Good afternoon, ladies and gentlemen. Welcome to the Vail Resorts Fiscal First Quarter 2025 Earnings Conference Call. Today's conference is being recorded. Currently, all callers are in listen-only mode, and after management's prepared remarks, the call will be opened for your questions. I will now turn the call over to Kirsten Lynchak, Chief Executive Officer of Vail Resorts. Ms. Lynch, please go ahead.

Thank you. Good afternoon everyone. Welcome to our fiscal 2025 first 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, 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, December 9, 2024, 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. With that said, let's turn to our fiscal 2025 first quarter results. Resort reported EBITDA was consistent with the prior year, driven by growth in our North American Summer business from increased activity spending and lodging results. This growth was offset by a decline in Resort reported EBITDA of $9 million compared to the prior year from our Australian resorts, due to record low snowfall and lower demand. Cost inflation, the inclusion of Crans-Montana, and approximately $2.7 million of one-time costs related to the two-year resource efficiency transformation plan and $0.9 million of acquisition and integration-related expenses. Moving on to our resource efficiency transformation plan, regarding the company's two-year resource transformation plan, which was announced last quarter, Vail Resorts continues to make progress against the plan. The two-year resource efficiency transformation plan is designed to improve organizational effectiveness and scale for operating leverage as the company grows globally. Through scaled operations, global shared services and expanded workforce management, the company expects $100 million in annualized cost efficiencies by the end of its 2026 fiscal year. We will provide updates as significant milestones are achieved. Turning now to our 2024-2025 North American Season Pass sales and early season indicators. Our Season Pass sales highlight the compelling value proposition of our Pass products and our commitment to continually investing in the guest experience at our resorts. Over the last four years, Pass product sales for the 2024-2025 North American ski season have grown 59% in units and 47% in sales dollars. For the upcoming 2024-2025 North American ski season, Pass product sales through December 3, 2024, decreased approximately 2% in units and increased approximately 4% in sales dollars, as compared to the period in the prior year through December 4, 2023. This year's results benefited from an 8% price increase, partially offset by unit growth among lower-priced Epic Day Pass products. Pass product sales are adjusted to eliminate the impact of changes in foreign currency exchange rates by applying an exchange rate of $0.71, between the Canadian dollar and the U.S. dollar in both periods for Whistler Blackcomb pass sales. For the period between September 1, 2024 and December 3, 2024, Pass product sales trends improved relative to the Pass product sales through September 20, 2024, and with unit growth of approximately 1% and sales dollar growth of approximately 7% as compared to the period in the prior year from September 23, 2023 through December 4, 2023 due to the expected renewal strength, which we believe reflects delayed decision-making. Our North American Pass sales highlight strong loyalty with growth among renewing Pass holders across all geographies. For the full selling season, the company acquired a substantial number of new Pass holders. However, the absolute number of new guests was smaller compared to the prior year, driven by the overall unit. Driving the overall unit decline for the full season. New Pass holders come from lapsed guests, prior year lift ticket guests and new guests to our database. The company achieved growth from lapsed guests, who previously purchased a pass or a lift ticket but did not buy a pass or lift ticket in the previous season. The decline in new passholders compared to the prior year was driven by fewer guests who purchased lift tickets in the past season, and from guests who are completely new to our database, which we believe was impacted by last season's challenging weather and industry normalization. Epic Day Pass products achieved unit growth driven by the strength in renewing pass holders. We expect to have approximately 2.3 million guests committed to our 42 North American, Australian and European resorts in advance of the season in non-refundable advanced commitment products this year, which are expected to generate over $975 million of revenue and account for approximately 75% of all skier visits excluding complementary visits. Now turning to our early season indicators. Heading into the 2024/2025 ski season, we are encouraged by our strong base of committed guests, providing meaningful stability for our company. Additionally, early season conditions have allowed us to open some resorts earlier than anticipated, including Whistler Blackcomb, Heavenly, Northstar, Kirkwood and Stevens Pass. Early season conditions have also enabled our Rockies resorts to open with significantly improved terrain relative to the prior year, including the opening of the legendary back bowls at Vail Mountain opening the earliest since 2018. Our resorts in the East are experiencing typical seasonal variability for this point in the year with all resorts planned to open ahead of the holidays. We are continuing to hire for the winter season and are on track with our staffing plans and have achieved a strong return rate of our frontline employees from the prior season. Lodging bookings at our U.S. resorts for the upcoming season are consistent with last year at Whistler Blackcomb, lodging bookings for the full season are lagging prior year levels, which may reflect delayed decision-making following challenging conditions in the prior year. Now I would like to turn the call over to Angela to further discuss our financial results and fiscal 2025 outlook.

