Vail Resorts Inc (MTN) 2013 Q2 法說會逐字稿

Good day ladies and gentlemen. Thank you for standing by. Welcome the Vail Resorts fiscal 2013 second-quarter results conference call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be opened for questions.

(Operator Instructions)

This conference is being recorded today, Wednesday, March 6, 2013. I would now like to turn the conference over to Rob Katz, Chairman and Chief Executive Officer. Please go ahead, sir.

Thank you. Good afternoon, everyone. Welcome to our fiscal second-quarter 2013 earnings conference call. Joining me on the call this afternoon is Michael Chao, our Vice President of Finance, who will be reviewing our financial results in more detail. Also available with me to answer questions is Mark Schoppet, our Interim Chief Financial Officer.

Before we start, 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 the press release that we issued this morning, along with our remarks today, are effective only today, March 6, 2013, and we undertake no duty to update them as actual events unfold.

Today's remarks also include certain non-GAAP financial measurements. A reconciliation of these measurements is provided in the tables included with our press release and in our quarterly report on Form 10-Q, filed this afternoon with the Securities and Exchange Commission, and is also available on the Investor Relations section of our website at www.VailResorts.com. In addition, during this call, at times, we will discuss results that exclude certain acquisitions we made in fiscal 2013 and fiscal 2012, including Kirkwood, Skiinfo, Afton Alps, and Mount Brighton, and which we will refer to collectively as the acquisition.

So with that said, let's turn to our second-quarter fiscal 2013 results. We are very pleased with our performance in the second quarter of fiscal 2013, which was notable for two distinct dynamics. The first was our results through the middle of December, which was marked by unusually warm and dry weather in Colorado that limited the terrain we could open, leading to lower than expected results for our four Colorado resorts.

The second dynamic began with the Christmas and New Year's holidays, as weather conditions in Colorado returned to more normal patterns, leading to strong visitation and significant consumer spending in our ancillary businesses, producing a record holiday season. Subsequent to the holidays, this momentum continued with solid results through the end of January.

For the three months ended January 31, 2013, excluding the acquisitions, lift revenue, excluding season pass revenue, was up 11.9%, compared with the same period in the prior year. In addition, we saw growth in ancillary revenue, with dining revenue up 11.7%, retail rental revenue up 10.7%, and ski school revenue up 9.5%. And mountain-reported EBITDA, excluding the acquisition, increased $16.6 million, or 13.7% for the quarter compared to the same period in the prior year.

Our lodging results benefited from higher visitation during peak holiday periods, and higher demand for luxury rooms. Despite the slow start to the season, for our Colorado properties, revenue at our owned hotels and managed condominiums increased 5.5%, contributing to a 43.4% increase in lodging-reported EBITDA, compared with the same period in the prior year.

Regarding real estate, we are continuing to see increasing levels of buyer interest, and are encouraged by the rate of sales we saw at both of our development projects. During the quarter, we closed on four Ritz Carlton Residences Vail and three One Ski Hill Place units in Breckenridge. Real estate reported EBITDA improved 26% for the second quarter of 2013. Net real estate cash flow for the second quarter was $8.9 million, and for the year to date, was $14.4 million. Subsequent to the end of the quarter, we closed on two additional Ritz Carlton Residences, and five additional One Ski Hill Place units.

Turning now to our season-to-date metrics through March 3, 2013, our ski season-to-date metrics are measured from the beginning of this ski season through Sunday, March 3, 2013, compared to the beginning of last season, through Sunday, March 4, 2012. The results have been adjusted to reflect Kirkwood being owned in both periods. The reported ski season metrics do not include the results of Afton Alps or Mount Brighton in either period.

The following is interim period data, and subject to fiscal quarter-end review and adjustments. The growth in the season-to-date visitations, lift revenue and ancillary revenues reflects the continued strong performance of our business, despite a challenging start to the season. In fact, all of the season-to-date metrics have accelerated from our mid-January metrics release.

Visitation is now up 3.8%, and lift ticket revenue is up 10.3%. Guest spending continues to be strong, with dining revenue up 12.5%, ski school revenue up 11.8%, and retail rental revenue up 10%, compared to the same period in the prior year. Our balance sheet remains in a very strong position. We ended the quarter with $136.6 million of cash on hand and no borrowings under the revolver component of our senior credit facility, and our net debt was 1.7 times trailing 12-months total reported EBITDA.

