Q3 2020 Vail Resorts Inc Earnings Call

Sure.

It was sourced third quarter fiscal 2020 earnings conference call at this time or something to date.

Away shortly I appreciate your patience simply certainly another one.

[music].

Please standby.

Good day look into the field resources third quarter fiscal 2020 earnings Conference call. Today's conference is being recorded at this time, let's turn the converts over to Mr. Cats. Please go ahead Sir.

Thank you good afternoon, everyone welcome to our third quarter fiscal 2020, <unk> earnings Conference call. Joining me on the call. This afternoon is Michael Barton, Our Chief Financial Officer before you begin to remind you that some information provided during this call may include forward looking statements are based on certain assumptions that are subject to a number of risks and uncertainties.

As described in our FCC filings actual future results may vary materially forward looking statements. Our press release issued this afternoon, along with our remarks on this call are made US up today June 420, 2020, and we undertake no duty to update them as actual events unfold. Today's remarks also include certain non-GAAP financial measures.

Reconciliations of these measures are provided in the tables included with our press release, which along with our quarterly report on form 10-Q were filed this afternoon with the FCC and are also available on the Investor Relations section of our website at Www Dot del resorts Dot com.

So with that said, let's turn to our third quarter fiscal 2020 results.

Thanks for the quarter and for the full 2019 2020, North American ski season were significantly impacted by Cobot 19, and the resulting closure of our North American Mountain resorts, beginning March 15th 2020.

Decision, we made for the safety of our gas employees and resort communities. In addition, even before the closure and during the first two weeks of March we experienced the negative change in performance that we believe was due to the impact of cobot 19 on traveler behavior.

At March 18th 2020, we anticipated that our operating result in March and April would be negatively impacted by $180 million to $200 million compared to the resort reported EBITDA expectation, we had our March 1st 2020.

Relative to these expectations our results were favorable by approximately $40 million, primarily driven by cost actions implemented in April 2020.

Addition, resort reported EBITDA for the quarter was negatively impacted by the deferral of approximately $113 million a pass product revenue and related deferred cost to fiscal 2021 as a result of Passholder credits offered to 2019 2020, North American pass holders to encourage renewed.

Well for next season.

Looking ahead to our summer operations, we're planning to be operational for the North American Summer and Australian ski season in late June or early July which could vary by resort and opening dates for each business are subject to new information and public health guidance with regard to cope with 19.

We expected our results in the fourth quarter fiscal 2020 will be materially negatively impacted by the travel environment, and we will see lower visitation to our resort properties.

However, we are not able to fully assessed that impact at this time I will not be issuing guidance for the fourth quarter for fiscal year.

We believe we have developed efficient operating plans to deliver a safe and enjoyable guest experience at our resorts. This summer in North America and for the Australian ski season, with the ability to adjust as consumer demand and local guidelines and practices shift.

Now I'd like to turn the call over to Michael to further discuss our financial results balance sheet and liquidity.

Thanks, Robin and good afternoon, everyone.

As Rob mentioned our results for the quarter were significantly impacted by October 19, and the resulting closure of our North American Mountain resorts.

Resort reported EBITDA was $304.4 million for the third fiscal quarter of 2020 compared to resort reported EBITDA of $480.7 million for the same period in the prior year, primarily as result of the negative impacts of cobot 19, offset by cost actions implemented.

Net income attributable to that resorts was $152.5 million or $3.74 per diluted share for the third quarter fiscal 2020, compared to net income of $292.1 billion or $7 in 12 cents per diluted share the same period in the prior year.

We expect to have sufficient liquidity to support our business as we continue to navigate the impacts of cobot 19, with total cash and revolver availability as of May 31st 2020 of approximately $1.1 billion with $465 million of cash on hand $419 million.

You asked revolver availability under the Vale Holdings credit agreement and $168 million of revolver availability under the Whistler credit agreement.

As of April Thirtyth 2020, our net debt was 3.6 times trailing 12 months total reported EBITDA.

In April one day, we implemented plans to support our liquidity, including completing an offering of $600 million of six in a quarter percent unsecured notes due 2000 2020 2025.

A portion of which was utilized to pay down the outstanding balance of our U.S. revolver under the belt holdings credit agreement in its entirety.

Additionally, we implemented plans to support our liquidity by reducing our capital plan for calendar year 2020 by approximately $80 million to $85 million suspending cash dividends to shareholders for two quarters, which preserves an additional $142 million of liquidity.

