Q3 2025 Vail Resorts Inc Earnings Call
Please go ahead.
[music].
Please standby your program is about to begin if you need assistance during your conference today. Please press Star zero.
Speaker Change: Good afternoon, and welcome to the Vail resorts fiscal third quarter 2025 earnings Conference call Today's conference is being recorded.
Currently all colors have been placed in a listen only mode and following management's prepared remarks, the call will be opened for your questions.
If you would like to ask a question at any 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.
At any time, if you should need operator assistance. Please press star zero.
Speaker Change: I will now turn the call over to Angela courts, Chief Financial Officer of Vail Resorts you may begin.
Angela Courts: Thank you operator, good afternoon, and welcome to our fiscal 'twenty 'twenty five third quarter earnings Conference call. Joining me on the call is Rob Katz, our Chief Executive Officer.
Speaker Change: 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.
Speaker Change: Forward looking statements in our press release issued this afternoon, along with our remarks on this call are made as of today June 2025, and we undertake no duty to update them as actual that's unfold.
Speaker Change: 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.
Speaker Change: Also available on the Investor Relations section of our website at Www dot fail restart satcom.
Rob: Before we discuss our results I would like to turn up the call over to Rob for some opening remarks.
Rob: Thank you Angela and good afternoon, everyone.
Rob: Humbled grateful and Super excited to be back in the CEO role at Vail resorts and it's good to be on this call with all of you again.
Speaker Change: So first I want to start out by thanking curious Tim Lynch, our former CEO for the incredible career. She has had with Vail resorts, including the past three and a half years as CEO huge progress was made on so many fronts from investments in our frontline talent to new guest experience innovations to much more which will all absolutely be things we will be left.
Rob: <unk> as we go forward and I have immense gratitude for her for all of that work.
Rob: So why did I choose to be back in this role.
Rob: First and foremost I loved this company because of the incredible people, we have working here and the amazing resorts, we get to operate I remain as passionate about this company the sport and our industry as I was when I first worked with salaries the worsening at least three decades ago.
Rob: Most importantly, I see a terrific opportunity ahead of us to drive value with the incredible foundation that has already been set.
Rob: Given how much time I've spent around this company company, it's natural to assume that I arrived here with a fully thought out detailed action plan, but that's not the case because there was a big difference between serving on the board and being an executive here every day with our teams driving change and that is where real change happens.
Rob: On the ground that was true in 2006, when I first took over as CEO and that is still true today.
Rob: I'm not a brand new CEO for this company I'm still note.
Rob: As so many things are different at the company and different in our industry and in the macro environment.
Rob: And it will be important for me to take the time to listen and learn from everyone here and for all of you to give me the space to do that as well.
Rob: That said of course, I'm not starting at ground zero and we will have much more to share on our future plans during upcoming earnings calls and at our Investor Conference next spring.
Rob: With that in mind I am starting this next chapter with some fundamental points of views.
Rob: The foundation of our success as a company remains our unique portfolio of owned and operated resorts and our strong business model that drives stability in an industry that is uniquely exposed to weather volatility.
Rob: Vance commitment remains central to the guest experience and our own thesis on how we drive value.
Rob: Equally as important is that the guest and employee experience is Paramount and is it at the center of everything we do and we need to always remember that while we also drive our financial success.
Rob: When I look back on this past year I see so much to be proud of and strong performance in so many areas. However, I also see areas, where we can and will do better because we have high expectations for ourselves.
Rob: And we are driving strong and we are driving strong guest satisfaction scores. However, we need a more consistent guest and employee experience throughout the season and across all of our resorts.
Rob: We can also do a better job communicating with our guests we have incredible data and insights on our guests and very sophisticated tools and talent to drive demand, but we need to continue to innovate our marketing efforts as the environment around US has continued to evolve and ensure that our strategies and tactics are meeting guess, where it's most impactful.
Rob: Missing the Mark here has clearly contributed to softer results than we expected this past season.
Rob: It also needs to be clear to our guests what our company stands for.
Rob: I recognize that the very existence of Vail resorts as the industry leader in a large publicly owned company can sometimes seem at odds with the essence of the ski industry, but that's not how I see it we.
Rob: We are a company filled with passionate people and so many avid skiers and riders who I've worked for decades to innovate this industry for the better and we can do a better job showcasing how we benefit our guests and employees and the industry overall and most importantly, do a better job avoiding the moments that often set us back.
Rob: Words.
Rob: Driving guest engagement and loyalty and stronger revenue growth are among my top priorities as CEO.
Rob: I also understand that there is a narrative that the industry is mature that there are not many strategies left to drive growth in our company.
Rob: Important to remember that that is exactly the same narrative I walked into when I became CEO in 2006.
Rob: Of course, we can't just replay the approach and success we had back then.
Rob: It means I'm not daunted by the challenges of how to drive growth.
Rob: I remain incredibly optimistic about whats possible because we are a much stronger and more innovative company than we were in 2006 with team members and leaders who are more thoughtful sophisticated in their approach and that is a powerful combination to drive change and.
Rob: And we need to recognize the change takes time.
Rob: Especially in an industry, where the majority of our earnings occur over only four months each year, but.
Rob: But the extra time it takes us to drive change also means that as we build our competitive differentiation those advantages can drive revenue growth for years to come.
Rob: Through it all my primary job as CEO is ensuring we aligned with all of our stakeholders to deliver an experience of a lifetime for our guests and employees, while driving financial success for our company as well and that is what fuels my excitement to be back as CEO.
Rob: With that I'll turn it over to Angela to cover our fiscal 2025 third quarter results.
Angela Courts: Thanks, Rob results in the quarter reflect the stability provided by our season pass program.
Speaker Change: <unk> net revenue excluding from Montana remain consistent with the prior year, even if visitation declined 7%.
