Q2 2020 Earnings Call
Good day and welcome to the there was short second quarter fiscal 2020 earnings Conference call. Today's conference is being recorded.
At this time would like to turn the conference over to Mr. Cats. Please go ahead Sir.
Thank you good afternoon, everyone welcome to our second quarter fiscal 2020 earnings Conference call. Joining me on the call. This afternoon as Michael Barton, Our Chief Financial Officer before we begin let me 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 restaurant uncertainties as described in our assay seats.
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 920 20.
Undertake no duty to update them as actual events unfold. Today's remarks also include certain non-GAAP financial measures reconciliations of these matters 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 FCC in are also available on the Investor Relations section of our website at Www Dot fail resorts Dot com.
So with that said, let's turn to our second quarter fiscal 2020 results overall the see this had both areas of challenge and areas of strong performance Whistler Blackcomb Stephens pass our resorts in the Pacific Northwest experienced a was snowfall in over 30 years through December 31st 2019, resulting in very poor.
Our results to the early season and critical holiday period visitation at those resorts continued to be challenging and below our expectations in January with Whistler, blackcomb experiencing a weaker than expected recovery in north American and international destination visitation in total visitation across our Pacific Northwest resorts was down four.
18% compared to prior year for the second quarter.
After a challenging start in the early season destination guests visitation at our Western U.S. resorts improved significantly during the holiday period and was in line with our expectations. The improvement continued through January So Colorado was modestly below our expectations for the post holiday period, partially offset by strong performance at our parks.
City resort finally, our northeast resorts are off to a great start to the season supported by the continued benefit from our expanded northeast network, which has been partially offset by challenging weather variability across the Midwest resorts.
Including results from peak resorts total with revenue increased 8.2% driven by an 8.8% growth and skier visitation total effective ticket price decreased 0.5% in the second quarter compared to the prior year with price increases in both our lift ticket and season pass products offset by the inclusion of results from peak resorts, which.
Generates a lower effective ticket price excluding season pass holders and peak resorts effective ticket price increase 4% compared to the prior year ski school dining and retail in rental revenues increased 11.4%, 15.8% and 4.1% compared to the prior year, respectively, primarily driven by.
The inclusion of peak resorts now I would like to turn the call over to Michael to further desktop to further discuss our financial results and our season to date metrics.
Thanks, Rob and good afternoon, as Rob mentioned on the season has had areas of challenging strong performance in the second fiscal quarter resort net revenue was $924.4 million, an increase of 8.8% compared to the prior year resort reported EBITDA was $378.3 million an increase of five.
0.7% compared to the prior year.
Well 2022nd quarter resort reported EBITDA included $1.9 million of acquisition and integration related expenses and approximately $1 million favorability from currency translation, which the company calculated on a constant currency basis by applying current period foreign exchange rates to the prior period results.
Net income attributable to Vail resorts was $206.4 million or $5 in four cents per diluted share for the second quarter fiscal 2020, compared to net income of $206.3 million or $5 in two cents per diluted share for the same period in the prior year.
Fiscal 2022nd quarter net income included the after tax effective acquisition and integration related expenses of approximately $1.4 million.
Our balance sheet remains very strong we ended the second quarter with $126.8 million of cash on hand, and our net debt was 2.4 times trailing 12 months total reported EBITDA, though it is important to note that this ratio only includes peak resorts results for the period between closing at quarter end, and we expect that ratio to decline as we incorporate a full.
Europe results from peak resorts.
Turning now to our season to date metrics for the period from the beginning of the ski season through Sunday March 1st 2020 and for the prior year period through Sunday March 13 2019.
The reported ski season metrics are for our North American destination Mountain resorts and regional ski areas, including the results of peak resorts in both periods and excluding the results of our Australian ski areas in both periods.
Reported ski season metrics include growth for season pass revenue based on estimated fiscal 2020, North American season pass revenue compared to fiscal 2019, North American season pass revenue and the metrics are adjusted to eliminate the impact of foreign currency by applying current period exchange rates to the prior period for Whistler Blackcomb results.
This is interim period data and is subject to fiscal quarter end review on adjustments.
Total lift revenue, including unallocated portion of season pass revenue for each applicable period was up 0.8% compared to the prior year see some day period.
Our ski school revenue increased 2.8% dining revenue decreased 1.4% and resort retail and rental revenue decreased 0.6% all compared to the prior year season today period.
Total skier visits were down 5.2% compared to the prior year season today period.
Based on results through March 1st 2020 indicators for the remainder of the year as of that date and excluding any identified impact from Corona virus. We estimate the resort reported EBITDA for fiscal 2020 was expected to be approximately $20 million below the midpoint of the guidance range previously issued.
