Vail Resorts, Inc. Aktie

Good afternoon, and welcome to the Vail Resorts Fiscal Third Quarter 2026 Earnings Conference Call. Today's conference is being recorded. [Operator Instructions]

I will now turn the call over to Connie Wang, Vice President of Investor Relations at Vail Resorts. You may begin.

Thank you, operator. Good afternoon, everyone, and welcome to Vail Resorts Fiscal 2026 Third Quarter Earnings Conference Call. Joining me on the call today are Rob Katz, our Chief Executive Officer; and Andrea 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, June 8, 2026, 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.

I would now like to turn the call over to Rob for opening remarks.

Thanks, Connie. Good afternoon, everyone, and thank you for joining us for our third quarter earnings call. Before getting into the details around the corner, I want to take a minute to step back and discuss our progress against the focus areas I laid out last year. This call a year ago is my first opportunity to speak with all of you after stepping back into the CEO role.

At that time, I outlined the foundational advantages that differentiate our company, including our owned and operated network, advanced commitment model and deep guest relationships and our commitment to leveraging those to deepen guest engagement, loyalty and drive stronger revenue growth. Now a year later, and despite just going through a very challenging season, those priorities remain unchanged, and we are encouraged by the progress we've made in evolving our marketing approach and enhancing our lift ticket strategies.

As I think is well understood, our results this past year were significantly impacted by weather challenges across the Western United States. The historically adverse weather conditions we discussed last quarter continued through March and April, which drove meaningful pressure on visitation and revenue in the quarter, particularly at our destination resorts in the Rockies, which experienced the worst season on record for snowfall.

To give context on the magnitude of the impact of conditions on visitation this past season, industry-wide visitation in the Rockies declined approximately 24%. When you look back over 40 years, the prior worst decline in visitation outside of COVID-related closures for the Rockies was down 8% in 2012, which illustrates the unprecedented severity of the conditions and the anomaly we just experienced.

Against that backdrop, our advanced commitment strategy and geographic diversity, along with our resource efficiency transformation plan, and ability to use our integrated systems to remain agile on expenses. We're pivotal in mitigating the impact from weather this past year. At the midpoint of our updated guidance range, resort EBITDA will decline 14% from our original fiscal year 2026 guidance issued back in September 2025, which is in line with the fiscal year 2012 miss to guidance despite snowfall in the Rockies being down approximately 30% from the previous low in 2012.

And year-over-year, the midpoint of resort EBITDA guidance implies a 12% decline. Nothing to cheer about, but something to be proud of given the visitation decline in a historically high fixed cost business. Importantly, the challenging conditions did not shift our focus from delivering a high-quality guest experience as we achieved record guest experience scores including year-over-year increases at every resort in the Rockies where we were most impacted by weather.

For the third season in a row, we had full staffing in our resorts, a strong return rate for our seasonal employees, high employee engagement scores, efficient utilization of our labor hours due to workforce planning and much better selectivity in our recruiting efforts as our need to hire new people continues to decline. We also saw a marked decline in employee injuries per labor hour, typically another good indicator of improving culture. Overall, we are very pleased with our operational execution within the areas we could control.

We are also encouraged by the positive proof points we're seeing across the key strategies we outlined heading into the season. evolving our marketing approach, focusing on driving lift ticket visitation and optimizing our past product portfolio, and I'd like to provide an update on each of these.

First, evolving our marketing approach. This involves increasing our focus on targeted paid media investments and adjusting the channel strategies to better reach and engage with guests. Heading into the season, we saw positive results from this shift in approach as we were able to improve the past sales trend by 5 percentage points in the post Labor Day selling period relative to the earlier selling period, which provided greater stability going into this past season. Additionally, with increased marketing investment and a clear focus on our resorts we saw increases in unaided brand awareness from destination guests for our top resorts.

Second, we made changes heading into the season to focus on driving lift ticket visitation, which delivered early positive results. We expanded our pass holder benefit program with Epic friend tickets at a 50% discount and saw visitation from benefit tickets increased 10% despite a decline in overall lift ticket visitation of 10%. In addition, we introduced super advanced lift tickets, which offered a 30% discount for purchases made a month in advance, which drove a 65% increase in tickets sold more than 28 days out, and we did not see evidence of material cannibalization of other advanced ticket products.

Combined with our shift in marketing approach, these strategies drove meaningful outperformance relative to the U.S. industry in lift ticket visitation this past season. based on preliminary data, as we saw our U.S. lift tickets declined 12%, while the rest of the industry lift ticket visitation was down approximately 20%. And in the Rockies, our outperformance was even stronger. There's no doubt a portion of our outperformance was due to the destination nature of many of our resorts, which may do better than local resorts in a tough weather year. But even in the Northeast, we saw excellent conditions, we saw an increase in our lift ticket visits of 8% and versus the rest of the industry down in an estimated 8% in the Northeast.

Finally, moving on to next season's pass sales. Spring pass sales were down 10% and sales dollars, including tax which reflects softer demand following one of the worst ski season in history. While our overall pass sales decelerated in May from our April deadline, part of that was the timing of military sales, a portion of which got pulled forward into April due to us offering pass benefit tickets to military pass holders for the first time, in part was due to the timing of auto renew charges. Excluding auto renew and military, unit declines are very stable between the 2 selling periods.

While we're clearly not satisfied with any decline in pass sales, the outcome is not necessarily surprising given the severity of the conditions we just experienced the past season and the massive growth we saw in pass sales in the previous 5 years, especially in our frequency products, which saw the biggest decline this past spring. Encouragingly, third-party data suggest that our spring pass performance meaningfully outpaced the broader industry, which we would attribute to all the new strategies we put in place for this year.

Angela will cover additional details on the Spring past results, but we do believe based on our own results and the broader market data that a portion of the decline is likely due to delayed purchase decisions rather than reduced overall intent to ski next season. creating an opportunity for improved past performance in the fall selling season and/or ultimately through in-season lift ticket purchases next year.

Looking back over the past several decades, U.S. ski market data indicates that visitation typically fully recovers following the season with poor conditions if the subsequent season has normal conditions, and we believe we are well positioned to capture that visitation recovery with the past analytic at product and marketing strategies we have developed. That said, given how unprecedented this past season was it's hard to know with certainty how any of this will play out.

Looking ahead, we see a unique opportunity to drive a step change improvement in the overall guest experience across our resorts, through continued investments in lifts, snowmaking, terrain and talent while leveraging the scale and strength of our integrated network to implement new technologies and processes to enhance key elements of the guest experience. We are uniquely positioned to differentiate the guest experience as we have intentionally built a fully integrated, owned and operated network of world-class destination and regional resorts connected through our path and marketing ecosystem and supported by unified data and technology platform.

We have key initiatives underway or gear ski school and dining businesses as well as every facet of guest engagement and communication, and we will share updates on these efforts in the upcoming months and throughout the year. Together, these initiatives will play an important role in driving future visitation growth and long-term value creation.

With that, I'll turn it over to Angela to walk through the quarter in more detail.

Thanks, Rob. I'll briefly cover the results from the quarter, our updated fiscal 2026 guidance and spring pass sell results. Starting with the third quarter results. Weather conditions remained extremely unfavorable in the quarter, which put continued pressure on visitation and revenue across the business. Resort revenue for the quarter declined 7% compared to the prior year. primarily driven by unfavorable weather conditions that impacted visitation and revenue for both local and destination guests, particularly at our resorts in the Rockies and in Tahoe.

Lift revenue declined 5% despite visitation being down 15%, primarily as a result of North American pass sales increasing 3% heading into the season. Resort EBITDA for the quarter was down 9% and as our advanced commitment model, cost discipline and the geographic diversity of our portfolio, partially mitigated the larger conditions headwinds.

To expand on the magnitude of the conditions impact, even our most committed past visitation in North America declined 17% over the winter, while lift ticket visitation declined 10%. The impact was particularly severe in the Rockies, where snowfall for the winter finished down 55% below the 30-year average.

Looking ahead to the fourth quarter, we expect stable demand across our North American lodging and Mountain Resort businesses during the summer season, and we are encouraged by early momentum in Australia, where Epic Australia Pass units are up approximately 26% and dollars are up approximately 31%.

Turning to full year guidance. We are updating our full year outlook with the resort EBITDA midpoint now at the bottom of the range we provided in March, consistent with our April update. We now expect net income attributable to Vail Resorts in the range of $128 million to $162 million and resort reported EBITDA in the range of $735 million to $755 million. This change reflects the continuation of historically challenging conditions through March and April, which further pressure visitation late in the season.

With the reduction in earnings, we now expect our cash taxes to be in the range of $75 million to $85 million. We remain on track to exceed our initial 2-year resource efficiency transformation plan of $100 million as we expect to achieve $106 million of annualized efficiencies by the end of this year. We also remain on track to deliver an additional $30 million of savings in fiscal 2028 as outlined in our March investor conference presentation. From fiscal 2026, this translates to an incremental $45 million of efficiencies year-over-year before $13 million of onetime costs. Our resource efficiency initiatives are providing a modest offset in a weather-impacted year and reinforce our commitment to driving structural efficiency across the business.

Turning to our balance sheet and capital allocation. Despite the difficult operating environment this year, we remain confident in the strength of our cash flow generation and the stability of our business model. Our balance sheet remains strong as we ended the quarter with liquidity of approximately $1.1 billion and net leverage of 3.5x trailing 12 months EBITDA. We are also reaffirming our capital plans of approximately $215 million to $220 million in core capital spending and $234 million to $239 million of total capital investments as we continue to invest in technology across our gear, ski school and dining businesses to enhance the guest experience and ultimately to drive long-term growth in our business.

Our capital allocation priorities remain unchanged, starting with reinvestment of the business and maintaining balance sheet flexibility to pursue potential acquisition opportunities, followed by returning capital to shareholders. We maintained the quarterly dividend at $2.22 per share and we'll remain opportunistic on buybacks as evidenced by the repurchase of approximately $45 million of shares year-to-date.

On pass sales, as Rob noted earlier, pass units and sales dollars through the May deadline were down 10% and 5%, respectively, including the effect of tax. Half days sold were down approximately 8% and reflecting a higher mix of unlimited products sold during the period. Pass performance to date has been driven by softer demand following the challenging conditions this season, evident in the fact that the weakness has been most pronounced in our more weather-impacted destination markets, including Colorado, Utah and Lake Tahoe as well as a long destination gap to typically travel to the Rockies, which all saw low double-digit unit decline.

In contrast, we saw much stronger performance in our Eastern U.S. markets and at Whistler Blackcomb, where cost units were down low single digits. We are seeing positive performance in our new initiatives as the new young adult product introduced this year saw results pacing well ahead of other age groups. And as I mentioned, our core high-value unlimited pass products are outperforming frequency products. all of which reinforces the strength of our value proposition.

We are also seeing better relative performance from growing pass holders and more pressure in pass sales within our new segment. as reduced visitation in the past season has resulted in a smaller conversion audience, which is typically a key driver of unit growth during this period. While near-term trends likely reflect delayed decision-making following a challenging season, we remain confident in the long-term growth opportunity given our strong resort network and marketing strategies.

In closing, while the season's results reflect an exceptionally challenging operating met, we are confident in the strength of our business model and the progress we're making on our key strategies. We remain focused on delivering a differentiated guest experience. strengthening our demand model and executing the opportunities within our control. Over the long term, we believe these efforts position us well to drive sustainable growth and create value for our shareholders.

With that, I'll turn the call back over to the operator for Q&A.

[Operator Instructions] And we'll take our first question from David Katz with Jefferies.

I wanted to ask, Angela, about the comment about the young adult product pacing well ahead of other groups. Could you put some context around how well that's doing, put some maybe relative size on that group's ability to make a difference? And just some more meat on the bones around that particular comment, please.

Sure. I'll comment on it, David. I think it's -- we're not going to put more specificity around it yet. We'll provide more color as we get to the end of the full selling period, but it's definitely meaningfully outperforming all the other age groups and has been from the beginning. The other comment I'll share is that what we're seeing is a good trade-up from a lot of other products, of course, into the core Epic product, which is what we were trying to do. So we see that as a real positive as well. In the end, I don't think it's not something that is going to drive our overall results for the year. It's a mitigator, I think, to some of the other declines that we're seeing.

Right. And frankly, if we were to break up the different cohorts within the pass group, right, like could you maybe give us just a bit more detail across the board on how some of those are doing and what your expectation is for those some up, some down?

Yes. I think what we're seeing is pretty -- I think as we highlighted, as Angela mentioned, I think one of the biggest things that we're noting is in Colorado, in Tahoe, in Utah and in destination markets, particularly destination guests who visited kind of the Rockies resorts or typically visit the Rockies Resorts. Those are where we're seeing the biggest decline. And we're seeing much, much more modest declines in the Northeast and in Whistler Blackcomb. And so that really tells us, right, that this is very much a conditions impact from last year as opposed to some broader structural impact.

Not surprised that following the season that we just saw that the new segment of our pass sales is down a lot more than renewal. But obviously, we're kind of heartened that the renewal piece is as strong as it is. And I think the other piece that -- yes, that we would mention is just that the unlimited products, which we have been focused on quite a bit since last Labor Day, are really outperforming our frequency products. and we're trying to move people from frequency up. I also would say, yes, obviously, if we're going to see a buyer is the newer buyer to the overall program a bit more sensitive and unlikely to buy as early given the conditions that we just went through.

We'll take our next question from Shaun Kelley with Bank of America. .

Rob, I guess, big picture, we're getting a lot of questions that are a little too early on sort of what the impact is of what we learned today on next year's planning and sort of to not box in on guidance, maybe the easiest way to ask it is based on what you know right now, does this -- these results and what you're seeing on the pass side, in particular, does it really change much in terms of how you're planning for the business, staffing for next year and how you're thinking about the broader operating expense and planning outlook at this stage?

No, it's not. I mean, I think when you look back historically, what you see is that -- and this is over a lot of years, and both -- when you look at years where the Rockies did poorly, I think another great example is when 2 years during the drought that we had in Tahoe. And then you look at the year that had normal conditions, yes, we see every indication that visitation comes fully back and in some cases, the passes even the year before the bad year like it did in Tahoe, some of which I think is pent-up demand that gets created during a season like we just went through.

That said, during those years, right, there was no past programs like we had or have today and certainly now past programs to the extent that we've grown them over the last 5 years. So it's not surprising to us that you're going to see some, especially in the spring delayed decision-making. This would be a perfect example of when you'd expect that. And so at the moment, no, we're seeing a lot of this as timing between spring and fall or even between fall and the season for lift tickets. That's why it's critical in our minds that we not only have great programs on the season pass side but also for lift tickets. So we are planning for, yes, a normal season next year with normal conditions.

Now that said, as we mentioned and as I mentioned, as Angela mentioned, yes, we are dealing with an unprecedented anomaly. So there's no way that we can be exactly sure what it's going to look like. But right now, there's no change in our planning for next season.

Great. And then just as my follow-up, I couldn't help but notice both, I think, in the release and also in your prepared remarks, you talked about I think it was a step function improvement on lifts, terrain, you mentioned snowmaking, but I think all of it built around the guest experience. And just wondering if you could either elaborate a little bit more? Or is there kind of right time to hear a little bit more about initiatives there that we should look forward to listening into?

Sure. I think what I'd say is it's kind of continued investments in the way we have in the past in things like lift and snowmaking terrain, upgrades to restaurants, things like that. I think where we really see the step change is taking the network of resorts that we have and using technology and new processes to obviously, to then elevate like through system-wide or network-wide investments, the experience that guests have. And so that could be like My Epic Gear in terms of completely changing how guests experience gear. It could be around Ski School, like the digitization of Ski School, which is something that we announced and that we have other things that we're working on that we'll be announcing kind of in the months ahead.

Same thing with food, other things we're looking at on food new things that we're looking at on how we connect with guests, address guest feedback, how critical and impactful the app is to everybody. And in our minds, we can create a bit of an ecosystem around our resorts that we think meets what guests of this generation, right, expect in this time, expect, which is technology that really makes a new process that makes everything easier and better and eliminates all the kind of a hurdle that some people can have when they go skiing, but at the same time, doesn't get in the way of their experience on snow. And we think we're just uniquely positioned to do that as well as the marketing piece, right?

Obviously, we have the ability to market both pass and lift tickets to these guests with a kind of unified marketing approach but at the same time, and I think we saw some of the benefits of this, still elevating each Resorts brand, elevating the experience and unique connection that each resort has to our guests.

We'll take our next question from Molly Baum with Morgan Stanley.

I guess one follow-up to -- you talked about the deferral of past purchasing. Do you expect heightened trade down to maybe some of the lower frequency pass products if demand does materialize later in the selling season? And I guess, to the extent that you can comment, I know not all of these products existed back then, what have you seen historically after a weaker weather year when it comes to the different pass products?

Yes. I think it's a little challenging because obviously, when the last time, certainly when the Rockies went through this, we actually saw a pass growth in the following year, but that was at a much earlier stage in the overall pass maturity cycle, and we did not have frequency products like we have today. At this point, I would say that it's hard to say. I think we're not seeing trade down in in our numbers and obviously the strongest performers right now are the unlimited products and higher-value Epic products versus regional products. So at the moment, we're not seeing any of those trends. But we'll see. I think we're in a unique moment.

In the end, we don't think this is about people saying that they're not going to ski next year. We think it's about people not willing to make that commitment today. And yes, obviously, unprecedented season that we just went through. It's so hard to say how it will play out when we get through the fall.

Got it. That's helpful. And then one other one. You talked a lot about the integration app in fiscal '28 bringing My Epic Gear into the app. But as we kind of think about that transition, particularly on the Epic Gear launch, does that transition period create any notable revenue gap in 2027 as we're going to the subscription revenues or starting to call out there in terms of the volatility we might see?

I mean I think when I say in FY '27 for My Epic Gear is that it's definitely a transition year where we're moving from kind of what we were offering before to taking kind of the ability to select your own gear and rolling that out for all of our demo skis that we're going to sell next year. So obviously, what I'd say is it's not from a financial perspective, no, we don't see any any issue there.

From an experience perspective, it's kind of going from a very small high-touch experience but very few number of guests to really rolling it out to the highest end guests but across a much broader base of tears. And then in FY '28, you would see the full experience with high touch points and everything else being rolled out to yes, to everyone who rent and then we'll have gradations, obviously, different parts of the experience at that point, but the ability to select your gear, the ability to have an app and get the gear wherever you want really reducing all these friction points.

The ability once you've gone through and try out a boot or use the ski and then you like it, we can actually have that already for you without you coming in again, trying anything on or even if we're delivering it to your unit or condo, you don't have to -- we'll just drop it off and you can pick it up. It's not like we have to actually have people go through the process of the fitting. So all of that is really FY '28 piece, but FY '27, it will be the first step towards that.

We'll take our next question from Arpine Kocharyan with UBS.

This is somewhat related to an earlier question. But assuming the current trend of down mid-single digit in dollar sales for the past product continues, that means the lift part of the business has to come in at a double-digit range for overall to be flattish, which is not, I guess, in conceivable or a tough year but probably hard to do. At the same time, you have given some nuggets of positive indicators in the release kind of suggesting that historically visitors seem to come back after a tough year. even after they kind of delayed purchase decisions initially. I guess, could you talk to the potential or perhaps have for the lift business to grow at a double-digit range based on historical patterns, but also programs you might have in plan for getting lift visitors? And then I have a quick follow-up.

Yes. I think if you look back -- I mean, when I say is maybe the reverse of this, right? So when we were growing season pass revenue 20-plus percent per year in the double digits for a long time, we absolutely saw a significant decline to lift ticket visitation as people move from passes -- from lift tickets to passes. And so we do think we have every opportunity to see strong growth in lift ticket visitation if the pass business comes down. So we do think there's a fluid movement between the 2 products. It doesn't mean that it's perfect.

It doesn't mean I can't exactly say because obviously, we're in a unique environment, exactly how that will play out. But we don't think there's any kind of artificial cap to how we can drive lift ticket growth, it really comes down to what the demand is. And I think for us, the key thing was having a product available for people at more accessible price points. And so there, I think, certainly, our Epic Friend tickets, the super advanced lift tickets sold. That has performed very well and obviously, only in its first year, not a ton of awareness. So we see that as a huge opportunity for next year.

We were very selective last year in picking certain resorts in certain time periods to be more aggressive on specific lift ticket products. And I think you'll continue to see us do the same thing ahead of going into next year. Now that said, it will always be that the best deal is going to come from a pass. And so as we get certainly towards the end of the pass selling season, we will make sure that we're reminding everybody of that fact before we go into next year. And obviously, we do have our turn in your ticket program, where folks who might have used an epic preticket this year or bought any lift to get can obviously use that to buy a path as they go into next year.

Okay. That's helpful. And then could we go over the levers you have to protect EBITDA, right, given mid-single-digit range decline so far, at least in past products, it seems like you see that improving a little bit later in the season. But sort of top line dynamics but also cost side of things, what kind of underlying cost inflation we're looking at and how you look at tape of that EBITDA recovery after an anomaly year with an underlying -- understanding that, ultimately, a lot also depends on strength of the lift business once we get there, I guess?

Yes. Well, first of all, we'll go into next -- into FY '27 with an opportunity to really see, right, the kind of run rate improvement in our resource efficiency transformation efforts because obviously, we're delivering on all of that for FY '26, a portion of which is going to really roll into FY '27 and we have new initiatives that we'll be talking more about as we go forward a portion. Most of that will be FY '28, but a portion of that will also hit FY '27.

And then obviously, yes, I think we have given a unified approach that we take towards how we schedule labor and all of our workforce planning. We can be nimble with labor to the extent that we see that visitation decline but we're going into next season looking for full staffing and really expecting -- assuming that the condition is good, yes, that we're going to get that full visitation. So we're not going to pull back on the guest experience. But I think as we saw this year, yes, if that's what happens, we certainly can make adjustments. But that's not what we're going to be planning for.

We'll take our next question from Xian Siew with BNP Paribas.

Maybe kind of going continuing on to the past selling season, as you kind of go through the rest of the year or summer, like how do you think -- are you changing any of the maybe strategies or like marketing to kind of drive a little bit of an acceleration? Or is it kind of using the same maybe like marketing approach as you have in the last maybe couple of months?

Yes. I would say that we're constantly looking at whatever our results are for the last deadline, especially and saying, okay, what did we learn? What can we do differently? Where can we lean in more one place or another? And we're taking all the learnings that we have in the spring, and we're to put them to work as we go through Labor Day and through the rest of the season. And I do think we have opportunities some of the new approaches that we launched post Labor Day last year, we have an opportunity, obviously, to put those in along with the learnings that we have through spring into this year's Labor Day.

And yes, in the midway, we tend not to make big product changes because we feel like, yes, it's critical for everyone to be making decisions on the product set that we have and important that the folks who buy earlier always get the best deal. We're not going to change from that. But in terms of how we go to market in terms of the dollars that we invest on media, Yes, that is always going to be about the numbers that we're seeing, and we did see good results from the incremental dollars that we put to work last fall. We saw good returns from the incremental dollars that we put together that we put to work this spring. And so that's definitely going to be front of mind as we go into the fall.

Okay. Got it. And then maybe going -- continuing on to the question around the kind of lift or window ticket demand into next year. So as you mentioned, following a kind of challenging season, you might expect conditions to normalize the visitation to recover. And I guess if past units are down a bit and maybe then that means that lift window tickets are higher, I guess, in a way that also creates a positive mix effect, where like maybe the price per window ticket visit maybe is higher. Is that something we should be thinking about in terms of like, I guess, the incrementality of window ticket visit into next year in terms of EBITDA?

Yes. Yes, absolutely. And I would say it's important to remember that, yes, we're down 10% units, 8% in days sold after this ridiculously horrible winter, we're still so far ahead of where we've been in any previous bad season in terms of advanced commitment in total. So if you think about how much advanced commitment we have at this point in front of next year versus any year we've had historically, like where we've had a bad season like this. No, no, no, we're well ahead. So actually, in some respects, we're in a much stronger position as we're thinking about next season, even though we had a bad year last year.