Rob: And at March and April destination visitation, among pre committed past guests improved as expected. However, visitation from uncommitted lift ticket guest was below expectations.
Rob: Horace Mann for destination guests visit was strong across our ski school and dining businesses throughout the quarter, while overall revenue on our ancillary business was impacted by the lower visitation.
Rob: When looking at our performance throughout this past North American ski season, our results reflect the strength of our advanced commitment strategy.
Rob: Destination guest spending and the impact of our resource efficiency transformation plan the.
Rob: The company achieved 3% growth in resort reported EBITDA year to date. Despite total skier visits declining 3% across our North American resorts are in the beginning of the flu season through April 30 of 2025.
Rob: North American visitation reflects the benefit of improved conditions in the second quarter relative to the prior year offset by the expected decline in visitation from selling to your past you answered Susan.
Rob: For the year to date period resort net revenue increased 3% driven by a 4% increase in season pass revenue and increased ancillary spend per guest across our ski school dining businesses.
Rob: Resort reported EBITDA year to date also reflects strong cost discipline.
Rob: <unk> savings from the resource efficiency transformation plan.
Rob: The company's full year resort reported EBITDA growth.
Rob: This is partially offset by $15 million expected increased cost from company wide performance based management incentive plan expense that was not earned in the prior year.
Rob: Of which $12 million has been incurred through the fiscal third quarter.
Rob: And $6 million of expected unfavorable reserve reported EBITDA impact from changes in foreign exchange rates of which $4 million does that encourage or the fiscal third quarter.
Rob: For all the results demonstrate the strength and resilience of the company's business model.
Rob: Courted by his expansive resort network and loyal guest base, even as the company is western North American destination resorts experienced a decline in visitation.
Rob: <unk> impacts from fewer lift ticket gas.
Rob: Through the 2020 for 2025, North American ski season guest satisfaction scores across our destination mountain resorts and regional ski areas were strong and consistent with prior year, Excluding Park City Mountain.
Rob: As a result of the investments we continue to make in our teams the company achieved record frontline return rates and strong employee engagement scores across our mountain resorts during the winter season.
Rob: In addition, we are on track to achieve our two year resource efficiency transformation plan, which was announced in September 2024.
Rob: The plan is designed to improve organizational effectiveness and scale for operating leverage as the company grows.
Rob: The three pillars of scaled operations global shared services and expanded workforce management, the company expects $100 million in annualized cost efficiencies by the end of its fiscal 2026 here.
Rob: The company now expects to deliver approximately $35 million of efficiencies before one time operating expenses in the fiscal year 2025.
Rob: Which includes $8 million of efficiency as a company is accelerating into the current fiscal year from its original fiscal year 2026 plan.
Rob: The company remains on track to deliver the $100 million in annualized cost efficiencies by the end of its fiscal year 2020.
Rob: Now turning to our outlook for fiscal 2025.
Rob: As a result of the lower than expected lift ticket visitation during the spring period announced on April 2020 April 24th 2025, and one time costs related to the CEO transition announced on May 27, 2025. The company is updating its fiscal guidance for fiscal 'twenty 'twenty five the.
Rob: The company now expects net income attributable to Vail resorts to be between $264 million and $298 million and resort reported EBITDA for fiscal 2025 to be between $831 million and $851 million.
Rob: The guidance reflects the lower than expected lift ticket visitation in the spring period that was partially mitigated by the company's focus on its resource efficiency transformation plan and strong overall cost discipline.
Rob: The updated guidance now includes an estimated $9 million in onetime costs related to the CEO transition. In addition to the estimated $15 million and onetime costs related to the multiyear resource efficiency transformation plan and the estimated $1 million of acquisition and integration related expenses specific to comment on them.
Rob: Compared to the original fiscal 2025 guidance. The updated guidance includes an estimated $7 million impact from foreign exchange rates.
Rob: At the midpoint the guidance implies an estimated resort EBITDA margin for fiscal 2025 to be approximately 28, 4% or 29, 2% before onetime cost from the resource efficiency transformation plan and CEO transition.
Rob: Turning to our balance sheet and capital allocation priorities.
Rob: As of April 32025, the company's total liquidity as measured by total cash plus revolver availability and delayed draw term loan availability was approximately $1 $6 billion.
Rob: This includes $467 million cash on hand, and $508 million of U S revolver availability 450 million delayed draw term loan availability and $215 million revolver availability under the Whistler credit agreement.
Rob: As of April 30 of 2025, the company's net debt was two six times, that's trailing 12 months total reported EBITDA.
Rob: The company declared a quarterly cash dividend on Vail resorts common stock of $2 22 per share the dividend will be payable on July 19, 2025 to shareholders of record as of June 24th 2025.
Rob: During the quarter the company repurchased approximately 0.2 million shares at an average price of approximately $161 per share for a total of $30 million.
Rob: Additionally, the board of directors increased the company's authorization for share repurchases by one 5 million shares to approximately $2 8 million shares.
Rob: We remain committed.
Rob: In a disciplined and balanced approach are stewards of our shareholders' capital we continue to prioritize investments that enhance our guest and employee experience provide high return capital projects and enable strategic acquisition opportunities.
Rob: After these priorities, we focus on returning excess capital to shareholders.
Rob: In the current environment the company looks to balance its approach between share repurchases and dividends.
Rob: The current dividend level reflects the strong cash flow generation of the business.
Rob: With any growth in the dividend dependent on a material increase in future cash flows.
Rob: And the company also maintains an opportunistic approach to share repurchases.
Rob: Based on the value of the shares.
Rob: As it relates to the investments and enhance the guest experience we remain committed to consistently increasing capacity at our resorts through lift train and food and beverage expansion projects along with investments in technology to further elevate the guest and employee experience at our resorts.
Rob: The company expects to invest approximately $249 million to $254 million.
Rob: Total capital in calendar year 2025.
