Good day and welcome to the Vail Resorts Second Quarter Fiscal 2020 Earnings Conference Call. Today’s conference is being recorded. At this time, I’d like to turn the conference over to Mr. Katz. Please go ahead, sir.

Thank you. Good afternoon, everyone. Welcome to our second quarter fiscal 2020 earnings conference call. Joining me on the call this afternoon is Michael Barkin, 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, and 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 9, 2020. 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, www.vailresorts.com. So, with that said, let’s turn to our second quarter fiscal 2020 results. Overall, the season has had both areas of challenge and areas of strong performance. Whistler Blackcomb and Stevens Pass, our resorts in the Pacific Northwest, experienced the lowest snowfall in over 30 years through December 31, 2019, resulting in very poor results through the early season and critical holiday period. Visitation at those resorts continued to be challenging and below our expectations in January, with Whistler Blackcomb experiencing a weaker than expected recovery in North American and international destination visitation. In total, visitation across our Pacific Northwest resorts was down 14% compared to the prior year for the second quarter. After a challenging start in the early season, destination guest visitation at our Western U.S. resorts improved significantly during the holiday period and was in line with our expectations. The improvement continued through January though Colorado was modestly below our expectations for the post-holiday period, partially offset by strong performance at our Park City Resort. Finally, our Northeast resorts are off to a great start to the season, supported by the continued benefit from our expanded Northeast network, which has been partially offset by challenging weather variability across the Midwest resorts. Including results from Peak Resorts, total lift revenue increased 8.2%, driven by an 8.8% growth in skier visitation. Total effective ticket price decreased 0.5% in the second quarter compared to the prior year, with price increases in both our lift ticket and season pass products offset by the inclusion of results from Peak Resorts, which generates a lower effective ticket price. Excluding season pass holders and Peak Resorts, effective ticket price increased 4% compared to the prior year. Ski school, dining, and retail & rental revenues increased 11.4%, 15.8%, and 4.1% compared to the prior year respectively, primarily driven by the inclusion of Peak Resorts. Now, I would like to turn the call over to Michael to further discuss our financial results and our season-to-date metrics.

Thanks, Rob, and good afternoon. As Rob mentioned, the season has had areas of challenge and strong performance. In the second fiscal quarter, resort net revenue was $924.4 million, an increase of 8.8% compared to the prior year. Resort reported EBITDA was $378.3 million, an increase of 5.7% compared to the prior year. Fiscal 2020 second quarter resort reported EBITDA included $1.9 million of acquisition and integration-related expenses, and approximately $1 million of favorability from currency translation, which the Company calculated on a constant currency basis by applying current period foreign exchange rates to the prior period results. Net income attributable to Vail Resorts was $206.4 million or $5.04 per diluted share for the second quarter of fiscal 2020 compared to net income of $206.3 million or $5.02 per diluted share for the same period in the prior year. Fiscal 2020 second quarter net income included the after-tax effect of acquisition and integration-related expenses of approximately $1.4 million. Our balance sheet remains very strong. We ended the second quarter with $126.8 million of cash on hand, and our net debt was 2.4 times trailing 12 months total reported EBITDA, though it is important to note that this ratio only includes Peak Resorts results for the period between closing and quarter end, and we expect that ratio to decline as we incorporate a full year results from Peak Resorts. Turning now to our season-to-date metrics for the period from the beginning of the ski season through Sunday, March 1, 2020, and for the prior year period through Sunday, March 3, 2019. The reported ski season metrics are for our North American destination mountain resorts and regional ski areas, including the results of Peak Resorts in both periods, and excluding the results of our Australian ski areas in both periods. The reported ski season metrics include growth for season pass revenue based on estimated fiscal 2020 North American season pass revenue compared to fiscal 2019 North American season pass revenue, and the metrics are adjusted to eliminate the impact of foreign currency by applying current period exchange rates to the prior period for Whistler Blackcomb’s results. This is interim period data and is subject to fiscal quarter end review and adjustments. Total lift revenue including an allocated portion of season pass revenue for each applicable period was up 0.8% compared to the prior year season-to-date period. Our ski school revenue increased 2.8%, dining revenue decreased 1.4%, and resort retail and rental revenue decreased 0.6%, all compared to the prior year season-to-date period. Total skier visits were down 5.2% compared to the prior year season-to-date period. Based on results through March 1, 2020 and indicators for the remainder of the year as of that date and excluding any identified impact from coronavirus, we estimate the Resort Reported EBITDA for fiscal 2020 was expected to be approximately $20 million below the midpoint of the guidance range previously issued on January 17, 2020, driven primarily by the continuation of challenging visitation trends at our Pacific Northwest resorts throughout January and February, and secondarily from results at our Colorado resorts that were modestly below our expectations in January and February, partially offset by strong performance at our Park City resort. Given the uncertainty surrounding the impact of the coronavirus on the broader U.S. travel market and any specific impact to the performance of our Company, we are not issuing guidance at this time for fiscal 2020 and are withdrawing our previous guidance issued on January 17, 2020. In the week ended March 8, 2020, we saw a marked negative change in performance from the prior week. With destination skier visits modestly below expectations and we expect this trend to continue and potentially worsen in upcoming weeks. We intend to provide updated commentary on our results by March 18, 2020. I’ll now turn the call back over to Rob.

