Robert Katz - Chief Executive Officer Michael Barkin - Chief Financial Officer.

Felicia Hendrix - Barclays Capital Shaun Kelley - Bank of America Merrill Lynch Chris Woronka - Deutsche Bank Ryan Sundby - William Blair Matthew Brooks - Macquarie Capital Markets Bradley Boyer - Stifel, Nicolaus & Co., Inc. Brennan Matthews - Joh. Berenberg, Gossler & Co. KG.

Good day, and welcome to the Vail Resorts’ Fourth Quarter Fiscal 2018 Earnings Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to CEO, Rob Katz. Please go ahead..

Thank you. Good morning, everyone. Welcome to our fiscal 2018 year-end earnings conference call. Joining me on the call this morning 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 morning, along with our remarks on this call are made as of today, September 28, 2018, and we undertake no duty to update them as actual events unfold. Today's remarks also include certain non-GAAP financial measures.

Reconciliations of these measures are provided in the tables included with our press release, which along with our Annual Report on Form 10-K, were filed this morning with the SEC and are also available on the Investor Relations section of our website at www.vailresorts.com.

Before jumping into our results, I would like to send a special welcome to the teams at our newest resorts; Stevens Pass in Washington, Crested Butte in Colorado, and Okemo in Vermont, and Mount Sunapee in New Hampshire.

We are thrilled to bring these four resorts into the Vail Resorts network and to offer unlimited, unrestricted skiing to our passholders at each of the resorts for the upcoming 2018/2019 season. So with that said, let’s turn to our fiscal 2018 results.

We are very pleased to complete fiscal 2018 with resort reported EBITDA growth from the prior year, despite the very challenging conditions in the Western U.S. this past winter.

This year’s results highlight the positive impact of our expanding geographic diversification, the stability provided by our growing season pass program, and the success of our guest-focused marketing efforts. Our Western U.S.

destination resorts experienced modest visitation declines compared to the prior year due to historically poor conditions, particularly in the first half of the season. However, revenue at our Western U.S. resorts was in line with prior year performance due to season pass sales and yield growth.

Whistler Blackcomb had another record-breaking year, growing from an exceptional fiscal 2017 as the resort benefited from excellent conditions throughout the season, currency favorability that attracted guests from the U.S. and around the world, and the first season of full integration with Vail Resorts.

At Perisher, fiscal 2018 results were strong with double-digit revenue and EBITDA growth compared to the prior year, driven by a strong finish to the 2017 Australian ski season and a strong start to the current 2018 Australian ski season, supported by pass sales momentum, which was positively impacted in part by the new pass partnership with Hakuba Valley in Japan.

Our U.S. Epic Discovery business continues to grow and generate strong financial returns on the capital we invested. However, Epic Discovery has not yet reached full maturity on profitability as quickly as we had originally planned.

With each summer season, we continue to learn more about our guests, improve operational consistency, and refine our pricing, product, and promotion strategy to take advantage of the high levels of summer visitation which already exists at these resort locations. Turning now to our 2018-2019 season pass sales.

We are very pleased with our season pass sales to date. Through September 23, 2018, North American ski season pass sales increased approximately 25% in units and 15% in sales dollars as compared to the period in the prior year through September 24, 2017.

These results include all military pass sales in both periods, exclude pass sales from Stevens Pass and Triple Peaks in both periods and are adjusted to eliminate the impact of foreign currency by applying current period exchange rates to the prior period for Whistler Blackcomb pass sales.

Growth in our total season pass sales dollars was lower than our unit growth, given the inclusion of the new Military Epic Pass, which is available at a substantial discount to our Epic Pass. The average price increase on all non-military passes was approximately 4.5%.

Excluding sales of military passes to new purchasers who were not pass holders last year, season pass sales increased approximately 9% in units and 12% in sales dollars over the comparable period in 2017.

We experienced strong growth in our season pass sales across nearly all products and geographies, including continued strong growth in destination markets, which drove over half of the unit growth. We also saw very strong growth in the local Whistler Blackcomb market and continued growth in the Colorado and Tahoe markets.

