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Good morning, and welcome to the Vail Resorts Fiscal 2023 First Quarter Earnings Conference Call. Currently, all callers have been placed in a listen-only mode and following management's prepared remarks, the call will be open for your questions. [Operator Instructions] Please be advised, I will now turn the call over to Kirsten Lynch, Chief Executive Officer of Vail Resorts. You may begin.

Thank you. Good morning, everyone. During our earnings call yesterday, the conference call system vendor for the event experienced a significant technical outage disrupting the call. The vendor was unable to reestablish their systems yesterday evening, therefore, we rescheduled the call for this morning. We apologize for the inconvenience this call caused and thank you for joining us this morning. Joining me on the call 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 yesterday afternoon, along with our remarks on this call are made as of today, December 9th, 2022, 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 the Form 10-Q were filed yesterday afternoon with the SEC and are also available on the Investor Relations section of our website at www.vailresorts.com. With that said, let's turn to our fiscal 2023 first quarter results. We are pleased with our results for the quarter with resort reported EBITDA improving, compared to the prior year period, primarily driven by the strong demand and visitation at Australian resorts. Australian resorts continued to experience record visitation, driven by strong demand, following two years of COVID-19-related disruptions and supported by continued momentum in advanced commitment pass product sales following the addition of Hotham and Falls Creek in April 2019. Our North American summer operations continued to recover following the COVID-19 pandemic. Turning now to our 2022-2023 North American season pass sales and early season indicators. We are pleased with the results of our season pass sales, which continue to demonstrate the strength of the guest experience, our network of mountain resorts and commitment to continually investing in the guest experience. Pass product sales for the North American Ski season increased approximately 6% in units and approximately 6% in sales dollars through December 5th, 2022, as compared to the period in the prior year through December 6th, 2021, including sales for the Seven Springs Resorts in both periods and adjusted to eliminate the impact of foreign currency by applying an exchange rate of $0.74 between the Canadian dollar and U.S. dollar in both periods for Whistler Blackcomb sales. Advanced commitment is our core strategy shifting lift ticket guests across all of our mountain resorts into a commitment before the season starts driving stability for our company and long-term lifetime value. Our North American season pass program has grown dramatically over the last three-years. Season pass units have grown approximately 86% in units and approximately 53% in sales dollars, compared to the sale -- to sales for the 2019 and 2020 season through December 9th, 2019. We expect to have approximately 2.3 million guest in advanced commitment products this year, generating over $800 million of revenue in advance of the season and representing over 70% of all skier visits committed to our 40 North American and Australian resorts in advance of the season in a non-refundable pass, an increase of over 1.1 million guest in the program from the 2019-2020 season, including all pass products for our North American and Australian resorts. This substantial base of pre-committed local and destination guests, revenue and visits also creates a strong foundation for in-season ancillary spending across our 40 mountain resorts in North America and Australia. For the full pass sales season, the business achieved strong unit growth from renewing pass holders, especially guests in destination and international markets, including strong renewals among those who are new to our pass program last year. Our strongest growth occurred in destination markets, which represents the largest addressable market for conversion of guests into advanced commitment and is a particularly attractive guest segment given the higher ancillary attachment. Our Epic Day Pass continues to be our highest growth product segment, targeting the large market of lower frequency skiers into advanced commitment and particularly destination guests with valuable ancillary spend. Our local markets also grew over the prior year in excess of our expectations, remaining a critical foundation for our advanced commitment strategy and are the most developed and highly penetrated markets. Sales of Epic and Epic Local passes are consistent with our expectations and with the trends seen in our September results, with unit sales declining by 12% relative to the prior year and increasing 39% over the last two years and 55% over the last three years. This represents substantial growth in our highest priced products and among our most penetrated high frequency skier segment. And we expected this year's performance as a result of the significant growth after last year's price reset. We continue to expect that the majority of the future growth in advanced commitment will come from the large and attractive addressable market of destination guests, primarily through transitioning lower frequency lift ticket guests into Epic Day Pass products and transitioning guests at our local and regional resorts into advanced commitment. Pass sales dollars continue to benefit from the 7.5% initial price increase and subsequent incremental price increases relative to the 2021 and 2022 season, offset by the mixed impact from the growth of new pass holders purchasing Epic Day Pass products. This year, net migration among renewing pass holders is in line with our expectations of a 4% decline year-over-year, following last year's positive 10% net migration that resulted from pass holders trading up to higher value products with more access following the price reset. We proactively use the breadth of our product line and our data to retain guests in the advanced commitment program by offering and in certain cases, encouraging them to purchase lower priced products to best suit their needs based on their behavior. We are pleased that over the last three years, we have maintained renewal rates among our unlimited pass holders, including Epic, Epic Local and Unlimited Regional passes, while growing these pass holders almost 75% during that time period. As previously announced, we completed a multi-year extension of our pass partnership with Telluride Ski & Golf and are pleased to continue offering Epic Pass our four to seven day Epic Day Pass with all resort access and Epic Adaptive Pass guests access to Telluride. Starting next winter for the 2023/2024 North American ski season, reservations will be required for pass holders skiing or riding at Telluride. Reservations will not be required for pass holders visiting Telluride in the 2022/2023 North American ski season, and more details will be provided in advance of next season. Heading into the 2022/2023 North American ski season, we are pleased with our significant base of committed guests that provide meaningful stability for our company, especially during economic uncertainty. We have strong early season conditions at our resorts in the Rockies and West and typical seasonal variability at our resorts in the East. While our mountain resorts have not yet completed hiring for the winter season, we are on track to have the staff needed to achieve full operation of lifts and mountain terrain and deliver normal operations of important guest experiences such as our restaurants, lodging, ski and ride school, and rental and retail locations. Hiring is still ongoing and a top priority as our mountain resort teams focus on hiring for specific roles and continue hiring to manage staffing needs that occur throughout the season. Looking forward, we are pleased with lodging booking trends for the upcoming season, which are consistent with pre-COVID-19 levels. We are also seeing lodging bookings that indicate visitation patterns may shift this year from the December holiday period into January through April. We are pleased to welcome guests to all of our resorts as the 2022-2023 North American and European ski season kickoff with significant investments in the guest experience, including 18 new or replacement lifts across 12 resorts, which will meaningfully increase lift capacity and reduce wait times at those lift locations. At Vail Mountain, this includes the installation of a new four-person high speed lift in the Sun Down Bowl and replacement of a four-person lift with a new six-person high speed lift in the Game Creek Bowl. At Whistler Blackcomb, this includes the replacement of the four-person high speed Big Red Express lift with a new six-person high speed lift and replacement of the six-person Creekside Gondola with a new 10-person high speed Gondola. As discussed in prior announcements, this also includes the installation of new or replacement lifts at Breckenridge, Northstar, Heavenly, Stowe, Mount Snow, Attitash, Jack Frost, Big Boulder, Boston Mills and Brandywine. Now I would like to turn the call over to Michael to further discuss our financial results and fiscal 2023 outlook.