Thanks, Kirsten, and good afternoon, everyone. As Kirsten mentioned, this quarter's results were driven by growth in our North American summer business, offset by lower results from our Australian resorts, cost inflation, the inclusion of Crans-Montana, the one-time costs related to the two-year resource transformation plan in acquisition and integration-related expenses. Net loss attributable to Vail Resorts was $172.8 million for the first quarter of fiscal 2025 compared to a net loss attributable to Vail Resorts of $175.5 million in the same period in the prior year. Resort reported EBITDA loss was $139.7 million for the first quarter of fiscal 2025, which included $2.7 million of one-time costs related to the previously announced two-year resource transformation plan and $0.9 million of acquisition-related and integration-related expenses. Compared to a Resort reported EBITDA loss of $139.8 million for the first quarter of fiscal 2024, which included $1.8 million of acquisition and integration-related expenses. As of October 31, 2024, the company's total liquidity as measured by total cash plus revolver availability was approximately $1 billion. This includes $404 million of cash on hand, $620 million of total combined revolver availability. And as of October 31, 2024, the company's net debt was 2.8 times its trailing 12 months total reported EBITDA. Regarding the return of capital to shareholders, the company declared a quarterly cash dividend of $2.22 per share of Vail Resorts common stock payable on January 9, 2025, to shareholders of record as of December 26, 2024. In addition, the company repurchased approximately 115,000 shares during the quarter at an average price of approximately $174 for a total of $20 million. The company has 1.6 million shares remaining under its authorization for share repurchases. We will continue to be disciplined stewards of our shareholders' capital, prioritizing investments in our guest and 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 turning to our outlook for 2025. The company's Resort reported EBITDA guidance for the year ending July 31, 2025, is unchanged from the prior guidance provided on September 26, 2024. The company is updating its guidance for net income attributable to Vail Resorts, which it now expects to be between $240 million and $316 million, up from the prior guidance range of $224 million to $300 million. The primary difference is due to a $17 million increase from the gain on sale of real property related to the resolution of the October 2023 Eagle County District Court final ruling and valuation regarding The Town of Vail’s condemnation of the company's East Vail Property that was planned for Vail Resorts incremental affordable workforce housing project, a transaction that has been recorded as Real Estate Reported EBITDA. Additionally, the guidance is updated to include a decrease in expected interest expense of approximately $2 million, which assumes that interest rates remain at current levels for the remainder of fiscal 2025. These changes have no impact on expected resort reported EBITDA. The company continues to expect resort reported EBITDA for fiscal 2025 to be between $838 million and $894 million, including approximately $27 million of cost efficiencies and an estimated $15 million in one-time costs related to multiyear resource efficiency transformation plan and an estimated $1 million of acquisition and integration-related expenses specific to Crans-Montana. As compared to fiscal 2024, the fiscal 2025 guidance includes the assumed benefit from a return to normal weather conditions after the challenging conditions in fiscal 2024, more than offset by a return to normal operating costs, and the impact of continued industry normalization impacting demand. Additionally, the guidance reflects the negative impact from the record low snowfall and related shortened season in Australia in the first fiscal quarter of 2025, which negatively impacted demand and resulted in a $9 million decline of resort reported EBITDA compared to the prior year period. After considering these items, we expect Resort reported EBITDA to grow from price increases in ancillary spending, the resource efficiency transformation plan and the addition of Crans-Montana for the full year. The guidance also assumes a continuation of the current economic environment, normal weather conditions for the 2024-2025 North American and European ski season and the 2025 Australian ski season, and the foreign currency exchange rates as of our original fiscal 2025 guidance issued September 26, 2024. Foreign currency exchange rates have experienced recent volatility, relative to the current guidance if the currency exchange rates as of yesterday, December 8, 2024, a $0.71 between the Canadian dollar and U.S. dollar, $0.64 between the Australian dollar and U.S. dollar and $1.14 between the Swiss franc and the U.S. dollar were to remain at those levels for the remainder of the fiscal year, the company expects this would have an impact on fiscal 2025 guidance of approximately negative $5 million for resort reported EBITDA. Now I'll turn the call back over to Kirsten.