We believe this growth continues to be driven by our increasingly sophisticated and data-driven targeted marketing efforts to move destination guests into our season pass products, as well as the strategic long-term pass partnerships and acquisitions we have announced that continue to expand our resort network and make the network incrementally more compelling to skiers worldwide.

Our growth was also positively impacted by the significant success of sales of our new Military Epic Pass. The vast majority of Military Epic Passes were sold to guests that were not previously season pass purchasers and over half of the Military Epic Pass purchasers were not previously in our guest database.

While the Military Epic Pass has a price that is much lower than our other season pass products, we are seeing significant incremental revenue for the program that far exceeds any loss of revenue from prior year pass holders who purchased a Military Epic Pass for this year.

Furthermore, we are helping to introduce our sport to, and create much higher engagement for, the men and women who have served their countries in the armed forces and their immediate families.

While in December 2017, our reported season pass growth rates were materially below the rates reported in September 2017, we expect our December 2018 season pass growth rates to be relatively consistent with our September 2018 growth rates.

Our Epic Australia Pass sales are off to a very strong start with growth of approximately 20% in units and approximately 23% in sales dollars through September 23, 2018 compared to the prior year ending September 24, 2017.

The Epic Australia Pass continues to be a very compelling product for Australian guests who can ski locally at Perisher, experience our growing network in North America and, for the first time, ski at Hakuba Valley in Japan through our new long-term partnership. Pass sales will continue through the Australian off-season leading up to the 2019 season.

Now, I would like to turn the call over to Michael to further discuss our financial results and our fiscal 2019 outlook..

Thanks, Rob, and good morning, everyone. As Rob mentioned, we are very pleased with the results from fiscal 2018, particularly in the face of challenging conditions across our Western U.S. resorts for much of the ski season. For fiscal 2018, total Mountain net revenue increased 6.9% to $1.7 billion.

Total skier visits increased 2.5%, primarily as a result of the inclusion of Stowe, which was acquired in June of 2017, offset by poor conditions at our Western U.S. resorts during the first half of the 2017-2018 ski season.

Total effective ticket price increased 5%, driven by season pass and lift ticket price increases across our resorts, and lower visitation per pass. Resort net revenue was $2 billion for fiscal 2018, an increase of 6.2%, compared to the prior year.

Resort reported EBITDA was $616.6 million for fiscal 2018, an increase of $23.2 million, or 3.9%, compared to the prior year. Fiscal 2018 resort reported EBITDA includes $10.2 million of acquisition-and-integration-related expenses and $2.6 million of additional payroll taxes related to the CEO's exercise of Stock Appreciation Rights.

Net income attributable to Vail Resorts was $379.9 million, or $9.13 per diluted share, compared to $210.6 million, or $5.22 per diluted share, in the prior fiscal year. Net income attributable to Vail Resorts, Inc.

for fiscal 2018 included a tax benefit of approximately $71.1 million or $1.71 earnings per diluted share related to employee exercises of equity awards primarily related to the CEO's exercise of Stock Appreciation Rights.

Additionally, included in net income attributable to Vail Resorts for fiscal 2018 was a one-time, provisional net tax benefit related to the U.S. tax reform legislation, estimated to be approximately $61 million, or $1.47 per diluted share. Our balance sheet continues to be very strong.

We ended the fiscal year with $178.1 million of cash on hand, $130 million of borrowings under the revolver portion of our senior credit facility and total long-term debt, including the long-term debt due within one-year of approximately $1.3 billion. At fiscal year-end, our net debt was 1.8 times trailing 12 months total reported EBITDA.

On August 15, 2018, we entered into an agreement to amend and restate our senior credit facility. The amended agreement provides for a revolving loan facility in an aggregate principal amount of $400 million and a term-loan facility in an aggregate principal amount of $950 million, increased from the previous term-loan facility of $684.4 million.