And yes, there is the opportunity. If somebody is going to not buy a path, and it's going to wait to buy a lift ticket even at the lower prices that we're putting out for lift tickets, they're going to be paying more. And so that is absolutely our lift ticket, effective ticket price will go up -- sorry, our overall effective our overall effective ticket price will go up as they move from past lift tickets. Now that said, that's not what we want. We still want people to be in the advanced commitment bucket, but yes, we have to have every lever available to us.

We'll take our next question from Jay Stantial with Stifel. .

Maybe starting off on pass sales. If we go back to this time last year, Rob, I think you talked to some resilience in purchasing behavior through Liberation Day and some of the choppiness we're seeing back then in consumer sentiment. Obviously, weather is going to be the bigger impact so far this year. But just curious if you think that macro uncertainty may be factoring in as well. If you look at trends so far the selling season? And then historically, can you just remind us what do you typically see when gas and flight costs are higher what sort of impact do you see to visitation behavior across the local and destination cohorts during the season?

Yes, sure. I mean, I'd say right now, tough to break out kind of any kind of macro impact from the weather impact and by the conditions impact from last year. And I think based on some of the data we were talking about in terms of how Whistler is doing or the East versus other markets, definitely seems like this is much more of a condition-driven decline.

I think when you look back historically, obviously, the further you travel the harder. So a lot of times, you do see people if they have an issue with the plane cost, they may drive. So we may see more and stronger global visitation. At the same time, a lot of people won't go and fly internationally to the extent that the cost of those flights are even higher. And obviously, we're seeing some cutback on some of the European flights and things like that. Asia. So ultimately, that could help the overall destination -- the U.S. destination or margin destination business here.

So I think our business provides a natural hedge of sorts, I think, in tougher economic times because of how core kind of skiing is and the kind of recreation component of our business. It's not all just vacation spend. But in the end, right now, I think it's hard to say what the overall economic environment will be next year. And so we're focused much more on the kind of unique situation we're dealing with rather than the overall economic environment right now.

That's great. And then you actually -- I think you touched on this a little bit, but it's a correlated question that we get from investors all the time is sort of how much impact the transatlantic or transpacific outbound steer travel is having on visitation, just given that value proposition and that seems to be a lot of word-of-mouth marketing benefit over the last or 3 years.

Rob, I'm curious, just when you look at the data, how material do you think this trend truly is versus just more of a narrative thing? And if it is material, is there obviously, flight costs and things of that are going to help you stay where they are. But from more in terms of the levers that you can pull, is there any opportunity with it's in the marketing strategy or otherwise to sort of go after this laps get space that's sort of opted for international?

Yes. We see that as a material driver, right? So obviously, we have data because our path is to provide right, access, both in Europe and in Asia, and we're not seeing a material increase in the usage of that. I think in unique locations, yes, it can be meaningful to a resort in Europe or Asia's U.S. business, they can see a real increase. But in terms of the overall visitation that's happening in the kind of North American ski industry, no, I don't think it's material either way. I think it's -- yes, it's a kind of nice kind of bucket list type thing that people add on every now and then, but it's not really replacing the normal visitation.

I would say the other side of it, which I don't think is changing anytime soon, but really, what we've seen over the last 5 to 7 years is a decline in inbound visitation into the U.S. And so between lots of different factors, part of it, the U.S. dollar, others just the overall inbound tourism, which is not just about skiing, but about everybody in tourism. I mean, I think that is the much bigger trend that international visitation to the U.S. for a lot of travel, but certainly for the ski industry has gone down a lot. And so if there's any normalizing trend ultimately over time, that is our hope. And I know that in addition to us, there's lots of other people in the U.S. travel business. trying to promote that.

We'll take our next question from Ben Chaiken with Mizuho.

Maybe one on cost. The midpoint of the new guide implies EBITDA down 12% with a cost base of just over $2 billion. As we think about next season, other than installation, how should we think about the flow-through of any incremental revenues? And then separately, are there any moving parts you would flag? I guess, for example, were there any onetime areas you pulled back this year, we should consider the need to come back as revenue presumably returns?

Yes. Thanks for the question. I think the biggest piece to think about is there's obviously a favorable component that we had this year of where we yes, we were able to manage to the demand levels and the revenue. That, of course, would come back with revenue, as you would expect, outside of just kind of inflation on our base operating cost. And then as Rob mentioned, we have the year-over-year benefit going the other way on our resource efficiency transformation. Expect that to be about $106 million relative to about, right, we were at the 82 cumulative point this year. So you'll see a year-over-year benefit from that.

Outside of that, it's really other things that just normally track with performance, things like our performance management compensation that you should think about will return, obviously, in a normal environment next year.

I guess maybe following up on that. I guess you were referring to variable cost components associated with visitation? Say that again?

Yes, the variable costs that go with the revenue, right, things like credit card fees and taxes and all of those types of things that go with the revenue that we would expect to come back with visitation returning.

Okay. And then maybe just one from a modeling perspective. I think this year saw what presumably is elevated effective ticket price. I assume that's basically just from season pass dollars trucks to pose against lower visitation from weather. I guess, am I thinking about this correctly? And is there any way you could help us quantify your ag next season and then any other offsets you would consider?

Yes, you're correct. The effective ticket price this year, when we have pass visitation in North America down 17%, but obviously has the revenue locked in, that is having a a very large impact on effective ticket price overall. So what I would do is I would separate out the past revenue piece from the lift ticket piece to really get more of a comparative of what you would expect in terms of the pricing change year-over-year versus just right, the visitation impact from this current season.

We'll take our next question from Anthony Bonadio with Wells Fargo.

I just wanted to ask about past trends versus peers. I think you mentioned pass sales are outperforming others in the industry. So can you just dig into that a little bit? Just anything to frame the magnitude there and the different drivers of that delta? .

Yes, it's hard for us to -- obviously, there's not a perfect information on that since we're the only one that's publicly reporting, but we're basing that on just some third-party entities that try and track transaction volume and other things in the marketplace. Yes, so it's hard to speak with a lot of precision on any of it. But to the extent yes, that we are outperforming. We do think it's from all the things that we did going into this pass selling season, which is we're spending more on media. We are -- we have the young adult pass, which we think was really priced well. We also think the message of that young adult pass was a really strong message for us as we went through this season.

And we also just, yes, lead into completely new marketing tactics and approaches than we had last spring. And because a lot of the new things that we started doing really were last fall. And so we feel like that helped as well. And we had a really strong year in terms of guest experience in our resorts, even with, I think, the down snowfall and conditions that were tough, I think. I think there was a sense broadly that on the things we could control this season, I think we did really well.

I certainly feel that way. And I think a lot of our guests feel that way. And I think that gives confidence that as we go into next season, yes, that we will, of course, put the -- put everything we have into making it the absolute best is impossible.

Got it. That's helpful. And then just maybe on M&A. Can you talk about what you're seeing out there from an M&A perspective, maybe how the abnormally poor season might be influencing decision-making from operators that might be looking to sell assets?

Yes. I'm not going to comment on M&A and never do, but in terms of spicy. But I would say, historically, I have not seen situations where down either economic years or down snow years, it trigger people to immediately sell. I think everybody feels like no one wants to be selling on it in a down year. I think sometimes it reminds people though that you can have these tough years. And so sometimes the year after, they're even 2 years after, right, there's a different mindset of ownership.

Obviously, a lot of resorts have transacted in North America over the last couple of decades. So a lot of the folks that are still owning resorts, I think, are doing so because this is a long-term family commitment that they have. So whether a year like this is going to impact them is kind of unclear.

We'll take our next question from Patrick Scholes with Truist Securities.

Can you just talk a little bit more about this, I believe, a new inclusion of a KPI with called days sold and certainly, it comes with footnote on it, about some metrics in there. Talk a little bit about why including that now, I assume it has to do with the prevalence of frequency products, but a little bit more color on that. And anything else we should be thinking about in watching that KPI specifically?

Yes. I think it is something that we've been looking at internally for a while, and it obviously tries to say we've been reporting on units, but if you sell an Epic Pass or a Global Pass, that's 1 unit, if you sell an Epic 1 day, that's also 1 unit. That's the way we've been tracking it. But obviously, those are 2 completely different products. And so internally, we've been tracking days sold because it tells us how many days of skiing we have. Now that said, like we don't -- we, of course, don't know when we sell a product, how many days they're going to use it.

So just for simplicity internally, and now we're sharing it externally, it highlights now that if we are mixing up in the kind of frequency of that unit, so to speak, yes, then that will show up in the days sold versus just units. So I think we started talking about that publicly at the investor conference. And I think we said -- talked about that we might continue to report on that, and we're going to. And in the end, it is what we track most closely in terms of thinking about overall revenue and how many visits we're going to get out.

Now obviously, it's important to us. The units are important, too, because we like to see all the guests. Obviously, that's kind of a transaction piece. So it's still important, but not quite as important as the days sold, which tracks, yes, just a little closer to how much volume people are buying.

We'll take our next question from Brandt Montour with Barclays.

So Rob, you mentioned the turn-in ticket program, the Epic Buddy ticket program and I apologize if I missed this, but how are those programs being utilized so far? Is it in line with your underwriting, better or worse? And just given the nature of those products and who owns those options, is there an obvious characteristic as to when you think they would turn them in to buy the pass throughout the cycle here?

Yes. I guess what I'd say is yes, there -- it's kind of early because a lot of that is going to -- we think probably happens later. But right now, yes, we're seeing improvements in both the turn in our ticket categories across the board. But Obviously, ultimately, we need to see how it goes out through the remainder of the season because the selling season for passes. So it's a little early to say. And both of those programs performed really well from our standpoint on a relative basis. But obviously, we didn't see the full benefit of them because, of course, overall visitation was lower, and we had serious headwinds with conditions.

But on a relative basis to other lift ticket products, they did well. But from a kind of turn in your ticket perspective in terms of the impact they can have on the past business, we would really need to see like a normal full season. see how many people actually buy it in that context and then how many people convert into passes following that. So this will be a tough year to make a full assessment of it. But the flip side to it, I would say we felt really good about introducing some of these new aggressive products last year in what turned out to be a tough winter because obviously it allowed us to have products that we are promoting that made it easier for people to buy.

And I'd say that's the same thing with pass, obviously, it is a tougher past selling season right now. And so the fact that we have these other avenues for people to get in, we see is all positive.

Okay. Fair enough. Second question would be on the competitive environment. You guys seem like you're gaining share in terms of pass sales versus your competitors and specifically, in that younger cohort where you guys adjusted the price lower. Do you have any concern that competing systems who are doing worse than you right now may get more aggressive in their pricing or promotions, especially in that younger cohort try and win some share back? And then how that could sort of impede your ability to try and improve pass sales throughout the next 3 defaults?

Yes. What I said -- of course, I have no idea, right? It's hard to know. And I think we take our purchase part of it -- there's a little bit of competitive dynamic that we're looking at there. But a part of it, I think, as we shared in the investor conference was we looked at how much we increased pass pricing over the last 4 years in both adult and young adult. And what we realized was in the adult category, yes, actually, we did quite well on that. But in the young adult category, we didn't. And so in a way, this was almost like a rollback of some of the increases that we took before.

Look, I think one of the benefits we have, and again, I have no idea how other people are going to make pricing decisions and and that's obviously on them. But one of the benefits we have here is that because we own, right, all of our resorts and how only limited partners, when we increase or decrease price, we're not constrained by the relationship that we have with the partners or how we're paying them, we're not paying them. how we're spending on media or not. I mean all of those things are easier. We also get the benefit of ancillary, right, in all of our resorts, not just in the owned resorts, or a limited number of resorts in the past.

So to the extent that we're being more aggressive with young adults, no matter where they ski largely in our North American network, we're getting the benefit of that lift full 100% of lift revenue was, we're also getting the benefit of everything they spend on the mountain. So I can see how that makes it a little bit trickier if you don't have that set up. And I think the same is true, right, for all of these other things that we're doing as we move back and forth between past and lifts, we're doing this in a very holistic manner. It can be harder to do when it's a little bit more vulcanized. So for us, in the end, we're not really in a reactive mode at all. We're really in how do we optimize. And I think we set that when I first came in, you were looking to optimize our past portfolio and make decisions that were pretty independent of what others are doing.

Thank you. This concludes the Q&A portion of today's call. I would like to now turn the call back over to Rob Katz for closing remarks.

Thank you. While this year presented weather challenges and tougher financial results, it also sharpened our focus and reinforce the work we're doing to address the end-to-end guest experience. from marketing to products to the entire on-mountain experience. On that point, I want to thank our frontline teams for their unwavering dedication throughout this exceptionally challenging season.

As we look ahead, we built an integrated network and platform that positions us to deliver a consistent, differentiated guest experience, strengthen loyalty and drive long-term growth. This network allows us to deliver a more consistent a more consistent experience at every touch point at scale, which remains the heart of everything we do, and I'm confident will drive us to the next phase of our growth. Thank you all for your time today.

Thank you. This concludes today's Vail Resorts Fiscal Third Quarter 2026 Earnings Conference Call and Webcast. You may disconnect your lines at this time, and have a wonderful day.

Good afternoon, and welcome to the Vail Resorts Fiscal Second Quarter 2026 Earnings Conference Call. Today's conference is being recorded. [Operator Instructions] I will now turn the call over to Connie Wang, Vice President of Investor Relations at Vail Resorts. You may begin.

Thank you, operator. Good afternoon, everyone, and welcome to Vail Resorts Fiscal 2026 Second Quarter Earnings Conference Call. Joining me on the call today are Rob Katz, our Chief Executive Officer; and 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, March 9, 2026, 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. I would now like to turn the call over to Rob for opening remarks.

Thanks, Connie. Good afternoon, everyone, and thank you for joining us for our second quarter earnings call. This quarter and our full year outlook reflect the challenges we faced this season, including the most difficult weather environment in the Rockies we have ever seen, with snowfall and snowpack at or near all-time historic lows, even worse than fiscal year 2012, which had previously been our season with the worst conditions in the Rockies. Our second quarter was significantly impacted by these unprecedented weather challenges in the Rockies, which weighed on visitation and overall performance. In addition to Rocky snowfall through February being at historic lows, it's also been the warmest winter to date on record for Colorado. For example, February was 9 degrees warmer than average in the Rockies, which has dramatically impacted our ability to open terrain. This season saw the latest opening of the back Bowls at Vail Mountain and Imperial Lift at Breckenridge and only 70% to 80% of acres opened through the end of February at our resorts in Colorado and Utah. The Rockies are the largest driver of resort EBITDA for the company, and as such, the poor weather had an outsized negative impact on our results this year.

While these conditions weighed on our results, they also underscore the importance of our advanced commitment strategies. While pass units may have declined a couple of points over the past few years, it's important to highlight that we've grown our pass units by 55% over the past 5 years with pass holders now making up approximately 75% of our annual visitation, providing meaningful stability, especially in a year like this. Over the past decade, we've also meaningfully expanded the geographic diversity of our portfolio to help mitigate regional weather impacts. While that benefit is less evident this year given the severity of conditions in the Rockies, diversification has provided more support than it did historically, and it will continue to play an important role over time. We're proud of the resilience of our business model that is now more durable, more diversified and well positioned for our next phase of growth. We continue to advance strategic initiatives to optimize visitation, supported by enhanced marketing initiatives and new products. We saw the first signs of that last fall as we materially changed the trajectory of pass sales post Labor Day, which was critical heading into this season. We also launched pass sales for the 2026, 2027 season last week with new products and targeted pricing adjustments.

Most notably, we introduced new pricing for skiers and riders ages 13 to 30 at 20% less than standard pricing, providing a more accessible pathway for the next generation of skiers who are the future of our sport. This incentivizes young adults, those ages 18 to 30, who tend to be more price sensitive and likely were more impacted by the price increases we took over the past 4 years. We supported this new product with our enhanced marketing strategy, including the launch of a new campaign this week called Epic Passion, which leans into the emotional connection skiers and riders, particularly Gen Z, have with the sport. This campaign exemplifies our evolved marketing approach of supporting new products through integrated investment and messaging across channels, including a social-first and influencer-driven approach to content to reach younger guests and drive awareness and conversion.

For our broader array of passes, we announced 3% to 4% price increases for Epic and Epic Local passes before taxes. Combined with our new 20% discount for young adults, price changes we made to Epic Day passes and other unlimited regional products, this results in an approximately 3% to 4% blended price increase before the impact of any mix changes. Additionally, this year, we are passing through the sales and lift tax the company pays to local communities on multi-resort passes in the same way we do for lift tickets and all of our other mountain products. The tax rate for most of our passes is approximately 3%. Lastly, as part of the broader integrated approach across lift tickets and passes, we also made targeted updates to pass pricing, including adjustments to Epic Day pass pricing to incentivize greater frequency, resulting in higher increases on 1- to 2-day passes and year-over-year decreases on 6- to 7-day passes. These are key steps in advancing our portfolio of products to address our largest opportunities to drive revenue growth.

Moving on to our lift ticket initiatives. We are seeing positive early reception to our Epic Friends and Advanced Lift tickets introduced this season, both of which are especially noteworthy in light of the soft weather conditions we've had this year. Epic Friend ticket redemption rates are up over the legacy pass holder benefit tickets and showing growth in visitation compared to declines across traditional ticket types, demonstrating that this product is both delivering meaningful value to pass holders while also expanding a key top-of-funnel audience. Similarly, our 1-month advanced lift tickets are showing positive signs of moving guest purchasing behavior earlier despite the uncertainty this year around weather. We are also encouraged by the results from our off-peak pricing strategy at select resorts. It's been a difficult season to truly evaluate performance of these products given the magnitude of the weather overhang, but these initial results give us confidence that these products are expanding our reach and strengthening the funnel into our pass business.

Most importantly, in the face of very challenging conditions, we achieved record high system-wide guest satisfaction scores this season, including increases year-over-year in Colorado and Utah, which is a direct reflection of the caliber of our team members and their exceptional execution throughout the season. I want to extend my sincere appreciation to our frontline teams for their unwavering commitment to our guests, which was critical during this time. Overall, the collective strength and focus of this organization are evident. As I mentioned upfront, this year underscores the stability of our advanced commitment strategy, what it provides. We have purposely built a model that has been designed to withstand challenging weather years through regional diversification, pre-commitment of roughly 75% of visits through our pass products and continued investment in snowmaking, and that's just part of the story. Combined with new lift ticket and pass initiatives launched this season and our reimagined marketing approach and significant investments in guest-facing technology and an opportunity to completely reimagine the gear business, I'm confident we are setting ourselves up for the next phase of growth. Looking ahead, we are well positioned to continue elevating the guest experience, executing with discipline and delivering sustainable long-term value for our shareholders. With that, I will now turn the call over to Angela to review our financial results and outlook in more depth.

Thanks, Rob. Good afternoon, everyone. I'll now walk through our second quarter financial results, season-to-date metrics and our updated outlook for fiscal 2026. Starting with the second quarter results. As Rob mentioned, historically challenging conditions in the Rockies significantly impacted performance in the quarter with Rockies snowfall down 43% year-over-year. Conditions in Whistler and Tahoe have also been variable, while conditions in the East were strong this season, providing a partial offset and highlights the geographic diversification of our portfolio. Q2 total net revenue declined approximately 5% in the second quarter compared to the prior year, driven by unfavorable weather conditions that negatively impacted visitation and ancillary spending for both local and destination guests. Total Q2 lift revenue declined approximately 3% despite visitation being down 13%. This performance reflects the stability provided by pass sales, which were up approximately 3% heading into the season. Q2 resort reported EBITDA declined approximately 8% compared to the prior year as weather-related headwinds were partially offset by disciplined cost management and continued savings from our resource efficiency transformation plan.

Turning to season-to-date metrics through March 1, skier visitation declined approximately 12%, consistent with the ongoing weather impacts we saw during the second quarter. Lift revenue declined approximately 4% as growth in pass revenue was partially offset -- was offset by declines in non-pass lift ticket revenue. To highlight the magnitude of the conditions impact, even our most committed pass visitation declined approximately 14%, while non-pass lift ticket visitation declined approximately 6%. Ancillary revenue trends improved compared to January metrics, though they remain down versus the prior year due to lower visitation, partially offset by increased yield per visit.

Moving to our fiscal '26 full year outlook. Persistent challenging weather conditions through February in the Rockies continue to limit terrain availability, and we are reducing our fiscal 2026 net income and resort reported EBITDA guidance. We now expect net income attributable to Vail Resorts in the range of $144 million to $190 million and resort reported EBITDA in the range of $745 million to $775 million. With the reduction in earnings, we now expect cash taxes for the year to be approximately $95 million to $105 million. Given the unprecedented conditions in the Rockies, we are pleased with the stability provided by our past program and resource efficiency transformation savings. To put the magnitude of the conditions impact into context, Rockies snowfall this season is approximately 40% lower than fiscal 2012, which was historically the year with the most unfavorable weather conditions until now. We acknowledge that given challenging conditions persisting this late into the season, there is greater variability in our guidance for the year despite limited time left in the season. Our updated guidance range reflects our assumptions outlined in the press release, including the conditions for the rest of the season are consistent with the current levels in North America.

Turning to our resource efficiency transformation plan. We now expect to exceed the initial $100 million annualized savings target by approximately $6 million by the end of fiscal 2026. This program continues to drive improvements in organizational effectiveness and operating leverage. For fiscal 2026, we expect to deliver approximately $42 million of incremental savings versus the prior year before approximately $15 million of onetime operating expenses.

Finally, turning to liquidity and capital allocation. Despite the difficult operating environment this year, we remain confident in the strength of our cash flow generation and the stability of our business model. Our balance sheet remains strong as we ended the quarter with liquidity of approximately $1.1 billion and net leverage of 3.1x trailing 12 months EBITDA. During the quarter, we retired our convertible debt of $525 million using a combination of net proceeds from our delayed draw term loan and cash on hand. On February 9, we amended our credit agreement to extend the maturity date to 2031, revised the pricing levels and slightly increased the facility size. On capital allocation, our priorities remain unchanged. We continue to prioritize reinvestment in the business and balance sheet flexibility to pursue attractive acquisition opportunities. We then look to return capital to shareholders. We reaffirmed our calendar year 2026 capital plan with core capital expenditures of $215 million to $220 million and total capital spending in the range of $234 million to $239 million, with a continued focus on technology investments that can be deployed at scale across the enterprise. We also maintained the quarterly dividend at $2.22 per share, and we'll remain opportunistic on buybacks as evidenced by repurchasing 0.3 million shares for a total of $45 million year-to-date. In light of the results from this year, we reevaluated the current dividend level and elected to hold our quarterly dividend flat as we do not believe this year's cash flow decline is indicative of the long-term cash generation potential of the business. We always take a long-term view when investing in the business and setting the level of the dividend, knowing that we may have variations due to weather like we experienced this year, and we built a business model with strong cash flow generation and a balance sheet to withstand those fluctuations and stay focused on the future.

To close, while this season has unfolded in an unusually difficult weather environment, the quarter reinforced the resilience of our business and the benefits of the strategic choices we've made over time. The stability provided by our advanced commitment strategy, the progress we're making across lift ticket and pass initiatives, along with our resource transformation plan have all helped mitigate the impact of extremely challenging conditions this year. We remain confident in the actions we're taking, the durability of our cash flow profile as conditions normalize and the strength of our balance sheet to support both reinvestment in the business and returns to shareholders. With that, I'll turn the call back over to the operator for Q&A.

[Operator Instructions] We'll take our first question from Sean Kelley with Bank of America.

Just wondering, Rob, if we could start off by -- I think usually right around now is when we flip the script and start talking about next season as hard as that is, and I know there's still a bit ahead of work for everybody at the team to do. But can you just talk about sort of how that conversation with your consumer is evolving in sort of a season like this? And specifically, we read a lot about unusually warm temperatures in the base communities around areas like Denver and Salt Lake. So just kind of how do you think this ultimately impacts renewals and the look to next year in some of these local communities that were hit hard by weather this year?