I am pleased to announce that the Board of Directors has decided to increase our quarterly dividend by 10% and declared a quarterly cash dividend on Vail Resorts common stock of $0.2075 per share, payable on April 9, 2013 to stockholders of record on March 25, 2013. The decision to increase our dividend was due to the results we are seeing this season, the strength of our business model and balance sheet, and the confidence we have in our future growth prospects. Now, I would like to turn the call over to Michael to further discuss our financial results and outlook for fiscal 2013.

Thanks, Rob, and good afternoon, everyone. Today, we released our financial results for our second quarter of fiscal 2013, ended January 31, 2013, and filed our quarterly report on Form 10-Q with the Securities and Exchange Commission, which you can now find available at VailResorts.com. Now turning to the highlights of the quarter, our second-quarter fiscal 2013 financial results reflected an improvement in resort-reported EBITDA of $20.7 million, or 17.0%, which included the incremental contribution from the acquisitions.

For the quarter, our mountain net revenue increased 14.5% to $361.7 million. These results were supported by increased visitation and higher effective ticket prices, as well as higher spending per skier visit. Lift revenue increased $22.0 million, or 14.3% for the quarter, resulting from a $15.1 million, or 17.9% increase in lift revenue, excluding season pass revenue, as well as a $6.9 million, or 9.9% increase in season pass revenue. The increase in lift revenue, excluding season pass revenue, was driven by an increase in visitation, excluding season pass holders, of 14.3%.

Effective ticket price, excluding season pass holders and excluding the acquisitions, increased $5.46, or 7.6%, compared to the same period in the prior year. Increases in guest spending supported revenue growth across our ski school, dining, and retail rental businesses. Dining revenues demonstrated the largest growth, with an increase of $5.1 million, or 20.6% in the second quarter of fiscal 2013, compared to the same period in the prior year, with the acquisitions contributing $2.2 million to total dining revenues. Ski school revenue increased $4.5 million, or 12.0% in the quarter, compared to same period in the prior year, with the acquisitions contributing $0.9 million to total ski school revenue.

Retail rental revenues increased by $9.9 million or 13.4%, due in large part to increases in rental revenue, strong growth in retail sales generated from our recently acquired online retailer O2 Gear Shop, and increases in our stores in our Tahoe resorts, which saw significantly better snowfall and weather conditions during the current fiscal year quarter compared to the same period in the prior year. Other revenue increased $4.4 million, or 16.5%, primarily due to incremental internet advertising revenue from Skiinfo of $1.9 million and higher strategic alliance marketing revenue.

Mountain operating expenses increased $25.5 million, or 13.0% for the quarter. Excluding incremental operating expense from the acquisitions of $12.0 million, operating expenses in the quarter increased 6.9%. Labor and labor-related benefits, which is the single largest component of mountain operating expenses, increased $5.6 million or 7.7%, excluding the acquisitions, and impacted by normal wage adjustments and increase in staffing levels to support higher business volumes, primarily in ski school and on-mountain dining operations. Mountain operating expenses increased at a lower rate than mountain net revenue in the quarter compared to the same period in the prior year.

Lodging results benefited from increased demand from luxury rooms, as lodging reported EBITDA increased 43.4% to $1.7 million in the quarter. Revenue at our owned hotels and managed condos increased $1.2 million, or 5.5%. Average daily rate or ADR, increased 6.4%, partially offset by lower overall transient guest visitation, due to the challenging conditions in the early season at our Colorado resorts.

Turning to real estate, our real estate net revenue is primarily determined by the timing of closings and the mix of real estate sold in any given period. As Rob mentioned, during the second quarter of fiscal 2013, we closed on four units at the Ritz Carlton Residences Vail and three One Ski Hill Place units in Breckenridge. Net real estate cash flow for the second quarter was $8.9 million and was $14.4 million year to date.

Real estate reported EBITDA was a negative $2.6 million in the second quarter of fiscal 2013, compared to a negative $3.5 million in the same period of the prior year. The two additional Ritz Carlton Residences and five One Ski Hill Place units that closed subsequent to quarter end generated $9.2 million of incremental net cash proceeds.