We borrowed $70 million on August 15, 2018, primarily to fund the Stevens Pass acquisition and on September 27, 2018, we borrowed an additional $195.6 million to fund the Triple Peaks acquisition. I am also pleased to announce that our Board of Directors has declared a quarterly cash dividend on Vail Resorts' common stock.

The quarterly dividend will be $1.47 per share of common stock and will be payable on October 26, 2018 to shareholders of record on October 9, 2018. Now turning to our outlook for fiscal 2019. Net income attributable to Vail Resorts is expected to be between $288 million and $335 million in fiscal 2019.

Our guidance includes an estimated benefit between $32 million and $40 million from the reduction of our U.S. federal tax rate from 35% to 21% as a result of the U.S. tax reform. We estimate resort reported EBITDA for fiscal 2019 will be between $718 million and $750 million.

Our resort reported EBITDA guidance includes the operating results for Stevens Pass, Okemo, Mount Sunapee and Crested Butte from the date of acquisition and also includes approximately $11 million of anticipated acquisition and integration related expenses.

Apart from our normal business drivers, our guidance for fiscal 2019 includes the following additional assumptions. First, we are assuming a full rebound in our fiscal 2019 second quarter performance as compared to fiscal 2018, from assumed normal conditions throughout the period.

Second, we expect a negative impact to our fiscal 2019 third quarter from the late Easter holiday, which is on April 21, 2019.

Third, we are investing $15 million of incremental expense related to above normal increases in labor costs, due to increasing our minimum wage by over $1 per hour at most resorts and other significant investments in compensation, all implemented due to both local market wage pressure and the benefits the Company received from U.S. tax reform.

And finally, we anticipate a $6 million unfavorable resort reported EBITDA impact from assumed lower rates for the Australian and Canadian dollars versus the average rates in fiscal 2018. We expect resort EBITDA margin to be approximately 31.5% in fiscal 2019, using the midpoint of our guidance range.

This is an estimated 80 basis point increase over fiscal 2018. We estimate fiscal 2019 real estate on our reported EBITDA to be between negative $3 million and $3 million. Fiscal 2019 guidance does not include any payroll tax impacts or income tax benefits related to the potential exercise of CEO stock appreciation awards.

All of these estimates are predicated on the assumption of normal weather conditions throughout the ski season and an exchange rate of $0.77 between the Canadian dollar and U.S. dollar, related to the operations of Whistler Blackcomb in Canada and an exchange rate of $0.72 between the Australian dollar and U.S.

dollar, related to the operations of Perisher in Australia. I will now turn the call back to Rob..

Thanks, Michael. We have been hard at work over the summer making significant improvements to our resorts, which were all on target to be completed prior to the ski season.

As previously announced, our ongoing work includes the largest capital investment in Whistler Blackcomb’s history, which we believe will dramatically improve the on-mountain experience for our guests with enhanced lift capacity, improved circulation and a significantly elevated experience for skiers, riders and sightseeing guests.

The centerpiece of this investment is a new gondola running from the base to the top of Blackcomb Mountain. We are also upgrading the four-person Emerald express chairlift to a high speed six-person chairlift, and upgrading the three-person fixed grip Catskinner chairlift to a four-person high speed lift.

At Park City, we are focused on enhancing the family, food and service experience for our guests from around the world.

In the Canyons area of Park City, we are upgrading the fixed grip High Meadow chair to a four-person high speed lift, as well as improving the grading and expanding snowmaking to create a world-class beginner and family learning zone.

This will be complemented by snowmaking investments to improve access for beginner and intermediate skiers traveling from the Quicksilver Gondola to the Canyons base area. We are also making two significant investments in the dining experience at Park City.

We are expanding Cloud Dine, a unique modern mountain dining experience overlooking the resort, with 200 additional seats and are renovating and upgrading the Park City Mid-Mountain Lodge to create a signature dining experience that will bring fine-dine quality cuisine to what we expect will be one of the premier fast-casual, on-mountain restaurants in the industry.

At Heavenly, we are replacing the Galaxy two-person chairlift with a three-person chairlift to increase capacity and allow us to re-open 400 acres of high quality intermediate terrain. At Vail, we have begun a multi-year investment in the resort's snowmaking system to open more terrain earlier in the season.

