Q4 2019 Earnings Call
Good day and welcome to the Vail resorts fourth quarter fiscal 2019 earnings call.
This conference is being recorded at this time object turned to conference over to Mr. Cats. Please go ahead.
Thank you good afternoon, everyone welcome to our fiscal 2019 yearend earnings Conference call. Joining me on the call. This afternoon as Michael bark in our Chief Financial Officer before we begin let me remind you that some information provided during this call may include forward looking statements that are based on certain assumptions and are subject to a number risks.
Certainties.
Described in our assay see filings actual future results may vary materially forward looking statements in our press release issued this afternoon, along with our remarks on this call I mean as of today September 26, 2019, 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 two.
Tables included with our press release, which along with our annual report on Form 10-K were filed this afternoon with the FCC and are also available on the Investor Relations section of our website at Www dot they'll resorts dot com before jumping into our results I would like to send a special welcome to the peak resorts team.
We're thrilled to bring be 17 resorts and their employees into the Vail resorts family.
With this significant expansion of our network, we're able to create a much stronger connection directly with gas and some of the largest population centers in the United States, making skiing and writing more accessible in North America and around the world.
So with that said, let's turn to our fiscal 2019 results.
We're pleased with our overall results for the year with strong growth in visitation and spending compared to the prior year, including a strong finish to the season with good conditions across our U.S. resorts. After the challenging early season period for destination visitation our results for the remainder of the year were largely in line with our original expectation.
Our results throughout fiscal 2019 highlight the growth instability, resulting from our season pass the benefit of our geographic diversification the investments we make in our resorts and the success of our sophisticated data driven marketing efforts.
Our Colorado, Utah resorts experienced strong local and destination visitation supported by favorable conditions across the western U.S. the company experience relative weakness in international visitation throughout the year compared to the prior year, particularly at Whistler Blackcomb in Australia fiscal 2019 results were.
A strong supported by the addition of false Creek and have them. We continued pass sales momentum.
Our fourth quarter fiscal 2019 summer results were in line with our expectations with strong continued momentum at Whistler Blackcomb offset by a slow start to the epic discovery season in Colorado and Heavenly due to late snowfall and cold temperatures in June .
Turning now to our 2019 2020 season pass sales.
We're very pleased with the results for our season pass sales to date.
Through September 20, Soc in 2019, North American ski season pass sales increased approximately 14% in units and 15% in sales dollars as compared to the print the period in the prior year due September 20, Threerd 2018, including military pass sales in both periods.
Excluding pass sales from peak resorts in both periods and adjusted to eliminate the impact of foreign currency by applying current period exchange rates to the prior period for Whistler Blackcomb pass sales.
Excluding sales of military passes season pass sales increased approximately 13% in units at 14% in sales dollars over the comparable period in the prior year. Our pass sales growth was modestly ahead of our expectations through this point in the season with strong results in our destination markets in particular.
We have seen very strong growth in our northeast markets, which are benefiting from the first full year pass sales with unlimited access it so okay email and mounts on be included on the epic and epic local pass products and the improved impact of the expanded guess data and insight we now have in that region.
Our broader destination markets continue to perform well do our enhanced ability to reach destination guests with our data driven marketing.
Our local markets continue to system to show solid growth driven by favorable results among our local gas in the Whistler Blackcomb region with particular strength in Seattle from the first full pass sales season with access to Stephens path.
We're also seeing strong results for both northern California, and you talked guess, partially offset by more modest sales growth in our Colorado local market.
The vast majority of our growth came from our epic an epic local products and we are also driving material contributions from epic day past and military pass products, we anticipate that the majority of the sales of the new Epic day pass product will be concentrated in the remainder of the selling period.
We're very pleased with the performance of our past sales effort to date, especially given the increased size and scale of the program as we enter the final period for season pass sales. We expect our December 2019, nonmilitary season pass sales growth rate will be modestly lower than the growth rates reported today, primarily driven by.
The inclusion of peak resorts passes and our current and prior year reporting and the impact of our success in moving purchasers early in the selling cycle, partially offset by the ramp up of epic day past sales.
Our epic Australia pass sales launched on August 15, 2019 for next season and are off to a very strong start with growth of approximately 23% in sales dollars through September 22nd 2019 compared to the prior year period ended September 20, Threerd 2018, though it is important and.
Note that it remains early in the Australian sales cycle.
We're pleased with our sales results in Victoria with the addition of Hoffman Falls Creek, which together with Perisher offer very compelling product for our Australian guess, who can skew locally at our three Australian resorts as well as experience our growing network in North America and at resumed suing Haka Valley in Japan path.
Sales will continue through the Australian off season, leading up to the 2020 season.
Now I'd like to turn the call over to Michael to further discuss our financial results in our fiscal 2020 outlook.
Thanks, Rob and good afternoon, everyone.
As Rob mentioned, we're very pleased with the results from fiscal 2019.
With a strong base of high end consumers, we're continuing to leverage our growing network of resorts and sophisticated marketing strategies to drive guest spending across our mountain segment.
