Q1 2024 Vail Resorts Inc Earnings Call
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Good afternoon, and welcome to the Vail resorts fiscal first quarter 2024 earnings call.
Today's conference is being recorded currently all callers had been placed in a listen only mode and following management prepared remarks, the call will be opened up for your questions. If you would like to ask a question at that time. Please press star one on your telephone keypad, if you need to remove yourself from the queue Press star two.
To get to as many questions as time permits we ask that you. Please limit yourself to one question and one follow up.
Anytime if you should need operator assistance press Star zero.
I would now like to turn the call over to Kirsten Lynch Chief Executive Officer of Vail Resorts you may begin.
Thank you good afternoon, everyone welcome to our fiscal 'twenty 'twenty four first quarter earnings conference call joining.
Joining me on the call. This afternoon is Angela courts, our Chief financial Officer before.
Before we begin let me remind you that some information provided during this call may include forward looking statements that are based on certain assumptions and are subject to a number of risks and uncertainties as described in our SEC filings and.
Actual future results may vary materially.
Forward looking statements in our press release issued this afternoon, along with our remarks on this call are made as of today December 7th 2023, and we undertake no duty to update them as actual events unfold.
Today's remarks also include certain non-GAAP financial measures reconciliations of these measures are provided in the tables included with our press release.
Which along with our quarterly report on Form 10-Q were filed this afternoon with the SEC and are also available on the Investor Relations section of our website at Www Vail resorts dotcom.
With that said, let's turn to our fiscal 'twenty 'twenty four first quarter results.
We are pleased with our results for the quarter, which exceeded our expectations due to the timing of expenses, primarily related primarily related to season ramp up activity.
As we expected resort reported EBITDA declined compared to the prior year period, primarily driven by cost inflation $14 million lower EBITDA from our Australian resorts due to normalized results following record demand and favorable conditions in the prior fiscal year.
As well as from current year weather related challenges that impacted terrain.
$4 million lower EBITDA from our North America summer operations due to lower demand for summer mountain travel and weather related challenges and $4 million negative impact from foreign exchange rates.
Turning now to our 'twenty to 'twenty three 'twenty 'twenty four North American season pass sales and early season indicators.
We are pleased with the results of our season pass sales, which continue to demonstrate the compelling value proposition of our pass products. Our network of mountain resorts. The strong guest experience created at each mountain resort and our commitment to continually invest in the guest experience.
Product sales for the North American ski season increased approximately 4% in units and approximately 11% in sales dollars three.
December 4th 2023, as compared to the period in the prior year through December six 2022.
<unk> product sales are adjusted to eliminate the impact of foreign currency by applying an exchange rate of 74 sense between the Canadian dollar and the U S. Dollar in both periods for Whistler Blackcomb pass sales we.
We expect to have approximately 2.4 million guests committed to our 41, North American Australian and European resorts in advance of the season and Nonrefundable advanced commitment products. This year, which are expected to generate over $900 million of revenue and over 70 Threep.
<unk> of all skier visits excluding complimentary visits.
The results of our North American pass sales demonstrates strong loyalty among our pass holders with particularly strong pass sales growth from in renewing pass holders and also from guests in our database, who previously purchased passes but did not buy a pass and the previous season.
The company successfully grew units across destination international and local geographies with the largest unit growth in destination markets, including in the northeast.
The business also achieved growth in the mid west and mid Atlantic, which after challenging conditions last season highlights the stability of our advance commitment program.
Royalty of our guests and significant opportunity to drive cash penetration in the east.
Pass sales grew across all major product segment past products segments with the strongest product growth and regional pass products and epic day products as lower frequency guests and local northeast gas continue to be attracted by the strong value proposition of these products.
Past unit growth rate moderated relative to our September 2023 growth rate as we successfully moved purchasers earlier in the selling cycle, including gas who purchased our newer product offerings in the prior year period.
Pass sales dollars benefited from the 8% price increase relative to the 2022 2023 season, and new pass holders coming into the program and higher priced products relative to the sales results in the prior year period, partially offset by the mix impact from the growth of regional and Epic day pass.
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Heading into the 'twenty to 'twenty, three 'twenty 'twenty, four north American and European ski season, our significant base of committed gas.
Which has approximately doubled over the past four years provides meaningful stability for our company, especially during economic uncertainty.
Iraqis resorts and Whistler Blackcomb have opened with typical conditions for this time of year and under ignite syndrome has had particularly strong conditions to start the season.
Oh Who's early season has been more challenging with limited snowfall and warm temperatures to date and our resorts in the east have experienced typical seasonal variability for this point in the season.
Lodging booking trends for the upcoming season are generally consistent with the prior year level. So it is important to note that our lodging bookings represent a small portion of the overall watching inventory around our resorts.
While our mountain resorts are continuing to hire for the winter season, we are on track with our staffing plans and encouraged by the strong return rate of employees from the prior season.
We are pleased to welcome guests to all of our resorts.
2023 'twenty 'twenty, four north American and European ski season kickoff with significant investments in the guest experience.
At Keystone. This includes the transformational lift served terrain expansion project and Bergman Bowl, increasing lift serve terrain by 555 acres with the addition of a new six person high speed lift.
