Vail Resorts Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Shaun Kelley - BofA Global Research (US) - Analyst : Hi, good afternoon, everyone. Hi, Kirsten and Angela. Maybe if we could just start -- I'm kind of curious, obviously, the season is off to a very good start on the weather front, it sounds like, and built into the guidance of some behavioral normalization that you've called out a number of times. Can you just give us your sense on what you're seeing so far? I know it's extremely early, and early season visit patterns don't always reflect the destination guest, but just what are you seeing so far in terms of behavior for the resorts that are open? How are you feeling about just that activity level thus far given what you can see through Thanksgiving? Thanks.

Question: Shaun Kelley - BofA Global Research (US) - Analyst : Fantastic. And then maybe just as my follow-up, Whistler has come up in a couple of the conversations and questions since the release. Could you just talk about the overall exposure there? If that were to stay where it's at, is that enough to be a risk to guidance or when you kind of put all those other pieces in and especially, if the snow conditions remain where they are, is there enough local visitation and other things that can offset that, and that's not something we need to be overly worried about at this point in the season?

Question: Jeff Stantial - Stifel, Nicolaus & Company, Inc. - Analyst : Hey, great. Good afternoon, Kirsten and Angela. Thanks for taking our questions. Starting off, I was hoping maybe just to expand upon, Kirsten, your answer to Shaun's first question and more specifically, narrow in a little bit on what you're seeing in terms of lodging bookings indicator specifically for the Christmas and the New Year's holiday period. And as a as a correlator to that, have you see the booking trends or the bookings pace accelerate in those markets that have experienced, we'll say, some favorable early season snowfall? Have you seen the bookings pace accelerate in those markets for that holiday period?

Question: Jeff Stantial - Stifel, Nicolaus & Company, Inc. - Analyst : Okay, great. That's helpful. Thank you for that, Kirsten. And then for my follow-up, turning over to capital allocation, if I bridge down from your net income guidance to what we think you should do in free cash flow this year, by my math, your current dividend policy, assuming unchanged implies about 80% to 90% payout from discretionary free cash flow. Assuming that that is accurate, can you just expand a little bit on your philosophy or your willingness to, to tap into your balance sheet should you see another year of challenging weather conditions and drive the payout level potentially north of 100%? And in a similar vein, how should we think about your dividend growth strategy just in light of the post-COVID normalization trend that you've been talking about that maybe wasn't fully understood or appreciated looking back one or two years ago? And that's all for me. Thanks.

Question: Megan Clapp - Morgan Stanley & Co. LLC - Analyst : Hey, good afternoon. Thanks so much. Wanted to shift a little bit to pass sales. Obviously, encouraging to see things improve a bit, especially, that positive unit growth here in the most recent period. And you did give a lot of color in the prepared remarks that sales trends improved due to the expected renewal strength. So maybe if you could just give a little bit more around that. Was it that renewals were just a little bit better than you were expecting? And you spoke to some positive cadence, I think, when you were answering a question earlier. So how much do you think was driven by the early openings at some of your resorts? And any commentary around -- just more around the composition of the better-than-expected pass sales in the last period would be great.

Question: Megan Clapp - Morgan Stanley & Co. LLC - Analyst : Okay, great. Thanks, Kirsten. That's helpful. But just as my follow-up, can you talk a little bit about the My Epic Gear rollout and how the uptake of that was relative to your expectations. I understand it's not a full rollout yet, but would just be curious to hear any early commentary on uptake, and how that makes you think about your expectations for ancillary in the upcoming season?

Question: David Katz - Jefferies LLC - Analyst : Hi, everyone. Thanks for taking my questions. Appreciate it. Can we just go double back to the guidance one more time? I apologize if we're beating this a little bit. But with the stronger start to the year and perhaps, maybe some of the Australian season there, can we just sort of walk through the puts and takes and how you're thinking about the rest of the year? Are you expecting whether to normalize at the results -- at the resorts that have started off strongly? Are you expecting others to improve? What are the pluses and minuses as we kind of unpack the guidance?

Question: David Katz - Jefferies LLC - Analyst : Understood. And as you've always accumulated a bigger and bigger base of passholders and with that, data, you've always been a very strong data-driven company. Is there anything within the database or any interesting findings or insights as that database gets bigger and bigger that shows some change? And not necessarily; either positive or negative, just interesting as that base of customers gets bigger, bigger, bigger. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 09, 2024 / 10:00PM, MTN.N - Q1 2025 Vail Resorts Inc Earnings Call

Question: David Katz - Jefferies LLC - Analyst : I appreciate that. Congrats on the quarter.

Question: Laurent Vasilescu - Exane BNP Paribas (France) - Analyst : Good afternoon. Thanks very much for taking my question. Kirsten, I think it was mentioned in the prepared remarks that the Epic Day Pass units grew. Can you maybe unpack that a bit? How much did it grow? What drove the growth? And then was there any trade-down due to the macroenvironment?