Rob: Key capital investments include the multiyear transformational investment plans at Park City Mountain.
Rob: Which include the new Sunrise gondola out of the canyons base area.
Rob: Long with again, our terrain improvements in restaurant upgrades. In addition to investments that Andre <unk> Citroen, a new six pack lift at Paris, or new functionality for them I epic App more advanced AI capabilities for myopic assistant and technology investments across the company as ancillary businesses.
Rob: Now I'll turn the call back to Rob to discuss the spring Test result, Thank you Angela pass product sales through May 27, 2025 for the upcoming North American ski season decreased approximately 1% in units and increased approximately 2% in sales dollars as compared to the period of the prior year through May 28 2000.
Rob: 24, given the elevated levels of macro economic volatility that occurred throughout the spring selling period. It is currently unknown, what if any impact that had on early past decision, making power sales dollars are benefiting from the 7% price increase relative to the 2020 for 2025 season, partially offset by the mix impact.
Rob: <unk> from the growth of Epic day pass products.
Rob: Product sales are adjusted to eliminate the impact of foreign currency by applying an exchange rate of 73 between the Canadian dollar and U S. Dollar in both periods for Whistler Blackcomb pass sales the <unk>.
Rob: The decline in units relative to the prior year season to date was primarily driven by new pass holders and lower tenured renewing pass holders, which may reflect delayed decision, making by the macro due to the macro economic environment Epic day pass products experienced strong unit growth driven by the strength in renewing pass holders overall renewing pass holder.
Rob: Product net migration was relatively consistent with the prior three years.
Rob: The majority of our past selling season is ahead of us and we believe the full year past unit and sales dollar trends will be relatively stable with the spring results. We will provide more information about our pass sales results in our September 2025 earnings release.
Rob: Australia pass sales through May 28, 2025 increased approximately 20% in units and approximately 8% in sales dollars as compared to the period in the prior year through May 29, 2024 Epic Australia pass sales are benefiting from the successful introduction of the epic Australia, four day pass, which is resonating with lower frequency skier.
Rob: And writers in Australia.
Rob: In closing with the North American and European Ski season is coming to an end I want to especially thank our frontline employees for their passion and dedication to delivering an experience of a lifetime to our guests. Our employees are the core of Vail resorts mission and I'm looking forward to seeing all of our employees and all of you up on the Hill.
Speaker Change: At this time, Angela and I would be happy to answer your questions. Operator, we are now ready for questions.
Rob: Yes.
Rob: Thank you if you would like 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.
Unidentified Moderator: We will take our first question from Shaun Kelley with Bank of America.
Shaun Kelley: Hi, good afternoon, everyone. Thanks for taking my questions.
Rob Katz: Rob will welcome back it's great to hear your voice again I appreciate you doing this.
Rob Katz: So I'd love to lead off with kind of where you started on some of the priorities that you highlighted I think if I caught it.
Rob Katz: Prepared remarks, you said customer experience and stronger revenue growth. So just what could some of the key levers being both those areas I. Appreciate it's super early but kind of maybe walk us through the brainstorm, a little bit about what you're exploring and what could be on the table in those areas. If that if that's the the top two that come to mind. Thank you.
Rob Katz: Sure I think on guest experience.
Rob Katz: I think it is building on the progress that we're already making I think we've made a lot of investments in guest experience and a few its park city had a challenging experience obviously as I think everybody knows.
Rob Katz: During a portion of this year, but when you look at all of our other resorts. We actually had really good guest experience scores that said no. The park city experience was obviously unacceptable and so yeah. One of my key priorities is ensuring that all of our resorts are consistently throughout the season delivering that experience and I think that's literally a matter of bill.
Rob Katz: <unk> on the.
Rob Katz: The track record and the investments that we've already made and just bringing them to life and execute it.
Rob Katz: I think on the marketing side, we've got incredible fundamentals and foundations right in that group and terrific talent, but I think theres an opportunity for us to take what we're doing in marketing and bring it to be a little bit more current we've had a number of things that have been so successful for us when you look back over the last decade.
Rob Katz: But obviously, some new tools and approaches for us to make sure we're really connecting with guests.
Rob Katz: In a way that's most impactful given the kind of changing environment that's out there.
Rob Katz: And I think that is for us a critical part of really returning to revenue growth.
Rob Katz: Thank you and then just as my follow up you also kind of reiterated that advance commitment remains.
Speaker Change: Much the core of the business and it obviously has revolutionized the stability of your earnings and cash flows over time, so zooming out as we kind of look at the mix as its progressed here in a few years after the price cut.
Speaker Change: What's on the table in terms of adjusting or tweaking the.
Speaker Change: Our pricing strategy and is the 75% of lift ticket sale still.
Speaker Change: The North Star is to in terms of what you're targeting would there be any opportunity to possibly readjust that mix and think about.
Speaker Change: Hi, Lo strategies and things like that to possibly drive different levels of utilization just help us think kind of how youre thinking about ways to maybe further revolve something that obviously, you basically transform the industry with.
Speaker Change: Yes, I think.
Speaker Change: I would say that.
Speaker Change: Weather volatility is not going away and so I think the core thesis that it's important to get people to commit to their skiing in advance remains I think.
Speaker Change: One of our focus areas. Those is obviously, how we get the pricing and product strategy of that right and I think we've continued to innovate on that but I think there are opportunities for us to look at our.
Speaker Change: Product portfolio and see where it is that we could there may be gaps that we could fill it is important to also remember when you look at our Peter when you look at season pass growth overall in the last like this year and certainly last year is that we obviously grew dramatically right. When you look back at 2002, and so we added we almost doubled right are up 40% right.
Speaker Change: Number of passes and so once you do that of course, it is true that you're probably pulling some future growth in a couple of those years right from future years, and that's somewhat to be expected that said, obviously, we're a much stronger company by having people commit in advance and I think that's true not just in the ski industry, but it's true in almost all travel where people are looking to get their customers to commit in advance.
