Q4 2022 Vail Resorts Inc Earnings Call
[music].
Good day and welcome to the Vail resorts fourth quarter earnings call.
Today's conference is being recorded at this time I would like to turn the conference Kierston Lynch Chief Executive Officer. Please go ahead.
Thank you good afternoon, everyone welcome to our fiscal 20th 22 year and earnings Conference call.
Winning 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 subject to a number of risks.
And uncertainties as described in our SEC filing an actual future results may vary materially.
Looking statements in our press release issued this afternoon, along with our remarks on this call are made as of today September 28th 2022 and.
We undertake no duty to update them as actual events unfold.
<unk> remarks are all also includes certain non-GAAP financial measures reconciliation of these measures are provided in the tables included with our press release.
Which along with our annual report on Form 10-K R filed this afternoon with the S. E. C are also available on the Investor Relations section of our website at Www Vail resorts dotcom.
Let's turn to our fiscal 2022 in fourth quarter results. We are pleased with our overall was results for the year, which highlight the stability and strength of our business model.
As expected results for the year significantly outperformed results from the prior year.
Marilee due to the greater impact of Covid, 19, and related limitations and restrictions on results in the prior year.
Despite the challenging early season conditions through the holiday period.
Challenges and impacts related to COVID-19.
Results exceeded our original expectations for the year with fiscal 20 twenty-two resort reported EBITDA of approximately $837 million.
The strong performance was driven by the stability from our advanced commitment pass products with approximately 72% a skier visitation.
North American resorts coming from Passholders, who committed in a dance of the season strong destination <unk>, including demand for a lift ticket and an improved guest experience from January through the remainder of the season.
Menstruating strong underlying demand for the experience at our resort.
Rosen visitation, primarily occurred during off peak periods, including weekdays and nine holidays.
Throughout the North American ski season are ancillary businesses continued to be capacity constrained by staffing and in the case of dining by operational restrictions associated with COVID-19.
Performance in the fourth quarter of fiscal 2022 improve significantly from the prior year driven by strong demand and visitation at our Australian resorts and they continued recovery in our North American Summer operations. Following the start of the COVID-19 pandemic.
Our Australian resorts experienced record visitation driven by strong demand. Following two years of COVID-19 related disruption continued momentum in advance commitment have failed. Following the addition of Hoffman Falls Creek in April of 2019.
And favorable early season condition that continued throughout the quarter.
Turning now tour of 2022 2023 season pass fail.
Advanced commitment continues to be the foundation of our strategy shifting gas from short term refundable lift ticket purchases two a nonrefundable past commitment before the season starts in exchange for value.
We are very pleased with the results of our season pass fail to date, which demonstrate the strength of the guest experience.
Network of mountain resorts, and our commitment to continually investing in the guest experience.
Through September 23rd 2022, North American ski season pass fail increased approximately six per cent in units and seven per cent and failed dollars as compared to the period in the prior year through September 24th 2021 <unk>.
Including failed for the seven Springs resorts in both periods and adjusted to eliminate the impact of foreign currency by applying an exchange rate of 76 cents between the Canadian dollar in U S. Dollar in both periods for Whistler Blackcomb paxil.
These results are particularly strong considering the company achieved the growth of approximately 42 per cent in units and 17% and failed dollars last year.
September 17th 2021 compared to the prior year through September 18th 2020 <unk>.
Excluding sales for the seven springs resorts in both periods.
<unk> sales growth was driven by our renewing passholders with particular strength and renewing pass product holders that were new to advance commitment products last year.
And we saw strong growth, particularly in destination market <unk>.
The strongest product growth was from epic day pass products are attracting new passholders, who are lower frequency gas into advanced commitment products, including the new tier of products launched in 2022 2023 with access to select regional and local resorts.
Epic and epic local past products continue to represent the largest portion of our past products with these products orienting two more higher frequency skiers and riders.
As we expected epic and epic local pass products were down approximately 10 per cent in units versus the prior year period after seeing growth of over 50% in the comparable prior year period.
We expect the majority of our future growth and pass sales will continue to come from our epic day pass products as we convert low or frequency lift ticket purchasers to our advanced commitment products.
Pass sales dollars continue to benefit from the seven and a half per cent initial price increase in subsequent incremental price increases relative for the 2021 2022 season, largely offset by the mixed impact of the growth of new Passholders into epic day pass products, including.
Our new lower price epic Daypack offerings.
Following the strong trade up results last year, we are pleased that net migration among renewing pass products holders remains near neutral with minimal degradation relative to our spring pastels.
As we enter the final period for season pass fail, we expect our December 2022 growth rate to be relatively consistent with our September 2022 growth rate.
We continue to prioritize advanced commitment is the best way for guests to access our resorts.
<unk> the last year lift ticket sales will be limited during the 2022 2023 season in order to prioritize gas committing an advanced and preserve the guest experience at each resort.
We expect these lift ticket limitations will further support our resorts and communities on peak days and we do not anticipate that the limitations will have a significant impact on our financial results.
Now I would like to turn the call over to Michael to further discuss our financial results in fiscal 2000 twenty-three outlook.
Thanks, Kirsten and good afternoon, I was curious emerging real pleased with our results for fiscal year 2020 to get into them attributable to bill resorts reached $347.9 million or $8.55 per diluted sure, particularly or 2022 compared to net income attributable.
