Vail Resorts, Inc. Price & Performance (MTN)

Thank you. Good afternoon, everyone. Welcome to our fiscal twenty twenty five second quarter earnings conference call. Joining me on the call this afternoon is Angela Korch, 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 are subject to a number of risks and uncertainties. As described in our SEC filings, natural future actual future results may vary materially. Forward looking statements in our press release issued this afternoon along with our remarks on this call are made as of today, 03/10/2025, and we undertake no duty to update them as actual events unfold. Today's remarks also include certain non GAAP financial measures. Reconciliations of these measures are provided in the tables included with our press release, which along with our quarterly report on Form 10 Q were filed this afternoon afternoon with the SEC. And are also available on the Investor Relations section of our website site at www.vailresorts.com. Let's turn to our fiscal twenty twenty five second quarter results. We are pleased with our overall results for the quarter with 8% growth in resort reported EBITDA compared to the prior year.

Our results reflect the stability provided by our season pass program, our investments in the guest experience, and the strong execution of our teams across all of our mountain resorts. Second quarter visitation at our North American resorts was slightly above prior year levels, with the benefit of improved conditions, partially offset by the expected continued and the shift in destination guest visitation for the spring, Destination guest visitation at our Western North America Vail which we believe was driven by the continued shift in his across the ski industry to later in the ski season, which increased after challenging early season conditions in the prior year. Local guest visitation was in line with expectations as conditions across our North American resorts improved from the prior year and returned to more typical conditions. Ancillary spend per destination guest visit was strong across our C School and Dining businesses throughout the quarter, while overall revenue in our ancillary businesses was impacted by the lower mix of destination visitation. Moving to our resource efficiency transformation plan. Vail Resorts is on track to achieve its two year through scaled operations, global shared services and expanded workforce management, the company is on track to improve organizational effectiveness and scale for operating leverage as the company grows globally and deliver the expected cost efficiencies in fiscal year twenty twenty five along with the $100,000,000 in annualized cost efficiencies by the end of its fiscal twenty twenty six fiscal year.

Now I would like to turn the call over to Angela to further discuss our financial results season to date metrics, and fiscal twenty twenty five outlook. Thanks, Kirsten, and good afternoon, everyone. As Kirsten mentioned, this quarter's results were driven by the benefit of improved conditions partially offset by the expected continued industry demand normalization and the shift in destination guest visitation to the spring. Net income attributable to Vail Resorts was $245,500,000 or $6.56 per diluted share, for the second quarter of fiscal twenty twenty five. Compared to net income attributable to Vail Resorts of $219,300,000 or $5.76 per diluted share in the same period in prior year. Resort reported EBITDA was $459,700,000 for the second fiscal quarter, which did include $2,900,000 of one time costs related to the previously announced two year resource efficiency transformation plan and $100,000 of acquisition and integration related expenses, which compares to resort reported EBITDA of $425,000,000 in the same period in the prior year, which included $2,100,000 of acquisition related expenses. Turning to our season to date metrics. The reported season ski season metrics are for the period from the beginning of the ski season through Sunday, 03/02/2025, and compared to prior year period through 03/03/2024.

And are for the company's North American destination mountain resorts and regional ski areas, excluding the results of Australian and European resorts in both periods. The data mentioned in this release is interim period data is subject to fiscal quarter end review and adjustments. Season to date, total SCAR visits were down 2.5% compared to the fiscal year twenty twenty four season to date period. Season to date total lift ticket revenue including an allocated portion of season pass revenue for each applicable period, was up 4.1% compared to the fiscal year twenty twenty four. Season to date period. For our Ancillary business results, season to date ski school revenue was up 3%, dining revenue was up 3.1%, and combined retail and rental revenue for North American Resort and scariel locations was down 2.9%. Compared to the prior year period. Similar to the drivers in the second quarter, season to date results through 03/02/2025 reflect strong local visitation from the improved conditions early season and with destination visitation impacted by the industry, demand normalization and an expected shift in destination guest visitation for the spring. Ancillary spend for destination guest visit was strong across the company's ski school and dining businesses with overall performance reflecting the higher mix of local visitation during the period.

Now turning to our outlook for fiscal twenty twenty five. Excluding a $7,000,000 negative impact from the change in foreign currency rates, the company's resort reported EBITDA guidance midpoint for fiscal twenty twenty five is unchanged from the original guidance provided on 09/26/2024. For the remainder of the season, the company is expecting improved performance compared to the season to date period, including a continued shift in destination visitation patterns to later in ski season, And this is based on a significant amount of pre committed guests our current lodging booking trends and historical guest behavior patterns. The company now expects net income attributable to Vail Resorts for fiscal twenty twenty five to be between $257,000,000 and $3.00 $9,000,000 The company expects resort reported EBITDA for the fiscal twenty twenty five period to be between $841,000,000 and $877,000,000 consistent with the original fiscal twenty twenty five guidance issued on September 26, 06/2024. The updated guidance includes an estimated $15,000,000 in one time cost related to the multi year resource efficiency transformation plan and an estimated $1,000,000 of acquisition and integration related [indiscernible] In addition, compared to the original guidance, the updated guidance includes an estimated $7,000,000 impact from foreign exchange rates.