Thanks, Michael. We remain confident in the strong cash flow generation and stability of our business model. We will continue to be disciplined stewards of our capital and remain committed to strategic high-return capital projects, continuous investment in our people, strategic acquisition opportunities, and returning capital to our shareholders through our quarterly dividend and share repurchase plans. We are pleased to announce that the Board of Directors declared a quarterly cash dividend on Vail Resorts’ common stock of $1.76 per share, payable on April 9, 2020 to shareholders of record on March 26, 2020. Given the current market instability caused by the coronavirus, we are deferring our decision on a dividend increase until June. Moving to our calendar year 2020 capital plan. We remain committed to reinvesting in our resorts, creating an experience of a lifetime for our guests and generating strong returns for our shareholders. The Company expects to invest approximately $155 million to $160 million, excluding one-time items associated with integrations, the one-time Triple Peaks and Stevens Pass transformation plan, one-time Peak Resorts capital improvements, real estate related capital and $4 million of reimbursable investments associated with insurance recoveries that we had originally expected to occur in calendar 2019. As previously announced, the calendar year 2020 capital plan includes a rare opportunity to expand with a 250-acre lift-served terrain expansion in the signature McCoy Park area of Beaver Creek, further differentiating the resort’s high-end, family-focused experience. We also plan to add a new four-person high-speed lift at Breckenridge to serve the popular Peak 7, a replacement of the Peru lift at Keystone, with a six-person high-speed chairlift, subject to governmental approvals, and a significant 250-seat increase in the seating capacity at the Rendezvous Lodge Restaurant on Blackcomb Mountain. We remain highly focused on investments that will further our company-wide data-driven approach, including the second phase of implementing our automated digital marketing platform that will allow us to aggregate a more holistic view of the guest that will drive improvements in personalization and engagement across all lines of business, including ski school and rentals. We are also planning to completely revamp and upgrade our digital ski rental online platforms and our EpicMix mobile app, which will offer new functionality and an improved user experience. We plan to continue to invest in corporate infrastructure and technology to improve our scalability and efficiency, including the first phase of implementation of an automated workforce planning system to optimize our labor scheduling and improved financial systems to enhance business analytics. We are planning to complete the $3 million initial phase of a two-year, $15 million investment program across Peak Resorts. We are also planning to complete the second and final phase of a two-year, $35 million investment program for Crested Butte, Okemo, and Stevens Pass, and we plan to spend approximately $24 million on integration activities primary related to Peak Resorts. Including one-time items associated with integrations, the one-time Triple Peaks and Stevens Pass transformation plan, one-time Peak Resorts capital improvements, real estate related capital and $4 million of reimbursable investments associated with insurance recoveries that we had originally expected to occur in calendar 2019, we expect our total capital plan to be approximately $210 million to $215 million. Turning now to season pass sales, which we recently launched for the 2020/2021 North American ski season. Vail Resorts is committed to providing the best value in skiing for all skiers and riders through its transformational Epic Pass and Epic Day Pass advanced commitment products. Last year, we launched the Epic Day Pass, giving all skiers and riders the same value and flexibility available to season pass holders, even if they only plan to ski or ride one