Thanks, Kirsten, and good afternoon and good morning. As Kirsten mentioned, we're pleased with our first fiscal quarter performance. Net loss attributable to Vail Resorts was $137 million for the first quarter of fiscal 2023, compared to a net loss attributable to Vail Resorts of $139.3 million in the prior year. Resort reported EBITDA was a loss of $96.5 million in the first quarter of fiscal 2023, compared to resort reported EBITDA loss of $108.4 million in the prior year. This increase is primarily due to the greater impact of COVID-19 and related limitations and restrictions on results in the prior year. Our balance sheet and liquidity position remains strong. Our total cash and revolver availability as of October 31, 2022 was approximately $1.8 billion with $1.2 billion of cash on hand, $417 million U.S. revolver availability under the Vail Holdings credit agreement and $207 million of revolver availability under the Whistler credit agreement. As of October 31, 2022, our net debt was two times trailing 12-months total reported EBITDA. The company declared a quarterly cash dividend of $1.91 per share of Vail Resorts common stock that will be payable on January 10, 2023 to shareholders of record on December 27, 2022. We will continue to be disciplined stewards of our capital and remain committed to continuous investment in our people, strategic high return capital projects, strategic acquisition opportunities and returning capital to our shareholders through our quarterly dividend and share repurchase program. Moving now to our fiscal 2023 outlook. We are encouraged by the strength of our pass sales, the strong early season conditions for our Mountain Resorts and the Rockies and the West, and staffing levels, which are on track to deliver an outstanding guest experience. We are reaffirming our fiscal 2023 guidance for net income attributable to Vail Resorts of $321 million to $396 million and resort reported EBITDA guidance of $893 million to $947 million that was included in our September earnings release. Assuming a continuation of the current economic environment, normal weather conditions and no material impacts associated with COVID-19, for the 2022/2023 North American and European ski season or the 2023 Australian ski season. It is important to note that there continues to be uncertainty around the economic outlook and the impact that may have on travel and consumer behavior as we head into our primary operating season. Our guidance includes an estimated $4 million of acquisition and integration related expenses in fiscal year 2023 associated with the acquisitions of the Seven Springs Resorts and our majority ownership in Andermatt-Sedrun. Foreign exchange rates have experienced recent volatility. The guidance assumes the foreign currency exchange rates as of our original September 2022 guidance. Relative to the fiscal 2023 guidance, if the exchange rates as of Wednesday, December 7th, 2022 of $0.73 between the Canadian dollar and U.S. dollar related to the operations of Whistler Blackcomb in Canada, $0.67 between the Australian dollar and U.S. dollar related to the operations of Perisher, Falls Creek and Hotham in Australia and $1.06 between the Swiss franc and U.S. dollar related to the operations of Andermatt-Sedrun in Switzerland were to continue for the remainder of the fiscal year. We expect this would have an impact on fiscal 2023 guidance of approximately negative $6 million for resort reported EBITDA. I'll now turn the call back over to Kirsten.