Following a significant number of or year round hourly and salaried employees in the U.S. and implementing six months salary reductions for all salaried employees in the U.S. among other cost actions.

The company is also recognized approximately $9 million of labor cost offsets in the third fiscal quarter associated with the U.S. Cures Act, Canada emergency wage subsidy and Australian job keeper legislation.

Additionally, we entered into an amendment to the they'll holdings credit agreement, providing among other terms the bell holdings will be exempt from complying with the agreements financial maintenance covenants for each of the fiscal quarters ending July 31st 2020 through January 31st 2022, unless fell holding make bell holdings makes a onetime.

You were vocal election to terminate such exemption off period prior to such date.

We expect to have sufficient liquidity. Following these actions to fund our operations for up to two years, even in the extent.

All of our extended resort shutdowns.

During the third fiscal quarter, the company paid a cash dividend of approximately $70.7 million or $1.76 cents per share a common stock.

Additionally, we repurchased approximately $25 million or stock at an average price of $155.33 per share, which was completed by March 13, 2020. Subsequent to these events, we suspended or cash dividend for a minimum of two quarters.

I'll now turn the call back over to Rob.

Thanks, Michael as announced on April 27th 2020 to address the difficult decision to close our North American Mountain resorts as a result of the unprecedented circumstances surrounding covert 19, we've rolled out a comprehensive plan to address our powerful those concerns about the early closure this past season.

And provide improved coverage for the future.

We are providing credits to 2019 2020, North American pass holders to apply towards the purchase of a 2020 2021 pass product.

Season pass holders will receive a minimum credit of 20% towards next season's path for season pass holders, who use their past less than five days they will be eligible for higher credits up to a maximum of 80% for season pass holders, who did not use their season pass at all for epic day past edge card and other frequency based products with unused.

Days remaining who will be offering credits for each on these day up to a maximum of an 80% credit the credits will be available for our pass holders, who purchased 2020 2021 pass products by September 720 20.

As a result to be early closure this season and the meaningful credits. We are offering to 2019 2020, North American pass holders will be the laying the recognition of approximately $121 billion of our deferred pass revenue as well as approximately $3 million of related deferred costs that would've been recognized in the remainder of fiscal 22.

And we'll now be recognized primarily in the second and third quarters of fiscal 2021.

Shifting recognition timing will partially or fully offset the negative impact of the credits being offered to pass holders depending upon the final usage of such credits towards the purchase of 2020 2021, North American pass products.

We are redefining how we will protect season passes through the launch of the epic coverage.

Coverages free for all North American pass holders and completely replaces the need to purchase path insurance epic coverage provides refunds and the unlikely event of certain resort closures, including for covert 19, giving passholders a refund for any portion of the season that is lost. Additionally, epic coverage provides a refund for personal circumstance.

This is covered by our Pops insurance for eligible injuries job losses, and many other personal events.

Given the uncertainty surrounded cobot 19, and the broader economy, we feel it is important to give our pass holders the time they need to make decisions regarding next season, and we have very intentionally delayed having any call to action around price increases benefit reductions or credit expirations.

While we had been the leader in moving past purchases earlier and earlier in the cycle.

Critical feature for US is that they are bought before the season really begins and in this moment with all that is going on in the world. We feel labor day is a much better time to have a conversation with our passholders about next season, and we'll continue to monitor things as we get to the fall and continue to be agile if necessary as it.

Results, we eliminated our traditional spring deadlines and are providing passholders until September 720, 20 to use their 2019 2020 credit and to receive spring benefits, including Buddy tickets. We're also extending the period for pass holders to lock in their purchase with only $49 down for the next few months.

As a result of moving our first deadline to September we will not be providing an update on the results of season pass sales until our fourth quarter earnings conference call in late September.

We plan to open Perisher false Creek and hop them in Australia for skiing and snowboarding on June 24th following approval by the New South Wales, and Victoria governments.

Given the current dynamics, we extended the final past payment date for the epic Australia path and plan to provide more information to our gas about the upcoming operations. This season by June 15th.

As well as any new pass options that will address coping 19 impacts on our season.

Pass holders and Australia will then have the option to request a refund of all payments made towards their epic, Australia pass and pass refund protection for move forward with a new pass product given the delayed openings in the uncertainty caused by the proximity of the Australian season to broader reopening plans to the Australian economy, we anticipate.