On January 17th 2020, Russia.
Merrily by the continuation of challenging visitation trends at our Pacific Northwest resorts throughout January and February and secondarily from results, our Colorado resorts there were modestly below our expectations in January and February partially offset by strong performance at our park City resort.
Given the uncertainty surrounding the impact of the Corona virus on the broader U.S. travel market and any specific impact to the performance of our company. We're not issuing guidance at this time for fiscal 2020, and our withdrawing our previous guidance issued on January 17th 2020.
And the week ended March eight 2020, we saw marked negative change in performance from the prior week with destination skier visits modestly below expectations.
And we expect this trend to continue and potentially worsen in upcoming weeks.
We intend to provide updated commentary on our results by March 18th 2020.
I'll now turn the call back over to Rob.
Thanks, Michael we remain confident in the strong cash flow generation and stability of our business model. We will continue to be disciplined stewards of our capital and remain committed to strategic high return on capital projects continuous investment in our people strategic acquisition opportunities and returning capital to our shareholders through our quarterly dividend.
And share repurchase plans, we're pleased to announce at the board of directors declared a quarterly cash dividend on Vail resorts common stock of $1.76 cents per share payable on April nine 2020 to shareholders of record on March 26 2020.
Given the current market instability caused by the Corona virus, we're deferring our decision on a dividend increase until June.
Moving to our calendar year 2020 capital plan, we remain committed to reinvesting in our resorts, creating an experience of a lifetime for our guests and generating strong returns for our shareholders. The company expects to invest approximately $155 million to $160 million, excluding onetime items associated with integrations the onetime.
Triple peaks and Stephens pass transformation plan onetime peak resorts capital improvements real estate related capital and $4 million of Reimbursable investments associated with an insurance recoveries that we had originally expected to recur in calendar 2019.
As previously announced the calendar year 2020 capital plan includes a rare opportunity do expand with a 250 acre lift serve to rate expansion in the signature Mcwhite Park area of Beaver Creek.
Further differentiating the resorts high end family focused experience.
We also plan to add a new for 4% high speed lift at Breckenridge to serve the popular peak seven replacement of the Peru lifted Keystone the six person high speed chairlift subject to government approvals and a significant 250 seat increase in the seating capacity at the round debut out large restaurant Wacko mountain.
We remain highly focused on investments that will further our companywide data driven approach, including the second phase of implementing our automated digital marketing platform that will allow us to aggregate a more holistic view of the gas that will drive improvements and personalization engagement across all lines of business, including ski school and rentals. We're also planning to completely rebuild.
Happen upgrade our digital ski rental online platforms, and our epic mix mobile App, which will offer new functionality and an improved user experience.
We plan to continue to invest in corporate infrastructure and technology to improve our scalability and efficiency, including the first phase of implementation of an automated workforce planning system to optimize our labor scheduling and improved financial systems to enhance business analytics.
We are planning to complete the $3 million initial phase of a two year $15 billion investment program across peak resorts. We're also planning to complete the second and final phase of a two year 35 million dollar investment program for crested Butte, chemo and Stephens path and planning to spend approximately $24 million on integration activities primarily.
Related to peak resorts, including onetime items associated with integration the onetime triple peaks and Stephens past transformation plan onetime peak resorts capital improvements real estate related capital and $4 million Reimbursable investments associated with insurance recoveries that we had originally expected to occur in calendar 2019, we expect our total cash.
A little plan to be approximately $210 million to $215 billion.
Turning now to season pass sales, which we recently launched for the 2020 2021, North American ski season.
Vail resorts is committed to providing the best value in skiing for all skiers and riders through its transformational epic pass and epic day past advance commitment products last year, we launched the epic day past, giving all skiers and riders the same value and flexibility available to season pass holders, even if they only plan to skier ride one day the epic pass provides on.
Every day past provides unparalleled value to all skiers and riders through discount of up to 50% of the lift ticket window prices by purchasing in advance of the ski season, we were very pleased with the success that the epic day past launch last year and expect to see continued growth in this product in its second season, as we convert existing lift ticket purchasers and new perspective guest.
Into advanced commitment products.
This year, we're transforming the breadth of value offered with our past products by providing our passholders truly epic discounts on their Mount experience with the introduction of Epic Mountain rewards.
2020, 2021, North American ski season pass holders will receive 20% off food and beverage lodging groups ski and ride school lessons equipment rentals, and more creating incremental savings or potentially hundreds of dollars per day for a family of for no. Other major cost product provides this level of across the board saved.
As for skiers and riders and with no sign up no point tracking and the blackout dates epic mountain rewards is designed to be as simple as possible.
Well resorts is uniquely positioned to offer this kind of across the board value to our guests through our integrated network of 37 owned and operated resorts.