Yes. I think it's certainly something that people will take into account. But I think what we've seen historically when there are big aberrations like what we saw this year in terms of weather, we saw this I think back in 2012, we saw this, I think, the following year in 2012, '13 for Tahoe, which had a pretty tough year. I think what we see is that people tend to look at this in terms of how many times they may have used their pass as also an aberration that it's not really that they don't love skiing. It's not that they're not as connected to the sport, but just that the weather didn't show up this year like they may have hoped. But I think everyone also knows that, that doesn't really change the likelihood that next year could be an amazing season even in this year where we had tough conditions out West. We obviously had really strong conditions in the Northeast. So I think people understand that there is a little variability to that. That's one of the reasons why we do provide our passes at a low price so that it's something that people can plan on year after year through good years and bad. Not to say, obviously, since we haven't seen a year like this, it's hard to know exactly how this will play out, but I don't think this is going to impact kind of long-term engagement in the sport.

Great. And then maybe just as a short follow-up more on the numbers. Angela, I got a couple of questions regarding sort of just the flow-through assumption here. So if we look at the change from where you started the season in revenue relative to the change in EBITDA, it's quite high. I mean it's roughly 80%, which I think when we think about locking in a lot of the Lyft revenue would hopefully be a little bit of an offset. But can you just talk us through that, maybe where the delta and expectation was to your model and why that flow-through is as elevated as it is, understanding that you're obviously a fixed cost business?

Yes. I mean that is the punch, Sean, I think that through -- yes, of course, our guidance already had the pass revenue piece. So what you're seeing in the change here is really the parts from the season. right, that's turning from demand from the conditions impact that's impacting revenue, there is a high flow-through, right? Because we are doing everything we can to, right, operate as much terrain and operate our resorts to the highest guest experience levels we can, which you did see in our kind of guest experience scores. And we don't change that, right? We don't pull back on those types of things. And so yes, there is a high flow-through when you see this large visitation change and the impact that has to revenue during the season.

We'll move next to David Katz with Jefferies.

Rob, I wanted to go back to one of the issues that we -- you've talked about a bit, which is the marketing efforts, particularly the social presence. And any feedback results, input, impact or updates there would be helpful.

Sure. I think we started to see, I think, the real benefits of that in the fall of last year with pass sales, where we really saw that kind of big change in trajectory of pass sales, which through Labor Day and then post Labor Day. And I think we've continued to see that this year. I think some of our kind of social-first content, influencer content has been some of the best-performing content we've had throughout the year. which I think highlights the strategic change, right, that -- which I think is, again, not about Vail Resorts, but the broader marketplace where people are looking for more authentic, more real-time content. They're looking for more voices than just the company amplifying that content. And quite frankly, they are -- yes, they want to see us show up in the places that they are engaging, which I think we have been this year. And so we are feeling -- we do feel very good about all the both media spend and channel shifts that we made this year because we are tracking kind of the incremental return that we're getting from that spend, and it's all been very good. Now unfortunately, that, of course, is not enough to overcome some of the other dynamics we're talking about with weather and visitation. But so far, in terms of what we've seen, we feel like it was absolutely the right choice and something we're going to continue going forward.

I appreciate that. And I wanted to -- just as my follow-up, at the risk of trying to steal some thunder from the analyst meeting. We've seen a couple of Buddy programs, Epic discount programs, the Gen Z program. Is this the direction we should expect you to continue progressing, which is to offer very specific kinds of discounts in the interest of driving some visitation with the hope of ancillary spending and return.

Yes. And yes, we'll share a little bit more at the investor conference. But I would say that it isn't necessarily like the strategy that we're going to take is about discounting. I think what you're going to see from us is constantly looking at where we think we can optimize price, optimize features and benefits and performance and we're going to make whatever moves we think are the right moves for the business and the program for that. And so what you saw with our kind of Gen Z effort, young adult effort was really seeing that, yes, when we look back over a number of years, we saw growth in a lot of different segments of our pass business, but the area that we were showing the most struggles was in this age group. And I think when you look back over the past price increases that we've had, those were taken -- I mean you could look at it as a discount today or you could look at it that, hey, we provided price increases over the last 4 years across the board in the program. That probably hit, right, folks who are earlier in their career, so to speak, harder. And so I think what we're doing is kind of resetting a little bit from that based on looking at all the data and all the information we have. And we do think it's critical that we keep the engagement of these folks in the sport for the future. But as we go forward, you'll see us make other adjustments whether we may increase prices, pass through prices, other things that we think make more sense in terms of how we drive overall revenue, which is really just the ultimate goal here.

We'll move next to Patrick Scholes with Truist.

When I think back to the most recent weak snowfall season, that being 2017 to 2018, after that season, you went very heavy on the CapEx and upgraded your systems for snowmaking. Is something like that being contemplated for after this season in light of the very weak snowfall?

Yes. I can't exactly remember. I'd have to go back and look at exactly what we did after that year. But I would say that the plans that we make for capital start -- so we're currently spending money in what we call capital year 2026. We start planning for capital year 2026 in the spring of 2025 or sometimes even earlier and making commitments on those plans maybe in September, late summer, September 2025. So what I'd say is we really make snowmaking investments based upon the results of that year because it's too late. Once we're going down that road, we also typically would need long permits and other things. So what I'd say is we have a long-term commitment to upgrading snowmaking as part of that guest experience. I think we actually did see, again, hard to see through all the challenge of this year, but Keystone had a strong year, which I think was absolutely because of the investments that we made in snowmaking there. And I do think that even the investments we made at Vail a number of years back, as you're pointing out, I think really helped us. So that is absolutely something we're going to continue to look at as we go forward. And I would say it's not that this year will change that. I think we understand having been in the business for a long time, yes, that this is the nature of the business. And so we're going to prioritize those types of opportunities as we think they make sense.

We'll take our next question from Matthew Boss with JPMorgan.

So Rob, maybe just trying our best to parse through some of the most difficult weather conditions this season for your business as you cited. Could you elaborate on traction that you're seeing with the proactive actions that you've put in place to accelerate visitation? Or how would you rank order maybe some of the green shoots...

Yes. I mean, again, it is hard to parse through this year because obviously, it's such a unique year. But we highlighted, obviously, the actions we took to drive pass sales, which clearly made a difference, and I think were really helpful as we went into the season. We talked about that, right, in December and what we did in the fall, and we did see those shifts. I think on the 3 kind of lift ticket initiatives that we launched, Epic Friends, yes, a ticket type that performed was up, right, when every other ticket type was down and obviously meaningfully down. So that tends to indicate that, yes, people are, of course, interested in going there and that the lower price made a difference. We also saw a lot of folks going into Epic Friends who right, came from a lot of different kind of corners, so to speak. And so we felt like that was a real positive. The 1-month advanced discount that we offered the same thing. People -- we saw that grow quite a bit again when a lot of other -- all of our other advanced ticket types were down. And we saw a lot of prospects coming in, people who are new to the database, so to speak, from this 1-month advance ticket. And again, I would say for that product, in particular, unusual that you would see people in a year like this with so much weather instability that they would commit a month in advance. So I think that was also helped by the fact that we had a greater call to action on the website kind of a month out when people are really in there kind of looking and booking time frame for making a vacation. So we feel really good about that. And we definitely saw some of the resorts like Keystone, which had good weather, but good better conditions, but honestly, really outperformed. And I think that was also because of the changes that we made to the off-peak ticket prices there. And even if you compare kind of the off-peak to off-peak or peak to peak for the exact same resorts, what we saw was that in a year like this, yes, the lower prices really made a difference. none of this is that shocking. I think we understand that bringing those prices back in line are important. But I think all of those, we do see as green shoots because there are things that we're going to continue to build on for next year. Now I will say that, that doesn't mean that like we're going to go around just discounting. It is really this kind of more sharpshooter approach, right, where we're not -- I think what we were probably doing before was a little bit more peanut butter as it related to past and as it related to lift tickets because we were trying to move everybody from lift tickets to VA. But at this point, right, we're now going to kind of coming back and really picking apart each and every product and time period to decide what's the best way to optimize it.

Great. And then Angela, with resort EBITDA forecasted roughly $100 million below initial expectations for this year, under normal weather conditions, if that played out, I mean, what do you see as the recapture opportunity next year? And are there any reinvestments for us to consider as it relates to bottom line?

Yes. Thanks, Matt. The changes from this year are all weather related as we noted, right? So all of this we see is, yes, the visitation impact that was obviously not part of our original guidance and very stark visitation obviously had the large revenue impact that we were just talking about with Sean. And so yes, that is all things that we would say was very unusual related to weather for this year.

We'll move next to Jeff Stantial with Stifel.

Maybe following up on Sean's question and then Matt's question just now, Rob, so obviously, a chunk of the pass sales historically has come from cross-selling skiers over that purchased a window ticket in the prior year season. Can you just remind us sort of years like this, really bad weather conditions, what have you seen in terms of the impact of that overall funnel? How does that play into pass sales? And sort of has that factor in your expectations for this year?

Yes. No, there is no doubt that I think when you see less usage, whether it's lift tickets or passes that it does have an impact. I think the question is like how much of that for folks, typically, it's because people are just choosing not to ski for some reason. And I think in those situations, yes, sometimes it's that kind of person who's either not -- maybe not going to renew, not going to buy or buy less frequency products or something like that. But this -- I think when you get to a year like this, it's almost more like a life event that happens. So if somebody, for instance, gets injured, well, their skiing might go to 0, but that doesn't have any impact on the following year if they're now healthy or a life event like children and things like that. So in other words, those are things that happen that people understand are really outside of this question that people think about like, well, do I really like skiing and how much am I going to ski and all that. So that's -- a year like this, I think, has a lot of that. Now that said, there's no doubt that it absolutely means that we have to work hard, right, to reach people who may not have come as much or may not have come at all or didn't buy a lift ticket. So that's -- there's no doubt about that. And that's where I think we feel good about some of the moves that we've made going into this year in terms of the broader marketing, the increased investment, the different channels that we're reaching out to people, the young adult discount, the Epic Friends discount and the promotion, we've been promoting turning your ticket right all season long, which is new for us because we typically didn't do that. So we do see all of those things as tailwinds. There's no doubt that the conditions and visitation is a headwind.

That's great. And then maybe switching gears over to Angela or Rob, whoever wants to take this on the operating expenses side of things, can you just remind us how much of the expense base here is utilities and just how to think about sensitivity in the model to higher energy costs given everything going on from a geopolitical perspective? And that's all from us.

Yes. We have not disclosed the exact percent that's utility or energy. Obviously, we do have utility costs at all resorts and energy at this point in the season, though that's dramatically ramping down. So yes, and we do also lock in some long-term contracts at a lot of our resorts. And so yes, we don't expect that the energy piece is not part of kind of our changed outlook for the year, and it's something we'll monitor as we go into next year.

We'll move next to Arpine Kocharian with UBS.

My question is on the pass product pricing for the upcoming season. It sounds like the actual price increase is around 7% or so if you look at it like-for-like basis after taxes. And I understand there was a difference last year the way that was -- I think taxes were included. At the same time, it seems like most of your initiatives, recent initiatives are really focused on pricing, mostly targeting discounting for both lift and pass offering for the upcoming season. I'm just trying to understand the 7% like-for-like pricing better. Is there a segment of your consumer that is not that price sensitive and you can better segment more price-sensitive consumer by raising sort of overall cost to the core consumer in that 7% range, which to me was not that different to the pricing versus the pricing increase you had the prior year?

Yes. So what I would say is, I think, first of all, we obviously are providing a pretty big discount to a big chunk of our pass holders through this new young adult pricing program. So for -- I think what you have to look at is everybody, it's not -- it isn't a one price fits all to everybody. So for those guests, they're obviously seeing a pretty significant decline in pricing. And we do think that, that is our most price-sensitive guests, especially those really 18 to 30. And so I think when you look at it that way, we are essentially segmenting the customer base in a way. It's also consistent with what we've seen over the last 4 years in terms of the performance of all of that. And I do think -- yes, I think we do charge tax on all of our products. And I think historically, just because network was growing, it was moving around. We just hadn't added it here, but we do think it's time. And we do think a lot of consumers understand, look at it a little bit differently. They understand that, that is what they should expect when they purchase almost any product and certainly any product in travel. So yes, it did give us comfort that on an overall basis, we felt good about the moves that we are making going into the past selling season for next year.

Helpful. And then you mentioned there's greater variability in your guidance. Could you zoom on that a little bit more? What is driving that variability on the guidance that you just issued? What needs to happen for you to come in at the higher end versus lower end of that guidance range?

Yes. I just think at this point in the season, I would say, typically because the snowpack is lower, the conditions is more variable now than it has been at different times. If I look back over the last 10 years on this same date, I think because the snowpack is higher, the conditions don't change as much between now and Easter or early April. where here, actually, right, if we get a storm that comes through, that could really improve the conditions. If we don't get a storm and it's -- the temperature goes up 5 degrees, that can hurt conditions. So I just think we're at a point in time that's -- obviously, as we've mentioned a few times on this call, for the Rockies, pretty much no one's ever seen. So I think that creates more uncertainty as to what we're going to see for the rest of the year.

So it's entirely weather driven. There's no sort of current macro or geopolitical...

No, no.

We'll take our next question from Ben Chaiken with Mizuho.

Rob, in the past, we've kind of talked about adding benefits to the past, both ski and non-ski to reduce weather dependency and drive year-round engagement. Clearly, you've been moving fast with the friend ticket, the advanced purchase, the lift ticket conversion. As you sit here today, using your words, arguably the worst Rocky Mountain season ever, does that accelerate or change your thinking on past benefits? Or do you feel the product is largely where you want it?

I think we're always looking at past benefits. And I think that's something, yes, we'll definitely be taking a look at as we go into next year for sure. And there could definitely be things we add. There could be things we add for next season. There could be things we add for the FY '28 passes that will go on sale in March of '27. I don't think -- I would say, though, I think in the end, the primary benefit. I think that will just be a nice add-on, but the primary benefit of the pass is still going to be winter focused. And we do think from all the research we've done, that is the thing that most people are saying that they want from the pass. Now it's not to say that they wouldn't like to have some other benefits and perks and things like that, and we'll do that. But for us, yes, the -- what we constantly hear is, yes, they want us to make the winter season better for them, whether it's benefits, perks, what they get, pricing, discounts, all of that. But that said, like, yes, there are probably ways that we can absolutely just improve the overall package by adding things that, yes, might be useful in the summer. But I don't know that, that changes like the weighting of winter, summer, the way people think about it.

Understood. And then as you think about the overall structure of your pass, is the young adult cohort largely a single-day guest today, again, on kind of a relative basis as you think about the buckets? Meaning do you expect this purchase to be largely an incremental pass sale?

Well, sorry, you said -- yes, you said are they a single day -- they're definitely -- no, they're frequent and they ski quite a bit, and so I wouldn't say that. But in terms of whether we think that this new pricing will help get new people into the program, absolutely. And we do think it makes a difference. And we think that, yes, being more aggressive to this cohort, especially right now, we think can make a real difference in terms of the people that we bring into our program and into the sport.

Got it. I didn't necessarily mean one day. I meant like a window ticket versus a pass is maybe the better way to phrase it.

Yes. I would say both. I think we -- yes, not window, but lift tickets, yes, I think they definitely -- we do see a lot of these folks not wanting to make that commitment. But I think it's broadly. It's also just, yes, that they may -- if the pricing gets too high, they just may not engage, right, overall in the sport or engage as much.

We'll move next to Laurent Vasilescu with BNP Paribas...

It's Xian on for Laurent. Could you talk a little bit more about what went into the decision in terms of getting to the 20% discount for Gen Z? Like maybe talk a little bit about elasticity kind of studies that you were looking at with that cohort? And then maybe more broadly also, how do you think about the pass pricing relative to lift or window ticket pricing?

Yes. So I think we -- the good news for us is that we have a lot of data on the behavior of our guests, and we have a lot of data that includes both lift ticket data across all of our resorts and pass purchase and visitation. We've been at this a long time. And so we're basically looking at yes, what we think are the price elasticities of these different groups and cohorts, and we're looking for prices that we think ultimately optimize the total revenue for us. And when we look at that, we do include -- it's not just Lyft revenue. We also include all of our ancillary revenue, and we also include what we think getting them into a pass does in terms of return rate and therefore, the long-term value that we're creating. And so that's how we got to that discount. And it is -- yes, it's not just a swag. Like it's -- we spend a lot of time trying to identify what we think is the best opportunity. And then sorry, your second question was?

About kind of maybe how you're thinking about pass pricing versus the lift ticket or...

Yes, we think there is definitely a gap there, right, that was created, I think, back 4 years ago in terms of when we reduced pass pricing 20%. So it has given us some room to move lift ticket pricing down without, in our minds, really affecting pass pricing or pass demand. But I think in this cohort, yes, I think we were really more looking at what the pass prices were for this cohort over the last 4 years and what we saw in terms of their demand and performance over the last 4 years. That's really what drove that decision less about actual lift ticket pieces. But we do think, yes, that obviously, some of the other things that we're doing, including Epic friend tickets and our 1-month advance ticket, all of that also, we think, are good opportunities for this cohort as well.

We'll move next to Brandt Montour with Barclays.

So Rob, you described young adults being a big chunk of your guests. It seems like you're expecting a fair amount of elasticity to come from this program. That would, to us imply perhaps a mix shift toward a lower value guest. Even if it's a higher LTV, it's perhaps a lower value guest near and medium term. So is that true, right? -- one? And then two, how should we think about how sensitive the model might be to that shift?

Yes. I would say, by definition, yes, there are folks -- I mean, this would be true for every travel company, I think, which is typically folks in their 20s have less disposable income than folks in their 40s and 50s and 60s -- and so -- but that doesn't mean that it may be that on a relative basis, that's true, but it doesn't mean that they're not highly value-add to our model and to the business and wanting to be a part of the program and the sports. So in our minds, we're really not looking at kind of the yield per guest because in a fixed cost business, right, there's a lot of flow-through that comes from adding people onto our mountains, and we have some of the largest mountains right, in the world. And so for us, we really look at it as, yes, how do we make sure that we're optimizing that equation for each age group. And I think as we look at the model going forward, no, we think it's accretive to the model going forward. We don't think it takes away anything. It's certainly true. There's possible that they may spend less on the mountain than other people, but that doesn't mean, again, that in total, it's not going to be highly accretive.

Cost business, it's all incremental adding those folks to the mountain, but you are limited in throughput for the infrastructure that you have in place, obviously. And so the question would be, if you do get a targeted boost in visitation from this program and let's say -- and again, hopefully, that doesn't happen, but you go into winter next year and something -- it looks kind of like '21, '22, that obviously had COVID problems, but let's say you have limited acreage. Do you still have structure in place to be able to limit, let's say, nonpass guests or what have you to make sure that you can protect the guest experience for those high-value guests if there is, again, more lower value units sold going into next year? Is that -- hopefully, that all makes sense.

Yes. But I would say really important to highlight that in '21, '22, that was not an issue of that we had too many people. It was an issue we had -- didn't have enough employees. And it was an issue of yes, that we had so many people out from COVID, it was right in the global labor shortage, and we literally -- Christmas was like a peak of that. I would say that while it's true that on any given day, in any given moment on a mountain, you could have lines, but we see that as relatively transitory. And I think when you look across our mountain that we do have lots of excess capacity. And so yes, we view this as highly incremental. And certainly, we don't see this as in any way pushing other guests out. I mean it's not -- we don't see it as a zero-sum game at all. And by the way, there are other pricing points in the rest of the vacation that tend to stabilize or balance that out in terms of the price of lodging, right? So if you're at a peak week between Christmas, lodging is very expensive, airfare is very expensive. Everything is very expensive. So to the extent you have more price-sensitive guests, they tend to come in other times. And actually, if you look back over the last couple of decades, what you've seen is that the pass program and this broadening of people in the program has actually smoothed out the visitation and has not really added to the peaks. And so yes, we don't -- we see this as just positive if we can do it successfully and not necessarily taking away from some other part of the revenue opportunity.

We'll move next to Chris Woronka with Deutsche Bank.

Not to beat the dead horse at this point, but circling back to the Gen Z young adult pricing strategy, was there -- is there any concern or have you done the math on cannibalization of folks who might have bought pass anyway? And then secondarily to that, do you worry at all that if cost is an issue for some of these younger skiers that it's more of an all-in cost, right, if they have to get out -- if they're taking a destination trip and they're going out of Colorado or Whistler, Park City, et cetera, that maybe the airlines aren't giving them the same discount or maybe they're not getting the same hotel discount. Is there any thought that this will be enough to get them over the finish line to buy a longer duration pass?

Yes. So what I'd say is 2 things. One is, yes, we -- of course, when we're doing any kind of analysis like this, we're looking very closely at what we think is the cannibalization in terms of, hey, wait, we had a bunch of folks buying this today and now we're giving them a discount. And so we're going to lose revenue on those folks. We're going to buy it anyway, and we have to make up in that with volume elsewhere. But I think it's important to remember that, that same dynamic is true in reverse. So ultimately, like when you raise price, you have to realize that some people are not going to keep paying those prices. And you're right that, of course, all of this happens on the margin. So it's not like there's like a bunch of people who all of a sudden say, "Oh, we're not going to do it, but it's on the margin. And I think based on what we've seen historically, that has allowed us to assess, right, what the pricing dynamic is here. So to the extent that we saw people coming out of the program from this cohort, but not in other cohorts, and we were taking price up quite a bit over the last 4 years, yes, you start to realize that, that may have had an impact. And yes, it's true that folks -- you could say that there are other parts of the vacation that may not have come down right now, but there are other parts of the vacation that were the same, right, over the last 4 to 5 years. So when we're looking at it, I think one of the things that we have learned over the last couple of decades is that past pricing in general is quite elastic. -- yes, there is a group of people, it's true that, yes, it doesn't really matter to them in some cases because we've just taken the overall price down from where it was $1,600 20 years ago and might have been $2,500 today. Yes. So those people who at the very top of the income, yes. But actually, what we've seen is when we've moved past pricing in the past, we do see volume going up and down. I think one of the things we saw this year with lift tickets was some of that price elasticity as well. That's not a bad thing. I think people feel like, oh, well, if you have price elasticity, does that mean you don't have pricing power? No. I think what we feel is that we just have to -- it's constantly optimizing it to make sure that we're setting the right price, which, of course, is what we did way back when we introduced the Epic Pass in the first place.

Okay. Yes. Fair enough. Fair point. And then just as a follow-up, it's kind of another, I guess, customer research question for you. But do you -- when you think about reasons why someone is not taking a ski vacation this year, obviously, weather is a good reason, but there could be other reasons. Do you look at something like the cruise industry, you guys study that and get a lot of information on that? Do you worry that you're losing customers to that industry and maybe not entirely related to the weather when you think about price points and multi-gen family travel, things like that?

Yes. I mean I think the cruise industry clearly is -- has done well. But when I look at overall visits to ski resorts last year, actually, they're pretty good, one of the better years right on record ever. And so I think that in the face of the cruise industry being fully back or whatever, -- and so I don't see that necessarily as -- yes, that people are going out. I think it's really for us more about, yes, overall -- weather is definitely a factor, the overall cost of the vacation, people's willingness to ski in general. But I don't know that, that's like that there's -- that the cruise industry per se is taking from us. But I do think that our sport has to stay competitive and aggressive. And I think that one of the things that I think the cruise industry does, and we do look at the cruise industry quite a bit. And I would say one of the things they do well is they are really strong marketers with all kinds of different offers to different groups all the time slicing and dicing their market, their experiences, what they're providing, the cross-sell, upsell technology. I think we've seen some really strong results there, especially from Royal Caribbean -- and I think that's all stuff that I think we can learn from, which I think you're seeing us kind of use in how we're trying to pivot the company right now.