Having greater clarity on operations and pastels heading into the North American ski season. This fall.

As we plan to reopen our operations in late June or early July we remain focused on developing safe operating plans in consultation with industry and government leaders, which will include social distancing Messrs enhance cleaning PERC protocols and necessary changes to regularly offered programs and services.

We believe we are uniquely positioned within the travel industry, the travel industry to deliver a safe high quality guest experience.

Our strong network of resorts provide unparalleled outdoor experiences that are located within drive to proximity of major population centers in the U.S., Canada and Australia.

We believe that this will be a significant advantage. This summer and next ski season with expectations that outdoor experiences and drive to leisure travel will be an early area of recovery relative to broader travel demand.

In addition, with the exception of Whistler Blackcomb, the vast majority of the gas to all of our resorts, our domestic travelers and while more internationally focused Whistler Blackcomb also has a very strong domestic guest base, representing approximately 50% of its visits in fiscal 2019.

In addition, our ability to leverage our guests data targeted digital marketing efforts and broad <unk> product offering, including the introduction of epic mountain rewards and its associated discounts on the full ski vacation experience.

Will position us well as travel recovers.

We continue to be confident of long term prospects of our business model that is built on the loyalty Vargas. The strong lineup of season pass products that provide access to our irreplaceable network of World class resorts in the sophisticated marketing approach, we use to communicate with and attract our guests.

We'll be focused on providing a safe and exceptional experience for our gas through our passionate employees and the investments we've made in our resorts and technology.

Supported by our strong capitalization and liquidity that positions us well positions us well to pursue our growth goals overtime.

I'm incredibly grateful for the commitment and loyalty of our teams.

I would like to thank all of our employees and particularly our employees on furlough for their continued passion and dedication during this time.

We're constantly evaluating the situation with the goal of getting our employees back to work as soon as feasible as we look towards the North American Summer the Australia ski season Australian ski season and beyond.

At this time, Michael and I would be happy to answer your questions. Operator, we're now ready for questions.

Thank you it would like to ask the question to signal by pressing star one on your telephone keypad, if you're using a speaker phone. Please make sure mute function is turned off to a lot of Smartreach our equipment again press star one to ask a question.

Well take our first question, Dave from Felicia Hendrix with Barclays.

Hi, good afternoon, it's good to hear the both you and it's just wondering if you could walk us through what the post Colgate 19 ski experience looks like.

And are you seeing any demand at all three then Nick Pcs and I know you said you would get more season pass color in mid September called but are there any ah data points you can share regarding season pass.

Oh Wow.

Ah yes, good to hear you to Felicia I mean, I think at this point. It would you know I think we're very much in a constantly moving environment in terms of exactly what they ski experience will look like right. Now we're focused on in terms of ski experience in Australia, where you know I think at this point they'll certainly be a limitation on the total.

Passes the of the resort to ensure that we protect social different thing on but at the same time or were very confident that we can provide a terrific experience for people who calm.

And our teams are working hard to kind of put all the details together and we'll be sharing that you know over the next you know we did 10 days and then that'll give us I think some very unique insight.

We'll be able to use as we plan a the north American ski season next year and so we are going to be closely monitoring every piece of our the experience that our three resorts.

And we intend to obviously too hot to of course look to improve right. Each week of the ski season every single part obviously this is new for all of us.

But we do have the opportunity through over the next couple of months to continue to find ways to.

Yeah, just improve.

Spanned <unk> and protect right I guess I in every single aspect of what we do and and we really do believe that by the end of that we'll be in a terrific position for next year, but of course some of that will remain based on you know terms of some of the particulars will remain based on whatever the local guidelines and local restrictions are at the time.

I I do feel though you know as we said in her comments that the fact that you know the core part of our experience has an outdoor experience over a very wide.

A piece of ground that that allows people to really spread out and then our focus will be on those pinch points certainly inside of our restaurants and lift line, a and certainly as people enter the resort art, our job will be to make sure that we can maintain social distancing, while still giving people a great experience.

And eat early data points, you might have in terms of.

Yeah, we really don't I think a you know I think we feel I I'd say very good about the fact that there's.

Tremendous passion and enthusiasm I think although a right obviously our past sales you know our are of course lower than last year. As you would expect if when we don't have a deadline I think our take away from what we're seeing is what we would expect that it's another strength I think not only of our company, but of the whole industry that there's any credit.

