Vail Resorts, Inc.

Good afternoon everyone and welcome to the Vail Resorts Fiscal Second Quarter 2025 Earnings Conference Call. Just a reminder, today's call 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 and if you do need to remove yourself from the queue, please 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. Lastly, if you should need any operator assistance during the call today, please press star zero. With that, I'll turn things over to Kirsten Lynch, Chief Executive Officer of Vail Resorts. Please go ahead, ma'am.

Thank you. Good afternoon, everyone. Welcome to our fiscal 2025 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 filings, 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 10, 2025, 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. Let's turn to our fiscal 2025 second quarter results. We are pleased with our overall results for the quarter with 8% growth in resort reported EBITDA compared to the prior year. Our results reflect the stability provided by our season pass program, our investments in the guest experience, and the strong execution of our teams across all of our mountain resorts. Second quarter visitation at our North American resorts was slightly above prior year levels with the benefit of improved conditions partially offset by the expected continued industry demand normalization and the shift in destination guest visitation for the spring. Destination guest visitation at our western North American destination mountain resorts was below prior year levels, which we believe was driven by the continued shift in historical visitation patterns across the ski industry to later in the ski season, which increased after challenging early season conditions in the prior year. Local guest visitation was in line with expectations as conditions across our North American resorts improved from the prior year and returned to more typical conditions. Ancillary spend for destination guest visit was strong across our ski school and dining businesses throughout the quarter, while overall revenue in our ancillary businesses was impacted by the lower mix of destination visitation. Moving to our resource efficiency transformation plan, Vail Resorts is on track to achieve its two-year resource efficiency transformation plan, which was announced in our September 2024 earnings. Through scaled operations, global shared services, and expanded workforce management, the company is on track to improve organizational effectiveness and scale for operating leverage as the company grows globally and deliver the expected cost efficiencies in fiscal year 2025 along with the $100 million in annualized cost efficiencies by the end of its fiscal 2026 fiscal year. Now, I would like to turn the call over to Angela to further discuss our financial results, season-to-date metrics, and fiscal 2025 outlook.