Speaker Change: And I do think Theres also opportunities for us to do a better job on driving lift ticket sales I mean, obviously for this year that was obviously an area that didnt perform to where we expected them to and it's going to be our job to really innovate and come up with approaches where we feel we can drive lift ticket sales, particularly in off peak periods, while at the same time not.
Speaker Change: Really putting our endangering right the value that we're offering from our season passes.
Speaker Change: Thank you very much.
Speaker Change: Yes. Thank you.
Speaker Change: We'll go next to Jeff <unk> with Stifel.
Jeff: Hey, good afternoon, everyone. Thanks for taking my questions and welcome back Rob.
Speaker Change: Maybe actually just sticking on that last point, rather you just made on driving ticket lift ticket sales. When you think about the decline you saw this season and for a couple of seasons now.
Speaker Change: Obviously part of this is sort of just post COVID-19 reversion in guest behavior. Some of it was weather, but part of it does feel a little bit more structural in nature. So with that in mind Robin just curious how you think about and frame. This moderation in window ticket sales that you have seen in recent years, how much of this is sort of an avoidable how much of it was more self inflicted and.
Speaker Change: And then strategically does it does it feel like a trend that can be reversed with just some some operational and marketing adjustments or does this really warrant a deeper discussion on on the optimal pricing strategy.
Speaker Change: I think I guess when I look at it what I would say is obviously, we want people to beyond the mountain right and we want people to visit our resorts and are of course, what we'd prefer that people buy in advance and come to the resort on a path product of some sort to the extent that there are people who are not doing that.
Speaker Change: It's still our hope to convert those lift ticket buyers or people, who you know.
Speaker Change: Today may not be buying a past to a path product, but if we don't get the amount of past product then it's our job to provide avenues and paths for them to come to our resorts to try them out and ultimately get them into our primary loyalty product I think that that does require right looking at.
Speaker Change: New approaches to our past product and pricing strategy, but I don't think it actually goes to the core thesis that we would prefer to have people in advanced commitment products and we're not about to do anything that would call into question the value proposition that we're offering to our pass holders.
Speaker Change: That's great. Thank you for that and then maybe just turning over to the current trade environment. As this is our first time hearing from you since April 2nd Rob or Angela can you just sort of frame out for us where the exposure is in the model the potential terrorists just ask will the landscape looks today all for keeping in mind, it's dynamic and then just.
Speaker Change: Sort of what sort of opportunity do you have to do offset or de risk any potential exposure.
Speaker Change: Yeah. Thanks, Jeff.
Speaker Change: This business, we don't have a lot of direct exposure to terrorists right because our main cost is labor, but theres, obviously right a larger impact that we're looking at from tariff switches right. How does that impact the consumer and does that impact any shifting in their spending patterns and of course right. In this kind of macro environment that does create some uncertainty.
Speaker Change: So that's the side that we watch more on the actual cost piece right. We do have a lot of long term agreements and as the largest purchaser with a lot of our suppliers right. We do have ways to kind of help mitigate on the expense side the impacts.
Speaker Change: Great. Thank you both.
Speaker Change: Thanks.
Speaker Change: We'll go next to David Katz with Jefferies.
Speaker Change: Afternoon, good to talk to you.
Speaker Change: Welcome back.
Unidentified Speaker: Thanks, Rob I wanted to I wanted to talk about sort of labor broadly speaking right, but much has changed since we last had this conversation one of which is just generally cost of living costs in general.
Unidentified Speaker: The company has made some adjustments et cetera, but that's I imagine a particular area of focus.
Speaker Change: No.
Speaker Change: And overall labor strategy.
Speaker Change: I know this is a general question, but I'd love to hear what what high level thoughts you may have so far.
Speaker Change: Yes, I mean, I think I said a couple of times.
Speaker Change: Both on this call and obviously on my.
Speaker Change: A letter to.
Speaker Change: All of our team members that everyone talent in total right all of our employees all of our team members at this company writer core to everything we do.
Speaker Change: We understand that that is right. The experience that people are coming for its not just the resorts right. It is actually how they interact with the people who are here and the service that they get is all about right all of our employees throughout every part of the business and so.
Speaker Change: It's critical for us to.
Speaker Change: Yes.
Speaker Change: Show up in a way that truly delivers that experience of a lifetime and that only happens if we do that for them and that includes our.
Speaker Change: Our employees that may be part of a union I mean, they are just as important as anyone else here and it's important for us to of course work through.
Speaker Change: The various processes that go on with our unionized employees in a way that brings those to a successful resolution there's always going to be tension is always going to be challenges through that of course.
Speaker Change: And.
Speaker Change: Obviously, even after the park city.
Speaker Change: You know negotiations and ultimately the impact that happened to the resort two other very successful union contracts that were signed this year and many others right in the years that preceded the park city situation. So.
Speaker Change: That is of course very top of mind for me, but again as part of a broader commitment to ensuring that we.
Speaker Change: Are delivering and supporting are delivering the right experience for our employees and supporting them. So that they can ultimately deliver the right experience for our guests and of course that is critical to driving revenue growth as we look ahead.
Speaker Change: Understood and one of the other sort of harder.
Speaker Change: Evolving challenges has been weather.
Speaker Change: And it seems as though the.
Speaker Change: Weather presents a challenge somewhere almost all the time.
Speaker Change: And I, just wonder the degree to which.
Speaker Change: You sort of think about that in today's.
Speaker Change: Environment.
Speaker Change: How are you.
Speaker Change: Aside from the pre sold nature of the patches are there other strategies, whether financial or otherwise that you can.
Speaker Change: Deploy and just dealing with the complexity.
Speaker Change: I think I think that is of course, one of the most important things. We always are thinking about in terms of the business and it's certainly a unique aspect right about this industry versus some other.