day. The Epic Day Pass provides unparalleled value to all skiers and riders through a discount of up to 50% off of lift ticket window prices by purchasing in advance of the ski season. We were very pleased with the success of the Epic Day Pass launch last year and expect to see continued growth in this product in its second season, as we convert existing lift ticket purchasers and new prospective guests into advanced commitment products. This year, we are transforming the breadth of value offered with our pass products by providing our pass holders truly epic discounts on their mountain experience with the introduction of Epic Mountain Rewards. For the 2020/2021 North American ski season, pass holders will receive 20% off of food and beverage, lodging, group ski and ride school lessons, equipment rentals, and more, creating incremental savings of potentially hundreds of dollars per day for a family of four. No other major pass product provides this level of across-the-board savings for skiers and riders, and, with no sign-up, no point tracking, and no blackout dates, Epic Mountain Rewards is designed to be as simple as possible. Vail Resorts is uniquely positioned to offer this kind of across-the-board value to our guests through our integrated network of 37 owned and operated resorts. The Company expects the new offering will continue to drive conversion of our guests from purchasing lift tickets to purchasing an advanced commitment pass product, where we see higher guest return rates and guest satisfaction. The Company is also delivering more value to our guests in key regional markets through the introduction of the Northeast Value Pass and Whistler Blackcomb Day Pass. The Northeast Value Pass offers unlimited skiing in the Northeast for $599 for adults and $419 for college students, with holiday restrictions at our Vermont and New York resorts and up to 10 days of access at Stowe. The Whistler Blackcomb Day Pass is a deeply discounted product, sold in Canadian dollars, that provides exclusive access to one of the world’s premier mountain destinations. This new customizable pass offers from one day to ten days of access and is ideal for skiers and riders who may not need the unlimited access offered on a traditional season pass but are interested in the value of this advanced commitment offering. By purchasing in advance of the ski season, Whistler Blackcomb guests can ski and ride for up to 50% off of lift ticket window prices, providing all guests with the value, flexibility, and convenience that comes with being a pass holder. The Company expects both new passes will continue to drive conversion of our guests from purchasing lift tickets to purchasing an advanced commitment pass product. Finally, important to highlight in the current moment that we remain focused on the health and safety of our guests and employees as we address the potential impacts of the coronavirus. We are in contact with and following all recommendations and precautions from state and local health officials. Our resorts are fully open and operating normally with good conditions. We understand that the current macroeconomic and business environment creates uncertainty for all of our stakeholders. And it’s a good time to remind everyone that the company remains on very sound financial footing with an incredible pass program, world-class resorts and the resources to ensure that we continue to make the right long-term investments and do not let any temporary dislocation in the broader markets take us away from those efforts. Most importantly, we have an incredibly committed team of people who understand how to provide an experience of a lifetime to our guests and to each other, even when dealing with external challenges. In many ways, we do this every day. But of course, this has been a trying time for many of our employees. And we very much appreciate their incredible engagement and dedication. It’s what lies at our success. At this time, Michael and I would be happy to answer your questions. Operator, we are ready for questions.