The company expects the new offering will continue to drive conversion of our gas from purchasing lift tickets to purchasing and advanced commitment past product, where we see higher gas return rates and guest satisfaction.
The company's also delivering more value to our guests and key regional markets through the introduction of the northeast value pass and Whistler Blackcomb day past the northeast value pass offers unlimited skiing in the northeast for $599 for adults and $419 for college students with holiday restrictions that are Vermont in New York resorts and up to 10 days of access.
So.
Whistler Blackcomb day passes that discounted products sold in Canadian dollars that provides exclusive access to one of the world's Premier Mountain destinations. This new customizable path offers from one day to 10 days of access and is ideal for skiers and riders who may not need be unlimited access offered on a traditional season pass but are interested in the value of this.
Advanced commitment offerings.
First thing in advance of the ski season Whistler Blackcomb guests can scan ride for up to 50% off lift ticket window prices, providing all gas with the value flexibility and convenience that comes from being a passholder. The company expects both new path and we'll continue to drive conversion of our gas for purchasing lift tickets to purchasing and advanced commitment product finally important to highlight.
In the current moment that we remain focused on the health and safety of our guests and employees as we address the potential impacts of the Corona buyers. We are in contact with and following all recommendations and precautions from state and local health officials are resorts are fully open and operating normally with good conditions.
We understand that the current macro economic and business environment creates uncertainty for all of our stakeholders and it's a good time to remind everyone that the company remains on very sound financial footing with an incredible pass program World class, a resorts and the resources to ensure that we continue to make the right long term investments and do not let any temporary.
And in the broader markets take us away from those efforts. Most importantly, we have an incredibly committed team of people who understand how to provide an experience of a lifetime to our guests and to each other even when dealing with external challenges in many ways. We do this every day.
Of course this has been a trying time for many of our employees and we very much appreciate their incredible engagement and dedication gets what lies at our success.
At this time, Michael and I would be happy to answer your questions operator, we're ready for questions.
Thank you if you'd like to ask a question. Please see more pressing start wondering your telephone keypad, if you're using a speakerphone. Please make sure. Your mute function is turned out to life signal to share equipment.
Again that is star one if you'd like to ask a question.
Ticker first question from Felicia Hendrix from Barclays. Please go ahead.
Hi, Thanks, so much.
Thank you.
On the decision to kind of hold off on raising your dividends.
Given the strength of your balance sheet and.
Your prepared remarks, there you kind of highlighted.
During the business.
You guys narrowly.
Derivative improvement, but just wanted to hear a little bit more adapted decision there.
Yes, I think I think as we went into that decision I think the board has obviously looking at the macroeconomic trends, which seem to be shifting by the day the marketplace shifting quickly.
I think also a sense it obviously the.
Corona virus impacts are certainly being felt particularly within the travel industry and Thats, obviously the industry we're in.
And so I think there's a sense that we could.
We've had a very consistent track record of increasing the dividend, but we can wait a quarter to see how this plays out before making any different definitive decision on on an increase or the amount of increase.
Okay, and so really I would just be kind of like a change in the overall environment.
So.
Okay.
Wide.
Looking at decision that really what you're waiting for.
Yes, I think I think understanding I think theres, obviously, a lot of movement right now in the both in the obviously enough financial markets, but also just in the economic markets for travel and so I think my guess is probably within a few weeks or months it'll be things will actually.
Be a little bit more clear probably to everyone and certainly by the time to get to the June quarter. I think the board felt like they would be making a decision with a lot more information than they were making today.
And.
Obviously, it's tougher to to set that increase without really an understanding of where the economic environment is going to go and I think.
Given that it's at the moment at least seems to be changing by the day.
Yes, that's really Sarah.
With that in mind.
I'm totally understandable that you would draw your guidance given the uncertainty, but you still middle of the season left to go just wondering.
You are.
I've made a decision just wondering.
What it said in the press, we see what you said, but.
Suddenly seeing significant drop off.
Would you anticipate closing resorts early are there certain areas that are holding up better than others, you any kind of color that you could get to us that behind that decision.
Yes, I would say I think it's absolutely true that they're there there is not much many weeks left in the ski season, obviously, they are big we express spring break and Easter.
But of course, then we will.
No we won't be really our ski resorts really won't be operating in any major way after Easter.
At the moment, we are not.
In all changing any of our operating schedules and plan to keep all of our resorts opened their all open and operating normally.
We do not expect any change whatsoever in the experience that we want to provide to our guests and we'll be doing that.
But but certainly as we looked over the last week.
I think following the previous turbulence Rona virus, we started to see declines.
Coming off of I think some strength and actually some pretty positive indicators that we were seeing for March.
