Vail Resorts Inc (MTN) 2015 Q2 法說會逐字稿

Good day and welcome to the Vail Resorts second-quarter fiscal 2015 earnings results conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Rob Katz, CEO. Please go ahead.

Thank you. Good morning, everyone. Welcome to our fiscal second-quarter 2015 earnings conference call. Joining me on today's call is Michael Barkin, our 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 made as of today, March 12, 2015 and we undertake no duty to update them as actual events unfold.

Today's remarks also include certain non-GAAP financial measures. A reconciliation of these measures is provided in the tables included with our press release and in our Quarterly Report on Form 10-Q filed this morning with the Securities and Exchange Commission and is also available on the Investor Relations section of our website at www.VailResorts.com.

So with that said, let's turn to our second-quarter fiscal 2015 results. Our results were very strong in the second quarter of fiscal 2015 as we benefited from strong pass sales, increased ancillary yields across our resorts and good conditions at our Colorado resorts. Total mountain revenue increased 18.2% compared to the prior year with lift revenue increasing by 22.5%, primarily driven by a 15.9% growth in visitation and a 5.7% increase in effective ticket price compared to the prior year.

We continue to see robust spending trends that drove a 22.1% increase in ski school revenue and an 18.5% increase in food and beverage revenue compared to the prior year. Our mountain performance includes the results of Park City in the second quarter of fiscal 2015, which we are pleased to report were in line with our previous public estimates. Excluding Park City, lift revenue, excluding fees and pass revenue, increased by 12.7% for the quarter compared to the prior year with commensurate growth in our ancillary revenue.

Unfortunately, we are experiencing another challenging year in Tahoe with record low snowfall that is impacting visitation and tempering our mountain EBITDA growth. Despite varied weather conditions though across our three primary regions, our results this fiscal quarter demonstrate the benefit of our geographic diversification and the impact of our destination marketing strategies.

Moving to lodging, our results were very strong for the quarter with both occupancy and rate increases compared to the prior year. Revenue, excluding payroll cost reimbursements, increased 6.3% compared to the prior year and revenue per available room increased 15.7% compared to the prior year. Our results were driven by strong demand for our lodging properties with particular strength in our Colorado markets.

Regarding real estate, we continue to see strong momentum in our resort markets with solid demand for our remaining condominium inventory and increasing interest in our development parcels. Net real estate cash flow for the second quarter of fiscal 2015 was $4.3 million. During the quarter, we closed on one Ritz-Carlton Residences, Vail and four One Ski Hill Place units.

Since January 31, 2015, we closed on three One Ski Hill Place units and closed on the sale of a property in Breckenridge that will be developed into a Marriott Residence Inn. These transactions will be included in our third-quarter fiscal 2015 results. Now I'd like to turn the call over to Michael to further discuss our financial results and our season-to-date metrics.

Thanks, Rob and good morning, everyone. I want to remind you that you can find a full discussion of our financial results for our second quarter of fiscal 2015 ended January 31, 2015 in our Quarterly Report on Form 10-Q, which we filed this morning with the Securities and Exchange Commission. Our Form 10-Q and our earnings announcement can be found on our website at www.VailResorts.com.

As Rob mentioned, our second-quarter results were very strong. Resort net revenue was $522.4 million for the second quarter, up 16.6% from the prior-year period and resort reported EBITDA was $199.7 million for the second quarter of fiscal 2015, up 32.2% from the prior-year period. Resort reported EBITDA margin improved nearly 450 basis points over the prior year as we continue to leverage our infrastructure and cost structure to drive profitable growth. The results highlight the success of our efforts to grow destination visitation and season pass sales, our ability to capture premium pricing and ancillary spending through consistent reinvestment in our resorts and the opportunities that we create through strategic acquisitions.

Mountain reported EBITDA was $194.3 million for the second quarter, up 31.1% from the prior-year period. Our strong mountain results were driven by the addition of Park City and the strength of our Colorado resorts, which saw increased lift revenue and higher ancillary spending. We also benefited from our strong season pass sales leading up to the ski season. Our ski school revenue increased $10.4 million, or 22.1%. Dining improved $6 million, or 18.5% and retail rental grew $9.3 million or 10.8% all compared to the prior-year period.

