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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good day and welcome to the Vail Resorts Second Quarter Fiscal 2020 Earnings Conference Call. Today’s conference is being recorded. At this time, I’d like to turn the conference over to Mr. Katz. Please go ahead, sir.
Thank you. Good afternoon, everyone. Welcome to our second quarter fiscal 2020 earnings conference call. Joining me on the call this afternoon is Michael Barkin, our Chief Financial Officer.
Before we begin, let me remind you that some information provided during this call may include forward-looking statements that are based on certain assumptions and are subject to a number of risks and uncertainties as described in our SEC filings, and actual future results may vary materially.
Forward-looking statements in our press release issued this afternoon along with our remarks on this call are made as of today, March 9, 2020. We undertake no duty to update them as actual events unfold. Today’s remarks also include certain non-GAAP financial measures. Reconciliations of these measures are provided in the tables included with our press release, which along with our quarterly report on Form 10-Q were filed this afternoon with the SEC and are also available on the Investor Relations section of our website, www.vailresorts.com.
So, with that said, let’s turn to our second quarter fiscal 2020 results. Overall, the season has had both areas of challenge and areas of strong performance. Whistler Blackcomb and Stevens Pass, our resorts in the Pacific Northwest, experienced the lowest snowfall in over 30 years through December 31, 2019, resulting in very poor results through the early season and critical holiday period. Visitation at those resorts continued to be challenging and below our expectations in January, with Whistler Blackcomb experiencing a weaker than expected recovery in North American and international destination visitation. In total, visitation across our Pacific Northwest resorts was down 14% compared to the prior year for the second quarter.
After a challenging start in the early season, destination guest visitation at our Western U.S. resorts improved significantly during the holiday period and was in line with our expectations. The improvement continued through January though Colorado was modestly below our expectations for the post-holiday period, partially offset by strong performance at our Park City Resort. Finally, our Northeast resorts are off to a great start to the season, supported by the continued benefit from our expanded Northeast network, which has been partially offset by challenging weather variability across the Midwest resorts.
Including results from Peak Resorts, total lift revenue increased 8.2%, driven by an 8.8% growth in skier visitation. Total effective ticket price decreased 0.5% in the second quarter compared to the prior year, with price increases in both our lift ticket and season pass products offset by the inclusion of results from Peak Resorts, which generates a lower effective ticket price. Excluding season pass holders and Peak Resorts, effective ticket priceincreased 4% compared to the prior year. Ski school, dining, and retail & rental revenues increased 11.4%, 15.8%, and 4.1% compared to the prior year respectively, primarily driven by the inclusion of Peak Resorts
Now, I would like to turn the call over to Michael to further discuss our financial results and our season-to-date metrics.
Thanks, Rob, and good afternoon.
As Rob mentioned, the season has had areas of challenge and strong performance. In the second fiscal quarter, resort net revenue was $924.4 million, an increase of 8.8% compared to the prior year. Resort reported EBITDA was $378.3 million, an increase of 5.7% compared to the prior year. Fiscal 2020 second quarter resort reported EBITDA included $1.9 million of acquisition and integration-related expenses, and approximately $1 million of favorability from currency translation, which the Company calculated on a constant currency basis by applying current period foreign exchange rates to the prior period results.
Net income attributable to Vail Resorts was $206.4 million or $5.04 per diluted share for the second quarter of fiscal 2020 compared to net income of $206.3 million or $5.02 per diluted share for the same period in the prior year. Fiscal 2020 second quarter net income included the after-tax effect of acquisition and integration-related expenses of approximately $1.4 million.
Our balance sheet remains very strong. We ended the second quarter with $126.8 million of cash on hand, and our net debt was 2.4 times trailing 12 months total reported EBITDA, though it is important to note that this ratio only includes Peak Resorts results for the period between closing and quarter end, and we expect that ratio to decline as we incorporate a of full year results from Peak Resorts.
Turning now to our season-to-date metrics for the period from the beginning of the ski season through Sunday, March 1, 2020, and for the prior year period through Sunday, March 3, 2019. The reported ski season metrics are for our North American destination mountain resorts and regional ski areas, including the results of peak resorts in both periods, and excluding the results of our Australian ski areas in both periods. The reported ski season metrics include growth for season pass revenue based on estimated fiscal 2020 North American season pass revenue compared to fiscal 2019 North American season pass revenue, and the metrics are adjusted to eliminate the impact of foreign currency by applying current period exchange rates to the prior period for Whistler Blackcomb’s results. This is interim period data and is subject to fiscal quarter end review and adjustments.
Total lift revenue including an allocated portion of season pass revenue for each applicable period was up 0.8% compared to the prior year season-to-date period. Our ski school revenue increased 2.8%, dining revenue decreased 1.4%, and resort retail and rental revenue decreased 0.6%, all compared to the prior year season-to-date period. Total skier visits were down 5.2% compared to the prior year season-to-date period.
