Q2 2021 Vail Resorts Inc Earnings Call

Please standby were about to begin.

Good day and welcome to the Vail resorts second quarter 2021 earnings call. During today's call. We won't have a question and answer session. If you would like to join the queue at any time. Please press the Starkey followed by the digit one on your telephone keypad.

<unk> conference is being recorded at.

At this time I would like to turn the conference over to CEO. Robert Katz. Please go ahead Sir.

Thank you good afternoon, everyone welcome to our fiscal 2021 second quarter earnings Conference call. Joining me on the call. This afternoon is Michael Barkin, our Chief Financial Officer.

Before we begin let me remind you that some information provided during this call may include forward looking statements that are based on certain assumptions and are subject to a number of risks and uncertainties as described in our filings and actual future results may vary materially from.

Are we looking terms in our press release issued this afternoon, along with our remarks from let's call. It made it very much alive in 2021, and we undertake no duty to update them as actual gone from pulp. 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.

Rob. This after you did with the FTC and are also available on the Investor Relations section of our website at www dot that resorts dotcom.

So with that said, let's turn to our fiscal 2021 second quarter results.

Given the challenging operating environment as a result of COVID-19, we are very pleased with our results at this point in the 2000 22021 ski season across our 34 North American resorts.

Welcome guests to each of our resorts with no major ongoing disruption.

Which has been enabled by our focus on the health and safety of our guests employees and community.

While our results for the second quarter continued to be negatively impacted by COVID-19, total visitation across our north American destinations out in resorts and regional ski area were down approximately five per cent compared to the same period in the prior year.

The strong visitation for the quarter highlights the underlying resiliency of our business the loyalty of our GAAP and the strong appeal of skiing and guess what easier travel plans.

We moved past the peak holiday period, which was constrained by capacity limitations driven by both COVID-19, and below average snow conditions.

Improved results in January, particularly with electric itself.

Visitation trends improved throughout the quarter, our ancillary lines of business continued to be negatively impacted by COVID-19 related capacity constraints and limitations, particularly in food and beverage and ski school.

We experienced strong results in the quarter from both our local and destination guests with local visitation up slightly compared to the same period in the prior year and destination visitation proving more stable than we expected.

Destination guests, including international visitors modestly declined to comprise 53% of our U S destination mountain resorts skier visits excluding complimentary access.

The travel challenges associated with COVID-19, which compares to 57% from the same period in the prior year.

International visitation as expected decreased significantly due to COVID-19 related travel restrictions.

Results at Whistler, Blackcomb, which disproportionately impacted throughout the second fiscal quarter due to the Canadian border remaining close to international guests, including gas from the U S with destination guests, including international visitors declining to 15 per cent of Whistler Blackcomb visits excluding complimentary assets, which compares to <unk>.

48% in the same period in the prior year.

Season pass unit sales growth with 20 per cent for fiscal year 2021 created a strong baseline of demand heading into the season across our local and destination audience nimble book.

And we'll be one of the most important drivers of our performance and relative stability for the season.

For the fiscal 2021 second quarter 71 per cent of our visitation came from season pass holders compared to 59% of visitation in the same period in the prior year.

Our growth in passengers. This past year also positions us well as we head into the 2021 'twenty 'twenty two season.

We remain even more committed to the benefits advanced commitment offers our company and intend to remain aggressive in providing the best value to skiers and riders who purchased in advance of the season and continuing our strategy to move lift ticket purchases into our pass program.

We are excited to launch our 2021 'twenty 'twenty two wind up of epic pass product on March 23rd 2021.

We maintained disciplined cost control throughout the quarter as we operated the business a reduced capacity resort reported EBITDA margin for the fiscal 2021 second quarter.

With 43 per cent compared to the prior year period, a 49% while resort net revenue decreased $240 $1 billion over the same period. These results reflect a rigorous approach to cost rigorous approach to cost management and we exceeded our expectations for profitability at these revenue levels.

Relative to the illustrative model previously outlined in our September 2020 earnings already.

Now I would like to turn the call over to Michael to further discuss our financial results season to date metrics in fiscal 2021 outlook.

Thanks, Rob and good afternoon, everyone as Rob.

Rob mentioned our results for the second quarter were impacted by COVID-19, and the resulting impact to our North American Mountain resorts net.

Income attributable to those or it says $147 $8 million $3 62 per diluted share for the second quarter 2021, compared to net income attributable to Vail resorts to our $6 $4 million or $5.04 per diluted share in the prior year.

With our reported EBITDA was $276 $1 million in the second fiscal quarter, which compares to resort reported EBITDA of $378 $3 million in the same period in the prior year and the decrease was primarily a result of the negative impacts from COVID-19.

Turning to our season to date metrics for the period from the beginning of the ski season through Sunday March seven 2021 and for the prior year period through Sunday March eight 2020.