We'll move next to Stephen Grambling with Morgan Stanley.

I realize most of the questions have been around pricing. But when we think about what's in your control from a customer experience standpoint, what initiatives are you most excited about, Rob, as we get ahead of next season?

Yes. I think the thing that I'm most proud about is, yes, it's just the talent and the staffing that we have, our team members on the ground at the resorts who I think are doing an incredible job. And I think I've heard that anecdotally and it's showing up in the actual results that we're seeing. They make a big difference in the guest experience. And in my mind, that started, I think, as we made investments in frontline wages back in 2022. And I think we've become much more selective. We top of the funnel in terms of our recruiting and using technology across our HR system to bring people in and then be able to select who we think are best aligned with the values that we have. We're then seeing right, higher seasonal employee return rates and engagement scores and retention rates. And that's now -- we're seeing this now after kind of 3, 4 years and all of a sudden, I think it's really coming together. So when I think about next year, I think that's a huge opportunity for us as we go forward. I think the other piece is technology, guest-facing technology, where I think there's really an opportunity with rentals, with the -- my Epic app, with the stats that we're providing with the digitized engagement that we're providing in ski school by adding commerce onto the app. All of these things are things where we're pretty far out in front in many cases, like Mobile Pass, where you don't need a lift ticket or card on your neck anymore, your phone access that. So it's kind of like we're creating an ecosystem where, yes, I think that -- and we're bringing our employees in on the technological ecosystem that we're creating. I don't think we're totally there yet. I think we've got another like, yes, absolutely a couple of steps until we're where we want to be, but we're seeing really good, strong results right now. I mean, candidly, in a year like this, yes, to have record guest satisfaction scores across the system, yes, highly unusual and to have guest satisfaction scores up in Colorado and Utah, yes. And again, Utah, obviously, Park City is up because we had the strike last year, but it's up even when you're looking back over 2 years. And so in our minds, like that speaks -- when conditions aren't good, usually, we see that go down. So the fact that we're seeing it up, we really say, yes, that is the whole system working well, which starts and ends with the folks on the ground who have the connection to our guests.

And Rob, you mentioned the technology side. And I think last quarter, you flagged content management system being rolled out as well and kind of alluded to it on this call. But is that fully implemented? And how do you think about the path to offering more personalized, not only pricing, but even some of those experiences and promotions? Are there still systems that need to be implemented? And/or is there an iteration that we should be thinking about over a couple of years?

Yes. So no, that new content management system, or CMS is -- we're putting it in now. So it's in cal year 2026, but it will be in place for next year for '26, '27. And yes, that will absolutely allow us much greater personalization and agility in how we manage that system. Obviously, we're putting new functionality into the app. And so when you combine that, yes, it does allow us to be much more personalized with people. I think there's another couple of steps for us to get to because we ultimately want to get -- for next year, we'll have lift tickets and passes in the commerce and the app, but we ultimately want to have rentals. We ultimately want to have -- right now, they are pop-outs where you can still do it, but it's not the same experience and obviously, ski school. And at that point, we really have like an incredibly cohesive guest experience, including kind of, yes, an FAQ bot of sorts that we have in the early stages of now where people can get their answer -- questions answered and things like that. So I think we're -- yes, next year will be a big step forward and 2 years from now, really will be in an outstanding spot.

This concludes the Q&A portion of today's call. I would now like to turn the call back over to Rob Katz for closing remarks.

Thank you, operator. To wrap up, this season reinforced the resilience of our model and the importance of staying focused on what we can control. We remain confident in the long-term outlook and our balance sheet strength. And I again want to thank our frontline teams for their exceptional dedication and execution this season. Thank you all for your interest and for your time.

This concludes today's Vail Resorts Fiscal Second Quarter 2026 Earnings Conference Call and Webcast. You may disconnect your line at this time, and have a wonderful day.

Good afternoon, and welcome to the Vail Resorts Fiscal First Quarter 2026 Earnings Conference Call. Today's conference is being recorded. [Operator Instructions] I will now turn the call over to Connie Wang, Vice President of Investor Relations at Vail Resorts. You may begin.

Thank you, operator. Good afternoon, and welcome to our fiscal 2026 1st quarter earnings conference call. Joining me on the call are Rob Katz, our Chief Executive Officer; and 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 10, 2025, and we undertake no duty to update them as actual events unfold.

Today's remarks also include certain non-GAAP financial measures. Reconciliations of these measures are provided in the tables included with our press release, which, along with our annual 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. I would now like to turn the call over to Rob for opening remarks.

Thank you, Connie. Good afternoon, everyone. Thank you for joining our first quarter conference call. Before we discuss the results from the quarter and pass sales results, I want to provide an update on some of the key strategies we laid out last quarter to drive visitation and evolve our marketing approach. Beginning in the fall, we made some shifts in our marketing approach to increase spending in channels outside of traditional e-mail that drove improved results for the fall pass selling period. This included broadly increasing paid media and specifically being much more present in social and influencer channels. We saw some initial positive results from this effort, turning around the pass sales dollar trend for the post Labor Day period from up 1% compared to the prior year through Labor Day to up 6% post Labor Day, even though we faced challenging early season conditions heading into the final pass selling period that likely impacted our local passholder results. As we head into the winter season in the Northern Hemisphere, we are turning our focus to driving lift ticket visitation. For this season, we have several new strategies aimed at increasing lift ticket visitation that is an important funnel for driving long-term guest lifetime value.

Earlier this year, we launched Epic Friends tickets, which provides a 50% discount to friends and family of householders. This pass holder benefit enables our most loyal pass guests to share their experience with their network of family and friends who can apply the cost of that lift ticket to a pass the following year. In addition to the new Epic Friend tickets, we have also announced a new advanced discount offering for guests willing to commit 1 month in advance. The new lift ticket offer provides a 30% discount off window pricing for customers who commit over a month in advance at select resorts. That means that some of the company's largest destination mountains, skiers and riders can save over $100 per lift ticket depending on the day by purchasing 4 more weeks in advance. This provides another important bridge in product offerings for guests who cannot commit to a pass purchase ahead of the season. In addition to our new lift ticket product offerings, we are also looking to be more strategic in pricing across our individual resorts and time periods.

We are implementing more dynamic pricing strategies targeted at driving off-peak visitation at certain resorts, which fulfills the dual purpose of pricing select resorts more competitively and incentivizing visitation in lower volume time periods. We will be utilizing these strategies at resorts like Keystone in the upcoming ski season where we see the most opportunity to offset lower price with additional volume capture to drive overall revenue. Finally, in addition to purchasers of Epic Friends tickets, purchases of advanced and window lift tickets will be able to apply up to $175 of the cost of their lift ticket to a pass for next season. Growing lift ticket sales is a critical entry point for guests to join our pass program, and we believe it is critical to have an integrated approach across all lift access products. Given the widened spread between lift tickets and pass prices, we believe that even with these new discounts, passes still represent the best value for our guests.

Moving now to our broader marketing efforts. We are looking to evolve and modernize our approach in how we reach and engage our guests. On the messaging front, we are in the early stages of creating content that builds a stronger connection with our guests by tapping into the passion they feel for our resort brands. Over the past quarter, we took some first steps to increase our media spending with messaging that celebrated the individual identity of each resort, which helped drive improved fall pass sales performance and incremental return compared to the spring selling period. We have also shifted our marketing to better capture guests at the top of the funnel, a key to building awareness and have expanded marketing in channels where younger consumers spend most of their time, including social, video, connected TV and streaming audio. While the full impact of brand-building marketing is expected to increase over time, we are seeing early signs that our investments in these channels are resonating with guests through increased engagement and outperformance versus our traditional branded creative and stronger brand awareness based on guest research.

The total magnitude of our actions around lift tickets and marketing will be less visible this fiscal year, but we are seeing early signs that reinforce our focus on these key areas. Longer term, we are focused on optimizing our products and pricing across our pass and lift tickets to drive long-term value creation. We are excited to have our new Chief Revenue Officer, [indiscernible], join us next month. [indiscernible] has an incredible 20-year track record of success at Lulu Lemon and is a very strong business leader with a passion for guest experience and leadership. I am more than confident that Celeste will make a very strong and long-term impact on helping us drive growth and ensure we live up to our mission of experience of a lifetime. I look forward to partnering with Celeste in modernizing our marketing engagement to drive future growth. While we've seen a slow start to our Rockies and Tahoe resorts due to challenging early season conditions, we've seen some strength in the Northeast and seen more typical patterns of Whistler Blackcomb and in Switzerland.

Changing weather and snowfall patterns are not new to us, but they reinforce the importance of the stability we create from our pass business, which remains a key long-term driver to our success. Overall, I am confident that we are working on the key areas that will drive our next phase of growth. We are laser-focused on delivering an exceptional guest experience, deepening our consumer connection with our resorts, and driving lift ticket visitation. And while still in early innings, we are seeing early signs that our initial efforts are resonating. We will continue to look for opportunities to optimize our products and pricing to support overall guest experience for fiscal year 2027. Our calendar year 2026 capital plan, which Angela will go into more detail shortly, reinforces our commitment to improving guest experience through investments in technology and multiyear initiatives to continue elevating our destination resorts. With that, I will turn the call over to Angela to review our financial results and outlook more in depth.

Thank you, Rob. Good afternoon, everyone. Overall, we are pleased with the results from the first quarter, which were in line with our expectations. Resort net revenue was up 4% year-over-year as we saw improved visitation at our Australian resorts due to more favorable weather conditions and the introduction of the Epic Australia four day pass. Fiscal first quarter Resort reported EBITDA was flat year-over-year, reflecting the Australia weather favorability and the benefits from the resource efficiency transformation plan, offset by typical inflation in year-round overhead costs, increased marketing spend aimed at driving winter pass product sales and onetime costs related to the resource efficiency transformation plan. Regarding our resource transformation plan, we expect to deliver approximately $75 million of cumulative efficiencies before onetime operating expenses of approximately $14 million in fiscal year 2020, which represents a $38 million in incremental savings versus fiscal year 2025.

As stated in our prior call, we anticipate exceeding the original $100 million annualized target, and we're looking forward to providing more details next spring. Turning to pass sales. We finished the North American pass product selling period for the upcoming 2025, 2026 ski season, with units down 2% and sales dollars up 3%. We saw an acceleration in pass sales trends from our September update, with pass sales improving from the 3% decline in units and 1% increase in sales dollars for the period ending September 19 and to a 1% decline in units and a 6% increase in dollars from September 20 through December 5, 2025, reflecting improvements from our paid media investments, and higher price flow-through from an increased mix of unlimited pass products. While paid media drove positive results, snowfall was also down almost 60% versus the prior year at our Western North American resorts, which likely impacted local pass sales near the end of the selling period.

The results from the full pass selling season, the company now has approximately 2.3 million guests committed to our 42 North American, Australian and European resorts in advance of the 2025, 2026 season in nonrefundable advance commitment products this year, which are expected to generate approximately $1 billion of revenue and account for approximately 74% of all skier visits excluding complementary visits this year. We have grown pass units by 55% over the past 5 years, highlighting the increased guest commitment, which in turn provides greater financial stability to the company.

Moving to guidance. We are reiterating our previous guidance range of $201 million to $276 million in net income and resort reported EBITDA of $842 million to $898 million for fiscal year 2026. Similar to last quarter, our guidance assumes growth from price increases and ancillary capture as well as the assumed benefit from the approximately $38 million in incremental efficiencies related to the resource efficiency transformation plan, offset partially by lower pass units, which are expected to have a negative impact on skier visits relative to the prior year, along with normal cost inflation. What's changed this quarter is that while our paid media efforts have driven an early improvement in hassles, we've also seen a slow start to the season from below average conditions and recognize that it's very early in the North American ski season. We have seen conditions improve with recent increased snowfall, but recognize that most of our primary earnings period is still ahead of us. Therefore, we are reiterating our previously announced guidance at this point in time.

Rounding out the fiscal first quarter, our balance sheet remains strong with liquidity of $1.5 billion and net debt at 3.0x trailing 12 months EBITDA. We are confident in our ability to address our upcoming convertible debt maturity with a combination of cash on hand and our delayed draw term loan facility. Our capital allocation priorities remain intact as we announced our calendar year 2026 capital investments at our resorts, along with maintaining the cash dividend of $2.22 per share. We continue to be opportunistic about share buybacks, and we completed approximately 200,000 shares of repurchases after the quarter and for $25 million. Standing on our 2026 capital plan, we announced a core capital investment plan of $215 million to $220 million, which reflects the growth in inflation, including the impact from tariffs. In addition to the core capital plan, the company plans to invest an additional $12 million of growth capital investments in its European resorts, $5 million of resource efficiency transformation projects and $2 million in real estate planning capital.

Including these investments, total capital is expected to be between $234 million to $239 million. Within our capital plan, I want to highlight our investments in a couple of key areas. First, we are making multiyear investments to elevate guest experience at our destination resorts. In Park City, we will replace the existing 8-passenger Cabriolet lift with a 10 passenger gondola, enhancing the accessibility and experience between the village and connecting multiple gondolas to the Canyons Village in the garage base area. At Whistler Blackcomb, we are also investing in new lift to replace a new lift to replace the showcase TBAR lift, which will greatly improve accessibility to scale terrain on the Blackcomb Glacier. We are also rolling out a larger initiative around elevating our dining experiences at our top resorts, which includes remodels as well as activations to -- at our destination resorts.

We are also beginning a multiyear investment at select resorts to implement remote avalanche control systems. These systems remotely trigger controlled apple inches reducing manual intervention and improving safety, reliability and the guest experience through faster, more consistent predictable train openings. We are also investing to upgrade the Blitzen lift at Seven Springs to ease congestion and improve the experience in accepting the North Face side of the resort. Next, we are investing in technology to support the guest experience with improvements in addition to the My Epic App, along with enhancements to our marketing capabilities and e-commerce platform. Within the My Epic App, we've added functionality. The functionality will provide guests with information they need and streamline their resort experience, allow for in-app commerce with Apple and Google Pay and continue to invest in revamping and digitizing the ski school experience and integrating the MiFi gear experience into the broader rental platform.

On the marketing front, we are modernizing our e-commerce platform by migrating to a new content management system, to enhance personalization, flexibility and speed to market. We're also expanding our capabilities for more agile pricing and product updates to capture revenue opportunities and improve the operational efficiency. Last, we will continue to support our sustainability initiatives through investments in low energy snowmaking at Okemo and waste reduction projects across the resorts. We are also investing capital to support the resource efficiency transformation plan. In closing, we are leveraging our distinct competitive advantages and progressing on the drivers of our next growth phase to drive results in fiscal year 2027 and beyond. With our track record of disciplined capital allocation, we are laying the foundation to drive long-term sustainable growth and consistent value creation. At this time, I'm happy to turn the call back to the operator for your questions.

[Operator Instructions] We'll take our first question from Shaun Kelley with Bank of America.

Rob or Angelo, I'd love to start with announcement yesterday, obviously, it kind of builds on the momentum of what you did with Epic Friends over the summer. But just help us think and how you're thinking about quantifying an initiative like this. Just how do you expect it to play out between price and volume as you take another stab at kind of the reduction here for the advanced period. How did you measure it? And when you put these 2 initiatives together, -- how are you thinking about just kind of when you're going to know like was this trade-off or was this kind of the right level to kind of to offer this product out to people?

Yes. So I think the drivers here, obviously, and we have been talking about this for a little bit in terms of, yes, making lift tickets more accessible, being more competitive on that front, but also doing it in a disciplined and fenced way, and in our mind, this is a unique opportunity to kind of address, yes, at this moment in time. So people -- there are some people who will book a vacation, obviously, they know they're going skiing. So they're going to buy a pass before the deadline that just passed in December. Then there are other people who may be truly making a decision right in the moment in that day. But there's a bunch of people who are not ready to make their decision by the December deadline, but are still planning to vacation in the future. And so when they go to our website, they will now see these lower prices. So as they think about the ability to make this decision, they're going to be looking at those lower prices on the website. That's one. So we're kind of trying to catch them like in their booking phase and then their comparing phase.

Two is that we are providing a call to action, right, for lift tickets that we think is a little bit stronger than what we've had before. So now when somebody is going to a website, for instance, if somebody is on the site now looking for them okay, then they'll know that, hey, they've only got a little bit of time if they want to book a lift ticket, and we're going to be obviously showing them that on the website. So that actually creates, right, some time sensitivity to their purchase. Last is that once people don't buy a pass, we see very few people buying lift tickets this early. So in our minds, it was also an opportunity to start getting kind of a little bit of the mini advanced commitment piece that we thought was actually more important than just the 7-day advance or the 3-day in some resorts that we have today.

So in our mind, yes, we looked at that and said, "Yes, we thought this would move enough vacation decisions plus enough additional incremental days of skiing even for people who are already get to come that, that trade was worth the cut in price.

Great. And then for my follow-up, and maybe just switch gears slightly, obviously, the comments on the weather on the one side, but what we saw on the pass trajectory on the others seem to offset each other here a little bit. But I just wanted to dig into that core message, if you could is the message here that all other things equal, we could have actually raised had it not been for what you're seeing in the early conditions on the resorts. And then if so or regardless, just help us think about, is that kind of comment on the weather through today? Or have you also derisked a little bit as we look into the forecast here, just kind of knowing that this is always evolving with the weather?

Yes. I guess what I'd say is I'm not going to comment on like a hypothetical around guidance, but I would say that, yes, we did overdeliver on passes. And even that the over-delivery on passes, we think, was muted by challenging weather at the end when obviously, that marginal consumer is not as motivated. Last year, at that exact time, we had very, very strong conditions. So we had a little bit of a tougher comp at the very end than we did this year. But we're really pleased with the turnaround that we see, particularly the revenue turnaround, right, up 1% through Labor Day and now up 6%, right, post Labor Day. And it speaks to a lot of what we've been saying in terms of changing how we're going to engage with guests and particularly drive much better results from our higher priced pass products.

In terms of conditions, yes, I think the comments you're making about guidance are, yes, are assuming a normal experience at our resorts over Christmas. It's really not possible for us to assess anything beyond that. Obviously, we've all seen conditions change dramatically in just a couple of days. So at this point, that is where we're focused. I do think, yes, that some of the early -- by definition, we lost some momentum in the early season, just given sluggish conditions, but that is factored into our guidance.

We'll take our next question from Ben Chaiken with Mizuho.

And apologies for any background noise. I guess sticking to the pass, as you strategize for next year, Rob, it'd be helpful to get your current view on pass benefits? And maybe specifically, how do you think about third-party benefits to the pass, how focused are you on this opportunity? And then 1 quick follow-up?

Yes. So I think we are taking a look kind of holistically at every piece of this. And as we've said, we'll look at pricing. We look at pricing in the different products. and see our focus as it's always been, is about driving -- maximizing long-term revenue. And so that's going to be a key driver for us. We absolutely look at third-party benefits. We do a lot of research direct primary research with our guests and actually broader destination guests on this. And I think some of those benefits can move the needle, but it's really on the margin. I mean I think people really are looking at this and they're looking at price and they're looking at access to the resorts. And it's about like whether -- do we have the resorts that they want to go to? And is that at a price that's reasonable. Of course, there's no doubt that people would love to have cut the line or they'd love to get on the mountain earlier and things like that. Certainly, those things move the needle.

The Epic Friend tickets, what we used to call buddy tickets, we do have seen that, that's quite important, especially to our spring pass purchasers. I think the third-party benefits are kind of a nice to have, but it's certainly not what we see as like the primary driver of results.

Got it. Okay. That's very helpful. And then as you think about the price investment made yesterday, as we sit here today, is that makes sense for the overall path in the future to evolve as well, whether that's through an extended deadline or different price points. I guess just thinking about the positioning of kind of the whole mosaic of the company today.

Yes. I don't see us extending the deadline for pass. So I mean, right now that is very much a key part of how we provide that discount is that it's before the majority of the ski season has started and that if you're buying products after that, they are refundable. And so that's true even with the product we just talked about. So this 30-day advance ticket is refundable ultimately. So it is why there's still a delta, a pretty significant delta between that and buying a pass in terms of what you could ski for by the day. So I think the core structure of this, we're not anticipating changing. But we do think, yes, there's an opportunity for us to be more creative about how we market lift tickets and I think there's an opportunity potentially for us to be a little smarter about how we price all of this.

I'd just say on the spectrum there, it is consistent with what we already do with our passes. When you think about the deadline approach we have with passes, right, the greater you commit in advance the better price you get with it pass, right? And so this is a similar thing with lift tickets. Yes, we had a 7-day advance lift ticket, 30 days in advance is kind of extending that out but in a similar structure and to drive the similar behavior that we're trying to do, which is to convey in advance.

We'll move next to David Katz with Jefferies.

Firstly, I'd like to just focus on the technology investments -- and just talk about the -- how you think about returns on those investments. Obviously, they enhance the experience. But what are you able to measure in terms of maybe school lift or other ancillary spend that may occur as you make those investments?

Yes. I think yes, absolutely, they drive, I think, 2 things. One is they definitely improve the guest -- digital kind of guest experience in the technology piece or they're enhancing kind of the in-person experience like we are doing with ski school or with rental. But a lot of these technology investments, right, also help us improve conversion. And certainly, if you compared it versus like putting in a new lift, Actually, it's a lot easier to track the return on these investments because there's -- because we're getting the real-time feedback and can see it. In particular, I think the focus that we're putting on the app, right now, we're seeing a lot of traffic growth to the app and on mobile, and we are currently in mobile, obviously, up here in a mobile website, certainly, we can take payment. But in the app, we're not doing any commerce and we don't have easy ways like Apple Pay and Google Pay to close a sale. And so we do see that as having a direct improvement in our ability to drive sales. I mean we're going to be starting with basically lift access products, but ultimately, we will have ski school and rental in there as well.

And so now when we look at ski school, for instance, yes, for this year, I would say one of the key things is going to be seeing how guests react to the digital ski school experience that we're going to be providing. I don't know whether it's necessarily going to have an impact this year on conversion. But obviously, to the extent that we can improve our guest experience scores and Net Promoter Scores within ski school, then we expect to see that actually come back certainly in follow-up visits or a next season.

Got it. And as my follow-up, I'd like to go back to Sean's first question and maybe ask it in a bit more direct way since it's something that comes up in our conversations quite a bit. With respect to the discounting on lift tickets, I think what we're all at least in part, trying to figure out is whether there is kind of a reset in lift ticket revenues separate and apart from pass revenues and/or whether those decisions that you're making are producing incremental revenue now? Or are they setting you up to create incremental revenue in the future, right? We're all trying to sort of plot your revenue growth and put it all together.

Yes. So what I would say is I think if you look at our lift ticket visitation over the last couple of years, it's declined at the same time that our season pass revenue has basically been flat. And so -- and particularly on visitation. And so when you look at that, I think that's not -- that relationship is not something that I think it was 1 thing to see lift ticket visitation decline when we were growing pass units dramatically. But to the extent that we are seeing more mature growth in season pass, we should see growth in lift tickets. How? And so this is one of the things that Epic Friend tickets would be a way, being more creative on pricing and more differentiated on pricing at our resorts is another way which we're doing. Another way is the promotion, the 30% off promotion that we announced yesterday, another way is increased marketing and improving the brand. And all -- I'd say the basic blocking and tackling of marketing of lift tickets, which we were not really doing in the same way that we were doing for pass before.

So yes, we do see this as adding revenue. And we do see this as adding revenue this year and that is included within our guidance and it's included -- when we put out our guidance and highlighted that we saw pass visitation declining, but overall, that would be offset by lift ticket visitation improving, that was included in that. What we're saying though is that, yes, we think these things take a few years to get into the guest psyche. It's not -- I think one of the things we've learned over time is that just like when we introduced the Epic Pass a long time ago, it wasn't that everyone in the entire ski industry was like aware of it and all of a sudden started making decisions around it. It took time. And these new things that we're doing, I think, are the same. That will have some impact this year, but we think we'll see better impact with Epic Friends and this 30% of 4-week out ticket as guests really start to get in that habit.