Speaker Change: Parts of travel.
Speaker Change: But we do think that our advanced commitment strategy is is critical for that and it is about this trade that we're making with our guests where we're providing.
Speaker Change: You know a <unk>.
Speaker Change: More accessible price point to them and in return, we're getting a commitment for the season and I don't see us shifting away from that obviously, it's critical for us.
Speaker Change: To be part of making our resorts.
Speaker Change: Kind of fulsome experience right. So when our resort communities in the towns that we operate in are thriving and the businesses there and the experience that they provide are thriving and that also provides a reason for people to come even if the snow isn't as good.
Speaker Change: And so that's also a component for us of how we ensure that even through lower snow years, we can still.
Speaker Change: Bring guests in and drive revenue.
Speaker Change: Understood. Thank you very much.
Speaker Change: Thanks.
Unidentified Moderator: We will go next to Megan Clark with Morgan Stanley.
Megan Clark: Hi, good evening. Thanks, So much Bob you mentioned in your prepared remarks, there's a lot that difference about the industry macro companies. Since you will ask them to see maybe if we could talk about the industry a bit.
Speaker Change: Ben maybe not necessarily new since you left but theres a lot of other multi mountain pass players many of which have grown their portfolio was pretty significantly over the last couple of years. So how do you think about the company.
Megan Clark: From a competitive perspective, both from the past offering as well as your network of resorts and how do you think about how that positions you to drive past in the U S and just what seems like a more competitive environment than it than it maybe had been historically.
Megan Clark: Yeah, absolutely I mean I think.
Megan Clark: There's no question that.
Megan Clark: The Ikon pass, which was which debuted when I was still CEO of course, I presented new competition to us, but I think it also helped build and secure the entire market for advanced commitment products. So I think from the time that iconic shown up till today I think the consumer mindset has shifted from thinking about weather.
Megan Clark: They should buy a pass at all to understanding that actually that's probably the best way to actually access the mountain and so now it's just a matter of which passed they buy and I think our company should welcome healthy good thoughtful innovative competition and there is no doubt that the Ikon pass has absolutely been that.
Megan Clark: I think I feel like our pass offering is very strong and very compelling and.
Megan Clark: Is tailored to the guests that we're going after and it's true we don't.
Megan Clark: We look at adding resorts or adding a partner in a very disciplined thoughtful way about what we think adds and is not duplicative to what we already have and to the extent that that.
Megan Clark: Yes, it brings in new gas or really provides an experience that will brought in.
Megan Clark: The experience that our guests are looking for and really move that needle and that's something that we looked at before and that's something we'll continue to look at as we go forward.
Megan Clark: I think it's also true, though that you know as we have competitors that have continued to get better we have to get better and that relates to some of the comments I made about our marketing effort in terms of I think there's opportunities for us to innovate there and to bring some of the approaches that we're using to be more current with the tools.
Megan Clark: And communication channels and approaches that are available in today's environment.
Megan Clark: And so I think just like you saw us do that in multiple incarnations over the last 15 years I think there are many opportunities for us to do that again.
Speaker Change: Okay. That's helpful and maybe just a follow up on the European strategy.
Speaker Change: <unk> been pretty clear as recently as the Investor Day in March and I think you even mentioned it in your prepared remarks on the benefits of the owner operator model.
Speaker Change: Europe is a place where you've had partnership for years and recently added I think six new partners in Austria, So should investors look at that.
Speaker Change: A signal of maybe like your willingness to explore the partnership model more broadly in Europe, and perhaps is there an opportunity in your mind to launch a pass.
Speaker Change: Through the partnership model in Europe versus the owner operated model and if I can just squeeze one in just how are you thinking about M&A I guess is the use of capital, probably particularly you might need to reinvest to reinvigorate growth and in the U S.
Speaker Change: Yes, I think I think in Europe.
Speaker Change: It's not that different than the U S or anywhere else I think our preference is always going to be to own and operate a resort that.
Speaker Change: That is a completely different business of course, then having a just a partner but it is the business that we're in and where we think we add tremendous value on multiple fronts. One we think we can operate the resorts better.
Speaker Change: And two we also think that we.
Speaker Change: We can collect the data from the resorts, we can be more flexible in the approach that we're using in terms of price promotion and communication channels.
Speaker Change: All of that we think is a comprehensive opportunity that said, especially internationally.
Speaker Change: No we have been open to partnerships and we will continue to be open to partnerships.
Speaker Change: We do think it enhances the path and at the same time many of those resorts are not resorts that are interested in selling and we completely understand that but we're still going to be disciplined in how we add either a partner or an owned resort and I think that's true on the M&A front here as well.
Speaker Change: Or anywhere in the world like we we need to be disciplined.
Speaker Change: It's critical for us right to ensure that we're buying the right resort in the right location for the right price with the right upside.
Speaker Change: Both in terms of how the ski and guest experience can be expanded and obviously financially right. The kind of returns we can drive from that investment.
Speaker Change: I don't see that as really changing.
Speaker Change: From the approach that we've taken over a fairly long period of time that said I think it's also true that within Europe, you absolutely are going to take a very disciplined approach.
Speaker Change: Just given the opportunity we have we think to begin to create a network and we don't want to.
Speaker Change: The end of the day when the right opportunity presents itself, we will pursue it but.
Speaker Change: But it is going to be a very targeted approach and a disciplined approach as we look forward.
Speaker Change: Great. Thanks, Rob.
Speaker Change: Thanks.
Speaker Change: Yeah.
Speaker Change: We'll go next to Ron Basso lawsuit with BNP Paribas.
Speaker Change: Hi, guys. This is John on for Rod.
Speaker Change: Maybe as you look to next season do you foresee any issues to get in terms of getting pieces for international workers and maybe just talk about the environment for seasonal workers into next season.
Speaker Change: Spending on that point about labor.