At Breckenridge. This includes the upgrades to the peak eight base area enhancing the beginner and children's experience and increasing upheld capacity from this popular based area, including a new four person high speed five chair to replace the existing two person fixed script left.
New teaching terrain and a transport carpet from the base to make the beginner experience more accessible.
At Whistler Blackcomb. This includes the replacement of the four person high speed Fitzsimmons left with a new eight person high speed lift it.
Stevens pass this includes replacing the two person fixed script cares chair left with a new four person left which is designed to improve out of base capacity and guest experience.
That out of cash. This includes the replacement of the three person fixed script stomach triple left with a new four person high speed lift to increase upheld capacity and reduce guest time I'm a longest left at the resort.
The company is also piloting my epic here at Vail Beaver Creek Breckenridge in Keystone for a limited number of pass holders during the 2023 'twenty 'twenty four North American ski season, which will introduce a new gear membership program that provides the best benefits of gear ownership, but with more choice.
Lower cost and no hassle.
My epic year provides its members with the ability to choose the gear. They want for the fall season or for the day with a select from a selection of the most popular and latest ski and snowboard models and have it delivered to them when and where they want it including Slopeside pick up and drop off every day.
In addition to offering the best skis and snowboards My epic year will also offer named brand high quality ski and snowboard boots with customized insoles and boot pet scanning technology.
The entire my epic your membership from gears selection to boot fit to personalized recommendation to delivery will be at the members' fingertips through the new my epic App.
My epic year is expected to officially launch for the 'twenty 'twenty four 'twenty twenty-five winter season at Vail Beaver Creek, Breckenridge, Keystone Whistler, Blackcomb Park City, crested Butte, Heavenly North Star Stowe, Okemo and Mount Snow.
And further expansions are expected in future years.
The company is also introducing new technology for the 2023 'twenty 'twenty four ski season at its U S resorts that will allow guests to store their past product or less tickets directly on their phone and scan it left hands free <unk>.
Eliminating the need for carrying plastic cards, visiting the ticket window or waiting to receive a pass or lift ticket in the mail.
Once loaded on their phones guests can store their phone in their pocket and get scanned him.
In the left flying using Bluetooth low energy technology, which is designed for low energy usage to minimize the impact on our phones battery life.
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Enhance the guest experience. This technology will also ultimately reduce waste.
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It's a part of the company's sustainability effort.
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And vision the company will have less cards for Patterson left to all guests and in future years plastic cards will be available to any guest.
Is there a phone to store their house product or lift ticket.
We are also excited to announce the launch of our new My Bank App, which includes mobile path and mobile lift tickets interact with trail maps real time, Ams predictive lift why wait times Personalised stats myopic gear and other relevant information to support the guest experience.
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 personalized messages and improve conversion.
Now I would like to turn the call over to Angela to further discuss our financial results our fiscal 'twenty 'twenty four outlook and the Crown Montana acquisition announcement.
Thanks, Kristen and good afternoon, everyone. I was curious Dan mentioned, we are pleased with our first quarter performance, which exceeded our expectations due to the timing of expenses.
Related to Susan ramp up activities.
Net loss attributable to Vail resorts was $175 $5 million for the first quarter of fiscal 2024 compared to a net loss attributable to Vail resorts of $137 million in the prior year.
Resort reported EBITDA was a loss of $139 $8 million for the first quarter of fiscal 2024 compared to resort EBITDA loss of $96 $5 million in the prior year.
Our balance sheet remains strong and the business continues to generate robust cash flow, our total cash and revolver availability as of October 31, 2023 was approximately $1 $4 billion were $729 million of cash on hand, and $634 million of combined revolver availability across our credit.
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As of October 31, 2023, our net debt was two six times trailing 12 months total reported EBITDA.
The company declared a quarterly cash dividend of $2.06 per share of Vail resorts common stock that will be payable on January 9th 2024 to shareholders of record as of December 26, 2023.
During the quarter the company repurchased approximately 0.2 million shares of common stock at <unk>.
Average price of approximately $211 for a total of $50 million.
We remain committed to returning capital to shareholders and intend to maintain an opportunistic approach to future share repurchases.
We will continue to be disciplined stewards of our capital and remain committed to prioritizing investments in our guest and employee experience.
High return capital projects strategic acquisitions, and returning capital to our shareholders through our quarterly dividend and share repurchase program.
Moving now to fiscal 'twenty 'twenty four outlook given the indicators for the upcoming season, we are reaffirming our fiscal 2024 net income attributable to Vail resorts guidance of $316 million to $394 million and resort reported EBITDA guidance of $912 million to 900.
$68 million that was included in our September earnings release based on the assumptions incorporated at that time, including foreign currency exchange rates, a continuation of the current economic environment and normal weather conditions.
Our fiscal 2024 guidance excludes the impact associated with crime, Montana, which remains subject to closing.
Heading into the 2023 'twenty 'twenty, four North American and European Ski season, we are encouraged that staffing levels are on track to deliver an outstanding guest experience and the strength of our pass sales.
Though it is important to note that our growth the growth in pass sales is expected to be partially offset by reduced lift tickets as we continue to successfully convert guests from lift tickets to past products.
In addition, there continues to be uncertainty around the economic outlook and the impact that may have on travel and consumer behaviors as we head into our primary operating season.