Fiscal 2019 total mountain net revenue increased 13.5% to approximately $2 billion.
Total skier visits increased 21.5% primarily as a result of the addition of Triple Peaks Stephens Pass Falls Creek and have them, which we collectively referred to as the acquired resorts and the favorable conditions across our U.S. resorts total effective ticket price or EGP decreased 3.4% compare.
Her to the prior year, primarily due to higher skier visitation by season pass holders lower ATP from the acquired resorts and the new military epic pass, partially offset by price increases in both our lift ticket and season pass products.
Excluding season pass holders EGP increased 4.9% compared to the prior year.
Resort net revenue was $2.3 billion, an increase of 13.1% compared to the prior year resort reported EBITDA was $706.7 million, an increase of $90.1 million or 14.6% compared to the prior year.
Fiscal 2019 resort reported EBITDA includes $16.4 million of acquisition and integration related expenses and approximately $8 million of Unfavorability from currency translation, which the company calculated on a constant currency basis by applying current period foreign exchange rates to the prior period results.
We estimate the fiscal 2019 resort reported EBITDA benefited by approximately $4 million in resort reported EBITDA from not owning triple piece and Stephens pass during a portion of the months of August and September a period that those resorts operate at a loss.
Net income attributable to Vail resorts was $301.2 million or $7.32 per diluted share compared to $379.9 million or $9 in 13 cents per diluted share in the prior fiscal year.
Net income attributable to Vail resorts for fiscal 2019 included a tax benefit of approximately $12.9 million related to the employee exercises of equity or awards, primarily related to the Ceos exercise of stock appreciation rights.
Additionally, in fiscal 2019 net income attributable to Vail resorts included the after tax effect of acquisition and integration related expenses of approximately $12.1 million and approximately $4 million of Unfavorability from currency translation, which the company calculated by applying current period for next.
Change rates to the prior period results.
Our balance sheet remains strong and the business continues to generate robust cash flow.
We ended the fiscal year with $108.9 million of cash on hand, and our net debt was 2.1 times fiscal 2019 total reported EBITDA.
On September 23rd 2019, the company entered into the second amendment to the eighth amended interest rate restated credit agreement.
Amended agreement provides for a term loan facility in an aggregate principal amount of $1.25 billion increase from the previous term loan facility of $914.4 billion as of July 30, Onest 2019.
The incremental term loan proceeds were used to fund the peak resorts acquisition and to prepay certain portions of the debt assumed in connection with the acquisition.
I'm also very pleased to announce our board of directors has declared a quarterly cash dividends on bell resorts common stock the quarterly dividend will be one dollar and 76 cents per share a common stock and will be payable on October 25th 2019 to shareholders of record on October eight 2019.
Turning now to our outlook for fiscal 2020.
Net income attributable to Vail resorts is expected to be hundred $93 million and $353 million for fiscal 2020.
We estimate resort reported EBITDA for fiscal 2020 will be between $778 million and $818 million.
Our resort reported EBITDA guidance includes an estimated contribution of $53 million for peak resorts operations, which includes an estimated 6 million dollar benefit from not incurring off season losses from August 1st 2019 through the closing date of September 24 2019.
The company expects to incur approximately $20 million of acquisition and integration related expenses in fiscal 2020 related to the acquisitions of peak resorts Fallstreak and have them.
We will be completing significant integration of peak resorts in fiscal 2020, but we do expect integration activities to continue into fiscal 2021, as we prepare the resorts for 2020 2021 ski season openings.
We expect resort EBITDA margin for fiscal 2020 to be approximately 31% using the midpoint of our guidance range, which has an estimated 10 basis point decrease compared to fiscal 2019, primarily driven by transaction and integration expenses. The inclusion of peak resorts, which historically generated lower margins as a standalone business.
And the full year impact of the acquired resorts, including all off season losses.
We estimate real estate reported EBITDA for fiscal 2020 will be between negative $2 million and positive $4 million.
All of these estimates are predicated on the assumption of normal weather conditions throughout the ski season, no significant recovery in early season performance a continuation of the current economic environment in which we have seen relative weakness in international visitation and exchange rate of 75 cents between the Canadian dollar and U.S. dollar related to.
The operations of Whistler, Blackcomb in Canada, and an exchange rate of 68 cents between the Australian dollar and U.S. dollar related to the operations of Perisher Falls, Greek an awesome and Australia.
Fiscal 2020 guidance does not include any payroll tax impacts or income tax benefits related to the potential exercise of STI CEO stock appreciation Awards I'll now turn the call backdrop, thanks, Michael our commitment to reinvesting in our resorts and the guest experience remains one of our highest priorities.
As previously announced we'll be completing a number of important strategic capital projects. Prior to the started the ski season, including a significant investment in our snowmaking systems in Colorado that we expect will transform the early season terrain experience at Vail Keystone and Beaver Creek at Park City, we plan to transform the Tombstone Express area.
With the new permanent tombstone barbecue restaurant and new four person over an out left that will provide a quicker more direct route for skiers and riders to access canyons village from the center of the resort.