At the midpoint, the guidance implies an estimated resort EBITDA margin for fiscal twenty twenty five to be approximately 28.8% or 29.3% before the one time cost related to the resource efficiency transformation plan. The updated guidance also assumes a continuation of current economic environment, industry normalization to pre COVID guest behavior, and normal weather conditions for the remainder of the twenty twenty four-twenty twenty five North American and European ski season and the March, including an exchange rate of $0.7 between the Canadian dollar and U. S. Dollar related to the operations of Blackcomb in Canada and exchange rate of $0.63 between the Australian dollar and the U. S. Dollar related to the operations of Parisher Vail Creek and Hotham in Australia and an exchange rate of $1.13 between the Swiss franc and the U. S. Dollar related to the operations of Anderma, Sedgrew and Kromantana in Switzerland. It does not include any potential impacts related to future fluctuations in foreign currency exchange rates which may be impacted by tariffs, trade disputes or other factors. As of 01/31/2025, the company's total liquidity as measured by total cash plus revolver availability and delayed draw term loan availability was approximately $1,700,000,000 This includes $488,000,000 of cash on hand, dollars $5.00 9,000,000 of U. S. Revolver availability and $450,000,000 of U. S. Delayed draw term loan availability under the Vale Holdings credit agreement and $2.00 $4,000,000 of revolver availability under the Whistler credit agreement.

On 01/27/2025, the company completed an amendment of its Vail Holdings credit agreement, which increased The U. S. Revolver to $600,000,000 and provided an incremental $450,000,000 term loan facility in the form of a delayed draw term loan the company can draw upon at any time at its option until January 2026. When any unused amount of the delayed draw term loans will expire. Additionally, on 01/30/2025, the company repurchased approximately $50,000,000 of its 0% convertible senior notes. For an aggregate cash repurchase amount of approximately $48,000,000 representing a 4% discount to par value. Following the closing of these repurchases, the company has $525,000,000 of 0% convertible senior notes outstanding, which mature on January 1, 2026. Proceeds from any borrowings on the incremental term loan facility and the increase in the revolver credit loan commitment both of which are currently undrawn, are available to be used to refinance the company's 0% convertible senior notes or for other general corporate purposes. Until the convertible notes mature or otherwise refinance or repurchased, the company will continue to benefit from the zero interest coupon. Overall, the company continues to have a strong balance sheet. As of 01/31/2025, the company's net debt was 2.5 times its trailing twelve months total reported EBITDA.

The company declared a quarterly cash dividend on Vail Resort common stock of $2.22 per share, The dividend will be payable on 04/10/2025 to shareholders of record of 03/27/2025. In addition, the company repurchased approximately 100,000.0 shares during the quarter an average price of approximately $196 per share for a total of $20,000,000 The company has 1,500,000.0 shares remaining under its authorization for share repurchases. We will continue to be disciplined stewards of our shareholder capital and prioritizing investments in our guest, in our employee experience, high return capital projects, strategic acquisition opportunities and returning capital to our shareholders. The company has a strong balance sheet and remains focused on returning capital to shareholders while always prioritizing the long term value of our shares. Now I'll turn the call back to Kirsten. Thank you, Angela. We are dedicated to delivering an exceptional guest experience and we'll continue to terrain, along with investments in technology to further elevate the guest and employee experience at our resorts, The company expects its capital plan for calendar year 2025 to be to $2.00 $3,000,000 in core capital before $45,000,000 of growth capital investments at its European resorts including $41,000,000 at Andres Matzadrine, $4,000,000 at Crown Montana, and $6,000,000 of real estate related capital projects to complete multi year transformational investments at the key base area portals of Breckenridge Peak 8 and Keystone River Run.

And planning investments to support the development of the West Lions Head area into a fourth base village at Vail Mountain. Including European growth capital investment and real estate related capital, the company plans to invest approximately $249,000,000 to $254,000,000 in calendar year 2025. Key capital investments include the launch of two multiyear transformational investment plans at Park City Mountain and Vail Mountain, significant lift, snowmaking and restaurant upgrades at Andres Monts De Drune, a new six pack lift at Perisher new functionality for the MyEpic app, more advanced AI capabilities for My Epic Assistant and technology investments across the company's ancillary businesses. Our guests are passionate about the mountains they love and so are we. Our investments Vail innovations have set the standard for the guest and employee experience across the ski industry, our business model has made the sport more accessible and created unprecedented stability amid climate change, for our shareholders, mountain communities and the sport more broadly. Throughout this journey, we have achieved numerous successes as well as learned valuable lessons Vail Resorts has a proven track record of turning challenges and enhancement. We have listened to our guest feedback and are proud of the progress we have made in the following key areas.