We are pleased to share our announcement last week that we entered into an agreement to acquire a majority stake in from Montana Mountain resort in Switzerland, The Companys second ski resort in Europe.
Carl Montana is an iconic ski destination in the heart of the Swiss Alps, with a unique heritage incredible train passionate team and a community dedicated to the success of the region.
This acquisition aligns to the company's growth strategy of expanding its resort network in Europe, creating even more value for our pass holders and guests around the world.
Much like under amounts of drone the company believes chrome, Montana Hudson unique opportunity for future growth.
Upon the closing of acquisition the company will acquire an 84% ownership stake in the entity that controls and operates all the resorts liffe and supporting mountain operations.
An 80% ownership stake in sport life, which operates one of the ski school located at the resort.
And 100% of 11 restaurants, located on and around the mountain.
Subject to closing adjustments the enterprise value of the resort operations is expected to be $118 5 million Swiss francs, including approximately 7 million Swiss francs of debt that will remain in place.
The company expects to fund the purchase price for the acquired ownership interest other resort operations through cash on hand.
Vail resorts anticipates that the resort will generate approximately 5 million Swiss francs of EBITDA in its first right in its fiscal year ending July 31, 2025, the first full year of operations. Following the expected closing later in fiscal 2024.
Bill resorts anticipates EBITDA growth over time from the inclusion of the resort on the epic pass products and investments in the guest experience.
Subject to the timing of capital project approvals and completion of Vail resorts is planning to invest approximately 30 million Swiss francs over the next five years.
In one time capital spending to elevate the guest experience and the resort is expected to generate over 15 million Swiss francs of annual EBITDA. Following these investments and inclusion on the epic pass.
This initial phase of growth of the resort is expected to be primarily driven by operating and marketing initiatives, along with capital investments focused on maximizing gastronomy efficiencies and improving and expanding snowmaking capabilities.
After closing the transaction normal annual maintenance capital expenditures for Chrome Montana are expected to be approximately 3 million Swiss francs.
The transaction is expected to close during the 2023 'twenty 'twenty four scan right Susan subject to certain third party consents.
Operations at Crown, Montana for the 20th 'twenty three 'twenty 'twenty four winter season will continue in the ordinary course of business Vail resorts plans to include access to crime, Montana on select epic pass products for the 'twenty 'twenty four 'twenty twenty-five ski and ride season.
The resort will not be included on the epic pass for any remaining part of the 'twenty two 'twenty three 'twenty 'twenty four season after the deal closes.
Now I'll turn the call back over to Harrison.
Yeah.
Thank you Angela we're pleased to announce additional details of our calendar year 2024 capital plan, which support the company's strategy is to grow with the subscription model unlock ancillary growth drive resource efficiency and further differentiate the guest experience we.
We expect our capital plan for calendar year, 2024 to be approximately $189 million to $194 million, excluding $13 million of incremental capital investments in premium fleet and fulfillment infrastructure to support the official launch of my epic here.
The 'twenty 'twenty four 'twenty 'twenty five winter season.
$7 million of growth capital investments at under Monster drink and $1 million of Reimbursable capital.
Including my Epic your premium fleet, and fulfillment infrastructure capital and onetime investments our total capital plan for calendar year 'twenty 'twenty four is expected to be approximately $214 million to $219 million. This excludes any capital expenditures associated with the crime.
Montana acquisition, which remains subject to closing.
As announced in September at Whistler, Blackcomb the company plans to replace the four person high speed Jersey cream left with a new six person high speed lift.
This left is expected to provide a meaningful increase in our pellet capacity and better distribute guests at a central part of the resort.
At Hunter Mountain, we plan to replace the four person fixed script Broadway left with a new six person high speed lift and plan to relocate the existing Broadway left to replace the two person fixed script you left providing.
Providing a meaningful increase in alcohol capacity and improved access to terrain that is key to the progressive learning experience for our guests.
At Park City, we are in the planning process to support the replacement of the Sunrise lift with a new 10 person gondola in partnership with the canyons village Management Association in calendar year 2025.
Which will provide improved access and enhance guest experience for existing and future developments within canyons village.
These projects remain subject to approval.
In addition to the projects announced in September.
At Park City, and Hunter Mountain beyond the planned Lyft investments, we plan to enhance snowmaking systems to improve the experience for key train increased early season terrain consistency and improve the efficiency through the installation of automated and energy efficient snow guns.
We also plan to further support the company's commitment to zero by investing and waste reduction projects across our resorts.
Cheap the goal of zero waste to landfill by 2030.
At Afton Alps, we plan to install a 10 lane tubing experience and renovate the existing alpine building to create a 200 seat restaurant to further enhance the guest experience.
At seven Springs, we plan to add 390, new parking spaces to increase capacity for peak demand periods.
At Paris sure in advance of the 20th twenty-five winter season in Australia, we plan to replace the Mt parish or double and triple chairs with a new fixed person high speed lift with capital spending commencing in calendar year, 'twenty 'twenty, four and continuing into calendar year 2025.
These projects remains subject to approval.
In addition, we are continuing to invest in innovative technology to enhance the guest experience in the coming year, we are investing in new functionality for the my epic App to better communicate with and personalize the experience for our guests.
Across our resorts, we plan to pilot new technologies at select restaurants to make it both easier and faster for guests to dine at our resorts.