Looking at the bottom line, net income attributed to Vail Resorts, Inc increased 30.5% to $60.6 million. Earnings per share was $1.65 per diluted share in the second quarter of fiscal 2013. Turning to guidance, we are reiterating our fiscal 2013 guidance issued on January 15 of this year. Our guidance calls for fiscal 2013 resort-reported EBITDA to be $244 million to $254 million, representing approximately a 19% to 24% increase over fiscal 2012.

Our fiscal 2013 real estate reported EBITDA guidance range of negative $9 million to negative $17 million. Included in the real estate estimates is a positive $15 million to a positive $25 million of net real estate cash flow, which is defined as real estate reported EBITDA plus non-cash real estate cost of sales plus non-cash stock compensation expense plus change in real estate deposits, less investment in real estate.

Net income attributed to Vail Resorts, Inc. is expected to be in the range of $39 million to $49 million in fiscal 2013, up more than double from last year's results. Before turning the call back to Rob, I wanted to mention that in April we will again announce certain season-to-date ski season metrics, which will include the Spring Break and Easter holiday periods. Now, back to Rob.

Thanks, Michael. Earlier today, we also released our resort capital expenditure plans for calendar year 2013, which includes the largest number of planned improvements in our Company's history. We anticipate spending approximately $130 million to $140 million in resort capital expenditures in calendar year 2013, including approximately $47 million to $52 million in maintenance capital, which is necessary to maintain the appearance and level of service appropriate to our resort operations, including routine replacement of snow grooming equipment and rental fleet equipment.

All of the proposed capital projects are subject to applicable regulatory approvals, including US Forest Service approval. This year's plan is highlighted by several new businesses and critical improvements to our mountain. First is phase one of Epic Discovery, our summer mountain activity plan, which includes approximately $25 million to transform the summer experience at six of our mountain resorts. Vail, Beaver Creek, Breckenridge, Keystone, Heavenly and Northstar.

Plans for each mountain include a selection of zip lines, ropes courses, signature climbing walls, forest flyers, summer tubing, expanded hiking and mountain biking trails, and education centers. Each of these new activities will capitalize on the existing summer visitation at each resort, and leverages the existing infrastructure, creating the opportunity for high impact and high-return projects. We expect these activities in total to generate approximately $7 million of incremental mountain-reported EBITDA in their first full summer of operation.

Second, we are planning major enhancements and upgrades to the newly acquired Afton Alps, located near Minneapolis, and Mount Brighton, located near Detroit. We plan to invest nearly $10 million at each resort to bring a completely new ski experience to these markets, which are home to more than 450,000 skiers and riders.

Our plans include, one, the dramatic improvement in snow-making to extend the season and provide a more consistent and high-quality snow surface. Two, the creation of state-of-the-art terrain parks, with extensive new features, animation, and dedicated lifts. We're also going to upgrade the base facilities and have the addition of EpicMix, EpicMix Racing, and lift ticket scanning to personalize the guest experience and capture and better promote our western resorts to these skiers.

Finally, there will be improvements to guest safety and quality across the ski areas. These improvements are being announced, along with new season pass plans for the resorts and a more dedicated sales effort in those markets. We believe that following these plans, future capital spending at each resort will be more limited in scope.

Third, the Peak 6 terrain expansion at Breckenridge, which includes plans for two new chair lifts and 543 acres of new terrain, representing a 23% expansion to the Resort's skiable acreage. Peak 6 will offer an intermediate bowl skiing experience, with the opportunity for a wide variety of guests to ski this new high alpine area that sits above tree line. Peak 6 will become another iconic feature of Breckenridge, and will better disperse skiers and improve the guest experience across the resort, which is perennially the number one or number two most-visited mountain in the United States.

Fourth, we plan to build a new 500-seat restaurant at Red Tail Camp at Beaver Creek, which more than doubles the existing restaurant's capacity. Red Tail Camp will offer gourmet dining options in an upscale cafeteria setting, and will add a second high-quality and high-capacity dining venue for Beaver Creek, better positioning the resort for continued growth and visitation. The new restaurant will follow on the success we have enjoyed with the Tamarack Lodge At Heavenly, the Zephyr Lodge At Northstar, and The 10th at Vail.