These projects along with the Leichhardt lift upgraded Perisher in several important enterprise-wide technology projects continue our efforts to enhance the experience for our guests across our resorts. In closing, I would like to thank our employees for delivering on our promise and providing an experience of a lifetime to our guests in fiscal 2018.

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

Thank you. [Operator Instructions] And we will take our first question from Felicia Hendrix with Barclays..

Thank you. You just kind of went through all the – and all the – sorry, let me back off for a second, it's Friday. You guys just went through your guidance commentary and mentioned – and it was in the release as well that your guidance assumes a full rebound in the second quarter performance from the challenging conditions last year.

So I just wanted to know given the weather vagaries of the recent past, how you can have confidence in that view? And then for context, have you seen a full rebound in prior years on just similar circumstances?.

Yes. I guess, I would say, you know it’s – yes, the vagaries of weather is unfortunately not something we can control. And I guess our level of confidence in the weather, one way or the other is always hard to assess, just like it is for everybody who tries to look at it, and we have the same information that everybody has about this season.

So we try and set our guidance with a certain assumption that then allows everybody to understand the assumption we are making and then make their own assessments of what they think that their own confidence is in and how the weather will play out.

I would say that we absolutely have seen when we get kind of that normal early season or normal rebound in weather, whether it's been in Colorado, in Utah, and Tahoe, we have absolutely seen a strong rebound from our guests.

And so, we think if we get that kind of normal strong early season, then yes, we're going to get – be able to deliver on this and that's what the assumption is..

Okay, great. That's helpful. I’ll try not to stammer on my next one, which is on season pass sales. You mentioned last quarter and you were pretty clear about this that the sales should decelerate because of the pull forward, which is what happened.

But you guys have definitely like given those kind of warnings before, I'm not going to call it a warning, kind of color before and then reported sales that accelerated, so just wondering, is it fair to look at this prior commentary versus now? What changed this time? And then also based on the data you provided, it looks like the price per unit decelerated from the prior quarter.

So, I was just wondering if you could talk about the driver of that? Is it more mix than anything else?.

Yes. So I think we do our very best as we're looking ahead to try and provide the best guidance we can, and sometimes we get it exactly right, sometimes we’re a little low, little high. I mean that's a little bit of a process that we go through.

And I think in this case, yes, we did know that we had a number of trends in which we talked about and pull forward with absolutely one of them. We saw that strongly in the spring. I think there was a lot of indication there.

Yes, a lot of excitement and engagement in part with two passes now with Ikon coming out in part because of the military product that we have launched. And just – honestly, our better marketing.

I mean, in our minds and we've said this year-after-year, our goal is really – our overall result for the year, it's not necessarily in any one period, and in fact we try and pull as much as we can right earlier and earlier into our selling season. So in our minds stronger spring pass sales are a good thing.

I think at the end of day that’s – I think the dynamics that we're seeing in terms of price absolutely are mix. It is not – I think we do see a lot of our renewals early on many of our higher priced products, and as we go forward, there's more of a mix down.

I think we've seen that somewhat consistently if you look in past years, so not totally surprising to see it this year as well..

Okay, great. And then just final question. It looks like the Epic Military passes, you are doing a good job of introducing skiing to some new customers and demographics, and as we all know the overall skiing participation rates in the U.S. haven't really grown much over the year.

So are there more things that you can do like the Epic Military pass that could grow your addressable market in the U.S.?.

Yes. I think we do look at that as a real opportunity to broaden the demographic, and yes, create these new relationships. We think our Epic SchoolKids program, which we've now launched in Colorado, in Utah and in Canada, which offers free skiing to all kids, K-5 is another one of these programs that we feel can bring in a broader group.

I think there's a lot more room that our industry has to do a better job especially with minority populations and really looking for ways that we can reach out to do that.

I think that’s something that our Company can help lead, but it ultimately needs to be an industry effort, and something that over the next five to 10 years if we want our industry to really maximize the growth potential of our sport, I think we all have to do a good job with that..