All of a set in a lot of those trends started to change and we talked about seeing modest.
Declines.
On visits and I think that in our minds.
As the week went on continue to worsen a bit.
And so a little bit unclear to us we would be sitting it's also though to your point about the fact that the season is coming to a close and a handful of weeks.
It is why we said that we would provide an update on current performance by the March 18th because we feel like we'll probably have some better sense. We may not have a final sense by then either.
And then I think that another piece for US is just a little bit of uncertainty as to how this will affect.
The north that northern Hemisphere summer, where we will have radar Australian resorts coming online, we'll have Grand Teton Lodge company.
Certainly coming on line, obviously all of that much less.
Impactful than our North American ski resorts, but but still go continue to be sump, certainly a lot more uncertainty than just a few weeks ago.
That's super helpful banks, and the like Anthony.
Where are you attribute this shortfall.
Faults seaport snowfall early season, and then kind of the lag effect from that but just wondering if you could sockets. We will have a demand soon from your Japanese clients out there.
And if that's been part of it.
Yes, I don't have I don't have us specific data that gave you on on Japan, but no doubt that the international business. There has been soft I think that.
I think we were hopeful to see more quick recovery.
And a pickup and just really did not see that occur.
And so that continue to be by far the biggest drag for us for this season.
Okay. Thank you so much.
Sure.
Thank you will hear from Shaun Kelley with Bank of America.
Hi, good afternoon, everyone.
Rob just maybe starting with the kind of a high level strategic question, but we've seen obviously fairly quick reaction across all their global stock markets or obviously, even in motion to travel landscape now some data around how quickly some of the behavior starting to change around kind of travel in the virus.
Yes, I mean, just but what's your instinct as the CEO and then and then you're experiencing your own industry.
Actually as we look forward more to the possible applications for pass sales. So do you think it's going to change purchasing behavior at all you know and just how do you think about it could be on one side, we have a very.
Insulated and.
Kind of thoughtful customer that you're able to drive a lot of renewal front on the other side. It's also very high end that's purchase for a lot of people. So can you just think about just probably we understand the operating impact upfront, but also just thinking about a little bit of the kind of the medium term here from a from a pass sales perspective.
Yeah, I guess I would say that's I think again I'll caveat all this by saying we're pretty early in understanding all the travel dynamics, but but I would say I think yeah, we'll be faced with two different dynamics, one dynamic will be just issues around travel itself because of Corona virus I think on that front obviously.
We're not going to be immune to that I am sure. We're not at same time, we do have a heavily domestic focus business.
And.
I think relative to other parts of travel I think that probably low in order to our benefit I think our season pass program is a huge strength and at a time like this.
And so I think battle in order to our benefit as we go through whatever we go through but again, we won't be immune to it I think the second piece is the economic impact of this and again on that I would say I also feel like.
We should fare relatively better than many other parts of travel.
We we have better supply demand characteristics in our industry.
We have continued to invest I.
I think our season pass program and now our epic Mountain rewards effort really is about delivering value.
And I think we will be absolutely pushing this message.
And I think very much like the epic pass.
When it was introduced back in 2008 was a with a terrific opportunity for the company as we went through 2008 2009 recession I think today, obviously, our past program as much much larger.
Perfect Mountain rewards program, I think we'll be that much stronger our data.
Much stronger the geographic piece that we have right now I mean, we're just going if we're going through some kind of slowdown of some of some sort I feel very good about the position that the companies and.
And I do think the pass will continue to remain incredibly attractive to people.
No doubt.
Lastly in a moment like this I'm sure you know for some buyers there'll be issues with making any purchases.
But again I think that the theres there'll be a short term impact from foreign buyers and then a longer term piece and I feel I'm not quite sure exactly what happens in the short term, but in the longer term actually feel the company's perfectly positioned for that you know even if it even if there are challenges.
Thank you for that and then maybe just turned to the numbers for one specific one on you obviously called out in the release.
At Colorado was modestly below expectations in.
In January I think it was sort of post holiday period that you specifically mentioned.
Just give a little bit more color there because obviously you provide you're you're lucky as of January 17th it doesn't need a lot of time at least as it relates to the kind of remaining period for the ended the quarter bike, but I think if some of this I know its factoring in probably be even the continued on into February. So can you just help us kind of isolate like.
What changed or what was going on there because it seemed like at least in what we had your January 17th Colorado was not an issue.
No I agree and I think we felt looking over the holiday period, we're not seeing an issue in Colorado and I think obviously had some disappointment about the early season not being as strong as the previous season, but the truth is I think we felt very good going into it and then as we came out of it I think we saw park city continue to perform very well and then we did see some sluggishness as hard to say.