Reducing friction in the guest experience, Over the last ten years, we have invested nearly $2,000,000,000 in capital improvements, including more than 30 new lifts in the last five years, Our award winning digital innovations such as Mobile Pass, My Epic Assistant and My Epic Gear have significantly reduced friction in the guest experience These investments have contributed to a decrease in Listline wait times year over year for the last three seasons. This season list lines lasting more than ten minutes have occurred approximately 3% of the time including during weekends and holidays. Also accessibility. The introduction of products such as Epic Day Pass provide exceptional value to even the occasional skier, or snowboarder keeping the Epic Pass unparalleled in access and unmatched in Vail. To further illustrate, an adult Epic one day pass for next season is available for as low as $56 significantly lower Also, the employee experience Our frontline team members are key to creating an experience of a lifetime. By investing in their experience, we are investing Continued investment in wages and benefits have transformed talent into a strategic competitive advantage leading to the highest return rate of frontline talent in our company's history. Ensuring the ski industry not only survives, but thrives as crucial to our business, guests, employees and the communities in which we operate, Our continued focus on growing our season pass program has created unprecedented stability for our industry our recent financial results highlight this stability.

Through the second quarter, guest satisfaction scores across our destination mountain resorts and regional ski areas were strong, and grew relative to scores in the prior three years, excluding Park City Mountain, where the guest experience during the thirteen day patrol union strike was not the experience we wanted to provide. Turning to past Vail, the company launched past sales twenty twenty five-twenty twenty six season, with a wide range of advanced commitment products, including the Epic Pass, which offers unlimited unrestricted access to Vail Resort's 42 owned and operated mountain resorts, and access to additional partner resorts across North America, Japan, and Europe. [indiscernible] And the Epic Day Pass, which allows skiers and riders to build their own paths [indiscernible] and provides up to 65% savings compared to lift ticket prices. New for the twenty twenty five-twenty twenty six season, access to Verbier 4 Valleys is expanded to more Epic Passes. With five consecutive days of unrestricted access included on the Epic Pass and Epic Adaptives Pass, and five consecutive days access with some restricted dates included on the Epic Local Pass, Epic Australia Pass and the Epic Australia Adaptive Pass. On average, pass prices have increased 7% over the prior season pass launch price and continue to represent tremendous value to our guests.

Further supported by our compelling network of mountain resorts, our strong guest experience created at each mountain resort and our commitment to continuing continually investing in the guest experience. We appreciate the loyalty of our guests visiting all of our mountain resorts this season and for the continued loyalty of our pass holders that have already committed to next season. In closing, I would like to thank all of our employees especially our frontline employees for their passion, hard work and commitment to creating an experience of a lifetime for our guests The guest experience that our employees created is our mission as a company and lies at the center of our all look forward to welcoming guests to our mountain resorts this spring. At this time, Angela and I are happy to answer your questions Operator, we are now ready for questions.

We'll go first this afternoon to Sean Kelly of Bank of America. Hi, good afternoon. Thanks for taking my questions.

Kirsten or Angela, can we just start with kind of the core conditions on the ground? Obviously, if we look at the season to date metrics provided, looks like visitation actually slowed a little bit in North America from what was provided at the early season update. So but you've talked a lot about things improving from here for our balance. So could you just walk us through whether it's calendar and timing of spring breaks, we know Easter falls quite late. What kind of improvement do you need to see? Should we see it more on the visitation side or more on the mix side? Just maybe help level set expectations from here and maybe a little bit of color about what you saw in February just to help us kind of get a sense of how much things need to improve to hit the numbers from here? Thanks.

Thanks, Sean. Thanks for the questions. First, I'll talk about conditions. Right now, when we look at our resorts, we're looking and we feel good about the condition that we have right now. I would say we have a mix. We have some resorts that are right at historical normal snowpack. We have some that are are slightly below and some that are slightly above. But I'd say overall, we are in what we would consider to be the range of historically normal conditions. Regarding Q2 versus the season to date match February. So Q2, our visitation at our North American resorts was slightly above prior year levels, so benefited from the improved conditions offset a little bit by, as we talked about, the beginning of our fiscal year, the continued industry demand normalization and some shifts that we're seeing in guest behavior into the spring vacation timing for destination guests So Q2 visitation was above prior year. When you include February, we did see February visitation contracted versus prior year, which we expected. December and January were easier year over year comparisons given the significant conditions impact that we had last year. So February was a little bit more challenging.

