Q1 2020 Earnings Call

December 9, 2019

You're kind of holds the Vail resorts first quarter fiscal 2020 earnings conference call at this time or something good audience and paving the way shortly I appreciate your patience and please remain on the line.

Operator: You're currently on hold for the Vail Resorts Q4 Fiscal 2020 Earnings Conference Call. At this time, we're assembling today's audience and plan to bring you away shortly. We appreciate your patience and please remain on the line. Please stand by. Good day and welcome to the Vail Resorts Q4 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.

Please standby.

Good day and welcome to the Vail Resorts first quarter fiscal 2020 earnings Conference call. Today's conference is being recorded at this time I turn the conference over to Mr. Cats. Please go ahead Sir.

Good afternoon, everyone welcome to our fiscal 2021st quarter earnings Conference call. Joining me on the call. This afternoon, Michael Barton, our Chief Financial Officer before we begin I remind you that some information provided during this call may include forward looking statements are based on certain assumptions are subject to a number of restaurants certainty.

Rob Katz: Thank you. Good afternoon, everyone. Welcome to our Fiscal 2020 Q4 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, an actual future result 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, 9 December 2019, and we undertake no duty to update them as actual events unfold. Today's remarks also include certain non-GAAP financial measures.

I've described in RCC filings actual future results may vary materially forward looking statements in our press release issued this afternoon, along with our remarks on this call I mean as of today December 929, Chino, we undertake no duty to update them as actual events unfold. Today's remarks also includes certain non-GAAP financial measures. Reconciliations of these measures are provided in the table included with our press release, which along with our quarterly.

Rob Katz: 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, www.vailresorts.com. With that said, let's turn to our fiscal 2020 Q4 results. Overall, we are pleased with our results in the first fiscal quarter. Our Australian resorts delivered a strong performance with another record year at Perisher on an Australian dollar basis and very strong results in our first year of operations at Falls Creek and Hotham. Our strong Epic Australia Pass sales, good conditions, and the addition of the Leichhardt chairlift at Perisher supported our continued momentum in the Australian market.

The report on Form 10-Q were filed this afternoon with the FCC in are also available on the Investor Relations section of our website Www Dot power source Dot com.

So with that said, let's turn to our fiscal 2021st quarter results. Overall, we are pleased with our results in the first fiscal quarter, Australia resorts delivered a strong performance with another record year at Perisher on an Australian dollar basis and very strong results.

First year of operations at Foster Creek and have them.

Our strong epic Australia pass sales good conditions and the addition of a wildcard chairlift at Perisher supported our continued momentum in the Australian market.

Consolidated results for Perisher were negatively impacted by the strong U.S. dollar, which created an approximate $2 million resort reported EBITDA headwind from currency translation in the quarter relative to the prior year results.

Rob Katz: Our consolidated results from Perisher were negatively impacted by the strong US dollar, which created an approximate $2 million Resort Reported EBITDA headwind from currency translation in the quarter relative to the prior year results. Whistler Blackcomb's summer business performed very well with strong performance in its world-class mountain biking operations and sightseeing, supported by the addition of the new Cloudraker Sky Bridge. Our US Epic Discovery business continues to grow and generate strong financial returns. Our lodging business experienced mixed results with continued success from our properties at Grand Teton Lodge Company, partially offset by softer results at our Colorado properties, in part due to weaker group demand in comparison to the prior year period. Turning now to our 2019-2020 North American Pass sales for our resorts and early season indicators.

What's your Blackcomb summer business performed very well with strong performance in its world class Mountain biking operations and sightseeing supported by the addition of the new cloud Raker Skybridge.

Our U.S. epic discovery business continues to grow and generate strong financial returns.

Lodging business experienced mixed results with continued success from our properties at Grand Teton Lodge company, partially offset by softer results at our Colorado properties in part due to weaker group demand in comparison to the prior year period.

Turning now to our 2019 2020, North American pass sales for our resorts in early season indicators.

As we approach the endorsed selling periods season pass sales for the North American ski season are up approximately 17% in sales dollars at approximately 22% in units through December 2nd 2019 compared to the prior year period ended December 3rd 28 gene.

Rob Katz: As we approach the end of our selling period, season pass sales for the North American ski season are up approximately 17% in sales dollars and approximately 22% in units through 2 December 2019, compared to the prior year period ended 3 December 2018. The results include military pass sales and Peak Resorts pass sales in both periods and are adjusted to eliminate the impact of foreign currency by applying an exchange rate of $0.75 between the Canadian dollar and US dollar in both periods for Whistler Blackcomb pass sales. Excluding sales of military passes, season pass sales increased approximately 16% in sales dollars and approximately 22% in units over the comparable prior year period. As we expected, growth in sales dollars was lower than our unit growth, primarily from the inclusion of our Epic Day Pass products.

Results include military Topsail at peak resorts pass sales in both periods and our adjusted to eliminate the impact of foreign currency by applying an exchange rate of 75 cents between the Canadian dollar and U.S. dollar in both periods for Whistler Blackcomb top shelf.

Excluding sales of military passes season pass sales increased approximately 16% in cell towers at approximately 22% in units over the comparable prior year period.

As we expected growth in sales dollars was lower than our unit growth primarily from inclusion of our epic day past products.

We're very pleased to see the strong sales growth in our season pass program that exceeded our expectations. We continue to see very strong growth in our north east markets, which are benefiting from the first full year a pass sales with unlimited access it so chemo and mouth Sunapee. The recent the recent addition peak resorts and the improved again.

Rob Katz: We are very pleased to see the strong sales growth in our season pass program that exceeded our expectations. We continue to see very strong growth in our Northeast markets, which are benefiting from the first full year of pass sales with unlimited access at Stowe, Okemo, and Mount Sunapee, the recent addition of Peak Resorts, and the improved impact of the expanded guest data and insight we now have in that region. Our destination markets outside of the Northeast also saw very strong growth and continue to perform well through our enhanced ability to reach destination guests with our data-driven marketing and the introduction of the Epic Day Pass. Our local markets continue to show solid overall growth driven by favorable results among our local guests in the Whistler Blackcomb region, with particular strength in Seattle from the first full pass sale season with access to Stevens Pass.

Part of the expanded guests data insight, we now have in that region.

Our destination markets outside of the North East also saw very strong growth and continued to perform well through our enhanced ability to reach destination guests with our data driven marketing and the introduction of the epic data.

Our local markets continued to show solid overall growth driven by favorable results among our local gas on the Whistler Blackcomb region with particular strength in Seattle from the first full pass sales season with access to Stephens costs.

We're also seeing strong results from our northern California, and you talk us.

Rob Katz: We were also seeing strong results from our Northern California and Utah guests. Sales in our Colorado local market were softer. The solid results in our Epic products offset with declines in certain regional products, which was expected without Arapahoe Basin on those passes. Those declines will be more than offset by lower partnership payments. The majority of our sales growth came from our Epic and Epic Local products, where we saw solid growth in new pass holders and renewing pass holders, with less trade down to Epic Day Pass than we were expecting. Epic Day Pass was a strong success in its first year with an expanded product offering and was a significant contributor to our overall growth and exceeded our expectations, particularly in the Epic 2 and 3-day products.

Sales in our Colorado local market were softer the solid results in our epic products offset declines in certain regional products, which was expected without arapahoe basin on those houses those declines will be more than offset by lower partnership payments.

The majority of our sales growth came from our epic an epic local products, where we saw solid growth in new pass holders and renewing pass holders with less trade down to epic day past than we were expecting.

Gay passed with a strong success in its first year with an expanded product offerings.

I was a significant contributor to our overall growth and exceeded our expectations, particularly in the epic two and three day products.

We believe this bodes very well for the long term opportunity of the epic data as we begin to highlight the incredible value to lower frequency guests.

