VAIL RESORTS INC Q2 FY2025 earnings call

• Vail Resorts is pleased with 8% growth in resort EBITDA for the quarter, driven by stability from the Season Pass Program, investments in the guest experience, and strong team execution. - The Resource Efficiency Transformation Plan is on track to achieve cost efficiencies, with $100 million in annualized cost efficiencies expected by fiscal 2026. - Capital plan for calendar year 2025 is approximately $198 million to $203 million in core capital, plus $45 million in growth capital for European resorts and $6 million in real estate-related capital. - Focus on delivering an exceptional guest experience, including reducing lift-line wait times, improving accessibility, enhancing the employee experience, and maintaining stability in the ski industry. - Pass Sales for the 2025-2026 season launched with a range of products, including the Epic Pass and Epic Day Pass, offering value and expanded access to partner resorts.

For the second quarter of fiscal 2025, resort reported EBITDA was $459.7 million, up 8% from the prior year. Season-to-date, total skier visits were down 2.5% compared to the prior year period. Total lift ticket revenue, including an allocated portion of season pass revenue, was up 4.1% season-to-date. Ancillary business results: ski school revenue up 3%, dining revenue up 3.1%, while combined retail and rental revenue for North American Resort and ski area locations was down 2.9% compared to the prior year period. Resort reported EBITDA contributed a significant portion to the overall financials, with specific segments showing varying revenue trends based on visitation mix and conditions.

• Excluding a $7 million negative impact from foreign currency rates, resort reported EBITDA guidance midpoint for fiscal 2025 is unchanged from September 2024. - Net income attributable to Vail Resorts for fiscal 2025 is expected to be between $257 million and $309 million. - Resort reported EBITDA for fiscal 2025 is expected to be between $841 million and $877 million, including an estimated $15 million in onetime costs related to the Resource Efficiency Transformation Plan and $1 million in acquisition and integration-related expenses. - Strong balance sheet with $1.7 billion in total liquidity as of January 31, 2025, and a quarterly cash dividend of $2.22 per share declared. - Share repurchases of approximately 0.1 million shares during the quarter, with 1.5 million shares remaining under authorization.

• Industry demand normalization and shift in destination guest visitation patterns, impacting revenue. - Foreign currency exchange rate volatility, which had a $7 million impact on fiscal 2025 guidance. - Political and macroeconomic factors affecting international visitation, particularly for resorts with strong international guest bases. - Labor contract negotiations and their potential impact on operational costs, though not material to the overall outlook.

Q: Good afternoon. Thanks for taking my questions. Maybe starting out here on some of the more recent demand trends that you've been seeing. We've been hearing that there's some softening in room rates and visitation trends at some of the U.S. resorts that are closer to the Canadian border just as the consumer up there starts to respond to the preparers and some of the rhetoric coming out of Washington. I'm just curious, is this something that you have seen recently at any of the resorts, I guess, on either side of the border. And then similarly, if you could add some color on just how the broader international guests has behaved this season in light of all the FX, the political and the macro volatility?

A: Thanks, Jeff. We have been -- we monitor very closely the visitation trends as well as the lodging and booking trend. I can't say that right now, we've seen a very overt or explicit reaction to the tariffs. We will continue to monitor that very closely. I think that the -- our largest international visitation resort is Whistler Blackcomb. And when we look at Whistler Blackcomb, we are seeing it perform similarly to the other resorts in our portfolio where we have strong local visitation the destination visitation has not been to where we would want it to be. And of course, because they have such a strong international visitation, there is a bit of longer planning or booking curve associated with that. I think in December, we had called out that the bookings were lagging prior year levels. We have seen the Whistler Blackcomb bookings improve through the season. But they are still lagging our U.S. resort markets potentially, in reaction to the really tough year that they had last year. And we continue to make sure that we're building the awareness of how strong the conditions are there and encourage our international and domestic destination guests to come visit.

Q: Good afternoon, everyone. Can I just get an update on your current level of commitment to continuing to pay the dividend? Thank you.

A: Hi, Patrick, yes, we do -- you've seen us typically reevaluate our dividend level. And we reaffirmed our dividend level for the quarter, which I think demonstrates our commitment to maintaining that current level. Really, when we look at it, right, we step back and that's always been our primary method, but we're always considering what are those alternative uses that we could apply for our capital that includes looking at the value of our shares. And so we do reevaluate it every quarter, but we remain committed to the current level. We feel very confident in the level of free cash flow generation of the business. And so I think the dividend shows that commitment and that stability.

Q: Hello, everybody. Thanks for squeezing me in here. I have a question on the Pass prices. Kirsten, you were talking about a 7% increase. When I look at the all resorts Day Pass. It looks like it went up well in advance of 7%, right, something like 25% to 30%. Can you -- first of all, am I looking at the wrong thing because that doesn't seem to be consistent with the 7%. But I guess, more importantly, is it a tactical shift with regards to Day Pass prices? Because I think the follow-on question is, I would think it's a pretty elastic pass when you cut prices in '21, you saw incredible increase in units? And so I'm curious if you guys have any concern about elasticity on the downside for demand. If you are in fact raising the price of the day passes to that -- at that sort of rate?

A: Thanks, Brandt. I know -- we'll follow up with you offline. I think the comparison point is we'll make sure that you have the right comparison point. It is 7% pretty much across the board. I think that the Epic Day passes maybe got compared to the wrong benchmark from prior years. So we'll make sure that you have that data separately offline to make sure that you're looking at it the same way that we are. But the overall increase is 7%. We are not disproportionately taking price on Epic Day Pass for exactly the reason that you're talking about is we have a very good understanding of the price elasticity, and we really see that pass as being the entry point for a lot of low-frequency skiers that transition from a lift ticket into that pass that we can then over time, retain and trade up in the number of days as well as into other pass products. But no, we did not take price up 25% to 30%. So we'll make sure we follow up with you to clarify that