Speaker Change: Okay.
Speaker Change: Yes, Thanks, Dan.
Speaker Change: Yes, we do use would be it looks like you know for some of our seasonal hiring, especially where we flex and the season has gone through a lot of different environments right through especially related to the curve at times, where there were a lot of restrictions on that we've been able to manage through those kind of changing levels than we've really reduced our.
Speaker Change: A number of these is also over time as you've heard us talk about the high retention rates and return rates that we've had for seasonal employees right that also reduces kind of.
Speaker Change: The need for some of those programs, but we continue to look at it every year and really evaluate where we are or we will take advantage of those programs or not but we don't see that as a.
Speaker Change: Something that we couldn't manage around at this point.
Unidentified Moderator: Okay got it and then you mentioned about $8 million worth of earlier cost savings from the transformation plan, maybe you could talk a little bit more about.
Speaker Change: How the transformation plan is going in.
Speaker Change: Some of the savings that Youre getting.
Speaker Change: Yeah. We are really pleased that we were able to really focus on accelerating some of our efforts that we had already identified for resource efficiency transformation plan into the current year.
Speaker Change: All right that obviously helped offset this year some of the visitation shortfalls that we had and the team has done an amazing job of really.
Speaker Change: Ensure that we can deliver on all three pillars.
Speaker Change: You saw us more recently, maybe in May see the announcement, where we also kind of put out for our <unk>.
Speaker Change: Change in operating model of our mountain division to realign some of those.
Speaker Change: Resorts, but also you know some centers of excellence that we can do that can really unlock savings for us as well.
Speaker Change: Okay, great. Thanks, guys.
Speaker Change: Thanks.
Speaker Change: We will go next to Patrick Scholes with <unk> Securities.
Patrick Scholes: Hi, good evening everyone.
Patrick Scholes: Regarding the standing offer for park city is entertaining that just a nonstarter.
Speaker Change: Sure Rob given your.
Speaker Change: <unk> reputation as a crew.
Speaker Change: Our creative outside the box financial idea person.
Speaker Change: Would you consider finding a way to to sell that at an accretive multiple but.
Speaker Change: Perhaps maintain a long term agreement for key Park city and the Epic pass network.
Speaker Change: No no that's not something that we're looking at.
Speaker Change: And we don't think that that ultimately is in the right long term interest of our company.
Speaker Change: We think it's.
Speaker Change: Especially a resort like Park City of course is critical to our overall company in our network.
Speaker Change: And yes, we think it's incumbent upon us to continue to listen to the feedback.
Speaker Change: Our guests from our community partners.
Speaker Change: And continue to drive improvement both in the way that we deliver an experience for our guests the way that we deliver for our employees and the way that we deliver for our community members and it's true.
Speaker Change: One of my priorities is aligning right all of our stakeholders and not all of our stakeholders are going to agree with.
Speaker Change: With the things that we decided to do they may not all agree amongst themselves about what is the right strategy and approach and it's our job to kind of navigate that dynamic and obviously in an environment, where you've got a fair amount of passion.
Speaker Change: And a fair amount of emotion that can sometimes be tricky and we may not always get it right, but that's still our job and something we're very committed to.
Speaker Change: Okay. Thank you for making that very clear.
Speaker Change: My follow up question actually is on the dividend.
Speaker Change: How comfortable are you Rob with the current dividend policy or the payout levels could that possibly.
Speaker Change: That payout.
Speaker Change: Be up for review thank you.
Speaker Change: Yes, sure I'm very comfortable with our dividend and I think our board is obviously that's why we.
Speaker Change: Announced an authorized the dividend again this quarter at the same time, we wanted to make it clear in our remarks that that the priority for us is always going to be the investments that we're making in our employees and our resorts and in acquisitions.
Speaker Change: And that always comes first and then we're looking at the funds that are left over after that in terms of what we're returning to shareholders and I think one of the comments. We made is that as we look at the dividend.
Speaker Change: We're comfortable with it and of course, if we were going to increase it going forward. It would have to be after write a real material increase in.
Speaker Change: And our free cash flow and so on.
Speaker Change: Fine.
Speaker Change: That of course would better align.
Speaker Change: The payout ratio as you were talking about as we look over the next couple of years.
Speaker Change: Okay.
Speaker Change: Very clear on that thank you.
Speaker Change: Thanks.
Speaker Change: We will go next to arpin Kocharyan with UBS.
Arpin Kocharyan: Hi, Thank you so much for taking my question and welcome back.
Speaker Change: To visit next question regarding the European strategy for a moment could you talk a bit about your approach. There do you think the playbook you had for North America could actually work for Europe, where you have more proximity of mountains, and where maybe raising lift ticket prices to make the customer choose the past product might not be as smooth.
Speaker Change: Yes.
Speaker Change: How that evolved in North America than other quick follow up.
Speaker Change: No. We don't think that the same playbook that we've used in North America would be the right playbook for Europe, and we think that to the extent that we launched.
Speaker Change: Hey.
Speaker Change: Really European based past product it would be different than the approach would be different because we understand that all the dynamics are very different there at the same time.
Speaker Change: We believe that there is an opportunity.
Speaker Change: To be more strategic right about the approach that is being taken in Europe, and I think even more so as you think about the Europeans ski industry going forward and the weather volatility that we talked about before so the same attractiveness.
Speaker Change: Attractiveness of an advanced commitment products, we believe exists there as well and just like in the United States. It took many years right for for even our past product let alone the rest of the industry to follow of course, it would take time for that to happen there.
Speaker Change: But if you look out over the long haul, we certainly think that there is a compelling opportunity not only for us but for the industry itself there.
Speaker Change: Great. Thank you that's very helpful and in terms of your outlook for 'twenty for next season for next year's season, and how that's shaping up I guess what are you seeing in the business to give you that confidence that trends that you saw in spring will sort of remain steady for the year.