Thank you, Angela. Vail Resorts is committed to enhancing the guest experience and supporting the company's growth strategies through significant capital investments. For calendar year 2025, the company plans to invest 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 multi-year transformational investments at key base areas at 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 and real estate-related capital, the company plans to invest approximately $249 million to $254 million in calendar year 2025. Projects in the calendar year 2025 capital plan described remain subject to approvals. In calendar year 2025, the company will embark on two multiyear transformational investment plans at Park City Mountain and Vail Mountain. At Park City Mountain, the transformation of Park City Mountain, Canyons Village is underway to support a world-class luxury-based village experience. These investments will support Park City Mountain in welcoming athletes and fans from across the world who visit the resort, as it serves as a venue for the 2034 Olympic Winter Games. As announced in September, we are replacing the Sunrise Lift with a new 10-person gondola in partnership with the Canyons Village Management Association in calendar year 2025 which will provide improved access and enhanced guest experience for existing and future developments within Canyons Village. The company also plans to enhance the beginner and children's experience by expanding the existing Red Pine Lodge restaurant to upgrade the dining experience for ski and ride school guests and by improving the teaching terrain surrounding the Red Pine Lodge. These investments are further supported by the construction of the Canyons Village parking garage, a new covered parking structure with over 1,800 stalls being developed by TCFC, the master developer of Canyons Village, which is expected to break ground in spring 2025. Planning of additional investments at Park City Mountain across the Mountain experience is underway and additional projects will be announced in the future. At Vail Mountain, the company previously announced the development of the West Lionshead area into a fourth base village at Vail Mountain in partnership with The Town of Vail and East West Partners. The new base village will reinforce Vail Mountain status as a world-class destination and is anticipated to feature access to the resort’s 5,317 acres of legendary terrain, plus new lodging, restaurants, boutiques and skier services, as well as community benefits such as workforce housing, public spaces, transit and parking. In addition, the company is developing a multi-year plan to invest in base area improvements, lift upgrades and across the beginner ski and ride school and dining experiences. In calendar year 2025, the company is planning to renovate guest rooms and common spaces at its luxury Vail Hotel, the Arrabelle at Vail Square. Additionally, in calendar year 2025 the company plans to invest in real estate planning to develop the West Lionshead area. In addition to embarking on two multi-year transformational investment plans, the company is planning significant investments across the guest experience in calendar year 2025. At Andermatt-Sedrun, the company plans to replace the four-person fixed grip, Calmut lift and the four-person fixed grip Cuolm lift with two new six-person high speed lifts that will increase capacity and significantly improve the guest experience at the Val area. The Company also plans to upgrade and expand snowmaking infrastructure at the Gemsstock area on the western side of the resort to enhance the consistency of the guest experience, particularly in the early season, and significantly improve energy efficiency. In addition, the company plans to complete the previously announced upgrade of the Sedrun-Milez snowmaking infrastructure and improvements to the Milez and Natschen restaurants. Through calendar year 2025, Vail Resorts will have invested approximately CHF50 million of a total CHF110 million capital that was invested as part of the purchase of the Company's majority ownership stake in Andermatt-Sedrun. At Perisher in Australia, the Company plans to replace the Mt Perisher Double and Triple Chairs with a new six-person high speed lift, following the capital spending in calendar year 2024 that is continuing into calendar year 2025 to be completed in time for the 2025 winter season in Australia. In addition, the company is continuing to invest in innovative technology to enhance the guest experience. In the coming years, the company will be investing in additional new functionality for the My Epic app including new tools to better communicate with and personalize the experience for our guests. The company will also be building on the pilot of My Epic Assistant, a new guest service technology within the My Epic app powered by advanced AI and Resort Experts at four resorts for the upcoming 2024-2025 ski season, the company is planning to invest in more advanced AI capabilities in calendar year 2025. To support the dining experience, the company plans to invest in physical improvements to dining outlets at its largest destination resorts to improve throughput. The company is also continuing to invest in waste reduction and emissions reduction projects across its resorts to achieve its goal of zero net operating footprint by 2030. At Breckenridge, The company is making real estate related investments to complete the multi-year transformation of the Breckenridge Peak 8 base area, where the Company has enhanced the beginner and children's experience and increased uphill capacity with the introduction of a new four-person high speed 5-Chair, new teaching terrain, and a transport carpet from the base, making the beginner experience more accessible. At Keystone, the company is investing in acquisition and build-out costs for skier services that will reside in the newly developed Kindred Resort at Keystone, a family-friendly luxury ski-in, ski-out lodging residence and Rock Resorts-branded hotel at the base of the River Run Gondola, including new restaurants, a full-service spa, pool and hot tub facilities, and the new home for the Keystone Ski & Ride School, and a retail and rental shop. The Kindred development follows the transformational lift-served terrain expansion project in Bergman Bowl, increasing lift-served terrain by 555 acres with the addition of a new six-person high speed lift which was completed for the 2023/2024 North American ski season. In addition to the investments planned for calendar year 2025, the Company is completing significant investments that will enhance the guest experience for the upcoming 2024/2025 North American and European ski season. As previously announced, the Company expects its capital plan for calendar year 2024 to be approximately $189 million to $194 million, excluding $13 million of incremental capital investments in premium fleet and fulfillment infrastructure to support the official launch of My Epic Gear for the 2024/2025 winter season at 12 destination and regional resorts across North America, $7 million of growth capital investments at Andermatt-Sedrun, $2 million of maintenance and $2 million of integration investments at Crans-Montana, and $3 million of reimbursable capital. Including these one-time investments, the Company's total capital plan for calendar year 2024 is now expected to be approximately $216 million to $221 million. In closing, I would like to thank all of our team members, especially our frontline teams across all of our Mountain Resorts for their passion, hard work and commitment to creating an experience of a lifetime for our guests. The guest experience that our employees create is our mission as a company and is core to our success. We all look forward to welcoming guests to our Mountain Resorts this winter season. At this time, Angela and I will be happy to answer your questions. Operator, we are ready for questions.