The reported ski season metrics are far North American destination mountain resorts with multiple areas and exclude the results of our Australian ski resorts in both periods.

The reported ski season metrics include growth for season pass revenue based on estimated fiscal year 2021, North American season pass revenue.

Compared to fiscal year 2020, North American season pass revenue fiscal year 2020 season pass revenue was adjusted to exclude the impact of the deferral in past product revenue as a result of the pass holder credits offered to 2019 and 2020 North American pass holders.

Fiscal year 2021 season pass revenue does not include the past product revenue recognized in the first quarter fiscal year 2021, as a result of Unutilized pass holder credits. This.

This approach results in a year over year comparison from season pass revenue exclusive of the impact of discounts provided to our 2019 2020 householders.

The metrics include all North American destination resorts and regional ski areas and are adjusted to eliminate the impact from foreign currency by applying current period exchange rates to the prior period for Whistler Blackcomb to adults.

David mentioned in this release is interim period data and is subject to fiscal quarter end review and adjustments.

We continue to be pleased with the positive momentum we're seeing in demand.

We began the third quarter presentation, continuing to improve throughout the North American ski season.

It's been a day total skier visits were down eight 2% compared to the prior years just from the day period.

He's been the day total lift revenue, including an allocated portion of season pass revenue per each applicable period was down eight 9% compared to the prior year Susan day period.

You can debate ski school revenue decreased 43, 2% dining revenue decreased 56, 9% and resort retail and rental revenue decreased 31, 6% all compared to the prior year since 90 day period.

Our results continued to improve in January and February we expanded capacity with more open for and as conditions improve and as certain COVID-19 related restrictions eased.

Additionally, as more reservations became available following the peak holiday period, we've seen a significant improvement and lift ticket purchases.

Our ski school food and beverage and retail rental businesses continue to be more significantly impacted from visitation due to the significant capacity and operating restrictions associated with COVID-19.

While our U S resorts solid material improvements in financial performance in the peak holiday period Whistler Blackcomb financial performance continues to be severely impacted by the continued closure of Canadian borders to international travel a trend that will likely continue through the rest of this new zone.

Now turning to our outlook for fiscal 2021.

We approach the end of the North American ski season, we are providing guidance for the nine month period, ending April 30 of 2021.

We expect net income attributable to Vail resorts to be between $204 million and $247 million and resort reported EBITDA is expected to be between $560 million and $600 million.

Assuming current regulations health and safety precautions and net levels of demand in normal conditions persist through the spring consistent with current levels.

Given the ongoing uncertainty of COVID-19, we will not be providing full year guidance for fiscal 2021 at this time as we continue to evaluate the potential economic and operational impacts of COVID-19.

On our fiscal 2021 fourth quarter results, particularly from three resorts in Australia, and our primary summer operations in North America, which we currently anticipate opening around our typical opening dates with certain capacity constraints associated with COVID-19.

We continue to maintain significant liquidity with total cash and revolver availability as of February 28, 2021 of approximately $2 billion with $1 $4 billion of cash on hand $419 million of U S revolver availability available credit agreement and 179 billion.

The revolver availability under the Whistler credit agreement.

As of January 31, 2021, our net debt was four two times trailing 12 months total reported EBITDA.

As previously announced the company raised $575 million of zero percent convertible notes in December 2020, which provides added flexibility in terms of our ability to pursue high impact acquisitions as well as reinvest in our resort portfolio.

We remain confident in the strong cash flow generation and stability of our business model and we will continue to be disciplined stewards of our capital with a focus on high return capital projects continuous investment in our people and strategic acquisition opportunities.

We are not real estate in the dividend this quarter, we remain committed to returning capital to shareholders and our board of directors will continue to closely monitor the economic and public health outlook on a quarterly basis to assess the appropriate time to reinstate the dividend.

Now I will turn the call back over to Rob.

Thanks, Michael.

Turning to our calendar year 2021 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. We plan to maintain a disciplined approach to capital investment and keeping our core capital at a reduced level given the continued uncertainty due to COVID-19.

We have increased our core capital plan by approximately $5 million based on our updated outlook and now expect to invest approximately $115 million to $120 million, excluding onetime items associated with integration of $5 million and $12 million of Reimbursable investments in real estate related capital.

As previously announced the calendar year 2021 capital plan includes several signature investments, which were previously deferred from calendar year 2020, as a result of COVID-19 and are subject to regulatory approvals from Colorado. We are moving forward with the 250 acre lift served terrain expansion in the signature Mccoy Park area of Beaver.

Creek.

Other differentiating the resorts high end family focused experience. We also plan to add a new four person high speed lift at Breckenridge to serve the popular peak seven replace the Peru at Keystone with the fixed person high speed chair lift and replace the Peachtree Leppek crested Butte with a new three person fixed grip left arrow.

