Vail Resorts, Inc. (NYSE:MTN) Q2 2024 Earnings Call Transcript

Vail Resorts, Inc. (NYSE:MTN) Q2 2024 Earnings Call Transcript March 11, 2024

Vail Resorts, Inc. misses on earnings expectations. Reported EPS is $ EPS, expectations were $6.07. Vail Resorts, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good afternoon, and welcome to the Vail Resorts Fiscal Second Quarter 2024 Earnings Call. Today’s conference is being recorded. Currently, all callers have been placed in a listen-only mode, and following management’s prepared remarks, the call will be opened up for your questions. [Operator Instructions] I would now like to turn the call over to Kirsten Lynch, Chief Executive Officer of Vail Resorts. Please go ahead, ma’am.

Kirsten Lynch: Thank you. Good afternoon, everyone. Welcome to our fiscal 2024 second quarter earnings conference call. Joining me on the call this afternoon is Angela Korch, our Chief Financial Officer. Before we begin, let me remind you that some information provided during this call may include forward-looking statements that are based on certain assumptions and are subject to a number of risks and uncertainties, as described in our SEC filings, and actual future results may vary materially. Forward-looking statements in our press release issued this afternoon, along with our remarks on this call, are made as of today, March 11, 2024, and we undertake no duty to update them as actual events unfold. Today’s remarks also include certain non-GAAP financial measures.

Reconciliations of these measures are provided in the tables included with our press release, which along with our quarterly report on Form 10-Q, were filed this afternoon with the SEC and are also available on the Investor Relations section of our website at www.vailresorts.com. Let’s turn now to our fiscal 2024 second quarter results. Given the unfavorable conditions across our North American resorts, we are pleased that our results for the quarter demonstrate the resiliency of our strategic business model and our network of resorts and loyal guests. The results for the second quarter were negatively impacted by challenging conditions at all of our North American resorts through January with approximately 42% lower snowfall across our western North American resorts compared to the same period in the prior year and limited natural snow and variable temperatures at our Eastern U.S. resorts, which comprise our Midwest, Mid-Atlantic, and Northeast resorts.

“Despite the impacts of conditions, Resort reported EBITDA for the second quarter increased approximately 8% compared to the prior year, primarily driven by the stability created by our season pass results. Resort EBITDA margin also improved 3.3 points in the second quarter compared to the prior year driven by disciplined cost management. “While visitation declined, our ancillary businesses performed well, in particular our ski and ride school, dining and rental businesses experienced strong growth in spending per visit compared to the prior year. We are pleased with the strong execution across our mountain resorts, as well as the impact of the Company’s investments in our employees, technology, and on-mountain experience.” Now I would like to turn the call over to Angela to further discuss our financial results, season-to-date metrics and fiscal 2024 outlook.

Angela Korch: Thanks, Kirsten, and good afternoon, everyone. As Kirsten mentioned, the results for the second quarter were negatively impacted by unfavorable conditions across our North American resorts. Net income attributable to Vail Resorts was $219.3 million or $5.76 per diluted share for the second quarter of fiscal 2024 compared to net income attributable to Vail Resorts of $208.7 million or $5.16 per diluted share in the prior year. Resort reported EBITDA was $425 million in the second fiscal quarter, which compares to resort reported EBITDA of $394.8 million in the same period in the prior year. Turning to our season-to-date metrics. The reported ski season metrics are for the period from the beginning of the ski season through Sunday, March 3, 2024, compared to the prior year period through March 5, 2023.

And for our company’s North American destination mountain resorts and regional ski areas, excluding the results of the Australian ski areas and Andermatt-Sedrun in both periods. The data mentioned in this release is interim period data and is subject to fiscal quarter end review and adjustments. Unfavorable conditions negatively impacted season-to-date visitation, which was down 9.7% compared to the fiscal year 2023 season-to-date period. Season-to-date total lift ticket revenue, including an allocated portion of season pass revenue for each applicable period, was up 2.6% compared to the fiscal year 2023 season-to-date period. For our [inflow] business results, season-to-date ski school revenue was up 5.5%, dining revenue was down 0.5% and combined retail and rental revenue for North American resort and ski area locations was down 9.3% compared to the prior year period.

