Vail Resorts Inc Q3 2024 Earnings Call Summary

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

Question: Shaun Kelley - Bank of America - Analyst : Hi, Good morning, everyone, or good evening, everyone. Thank you for taking my question. Kirsten, Angela, just wondering if we could dig a little deeper on the past behavior that you saw. Specifically wondering if you could just give us a little bit of insight on what feedback are you hearing from the guests that are in that kind of new pass cohort, and in the sort of, I guess, younger cohort that didn't renew this period. Because historically, you've done pretty well on pulling forward and incentivizing activity earlier in this pass sales season. So we're getting some concerns that whatever trend you're seeing now could actually deteriorate a little bit. So maybe some behavior could give us some sense as to why maybe they waited a little bit, just what are you hearing back from maybe some feedback from people as you dug into the behavior that you saw in the early pass period here?

Question: Shaun Kelley - Bank of America - Analyst : That's helpful and thank you for the extra color there. And then my second -- my follow-up would just be, you mentioned in the release a little bit around post-COVID normalization, right, and so a lot of the activity here feels like it was connected to, especially, with the new pass holders around visitation, you didn't have that base of customers to sell to, and obviously, a lot of that traces back to weather. But the post-COVID normalization piece is a different factor, so could you just elaborate on what you mean by that? And kind of -- again, there's a lot of cross-currents here, so just -- how do you kind of separate the two if both of those are factors? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 06, 2024 / 9:00PM, MTN.N - Q3 2024 Vail Resorts Inc Earnings Call

Question: Jeff Stantial - Stifel - Analyst : Hi, great. Good afternoon. Kirsten, Angela, thanks for taking our questions. Maybe starting off, I'll just try to ask Shaun's first question in a slightly different way. So, Kirsten, you talked a lot about soft lift ticket demand this past season impacting your conversion from lift to Epic passes during the spring selling season. To me that seems like more of a spring headwind, and going to ease up as the selling season progresses. You also talked about potential for some conversions of less tenured pass holders to accelerate in the summer and in the fall selling season. So I guess, can you just help us reconcile those two comments with the expectation for trends to remain stable to the levels you just reported through the remainder? In other words, is it fair to conclude you're being a bit conservative with that comment? Just any color there would be helpful. Thanks.

Question: Jeff Stantial - Stifel - Analyst : Okay, perfect. That's very helpful commentary. Thank you for that. And then for my follow-up, I wanted to double-click on some of the softness in the lift ticket visitation later in the season this year. You called out specifically Whistler Blackcomb as showing the most headwinds here. I guess, could you expand on that a little bit more? Is there anything in terms of nuances to that resort that might explain it? Is it higher fly to traffic? Just anything that sort of explains the nuances that you're seeing with that resort versus more of your US resorts?

Question: Ben Chaiken - Mizuho Securities - Analyst : Hi, how's it going? You noted the decline in passes was largely driven by lower new pass holders with that pool being primarily window ticket guests. I guess it's very reasonable that the pool is smaller given the poor weather, but when you look at the penetration of that pool of single-day window guests who subsequently decided to purchase a pass, was it consistent with what you would have expected, just at a smaller-scale, better or worse? Thanks. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 06, 2024 / 9:00PM, MTN.N - Q3 2024 Vail Resorts Inc Earnings Call

Question: Ben Chaiken - Mizuho Securities - Analyst : Sure, sure. You were saying that one of the larger reasons of the decrease in the pass was lower new pass owners and that the major pool for that was window guests from the previous season. I'm saying it's very reasonable that that pool is smaller given the poor weather, but of the people who did purchase, of the window guests who did subsequently purchase a season pass, is the penetration in line with what you would have expected? Better or worse? And if that didn't make sense, we can catch up later.

Question: Ben Chaiken - Mizuho Securities - Analyst : Got it. Okay. That's helpful. And then as you think about the evolution of the pass, I would assume there's been a lot of destination customers who are now part of the pass program who were not there three or four years ago. You mentioned some lower tenure guests who tend to renew closer to the season, do you think the pass needs to evolve in any way to extend or smooth the seasonality of the pass? In other words, would it make sense to add partnerships, retail or otherwise, that add demand for the pass outside of the core season? In essence, extending the demand and utility of the past outside of the core season? Just would love your thoughts there. Thanks.

Question: Laurent Vasilescu - BNP Paribas - Analyst : Good afternoon. Thank you very much for taking my question. It's noted in the press release that the Epic Australia Pass sales are down 22% in units, primarily due to weather. Kirsten, can you provide some context for the audience just how bad the weather was in Australia this season so far? Could this be a leading indicator on how the US might react if bad weather could continue for the next few seasons? And are there any learnings from Australia that you could apply when you will guide for FY25 next quarter?

Question: Laurent Vasilescu - BNP Paribas - Analyst : Very helpful. And in terms of my second question, Kirsten, Angela, your dividend payout ratio is at 100% on a trailing 12-month basis, can you discuss what's the ideal payout ratio going forward? Or asked another way, how do you prioritize your capital allocation strategy across the different avenues for shareholder returns?