Chemo, we plan to complete a transformational investment, including upgrading the quantum left from a four person to a six person high speed share left and relocating the existing four person quantum work to replace the Green Ridge three person fixed grip cherilyn.

These investments will greatly improve uphill capacity further enhance the guest experience and complete our $35 million capital plan for Triple peaks.

We remain highly focused on investments that will further our company wide technology enhancements to support our David data driven approach guest experience in corporate infrastructure as part of these efforts we are continuing to invest in resources and technology to improve our customer service experience, including significant staffing increases and our call centers themselves.

Service technology that will provide our guests the ability to better manage their own accounts.

We will also continue to invest in ongoing maintenance capital to support our infrastructure across our resorts, including onetime items associated with integrations, the $5 billion and $12 million of Reimbursable investments in real estate the weighted capital we expect our total capital plan to be approximately $135 million to $141.

In closing I want to take a moment to thank all of our employees for their tireless dedication to deliver a safe.

Exceptional experience for our guests this year, despite the challenges of the COVID-19 pandemic.

We had stronger than expected financial results and our employees have been a primary reason for the six months the.

These efforts we implemented a one time end of season bonus totaling approximately $15 million. So I think over 28000 year round and seasonal employees, who are not part of our other annual bonus programs.

We're grateful for the commitment our teams have demonstrated day in day out to navigate a truly unusual Susan at.

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

If you'd like to ask a question. Please press star one on your telephone keypad.

Please limit yourself to one initial question and one follow up question.

Your question has already been addressed.

Sure.

Once again Thats star one if you like ask a question.

Well take our first question from Shaun Kelley with Bank of America.

Just wanted to dig in a little bit you know.

Rob I think you were pretty clear in the prepared remarks day. The yeah. The upside to what you saw you really exceeded your expectations on the cost side from kind of what you were expecting I was just hoping you could help us dig in there a little bit more on what some of those levers where you know it.

It was mix a factor at all between either destination in local or.

Let's take it from ancillary it like or let's tickets versus ancillary or was it more about.

Specific reductions in targeted areas and if you could talk about that a little bit more.

I think we went into the season, obviously preparing for.

Free challenging environment. So I think you now have as we prepared well.

We took a pretty thoughtful and disciplined approach in terms of where we would set our expense level and you know and as we saw.

Revenue kind of greater than expected.

We were able to manage through that without necessarily adding a huge amount of expense and material expense to the season.

And I think that you know that was an amazing job by all of our teams across the whole company.

And also yes it was.

A challenge.

We shouldn't underestimate that but I think we feel very good about that and do that.

Could be some upside as we went in and that's where our original expectation from the revenue side of things of course, we also need to be from downhole and given the volatility we're seeing in the overall COVID-19 environment before the season, we try to pick a spot that we thought was one of the Liza one.

Are there learnings and efficiencies we can we can pull forward out of that study can you just do more with a different about modestly or even you have significantly different cost structure and just kind of how do you think about you know how much of this can be pull forward or extrapolated into what your operating plan for next season might look like.

Yeah, I think it's probably a little bit early to take away any any concrete learning from the season and beyond obviously want to see how the season ends up I would say that this is a unique moment.

And our unique season and I don't think it's certainly not something that we would replicate year after year, but there are definitely going to be takeaway.

That <unk> can obviously add value as we go forward.

I think these are some of these things are things that we've been implementing over a number of years, but in many cases got accelerated this year.

Because of necessity. So some of that I think we can continue that obviously a lot of.

You know the way we operated this year is not something that we would repeat going forward and.

Especially as we would expect.

Obviously, the brand visitation back on a much more consistent basis to where we were before the pandemic.

Thank you very much.

And kitchen.

Go ahead and take our next question from Michael.

Good day.

J P Morgan.

Good afternoon, everyone. Thanks for taking my questions.

Let's start with.

Your new pass holders that day.

Maybe you've learned a little bit more about you know in the last couple of months where.

Where are they coming from in terms of their history and scale do you think any of them are new skiers.

A lot of Mark probably pulled forward with port over from.

Buying tickets at the window prior to this but maybe you could give us some of your learnings from net data center.

Sure.

Any given year, we have two types of new pass holders, we have new pass holders who are in our day to day and we're showing up previously.

Typically the what's the goodbyes, though it could be the day on the pop from the previous season, and then obviously you have people.

Who would be who don't know who it is.

Not in our day to day may have been at our one of our resorts and the path from.

Now we didn't capture that information or they may be truly no.

I think theres no doubt that that when ticket buyers.

The trend we're seeing is that they convert into pass holders were seeing a bump in frequency.

And typically and I think we've talked about this before we see a bump in renewal.

After we launched the epic four day and certainly as we've launched now with two years with the flow epic.