Across our North American resorts, unfavorable conditions negatively impacted season-to-date visitation, which was below both prior year levels and our expectations based on the number of guests visiting and their frequency. Following the Martin Luther King Jr. holiday weekend, challenging conditions persisted until early March at Whistler Blackcomb and our Tahoe resorts, and while conditions improved at our Rockies and Eastern resorts, visitation did not improve as quickly as expected. We expect a portion of the lower visitation is related to the challenging conditions in the first half of the season as well as a shift in visitation patterns. Despite the decline in season-to-date visitation relative to the prior year period, we are pleased with lift revenue growth driven by the stability created from our season pass program, the strength in our ancillary spending per skier visit across our ski school, dining, and rental businesses, and the improving trends as the season progresses.

Now turning to our outlook for fiscal 2024. Due to the season-to-date underperformance, we are lowering our guidance for fiscal 2024. For the remainder of the season, we are expecting improved performance compared to the season-to-date period, including an expected shift in visitation patterns into March and April. This is based on our significant base of pre-committed guests and their historical behavior patterns, the improvement in conditions across our western North American and Northeast resorts, and our lodging booking trends for the Spring Break period. While we are lowering guidance for the fiscal year, we know that the financial impact of the weather disruptions was greatly mitigated by our advance commitment products, which create stability for our Company, our shareholders, and our communities in exchange for an incredible value to the guest.

We now expect net income attributable to Vail Resorts for fiscal 2024 to be between $270 million and $325 million, and resort reported EBITDA for fiscal 2024 to be between $849 million and $885 million. We estimate resort EBITDA margin for fiscal 2024 to be approximately 29.6% using the midpoint of the guidance range. Our guidance includes an estimated $4 million of acquisition-related expenses specific to Crans-Montana, but does not include any estimates for the closing costs, operating results or integration expense associated with the Crans-Montana acquisition, which is expected to close this spring. The updated outlook for fiscal 2024 assumes a continuation of the current economic environment and normal weather conditions for the remainder of the 2023/2024 North American and European ski season and for the 2024 Australian ski season.

The guidance assumes an exchange rate of $0.74 between the Canadian dollar and U.S. dollar related to the operations of Whistler Blackcomb in Canada, an exchange rate of $0.65 between the Australian dollar and U.S. dollar related to the operations of Perisher, Falls Creek and Hotham in Australia, and an exchange rate of $1.13 between the Swiss Franc and the U.S. dollar related to the operations of Andermatt-Sedrun in Switzerland. Our balance sheet remains strong, including total cash and revolver availability as of January 31, 2024, of approximately $1.4 billion with $812 million of cash on hand and $630 million of combined revolver availability across our credit agreements. As of January 31, 2024, our net debt was 2.4x trailing 12 months total reported EBITDA.

We remain confident in the strong free cash flow generation and stability of the underlying business model. Given these dynamics, we are pleased to announce that our Board of Directors declared a quarterly cash dividend on Vail Resorts common stock of $2.22 per share, representing an 8% increase in our quarterly dividend. The dividend will be payable on April 11, 2024, to shareholders of record as of March 28, 2024. We remain committed to returning capital to shareholders and intend to maintain an opportunistic approach to share repurchases. We will continue to be disciplined stewards of our capital and remain committed to prioritizing investments in our guest and employee experience, high-return capital projects, strategic acquisition opportunities, and returning capital to our shareholders through our quarterly dividend and share repurchase program.

As previously announced on November 30, 2023, the company entered into an agreement to acquire a majority stake in Crans-Montana Mountain Resort in Switzerland. The company’s second ski resort in Europe. Crans-Montana is an iconic ski destination in the heart of the Swiss Alps, with a unique heritage, incredible terrain, passionate team, and a community dedicated to the success of the region. This acquisition aligns to the company’s growth strategy of expanding its resort network in Europe, creating even more value for our pass holders and guests around the world. Much like Andermatt-Sedrun, the company believes Crans-Montana has a unique opportunity for future growth. The transaction is expected to close the spring, subject to third-party consents.

Now I’ll turn the call back over to Kirsten.

