Operator: Good afternoon, everyone, and welcome to the Vail Resorts Fiscal Second Quarter 2025 Earnings Conference Call. Just a reminder, today’s call is being recorded. Currently, all callers have been placed in a listen-only mode. And following management’s prepared remarks, the call will be opened up for your questions. [Operator Instructions] With that, I’ll turn things over to Kirsten Lynch, Chief Executive Officer of Vail Resorts. Please go ahead, ma’am.

Kirsten Lynch : Thank you. Good afternoon, everyone. Welcome to our fiscal 2025 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 and are subject to a number of risks and uncertainties, as described in our SEC filings, 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, March 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 with the SEC and are also available on the Investor Relations section of our website at www.vailresorts.com. Let’s turn to our fiscal 2025 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 industry demand normalization and the shift in destination guest visitation for the spring.

Destination guest visitation at our Western North American destination Mountain Resorts was below prior year levels, which we believe was driven by the continued shift in historical visitation patterns 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 return to more typical conditions. Ancillary spend per destination guest visit was strong across our Ski 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 Resource Efficiency Transformation Plan, which was announced in our September 2024 earnings 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 2025 along with the $100 million in annualized cost efficiencies by the end of its fiscal 2026 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 2025 outlook.

Angela Korch : 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 $245.5 million or $6.56 per diluted share for the second quarter of fiscal 2025, compared to net income attributable to Vail Resorts of $219.3 million or $5.76 per diluted share in the same period in the prior year. Resort reported EBITDA was $459.7 million for the second fiscal quarter, which did include $2.9 million of onetime costs related to the previously announced two-year Resource Efficiency Transformation Plan and $0.1 million of acquisition and integration-related expenses, which compares to resort reported EBITDA of $425 million in the same period in the prior year, which included $2.1 million of acquisition-related expenses.

Turning to our season-to-date metrics. The reported ski season metrics are for the period for beginning of the ski season through Sunday, March 2, 2025, and compared to prior year period through March 3, 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 and is subject to fiscal quarter end review and adjustments. Season-to-date, total skier visits were down 2.5% compared to the fiscal year 2024 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 2024 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 ski area locations was down 2.9% compared to the prior year period. Similar to the drivers in the second quarter, season-to-date results through March 2, 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 to the spring. Ancillary spend per 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 2025. Excluding a $7 million negative impact from the change in foreign currency rates, the company’s resort reported EBITDA guidance midpoint for fiscal 2025 is unchanged from the original guidance provided on September 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 2025 to be between $257 million and $309 million. The company expects resort reported EBITDA and for the fiscal 2025 period to be between $841 million and $877 million, consistent with the original fiscal 2025 guidance provided on September 26, 2024.

The updated guidance includes an estimated $15 million in onetime costs related to multiyear Resource Efficiency Transformation Plan and an estimated $1 million of acquisition and integration-related expenses specific to Crans-Montana. In addition, compared to the original guidance, the updated guidance includes an estimated $7 million impact from foreign exchange rates. At the midpoint, the guidance implies an estimated resort EBITDA margin for fiscal 2025 to be approximately 28.8% or 29.3% before the onetime costs related to the Resource Efficiency Transformation Plan. The updated guidance also assumes a continuation of the current economic environment, industry normalization to pre-COVID guest behavior and normal weather conditions for the remainder of the 2024-2025 North American and European ski season and the 2025 Australian ski season.

In addition, updated guidance reflects the foreign currency exchange rate volatility as compared to the original assumptions. The updated guidance assumes a currency rate as of March 7, 2025, including an exchange rate of $0.70 between the Canadian dollar and U.S. dollar related to the operations of Whistler Blackcomb in Canada, an exchange rate of $0.63 between the Australian dollar and the U.S. dollar related to the operations of Perisher, False 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 Andermatt-Sedrun and Crans-Montana in Switzerland and does not include any potential impacts related to future fluctuations in foreign current exchange rates, which may be impacted by tariffs, trade disputes or other factors.