Day pass products and so you know I would say that those trends.

And plus.

Already this year to bring a significant number of new people, who were not previously in our database into our pass program. This year.

So did our resolve around the importance of book program got it adds tremendous.

That stability to our business better.

But it does increase frequency and engagement by the GAAP and obviously the GAAP.

You feel like they're getting a much better value and have higher guest satisfaction scores. So all of that to be positive.

I think on the folks who are truly moving our day to date and then we've got we have on them I don't think we know that book store yet for this season I think one of the thing that has been interesting to us is that.

People are purchasing the path of using it throughout the season I think if you went back seven to 10 years, you might you might a lot of people were kind of initially buying top of it.

Absolutely our epic seven day, when our epic four day adjusted skewed maybe at the holidays are in kind of early January but I think Rob about last couple of years, we've really seen that people are buying new products because of the value they offer and the flexibility to really do it throughout the whole season.

We obviously have done other visitation patterns, yet olive margin Easter, but my guess is based on trends. We're seeing today as it is a product that's not really available for the entirety of the season.

So that's a positive and I think we'll know a lot more finish the season in terms of.

Some of these top both of them and I think the great News is we do see again higher return rates from new pass holders. After they convert from lift ticket buyers and we then to even higher return rates when they come into the second or third year.

Under the program. So we feel good about all of that and again. It is just reinforce the point to us.

This is.

Core to our success from a quarter of our stability and it's something that's critical perhaps David to go forward.

Okay. Thanks, that's really helpful. And then my follow up question is it really sort of how you think about pricing are heading into a period of potentially extreme pent up travel demand where your product focuses on its value proposition, but we could be entering it.

Period, where your core customer maybe willing to pay a lot more for their vacation and they may have in a long while so yeah I know.

I know you havent rolled out the official past price, which is how are you thinking about pricing in general even on the ancillary.

Yeah I think.

I would say that you know we tried.

Over time to take a more ratable approach to price.

And.

You kind of a lot of some of the core mountain products, obviously, our lodging business.

Move to the west of the rest of the market.

In terms of the lodging market.

But I would say in terms of a lot of our core products you know, we do try and take.

Ratable increases over time, we try not to move too much that said I think I would say that we do feel differently about our GAAP commitment products, where you know one of our critical strategies is to move people from lifted into advanced commitment products and so we've always been focused on in good times or bad at providing more value to people in those products.

So we can move more people and I think that.

There may be some unique opportunities on that standard as we look to the future in terms of both our butter.

Environment for travel and also that we have now approved.

Some of our newer products that we can really move people in there. So I think there's no doubt that.

As we look to the future there could be a healthier travel environment.

But I would say much more focus on our core.

Driving a advanced commitment that we are necessarily driving price.

Thanks for the thoughts.

Sure.

Well go ahead and take our next question from Jeff.

With Stifel. Please go ahead.

Hey, great. Thanks, good afternoon, everyone.

I wanted to start by touching on that you know people pick up towards the acquisition, we're starting off really in the first full normalized or normalize. If you can really get these days past selling period with those assets in the portfolio I just wanted to get your updated thoughts on potential tailwind there now that you've had from time to integrate.

It's there.

Yes, I think we feel we feel real good about the contribution of peak resorts.

Made toward the top zone, Susan I think we also feel good about their contribution in making this season.

And.

Those resorts generally speaking you now have.

I have a much higher percentage of pay per click putting some of our <unk>.

Larger destination resorts that have been in the portfolio on departments for quite some time.

We definitely think that there is continued opportunity there to convert.

Take a buyer's into pass holders and you know I think we're going to be focused on how to aggressively do that and we think there are some unique opportunities that were seeing and that we have experienced over the last.

Couple of selling cycle.

But I think there's no doubt that having peaked in our system.

Passive from our company system all of our infrastructure with political this year because there was a lot of business that is done.

People driving.

Rather than flying and we were able to pick up pick up those folks when they visit and I think when people were making a decision about buying a path.

Our last fall and there would probably even more anxiety around potentially getting on a plane knowing that they have the opportunity to also drive to a local resort I think would helpful in driving our convergent and Theres no doubt that there is a multiyear opportunity.

As we convert new I've got to come with new resorts.

Yeah on the question of the profit can we felt like that what can we do to really move that needle from corporate.

Okay. Great. That's helpful. You know, taking a step back and thinking more thematic league here, there's a narrative across our broader coverage of a compelling.

Pent up demand piece is starting to unfold in the back half of the calendar year with folks can't seem to get into the house and put more money in their wallet and they had kind of coming in if you look at the forward indicators that you guys track, whether internal or looking at you know call. It other luxury travel.

Type offerings or are you seeing any evidence of this narrative are quite yet or too much noise.

Yeah, I think at this point.