Based on results through March 1, 2020 and indicators for the remainder of the year as of that date and excluding any identified impact from coronavirus, we estimate the Resort Reported EBITDA for fiscal 2020 was expected to be approximately $20 million below the midpoint of the guidance range previously issued on January 17, 2020, driven primarily by the continuation of challenging visitation trends at our Pacific Northwest resorts throughout January and February, and secondarily from results at our Colorado resorts that were modestly below our expectations in January and February, partially offset by strong performance at our Park City resort.
Given the uncertainty surrounding the impact of the coronavirus on the broader U.S. travel market and any specific impact to the performance of our Company, we are not issuing guidance at this time for fiscal 2020 and are withdrawing our previous guidance issued on January 17, 2020.
In the week ended March 8, 2020, we saw a marked negative change in performance from the prior week. With destination skier visits modestly below expectations and we expect this trend to continue and potentially worsen in upcoming weeks. We intend to provide updated commentary on our results by March 18, 2020.
I’ll now turn the call back over to Rob.
Thanks, Michael.
We remain confident in the strong cash flow generation and stability of our business model. We will continue to be disciplined stewards of our capital and remain committed to strategic high-return capital projects, continuous investment in our people, strategic acquisition opportunities, and returning capital to our shareholders through our quarterly dividend and share repurchase plans. We are pleased to announce that the Board of Directors declared a quarterly cash dividend on Vail Resorts’ common stock of $1.76 per share, payable on April 9, 2020 to shareholders of record on March 26, 2020. Given the current market instability caused by the coronavirus, we are deferring our decision on a dividend increase until June.
Moving to our calendar year 2020 capital plan. We remain committed to reinvesting in our resorts, creating an experience of a lifetime for our guests and generating strong returns for our shareholders. The Company expects to invest approximately $155 million to $160 million, excluding one-time items associated with integrations, the one-time Triple Peaks and Stevens Pass transformation plan, one-time Peak Resorts capital improvements, real estate related capital and $4 million of reimbursable investments associated with insurance recoveries that we had originally expected to occur in calendar 2019.
As previously announced, the calendar year 2020 capital plan includes a rare opportunity to expand with a 250 acre lift-served terrain expansion in the signature McCoy Park area of Beaver Creek, further differentiating the resort’s high-end, family focused experience. We also plan to add a new four-person high speed lift at Breckenridge to serve the popular Peak 7, a replacement of the Peru lift at Keystone, with a six-person high speed chairlift, subject to governmental approvals, and a significant 250-seat increase in the seating capacity at the Rendezvous Lodge Restaurant on Blackcomb Mountain.
We remain highly focused on investments that will further our company-wide data- driven approach, including the second phase of implementing our automated digital marketing platform that will allow us to aggregate a more holistic view of the guest that will drive improvements in personalization and engagement across all lines of business, including ski school and rentals. We are also planning to completely revamp and upgrade our digital ski rental online platforms and our EpicMix mobile app, which will offer new functionality and an improved user experience. We plan to continue to invest in corporate infrastructure and technology to improve our scalability and efficiency, including the first phase of implementation of an automated workforce planning system to optimize our labor scheduling and improved financial systems to enhance business analytics.
We are planning to complete the $3 million initial phase of a two-year, $15 million investment program across Peak Resorts. We are also planning to complete the second and final phase of a two-year, $35 million investment program for Crested Butte, Okemo and Stevens Pass and planning to spend approximately $24 million on integration activities primarily related to Peak Resorts.
Including one-time items associated with integrations, the one-time Triple Peaks and Stevens Pass transformation plan, one-time Peak Resorts capital improvements, real estate related capital and $4 million of reimbursable investments associated with insurance recoveries that we had originally expected to occur in calendar 2019, we expect our total capital plan to be approximately $210 million to $215 million.
Turning now to season pass sales, which we recently launched for the 2020/2021 North American ski season. Vail Resorts is committed to providing the best value in skiing for all skiers and riders through its transformational Epic Pass and Epic Day Pass advanced commitment products. Last year, we launched the Epic Day Pass, giving all skiers and riders the same value and flexibility available to season pass holders, even if they only plan to ski or ride one day. The Epic Day Pass provides unparalleled value to all skiers and riders through a discount of up to 50% off of lift ticket window prices by purchasing in advance of the ski season. We were very pleased with the success of the Epic Day Pass launch last year and expect to see continued growth in this product in its second season, as we convert existing lift ticket purchasers and new prospective guests into advanced commitment products.