Really passionate committed a basis skiers, who see skiing in writing as a core part of what they do and and every indication that we have so far you know I would suggest that that's going to continue exactly to what level. It you know that remains to be a you know scene.

Thank you and Michael just as you contemplate opening up we've been able physically we evaluate your cost structure, though at that so that you opened are there opportunities to be leaner, where they do away with certain practices our offerings that may not have seen as possible.

In the past.

Yeah, you know I think we've gone through a comprehensive reviews certainly on on the cost actions that we took in reaction to their shutdown and and certainly are trying to take a measured approach.

As we look to reopen.

To ensure that we're taking a balanced view.

That's really oriented to ensuring that we deliver that guest experience that Rob talked about.

While also sizing the operations appropriately both for the distancing requirements as well as the potential demand scenarios.

Okay. Thanks very much.

Thanks for listening to you.

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

Hi, Good afternoon, everyone. You guys are occasion, while I'm just wanted to ask are getting a little bit farther on on maybe the task to either robinho. There's only so much for Qinglian given you know exactly as you said it there's no real kind of deadline or call to action at the moment, but perhaps you could just maybe.

Ah tell us a little bit about either what was the reaction you Shaw kind of before the trend you were seen before you need some of the the material updates and then how materially did that change.

After you gave the getting to the credit program and then also any color on destination versus local behaviors, where it can be really interesting are useful.

Yeah, I think one of the challenges with that Sean is that you know so much of our business is done around the deadline and they are a key part of of our selling cycle and so it really is tough to read anything into the information that we're seeing today versus what we might have seen last year because of the absence.

At this point now two different deadlines.

But I think what I would say that you know given that we have not had deadline you know I think we're pleased with the enthusiasm pleased with the engagement.

And you know obviously our message to pass holders at this point has been to give them more time, because we think that you know the conversation about next season is best Todd when you know when there is more information about next season.

So I I'd say, so far I think what we take away is positive, but I think to read into any trends.

You there might be misleading at this point, so hard to comment on that.

And.

Material differences on the destination local piece rather than it is like or at all just a little bit yeah too early to tell.

Again, I think it's too early to tell and again I don't I you know I think we've you know when we do a huge percentage of our business on the deadlines and so when you eliminate them.

I you know that's one of the reasons why we're not giving commentary because you know again, neither positive nor negative. We just don't think we want to read anything into it.

And.

But again I I feel like again that certainly be many of the indicators you know that are out there in a number of different forms I think would suggest that there's tremendous passion and enthusiasm to get back on the mountain.

Exactly how that will play out in the final numbers you know again, we don't know, but at this point you know we feel good about the path and I would say certainly on anecdotally I think we're getting very good response from many of our powerful through is not all but many many of our pass holders who I think certainly we're disappointed in last season.

I think feel good about what we're doing for next season. Both in terms of the credits were giving that we are providing credits up to 80% that we're giving everybody at 20% credit from a season pass holder perspective. The epic coverage addition people feel I think good about that they feel like I think they're being protected.

And I think they feel good about the time you know I I think people understand that this is a a tough moment. So again I I'd say on the you know what what we hear from emails what we see on social media and everything has been has been reassuring.

That's helpful and he I think you talked in the past and certainly I think in recent quarters about you know a little bit kind of trend line relative for Vale relative to broader what's called luxury travel you know just any indicators or anything you're watching on just maybe a broader travel behavior as your as you're trying to gauge.

Maybe around summer program and then obviously heading into the fall that you think are particularly important whether its things going on in the airlift side or anything else again appreciate that like many decisions <unk>, maybe being made last minute, but just a kind of what are you keeping an eye on and you're trying to gauge that you know that capacity piece or.

Occupancy piece.

In the next season.

Yeah. We're tracking you know very rigorously a number of travel consumer surveys I and we're also obviously you know listening to the input feedback we're getting from other people in the travel.

Sector, and you know I think our takeaways, which we have mentioned before but I think are worth reiterating is that a there's no doubt that you know the should the right now at least consumer sentiment seems to be you know the shorter the distance.

The better so obviously you know for for our resorts. The fact that were near so many major urban markets. I think so I think is a big positive no doubt domestic travel air travel I think is a in a much better spot than international travel, which again I think bodes well for most of our resorts, obviously Whistler does have access.