We are you know I think it's a little early thoughts in terms of our own internal metrics.

To pick up to what's going to happen at the back half of the calendar year I think obviously a lot more of our focus is right now on finishing the season and then on from the summer season, where I do think it's probably our best our best opportunity.

And also probably the greatest uncertainty.

And.

I would also say well, there's no doubt that we outperformed.

I think many other aspects other parts of travel and leisure and so I think there'll definitely be pent up demand for us, but obviously no compared to some others that have a more challenging time of loss.

Three to four months, probably a bigger rebound that we might experience.

But again I think.

Our minds up I think what came through to US is just the the loyalty and stability of our gas going into it.

By far the.

Season in a year with the most uncertainty.

And particularly without proper there. So obviously in our minds, it's like how do we continue to drive that that as you know.

Because we're thinking about next year, but we're also thinking about three to five years from now how do we continue some of the secular changes that we've been making in our business model and use a strong travel environment to help accomplish that.

Okay, Great fair enough. Thanks for all the color and congrats on a strong quarter of execution.

Absolutely.

We'll go ahead and take our next question from David Katz with Jefferies. Please go ahead.

Afternoon, everyone. Thanks for taking my question and congrats on your quarter well done.

But.

One of the topics that.

Always comes up and has been sort of part of the company's DNA damage acquisition targets.

Because you have done some nicely with them.

It seems just natural that there could be some opportunities bubbling up.

Given some of the turmoil that we've gone through and your financial strength coming out of it.

How do you look at that.

Could we realistically see some of those things and is that a fair assessment of what the market is.

I think.

I do think that there are obviously, we're always interested in always looking at opportunities.

Opportunity to expand I think.

And so that.

Resorts, where we think they really add value to our existing portfolio and make a difference to our guests.

I think no doubt it was a little.

But it has down over the last.

Nine months or so with 12 months I guess now.

And so there's certainly a good portion of that I think it was tough for us to pick our heads up and start focusing on acquisitions, but I don't think many people who owned resorts necessarily in a selling mode. Either they were focused on what was going on in stand alone.

Typically as we come out of the.

Dislocations, there are opportunities and I think.

We're hopeful that there will be at the same time, you know as I always say on these calls.

It would be difficult.

We're very cognizant that we have been successful with acquisitions over a long period of time, but but that you have to always be disciplined otherwise you know you can kind of lose focus.

And so for US it's about the right acquisition at the right time, including certainly opportunities in North America, but also opportunity globally, whether that's in Asia and Europe.

Some of which take longer right to create and actually be upside an opportunity maybe longer but we are remain just as committed as we were before to the benefit that strategic acquisitions of resorts can provide and so we're certainly not backing off from them.

Understood and if I can just clarify one detail from your remarks about the capital plan I think you said $1 35 to 140.

Is that a total number or is that.

Excluding our maintenance budget.

No that's that's total number including maintenance.

Got it okay. Thank you very much.

Well go ahead and take our next question from Ben Chaiken with Credit Suisse. Please go ahead.

Hey, How's it going.

Clearly a unique clearly are clearly unique season, and some strong resolve costar passes up 20% and the past program, where you're starting March 23rd as you mentioned just curious on your thought process on.

Moving forward over the next six to eight months, how to keep that past number flat or even grow it is it the and less about the direction, but more about just the point is it the traditional playbook that you use or is there a different strategy you use this year just given the unique situation that we're in and the strong growth over the last couple of months.

I think you know again I I.

I think some of what I said earlier you know if they can.

If you are just worth repeating in terms of.

We saw we obviously went into this season.

Which had more uncertainty than any time any of us can remember.

And I think our pass program and it was at the cornerstone of the results that we delivered in share of course as you know our lift ticket sales are also critical.

Obviously, that's the most uncertain right and in the hardest to predict and in many respects right. The larger that we grow that path program.

But yeah, the greater opportunity we have to.

Really do you know kind of.

The business that 10 15 years ago was to.

Truly a day out decision based on sell in we really moved that much more towards kind of a subscription approach to how people are engaging and and buying their skiing, and therefore, Susan whether it's for an unlimited product or even if it's for just an epic three day right either way I think really started to make inroads. So what I would say that we feel.

Like there is a unique opportunity to continue to be aggressive on that front and really move big numbers of people into the program and it's something we've talked about for a couple of years and I think we have more data now than.

Than ever before on all the different ways that we can do that and I think you know, we're nowhere and operating as a standard playbook.

We never do.

Where every every year every season, we come at this with a lot of new information in and we're going to deploy that information in ways that we think can help drive the program and I think when you look back obviously the.

Whether it was epic day pass or even epic mountain rewards this year, which of course was a little more challenging offering 20% discounts on.

On ski school food on rentals on margin, obviously tougher this year, but still we see enough engagements to understand that that's also going to be a key driver as we go forward. So.