Certainly Ms. Lynch. We'll go first to Shaun Kelley with Bank of America.

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 is some behavioral normalization that you called out a number of times. Can you just give us your sense on kind of what you are 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 kind of behavior for the resorts that are open? Kind of how are you feeling about just that activity level thus far given what you can see through Thanksgiving? Thanks.

Thanks for the question, Shaun. There are a few indicators to consider. One is Pass Sales, which we're very pleased with. We've seen an improvement in the growth rates in the final selling period, resulting in a 2% decline in units but a 4% increase in sales dollars. This means over 2.3 million guests have committed to visiting our resorts, which is a strong sign for us. The early season conditions look promising, particularly since we've been able to open some resorts ahead of schedule. Another aspect we're monitoring is lodging. In the U.S., lodging market data for our resorts shows that bookings are consistent with last year's levels for the entire season and even better than pre-COVID levels. However, Whistler Blackcomb's bookings are trailing behind both last year and pre-COVID figures. In terms of our owned and operated lodging, the latest data indicates it's slightly above last year. All these indicators are showing improvement as we move closer to the season, and we're considering them collectively, including the positive Pass sales and lodging trends. Therefore, we are maintaining our guidance for now.

Fantastic. As a follow-up, can you discuss the overall exposure in Whistler? If conditions stay the same, will that pose a risk to guidance? Considering all the other factors, especially if the snow conditions remain stable, is there enough local visitation and other elements to offset that, or should we be concerned about it at this point in the season?

When I look at the Whistler Blackcomb lodging data, I think what we see is that it continues to be improving. So I think given the strong conditions, I think it's possible what we're seeing in the bookings is some delayed decision-making, which you obviously saw in total for our Pass sales as our trends improved as we went through the selling cycle. The conditions are off to a really great start. The terrain that we have is off to a great start. Destination guests are very important to that resort and the outcomes associated with that resort. So we'll continue to monitor and do everything we can to encourage visitation to the resort. So nothing to be, I would say, concerned about right in this moment, just a mix of indicators with coming off of, I think a really tough year at Whistler Blackcomb last year. So the fact that there could be some delayed decision-making going on where people want to wait and see how the season starts there, I think makes sense, and we'll hope to see that play out as the season moves along here.

Perfect. Thank you so much.

Thank you, Shaun.

Thank you. We go next now to Jeff Stantial at Stifel.

Hi, 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 indicators specifically for the Christmas and the New Year's holiday period, and as a correlator to that, have you seen sort of the booking trends or the bookings piece 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?