Exactly what that was is that overall travel industry sluggishness that I think has continued throughout this year, even before we got to Corona virus is it the ski industry kind of Comping, a better year last year, I'd say cross our resorts, we saw more strengthen Beaver Creek, and Keystone and a softer results invoice.
Alan Breckenridge, so wasn't really completely across the board, but it was enough that it added to the issue. The primary issue again was Whistler Blackcomb at this there was definitely a gap there as well that added to our performance I'd say in the totality of the year.
Not that significant button, but certainly in terms of what we were expecting coming out of.
The holidays.
Meaningful and I'd also say that as we're going into the March period, Val had some of the strongest indicators of any of our resorts going into both margin Easter at this point not sure that we'll get a chance to test those out and see what those would have been but there's also one of the things we highlighted in the queue is we have seen a real shift in visitation from Q2 to <unk>.
Q3, we've actually we're now allocating pass revenue more to Q3 in Q2 and get more information on that in the queue, but but and that's because we have seen right visitation coming later in the season. We saw this last year too with a very strong finish to the season, particularly in Colorado says there could be some of that shifting but but at this point I'm not sure will be.
But I completely assessed that given current of ours.
Thank you for for all the color appreciate it.
[music].
Thank you we'll take our next question from Chris Woronka with Deutsche Bank.
Hey, good revenue does.
Want to ask you and I know Gn store early in the process some to the virus fall output.
At some point would you guys make a decision to extend kind of your early season purchase theater, maybe throw in additional plans or what's going to be kind of your indicator to thank you, Mike up off or something.
You are different this year.
Well I think we feel.
That epic Mountain rewards is is very new and very different right. It really it offers a 20% discount to pass holders on.
On.
Group Ski school lodging and rental that's a pretty powerful offer and we absolutely intend to ensure that our guests understand that both our existing gas and perspective guests. So we feel like this is.
Again, we given the current and obviously this this program has been in planning for awhile, but but we think it's perfect because we actually wanted to lean into a much stronger value message for the path. So we feel very good about that we have no plans at this point to change any of our dates of deadline.
But I guess certainly like everything in the World right now things are moving quickly so always hard to tell but at this point.
No no change to the operations of any of our resorts are any of our normal past deadline.
Okay.
Fair enough appreciate that and then follow up what's kind of on that on that you.
The per 20% discount.
Pass holders is that.
I guess the question is really how do we think about that financially in terms of how you underwrote.
What you guys hope in terms of more volume more pass sales et cetera, just what the financial impact might be the way you initially sought going.
We feel.
That theres a couple of pieces, obviously theres the discount itself and obviously for existing pass holders who were currently using those products.
There will be a discount that that cost to us obviously I think pass holders and we've shared this before you know with folks tend to purchase less of these ancillary products than than lift ticket buyers and especially many of our local pass holders.
Don't have the same engagement rate with a lot of these businesses that you know that our destination guests do and so in some ways. We feel like there is also going to be incrementality on this in terms of actually this discount providing an incentive for people to actually engaged with ski school rental and FNB.
To either when they haven't before or obviously just up sell in the moment in terms of buying more product and so we think when you look at those two things plus the opportunity to drive more people into the program to convert existing lift ticket buyers into the program to take prospects new people to Vail resorts into the program.
We think all of that as a real positive and then I think are on the lodging side. It's a great offer in terms of the 20%.
But it also right does need to be a direct booking to the company when you.
To get that it's obviously that to eliminate for US a lot of the OTA and other indirect commissions that we have to pay and in many of these businesses like rental white lodging.
We are competing in the marketplace and this gives us a very compelling opportunity for that I think on on on the group Ski school and on food, we really have an opportunity I think to drive capture.
You know again, we looked at it obviously felt like it was a very compelling proposition.
Okay.
Thanks, Rob.
Yes. Thank you.
Thank you we'll take our next question from Ryan soon be with William Blair.
Hi, Thanks for taking my question.
Just wanted to follow up on on Felicia's question on kind of bounce this season.
Is there anyway, you can help us just from a kind of a framework standpoint, I think about what what what's left in terms of visitation or profitability from kind of the weaker March eight on.
And then second I guess.
If you look out and if we do see some kind of larger impact in terms of skier visitation can you maybe just walk us through what kind of levers you have on them down to maybe manager.
Bigger pullback visitation. Thanks.
Yes, I think I.
I can't really give guidance.
To parse through kind of different points in the season, obviously I think you have a sense for.
Historically Q2 Q3, so you can obviously look at that.
But but I would say spring break and Easter is an important time period for us so.
I think it is it's true that that that it's this is happening towards the end of our season, but it's also still.
Impacting an important part of the season.
Yeah, I really wouldn't see we are going to be providing a full comprehensive experience at all of our resorts.