This year, we are transforming the breadth of value offered with our pass products by providing our pass holders truly epic discounts on their mountain experience with the introduction of Epic Mountain Rewards. For the 2020/2021 North American ski season, pass holders will receive 20% off of food and beverage, lodging, group ski and ride school lessons, equipment rentals and more, creating incremental savings of potentially hundreds of dollars per day for a family of four. No other major pass product provides this level of across-the-board savings for skiers and riders, and, with no sign-up, no point tracking and no blackout dates, Epic Mountain Rewards is designed to be as simple as possible. Vail Resorts is uniquely positioned to offer this kind of across-the-board value to our guests through our integrated network of 37 owned and operated resorts. The Company expects the new offering will continue to drive conversion of our guests from purchasing lift tickets to purchasing an advanced commitment pass product, where we see higher guest return rates and guest satisfaction.
The Company is also delivering more value to our guests in key regional markets through the introduction of the Northeast Value Pass and Whistler Blackcomb Day Pass. The Northeast Value Pass offers unlimited skiing in the Northeast for $599 for adults and $419 for college students, with holiday restrictions at our Vermont and New York resorts and up to 10 days of access at Stowe. The Whistler Blackcomb Day Pass is a deeply discounted product, sold in Canadian dollars, that provides exclusive access to one of the world’s premier mountain destinations. This new customizable pass offers from one day to ten days of access and is ideal for skiers and riders who may not need the unlimited access offered on a traditional season pass but are interested in the value of this advanced commitment offering. By purchasing in advance of the ski season, Whistler Blackcomb guests can ski and ride for up to 50% off of lift ticket window prices, providing all guests with the value, flexibility and convenience that comes with being a pass holder. The Company expects both new passes will continue to drive conversion of our guests from purchasing lift tickets to purchasing an advanced commitment pass product.
Finally, important to highlight in the current moment that we remain focused on the health and safety of our guests and employees as we address the potential impacts of the coronavirus. We are in contact with and following all recommendations and precautions from state and local health officials. Our resorts are fully open and operating normally with good conditions.
We understand that the current macroeconomic and business environment creates uncertainty for all of our stakeholders. And it’s a good time to remind everyone that the company remains on very sound financial footing with an incredible pass program, world class resorts and the resources to ensure that we continue to make the right long-term investments and do not let any temporary dislocation in the broader markets take us away from those efforts. Most importantly, we have an incredibly committed team of people who understand how to provide an experience of a lifetime to our guests and to each other, even when dealing with external challenges. In many ways, we do this every day.
But of course, this has been a trying time for many of our employees. And we very much appreciate their incredible engagement and dedication. It’s what lies at our success.
At this time, Michael and I would be happy to answer your questions. Operator, we are ready for questions.
Thank you. [Operator Instructions] And we’ll take our first question from Felicia Hendrix from Barclays. Please go ahead.
Hi. Thanks so much. Rob, I just wanted to start on the decision to kind of hold off on raising your dividend. Just, given the strength of your balance sheet, and at the end of your prepared remarks there, you kind of highlighted how strong the business is, you guys are always conservative and prudent, but just wanted to hear a little bit more about the decision there.
Yes. I think, as we went into that decision, I think the Board was obviously looking at the macroeconomic trends, which seem to be shifting by the day. The marketplace is shifting quickly. I think also a sense that obviously the coronavirus impacts are certainly being felt particularly within the travel industry, and that’s obviously the industry we’re in. And so, I think there was a sense that we could -- we’ve had a very consistent track record of increasing the dividend, but we could wait a quarter to see how this plays out before making any definitive decision on an increase or the amount of increase.
Okay. And so, really, it would just be kind of like a change in the overall environment, so you would just [indiscernible] and so it would look more wise to make that decision, is that really what you’re waiting for?
Yes. I think understanding of -- I think there’s obviously a lot of movement right now in the -- both in the financial markets, but also just in the economic markets for travel. And so, I think, my guess is probably within a few weeks or a month, it will be -- things will actually -- be a little bit more clear probably to everyone, and certainly by the time we get to the June quarter, I think the Board felt like they would be making a decision with a lot more information than they were making today. And today, obviously, it’s tougher to set that increase without really an understanding of where the economic environment is going to go. And I think, given that it at the moment at least, seems to be changing by the day.
Yes. That’s really fair. And then, with that in mind, totally understandable that you would withdraw your guidance given the uncertainty, but with so little of this peak season left to go, just wondering, also why you are -- have made that decision, just wondering, and this isn’t what is said in the press release or what you said, but, are you just suddenly seeing a much significant drop off, could you anticipate closing resorts early? Are there certain areas that are holding up better than others, any kind of color that you could give to us behind that decision?