Hi, Jeff, thanks for the question. As we monitor the market data for our resorts in the U.S. along with Whistler, we are consistently noticing improvements in bookings as we approach the season. Overall, for our U.S. resorts, occupancy and bookings are above pre-COVID levels and are quite consistent with last year. We've observed similar improvements during key holiday periods. Regarding our owned and operated properties, we have better visibility to that data than to the published market data. However, our owned and operated segments represent a relatively small percentage of our lodging, so it serves more as a directional indicator. It reinforces what we're seeing: booking patterns appear to be strengthening as we get closer to the holidays, especially as people notice favorable snow conditions. We are definitely observing a positive trend and hope to maintain this momentum.

Thank you for that insight, Kirsten. For my follow-up on capital allocation, I'd like to discuss how your net income guidance relates to your anticipated free cash flow this year. From my calculations, your current dividend policy suggests that 80% to 90% of discretionary free cash flow will be paid out, assuming it remains unchanged. Can you elaborate on your approach or willingness to utilize your balance sheet if another year of tough weather leads to a payout exceeding 100%? Additionally, how should we view your dividend growth strategy considering the post-COVID normalization trend that perhaps wasn't fully recognized one or two years ago? That’s all from me. Thank you.

Thanks, Jeff. It's Angela. I'll take this one. And yes, we always look at our dividend and really all of our capital allocation alternatives. We are constantly looking and reevaluating that what you saw us do, right, this quarter has announced our investment in the guest experience and investment in our resorts which we've consistently done. And for return of capital, right, we have been prioritizing the dividend and even in a year like last year where we did miss our original guidance, right we still were able to cover our dividend payout and pursue all of our capital allocation priorities. So we feel very comfortable, we reaffirmed and announced our dividend stayed at the same level. We typically look at our dividend in the March quarter, and we'll continue to reevaluate it, though every quarter.

Great. That’s helpful. Thank you for that Angela, I’ll pass it on.

Thank you. We go next now to Megan Clapp with Morgan Stanley.

Hi, good afternoon. Thanks so much. I 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 could you 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 that by the early openings at some of your resorts? And any commentary around just more on the composition of the better than expected Pass sales in the last period would be great.

Thank you, Megan. I'm happy to provide more insight on Pass Sales. We are very satisfied with the results from Pass Sales. We observed several key factors. Firstly, there is strong loyalty among our renewing Pass holders, with growth seen across all regions. Most of these renewers chose to renew to the same Pass type, which we view as a positive trend. Regarding new Pass holders, I mentioned in the prepared remarks that we acquired a significant number. They primarily came from three sources, each with different dynamics. We converted lapsed guests—those who had previously visited our resorts but hadn't returned last year—into new Pass holders for this upcoming season. However, we noticed a decline in renewals from previous year Lift ticket guests due to a smaller audience following a challenging weather season and overall industry normalization. Additionally, the number of prospect guests—those new to our database—also decreased compared to the previous year. I'm pleased to report strong price realization. One final point I want to emphasize is the trend of delayed decision-making. Throughout our selling cycle this year, we observed both renewers and new guests postponing their decisions, which affected the timing of our results. As we discussed in earlier earnings calls, this delay influenced the growth rates we saw between September and December, particularly in the latter part of the selling cycle.

Okay great. Thanks Kirsten. That's helpful. And maybe just as my follow-up, can you talk a little bit about 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 kind of hear any early commentary on uptake and how that makes you think about your expectations for ancillary in the upcoming season?

Yes. Thanks for the question. We continue to be very excited about My Epic Gear. I would say it's very early. I mean it's not a Pass type of business where all of it is committed in advance. So it's very early in the selling cycle. We are launching year one at 12 different resorts with some limitation, so that we can make sure we scale the business appropriately. So nothing really substantial to report in terms of results because it's so early in the selling cycle for that experience. I think in March, we will have a more robust update to share. We'll have a much better idea of the experience our guests had the number of members that subscribe to the service. So I think we'll have more details to share with you in March. So it's a little too early right now.

Okay. Understood. Thank you.

Thank you, Megan.

Thank you. We go next now to David Katz with Jefferies.

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 are thinking about the rest of the year? Are you expecting weather 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?