Kirsten Lynch: Thank you, Angela. We remain dedicated to delivering an exceptional guest experience, and we will continue to prioritize reinvesting in the experience at our resorts, including consistently increasing capacity 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. As previously announced, we expect our capital plan for calendar year 2024 to be approximately $189 million to $194 million, excluding $13 million of incremental capital investments in premium fleet and fulfillment infrastructure to support the official launch of My Epic Gear for the 2024/2025 winter season, $11 million of growth capital investments at Andermatt-Sedrun and $1 million of reimbursable capital.

Including My Epic Gear premium fleet and fulfillment infrastructure capital and one-time investments, our total capital plan for calendar year 2024 is expected to be approximately $214 million to $219 million. This excludes any capital expenditures associated with the Crans-Montana acquisition, which remains subject to closing. At Whistler Blackcomb, the company plans to replace the four-person high speed Jersey Cream lift with a new six-person high speed lift. This lift is expected to provide a meaningful increase to uphill capacity and better distribute guests at a central part of the resort. At Hunter Mountain, subject to approvals, we plan to replace the four-person fixed-grip Broadway lift with a new six-person high speed lift and plan to relocate the existing Broadway lift to replace the two-person fixed-grip E lift, providing a meaningful increase in uphill capacity and improved access to terrain that is key to the progressive learning experience for our guests.

At Park City, we are in the planning process to support the approved replacement of the Sunrise lift with a new 10-person gondola, in partnership with the Canyons Village Management Association in calendar year 2025, which will provide improved access and enhanced guest experience for existing and future developments within the Canyons Village. At Park City and Hunter Mountain, beyond the planned lift investments, we plan to enhance snowmaking systems to improve the experience for key terrain, increase early season terrain consistency and improve the efficiency through the installation of automated and energy-efficient snowguns. We also plan to further support the company’s Commitment to Zero by investing in waste reduction projects across our resorts to achieve the goal of zero waste to landfill by 2030.

At Afton Alps, we plan to install a 10-lane tubing experience and renovate the existing Alpine Building to create a 200-seat restaurant experience. At Seven Springs, we plan to add 390 new parking spaces to increase capacity and improve the experience. At Perisher, in advance of the 2025 winter season in Australia, we plan to replace the Mount Perisher Double and Triple Chairs with a new six-person high speed lift, with capital spending commencing in calendar year 2024 and continuing into calendar year 2025. These projects remain subject to approvals. In addition, we are continuing to invest in innovative technology to enhance the guest experience. In the coming year, we are investing in new functionality for the My Epic App and expanding Mobile Pass and Mobile Lift Tickets to Whistler Blackcomb.

Across our resorts, we plan to pilot new technologies at select restaurants to make it both easier and faster for guests to dine at our resorts. In addition, in order to support the launch of My Epic Gear, we plan to invest in logistics and technology infrastructure to help deliver a transformational and elevated gear access experience for our guests. The 2023/2024 My Epic Gear pilot at Vail, Beaver Creek, Breckenridge and Keystone is delivering a strong guest experience to pilot participants and valuable learnings for the business launch. My Epic Gear provides its members with the ability to choose the gear they want for the full season or for the day from a selection of the most popular and latest ski and snowboard models and have it delivered to them when and where they want it, including slopeside pick up and drop off every day.

In addition to offering the latest skis and snowboards, My Epic Gear will offer name brand, high-quality ski and snowboard boots, with personalized insoles and boot fit scanning technology. The entire My Epic Gear membership from gear selection to boot fit to personalized recommendations to delivery will be at the members’ fingertips in the new My Epic app. The company plans to launch My Epic Gear for the 2024/2025 winter season at 12 destination and regional resorts across North America, including kids gear, and will be limiting membership to 60,000 to 80,000 members in the first year launch as the business scales. To support the initial year of this new business in calendar year 2024, the company plans to invest $13 million beyond our typical annual capital plan in incremental premium gear fleet and fulfillment infrastructure to support the anticipated growth of this business.

