Vail Resorts, Inc.

Good afternoon, ladies and gentlemen. Welcome to the Vail Resorts Fiscal First Quarter 2025 Earnings Conference 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 should need operator assistance during the call, please press star zero. I'll now turn the call over to Kirsten Lynch, Chief Executive Officer of Vail Resorts. Ms. Lynch, please go ahead.

Thank you. Good afternoon, everyone. Welcome to our fiscal 2025 first 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 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, December 9, 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 10-Q were filed this 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 2025 first quarter results. Resort reported EBITDA was consistent with the prior year driven by growth in our North American summer business from increased activity spending and lodging results. This growth was offset by a decline in resort reported EBITDA of $9 million compared to the prior year from our Australian resorts due to record low snowfall and lower demand. Cost inflation, the inclusion of Crown Montana, and approximately $2.7 million of one-time costs related to the two-year Resource Efficiency Transformation Plan and $0.9 million of acquisition and integration-related expenses. Moving on to our Resource Efficiency Transformation Plan, regarding the company's two-year Resource Transformation Plan, which was announced last quarter, Vail Resorts continues to make progress against the plan. The two-year Resource Efficiency Transformation Plan is designed to improve organizational effectiveness and scale for operating leverage as the company grows globally. Through scaled operations, global shared services, and expanded workforce management, the company expects $100 million in annualized cost efficiencies by the end of its 2026 fiscal year. We will provide updates as significant milestones are achieved. Turning now to our 2024-2025 North American season pass sales, and early season indicators. Our season pass sales highlight the compelling value proposition of our past products and our commitment to continually investing in the guest experience at our resorts. Over the last four years, past product sales for the 2024-2025 North American ski season have grown 59% in units and 47% in sales dollars. For the upcoming 2024-2025 North American ski season, past product sales through December 3, 2024, decreased approximately 2% in units and increased approximately 4% in sales dollars as compared to the period in the prior year through December 4, 2023. This year's results benefited from an 8% price increase partially offset by unit growth among lower-priced Epic Day Pass products. Pass product sales are adjusted to eliminate the impact of changes in foreign currency exchange rates by applying an exchange rate of 0.71 cents between the Canadian dollar and the U.S. dollar in both periods for Whistler Black Home pass sales. For the period between September 21, 2024, and December 3, 2024, pass product sales trends improved relative to the past product sales through September 20th, 2024 with unit growth of approximately 1% and sales dollar growth of approximately 7% as compared to the period in the prior year from September 23rd, 2023 through December 4th, 2023 due to the expected renewal strength which we believe reflects delayed decision making. Our North American pass sales highlight strong loyalty with growth among renewing pass holders across all geographies. For the full selling season, the company acquired a substantial number of new pass holders. However, the absolute number of new guests was smaller compared to the prior year driven by the overall unit driving the overall unit to climb for the full season. New pass holders come from lapsed guests, prior year lift ticket guests, and new guests to our database. The company achieved growth from lapsed guests who previously purchased a pass or a lift ticket but did not buy a pass or lift ticket in the previous season. The decline in new pass holders compared to the prior year was driven by fewer guests who purchased lift tickets in the past season and from guests who are completely new to our database, which we believe was impacted by last season's challenging weather and industry normalization. Epic Day Pass products achieve unit growth driven by the strength in renewing pass holders. We expect to have approximately 2.3 million guests committed to our 42 North American, Australian, and European resorts in advance of the season in non-refundable advanced commitment products this year, which are expected to generate over $975 million of revenue and account for approximately 75% of all skier visits, excluding complimentary visits. Now turning to our early season indicators. Heading into the 2024-2025 ski season, we are encouraged by our strong base of committed guests, providing meaningful stability for our company. Additionally, early season conditions have allowed us to open some resorts earlier than anticipated including whistler blackholm heavenly north star kirkwood and stevens pass early season conditions have also enabled our rockies resorts to open with significantly improved terrain relative to the prior year including the opening of the legendary back bowls at vale mountain opening the earliest since 2018. our resorts in the east are experiencing typical seasonal variability for this point in the year with all resorts planned to open ahead of the holidays. We are continuing to hire for the winter season and are on track with our staffing plans and have achieved a strong return rate of our frontline employees from the prior season. Lodging bookings at our U.S. resorts for the upcoming season are consistent with last year. At Whistler Black Home, lodging bookings for the full season are lagging prior year levels, which may reflect delayed decision-making following challenging conditions in the prior year. Now I would like to turn the call over to Angela to further discuss our financial results and fiscal 2025 outlook.