In addition, we plan to fully invested in a full renovation of the Beaver Creek children Ski school facilities and improvements to the Piquet base area at Breckenridge, with New ski school and child care facilities as well as an improved ticket and retail and rental experience. We remain highly focused on investments that we believe will substantially improved the guest experience.
Across our resorts, including a new mobile lift ticket express fulfillment technology that will eliminate the ticket window for guests who purchased their tickets in advance.
We also expect to complete the final stage of our point of sale modernization project and we are investing in technology to automate our data driven marketing efforts. We also plan to make significant onetime investments across the acquired resorts of crested Butte.
Chemo mounts on a b and Stephens pass, which will include replacing and upgrading the Daisy and Brooks lifts at Stephens passed and the Tio Cali lifted crested butte as well as an on mountain restaurant upgrade Addo chemo.
In closing I would like to thank our employees for their commitment throughout the last year to deliver on our promise of providing an experience of a lifetime to our gas and we're looking forward to working together to create a great ski season. This coming winter at this time, Michael and I will be happy to answer your questions. Operator, we're now ready for questions.
Thank you.
I'd like to ask a question. Please signaled by pressing star one on your telephone keypad.
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Signal to reach our equipment once again press star one to ask a question.
First question from Mr., Chris wrong.
Pardon.
First question from Felicia Hendrix from Barclays. Please go ahead.
Good afternoon.
And thank you for all the color as usual just wanted it seems to be a lot of focus by the investment community on your organic growth. So just kind of kept making some adjustments to your numbers. It looks like it for guidance implies about 6%. So just wondering if you could touch for a moment upon how you I think.
About organic growth and is it kind of.
Copper or the correct thing to do to look at that growth weight relative to your season pass sales, we seem to grow faster.
Yes, I know I think you know we do.
We're obviously very focused on organic growth and.
And we think we're obviously entering into a time period.
You know after a number of years, a very strong growth, where we think overall revenue growth probably moderates at that.
You know continued cost pressures.
And and we think that that's kind of a little bit based on I would say the broader economy.
And what we expect going forward.
I think that you know our past sales growth.
Including Epic day past, Yeah, we would expect to be certainly in excess of our overall growth and largely because in part right were moving.
Many of our gas from buying a single day lift tickets to buying.
Season passes or epic day passes in advance of.
Sometimes right.
We'll see.
Price pressure on that because we're making this trade, but the increase in loyalty reduce reduction in churn rate.
The data the relationship that we have to the gas we think provides.
As such a strong long term business value for us.
Thats been at the core of how we've been driving value and stability and growth over the last decade.
That's an expectation that we'd have for every year.
That part of our season pass sales growth will absolutely grow this that years.
EBITDA and then a part of it is really about the stability and long term.
Kind of lifetime value of the guest.
Thanks, and then just like for future modeling purposes.
Really asking you to give guidance you might think I am.
With that kind of mid single digit rate is that fair to think of that into maybe a near term perpetuity for organic growth.
Yes.
Right that sounds like maybe we're talking about guidance.
Yeah not.
I'm not going to comment on that I think you know, but but I would say you know our goal obviously is.
As to use right, David the data driven marketing to sophistication, we apply to the rest of the business the strain.
Our resort portfolio to outperform the broader travel industry.
And but that said, we're always going to be bound it somewhat by the broader trends and the travel industry, but we think we have a number of both internal and structural reasons why.
Why we.
Absolutely can come out ahead.
But again somewhat depends on all the other factors that we all see in the economy.
Great and then just.
Dial up is just on peak and congratulations on closing that.
I did that that Youve given us for 2020 is just a tad higher than what I was expecting even if you adjust for that the 6 million benefit. So just I know you just closed but is there anything you know that you saw that need you more optimistic than you might have originally thought and.
Along those lines do you still expect that 60 million in synergies in 2021.
Yes.
Yes got including the synergies in Switzerland.
Yes, So I think the you know for this year as you mentioned, we do have on the stub period benefit of about 6 million, which was included in the 53 that we included when you back that out. It's you know is modest growth over.
Over over the prior year.
We do anticipate that we'll get some level of cost synergies, but certainly not.
Not the full benefit of that as we go through the full integration process. This year and then yes, we would look at next year as kind of the the first full year, where it's fully integrated and has a false pass sales season, when we'd start to see the real benefits of that.
Okay, great. Thank you.
Thank you.
Thank you if you find a question has been answered you may remove yourself from the Q by pressing star.
Next we'll go with Shaun Kelley from Bank of America.
Hi, good afternoon, everyone on.
Maybe just a question to go back to the kind of the core.
Earnings growth that you guys are sort of looking for when we when we stripped back somebody's layers can you just tell us at all at a high level on how you thought about lapping or including some of the issues from last season, I mean, right. These are pretty well documented throughout the you know the at the analyst day in terms of some of the timing of snowfall being a challenge and then obviously the early season period. So you can you just help.
Just like kind of or at least frame first of all that how you thought about balancing some of those the and in terms of what you incorporated and the guidance that we just received.
Sure I think yeah, we certainly factored in last year, you know as we thought about this year and the growth rates and I no doubt that there was very strong season.