In addition in order to support the launch of my Epic gear, we plan to invest in logistics and technology infrastructure to help deliver a transformational improvement to the gear rental experience for our guests.
The company is planning to launch myopic here for the 'twenty 'twenty four 'twenty twenty-five winter season at 12 destination and regional resorts across North America, including Kids gear, and we will be limiting membership to 60000 to 80000 members.
To support the initial year of this new business in calendar year 'twenty 'twenty four the company plans to invest $13 million beyond our typical annual capital plan and incremental premium gear fleet and fulfillment infrastructure to support the anticipated growth of this business.
We plan to provide additional updates on my epic gear and the ongoing capital needs of the business after the year one launch.
And Andre amounts of drones, we are pleased to announce plans to invest approximately $11 million in high impact growth capital projects as part of a multi year strategic growth investment plan to enhance the guest experience on the mountain, which will be funded by the 110 million Swiss francs of capital that was invested as part of.
The purchase of a majority stake in under Monster drone.
As part of the capital year 'twenty 'twenty four investments, we were planning to upgrade and replace snowmaking infrastructure.
At this the drone and the life area on the eastern side of the resort to enhance the guest experience for keep beginner and intermediate terrain and significantly improve energy you see.
In addition, we plan to invest in the Iron mountain dining experience with improvements to the May late and not Shin restaurants. These investments are expected to be completed ahead of the 'twenty 'twenty four 'twenty twenty-five Europeans ski season and remain subject to regulatory approvals.
In 2017, Vail resorts announced an ambitious plan to take action to address our direct impact on the environment with a commitment to achieve zero net operating footprint by 2030.
Including zero net emissions zero waste to landfill zero net operating impact on forests and habitat.
We continue to be on track to achieve our zero net operating footprint by 2030.
In fiscal 2023 we achieved 100% renewable electricity across North American operations for the second year in a row.
And we achieved our 15% energy efficiency goal early.
<unk> by over $10 million in energy savings investments.
Since fiscal 2018.
Additionally, we achieved a 36% overall reduction and waste to landfill diverting nearly 12 million pounds of waste from landfills.
With this progress the company is ahead of schedule to meet its emissions goals and is on track to reach zero waste to landfill zero net operating impact on forest and habitats to achieve a zero net operating footprint by 2030.
In addition to protecting the environment, we continue to expand our youth access program and promote diversity equity and inclusion.
During the 2022 2023 winter season, Vail resorts hosted more than 11000 youth through our multi day epic for everyone used to access program, which.
Which aims to remove barriers to entry and create a more inclusive sport by providing gear lessons mentorship and access for us around our resorts.
We remain dedicated to doing our part as responsible stewards of the great outdoors and the future of the ski industry and committed partners to our communities.
More information about our commitment to zero and efforts towards sustainability can be found at epic promise dotcom and we expect our fiscal 'twenty twenty-three progress report to be released in the coming weeks.
In closing I would like to thank all of our team members, especially our frontline teams across all of our mountain resorts for their passion hard work and commitment to creating an experience of a lifetime for our guests for our guest the guest experience that our employees create is our mission is.
A company and as core to our success.
And I would like to extend a special welcome to the team members at Crown, Montana in Switzerland, We all look forward to welcoming skiers and Snowboarders Tour Mountain resorts. This winter season.
This time, Angela and I will be happy to answer any of your questions. Operator, we are now ready for questions.
Yes ma'am.
Tom If you wish to ask a question. Please press star one on your telephone keypad, you may remove yourself from the queue by pressing star two.
Again, please limit yourself to one question and one follow up.
Our first question comes from Shaun Kelley Bank of America.
Hi, good afternoon, everyone. Thanks for taking my question.
Sure sooner Angela if I can start I mean, obviously very encouraging that you were able to maintain double digit dollar growth on the Pos side, but.
But just kind of wondering on the composition you know in terms of how this played out and I know you did give a lot of color here, but I guess on the one side you told us that the epic day pass and the northeast regional area, we're pretty strong and on the other side I think those are slightly lower value products that would probably drag down that spread a little bit. So you can do.
Can you just talk a little bit about that mix and how that evolved that you can make changes to widespread between dollars and units.
Yes, we are very pleased with the price pass through Sean at impart driven by we took an 8% price increase we did see that renewals were very strong in this year and.
We were able to grow across all major product segments, including epic and epic local.
We also saw that our net migration among renewing pass holders have improved versus the prior year.
And I think importantly, new pass holders coming into the program came in at higher priced products relative to the prior year and as a reminder, last year, we had launched a new product.
That drove a significant acquisition of new pass holders late in the selling cycle last year, which was the aversion of our epic day pass that was targeted towards more local geographies.
Got it okay that that last point I think is probably the most helpful. And then look I think the other big area, where we're getting a handful of questions is on.
Just the the terrain and snow package as you kind of you know, we we tilted to the actual season. So again, you gave us some condition updates, but maybe give us a sense of what's kind of the point of no return in terms of you know sort of seasoned loss and can the season season launch and conditions, meaning.
When do we really need to have a pretty good terrain opening set for you know for financial results as we get into closer to the holidays here.
Mhm. Meanwhile, obviously the Christmas holiday time period is really important for our gas and important for our performance I mean right now at this point in time.