We'll move next to Arpine Kocharyan.

This is a bit of a maybe unfair question since I'm asking about the current quarter, but I was wondering if you could speak to broader visitation trends into November and early December in terms of seeing traction with some of the promotional initiatives you have going on for the season. But specifically, within this broader bifurcation in the consumer space between upper end and lower end. What are you seeing in regional versus destination resorts? Do you see that leverage of lower pricing kind of discounting working better at your original resorts? While maybe higher end not is price elastic and maybe there isn't much need to discount with those guests.

Yes. I think we said in our comments, and I'd reiterate that I think we're in very early innings of even this season, let alone the life cycle of a lot of these changes that we're doing. And -- but what we're seeing is encouraging. But yes, it's hard. Obviously, we're not ready to really speak to a lot of this because the season has barely begun. And of course, conditions are impacting so much of this in terms of looking at current visitation. So really hard for us to assess a lot of this. I'd say on the broader point about upper and versus lower end of the consumer, yes, I think at this point, we're not ready to suggest that any of our results are being impacted by that. That's maybe a broader point about the economy and broader points about travel. But I think it's a little too early for us to comment on that. I think a lot of what we're seeing, we think is much more about our own trends than it is necessarily about macro trends at this point.

We'll move next to Patrick Scholes with Truist Securities.

As you think about changes to your pass structure, I've seen that there's been the announcement of the Icon reserve type of pass, would that ever be a consideration for you folks? That type of pass.

I would say everything is always a consideration for us. So I think in terms of having some more premium experience, that's something we clearly -- we'll always think about and focus on, I think, some of the things that they're doing, we have in some of our higher-end resorts, obviously, like private clubs and private dining. And then obviously, ski school for us is a major driver. It's almost like a club in and of itself, right, in terms of getting the line cutting privileges plus concierge-type support services plus obviously, ski instruction in the midst of all that. So it's something we'll always look at. But for us, like -- just like a lot of the other changes that sometimes people suggest we have to look at like how it would impact the total ecosystem and other sources of revenue and other business lines that we have. But for us, for our upper-end guests, we really do feel like we've got some pretty good avenues if they want to spend more on their vacation and get kind of some unique services.

Okay. And then sort of breaking news well, there's a chance to tell you right, it may go on strike. Roughly, how much does in a normal year does your relationship with Telluride and Epic Pass contribute to your overall earnings ballpark?

Well, it's -- I mean I think it's -- yes, the relationship is it doesn't -- Telluride doesn't necessarily contribute to our earnings into the year. I think access to Telluride helps pass sales. which is important. And obviously, yes, we're very hopeful that -- yes, that they can find a way to resolve the differences. And yes, that they have an amazing ski season ahead.

Okay. So it's pretty small, I assume, in the big picture of things because you don't own it. It's just a past relationship essentially, correct?

There's no earnings from Telluride that go to us.

We'll take our next question from Chris Woronka with Deutsche Bank.

I guess, Rob, as you kind of look at this year and understanding the slow start, but if you kind of look at -- I know you've always lodging bookings for both pay period and then kind of further out into the spring is a little bit of an indicator. Are you seeing any change in pattern or booking behavior in terms of people maybe if you look at same customer coming that has an Epic Pass are they waiting longer to book, are they booking shorter, longer? Any patterns you can see yet?

What I'd say is I think there's no doubt that I think as conditions were not great, right, during November and early December, we definitely have seen booking deceleration by that. But the flip side to that is we've also seen it rebound very, very quickly. And so that's not that uncommon in terms of where we are. I think, obviously, we go into the season with $1 billion of revenue, right, on passes, but those represent visits like we're saying almost 75% of our visits. So those are folks who are going to come, most likely as we see in every year. But yes, we do see -- of course, people are trying to pick and choose like when is the right time to come. I think for Christmas, we're going to get a lot of folks who -- because a lot of our biggest destination resorts they have incredible experiences, right, not only on the mountain, but of course, in the town and with other activities.

And so what we see actually, there's been a lot of evidence of this. And even in years that were slower for us on the mountain sometimes, actually, it's been record sales years for some of these towns. So actually, for us, we feel like that's where this combination of a broad set of experiences that people have plus the pass pulls people in. And yes, then it's just a matter of how many visits do we get during Christmas and when snow cons and when conditions shift. But at this point, we're -- we have kind of factored that in. And yes, assuming that we have a more normal Christmas experience, we always feel very good about the guidance.

Okay. Understood. And then as you -- and this kind of question relates to both your -- the new friend pass print tickets and also just your overall goal of getting more folks on to the mountains. Any early read on how ancillary spend looks for kind of the first timers and what's kind of embedded in your expectations related to ancillary spend for first timers.

We don't -- I'd say -- yes, it's way too early to try and to sell that because we -- I think that -- that's something we'll probably have a much better sense of much deeper into the season. But I would also say that the folks -- there'll be some people who are true first timers, there will be some people who, yes, just couldn't make up their mind in Epic Friends, for instance, before the pass deadline. And then there'll be other people who are normal lift ticket purchasers who are just going to be committing 30 days in advance. So for us, these guests, I think, our destination guests largely we see as a cohort in terms of their spend on the mountain, and we would expect that a lot of these folks who were coming in would be quite similar to those folks.

We'll move next to Jeff Stantial with Stifel.

I wanted to follow back up on Sean's questions from earlier. If I heard you correctly, Rob, I think you described the 30% 1-month advanced discount as sort of unique was the term, I believe you used. I guess my question is this, could this represent a bit more of a transition long-term evolution towards a suite of, call it, advanced lift ticket discounts, whether it's 4 weeks, 3 weeks, 2 weeks and it starts to become really more of a yield management exercise more than anything else? Or to that point, you should we think about this more as one-off? And then just as a corollary to this, how do you think about the potential for AI to sort of, we'll call it, simplify the consumer purchasing journey and and help enable some more differentiation that you've been able to drive historically?

Yes, sure. So I think -- I don't remember if I -- I don't know if I said it in the prepared remarks, but if I said it in the answer in terms of unique, what I would say is I think it's unique for us. Sure. We have not had a product like this before. At this point, no, we're not anticipating having kind of multiple products that by 7 days, 10 days, 15 days, 20 days, we're not thinking that. I mean, I guess it's certainly possible. I would say, yes, I think AI does help quite a bit, and it's certainly something we are using in terms of taking a lot of data and synthesizing it down to give you some insights. And so when you look across how many resorts we have, how many lift ticket products we have and how many pass products we have that give essentially the same access and all the different advanced dynamics, we do think that AI can help kind of really take our information plus research and assess like what's the right pricing point and approach for that.

But in the end, it's of course, it's still a business judgment and offsetting our strategy for what we think makes the most sense for the company, and that's still going to be it's us ultimately setting pricing based on what we think ultimately drives revenue.

That's great. And then turning over to the lodging side of things. I'm just curious if you think there's opportunity to sort of run similar initiatives as is what you're doing right now with the window and the lift ticket side of things, whether it's more advanced on sort of discount? Just obviously, lodging is a material piece of the budget for a destination guests coming into one of your resorts. So I'm just curious if there's opportunity to sort of rethink pricing there as well.

Well, I would say, I mean, lodging is already, right, a highly dynamic pricing system because it basically is participating in the broader lodging dynamic pricing system. So there, right? Obviously, we're changing price all the time, literally on an almost daily basis based on what we have in inventory, what we're seeing out in the market. So it is a very different, I don't know, eco sphere than what we see in lift tickets and passes. So I'd say, no, I don't see us trying to do what we're doing right now and lift access to lodging because lodging is yes, much further along. I also don't see lift access going to where lodging is either because they're just different businesses, and I think we respect that. But we feel good about our entire approach to lodging. I think we absolutely are leveraging like the right technology and very much looking at all of our competitors to ensure that we're, yes, driving the most revenue.

We'll take our next question from Brandt Montour with Barclays.

So the first question is I think it was pretty clear, the pricing discounts and cuts that you've talked about throughout the call are more than offset by volumes and you said you're going to -- you had baked in some incremental revenue for these. And so I guess the question is, when you think about the incremental revenue that you baked in, I know you're not going to give that number, but is it -- is that piece more coming from what you called out today, selectively being more aggressive on dynamic pricing from window tickets at certain resorts? Or is it more from the thing you announced yesterday the month ahead, 30% discounted ticket program?

Yes, we're not going to give specifics on that. But all of these things come together, including Epic Friends to help and marketing, right, to help in terms of marketing, I mean, additional paid media, better brand elevation, more top of funnel. I mean all of these are things that are all coming together to create the guidance that we have. And so yes, at this point, tougher to parse it out. But I would say, yes, we absolutely see this as driving additional revenue because, yes, I mean, that's based on the assessment that we have and what we look at in the market and what other people are doing. And in a way, just because we've been -- again, if you go back historically, right, we have been -- we really haven't been focused on lift tickets to drive lift tickets on their own. We've really been focused on moving people to pass. So you just haven't seen this level of dynamic approach that we're taking today. So I think it maybe stands to reason that you're going to see some benefit from this now that we're really putting our muscle behind it.

Okay. That's helpful. I appreciate it. A follow-up on this, though would be for that sort of more dynamic pricing, it's like resorts throughout the season. Can you just benchmark us on sort of what the what you did before? I mean we remember you talking about pushing into off-peak before, but it wasn't really a situation where you were taking price down specifically? What were you doing before? And then what also -- what can you see in your data as you were raising prices that kind of gives you the sense for the elasticity that you need to see for this to work out in terms of volumes.

Well, I'd say 2 things. One is in terms of what we're doing for Well, we had -- I mean there's certainly activations at the resort. Obviously, pricing was lower. Lodging pricing was lower and off-peak and another time periods. Ski School prices were lower, rental prices were lower. So it's not that -- obviously, we weren't ignoring it. But in a way, right, but so much of our focus was on a pass. And the pass really wasn't focused on -- I mean, there are some passes that have blackout days, some didn't. So we were focused, but we were not really focused on when it's actually going to use the product. It was much more of a focus on just getting them into the program as a whole. So like this is a pretty big shift in terms of where we're sitting today and how we're going to go about this. And I would say that, yes, we have done a number of price tests on different things at different resorts yes, that are not -- we don't -- we're not going to call attention to, but we actually do get learnings from that. And a lot of what we've launched so far has been built on the experience that we've gleaned from a number of those things.

And again, it's helpful because we have a lot of data capture, and we have a lot of personalization amongst our guests and so we can really track and we can compare resort to resort, we can compare different periods. So that allows us to do some things that obviously are tougher to do if you don't really have the same breadth that we have and that we could bring. And I'd say, yes, of course, the other piece is -- what we have just the broad piece that I mentioned earlier, which is our lift ticket sales were down the last 2 years, even though the industry's lift tickets sales were, I think, flat and then up or maybe up in both years. And so I would say that's also a test that, clearly, we're doing something that wasn't working. And so -- which is why it's not like we're not saying that it's just about price. What we're saying is it's about these multiple things. It's about price, it's about promotion. It's about engaging with guests. It's about brand and the individual resort brands. And it's about, yes, this kind of top-of-funnel advertising versus call to action. I mean -- so we see this as a multipronged effort, not just price.

We'll move next to Molly Baum with Morgan Stanley.

The first one I wanted to ask is about the larger initiative you mentioned to enhance your dining offerings. Can you talk about what the impetus was for that investment? Was it driven by guest feedback -- and maybe at a high level, how you're thinking about your value proposition there and how impactful you think the investments will be ultimately for your ancillary business?

Yes. I think one of the challenges I think we saw from COVID was we went into COVID and although it was terrific that we could operate the resorts in the second year. kind of 2020, 2021, we could barely could operate our dining and then even in the following year, we also we're operating at a much more scale down level. And I just don't think the company has fully come back from that. I think maybe we're a little slow to do that. And I think a little slow maybe to realize that it was going to take the consumer right, more effort by us to get them back into our restaurants. It wasn't going to be enough for us to do what we were doing before COVID. We actually we're going to need to do some new things. And so the things that we've launched are really, one, having a much greater level of personalization and creativity and merchandising, branding in each outlet, both resort by resort and within each resort.

So I think yes, giving more initiative opportunity to people managing all of these locations. But at the same time, having a central team that's watching all of it and then saying, wait, here, this is working, that's not working, we should try this, we should try that and much better data. So that's key. Then 2 is, yes, the investments we're making, which are really, I'd say, threefold. One investment is we're actually improving the dining -- physical structure of the dining. Sometimes it's adding new food or stations. Sometimes it's just upgrading the visual look of it or upgrading kind of how people move through it. We also have another initiative where we are trying to optimize seating. And so we've gone back and looked at table size and chair size and everything else and how we're laying out each of the dining group. And again, with technology and a centralized approach, we can kind of compare and contrast what's working in one place, what's working in another place and make sure that we're doing what we can on that. And then last is ultimately the food itself. And then this is not a capital investment but more of an operating investment in terms of how we can invest in the food either elevating ingredients or providing more breadth.

So it's -- and we do see this as also a multiyear effort, where I think you'll see even more of this as we go into FY '27 where we've got a lot of work going on right now on, yes, what are ways for us to really differentiate on the food business.

Got it. That's very helpful. And then just one quick follow-up on the improvement in pass sales trends post September. You saw it in both pricing and in units, but you mentioned that the marketing investments helped improve mix sequentially. So I guess my follow-up there is, was that an intentional byproduct of your marketing changes? Should we expect to see more improvement from mix going forward? Or do you think maybe units may accelerate a little more as we go forward and as these initiatives mature?

Well, I think we're -- one, we're obviously going to be trying to drive growth. But yes, our marketing was, I think, a little more heavily weighted this year to our unlimited products. One, the Epic Friend tickets, are for unlimited products. And the Epic friend, we extended it for the first time into the fall, so that fall purchasers of unlimited products could get Epic Friend benefits. We also -- doing more upper funnel kind of brand building and brand connection. We also felt was directed at these folks who are making a bigger commitment and really trying to inspire their passion for the business. And that is something that we intend to do, I think, more of a -- candidly, a much better job of as we have more time to prepare as we go into next year, I think we are going to be focused on those unlimited products.

I think we've done maybe much like the season pass, the pass and lift ticket piece, we've done this incredible job of building out the Epic Day pass product line and promoting that and bringing new people in. And obviously, when you look at the growth we've had over the last 4 years, it's been significant. A lot of it coming in Epic day. But we also think it's now an opportunity for us to go back to that kind of unlimited pass holder and the Epic and Epic Global pass holder to make sure that they're feeling, yes, the strong connection and incentives to go into those products.

This concludes the Q&A portion of today's call. I would now like to turn the call back over to Rob Katz for closing remarks.

Thank you all for joining our first quarter fiscal 2026 earnings call. I want to close out by saying that our path to sustainable growth is clear, and I'm confident we're focused on the right priorities to keep advancing these strategies. I'd also like to take a moment to thank our dedicated team members, particularly our frontline employees as they create an experience of a lifetime for our guests. It is only because of our team's commitment and passion that we are able to deliver on this mission. With that, thank you all again for your interest and time, and we look forward to seeing you on the slopes this season.

This concludes today's Vail Resorts Fiscal First Quarter 2026 Earnings Conference Call and webcast. You may disconnect your line at this time, and have a wonderful day.

Good afternoon, and welcome to the Vail Resorts Fiscal 2025 Year-End Earnings Conference Call. Today's conference is being recorded.

[Operator Instructions]

I will now turn the call over to Angela Korch, Chief Financial Officer of Vail Resorts. You may begin.

Thank you, operator. Good afternoon, and welcome to our fiscal 2025 fourth quarter earnings conference call. Joining me on the call today is Rob Katz, our Chief Executive 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, September 29, 2025 and we undertake no duty to update them as actual events unfold. Today's remarks also include certain non-GAAP financial measures. Reconciliations of these measures are provided in the tables included with our press release, which along with our annual report on Form 10-K, were filed this afternoon with the SEC and are also available on the Investor Relations section of our website at www.vailresorts.com.

I would now like to turn the call over to Rob for some opening remarks.

Thank you, Angela. Good afternoon, everyone. Thanks for joining us. Before we discuss our results and fiscal 2026 guidance, I want to share my perspective on where the business stands today and where I see opportunities for future growth after being back in the CEO role for the past 4 months. I want to start by acknowledging that results from the past season were below expectations, and our season-to-date pass sales growth has been limited. We recognize that we are not yet delivering on the full growth potential that we expect from this business in particular, on revenue growth in both this past season and in our projected guidance for next year. That said, I am confident that we are well positioned to return to higher growth in fiscal year 2027 and beyond.

At the heart of our underperformance is that the way we are connecting with guests has not kept pace with the rapidly evolving consumer landscape. We have not fully capitalized on our competitive advantages nor have we adopted our execution to meet shifting dynamics. For years, e-mail is our most effective channel for reaching and converting guests, leveraging data to deliver efficient and targeted communications. However, as consumer preferences have changed, particularly over the last few years, e-mail effectiveness has significantly declined, but we did not make enough progress in shifting to new and emerging marketing channels. Compounding this, we historically have prioritized transactional call-to-action messaging with our guests and [indiscernible] the opportunity to tap into the strong emotional connection our guests have with the Epic brand and our individual resorts.

This approach was successful during a time period where we were rapidly adding resorts and innovating our pass product portfolio. But over the last few years, where we have not benefited from those types of positive news events and instead have dealt with actually some moments where we did not deliver on the operational front, our approach has not been reaching a broader array of guests in order to amplify brand awareness, attract new guests and increase guest loyalty. We've also not had enough focus on our lift ticket business. Again, this made sense as we were rapidly growing our pass business, but as we dramatically increased pass penetration, we have not pivoted to bring the same level of focus, creativity and resources to engaging with guests who for whatever reason, we're not yet ready to purchase a pass before the season.

Finally, while we have made great strides in developing and improving our My Epic app. The app does not have native commerce and we have not been set up to accept either Google Pay or Apple Pay. However, we are seeing guest engagement dramatically increase in the app and on mobile, yet purchase conversion within both are significantly lower than what we would see on our websites, and below its potential. I'm fully committed to course correcting and executing a multiyear strategy that unlocks the full potential of our business. The strategy is rooted in leveraging our strong competitive advantages to drive sustained and profitable growth. We own and operate 42 resorts across almost all regions in North America and Australia and we have the strongest brands and most popular resorts. By owning and operating our resorts, we are able to collect extensive data from our guests across all our lines of business throughout the entire network, giving us tools we can leverage in every marketing channel, and used to inform mountain and technology investments in the highest return areas across all our resorts. We can also leverage our integrated model and data to optimize every aspect of our product and pricing approach across all lift access products, passes and lift tickets at each resort as well as ancillary revenue, which will continue to be a larger focus for the company going forward.

Finally, we are well positioned to leverage the new technologies that are defining the current market environment. However, our immediate priority is increasing guest visitation to our resorts and essential driver of revenue and ultimately free cash flow. We will continue to invest in our resorts and our employees consistent with our long-standing focus on delivering exceptional guest experiences. At the same time, we are taking decisive steps that we believe will rebuild lift ticket visitation, evolve our guest engagement approach to better reach and convert guests and reaccelerate growth of our pass program, all of which are critical to strengthening our long-term financial performance.

On the first item, we are focused on rebuilding lift ticket visitation, an essential driver of revenue and long-term growth. We are strategically enhancing lift ticket offerings, pricing strategies and our marketing approach aimed at bringing in new guests to our resorts in ways that complement our pass program. In August, we introduced Epic Friend tickets, a new benefit for the 2025, 2026 Epic Pass holders giving them the ability to share discounted lift tickets with family and friends. This not only celebrates the social side of skiing and riding, but it also drives lift ticket sales for new guests that would be attracted to visiting our resorts with their friends and family.

Importantly, the full value of the ticket can be applied towards a future path purchase, making it a powerful tool for future pass conversion. At the same time, we're evolving our lift ticket pricing strategy with more targeted adjustments by resort and by time period. This allows us to balance guest access and value while optimizing demand, particularly in off-peak periods without compromising the strength of our pass program. We are also increasing our media investment with a focus on top of funnel awareness of our resorts to help us reach new audiences and drive incremental visitation throughout the winter and intend to continue to innovate our lift ticket product offering as we get into the upcoming ski season.

Beyond the expected immediate impact on visitation, lift ticket guests represent a high conversion population for future pass sales, which supports our pass growth in FY '27 and beyond. Second, we're evolving our guest engagement strategy to better connect with skiers and riders and drive stronger performance. Our focus is on broadening our reach and modernizing how we engage across channels. we plan to increase our exposure within digital and social platforms and expand our influencer partnerships. We believe this shift will allow us to reach guests where they are and to fully utilize our guest data to create content that resonates with our guests and drives action. We're also aiming to elevate the individual brands of our resorts by tapping into the emotional connection guests have with each destination.

We believe this is an important differentiator in a competitive landscape. Third, we continue to see meaningful opportunities to expand advanced commitment and grow our pass business. The pass price reset ahead of the 2021, 2022 season exceeded our expectations in the initial years. And despite some modest declines recently, pass units are expected to be up over 50% in fiscal 2026 compared to fiscal 2021. And the same is true for our Epic and Epic Local Pass products, which despite recent modest declines, we expect to be up approximately 20% in units since the 2020/2021 season. And importantly, we have delivered this strong growth in those products despite significantly expanding other pass options for guests, including our Epic Day Pass products. This growth in our pass program has significantly strengthened our financial resilience and stability. We're focused on driving long-term guest loyalty, which means ensuring we're optimizing the pass offering and continue to drive retention and conversion of new guests to the program.

Toward that end, while driving lift ticket sales, Epic friend tickets is also a new benefit for unlimited pass holders. We're also investing in personalized media and influencer channels to better target and convert prospective pass buyers. Because passes were already on sale during the CEO transition, our ability to influence fiscal 2026 pass results was limited.

Looking ahead to fiscal 2027, we will be evaluating all aspects of our pass portfolio, including the product offering, pricing and benefit in conjunction with our lift ticket products and pricing with a focus on driving conversion to our highest value, highest frequency products and optimizing our overall lift access revenue growth. We are also actively searching for a new leader of our marketing organization and have retitled the role as a Chief Revenue Officer, reflecting the clear focus for this leader on driving all aspects of revenue for the company and are looking for an executive with strong P&L ownership and overall leadership experience.

Finally, we will continue to invest in our people and our resorts to ensure we are delivering an experience of a lifetime. We are uniquely positioned to capitalize on investments in new technologies and processes that make it easier for our guests to engage with each aspect of the physical and digital experience we provide, driving both more value for our guests and revenue opportunities for the company. Vail Resorts has delivered incredible stability and has an extraordinary foundation to execute on these opportunities and generate stronger long-term sustainable growth. We have irreplaceable resorts an owned and operated business model and robust data infrastructure that enables a sophisticated approach to product and pricing decisions across our resorts. We continue to execute against our growth strategies of growing the subscription model, unlocking ancillary, transforming resource efficiency, differentiating the guest experience and expanding the resort network.

In addition, we have a resilient business model with demonstrated financial stability and strong free cash flow generation and a track record of disciplined capital allocation and consistent innovation. Coupled with our passionate and talented teams, we believe we are well positioned to succeed in the future. These actions taken together with the continued success of our Resource Efficiency transformation plan gives me confidence in our ability to deliver long-term sustainable growth and long-term value for our shareholders, our guests, our communities and our employees in the years ahead.

With that, I will turn it over to Angela to further discuss our financial results and fiscal 2026 outlook.

Thank you. As Rob mentioned, while our financial results in fiscal 2025 do not reflect the full potential of the company, the results do highlight the stability of the business model and early success of the Resource Efficiency Transformation plan. The company generated $844 million of resort reported EBITDA in fiscal 2025, which represents 2% growth compared to prior year, despite total skiers visits declining 3% across our North American resorts. The results were within the original guidance range for fiscal 2025 per resort reported EBITDA provided in September 2024. And excluding the CEO transition costs and changes in foreign exchange rates, the result was within 1% of the midpoint of the original resort reported EBITDA guidance range.