Thanks, David. I think there are a couple of things for us to consider. First, both our Q1 results and our Pass Sales results were generally in line with our expectations. Second, we have strong early season conditions in the Rockies and the West, putting us in a good position as we head into the season. Third, we are analyzing lodging bookings and their trends in our U.S. resort markets and at Whistler Blackcomb, our largest resort. At this early point in the season, we are considering all of these factors. The season has just started, and we are hopeful for a strong season but are not altering our guidance based on the current mix of indicators. A significant part of our season is still ahead of us.

Understood. And as you've always accumulated a bigger and bigger base of Pass holders. And with that data, and 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.

We have over 25 million marketable guests in our database which is a pretty incredible asset and advantage for our company to have I think the bigger the database gets, the more we understand the behavior and the dynamics and the experience of our guests which, over time, as we have in the past and as we look forward, the goal is to unlock that potential in differential ways to drive growth. Our real key critical focus which we've talked about before is going to be around ancillary, obviously, right? The fact that we have so many committed guests, the fact that we have so many guests in our database, understanding their ancillary behavior and how we drive the loyalty but also the capture of the spend. In terms of insights about their guests and their behavior of not sharing anything proprietary or significant on this call today. But it is a tremendous competitive advantage that we have to have that much data. And you will hear us talk more about how we'll leverage that in different ways going forward.

I appreciate that. Congrats on the quarter, thanks.

Thanks, David.

We'll go next now to Laurent Vasilescu at BNP Paribas.

Good afternoon, thanks very much for 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 they grow? What drove the growth? And then was there any trade down due to the macro environment?

Thank you, Laurent. I'll start with the trade down aspect. As I mentioned, most of our renewing Pass holders opted for the same pass as last year, which aligns with our expectations. While we typically experience some trade ups and trade downs, nothing stood out as unusual this time. The net migration between the two categories remained consistent with recent years, which is quite encouraging. The Epic Day Pass serves as our entry-level offering to attract new Pass holders, and we're seeing growth there as we're pulling in new guests. Our goal is to encourage these guests to upgrade, whether that means better resort access or more days. I'm pleased to note the growth in this product. Additionally, the increase in units and sales reflects strong price flow-through throughout the selling cycle, which is another positive sign for us.

Okay. Very helpful. And then on the $100 million transformation plan, $27 million of it for this year. Curious to know two things. Where should we start seeing that through the OpEx line as you achieve these milestones? And in terms of upcoming milestones, any time frame 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?

Hi Laurent, yes, the transformation plan overall, the total $27 million for this year before the one-time expenses is expected to grow to $67 million for next year. The places that you'll see that show up in the P&L really come through on labor primarily both through the general and administrative expenses and then also at labor that you'll see on the Mountain and Lodging side. And in terms of milestones, we'll continue to provide updates as we get through kind of the fiscal year and then into the coming year. We'll continue to keep you updated on the progress.

Very helpful. Thank you very much and best of luck with the start of the season.

Thanks Laurent.

Thank you. We go next now to Chris Woronka at Deutsche Bank.

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 is ski-school dining or hotels? Is there any discernible pattern? Just trying to figure out if we can expect the same level of incremental contribution from the new pass holders you get? Thanks.

Thanks, Chris. What you saw last year at the end of even after a tough season last season with challenging weather and the normalization. We had really strong spend per guest results, which is really encouraging because we are yes, attracting the guest that wants to spend and experience those ancillary businesses. As we look at, there are some differences between how and when destination guests spend versus local guest spend. But the real key for us is our capture and our ability to innovate. And what you see us doing with My Epic Gear is really trying to innovate a business that has not innovated in decades, which is how people get their gear. And it's early days for My Epic Gear, it's year one for us and launching that. But that innovation is really critical as we believe that we can unlock differential growth in ancillary through innovation, as well as the investments we're making. So that's what I would hope that you should be able to see. When we attract new guests into Epic Day Pass. Those tend to orient more towards destination guests, not locals. And so that is a guest that has a strong spend in ancillary historically.

Thank you, Kirsten. As a follow-up, if you end up having a better than expected season due to favorable weather, how confident are you about your staffing? Specifically, do you believe you have enough staff and that the costs won’t significantly exceed your current expectations?

I am very confident in our staffing plan right now. We are on track to achieve that plan, and we have been successful in increasing our return rate among our frontline teams season after season, reaching historic highs. This is important because these team members deliver the guest experience, which strengthens our execution of it and improves efficiency in training and onboarding due to a high percentage of returning staff. Therefore, I feel very confident and do not have concerns regarding staffing.

