to our outlook for fiscal 2024. Due to the season to date underperformance, we are lowering our guidance for fiscal 2024. For the remainder of the season, we are expecting improved performance compared to the season to date period, including an expected shift in visitation patterns into March and April. This is based on our significant base of pre-committed guests and their historical behavior patterns, the improvement in conditions across our Western North American and Northeast resorts, and our lodging booking trends for the spring break period. While we are lowering guidance for the fiscal year, we know that the financial impact of the weather disruptions was greatly mitigated by our advanced commitment products, which creates stability for our company, our shareholders, and our communities in exchange for an incredible value to the guest. We now expect net income at Trader Joe's Vale Resorts for fiscal 2024 to be between $270 million and $325 million. And a resort reported EBITDA for fiscal 2024 to be between $849 million and $885 million. We estimate resort EBITDA margin for fiscal 2024 to be approximately 29.6% using the midpoint of the guidance range. Our guidance includes an estimated $4 million of acquisition-related expenses specific to Crown Montana, but does not include any estimates for the closing cost, operating results, or integration expense associated with the Crown Montana acquisition, which is expected to close this spring. The updated outlook for fiscal 2024 assumes a continuation of the current economic environment and normal weather conditions for the remainder of the 2023-2024 North American and European ski season and for the 2024 Australian ski season. The guidance assumes an exchange rate of 74 cents between the Canadian dollar and the U.S. dollar related to the operations of Whistler Black Home in Canada, an exchange rate of 65 cents between the Australian dollar and the U.S. dollar, related to the operations of Parish, Falls Creek, and Hotham in Australia, and an exchange rate of $1.13 between the CISFRNC and the U.S. dollar related to the operations of Andermont, Cedroon, and Switzerland. Our balance sheet remains strong, including total cash and revolver availability as of January 31, 2024, of approximately $1.4 billion. with $812 million of cash on hand and $630 million of combined revolver availability across our credit agreements. As of January 31st, 2024, our net debt was 2.4 times trailing 12 months total reported EBITDA. We remain confident in the strong free cash flow generation and stability of the underlying business model. Given these dynamics, we are pleased to announce that our board of directors declared a quarterly cash dividend on Vail Resorts common stock of $2.22 per share, representing an 8% increase in our quarterly dividend. The dividend will be payable on April 11th, 2024 to shareholders of record as of March 28th, 2024. We remain committed to returning capital to shareholders and intend to maintain an opportunistic approach to share repurchases. We will continue to be disciplined stewards of our capital and remain committed to prioritizing investments in our guest and employee experience, high return capital projects, strategic acquisition opportunities, and returning capital to our shareholders through our quarterly dividend and share repurchase program. As previously announced on November 30th, 2023, the company entered into an agreement to acquire a majority stake in Crown Montana Mountain Resort in Switzerland, the company's second ski resort in Europe. Cremantana is an iconic ski destination in the heart of the Swiss Alps, with a unique heritage, incredible terrain, passionate team, and a community dedicated to the success of the region. This acquisition aligns to the company's growth strategy of expanding its resort network in Europe, creating even more value for our pass holders and guests around the world. Much like Andermatt Cedroon, the company believes Cremantana has a unique opportunity for future growth. The transaction is expected to close this spring, subject to third-party consent. Now I'll turn the call back over to Kirsten.