<unk> $127.9 million or $3.13 per diluted you're in the prior year.
Reward reported EBITDA was $836.9 million in fiscal year 2022, compared to resort reported EBITDA $544.7 billion in the prior year.
This increase was primarily due to the greater impacted COVID-19, and related limitations and restrictions on results of the pro your.
Moving now to our official 20 twenty-three outlook.
Head into fiscal year 2023, we were encouraged by the strike in advance commitment product sales and our continued focus on enhancing suggestion employee you experienced while maintaining cost discipline or.
Or employee embarrassment of approximately $175 million to return to full shopping level of operational but <unk>, along with our expected capital investment of over $300 million in calendar year 2022, or expect to get further elevate suggests experienced receiving an increase the capacity of our resorts.
Despite freezing broad policy inflation and after incorporated in our industry, leading <unk>, we expect meaningful growth for fiscal 2000 twenty-three relatively official 2022 and strong resort EBITDA margins.
Or guidance for net income attributable to Vail resorts is estimated to be between $321 million and $396 million for fiscal 2023.
Tomato resort reported either golfer official 20, twenty-three will be between $893 million and $947 billion.
We expect the operations will be seven springs resorts and <unk> to contribute approximately $22 million resort reported EBITDA officially your 2023, which is an incremental $4 million a resort reported EBITDA compared to fiscal year 2022, excluding the application and integration related expenses.
Decision and integration related expenses are expected to be an estimated $4 million in fiscal year 2023 associated with the resort acquisitions.
We estimate the resort EBITDA margin for fiscal 2000, twenty-three will be approximately 31% using the midpoint of the guidance range.
The guidance as soon as the continuation of the current economic environment normal weather conditions and no material impacts associated with COVID-19 for the 22 23, North American and European ski season.
2022, and 40 twenty-three Australians excuses.
Guidance also was supposed to return to full staffing levels and operational but bridge consistent with the expectation shared in the company's March 2022, Investor Coffers Frequentation.
Guidance assumes an exchange rate of 77 cents between the Canadian dollar in the U S. Dollar related to the operations were black hone in Canada and exchange rate of 70 cents between the Australian dollar in U S dollar related to the operations Hirscher falls Greek and haul them in Australia and in exchange rate of one dollar and two cents between the Swiss franc in U S.
Related to the operations of vulnerable children in Switzerland.
While we are cognizant of the broader economic outlook remains on certain and there are challenging headwinds, including inflation monetary policy in segments of the economy showing signs of slowdown we remain encouraged by refusing the data advantage commitment sales results.
Which demonstrate continued strength in demand for the experienced that are resorts and the loyalty of our past product orders.
We will monitor the macroeconomic environment as we head into the upcoming season and believes that we will continue to benefit from the stability and resilience of the business model, particularly with the strength scale and affordability of our advanced commitment products and the diversification of our resort network.
Our balance sheet and liquidity position remains strong or total cash and revolver availability as of July 31st 2022 was approximately $1.7 billion with $1.1 billion in cash on hand $417 million.
U S revolver availability under the Veil holdings credit agreement and $220 million, a revolver availability under the Whistler credit agreement.
As of July 31st 2022, our net debt was two times trailing 12 months total reported EBITDA.
On August 31st 2022, the company entered into an amendment avail holdings credit agreement to extend the maturity date by two years to September 2026.
Company declared a quarterly cash dividend of one dollar and 91 cents per share avail resorts common stock that will be payable on October 24th 2022 to shareholders of record as of October of 2022 <unk>.
Including shares repurchase during the fourth quarter for the year ended July 31st 2022, the company's repurchase 304567 shares of common stock at an average price of $246.27 for a total of approximately $75 million.
We intend to maintain an opportunistic approach to share repurchases. We will continue to be disciplined stewards of our capital and remain committed to continuous investment in our people strategic high return capital projects strategic acquisition opportunities such as the recent additions are vulnerable to dream in the seven Springs resort Andrew.
Turning capital to our shareholders through our quarterly dividend and share repurchase program.
As previously announced on August 3rd 2022, the company closed on its purchase of a majority stake in <unk>, marking the company's first strategic investment in an opportunity to operate a ski resort in Europe .
<unk> is a renowned destination ski resort in central Switzerland, located less than 90 minutes from three of Switzerland major metropolitan areas absurd Lucerne Lugano in approximately two hours from Milan, Italy.
The company acquired a 55 per cent ownership stake in <unk>, which controls and opera resolve the resorts mountains or mountain ski related assets, including list most of the restaurants and the ski school operation.
Bill Resorts 149 million Swiss francs investment is comprised of 110 million Swiss francs investment into <unk> indirectly for using capital investments to enhance the guest experience on the mountain and 39 million Swiss francs pay the <unk>, which will be fully reinvested into the real estate developments in the base area.
For the 2022 2023 season epic Passholders will receive unlimited and unrestricted access to honor and lots of <unk>.
Local passholders will receive five days at the resort and Epic day pass holders with all resorts access will be able to visit during any of their days.
Now turn the call back over to <unk>.
Thank you Michael.