Rob Katz: We believe this bodes very well for the long-term opportunity of Epic Day Pass as we begin to highlight the incredible value to lower-frequency guests. Importantly, the vast majority of Epic Day Pass sales came from new pass holders, with particular success in destination markets. Our military program delivered strong growth, with the program continuing to generate strong renewal rates while also adding new pass holders. We expect that the total number of guests on all advanced purchase passes this year will exceed 1.2 million, including all US, Canadian, and Australian passes and Epic Day Pass, representing an incredible group of highly loyal and passionate guests. Overall, lodging bookings for the season are largely in line with prior year bookings.

Importantly, the vast majority of epic day past sales came from new pass holders with particular success in destination markets.

Our military program delivered strong growth with the program continuing to generate strong renewal rates, while also adding new pass holders. We expect that the total number of gas on all advanced purchase passes this year will exceed 1.2 billion, including all U.S. Canadian and Australian passes and epic data right.

Presenting an incredible group of highly loyal and passionate gas.

Overall lodging bookings for the season.

Largely in line with prior year bookings.

Based on historical averages around half of the bookings for the winter season have been made by this time, though it is important to note that our lodging bookings represent a small portion of the overall lodging inventory around our resorts.

Rob Katz: Based on historical averages, around half of the bookings for the winter season have been made by this time, though it is important to note that our lodging bookings represent a small portion of the overall lodging inventory around our resorts. The early season experience at our resorts has been encouraging, with strong conditions across our Colorado, Tahoe, and northeastern resorts. Both Keystone and VAIL have benefited from early snow and our recent snowmaking investments, which allowed Keystone to open on 12 October and VAIL to open on 15 October and deliver a much improved experience to guests over Thanksgiving. Our resorts in Tahoe and Utah have opened with typical conditions for this time of year, and our northeast resorts have started strong, with certain resorts opening weeks earlier than in prior years.

Early season experience at our resorts has been encouraging with strong conditions across our Colorado Tahoe and north Eastern resorts, both Keystone in Dallas benefited from early snow and our recent still making investments, which allow Keystone to open on October 12 unveiled to opened on October 15th and deliver a much improved experienced.

I guess over Thanksgiving.

Our resorts in Taiwan, Utah have opened with typical conditions for this time of year and our northeast resorts have started strong with certain resorts opening weeks earlier than in prior years.

We're thrilled to welcome gas to all of our resorts as the 2019 2020, North American ski season kicks off with several transformational enhancements to the guest experience in our resorts.

Rob Katz: We are thrilled to welcome guests to all of our resorts as the 2019-2020 North American ski season kicks off with several transformational enhancements to the guest experience at our resorts. In Colorado, we have made significant investments in our snowmaking systems that have transformed the early season terrain experience at VAIL, Keystone, and Beaver Creek. As a result of these investments, Keystone experienced its earliest opening in more than 20 years, and VAIL opened earlier than usual with an improved terrain offering available at opening, elevating the experience for our guests. At Park City, we transformed the Tombstone Express area with a new permanent Tombstone barbecue restaurant and the new four-person Over and Out Lift that provides a quicker, more direct route for skiers and riders to access Canyons Village from the center of the resort.

In Colorado, we've made significant investments in our snowmaking systems that have transformed the early season to rein experience at Bell Keystone and Beaver Creek as a result of these investments Keystone experience. It's early O earliest opening in more than 20 years and bell opened earlier than usual with an improved terrain offering available at opening elevating.

The experience for our guests at Park City, we transformed the Tombstone Express area with a new permanent tombstone barbecue restaurant and the new four person over in outlets that provides a quicker more direct route for skiers and riders to access canyons village from the center of the resort.

In addition, we completed a full renovation of the Beaver Creek children Ski school facilities and improvements to the peak eight base area at Breckenridge wouldn't you ski school and child care facilities as well as an improved ticket and retail and rental experience.

Rob Katz: In addition, we completed a full renovation of the Beaver Creek Children's Ski School facilities and improvements to the Peak 8 base area at Breckenridge with new ski school and childcare facilities, as well as an improved ticket and retail and rental experience. We remain highly focused on investments that will substantially improve the guest experience across our resorts and implemented a new mobile lift ticket fulfillment technology that eliminates the ticket window for guests who purchase their tickets in advance. We also completed one of the final stages of our point-of-sale modernization project and invested in technology to automate our data-driven marketing efforts. We completed significant one-time investments across the acquired resorts of Crested Butte, Okemo, and Stevens Pass, which included replacing and upgrading the Daisy and Brooks lifts at Stevens Pass and the Teocalli lift at Crested Butte, as well as on-mountain restaurant upgrades at Okemo.

We remain highly focused on investments that will substantially improved guest experience across our resorts and implemented a new mobile lift ticket fulfillment technology that eliminates the ticket window for guests who purchase their tickets in advance. We also completed one of the final stages of our point of sale modernization project invested in technology to automate.

Our data driven marketing efforts.

We completed significant one time investments across the acquired resorts have crested Butte okimoto at Stephens path, which included replacing and upgrading the Daisy and Brooks less at Stephens path and the Tio Cali lifted crested butte as well as on mountain restaurant upgrades at Occhino.

Now I would like to turn the call over to Michael to further discuss our financial results and our fiscal 2020 outlook.

Rob Katz: I would like to turn the call over to Michael to further discuss our financial results and our fiscal 2020 outlook.

Thanks Robin good afternoon, everyone as Rob mentioned, we're pleased with our first quarter performance resort net revenue was $263.6 billion in the first fiscal quarter, an increase of $43.7 million compared to the prior year.

Michael Barkin: Thanks, Rob, and good afternoon, everyone. As Rob mentioned, we are pleased with our Q1 performance. Resort net revenue was $263.6 million in the Q1, an increase of $43.7 million compared to the prior year. Resort Reported EBITDA was a loss of $76.7 million in the Q1, which compares to a Resort Reported EBITDA loss of $72.5 million in the same period in the prior year. Fiscal 2020 Q1 Resort Reported EBITDA included $9 million of acquisition and integration-related expenses and approximately $2 million of unfavorability from currency translation, which the company calculated on a constant currency basis by applying current period foreign exchange rates to the prior period results.

Resort reported EBITDA was a loss of $76.7 million in the first fiscal quarter, which compares to a resort reported EBITDA loss of $72.5 million in the same period in the prior year.

Fiscal 2021st quarter Resort reported EBITDA included $9 million of acquisition and integration related expenses and approximately $2 million of unfavorable unfavorability from currency translation.

The company calculated on a constant currency basis by applying current period foreign exchange rates to the prior period results.

Net loss attributable to Vail resorts was $106.5 million for the first quarter fiscal 2020 or loss of $2.64 per diluted share as compared to a net loss of $107.8 million or a loss of $2.66 per diluted share share for the same period in the prior year the.

Michael Barkin: Net loss attributable to Vail Resorts was $106.5 million for Q1 of fiscal 2020, or a loss of $2.64 per diluted share as compared to a net loss of $107.8 million, or a loss of $2.66 per diluted share for the same period in the prior year. The net loss for Q1 of fiscal 2020 included the after-tax effect of acquisition and integration-related expenses of $6.8 million and approximately $1 million of unfavorability from currency translation, which the company calculated on a constant currency basis by applying current period foreign exchange rates to the prior period results. Our balance sheet at quarter end remained strong. We ended the quarter with $136.3 million of cash on hand and $1.9 billion of net debt.

Loss for the first quarter fiscal 2020 included the after tax effect of acquisition and integration related expenses of $6.8 million and approximately $1 million unfavorability from currency translation, which the company calculated on a constant currency basis by applying current period foreign exchange rates to the prior period results.

Our balance sheet at quarter end remains strong we ended the quarter with $136.3 million of cash on hand, and $1.9 billion of net debt.

As part of the peak resorts acquisition, we expanded our existing term loan facility by approximately $336 million and assumed a portion of peak resorts debt.