Throughout this time period, we are not going to be pulling back on any component of it.
I think if we do see some.
Some pull back on the revenue side, a lot of that will fall to the bottom line. This just obviously, we want to ensure that whoever comes to our resorts has an outstanding experience.
At this point not something that that that we're looking to.
And again I think we're also anticipating that yeah. Our resorts are going to continue not fully operate normally and providing the best experience possible to our guest.
Great and then just on that that $11 million shifts in the past allocation.
I think there with the sales if it is it fair to think about drops straight out of profits or is there are some offset there.
Yes, yes, largely drops through I mean this as.
Incremental.
We're not incremental it's it's how we allocate our our past revenue and so it's really just a shift between Q2 in Q3 doesn't affect the overall.
Year, but really is just as Rob said a reflection of.
The historical shift in visitation that we've seen.
Moving more visits into the spring break and Easter period.
Okay. Thanks.
Sure.
Thank you will not take a next question from rubber and with Keybanc capital markets.
Hi, Thank you Rob RM done for Brett Andress today I'd like to start you talked about the slowdown during the weekend in March 8th.
The difference to call out between destination in non destination resorts.
I would say actually.
And maybe this as mentioned earlier and I know that I fully answered it but yes, we're not it is not the exact amount of impact across every single resorts that we're definitely seeing fluctuations, but I part that's just normal fluctuations between our regions.
And so I don't want to get into kind of parsing parsing. It apart, but I think overall, we're definitely seeing.
Certainly on the destination visit side right.
That that kind of modest decline and then but that's something that's been increasing.
As the days go on and and you know in our mind, just given some of the media itself and that.
The chatter.
We expect to likely continue and obviously potentially get worse, we don't we don't know at this point yet.
Okay, and then can you give us any color on forward booking trends, you're seeing and I guess fix that you're seeing cancellations and to the extent GRC cancellations kind of domestic cancellation versus international cancellations.
Yes, I think I think that at the same time that we from if I look back to last weekend. So that kind of March 1st second time period also saw kind of a slowdown in bookings.
An increase in cancellations.
Both now I would say that that the trending also yes definitely wet wet weather markedly more negative for sure and the absolute numbers compared to kind of occupancy over the next couple of weeks you know is not.
It's not huge either because obviously as you would imagine at this point in the year, we do have right a fair amount of occupancy already booked into most of our properties.
So, but certainly the trending doesn't look good but I'd when.
I would imagine if that continued yes, it'll have a bigger impact as you get later into margin into Easter. If it continues and again I don't know whether it well.
Alright, Thank you very much.
There.
Thank you will not take our next question from Alex smoking ban Burke.
Hey, good afternoon, guys. Thanks for taking the questions.
It was pretty sad to see the damage to areas around the Australian resorts as well as some of your peers given a loss of the infrastructure and the evacuation in that area are you seeing any issues that could come early in a 2020 season, whether it's an inability to propel properly or just a lack of demand.
No we're not seeing any don't expect any operational issues.
From the fires down there in their summer.
And expect to be fully fully operational and ready to go for the ski season.
On the demand side I think at this point.
You know in the absence of Corona virus, and and and oil prices and things like that certainly.
I think we.
Mike might there've been some input economic activity impact for all of Australia because of the fires potentially but I don't think we were thinking that was going to be a huge issue going into.
In July and August I think at this point I harder for me to tell exactly how the current economic environment is going to around Corona virus and natural resources, how that will affect Australia.
I think thats just too early to tell at this point.
All right. So it all makes sense. Thanks, and then secondly peak resorts mountain fall pretty minimal amount of snow. This one or can you discuss if there any major increases in cost associated with snowmaking and then if you saw the function attendance at some of the larger mountains.
Yeah actually we're quite pleased with how how we've done with with peak in its first year, obviously, we're still in the process of integrating the resorts. So.
In that process, but.
But certainly pleased with how it did relative to the portfolio of resorts that make up peak certainly a strong years, we called out in terms of the northeast resorts.
Including our.
Existing resorts in the northeast offset a bit by.
Weaker snowfalls as you mentioned in the Midwest that had some some more operational disruptions that offset some of that favorability in the northeast.
Hi, Thanks for the color guys.
Sure. Thanks.
Thank you you know from Patrick Scholes with Suntrust.
Hi, good afternoon gentlemen.
I apologize if I missed it are you able to quantify what impact would be for now to the end of the ski school ski season change that April 19th Dale.
The trends.
Some of the virus that you've seen over the past week will continue to that point.
Yes, I think where we're intentionally not.
Not commenting on guidance for the rest of the season or the rest of year for that matter.