Results for our fourth quarter fiscal quarter 2025 were slightly ahead of our expectations with strong cost management, solid demand for our North American summer operations and improved visitation in Australia relative to the prior year.

Now turning to our outlook for fiscal 2026. In fiscal year 2026, we expect net income attributable to Vail Resorts to be between $201 million and $276 million and resort reported EBITDA to be between $842 million and $898 million. The guidance includes an estimated $14 million in onetime costs related to the Resource Efficiency Transformation plan. We anticipate growth in fiscal 2026 to be driven by price increases, ancillary capture, incremental efficiencies related to the resource efficiency transformation plan and normalized weather conditions in Australia in the first fiscal quarter of 2026, partially offset by lower pass unit sales, which are expected to have a negative impact on skier visits relative to the prior year and cost inflation. Season Pass sales through September 19, 2025, for the upcoming North American ski season decreased approximately 3% in units and increased approximately 1% in sales dollars as compared to the prior year period through September 20, 2024. The season-to-date trends through September 19, 2025, were generally consistent with the spring selling period with the decline in units driven by less tenured renewing guests, those that had a path for just 1 year and fewer new pass holders. Renewals are up for our more loyal pass holders, those that have had a pass for more than 1 year.

As we enter the final period for season pass sales, we expect our December 2025 season-to-date growth rates to be relatively consistent with our September 2025 season-to-date growth rates. The Resource Efficiency Transformation plan continues to generate strong results for the company, and we expect to exceed the $100 million in annualized cost efficiencies by the end of fiscal year 2026. Our fiscal 2026 guidance assumes that we will deliver $38 million of incremental efficiencies before onetime costs, contributing to the achievement of an expected $75 million of cumulative efficiencies since we announced the plan in September 2024.

Finally, in fiscal 2026, we anticipate cash tax payments to be between $125 million to $135 million. As Rob noted, while our guidance for fiscal 2026 reflects growth over prior year, it does not reflect the full potential of the company. We are committed to positioning the company to unlock stronger and sustainable long-term growth moving forward.

Turning to our capital allocation priorities. We remain committed to a disciplined and balanced approach as stewards of our shareholders' capital. Our capital allocation priorities remain consistent: First, prioritize investments that enhance our guest and employee experience and generate strong returns; and second, maintain flexibility to pursue strategic acquisition opportunities. After those top priorities, we return excess capital to shareholders. In support of reinvestment in our resorts, in calendar year 2025, we expect to spend approximately $198 million to $203 million in core capital before $46 million of growth capital investments at our European resorts and $5 million of real estate-related capital projects.

In addition to this year's significant investments, we are pleased to announce some select projects from our calendar year 2026 capital plan with the full capital investment announcement planned for December of 2025, including a core capital plan consistent with the company's long-term capital guidance. At Park City, we are continuing the multiyear transformation of the Canyons Village to support a world-class luxury-based village experience. Vail Resorts, in partnership with the Canyons Village Management Association, is replacing the Open Air [indiscernible] transport lift with a modern 10-passenger gondola, which will improve the guest experience, reduce weather-related disruptions and complement the Canyons Village parking garage, a new covered parking structure with over 1,800 spaces being developed by the developer of the Canyons Village.

In addition, we plan to resubmit for permits to replace the Eagle and Silver load lift at Park City Mountain to continue our investment in the On-mountain experience, which if approved, would be upgraded for the 2027, 2028 North American ski season. Planning of additional investments at Park City Mountain across the Mountain is underway and additional projects will be announced in the future. The company also remains committed to the multiyear transformation of Vail Mountain and in calendar year 2026, we will continue to invest in real estate planning to develop the West Line [indiscernible] area into the fourth best village in partnership with the [indiscernible] Vail and developer, East West Partners. In addition, the company plans to build on the success of its calendar year 2025 lodging investment at the [indiscernible] at Vail Square, with plans to renovate guestrooms at the lodge in calendar year 2026.

In addition to further enhance the guest experience across our resorts, the company will be investing in technology enhancements and and new functionality for the My Epic app, including new in-app commerce functionality and payment platform integrations to improve mobile conversion enhanced by My Epic assistant functionality and expansion of the new ski and ride school technology experience. In addition, the company will make technology investments to enhance the integration of My Epic guest experience.

Turning to the second priority. Our balance sheet remains strong and is positioned to enable future strategic acquisition opportunities. As of July 31, 2025, the company's total liquidity as measured by total cash plus revolver availability and delayed draw term loan availability was approximately $1.4 billion. The company's net debt was 3.2x its trailing 12 months total reported EBITDA. On July 2, 2025, the company completed its offering of $500 million aggregate principal amount of 5 and 5/8% notes due in 2030. We used a portion of the proceeds from the offering to repay seasonal borrowings under our revolving credit facility in addition to the $200 million of share repurchases completed during the quarter.

We intend to use the excess proceeds from the bond issuance, together with the $275 million delayed draw term loan for the repurchase or repayment of our outstanding 0% convertible senior notes due 2026 at or prior to their maturity on January 1, 2026. After these priorities, we focus on returning excess capital to shareholders. In the current environment, we look to balance our approach between share repurchases and dividends. The company declared a quarterly cash dividend on Vail Resorts common stock of $2.22 per share. The dividend will be payable on October 27, 2025, to shareholders of record as of October 9, 2020. Current dividend level reflects the strong cash flow generation of business with any future growth in the dividend dependent on material increases in future cash flows. We also maintain an opportunistic approach to share repurchases based on the value of the shares. As mentioned in the quarter, we repurchased approximately 1.29 million shares or 3% of outstanding shares at an average price of approximately $156 per share for a total of $200 million. We continue to evaluate the highest return opportunities for capital allocation. Now I'd like to turn the call over to Rob.

Thanks, Angela. In closing, we greatly appreciate the loyalty of our guests this past season and the continued loyalty of our pass holders that have already committed to next season. With our Australia winter season coming to a close, I would like to thank our frontline team members for their passion and dedication to delivering an incredible experience to our guests. I would also like to thank all of our team members that are working to welcome skiers and riders back to the mountain this coming winter season. We are looking forward to a great upcoming winter season in the U.S., Canada and Switzerland. At this time, Angela and I would be happy to answer your questions. Operator, we are now ready for questions.

[Operator Instructions]

We'll take our first question from Shaun Kelley with Bank of America.

Robert, Angela, maybe I just wanted to start with kind of the broad backdrop for visitation for this upcoming season. So Rob, in the prepared remarks, you talked a lot about some very, I think, interesting initiatives to start to address the visitation -- some of the visitation challenges and some of the opportunities you see there? Obviously, the Epic friend tickets being a piece there, and I imagine you expect utilization on those to be pretty good. So can you help us just kind of think about that underlying backdrop and what you're doing on marketing and with Epic Friends and [indiscernible] that with kind of in the bridge for the year on the financial side, it seemed like the implication was that the expectation given the pass units are down a little bit, was that maybe visits are down, but I might be misreading that. So just wondering kind of how you expect really this season to play out from a visitation standpoint, given some of the initiatives in play.

Yes. Thanks, John. Yes, that's true. We do expect visitation in total for this year to be down slightly. I think that, that is primarily driven by the decline in pass sales to this point. And while we do think that we're going to make a portion of that up with lift ticket sales, it's not going to be enough to overcome in our view, the decline in pass sales to this point. What I would say is that a lot of the things that I mentioned about what we need to do to correct how we engage with guests are things that are multiyear efforts. None of those things are things that happen right away. Even the Epic friend piece will take time for our guests to understand what they have for us to communicate with our guests for them to then increase their utilization to understand the change in terms for that and how they can use it and how they could turn it into a ticket the following year. So we expect to see some benefit from it this year, but obviously, additional benefit from it in future years. The same is true of our paid media investments. Again, I think if you're looking for a top of funnel brand-building effort, that's not something that's going to happen in a month or 2. That's something that takes more time. The same is true for getting deeper and more skilled and more sophisticated and all the other marketing channels that we have.

So what I would say is, I think in the end of the day, we are starting to prepare for the fiscal 2027 season now, right? So we have work going on. We're obviously working on pass sales but also working on other initiatives. So if you kind of back that up, you realize like, yes, from the time that some of this started, right, not possible to have a full impact on fiscal 2026.

Got it. Makes complete sense. And then just as my follow-up, you kind of touched on a little bit of it. Just for the 2027 and beyond plan, some of the outline for maybe the Chief Revenue Officer and some of the opportunity. But just how big of a change is on the table here, Rob, just in terms of like, look, the big initiative done was to push for volume to push pass utilization up at the expense a little bit of price, right? That was sort of the compromise made back during the pandemic. Is something as fundamental as that shift on the table here as we think about moving forward, whether it be raising the pass price in its entirety of balance out that ecosystem differently? Or maybe think about it differently, just the possibly charging an add-on, which has been proposed at a major kind of high-value resort like a Vail just to change the composition of price versus volume? Just how are you thinking about sort of that very fundamental idea as we turn the page to next year?

Yes. I think the way to think about it is, I think what we did with the price reset was really kind of a right across-the-board approach because what we saw was that we felt like all of our pricing was too high in terms of getting the penetration that we wanted and pass. And I think that was the right move at the time, and I think it's driven actually good success. And obviously, as we highlighted, we're still well above where we were before them. But what I would say though is I think what we have not done is we have a lot of different pass products, right? So it's not just the Epic and Epic Local, right? We have a lot of different path products for that, but then we have child pricing and college pricing and team pricing and regional houses. And then all of those products really sit on top of all of our lift ticket products. And I think what you're hearing from us is I think what we can do is now, right, not take a kind of across-the-board approach to any of this, but actually resort by resort or path product by pass product approach and there's technology now that's available that given our data and what we can put into it, right, where all of a sudden, we have a much higher level of confidence in terms of what we can drive with some of these individual moves. It's -- we have, I don't know, 200-plus pass products or something like that. We have thousands of lift ticket products. And those have largely been marching in lockstep where we think actually there's an opportunity for us to think much more strategically about it, again, using some of the tools that are out there that we all know about. And so what I'd say is, in a way, the big -- if we're cracking something open, it's not necessarily that we're looking to take price up or price down per se. It's that we're actually cracking the this kind of connection that every single product has had to each other over the last 15 years.

We'll move next to David Katz with Jefferies.

With respect to the sort of single-day visitation or the walk-up window, one of the debates, I guess, you're having is on sort of that price, right? And whether any of the strategies around improving walk-up visitation includes adjusting some of the price schedules that are out there or some of the pricing strategies.

Yes. What I would say -- I think we look at it, I mean, maybe a little bit more broadly. So right at a top line level, we're looking at pass, right? So that's all the products that are sold before the season begins that are nonrefundable and then there's lift tickets. And within lift tickets, we have a lot of different lift tickets, some of which -- most of which candidly are advanced lift tickets. So there's something that you buy 3 days in advance, 7 days in advance and so we do put a lot of business through that. And then, yes, we do have people who walk up to buy tickets just that day. And so we are looking at all of those prices, but of course, I would say, yes, we're still going to be putting -- and the Epic Friend ticket is a 50% discount on the walk-up price so that would perfectly fit for somebody who wants to make a decision that day. But we think there could be opportunities for us to be more creative about some of the other prices that we have and the kind of advanced windows that we have for them because of when people -- if you haven't made your decision by the past deadline, then it's a question of when do people start making decisions for their future trips.

So in the end, some of this is like we're trying to kind of tailor this to how people make a decision. It's not that many people are deciding to go to Vail that day and then kind of flying out. So the question is like when can we ship price that makes the biggest impact on driving more visitation.

Understood. And interesting about the discussion around media channels. And historically, the company has always been particularly advanced at data gathering, how much of this strategy about sort of reaching customers through the right channels is also about data gathering that builds intelligence for the future? Or is it just the right connection channel?

Yes. I think I actually feel really good about the data that we have on our guests. We have extensive data. I think though that our -- we've had kind of a maybe not a singular focus, but close to around e-mail because it was obviously, we could present the information, the offer, the communication to the guest in a great way. We can get in front of them, and we made a huge effort, right, to collect e-mails over the last 10 to 15 years. And if that channel is still going to be important for us. But we can use that data now with all the tools that are available to go out and use tons of different paid media networks that do personalize, right? And we can go through other companies that we can kind of bump our list against their list and then make sure we're delivering the right ad to the right person and then we can use look-alike modeling, right, to -- even for prospects that we don't necessarily have in our database, to make sure that we're targeting the right people. And this is true not only with digital -- traditional digital media, but TV right?

Tons of TV now is -- are things that -- where you can run ads that go down to the individual person, which is important for us because obviously, we're not a mass marketed type item. And by the way, that's -- that's traditional media, then you add social media. You have influencers, boosting influencers, own post about your product and then using that creative to actually just run it in those social media channels at the same time using TikTok, which historically, we have really not been engaged in. And again, all of these things made total sense for a lot of time because obviously, we did have a much better, more efficient communication channel. But as things shift, like we have to be out front of those as well and take the same level of sophistication and data that we have and just leverage them in different ways.

We'll take our next question from Jeff Stantial with Stifel.

Maybe just starting off on the initial fiscal '26 guidance, which is where we're getting the most questions this afternoon. Angela, you looked out some of the puts and takes that factored in. One that seem to be missing or early that we didn't hear was sort of how you're thinking about lift ticket or window ticket sales this year. So is it your expectation that lift ticket unit sales are down year-on-year, again, similar to sort of what we saw this past season and 1 or 2 before that. Or is it an expectation that should stabilize on some of these efforts as quickly as fiscal '26. And similarly, just how should we think about sort of the blended price growth or decline, just given these changes to the buddy passes and the more dynamic pricing strategy, maybe net of the typical price taking action that we've seen from you historically.

Yes. Thanks, Jeff, for the question. Yes, we did talk about just on visitation, what Rob was commenting on. We do expect some offset to the pass visitation to occur on growth on lift ticket visitation. And with our pricing actions, while we're taking some opportunities to introduce new products like Epic Friends and those, we still expect to be slightly positive on lift ticket revenue. I'll maybe go through some of the other kind of gives and takes that I tried to outline on the midpoint of the guidance relative to last year, it's up about $26 million. And we called out, obviously, the resource transformation plan playing a big role in that of up $38 million, also the normalized kind of conditions within Australia, being another $9 million. And on top of that, really coming from growth, both the pass price growth that we took, but also our lift ticket prices is part of that as well. And then improved ancillary, those are kind of the positives, right? And those are being offset by our pass unit sales, right, which will have a negative impact on visits and then normal just expense in labor inflation.

That's great. That extra color, Angela. And then turning over to the Epic friends changes to the structure there, Rob, or Angela. Can you just maybe start off by helping frame for us the materiality of Body passes historically, whether in terms of total units, revenue contribution, just any metrics that that you could provide there? And then as we think about sort of the overall return on this change, is it your expectation that onetime sort of pricing hit in year 1 can be recouped by higher volume of lift ticket sales? Or should we really think about this more as a longer-term investment where the return manifests over time through sort of long-term replenishment of that funnel for new support and lapse skiers and ultimately, conversion over to pass sales. Just any extra color there would be great.

Yes, sure. So I would say -- so buddy tickets historically are a material part of lift ticket sales. And Angela, have we disclosed that before?

Yes. There's a pie chart in our investor presentation where you can see, right, it's about 7% of total lift revenue, but right, it is 20% of paid lift ticket revenue that comes from those benefit tickets.

So yes, so it's material and that gives you kind of a sizing of it. What I would say is I think our view is that it is something that we would expect to be a positive, right, to the year. We're not expecting it to be negative to the year. I think, obviously, it's something that will grow over time. But we do see that -- and in large part, it's because, of course, we're going to be giving a discount an additional discount to some people who are already using the program, but we're expecting, right, more people to use the program now that we're going to promote it in a much more significant way.

Now that the discount is just 50% across the board for everybody. Now that we're giving the discount to pass holders in the fall, not just householders in the spring and obviously, have been more clear about the ability to turn it into the following year for a pass. So in total, we just feel like, yes, we will ultimately add more visits, and that is something that is contributing to the lift ticket growth that we're expecting for this year, as we talked about earlier.

We'll move next to Stephen Grambling with Morgan Stanley.

A couple of follow-ups on the moving parts you ran through in the guidance for the year ahead. Do you generally anticipate that some of the efforts to communicate the new pricing and marketing will be incurred this year? Or is that more of a 2027 thing? So as we think about the potential for recovery in visitation in top line '27, will there also be a step-up in incremental costs?

Yes. I think 2 things. One is, I think there are opportunities actually to offset as we use more sophisticated technology in our marketing department to actually get more efficient with our overall cost, which I think is kind of an overall view that we have about the business going forward that we believe that there are continued opportunities for us to drive resource efficiency and marketing is one of those places and our goal is to take those savings and obviously redeploy them into investments that we think can be more productive. So while we do see that there will be additional investments that we have to make both within our marketing group, and of course, on the Mountain and our employees as we look to take the experience up. We also feel like there are other opportunities for us to take costs out of the business. So the investments that we want to make are not ones that we think should pull down the margin at all.

That's helpful. One other follow-up. How are you thinking about the net impact from the disruption at Park City last year versus this year? Is that a tailwind in your expectations or a headwind?

Yes, it's definitely a tail in our minds. Obviously, of course, there could be some guests that didn't have a good experience and are concerned about returning. But we see the experience was so challenging last year, and we think the tail from that likely was last season. where I feel like this year, we're going to be going in and the team, I think there has done a great job of preparing for the season. I think we're in a great spot to deliver a very high level of experience all season long. I think that's something that's going to come through, and we're seeing evidence of that in the broader market bookings as well in Park City. So for us, I think it's -- we're starting off in the right spot, and so we feel like it's a tailwind.

We'll move next to Laurent Vasilescu with BNP Paribas.

The March Investor Day laid out a vision, I think, on Slide 45, to have pass revenues go from 64% of the mix to over 75% over time. Rob, with the comments provided in earlier on the lift tickets, where do you want that mix rate to go over time. Should they still go over to 75%? Or are you happy with that rate at 64% currently?

I would say right now, I think my primary focus is on overall visitation to the resorts and overall lift revenue. And I think -- but I would say that I do think there's -- yes, there's some pullback that is maybe to be expected given the kind of rapid growth that we saw over the last 4 years. But I actually feel that, yes, there's continued opportunity, just like we talked about with Epic Friends tickets and moving people through lift tickets, those are all opportunities for us to ultimately convert them into a pass. And so we absolutely are going to continue to march forward as we get the new visits from every source to convert them and drive our path to the stuff. It's ultimately -- it's the best deal. It's the cheapest per day price and as people get more comfortable and more are willing to commit in advance, we think we can transition them into those products. But again, Yes. It starts with visitation growth, overall visitation.

Okay. Very helpful. And then tonight's press release outlines that you expect the December 2025 season date growth rate to be comparable to what you saw for the month of September. Can you maybe comment a bit more about this? What gives you the confidence that the trends remain consistent going forward for the next few months?

What I would say is every time we put out some color commentary on that, we use the trends we're seeing, how they're shifting. And it is true that as we go into the last deadlines. It is more heavily weighted to new than renew. So there's always a little bit more uncertainty. At the same time, obviously, a lot of the selling season is behind you. So we take all of those things into yes, an estimate, right? We use forecasting to come up with what we see going forward. And it doesn't mean we're going to be precisely accurate each time, but we try and give people kind of our best assessment of every piece of data that we have at the moment.

We'll move next to Patrick Scholes with Truist Securities.

I'd like to talk about the dividend coverage. When I run some back of the envelope numbers, and certainly, I could be off in my assumptions here. At the low end of the guide, it looks like the dividend is not fully covered by the free cash flow, assuming I'm not completely wrong in my calculations, my question is, how comfortable are you taking on some debt, assuming you come in at the lower end of the guide to maintain that dividend? And along that line at what's net leverage ratios are you comfortable with?

Yes. We're very comfortable with the current leverage ratios that we have. We think they provide a lot of room for the company especially given the stability of the business. So that has given us comfort on our dividend levels. And yes, we're certainly comfortable if it means that, yes, leverage goes up a little bit given where we're starting from. That said, I think we've been really clear that to show an increase in our current dividend -- yes, we need to see a material improvement in free cash flow. But in terms of the current dividend, yes, we're comfortable with that.

Okay. So would take on a little bit of leverage if needed -- if needed to be in that scenario. Next -- or my follow-up question here. Curious as to in your pass sales, what have been the trends for international guests. I know you've got probably a lot of moving parts there when we say international kind of depends what country wants to visit us at this moment and what doesn't. How is that looking, say, Mexico versus Europe versus Canadians, what are the trends you're seeing? And has sort of the negative rhetoric has that been, I guess, a negative for you because you did see some deceleration in pace since your May update.

Yes. I think what I'd say is the -- yes, certainly, no trend there that's material enough to affect kind of the overall results that we're talking about. I think we -- yes, we've not seen any specific evidence of a shift per se, in future international visitation. Now I would say international visitation has gone down, if you look back over the last 5, 7, 8 years for a whole variety of reasons, some of which was the dollar, some of which was some of the rhetoric and stuff like that in the past or concerned about Visas and [indiscernible] that -- but yes, at this point, we don't see that as a major issue one way or the other as we go into next season.

We'll take our next question from Arpine Kocharyan with UBS.

I was wondering if you could give a little bit more color where you're seeing most weakness in your customer base and maybe where you're seeing more sort of a resilient customer and anything else you would highlight on destination versus regional resorts that you saw in past sales trend. You also talked about less tenured pass holders, maybe not renewing at the same rate as last year. Anything else you would highlight that you're selling pass purchase trends that we should be aware of getting into the season here? And then I have a quick follow-up.

Yes, sure. I think one of the things I would say is that the results that we're seeing are fairly consistent between yes, a lot of different guest demos, geos, past ties, new, new. I mean, yes, we do -- we obviously have a lower renewal rate for 1 year or less, pass holders, that's true. But I'd say broadly that maybe the takeaway from the result is this broad-based result in performance, which is one of the reasons why, yes, we peg -- sometimes if we're seeing -- we have so many different pass products and so many different resorts that yes, if there's an issue with 1 resort or an issue with a region or an issue with a guest group, we would typically then see that show up. But when you see it, so broad-based, it says 1 or 2 things. Either there's just a broad -- potentially like, again, we grew the market dramatically. ICON was growing dramatically. Now you're seeing kind of like maybe a maturation or stability of the overall market, even if you just look at the NSAA, National [indiscernible] Association data over the last couple of years, it's the first couple of years in a long time where past visits have actually declined and lift ticket visits have actually increased. That's where the growth that you saw actually came from.

And so there's probably some market maturity, right, because of the rapid growth over the last couple of years. And then it's also why when we talk about our marketing effort and why we're not connecting because because obviously, we're using -- even though the content is not the same for each guest group, a lot of our marketing approaches are consistent. And why in my mind, it highlights, right, that's an opportunity for us as we go forward. But yes, no, there's nothing that I can call out specifically about some group or another.

One thing I'll just add on the consumer piece on renewals is we're not seeing any change in kind of that net migration behavior as well, right? We're continuing to see about the same amount of trade-up as trade down as we've seen over the last few years. So you're not seeing the renewal base be kind of a [indiscernible] people pulling back because of pricing are trading down. We're not seeing that dynamic within our renewals.

Interesting. That's very helpful. Just to go back to the EBITDA bridge, you mostly covered this question earlier. But I was wondering what needs to happen for you to hit the upper end of your guidance range versus midpoint? You obviously talked about more nimble pricing in off-peak POAs, maybe more targeted approach to drive window of traffic, it sounds like that has the potential to impact lift volume as soon as this season? Is it just a matter of sort of those strategies working for you to hit the upper end of the guidance range?