Michael Barkin: As part of the Peak Resorts acquisition, we expanded our existing term loan facility by approximately $336 million and assumed a portion of Peak Resorts debt. Our net debt was 2.8x trailing 12 months total reported EBITDA, though it is important to note that this ratio only includes Peak Resorts results for the lost period between closing and quarter end. We do expect that ratio to decline as we incorporate the full season of Peak Resorts results. I am also very pleased to announce that our board of directors has declared a quarterly cash dividend on Vail Resorts common stock of $1.76 per share payable on 9 January 2020, to shareholders of record on 26 December 2019. Additionally, the company repurchased approximately $21.4 million of stock during the quarter at an average price of $224.28. Now turning to our outlook for fiscal 2020.

Our net debt was 2.8 times trailing 12 months total reported EBITDA, though it is important to note that this ratio only includes peak resorts results for the last period between closing at quarter end and we do expect that ratio to decline as we incorporate the full season peak resorts results.

I'm also very pleased to announce that our board of directors has declared a quarterly cash dividend on Vail resorts common stock of $1.76 cents per share payable on January nine to 2020 to shareholders of record on December 26 2019.

Additionally, the company repurchased approximately $21.4 million or stock during the quarter at an average price of $224.28.

Now turning to our outlook for fiscal 2020.

Given our first quarter results in the indicators were seeing for the upcoming season, we are reiterating our resort reported EBITDA guidance for fiscal 2020 that was included in our September earnings release, which is based on the assumptions incorporated at that time, including foreign currency exchange rates.

Michael Barkin: Given our Q1 results and the indicators we are seeing for the upcoming season, we are reiterating our Resort Reported EBITDA guidance for fiscal 2020 that was included in our September earnings release, which is based on the assumptions incorporated at that time, including foreign currency exchange rates. While pass sales results to date have been encouraging, it is important to remember that the North American ski season has just begun, with our primary earnings period still in front of us. As always, the upcoming holiday period is a key period of the ski season, and we plan to publicly report certain season-to-date ski season metrics on 17 January 2020. I'll now turn the call back to Rob.

Ill pass sales results to date have been encouraging it is important to remember that the north American ski season has just begun with our primary earnings period still in front of us.

As always the upcoming holiday period is a key is a key period of the ski season, and we plan to publicly report certain ski certain season to date ski season metrics on January 17th 2020.

Ill now turn the call back to Rob.

Thanks, Michael.

Rob Katz: Thanks, Michael. We remain committed to reinvesting in our resorts, creating an experience of a lifetime for our guests, and generating strong returns for our shareholders. We will announce our complete capital plan for calendar year 2020 in March 2020, but we are pleased to announce our signature investments plan for the 2020-2021 season. We are excited to announce a 250-acre lift-served terrain expansion in the signature McCoy Park area of Beaver Creek. This new lift access beginner and intermediate bowl experience is a rare opportunity to expand with highly accessible terrain in one of the most idyllic settings in Colorado, and will further differentiate the high-end family-focused experience at Beaver Creek. At Breckenridge, we plan to install a new four-person high-speed lift to serve the popular Peak 7.

We remain committed to reinvesting in our resorts and creating an experience of lifetime of a lifetime for gas and generating strong returns for our shareholders. We will announce our complete capital plan for calendar year 2020 in March 2020, but we're pleased to announce our signature investment plan for the 2020 2021 season.

We are excited to announce at 250 acre lift serve terrain expansion in the signature quite park area of Beaver Creek.

This new lifted access beginner intermediate bowl experience is a rare opportunity to expand with highly accessible to rein in one of the must idyllic settings in Colorado and will further differentiate the high end family focused experience at Beaver Creek.

At Breckenridge, we plan to install a new four person high speed lift just started the popular peak seven this additional lift will further enhance the guest experience at the most visited resort in the U.S. and will significantly increase guests access in circulation for the intermediate terrain on peaks six six and seven.

Rob Katz: This additional lift will further enhance the guest experience at the most visited resort in the US and will significantly increase guest access and circulation for the intermediate terrain on Peaks 6 and 7. Subject to government approvals, at Keystone, we plan to replace the four-person Peru lift with a six-person high-speed chairlift in order to increase capacity out of a key base area of the resort and improve guest access, circulation, and the experience in one of the top-performing resorts in the US. At Whistler Blackcomb, we intend to significantly increase the seating capacity at the Rendezvous Lodge restaurant on Blackcomb Mountain. The expansion will add 250 seats at a critical on-mountain restaurant, further enhancing the experience at North America's largest resort. Our capital plan includes several key investments that will continue to further our company-wide data-driven approach.

Subject to government approvals at Keystone, We plan to replace the 4%, Peru lift with a 6% high speed chair lift in order to increase capacity out of a key base area of the resort and improved guest to access circulation and the experience and one of the top performing resorts in the us.

At Whistler Blackcomb, we intend to significantly increase the seating capacity at the rounding to large restaurant on black on mountain.

Expansion will add 250 seats at a critical on mountain restaurant further enhancing the experience at north Americas largest to resort.

Our capital plan includes several key investments that will continue to further our companywide data driven approach. We are now in the second phase of implementing our automated digital marketing platform that will allow us to aggregate a more holistic view of the gap that will drive improvements and personalization and engagement across all lines of business, including scheme.

Rob Katz: We are now in the second phase of implementing our automated digital marketing platform that will allow us to aggregate a more holistic view of the guests that will drive improvements in personalization and engagement across all lines of business, including ski school and rentals. We will also be investing to completely revamp and upgrade our digital ski rental online platforms to provide a more seamless advanced purchasing process and to allow more dynamic pricing and discounting to broaden access during off-peak times. Finally, we will be launching a completely revamped EpicMix mobile app that will offer new functionality and an improved user experience. We will continue to invest in corporate infrastructure and technology to improve our scalability and efficiency as we work to optimize our processes, business analytics, and cost discipline across our network.

Cool and rentals.

We will also be investing to completely REVAP, an upgrade our digital ski rental online platforms to provide a more seamless advance purchasing process and to allow more dynamic pricing and discounting to broaden access during off peak times.

Finally, we will be launching a completely revamped epic mix mobile app that will offer new functionality and an improved user experience.

We will continue to invest in corporate infrastructure and technology to improve our scalability and efficiency as we work to optimize our processes business analytics and cost discipline across our network. This will include the implementation of an automated workforce planning system to optimize our labor labor scheduling and improved financial systems to enhance.

Rob Katz: This will include the implementation of an automated workforce planning system to optimize our labor scheduling and improved financial systems to enhance business analytics. For the recently acquired resorts of Crested Butte, Okemo, and Stevens Pass, we are planning to complete the second and final phase of a 2-year $35 million investment program. Subject to government approvals, we plan to complete a transformational investment at Okemo, including upgrading the Quantum lift from a 4-person to a 6-person high-speed chairlift, relocating the existing 4-person Quantum lift to replace the Green Ridge 3-person fixed grip chairlift, and improving the base area experience through a renovation of the Base 68 restaurant, expansion and renovation of the children's ski school facility, and enhancement of the guest arrival experience. We plan to spend approximately $24 million on integration activities primarily related to Peak Resorts.

Business analytics.

For the recently acquired resorts of crested Butte, Chemo and Stephens path, we're planning to complete the second and final phase of a two year 35 million dollar investment program subject to government approvals, we plan to complete a transformational investment it up chemo, including upgrading the quantum lift from a 4% to a 6% high speed chairlift really.

Getting the existing 4% quantum lift to replace the Greenridge three person fixed script chairlift, improving the base area experience through a renovation of the base 68 restaurant expansion and renovation of the children Ski school facility and enhancement of the guest arrival experience.

We plan to spend approximately $24 million integration activities, primarily related to peak resorts are.

Our capital plan for calendar 2020 includes onetime real estate investments of approximately $3 million, which are related to and funded by land sales completed in calendar 2019 with third party developers at the Keystone One River run site and Breckenridge ease peak eight site.