In the us a little bit softer season in Whistler Blackcomb.
And I think you know as we look forward, yes, theres no doubt that probably little bit softer growth, probably coming from Whistler blackcomb little bit slower growth coming from.
From the U.S., Yeah that said I think.
To that to the discussion earlier about pass sales.
We feel like.
There are a lot of drivers right that that we leverage right to be able to grow even off of a strong season last year and I think our you know the guidance really includes.
The best we can tell about what a normal season would look like.
Which no doubt would be.
A little bit less robust in the U.S. in terms of strength of conditions and.
With better and.
You know in Canada, and I'd say that those things are in there and I say then this broader economic picture is in there as well so I think that you've got all of that with which which which kind of lines along with.
All the different initiatives that we have for this year in terms of how we think we can drive growth whether that obviously I pass sales, which we've talked about whether that's using a lot of.
You know are more sophisticated approaches to driving lift ticket revenue to driving ski school to driving food much of which we did talk about at the investor.
Conference last year, and so a lot of that discussion about things that were in the works. We now feel like we can really put into action. This year in that that all flows into the core growth rate of many of which.
You know, we think absolutely give us a boost over what might have been a slower growth rate just because last year was so high but but given the number of things that we have going into this year that we feel like and actually showcase benefit.
That's that's what gives us confidence in in the guidance range that we put out.
Great. Thanks, and then on I'm, just wondering about the product line up I mean, we obviously still get some questions all the not nearly as many as a year ago on the broader competitive landscape and pricing environment out there.
Can you help us think about I think it seems like you saw growth in virtually every region and then some particularly strong growth in some of the destination areas, but on any areas on the pricing side or the competitive side that surprised you and specifically is Colorado being impacted at all by the by the loss of eight basin or any comments or call out there.
You know I would say that the nothing has as necessarily surprised us I think the pricing structure.
For our most of the pre existing products largely in line with certainly ours are.
And we haven't really made any huge changes to that of course, obviously, we expanded the product line with epic day past and we have seen good success with that.
Even even in this early part of the selling season.
So I think thats clearly been a positive and I think our Colorado, we had a pretty strong year last year in Colorado. So I think there there is up as always this lapping component with some of our geographies and so I think I think we're seeing a little bit softer growth because of that theres no doubt I'm sure that there there are some folks who are not renewing because of a basin we would expect.
That obviously a great resort.
Obviously in the that'll be offset which is baked into our guidance.
You know with some of our total partnership payments, but but in total I think we feel like as we said where we're quite pleased with the results were seeing.
You know I think given the size of our program and the growth that we've had over so many years I think to be able to continue.
To showcase the revenue growth are up that we're putting up we feel like really speaks to.
Both yeah, the options were giving guests in terms of the the resorts the options were giving them in terms of products and then the personalization and.
Constant improvement on on how we actually selling communicate to the guest.
Great and lasting for me would just be a you've given the lodging guidance on the I came in a little bit better than what we were.
Actually expecting but it does include I think there is some lodging contribution from peak.
Can you help us think about just for sort of what.
You're seeing on the hotel bookings front or what kind of core trend, you're seeing underneath that kind of underlines the the guides and lodging that's it for me.
I think.
We.
I'm not going to put out new information per se, but I guess I'd say more broadly that obviously that guidance is baked into the numbers that we have we do think.
That generally speaking we can outperform in our lodging business also the lot of the broader travel trends.
Because we have more unique markets the positioning of where our markets are.
All predicated obviously on the economic environment, continuing but we feel good about this year on the lodging front and and the number we actually even additional beyond peak number of new properties that we've taken under management, which we think will help.
So all of that kind of flows into the numbers that you're saying.
Thank you very much.
Thanks.
Thank you we'll next go with Chris Woronka from Deutsche Bank. Please go ahead.
Hey, good are you guys.
Wanted to drill down maybe a little bit on on your comments about international but but more forward looking.
You can tell from looking out.
As to how your international your destination visitors are going to look during the kind of it.
Peak winter periods or any anything you can you can look at sells its going to be better worse than last year.
You know I guess what I.
Well, what I'd say on the international front is that you know, we think theres still challenges on the international upfront I think.
You know combination of a factor certainly the UK.
You know continues to seeing.
Softer currency issues.
Visa issues in certain areas. So I think we you know.
I would imagine I think as we go in that we have tried to bake that into our guidance.
And so I think that hopefully largely be factored in and.
But I would see that yeah, a lot of our business and especially over the broader company I will certainly be.
More of a north American based.
You know driver in terms of our results for this year I think though on the margin. There's no doubt international can help or hurt based on guidance, but I think we're you know we're factoring in.
A continued soft environment on that front.
Okay Fair enough and then as we think about the the impact of the.
Good day pass.
How do you guys kind of internally underwrite.
Yes.
Is that going to kind of kind of break down one day to day three day 45 days or any way you guys have kind of and I'll go to try to figure that out based on some of your your marketing or your prior trends.
I would say, we yeah, absolutely we.
Went into this.
Thinking through all the different components of the product and.