Question: Laurent Vasilescu - Exane BNP Paribas (France) - Analyst : Okay. Very helpful. And then on the $100 million transformation plan and the $27 million of it for this year, curious to know two things. Where should we start seeing that through the OpEx lines as you achieve these milestones. And in terms of upcoming milestones, any timeframe that we should consider -- I know this year is a smaller number versus next year. But should we assume that that next milestone is after the ski season? Is that a fair assumption into spring next year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 09, 2024 / 10:00PM, MTN.N - Q1 2025 Vail Resorts Inc Earnings Call

Question: Chris Woronka - Deutsche Bank Securities Inc. - Analyst : Hi, good afternoon, Kirsten and Angela. So I'm curious. Kirsten, you've mentioned a few times now that you're going to have a number of new skiers in the network this year as you always do. If you look back to prior years, is there any consistency in how they perform on ancillary, whether it's ski school dining or hotel? Is there any discernible patterns? Just trying to figure out if we can expect the same level of incremental contribution from the new passholders you get. Thanks.

Question: Chris Woronka - Deutsche Bank Securities Inc. - Analyst : Okay. Thanks, Kirsten. And as a follow-up, if I could, to the extent that you may end up having a even better-than-expected season if the weather cooperates, how confident are you on the staffing side that you can -- that you may have enough, and be that the cost wouldn't dramatically exceed what you expect currently? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 09, 2024 / 10:00PM, MTN.N - Q1 2025 Vail Resorts Inc Earnings Call

Question: Ben Chaiken - Mizuho Securities USA, LLC - Analyst : Hey, two somewhat high-level questions. I guess, first, the essence of the Epic Pass historically, obviously, is an irrefutable price value. However, with lodging ADRs up 40% to 60% versus '19, in some cases, that changes the calculus for your destination visitor. How much time do you spend Kirsten thinking about the degree to which lodging is or isn't a limiting factor? And then related, is there any part of you that wants more lodging exposure in order to control the entire experience and price value? I guess why or why not? Then I have one follow-up. Thanks.

Question: Ben Chaiken - Mizuho Securities USA, LLC - Analyst : No, I think you captured it all. This works. I guess just moving on to the second one, skiing clearly was one of the leisure sectors that received a benefit from the pandemic for a variety of reasons. As you reflect on the pandemic, in retrospect, do you think this limited your ability for M&A over the last two or three years given what was likely -- what I would suspect was a disconnect in elevated earnings and multiples? And then do you feel any better about it today given what you've described as a COVID normalization? Thanks.

Question: Arpine Kocharyan - UBS Securities LLC - Analyst : All right. Thank you so much for taking my question and good evening. Your pass penetration is already at that 75% of visitation. And I think you've previously talked about how you plan to take that higher to perhaps higher than 65% of revenue mix. Could you perhaps talk a little bit about the puts and takes of that in terms of in the year for the year impact? Because pass pricing is, of course, about 35%, 37% lower than lift. And historically, strong lift price increases have obviously helped you close that GAAP nicely and in terms of impact on overall P&L. I guess I'm indirectly asking about sort of whether there's more room to push lift pricing higher here from whatever trends you have in front of you, from whatever early read you might have into lift pricing. Thank you, and I have a quick follow-up. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 09, 2024 / 10:00PM, MTN.N - Q1 2025 Vail Resorts Inc Earnings Call

Question: Arpine Kocharyan - UBS Securities LLC - Analyst : Thank you very much. And then one quick one. I know you haven't given guidance on this outside of CapEx, but whatever you could share directionally would be helpful. I was wondering if you could detail what kind of OpEx you are including in your guidance for 2025 for My Epic Gear? Anything directionally would be helpful.

Question: Arpine Kocharyan - UBS Securities LLC - Analyst : Got it. Thank you very much.

Question: Paul Golding - Macquarie Capital (USA) Inc. - Analyst : Thanks so much. Just a quick question to start with on Australia. Just wanted to separate the commentary around the performance over this past season. It seemed like there was a comment in the press release about lower demand and just wanted to understand where that's coming from. Is that just comping the normalization as they were a season behind post-COVID, or is that relating to some other structural dynamics there?

Question: Paul Golding - Macquarie Capital (USA) Inc. - Analyst : Got it. So aside from demand and -- I'm sorry -- aside from weather and inflation, nothing specific to that lower demand comment that would be separate or structural to that market?

Question: Paul Golding - Macquarie Capital (USA) Inc. - Analyst : Got it. Thanks, Angela. And then another question around this delayed decision-making due to prior-year weather, just wondering if there are any other levers left to overcome some of this delayed decision-making, aside from the natural escalators that you have in pass price and better weather conditions in the preceding year, obviously, which wouldn't have you in the delayed decision-making situation with some of the resorts. So just wondering any other levers you have that you're considering whether it's bundling or something on the lodging front or otherwise to help give more visibility earlier in the selling season to what season dynamics might look like. Thank you.

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

Question: Brandt Montour - Barclays Capital Inc. - Analyst : Okay, great. That's helpful. And then just following up with a high level-question about the East Coast specifically. Looking back at the last couple of years, obviously really tough weather, but looking through the lens of weather potentially shifting warmer, even permanently warmer, even if it's marginally, I'm curious if in your long-term planning, you've thought about adjusting your operating model at any of those mountains to account for that in order to maximize cash flow as well as the strategic importance of those mountains.