Because of the uncertainty in that it's I don't think there's a there's not a simple way to take the trend from the last week and understand and parse it well enough because even in the last week I think we saw shifting and I think it'll definitely take us a little more time to assess that.
I think where we're hopeful.
To provide more color.
Around this.
Before the before March 18th.
But again I don't even at that point, obviously, it will somewhat depend on whats happening, but at a minimum we'll be able to provide a little more color like we have today on kind of the actual results were seeing.
Okay. Thank you and then my second question here.
What about the go there were some negative Wes.
And.
So I like videos, showing what would your excessive.
Lets lines at some of your chairs Vale.
Do you see that it sort of a one time one off of bad or are you going to be taking steps or specifically, what the future to prevent that or does just the limitation to probably caused people to go through the tunnels sort of Karabakh problem with overcrowding itself.
Yes, no I think.
You know, obviously very aware of that situation and.
I think there are two kind of different pieces to it one piece was a long line earlier in the morning at the gone back onto a one.
Huge powder day people kind of lining up really to get on and go up skiing that line really dissipated relatively quickly not that long into the day I think thats something that got a one is a very high capacity gondola, we feel good about that and you know on huge powder day, sometimes we're going to get a little bit of that line.
Not as concerning I think the line of chair five was definitely a yes, not a great guest experience.
That's probably you know on an understatement, obviously not something that we.
Oh.
Want to have happened for any of our guests at the same time you know we had again this huge powder day, and unfortunately didnt have the opportunity to open more of our terrain. So we only have that area opened one of our guest service folks were kind of up.
As people were scaling down trying to alert and that the line was going to be pretty big when they got to the bottom.
And I think our takeaway from that is it yet that was a very one off situation.
Really the snow cycle that created that was was.
One of a handful over the last decade or more in terms of the intensity of it.
And but but I do think we take away from I guess communication I think we have responsibility to be out front with our gas.
And I think one of the things were currently talking about is how do we have a.
A singular effort that make sure that every guest knows exactly what to expect when and where.
And that's something that we're going to absolutely be continuing to improve upon and we'll make sure I will be more dialed in for next year.
Okay. Thank you very much that's it.
Thanks.
Thank you move on to David Katz with Jefferies.
Hi, good afternoon, everyone.
Hi.
Thank you for the impose a kanders always is greatly appreciated.
As we're sitting here trying to.
You know work with our model for the rest of this year can you help us just talk about what aspects within the mountain segment.
Breakdown between fixed and variable expenses and help us think through.
That aspect of it.
Sure I think obviously for US we have a.
Hey.
I think we have at a number of pieces to it. So obviously, we've got the revenue piece.
To the extent that goes down we have things like credit card fees and U.S. fire service fees that will come down as that goes down.
We have lower ski school usage, then obviously the ski school labor piece would come down if we have lower.
Retail sales are lower food sales and obviously you know how savings on cost of goods, but a lot of the other components of the resort are either actually fixed like utilities or overhead or essentially fixed which as most of our seasonal population that we need to really opened the mountain Amit So theres not a.
On that that we would do to reduce any of that because we want to ensure that we have the best experience for our guests.
And that's something that we do all season long and we're not going to pull back from that at all.
And.
So I do see as you look through it. We also obviously have a large component of our bar revenue that season pass revenue.
And so that portion of the revenue is.
It is really fixed as well and somewhat locked in and so really the question. As you are paid lift ticket revenue kind of daily lift ticket revenue plus.
Any ancillary uptick when people are there.
That's helpful to provide a basic overview.
It is it is helpful can I, if you don't mind I'd like to just following up a bit more directly it it it sounds as though.
More than half meaningfully more than half of the total cost space that we look out is.
Have a more fixed nature with the remainder being variable with whatever revenue.
We wind up with.
Yes, I think.
To put a finer point on it.
Yeah, I think as Rob articulated there's there's aspects of our cost structure, which are outlined in our financial statements and two including cost of goods sold.
And that are highly variable, but for the most for the remainder of our labor is not outside of some some circumstances with businesses like seasonal or otherwise, but as Rob articulated the majority of our cost structure is labor and yes, a a good portion of that in the short term is a yes.
As a fixed cost of of running the.
The operations.
Got it perfect. Thank you very much appreciate it.
Thank you.
Thank you will hear now from Mark to Hunt with Wells Fargo Securities.
Hey, good afternoon, thanks for taking her question today.
So prior to the impact of crooner buyers, how was international visitation trending.
Maybe from the major source markets, Japan, and Australia South America.
I think in the us.
The international business has declined over the last number of years largely because of.
Strong U.S. dollar travel restrictions and challenges I think being another component.
So I think it was.
Soft, but but not material driver our of our US performance I think it with our was.
Definitely.