Conditions vary across the geographies I think in the Rockies currently we're seeing fairly typical for this time of year and there's more snow in the forecast which is encouraging.
Whistler Blackcomb is expect experiencing what I would call typical variability for this early season time period undermine the drone is off to a very strong start with strong early snowfall and last year that was quite a challenge.
<unk> is probably the most challenging right now they've had a slower start with limited snowfall the warm temps, making it hard for us to make snow.
And then the east right now I'd say are probably what we would call tip of its typically variable and we're seeing that variability and the different says so.
Yeah, we're in a situation where it varies pretty significantly geography to geography, and the season's just begun ahead of us, but the hope would be that we're in a good spot as we head into that.
Peak sort of Christmas time period.
Very encouraging thank you very much.
Thanks, Sean.
Our next question comes from Laurent <unk> BNP Paribas.
Good afternoon. Thank you very much for taking my question last quarter. There was a lot of questions regarding the anticipated $46 million impact <unk> EBITDA I appreciate that you parsed it out been buckets in the press release and on the on the prepared remarks, but.
They add up to $29 million for rough math, just curious to know if this.
Is that the number that actually materialize or are there other parts that we're too late too small to call out which would be about $15 million in total.
And then as we think about two Q3 Q are there any other onetime.
EBITDA impacts that we should consider.
Yeah.
Thanks, Laurent this is Angela yeah, we called out a certain pieces of the Q1 variance and I think that the key part in there is the cost inflation piece, which we didn't put the number in but really is the balance of that variance that you're that you're walking. So there's the 7 million wage investment as part of that cost in.
Relation and in total that remaining 21 million variance relates to cost inflation also like typical we always invest ahead of the season right and so that's the part that also we noted in line with our expectations for the full season. There was some timing within there that will move into <unk>.
Two in Q3 and that that really is typical as we invest how does the core winter season that some of those things move around between Q1 and Q2.
Very helpful. Angela and then I wanted to follow up on Craig's Montana.
In the press release last week.
For the resort to drive about $5 million of EBITDA in fiscal year 'twenty five.
Eventually over five years to get to $15 million of EBITDA.
What's driving that is that increase in visitations are there higher efficiencies in the business that you think you can you can execute on and on.
No ownership of antibodies early innings, there or are there any learnings that you could apply to kras, Montana from Andrew Mok.
Thanks for the question Yeah. We are very excited about crown Montana in Switzerland. This is a top tier brand a resort in Europe with expansive terrain or large bed base.
Strong base areas with lodging dining retail experience, we when we think about the growth opportunity.
Because of the strength of this brand in the ski resort, we believe part of it is returning it to its full potential and that's investing in the guest experience and bringing our operations and marketing expertise and that there is future aggressive growth potential through epic pass.
Pass and the network effect being by being a part of our company. So that is really what's driving what we view as to be the growth potential.
We've had our first year it undermines a drone I would say that was a we're very pleased with our first year of operations, there and we learned a lot I'd say, primarily about operations and operating in the resort. Our first year. We did have some unique challenges related to.
Do the conditions as well as some pressures regarding in Europe regarding energy costs, we learned about operating there and we are really excited about the transformational capital plan that we have for undermine syndrome.
It's a really special and unique.
Ski resort that has a lot of growth potential and we feel the same way about crown Montana.
Very helpful. Thank you for all the color.
Okay.
Our next question comes from Jeff Stanfill Stifel.
Andrew Thanks for taking our questions.
Starting off here I was hoping just to follow up on Sean's question earlier, so it sounds like.
Two things really sort of driving that expansion in the spread between the units and dollars that new pass holders coming in and leaning into the higher priced products as well as Youre now anniversarying the launch of the Epic day limited and the prior season and focusing on that for.
First cohort.
You are limited in the data available, but is there anything you can add or any sense you have regarding the complexion of kind of these new pass holders that seem to be leaning into the full path are they coming from other passes were they previously were.
Ticket buyers just do you have any sort of sense.
These customers and their sort of characteristics.
Thanks, Jeff I, you know I think there's a couple of dynamics to highlight overall and then we can talk.
Some more about the price pass through I mean, I think important to note that we grew in destination local and international and really importantly that loyalty, which is renewals were the driver of the growth, which is really critical a critical part of our business model and great to see because.
Has the loyalty and the renewals driving the growth is a really speaks to the strength and the compelling value proposition of the past, but also the experience we deliver liver at our resorts. Another interesting dynamic we saw on the news side. So when we think of new it's composed.
A couple of different segments.
Comprised of people that are lapsed pass holders, meaning they might've been pass holders.
Last prior years five years ago, seven years ago, and they were not a pass holder yeah last year, and then coming back to US. It also includes lift ticket purchasers and then it includes people are brand new to our database and so have not actually showing up at any of our resorts in the past and one really strong <unk>.
NAMIC that we saw in addition to the loyalty and the renewals is very strong growth and return of prior pass holders what I would call lapsed pass holder. So these are people who work pass holders with us in the past, but not last year and we've gained them back again, which again again I think speaks.
Two the strength of our pass program and the experience at our resorts. So I was really pleased to see that.
In terms of the new pass holders and that while the price differential we can talk about.
I think the strength of renewals versus this year and the fact that we grew across all the product product segments, including epic and epic local certainly helped.