As of January 31, 2025, the company’s total liquidity as measured by total cash plus revolver availability and delayed draw term loan availability was approximately $1.7 billion. This includes $488 million of cash on hand, $509 million U.S. revolver availability and $450 million of U.S. delayed draw term loan availability under the Vail Holdings credit agreement and $204 million of revolver availability under the Whistler Credit Agreement. On January 27, 2025, the company completed an amendment of its Vail Holdings credit agreement, which increased the U.S. revolver by an incremental $100 million to $600 million and provided an incremental $450 million term loan facility in the form of a delayed draw term loan, which 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 January 30, 2025, the company repurchased approximately $50 million of its zero percent convertible senior notes for an aggregate cash repurchase amount approximately $48 million representing a 4% discount to par value. Following the closing of these repurchases, the company has $525 million of zero percent 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 coming drawn are available to be used to refinance the company’s zero percent convertible senior notes, or for other general corporate purposes. Until the convertible notes mature or otherwise refinanced or repurchased, the company will continue to benefit from the zero percent interest coupon.

Overall, the company continues to have a strong balance sheet. As of January 31, 2025, the company’s net debt was 2.5 times its trailing 12 months total reported EBITDA. The company declared a quarterly cash dividend on Vail Resorts’ common stock of $2.22 per share. The dividend will be payable on April 10, 2025, to shareholders of record as of March 27, 2025. In addition, the company repurchased approximately 0.1 million shares during the quarter at an average price of approximately $196 per share for a total of $20 million. The company has 1.5 million shares remaining under its authorization for share repurchases. We will continue to be disciplined stewards of our shareholders’ capital and prioritizing investments in our guests and 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.

Kirsten Lynch : Thank you, Angela. We are dedicated to delivering an exceptional guest experience, and we’ll continue to prioritize reinvesting in the experience at our resorts, including consistently increasing capacity through lift, terrain and food and beverage expansion projects, 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 approximately $198 million to $203 million in core capital before $45 million of growth capital investments at its European resorts, including $41 million at Andermatt-Sedrun and $4 million at Crans-Montana and $6 million of real estate-related capital projects to complete multiyear 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 Lionshead area into a fourth base village at Vail Mountain.

Including European growth capital investments, real estate-related capital, the company plans to invest approximately $249 million to $254 million 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 Andermatt-Sedrun, a new 6-pack lift at Perisher new functionality for the May Epic 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 in innovation 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 learn valuable lessons. Vail Resorts has a proven track record of turning challenges into opportunities for innovation 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 10 years, we have invested nearly $2 billion 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 lift-line wait times year-over-year for the last three seasons. This season, lift lines lasting more than 10 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 snow border, keeping the Epic Pass unparalleled in access and unmatched in value. To further illustrate, an adult Epic 1 day pass for next season is available for as low as $56, significantly lower than a lift ticket. 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 in the guest experience, 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.

And stability; ensuring the ski industry not only survives but thrives is 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 and our recent financial results highlight the 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 guests experienced during the 13-day petrol union strike was not the experience we wanted to provide. Turning to Pass Sales, the company launched Pass Sales for the 2025 — 2026 season with a wide range of advanced commitment products, including the Epic Pass, which offers unlimited unrestricted access to Vail Resorts 42 owned and operated Mountain Resorts and access to additional partner resorts across South America, Japan and Europe, and the Epic Day Pass, which allows skiers and riders to build their own pass and provides up to 65% savings compared to lift ticket prices.

New to 2025-2026 season, access to Verbier 4 Vallées is expanded to more Epic passes, with five consecutive days of unrestricted access included on the Epic Pass and Epic Adaptive 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 continually investing in the guest experience. We appreciate the loyalty of 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 our mission as a company and lies at the center of our success. We 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’re now ready for questions.

Operator: Thank you very much. [Operator Instructions] We’ll go first this afternoon to Shaun Kelley of Bank of America.