And of course, we do see that industry demand normalization. When we look forward to spring, there's a couple of things that we're looking at and that is really tied to we think our conditions are in good shape. Our local visitation has been where we expected it to be. It is really that we are looking at the indicators for destination guest visitation. And there's a couple of different indicators that we're looking at. One is the significant base of pre committed guests we have, which are pass holders. So we can look at our destination pass holders and we can see who has shown up, who has not shown up, who has days remaining left on their path to use. So we factor that into our assumptions for the remainder of the year. We're also looking at lodging booking trends for the spring time period not just in our owned and operated, but also just in the market overall where we have our mountain resorts. Which factors into the forecast. And then there has been a long term behavior shift in the ski industry of visits moving more and more into the springtime period presumably because it's sunny and warmer and bluebird skies in good conditions.

And so we tend to see guests have a strong desire to come during that time period. And that's been going on for over a decade in the ski industry and so that's factored into the assumptions as well.

Perfect. Thank you. And then maybe just as my follow-up and kind of to zoom out. Obviously, in the prepared remarks, a bit more color than we've historically gotten as it relates to just some of the kind of key constituencies and a little bit of your message out there Kirsten, you talked about guest satisfaction scores. A little bit probably about employee satisfaction, where you're at with the frontline team members. Lift lines. So as we zoom out, do you think there's room or the need for a little bit of a bigger, let's call it, pivot as it relates to sort of getting your narrative or telling your side of the story out there? Just obviously, there's a lot that happened around Park City, but [indiscernible] further than that as we think about employees, the mountain towns and even the consumer feels like with where we're at on social media. Can you just help us very big picture, how are you thinking about that? Are there efforts are underway to maybe reengage some of those core constituencies and maybe tell your side of the story a little differently or a little bit better?

Thanks, Sean. Yes, I absolutely feel that way. I mean, our guests are incredibly passionate about our mountain resorts and the experience that they have there. And we're very fortunate to have a passionate guest base. And we're not always perfect. And so sometimes and I think it's key for us to acknowledge when things don't go the way that we had hoped and make sure that we're taking action to address those things. And there are challenges that we face And I do think that part of the reason to share those remarks is to acknowledge that we're constantly listening and taking action as we should be but also to make sure that we continue to share the narrative that yes, Park City, Mountain and the patrol union strike the thirteen day strike was very challenging. It did not we did not deliver the guest experience that we wanted to. Absolutely acknowledge that and take action on it, but also acknowledge that that was not indicative of the guest experience at our other resorts during that timeframe. And that our employee engagement, our employee execution of the guest experience and our guest experience scores excluding Park City during that timeframe, were very strong and it is important that we get that message out.

So yes, thank you for asking.

Thank you.

Thank you go next now to Jeff Stanchal at Stifel. Hey, good afternoon, Jason Angelo. Thanks for taking our 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 proposed tariffs and some of the rhetoric coming out of Washington. I'm just curious, is this something that you have seen recently at any of your resorts on, I guess, on either side of the border? And then similarly, if you could add some color on just how the broader international guest has behaved this season in light of all the FX political and the macro volatility? That would be helpful. Thanks.

Thanks, Jeff. We have been we monitor very closely the visitation trends as well as the lodging and book [indiscernible] 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 a 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 That's great. And you do have some destination visitation coming up next week.

So hopefully that helps.

And then for my follow-up, just turning over to the Epic Pass launch for the upcoming season. It sounds like based on the commentary the prepared remarks, that base of kind of core destination here visitation, it does seem to be back on track this season and we'll kind of monitor and see how the remainder of the season plays out, but it does seem to be back on track back to normalize. So my question is, is it your expectation that Vail sales units get back to growth this year? Are there other kind of multiyear headwinds or puts and takes that we should be contemplating? As we think about the trajectory of pass sales from here? Just any thoughts there would be great. Thanks.

Thanks, Jeff. Yes, we continue to believe that Pass has plenty of room and opportunity for growth because of the database that we have to talk to guests one to one because of the upside potential in the East in destination markets and then eventually long term in Europe as well. I would say that we will probably have a better perspective when we get through this season. Right now, yes, we do expect to continue to grow that business. In terms of like any multi year normalization impacts right now, we are assuming that we took the normalization impact in this prior cell cycle. And if we see any indications otherwise, we'll make that we share that. Thanks, Jeff.

We'll go next now to Megan Clap with Morgan Stanley.

Hi, good evening. Thanks so much. I maybe wanted to ask Sean's first question on visitation just a bit differently. In January, you did say in the release that you expected improved performance compared to the season to date period. Obviously, you said February contracted, that was as you expected. But sitting here today, you are still saying you expect improved performance and you didn't change the guide.

So putting that together, is it fair to assume that you'd still expect visitation to improve from that down 2.5% today to something positive? I'm just thinking relative to the the flattish in January Or has what you're expecting for overall visitation maybe changed a bit and there's something else offsetting, maybe some conservatism that's allowing you to maintain the guide today?