Thank you. We’ll take our first question from Felicia Hendrix from Barclays. Please go ahead.

Hi. Thanks so much. Rob, I just wanted to start on the decision to kind of hold off on raising your dividend. Just, given the strength of your balance sheet, and at the end of your prepared remarks there, you kind of highlighted how strong the business is, you guys are always conservative and prudent, but just wanted to hear a little bit more about the decision there.

Yes. As we approached that decision, the Board was clearly considering the fast-changing macroeconomic trends. The marketplace is evolving rapidly. Additionally, the impact of the coronavirus is being particularly felt in the travel industry, which is our sector. Therefore, there was a feeling that while we have a strong history of increasing the dividend, it would be prudent to wait a quarter to see how things develop before making a final decision regarding any increase or the extent of that increase.

Okay. So, it would really just depend on the overall environment, and it would seem more sensible to make that decision. Is that what you’re waiting for?

Yes. I think there’s a lot of movement right now in both the financial markets and the travel economic markets. My guess is that within a few weeks or a month, things will probably be clearer to everyone. By the time we reach the June quarter, the Board believes they will have much more information to make a decision than they do today. Right now, it's challenging to determine that increase without a clear understanding of the economic environment's direction, which seems to be changing daily.

Yes, that makes sense. Given the uncertainty, it’s completely understandable that you've withdrawn your guidance. However, with so little time left in this peak season, I’m curious about your decision. Are you seeing a significant decline in performance? Could you potentially close resorts early? Are there specific areas that are performing better than others? Any insights you could provide regarding this decision would be appreciated.

Yes, it is true that there are only a few weeks left in the ski season. These weeks are significant for us, especially with spring break and Easter approaching. After Easter, our ski resorts will not be operating in any major way. Currently, we are not changing our operating schedules and plan to keep all our resorts open and functioning normally. We do not expect any change in the experience we aim to provide our guests. However, over the last week, following the previous week’s challenges with coronavirus, we began to notice declines after seeing some strength and positive indicators for March. Many of those trends shifted unexpectedly. We observed modest declines in visits, which worsened as the week progressed, leaving us uncertain about our position. Regarding the approaching end of the ski season, we mentioned we would provide an update on current performance by March 18, which should give us a clearer picture, although we may not have final insights by then. Additionally, we are uncertain how this situation will impact the northern hemisphere summer, with the opening of our Australian resorts and the Grand Teton Lodge Company. While these developments are less impactful than our North American ski resorts, there remains significantly more uncertainty than just a few weeks ago.

That’s super helpful, thanks. And the last one for me is just, at Whistler, you attributed the shortfalls across the shortfall for snowfall early season and then kind of the lag effect from that. But just wondering if you could talk us through how the demand has been from your Japanese client out there, and if that’s been part of it?

Yes, I don’t have specific data regarding Japan, but it's clear that our international business there has been weak. We were optimistic about a quick recovery and an increase in activity, but that simply did not happen. As a result, this has remained the largest challenge for us this season.

We’ll hear now from Shaun Kelley with Bank of America.

Rob, starting with a broad strategic question, we've noticed a swift response in global stock markets and the travel sector, along with some data indicating how quickly travel behaviors are shifting due to the virus. What’s your instinct, given your role as CEO and your experience in the industry, especially regarding potential effects on pass sales? Do you believe this situation will alter purchasing behavior in any way? How do you view this, considering we have a somewhat insulated and thoughtful customer base that consistently renews, while at the same time, this is a significant and costly purchase for many? Could you help us understand not only the immediate operational impact but also provide insight into potential medium-term effects on pass sales?