The price pass through and then that migration among our renewing pass holders improving year over year and just a reminder, net migration is defined as the well we measure that is the difference between trade up and trade down among our renewing pass holders. So some of the dynamics the growth of renewals.
The dynamics within renewal certainly contributed.
And then when you look at new pass holders coming into the program at a higher price point relative to prior years, you know, we're always striving to trade people up but also.
Acquired guests into the past products that is most suitable for them and I'm really encouraged to see that we were able to get pass holders coming into high or higher priced products and as I noted in Sean's question are important to note that we did have a new product launch last year.
<unk> that drove new acquisition late in the season because.
Because that is typically when new people come in late in the selling cycle and that was a product that was very specifically designed to increase our penetration in some of those eastern geographies.
As that access is fenced very specifically to some of those local geographies. So I mean overall when I look at the underlying dynamics of the health of the business I'm very pleased as I think all of those kind of movements within the business, who is renewing who are acquiring are actually.
<unk> are very strong indicators for the business.
Great that is both really helpful commentary as well as encouraging as it relates to.
Forward indicators heading into this season for for my follow up I was hoping to turn to your commentary on lodging bookings specifically just in the release you used the term generally consistent with prior year levels I was hoping you might just expand upon.
What was meant by sort of the term generally where.
Were you trying to refer to perhaps some geographic dispersion more so than what you typically see.
Any thoughts there and if I'm reading into verbiage too much as well.
That's fine as well, but any thoughts there would be helpful. Thanks.
Sure you know I think it's important just as a reminder, our lodging bookings represent a small portion of the overall lodging inventory around our resorts.
And you know, we see variance by months Ah by geography, I would say like overall when I look at the bookings right now here's what I'm seeing at our properties is seeing solid holiday and spring bookings and some softness in between holiday in.
Spring break and I would actually say also it's still relatively early and we will continue to monitor this and as we go into the season.
Pass pass sales is a critical indicator and overall when I look at the lodging booking trends.
Yeah generally consistent with prior a lot your levels with it looking pretty solid for holiday and spring that's for our lodging bookings.
Okay, Great. That's really helpful. Thanks very much.
Okay. Thanks, Jeff.
Our next question comes from Matthew Boss Jpmorgan.
Great. Thanks.
So kierston on maybe real time customer behavior any.
Notable trends to call out on the ancillary front. So far this ski season and can you elaborate on the opportunity you see from my epic.
And then Angela on the margin front could you maybe just speak to the multiyear opportunity you see from the workforce management initiative.
So real time on other ancillary businesses, Matthew I would say, it's a bit too early to really have any indicators. So lodging I just gave an overview to Jeff on that in terms of other ancillary sales or bookings, it's a bit too early.
In the cycle I think we'll have more insights once we get further into the season my epic gear are.
We are very excited about it is just a pilot in this coming season, and we hope to learn a lot about the sort of logistical delivery of the guest experience, but when you think about gear as part of the an ancillary business and obviously, we have a very strong gear business everyone.
[laughter] needs geared to participate in that score there are a lot of people, who ski and snowboard in North America, you know on average their frequency of skiing is.
Four to six days and you have a ton of people who own gear and a ton of people, who rent gear and there's real barriers or frustration as I'll call. It on both of those fronts right the people who own gear, who live in destination markets.
Ah the hassle of transporting it to the airport through the airport up to the mountains.
The cost of purchasing at our frustration for an asset that sits in their garage you know the majority of the skier. Obviously, we have local skiers and snowboarders that are using their gear and much much more but I'm talking more about the destination guests and then on the rental side for the people who don't own gear.
Hassle and the time of standing in line in store to pick up or drop off.
So this idea is a brand new business model that we believe can completely transform the gear business for our guests and offer an alternative that is.
Basically managing the gear expert experience on your App that you can select the gear you want where you want it when you want it.
The best gear top brands and don't either delivered to you at your a condo or a hotel and resort or Slopeside. So you don't have that hassle of transporting it. It's all ready to go you can drop it off slopeside.
And you can manage the whole experience on your app without any of that hassle, and we think theres a real opportunity to convert our invest in existing renters over into this which is a subscription so the stickiness to our resorts Israeli.
It's really important we can convert owners, who really don't have a need to own that asset to enjoy the mountains and can get whatever gear, they're looking for wherever they want it by being a part of this membership.
And create stickiness to our network of resorts as well. It is a pilot will be learning a lot and I would say that the year, one launch which is next season.
We will have a lot more.
Insights about the business and and at the end of the season in terms of what we learned from the pilot as well.
Yeah.
And Matt on workforce management and yeah, that's part of our resource efficiency strategy that we talked a lot about and were really excited to roll. This out this season across all of our resorts.
We did a pilot of two of our.
Resorts at W. At Whistler, Blackcomb and at Park City, and got a lot of good learnings and of course any new tool. It takes some time to optimize and so this first year, we're gonna be and rollout change management, but we're very excited about the multi year opportunity. What it does is you know we've historically.
Berkeley really managed all.
All of these in various different ways and tools so to give both employees and our managers are better tool that allows them to free up their time to do our guest service and so many other more important things done right keeping track of schedules on some of these systems that will be a great enabler for both our managers at our <unk>.
Floyd isn't so we're really excited about rolling that out this year.