Rob Katz: Our capital plan for calendar 2020 includes one-time real estate investments of approximately $3 million, which are related to and funded by land sales completed in calendar 2019 with third-party developers at the Keystone One River Run site and Breckenridge East Peak 8 site. While we expect these projects to occur in calendar 2020, these investments remain subject to municipal approvals of those development projects, creating timing uncertainty. Our capital plan for calendar 2020 will be approximately $155 million to $160 million, excluding one-time items associated with integrations, the one-time Triple Peaks and Stevens Pass transformation plan, one-time Peak Resorts capital improvements, real estate-related capital, and $4 million of reimbursable investments associated with insurance recoveries that we had originally expected to occur in calendar 2019. Including these one-time items, our total capital plan will be approximately $210 million to $215 million.

While we expect these projects to occur in calendar 2020. These investments remain subject to municipal approvals of those development projects, creating timing uncertainty.

Capital plan for calendar 2020 will be approximately $155 million to $160 million, excluding onetime items associated with integrations, the onetime triple peaks and Stephens cost transformation plan onetime peak resorts capital improvements real estate related capital and $4 million of Reimbursable investments.

So ceded with insurance recoveries that we had originally expected to occur in calendar 2019.

Including these onetime items, our total capital plan will be approximately $210 million to $215 million, we'll be providing further detail on our calendar year 2020 capital plan in March 2020.

Rob Katz: We will be providing further detail on our calendar year 2020 capital plan in March 2020. Our attention to service and our commitment to delivering an outstanding guest experience across our network continue to be the focus of our company's efforts. We are thrilled to welcome our pass holders to the 17 Peak Resorts ski areas this year. I would like to thank all of our employees for their passion, hard work, and commitment to creating the experience of a lifetime for our guests, which, as always, lies at the center of our success. We hope that you all enjoy a fun and safe season ahead. At this time, Michael and I would be happy to answer your questions. Operator, we are now ready for questions.

Our attention to service and our commitment to delivering an outstanding guest experience across our network continue to be the focus of our company's efforts and we are thrilled to welcome our pass holders to the 17 peak resorts ski areas. This year.

I would like to thank all of our employees for their passion hard work and commitment to creating the experience of a lifetime for our guests which has always lies at the center of our success.

We hope that you all enjoy a fun and save season ahead at this time, Michael and I would be happy to answer your questions. Operator, we are we're now ready for questions.

Thank you if you would like to ask the question. Please signal by pressing star one on your telephone keypad, if you're using a speakerphone. Please make sure. Your mute function is turned off to let us know treat your equipment again press star one to ask a question.

Operator: Thank you. If you would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow us to not treat your equipment. Again, press star 1 to ask a question. We'll take our first question today from Felicia Hendrix with Barclays.

We'll take our first question today from Felicia Hendrix with Barclays.

Hi, good afternoon. Thank.

Felicia Hendrix: Hi, good afternoon, and thank you. Your Stevens Pass sales were great. Congratulations on a strong year there. Wondering if, by any chance, you guys could help us understand what percentage of the Peak folks converted to Epic, and considering that I don't really think you're going to answer that question, maybe that you can kind of frame it in, was it kind of better in line or worse than what you expected?

Thank you.

Hello.

Great.

Just want to strong year, there wondering if.

Any chance you guys could help us understand what percentage.

Keith folk converted ethnic and considering that I don't think you can answer that question, maybe that you can kind of granite and.

It is better in line or worse than what we expect that.

Yes, I would say.

Rob Katz: Yeah, I would say we're not sharing that for 2 reasons. One, we typically don't share that kind of detail. Also, we're just in the process of actually bringing the 2 databases together. At this point, we couldn't even say because we haven't had a chance to really fully look at the results from that just ended a little while ago. I would say, yeah, I think we've been quite pleased with the results from Peak, obviously including Peak's program. Obviously, just because they have a base of passes that most of you could see in their public results from last year, obviously, that depresses our growth rate, modestly.

Not sharing that and up for two reasons. One we typically don't dumped share that kind of detail, but also we're just in the process of actually bringing the two databases together and so at this point, we couldn't even say because we havent had a chance to really fully look at the results from the just ended a little while ago.

I would say I think we've been quite pleased with the results from peak obviously, including.

Peaks program.

Lastly, just because they have a base of passes that most of you could see in their public results from last year, obviously that depresses our growth rate modestly, but then obviously there is an incremental opportunity by having peak in the program.

Rob Katz: Obviously, there's an incremental opportunity by having Peak in the program, both in terms of the people who might convert or upgrade over to our passes, but also, obviously, new people coming in from the different destinations where Peak has a resort. We feel very good about it. Again, in the first year, we haven't had a full opportunity yet to really market to those guests to do all of our data collection and capture, so we believe there's still a very strong opportunity on that front for next year. I think we're also quite pleased that a lot of the strong trends that we saw on the destination side in the Northeast, we saw across our network. Just, I think, felt very confident in everything that we laid out for the Stevens Pass effort this year and seeing it come to fruition, including Peak.

Both in terms of the people who might convert or upgrade over to our passes but also obviously new people coming in from.

The different destinations where peak hazard resorts. So we feel very good about it get in the first year.

We havent had a full opportunity yet really market to those gas to do all of our data collection and capture so we believe there is still a very strong opportunity on that front for next year.

I think we're also correctly is that a lot of the strong trends that we saw on the destination site in the northeast we saw across our network.

So just.

Just I think felt very confident in everything that we laid out for the season pass effort this year and seeing your come to fruition, including peak.

Yes, that's really helpful.

Felicia Hendrix: That's really helpful. You did mention both in the press release and in your prepared remarks that you didn't see much trading down, and you did see new entrants to the program. I was just wondering why you didn't see as much trade down as you expected. Kind of maybe you can give a little bit more color on the complexion of the sales there. Can you also tell if you were able to recapture folks who were on Epic in the past but left the program because it didn't fit their needs and now they're coming back?

You'd mentioned both in the persons and in your prepared remarks that.

You didn't see much trending down.

You can see new entrance to the program. So just wondering why you didn't see as much trade Dan as you expected kind of maybe can give a little bit more under construction.

The sales there and then can you also so if you're able to recapture folks on epic in the past, but lets the program because it did it.

And now they're coming back.

Yes, I think on the trade data I would say broadly I think one.

Rob Katz: Yeah, I think on the trade down, what I would say broadly, I think, 1, there's a lot of loyalty, obviously, to our Epic and Epic Local Pass holders into those products. A lot of loyalty from even the Epic 4 and Epic 7 holders in those higher volume products. I think, obviously, as we offered, broadened kind of the number of options at lower price points, we assumed we might see a little bit more trade down, which didn't happen, which I think speaks very well for the kind of connection that we have to those guests.

There's a lot of loyalty, obviously to our epic and epic local passholders into those products a lot of loyalty from even the epic foreign Epikseven holders again that in those higher volume products.

And.

I think obviously as we offered.

Brought in kind of the number of options at lower price points, we assumed we might see a little bit more trade down, which didnt happen, which I think you know speaks very well for the kind of connection that we have to those gas.

I think it's also at its a program that will take time overtime to.

Rob Katz: I think it's also a program that will take time, over time, to just like when we first introduced the Epic Pass, one of the things that was our biggest challenge was just convincing people who didn't live near the ski resort that a season pass was a potential option for them. Now, I think we're really on a new journey, which is convincing these one, two, three, four-day skiers that actually a pass product is right for them, gives them a great discount. The economics make sense, clearly, but obviously, getting that message out takes a number of years and all the marketing effort that we put into it. I think that, in our minds, still kind of lies ahead, I think, for the overall program and the opportunity with Epic Day Pass.

Just like when we first introduced the epic pass one of the things that was our biggest challenge was just convincing people who didnt live near the ski resort that a season passes as a potential option for them now I think we're really on to on a new journey, which is convincing these 1234 day.

Skier that actually a pass product is right for that gives them a great discount the economics makes sense, clearly, but but obviously getting.

Getting that message out takes a number of years and all the marketing effort that we put into it.

So I think that.

At our minds is.

Still kind of lies ahead I think for the overall program any opportunity with epic day past.