That’s super helpful. Appreciate it..

Thanks..

And we will take our next question from Shaun Kelley with Bank of America..

Hi, everyone. Good morning. Rob or Michael, we've gotten a lot of questions just on the – trying to compare the core pass metrics that you gave. So I guess the plus 9 in units and plus 12 in dollars versus what you gave last period, and I know with military that introduced another variable that was sort of hard to predict.

If we read the release correctly, I don't think these numbers were exactly apples-to-apples because of not knowing exactly where the military – like the people that have purchased military and not have them in the base previously. So I think there's some cannibalization in what was reported last time.

Is there any sense you could give us sort of how the core numbers this period kind of would have compared on an apples-to-apples basis either directional or absolute?.

Yes. I would say that that you're right. That the numbers we gave in June, which excluded all military are different from the numbers that we're giving now, which included military pass purchasers who last year were a season pass purchaser.

Obviously, if you’re comparing like-for-like, the number would be lower, than it was obviously from what we reported in June. I think when we put out those numbers in June, what we were seeing was we had a lot of military folks coming in, a lot of those folks were coming in early. We also saw a lot of pull forward going on just overall.

And so without having a chance to verify the military piece, we felt like the most conservative approach was giving kind of that core number.

Today, we have a lot more insight and transparency into right how everything moved and that's why we felt that, in our minds I guess the core number should include people who obviously were in our program last year and went into a new product this year, because obviously we have people doing that all the time.

Now obviously this product was priced much lower, but the truth is we have people moving up and down in our product mix. And so we feel like that probably the best way to look at tracking kind of if you're looking at numbers from last year to this year, how you see kind of that consistency in terms of the performance of our overall effort.

Now I would say we're also quite focused on the total revenue number. We feel like to the extent that we are adding people into the program. That's a real positive. And obviously, while what's getting represented in our numbers today is just the season pass portion, which is lower for military.

Of course, these folks, we expect to come and we’ll obviously spend on the Mountain and we’ll bring other folks just like we see with all of our pass holders and then create a level of loyalty to our Company that we've seen again over the past decade with our pass programs.

So we also are definitely focused on both that unit and revenue number that includes total military as well..

Got it. Thank you. And Rob just to be like crystal clear, because again there's just been a lot of questions I received at least this morning about it.

The original number that you had back in June would have been – it would have been higher – on an apples-to-apples basis would have been higher or lower, just to be very clear, the 12 and the [19]?.

No, if we had included people who were trading down from prior year passes to a military pass, those numbers would have been higher. So if you were looking at a change in growth rate from the June announcement to today, it would have been bigger..

Got it, okay. Thank you for that. And then the second question, I think the way I was thinking about expectations out there, you have in the past also seen a bump whenever you started to include the acquisitions, and obviously the data it seems like provided here all excludes any impact from Stevens Pass and Triple Peaks.

So could you just talk a little bit about that, both historically have you seen an uplift or an increase in adoption when you do incorporate these types of acquisitions into your – kind of into your metrics? And then do you expect to do that for the next pass period or would that be something you'd be more comfortable doing in next season once you kind of have a full-year under your belt?.

So probably might be helpful to kind of differentiate between the impact to our overall program from an acquisition and then actually including the season passes kind of a local resort specific season passes sold by that individual resort.

So what we're saying this time was that we did not include the results of Stevens Pass or Triple Peaks, their season pass sales to-date on their own resorts mostly before we bought them obviously with Triple Peaks all before we bought them because we just closed, either for this year or for the prior year.

And we just felt like in terms of we haven't even had a chance to actually really integrate that and get all those numbers and given that we literally just closed on the transactions. We absolutely expect a positive impact from having those resorts in our pass portfolio.

That's a critical component of why we do the acquisitions in the first place and we certainly expect that here. And there's a portion of that impact right that will come in when people see the announcement and some people who will say, oh well, I know that Vail Resorts is probably going to close this acquisition.