The experience of our employees and gas is the core of our business model and the company is using its financial resources and the stability. It has created through its advanced commitment pass program to aggressively reinvest and deliver on our company mission of providing an experience of a lifetime is.
As previously announced the company is making its largest ever investment in both its employees and its resource.
The company is investing approximately $175 million in our employees, making our frontline talent, a strategic advantage, including industry, leading minimum wage plus career and leadership differentials across all 37 of our North American resorts.
Leadership development for frontline talent to build their careers that fail resource invest.
Investments in affordable housing for our employees and expanding our human resources department to better serve our employees.
The company achieved full staffing levels for summer in North America and across our three Australian resorts for winter.
While it is very early in our hiring process for North America Winter season staffing are hiring is currently on track for full staffing levels with strong volume of applications for seasonal frontline staff and strong retention of staff from last winter and the summer.
We remain dedicated to delivering an exceptional gassed experience and will continue to prioritise reinvesting in the experience at our resort.
We are committed to consistently increasing capacity through lift terrain and food and beverage expansion projects.
And are on track to complete 18, new or replacement lifts across 12 resorts in advance at the 2022 2023, North American ski season.
Part of our one time incremental investment this year to accelerate that strategy, which will meaningfully increase lift capacity at those lifts location.
Vail Mountain. This includes the installation of a new four person high speed lift in the Sun Sun downfall, and the replacement of a four person lift with a new six person high speed lift and the game Creek Bowl.
At Whistler Blackcomb. This includes the replacement of the four person high speed Big Red Xpress lift with a new six person high speed lift and.
And the replacement of the six person Creekside gondola with a new 10 person high speed gondola.
As discussed in prior announcements, we are also make installing new or replacement lift at Breckenridge Northstar Heavenly So Mount snow at a cash Jack Frost, Big Boulder, Boston nose and Brandy one.
While 18 lift projects are on track for the 2022 2023 season three lift project has been delayed and are expected to be completed in calendar year 2023 subject to approval.
In Park City, The Park City planning Department approved a permit to upgrade the Eagle in silver load lifts at Park City Mountain in April of 2022.
And the planning Commission subsequently revoked that permit in June 2022.
While the company is committed to resolving our permit to upgrade the Eagle and <unk> silver load Lips and park city the company intends to install the two previously purchase lips at Whistler Blackcomb.
Calendar year 2023.
Replacing the four person high speed Jersey cream lift with a new six person high speed lift and replacing the four person high speed Fitzsimmons lift with a new eight person high speed lift.
Whistler Blackcomb installations remain subject to approval.
<unk> served terrain expansion project and Berkman bullet Keystone is delayed due to a previously disclosed construction issue impact.
Impacting in an area where minimal construction was permitted.
While keystones Bergman Bowl is planned to be open to gas for the 2022 2023 ski season. The lift installation is delayed with the goal for completion in advance.
Of the 2023 2024 ski season.
R Capital plan for calendar year, 20, 2020, 2022 was previously expected to be approximately $327 million to $337 million.
Due to the delays for the park city in Keystone lift project, we will be deferring approximately $10 million of capital from the calendar year 2022, the calendar year 2023.
We now expect our capital plan for the calendar year 2020, <unk> 2022 to be approximately $323 million <unk>.
The $333 million, including one time investments in real estate related projects $4 billion related to the addition of undermine sidra and integration activities associated with the seven Springs resorts.
In addition to the $10 million of cost differed from calendar year 2022 the.
The company expects to incur approximately $20 million in additional cost related to the park city in Keystone looks projects, which is included in our calendar year 2023 capital plan.
In addition to this your significant capacity expanding investment we are excited to announce details of our calendar your 2023 capital plan.
We expect our capital plan for calendar year, 2023 to be approximately $180 million to $185 million.
Including $2 million of maintenance capital for <unk>, and excluding $1 million of one time investments related to integration activities and $10 million a preferred capital associated with the Keystone in park city projects, including.
Including these one time investments are total capital plan for calendar year, 2023 is expected to be approximately $191 million $196 million.
This calendar year 2023 capital plan currently excludes gross capital investments and <unk> to drink, which we expect to announce along with further details on.
On our calendar year 20 twenty-three capital plan in December 2022.
At Breckenridge, we plan to upgrade the P. K face area to enhance the beginner and children's experienced an increase uphill capacity from this popular base area. The investment plan includes a new four person high speed five chair to replace the existing two person fixed grip lift.
As well as significant improvements, including new teaching terrain and a transport carpet from the base to make the beginner experience more accessible.
At Stevens path, we're planning to replace the two person fix script cares chairlift with a new four person lift which is designed to improve out of faith capacity and guest experience.
At <unk>, we plan to replace the three person fixed grip stomach triple lift with a new four person high speed left to increase upheld capacity and reduce guest time on the longest lift at the resort.
These projects are subject to regulatory approvals and are currently planned to be completed in time for the 2023 2024, North American winter season.
Additionally, the company plans to expand parking across four resorts by more than 500 spaces to improve the guest experienced.
The company is planning to introduce new technology for the 2023 2024, North American ski season.
That will allow guests to store their pass product or lift ticket directly on their phone.
Eliminating the need for carrying plastic cards visiting the ticket window are waiting to receive a pass or lift ticket in the mail.