I can't really comment on the on the specifics of that in terms of in terms of some of the trading but we absolutely saw.

Rob Katz: I can't really comment on the specifics of that in terms of some of the trading. We absolutely saw, I think, a benefit in terms of both bringing people back into the program. Most importantly, introducing new people to the program. That was the predominant, I think, success that we saw with Epic Day Pass, both in terms of people who were previously on lift tickets and prospects, people who were not necessarily in our database before. I think all of those are good signs for the future.

I think a benefit in terms of both bringing people back into the program, but most importantly, introducing new people to the program. So that was the predominant I think success that we saw with epic day past both in terms of people who were previously on lift tickets and prospects people, who were not necessarily in our database before.

So I think all of those are good signs for the future.

Yes. So helpful. Thank you and then just my final question is just on what I think some folks seats or that this is getting full starts.

Felicia Hendrix: That is so helpful. Thank you. Just my final question is just on Whistler. I think some folks are concerned that this is getting a slow start. How are you thinking about the demand patterns that you're seeing there?

How are you thinking about the demand patterns that you're seeing there.

I think conditions at Whistler definitely more challenging that probably anywhere else in our network.

Rob Katz: I think conditions at Whistler are definitely more challenging than probably anywhere else in our network, and I think, obviously, we're hopeful that we're going to see that turn around, obviously, before the key Christmas holiday. I think certainly the data points on Whistler, I think, generally look fine, again, largely in line with what we would expect. Obviously, in part, some of our results will depend, of course, upon the actual conditions when people come, certainly for the holidays and beyond. I think one of the good things about Whistler, obviously, is that you have a lot of people who book with longer lead times. I think so long as kind of conditions come before the holidays, I think that still gives us a good opportunity to essentially have, I think, a strong holiday period.

And I think obviously, where we're hopeful that we're going to see that turnaround obviously before the key Christmas holiday.

I think certainly the data points on Whistler, I think generally book Fine again, largely in line with what we would expect.

But obviously that in part that's going to some of our results will depend of course upon the actual conditions when people come certainly for the holidays and beyond any one of the good things about with are obviously is that you have a lot of people who book with longer lead times.

And so I think so long as kind of conditions comp for the holidays.

Think thats still gives us a good opportunity.

To to capture.

Essentially have I think it's still a strong holiday period, but that said obviously yet some of this is still going to be dependent on what the conditions are at the time.

Rob Katz: That said, obviously, yeah, some of this is still going to be dependent on what the conditions are at the time.

Great. Thank you so much.

Felicia Hendrix: Great. Thank you so much.

Absolutely.

Rob Katz: Yep, absolutely.

Yes.

Next we'll hear from Shaun Kelley with Bank of America.

Operator: Next, we'll hear from Shaun Kelley with Bank of America.

Hi, good afternoon, everyone.

Shaun Kelley: Hi, good afternoon, everyone. Rob and Michael, maybe just to start in kind of talking about the Day Pass in a different variety, can you maybe help us just think about how the launch has gone off relative to some of the initial results you either saw from the Epic four-day product or the military product? I think from the outsider perspective, military was kind of huge adoption upfront and pretty close to like 100,000 units. Day Pass or the four-day took. It was an introduction but probably more incremental and took some time to build. Maybe without giving specifics because I know you won't, maybe give us just some color about how relative to those products, what kind of behaviors you saw with the Day Pass.

Rob on Michael maybe just to start.

Kind of talking about the day passionate in a different varieties can you maybe help us just think about how the launch has gone off relative to some of the initial results you either saw from the epic Ford any product or that military product I think.

From from the outside of perspective military was kind of huge adoption upfront.

Well, it's like 100000 units.

Good day past the Florida. It took it was an introduction probably more incremental and took some time to build.

Maybe without giving specific because I know you won't maybe give us give us just some color about how relative those products, what you what kind of behavior as you saw with with the date.

I would say definitely much more in line with a four day I mean, just broadly not not specific by specific but more broadly.

Rob Katz: I would say definitely more in line with the 4-day. I mean, just broadly, not specific by specific, but more broadly, definitely different than military. Obviously, military was a product that was discounted very, very significantly and really changed kind of how we provided access to those who served in the armed forces. I would say that was obviously a much more quick adoption, but I certainly think we mentioned in our remarks, we're quite pleased to see the results in the 2nd year and seeing both the loyalty and just the improvement, obviously, in the revenue from the program. I think on Epic Day Pass, my belief is that it'll take a number of years to continue to broaden, I think, especially in those lower frequency pass products.

Any different than military obviously military where the product that was.

Discount it very very significantly and.

Really change kind of how we provided access to those who served in the armed forces. So I would say that was obviously a much more quick adoption, but but I certainly think we mentioned in our remarks, we're quite pleased to see the results in the second year.

And seeing but the loyalty and Theres improvement obviously in the revenue from the program.

I think on epic day past my belief is that it will take a number of years to continue to broaden I think especially in those lower frequency.

Pass products and that is where I think we said that it certainly exceeded our expectations in part because.

Rob Katz: That is where I think we said that it certainly exceeded our expectations in part because a little unclear to us when we launched and designed the product how long it would take us to begin to get adoption on that. We're very pleased to start off on such a strong foot. Like Epic four and seven, it'll take a number of years, I'm sure, for us to come close to where the maturity could be for that product.

Little unclear to us as we when we launched in design the product how long it would take us.

To begin to get adoption on that and so we're very pleased that.

To start off on such a strong, but but like epic foreign seven it'll take a number of years I'm sure for us to come close to where the maturity could be for that product.

Great. Thanks, and you noted both throughout I think lot of the commentary the strengthened destination and then also obviously seeing new gas and I think there was some skew towards destination.

Shaun Kelley: Great. Thanks. You noted both throughout, I think, a lot of the commentary of the strength in destination and then also, obviously, seeing new guests, and I think there was some skew towards destination markets even for new signups around the Day Pass. Why aren't we seeing a similar movement on the lodging side? I know the lodging business is going to depend probably more market to market and maybe a little bit lumpier. I would think if you're seeing such great activity from destination, they're likely to have longer lead times that might be like what you'd see in lodging. Just any kind of observation on why that pattern may be a little different?

It's even for new sign ups around the day past.

Where are we seeing like similar movement on the lodging side I know the lodging business is going to depend probably more market to market and maybe a little bit lumpier, but I would think if you're seeing such great activity from destination, they're likely to have longer lead times that might be like what you see lodging. So just any observation on why that may not.

That pattern, maybe a little different.

Well I think you're looking at different dynamics that are going on I think if we're talking about quote lodging bookings into the season, if thats what were looking out than I think.

Rob Katz: Well, I think you're looking at different dynamics that are going on. I think if we're talking about lodging bookings into the season, if that's what we're looking at, then I think, obviously, although we're making great strides on the Epic Day Pass, still, obviously, doesn't represent a huge percentage of the total in terms of how many people ultimately come to the resort. I think we feel good about where we see lodging bookings and, obviously, feel like they support our overall guidance for the year. The overdelivery on Epic Day Pass, I think, certainly builds confidence, but I don't know that it's yet enough that it would really change the total lodging drivers for any of our resorts. Again, especially a lot of the lodging bookings that we're talking about in the release speak to our owned and operated managed properties.

Obviously, although we're making great strides on the epic day path still obviously doesn't represent a huge percentage of the total right in terms of how many people ultimately come to the resort and and I think we feel good about where we see lodging bookings and obviously feel like they support our overall guidance for the year and.

Over delivery on everyday path I think certainly builds confidence.

But I don't know that it yet enough to that it would really change.

The total lodging.

Drivers for for any of our resorts and again, especially lot of ourselves the lodging bookings that were talking about in the release speak to our owned and operated managed properties that right is also a smaller percentage right up the overall market.

Rob Katz: That is also a smaller percentage of the overall market.

Right.