Decline this year.
A large part of that has been the weather I think another component of it has been there we've definitely seen as the cost and in Whistler, but not really partially what tickets, but really about the total vacation costs of logic and other pieces.
Definitely seeing some shifting there, but but I would say.
The primary driver on international visitation to the company's Whistler and the primary driver of that was really conditions.
Okay.
Have you look favorable business.
How does that impact.
Visitation.
For the next year.
After that.
I think we've seen.
A variety of different examples going back I think you know we have seen.
I think I think of time, though as a good example, which had some chow very challenging year like you know in 2014 2015, but then with good conditions came roaring back and we saw all the demand come back. So we do tend to see a pretty.
Strong rebound from that.
I think you know sometimes you know there there could be a lag effect as it relates to advanced bookings are passed out things like that but can we have tended to again historically navigate through that without really seeing that immediate impact.
I do think you know one of the things that we are seeing though is that early season versus late season, which as it does seem to be some migration from the early season, so late season, which I.
I think absolutely could be about conditions, which obviously over the last number of years have been much more reliable in the late season.
With Terrata buyers not sure we're going to be able to assess that again exactly this year, but certainly when you look back over the last couple of years that's been a.
Constant trend, but again have not seen.
Any longer term degradation because of back conditions in one region or another.
Okay, Great and then just lastly, you did provide some commentary on capital allocation going through this market volatility I don't think you repurchasing shares during the quarter.
Should we expect you guys and step in more here and then.
This change your view on M&A near term.
Yes, I think on.
Obviously every quarter, we assessed that with the board and so we'll be doing that again this quarter, but I really can't comment but beyond that.
And now where I think we remain one of the things we wanted to make sure comes across as remain fully committed to investing in our resorts for the long term.
And strategic opportunities when when they make sense and we're going to continue to be aggressive on that front, obviously disciplined and thoughtful on value and all the rest of it just like we always are.
And.
But obviously, we yeah, we're going to look for those unique opportunities in absolutely still pursue them.
Okay. Thanks, guys.
Thanks, Thank you.
Thank you we'll take the next question from our final question from Brad Boyd with Stifel.
Yeah. Thanks for putting good guys. So just to expand on the M&A question Rob.
As we look at it here historically over the last several years. This has been a pretty good seasonal.
Time to get involved with the stock and I think some of that coincides with the fact that you guys execute a lot of your M&A in the off season period.
So as you sort of the landscape today, you, obviously you built out.
The lower end by kind of going in and doing the p. deal last year and getting closer to the customer you guys are in almost every major city market here in North America. Today can you just give us a sense of is there anything out there sort of looks like a strategic priority on the M&A from here as we look at it today are there any regions, where you'd like to have more exposure.
Sure.
Would you like to have more exposure in sort of the regional ski business just any additional color you could provide around that would be helpful.
Yeah, I think that there.
It's definitely going to be I think strategic opportunities select opportunities in North America, whether you know it could be a destination resort or could be a regional resort. Obviously, that's something you know.
You're right I think we were also very cognizant of the fact that we have a very strong network right now and a lot of our focus actually is on integrating and ensuring that we get the maximum benefit of the network that we already have but theres no doubt that there are a handful of opportunities. We would always pursue we still remain very focused on.
Opportunities in Japan are opportunities and.
In Europe.
And so all of that is still very very true, but yeah, we're going to remain disciplined and disciplined and focused in the context of whatever the environment is that we're operating in.
But it but I would say you know that a lot of our foot.
Kind of where we're putting a lot of our attention is actually really leveraging the network that we built moving people to advance commitment and kind of this business shifts that we've been going through over the last number of years. If there's some huge we've seen huge benefits you know over a number of years in moving kind of from where we were in season pass number of years ago to where we are today.
But theres a whole kind of new set of benefits that we can actually get by moving to kind of a whole motor level and we think even in a more challenging economic we're travel environment, we think that opportunity still excess.
And still represents a major opportunity for us because of the focus that people will have on value in our ability to deliver on that.
And so we'll be thoughtful about M&A as to where it can really help in that strategy just like we always out there.
Helpful. And then Michael just a housekeeping item could you remind us what you have left on the existing authorization on the buyback front. That's all for me. Thanks.
Yeah, I'll have to opt to go look that up and get back to you on the specific number of shares.
Okay. Thanks, a lot guys appreciate it.
It's actually just a follow up on that we have about one and a half million.
Shares remaining.
Thank you and that does conclude today's question answer session. Please turn the conference back over to Mr. cats for any additional for closing remarks.
Thank you operator. This concludes our fiscal second quarter 2020 earnings call. Thanks to everyone, who joined US today on the conference call. 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 all through participation you may now disconnect.
HM.
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