Yes. I think the range -- usually, I mean, the biggest driver is always visitation, right, in terms of the range that we put out because that impacts everything, right? It impacts all of our ancillary and flows through at a very high rate. So yes, visitation is really the key for us on both ends of the spectrum of the guidance range.

Yes. So what needs to happen for you to hit the upper end of your visitation guidance?

Well, I think -- I mean, I think in the end, there's obviously opportunity for us to outperform either on pass or on lift ticket visitation. We've got a number of assumptions that go into how we come up with guidance and there's always going to be kind of up or down estimate around each one. And sometimes things will work earlier than you think. But of course, that's true. Sometimes things don't work as well as you think. So it's one of the reasons why we have a range. It's not possible for us to pinpoint exactly. But it's meant to say that, yes, that we feel when we are looking at the totality of the business that this is the most likely range that we'll wind up in.

We'll take our next question from Ben Chaiken with Mizuho.

Rob, you mentioned evaluating the past product offering in the release and the Q&A a few times. I guess just taking a different perspective, I guess, where do you see the largest holes with the past. So not asking like the strategy necessarily, which I think is where the conversation has been, but what are you trying to solve for? Like where do you think Vail is lacking to the extent that you do and what are the largest areas to improve?

Yes. I think we've got a pretty broad portfolio. So it's not that I feel like we're missing a particular product. But I'm not sure -- with this many products, I'm not sure that we are pricing these products in the optimal way, but either against each other or against kind of the need that we're looking for, for each segment. I also think there's opportunities for us to look at the benefits we provide on our passes, which again largely have not changed that much over the years. And who gets what and why and where and all of that.

I mean, again, I think what you're seeing. It's a little bit like what we've said about resource transformation for the company, which is we added a lot of resorts over a relatively short period of time and are now taking the opportunity to go back and say, okay, wait a minute, we can do things a lot smarter than we've been doing them when we were just in full acquisition. But the same is true for pass. We've added a lot of products over a very long period of time and have not really gone back to say, wait a minute, like how do we optimize each one of these price relationships or benefit relationships. So in our minds, that's -- it is a product and pricing piece. But it's not necessarily because we see some gaming obvious hole that we need to fill. I mean I think one of the things that we did identify was buddy tickets and [indiscernible] friends tickets and the benefit tickets. And we -- that was something that we have identified, identified -- that wasn't simple enough, it wasn't clear enough, it wasn't really moving the needle the way we wanted. And so yes, we certainly addressed that as you saw for this season.

Got it. That's helpful. And then just one quick follow-up. You've mentioned kind of benefits a few times. I guess, what's your thought process on adding like additional member benefits or perks to the pass and the attempt to increased the year-round utility. I think there's a few passes out there that provide these other ancillary benefit to pass holders. I mean it would be great to get your take on that strategy.

Yes. I think that's something that we absolutely need to look at. I also want to make sure if we do something that it's not just like window dressing that it's something that really will move the needle. And that if we're going to certainly, if it's coming from our company and we're going to put time and effort in our own energy to it. If it's a third-party benefit, then it has to be a partnership that we want to really get behind. So either one of those, I think in our mind, it's -- the primary benefit obviously is skiing. And so yes, then once we get beyond that, now it's -- we've got our Epic Mountain Rewards right, which gives people the 20% discount on a lot of our ancillary lines of business. So once we start going beyond that, like, yes, it needs to be something that should make a difference. But also, I think we're in a good moment in time, I think, to start exploring all that.

We'll move next to Brandt Montour with Barclays.

So my first question is on the guidance. You guys gave the usual sort of normal weather implied in guidance. I just was hoping, maybe, Rob, you could put a finer point on that is -- was last year -- last year, it seemed like it was really good weather, but was that normal? Or was that better than normal? I know the years prior to that would be obviously firmly worse than normal, but maybe you can just give us a little bit of help with what you sort of baked in there?

Yes. Thanks, Fran. I would say last year, we had a pretty normal ramp across most of our regions where we were able to get terrain open kind of on a typical schedule. It actually finished for the year, right? Q3 actually had kind of a fall off on some of those conditions. But again, that doesn't usually drive as much of the overall impact as being able to get kind of open and terrain open ahead of some of those peak seasons. So we didn't see any unusual disruptions, I would say, like we've called out in some of the other 2 years. So it was much more of a typical pattern though I wouldn't say it was like a bob average snow pack or snowfall year by any means last year.

Okay. Great. And then on the lift ticket strategy and the discussion around that, I think it was -- I think the pitch was pretty clear. the message from you guys today that the optimization opportunity exists. When you think of absorbing this from you guys, and I don't want to say it sounds like discounting or anything like that, but just smarter marketing, smarter pricing. Is there a risk that as you improve the attractiveness of the Lyft ticket, you could cannibalize early commitment. I know that would be a little bit on a delay because you're marketing data gets after the past selling season. But those same folks are probably going to overlap in terms of who you're reaching with that marketing? Is that a risk for the following year going down that road?

I mean I think it's -- what I'd say is yes, it's a risk in terms of it's something we pay a lot of attention to. But I think if you look at the differences between window, the walk-up window or advanced lift ticket prices and the price you pay if you buy in advance, if you buy in a pass before the season, that gap has widened dramatically over the years, in particular when we took pass pricing down 4 years ago. So I think when you -- there's -- in our minds, there's plenty of room to be more aggressive and creative on lift ticket pricing without necessarily sacrificing pass business, but it is absolutely something we're very cognizant of and pay close attention to.

We'll take our next question from Chris Woronka with Deutsche Bank.

So I guess the first question I'm thinking about, Rob, is strategically, the idea to kind of go after more volume. You've talked about making ski more accessible to a wider range of people. Is this more about an age bucket or a certain demographic? I'm trying to kind of square like what you -- where those people are going now if they're not going on skiing and this price -- how confident are you on if you've done survey work or other things around that? How confident are you that investment in price, so to speak, and other things in the experience is going to get those folks to your mountains versus whatever else they're doing today?

Yes, sure. Well, I mean, one is -- yes I think, yes, we need to make sure that even within whoever is going to ski next year, yes, that we're getting our fair share that's representative of the quality of our resorts, the quality of how we engage with them and to make sure that we've got the right price matrix, right, to optimize our overall lift revenue. And so that -- I mean, it does start with that. And I would say, I think like this, one of the things that's important to understand about the skiing industry is that it's constantly in flux. So there's a ton of people every year that go out of the ski industry and a ton of people every year that come in and then a ton of people every year that come back or take 2 years off or 3 years off, people that take go for 2 days, then next year could go for 4, right? And so actually, even within like if you took the total number of people in -- let's just start with the U.S. that know how to ski, so therefore, could take a ski vacation -- yes, like there's a lot of opportunity to move frequency, skier visits within that without necessarily kind of convincing somebody who never skis to ski, right? And so that is really our primary target. And that is a combination, right? It's not just price, right? It's like we've got to get the right message in front of them. We've got to make the right emotional connection to them, to their friends or family, to their kids depending on who it is.

And then, yes, you have to have the right overall mix of value, right, to move some of these folks. Obviously, they are the least committed skier, but again, it's not -- there's a huge percentage of the market each year that's going in and out so to speak, and a huge percentage that's moving their frequency. And it's within all of that, right? It's not like we're selling soap and everybody's been buying a bar of soap and now you're just trying to commence somebody who bought some other brands about yours. This is a product that is -- yes, that is very much a discretionary vacation choice. And we think there's real opportunity for us to drive overall frequency up. And I would say, when you look at -- I mean -- and Chris, you go back a long way, I go back a long way.

It's like, yes, people have been talking about the fact that the industry never grows, but 2 years ago, right, we hit a record. Now people say, "Oh, well, that's COVID." But okay, that's fine, maybe, but in the end, right, it was still -- or it was it 3 years ago, I guess that was a record. But in the end, right, it shows that there's enough people in the U.S. to actually do that. right? And so in the end, for us, it's not -- it's about getting people out and getting people to the resort and getting more days.

Yes. It makes sense. Rob, super helpful. I just have a follow-up on CapEx. And the question is kind of almost like what you're solving for there. I know over time, you guys have identified specific projects. There's a maintenance piece to it. But I guess, do you think CapEx, is there a step function or CapEx you think needs to jump up to try to -- is that part of your plan to get people back and adding new amenity moving along faster or whatever it might be or you think, hey, capital plan is going to be what it's going to be year-to-year. There's constraints based on where we are in EBITDA and that kind of thing. I'm really just trying to get at whether you think a bigger uptick in CapEx would actually help if it's necessary or you plan to do it in the near future?

Yes. I guess I'd say, I think absolutely, we're always going to be upgrading lift, and we announced the new lift for next year, obviously, and that's critical. But it can't -- I think we need to realize also as a company and as an industry that it can't just be about lift. It's not the only thing that matters to people. And in our minds, like one of the things where I think we're kind of at the beginning of this, and we've made some initial forays, but like we think there's technology that can make a big difference. So how people use technology and the digital experience, how it makes it easier for them to rent skis, how it makes it easier for them to connect with their skiing instructor, how it makes it easier for them to get food, how it makes it easier for them to figure out how to book or get around a resort or overall book of vacation, I think these are all things that are critical that really speak to the entirety of the guest experience when they come to us. And those are things where we really have both a unique advantage, right? Because obviously, we own and operate all our resorts, they're all on a common platform. And it's where you invest that actually impact everyone's experience with all of our resorts rather than a singular lift, which affects one resort for some people who use that lift.

Now that said, we have to keep investing in lift, when you look back historically, I think you've seen us, we have spent a lot of money on lift over the last 4 years. So that's continuing. We're still going to keep proposing lift. But I think the differentiator is going to be in this other area, where I think it is actually not as capital intensive, right, as trying to replace every lift on Vail Mountain or something like that. And so it is where we're putting our focus. At this point, we're not making any changes to our long-term capital guidance, but to the extent that we saw opportunities that made sense to do it, of course, we'd come back to everybody and share that. But at this point, we're not seeing that.

This concludes the Q&A portion of today's call. I would now like to turn the call back over to Rob Katz for closing remarks.

Thank you. This concludes our fiscal year-end 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.

This concludes today's Vail Resorts Fiscal 2025 Year-end Conference Call and Webcast. You may now disconnect your line at this time. Have a wonderful day.

Good afternoon, and welcome to the Vail Resorts Fiscal Third Quarter 2025 Earnings Conference Call. Today's conference is being recorded. [Operator Instructions]. I will now turn the call over to Angela Korch, Chief Financial Officer of Vail Resorts. You may begin.

Thank you, operator. Good afternoon, and welcome to our fiscal 2025 third quarter earnings conference call. Joining me on the call is Rob Katz, our Chief Executive 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, June 5, 2025, and 0and 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.

Before we discuss our results, I would like to turn the call over to Rob for some opening remarks.

Thank you, Angela. Good afternoon, everyone. I am humbled grateful and super excited to be back in the CEO role at Vail Resorts. And it's good to be on this call with all of you again.

So first, I want to start out by thanking Kirsten Lynch, our former CEO for the incredible career she has had with Vail Resorts, including the past 3.5 years as CEO. Huge progress was made on so many fronts from investments in our frontline talent to new guest experience innovations to much more, which will all absolutely be things we will be leveraging as we go forward, and I have immense gratitude for her for all of that work.

So why did I choose to be back in this role? First and foremost, I love this company because of the incredible people we have working here and the amazing resorts we get to operate. I remain as passionate about this company, the sport and our industry as I was when I first worked with Vail Resorts nearly 3 decades ago. But most importantly, I see a terrific opportunity ahead of us to drive value with the incredible foundation that's already been set.

Given how much time I've spent around this company, it's natural to assume that I arrived here with a fully thought out detailed action plan, but that's not the case, because there is a big difference between serving on the board and being an executive, here every day with our teams driving change, and that is where real change happens on the ground. That was true in 2006 when I first took over as CEO, and that is still true today.

So while I'm not a brand-new CEO for this company, I'm still new. As so many things are different at the company and different in our industry and in the macro environment, and it will be important for me to take the time to listen and learn from everyone here and for all of you to give me the space to do that as well. That said, of course, I'm not starting at ground zero, and we'll have much more to share on our future plans during upcoming earnings calls and at our investor conference next spring.

With that in mind, I am starting this next chapter with some fundamental points of views. The foundation of our success as a company remains our unique portfolio of owned and operated resorts and our strong business model that drives stability in an industry that is uniquely exposed to weather volatility. Advanced commitment remains central to the guest experience and our own thesis on how we drive value.

Equally as important is that the guest and employee experience is paramount, and it is at the center of everything we do. And we need to always remember that while we also drive our financial success.

When I look back on this past year, I see so much to be proud of and strong performance in so many areas. However, I also see areas where we can and will do better, because we have high expectations for ourselves and we are driving strong -- and we are driving strong guest satisfaction scores.

However, we need a more consistent guest and employee experience throughout the season and across all of our resorts. We can also do a better job communicating with our guests. We have incredible data and insights on our guests and very sophisticated tools and talent to drive demand, but we need to continue to innovate our marketing efforts as the environment around us has continued to evolve and ensure that our strategies and tactics are meeting guests where it's most impactful. Missing the mark here has clearly contributed to softer results than we expected this past season. It also needs to be clear to our guests what our company stands for.

I recognize that the very existence of Vail Resorts as the industry leader and a large publicly owned company can sometimes seem at odds with the essence of the ski industry. but that's not how I see it. We are a company filled with passionate people and so many avid skiers and riders who have worked for decades to innovate this industry for the better and we can do a better job showcasing how we benefit our guests and employees and the industry overall and most importantly, do a better job avoiding the moments that often set us backwards.

Driving guest engagement and loyalty and stronger revenue growth are among my top priorities as CEO. We -- I also understand that there is a narrative that the industry is mature, that there are not many strategies left to drive growth in our company. It's important to remember that, that is exactly the same narrative I walked into when I became CEO in 2006.

I -- of course, we can't just replay the approach and success we had back then. But it means I'm not daunted by the challenges of how to drive growth. I remain incredibly optimistic about what's possible, because we are a much stronger and more innovative company than we were in 2006, with team members and leaders who are more thoughtful, sophisticated in their approach and that is a powerful combination to drive change, and we need to recognize that change takes time, especially in an industry where the majority of our earnings occur over only 4 months each year.

But the extra time it takes us to drive change also means that as we build our competitive differentiation, those advantages can drive revenue growth for years to come. Through it all, my primary job as CEO is ensuring we align with all of our stakeholders to deliver an experience of a lifetime for our guests and employees while driving financial success for our company as well, and that is what fuels my excitement to be back as CEO.

With that, I'll turn it over to Angela to cover our fiscal 2025 third quarter results.

Thanks, Rob. Results in the quarter reflect the stability provided by our season pass program as sort net revenue, excluding Crans-Montana, remained consistent with the prior year, even as visitation declined 7%. In March and April, destination visitation among precommitted pass guest improved as expected.

However, visitation from uncommitted lift ticket guest was below expectations. Ancillary spend per destination guest visit was strong across our ski school and dining businesses throughout the quarter while overall revenue in our ancillary business was impacted by the lower visitation. In looking at our performance throughout this past North American ski season.

Our results reflect the strength of our advanced commitment strategy, strong destination guest spending and the impact of our resource efficiency transformation plan. The company achieved 3% growth in resort reported EBITDA year-to-date despite total spare visits declining 3% across our North American resorts from the beginning of the C season through April 30, 2025.

North American visitation reflects the benefit of improved conditions in the second quarter relative to the prior year, offset by the expected decline in visitation from selling fewer pass units to season.

For the year-to-date period, resort net revenue increased 3% driven by a 4% increase in season pass revenue and increased ancillary spend per guest across our ski school and dining businesses. Resort reported EBITDA year-to-date also reflects strong cost discipline, including savings from the Resource Efficiency transformation plan.

The company's full year resort reported EBITDA growth is partially offset by $15 million of expected increased costs from company-wide performance-based management incentive plan expense that was not earned in the prior year, of which $12 million has been incurred through the fiscal third quarter and $6 million of expected unfavorable resort reported EBITDA impact from changes in foreign exchange rates, of which $4 million has been incurred through the fiscal third quarter.

Overall, the results demonstrate the strength and resilience of the company's business model, supported by its expansive resort network and loyal guest base even as the company's Western North American destination resorts experienced a decline in visitation with outsized impacts from fewer lift ticket guests.

Through the 2024, 2025 North American ski season, guest satisfaction scores across our destination mountain resorts and regional ski areas were strong and consistent with prior year, excluding Park City Mountain. As a result of the investments we continue to make in our teams, the company achieved record frontline return rates and strong employee engagement scores across our mountain resorts during the winter season.

In addition, we are on track to achieve our 2-year resource efficiency transformation plan, which was announced in September 2024. We -- the plan is designed to improve organizational effectiveness and scale for operating leverage as the company grows.

Through the 3 pillars of scaled operations, global shared services and expanded workforce management, the company expects $100 million in annualized cost efficiencies by the end of its fiscal 2026 year. The company now expects to deliver approximately $35 million of efficiencies and -- before onetime operating expenses in the fiscal year 2025, which includes $8 million of efficiencies the company is accelerating into the current fiscal year from its original fiscal year 2026 plan. The company remains on track to deliver the $100 million in annualized cost efficiencies by the end of its fiscal year 2026.

Now turning to our outlook for fiscal 2025. I -- as a result of the lower-than-expected lift ticket visitation during the spring period announced on April -- April 24, 2025, and onetime costs related to the CEO transition announced on May 27, 2025, the company is updating its fiscal guidance for fiscal 2025. We -- the company now expects net income attributable to Vail Resorts to be between $264 million and $298 million and resort reported EBITDA for fiscal 2025 to be between $831 million and $851 million.

The guidance reflects the lower-than-expected lift ticket visitation in the spring period that was partially mitigated by the company's focus on its resource efficiency transformation plan and strong overall cost discipline. The updated guidance now includes an estimated $9 million in onetime costs related to the CEO transition, in addition to the estimated $15 million in onetime costs related to the multiyear resource efficiency transformation plan and the estimated $1 million of acquisition and integration-related expenses specific to Crans-Montana.

Compared to the original fiscal 2025 guidance, the updated guidance includes an estimated $7 million impact from foreign exchange rates. At the midpoint, the guidance implies an estimated resort EBITDA margin for fiscal 2025 to be approximately 28.4% or 29.2% before onetime costs from the Resource Efficiency Transformation Plan and CEO transition.

Turning to our balance sheet and capital allocation priorities. As of April 30, 2025, the company's total liquidity as measured by total cash plus revolver availability and delayed draw term loan availability was approximately $1.6 billion. This includes $467 million of cash on hand, $508 million of U.S. revolver availability to $450 million of U.S. delayed draw term loan availability and $215 million of revolver availability under the Whistler Credit Agreement.

As of April 30, 2025, the company's net debt was 2.6x its trailing 12 months total reported EBITDA. The company declared a quarterly cash dividend on Vail Resorts common stock of $2.22 per share. The dividend will be payable on July 9, 2025, to shareholders of record as of June 24, 2025. During the quarter, the company repurchased approximately 0.2 million shares at an average price of approximately $161 per share for a total of $30 million. Additionally, the Board of Directors increased the company's authorization for share repurchases by 1.5 million shares to approximately 2.8 million shares.

We remain committed being a disciplined and balanced approach as stewards of our shareholders' capital. We continue to prioritize investments that enhance our guest and employee experience, provide high-return capital projects, and enable strategic acquisition opportunities.

After these priorities, we focus on returning excess capital to shareholders. In the current environment, the company looks to balance its approach between share repurchases and dividends. The current dividend level reflects the strong cash flow generation of the business with any growth in the dividend dependent on a material increase in future cash flows. And the company also maintains an opportunistic approach to share repurchases based on the value of the shares.

As it relates to the investments and enhance the guest experience, we remain committed to consistently increasing capacity at our resorts through lift, terrain and food and beverage expansion projects, along with investments in technology to further elevate the guest and employee experience at our resorts. The company expects to invest approximately $249 million to $254 million of total capital in calendar year 2025.

We -- Key capital investments include the multiyear transformational investment plans at Park City Mountain, which include the new Sunrise Gondola out of the Canyons base area, along with the dinner terrain improvements and restaurant upgrades, in addition to investments at Ondoma Citron, a new 6 pack lift at Perisher, new functionality for the My Epic App, more advanced AI capabilities from My Epic Assistant and technology investments across the company's and for businesses.

Now I'll turn the call back to Rob to discuss the Spring test results.

Thank you, Angela. Pass product sales through May 27, 2025, for the upcoming North American ski season decreased approximately 1% in units and increased approximately 2% in sales dollars as compared to the period in the prior year through May 28, 2024.

We -- given elevated levels of macroeconomic volatility that occurred throughout the spring selling period, it is currently unknown what, if any, impact that had on early past decision-making. Pass sales dollars are benefiting from the 7% price increase relative to the 2024-2025 season, partially offset by the mix impact from the growth of Epic Day Pass products.

Pass product sales are adjusted to eliminate the impact of foreign currency by applying an exchange rate of $0.73 between the Canadian dollar and U.S. dollar in both periods for Whistler Blackcomb pass sales. The slight decline in units relative to the prior year season to date was primarily driven by new pass holders and lower tenured renewing pass holders, which may reflect delayed decision-making by the macro due to the macroeconomic environment. Epic Day Pass products experienced strong unit growth driven by the strength in renewing pass holders.

Overall, renewing pass holder product net migration was relatively consistent with the prior 3 years. The majority of our past selling season is ahead of us, and we believe the full year past unit and sales dollar trends will be relatively stable with the spring results. We will provide more information about our past sales results in our September 2025 earnings release.

Epic Australia Pass sales through May 28, 2025, increased approximately 20% in units and approximately 8% in sales dollars as compared to the period in the prior year through May 29, 2024. We -- Epic Australia pass sales are benefiting from the successful introduction of the Epic Australia 4-Day Pass, which is resonating with lower frequency skiers and riders in Australia.

In closing, with the North American and European ski seasons coming to an end, I want to especially thank our frontline employees for their passion and dedication to delivering an experience of a lifetime to our guests. Our employees are the core of Vail Resorts' mission, and I'm looking forward to seeing all of our employees and all view up on the hill.

At this time, Angela and I would be happy to answer your questions. Operator, we are now ready for questions.

[Operator Instructions]. We will take our first question from Shaun Kelley with Bank of America

Rob, welcome back. It's great to hear your voice again. I appreciate you doing this. So I'd love to lead off with kind of where you started on some of the priorities that you highlighted. I think if I caught it in the prepared -- prepared remarks, you said customer experience and stronger revenue growth. So just what could some of the key levers be in both those areas? I appreciate it's super early, but kind of -- maybe walk us through the brainstorm a little bit about what you're exploring and what could be on the table in those areas, if that's the top 2 that come to mind. .

Sure. I think on guest experience, I think it is building on the progress that we're already making. I think we've made a lot of investments guest experience. And if you -- it's -- Park City had a challenging experience. Obviously, I think everybody knows, during a portion of this year. But when you look at all of our other resorts, we actually had really good guest experience scores.

That said, the Park City experience was obviously unacceptable. And so yes, one of my key priorities is ensuring that all of our resorts are consistently throughout the season, delivering that experience. And I think that's literally a matter of building on the -- the track record and the investments that we've already made and just bringing them to life and executing.

I think on the marketing side, we've got incredible fundamentals and foundations, right, in that group and terrific talent, but I think there's an opportunity for us to take what we're doing in marketing and bring it to be a little bit more current. We've had a number of things that have been so successful for us when you look back over the last decade, but obviously, some new tools and approaches for us to make sure we're really connecting with guests in a way that's most impactful given the kind of changing environment that's out there. And I think that is, for us, a critical part of really returning to revenue growth.