Yes. I would say -- I think, it’s absolutely true that there is not much -- many weeks left in the ski season. Obviously, they are big weeks for us, spring break and Easter. But of course, then we will -- we won’t be really -- our ski resorts really won’t be operating in any major way after Easter. And at the moment, we are not at all changing any of our operating schedules and plan to keep all of our resorts open, they’re all open and operating normally. We do not expect any change whatsoever in the experience that we want to provide to our guests, and we’ll be doing that. But certainly, as we looked over the last week, I think following the previous week’s turbulence of coronavirus, we started to see declines, coming off of, I think some strength and actually some pretty positive indicators that we were seeing for March, all of a sudden a lot of those trends started to change. And we talked about seeing modest declines on visits. And I think that that in our minds as the week went on continued to worsen a bit. And so, a little bit unclear to us where we would be sitting.
It’s also, though, to your point about the fact that the ski season is coming to a close in a handful of weeks. It is why we said that we would provide an update on current performance by the March 18. So, we feel like we’ll probably have some better sense. We may not have a final sense by then either. And then, I think, another piece for us is just a little bit of uncertainty as to how this will affect the northern hemisphere summer where we will have our Australian resorts coming on line, we’ll have Grand Teton Lodge Company certainly coming on line. Obviously, all of that much less impactful than our North American ski resorts, but still there’ll continue to be certainly a lot more uncertainty than just a few weeks ago.
That’s super helpful, thanks. And the last one for me is just, at Whistler, you attributed the shortfalls across -- the shortfall for snowfall early season and then kind of the lag effect from that. But just wondering if you could talk us through how the demand has been from your Japanese client out there, and if that’s been part of it?
Yes. I don’t have a specific data to give you on Japan, but no doubt that the international business there has been soft. I think that -- I think we were hopeful to see more quick recovery and a pickup, and just really did not see that occur. And so, that continued to be by far the biggest drag for us for this season.
We’ll hear now from Shaun Kelley with Bank of America.
Rob, just maybe starting with kind of a high level strategic question, but, we’ve seen obviously, a fairly quick reaction across global stock markets or obviously even in most of the travel landscape now some data around how quickly some of the behavior started to change around kind of travel and the virus. I mean, just what’s your instinct as both, the CEO and then your experience in your own industry especially as we look forward more to the possible implications for pass sales? So, do you think this is going to change purchasing behavior at all? And just how do you think about it, because -- on the one side, we have a very sort of insulated and kind of thoughtful customer that you’re able to drive a lot of renewal from? And on the other side, it’s also a very high end expensive purchase for a lot of people. So, can you help us think about just probably -- we understand the operating impact upfront, but also just thinking about a little bit of kind of a medium term here from a pass sales perspective?
Yes. I would say this, I think again, I’ll caveat all this by saying we’re pretty in understanding all of the travel dynamics, but I would say I think -- yes, we’ll be faced with two different dynamics, one dynamics will be just issues around travel itself, because of coronavirus. I think on that front, obviously, we’re not going to be immune to that; I’m sure we’re not. At the same time, we do have a heavily domestic focused business. And I think relative to other parts of travel, I think that probably will inure to our benefit. I think, our season pass program is a huge strength in a time like this. And so I think that’ll inure to our benefit, as we go through whatever we go through. But again, we won’t be immune to it.
I think, the second piece is the economic impact of this. And again, on that, I would say, I also feel like -- again, we should fare relatively better than any other parts of travel. We have better supply demand characteristics in our industry. We have continued to invest. I think our season pass program and now our Epic Mountain Rewards effort really is about delivering value. And I think, we will be absolutely pushing this message. And I think very much like the Epic Pass, when it was introduced back in 2008, was a terrific opportunity for the company as we went through the 2008-2009 recession. I think today, honestly, our pass program is much, much larger. The Epic Mountain Rewards program, I think, will be that much stronger. Our data is much stronger. The geographic piece that we have right now, and we’re just going -- if we’re going through some kind of slowdown of some sort, I feel very good about the position that the Company is in.
And I do think the pass will continue to remain incredibly attractive to people no doubt on. Obviously in a moment like this, I’m sure for some buyers, there’ll be issues with making any purchases. But again, I think, there will be a short-term impact from coronavirus, and then a longer term peace. And I feel, I’m not quite sure exactly what happens in the short-term. But in the longer term, I actually feel the Company is perfectly positioned for that, even if there are challenges.
And then, maybe just to turn to the numbers for one specific one. You obviously called out in the release that Colorado was modestly below expectations in January. I think, it was sort of in the post-holiday period that you specifically mentioned. Could you just give a little bit more color there, because obviously, you provide your update as of January 17th? It doesn’t leave a lot of time, at least as it relates to the remaining periods at the end of the quarter. But, I think some of this I know is factoring in -- probably be able to continue on into February. So can you just help us kind of isolate like what changed or what was going on there? Because it seemed like at least what we had through January 17, Colorado was not an issue.