Question: Laurent Vasilescu - BNP Paribas - Analyst : Okay, very helpful. Thank you very much. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 06, 2024 / 9:00PM, MTN.N - Q3 2024 Vail Resorts Inc Earnings Call

Question: Megan Alexander - Morgan Stanley - Analyst : Hi, good afternoon. Thanks so much for taking our questions. Maybe a follow-up just on the lift ticket visitation again. I know I think you said it was down 17% from that window lift ticket. It's obviously clear weather was a big headwind to that customer, but I'm just curious your thoughts on whether price is having any impact, and the reason I ask is, your largest competitor did recently say something to the tune of you won't see us taking prices on lift tickets anymore. So just bigger picture, would love to kind of get your thoughts on your pricing strategy more broadly, and whether you think potentially there could be some room for some changes, maybe something like dynamic pricing? I understand the goal is to push people to the advanced commitment, but at the same time, you're talking about the lift ticket guests being the funnel for that. So I'm just trying to understand how you think about the pricing strategy and the ability to kind of retain and acquire more guests.

Question: Megan Alexander - Morgan Stanley - Analyst : That's really helpful. Appreciate the color. And then maybe just a follow-up to what you just said at the end there, how should we think about visitation for 2025? I guess, both from an industry perspective and from Vail perspective? I guess from the industry, you're going to be lapping a pretty challenging weather season, but perhaps there was some normalization, so you don't necessarily get a full recovery. And then from Vail's perspective, at this point, pass units down 5%, you have just less people on the mountain skiing just as a result of that. So I guess just any way to think about how kind of the net of all of these factors should impact next year? Does any one factor kind of have more weight over the others?

Question: Megan Alexander - Morgan Stanley - Analyst : Got it. Thank you.

Question: Patrick Scholes - Truist Securities LLC - Analyst : Hi, good evening, everyone. One thing I've been hearing in the industry the last couple of weeks is how Ikon unit sales at least are up or tracking up at least mid-single-digits year-over-year. I'm curious as to your opinion, what might account for the difference between where you are and they are. Certainly, part of that is they will have a basin, I think, Blue and Camelback were added, and then I think Crystal is going back to the unlimited full Ikon, anything else to think about between the difference between the two? Thank you.

Question: Patrick Scholes - Truist Securities LLC - Analyst : Okay. Thank you. And then my follow-up question also, this one is a bit more of a high-level question. There's certainly debate in the ski community and subsequently with investors regarding what is the better operating strategy to go with? You folks seem to have more of a centralized out of Broomfield as it relates to mountain operations and HR, whereas your main competitor leaves it up more to the local resort to make decisions. I guess in your opinion, why is your methodology the superior one? Thank you.

Question: David Katz - Jefferies - Analyst : Good afternoon, everyone. Thanks for taking my question. I appreciate it. Can we just drill down a little bit on Switzerland and how we think about expectations for pass sales there? Obviously, it's a ramp, but my sense is that you've included some of that in your underwriting, and would just love to hear your thoughts there. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 06, 2024 / 9:00PM, MTN.N - Q3 2024 Vail Resorts Inc Earnings Call

Question: David Katz - Jefferies - Analyst : Understood. And as my follow-up, I wanted to ask about the new app and any data points, any learnings, any benefits, anything that's knowable there would be great.

Question: Chris Woronka - Deutsche Bank - Analyst : Hi, thanks. Good afternoon, everyone. So first question is kind of on the hotel side, I know when you guys initially talk about guidance in September, you typically look at what you've got on the books on the hotel side and I know it's really for peak periods. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 06, 2024 / 9:00PM, MTN.N - Q3 2024 Vail Resorts Inc Earnings Call But as you look back now at the end of the ski season, were those hotel bookings, do they offer the same level of predictive value that they used to, or that you expect, or do we just have to say that the weather is impacting things more than the initial hotel bookings?

Question: Chris Woronka - Deutsche Bank - Analyst : Okay. Thanks, Angela. And then follow-up is kind of as we look out to next year and we think about the Epic Gear launch, right, being more fully available and taking into context your comments about renewal rates and the fact that you're doing better with folks who have been with you for a while. Would that change any of your very preliminary views on what you think about Epic Gear uptake in participation rates, or do you think you have a lot of confidence in that given that you're doing well with your renewing pass holders? Thanks.

Question: Brandt Montour - Barclays - Analyst : Hi, good evening, everybody. Thanks for squeezing me in here. So on the COVID normalization comments, Kirsten, and apologies if you already touched on this, but I'm assuming that obviously included sort of a comment on total travel demand, which you definitely alluded to. But does that also include a shift of consumer behavior back to peak travel periods, i.e., weekends and holidays, that was something that was a nice tailwind for you early in COVID, is that something that it could be a -- is it already a headwind? Is it could be an additional headwind creating more load pressure on your business operations?

Question: Brandt Montour - Barclays - Analyst : Okay. That's super helpful. And then another question on the competitive landscape. Based on publicly available data from your peer, Alterra, it does look like their initial and sort of mid-season pass prices are widening out versus yours is the widest level, I think, since they launched. And I guess I'm curious how you think about that from a strategic positioning standpoint. And if you -- if there's any concern that they might be trying to position themselves as a higher-tiered product than yours, and the reason I ask is maybe, obviously, not every skier is created equal in terms of profitability, and so how do you think about that competitive positioning?