VAIL RESORTS INC Q1 FY2025 earnings call

Resource Efficiency Transformation Plan

• Vail Resorts continues progress on the two-year resource efficiency transformation plan, aiming for $100 million in annualized cost efficiencies by fiscal 2026.

North American Season Pass Sales

• 2024-2025 North American Pass sales had 59% unit growth and 47% sales dollar growth over 4 years. Through Dec 3, 2024, units were down ~2% but sales dollars up ~4%, with an 8% price increase and unit growth in Epic Day Pass products.

Early Season Indicators

• Early season conditions allowed some resorts to open earlier, with strong base of committed guests. Lodging bookings in U.S. resorts are consistent with prior year, while Whistler Blackcomb lodging bookings lag prior year. Frontline employee return rate is strong.

Financial Results

• Net loss attributable to Vail Resorts was $172.8 million in Q1 2025 vs $175.5 million in prior year. Resort reported EBITDA loss was $139.7 million, including one-time costs related to resource transformation and acquisition/integration expenses.

Return of Capital to Shareholders

• Declared a quarterly cash dividend of $2.22 per share, repurchased ~115,000 shares during the quarter.

Capital Investments

• Plan to invest ~$249M-$254M in 2025, including transformational projects at Park City Mountain and Vail Mountain, upgrades at Andermatt-Sedrun and Perisher, and investments in technology and dining experience improvements to achieve zero net operating footprint by 2030.

Resort reported EBITDA was consistent with prior year, driven by growth in North American Summer business from increased activity spending and lodging results. However, there was a $9 million decline in Resort reported EBITDA from Australian resorts due to record low snowfall and lower demand. Pass product sales for 2024-2025 North American ski season saw a ~2% decline in units and ~4% increase in sales dollars through December 3, 2024, with Epic Day Pass products achieving unit growth. Pass product sales are adjusted for foreign currency exchange rates, and there was growth from lapsed guests, but decline in new passholders compared to prior year. Approximately 2.3 million guests are committed to resorts in non-refundable advanced commitment products, generating over $975 million in revenue.

Resort Reported EBITDA

• Guidance for fiscal 2025 remains between $838M and $894M, including ~$27M cost efficiencies and ~$15M-$1M in one-time costs.

Net Income

• Updated net income guidance to $240M-$316M, up from prior range, due to gain on sale of real property and decrease in interest expense.

Assumptions

• Guidance assumes normal weather conditions, current economic environment, and foreign currency exchange rates as of Sept 26, 2024, with potential $5M impact on resort reported EBITDA if exchange rates deviate.

• Challenging weather conditions, particularly in Australia, impacted Resort reported EBITDA in Q1 2025. - Industry normalization may impact demand, affecting Pass sales and overall resort performance.

Q: Good afternoon everyone. I'm kind of curious about the season start on the weather front and behavioral normalization. What are you seeing so far in terms of activity level thus far given what you can see through Thanksgiving?

A: Thanks for the question. Pass Sales are strong with over 2.3 million guests committed. Early season conditions are encouraging with some resorts opening early. U.S. lodging booking data is consistent with prior year levels, better than pre-COVID. Whistler Blackcomb lodging bookings are lagging prior year but owned and operated lodging is slightly above prior year. We are holding guidance at this time.

Q: Hi Kirsten and Angela. Maybe just as a follow-up, Whistler has come up. Could you just talk about the sort of overall exposure there. If that were to stay where it's at? Is that enough to be a risk to guidance?

A: When I look at the Whistler Blackcomb lodging data, it continues to improve. The strong conditions and Pass sales indicators make us feel comfortable holding guidance at this time. There's nothing to be overly concerned about right now as we monitor the mix of indicators.

Q: Hi, good afternoon. I wanted to shift a little bit to Pass Sales. Encouraging to see things improve a bit, especially that positive unit growth here in the most recent period. Could you just give a little more around that, was it that renewals were just a little bit better than you were expecting?

A: Thanks. We're very pleased with Pass Sales. There's strong loyalty with growth among renewing Pass holders across all geographies. Renewers mostly renewed into the expected path. New Pass holders come from lapsed guests, prior year lift ticket guests, and new guests to our database. We saw delayed decision-making later in the selling cycle which impacted the cadence but improved growth rates.

Q: Hi, everyone. Thanks for taking my questions. Can we just go double back to the guidance one more time. I apologize if we're beating this a little bit. But with the stronger start to the year and perhaps maybe some of the Australian season there. Can we just sort of walk through the puts and takes and how you are thinking about the rest of the year?

A: Thanks. Our Q1 results and Pass Sales were in-line with expectations. We have strong early season conditions and are looking at lodging bookings. At this point, it's early in the season and we're not changing guidance as we have a significant part of the season ahead.

Q: Hi, good afternoon. Kirsten, I think it was mentioned in the prepared remarks that the Epic Day Pass units grew. Can you maybe unpack that a bit how much did they grow? What drove the growth? And then was there any trade down due to the macro environment?

A: Thanks. Epic Day Pass units grew. We saw growth as we attract new guests into that Pass. There was no unusual trade down; the net migration between trade up and trade down was relatively consistent with prior years.

Q: Hi. Two somewhat high-level questions. I guess, first, the essence of the Epic Pass historically obviously is an irrefutable price value. However, with lodging ADRs up 40% to 60% versus '19 in some cases, that changes the calculus for your destination visitor I guess, how much time do you spend thinking about the degree to which lodging is or isn't a limiting factor?

A: Thanks. We're fortunate to have incredible lodging partners. We're pleased with our lodging portfolio and the options it provides for guests. We look at the balance between our owned and operated lodging and other partners to create an appealing experience for guests.

Q: This is John on for Matt. Just going back to the start of the ski season. When you look at November and kind of early December trends, how is visitation kind of versus ancillary spend? And then multi-year, how are you thinking about this normalization headwind on the participation rate relative to like new Pass growth?

A: Thanks. The normalization we talked about last year is impacting Pass Sales. We saw a lag effect of normalization on Pass Sales results, with units down ~2% but sales dollars up due to price increases.

Q: Hi, thank you so much for taking my question. And good evening. Your past penetration is already at that 75% of visitation. And I think you've previously talked about how you plan to take that higher to perhaps higher than 65% of revenue mix. Could you perhaps talk a little bit about the puts and takes of that in terms of in the year for the year impact?

A: Thanks. There are opportunities for growth in Pass sales, including converting lift ticket guests, targeting underpenetrated markets, and connecting with the large database of marketable guests. We look at price elasticity and behavioral data to adjust Pass and lift ticket pricing.

Q: Thanks so much. Just a quick question to start with on Australia. Just wanted to separate the commentary around the performance over this past season. Seemed like there was a comment in the press release about lower demand. I just wanted to understand where that's coming from.

A: Thanks. This past winter season in Australia had historic challenging weather conditions and snow conditions, which impacted demand at the Australian ski resorts.

Q: Hi, good afternoon everybody. Thanks for squeezing me in here. So first question is on Whistler. I want to make sure I'm just not reading too deep into your comments about Destination guests being important here. But I guess the question is, I know Whistler has probably a very large relative mix of international guests and guests traveling from afar. And so is there any sort of dynamic whereby if you don't – there is a lag related to those folks having to book further out -- and if you get too far into the season without seeing a recovery in those bookings, and you might not be able to make that up even in a really good weather season?

A: At this point, we're so early in the season that I'm not anticipating a significant risk from that. The strong early conditions and improving lodging bookings indicate that we're monitoring the situation but feel comfortable holding guidance for now.