No, I agree. I think, we felt, looking over the holiday period, we’re not seeing an issue in Colorado, and I think obviously, had some disappointment about the early season not being as strong as the previous season. But the truth is, I think we felt very good going into it. And then, as we came out of it, I think we saw, Park City continue to perform very well. And then, we did see some sluggishness. It’s hard to say exactly what that was. Is that overall travel industry sluggishness that I think has continued throughout this year, even before we got the coronavirus? Is it the ski industry kind of comping a better year last year? I’d say across our resorts, we saw more strength in Beaver Creek and in Keystone, and softer results in Vail and Breckenridge. So, it wasn’t really completely across the board, but it was enough that it added to the issue -- the primary issue again was Whistler Blackcomb. But this -- there was definitely a gap there as well that added to our performance. So, I’d say, in the totality of the year, not that significant, but in -- but certainly, in terms of what we were expecting coming out of the holidays, it was meaningful. And I’d also say that as we are going into the March period, Vail had some of the strongest indicators of any of our resorts going into both March and Easter. At this point, not sure that we’ll get a chance to test those out and see what those would have been. But, there’s also -- one of the things we highlighted in the Q is we have seen a real shift in visitation from Q2 to Q3. We’ve actually -- we’re now allocating pass revenue more to Q3 than Q2 and get more information on that in the Q. But -- and that’s because we have seen right visitation coming later in the season, we saw this last year too was a very strong finish to the season, particularly in Colorado. So, there could be some of that shifting, but at this point, I’m not sure we’ll be able to completely assess that given coronavirus.
Thank you for all the color. I appreciate it.
Sure.
Thank you. We’ll take on this question from Chris Woronka with Deutsche Bank.
Hey. Good afternoon, guys. I want to ask you -- and I know again still early in the process with the virus fallout. But, at some point, would you guys make a decision to extend kind of early season purchase date or maybe throw in additional plans, or what’s going to be kind of your indicator to think that you might have to offer something new or different this year?
Well, I think we feel that Epic Mountain Rewards is very new and very different, right? It really -- it offers a 20% discount to pass holders on food, group ski school, lodging and rentals. It’s a pretty powerful offer and we absolutely intend to ensure that our guests understand that, both our existing guests and prospective guests. So, we feel like this is -- again, we -- given the current event, obviously this program has been in planning for a while. But, we think it’s perfect because we actually want to lean into a much stronger value message for the past. So, we feel very good about that. We have no plans at this point to change any of our dates or deadlines. But, I guess, certainly like everything in the world right now, things are moving quickly. So, always hard to tell, but at this point no change to the operations of any of our resorts or any of our normal path deadlines.
Okay, fair enough. I appreciate that. And then, follow-up was kind of on that 20% discount for pass holders. Is that -- I guess, the question is really, how do we think about that financially in terms of how you underwrote what would you guys hope in terms of more volume, more pass sales et cetera, etcetera? Just what the financial impact might be the way you initially saw going?
Yes. I think, we feel that -- there’s a couple of pieces. Obviously, there’s a discount itself and obviously for existing pass holders who are currently using those products, there’ll be a discount that’s a cost to us, obviously. I think, pass holders -- and we’ve shared this before, with folks tend to purchase less of these ancillary products than lift ticket buyers and especially many of our local pass holders don’t have the same engagement rate with a lot of these businesses that our destination guests do. And so, in some ways, we feel like there’s also going to be incrementality on this in terms of actually this discount providing an incentive for people to actually gauge with the ski school, rental and F&B, to either when they haven’t before, or obviously just upsell in the moment in terms of buying more product. And so, we think when you look at those two things, plus the opportunity to drive more people into the program, to convert existing lift ticket buyers into the program, to take prospects, new people to Vail Resorts, into the program, we think all of that is a real positive. And then, I think, on the lodging side, it’s a great offer in terms of the 20%. But, it also -- it does need to be a direct booking to the company when you -- to get that. So obviously that eliminates for us a lot of the OTA and other indirect commissions that we have to pay.
And in many of these businesses, like rental, like lodging, we are competing in the marketplace, and this gives us a very compelling opportunity for that. And I think on good ski school and on food, we really have an opportunity, I think to drive capture. So, again, we looked at it and obviously felt like it was a very compelling proposition.
We’ll take our next question from Ryan Sundby with William Blair.
I just want to follow up on Felicia’s question on kind of a balance of the seasons. Is there any way you can help us just from a framework standpoint, think about what -- what’s left in terms of visitation or profitability from kind of the week of March 8th on? And then second, I guess, as you look out, and if we do see some kind of larger impacts in terms of ski visitation, can you maybe just walk us through what kind of levers you have on the mountain to maybe manage or a bigger pullback in visitation?