We plan to provide additional updates on My Epic Gear and the ongoing capital needs of the business after the year one launch. At Andermatt-Sedrun, we are pleased to announce plans to invest approximately $11 million in high-impact growth capital projects as part of a multi-year strategic growth investment plan to enhance the guest experience on the Mountain, which will be funded by the CHF110 million of capital that was invested as part of the purchase of our majority stake in Andermatt-Sedrun. As part of the calendar year 2024 investments, we are planning to upgrade and replace snowmaking infrastructure at the Sedrun-Milez area on the eastern side of the resort to enhance the guest experience for key beginner and intermediate terrain and significantly improve energy efficiency.

In addition, we plan to invest in the on-mountain dining experience with improvements to the Milez and Natschen restaurants. These investments are expected to be completed ahead of the 2024/2025 European ski season and remain subject to regulatory approvals. Turning to pass sales. We are pleased to launch pass sales for the 2024/2025 season, with a wide range of advanced commitment products including our Epic Day Pass, which provides one to seven days of access at our owned and operated resorts and our unlimited Epic Pass and Regional Pass products, which can provide unlimited access to 41 resorts every day of the season and access to additional partner resorts with no reservations required at any resort except Telluride. Subject to close, Vail Resorts plans to include access to Crans-Montana Mountain Resort on select Epic Pass products for the 2024/2025 ski and ride season.

Starting in the 2024/2025 North American ski season, when pass holders are skiing or riding with the guests utilizing Buddy Tickets or Ski with a Friend Tickets, they can now skip the ticket line and go directly to the lift. On average, pass prices have increased 8% over the prior season’s launch price and continue to represent tremendous value to our guests, further supporting our compelling network of mountain resorts, our strong guest experience created at each mountain resort, and our commitment to invest in the guest experience. We greatly appreciate the loyalty of our guests visiting across our entire network of resorts this season and the continued loyalty of our pass holders that have already committed to next season. In closing, I would like to thank all of our employees, especially our frontline teams for their passion, hard work and commitment and creating an experience of a lifetime for our guests.

The guest experience that our employees create is our mission as a company and lies at the center of our success. We all look forward to welcoming guests to our Mountain resorts this spring. At this time, Angela and I will be happy to answer your questions. Operator, we are ready for questions.

Operator: [Operator Instructions] Our first question comes from Shaun Kelley, Bank of America.

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Q&A Session

Shaun Kelley: Hi. Good afternoon, everyone. Kirsten, Angela, maybe we could just start with the visitation patterns you saw because there’s clearly – it seems like there’s two parts in here. You called out those challenging conditions. I think which we all saw and clearly, you documented early in the season and some of that continued. And then the second part where you saw some change in visitation patterns. And I’m wondering if you could just help us maybe divide between those two a little bit, if you could explain them overall, kind of what you saw behaviorally? And if you could help us to sort of help quantify the two buckets so investors could get a sense of certainly the weather impacts as you see them for this year as they start thinking about building up next year? Thank you.

Kirsten Lynch: Thank you, Shaun. If you look at Q2, I would say, incredibly challenging conditions, as we noted, 42% lower snowfall than the prior year, which definitely had an impact on visitation. When we look post MLK, some things shifted. We continue to see some challenging conditions at Whistler Blackcomb and Tahoe while conditions improved at the Rockies – in the Rockies and the East. Visits, however, did not improve as we had expected. We did, however, see were President’s weekend the trends improve, not all the way to our expectations, but the trends did improve over that President’s Day holiday. As we look forward to spring, we’re looking at a lot of different information, Shaun. One, conditions are looking pretty good across the Board at our resorts overall.

I would say two lodging indicators in our lodging as well as our market lodging. And I would also then say and most importantly, is our data about our guests and our pass holders, we obviously have a significant base of pre-committed guests and have visibility into their behavior, visibility into who has already pre-committed and has a pass, but have not even visited the resorts at all yet. And what we’re seeing season-to-date is that there is a higher percentage of those guests that have not yet utilized their pass, which suggests based on historical behavior, a shift in visitation until later into the season, and we would apply that same assumption as it relates to lift ticket guests as well. So when we think forward to spring, it’s really a combination of – we think the conditions are in good shape, the lodging indicators for our lodging in the markets that our resorts are in are looking favorable and then the data that we have because so many of our guests are pre-committed, and we can see if they have visited or not and how frequently.