Fifth, we plan to replace Vail's Chair 4 with a high-speed six-person chair lift. Vail's Chair 4, or Mountaintop Express, is one of the most recognized and highly utilized chair lifts in North America, serving both the critical skiing pop for the mountain and an important transportation lift from line fed in Vail Village to the back bowls in Blue Sky Basin. The new six-pack chair-lift will increase capacity by 33%, dramatically reducing lift lines, and building on this year's success of the newly built Gondola One. The new chair will continue to build on Vail's preeminent position in delivering the best ski experience in the ski industry worldwide.

Finally, we will be launching EpicMix academy, the fourth generation of the groundbreaking and award-winning EpicMix application, following the introductions of EpicMix Photo and EpicMix Racing. With EpicMix Academy, our ski school instructors will be able to certify the attainment of certain skills and ski levels for any of the students in their classes.

Children and adults in both group and private ski lessons will be able to earn permanent recognition and review their accomplishments, and parents will be able to track the progress of their kids. The ski schools will immediately know the ability level of every student before the start of each lesson. EpicMix Academy will offer special certified digital PINs, which can be easily shared through Facebook and Twitter, along with PINs for vertical feet, photos, and racing medals.

The 2013 capital plan is unprecedented in its size, and underscores our operating philosophy of continually reinvesting in our resorts to offer the absolute highest-quality experience to our guests. Our commitment to continually investing in our resorts to enhance the guest experience grows our season pass programs, that create customer loyalty, supports our premium pricing strategy, drives new visitation, and increases guest spending.

This year's plan represents the culmination of many years of hard work, with recent regulatory approvals allowing for projects such as Epic Discovery and the Peak 6 terrain expansion at Breckenridge, as well as a focused acquisition strategy that allows for a stronger connection to skiers and riders in Minneapolis and Detroit.

We are excited about the strong momentum in the business, including the return in visitation and the growth in guest spending across our operations. These trends have us well-positioned as we enter March, our historically largest revenue month of the year. As we look forward to Spring Break and the Easter holiday, our mountains in Colorado have tremendous conditions, with numerous storms over the last several weeks, and more forecasted for the upcoming week in Colorado and Tahoe. At this time, we are happy to answer your questions. Operator, we are ready for questions.

(Operator Instructions)

Our first question comes from the line of Felicia Hendrix with Barclays Capital. Please go ahead.

Rob, following your very thorough review of the capital spending plans, and not to get ahead of ourselves here, but your current plans are obviously very thorough. Knowing you, you're always looking out into the future. So just wondering what else is on your wish list.

You mean for beyond this calendar year?

Yes.

We just announced this year.

I don't want to be greedy, but just kind of --

What I would say is I think as we look ahead, I think the capital plan certainly for our existing resorts and for the winter business, I think becomes a little bit more limited in scope after these projects are done. I think there's probably some additional capacity enhancements in lifts, potentially at Beaver Creek, as we see that resort continue to grow. And probably a restaurant or two at best, as we look out over the next three to five years. I would say a lot of our capital, though, will ultimately be focused on the summer. So what we announced a little while back was that the full plan, for instance, at Vail would be $25 million in total, with similar plans at Heavenly and Breckenridge, smaller plans at the other three resorts.

This year, we're announcing a $25 million plan across all six, as kind of a down payment to the first phase of all of those efforts. So what I would say is, I think we will continue to see that summer spending, because we really are big believers in the opportunity to drive high ROIs through those types of projects, and then selected improvements to our resorts, of course. But probably, tailing off as we look towards three to five years from now.

Okay. That's helpful. And then, it was really nice to see the kind of pickup in the One Ski Hill real estate sale. So I'm just wondering, what do you think has stimulated that? What's changed? And do you think that's a trend of continued sales at the property right now?

What we did was we decided to take a handful of the units and become a little bit more aggressive on our approach to them, in terms of the benefits we're offering, some of the pricing opportunities, and use that to really spark interest in the overall project. What I would say is that it wasn't a huge change, relatively modest, but it actually spurred a lot of interest. We shifted how we're selling the project in total, in terms of some of our strategies there, and who is selling it and everything else. Again, we've been very, very pleased. It's actually the success at One Ski Hill Place has been beyond our expectations for the season.