And just to build on what Angelus Sad, we would expect the financial impact in year, one, which this is year one to be modest as we're focused on the change management. The training the implementation of the tool, but we do believe over a multiyear period four.
This to be a big benefit to the company over time in terms of efficiency.
Great color best of luck.
Thank you.
Our next question comes from David Katz Jefferies.
Yeah.
Hi, everyone. Good afternoon. Thanks for taking my questions I wanted to ask about.
Latest acquisition.
And you did give some sort of longer term guidance on it and what I'm wondering is how about mountain is pricing today.
Relative to your other Swiss mountain or other mountains or the Premier Mountains and the U S.
Hum.
Weather.
Aspirational earnings level is driven by pricing volumes margin.
There are all all of the above.
Just putting it in a historical context that Europe is often have a lot more volume a lot more scared days, but in many cases, it's pricing and it's been lower and I'm. Just wondering how this gets you to that.
Yeah, David I would say that consistent with a lot of what you see across the European market right. It looks a lot like from a pricing perspective, North American debt before the launch of the epic pass and so yeah. We do think over time, there is an opportunity right here too as we build out our network.
To get more into advanced commitment through creating a compelling.
Guest centric network, there, but in terms of like the exact pricing strategy, we're not commenting on what we're doing moving forward with them within crime, Montana at this point.
Understood and then just.
Just to follow up with respect to the capital.
Assuming that you do close on time.
Would we be.
Hum.
Actively about including some capex in this.
This fiscal year.
For that or how might we tie them some of the capex that you're planning.
Planning out the future post closing.
Yeah, David the 30 million Swiss francs that we announced it's going to be subject to what we get with a regulatory approval. So you should expect that that will comma likely after this first year right. We're.
So going to be in a learning mode as we close and so we will go through a full plan and got them evaluating our approval process with our communities to build out that capital plan and it will occur over the following years.
Okay. Thank you.
Thanks, David.
Our next question comes from Patrick Scholes True Securities.
Thank you good evening everyone.
Hello, Patrick.
Now going forward.
In Europe, you'll know that you've had I guess the coronavirus.
Two years or three years.
Two acquisitions now would you expect the.
Okay.
Acquisitions to accelerate at this point.
So hard to predict in this industry Patrick.
You know, obviously, we would hope so, but we really have no way of predicting messages.
So driven by the <unk>.
Market dynamics in the the owners of these assets and kind of where they are and what they are interested in doing but we certainly hope.
Hope to see here that we will continue to make progress on Europe. As you know we've been focused on Europe in this market as a big opportunity for growth for a long time. So we're very encouraged to have undermined zadran and crown Montana here over the last couple of years.
And but the market. There is you know almost three times the size of the number of skier visits as our other North America. So we hope to continue to make progress with the aspiration to build a network there, but no idea how fast that piece is going to be I wish I knew.
Sure sure fair enough.
Later, a follow up question.
And that's really where all the focus I think rightfully. So at this point has been on international specifically in Europe, but you know do you still see.
Opportunities in North America, where perhaps tuck in acquisitions.
Vermont, or perhaps northern Vermont or the like.
Yeah, absolutely absolutely, we see opportunities in North America, and our acquisition focus has been on Europe. As you know we also believe there's a big opportunity in Japan, and then we still believe that there.
Or are the accretive acquisition opportunities in North America that can really add to our network and connect our network to major markets and between our local ski areas regional and our destination scary is and so we continue to stay focused on that as well.
Okay.
Just.
Slip in one last question here or do you have an EBITDA target first year for epic gear or maybe I should say.
Do you expect that initiative to be EBITDA positive first year, if you can't give us targets.
Now we're going into the pilot this year and I think we're going to learn a lot from the pilot, which is a very limited execution and we have not yet gained those learnings and we have not yet disclosed exactly what the target would be but I believe we would have more information.
To share with you as we go along on this journey.
Okay fair enough. Thank you.
Thanks, Patrick.
Our next question comes from Chris Walker Deutsche Bank.
Yes.
Yeah.
Hi, curious and Hi, Angela.
Once you wanted to go back to that.
As I've mentioned you expect that.
The lift ticket.
So lift ticket revenue could moderate or whats implied by the buy the pass sales to date as you expect to pull more peace boardroom pass product as opposed to a lift ticket product I guess is there anything you saw last year that gives.
It gives you any kind of indication as to what that pace might look like the pace of moderation this year or anything else you can add any kind of color you can you can.
Give us as to how that might unfold.
Well I mean every year when we think about our past business right. We're always striving to convert our lift ticket purchasers into a path because of the stability that creates the renewal the retention that frequency increase the lifetime value. So we view that as a good thing it's just when we.
We share our growth rates on past, where you just want to make sure do acknowledge that so that everyone remembers that some of those the guests are coming from lift tickets and Ah that they're factoring that in as to how they think about the upcoming season, we obviously track that very closely and those expectations.
<unk> that we have on total lift revenue and visitation are incorporated into our guidance and we just reaffirmed our guidance.
Okay Fair.
Fair enough and then.
Kind of a longer term question for you here.
As we think about the level of investment over time, we could go back over a number of years and look at percentage of revenue or something like that and mindful that you you've done a bunch of acquisitions as well is there any way to think about.