Our lodging segment revenue, excluding payroll cost reimbursements, increased $3.4 million, or 6.3%, compared to the same period in the prior year and lodging reported EBITDA increased 85.7% to $5.4 million for the second quarter of fiscal 2015. These results were driven by gains in occupancy and revenue per available room. Real estate reported EBITDA for the second quarter of fiscal 2015 improved by $1.1 million to a loss of $2 million. Net real estate cash flow for the second quarter of fiscal 2015 was $4.3 million.

During the second quarter, we finalized a comprehensive settlement agreement with the IRS regarding court proceedings related to the utilization of net operating loss carryforwards. We recorded an income tax benefit of $23.8 million related to the settlement and received a $19.1 million cash refund from the IRS. Net income attributable to Vail Resorts, Inc. was $115.8 million for the second quarter of fiscal 2015, or $3.10 per diluted share, as compared to net income of $59.3 million, or $1.60 per diluted share for the same period in the prior year.

Our balance sheet and cash flow remained very strong. We ended the quarter with $36.6 million of cash on hand. Our operating model continues to drive significant and growing cash flow augmented by real estate sales, favorable tax attributes and disciplined capital spending. Our cash flow this quarter allowed us to pay down the full $182.5 million of borrowings under the revolver component of our senior credit facility, which was used to finance the Park City acquisition in the first quarter of fiscal 2015. Our net debt, including the capitalized Canyons obligation, was 2.0 times trailing 12 months total reported EBITDA, excluding the non-cash gain related to the Park City litigation settlement.

With a continued focus on generating incremental cash flow, we are pleased to announce our plan to redeem the remaining $215 million of 6.5% senior subordinated notes due 2019 and the aggregate $41.2 million of our 6.95% Eagle County Bonds in May of this year. We plan to fund this refinancing with a $250 million term loan under our existing senior credit facility and cash on hand. At current rates, the Company anticipates this refinancing will result in approximately $12 million in pretax annual interest savings.

Turning now to our updated metrics, we are providing ski season-to-date metrics for the comparative periods from the beginning of the ski season through March 8, 2015 and for the prior-year period through March 9, 2014, adjusted as if Park City was owned in both periods. The reported ski season metrics do not incorporate the urban ski areas of Afton Alps and Mt. Brighton. The data is interim period data and is subject to fiscal quarter-end review and adjustments.

We continue to drive strong results as we approach the final peak period of our ski season through spring break and Easter. Season-to-date total lift revenue at the Company's nine mountain resorts, including an allocated portion of season pass revenue for each applicable period, was up 8% compared to the prior-year season-to-date period. Our ski school revenue increased by 2.1%, dining revenue increased by 4.8% and resort retail rental revenue increased by 2.9% all compared to the prior-year period. Our visitation was consistent with the prior year, down 0.3% compared to the prior-year season-to-date period. I'll now turn it back to Rob.

Thanks, Michael. As Michael outlined in our metrics, our results in February and early March remained strong in Colorado, but were offset by increasing shortfalls to our expectations in Tahoe where the conditions continue to be very challenging. Snowfall in the region through February is down 42% compared to the very difficult 2013/2014 season, which is significantly impacting visitation and revenue.

In addition, in early February, Vail and Beaver Creek had the honor of hosting the 2015 World Alpine Ski Championships. The event was an extraordinary showcase of both resorts with outstanding attendance and terrific television and online media coverage both in the United States and around the world. We are so proud of the effort and collaboration of our employees and the entire Vail Valley community to make the races a true experience of a lifetime for everyone who was there. However, as with any major international event, the championships did depress skier visits and financial performance at both Vail and Beaver Creek in February compared to the prior year, which impact was largely in line with our original expectations. Our overall performance through March 8, 2015 has been incorporated in our updated guidance for fiscal 2015.

We also recently announced pricing and benefits for our season pass products. Most notably, on our Tahoe local pass, we added five days of skiing at our Colorado and Utah resorts. The Tahoe local pass is our most popular pass in the Bay area and by giving those passholders access to Colorado and Utah, we feel we can dramatically improve the value of that pass and help mitigate concerns about weather in California.