Once loaded onto their phones guess can store their phone in their pocket and get scanned hands free in the lift line using Bluetooth too slow energy technology.
In addition to the significant enhancement of the guest experienced this technology will also reduce waste of printing plastic cards for past products and lift tickets and RFID chest.
As a part of the company's commitment to zero.
Even after lunch the company will continue to make plastic cards available to any guest who cannot or do not want to use their phones to store their pass or pass product or lift ticket.
The company is also investing in network wide scalable technology that will enhance our analytics e-commerce and guest engagement tools to improve our ability to target our guest outreach personalised messages.
And improve conversion.
In closing we are thrilled to see that continue the loyalty of our gas and the value proposition they see in our past products.
Or advanced commitment strategy is core to the longterm growth and sustainability of our business.
And our focus on continuing to invest in the guest experienced and our employees, who deliver that experience day in and day out.
With the North American ski season approaching I want to thank all of our employees across all of our resorts for their work to welcome skiers and riders back to our resorts.
We are all committed to delivering an experience of a lifetime this coming season.
At this time, Michael and I will be happy to answer your question. Operator, we are now ready for questions.
Thank you if you would like to ask a question. Please signal by pressing star one on your telephone keypad, if you're using a speaker phone. Please make sure your mute function. It's turned off to allow your signal to reach our equipment and.
Again, Please press star went to ask a question. Please limit your questions to one question and one follow up question.
We will take our first question from Sean Kelly with Bank of America.
Hi, good afternoon, everyone.
Wanted to start with the the the the past purchasing to you know just to make maybe a two parter here would be you know first of all you know historically, you've been a little bit more conservative on or maybe expecting Ah slowdown as we get further through the selling period you you've obviously very successful at pulling people forward. So.
[noise] your commentaries more constructive than that I think that is even into a more challenging Cobb. So what gives you some of the confidence.
You know the trends can continue you know so maybe that's kind of part one part two curious cause. This is I just was hoping you could unpack if I caught it correctly accommodate a scripted out full price epic and epic local you know those those products being down a little bit relative to prior year I'm just kinda what do you make of that what what could be the drive.
Or if I caught that dot com it correctly.
Thanks for the question, Sean I'll start with your second question first which is about epic and epic local passes.
Those passes continue to represent the largest portion of our past product portfolio and as you know they are oriented more to high frequency skiers and riders, where we are highly penetrated.
So as we expected epic and epic local or down about 10% in units versus prior year and that's after seeing growth of over 50% in the comparable prior year and that was on our expectations for epic and epic local.
So I think important to note that we expect the majority of our future growth in past will really come from epic day pass as we convert both low frequency lift ticket purchasers to advance commitment, but also guess that ski and ride at our lower priced resorts and converting those and.
Individuals into our advanced commitment products.
So at that can epic local we're on our expectations.
The in terms of our results in what we expect for the remainder of the season and the commentary that we expect our growth rate to be largely consistent I would say that our results Stevens date are very encouraging to be up 6%.
Which was in line with our expectations and particularly given we were laughing 40 per cent unit growth. The underlying dynamics that we are seeing this driven by renewing passholders, particularly people who are first time passholders last year demonstrating uhm.
Strong growth for us renewing our destination gas being a car driver and then <unk> as we think about the remainder of the season.
And what we typically see as we get move through the season as we start to we have strong underlines Amex and then we start to see him attracting more new gas into the program as we get closer to the start of the season. So at this point in time feel good about our trends at.
And what we expect them to be for the remainder of the selling cycle.
It makes a lot of time, thanks, and then here's what my father would be on labor your comments were.
Noted and and very helpful. Can you just remind us of sort of what where do we get into the P car and we do I assume we're rapidly approaching that and then you know sort of what milestones or you watch. It for you know to kind of make sure that that's in place in in any.
Plans are contingency plans you have to kind of <unk>, you know any sort of last minute shortfalls cause we know we're trying to accomplish a lot in a very short period of time, just given a seasonality of the workforce in general.
Thanks, Sean as you know our employees are the the core of our mission to create an experience of a lifetime and we made a significant investment in our employees going into this season.
When we look at our winter seasonal staffing. It is early it will be ramping up significantly over the next couple of months as we head toward opening our resorts.
And right now the indicators are very strong one being well are resolved in terms of achieving full staffing over summer. We're very good but we look at retention over employees that worked at our resorts last winter. We look at retention of our employees that are working at our resources over the summer.
And both of those are very strong indicators and then we look at the number of applicants for the job postings of new people that we need to hire as you can imagine we have pretty strong analytics around all of the measures and metrics that we're looking at.
And are disclosing this because we're feeling good about where we are on this process right now I would highlight that it does ramp up over the next few months, though as we get closer to the season and so it is still early in the process, but feeling good about where we are right now.
Thank you very much.
And our next question comes from.
B N P a pair of.
Please go ahead.
Hi, guys. It's <unk>. Thanks for the question, maybe thinking it a little bit more but you mentioned, how you expect to grow or the incremental gripped come mostly from the.
So should we expect going forward that mix remains like Edwin even if you're taking Fraser, how how should we think about.
I guess you mix in pricing.
Going forward.