Thanks, Megan. I'll take that one. So yes, we did expect that the comparison in February, we knew, right, that's when conditions in the prior year had improved. So we knew that that would be a tougher comp, if you will, than the Q2 period. So as we talked about kind of that progression, that's what we were we were seeing into February. The improvement that we're expecting for the rest of the season is really an improved trend from the trend currently season. So that down 2.5% We are not expecting to turn positive for the full year though. And so we're just saying that this shift in destination right, behavior that's coming later will improve it from what we've seen currently through the season to date period. And Megan, I'll just to build on that, the reason why we're not expecting [indiscernible] a normalization of guest participation, guest frequency, relative to pre COVID. So I just wanted to make sure I reiterated that. [indiscernible] That's perfect. Thank you so much. And then maybe a follow-up on past sales too under [indiscernible] later in the season. But I guess if we just take a step back you've had Epic Pass, you've a lot of data, you've been selling passes for maybe fifteen years this point, maybe longer than that.

And as you think about just some of the recent dynamics, I would just be curious to get your perspective as to how they may impact past sales given what you've seen historically and things I'm referring to are there clearly does seem to be some heightened concern around the consumer. I think Delta said tonight they're seeing softer demand. And you acknowledge the Park City strike, which had some impact on the guest experience. And then the offsetting is maybe conditions have been relatively strong, so there could be some pent up demand. So as you look back historically kind of thinking at all those puts and takes I'd just be curious whether you have a view on how some of those dynamics might play into past sales as we head into the selling season in the next couple of months?

Yes.

I'll speak about the Park City piece first since you brought that up. I mean, we part of the reason why we immediately took action to provide those guests with a credit is to try to address that while the resort was open and we did not shut down the resort when patrol went on strike. We did not deliver the full experience that we would have expected to have given the snowpack and conditions that existed at Park City Mountain. And so so our hope is that we are showing the commitment to those pass holders that we heard them that it was not a good experience and they have credits that they can apply toward a pass next year. And that we can earn back their loyalty. I think it's really critical that we earn back their loyalty and that we acknowledge that it was not the experience that our team or any of us would have wanted to provide. In terms of consumer demand or softness going on in the macroeconomic environment, I think hard to forecast exactly what that impact will be at this point. When we look at certainly the conditions and if we end the season with the visitation and the utilization of the past excuse me that we expect to end with, I would certainly feel up that we will be set up to have a strong selling season going into past sales for next winter.

Great. Thanks so much, Kirsten. Thanks, Megan.

Thank you. We'll go next now to David Katz with Jefferies. And Mr. Katz, your line is open. You might be on mute. Hearing no response, we'll move on now to Laurent Vasilescu at BNP Paribas.

Good afternoon. Thank you very much for taking my question.

Kirsten, I think it was mentioned in the prepared remarks that non pass revenues increased about 18%, primarily driven by East Coast visitation. I'm curious to know what really drove that growth, if you can unpack that a little bit? And if you saw on the flip side, if you saw any impact on the from a negative perspective on the brutally cold weather that we faced over the last several months in the East Coast.

Hi Laurent, this is Angela. I'll take that one We did see improved conditions have a really good response at our Eastern U. S. Resorts. So we had an increase there of nonpass lift revenue. It's up we were up 17.5% primarily from East U. S. Resorts. And of course the pricing that we take across the portfolio. And so we did see them respond to conditions. And yes, those conditions have some severe events that come and go and that does happen throughout the season. But that always just usually affects the timing of when those visits happen. And overall, I would say we were set up with a a much more typical conditions framework across our Eastern Resorts.

And I think just to build on that, just to build on that, David, I think that certainly having that visitation in the East at those resorts sets us up in a good spot as we head into next year and we think about the addressable market for pass holders as well.

Okay, helpful. And then, I saw that rental revenues were down about 1%, the dining was up 11 school was up 5%, Can you maybe unpack that a little bit like what's happening there? And how should we think about those three line items going forward? Yes.

When we look at our ancillary businesses, our Destination Guest spending on ancillary has been strong. The overall flow through is impacted by the mix that we've been talking about where we've had a higher mix of local visits versus destination visits and that impacts it. Rental and retail is performing a little bit differently than some of our ancillary businesses, as you probably noticed. That is impacted by the guest mix toward locals as those guests are much more likely to own their gear, but also while our capture among locals has been strong, local guests from a product mix perspective are purchasing different rental packages and products that we would see if the desk business. Versus our ski school and our restaurants on the mountain, the rental retail business is incredibly competitive. So there's certainly some competitive and pricing dynamics that impact that business as well.

That makes it look different than some of the other ancillary.

Very helpful. Thank you very much.

Thank you.

Thank you. We'll go next now to Patrick Scholes at Truist Securities. Hey, Great. Thank you. Good afternoon, everyone.

Hi, Patrick.

Hello.

Can I just get an update on your current level of commitment to continuing to pay the dividend? Thank you.

Hi, Patrick.

Yes, we do you know you've seen us typically reevaluate our level and we reaffirmed our dividend level for the quarter. Which I think demonstrates our commitment to maintaining that current Vail. 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. And 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 so I think the dividend shows that commitment and that stability.