Despite the challenges in Tahoe, we're pleased to provide updated guidance within our original guidance range issued last September. Our resort reported EBITDA is now expected to be within the lower half of our original range, between $340 million and $350 million, excluding the $16.4 million non-cash gain related to the Park City litigation settlement. Our estimates for fiscal 2015 resort reported EBITDA include approximately $5 million of integration and litigation expenses related to Park City and Canyons.

Our resorts in Colorado and Utah have performed very well this year with strong demand and by providing a great experience. Unfortunately, this was partially offset by results in Tahoe where our resorts are expected to generate an approximate $37 million revenue shortfall relative to our expectations. We now expect our resort EBITDA margin to be approximately 25.5% at the midpoint of our updated guidance range. This would represent an approximate 320 basis point margin expansion over fiscal 2014 representing the strong operating leverage we create in our business with growth, yield increases and acquisitions.

We are also pleased to provide improved guidance for our real estate EBITDA and net real estate cash flow driven by favorable sales trends in our resort real estate business. We now expect fiscal 2015 real estate EBITDA to be between negative $10 million and negative $6 million and net real estate cash flow to be between $20 million and $30 million.

We continue to be very focused on our capital allocation strategy. I am happy to announce that our Board of Directors has decided to increase our quarterly dividend by 50% to $0.6225 per share payable on April 15, 2015 to stockholders of record as of March 31, 2015. This significant dividend increase follows a 100% increase last year. We remain committed to returning capital to stockholders and believe that our performance underscores our ability to drive growth and generate significant cash flow despite varying conditions.

Moving to our calendar year 2015 capital plan, our 2015 capital plan reflects our goal to target high return investments that support a premium experience for our guests while generating significant cash flow. Our planned investment in Utah will be one of the most transformative ever undertaken in the ski industry and we are pleased with the progress of the local approval process for those projects. Consistent with prior estimates provided in December 2014, we expect to spend approximately $50 million to complete our plan to connect the Park City and Canyons resorts creating the largest ski resort in the United States by skiable acreage. We plan to invest an additional $60 million to $65 million in maintenance spending and prioritized discretionary spending across all of our other resorts. These investments include the upgrade of Vail Mountain's Avanti Chair to a six person high-speed chairlift, the expansion of snowmaking at Beaver Creek and at our recently opened Peak 6 terrain at Breckenridge, room renovations at the Keystone Lodge and investments in technology and marketing systems to drive increased yields and data capture across our ski school and rental ancillary services.

Finally, we are pleased to announce our 2015 capital plan for Epic Discovery, our summer initiative. Epic Discovery is an incredible opportunity to leverage our existing infrastructure and capitalize on the large number of guests already visiting certain resort destinations during the summer months. We expect to spend approximately $10 million in calendar 2015 for the first major construction effort for Epic Discovery's summer activities. The summer capital will be focused on a mountain coaster, canopy tours and summer tubing at Vail for which we have received all necessary US Forest Service approvals. Additional capital will be used to construct kids' activities on private land at Breckenridge and for significant planning investments for the next phase of construction, which will occur in 2016 at Vail, Breckenridge and Heavenly. We expect that these summer activities at Vail and Breckenridge will contribute between $4 million and $5 million of incremental resort reported EBITDA during calendar year 2016, which will be reported in both fiscal 2016 and fiscal 2017. Construction at Heavenly remains subject to regulatory approval and we will provide further guidance on potential incremental investments on our next earnings call in June.

We are excited about the strong results we are generating this year and the benefits we receive from our geographic diversity. Our attention to service, our reinvestment in the resorts and our commitment to delivering an outstanding guest experience continue to be the focus of our efforts that lead to our continued growth, our strong cash flow and our ability to return capital to shareholders. I would like to thank all of our employees for their passion, hard work and commitment to our organization, which as always lies at the center of our success. Operator, we are now ready for questions.

(Operator Instructions). Sean Kelley, Bank of America.

Nice results. So maybe we could start with just talking a little bit about what you saw in Tahoe. Thank you for quantifying the revenue impact. But just as we see -- we think about your underwriting for the year, curious to think about -- when you think about that revenue impact and then your guidance reduction as it relates to EBITDA, are we seeing better strength than you would have anticipated in your guidance previously as it related to Colorado and Utah, or are those closer to in line with what you were thinking?