Thats limits and ranges on on how the product would come in in terms of the various days.
Probably the biggest area of unknown I would say is is that one and two day product.
Lower frequency, obviously that that's the biggest obviously we.
Kind of the higher frequency products.
As a market that we've been in for a while we've now just.
Offered up a lot more choices.
You know on that front and so we know that Thats really helping you know that business, but certainly on the lower frequency side, that's probably a business that will come in mostly toward the end.
And yeah, I think that you know that that's something we're probably going to learn learn the most about you know as as we.
Go through October and November .
And then we'll probably have more to say about that in December , but but theres no doubt I think what we what I can't say is.
The product is really performing largely along how we expect it to this point.
You know, which in our minds is a good thing given that there were so many unknowns launching a new product we feel really pleased that that it is playing out with all of the major trends.
You know in terms of uptake in terms of trade up or trade down all of that actually really aligning with expectation.
You know, which again gives us good confidence that.
This is a powerful product you know course, I'll take a number of years.
Fully get integrated into the market, but but but obviously speaks to I think a real.
Group core group of the skiing public that that is looking for less than a full season and wants more choice and many more options in terms of how to pick and choose how they want to access the mountains and so they can now do all of that and we can still be getting the commitments stability in the loyalty of the advance purchase.
Okay. That's a that's great color and then just I guess on on peaks as you kind of look forward a little bit and I know this is a multi year.
Kind of process, but are there you see many opportunities on kind of on the revenue side or I should say on the ancillary side I know these are not not seem kind of resources you have.
In Colorado, Whistler, and such but are there opportunities on the on the ancillary side at all overtime.
Yes, I think I think we see a lot of opportunity with peak hour I wouldn't say weren't necessarily calling out a specific line of business. So when you look at.
The resorts and how complementary their resort on network is that peak bill so successfully over the years and integrating that in with our network.
What is really going to do is give.
Some other major population centers in the U.S. access to local and regional skiing on the same pass that.
Yeah that they can access destination resorts within our network and so we think that theres going to be a lot of opportunity from the data side.
In terms of working with the teams there on the the experiences investments we can make there.
As well as just push putting people onto the pass that we think is going to wind up.
Having a lot of benefits network wide. So yeah, we're very.
Very optimistic about the impact that piece is going to have over the years.
[laughter].
Okay very good thanks, guys.
Thank you.
Go with Ryan Sunbeam.
[laughter].
Hi, Thanks, Thanks for taking my questioning congrats on restaurant finished the year there.
I guess two questions for either Robert Michael.
Can you maybe talk about where you outperformed on past cells, because it seemed like RAF call you talked growth might flow over the summer then pick up again at the ended the year and now it seems to flipped and then second I guess, given where it sounds like quite strong growth and in the northeast can you dig in there on that market a little bit do you feel like the resorts you've added there are helping drive.
Broader overall path adoption or do you feel like your it's more a function of recapturing maybe some prior epic holders that might have tried to icon now and are switching back to you now that youve beefed up your holdings there.
Yeah on the performance I would say you know I'm on the Pascal program I would say really outperformance.
Somebody across the board.
You know I, I wouldn't say necessarily everything home market or geo or segment, but but certainly it just.
Overall stronger.
Labor day performance then.
You know that than we were expecting.
And I think you know likewise saw stronger Memorial day performance. So.
I think it.
Speaks a little bit too.
You know the both the approach on marketing, how we're engaging with people I think the epic day pass absolutely, helping I think military passes right.
Absolutely helping.
And and you know this opportunity that.
That that we're always looking out which is how do we move people to buy their pass earlier in the cycle. So I think you know to your point about the flipping it's true and I think just also just saw real success with between people earlier in the cycle and and we're always cautious about knowing that.
You know when we kind of have growth targets for the overall year and when we see some of that move up that's a great signed usually gives us more confidence, but the same time doesnt necessarily mean that we can grow on top of that because we know we're pulling some of that forward.
And whether that people who were new earlier, new people, who were you know kind of maybe estimating or buying it and the October deadline now seeing them in that labor day deadline. So.
So all those factors really really go into that and you know we have a number.
It's important to point out a lot of different components to the program now a fair amount of complexity, I think thats, allowing us to grow the program.
Broaden and deepen it with our gas than at the same time, obviously makes it a little tougher to have perfect precision on forecasting.
Given the number of products and different markets.
We're now selling too.
And on the North East I would say.
Yes, I can't speak to that.
You know the icon point, but I, but I certainly can say, absolutely we think that.
Having the resorts is a big benefit by one of the things we tried to call out was it's not just the resort I know that tends to be what everyone focuses on old great. You've got this resort. Therefore, it makes the past better and that's true, but there is a multiyear impact of having the data right. So all the guest that went to these resorts last year, where we were able to capture there.
Our data those are all opportunities for us to make a more informed and direct pitch to people and it when we can send somebody an email and we have some information on them and therefore, we can personalize it make it more relevant to them that just bar outperforms running it to have in a newspaper or even on a wet.