And I would also say that I think the market in total is getting better. So I think we're seeing continued strength both in Breckenridge and in Vail. I think you're seeing that at our projects. I think you're seeing that in the retail market. I think you're seeing that when you look at inventory numbers both in those counties. And candidly, I think outside of our communities, just the real estate market nationally. So I think it all played currently very well and we're really pleased seeing the momentum.

Thank you. And final question for Mark, hello. Just on the margins in the quarter, your flow-through on Mountain revenues were a little bit lighter than we were looking for, but we might have just been too high. As I'm thinking about, first of all, other than the poor early season snow and some of the labor-related increases that you talked about, was there anything in your operations you think could have improved further, or might have inhibited some higher margins?

I think probably on retail, we could have seen a better flow-through there where you had lower margins, gross margins than what we originally expected. So certainly in that area.

Okay.

This is Rob. Obviously, we're reporting the two segments, those two businesses together in the Mountain division.

Yes. And so as we think about the next quarter, just given the strong snow and obviously trying to take into consideration some of the labor issues, does the retail continue -- basically what I'm trying to get to, is there any reason why you might not get close to prior record Mountain EBITDA margins in the next quarter, in the current quarter that you're in?

Yes, I think again, it's always important to remember one of the things -- we have different mountains now in the mix. So first of all, Northstar, which has a lease which suppresses EBITDA margin a bit. I would say if you look on a like-for-like basis, we would not expect retail to depress margins in the same way that it did in the second quarter. And so we would absolutely see increases and expect increases, but when you look back over the last few years, there are some structural changes to the business that will drag down the margin, even if we're as effective as we were back then.

Okay, perfect. Thank you so much.

Thank you. Our next question comes from the line of Shaun Kelley with Bank of America. Please go ahead.

Rob, I wanted to start with a little bit of discussion on the acquisitions that you made back in December. We've gotten a lot of feedback from investors on it. But I wanted to get a sense from you. Could you just walk us through the strategy, in terms of acquiring some smaller mountains and exactly how you view both the expense that you made there, as well as the future plan here? And I guess what I'm trying to get at is, how much are you thinking about this as a marketing strategy, in terms of customer acquisition? And how much are you thinking about it in terms of the overall strategic portfolio, because we've often thought of Vail as largely big core mountains that we could probably identify or name and these were not of that same kind of pattern.

Absolutely. When you step back and look at it strategically for our Company, there's no question that our goal is to create a better connection between our Western resorts and the skiers and riders in those markets. And I think as we did our homework on the US ski industry and really started to delve down into where everybody travels from, the best market for taking trips out West is the Midwest. And that's probably not something that everybody focuses on, when they think about our company. But there are more trips from those markets, broadly in the Midwest, as destination visitors.

When you think about 450,000 skiers between the two markets, and you start to do a little bit of math on how many skier visits that likely represents, even if you take percentages of that and think about how much business that could represent out to the western part of the country, there's no question that we view the opportunity to make a connection, to get data, to provide an experience to better promote, to put on our season passes, to all of these folks. We view that as just a very unusual and very compelling opportunity for our Company as we look towards the future.

With that said, we absolutely feel like there is an opportunity to create a better experience at these smaller resorts than what exists today and to take an approach to focus on what these smaller resorts do really well, which is terrain parks, which is learning how to ski, and certainly racing. And so we felt like we could put investments into the resorts to make all of those things better to help garner more market share and attract more skiers and riders in those markets to our resorts. But we're also making an investment in things like scanning, IT systems, EpicMix, to capture data and be able to provide a communication path from us to these skiers and riders.

So what I would say is we feel like when you think about a market like Minneapolis, we feel the combined expense of both what we spent to buy the resort and now this $10 million upgrade, and we think about that over the next 5 to 10 years, we think this is actually a very high return investment for us, because candidly, we also announced our season pass plans today. One of the pieces of it, which was in a separate press release, was that the child's price for the season pass at Afton Alps was the same price as the child's price for the Epic season pass. So we will now be offering, in Minneapolis, a child's season pass that not only offers access to Afton Alps, but all seven of our resorts in Tahoe and Colorado, and our assumption is that will be quite attractive to families out there. And once their kids are on our passes, when it's time for that family to choose where to go for a vacation, we think that it's highly likely they might choose where their kid will ski for free. Even if the adults didn't buy a season pass at beginning of the season. That's just one example of many of the different tactics and approaches we intend to use.