Yes, I think we are gaining a solid understanding of the travel dynamics we are facing. We will encounter two primary issues: one relating to travel disruptions due to coronavirus, which will definitely affect us since we won’t be immune. However, we have a strong domestic focus that may work in our favor compared to other travel sectors. Our season pass program is particularly advantageous during times like these, and it should benefit us as we navigate through these challenges, although we won't escape the impact entirely. The second concern is the economic repercussions of the situation. I believe we are likely to handle these impacts better than many other travel sectors due to our favorable supply and demand conditions. We have been investing continually, and our season pass program, along with our Epic Mountain Rewards initiative, is geared toward providing value. We will actively promote this message. Reflecting on the introduction of the Epic Pass in 2008, it was a significant opportunity for the company during the recession, and I believe our current pass program is even larger and the Epic Mountain Rewards program will be stronger. Our data supports this confidence, and considering our geographical positioning, I feel optimistic about the company’s prospects even if we encounter a slowdown. While there may be challenges for potential buyers making purchases in the short term, I believe the pass will remain highly appealing. I anticipate a temporary impact from coronavirus, with more lasting effects over time. Although I can't predict exactly how the short term will unfold, I feel the company is well-positioned for the longer term, even amidst challenges.

I wanted to discuss the numbers, specifically regarding Colorado, which you mentioned in the release was slightly below expectations in January, particularly in the post-holiday period. Could you provide more details on this? Your update was as of January 17th, which doesn’t leave much time to assess the remaining periods in the quarter. I understand that some of this will likely carry into February. Can you clarify what changed or what was happening? From what we saw up until January 17, Colorado didn’t seem to be a concern.

No, I agree. Looking over the holiday period, we didn’t see any issues in Colorado, although there was some disappointment with the early season not being as strong as last year. Overall, we felt positive going into the season, and coming out of it, Park City continued to perform well. However, we did experience some sluggishness. It's difficult to determine the exact cause—whether it's related to the overall travel industry's performance this year, even before the coronavirus, or if it's the ski industry's comparison to a better year last year. Across our resorts, we observed stronger results in Beaver Creek and Keystone, while Vail and Breckenridge showed softer performances. So, while it wasn't uniformly negative, it contributed to our challenges, particularly at Whistler Blackcomb, which was the primary issue. In the grand scheme of the year, the impact was not overly significant, but it was certainly meaningful compared to our expectations after the holidays. As we head into March, Vail is showing some of the strongest indicators among our resorts. At this point, we’re uncertain if we’ll be able to fully evaluate those indicators. Additionally, we noted a shift in visitation from Q2 to Q3, allocating more pass revenue to Q3 than Q2, and we anticipate more information on this in the upcoming quarter. This change is due to visitation occurring later in the season, similar to last year when we saw a strong finish, particularly in Colorado. However, given the current situation with the coronavirus, it’s unclear if we’ll be able to fully assess this shift.

Thank you for all the color. I appreciate it.

Sure.

Thank you. We’ll take on this question from Chris Woronka with Deutsche Bank.

Hey. Good afternoon, everyone. I want to ask you, and I know it's still early in the process with the effects of the virus. At some point, will you make a decision to extend the early season purchase date or possibly introduce additional plans? What will be your indicator to consider offering something new or different this year?

We believe that Epic Mountain Rewards is quite new and unique. It provides a 20% discount to pass holders on food, group ski school, lodging, and rentals, which is a compelling offer. We are committed to ensuring that both our current and potential guests are aware of this. This program has been in the works for some time, and we find it suitable since we aim to emphasize a stronger value proposition for the season. We are confident about this initiative and currently have no plans to alter any of our timelines or deadlines. However, like everything in the current climate, things are changing rapidly, so it’s difficult to predict. At this moment, there are no changes to the operations of our resorts or any of our usual deadlines.

I appreciate your feedback. Regarding the 20% discount for pass holders, I'm curious about the financial implications. Specifically, how do you anticipate the discount influencing volume and pass sales? What was the initial financial outlook you had in mind?

Yes, we believe there are a couple of important factors. There is obviously the discount itself, which is a cost to us, particularly for existing pass holders who are utilizing those products. We know from previous experience that pass holders tend to purchase fewer ancillary products compared to lift ticket buyers. Many of our local pass holders have lower engagement levels with some of these businesses compared to our destination guests. Thus, we believe this discount could also encourage pass holders to engage more with ski school, rentals, and food and beverage services, either when they haven't done so before or by upselling them when they are in the moment. Additionally, we see an opportunity to bring more people into the program, convert existing lift ticket buyers to pass holders, and attract new customers to Vail Resorts. On the lodging front, the 20% discount is appealing, but it must be a direct company booking to qualify, which helps us avoid many OTA and other indirect commissions we would otherwise incur. In sectors like rentals and lodging, we face competition, and this discount presents a strong opportunity. For ski school and food, we feel we have a chance to enhance our revenue. Overall, we looked at this and concluded it is a compelling proposition.