Shaun Kelley: And sorry, just as a follow-up here, but is there any risk that – again, there’s some pattern here that’s changing that is more permanent. Again, we’re looking at a lot of the same visitation data, I think the investor base was as well. And the question we’re sort of getting is just why? Is it a question of shifting? Or is there a behavioral change that maybe happening in terms of when they’re willing to go, what they’re willing to do or possibly even a reaction to sort of the pricing environment? Just maybe you could help us think about what your best guess is on the behavior? Is it really all timing? Or is there some change in just the way people are consuming skiing, be it this season or just kind of what you’re seeing because we have had a lot of the season go by so far. So we should have some sense of just how they’re acting.

Kirsten Lynch: Yes. We have a lot of information about our pass holders and those are guests who have obviously already pre-committed. And based on historical behavior, we’re making an assumption that at a normal historical level that they will still visit. Whether or not there’s kind of a broader trend going on, I think it is really hard to say given the season is not over yet. I think we’ll probably have better visibility into that once we get through spring, it would appear that season-to-date is really significantly impacted by unfavorable conditions, and it would appear based on our historical data on guest behavior that there is a shift, and we certainly see our lodging trends moving in that direction, but a broader kind of underlying impact. I don’t think that we can say for certain is there’s anything like that going on at this time, and we’ll know more once we get through the full season.

Operator: Our next question comes from Jeff Stantial with Stifel.

Jeffrey Stantial: Hey. Great. Good afternoon, everyone. Thanks for taking our questions. Just starting off here on the announced prices for the Epic Pass in the upcoming season, 8% higher year-on-year. That’s consistent with last season’s pricing action. But if you think about pricing as a spread over CPI that does seem to suggest more pronounced price taking this year relative to last. So curious if you just expand on this decision a bit more? And I guess, more specifically, what sort of data do you look at that gets you comfort around potentially elasticity? Thanks.

Kirsten Lynch: Thanks, Jeff. We have, as you know, historically consistently priced above inflation given the investments that we make and the guest experience at our resorts. If you look at each year, the data that we look at is guest behavior. We look at the investments we’re making, and we look at inflation. When we’re looking at inflation, we’re looking at total inflation, but we’re also looking at things like services inflation because, obviously, we’re in the services business, and we also look at admissions inflation. So we’re really looking holistically at inflation and then our own guest behavior and price elasticity that we have based on the results of our – in our pass business. So overall, those are all of the factors that go into our decision this year, the increase, as you noted, is an 8% increase. Last year was also an 8% and the year prior was a 7% increase.

Jeffrey Stantial: That’s great. Thank you for that, Kirsten. And then for my follow-up, I was hoping you might just expand upon some of the resiliency that you called out in some of the ancillary lines, in particular in ski school and dining. I guess how much of this growth in revenue per visit is driven by guest mix or easy comps? Or is this going to be mostly strong underlying demand or a return on some of the initiatives that you’ve talked about at recent conferences? Thanks.

Kirsten Lynch: Yes. I think what we’re seeing is that the guests that are coming are still spending money on those ancillary businesses. So you heard that in our comments about ski school, about dining, about the rental business, and we’re really pleased to see that behavior. Some of the initiatives that you’re alluding to like My Epic Gear maybe as a new initiative would not really given it’s only in a pilot will not be having a material impact in this year, but we would expect it to going forward as that business scales. But I think the spending on ancillary is certainly, I think, a positive indicator for the business as is even with the challenging snow conditions and lower visitation that our overall EBITDA was up for the quarter.

Operator: Our next question comes from Laurent Vasilescu with BNP Paribas.

Laurent Vasilescu: Good afternoon. Thank you very much for taking my question. I wanted to ask about weather disruptions. In the prepared remarks, it’s mentioned that you’re rolling out enhanced snowmaking systems at Park City and Hunter Mountain to improve the guest experience. Kirsten, can you provide a little bit more detail there? How is the technology different from what you have currently? How much CapEx is required to roll this technology out? And should we expect this rollout to expand beyond these two resorts?