Well, yes, I that is accurate assumption that what we are trying to do is move are low frequency lift ticket gas over into an advanced commitment because that is the core of the subscription model assumption that that drives stability loyalty spend capture.
And then we're trying to also move gas that go to some of our lowest lower priced resorts over into advanced commitment as well so.
I would say that it's an accurate assumption to under two assume that the future growth will come from epic day pass in terms of.
Pricing won't comment on that going forward, except that we as you know have a significant amount of data and analytics and we are constantly looking at what are the levers to pull to achieve our business outcomes.
Okay got it and then maybe a follow up on retention maybe talk about.
So you had a big increase in.
<unk>.
And last year, So how was I guess the retention of those new.
New Passholders, yeah, any color there because I guess if you. The here you don't have as many the incremental is coming mostly from day and that'd be passed that the global password is it fair that some of those guys want reviewing or do you think about that.
Thanks.
No I well first of all I would say when we look at renewing Passholders you can maybe think about it in two different buckets the year, one renewals or the new people who.
Actually where new into the past program last year, and then you have what what I'll call our multiyear passholders people who've been in the past program for years and years.
Overall, our net migration among renewing passholders remains near.
Near neutral with minimal degradation relative to our spring pass fail. So I think that's an important metric or renewals or strong with both of the population that I. Just mentioned are multi year renewals were strong and our year one.
First time householders, the renewals among that group or strong as well and I think that's an important underlying health of the business dynamic because it really validates are compelling resort network. It validates the guest experienced the investments that we make into the guest experienced as well as the value that that <unk>.
<unk> for a desk.
Yeah, no that's great to hear thanks, so much.
Thank you.
And we'll take our next question Chris.
Please go ahead.
Yeah. Good afternoon, everyone. Thanks for taking my question what was always talk for me about margins user guide you to about 31% resort margin at the mid point.
I think that's about where you word for school 17, 18 19, there's been a lot of.
Changes to your two business models since then with the volume in pricing and it obviously depletion amuses is that 31% kind of do you think that's kind of a new one right is there you know whether structural things that they can make that go higher in the future or do you think that's great way to.
The basic.
Yeah. Thanks for <unk>, you know I think yeah, we're actually quite pleased to be able to guide did a 31 per cent, Oregon, we think that that's really strong in the context in which we're operating and you know I think important to remember that last year actual margin was actually above what we guided too.
In part because <unk> you know in part because we actually did not achieve the staffing levels, but but we wanted and we did have strong business results, but but you know we we did wind up with a stronger than expected margin last year and I think importantly, this year as we look to return the business to Falstaffian.
And her full operating capacity to really focus on the guest experience. We're also doing that in a way that's very focused on the on the discipline for cross R. P N L and how we're gonna drive the most revenue growth with that full operating capacity, but also investing where we need to to ensure the sustainability of our work for.
<unk> and the investments that we want to make any employees <unk> and of course, we're making a very significant one time investment this you're in our wage structure and as we've shown over time when you look at the longterm margin growth in this business, we've shown us wrong ability through price and growth and caused this.
Plan to expand margins over time and will absolutely continue to focus on that going forward.
Okay. Thanks, Thanks, Michael and then.
You'll just have to follow up you you've talked about kind of an expectation that a lot of the growth going forward on past products is likely to come from the the day pass.
Is there any way to possibly also capture ancillary more ancillary stuff.
Uhm upfront with advanced commitment I know, that's tricky and I know, there's a mount some amount that spur of the moment people will just do it but is there any thought to.
Possibly getting a little bit more of that locked into or is that is that just too difficult to do.
No Chris I think absolutely that is our intention in the premise of the lifetime value model and subscribing or gas in advance of the season and part of that assumption and data support is that we will get the capture of the.
The ancillary in the compounding effects of that one of the things you sauce do a couple of years ago pre Covid was announced at epic mountain rewards incentive to our passholders for a discount on ancillary businesses and that benefit of being a subscribe.
<unk>, we absolutely leverage and intend to keep leveraging to increase that spend capture.
Okay very good thanks.
Thanks, Chris.
And we'll take our next question from David Cats with Jeffries. Please go ahead.
Alright afternoon, everyone. Thanks for taking my question can you talk a bit about <unk> no I think it might be.
Instructive just to get a sense for.
What your vision is you know for that and how it sort of leaves into the rest of the system potentially you know what that could become longer term.
Yeah, I mean, I think you know we're we're very excited about you know honor my joining the Vail resorts network and you'll pass access you know we've announced since the acquisition clothes in in early August .
I think it is we talked about before I think you know we feel like this is a really important moment for us to have the opportunity to you know wind up taking a majority stake in and and an operating position in a resort you right in and one of the the best ski regions in Europe and Central Switzerland.
And it's yeah, let me think that it's a quite remarkable resort. Both in terms of this do you experience the capital that we're going to be able to invest in the deal that we ultimately structured with our partners as well as the base area to it I'll admit that you know has been done and N as ongoing there to truly make it a prime.
Near destination in Europe , and and we're very excited both about what what <unk> today, and and you know with the team that we have there and with our partners, making it one of the truly great destinations in Europe , and we do think it's an important you know first step for us as as we consider future growth opportunities in your.
<unk>, we're going to be very focused on executing well <unk> for the guests that are that are visiting us there and yeah, certainly optimistic about what it what it serves as a starting point for us in Europe .