Speaker Change: The reason I'm asking that you as investors sort of think of vales average consumer to be a bit higher and then U S average may be in some ways, maybe a little bit insulated from the inflationary pressures at the same time, we are in a different macro environment today than three months ago, how does that go into your overall sort of calculations for.
Speaker Change: Next ski.
Speaker Change: Ski season.
Speaker Change: Yes, I think.
Speaker Change: I think the macroeconomic environment is definitely risk I think the our comments about continuing.
Speaker Change: The trends on season pass sales are dependent upon the macroeconomic either the macroeconomic environment staying relatively stable obviously, if it got dramatically worse now those of course that could change.
Speaker Change: And if it got better right, we could see the opposite.
Speaker Change: We also commented that yes, it's unclear yet.
Speaker Change: Whether the macroeconomic environment over spring pass sales, especially when decent.
Speaker Change: <unk> amount of our spring pass sales occur before the April deadline, which was right in the heart.
Speaker Change: Part of a lot of the chatter that was going on there on a macro basis.
Speaker Change: Yes weather that led to delay decision, making is something we wont see until the end of the season.
Speaker Change: So I'd say based on what we're looking at right now and the data we have on our own gas and assuming a relatively consistent macro environment, yes, we feel good about maintaining.
Speaker Change: The trends that we're seeing right now.
Speaker Change: Thank you.
Speaker Change: Thanks.
Speaker Change: We'll go next to Ben Chaiken with Mizuho.
Speaker Change: Yes.
Speaker Change: Hey, Thanks for taking my questions.
Speaker Change: Regarding Europe the partnerships in Australia over the last few weeks are pretty notable how do you think about the tipping point, if you will whether its momentum with a European pass or a regional passed within Europe, meaning meaning do you think about like the number of assets required to create this flywheel that you've developed elsewhere.
Speaker Change: And then maybe related following up on a previous question can you achieve the desired network effect in Austria for example, without owning your assets or is that just a precursor to eventually buying.
Speaker Change: I think that is.
Speaker Change: I would say, there's probably still an open question right in terms of I don't think its I don't think its necessary for us to own a certain amount of assets to be able to put a product out but the question is.
Speaker Change: Right to have a product that would be compelling or make an impact.
Speaker Change: Or b.
Speaker Change: Differentially important.
Speaker Change: Important to the guest in some way, yes, we do think that that probably owning some additional assets might be critical for that but where those come in the lifecycle of that potential product is a question. When we would feel confident enough to launch that product, where we feel like again. It would be additive is also still an open question and I don't think we have not come to any final conclusion.
Speaker Change: On that in the end of the day like we are going to.
Speaker Change: Just like we have done historically right we.
Speaker Change: We pursue a lot of different things and we look to see where the openings are and where the opportunities are that we think ultimately drive value and thats, where we put our resources and our focus in Europe, we'll absolutely be there when we think it's the right time.
Speaker Change: Got it and then Rob I'd Love your take on the ancillary obviously, that's been a large push over the last.
Rob Katz: Maybe sorry, three years, our epic gear and driving ski school attached still top priorities for you.
Rob Katz: Thanks.
Rob Katz: Yeah, no absolutely I think we have.
Rob Katz: Obviously, we do these are guests that are already visiting our resort, where we feel like there's opportunity to deepen our relationship with them and broaden our capture rate.
Rob Katz: And our minds part of that is going to be.
Rob Katz: Kind of some of the marketing improvement that I think we're going to be focused on as we look ahead to the upcoming seasons.
Rob Katz: But part of it is also innovating on the product that we're offering and how they are engaging with that product or service.
Rob Katz: And so in that respect we think my epic year end, my epic pro or both.
Rob Katz: Critical to that right. It is something new using technology and providing a better guest experience and then we layered on top of that and improve marketing approach that we think will be one of the most important revenue drivers as we look to the future.
Speaker Change: We will go next to Brian <unk> with Barclays.
Speaker Change: Great. Thanks, so much.
Rob Katz: Taking the question.
Rob Katz: So.
Rob Katz: Looking back at this.
Rob Katz: This past season, and sort of a hesitation shortfall.
Rob Katz: I'll leave you guys would say underperformed what you were trying to do what the industry did.
Rob Katz: When you look at where.
Rob Katz: Geographically, you lost share or sort of by source market.
Rob Katz: What can you tell us about sort of who that guest is right I know, Rob you said that.
Rob Katz: The experience gained experience consistent experience right is top of mind, which guests.
Rob Katz: Do you need to win back.
Rob Katz: Mountain specific or is it more I guess, yes source markets.
Speaker Change: Well a couple of things one is I would say, yes, we.
Rob Katz: Absolutely we did not achieve this year. The result that we were looking for and it is true that I think we underperformed the industry now part of that is where the industry over performed right and some of the markets like the Midwest, where we did perform well, but obviously, we have a tiny market share with only a couple of resorts there.
Rob Katz: So part of it as a geography balanced but part of it even within the geographies right. We feel like we didn't hit our mark.
Rob Katz: And the biggest area, where we feel like we fell short was on.
Rob Katz: I'm committed litigate visitors.
Rob Katz: And I think that obviously is someone who is.
Rob Katz: They're not committed in front of the season, but they are obviously not also committed likely to skiing that season are not committed to skiing at our resort or maybe another resort that season and in our minds right that that is where we need to take a different marketing approach.
Rob Katz: To be able to compete and compete well right in that marketplace. I think theres also opportunities for us to drive past sales as well and again, it's typically going to be add Adam the margin of course is that less committed person, who we have to convert again something that this company has done successfully for a long period of time and I feel like is.
Rob Katz: Yeah, it's right in our wheelhouse to be able to turn around.
Rob Katz: And yes, we look forward to the next couple of years. We think this is very achievable.