Again in total we just feel like every year is a little bit different than this year, if anything Yahoo, Embolden us I think too.

So really.

Be aggressive as it relates to growing the number of people who are in the program.

Gotcha.

Yeah, and I was kind of referring to how to reengage with our customers had thought so that was helpful.

Then on on peak I guess does it make you think any differently about some of the feeder markets that historically may be viewed as David like.

Maybe not.

Non traditional somebody I'm thinking of like the mid Atlantic for example, I guess post peak and having that in the portfolio for the last 12 months.

You come at that would be different view or.

Just any comment there.

I think the good news is that I feel like we obviously it was a little bit of a departure for us to.

Purchased so many resorts at one time a lot of the resorts are obviously smaller in markets that we historically of course, having operated in.

I think we feel really good about the fact that we were able to.

Integrate the resorts and have those resorts have a true impact on our results in this kind of first full year net.

At year that of course had somebody challenges to it. So I think it speaks really well to the opportunity and I think it's important to know that we were not we were dialed in this year, mostly on safety and then of course trying to do what we could on the guest service side, but of course. It is safety first and you know as we go forward, we're going to be able to make a lot more changes to the guest experience.

Taking candidly a lot of the learnings that we have from Covid.

And a lot of the approaches that actually kind of turning them a little bit so hopefully it won't be the push will always be focused on.

Safety, but not around the pandemic and will be able to take that through I think a lot of these.

<unk> resorts and the mid Atlantic resorts, and really make differences right for the guest to come back.

Over next year and the year thereafter, right well, we'll shift the experience not just their ability to do there on a season pass. It also gives them access to.

With her but that actually make differences in how they engage with the resorts you know something that we're going to do with all of our resorts. So yeah. We feel like it was on the one hand, you could obviously look at that peak when we started to go through the pandemic because of the problem in terms of trying to integrate an acquisition and having just done one right up right to flow.

We go through the pandemic and candidly it turned out quite the opposite in terms of it being a very significant contributor, which again I think again bodes well for the future net.

I appreciate it thank you.

Okay.

And I'll go ahead and take our next question from Laurent <unk> with Exane BNP Paribas. Please go ahead.

Good afternoon, and thank you for taking my question.

I appreciate that.

You gave us an implied third quarter total EBITDA.

Dollar range I think roughly.

Rough math about $380 million to $420 million.

Is the range of function of visitations or cost containment, maybe asked another way delivering 50% EBITDA margin <unk> 19, I'm trying to think about a two year stack and is there any reason why you can't get back to.

That that EBITDA margin.

And potential cost containment.

Yeah, I think we're trying to set a range that incorporates the.

Continued uncertainty.

For the remainder of this event I think we're comfortable putting out a range at this point given that we largely have about a month of this isn't going to last and so you know it.

It incorporates what we think is a reasonable range of outcomes.

For the remainder of the season I think you know as.

As you saw in Q2.

Our margin was very consistent with last year, we felt like demonstrated the costs are there.

Our net debt, we've gone in and the great work by our teams throughout the throughout the season to manage the business at lower revenue levels and we'll plan to continue to do that so.

Certainly anticipating continued.

Strength on the on the margin side.

But yeah.

Consistent with the range that we put out.

Very helpful. Thank you and then forgive me if I missed this in the prepared remarks, but I think on the last call you talked about about $121 million it.

Our deferred.

Deferred revenue recognized that would be recognized in <unk>.

Did you recognize when you get into June and then.

And then how do we think about <unk> and I know, it's probably still early but do you have any deferred revenue that could trickle into into 2022.

Yeah, so the deferral of the.

Of the revenue associated with the incentive credits recognized primarily across Q2 and Q3 radically with how we recognize season pass revenue across the quarters.

It was roughly split between the two quarters.

As it relates to any.

Deferrals into 2022, nothing material that we'd call out at this point.

And so yes, we're expecting to recognize that this year.

Very helpful. Thank you very much and best of luck.

Thanks.

Well go ahead and take our next question from Paul Golding with Macquarie Capital. Please go ahead.

I appreciate you taking my question I think the first thing I wanted to ask was around just following on to David's question around acquisition has the pandemic.

And sort of varying degrees of lockdown and just pick up.

International.

Visits has that changed your perspective around what.

What regions make no sense per acquisitions right now and then I have a follow up around cost. Thanks.

No I don't think it really has I think certainly different parts of the world.

We went through the pandemic.

With different dynamics and in some cases right. They were more significant closures in other cases resorts weighted but to be open.

But certainly you know local.

Our resorts like Whistler, Blackcomb, which had a much tougher.

So far our experience this season.

Because of the border closures that we wouldn't change our view of course is the long term value and opportunity.

No critical or why do you think there is one of the benefits of actually having.