Kirsten Lynch: Yes. Obviously, we’re always looking at ways that we can keep investing in snowmaking and automation and high-efficiency snowmaking is a key area of opportunity for us. When we talk about our growth strategies going forward, we really do view that one of the key growth strategies is resource efficiency and that comes from things like [risk management] and guest self-service, but one of the other ways that, that comes is through automation and things like automated snowmaking help contribute to that. We do have automated snowmaking currently at some of our resorts, and I would anticipate every year as we look at capital, we’ll be assessing if there’s further opportunities to expand that investment where we can to get the highest efficiency and also to ensure that we can maximize the season and the resorts where it can have an impact.

Laurent Vasilescu: Very helpful. And then I want to ask about retail and rental revenues. It declined 15% in the quarter. So I think about five points of that by my math was driven by the exit of certain lease locations last year. Are you at the current footprint of 250 retail and rental locations in North America? Is that the right number going forward? Or do you think there’s an opportunity to reduce that, especially with My Epic Gear as it gets rolled out across the ecosystem?

Kirsten Lynch: So regarding rental and retail overall, rental, just to talk about that business and then forward, rental and retail rental. As we noted, we did achieved growth in our rental yields, which we’re very pleased about season-to-date. The retail side, which I think you alluded to, was impacted by the exit of 19 rental and retail locations in Aspen and Telluride, which we deliberately chose to exit those locations to focus our resources on our core Mountain resorts as strategic priorities. So that was an impact as well in Q2. And there are also some headwinds in retail that I think are not dissimilar from what’s happening in the outdoor retail industry overall right now. In terms of looking forward in My Epic Gear and what that means for brick-and-mortar versus the business model, I think a lot of that will depend on the evolution and the success of the My Epic Gear business.

One of the things that I really like about that business model is it really utilizes the existing infrastructure that we have in terms of distribution centers and warehouses and locations for the gear without the need for the guest to go into a brick-and-mortar location because we’re essentially through the app delivering the gear they want, when they want it, I can’t say for sure how that’s going to play out in terms of the need for brick-and-mortar locations, but I think it will definitely evolve, especially. And we’ll probably know more as we get through year one of the launch and how that business performs on a broader level at scale. So more to come on that. A little too early to know.

Operator: Our next question comes from Matthew Boss with JPMorgan.

Matthew Boss: Great. Thanks. I appreciate all the color. So maybe two-part question. Kirsten, can you elaborate on underlying customer spending trends? Or maybe when you think through the weather and visitation shifts that you cited, is there any change in your view to the multiyear topline growth just based on the season or any underlying lead indicators that you’re most focused on? And then for Angela, with margins this year expected about 150 basis points below 2019, are there any structural constraints that you see to recapturing this margin shortfall next year? And if you think about the core underlying growth of the business, is mid-single-digit EBITDA dollar growth. I think that’s been the historical run rate. Any change to that in your view?

Kirsten Lynch: Thanks, Matt. I’ll tack the first question that you outlined about underlying spending trends. At this point, I’m not seeing any underlying spending trends that are concerning, obviously, come the season, so when our pass sales ended in early December, we had unit growth on pass sales and a very high flow-through on price in terms of the dollar sales on pass sales, which is certainly a big indicator for us. Q2 was 42% less snowfall and visitation impacted by that seems the spend visit looking healthy and strong on ski school, dining and rental, I think, is also a very strong indicator. I’m not seeing any indicators right now that would reflect the kind of big shift in spend. What I am seeing is indicators of a shift in visitation from the first part of the season, and into spring is what we’re assuming.

I’m not seeing any other indicators that would reflect that our guests are pulling back on their spending right now. I’ll let Angela answer the second question about margin.

Angela Korch: Yes, Matt, on margin, we talked about going into this season that we expected our margins to kind of go back to the midpoint of our prior guidance of 31%. And that was obviously impacted though by what happened this year with Q1. Outside of Q1, right, what you saw – what we just talked about in the winter, we saw our margins impacted for the winter season by the conditions and the revenue impact in Q2 and that continued into season-to-date. So for the full-year, the revised forecast is 29.6% at the midpoint. I would say though more broadly to your question really about our ability to expand this over time. We do see our broadly the ability to move this over time, right? We do have a high cost structure, which gives us operating leverage tied to the revenue growth of the company.