Yes. I think -- I can’t really give guidance, it’s a parse through kind of different points in the season, obviously. I think, you have a sense for, historically Q2, Q3. So, you can obviously look at that. But I would say spring break and Easter is an important time period for us. So, I think it’s true that it’s -- this is happening towards the end of our season, but it’s also still impacting an important part of the season.
Yes, I really wouldn’t see -- we are going to be providing a full comprehensive experience at all of our resorts throughout this time period. We are not going to be pulling back on any component of it. I think, if we do see some pullback on the revenue side, a lot of that will fall to the bottom line. This is just -- obviously, we want to ensure that whoever comes to our resorts has an outstanding experience.
So, at this point, not something that we’re looking to. And again, I think we’re also anticipating that yes, our resorts are going to continue to fully operate normally, and providing the best experience possible to our guests.
And then, just on that $11 million shift in the pass allocations. I think, there was the sales -- is it fair to think that that’s drop straight down the profits, or is there some offset there?
Yes, largely drops through. I mean, this is incremental -- or not incremental, it’s how we allocate our pass revenue. And so, it’s really just a shift between Q2 and Q3, doesn’t affect the overall year, but really is just, as Rob said, a reflection of the historical shift in visitation that we’ve seen, moving visiting to the spring break and Easter period.
We’ll now take a next question from Robert Aurand with KeyBanc Capital Markets.
Robert Aurand on for Brett Andress today. I guess, just to start, you talked about the slowdown during the weekend in March 8th. Was there any difference to call out between destination and non-destination resorts?
I would say actually -- and maybe this is mentioned earlier, and I don’t know that I fully answered it. But, yes, we’re not -- it is not the exact amount of impact across every single resort. So, we are definitely seeing fluctuations. But in part that’s just normal fluctuations between our regions. And so, I don’t want to get into kind of parsing it apart. But I think overall, we’re definitely seeing, certainly on the destination visit side that kind of modest decline and then -- but something that’s been increasing as the days go on. And in our mind, just given some of the media itself and the chatter, we expect to likely continue and obviously potentially get worse. We don’t know at this point yet.
And can you give us any color on the forward looking trends you’re seeing. And I guess, to the extent you’re seeing cancellations, and -- to the extent you’re seeing cancellations, kind of domestic cancellations versus international cancellations?
Yes. I think, at the same time that from -- if I look back to last weekend, so that kind of March 1st, 2nd time period, also saw kind of a slowdown in bookings and increasing cancellations, both. Now I would say, the trending also definitely went -- was markedly more negative for sure. And the absolute numbers compared to kind of occupancy over the next couple of weeks is not huge either. Because obviously, as you would imagine, by this point in the year, we do have a fair amount of occupancy already booked into most of our properties. But certainly, the trending doesn’t look good. But, I would imagine if that continued, yes, it’ll have a bigger impact, as you get later into March and into Easter, if it continues. And again, I don’t know whether it will.
We’ll now take our next question from Alex Maroccia with Berenberg.
It was pretty sad to see the damage to areas around the Australian resorts, as well as some of your peers. Given the loss of the infrastructure and the evacuations in that area, are you seeing any issues that could come early in the 2020 season? Whether it’s an inability to prepare properly or just a lack of demand?
No, we’re not seeing any -- don’t expect any operational issues from the fires down there in their summer, and expect to be fully operational and ready to go for the ski season. On the demand side, I think at this point, in the absence of coronavirus, and oil prices and things like that, certainly, I think we -- might there have been some economic activity impact for all of Australia, because of the fires potentially, but I don’t think we were thinking that was going to be a huge issue going into June, July and August. I think at this point, harder for me to tell exactly how the current economic environment is going around coronavirus and other natural resources, how that will affect Australia. I think that’s just too early to tell at this point.
All right, that all makes sense. Thanks. And then, secondly, Peak Resorts Mountains saw pretty minimal amount of snow this winter. Can you just tell us if there are any major increases in costs associated with snowmaking, and then if you saw any swings attendance at some of the larger mountains?
Yes. Actually, we’re quite pleased with how we’ve done with Peak in its first year. Obviously, we’re still in the process of integrating the resorts. So, in that process. But certainly, pleased with how it did, relative to the portfolio resorts that make up Peak, certainly a strong year as we called out in terms of the Northeast resorts, including our existing resorts in the northeast, offset a bit by weaker snowfalls, as you mentioned in the Midwest but had some more operational disruptions but offset some of that favorability in the northeast.
Thank you. We’ll hear now from Patrick Scholes with SunTrust.
Good afternoon, gentlemen. I apologize if I missed it. Are you able to quantify what EBITDA impact would be for now to the end of the ski season, saying that’s April 19th in Vail, if the trends from the virus that you’ve seen over the past week were to continue to that point?