Okay, great. Thanks Kirsten.

Thanks Chris.

We'll go next now to Ben Chaiken at Mizuho.

Hi. 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 I guess, 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.

Thanks, Ben. We are fortunate to have some amazing lodging partners at our resort destination. While I’m proud of our owned and operated lodging portfolio, we are also pleased to have well-known lodging brands that attract guests and enhance their experience by offering various lodging options. I’m very satisfied with our portfolio and our partnerships in the lodging sector. Could you reiterate the first part of your question, Ben?

No, I think you captured it all. Moving on to the second point, skiing was definitely one of the leisure sectors that benefited from the pandemic for various reasons. As you think back on the pandemic, do you believe it has limited your ability for mergers and acquisitions over the past two or three years, considering the likely disconnect between elevated earnings and multiples? Do you feel more optimistic about this now, given what you've described as a COVID normalization? Thank you.

Many of the assets in this industry trade infrequently and are quite unique. There is little new supply, which is a significant advantage for us. We've been successful in the post-pandemic period, advancing our strategy to grow in the large European market by acquiring Andermatt-Sedrun and Crans-Montana. I'm pleased with our progress there. It's uncertain whether there will be more families or asset owners looking to make transitions, making it a challenging acquisition market to predict in the ski industry. We've been clear that we're focusing on three areas. First, we're still concentrating on North America, where we see specific areas in our portfolio that could be valuable acquisitions. Second, Europe is a massive market, with participation in sports significantly larger than in North America. We believe our business model is a long-term strategy with real advantages for success there over time. Lastly, Asia presents a significant opportunity. While we think we've made good progress, it's difficult to foresee if this normalization phase will open up more opportunities. Thank you, Ben.

And we'll go next now to Matthew Boss with JPMorgan.

This is John on for Matt. Just going back to the start of the ski season. When you look at November and kind of early December trends, how is visitation kind of versus ancillary spend? And then multi-year, how are you thinking about this normalization headwind on the participation rate relative to like new Pass growth?

Yes, the normalization we discussed last year highlighted some variability and surges in demand post-pandemic that started to stabilize last year. The entire North American industry experienced a decline of over 9% in skier visits, while our visits in North America decreased by about 8%. As we enter this season, we are witnessing the effects of this normalization, with Pass Sales increasing. We are noticing the delayed impact of that normalization on our Pass Sales results, which are down only 2% in units. This illustrates the effects we are seeing from normalization.

Great. Thank you.

And we'll go next now to Arpine Kocharyan at UBS.

Hi, thank you so much for taking my question. And good evening. Your past 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 than historically strong lift price increases have obviously helped you close that gap nicely 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 the lift pricing? Thank you. And I have a quick follow-up.

If I'm understanding your question correctly, there are several areas where we still see potential for growth, particularly in relation to our Lift revenue that is committed in advance. We are aiming to convert lift ticket guests into Pass holders and believe there are still underdeveloped markets and destination markets where we haven't reached our potential with Pass sales for the number of skiers available. Additionally, with over 2.3 million pass holders and more than 25 million marketable guests in our database, our challenge is finding effective ways to engage them and incorporate them into our resorts network. We are not concentrating on lowering lift ticket prices to increase volume as that is a short-term strategy. Instead, we set our lift ticket prices to reflect the overall experience while encouraging advance commitment to the Pass, which offers significant value in return for a non-refundable commitment for the entire season. Each year, we analyze price elasticity and behavioral data to establish our resort lift ticket and Pass prices. Currently, I am satisfied with the balance we have achieved between these two pricing strategies. Lastly, I want to remind everyone that while people commonly focus on Vail Mountain's lift ticket prices, we manage a diverse portfolio of 42 owned and operated resorts, each varying in type and pricing. We continually evaluate this landscape and make adjustments based on relevant data and trends.

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.

Hi, Arpine. Yes, we do not disclose what we're including in there for OpEx related to this. As we talked about, it is early the first year of rollout, we have a lot of the infrastructure already in place. So if you think about what we are doing to drive this incremental business, right, you can think about that in terms of the capital that we announced, but then on the operating expenses, there will be some incremental variable costs that will come with delivering that experience, but we haven't provided specific guidance.