Shaun Kelley : 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 the early season update. So — you’ve talked a lot about things improving from here or on 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.

Kirsten Lynch : Thanks, Shaun. Thanks for the questions. First, I’ll talk about conditions. Right now, when we look at our Resorts, we’re looking — we feel good about the conditions that we have right now. I would say we have a mix. We have some resorts that are right at historical normal snow pack. We have some that are slight below, slightly below and some that are slightly above. But I’d say overall, we are in what we would consider the range of historically normal conditions. Regarding Q2 versus the season-to-date metrics, which included 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 at the beginning of our fiscal year, the continued industry demand normalization and some shift 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 our 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 on their pass 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 spring time period, presumably because it’s sunny and warmer and bluebird sky is 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.

Shaun Kelley : Perfect. Thank you. And then maybe just as my follow-up and kind of 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 happening around Park City, but it dates further than that as we think about employees, the mountain towns and even the consumer, it feels like with where we are 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?

Kirsten Lynch : Thanks, Shaun. Yeah, 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, yeah, Park City, Mountain and the petroleum union strike, the 13-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 time frame and that our employee engagement, our employee execution of the guest experience and our guest experience scores excluding Park City during that time frame, we’re very strong, and it is important that we get that message out. So yes, thank you for asking.

Shaun Kelley : Thank you.

Operator: We go next now to Jeff Stantial at Stifel.

Jeff Stantial : Hey, good afternoon Kirsten and Angela 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 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? That would be helpful. Thanks.

Kirsten Lynch : 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.

Jeff Stantial : 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 in the prepared remarks, that base of kind of core destination 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 your expectation that pass sales in units get back to growth this year? Are there other kind of multiyear headwinds or puts and takes that we should be contemplating just as we think about trajectory of pass sales from here? Just any thoughts there would be great. Thanks.

Kirsten Lynch : Thanks, Jeff. Yeah, 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 multiyear normalization impact right now, we are assuming that we took the normalization impact in this prior sales cycle. And if we — any indications otherwise, we’ll make sure that we share that.

Jeff Stantial : That’s great. Thanks very much.

Kirsten Lynch : Thanks, Jeff.

Operator: We go next now to Megan Clapp with Morgan Stanley.

Megan Clapp : Hi, good evening. Thanks so much. I maybe wanted to ask Shaun’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 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?

Kirsten Lynch : Thanks, Megan. I’ll take that one. So yes, we did expect 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 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’s down 2.5%. And 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.

Angela Korch : And Megan, just to build on that, the reason why we’re not expecting it turn positive again is the underlying core assumption of a normalization of guest participation, guest frequency relative to precut. So I just wanted to make sure I reiterated that.

Megan Clapp : Yeah. That’s perfect. Thank you so much. And then maybe a follow-up on Pass sales to understanding you’ll have a bit more — you just launched them, and you’ll have more perspective later in the season. But I guess if we just take a step back, had Epic Pass, you have a lot of data, you’ve been selling passes for maybe 15 years at this point, maybe a lot 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 the 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 acknowledged 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 Pass sales as we enter the selling season in the next couple of months.

Kirsten Lynch : Yeah. 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 petrol went on strike. We did not deliver the full experience that we’ve expected to have given the snow pack and conditions that existed at Park City Mountain. And so — our hope is that we are showing the commitment to those pass holders that we heard them that was not a good experience and they have credit. They can apply toward 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 that we expect to end with I would certainly feel optimistic that on a full year basis that we will be set up to have a strong selling season going into pass sales for next winter.

Megan Clapp : Great. Thanks so much, Kirsten.

Kirsten Lynch : Thanks, Megan.

Operator: Thank you. We’ll go next now to David Katz with Jefferies. 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.

Laurent Vasilescu : Good afternoon. Thank you very much for taking my question. Kristen, I think it was mentioned in the prepared remarks that non-pass revenues increased about 18% primarily driven by the East Coast visitations. 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?