Shaun Kelley: Right. Okay, thanks for that. Last question for me would be just, I think you may have alluded to this in the answer to Felicia's question, but just when we think about the contribution from Peak overall, again, I apologize if I missed it. What was the overall impact to growth rate now that we put it in the base? Was the core Peak trend accretive to the total growth kind of in line with? Did it move it at all, or did it sort of dilute the total growth rate as you think about what you saw overall?

Okay. Thanks for that and then last question for me it would be on.

Just I think you may have alluded to this and the answer to Felicia's question, but just on a when we think about the contribution from peak overall on it and again I apologize if I missed it.

What was the overall impact to growth rate now that we put in the base what was that there was the core peak trend.

Relative to the total gross kind of in line with didn't move it at all or was it less than it's ever to sort of dilute the total growth rate as you think about what you saw overall.

Yes, I think again, it's hard for us to be precise around that because theres. So many different things happening at the same time. When you include peak and we can track any of them necessarily with precision so.

Rob Katz: Yeah, I think, again, it's hard for us to be precise around that because there are so many different things happening at the same time when you include Peak, and we can't track any of them necessarily with precision. Obviously, including Peak in our program pulls down the growth rate because it increases the base. You have people who actually move from Peak Passes to Epic Passes, and as I mentioned, we feel good about that, but we haven't been able to do all the analysis to kind of bump those two databases piece by piece.

Obviously, including peak and our program pulls down the growth rate because it increases the base.

Then you have people, who actually move from peak passes to epic passes and as I mentioned, we feel good about that but we haven't been able to do all the analysis tail kind of.

Bumped us to databases piece by piece, but then there is in every pass program certainly for peak certainly for US. There's there are people who come in and out every year and so it's a little bit hard for us to fully understand right. When we see pickup in markets around peak is that people who were going to peak is it because it peak is that where they are.

Rob Katz: There's, in every pass program, certainly for Peak, certainly for us, there are people who come in and out every year. It's a little bit hard for us to fully understand when we see pickup in markets around Peak is that people who were going to Peak, is it because of Peak? Were they on the verge of buying before and Peak just pushed them over the edge? I mean, all of those things, I think, we're trying to assess. Now, overall, I think we feel like absolutely Peak was a positive, not the primary driver of our results by any stretch, but absolutely a positive for this year and I think a first step in the kind of impact that I think Peak can make. Again, I think we think we'll see a bigger impact next year.

On the verge of buying before and Pete just push them over the edge I mean, all of those things I think we try and assess that overall I think we feel like absolutely peak was a positive not the primary driver of our results by any stretch, but but absolutely positive for this year and I think first step.

The kind of impact I think Pete can make again I think we we think we'll see a bigger impact next year. So I think in line and kind of it's largely to what we expected, but unfortunately not possible to truly parse it out.

Rob Katz: I think in line and kind of largely to what we expected, but it's unfortunately not possible to truly parse it out.

Thank you very much.

Shaun Kelley: Thank you very much.

Thank you.

Rob Katz: Thank you.

Well hear from David bearing with Baron capital.

Operator: We'll now hear from David Baron with Baron Capital.

Okay.

Now in Thailand, sorry.

David Baron: Hi. No, I didn't dial in. Sorry.

I was wondering did you have a question.

Operator: I'm sorry, Mr. Baron. Did you have a question?

No I do not.

David Baron: Nope, I did not. I did not ring a question. Sorry.

And I question sorry.

Okay. Thank you will hear from Alex Moshe with Berenberg.

Operator: Okay, thank you. We'll hear from Alex Moroscia with Berenberg.

Hey, Good afternoon, guys just one for me I'm looking at some of the political unrest in South America right now just wondering what you're seeing year over year in the early buys and season pass sales to some of those international customers.

[Analyst] (Berenberg): Hey, good afternoon, guys. Just one for me. I'm looking at some of the political unrest down in South America right now and just wondering what you're seeing year-over-year in the early buys and season pass sales to some of those international customers.

Alex Maroccia: Hey, good afternoon, guys. Just one for me. I'm looking at some of the political unrest down in South America right now and just wondering what you're seeing year-over-year in the early buys and season pass sales to some of those international customers.

Yes, I don't.

Rob Katz: I don't think at this point, obviously, Mexico is a very important market for us. I think outside of Mexico, the other markets in Latin America are a little bit less important, especially over the last couple of years because Brazil has become a little less important. Some of the other countries have receded a bit, both with the strong US dollar and some of the challenges, I think, that we've seen in those economies over the last couple of years. I don't think in outside of Mexico, I don't think we see some of those other countries as being overall material at this point to present a trend. We're watching the same thing, but a little bit of a smaller impact probably to the company in the upcoming year.

I think at this point the obviously, Mexico is a very important market for us I think outside of Mexico. The other markets in Latin America, or a little bit less important, especially over the last couple of years, because Brazil has become a little less importance of any other countries have receded a bit both at the strong U.S. dollar and some of the challenges I think that we.

As seen in those economies over the last couple of years. So we don't I don't think and outside of Mexico, I don't think we see some of those other countries as being overall material at this point.

To present a trend.

So we're watching the same thing, but but a little bit of a smaller impact probably to the company in the upcoming year.

Got it all right that was it for me thanks.

[Analyst] (Berenberg): Got it. All right, that was it for me. Thanks.

Alex Maroccia: Got it. All right, that was it for me. Thanks.

Now here from Brent, Brett Andrus with Keybanc capital markets.

Operator: We'll now hear from Brett Andress with KeyBanc Capital Markets.

Hi, good afternoon.

Brett Andress: Hey, good afternoon. Just a quick question for me. On the December period, the one that caught most of us off guard last year, do you have any leading indicators that give you confidence that the early holiday period this year could improve, if not stabilize, versus last year?

Question for me.

On the December period.

The one that caught.

Most of US off guard last years, you have any leading indicators that give you confidence that the early holiday period this year could improve.

Stabilize versus last year.

Yes, I think.

Rob Katz: Yeah, I think, obviously, we stare at that and obviously include whatever indicators we have on that, certainly, in the decision we make about reaffirming guidance. At the same time, I would say we don't have perfect information. As we said, we have different logic indicators, but in some cases, they don't represent the totality of, by any stretch, of the market. Obviously, the pass sale piece, we certainly feel good about. On conditions, we feel good, but those are always going to be variables. What I'd say is, yeah, we obviously have taken the experience from last year and incorporated that in our thinking as we put out reaffirmed guidance this year. Of course, there's always going to be uncertainty no matter what.

Obviously, we think we stare at that and obviously include whatever indicators, we have on that certainly in the decision we make about reaffirming guidance.

But at the same Thomas I would say, we don't have perfect information as we said we have different logic indicators, but in some cases, they don't represent the totality.

Of.

By any stretch of the market.

Obviously, the past sale piece, we certainly feel good about.

And and on conditions, we feel we feel good but those are always going to be variable. So what I'd say, it's yeah. We obviously have taken the experience from last year.

And incorporated that in our thinking as we put out reaffirmed guidance this year.

But but of course, there's always going to be uncertainty no matter what.

Thank you.

Brett Andress: All right, thank you.

Thanks.

Rob Katz: Thanks.

Next we'll hear from Patrick Shoals with Suntrust.

Operator: Next, we'll hear from Patrick Scholes with SunTrust.

Hi.

Ryan Sundby: Hi. Good evening, Rob and Michael.

Patrick Scholes: Hi. Good evening, Rob and Michael.

Good evening Robin Michael.

Good evening.

[Analyst] (Berenberg): Good evening.

Rob Katz: Good evening.

Yeah.

Just pointed question one clarification, you talked about overall lodging bookings for the season.

Ryan Sundby: Just a point of or a question on clarification. You talked about overall lodging bookings for the season coming up are largely in line with prior year bookings. To be specific, is that just the occupancy on the books, and how does room rate, ADR, look for those bookings?

Patrick Scholes: Just a point of or a question on clarification. You talked about overall lodging bookings for the season coming up are largely in line with prior year bookings. To be specific, is that just the occupancy on the books, and how does room rate, ADR, look for those bookings?