Upside or certainly all the other kind of more broad based marketing effort. So you know and that we we've seen this sweat park city and canyons. We saw this was lesser we're seeing this with these acquisitions right that data piece is a huge component of how we drive long term growth in the program and a lot of that data comes from people who.
Lift tickets at these resorts.
So so that combination that we think is helping.
Great. Thanks, so much for the color.
Yeah.
Thank you once again, if you find a question has been answered you may removes yourself from the Q by pressing star.
And if you'd like to ask a question. Please press star One we'll next go with Mr., Alex <unk> from Berenberg. Please go ahead.
Hey, good afternoon, guys. Thanks for taking the question. So I know you ran a conversion opportunity for people who had the peak has prior to the acquisition.
You were pixi any type of delayed purchasing due to potential issues with the acquisition and then how many people did on the converting their passes from the peak to the epic.
So I think what you mean is yeah, there were up where to allow people who had a peak pass to make of choice. If they want to to exchange their peak path for an epic path and and that's a process that actually did not.
Start until closing and actually we've kind of guided a lot of those folks.
That you know they theres no rush for them to try and get into this way because it'll take time for our customer service folks to support them.
So we've actually in fact.
Advise them to me, maybe even wait till after our next deadline in mid October .
So we don't have insight at this point on on those conversions and what that will look like and and honestly, it's a it's a.
Hard for us to tell to you because as you point out you're right right. There are some people who bought the peak pass other people, who would've bought the peak path and maybe haven't yet and are now going to buy an add back some people who would've bought in the fall no matter what.
So.
So again hard for us that really have insight into any of those trends are dynamics and on the peak side.
We literally just got access to to peak, obviously, a couple of days ago, and so really have not had a chance to do any kind of deep dive.
On their information on their pass program.
So that's still to come.
But you know we obviously are are quite hopeful, though about yeah that that this well the opportunity for a lot of the either both peak customers who are in passes our peak customers, who tend to would've been lift ticket buyers that they will give a close look to all of our epic products.
And but you know understanding that this year is is the first year, so ill and we haven't really had a chance to put a full marketing campaign behind it.
Okay, Great. That's helpful. And then just the second one.
Looking at partnerships globally, a long term you the competitor recently get into Europe with one of the bigger resorts over there I guess what are you seeing right now in terms of potential for you to partner with the resorts not necessarily on the M&A front, but with the thing you've done in Japan and elsewhere.
If you're in the U.S. and in Europe and Asia. Thanks.
Yeah, I think you know certainly something we're always having conversations about yeah, we're pretty selective about which partners to bring in and the kind of relationships that we want we want to make sure that you know any partner that we're bringing in his is additive to our existing partners.
You know, we don't we don't like to see you know duplication our partners don't like to see that kind of duplication.
You know I think we feel good about the coverage that we have right now and in North America in Europe in Japan on this front.
So it will always continue to have dialogue, but I'm not sure that new partners per se are you know are going to be a major driver I think obviously, our hope longer term is to have a deeper relationship with some of these resorts acquisitions investments you know stronger alliances whether in Japan.
Our Asia or in Europe , and those I think you know actually have an opportunity to to really.
Take up a notch the kind of benefit in the kind of impact that we can have.
Obviously also going into this year you know in addition to the Europe piece, which we've had for number of years, where we have Sun Valley in Snow basin that have been added resumed to that up it added in Japan, all of which we think will be quite quite a benefit for our pass holders and impactful to the program.
Alright, Thank you I appreciate it.
Thanks.
Thank you we'll next go with Patrick Scholes from Suntrust. Please go ahead.
Hi, good afternoon.
A question for you on a snowmaking upgrades.
In light of what you're doing in Colorado.
What.
Would you be sort of rolling that out to other western resorts.
As far as upgrading snowmaking and making up more consistent product.
For the especially for the early season.
Yeah, I would say you know I think the you know if we think about Vale, which as you know where most of.
The investment biggest changes happening I would say Vale historically, probably has had less.
Snowmaking coverage than many of our other resorts and also the location of the coverage, which was set up many many many years ago at the base of the mountain.
You know in line side I think just over time, it's just I'm not sure. That's the most efficient or impactful place really to start our season and so one of the main reasons why we've made this investment is to bring that up to the top of the mountain into the mid Val chair for area and a you know we feel like that's just going to be a much much better product.
And yes, because of the higher elevation, we'll be able to get it opened earlier.
So I would say that's probably.
No more unique I think each resort like a keystone.
We're looking to have Keystone be absolutely one of the first resorts open in the U.S. I'm not sure that that would be the same strategy or approach for every one of our resorts.
And so I don't know that that's necessarily an opportunity that will look at.
And a lot of our other western resorts.
In Beaver Creek.
More of a unique.
Opportunity there and you know I've to take a certain area of it really kind of improve what we can offer so what I would say the Vale thing probably stands out some of the Keystone piece, because we want to be one of those first resort to open in you know in the U.S. I think those those are probably more unique other situations will probably be more one off but.
I don't know that you're going to see I don't know that this is an indication of a much larger scale snowmaking investment going forward.