Speaker Change: Okay. That's really helpful color. Thanks for that second question is you alluded a couple times Rob too.
Speaker Change: Based on the past some of your peers are notable in there sort of constantly tinkering and more dynamic sort of act.
Speaker Change: Active management of tearing and.
Speaker Change: No blackout dates and things like that I know youre not going to announce your idea or ideas here, but just to get your maybe your philosophy on the pros and cons of.
Speaker Change: More hearing.
Rob Katz: At the expense of being more complicated of course, but perhaps to unlock the unique supply and demand dynamics of each particular mountain you have.
Rob Katz: Yes, I mean, I think most people would say that we've done a lot of that already and if anything sometimes.
Rob Katz: We could be.
Rob Katz: People can criticize us for having too many products.
Rob Katz: Two complex, but it is for this exact reason that we are constantly looking at whether or not theres, a new approach for us to get somebody to commit in advance.
Rob Katz: And of course, it is true that as time has gone on that becomes harder because the people who are easier to convince of course, we already converted them a long time ago, but but in our minds like that that's what we're here to do and that innovation is critical and so as I talk about potentially changing our past product portfolio.
Rob Katz: See some huge overall, but it is to see where we can be more aggressive.
Rob Katz: And how can we continue to mind, both I would say to your earlier question both types of gas and source markets right. I think it's both I don't I don't think its isolated to one market or one type of guest I think it's it is what I would call it though.
Rob Katz: It is the less committed skier.
Rob Katz: I think is where our focus will be.
Speaker Change: That's great. Thanks, Debbie thanks for everything.
Speaker Change: Thanks.
Speaker Change: We'll go next to Chris <unk> with Deutsche Bank.
Speaker Change: Hey, good afternoon, everyone, Rob it's nice to have you back in the seat.
Speaker Change: So let's start off with it it's a little bit of a different question, Rob, but if you look at like the cruise industry right you look at it.
Speaker Change: Ticket places that are probably significantly higher than they were in 2019.
Speaker Change: Or kind of on a like for like basis, not not a lot higher.
Speaker Change: That's mix.
Speaker Change: Maybe some of that and cruise industries, just new hardware and stuff. So the question is do you think you can continue driving price engagement do you have enough we used to kind of.
Speaker Change: We invigorate or not reinvent.
Speaker Change: Yes, reenergize the product without going off the rail spending wise is that possible do you think you need to do that.
Speaker Change: Yeah I think.
Speaker Change: Absolutely believe that our opportunity to continue to drive price is.
Speaker Change: Is there as it's been there before and I think we've shown that in a lot of different ways.
Speaker Change: It is it's a little bit different than the cruise industry or the retail industry and that we've got this matrix right around advanced commitment and lift ticket and we're dialing both at the same time and even within lift tickets right. We're dialing people who want to buy right in advance of showing up the day off.
Speaker Change: So it's a bit more complex, but that's also I think where we've been able to be successful and we.
Speaker Change: We are continuing to invest in our resorts continuing to add new liffe upgrade restaurants, right new experiences continuing to use technology to improve the guest experience and we think all of those absolutely justify right the opportunity for us to continue to charge for that but at the same time, yes.
Speaker Change: We understand that to move people into advanced commitment that's going to be something that.
Speaker Change: We have to look at from a kind of longer term basis right. As we give that discount. The question is right are we picking up extra days of skiing or extra dollars over a four year season, where if we don't do that right. We may lose that person in a bad snow year, which by the way it could be a bad snow year or it could be a bad weather day right. We could have an amazing snow.
Speaker Change: Here and one day over Christmas right. If it's very windy you can lose people so getting those folks to commit advanced for us even if it's a week in advance where I can still be quite compelling to our overall value thesis for the company.
Speaker Change: Okay, Yes fair enough I appreciate that color.
Speaker Change: The follow up is you've covered a lot of ground on costs and there's a lot of different angles to it but.
Speaker Change: We're certainly not trying to get a number from you for any future year, but just directionally at a high level do you think based on what you see today, which may change you think there needs to be kind of a grand reset of sorts on operating expenses in terms of labor housing or whatever you think you just need to tweak certain things in.
Speaker Change: Other things with corporate expenses, and such will will counterbalance the operating expenses.
Speaker Change: No. We don't we don't think that there needs to be some grand reset we think we need to ensure that we stay competitive.
Speaker Change: In terms of.
Speaker Change: How we attract employees to the company and when you look at the.
Speaker Change: The investment that was made a couple of years ago with significant and I think it really reset us and I think has allowed us to deliver a much better experience along with many other ways that we're connecting with our employees, which is especially on the seasonal frontline levels, which is why we are seasonal return rates and retention rates right are the best they've ever been.
Speaker Change: Ben.
Speaker Change: So to me right that I think we start with that now I also think though there's ways that we can be a lot smarter.
Speaker Change: So what youre seeing in the resource transformation efforts.
Speaker Change: Is not we're not pulling back on the guest experience at all but we're realizing that we're a big company now that group pretty quickly and we can actually just be more thoughtful about how we resource and how we oversee the same things and obviously then no different than any other company. There are opportunities right for us to use technology and AI and other stuff that we're going to continue to.
Speaker Change: Average just like everybody else's.
Speaker Change: Okay. Thanks, Rob.
Speaker Change: Thanks.
Speaker Change: Yes.
Unidentified Moderator: This will conclude the Q&A portion of today's call I would now like to turn the call back over to Rob Katz for closing remark.
Unidentified Moderator: Thank you operator. This concludes our fiscal 2025 third quarter earnings call. Thanks to everyone, who joined US today, Please feel free to contact Angela or me directly should you have any further questions. Thank you for your time this afternoon and goodbye.
Speaker Change: Thank you Sir This concludes today's Vail resorts fiscal third quarter 2025 earnings conference call and webcast. You may now disconnect. Your lines at this time and have a wonderful day.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Hum.