Thank you, Michael. We remain dedicated to delivering an exceptional guest experience and we'll continue to prioritize reinvesting in the experience at our resorts, including consistently increasing capacity through lift, terrain and food and beverage expansion projects. As announced in September, the company expects to invest approximately $180 million to $185 million in calendar year 2023 capital expenditures, excluding one-time investments related to integration activities, deferred capital associated with the Keystone and Park City projects and $13 million of growth capital investments at Andermatt-Sedrun. At Keystone, we plan to complete the transformational lift served terrain expansion project in Bergman Bowl, increasing lift-served terrain by 555 acres with the addition of a new six-person high speed lift. At Whistler Blackcomb, we plan to replace the four-person high speed Jersey Cream lift with a new six-person high speed lift and replace the four-person high speed Fitzsimmons lift with a new eight-person high speed lift. At Breckenridge, we plan to upgrade the Peak 8 base area to enhance the beginner and children's experience and increase uphill capacity from this popular base area. The investment plan includes a new four-person high speed 5-Chair to replace the existing two-person fixed-grip lift, as well as significant improvements, including new teaching terrain and a transport carpet from the base, to make the beginner experience more accessible. At Stevens Pass, we are planning to replace the two-person fixed-grip Kehr’s Chair lift with a new four-person lift, which is designed to improve out-of-base capacity and guest experience. At Attitash, we plan to replace the three-person fixed-grip Summit Triple lift with a new four-person high speed lift to increase uphill capacity and reduce guests’ time on the longest lift at the resort. These lift projects are subject to regulatory approvals and are currently planned to be completed in time for the 2023/2024 North American winter season. Additionally, the Company plans to expand parking across four resorts by more than 500 spaces, to improve the guest experience. The Company is planning to introduce new technology for the 2023/2024 North American ski season that will allow guests to store their pass product or lift ticket directly on their phone and scan at lifts hands-free, eliminating the need for carrying plastic cards, visiting the ticket window or waiting to receive a pass or lift ticket in the mail. Once loaded on their phones, guests can store their phone in their pocket, and get scanned hands free in the lift line using Bluetooth Low Energy technology. In addition to the significant enhancement of the guest experience, this technology will also reduce waste of printing plastic cards for pass products and lift tickets, and RFID chips, as a part of the Company's Commitment to

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

Hi, good morning, everyone. Michael maybe just start with thanking you for all your help, your guidance, maybe a little bit of your patience over the years, best wishes in your next venture here.

Thanks so much, Shaun.

To Kirsten, if we were going to kind of dig into one thing that was kind of new on this release, I think it would probably be around some of your commentary on the lodging bookings. So could we expand on that a little bit specifically the comment around, sort of, the patterns that you're seeing around the December holiday period this year? And sort of I think the perspective that a lot of questions we're receiving have to do with, is there an issue or something that's kind of changing the pattern around either the fiscal second quarter specifically around the holiday? Or is this sort of a kind of more natural yield management just as that period is always full and people are booking, kind of, further out in the pattern you're able to track kind of similar people? Just help us understand that comment and what you're getting at a little bit more there?

Thank you, Sean. Yes, regarding our pacing on the books and bookings, they look good versus pre-COVID levels and we're pleased to see that, so that's in total. As noted, there we are seeing some shift in the timing within that and between December into January through April and wanted to be transparent about that. The pacing for the entire season is looking strong and good at this point. And as, you know, we noted last year, we have seen more of a move to off peak, which we consider to be a positive. It's still early in the season, but wanted to note that we're seeing some shifting within the total bookings from December into January through April.