Okay. Thank you. And secondly, you talked about improving guest satisfaction scores, one area that you called out was improvement in lift lines. Where do you what areas do you think need work? Let's leave Park City aside and I did see Keystone labor was reached the contract, so that looks good. But what are some of your can we say, pain points that you would like to work on or you are working on and would like to see improved, especially around cost satisfaction? Thank you.

Yes, absolutely. Thanks for the question, Patrick. And Patrick mentioned this, but I'll just reiterate while the Park City Mountain Patrol Union strike was very challenging. We did ultimately reach an agreement and at same time shortly thereafter, we did reach an agreement with our Keystone Patrol Union as well our Crested Butte lift maintenance unit and those reached contract agreements that we're quite pleased with as well. In terms of the guest experience, the waiting in lines is always source of frustration for guests. They want to get on the mountain and they want to enjoy themselves. Whether they're on vacation or they're locals. Either way, standing in line is a source of frustration. And so what you see us doing is making investments that really try to address that. If you go all the way back to giving full transparency to the list line wait times across our mountains, even predicted lift line wait times that is really designed to help people navigate that Investments we've made in Lyft even things like mobile pass, having your Lyft ticket or your pass on your phone means you don't have to stand in that ticket window line My Epic Gear is another good example that standing in line to rent gear can be incredibly frustrating and not a great experience.

And so really being able to manage your gear at your fingertips on an app from start to finish What gear do you want? Where do you want it, when do you want it, if you want to swap out gear, putting all of that at your fingertips. And a lot of what you see us doing is looking for ways to improve the guest experience and take the friction out of that experience and make it so that our guests can get on the mountains as fast as they possibly can. Without having to stand in multiple lines, whether it's the ticket line, or the lift line or standing in line for gear. Thanks, Patrick.

We'll go next now to Chris Varonke at Deutsche Bank.

Good afternoon, Kirsten and Angela. I wanted to ask about kind of long term structural margins. I know you're guiding reserve to just under 29% this year. I know it was into the 30s prior to COVID. What has to happen to get back there? Is it Is it a cost issue? I know you talked a lot about the efficiency plan, so maybe that's most of the answer. But is there anything on pricing or ancillary or just the way you're running business on the mountain that needs to happen to get there?

Thanks.

Thanks, Chris, for the question. Yes, we are this year, we're guiding to 29.3% margin when you take out the one time costs from the resource transformation. When you actually look at that relative to pre COVID, it is really in line with where we were in 2019 when you adjust for the acquisitions that have changed the portfolio mix over that time. But we do think from this point forward, there's an ability to increase margins both from the normal operating leverage from the fact that we do take pricing typically above inflation and we have strong flow through. Of our ancillary business to the bottom line. Those things will help on their own. Added to that is the resource transformation plan that we expect to be at that $100,000,000 level. And when you step back to think of that, that's a that is a significant change in kind of our cost structure. To help us scale globally that we'll be at that run rate by the end of the next fiscal [indiscernible] we see as margin drivers moving forward.

Okay. Very helpful. Thanks, Angela. As a follow-up, I a lot of questions about the season the new pass launch for next year. I know 7% kind of was the pricing My question is pretty simple. Is that based on just some kind of internal expectations for cost increases? Or is that more of a just trying to get a sense for what the if you're willing to share any color on the formula behind that would be great. Thank you.

Thanks, Chris. Yes, we took price increases pretty consistently across the board, 7% on pass going into next season. And we look at a lot of different things, but what you see us doing pretty consistently over many, many years is looking at what is inflation and pricing above inflation because of the experience we deliver and because of the investments that we make. We also obviously look at our renewal rate by guest type, guest segments, tenure of pass holder, And we have a pretty extensive price elasticity last elasticity data on the past business that we can look at. That helps us make decisions So when you look at the 7%, it's really a combination of all those different factors. But I think ultimately at a high Vail, pretty consistent with how you've seen us price over the long term, which is several points above inflation. And looking at inflation, goods inflation and also services inflation.

Okay. Very good. Thanks, Angela.

Thanks, Chris.

Thank you. We'll go next now to Ben Chacon at Mizuho.

Hey, it's John.

Just wanted to touch back on Park City Canyons. Obviously, guests that were impacted by the strike received discount on future passes. Understanding it's early, is there any color regarding retention statistics or success of this program? And then on a gross basis, is there any way to quantify the impact of this year's EBITDA? I know the cost will be allocated to FY 2024 or 2025. Thanks.