As the level of capital intensity, increasing overtime again, maybe it's relative to revenue or some other metric do you have a you have an opinion on that.
Yeah, Chris if you look back over time actually you'll see that we've become more and more efficient as a percent of revenue with our capital and we just put forward our capital for the next year in line with what we've put out there historically in terms of how we think about capital, which it typically will grow more with inflation and then we adjust it for them.
Acquisitions, and so we've been very disciplined in that approach, which you can see are translated or kind of more and more efficiency over time.
Okay.
Okay.
Thank you.
Our next question comes from Brent Mantra Barclays.
Hey, guys. This is christie on for Brent. Thanks for taking my question we've.
We've been seeing some competing passes like the relatively new in the past receive a lot of attention. This year I was wondering if you could talk about the competitive landscape for passes and how thats evolved to impact your performance either good or bad this year and that's all for us. Thanks.
Thanks, Yeah, you know, we think it's great I mean honestly. This industry are we view that the more of this industry that is in a past and committed in advance are the better. So I think it's great to see the emergence of other passes out there.
And you know past decisions.
Are often tied to the resorts that you love and that you want to go too and so.
You know, while they you could view them as competitive dynamics. There's a also a fierce amount of loyalty that people have to certain resorts.
And we've been fortunate that we continue to bring more and more new people back into.
Back into our pass program and in terms of renewals, but as I highlighted when earlier that percentage growth of people, who were pass holders and outback, but were not last year that came back.
Was staying agile and we're really pleased to see those pass holders returning back to us I can't say exactly what products. They were in last year or what if they were on a pass last year and then came back to us, but part of our whole strategy is that we continue to reinvest in that.
Guest experience that attracts our guests and keeps that loyalty, we're bringing people back who may have tried something else things like mobile path and my epic gear and the investments we make in left my epic App or a whole part of driving those results and we're incredibly pleased with our growth.
And path for this upcoming season, and we're incredibly pleased to have over 2 million people that we know are coming to our resorts for it this coming season. Thanks, so much for the question.
Our next question comes from Meghan Alexander Morgan Stanley.
Hi, Thanks for squeezing us in maybe kind of a shorter term question and then a longer term one from us.
The Australian impact you quantified is $14 million, that's probably I imagine pretty transitory. So I guess, if we sit there sit here and add that back to kind of the midpoint of your EBITDA guide this year.
All else equal in a normal environment that would imply kind of a resort EBITDA margin in the third one and a half per cent range.
Think about going forward again, all else equal in a normal environment. You know is there any reason, whether it's opex investments related to my gear or anything else why you couldn't see you know margins above that level next year.
Thanks, Megan Yeah first part of your question just on the Australia. In fact, we really highlighted two pieces about one being that the prior year, which right had a phenomenal finish to the season had some pent up demand dynamics from after two years of Covid versus this current year.
Ear, right, which had one of the warmest seasons on record down there and was obviously impacted by very challenging weather conditions in the first quarter of this year and so the $14 million is kind of a combination of both of those factors and you know roughly equal between those two so that's maybe how you should think about kind of the.
One time versus ongoing type of impact.
And then to your question long term on margins Yeah, we have talked a lot about how we intend to grow going forward, we've talked about our resource efficiency growth strategy as well, which you know is how we're very focused on driving margin improvement moving forward, but we haven't given specific that kind of forward guidance on that.
Okay Fair enough and then you know Tristan you talked about creating a network in Europe similar to what you've done in the U S to drive that pass penetration.
How do you I know, it's early but think about the level of scale you might need whether it's you know in a localized market like Switzerland, or Europe in general to be able to do that you know what you know when you think about kind of the differences between Europe and the U S. What are what are some of the highlights in terms of how you think about what kind of scale you might need there.
Sure.
Mhm, well, we view Europe, as a huge market and a big opportunity and I would say a long term growth strategy that we will.
We have a lot to learn as being new operators in the market with the undermine the drone and with the closing of Crown Montana.
And I think we have some of our initial thinking on what we think that network or that scale would need to be but obviously being there in market and being an operator in the market, we'll certainly refine and help us think about that in the evolution of that and what that means in terms of owned and.
Added resorts versus partner resorts.
Would say that our business model.
Is.
I think structured in a way that can be very beneficial in Europe, because our business model is structured in such a way that is driven by advanced commitment and that stability that creates some.
Protection from the impacts of climate change. It also creates strong free cash flow that enables real reinvestment in these resorts.
And we still have a lot to learn on how that business model may need to adjust or evolve in order for us to be successful in a market like Europe. So we view this as a long term growth strategy that we're very excited about but I don't think I can give you a specific answer right now because the market.
And Alex are quite different than North America, and we want to be very thoughtful and cognizant as we go with new into this market.
Understood. Thanks, very much thanks.
Thanks Megan.
This concludes the Q&A portion of today's call.
I'd like to turn the call back over to Christopher Lynch for closing remarks.
Thank you operator. This concludes our fiscal 2024 first quarter earnings call. Thanks to everyone, who joined US today. Please feel free to contact me or Angela directly should you have further questions. Thank you for your time this afternoon and goodbye.
This concludes today's Vail resorts fiscal first quarter 'twenty 'twenty four earnings call and webcast. You may disconnect. Your line at this time and have a wonderful day.
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