Those are there as we mentioned and Ah you know I think another piece is that all of our resorts for the most part are really you know located near major metropolitan airports as well and you know, we're not really subject to some of the smaller efforts, we benefit them from them in certain locations, but in the end of the day all.

Of our resorts are largely conveniently located to these airports.

And and that's where I think most of the you know capacity is going to remain and so we feel like that gives us an advantage as well as we look into next year, we're not necessarily depended on the smaller local or regional airport.

Last question would be that you alluded to this nobody go about you know <unk> working through some guidelines, especially in Australia around potential capacity restrictions obviously.

Industry is not a right now probably front and center for governance, you're trying to figure this out across lots of different industries lots of different businesses, but.

No. It's your base case or is your expectation that there could be some capacity constraints in the next ski season, obviously, you can playing around either way there just kind of curious how your.

Like how you're thinking about it and what that conversation might be like we sat with local authorities.

Yeah, I think the two places that you know, we're certainly well aware of potential capacity constraints. One is on loading lift some gondolas and to the extent that you know you're maintaining social distancing between unrelated groups right that could limit. The number of people you know that you could put on a chair put on a goggle anything one time and that's certainly something that you know will likely.

The apart of the plan and Australia unclear, whether that will still be necessary next winter season, but that's the one up potential constrained other potential constraint is in foodservice and.

And you know the ability in terms of how many people we could have in foodservice, how what what are you know food and beverage operation will look like that could shift as well, which I think will be the case down in Australia, and again hard to know whether that will still the case next winter.

Some interestingly some of these are things that were actually implemented before we shut down our resorts.

And we were able to do that very quickly, obviously, probably a little bit on the clumsy side in terms of guest experience because we're so focused on the safety piece that I think with more time, you know we feel like we could start to narrow these in and make sure that we could manage the capacity in the experience on all these front you know <unk> certainly there's.

Impacts depending on the on the regulation of the restriction that could be across the board, but that's certainly those are the two things that that I think you know where are probably you know top of mind for us right now.

And you know and I think that that will be the question you know oh, even apart from capacity restrictions what will ultimate consumer travel demand be December through March of next year.

And how will that marry up with any capacity constraint that we have.

Thank you very much.

Yep.

David Katz with threats Jefferies has our next question.

Oh, Hi afternoon, everyone.

Yeah. They are in the.

Good to hear everyone's horses.

For sure.

And in the context, but yeah, you all have.

Historically been quite good getting to the right answer I'm listening to the commentary that September seven.

Deadline that.

Is that you know how firm would you say that is or is that something we could get closer and start to reevaluate.

Yeah, I you know I think right now I'd say to from deadline that at the deadline that we you know our are of course opening two adjusting it that's what's required I think you know if we have learned anything over the last number of months, it's that dynamics on the ground shift.

And you know, we're going to we're going to shift with that you know with with the mindset of doing what's right for our gas and I think and especially I pass holders in this case and I I think you know we're very focused on the long term and so you know we're going to add to the extent that we can and sent earlier behavior. We are absolutely going to do that and we think that's the right thing for us.

So we think that provides great value to our to our gas, but you know if we have deadlines have to shift we're going to do that too.

And you know ultimately you know this is about you know guest loyalty and and making sure that we do what we can to protect it.

And and so you know we're going to look at every option.

And that said yeah at this point given the trajectory that I think you know we are on a you know we feel like as we get to labor day, probably will be in a.

Good spot to really ask our pass holders to make a decision.

And if I can just go back to my car one point there policies for the background noise. It's it's not myself [laughter] [laughter].

But simply stuff.

On the subject of Costa is you know what we're seeing across a lot of assets based companies as you know opening with very limited demand he tried to strict trends.

But the ability to perhaps do show with much better profitability and perhaps even structure savings that will endure.

Is that a reasonably expected outcome here.

You know I I can't comment on on profitability. Obviously is work still evaluating exactly how are you know the planning for next year will take place, but what I would say is that I think will continue.

As I said earlier to Felicia's question, you're continuing to take the same rigorous approach that we've taken to our cost structure all the way through and I think that you know certainly demonstrated that over the years relative to our focus on on barge in in free cash flow overtime, but again I think really important drop.

<unk> point that we will continue to take a very balanced long term view.

Really focused on ensuring that we're giving our guests the right experience and if that involves investing a you know beyond the demand. So it to ensure that yeah, we get bad experience I think we'll we'll be assessing each of those decisions as we go into planning for next year, but certainly always with an eye towards you know costs.