Got it. Thank you very much.

I'll just build on that to reinforce the point that this is a brand-new business model that doesn't exist really in the ski industry right now. So obviously, there is an awareness and a trial and conversion plan associated like there would be with any business. But we are also quite fortunate, as Angela said, that we're already heavily in the gear business in rental and retail and have substantial infrastructure. So really connecting the existing infrastructure we have and utilizing it in a different way to deliver a completely different business model we're focused on.

Thank you very much.

Thank you. We'll take our final question today from Paul Golding at Macquarie Capital.

Thank you very much. I have a quick question regarding Australia. I wanted to clarify the comments about performance from this past season. There was a mention in the press release about decreased demand, and I would like to know the source of that information. Is it simply a comparison to the normalization following the post-COVID season, or does it relate to other structural issues in that market?

Thanks, Paul. This past winter season in Australia, we had historic challenging weather conditions and snow conditions. So that really impacted the demand at the Australian ski resorts.

Got it. So aside from demand, weather, and inflation, is there anything specific about that lower demand comment that is separate or structural to that market?

No, that's what we are referring to. We were talking about going into the season. We knew that Passes were impacted, obviously on the demand side and then the conditions on top of that were a compounding factor for the winter in Australia.

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 the 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.

Thanks, Paul. Yes, ideally, we would love to have all of our Pass holders committed in the spring. We have been quite successful over time in encouraging guests to make their decisions earlier in the selling cycle, rather than waiting until one or two weeks before their ski vacation. However, this year we noticed some delayed decision-making following a challenging season. As we prepare for next year's Pass sales, we always assess the business to understand what worked, what didn’t, and what changes we want to implement. We continuously evaluate how we can incentivize our guests to commit as early as possible. Although Passes for the next season are not on sale yet, I can't disclose our specific ideas at this time. Nonetheless, we review this every year and strive to create value for our guests to encourage early commitments. More information will follow on this.

Great. Thanks.

Thank you, Paul.

And we'll take our final question today from Brandt Montour of Barclays.

Hi, good afternoon everyone. I appreciate you fitting me in. My first question is about Whistler. Kirsten, I want to clarify your comments regarding the importance of international guests. Whistler likely has a significant number of international visitors and those traveling from distant locations. Is there a situation where, if these guests don’t book ahead, there might be a delay in bookings? If we get late into the season without seeing a recovery in those reservations, could that impact potential revenue even during a strong weather season? Or is that not how it works?

I can't say I'm expecting anything like that at the moment. The start at Whistler Blackcomb has been excellent with a significant amount of terrain open and favorable snow conditions. Last season was quite challenging there, so beginning this season on a strong note is encouraging. The hope is that both our international and domestic guests are contemplating and scheduling their ski vacations now, which could positively influence this season. At this stage, I cannot predict any specific threshold that might cause difficulties for people booking their vacations since we are still early in the season. However, the lodging data for Whistler shows that with each reporting period, the bookings appear to be improving and moving in a favorable direction. I want to be open about the early indicators we're observing. We're fortunate that the early snowfall is a significant advantage and hopefully encourages more people to plan their vacations here.

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 whether potentially shifting warmer, even permanently warmer, even if it is marginally. I'm curious if in your long-term planning, you've thought about adjusting your operating model any of those mountains to account for that in order to maximize cash flow as well as the strategic importance of those mountains?

Yes, Brandt, we continuously evaluate our operations and business model across all our resorts, particularly in the East, as that area is relatively new for us. Our Mountain operations teams are frequently learning and identifying necessary adjustments due to the variability in that region. Additionally, we recognize the significance of geographic diversity. Having a presence in the East is essential because it connects us to major metropolitan markets with a large number of skiers, which greatly influences our pass sales. Our aim is to maintain a balanced presence in the Rockies and the West, including Whistler Blackcomb in Canada, alongside our operations in the East to manage challenges, even amidst weather variability.

Great. Thanks everyone.

Thanks, Brandt.

That is all the time for questions today. Ms. Lynch. Back to you for any closing comments.

Thank you, operator. This concludes our fiscal 2025 first 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, and goodbye.

Thank you, Ms. Lynch. Again, that does conclude today Vail Resorts fiscal first quarter 2025 earnings call and Webcast. You disconnect your line at this time, and have a wonderful day. Goodbye, everyone.