I think Utah is largely in line with what we were thinking. Colorado has been trending better. Season pass sales were better than our expectations for the year and that was offset by Tahoe.

Great. And then as we think about the deceleration in some of the overall season-to-date metrics, you gave some pretty good color. Would it be fair to assume that those numbers are starting to pick up now that we are kind of post the Alpine ski championships, particularly given that Colorado is probably a huge part of the visitation numbers?

Yes, I think what I would say though -- I will certainly stick to the metrics that we gave through March 8 and yes, absolutely. I think certainly for Vail and Beaver Creek, the minute the championships were over, we saw a significant and marked improvement in their performance, so absolutely. I think from -- let's say that was mid-February through the March 8 guidance and I would say that Tahoe though has continued to struggle. A couple of pockets of bumps, positive bumps, but largely speaking I think a more challenging year this year than last year all the way through the March 8 period.

Got it. And maybe lastly just as we think about margins, huge margin growth in the quarter and the flow through was I think right back to levels that we had seen you guys deliver a number of years ago. As we think about the continued integration of Park City, do you think there is outsized margin growth even in year two and year three of your integration and efforts here as you continue to cross-market and consolidate, or do you think you are actually seeing better results today and that we should expect the bulk of that is really in year one?

On the margin piece, I think we're seeing two things. One, obviously, being able to add Park City to our existing centralized infrastructure leads to significant improvements when we make these strategic acquisitions. And so that has been a driver this year. And then overall as we look forward, we're certainly seeing the benefit of the growth that we are driving flowing through and driving margins. And so I think we're certainly seeing that in the rest of the business this year, along with the Park City benefit and as we look forward, we continue to look at ways to leverage that cost structure to continue to drive margins, but clearly when you make an acquisition like this, it has a big impact in year one.

Very good. Thank you very much, guys.

Joel Simkins, Credit Suisse.

Hi, this is Christie Fredericks on for Joel. Congrats on a great quarter. I guess my first question would be around the 5% increase in the early season pass pricing for next year. I was just wondering how comfortable you are that the market can absorb this given just weakness in Utah and Tahoe snow?

Obviously, we just announced those yesterday or two days ago and so, obviously, we factored in all of these things, I think, into our thinking about as we look forward to next year. I think, as a company, our focus is on constantly reinvesting in the resorts and improving the experience and therefore delivering more and more value to our guests. I think when you think about Park City and Canyons in particular, the investments that we are going to make into both of those resorts obviously connecting them is such a dramatic improvement in the guest experience that, candidly, we feel like this is something where the guests will see huge value, candidly, for our passes.

I would say with our passes also, we tend to take a fairly ratable methodical approach to price increases year after year and that, I think, has over the last -- if you look over the last seven to eight years I think has helped guide our guests with their expectations. So that's a little bit of a long-winded answer to say, yes, we are very comfortable.

Great. Thanks. Also just with the currency movement in the euro, did you see any cancellations from customers abroad this past season?

Yes, obviously, I'm not going to speak to any specific cancellations by customers, but what I would say is our international business through the metrics that we provided has been actually quite healthy. We have not seen any material decline in our primary markets. And I think some of that is -- again, we absolutely are increasing and improving our marketing and sales efforts, PR efforts in all of these international markets. We've become very targeted and very focused on which guests within these markets we are trying to pull into our resorts. The target demo that we have in a lot of these markets is at the upper end on income. They are a little bit less sensitive, I think, to the currency fluctuations. A number of our markets certainly in Latin America, many of those guests have significant investments that are more US dollar-related, so again they are less sensitive to it. So overall, we have not, again, to this point, seen a major impact from those currency fluctuations.

Okay, great, thanks.

Felicia Hendrix, Barclays.

Rob, looking at your season-to-date lift ticket revenue growth, it definitely speaks highly to your pricing power. I'm wondering if you could just update us on the dynamic pricing strategy you have for single day lift tickets, how that is progressing. And then you touched upon the season passes and how you think about pricing there in an earlier question, but arguably you do have this pricing power to raise your season passes more than you have. So I was just wondering if you could address that too.