I think the you know you know probably each each resort had its own unique reason why we thought this would be very impactful this year.
Okay.
Thank you just a quick follow up and I apologize if you.
Said this on past earnings calls.
What is the cost of those upgrades in Colorado.
I don't think we've we've not released.
The individual cost you know for any of our snow making efforts.
So you know, but but no doubt the Vale investment was a significant part of our discretionary capital this year.
But but I can't provide more details at this point.
Okay. Thank you very much.
Thanks.
Thank you.
Once again, if you'd like to ask your question. Please press star one and if you find a question has been answered you may remove yourself from the Q by pressing star to well next take David Katz from Jefferies. Please go ahead [noise].
[noise], Hi afternoon, and and congrats on a on a great year.
I wanted to ask about you know the urban strategy as you've discussed it in you know that peak steel and when we look at the theoretical value of customers that are being captured you know new entrance to the system.
How is that sort of theoretical value capture.
Trending and I suppose what I'm getting out as you know our their customers within those systems.
That average lower.
Or you know are you in some respects cherry picking.
The ones that sort of the system the best.
I you know I think there's a mix for shortly so I think.
Obviously, there is especially for the true Urbans a lot of visitation that come from a local markets and you know a large percentage of those folks are probably never get a ski out west and never ski at any of our other resorts and so those folks would have probably the lowest value.
In terms of system system value, but that's you know that said right you know that maybe in the first year that they come to the resort, but of course right. If we can get them to come back to lets call us take them out Brian if we can get somebody to go to Mount Bright and then come back another year from up Brian take their kids. All the started they may move into the could be two years.
Three years were all of a sudden.
You know that person is now taking a trip out west. So we do see even if in the first year right. The value is not as high we do see this kind of lifetime value.
From from these gas.
And then we do have folks absolutely who are I take trips out west all the time.
But like to have maybe do one or two days or more in their local resort.
And you know the ability.
To use the local resort to get them into our pass program to get them into our data you know.
System and now allow us to make personal relationship with them that has huge value to our system.
I would say is that you know we now have really too.
You know a couple of different opportunities. We've got this urban opportunity for the people who just go to the local resort, we have that opportunity now that to have them come out west and now we have an opportunity to have somebody spokes in the mid Atlantic in mid West region actually go up to the North East So right because we now have a number of good destiny.
And resorts in the northeast so we really see this as like a migration pattern that can go in a multitude of direction.
But it all starts.
Our mind with us having this relationship understanding somebody's skiing behavior understanding who they ski with how often and then being able to.
Promote to them the right product that gets them too.
Yeah, two to broaden their relationship with our company.
Thank you and one last follow up is you know as you look at growing particularly internationally I'm thinking about just bringing in partnerships versus the opportunities to own the mountain.
You know should we continue to think more about you know the partnership.
Model versus you know investing in real estate internationally, how does that that is that landscape look.
Yeah, I think we still have a strong interest and investing I don't know that I'd say real estate for let's call. It assets right. So there's no doubt that we would still have an interest a strong interest in I'm, having a investments in these resorts, having a component of the operating opportunity.
I think there's no doubt that you know like in many businesses for us having these partnerships is a good first stab potentially even if we had you know and ownership stake you may still have local partners.
You know two to helping to support.
The operation of the business and that's something that I think has to be on our radar screen for yeah.
In a lot of these markets.
But I I think we do think that it's you know the deeper the partnership which often comes with a financial investment the more impact we can have on the resort the local resort or resorts and at the same time the bigger impact that they can have on our past programs. Obviously, you know our willingness to be more aggressive.
I have on these partnerships changes if we've got an investment certainly if we own the resort. Obviously, if you know if we've got a big investment in the resorts. So.
In my mind, I think we still would like to see that the opportunities migrate from partnerships to operating opportunities or investment opportunities, but but up but it does take time right and there was a limited number of opportunities and we have to rape wait for the right ones.
Very good thanks for your answers and for taking my question sure. Thank you.
We'll next tech Brad buyer from Stifel.
Yeah. Thanks for taking the question guys just a quick ones from me.
Having followed peak for several years.
It's it's no big surprises the access to reasonably priced capital wasn't necessarily their strongest soon.
Just curious does you assess their 17 resources are anywhere you see an opportunity to inject you know a decent amount of capital to really transform.
The EBITDA productivity of a particular asset.
I think that's something that we're going to spend time on this year assessing obviously really no opportunity to to spend significant dollars.
On kind of discretionary projects at the resorts.
Before the season, but I think that's something we're going to look at and it will absolutely be focused as you said on on where we can get the biggest benefit where we can drive the highest return some of that will be about the the resort itself. Some of that will be about how we brought in the market share for for that resorts in the region.
Bring more people into our past program. So I think we'll we'll kind of look at all of that.
And a and you know I think also.
I think they were able to spend you know certainly at like a Mount snow.
Have actually put in a significant amount of capital and snowmaking water and based lots things like that so I think we feel good about that I think lot of capital has been put into a number of the snow time resorts and I think you know they just did it had done certainly when we what we can see from a debt. If it has since I've done a good job maintaining the resorts. So I don't know that.