All of these resorts within our company is that some will do better than others at different moments in time.

I think any of us had thought about a pandemic and not prospective but but obviously it has played out during the pandemic as well and so I think the diversity opportunity in terms of having resorts from different locations and different market different weather patterns different economy different governments.

That speaks well to our company continuing to broaden.

And so that that's something that we're not going to back off of and I don't think the experience of one resort versus another or one region versus another during the pandemic would change our view I think that.

Our hope collective hope is that we yeah, our market will be going through with situations like this on them on an ongoing recurring basis.

But again those are the type types of shocks to the system that I think again reinforce our view that having a global footprint, having geographic diversity is critical.

Great. Thanks, so much for that Robin.

Labor costs, I guess I'm trying to see if I can still tease out some of what might be extrapolated for next quarter next year.

On the cost side from a labor are you seeing.

As the environment is the supply of seasonal labor impacted by the international restrictions without driving cost up or are you seeing other leisure businesses have a slack in there.

Labor demand.

Create a favorable labor environment for you.

Yeah, I think I think there was a.

Very unique labor environment, I think for for our resorts. This year with yes, we didn't we're not able to access international.

And our folks who reside outside of the U S to come first and then is the lack of something that we couldn't do this year on the other hand, obviously they were given the closures across travel and leisure there maybe more folks who are interested in working with in the U S. At one of our resorts.

And so I just thought that was helpful. On the other hand, we obviously also operated all season long growth.

Health screens.

A certain percentage of our employees that were early.

I had to stay home because of.

Largely symptoms not necessarily.

<unk> been positive, but so that we can figure out what other challenge on that from.

I don't think there's going to be a whole new set of dynamics as we look to the future for next year.

And yeah, we do feel like it's going to be critical for us to ensure that we have a strong workforce that we have.

Enough people to the provide the experience that we need.

That we have enough affordable housing for them to be able to live in.

So I think that all of those things that we can play exactly what the environment is.

Next year I'm not sure, but I think we are planning certainly for a return to a more normal environment, probably one there.

The demand for core very poor quality individuals to work on growth.

Great. Thanks, so much.

Thanks.

Well go ahead and take our next question from Alex <unk> with Baird. Please go ahead.

Hi, good afternoon. Thanks for taking my questions I have two more near term focused ones. The first on the timing of Easter We do have an earlier Easter this year versus the last good comparable period in 2019.

Much has an early Easter weekend, moving the needle in the past, especially at more snow, making heavy resorts that might be closed in mid April.

No I don't.

I don't think we have an exact.

Assessment of that I think again, you're likely to have just these unique dynamics around COVID-19 and the travel.

System I think there's no doubt that having an earlier Easter did better than how they can start later in April because we do think it keeps people more engaged in the sport.

I think you know unclear what will happen this year and that's one of the reasons for the uncertainty in our Q4, which is on the one hand, obviously more people are getting vaccinated restrictions or moving more people I think they were looking to travel on the other hand, you know whether people decide that that's.

If the weather turns out they're going to pivot to warmer weather opportunity.

You know that.

That's possible too.

Different.

During the winter our resorts were one of the only places that you could have a real.

<unk> unique outdoor experience battleship that we had in disciplined so I think that's still unclear, but I think the earlier Easter David absolutely a positive relative to where it's.

April 20th year 'twenty growth.

Got you that's helpful. And then the second one is on the Vermont resorts, it's only been two weeks and it's getting late in the season, but can you give us a sense of how the lack of quarantine for vaccinated folks have benefited out of state visitation recently.

Yeah.

No comments on that at this point I think it's a little too close it or not I don't have that data.

I don't think we're typically giving specific data on how to stay at one particular region than the other but.

But theres no doubt that you know any relaxation of the restrictions from out of where they are I think certainly give people more confidence to come in.

Which is good and obviously as you know and I would say that the.

Certain resorts.

I've had a solid year. Despite some of the challenges that have been out there, which could push has been good and I think.

As mentioned earlier, the Pic acquisition.

[noise] contributor I think to our results for the season.

Okay understood. Thank you.

Right.

And we'll go ahead and take our next question from range.

William Blair. Please go ahead.

Hi, Rob and Michael Thanks for taking my question.

I know, it's a tough year to draw conclusions clearly, but.

Just wanted to follow up on your comments on the epic Mountain rewards and how that coupled with loyalty program performed this year.

I guess did the discounts offered to the program helped things like SKU tool right or maybe hold up better than you would've thought just given the message here this year.

Any color on just how extensively guests are using the benefits.

And or if theres any kind of pain.

Panned out so far that.

Appeared to be appealing to Skus this year.

Yes, I think it's a very tough year to make a lot of these assessments.

Hey.

We have absolutely seen engagement.

I think though that in terms of weather and help drive business is tough to say because so much of the business in both ski school and timing.