Now, will this all happen in the first year? No, of course not. It will take some time. But we really feel like this is a unique way for us to broaden the reach of our Company and really leverage the sophistication and data capabilities that we have.

That's helpful. And then I guess, maybe taking it to one step on a higher level, and that's really good color on the children's season pass strategy. So I guess to get to a higher level, should we think of more of this -- I'm not trying to characterize it in an incorrect way, but maybe almost a hub and spoke model, is there more of this to come as you build out your strategic vision here? Or do you let these deals season for a couple of years before you move on, because again, what I'm getting at is historically we've always kind of thought of looking at more named, chunky resorts that I think we would have thought of, and just trying to understand if there's going to be more of these to come, as you can build out and try and capture -- I think what you're saying is trying to capture that extra trip.

Yes, I think -- well, two things. One, when you think about what we're spending, obviously, I guess what I would probably share is that there's risk in anything that you do. And every time we spend any money, there's always risk into whether or not it will pay off the way we hope. I would look at the costs for getting into these as offering, candidly, a better opportunity over the long haul than even some of the lifts and other upgrades we made to our mountains, which candidly I think are great projects as well. But obviously, these are really broadening and branching, yes, in a bit of a hub and spoke approach. But when you think about the investment that we have across our, we have $2 billion or more really in investment in ski assets in the seven western resorts, so to add $10 million or $20 million to branch out into our primary markets, when you look on that framework, it's not that we're trying to buy another resort like Vail. We're trying to buy a conduit or a pathway to better feed our resorts out in Vail, where we know -- it may be that the spending at an Afton Alps obviously is not going to compare and the ticket prices won't compare. But when they come out to our western resorts, obviously that offers a huge opportunity for us.

What I would say is yes, I do think we would intend -- as the opportunities present themselves, to expand this strategy, though I would caution or confirm that it won't compare to the investment that we have out west, and there's only so many markets. We're targeting high-volume, high-capacity markets and so as you could well imagine, obviously has to -- they have to have snow, they have to be cold temperatures. It's not hard to look quickly at and assess that it's really only a few of these out there and we'll continue to, like we do with our primary acquisition strategy, we'll continue to monitor what's available and what makes sense, and so I think if something comes available, it's something we would pursue. But I think it's important to realize, it's not a strategy that we want to own 50 ski resorts in North America. It's that we want to better support the iconic, large destination resorts we already own.

Okay. That's helpful and pretty clear. So last question would just be, and I think maybe thinking about some of the real estate stuff, just to stay on the big strategic thing, obviously the sales have picked up. Does this -- any thoughts about dusting off some of the plans? And I know you have actually been active, so dusting off is really not the right word for it, but thinking about Ever Vail and Keystone and some of the expansion plans for those places, or do you remain real focused on real tactical stuff like Beaver Creek and on Mountain?

We're not dusting plans yet. But I think that we -- I would say projects like Keystone or more likely at Breckenridge, at One Ski Hill Place, where are already far down the road on most of the infrastructure that's there, of course, I think at Peak 8, I think that -- those are probably the next things to come. Obviously, a project like Ever Vail, given its size and scope, requires a market that is further ahead and a velocity that's, even though it's picking up, we're still quite a ways away from the rate of sales we were seeing in 2006, 2007, 2008. I think we're still, before we really pursue a big, broad development project, we're going to have to see an even further increase to what we're looking at today.

That's great. I'll jump back in the queue. Thanks.

Thank you. Our next question comes from the line of Will Marks with JMP Securities. Please go ahead.

A few questions. First, I don't think you mentioned anything in the CFO search. I don't expect a long dialogue, but it continues, or do you feel like you have an announcement to make in the next month or any thoughts?

Both. I think it continues, and, yes, I'm hopeful to make an announcement relatively soon.