Thanks, Ben. I think it's a little bit early to be able to quantify the impact, although we have our own estimates of what we expect the impact would be. And just to provide clarity for everyone, we provided credits up to 50% to apply towards the purchase and this is for Epic Pass, Epic Day Pass list tickets to apply toward a pass for next next year with a minimum credit for Pass holders that's 25% of the total purchase price of their twenty twenty four-twenty twenty five pass we have our own internal estimates and we have qualitative feedback from Vail that we've gotten from guests in reaction both positive and of course there are some guests where they were hoping for more, expecting more and then there's guests that this exceeded their expectations. So there's a mix I think we'll know more as we go into the past selling cycle what to expect or what we're seeing in terms of the retention of those pass holders In terms of the cost of the guest recovery, we are not disclosing the specifics on the cost of that, but I would say that it is not material and it is included in our guidance that we've provided.

Okay, understood. And then then this is the first real season of Epic Gear. Are there any financial or customer usage statistics you can share to judge this the success of the new platform? And then is 25%, 26 still kind of like a beta year or fully rolled out? And then lastly, is there anything you're changing next year based off of what you experienced this year? Thanks.

Thanks, Ben. Yes, happy to talk about My Epic Year. This was year one of building out this brand new approach to gear where you can get your gear at your fingertips in the app And what we'd say is we're building awareness and trial as you would in any year one of a new business.

A couple of learnings. One, the guest experience and the feedback we've gotten about the guest experience has been very strong and we're quite pleased with that. I'd also say that it has high incrementality. What I mean by that is among the members of the program, we are seeing very low cannibalization of traditional our existing traditional rental gas and high incremental [indiscernible] which we're really pleased to see because that was the business thesis we've had. We did limit the membership this year because it's year one and we wanted to make sure we can execute And we expect to be at about 40,000 to 50,000 members for this first year In terms of expansions or changes to the program, we're not announcing those quite yet because we still have a big chunk of the season ahead of us and we want to get the full learnings before we make any announcements. [indiscernible] we will make sure that we share any changes to that program. But we continue to be very excited about it. We continue to believe it's a transformational opportunity and one that we are uniquely positioned to succeed in.

Thank you. We'll go next now to David Katz at Jefferies.

Hi, everyone. Thanks for taking my questions. I wanted to ask about Europe. And sort of how you're progressing there? What kind of traffic you're seeing What are you, if any, seeing from The U. S. Obviously become somewhat of a trend as a cost matter with people traveling to Europe? Just some insight there would help please.

Hi, David. Yes, as you know, we we are excited to have the first year of Crown Montana this year. And so operating the two resorts now in Switzerland. We are starting to get lots of of learnings. And yes, we're really taking those first year and a couple of years now in Andremont as right, we're learning the market and we're really trying to kind of understand what the we can have some success across the region. Would say for the travel from The U. S, right, that has not been the primary part of this thesis, right? It is a network benefit that we have. To give our Epic Pass holders access to Switzerland, which is incredible. But what we're seeing really, right, is the market itself is very much a market that attracts destination visitation within the Alps and within Europe and from outside of Europe. And so that's really where the growth opportunity that we see long term within that market. And so it's early, I think, for us to be seeing a significant change in behavior from North America to Europe, for instance, or vice versa.

The only build I would agree with all of that David and the only build I would say is there's our teams are learning a lot about the market, the guests, the European ski market is huge and really understanding that guest better their expectations, but also even some unique differences in how the example, some of the European resorts are very sophisticated in automated snowmaking, automated avalanche control, autonomous lift systems. So there's some really great learnings about how we operate the mountains that we're gaining during this early tenure as well.

And if I can just follow that up.

Kirsten. You talked about the size of the mountain. Patrons tend to also I believe, spend less, or at least pay less for Lyft tickets. Can you just shed some light on any sort of pricing acceptance or resistance or kind of what you're seeing specifically around that part of it?

We do see dynamics in Europe. David, where it looks a bit more the way North America used to look before Epic Pass where lift tickets were less expensive and passes tended to be very expensive. And then as you well know, it took time, but that changed over time where people started to recognize the value of committing in advance and getting a great value associated with that. What you see in Europe is season passes tend to be more expensive, list tickets tend to be less expensive. But we still see an incredibly valuable guest that spends money on food, spends money on gear, spends money on ski school or ski guides. And we continue to be to grow. And it is a long term growth strategy and we do view that we have to be thoughtful and methodical about how we approach unlocking the potential there.

Thank you.

Thank you. We'll go next now to Matthew Boss of JPMorgan. Hey, Great. Thanks. So Kirsten, could you elaborate on real time historical demand indicators that you're watching more so to gauge the current health of your core consumer? Then just multiyear, guess what do you see as a normalized underlying revenue growth rate for the business maybe after the impact from the destination shifts as well as the impact from normalization?