Coming up are largely in line with prior year bookings.

To be specific is that just occupancy on the books and how does.

We're rate.

For those bookings.

So yes that commented is just about occupancy and room nights on the books and does not we're not commenting on on rate.

Rob Katz: Yeah, that comment is just about occupancy and room nights on the books and we're not commenting on rate.

Okay.

Ryan Sundby: Okay. Okay, I'll see. Okay, thank you. That's it.

Patrick Scholes: Okay. Okay, I'll see. Okay, thank you. That's it.

Okay, I'll Oh, okay. Thank you.

Thanks.

Rob Katz: Thanks.

Our next question will come from David Katz with Jefferies.

Operator: Our next question will come from David Katz with Jefferies.

People are in one form.

Brett Andress: Evening everyone. Congrats on the quarter.

David Katz: Evening everyone. Congrats on the quarter.

Quarter.

Thanks.

[Analyst] (Berenberg): Thanks.

Rob Katz: Thanks.

I wanted to ask about.

Brett Andress: I wanted to ask about kind of a longer-term growth. We have many discussions about what lies ahead on the M&A front in particular. We've talked in the past about maybe Europe, maybe Asia, and we've seen the acquisitions that you've made very productively in the domestic market. Where is your focus in terms of M&A going forward?

David Katz: I wanted to ask about kind of a longer-term growth. We have many discussions about what lies ahead on the M&A front in particular. We've talked in the past about maybe Europe, maybe Asia, and we've seen the acquisitions that you've made very productively in the domestic market. Where is your focus in terms of M&A going forward?

Kind of a longer term growth.

We have many discussions about what's.

What lies ahead.

On the M&A front in particular, and we've talked in the past about maybe you're going to ensure.

And we've seen the acquisitions that you've been very productively.

In the domestic market.

Where's your.

Yes in terms of M&A going forward.

Yes, well what I just would add I think not only I think have we been successful with our acquisitions.

Rob Katz: Well, one, I just would add, I think not only have we been successful with our acquisitions domestically in North America, but I think we've been very successful with the acquisitions in Australia that have been huge contributors, I think, to incremental growth, certainly, in the summer months. I think the pass opportunity in Australia has also been quite strong. I think there are going to be select opportunities in North America where we feel like we can continue to bolster the network. Then I think we are focused in Asia, particularly in Japan and certainly in Europe. I think we've been quite open that those are obviously tougher markets, obviously, to enter into, and we'll probably have to ultimately be more flexible in terms of our approach.

Domestically in North America, but I think we've been very successful with the acquisitions in Australia.

You know that have been huge contributors I think to incremental growth certainly in the in the summer months.

And I think.

Half opportunity in Australia has also been quite strong.

I think there are going to be select opportunities in North America, where we feel like we can continue to bolster the network.

And then I think we are focused in Asia.

Particularly in Japan, and certainly in Europe .

And I think we've been quite open that that those are obviously tougher markets.

Obviously to enter into and we'll probably have to ultimately be more flexible in terms of our approach.

But we also feel like there are both short term and long term opportunities in those markets from.

Rob Katz: We also feel like there are both short-term and long-term opportunities in those markets from passes, from using data in a better way, from the collaboration and partnership that I think we could bring to any of the resorts in those markets. No doubt it takes longer, and no doubt also, we've been preoccupied with a lot of things that we've been doing in North America over the last number of years. As we look to the future, we certainly see more, ultimately, on the opportunity front coming from outside North America.

Passes from using data and about away from the collaboration and partnership that I think we could bring to any of the resorts in those markets. So.

No doubt it takes longer and no doubt also.

We've been.

Preoccupied with a lot of things that we've been doing in North America for the last number of years, but but as we looked at a future we certainly see more ultimately.

On the opportunity front coming from outside North America.

Got it and I I did not know intend to suggest that the international acquisitions hasn't been all of the acquisitions.

Brett Andress: Got it. I did not intend to suggest that the international acquisitions haven't been. All of the acquisitions have been very, very productive. Rob, the last quarter, we went through the transcript, as I recall, and counted references to the economy. Irrespective and not asking you for a broad call on the economy, but what are your perceptions from what you're seeing in Vail's business in terms of just consumer appetite, strength, weakness, versus where it was 90 days ago?

David Katz: Got it. I did not intend to suggest that the international acquisitions haven't been. All of the acquisitions have been very, very productive. Rob, the last quarter, we went through the transcript, as I recall, and counted references to the economy. Irrespective and not asking you for a broad call on the economy, but what are your perceptions from what you're seeing in Vail's business in terms of just consumer appetite, strength, weakness, versus where it was 90 days ago?

Great very productive Rob the last quarter, we went through the transcripts as I recall and no counted references to the economy.

Irrespective and not asking you for a broad call on the economy, but what are your perceptions from what youre seeing in sales business.

In terms of just consumer appetite screen weakness versus where it was 90 days ago.

I don't know I think in the you in the us.

Rob Katz: I don't know. I think in the US, I'm not sure we're seeing a discernible change. I mean, I think that inside our business obviously, I'm reading the same stories and research reports that everybody is. In terms of inside our business, I'm not sure that we've seen necessarily a discernible change. I still think we feel certainly quite good about the trends that we're seeing in the US. I think on the international front, it's a little tougher, obviously, with stronger US dollar, with some instability in terms of what was mentioned earlier elsewhere in Europe. On that front, I think a little bit more unclear, but certainly, are not seeing, I think, a big enough change since the September call that it has affected our outlook for the season.

Im not sure we're seeing a discernible change I mean, I think that.

Inside our business, obviously I'm reading the same story than research reports that that everybody as but in terms of inside our business I'm not sure that we've seen necessarily a discernible change.

So I still think we feel certainly quite good about the trends that we're seeing in the U.S. pick on the international front, a little tougher obviously with stronger US dollar with what you know with some instability terms what was mentioned earlier.

Elsewhere in Europe .

So on that front, I think a little bit more unclear, but certainly.

And are not seeing I think a big enough change.

This September call that it.

That it has affected our outlook for the season.

Got it thanks very much.

Brett Andress: Got it. Thanks very much.

David Katz: Got it. Thanks very much.

Thanks.

Rob Katz: Thanks.

Next we'll hear from Ryan Sundby with William Blair.

Operator: Next, we'll hear from Ryan Sundby with William Blair.

Hi, Thanks for taking my question and congrats on the quarter.

Ryan Sundby: Yeah, hi. Thanks for taking my question and congrats on the quarter.

Thanks, Rob Rob I guess.

Rob Katz: Thanks. Rob, I guess, as you've kind of doubled your pass base, it feels like, over the last handful of years or so, are you starting to see any kind of on-mountain or maybe it's even off-mountain capacity constraints that are kind of preventing you from selling more passes going forward? I guess, second, when you look at kind of pass sales exceeding expectations for the year, could you maybe just point out what you thought was maybe the biggest upside driver or maybe one or two biggest upside drivers for where that upside came from? That'd be great. Thanks. Sure. We're not seeing capacity constraints, I think. In terms of on-mountain, I think there are only a handful of days, typically, in any year where we feel like we run into true capacity issues.

Kind of doubled your past base it feels like Overwatch handful years or so.

Are you starting to see any any on non or maybe it's even off non capacity constraints that are going to.

Pretty from selling more passive going forward.

And then I guess second when you look at kind of pass cells exceeding expectations for the year you, maybe just point out what you thought with maybe the biggest upside driver or maybe one or two big offensive drivers.

I would benefit came from it'd be great. Thanks.

Sure.

Not seen capacity constraints I think.

In terms of on mountain I think there are only a handful of days typically in any year that.

With that where we feel like we run into true capacity issues.

You know and often especially on the destination side really the capacity limit or is.