Just wanted to hear a comment from you, because I know people are going to ask.

I can assure you I have not forgotten about it.

That wasn't quite what I meant. Anyway, Epic Pass pricing, looks like $689, the easy math says 4.55% increase. Does that sound right? I can read this, but on average, can you tell us, are passes up around 4% or 5% for different products?

Yes, and what you're reading, we actually have not announced the broad plans for Colorado and Tahoe. What you're looking at is the announcement for Detroit and Minneapolis, but yes, those prices would translate. Only reason I make that -- yes, the price increases you're talking about are consistent. Only reason I make the other point is we may have some other things to announce in terms of new products, for instance, in Colorado, new announcements in Tahoe. What you're looking at isn't the totality of our program yet. That will be announced probably next week or so and certainly something we'll be able to talk in more detail about at the investor conference.

I was reading the Afton-specific press release. For example, as you mentioned, the six buddy tickets, did you have anything like that last year for an early buyer in the past?

We did. That's actually a comparable program to what we had last year. And we will have that, I think, available again in this year's program.

Okay, thanks. Okay. A few other things, on modeling the Epic Discovery, can you give us any guidance -- you talk about $7 million in the first full summer. What kind of margin would that be? I really have no idea where to start on the revenue side, if you care to discuss.

We can talk about that in more detail at in the investor conference. It's a very high margin.

Okay.

As you could well imagine, because obviously the primary cost there is the capital cost to put it in, not the operating costs going forward. We can talk about that in more detail. At this point, we're not announcing our revenue target for those projects yet.

Fair enough, okay. I wanted to ask you about Tahoe, being out here on the West Coast, as opposed to just the West. The snow this way hasn't been so good since Christmas, as you obviously know, and I know you don't break out things by ski area region. But can you just comment a little more on any weakness, if you're seeing that in Tahoe? Thank you.

Again, I think on the margin, there's no question that Tahoe had a strong start and then softer, since it hasn't seen more recent snow, where Colorado had a weak start and then a stronger performance. It tends to have diversification theory has helped a bit there. What I would say, though, is that I think we're actually getting some good snow this week, and so we actually feel like we're setting up nicely for March, but you're right that I think that strong beginning to the season having continued on the same pace, and that's been a partial drag. On the other hand, Colorado has set up quite nicely over the past month.

Okay. That's all for me. Thank you.

Thank you. Our next question comes from the line of Tim Hamby with Janco Partners. Please go ahead.

Just a quick follow-up on some of your comments about the real estate market, specifically in Colorado. Not too much has changed, as far as your overall approach to long-term projects. But has the overall strength you've seen there done anything to change your more near-term outlook for real estate sales and at One Ski Hill Place and Ritz?

I think it certainly makes us pretty bullish, we came out with some estimates on what we thought net cash flow would be from real estate, and it's no question that I think we feel pretty good about those numbers, since I think we're on the other side of our estimate. So that would be the kind of place where I think we're seeing momentum. And candidly for us, I think, it probably makes us more bullish as we look towards next year and the year after in terms of pricing, but I would also say that we have an interest in keeping good momentum at these projects, because every person who buys in one of these developments becomes a permanent customer. Them, their immediate family. Then it becomes their extended family, their friends. So there's no question that we're still incented to maintain this momentum, but it definitely I think bodes well, as we think about real estate pricing and flow-through next year.

So will you just kind of continue using some of the incentives and things like that, that you've already used so far this quarter to drive sales there?

Yes, although there's no question we're actually -- we already have started to ratchet them back. So in other words, I think, our approach at One Ski Hill Place was to be more aggressive with the first few units and then start to step back. And we're already doing that. My only point is that I don't, from an investor perspective, I'm just saying I don't know that those steps will be material over this year, and we still want to pick up folks to go into these projects and help drive our total business.

All right. Thank you very much.

Thank you. At this time, I would like to turn the conference back to Mr. Katz for any closing remarks.

Thank you, operator. This concludes our fiscal 2013 second-quarter earnings call. Thanks to everyone who joined us on the conference call today. 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. Ladies and gentlemen, this concludes the Vail Resorts fiscal 2013 second-quarter results conference call. We thank you for your participation. You may now disconnect.