Real time indicators that we look at include our net promoter scores and the experience that our teams are delivering at every one of the resorts We have a very disciplined and rigorous approach and we hold our mountain operations teams accountable to the guest experience. And so we can see that pretty real time, every single day, how that guest experience is coming to life, including overall, but for every aspect of the business. We also look at, our visitation, the dynamics that we expect to see because we have extensive data in our not just the guests, but also the frequency that we expect to see. And we also look at external factors like market lodging and the bookings that we see. And so as I highlighted earlier, I think when Sean asked, when we look at spring and what we expect for spring, we are set up with strong conditions that are what I would call normal. We are set up in that our operations teams are delivering an outstanding guest experience that looks very healthy and strong and the lodging indicators look strong. And we know that our pass holders are we know who's shown up and who has not shown up and so that is factoring into what our expectations are for the remainder of the year.

Thank you. We'll go next now to Arpine Kocharian at UBS.

Hi. Thanks for taking my question. I wanted to go back to EBITDA guidance for just 1 second. So you mentioned $7,000,000 of FX impact on EBITDA. So at midpoint, preserve EBITDA is unchanged. But I was wondering if you could give a bit more color on puts and takes for the top end of range. It seems like that came down more than the FX impact. And then I have a quick follow-up. Yes. For Dave, this is Angela. Yes, we did take the FX impact of $7,000,000 negative to the midpoint of the range. But that is really the shift in the the September guidance. That is the only shift that was reflected on the midpoint. And typically as we get into March, we do narrow the range. So you saw the top end and the bottom end come up then proportionate to that new midpoint.

So the puts and takes that can put us like always at the top end of the are really around those core assumptions that we have for the remainder of the year in terms this improvement on the destination visitation, this normalization, like where we land for the full year on the contraction of the industry and that behavior that we were expecting.

Then conditions can obviously play a factor, typically less of a factor as you get this far into the season.

Great. Thank you. That's helpful. And then I was wondering, would it be possible to talk kind of more broadly about labor cost pressures? This is a question that we get often. Is it possible to quantify what you were expecting a quarter ago and how those puts and takes have changed in light of some of the labor agreements you've made throughout the quarter? Kind of that incremental pressure on EBITDA this year and more importantly sort of run rating into 2026, would you say there is a material impact impact in your outlook as you look at the cost basis on a run rate basis outside of the $100,000,000 of cost savings? Thanks.

No.

Thank you. No, we would not say there is a material and impact from the labor contracts that we have negotiated We also have made in terms of how we manage our labor One thing you've probably heard us talking about as an example is workforce management as a tool that is actually a benefit to how we utilize our labor on the mountain. And enables us to have strong efficiencies this year, but also as we look forward with the resource efficiency transformation plan, we believe has a significant impact on that as well. But the labor union contracts and just for some context, obviously, those teams in those contracts are very, very important to us. But the number of labor unions we have is five out of our 37 North American ski patrol teams are unionized in two out of our 37 North American lift maintenance teams are unionized. So when we look at the decisions that we're making on those labor contracts, we are looking at it in totality across the entire N Thank you. That's very helpful.

Thank you.

Thank you. We'll take our final question this afternoon from Brent Montour of Barclays. Hey, Hello, everybody. Thanks for squeezing me in here. I have a question on the pass prices. Kirsten, you were talking about 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 seven % But I guess more importantly, is this a tack [indiscernible] I think the follow on question is, I would think it's a pretty elastic pass when you cut prices in 'twenty one, 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?

Thanks, Brandt. You know what, 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 year. 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 that overall increase is 7%. We are not taking price on Epic Day Pass for exactly the reason that you're talking about is we have a very good path is being the entry point for a lot of low frequency ticket into that path that we can then over time retain and trade up in the number of days as well as into other past products. No, we did not take price up 25% to 30%. So we'll make sure we follow-up with you to clarify that.

I appreciate that. So then maybe I'll just ask the same question in a different way. 7% puts the full Epic pass at well over $1,000 that's going to be sort of a record of course Obviously, it was below $1,000 back in 'twenty one, but you've come a long way since then. Again, same question because there was a lot of a lot of demand elasticity when you cut the price. Are you expecting any sort of elasticity in the other direction?

Yes.

Thanks for that follow-up. We factor that into our decision making and it is as you noted, I mean, it is always threading a needle in understanding the guest behavior, the price elasticity, but also what we're providing on the path to access to the resorts and then the investment [indiscernible] and where we're landing on that past product and we are constantly trying to make sure that we strike the right balancing act in not tipping too far on price because we still do believe that there is growth to be had here. Hence the reset that we took. And so making sure that these price increases we've taken since that reset are appropriate for the experience and the investments we've made. But not taking it too far. And we believe the 7% strikes that balance.

Perfect. Thanks everybody.

Thanks. Thanks, Brandt.

Thank you. And at this time, Ms. Lynch, I'd like to turn things back to you for any closing comments.

Thank you, operator. This concludes our fiscal twenty twenty five second 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.

Thank you, Ms. Lynch. Again, ladies and gentlemen, that does conclude today's Vail Resorts fiscal second quarter twenty twenty five Earnings Conference Call and Webcast. You may disconnect your line at any time and have a wonderful day.