Yes. I think, we’re intentionally not commenting on guidance for the rest of the season, or the rest of the year for that matter. Because of the uncertainty in that it’s -- I don’t think there’s not a simple way to take the trend from the last week and understand and parse it well enough. Because even in the last week, I think we saw shifting. And I think it’ll definitely take us a little more time to assess that. I think, we’re hopeful to provide more color around this before March 18th. But again, I don’t -- at that point, obviously, it will somewhat dependent on what’s happening. But at a minimum, we’ll be able to provide a little more color like we have today on kind of the actual results we’re seeing.
Okay, thank you. And then, my second question here. About a month ago, there was some negative press and various online videos showing what would appear to be excessive lift lines at some of your chairs at Vail. Do you see that as sort of a onetime one-off event or are you going to be taking any steps or specifically what in the future to prevent that or does just the limitation on how many cars per day can go through the tunnels sort of take care of that problem with overcrowding itself?
Yes. I think, they’re obviously very aware of that situation. And, I think there were two kind of different pieces to it. One piece was a long line earlier in the morning at Gondola One, huge powder day, people kind of lining up early to get on and go up skiing. That line really dissipated relatively quickly, not that long into the day. I think, that’s something that the Gondola One is a very high capacity envelope. We feel good about that. And, on huge powder days, sometimes we’re going to get a little bit of that line, not as concerning. I think the line chair 5 was definitely a -- yes, not a great guest experience. That’s probably an understatement. Obviously, not something that we want to have happen for any of our guests. At the same time, we have again, this huge powder day and unfortunately didn’t have the opportunity to open more of our terrain. So, we only have that area open. A lot of our guest service folks were kind of up as people were skiing down, trying to alert them that the line was going to be pretty big when they got to the bottom. And I think, our takeaway from that is, yes, that was a very one-off situation. Really the snow cycle that created that was one of a handful over the last decade or more in terms of the intensity of it. But I do think we take away from it, guest communication. I think we have a responsibility to be out front with our guests. And I think, one of the things we’re currently talking about is how do we have a singular effort that makes sure that every guest knows exactly what to expect when and where. And that’s something that we’re going to absolutely be continuing to improve upon, and we’ll make sure we’ll be more dialed in for next year.
Thank you. We’ll move on to David Katz with Jefferies.
Thank you for the info. The candor is always greatly appreciated. As we’re sitting here trying to work with our model for the rest of this year. Can you help us just talk about what aspects within the mountain segment, the breakdown between, fixed and variable expenses? And, help us think through that aspect of it?
Sure. I think, obviously for us, we have a -- I think we have a number of pieces to it. So, obviously, we’ve got the revenue piece. To the extent that goes down, we have things like credit card fees and U.S. fire service fees that will come down, as that goes down. If we have lower ski schools, usage, then obviously the ski school labor piece will come down, if we have lower retail sales or lower food sales, then obviously we’ll have savings on cost of goods. But, a lot of the other components of the resort are either actually fixed, like utilities or overhead or essentially fixed, which is most of our seasonal population that we need to really open the mountain. And so there’s not a ton that we would do to reduce any of that, because we want to ensure that we have the best experience for our guests. And that’s something that we do all season long, and we’re not going to pull back from that at all. And so, I do see -- as you look through it, we also obviously have a large component of our revenue that’s season pass revenue. And so, that portion of the revenue is really fixed as well and somewhat locked in. And so really the question is, yes, our paid lift ticket revenue, kind of daily lift ticket revenue plus any ancillary uptick when people are there. Is that helpful to provide a basic overview?
It is helpful. Can I -- if you don’t mind, I’d like to just follow it up a bit more directly. It sounds as though, more than half, meaningfully more than half of the total cost base that we look at is of a more fixed nature, with the remainder being variable with whatever revenue we wind up with?
Yes. I think, to put a finer point on it. Yes, I think as Rob articulated, there’s aspects of our cost structure, which are outlined in our financial statements including cost of goods sold that are highly variable. But for the most part, the remainder of our labor is not, outside of some circumstances with businesses like ski school or otherwise. But as Rob articulated, the majority of our call structure is labor. And yes, a good portion of that in the short-term is a fixed cost of running the operations.
Moving now from Marc Torrente with Wells Fargo Securities.
So, prior to the impact of coronavirus, how was international visitation broadly trending, maybe from the major source markets Japan, Asia, Australia, and South America?
I think, in the U.S., the international business has declined over the last number of years, largely because of strong U.S. dollars, travel restrictions and challenges I think being another component. So, I think it was soft, but not a material driver of our U.S. performance. I think, it was definitely a decline this year. A large part of that has been the weather. I think another component of it has been -- there we’ve definitely seen is the cost in Whistler, but not really -- partially lift tickets, but really about the total vacation costs with lodging and other pieces. We’ve definitely seen some shifting there. But, I would say, the primary driver on international visitation to the Company is Whistler in the primary driver of that was really conditions.