We’ll take our next question from Ryan Sundby with William Blair.

I would like to follow up on Felicia's question about balancing the seasons. Can you provide some insight into what remains in terms of visitation or profitability from the week of March 8th onward? Additionally, if you anticipate larger impacts on ski visitation, could you explain what strategies you have in place to manage a significant decline in visitation?

Yes. I can’t provide specific guidance since it varies at different points in the season. However, you can gauge trends based on historical performance in Q2 and Q3. Spring break and Easter are critical periods for us. While this occurs toward the end of our season, it still affects a significant part of it. We will be offering a complete experience at all of our resorts during this time and will not reduce any aspects of it. If there is a decline in revenue, it will primarily impact profitability. Our goal is to ensure that every guest who visits our resorts has a remarkable experience. At this stage, we are not planning any changes. We expect our resorts to continue operating normally and to provide the best possible experience for our guests.

Regarding the $11 million shift in the pass allocations, is it reasonable to conclude that this will directly affect profits, or is there some other factor to consider?

Yes, it generally translates into revenue. This is related to how we allocate our pass revenue, representing a movement from Q2 to Q3. It does not impact the overall year but reflects the historical changes in visitation we've observed, particularly the shift to the spring break and Easter period.

We’ll now take a next question from Robert Aurand with KeyBanc Capital Markets.

I guess, just to start, you talked about the slowdown during the weekend in March 8th. Was there any difference to call out between destination and non-destination resorts?

I would say that we are seeing variations in impact across our different resorts. While there are fluctuations, they are normal and can be attributed to regional differences. Overall, we are noticing a modest decline in destination visits, but we are also seeing some improvement as time goes on. Given the current media coverage and discussions, we anticipate that this situation may continue and could potentially worsen, although we cannot determine that at this point.

Can you provide any insights on the trends you are observing for the future, particularly regarding any cancellations, and whether these cancellations are more prevalent domestically or internationally?

Yes. Looking back to last weekend, around March 1st and 2nd, we noticed a slowdown in bookings and an increase in cancellations. The overall trend has definitely been more negative, and the total occupancy numbers for the upcoming weeks are not significant. By this point in the year, we typically have a good amount of occupancy already booked in most of our properties. While the trend is concerning, I would expect that if it continues, it could have a larger impact later in March and into Easter. However, I cannot predict if that will happen.

We’ll now take our next question from Alex Maroccia with Berenberg.

It was pretty sad to see the damage to areas around the Australian resorts, as well as some of your peers. Given the loss of the infrastructure and the evacuations in that area, are you seeing any issues that could come early in the 2020 season? Whether it’s an inability to prepare properly or just a lack of demand?

No, we’re not seeing any operational issues from the fires down there this summer and expect to be fully operational and ready for the ski season. On the demand side, considering the absence of coronavirus and fluctuations in oil prices, there might have been some economic impact across Australia due to the fires, but we didn’t anticipate it being a significant concern going into June, July, and August. At this point, it’s harder for me to determine how the current economic environment related to coronavirus and other natural resources will affect Australia. I think it’s too early to make a judgment on that.

All right, that all makes sense. Thanks. And then, secondly, Peak Resorts Mountains saw pretty minimal amount of snow this winter. Can you just tell us if there are any major increases in costs associated with snowmaking, and then if you saw any swings attendance at some of the larger mountains?