Angela Korch : 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 non-pass lift revenue is up — we were up 17.5%, primarily from East to U.S. resorts and, of course, the pricing that we take across the portfolio. And so we did see them respond to conditions. And yeah, 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’re set up with a much more typical conditions framework across our Eastern resorts.

Kirsten Lynch : I think just to build on that, David, I think that’s 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.

Laurent Vasilescu : 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?

Kirsten Lynch : Yeah. 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 guest from a product mix perspective or purchasing different rental packages and products that we would see if the destination mix was higher. And then it’s such a competitive 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.

Laurent Vasilescu : Very helpful. Thank you very much.

Kirsten Lynch : Thank you.

Operator: Thank you. We’ll go next now to Patrick Scholes at Truist Securities.

Patrick Scholes : Great. Thank you. Good afternoon, everyone.

Kirsten Lynch : Hi, Patrick.

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

Angela Korch : 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.

Patrick Scholes : Okay, thank you. And secondly, you talked about improving guest satisfaction score is 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 — we say pain points that you would like to work on or you are working on and would like to see improved, especially on customer satisfaction? Thank you.

Kirsten Lynch : Yeah, absolutely. Thanks for the question, Patrick. And Patrick mentioned this, but I’ll just reiterate, while the Park City Mountain Control Union strike was very challenging. We did ultimately reach an agreement and at the same time, shortly thereafter, we did reach an agreement with our Keystone Petrol Union as well as 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 line is always a source of frustration for guests. They want to get on the mountain and they want to enjoy themselves, whether on vacation or they are locals either way, standing in line as 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 that will lift line wait times across our mountains even predicted lift line lead times that is really designed to help people navigate that investments we’ve made in lift, but even things like Mobile Pass, having your lift 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? 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 mountain 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 Scholes : Thank you.

Operator: We’ll go next now to Chris Woronka at Deutsche Bank.

Chris Woronka : Good afternoon, Kirsten and Angela. I wanted to ask about kind of long-term structural margins. I know you’re guiding Resort to just under 29% this year. I know it was in terms of 30s prior to COVID. What has that happened to get back there? 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.

Angela Korch : Thanks, Chris, for the question. Yeah, we are — this year, we’re guiding to 29.3% margin when you take out the onetime 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 ’19 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 million level.

And when you step back to think about that’s — 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 this next fiscal year. And so both of those are what we see as margin drivers moving forward.

Chris Woronka : Okay. Very helpful. Thanks, Angela. As a follow-up, I did a lot of questions about the season the new Pass launch for next year. I know 7% kind of was surprising. My question is pretty simple. Is that based on just some kind of algo — can read back into your 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 kind of the formula behind that would be great. Thank you.

Kirsten Lynch : Thanks, Chris. Yeah, 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 rates by guest type guest segment tenure of pass holder. And we have a pretty extensive price elasticity data on the Pass 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 level, 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.

Chris Woronka : Okay, very good. Thanks, Angela.

Kirsten Lynch : Thanks, Chris.

Operator: Thank you. We go next now to Ben Chaiken at Mizuho.

Ben Chaiken : Just wanted to touch back on Park City Canyons. Obviously, guests who were impacted by the strike received a 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 ’24-’25? Thanks.

Kirsten Lynch : 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 credit up to 50% to apply towards the purchase — and this is for Epic Pass, Epic Day Pass Lift to apply toward a pass for next year with a minimum credit for pass holders that’s 25% of the total purchase price of their 2024-’25 Pass. So we have our own internal estimates, and we have qualitative feedback from e-mails 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 pass 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.

Ben Chaiken : Okay. Understood. And then this is a — this is the first real season of Epic Gear. Are there any financial or customer usage statistics you can share to judge 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.

Kirsten Lynch : Thanks, Ben. Yeah, happy to talk about My Epic Gear. This was year 1 of building out this brand new approach to gear where you can get 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. And what I mean by that is among the members of the program, we are seeing very low cannibalization of traditional — our existing traditional rental guest and high incrementality in terms of bringing in new guests or even gear owners, 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 announcement on any changes. But once we have assessed the full season, 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.