So I'm going to buy an Epic Pass because of that. And then there's a portion of that that will come in and people will wait for the closing and say, okay now I'm really going to make my decision. And so I think we absolutely expect a boost from closing, especially the Triple Peaks piece which is the bigger of the two acquisitions that we did.

But no doubt, I'm sure there's some benefit that was already in some of our numbers..

Got it.

The boost will be to the core just from the halo effect on people making that decision that are already there versus I guess like you said sort of newcomers, correct?.

Yes. And I think – yes, absolutely in our December release, we will include all Stevens Pass and Triple Peaks pass sales both for this year and last year, because at that point, we will have enough time to do our – full checking, rigorous, right, all of the alignment that we have to do to put them in the numbers.

There’s literally – we don’t have a real access to that for Triple Peaks..

Understood. Thank you very much..

Thanks..

And we’ll take our next question from Chris Woronka with Deutsche Bank..

Hey. Good morning, guys. I was hoping maybe we could talk a little bit about the Easter shift and you guys obviously call that out in the press release.

Is there any way to quantify the potential impact there based on your prior experience?.

It's obviously hard to exactly know, I would say that it's an impact that is much lower than the benefit that we’re assuming from the rebound in – early in holiday weather, but material enough that we called it out..

Okay. Fair enough. And then kind of going back to the recent acquisitions and I know you just covered kind of how the timing of how people buy Epic Passes.

But as we think about on more of a multi-year basis, do you have any sense as to how much pickup do you get between – in year zero, if you will, and then year zero to year one and year one to year two? Is there still a pretty good lift and people that are going to buy an Epic Pass after you've owned a new resort for a year or two?.

Yes. We do tend to see a multi-year impact from acquisitions. And no doubt that the impacts of acquisitions are muted if the acquisitions only close so far into the selling season. So I would expect that – especially in next season, I would absolutely expect a bump because obviously we haven't really had the chance to truly market to these guests.

But then the second piece and more important piece of the data that we get on each of our pass holders, right.

So right now we have not had an opportunity to take any of these resorts and their existing guests list and put them through our pass marketing effort and then of course secondarily putting in our better data collection processes at the resorts to make sure that all the people who ski at the resort we try and capture as many as we can of them and then of course market to them as we go forward.

And so that's really the benefit that we see going in the future. We also have planned, right, a $35 million capital improvement effort at – resorts which will really be next summer and obviously that will provide its own benefit as we announce those projects and build excitement there..

Okay. Very helpful. Thanks..

Thanks..

And we'll take our next question from Ryan Sundby with William Blair..

Hey Rob and Michael..

Hi..

Hi..

Little surprised, I guess, the size of the delta between the overall unit growth and ex-military, which suggest military will be pretty sizable addition to your base here.

What can you tell us about this group? Are they mostly destination and what geographies are they coming from? And then any thoughts on kind of the visitation frequency around Mountain spending versus kind of the current season pass holder?.

Yes, you're right. I think the delta in the unit and revenue piece was the significant enthusiasm, a very material number of military passes have been sold again, as we noted, over half of them folks that were not in our database before. By definition, if they're not in our database before, we obviously don't have perfect information on these folks.

But yes, we would expect that just based on the price, the breadth, some of the other information that, yes, it’s unlikely that these are folks who will ski as many days as others. Not clear yet whether their spend would match many of our other destination guests.

But with so much of this being incremental, we feel like that's just a positive to our overall results, and then our job to actually continue to build the engagement and commitment and spend of all these guests just like we do with everyone else..

Great. And then did Triple Peaks take longer to close than you expected. I thought you already announced that you were thinking this summer.

And I guess if so, does that limit what you can do with these resorts this season or is there time still that kind of ramp that up?.

I think we were hopeful to try and get the Triple Peaks acquisitions closed potentially by Labor Day. And obviously that flipped a couple of weeks given the public process, which we totally understand and fully support. It is our intention to have all four of these resorts fully integrated on our systems by the beginning of the year.

So, obviously there will be some bumps along the road on that as there always would be. We will be prioritizing the most important systems for that integration. So there will be some things that the resorts don't have.