David Please.
Just to build on that David I agree with that and that would just stay in the in the short term you know we are really focused on as newly into the European market learning building, our six dash building, our relationships and our partnerships longterm. If you look at the total addressable market in your.
We're up in the size of it compared to North America, you can see the potential for the bed unlock and growth and value creation.
So if I may just just to follow that up it it it sounds as though your next move in Europe is probably to put more capital into that mountain before you would contemplate.
Another one or.
Sort of Chew on this one and actualize. This one a bit before you look at more.
Okay.
<unk> <unk> <unk> <unk> I was just gonna say no. We're we're very focused you know as both gears and I sat on executing well right at all undermine it's it's a great resort with a lot of growth opportunities I think importantly, if you remember from our announcement about the deal the way that we structured the deal was actually oriented.
Very much to reimbursement. So you know the hundred and 49 million Swiss francs that we invest at 110 million of that is injected directly into the business for future capital that were already in the process of planning and plan to announce the first phase of hopefully in December <unk>.
And yeah, that's gonna be very much. The focus is both how we can invest to improve the resort how we can partner with with as I am in the base area and yeah deliver the guest experience you know in the next few years and certainly started to introduce our epic passholders to the resort, which will be a great opportunity for for.
Yes.
Perfect. Thank you very much.
Thanks, David.
And we will take our next question from my Santa with J P. Morgan. Please go ahead.
<unk> Michael Thanks for taking my questions first an ancillary revenue how do you think about where this bucket trends normalize is going forward and how does a shift towards more pass units and pass sales in Texas.
Yeah, or if I'm if I'm interpreting your question correctly in terms of ancillary revenue you know I think the the biggest thing for this coming year is the return to the full capacity as you know over the last few years, we've had quite significant operating constraints.
Primarily due to Covid and then last year due to some of our our stopping challenges and so a big part of our employee investment was to bring those businesses back to full capacity, which will be a big driver. We anticipate of our revenue growth this year and and then more broadly.
<unk> certainly looking at differentiated strategies to you know continue to drive each of those businesses and will continue to invest and innovate. There you know as it relates to Passholders, an ancillary I think in order to remember that we have a few years ago introduced our program called Epic Mountain rewards, which gives path.
<unk> 20 per cent discount on.
On those ancillary products and so that is a key part of our strategy in moving people into advanced commitment and then encouraging those guests to use those ancillary businesses to drive growth.
Okay helpful. Thank you and then maybe one just pivoted interested and you talked about capacity and all of these projects that are going on park City Keystone Breckenridge Stevens pass how do you think about the total capacity that these projects can add after completion.
You know when I think about lift projects in particular, I think about improving the guest experienced in terms of the upload capacity and the lift line wait times and the impact that that has on our gas waiting in those <unk>.
Lines, so I'm, putting in high capacity high speed lifts and prove that experienced by reducing that wait time for our guest.
Mmm.
And we will take our next question from dead Chicken with Credit Suisse. Please go ahead.
Hey, How's it Goin'. Thanks for taking my question on on <unk> did you ever see an acceleration after the announcement that window tickets would be limited was this this trigger or like a call to action and was there any cohort in particular was it renewals single day conversion.
<unk> or just <unk>.
The announcement about our lift ticket restrictions you know hard to tell if there was really a meaningful call to action or impact because it's actually similar to how we operate at the last couple of seasons.
And we're always focused on driving more gas into advanced commitment and earlier. So I think I would say, it's hard to parse out if really that had any type of an impact.
[noise] that's helpful and then pivoting a little bit Canada was pretty much closed off the U S gears. The last few years, so and your guidance did you assume a full recovery of that market and then what data points, where you're looking at to make that decision whether hotel bookings just what kind of phone you're looking do you have.
Yeah, and then we did we did assume for recovery on on Whistler Blackcomb. It certainly was impacted last year and you know the the biggest indicators that we're looking at our our travel restrictions, which had largely been lifted at this point for for Whistler.
Black home and yeah. So we're quite optimistic about the outlook in particular, because a lot of yes, we're not able to to get there. The last few years in their normal travel schedule.
Gotcha that was all for me. Thank you.
And we'll take our next question from Ryan Sunday with William Blair.
Okay, guys and thanks for the question.
I wanted to follow up on the strength of <unk> passengers that were nude ethics this year.
<unk>, how much of a surprise I guess, if any of <unk> was that to you and does it imply you should maybe you're taking the past even work encourage that first trial or is there a point, where you start to do that and it makes it past just too complex for the kitchen to understand.
Sorry, Ryan can you repeat the second part of your question.
Yeah.
More around you know <unk>.
Should you continue to evolve to past encourage trial or if you get to a point, where it becomes too complex and the guest doesn't really understand how it works.
So in terms of our renewing householders were incredibly pleased to see it and overall are resolved are on our expectations. So no I would not say that that was a surprise highlighting though for all of you that the drivers of why we're able to grow six.
Per cent on top of 42 per cent unit growth.
Is this combination of strength that we see in our renewing passholders in particular, those first time Passholders that just joined last year, which to me I take as a really great validation of the guest experienced the resort network. The investments, we're making the value that we have we all.
Saw the strength and destination and epic Daypack, but our overall results.