That's helpful. And then, curious to maybe just to, kind of, push or dig a little further on that. We talk about bookings or pacing. Are we talking about, sort of, nights and volumes? Or are we in including -- are we talking about dollars? So are we including rate increases? Obviously for those of us who, kind of, focus on lots of leisure categories, pricing it up quite dramatically in most leisure activities out there? So help us think about are we talking volume or dollars, because we would think that probably dollars should be doing materially better than just bookings?

Yes. To clarify, Shaun, I am not referring to dollars, I am talking about occupancy.

Great. Thank you very much.

Thanks, Shaun.

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

Hey, how's it going? Michael, just want to echo Shaun, say good luck with whatever comes next. It's been a pleasure and hopefully you can personally boost the FY ’23 skier visit number.

Thanks.

With regards to ancillary, there seems to be a push to move skiers into advanced ticket options, especially the lower frequency, presumably this brings you closer to a very valuable customer and thus better situate you to drive ancillary spend. I guess the two questions on that would be when you look at the existing base of lower frequency skiers that you have, this may be tough, but how underpenetrated do you think you are? Is that something you can quantify? Have you done it like internally and then set in? What -- can you kind of just talk about the levers you can pull once that advanced decision has been made? Is it as simple as email? I guess the question is basically saying like after the advanced purchase decision has been made by the customer, is that enough? Or is there still more work on your end? And then my frame of reference for these questions is again the lower frequency guests with the advanced purchase decision? Thanks.

Yes. Hi, Ben. Thank you for the question. So we do believe that as it relates to advanced commitment, the largest addressable market to really penetrate is the lower frequency destination guests. And it is a large and attractive market. They are low frequency destination guests. Because their destination guests, they do tend to spend on ancillary businesses such as F&B, rentals, ski school. When we think about this coming season, I'd say overall, we are in a very good position in that we have over 2.3 million guests pre-committed to come visit our resorts this season. When you think about the value of that in the travel and leisure business of knowing 2.3 million people are pre-committed to coming and visiting that's the benefit of the units of pass sales and the dollars that we've sold, but also the ancillary attachment that naturally comes with that. Related to that, in terms of ancillary attachment there are some natural behaviors that occur in terms of ancillary attachment, but we also have a data-driven approach to connecting with those guests in a way that's relevant to them to encourage ancillary capture and also pass holders receive what I would call, like membership benefits with Epic Mountain rewards, with discounts on our ancillary. So as we pursue this addressable market, there's a natural spend behavior that already exists. And of course, our goal is to increase that share of wallet as they come to our resorts.

Okay. That makes sense. So it's like almost two pronged, it’s increased the penetration of the existing lower frequency part one and then part two increase the deeper into the TAM of the potential lower frequency guest?

Yes, and utilize our data to increase our capture, yes.

And then just one quick follow-up. Is that something in terms of your existing lower frequency guest base, have you guys tried to take a swing at like quantifying how penetrated you are relative to where you would like to be? Is that something you've done? And would you share that ever?

We're not sharing that number today, but we obviously quantify the TAM and the progress we're making on the TAM and continue to believe that there is a lot of upside potential in terms of penetrating that addressable market.

Thank you very much. I appreciate it.

Thanks, Ben.

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

Hey, good morning everyone and Michael thanks for all that to help over the years and best of luck.

Thanks, Chris.

Yes. So question is kind of on -- if you're seeing any discernible difference in, I guess, pass buying behavior among your local and say, Western, I guess, just trying to drill down a little bit into whether there's any noticeable impact yet from some of these economic pressures in terms of when people are buying or what kind of pass they're buying relative to what they did last year or maybe in 2019 for those that you have history with?

Thanks, Chris. You know, overall, I think the underlying dynamic, I feel very good about. And do not see any underlying shifts in behavior dynamics that are concerning at this point. The key metric that I look at is our renewing pass holders and our renewing pass holders continued to be strong are including and especially the first time pass holders that joined last year were new to the program last year and to me that really validates the resort network, the guest experience and our investments that we're making into that experience. We are seeing both local and destination grew versus prior year, which I do feel very good about in terms of, yes, seeing growth in both of those especially after a really strong growth year last year to have growth on top of that is a pretty incredible accomplishment. I think what's happening in terms of our pass holder mix is the progress that we're making on penetrating that destination addressable market with Epic Day Pass and that is a product that's designed very specifically to attract and penetrate into that addressable market. And that is -- so it's very good news that we're making progress there on Epic Day Pass, and we think that, that's a really valuable guest. And so in terms of our overall pass mix, that's probably the biggest shifts that we've had is the introduction of Epic Day Pass and making progress against that market, that prior to launching Epic Day Pass, we really would not have seen a ton of success with that addressable market, because they were never going to come into an Epic or an Epic Local Pass given the high frequency nature of those products.