Thanks, Kirsten, and good afternoon, everyone. As Kirsten mentioned, this quarter's results were driven by growth in our North American summer business, offset by lower results from our Australian resorts, cost inflation, the inclusion of Crown Montana, The one-time cost related to the two-year resource transformation plan in acquisition and related integration related expenses. Net loss attributable to Vail Resorts was $172.8 million for the first quarter of fiscal 2025 compared to a net loss attributable to Vail Resorts of $175.5 million in the same period in the prior year. Resort reported EBITDA loss was $139.7 million for the first quarter of fiscal 2025, which included $2.7 million of one-time costs related to the previously announced two-year resource transformation plan and $0.9 million of acquisition-related and integration-related expenses, compared to a resort-reported EBITDA loss of $139.8 million for the first quarter of fiscal 2024, which included $1.8 million of acquisition and integration-related expenses. As of October 31, 2024, the company's total liquidity, as measured by total cash plus revolver availability, was approximately $1 billion. This includes $404 million of cash on hand, $620 million of total combined revolver availability, and as of October 31, 2024, the company's net debt was 2.8 times its trailing 12 months total reported EBITDA. Regarding the return of capital to shareholders, The company declared a quarterly cash dividend of $2.22 per share of Vail Resorts common stock, payable on January 9, 2025, to shareholders of record as of December 26, 2024. In addition, the company repurchased approximately 115,000 shares during the quarter, an average price of approximately $174 for a total of $20 million. The company has 1.6 million shares remaining under its authorization for share repurchases. We will continue to be disciplined stewards of our shareholders' capital, prioritizing investments in our guest and employee experience, high-return capital projects, strategic acquisition opportunities, and returning capital to our shareholders. The company has a strong balance sheet and remains focused on returning capital to shareholders while always prioritizing long-term value of our shares. Now turning to our outlook for 2025. The company's resort-reported EBITDA guidance for the year ending July 31, 2025 is unchanged from the prior guidance provided on September 26, 2024. The company is updating its guidance for net income attributable to Vail Resorts, which it now expects to be between $240 million and $316 million, up from the prior guidance range of $224 million to $300 million. The primary difference is due to a $17 million increase from the gain on sale of real property related to the resolution of the October 2023 Yucca County District Court final ruling in valuation regarding the town of Vail's condemnation of the company's East Vail property that was planned for Vail Resort's incremental affordable workforce housing project, a transaction that has been recorded as real estate reported EBITDA. Additionally, the guidance is updated to include a decrease in expected interest expense of approximately $2 million, which assumes that interest rates remain at current levels for the remainder of fiscal 2025. These changes have no impact on expected resort reported EBITDA. The company continues to expect resort reported EBITDA for fiscal 2025 to be between $838 million and $894 million, including approximately $27 million of cost efficiencies and an estimated $15 million in one-time costs related to the multi-year resource efficiency transformation plan, and an estimated $1 million of acquisition and integration-related expenses specific to Crown Montana. As compared to fiscal 2024, the fiscal 2025 guidance includes the assumed benefit from a return to normal weather conditions after the challenging conditions in fiscal 2024, more than offset by a return to normal operating costs and the impact of continued industry normalization impacting demand. Additionally, the guidance reflects the negative impact from the record low snowfall and related shortened season in Australia in the first fiscal quarter of 2025, which negatively impacted demand and resulted in a $9 million decline of resort reported EBITDA compared to the prior year period. After considering these items, we expect resort reported EBITDA to grow from price increases in ancillary spending the Resource Efficiency Transformation Plan, and the addition of Crown Montana for the full year. The guidance also assumes the continuation of the current economic environment, normal weather conditions for the 2024-2025 North American and European ski season, and the 2025 Australian ski season, and the foreign currency exchange rates as of our original fiscal 2025 guidance issued September 26, 2024. Foreign currency exchange rates have experienced recent volatility. Relative to the current guidance, if the currency exchange rates as of yesterday, December 8, 2024, of $0.71 between the Canadian dollar and US dollar, $0.64 between the Australian dollar and US dollar, and $1.14 between the Swiss franc and the US dollar were to remain at those levels for the remainder of the fiscal year, the company expects this would have an impact on fiscal 2025 guidance of approximately negative $5 million for resort reported EBITDA. Now I'll turn the call back over to Kirsten.