Are in line with what we expected.
Okay. Thanks, I just wanted to understand it would seem more cause segmentation there.
The final product.
And then it sounds like demand in Australia was great with with macro and inflation, becoming bigger headwinds is there anything that could glean from that season in terms of the way. It gets behaved either in terms of spending or you know behavior around my could stay as you move through the quarter and beyond just to kind of projected.
The end of the the North American cheese.
All three of our Australian resort had record years, and I think that you know some pent up demand because of Covid impact in Australia, we are always.
<unk> you know we have the benefit of having those three Australian resorts over the summer and their winter to really get learnings from and we do always look at that and try to understand what implications that has for us going into this coming.
As in and I'd say, yeah, right now as we look forward into this coming season, feeling like the indicators per us are strong in terms of the past growth, which is you know probably the single biggest indicator of the demand for our experienced but also then mitigating risk that.
He may faced with the economic uncertainty that's going on.
Great. Thanks.
And we will take our next question from Patrick.
Securities. Please go ahead.
Good afternoon, everyone.
It looks like today, you're sitting on about 1.1 billion of cash and obviously a substantial increase from pre COVID-19 levels about 100 million.
At what point do you get more confident that you can have a cash balance that's closer to.
To those pre COVID-19 levels, and that's roughly a billion dollars and what would your priorities for that billion dollars of cash B. If you should.
Get to that level of comfort.
Yeah. Thanks for the question Patrick I mean, I think you know we've taken a quiet consistent stand on on capital structure and and capital allocation over time and you know I think the expectation is that that will continue to to focus on the areas that we have in in terms of capital allocation. We certainly you know whether.
Whether it's cash on the balance sheet availability on credit facilities, we're really focused on the opportunity to reinvest in the business and clearly with our capital plan for last year.
Capital plan, we just announced this you're the employee investment that we're making as well as the two acquisitions are our ability to continue to invest in in internally in the business as well as defined strategic acquisitions US Yeah. We're we're going to focus you know I think as it relates to cash on the balance sheet and that that.
You know, we we continue to be in a in a very you know a good spot where around two times not dead in total and you know we we continued to look at that to ensure that we keep an appropriate amount of of leverage on the balance sheet and you'll have the board support as it relates to returning capital to shareholders with our.
Primary tool will be in the quarterly dividend and you know we've been quite aggressive and raising that as we would come out of Covid and taken opportunistic moments to to do share repurchases, which I think will will continue to look at both as ways to return access capital to shareholders.
Okay.
Okay. Thank you.
Second question to your.
I Wonder if you folks have any views on a short term rental for with many of the resort communities. There are a lot of controversy we've seen a lot of.
Short term rentals come on the market you know much more so than.
<unk> pre COVID-19 levels and I'd have to imagine.
Short term rentals refer to the.
You're gonna get her a double edged sword for you folks one certainly helps visitation and those visitors or I was looking to spend on your.
And resorts, but on the other side you know it really takes employee housing out of the market, which odysseys as we know is a big issue right I Wonder if you have any any view on.
That issue at hand, with a short term rentals. Thank you.
Yeah. Thanks, Patrick <unk> view on short term rentals, but view on affordable housing for employees, obviously is a huge priority for us and.
The key for us on that is really partnering in our mountain communities to try to solve that problem.
We.
Believe it's gotten to the point, where it is a crisis in our mountain communities and it has to be a top priority and I think we've.
Thankfully had some really strong success recently focused on that in partnership in Park City in the Canyon village with a new affording affordable housing development that is gonna provide affordable housing for over 440 of our employees and then in Whistler Blackcomb a great <unk>.
Aberration and partnership with the town to work on an affordable housing project for our fiscal year 24 that will come to fruition, so really our our key focus in priority.
Is trying to find these opportunities and our mountain communities and to partner with our communities to create those opportunities. So that we can make sure.
That there are options for our employees.
And we'll take our next question from Jeff <unk>. Please.
Please go ahead.
Pay a property that really for taking my questions. Just just two quick ones for me you know people get guidance. It looked like it implies by 9% organic growth once you adjust for the <unk> for the various headwinds and tailwinds that you've decided against the $837 million resort EBITDA.
Reported I guess what are the unique puts and takes you would call out. So it kind of factors is at 9% as compared to what you would be U S. I guess, a quote unquote normalised run rate organic growth rate, let me know if that makes sense.
Yeah, I think I think it does make sense I mean, I think you know the the clear drivers you know kind of go back to what we actually presented in our March Investor presentation, where are we have the.
Large employee investment and wage investment that we're making off set you to visit but that's it inquiries on the cost side, but that's offset by significant growth that we're going to be able to achieve right from a number of things. One is last year, we had a number of headwinds and to.
Terms of Q1 impacts in Australia challenging early season in North America, and some of the travel concerns and Whistler Blackcomb. So we're anticipating all those come back to normal. We're also getting the what we expect to be the full benefit of the full capacity of our ancillary businesses, particularly in food and.
Beverage <unk> as we return to full staffing and no COVID-19 restrictions. So those pieces are are big parts of the top line growth story and that of course, we are anticipating Ah price increases in this inflationary environment, which will also drive pieces of the the revenue grocery.