Okay. Super helpful. And just as a follow-up, I know you mentioned you're not completely done with hiring yet for the full season, but any surprises positive or negative as you're going through that process in terms of cost or availability? And then anything new on the longer term employee housing projects or initiatives?

Yes, I'm really pleased with where we are on recruiting, retention, talent overall. Our investments in the employee experience we’re seeing significant improvements versus where we were last year. Our hiring is ahead of schedule, we have significantly higher levels overall in staff than we did last year. And as I mentioned, hiring is still ongoing as a top priority for our Mountain Resort teams. They are still hiring for some specific roles and we'll see them continuing to hire through the season as staffing needs occur through the season. I feel very good that we're on track to have the staff that we need for full operation of lift and mountain train normal operations of some of the ancillary businesses that I shared earlier. I have noted that one of the biggest challenges to getting fully staffed is affordable housing. We as a company are committed to investing in affordable housing, we have increased our affordable housing options for employees versus last year. And this has been and continues to be a challenge in our market community -- in our mountain communities. So there's ongoing work that we need to do to make progress on this and continue to partner with our communities that they also make it a priority.

Okay. Very good. Thanks everyone.

Thanks, Chris.

We'll take our next question from Laurent Vasilescu with BNP Paribas Exane.

Good morning. Thank you very much for taking my question. I wanted to follow-up on Ben's question with regards to ancillary revenue. Michael, should we assume that ancillary spend per visit gets back to pre-COVID levels? What's actually embedded in guidance? Or are you anticipating based on your commentary about economic uncertainty that it might not come back to the pre-pandemic levels?

Thanks, Laurent. We -- on ancillary, we look at this at a much more granular level in terms of by resort and whether those guests are destination or local. And so I think one important thing to keep in mind relative to pre-COVID levels in particular is that the resort mix has shifted actually, right, as we incorporated peak resorts and as our Eastern resorts grow, the yield at those resorts is actually lower as you would imagine than at our destination resorts. And so there is going to be a mix shift component to that, when you look at historical financials over time, from this base going forward. Certainly, our goal is to increase attachment over time. That's certainly one of our goals and every year we look at that as we did this year in terms of guidance of what attachment we think we'll be able to achieve. And certainly as Kirsten mentioned, adding more destination guests into our Pass program should over time be helpful relative to that.

And Laurent, I would just build on that to also note that our guidance assumes that the current economic conditions continue. And if there was a significant change that could impact our outlook.

Okay. Very helpful. And Kirsten, it's great to hear about the smartphone initiative. Are there any learnings or are there any other initiatives that we should contemplate maybe not for this year, but maybe going forward that could maybe further elevate the consumer experience? And then once -- sorry, one housekeeping question, Michael, I didn't see this in the press release, but should we still anticipate $175 million investment in employee wages? Or was that up since that announcement earlier this spring?

So I'll take that one, the $175 million investment in wages was incorporated into our guidance in September that we reaffirmed and so we are on track with that.

And with regards to your question about the guest experience, we are very excited about mobile pass and mobile lift tickets that is actually being tested this season for a rollout to our guests next season. And we have not announced any other innovations at this point that I'm discussing, but I will tell you that, yes, we're constantly focused on every aspect of the guest experience and where can we make investments or innovate in order to make that better?

Very helpful. Thank you very much. Best of luck.

Thank you.

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

Hey, good morning, everyone. Let me start by echoing some of my peer sentiment and say thank you, Michael, for all your help over the years and best of luck on your next venture.

Thanks, Jeff.

Starting off here, I wanted to hone back in on some of the lodging bookings color. Kirsten, you talked to bookings pacing in line with pre-COVID levels, if memory serves at this time last year, you were trending more ahead versus pre-COVID. So is that called deceleration? Is that more a function of some of the pent up demand that we saw last season? I do recall you did talk to tough RevPAR comps on the last earnings call? Or is there anything in here more on the macro? Thanks.

Yes. Hi, Jeff. I think we did see some different dynamics last year with COVID, there was a lot of pent up demand for travel and people getting back to having experiences. And so there were some dynamics that we saw where decisions and bookings were made very early and much earlier than typical. There was a lot of enthusiasm and pent up demand. So I think last year, there were just some unique dynamics as people got back out doing things. And at least what we're seeing right now in our indicators is returning more to a pattern that we would have seen pre-COVID.