Discipline, where we think that's appropriate.

Yeah, not maybe I'll just tack onto that I do think that maybe important to just emphasize that you know even we understand that there may be situations, where we have left gas and but we're still going to of course have the full mountain opened with a full experience for them and so there'll be maam, you know areas, where the volume you piece obviously.

We could potentially be reduced in terms of our expense load, but we're not going to pull back at all on what the guest whatever you don't expect when they come to one of our resorts.

Thanks, very much and good luck yeah sure. Thanks.

Our next question Patrick Shoals with Suntrust.

Hi, good afternoon, everyone.

I know what a in a prior press release, you had possible indicated you might open up the.

Second rich for at the end of the season, they get to that 80 basis.

<unk> has reopened I'm sure it's about a.

You find that she was impactful if you did or didnt, but it did seem to get a they'd be some good ER positive press I'm wondering what we're going to your decision to not open a technical rich.

Yeah, Yeah, I think you know we felt a shared at an email that yeah. We knew you know they'd be tremendous enthusiasm certainly to come back Oh, I personally would love to have gotten back on skis.

But we also knew you know in our and our resorts are you know or some of the most popular resorts right and in North America, and so you know we know that.

When when we are going to reopen and let people come back you know, it's got to be in a moment, where both our resort our employees and the local community and obviously you know at Breckenridge were very intertwined. There you know we have to think that it's the right thing all around and I think we felt like it was just a little early to do that for us.

And you know where I think a basin very supportive of of them, providing if you experience that they did and a good to get some folks back on obviously more limited than anybody would have wanted of course and and I think you know will ultimately be kind of you know a shorter experience you know for.

Or any of our resorts I don't think any of US you know could have gone you know deep into June or July this year. So for us. It's really a safety thing you know I think we just felt like given the unique nature of Breckenridge and the community and the dynamic I was just right for us to to not bring that piece on yet and really phone.

Because all of our attention on providing a safe.

And really enjoyable experience for summer, which is gonna get going here in just a couple of weeks.

Okay. Thank you for the or do you tell.

Thank you.

Next we'll hear from Chris Woronka with Deutsche Bank.

Hey, good afternoon, guys I know you addressed a couple of questions on the on the cost structure earlier, but just to maybe hit it one more time. If you guys think longer term. So you know where do you wait post kogan would translate into its really soon but you see any changes to the.

What you take away from this situation and how you adjusted the cost model and also giving up the cost of labor <unk> view on where that goes over the next two to three years given.

More slack in the environment I mean, the crazy to think you have higher margins two three years from now.

But you know it I think at this point, we're not we have not made any longer term decisions on on cost and that and again I think or do you know that we I think to the extent that there's you know technology or other productivity opportunities to take you know kinda back at the house or you know cost out of our business.

I think we'll always look to do that we always are doing that before but but in terms of anything that could negatively impact. The guest experience. Yeah. We're not that's not on the table and I think in terms of labor Yeah. I don't think we're looking at necessarily any any reductions on labor rate I think that the certainly the market you know maybe.

Easier in terms of hiring I think the market maybe easier in terms of housing.

Many of our local communities and so I think that's you know that's up a small positive in an otherwise very challenging you know negative environment.

And then I think that's an opportunity for us and I think we shared as you know some of this a couple of years ago, which is you know to use this too to make sure. We stay out ahead of this trend going forward.

And to ensure that you know I think you know probably we will have an easier time fully staffing this year and now's the time for us to get out ahead of that to make sure over the next three to five years or you know, we don't see staffing issues again, and so you know that's something we're very focused on but in terms of cost or or margin improvement on that front no I don't think so.

I think we'll be looking on the revenue line you know for so that piece.

Okay Fair enough and then.

I understand that you'll you'll give us more of an update late summer on on the season pass but.

Is it possible are there different scenarios, where do you. There was a do kind of pass product that could come into the fold later in the season, if you see certain things developing or.

You kind of think there what's out there is going to stick in its current form.

You know at this point yeah, we're not we're not expecting any changes I think we've got a product that we think is you know remains very compelling and you know is because I think price well, obviously, we've got significant credits for people who bought last year.

And you know we intend to reach out obviously not just are on Passholders, but can you pass holders again of course, I and we do think that you know because we were a drive to destination domestic choice I think for many people. They know our resorts and they know the experience I think that will go a long way and providing people comfort I think they you know understood.