Rob Katz: Often, especially on the destination side, really, the capacity limiter is lodging and places for people to stay. At the moment, we're not concerned about that being something that would constrict our growth in the short term on the capacity side. I do think, though, obviously, that having dramatically grown, the pass program has really added tremendous stability and loyalty to our company, and that's something that I think bodes quite well for the long term. On the biggest upside driver, I would say probably 2 different pieces. One, I think we've already talked about, which is we certainly saw great strength on the Epic 2-Day and Epic 3 day, particularly, obviously, later in the selling cycle, which we knew was the potential opportunity.

Lodging.

And places for people to stay.

And so.

A moment I am not we're not concerned about that being.

Something that would constrict.

Our our growth in the short term out of capacity side.

I do think though obviously that having dramatically.

Growing to pass program has really added.

Tremendous stability and loyalty.

You know two to our company and that's something that I think bodes quite well for the long term.

On the biggest upside driver.

I would say probably two different pieces.

One I think we've already talked about which is we certainly.

Saw great strength on the haptic to an epic three day.

Particularly obviously later in the selling cycle, which we knew what the potential opportunity.

I think a lot of new people, both new to pass program prospects coming into the program. All of that was was quite positive I think the other piece was real strains in the epic and haptic local products.

Rob Katz: I think a lot of new people, both new to the pass program, prospects coming into the program, all of that was quite positive. I think the other piece was real strength in the Epic and Epic Local products. The fact that we saw both of those do quite well this year, yeah, again, I think speaks volumes to both the experience we offer, the design of the product, and how we market it and communicate with our guests about it. Yeah, all of those were strong positives this year.

So the fact that we saw both of those do quite well this year.

Yes, I got I think speaks volumes to both the experience we offer the design to the product and how we market and communicate with our guest about it so.

Yes, all of those where where were strong positive this year.

Great. Thanks.

Operator: Great. Thanks.

Ryan Sundby: Great. Thanks.

Thanks.

Rob Katz: Thanks.

My final question will come from Merck to rent tape with Wells Fargo.

Operator: Our final question will come from Marc Torrente with Wells Fargo.

Hey, guys. Thanks for taking your question congrats on the quarter.

Ryan Sundby: Hey, guys. Thanks for taking our questions. Congrats on the quarter. With Epic Day, any more detail you could provide on the makeup of those product sales, maybe days purchase, local versus destination, consumer type compared to your expectations originally? Are you able to tell, of those who previously purchased lift tickets, are they buying more days on that product since it's more affordable?

Marc Torrente: Hey, guys. Thanks for taking our questions. Congrats on the quarter. With Epic Day, any more detail you could provide on the makeup of those product sales, maybe days purchase, local versus destination, consumer type compared to your expectations originally? Are you able to tell, of those who previously purchased lift tickets, are they buying more days on that product since it's more affordable?

I think they any more detail you can provide on the makeup of those chronic sales maybe these purchases workovers destination and consumer type compared to your expectations. Originally and then are you able to tell as those who previously purchased lift tickets are they buying more days on that products more.

Trouble.

Yes, I would say on.

Rob Katz: Yeah, I would say on mostly aligned with what I've been sharing earlier, I think that obviously, in terms of versus our expectation, I would say pleasantly surprised by just the strength of the prospect market for that product. You just don't know when you go out with a new product how many people will come in who you don't have currently in your database. I think between that, people who, again, just knew to the pass program, all of that was a real positive. The strength of Epic Day Pass is very much in the destination markets, much more so than in the local markets. I think that may represent an opportunity as we go forward and again, as we continue to craft our marketing approach. Right now, it's very much a destination product, which is good because that's exactly where it was targeted towards.

You know, what mostly aligned with what I've been sharing earlier I think that the.

That obviously that in terms of versus our expectation I would say pleasantly.

Surprised by the just the strength of.

The prospect.

Market for that product, obviously, you just don't know when you out the new product how many people.

We will come in who you don't have currently in your database, so I think between that.

People, who again just new to the pass program all of that was a real positive the strength of epic day past is very much in the destination markets much more so than other local markets.

I think that that may represent an opportunity as we go forward and again as we.

Continue to craft, our marketing approach for right now, it's very much a destination product, which is good because that's that's exactly where it was targeted towards.

And we are seeing increases, but but hard to say I think well well, we'll kind of how probably have better insight on kind of the overall frequency improvement as we see this season, you know play out.

Rob Katz: We are seeing increases, but hard to say. I think we'll kind of probably have better insight on kind of the overall frequency improvement as we see this season play out. Right now, again, feeling good about the opportunity that we've provided people and the opportunity that it's given the company.

But but right now again feeling good about the opportunity that we provided people and and the opportunity that it's given the company.

Okay, Great and just one more now that you.

Ryan Sundby: Okay, great. Just one more. Now that you've owned Peak for a few additional months, what have you learned in terms of their strengths, weaknesses, needs, their pass program, data, etc.?

Marc Torrente: Okay, great. Just one more. Now that you've owned Peak for a few additional months, what have you learned in terms of their strengths, weaknesses, needs, their pass program, data, etc.?

For a few additional money.

What are you learned in terms of their strengths weaknesses.

The third pass program data et cetera.

I think.

Rob Katz: I think we've been, one, really impressed with the people. I think they've got a terrific employee base, incredibly passionate, very committed. Obviously, it's a big challenge to go through a transition like this, and I think they've been totally committed to the experience on the mountain and the gap. I think that was great to see. Their operations, their snowmaking expertise, also quite strong, obviously, very critical for many of their resorts. No surprise they have a real strength there. I think absolutely opportunities around data. I think they had a very good first couple of years with their new pass program, but obviously, are still early in that effort.

Then.

Really impressed with the people I.

I think they've got a terrific employee base incredibly passionate very committed obviously, it's a big Big challenge to go through a transition like this and I think they've been.

Totally committed to the experience on them out on the gas. So I think that that was great to see.

You know their operations there snowmaking.

Expertise also quite strong obviously very critical for many of their resorts.

No surprise, they ever real strength, there and I think absolutely opportunities around data I think they are you know how to very good first couple of years with their new pass program, but that obviously are still early in that operating so I think thats, an opportunity, especially for us for next year.

Rob Katz: I think that's an opportunity, especially for us for next year, as we can use a little bit of the tools that we have at our disposal and the team that we have here to use data better, capture data on a much more rigorous basis, and really broaden the kind of impact that they can have in the local markets that they serve. I think very much aligned with our expectations. Good resorts, run well. I think that they'll be a great addition to our broader mountain team and then a real opportunity for us to use a little bit more sophisticated approaches on the data marketing and many of the corporate functions. Obviously, we just have a little bit more history right behind us that we think can help to drive value.

As we can use.

A little bit of our tools that we have at our disposal and the team that we have here to use data better capture data on a much more rigorous.

Basis.

And really brought in the kind of impact that they can have in local markets that they serve so I think it very much aligned with our expectations.

Good resorts.

Run well I think that there will be a great addition to our broader mountain team and then a real opportunity for us to use a little bit more sophisticated approaches on the data.

Marketing and many of the corporate functions, obviously, we just have.

Just a little bit more history right behind us that we think can help to drive value.

Okay, great. Thank you.

Ryan Sundby: Okay, great. Thank you.

Marc Torrente: Okay, great. Thank you.

Thank you.

Rob Katz: Thank you.

That concludes today's question and answer session Howard I'll turn the conference over to Mr. cats for any additional closing remarks.

Operator: That will conclude today's question and answer session. I will now turn the conference over to Mr. Katz for any additional closing remarks.

Thank you operator. This concludes our fiscal 2021st quarter earnings call. Thanks to everyone, who joined US today. Please feel free to contact me or Michael directly should you have any further questions. Thank you for your time this afternoon and goodbye.

Rob Katz: Thank you, operator. This concludes our fiscal 2020 Q1 earnings call. Thanks to everyone who joined us today. Please feel free to contact me or Michael directly should you have any further questions. Thank you for your time this afternoon, and goodbye.

That does conclude today's conference. Thank you for your participation you may now disconnect.

Operator: That does conclude today's conference. Thank you for your participation. You may now disconnect.

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