<unk>. So those are those are really the big drivers of of the top line growth and of course, the increase in wages will be the biggest driver on the cost side along with of course, we are facing inflation is everybody else's all across our operating expense structure.
I would say that the acquisition side is actually not as impactful this year outside of the acquisition and integration expenses, because seven springs perform so well last year, we actually yeah, we're able to actualize. It a good portion of seven Springs results all last urine and those will continue into this year and then.
Of course, we have the the additional $4 million that we pulled out additional undermine expected contribution. This year. So those are the big pieces I think.
I think yeah, we're we're quite yeah quite comfortable with the the plan that we put together.
Okay understood. That's all part I guess, just just to hang on there for a second just to be clear. So it kind of what I'm, what I'm calculating the 9% a baseline I'm thinking about.
The fully adjusted you know when you reported it during the Investor Day is 832 cents. Then you about paste your initial full year 22 guidance, but I'm, taking the normalized.
Got a four year 22 after the Labour investments after the ketchup to full capacity you know after the normal I travel condition, yes kind of that normalized.
Using that as a baseline yes, the calculate the groceries I guess with that in mind.
<unk> <unk> do you mind kind of framing I guess, you know how that 90%. So yeah. So normalize the areas of the largest so the largest differences between kind of the normalized and for everybody else I think I think we're referring to the Investor Conference presentation Bridge that we provided back in March of 2022, the largest pieces that we had not.
Included in that bridge, which are of course, the the bridge between that to our full year guidance word two pieces one what we anticipated from organic revenue growth, which of course is the combination of both our price increases and or volume expectations outside of the normalizing adjustments.
And then inflation essentially on non wage areas of the business and so those are the two pieces that would be incremental to the normalized to the normalized starting point.
Okay understood. That's that's helpful. Thank you Michael and then for my follow up it looks like logging IBRA as being guided down year on year at the mid point just curious if you could provide some more context with what's going on there.
Yeah, I mean, the the biggest driver of that is that as we announced we we actually sold one of our properties. The double tree in Breckenridge, which was you know as as with any hotels sale getting getting the proceeds but of course when you enter into a management agreement instead of a note and operated situation.
The the EBITDA goes down and so that's the primary driver of that change I would say that the logging business did quite well last year as do the rest of hospitality as it related to right and so you know we did not have some of the same constraints on logging that we have in the rest of the business.
Okay perfect. That's that's very helpful. Thank you very much.
Okay.
And we will take our next question from <unk>. Please go ahead.
Hello, Good evening, everyone. Thanks for taking my questions. So.
So I wanted to circle back to the first question and I hope I'm, not beating a dead horse here, but the ethic, an ethic local being down this year and I understand that that's in line with internal expectations, but <unk> I put your comments together right. We notice the highest like the highest frequency skier and it sounds like from your comments.
This would be a skier that's not new to the program. So I guess you know looking at all the data that you guys could like who are these these folks I guess that are that are leaving here at this point.
Okay. So to clarify on <unk> that is the largest portion of our passport folio. It's comprised of both Brant renewing passholders as well as new people come into the past program on epic and epic local as well.
Those.
Yes tend to be high frequency skiers and riders and so when you think about the total addressable market. We are highly penetrated in that market and last year epic and up at local through over 50% versus the prior year. So we saw tremendous amount of growth and those two <unk>.
Product lines, what we're seeing this year as we expected is that we're down about 10%.
<unk> noted earlier that we do have strong renewals overall that includes an epic an epoch local <unk>.
And that when you think about the.
Sporadic line and how we're gonna capture the majority of new people coming in incrementally to the past programs.
The total addressable market that is remaining <unk>.
Tends to be the lower frequency skiers or the skiers that are skiing at lower price point.
<unk> and our portfolio and really sell the majority of the growth that's gonna come in the future is really gonna come from that group because the addressable market of that group is so much bigger does that help clarify.
It sounds like it's just really really tough comparisons send that segment, if I'm, if I'm able to <unk>.
Maybe paraphrase.
Mm.
Okay. Yeah. That's helpful. Thank you and then just a second follow up you know.
E F. F X rates are are obviously extremely volatile and every everyone sort of has outsized attention to it right. Now I was just curious if you guys have given her could give them sort of a net or <unk> EBITDA sensitivity to to a 1% change in your basket of currencies across Canadian dollar and 10 and the Aussie dollar specific.
<unk> that would be helpful for us.
No I appreciate the appreciate the end, but we've not put that out publicly but I can certainly you know think about how we can can help size that for you in the future I mean, I would say that you know that the vast majority of our EBITDA revenue in and guess continued to be U S centric.
Of course, we do have you know Whistler, which is a large resort you know the largest in our portfolio and then you know Australia has performed well but continues to be you know it can just be a relatively small part of the overall company, but we can certainly think about how besides that.
For you in the future.
Okay, great. Thanks.
It appears there are no further questions at this time I'd like to turn the conference back to curious to Lynch for any additional Ah closing remarks.
Thank you operator. This concludes our fiscal 20 twenty-two ear and earnings call. Thanks to everyone, who joined US today. Please feel free to contact me or Michael directly you should you have any further questions. Thank you for your time this afternoon Goodbye.
This concludes today's call. Thank you for your participation and you may now disconnect.
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