And that we're going to put safety first no matter, what and I think that will also go a long way and so we feel like the path.

And the relationship we have there I think will will bode well for us were not necessarily seeing anything that we that we have to change, obviously, I'd say that and of course.

In this environment, that's the with you know so many different changes happening. So quickly you know who knows but at this point again, where we're pretty.

Comfortable with the direction that we're going in with our past broke program.

Okay very good thanks, guys.

Yeah. Thanks.

Oh, that's most young with bearing FERC has our next question.

Hi, Good afternoon, guys given the data you have on your customers can you provide any visibility into your average customer demographics as it pertains to current unemployment and declining wage trends, we're seeing in the states and abroad.

I don't you know I don't have that to share you know in this moment a you know I think you know I think we've shared before and can certainly get to use some of the demo statistics that weve provided on our on our guests.

You know obviously.

You know there where our guests are certainly impacted you know in part maybe due to unemployment in other cases, many of our guests do come from major urban area of a that have been impacted or you know by co bed and things like that so you know I think you know that's an x. That's part of what we're gonna have to overcome I think.

As we look to next year, but at same time, we also here very distinctly from the you know these gas and from all the consumer research that people.

Have a pent up desire to travel again, and I think you know that it's a matter of making sure that where they go is safe that they feel comfortable that they have trust a in a the location that they're going and and you know the operator.

Whatever the experiences and so that's something we're going to be relying on but in terms of specifics on the unemployment side. It I wouldn't have though.

Okay understood and secondly, I'm sure the weakness this spring and potentially the summer could be impacting some of that smaller resorts are around gears a bit more heavily just due to the lower capitalizations from those peers can you provide any information about financial distress in the industry currently and how could benefit your reputation in the market.

And could potentially presents an M&A or epic pass partnership opportunities at the cash in there.

Yeah, you know at this point I think you know many many of the players in the industry I think our target or whether this storm.

And that and that's what we want to see and you know in certainly in times of previous be perceptions are crisis. You know, it's not typically a time, where you see a ton of M&A right away.

And I think that would be true for us and in part I think right now we do feel like you know a lot of our focus is going into all of our focus is going into our existing resorts are existing properties. Our existing employees. We think you know this is a moment the calls for that I think as we get pass code that as as next winter season starts to ramp up as theirs.

I would have Ah you know more consistent recovery off and historically you see you know conversation start to happen at that point, sometimes and so we'll certainly be open to that at that point, but right. Now I think there's a lot of focus just on you know making sure that that we can provide you know yeah, just the vast experience in terms of.

Both safety.

And and how enjoy the list.

Alright, great. That's helpful. Thank you.

I mean.

Right Sunbeam with William Blair has our next question.

Yeah, Hi, good afternoon, <unk> doing well I'm, making I guess are you.

We're pretty excited about the coverage and the Allergan cute and passes that people are Saar close to close next year.

It does put restrictions on what you can be it the cash <unk> do you have to to make me funds and would it worked similar to that to pass credits and what it's going be proportionately, maybe how many dangerous theater or how many days actually clubs.

Yeah, I think I'll take those into and then I'll, probably turn over the epic coverage piece, Rob, but I think as it relates liquidity piece, obviously any any refunds would be relative to.

Deposits made or purchases made still our liquidity today right is largely ahead of pass sales for next year.

So obviously, we would be collecting those payments over the fall and then would have that cash so our our liquidity.

Position and the and estimates that we made for kind of the runway with exclusive about.

And I'm not sure I totally copy epic coverage piece, but rather if you did you can.

Just one.

Yeah, I think it two things one I think you know we <unk>, we made a decision that or you know obviously, we went through this past season and we did you know we obviously we were closed early on and we decided that you know we were still going to provide credits even though the program didn't really provide for that at all.

But we were not going to provide refunds to there's really you know no way to do that but for next season. You know we felt strongly that if there are these kind of closures again.

That yard got deserved refunds and that's something that a you know as we look to you know we didn't have that program in place going backwards, but we are going to have it going forward and yeah. We will absolutely have liquidity, it's not an issue for our company.

In terms of providing refund should that come up and obviously you know we should be we've shared that even in the absence of all the any operations right. We have a pretty long runway on the liquidity side. So we don't see there was an issue in terms of providing the refunds. You know we have we got want a couple of options for our you know for our pass holders.