Thanks, Kirsten, and good afternoon, everyone. As Kirsten mentioned, this quarter's results were driven by the benefit of improved conditions partially offset by the expected continued industry demand normalization and the shift in destination guest visitation to the spring. Net income attributable to Vail Resorts was $245.5 million or $6.56 per diluted share for the second quarter of fiscal 2025. Compared to net income attributable to Vail Resorts of $219.3 million or $5.76 per diluted share in the same period in the prior year. Resort reported EBITDA was $459.7 million for the second fiscal quarter, which did include $2.9 million of one-time cost related to the previously announced two-year resource efficiency transformation plan and $0.1 million of acquisition and integration-related expenses, which compares to resort reported EBITDA of $425 million in the same period in the prior year, which included $2.1 million of acquisition-related expenses. 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 2, 2025, and compared to prior year period through March 3, 2024, and are for the company's North American destination mountain resorts and regional ski areas, excluding the results of Australian and European resorts in both periods. The data mentioned in this release is interim period data and is subject to fiscal quarter-end review and adjustments. Season-to-date, total skier visits were down 2.5% compared to the fiscal year 2024 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 4.1% compared to the fiscal year 2024 season-to-date period. For our ancillary business results, season-to-date ski school revenue was up 3%, dining revenue was up 3.1%, And combined retail and rental revenue for North American resort and ski area locations was down 2.9% compared to the prior year period. Similar to the drivers in the second quarter, season-to-date results through March 2, 2025, reflect strong local visitation from the improved conditions early season and with destination visitation impacted by the industry demand normalization and an expected shift in destination guest visitation to the spring. Ancillary spend per destination guest visit was strong across the company's ski school and dining businesses, with overall performance reflecting the higher mix of local visitation during the period. Now turning to our outlook for fiscal 2025. Excluding a $7 million negative impact from the change in foreign currency rates, the company's resort reported EBITDA guidance midpoint for fiscal 2025 is unchanged from the original guidance provided on September 26, 2024. For the remainder of the season, the company is expecting improved performance compared to the season-to-date period, including a continued shift in destination visitation patterns to later in ski season. And this is based on a significant amount of pre-committed guests, our current lodging booking trends, and historical guest behavior patterns. The company now expects net income attributable to Vail Resorts, for fiscal 2025 to be between $257 million and $309 million. The company expects resort reported EBITDA for the fiscal 2025 period to be between $841 million and $877 million, consistent with the original fiscal 2025 guidance issued on September 26, 2024, the updated guidance includes an estimated $15 million in one-time cost related to the multi-year resource efficiency transformation plan and an estimated $1 million of acquisition and integration related expenses specific to Crown Montana. In addition, compared to the original guidance, the updated guidance includes an estimated $7 million impact from foreign exchange rates. At the midpoint, the guidance implies an estimated resort EBITDA margin for fiscal 2025 to be approximately 28.8% or 29.3% before the one-time cost related to the resource efficiency transformation plan. The updated guidance also assumes a continuation of the current economic environment, industry normalization to pre-COVID guest behavior, and normal weather conditions for the remainder of the 2024-2025 North American and European ski season and the 2025 Australian ski season. In addition, updated guidance reflects the foreign currency exchange rate volatility as compared to the original assumptions. The updated guidance assumes the currency rate as of March 7, 2025, including an exchange rate of 70 cents between the Canadian dollar and U.S. dollar related to the operations of Whistler Black Home in Canada, an exchange rate of 63 cents between the Australian dollar and the U.S. dollar related to the operations of Parisher, Falls Creek, and Hotham in Australia, and an exchange rate of $1.13 between the Swiss franc and the U.S. dollar related to the operations of Andermatt, Sedruin, and Cremantana in Switzerland. It does not include any potential impacts related to future fluctuations in foreign currency exchange rates, which may be impacted by tariffs, trade disputes, or other factors. As of January 31, 2025, the company's total liquidity, as measured by total cash plus revolver availability and delayed draw term loan availability, was approximately $1.7 billion. This includes $488 million of cash on hand, $509 million of U.S. revolver availability, and $450 million of U.S. delayed draw term loan availability under the Vail Holdings Credit Agreement, and $204 million of revolver availability under the Whistler Credit Agreement. On January 27, 2025, the company completed an amendment of its bail holdings credit agreement, which increased the U.S. revolver by an incremental $100 million to $600 million, and provided an incremental $450 million term loan facility in the form of a delayed draw term loan, which the company can draw upon at any time at its option until January 2026, when any unused amount of the delayed draw term loans will expire. Additionally, on January 30th, 2025, the company repurchased approximately $50 million of its 0% convertible senior notes for an aggregate cash repurchase amount of approximately $48 million, representing a 4% discount per value. Following the closing of these repurchases, the company has $525 million of 0% convertible senior notes outstanding, which mature on January 1st, 2026. Proceeds from any borrowings on the incremental term loan facility and the increase in the revolver credit loan commitment both of which are currently undrawn, are available to be used to refinance the company's 0% convertible senior notes or for other general corporate purposes. Until the convertible notes mature or otherwise refinanced or repurchased, the company will continue to benefit from the zero interest coupon. Overall, the company continues to have a strong balance sheet. As of January 31st, 2025, the company's net debt was 2.5 times its trailing 12 months total reported EBITDA. The company declared a quarterly cash dividend on Vail Resorts common stock of $2.22 for share. The dividend will be payable on April 10th, 2025 to shareholders of record as of March 27th, 2025. In addition, the company repurchased approximately 0.1 million shares during the quarter, an average price of approximately $196 per share for a total of $20 million. The company has 1.5 million shares remaining under its authorization for share repurchases. We will continue to be disciplined stewards of our shareholders' capital and prioritizing investments in our guest and our 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 the long-term value of our shares. Now I'll turn the call back to Kirsten.