Operator: Thank you. We’ll go next now to David Katz at Jefferies.

David Katz : Good morning, 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 becomes somewhat of a trend as a cost matter with people traveling to Europe. Just some insight there would help, please.

Angela Korch : Hi, David, yeah, as you know, we are excited to have the first year of Crans-Montana this year. And so operating the two resorts now in Switzerland. We are starting to get lots of learnings. And we’re really taking this first year, a couple of years now in Andermatt right? We’re learning the market, and we’re really trying to kind of understand what — where we can have success across the region. I 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 apps 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.

Kirsten Lynch : 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 guest, that the European ski market is huge and really understanding that guest better their expectations, but also even some unique differences in how the mountains are operated. For example, some of the European resorts are very sophisticated and 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.

David Katz : And if I can just follow that up, Kirsten, you talk about the size of the Mountain. Patrons tend to also I believe spend less or at least pay less for lift 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?

Kirsten Lynch : 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, lift tickets tend to be less expensive. But we still see an incredibly valuable guest — that spends money on food, spends money on gears, spend money on ski-school or ski guides, and we continue to be excited about the opportunity 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.

David Katz : Thank you.

Operator: Thank you. We’ll go next now to Matthew Boss of JPMorgan.

Matthew Boss : 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? And then just multiyear, I 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.

Kirsten Lynch : Real-time indicators that we look at include our Net Promoter Scores and 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 — 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 Shaun 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.

Operator: Thank you. We’ll go next now to Arpine Kocharyan at UBS.

Arpine Kocharyan : Hi, thanks for taking my question. I wanted to go back to EBITDA guidance for just one second. So you mentioned some relative FX impact on EBITDA, so at midpoint Resort 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.

Angela Korch : Arpine, this is Angela. Yeah, we did take the OpEx impact of $7 million negative to the midpoint of the range. But that is really the shift in the — from 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 and the bottom end come up then proportionate to that new midpoint. And so the puts and takes that can put us like always, at the top end or the bottom end of these ranges, right, are really around those core assumptions that we have for the remainder of the year in terms of 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. And then conditions can obviously play a factor typically less of a factor you get this far into the season.

Arpine Kocharyan : 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 ’26. Would you say there is a material impact in your outlook as you look at the cost basis on a run rate basis outside of the $100 million of cost savings? Thanks.

Kirsten Lynch : Thank you. No, we would not say there is a material impact from the labor contracts that we have negotiated. We also have made significant changes 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 and those contracts are very, very important to us. The number of labor unions we have is 5 out of our 37 North American Ski Patrol Teams are unionized in 2 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 enterprise and the impact it has.

Arpine Kocharyan : Thank you, that’s very helpful. Thank you.

Operator: Thank you. We’re going to take our final question this afternoon from Brandt Montour of Barclays.

Brandt Montour : 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?

Kirsten Lynch : 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.

Brandt Montour : 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 ’21, but you’ve come a long way since then. Again, same question because there was a lot of demand elasticity. You cut the price. Are you expecting any sort of elasticity in the other direction?

Kirsten Lynch : Yeah. 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 or the price elasticity, but also what we’re providing on the pass to access to the resorts and then the investments that we’ve made. And so we feel good about the 7% and where we’re landing on that pass 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 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.

Brandt Montour : Perfect. Thanks everybody.

Kirsten Lynch : Thanks, Brandt.

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

Kirsten Lynch : Thank you, operator. This concludes our fiscal 2025 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.

Operator: Thank you, Ms. Lynch again. Ladies and gentlemen, this concludes today’s Vail Resorts fiscal second quarter 2025 earnings conference call and webcast. You may disconnect your line at any time, and have a wonderful day. Thanks again, everyone.

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VAIL RESORTS INC

Q2 2025

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