Okay. That makes sense. Thank you, Kirsten. And then for my follow-up moving to call it the Epic Pass Tiering strategy, now that the selling season has wrapped up and you've been able to parse through some of the data. Any thoughts on potentially continuing to introduce new pricing tiers in order to succeed and penetrate that more lower frequency destination, currently window ticket skier and apologies for potentially front running the Investor Day here, but any thoughts there would be helpful?

That’s, okay. We are always looking at that. We're always looking at the addressable market? And what do we think are the barriers among that addressable market. And what -- does our product and pricing portfolio address those barriers in order to convert them into an advanced commitment. So we're always assessing that. And last year, we created a new tier within Epic Day Pass that was specifically targeted to guests in our local and regional resorts. It's restricted to only 22 resorts, resorts like Mount Sunapee or Afton Alps and that product was designed and priced in such a way to convert those guests into advanced commitment. We still think that there is more potential there to grow that particular product and we're always looking at what are the other ways to address the barriers to convert into advanced commitment primarily because advanced commitment, we believe, is just so fundamental to the stability of our company but also to lifetime value and long-term growth and loyalty.

Great. Very helpful. Thank you both.

Thanks, Jeff.

We'll take our next question from Gregory Miller with Truist Securities.

Good morning. I have one question on behalf of my colleague, Patrick Scholes, and this relates to the booking pace. Could you discuss how ADR is tracking for this coming winter?

I think we feel good about where ADR is in addition to how we feel about occupancy. And really the main kind of unique dynamics that we're seeing is what we called out and noted, which is some indications of potential shift in behavior between December and January through April. But otherwise, feeling good about the way ADR and occupancy is tracking.

Thank you very much.

Thank you.

We'll take our last question from David Katz with Jefferies.

Good morning. Michael, thanks for everything and all the best. I wanted to just focus on Mountain margins, if I may. With a lot of the engine outs and a lot of the discussion around labor costs, et cetera, can you give us a little bit of kind of long-term aspirational margin levels or kind of a new normal margin given everything we've gone through and everything you've done?

Well, I think that we -- as I -- to comment on long term, we are very focused on margin, and we are constantly looking for ways to improve margin. Obviously, this year, we had a significant investment in our employees. And we are constantly looking at one, cost discipline and two, efficiencies to continue to improve the margin and offset any investments that we make in the future. So while I can't commit to a specific margin at this point and maybe we can talk more about that at the investor conference and where we think we're headed as a company, what I would say is that we're very focused on it and very focused on cost discipline and efficiency.

Yes. And maybe just to build on that. I think the -- I think with the employee investment that Kirsten talked about, right, in our guidance, we're guiding to 31%. EBITDA margins, which, of course, we've built up over time. And the fundamentals of our business model right result in very strong flow-through from revenue growth and very strong free cash flow conversion. And to Kirsten's point, I think the fact that we were able to invest as much as we are investing and continue to drive margins in the business and really setting that foundation up for the strength of our free cash flow, as Kirsten said, is something that we have been focused on. And yes, I'm confident that we'll continue to focus on.

I appreciate that. And as my follow-up, I was hoping we could spend a minute or two on Andermatt and sort of a broader view about Europe. And again, I might be trying to front run your analyst meeting, but I'd love to get more of a sense for your vision for that property and whether we should look at this as one step in a journey and sort of building more of a European presence?

Yes. Thank you for the question. We are incredibly excited about Andermatt. It is already an amazing Mountain resort with strong investment in the base area to attract a high-end European skier and we're excited to continue to invest in that. We believe that this is the perfect sort of first step for us in Europe. To come in with Andermatt to listen, to learn to build our reputation and that there is significant opportunity for Andermatt to grow its share of the luxury European skier market. Longer term, as we've shared it our investor conferences, the addressable market in Europe is almost 3 times the size of North America. And we believe that, that is a big opportunity for us for growth and we have not an easy market to penetrate. So a long-term strategy to build our experience, our credibility and hopefully, over time, build a network of resorts that can achieve value creation for our shareholders.

Okay, perfect. Thank you.

Thank you.

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

Thank you, operator. This concludes our fiscal 2023 first quarter earnings call. Thank you to everyone who joined us today. Please feel free to reach out to me or Michael directly, should you have any further questions. Thank you for your time this morning and goodbye.