We've driven by capacity.

<unk> right in terms of how many people, we could really have lots and growth.

Length of Alaska, and obviously on the dining side just massive.

Challenging I would say that from you.

Looked at Epic Mountain rewards I think the discount in dining was one that we thought would be a big driver because obviously everyone is on the mountain typically stops and for food.

And so I don't think we have those learning that said I think we feel like some of them.

On real data that we've been able to book that we know that it matters to people and people are using it.

And you know we've stopped kind of almost a relaunch of it for next season.

Then we'll have all of those businesses kind of.

Able to fully market and leverage that not worried about.

Not having the capacity to fill it up with the demand.

And I think we'll provide more information probably on our next quarterly call about some of our thoughts and we have a fall season, David will be able to look at from know exactly what happened.

So yeah, I think we still feel very committed to it.

And feel like it will absolutely be a big driver and yes. This is mark a year two.

<unk> to really test it out.

Great day extra color there on how the full day one.

Okay.

Yeah.

And we'll go ahead and take our next question from Chris <unk> with Deutsche Bank. Please go ahead.

Hey, good afternoon guys.

So you've had the epic day pass around for a few years now.

One of which is a very difficult year.

To draw any conclusions from you just said, but our question is.

With what information you do have and I know you haven't given us a ton of detailed numbers on how those various phase breakdown, but.

You kind of view that passed in something that has good pricing potential going forward.

Are you more likely to maybe add certain things to it to make it kind of the bundling product that was talked about earlier or.

How do you think how you view that day pass a couple of years in.

Yeah, I would say I live on Epic day pass I think are different and epic mountain rewards I think on epic day pass we felt like this was a good year or two.

To test it out and it's kind of second year on that.

Where we have the flow line of products because.

Yeah, I think it performed incredibly well even in the face of Covid. The obviously.

Converted a lot of people who were previously what type of buyers to the past.

And the past does come obviously with an advanced commitment so that requires people to have more confidence in their data and their ability to speak for the season. So there is no doubt that I think there was a mix of things going on this year with COVID-19 and the uncertainty around travel obviously, we did implement a reservation performed and it certainly could be.

Some people, who want to kind of get into a pass because of that.

But largely I think our reaction to watching what happened with the product was that in its second year. It continued to make inroads.

Thank you.

I think the legs on that product are much bigger than we probably you can imagine when we first launched it.

Because it is.

<unk> used by people, who were planning to travel throughout the season versus somebody who's just coming for Christmas buying it in late November a few days and then getting the discount that way, we've always seen a much broader engagement with the product which gives us.

We think the opportunity to be aggressive with that and continue to drive forward on it.

Mountain reward.

We have not put out anything on that I think.

In terms of changing it but I would say that yeah, we absolutely would like to see that program go through a full season.

And so the bundling that we would see would be that it's kind of an epic mountain rewards and all of our season pass products not just epic day pass.

But theres no doubt that both of these things really help.

And it was we are are essentially providing a.

Lift ticket buyers, who were one to three day buyers with a product now at a substantial discount and substantial stability trough right. They are increasing their frequency, which is if you think about it for us a huge opposite right. If we can take a look at it buyers not only get them to commit an exam, but actually have them commit to more day.

They're not kind of ships that pricing discounts like that you look at the assets at a discount to overstated, but but ultimately if there.

Giving us more days than I can really balance out assessing the business like ours on the lift side there are fixed costs.

So yeah, we view well epic mountain rewards.

Couldnt perform of course, this year and provide us insight, we think epic day pass was critical to our success.

Okay very helpful. I appreciate all those thoughts and then.

This can be difficult question, probably just too early but given how important California has been.

Sure resorts in terms of customer origination.

Central outflow from California to other states further away does that is that something you can think about at this point or is it just kind of wait and see but impact your initial marketing strategies at all.

You know I think at this point no I don't think we're seeing a big enough shift in there.

That would.

It's something that we would.

What are your strategic objective around however, I would put it right obviously, we have resorts.

<unk> North America and to the extent that people are skiers and they are relocated away from California or away from a drive to one of our resorts. Obviously, we will continue to market to them to come to one of our other resorts.

And so you know it's one of the benefits I think of having that broad array, but the key thing is that we need to keep them engaged and SKU, which again goes back to the path and epic day pass like how do we make sure that we increase their frequency their engagement their renewal rates in accordance with our resorts, whether there regardless of where they live I think.

We have the opportunity to.

So trying to activate that growth.

Okay fair enough thanks very much.

Okay.

There are no further questions I'd like to turn the call back over to Mr. Katz for any additional or closing remarks.

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

Yeah.

Once again that does conclude today's conference we do appreciate your participation.

Disconnect your phone lines.

[music].

Yeah.

Okay.

[noise].