And sure, it compresses a bit, our ability to do kind of what we would want and a lot of the kind of best opportunities will come in the second year of our ownership, I think both on the pass side and at the local resorts with both the capital investment truly marketing these resorts from kind of beginning to end in our approach.

All of that is going to be a little bit of a half measure this year just because of the timeframe we have between now and the start of the season..

Yes. That makes a lot of sense. Thanks..

Thanks..

And we'll take our next question from Matthew Brooks with Macquarie..

Hello.

A quick question, with 15% pass growth and even better volume growth, is your guidance a bit conservative, I guess if you adjust for the earnings from acquisitions, the extra labor costs, you're about 8% above the initial guidance from last year?.

Yes, I think if you – the way we're looking at is kind of how we outlined it in the release, which was that we've got the rebound, we have the wage piece, we've got currency and we have a late season. And we feel pretty good about where this guidance is.

Obviously, the guidance we're providing is a range of outcomes and so we understand that, sure there could be upside from it, there could be downside from it. But we think it is consistent with the pass results that we announced.

And all of those pieces – any information that we have that we think could help give us a thoughtful estimate for the year has been incorporated and we feel like this is kind of our best guess right now..

All right. And as a follow-up, I guess, on the FX comment, you noted that the pass sales from Australia were quite strong.

Are you seeing any offset there for maybe the international destination visits from Latin America at the moment?.

No, nothing. I would say nothing that stands out as material at this point to the Company overall. I think there's no doubt that the currency difference between U.S.

dollar and Canadian dollar has helped Whistler Blackcomb in the past and I think we will continue to help Whistler Blackcomb assuming the things stay as they are in the currency markets, and that has been absolutely the impact in Australia, in the UK and in Latin America. So at this point, we're not expecting that to change..

Okay, thanks..

And we’ll take our next question from Brad Boyer with Stifel..

Hey guys. Thanks for taking the questions. This is just sort of a bigger picture industry question here, but if I look at yourselves and [Aptera] kind of seems like they're following you guys around the globe.

But thus far we really haven't seen any big push into Europe, and I know historically you guys have talked about sort of the different ownership structure over there for a lot of the resorts.

But just curious to hear your updated thoughts around Europe as a potential area of expansion sort of going forward and what maybe sort of some of the limitations thus far behind certainly yourselves not looking to pursue any additional alliances and/or deals there at this point? Thanks..

Well I would say, first, important to note that we have a number of strong pass alliance and pass partnership agreements and relationships there, which I think are helpful and certainly something that we intend to continue and are important to our overall program in terms of just having that geographic breadth.

On the acquisition side or taking on operating role in Europe, we feel like that's an important long-term objective for the Company. Europe is the biggest ski market in the world and it has the most resorts, the most skiers and has a lot of complexity, different business models, different rules, regulations, different approaches to marketing.

But we think there is a lot of what we do well here will serve us, right in and ultimately at some point operating within Europe, we will have to absolutely adjust and make sure we're tailoring our approach to the local markets and local culture.

But I think us bringing sophistication in our global network of pass holders, folks obviously from the UK ski in huge numbers in both Europe and in North America and even in markets like Australia, ultimately in China, right, there's going to be connections between the Asian markets, the Australian market, the U.S. market and Europe as well.

So we see that as absolutely an opportunity and one that – yes, we do not intend and have not rushed because obviously we want to be thoughtful and do it in the right way to ensure we get the right outcome..

Thanks Rob for that. And then second question is just around labor. You guys called out the impact you expected in a dollar term in the release. Just as we look across sort of all the businesses that we follow and the kind of the economy broadly especially in kind of seasonal labor markets that there's obviously been a lot of challenges out there.

Just curious if you could share anything you guys are doing in year-end from a strategic perspective to help mitigate some of the pressures around both sourcing labor and on the wage rate side? That's all. Thanks..

Sure. Yes, I think the labor market has been quite challenging. It's obviously the market as a whole has continued to strengthen, I think throughout the U.S. and in North America more broadly.