And so we do see opportunities here for both resource efficiency and for right what we’ve talked about in terms of ways that we can expand our margins over time. Sorry, your second part of your question was on the growth rate. And we don’t give the forward-looking kind of growth algo in terms of revenue or EBITDA growth but we do talk about really what those drivers are, right, for our business model, right? We see the ability to kind of continue to grow in our advanced commitment and continue to take what you’ve seen us do historically, which is price above inflation that you also see what we did with our price for pass launch this coming year.

Kirsten Lynch: So one other comment, Matt, just to circle back on your question is on guest spend. It is also that we are very fortunate that we have an enormous amount of loyalty among our guest base and our pass holder base, and it is really incumbent on us to keep reinvesting into the guest experience in dining My Epic Gear innovation like the app that keep – retain that loyalty and also retain that spend that you asked about.

Matthew Boss: That’s great color. Best of luck.

Operator: Our next question comes from David Katz, Jefferies.

David Katz: Good afternoon, everyone. Thanks for taking my questions. I’m curious on two things. When we look at the European mountains that we have, thinking about those in the context of what the company has done historically in terms of really adding a ton of value to them over time. In general terms, are these mountains that we think can sort of add that kind of value? Or are they just sort of a different market? And I just had one quick follow-up on the guide, which is are we – is the change entirely because of weather, mostly because of weather or part weather in part visitation? I’m just trying to sort of unpack that a little bit? Thank you.

Kirsten Lynch: Hi, David. With regards to the European resorts, we absolutely believe that the strategy to expand into Europe can drive value creation. And we believe that Andermatt-Sedrun has unique growth potential because of the nature of the resort and the investments that have been made there and that we will make there. And I’d say similar for Crans-Montana, which is a very well-known brand, and we believe with investment has a unique growth potential. Each of them individually have potential but the real opportunity longer term is where we can take it from here. Similar to the approach we had in North America, is there an opportunity to build a network that can create further stability for the resorts in Europe and even unlock greater potential there. That is what we are really focused on.

Angela Korch: And David, I’ll hit on the second part of your question. And in terms of the impact, right, the conditions obviously were a big factor that we called out in the quarter when we have snowfall down 42% across our North American Western resorts. That’s obviously a big change and impacts our visitation. And so what we noted though, there is also right things in – when it improves in Rockies in the East, we did see improved results, although it was slower, right, it didn’t respond as quickly as we expected, which was also a contributing factor to the reduced guidance for the full-year. And we also noted just we’re seeing some of the shift in behavior pattern into kind of the March and April period based on the items Kirsten outlined kind of earlier, our pass holder data that we have in terms of their behavior, our lodging indicators and obviously, conditions improving.

David Katz: Got it. Thank you very much.

Kirsten Lynch: Thanks David. I think important that it is very – the expectations we have for spring are very tied to the information we have about our guest behavior and our base of pre-committed debt.

Operator: Our next question comes from Patrick Scholes with Truist.

Patrick Scholes: Hi. Good afternoon. A couple of questions here. First one, you somewhat alluded to, but how would you say your destination scale, the one that comes over Christmas and New Year’s performed or the destination visitor performed versus, say, your drive to? Was that a bit more as expected? Or was that a disappointment as well? Thank you.

Kirsten Lynch: Thanks, Patrick. All of our visitation was impacted season-to-date by having the snow conditions. I think for the guests that did come, we did see, as we noted, the strong spend per guest. So that would reflect if we have guests that are spending on ski school and dining and rental that tend to orient more to destination visits which is a great sign. But I’d say overall, visitation was impacted across the board by having snowfall down so substantially across the network.

Patrick Scholes: Okay. So fair to say that the rough expectations were for both of those were, I guess, equally disappointing? Or was one any less bad than or less worse than you expected?

Kirsten Lynch: I would say both segments were impacted due to the snow conditions and the in terms of the year-over-year and versus our expectations, both were impacted. Having a base of so many guests that are pre-committed into a pass, certainly, helped us enable us to deliver the strong EBITDA up. But across the board, we saw impacts. We’re not really quantifying one or the other right now. And I think will have a much better understanding of the total impact on destination versus local at the end of the season, given this upcoming time period is…