Yes. Actually, we’re quite pleased with how we’ve done with Peak in its first year. Obviously, we’re still in the process of integrating the resorts. So, in that process. But certainly, pleased with how it did, relative to the portfolio resorts that make up Peak, certainly a strong year as we called out in terms of the Northeast resorts, including our existing resorts in the Northeast, offset a bit by weaker snowfalls, as you mentioned in the Midwest but had some more operational disruptions but offset some of that favorability in the Northeast.

Thank you. We’ll hear now from Patrick Scholes with SunTrust.

Good afternoon, gentlemen. I apologize if I missed it. Are you able to quantify what EBITDA impact would be for now to the end of the ski season, saying that’s April 19th in Vail, if the trends from the virus that you’ve seen over the past week were to continue to that point?

Yes, we're intentionally refraining from making comments on guidance for the remainder of the season or the rest of the year due to the uncertainty. I don’t think there’s a straightforward way to interpret the trends from last week and understand them clearly. Even over the past week, we've seen changes that will require more time for us to assess. We hope to provide more information on this before March 18th. However, this will depend on ongoing developments. At the very least, we'll be able to share more details about the actual results we're observing, similar to what we've done today.

Okay, thank you. And then, my second question here. About a month ago, there was some negative press and various online videos showing what would appear to be excessive lift lines at some of your chairs at Vail. Do you see that as sort of a one-time one-off event or are you going to be taking any steps or specifically what in the future to prevent that or does just the limitation on how many cars per day can go through the tunnels sort of take care of that problem with overcrowding itself?

Yes, they are certainly aware of the situation. There were two main aspects to consider. One was the long line at Gondola One during a major powder day, with people arriving early to ski. Fortunately, that line cleared up fairly quickly within the day. Gondola One has a very high capacity, so we are confident about its ability to handle busy days like that, even though we may still see some lines during peak times. The line at chair 5, however, was definitely not a good experience for our guests, and we recognize that it was an issue we want to avoid in the future. Given the huge powder day, we unfortunately could not open more terrain, which contributed to the congestion. Our guest service team was actively informing guests about the expected wait at the bottom as they skied down. We view this as a unique occurrence created by an especially intense snow cycle that is rare, and we will prioritize improving our guest communication based on this experience. We have a commitment to ensure our guests know exactly what to expect, and we are focusing on ways to enhance that for next season.

Thank you. We’ll move on to David Katz with Jefferies.

Thank you for the info. The candor is always greatly appreciated. As we’re sitting here trying to work with our model for the rest of this year. Can you help us just talk about what aspects within the mountain segment, the breakdown between fixed and variable expenses? And, help us think through that aspect of it?

Sure. We have several elements to consider. Firstly, we have revenue, and if that decreases, we'll see a reduction in things like credit card fees and U.S. fire service fees. If there are fewer ski school attendees, then ski school labor costs will also decrease. Should retail or food sales decline, we'll save on the cost of goods. However, many other aspects of the resort are fixed, such as utilities and overhead, along with most of our seasonal staff needed to operate the mountain. We won't make significant cuts in those areas because we aim to provide the best experience for our guests throughout the season. Additionally, a substantial part of our revenue comes from season passes, which is more stable and somewhat guaranteed. Thus, the main concern is our paid lift ticket revenue along with any additional income when guests are on-site. Does that give you a clear overview?

It is helpful. If you don’t mind, I’d like to follow up a bit more directly. It seems that more than half of our total cost base is fixed, while the remainder is variable based on our revenue.

Yes. I think, to put a finer point on it. Yes, I think as Rob articulated, there are aspects of our cost structure, which are outlined in our financial statements including cost of goods sold that are highly variable. But for the most part, the remainder of our labor is not, outside of some circumstances with businesses like ski school or otherwise. But as Rob articulated, the majority of our call structure is labor. And yes, a good portion of that in the short-term is a fixed cost of running the operations.

Moving now from Marc Torrente with Wells Fargo Securities.

So, prior to the impact of coronavirus, how was international visitation broadly trending, maybe from the major source markets Japan, Asia, Australia, and South America?