And I think our Mountain Resort communities have actually seen that to an even larger extent, many of our resort communities in the adjacent cities have record low unemployment. And that creates challenges. One, it creates wage pressure, which obviously is one of the things we announced today.

We also announced a couple years ago a commitment to invest significant dollars in affordable housing because that's the other piece is that there inventory places for these folks to live. It's contracting.

And so fortunately we've got a number of projects that we've identified in a number of our most important resorts to really try and move that needle and we're hopeful within the next 12 to 24 months have really brought on a number of additional beds.

And then within each community, we work extensively to try and even within existing facilities like how do we maximize the opportunities for our employees to have a place to sleep and reside, and that really ensures the health of the community and the health of our Company.

I think on the recruiting side, one of the things that we've done as we have a central recruiting effort that, right, is using the same sophisticated approaches that we use in marketing, they're a little bit earlier in their maturation.

But we are out there advertising through digital channels, all the different social channels that we can use, using analytics to understand what messages make sense and then ensuring that the experience when our employees arrive at the company is one that actually incensed return somebody to come back for another season, somebody to talk about our Company, it’s a good place to work for others.

So a lot of the same things that we do on the guest side, we are currently doing on the labor side to make sure that we can provide a great experience to the guest who come to our resorts..

Thanks Rob. Appreciate all the color..

Thanks..

And we'll take our next question from Brennan Matthews with Berenberg..

Hi. Thank you for taking the question. You guys kind of alluded to this I think a little bit earlier as far as the – I guess the military pass purchasers being new to your network.

And I guess what I'm trying to get at is just how much there could be maybe outsized growth for the ski school as well as for ski rental, just giving these guys might be just newer to skiing in general?.

Yes. No doubt, I think that we feel like there's a real opportunity with that group. I think at this point given that they're so new in many cases. We're not clear yet in terms of exactly how much that spend will be on some of our ancillary businesses.

But we intend especially one of the benefits, right, having these folks within the past program as we have a great relationship that we start off with. I also think, right this is a group of people that have a tremendous enthusiasm and appreciation I think for our Company in making this program available.

So that gives us a great opportunity to them reach out and say, hey how can we also help you with rentals and ski school and other parts of the vacation and lodging, right.

So all these areas that we think we have opportunities and I think it will probably take a little while for us; one fully recognize that and realize it, and two, even understand it just because again they're so new. But we see this as a big positive to the overall guest base that we have..

Yes. Absolutely that's the only question I have. Thank you..

Okay, great. Thanks..

We’ll take our final question from Matthew Brooks with Macquarie..

Hi, this is another follow-up for me.

With the pretty big increase in price from Ikon, does that give you some more scope to raise your prices or just strategy not really dependent on what the competitors doing?.

Yes. I think we have a lot of history and information data that goes into how we set prices. I think we also look around obviously at what other people are doing, but I’d say that preponderance of how we price our pass is based on the kind of results that we see.

We're looking at obviously maximize the revenue and penetration of the program, and so I think we certainly take note, but at the same time I think we – at the moment are certainly a little bit more focused on our own metrics and own analysis in terms of what's the right price for each product, for each demographic and for our strategy..

On that kind of data driven approach, are you listing the price more times this season like you had the Labor Day price increase, and then you’ve got October 7, I think usually have one in November.

Are you still going to have a November or has the strategy sort of brought forward the price increase?.

So I would say that the cadence of our price increases this year has been pretty much exactly the same with the deadline so far as we've seen in the past. Obviously, we don't like to comment on exactly what we're to do in the future.

But certainly so far to this point our deadlines and I'd say even relative percentages on price increases have been fairly consistent with last year..

Okay. Thank you very much. End of Q&A.

And there are no further questions at this time. I'd like to return the call back to Rob Katz for any further additional or closing remarks..

Thank you, operator. This concludes our fiscal 2018 earnings call. Thanks to everyone who’ve joined us today. Please feel free to contact me or Michael directly should you have any further questions. Thank you for your time this morning and good bye..

And that concludes today’s presentation. We thank you for your participation. You may now disconnect..