No.
I don't know that anyone of these resorts is a park city or Whistler in terms of size of capital that would go in but theres no doubt that that theres, probably us maybe smaller dollar amounts that could have a a nice impact at a nice inflection point.
In terms of the kind of connection that they have with their guests.
That's helpful. And then just lastly, just on them.
Obviously, we also you know these these businesses that are dependent upon seasonal labor. We all know the challenges that are facing that market can you just give us a sense of any any initiatives that youve put in place to help.
Sort of mitigate any pressures you might be feeling on the labor front and that's all for me. Thanks.
Yeah, I would say on the labor front, we absolutely are you know where operating a fairly low unemployment environment. Many of our resort communities are at.
The lowest numbers you know we've ever seen in terms of.
So finding help is challenging how affordable housing makes that even more difficult terms of the scarcity of that which is why it's critical that we you know as a company remain aggressive and try to push forward on affordable housing projects, you know anywhere we can because.
Those it's just critical for I think for the overall health of the communities.
And I think what what we're doing on the labor side really is around talent acquisition and making sure that we remain aggressive on reaching out to as many people as possible using many of the same techniques that we use on the marketing side.
At a more and more basic level, but still using a lot of those things to go out and recruit and its I think you know when I look at the last couple of years and our ability to still provide a very high level experience at our resorts, even with this labor market a lot of that is because.
More sophisticated recruiting and centralized recruiting.
So that weekend, you know find the right people <unk> match them up with the right jobs and the right resorts.
And levers that you know in the best possible way I think candidly, there's more that we can do there's a lot there there a number of great technological solutions.
To how to be more systematized with seasonal labor in general, but certainly seasonal labor and I think that's that's something you'll probably hear us talk more about in terms of how again, we can use sophistication to even once they are here, how we maximize the opportunity that everybody has to get the most hours and the most efficient.
Hi possible.
So in our in our minds is it's you know obviously, the overall economy could shift, but but we're not planning for that aren't where we're planning to use.
Technology data systems.
To to be more skillful and more successful on the talent from.
Thanks, Rob appreciate the thoughts.
Yep.
And for our final question, we'll take Mark Torrente from Wells Fargo. Please go ahead.
Hey, good afternoon, just going off some of the earlier questions on key contribution to the season pass program and recognizing that you just got access to the company, but any sense of the quality of the data capture is that something that will need to be improved.
I don't know that we yeah I don't think we have a you know a great sense of that I think on the on the season pass I. You know again, just just got in there, but certainly you know our assumption would be that they've got good data on that I think probably a mixture of how their resorts are capturing data.
And then leveraging that I think certainly not.
They don't have the same systems that we have or the same operating procedure. So I think we see that as a real opportunity just given when we're closing when the deal was announced unfortunately, not something we're going to be able to radically change for for this year, but but we're going to do certainly our best to to do whatever.
Our improvements we can't do their data capture but but it is something that I think will be a long term big opportunity for us.
Okay, Great and then lastly on epic discovery slow start to the season, given a lead snowfall, but once the season did start for discovery how did it performed versus your expectation for this year.
And where are you I guess against your original targets for that program or maybe where do you see that contribution going over time.
Yeah, I would say I think you know I think as the summer progressed.
Results from Epic discovery actually just got better and better and you know I think that was a little bit of the story I think we had a combination of.
You know right snow literally up through almost you know July 4th and beyond in many areas.
And you know very cold temperatures do a lot of June so I think with which held back some of the bookings that we would normally see.
That I think you know impacted the overall business not just epic discovery activities, but impacted lodging impacted.
Retail up there you know again, obviously on the other hand, a you know provided a strong finish to the ski season, so a little bit of a balance there I think a you know broadly on epic discovery I think absolutely it.
It's below I think you know some of our original hopes for the program I think the.
All of the things that we've invested and we feel like are very good ROI, great flow through opportunities, but ultimately getting the pivot to both the the maximum flow through the maximum kind of how do we get people about other resorts I think we haven't completely turned the corner on that and and we're still going to be focused on that and you know a bit of a piece for us around takes a long.
Build like a fully thriving stable business takes a long time and that's the you know I think the path ROM there. The good news is that the resorts in total remained very very strong over the summer in terms of overall visitation and obviously Whistler blackcomb us on our business.
You know continues to exceed expectations I think maybe in every single year that that so far under our ownership.
We are been constantly impressed and surprised with.
Just with there the ability for them to drive visitation experience they provide and the financial results that we got from it. So that's been a bit of an offset to you know maybe slower growth than we might have wanted in the U.S. as in a very strong growth and Whistler blackcomb.
Alright, great. Thank you guys.
Thank you.
Thank you.
Moment, there are no further questions I'd like to turn the conference over to the monitor meter.
Thank you operator. This concludes our fiscal 2019 earnings call. Thanks to everyone, who joined US today. Please feel free to contact me or Michael directly should you have any further questions. Thank you for your time this afternoon and goodbye.
So this concludes today's call. Thank you for participation you may now disconnect.