In the U.S., the international business has seen a decline in recent years primarily due to the strong U.S. dollar, travel restrictions, and various challenges. While it was indeed weak, it was not a major factor affecting our U.S. performance. This year, there was a definite decline, largely attributed to weather conditions. Another factor has been increased costs in Whistler, not just for lift tickets but for overall vacation expenses, including lodging. We've noticed some changes in this area. However, the main driver for international visitors to the Company remains Whistler, heavily influenced by conditions there.

Okay. And when you have these less favorable conditions in a particular season, how does that impact visitation in the comparable period for the next year or the year after that?

We have observed various examples over the years. Tahoe serves as a notable instance; despite facing a challenging period in 2014-2015, we experienced a strong recovery when conditions improved, leading to a resurgence in demand. Historically, we tend to see a robust rebound from such situations. There can be a lag effect related to advanced bookings or pass sales, but we have typically managed to navigate through those challenges without immediate negative impacts. One trend we are noticing is a shift from early season to late season, likely due to more reliable conditions in the late season over recent years. While it's difficult to gauge this year's situation due to the pandemic, past years have shown this trend to be consistent. Nonetheless, we have not experienced any long-term decline due to adverse conditions in any specific area.

And then, just lastly, you did provide some commentary on capital allocation going through this market volatility. I don’t think you repurchased any shares during the quarter. But should we expect you guys to step in more here? And then, does any of this change your view on M&A near-term?

Yes. Each quarter, we evaluate our strategy with the Board, and we'll be doing so again this quarter, but I can't provide further comments on that. However, we remain fully committed to investing in our resorts for the long term and pursuing strategic opportunities when they arise. We will continue to take an aggressive approach in this area while being disciplined and mindful of value, as always. We are also on the lookout for unique opportunities and will definitely pursue them.

Thank you. We’ll take our next question from Brad Boyer with Stifel.

Thank you for including me in the discussion. To further elaborate on the M&A question, Rob, historically, this time of year has been favorable for engaging with the stock. This trend aligns with your pattern of executing M&A during the offseason. Given the current landscape, you've strengthened your presence by completing the Peak deal last year and enhancing your customer connections. You now cover nearly all major ski markets in North America. Can you provide insights into any strategic priorities on the M&A front at this time? Are there specific regions where you'd like to increase your presence in the regional ski business? Any additional information you could share would be appreciated.

Yes, I believe there will definitely be strategic opportunities in North America, whether it’s in destination resorts or regional resorts. We are very aware of the strong network we have right now, and much of our focus is on integrating it to maximize its benefits. However, there are certainly a few opportunities that we would continually pursue. We are still very much focused on opportunities in Japan and Europe. All of that remains true. We will continue to be disciplined and focused on the environment we are operating in. A lot of our attention is on leveraging our established network. Moving customers to advanced commitments and making the business shift we've been going through over the years has yielded significant benefits, transitioning from where we were with season passes to our current position. We see a new set of advantages by advancing to the next level, and even in a challenging economic or travel environment, we believe that opportunity still exists and represents a major chance for us, given people's focus on value and our ability to deliver on that. We will be careful with M&A decisions to ensure they align with our strategy, as we have always done.

Helpful. And then, Michael, just as a housekeeping item, could you remind us what you have left on the existing authorization on the buyback front? That’s all for me. Thanks.

Yes. I’ll have to go look that up and get back to you on the specific number of shares.

So, actually, just to follow up on that. We have about 1.5 million shares remaining.

Thank you. That does conclude today’s question-and-answer session. I’ll turn the conference back over to Mr. Katz for any additional or closing remarks.

Thank you, operator. This concludes our fiscal second quarter 2020 earnings call. Thanks to everyone who joined us today on the conference call. Please feel free to contact me or Michael directly, should you have any further questions. Thank you for your time this afternoon. And goodbye.

Thank you. That does conclude today’s conference. Thank you all for your participation. You may now disconnect.