Okay. And when you have these less favorable conditions in a particular season, how does that impact visitation in the comparable period for the next year or the year after that?
I think we’ve seen a variety of different examples going back. I think, again, we have seen -- I think of Tahoe as a good example, which has very challenging year like in 2014-2015, but then, with good conditions came rolling back and we saw all the demand come back. So, we do tend to see a pretty strong rebound from that. I think sometimes there could be a lag effect as it relates to advanced bookings or pass sales, things like that. But, again, we have tended to, again, historically navigate through that without really seeing that immediate impact.
I do think, one of the things that we are seeing though is that early season versus late season, which is, there does seem to be some migration from the early season to the late season, which I think, absolutely could be about conditions, which obviously over the last number of years have been much more reliable in the late season. With coronavirus, not sure we’re going to be able to assess that again exactly this year, but certainly, when you look back over the last couple of years, that’s been a constant trend. But again, have not seen any longer term degradation because of bad conditions in one region or another.
And then, just lastly, you did provide some commentary on capital allocation going through this market volatility. I don’t think you repurchased any shares during the quarter. But should we expect you guys to step in more here? And then, does any of this change your view on M&A near-term?
Yes. I think on -- obviously, every quarter, we assess that with the Board. And so, we’ll be doing that again this quarter, but I really can’t comment beyond that. And no, I think we remain -- one of the things we wanted to make sure comes across is, remain fully committed to investing in our resorts for the long-term and strategic opportunities when they make sense, and we’re going to continue to be aggressive on that front, obviously disciplined and thoughtful on value and all the rest of it, just like we always are. But obviously, we’re going to look for those unique opportunities and absolutely still pursue them.
Thank you. We’ll take our next question -- our final question from Brad Boyer with Stifel.
Yes. Thanks for fitting me in, guys. So, just to expand on the M&A question, Rob. As we look at it here historically over the last several years, this has been a pretty good seasonal time to get involved with the stock. And I think some of that coincides with the fact that you guys execute a lot of your M&A in the offseason period. So, as you assess sort of the landscape today, you obviously -- you’ve built out the lower end by kind of going in and doing the Peak deal last year and getting closer to the customer. You guys are in almost every major ski market here in North America today. Could you just give us a sense of if there -- if anything out there sort of looks like a strategic priority on the M&A front here as we look at it today? Are there any regions where you’d like to have more exposure -- would you like to have more exposure in sort of the regional ski business? Just any additional color you could provide around that would be helpful.
Yes. I think that there’s definitely going to be I think strategic opportunity select opportunities in North America, whether it could be a destination resort, or could be a regional resort. Obviously, that’s something -- you’re right, I think we’re also very cognizant of the fact that we have a very strong network right now. And a lot of our focus actually is on integrating and ensuring that we get the maximum benefit of the network that we already have. But there’s no doubt that there are a handful of opportunities we would always pursue. We still remain very-focused on opportunities in Japan or opportunities in Europe. And so, all of that is still very, very true. But yes, we’re going to remain disciplined and disciplined and focused in the context of whatever the environment is that we’re operating in. But, I would say that a lot of our -- kind of where we’re putting a lot of our attention is actually really leveraging the network that we’ve built. Moving people to advanced commitment and kind of this business shift that we’ve been going through over the last number of years, is there’s some huge -- we’ve seen huge benefits over a number of years and moving kind of from where we were in season pass a number of years ago to where we are today. But, there’s a whole kind of new set of benefits that we can actually get by moving to kind of a whole another level. And, we think even in a more challenging economic or travel environment, we think that opportunity still exists and still represents a major opportunity for us because of the focus that people will have on value and our ability to deliver on that.
And so, we’ll be thoughtful about M&A as to where it can really help in that strategy, just like we always have been.
Helpful. And then, Michael, just as a housekeeping item, could you remind us what you have left on the existing authorization on the buyback front? That’s all for me. Thanks.
Yes. I’ll have to go look that up and get back to you on the specific number of shares.
Okay. Thanks a lot, guys. I appreciate it.
So, actually, just to follow up on that. We have about 1.5 million shares remaining.
Thank you. That does conclude today’s question-and-answer session. I’ll turn the conference back over to Mr. Katz for any additional or closing remarks.
Thank you, operator. This concludes our fiscal second quarter 2020 earnings call. Thanks to everyone who joined us today on the conference call. Please feel free to contact me or Michael directly, should you have any further questions. Thank you for your time this afternoon. And goodbye.
Thank you. That does conclude today’s conference. Thank you all for your participation. You may now disconnect.