You know to the extent that there is a closure you know from cobot or <unk> or something like that then there's really two options for our Passholder. One is that they can choose before the season, a particular week of the season that they're kind of protecting and you know this way and if and if the resort is closed during that.

We then they would get a full refund and again summarizing that as a lot of details on this of course online.

But but or they could choose the whole season, and then if there was a closure they would get a proportionate amount.

Of the season that was close.

And we did that because obviously there are two types of skiers and I think that was one of the challenge is looking backwards to this past year. Some skiers really do want to use the past start to finish other skiers a buying the past just for a particular week of the season, when they're going to come out and so we designed this coverage to really be flexible to be able to provide both.

Both.

Of those gas, but really the peace of mind to know that they are not at risk one way or the other as they go into next season.

Yeah. Thanks.

If you can't say, there and then I guess, it's Rob that's good because he'd be kind of starts to kick off do you feel obligated to have them out and open up the day.

Do you have there.

To do come next may be open up on the weekend going on here, if that's up which means that treats.

Yeah, I know, we we would we do feel the that there you know it's incumbent upon US I think two to keep our mountains open when we can open them based on weather conditions, and obviously, you know restructure restrictions from health or whatever.

Koby type things, but apart from that no we do open our resorts.

And we do open our terrain and we want people who come to get the full experience and you know we we feel that it's critical to do that for all of our gas passholders and otherwise.

And that's something we are going to do for next year. So we don't see you know if there's lower demand and I think you know if you look backs it like the Oviedo nine recession no. We did we maintained you know full terrain full resorts open even though we had you know where we're doing I know it's possible there because of it we could see even lower demand but.

But we think we can absolutely still be.

Profitable.

You know a once a once we get into the season and and that that you know is both the right decision for our guests and the right decision for the business.

Stickier.

Thanks.

Final question will come from what Torrente with Wells Fargo Securities.

Hey, good afternoon. Thank you for taking my question in terms of lodging bookings could you give a little more detail on how they are looking month to month.

She hasn't even started early fall.

Yeah I think.

We don't we're not giving any specifics on that I think you know where I think you know many of the trends. We're seeing are probably similar in terms of our markets as GE and other markets and bad you know cancellations have begun to send again I'm I'm speaking broadly now cancellation subsiding people you know starting to to book again, I think there's more.

Confidence out there, but it is coming off a very low base. So it's important to remember that we went over a long while there were no bookings and with full cancellations. So I'd say at the moment you know our our lodging properties are probably not that different than what you're seeing in a lot of Dino resort communities.

I think you know what will be more telling obviously as we get towards the end of this summer, but at this point, probably not a ton of insights from from the you know the trends just given how low of a base we're starting from.

Okay, Great and then could you maybe provide any other detail on your assumptions around each season pass credits, what's the typical with new owned rate what.

Average credit look like anything else you right here would be helpful.

Yeah, I would say yeah, we're we're not providing a those details you know I'd say you know historically, we haven't provided that level of granularity.

And certainly in this moment, there's a fair amount of uncertainty and obviously a fair amount of.

Shifting change, but but of course I'm you know we do feel that you know the credit program of design you know to solve I think two to opportunities for US one was to make us feel better about last season, and two wise as we said to Incent renewal for next season and so the passes.

Really designed.

To address both of those and the credit piece and a little bit unclear, you know where where that's going to go but obviously you know for US somebody you know with an 80 who's getting an 80% credit let's say on the one hand, you could see that at the cost on the other handed could really see that as an opportunity to the extent that they were not going to renew for next year, if they didnt use their power.

Last year. So it really tried to factor both of those things and then B you know precise and I would say that that is Oh, you know the way that that program was designed I think was was leveraging off of all this work and time that we've had in terms of understanding and dealing with our gas on a more personal one to one basis and the flexibility that we had in our systems the kind.

Of robustness that we had to do the analysis to know that.

No. This was a good decision for US not just you know afford the guest piece, which I think it was but also from a business perspective. So so we feel good about it and I guess, what we'll have more to share once once a you never get deeper into the selling cycle.

Okay, great appreciate it guys.

Yeah. Thank you.

Okay. So today's question and answer session well I'll turn the conference over to Mr. cats for any additional closing remarks.

Thank you operator. This concludes our fiscal third quarter 2020 earnings call. Thanks to everyone, who joined US on the conference call. 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 concludes today's conference. Thank you for your participation you may now disconnect.

And.

[noise] HM.

[noise].