And then just as my follow-up, you also kind of reiterated that advanced commitment remains pretty much the core of the business, and it obviously has revolutionized the stability of your earnings and cash flows over time. So zooming out as we kind of look at the mix as it's progressed here in a few years after the price cut, what's on the table in terms of adjusting or tweaking the pricing strategy?

And is the 75% of lift ticket sales still the North Star in terms of what you're targeting? Would there be any opportunity to possibly readjust that mix and think about high-low strategies and things like that to possibly drive different levels of utilization? Just help us think kind of how you're thinking about ways to maybe further evolve something that obviously you basically transform the industry with.

Yes. I think I would say that weather volatility is not going away. And so I think the core thesis that it's important to get people to commit to their skiing in advance remains. I think -- one of our focus areas, though, is obviously how we get the pricing and product strategy of that right. And I think we've continued to innovate on that, but I think there are opportunities for us to look at our product portfolio and see where it is that we could -- there may be gaps that we could fill.

It's important to also remember when you look at our -- when you look at season pass growth overall, in the last -- like this year and certainly last year, is that we obviously grew dramatically, right? When you look back at 2002 and so we added -- we almost doubled, right, up 40%, right, the number of passes.

So once you do that, of course, it's true that you're probably pulling some future growth in a couple of those years, right, from future years? And that's somewhat to be expected. That said, obviously, we're a much stronger company by having people commit in advance. And I think that's true not just in the ski industry, but it's true in almost all of travel where people are looking to get their customers to commit in advance.

I do think there's also opportunities for us to do a better job on driving lift ticket sales. I mean, obviously, for this year, that was obviously an area that didn't perform to where we expected them to. And it's going to be our job to really innovate and come up with approaches where we feel we can drive lift ticket sales, particularly in off-peak periods, while at the same time, not really putting or endangering, right, the value that we're offering from our season passes.

We'll go next to Jeff Stantial with Stifel.

Welcome back, Rob. Maybe actually just sticking on that last point. that you just made on driving ticket -- lift ticket sales. When you think about the decline you saw this season and for a couple of seasons now, obviously, part of this is sort of just post-COVID reversion in guest behavior. Some of it was weather, but part of this does feel a little bit more structural in nature.

So with that in mind, Rob, I'm just curious how you think about and frame this moderation in wind of ticket sales that you have seen in recent years? How much of this is sort of unavoidable, how much of it was more self-inflicted? And then strategically, does this feel like a trend that can be reversed with just some operational and marketing adjustments? Or does this really warrant a deeper discussion on the optimal pricing strategy?

I think -- I guess when I look at it, what I would say is, obviously, we want people to -- beyond the mountain, right? And we want people to visit our resorts. And our -- of course, what we prefer is that people buy in advance and come to the resort on a pass product of some sort. To the extent that there are people who are not doing that, it's still our hope to convert those elliptical buyers or people who today may not be buying a pass to a pass product.

But if we don't get them on a pass product, then it's our job to provide avenues and pass for them to come to our resorts to try them out and ultimately get them into our primary loyalty product. I think that, that does require, right, looking at new approaches to our pass product and pricing strategy, but I don't think it actually goes to the core thesis that we would prefer to have people in advanced commitment products.

And we're not about to do anything that would call to question the value proposition that we're offering to our householders.

That's great. And then maybe just turning over to the current trade environment as this is our first time hearing from you since April 2. Rob or Angela, can you just sort of frame out for us where the exposure is in the model to potential tariffs just after the landscape looks today, keeping in mind is dynamic. And then just sort of what sort of opportunity do you have to offset or derisk any potential exposure?

Yes. Thanks, Jeff. As a service business, we don't have a lot of direct exposure to tariffs, right, because our main cost is labor, but there's obviously, right, a larger impact that we're looking at from tariffs, which is right, how does that impact the consumer? And does that impact any shifting in their spending patterns. And of course, right, in this kind of macro environment, that just creates some uncertainty. So that's the side that we watch more.

On the actual cost piece, right? We do have a lot of long-term agreements and is the largest purchaser with a lot of our suppliers, right? We do have ways to kind of help mitigate on the expense side, the impacts.

We'll go next to David Katz with Jefferies.

Good to talk to you. Welcome back. Rob, I wanted to talk about sort of labor broadly speaking, right? But much has changed since we last had this conversation, one of which is just generally cost of living, costs in general and the company has made some adjustments, et cetera. But that's, I imagine, a particular area of focus and sort of an overall labor strategy I know this is a general question, but I'd love to hear what high level thoughts you may have so far. .

Yes. I mean I think I said a couple of times, both on this call and obviously, on my letter to all of our team members that everyone, talent in total, right, all of our employees, all of our team members at this company write are core to everything we do. And we understand that, that is right, the experience that people are coming for. It's not just the resource, right? It is actually how they interact with the people who are here and the service that they get is all about, right, all of our employees throughout every part of the business.

And so it's critical for us to have show up in a way that truly delivers that experience of a lifetime and that only happens if we do that for them. And that includes our employees that may be part of a union. I mean they are just as important as anyone else here.

And it's important for us to, of course, work through the various processes that go on with our unionized employees in a way that brings those to a successful resolution. There's always going to be tension. There's always going to be challenges through that, of course. And obviously, even after the Park City negotiation and ultimately, the impact that happened to the resort, 2 other very successful union contracts that were signed this year and many others, right, in the years that preceded the Park City situation.

So that is, of course, very top of mind for me. But again, as part of a broader commitment to ensuring that we are delivering and supporting our -- delivering the right experience for our employees and supporting them so that they can ultimately deliver the right experience for our guests. And of course, that's critical to driving revenue growth as we look ahead.

Understood. And one of the other sort of harder evolving challenges has been weather, right? And it seems as though the weather presents a challenge somewhere almost all the time. And I just wonder the degree to which you sort of think about that in today's environment and how you -- aside from the presold nature of the passes, are there other strategies, whether financial or otherwise, that you can deploy in just dealing with that complexity?

I think that is -- of course, one of the most important things we always are thinking about in terms of the business, and it's certainly a unique aspect right about this industry versus some other parts of travel. But we do think that our advanced commitment strategy is critical for that and it is about this trade that we're making with our guests, where we're providing a more accessible price point to them and in return, right, we're getting a commitment for the season. And I don't see us shifting away from that.

Obviously, it's critical for us to be part of making our resorts right -- kind of fulsome experience, right? So when our resort communities and the towns that we operate in are thriving and the business is there and the experience that they provide are thriving, then that also provides a reason for people to come even if the snow isn't as good. And so that's also a component for us of how we ensure that even through lower snow years, we can still bring guests in and drive revenue.

We'll go next to Megan Clapp with Morgan Stanley

Bob, you mentioned in your prepared remarks, there's a lot that difference about the industry macro companies since you were last in the seat. Maybe if we could talk about the industry a bit. there's been maybe not necessarily new since you left, but there's a lot of other multi-mountain pass players, many of which have grown their portfolios pretty significantly over the last couple of years. So how do you think about the company's position from a competitive perspective, both from the past offering as well as your network of reports and how do you think about how that positions you to drive past in the U.S. and just what seems like a more competitive environment than it maybe have been historically?

Yes, absolutely. I mean I think there's no question that the Icon Pass, which was -- which debuted when I was still CEO, of course, right, presented new competition to us. But I think it also helped build and secure the entire market for advanced commitment products. So I think from the time that Icon has shown up till today, I think the consumer mindset has shifted from thinking about whether they should buy a pass at all to understanding that actually that's probably the best way to actually access the mountain, and so now it's just a matter of which pass they buy.

And I think our company should welcome healthy, good, thoughtful, innovative competition. And there's no doubt that the Icon Pass has absolutely been that. I think I feel like our pass offering is very strong and very compelling and is tailored to the guests that we're going after. And it's true.

We don't -- we look at adding resorts or adding a partner in a very like disciplined, thoughtful way about what we think adds and is not duplicative to what we already have. And to the extent that, that brings in new guests or really provides an experience that will broaden the experience that our guests are looking for, and really move that needle, and that's something that we looked at before, and that's something we'll continue to look at as we go forward.

I think it's also true, though, that as we have competitors that have continued to get better, we have to get better. And that relates to some of the comments I made about our marketing effort in terms of, I think there's opportunities for us to innovate there and to bring some of the approaches that we're using to be more current with the tools and communication channels and approaches that are available in today's environment.

And so I think just like you saw us do that in multiple incarnations over the last 15 years, I think there are many opportunities for us to do that again.

Okay. That's helpful. And -- maybe just a follow-up on the European strategy. Bill has been pretty clear as recent as the Investor Day in March, and I think you've mentioned it in your prepared remarks some -- on the benefits of the owner-operator model. Europe is a place where you've had partnership for years, and you recently added, I think, 6 new partners in Austria.

So should investors look at that as a signal maybe about your willingness to explore the partnership model more broadly in Europe? And perhaps is there an opportunity in your mind to launch a pass through the partnership model in Europe versus the owner-operated model?

And if I can just squeeze one in, just how are you thinking about M&A, I guess, is the use of capital broadly particularly as you might need to reinvest to reinvigorate growth in the U.S.?

Yes. I think in Europe, it's not that different than the U.S. or anywhere else. I think our preference is always going to be to own and operate a resort. It's -- that is a completely different business, of course, than having just a partner. But it is the business that we're in and where we think we add tremendous value on multiple fronts. One, we think we can operate the resorts better. And two, we also think that we have collected data from the resorts, we can be more flexible in the approach that we're using in terms of price, promotion and communication channels, all of that, we think is a comprehensive opportunity.

Now that said, especially internationally, note we have been open to partnerships, and we'll continue to be open to partnerships, because we do think it enhances the pass and at the same time, many of those resorts are not resorts that are interested in selling, and we completely understand that.

But we're still going to be disciplined in how we add either a partner or an owned resort. And I think that's true on the M&A front here as well. or anywhere in the world, like we need to be disciplined. It's critical for us, right, to ensure that we're buying the right resort in the right location for the right price with the right upside both in terms of how the ski and guest experience can be expanded and obviously, financially, right, the kind of returns we can drive from that investment. I don't see that as really changing from the approach that we've taken over a fairly long period of time.

That said, I think it's also true that within Europe, we absolutely are going to take a very disciplined approach. Just given the opportunity we have, we think, to begin to create a network, and we don't want to -- at the end of the day, when the right opportunity presents itself, we will pursue it, but it is going to be a very targeted approach and a disciplined approach as we look forward.

We'll go next to Laurent Vasilescu BNP Paribas.

This is Xian on for Laurent. Maybe as you look to next season, do you first see any issues to get in terms of getting visas for international workers? And maybe just talk about the environment for seasonal workers into next season and kind of expanding on that point about labor?

Yes. Thanks, Xian. We -- yes, we do use basis like you know, for some of our seasonal hiring, especially where we flex in the season. And we've gone through a lot of different environments, right, through, especially related to the COVID times where there were a lot of restrictions on that. We've been able to manage through those kind of changing levels. And we've really reduced our a number of these as also over time, as you've heard us talk about the high retention rates and return rates that we've had for seasonal employees, right?

That also reduces kind of the need for some of those programs, but we continue to look at it every year and really evaluate where we will take advantage of those programs or not. But we don't see that as something that we couldn't manage around at this point.

Okay. Got it. And then you mentioned about $8 million worth of earlier cost savings from the transformation plan. Maybe you could talk a little bit more about how the transformation plan is going and maybe some of the savings that you're getting?

Yes, we are really pleased that we were able to really focus on accelerating some of our efforts that we'd already identified for our resource efficiency transformation plan into the current year. And right, that obviously helped offset this year some of the visitation shortfalls that we had.

And yes, the team has done an amazing job of really making sure that we can deliver on all 3 pillars. You saw us more recently, maybe in May, do the announcement where we also kind of put out for our change in operating model for our Mountain division to realign some of those resorts, but also some centers of excellence that we can do that can really unlock savings for us as well.

We'll go next to Patrick Scholes with Truist Securities. .

Regarding the standing offer for Park City, is entertaining that just a nonstarter? Or Rob, given your reputation as a creative outside-the-box financial idea person, would you consider finding a way to sell that at an accretive multiple, but perhaps maintain a long-term agreement to keep Park City and the Epic Pass network? .

No. No, that's not something that we're looking at and we don't think that, that ultimately is in the right long-term interest of our company. We think it's -- especially a resort like Park City, of course, is critical to our overall company and our network, and yes, we think it's incumbent upon us to continue to listen to the feedback from our guests, from our community partners and continue to drive improvement, both in the way that we deliver an experience for our guests, the way that we deliver for our employees and the way that we deliver for our community members. And it's true.

One of my priorities is aligning, right, all of our stakeholders. And not all of our stakeholders are going to agree with -- with the things that we decide to do. They may not all agree amongst themselves about what is the right strategy and approach. And it's our job to kind of navigate that dynamic. And obviously, in an environment where you've got a fair amount of passion and a fair amount of emotion that can sometimes be tricky. And we may not always get it right, but that's still our job and something we're very committed to.

Okay. My follow-up question actually is on the dividend. How comfortable are you, Rob, with the current dividend policy or the payout levels? Could that possibly that payout be up for review? .

Yes, sure. I'm very comfortable with our dividend. And I think our Board is. Obviously, that's why we announced and authorized the dividend again this quarter. At the same time, we wanted to make it clear in our remarks that the priority for us is always going to be the investments that we're making in our employees, in our resorts and in acquisitions. And that always comes first. And then we're looking at the funds that are left over after that in terms of what we're returning to shareholders.

And I think one of the comments we made is that as we look at the dividend, we're comfortable with it. And of course, if we were going to increase it going forward, it would have to be after, right, a real material increase in -- in our free cash flow. And so in our mind, that, of course, would better align the payout ratio as you're talking about as we look over the next couple of years.

We'll go next to Arpine Kocharyan with UBS.

Welcome back to revisit Megan's question regarding the European strategy for a moment. Could you talk a bit about your approach there? Do you think the playbook you had for North America could actually work for Europe where you have more proximity of mountains and where maybe raising lift ticket prices to make the customer choose the pass product might not be as smooth, how that evolved in North America? And then another quick follow-up.

No. We don't think that the same playbook that we've used in North America would be the right playbook for Europe. And we think that to the extent that we launched really European-based pass product, it would be different and the approach would be different because we understand that all the dynamics are very different there.

At the same time, we believe that there is an opportunity to be more strategic, right, about the approach that is being taken in Europe. And I think even more so, as you think about the European ski industry going forward and the weather volatility that we talked about before.

So the same attractiveness of an advanced commitment product, we believe exists there as well. And just like in the United States, it took many years, right, for -- for even our pass product, let alone the rest of the industry to follow. Of course, it would take time for that to happen there.

But if you look out over the long haul, we certainly think that there is a compelling opportunity, not only for us but for the industry itself there.

Great. That's very helpful. And in terms of your outlook for -- for next season for next year season, on how that's shaping up? I guess, what are you seeing in the business to give you that confidence that trends that you saw in spring will sort of remain steady for the year.

The reason I'm asking this as investors sort of think of Vail's average consumer to be a bit higher end than U.S. average maybe and in some ways, maybe a little bit insulated from the inflationary pressures. At the same time, we are in a different macro environment today than 3 months ago. How does that go into your overall sort of calculations for next year's ski season?

Yes. I think the macroeconomic environment is definitely risk. I think our comments about continuing the trends on season pass sales are dependent upon the macroeconomic -- the macroeconomic environment staying relatively stable. Obviously, if it got dramatically worse, no, those -- of course, that could change. And if it got better, right, we could see the opposite.

And we also commented that, yes, it's unclear yet whether the macroeconomic environment over spring pass sales, especially when a decent amount of our spring pass sales occur before the April deadline, which was right in the heart of a lot of the chatter that was going on there on a macro basis. Yes, whether that led to delayed decision-making is something we won't see until the end of the season.

So I'd say, based on what we're looking at right now and the data we have on our own guests and assuming a relatively consistent macro environment, yes, we feel good about maintaining the trends that we're seeing right now.

We'll go next to Ben Chaiken with Mizuho.

Regarding Europe, the partnerships in Australia over the last few weeks were pretty notable. How do you think about the tipping point, if you will, where there's momentum with a European pass or a regional pass within Europe?

Meaning do you think about like the number of assets required to create this flywheel that you've developed elsewhere? And then maybe related, following up on a previous question, can you achieve the desired network effect in Austria for example, without owning the assets? Or is that just a precursor to eventually buying?

I think that is -- I would say that's probably still an open question, right, in terms of -- I don't think it's necessary for us to own a certain amount of assets to be able to put a product out. But the question is, right, to have a product that would be compelling or make an impact or be differentially important to the guests in some way. Yes, we do think that -- that probably owning some additional assets, right, might be critical for that. But where those come in the life cycle of that potential product is a question.

When we would feel confident enough to launched that product, where we feel like, again, it would be additive is also still an open question. And I don't think we have not come to any final conclusion on that. In the end of the day, like we are going to -- just like we have done historically, right? We pursue a lot of different things, and we look to see where the openings are and where the opportunities are that we think ultimately drive value and that's where we put our resources and focus. And Europe will absolutely be there when we think it's the right time.

Got it. And then, Rob, I'd love your take on ancillary. Obviously, that's been a large push over the last maybe 3 years. Are Epic gear and driving ski school attached still top priorities for you?

Absolutely. Yes. No, absolutely. I think we have -- obviously, these are guests that are already visiting our resort where we feel like there's opportunity to deepen our relationship with them and broaden our capture rate.

And in our minds, part of that is going to be kind of some of the marketing improvement that I think we're going to be focused on as we look ahead to the upcoming seasons. But part of it is also, right, innovating on the product that we're offering and how they're engaging with that product or service. And so in that respect, we think My Epic Gear and My Epic Pro are both yes, critical to that, right? It is something new, using technology and providing a better guest experience. And then we layer on top of that, an improved marketing approach that we think, yes, will be one of the most important revenue drivers as we look to the future.

We'll go next to Brandt Montour with Barclays.

Looking back at this past season and sort of the visitation shortfall that I believe you guys would say, underperformed what you were trying to do what the industry did. When you look at where geographically, you lost share or sort of by source market. What can you tell us about sort of who that guest is? I know that, Rob, you said that the experience -- experience consistent and the experience right is top of mind, which guests do you need to win back? Is it more mountain specific? Or is it more, I guess, yes, source market specific?

Well, a couple of things. One is, I would say, yes, we -- absolutely, we did not achieve this year the result that we were looking for. And it's true that I think we underperformed the industry. Now part of that is where the industry overperformed, right, in some of the markets like the Midwest where we did perform well. But obviously, we have a tiny market share, with only a couple of resorts there.

So part of it is a geography balance. But part of it even within the geographies, right, we feel like we didn't hit our mark. And yes, the biggest area where we feel like we fell short was uncommitted lift ticket visitors. And I think that obviously is someone who is -- they're not committed in front of the season, but they're obviously not also committed likely to skiing that season or not committed to skiing at our resort or maybe another resort that season and in our minds, right, that is where we -- yes, we need to take a different marketing approach to be able to compete and compete well, right, in that marketplace.

I think there's also opportunities for us to drive pass sales as well. And again, it's typically going to be at the margin, right, of course, is that less committed person who we have to convert. Again, something that this company has done successfully for a long period of time, and I feel like is yes, it's right in our wheelhouse to be able to turn around. And yes, as we look forward to the next couple of years, we think this is very achievable.

Okay. That's really helpful color. A second question, you alluded a couple of times Rob, to innovation around the pass. Some of your peers are notable in their sort of constant tinkering and more dynamic sort of active management of tearing and blackout dates and things like that. I know you're not going to announce your idea or ideas here. But just to get your maybe philosophy on the pros and cons of more tiering at the expense of being more complicated, of course, but perhaps to unlock the unique supply and demand dynamics of each particular mountain you have.

Yes. I mean I think most people would say that we've done a lot of that already. And if anything, sometimes we could be -- people can criticize us for having too many products, right? We being too complex. But it is for this exact reason that we are constantly looking at whether or not there's a new approach, right, for us to get somebody to commit in advance.

And of course, it's true that as time has gone on, that becomes harder, because the people who are easier to convince, of course, we already converted them a long time ago. But in our minds, like that's what we're here to do. And that innovation is critical. And so as I talk about potentially changing our pass product or portfolio, yes, I don't see some huge overhaul, but it is to see where we can be more aggressive and how can we continue to mine both -- I would say, to your earlier question, both types of guests and source markets, right? I think it's both. I don't think it's isolated to 1 market or 1 type of guest. I think it is -- what I would call it, though, is it is the less committed skier that I think is where our focus will be.

We'll go next to Chris Woronka with Deutsche Bank.

Rob, it's nice to have you back in the seat. So I want to start off with -- it's a little bit of a different question, Rob. But if you look at like the cruise industry, right, and you look at they have ticket prices that are probably significantly higher than they were in 2019, and you guys are kind of on a like-for-like basis, not a lot higher and some of that's mix. And maybe some of that in cruise industry is just new hardware and stuff.

So the question is, do you think you can continue driving price and engagement? Do you have enough ways to kind of reinvigorate or not reinvent but reenergize the product without going off the rail spending-wise, is that possible to you think you need to do that?

Yes. I think I absolutely believe that our opportunity to continue to drive price is there as it's been there before, and I think we've shown that in a lot of different ways. I think it is -- it's a little bit different than the cruise industry or the hotel industry in that we've got this matrix, right, around advanced commitment and lift tickets. And we're dialing both at the same time and even within lift tickets, right, we're dialing people who want to buy, right, in advance of showing up the day off.

And so it's a bit more complex, but that's also, I think, where we've been able to be successful. And we are continuing to invest in our resorts, continuing to add new lifts, upgrade restaurants, right, new experiences, continuing to use technology to improve the guest experience. And we think all of those absolutely justify, right, the opportunity for us to continue to charge for that.

But at the same time, yes, we understand that to move people into advanced commitment that's going to be something that we have to look at from a kind of longer-term basis, right? As we give that discount, the question is, right, are we picking up extra days of skiing or extra dollars over a 4-year season, where if we don't do that, right, we might lose that person in a bad snow year, which, by the way, it could be about snow year or it could be a bad weather day, right? We could have an amazing snow year and 1 day over Christmas, right, if it's very windy, you can lose people. So getting those folks to commit in advance for us, even if it's a week in advance, right, can still be quite compelling to our overall value thesis for the company.

Okay. Yes, fair enough. Appreciate that color. The follow-up is you've covered a lot of ground on costs, and there's a lot of different angles to it, but -- and I'm certainly not trying to get a number from you for any future year. But just directionally, at a high level, do you think, based on what you see today, which may change, do you think there needs to be kind of a grand reset of sorts on operating expenses in terms of labor, housing or whatever? Do you think you just need to tweak certain things and other things with corporate expenses and such will -- will counterbalance the operating expenses?

No. We don't think that there needs to be some grand reset. We think we need to ensure that we stay competitive in terms of how we attract employees to the company. And when you look at the investment that was made a couple of years ago was significant. And I think it really reset us and I think has allowed us to deliver a much better experience along with many other ways that we're connecting with our employees, which is -- especially on the seasonal front line levels, which is why we -- our seasonal return rates and retention rates, right, are the best they've ever been.

So to me, right, that I think we start with that. Now I also think though there's ways that we can be a lot smarter. And so what you're seeing in the resource transformation efforts is not -- we're not pulling back on the guest experience at all, but we're realizing that we're a big company now that grew pretty quickly and we can actually just be more thoughtful about how we resource and how we oversee the same things.

And obviously then, no different than any other company. There are opportunities right for us to use technology and AI and other stuff that we're going to continue to leverage just like everybody else's.

This will conclude the Q&A portion of today's call. I would now like to turn the call back over to Rob Katz for closing remarks. .

Thank you, operator. This concludes our fiscal 2025 third 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, sir. This concludes today's Vail Resorts Fiscal Third Quarter 2025 Earnings Conference Call and Webcast. You may now disconnect your line at this time, and have a wonderful day.