Sure. So far, we have seen a lot of success with our pricing strategies and largely because we have absolutely been more dynamic when we have peak days. And then to the extent that we are offering discounts, we are being very targeted with those discounts and we really try and make sure that we are providing a consistent, reliable message to our guests and we also feel like it's very important that we control the communication and the distribution channel on all of our products as much as we can with the Company.

We think that has provided this very stable -- much like I said with season pass -- reliable, understandable process for our guests that has worked quite well. One of the things, for instance, we saw this past year, we did when we acquired Park City, we actually pulled Park City out of -- they were using Costco as a distribution channel. They were using Liftopia as a very significant distribution channel and we pulled back from both of those and were able to deliver to the guest a terrific value and a terrific yield increase to the Company and obviously now we own the communication message with them. So on that front, we have actually been quite pleased.

On season passes, our goal there is really to broaden our season pass base. And we believe that there is still tremendous opportunity within the destination market to do that. I think we do feel like our season passes have more price reaction and are less inelastic, or more elastic than our lift tickets, daily lift tickets. You are asking a guest to make a decision before the season begins and to commit and you've got to make that decision easier. And I think an interesting piece there is obviously there have been a number of new announcements from our competitors around season passes and I think, one, we like that. We'd like to see more press and media and guest attention to all of these passes. We think that brings people to candidly looking and taking maybe a closer look at the Epic pass and all of our passes that we offer.

At the same time, it is a -- it's not the same kind of decision as I mentioned that the guest makes early on, certainly in the spring or in the fall and so making that message easy and having that value equation is very simple that we can deliver immediately we think is the hallmark of our success and we think does differentiate our products from some of the other products where some of them are at actually a fairly significant price point and you are having to kind of jigsaw puzzle together how am I going to make this work.

Even though we do feel like we deliver this great value from our pass, the lesson we have learned over the years is that we have to make this a very easy decision for the guest and that's how you can drive growth. If you push price too much or make the pass too complicated, what we see is people saying they will delay that decision until the season. And so I guess we have taken this bifurcated approach to lift tickets and passes and so far, it has been working well for us.

That's really helpful. Thanks. And then just moving on to Utah, just wondering, do you have all the approvals needed to go ahead with the connection of Park City and Canyons and if not, can you just kind of walk us through a timeline of how that is going to work?

Sure. So the two major approvals that we need for the Park City improvements, one is in Summit County, Utah and the other is in Park City. And we have received approval from the Park City Planning Commission, that's the major approval from Summit County and we received that a few weeks back. And we've had our first meeting with the Park City Planning Commission and we think that went very well and we had a great community engagement, great dialogue, great discussion. We will be back meeting with them later on this month, the third or fourth week of March and we're certainly hopeful that we make significant progress at this second meeting as well. At the moment, we feel like we are very much on track to put these in place during the summer. We haven't seen anything that would change that.

Great. And then just final question again sticking with Utah, just given your EBITDA expectations for Park City and Canyons in 2016, just wondering what magnitude of skier visit increase is embedded in that. So if maybe you could break out skier visit and ticket and other revenues there directionally because I know you are not going to give specific guidance.

Yes, I'm not going to be able to give additional detail on that. I think certainly we can maybe have a more robust discussion about that at the investor conference or maybe off-line more broadly about our thoughts, but, yes, specific guidance we are not going to be giving on that.

Okay, is there any way just to help us think about just at all how we should think about skier visits, visitation there?

Well, I guess what I would say is what's important to remember about our Company is that we are really focused on driving revenue and EBITDA and when you think about the pass mix with daily lift tickets, pass visitation can move around quite a bit and so it is one of the reasons why, in addition to, yes, we don't provide specific guidance for specific resorts as a separate thing, but on visitation we actually don't -- we rarely are focused at the Company on driving specific visitation numbers with these strategies because we know that that visitation can fluctuate quite a bit. So that is why I have to hesitate to give more specificity around that and that's why we really drive -- when we give guidance, we are really giving guidance on EBITDA and revenue because that's what we focus on.

Okay, great. Thanks so much.

(Operator Instructions). Afua Ahwoi, Goldman Sachs.

Two questions from me. First, in the outlook, you gave season-to-date metrics that assumed you already have PCMR in both periods. Could you give us the comparable metrics for the end of 2Q? Just trying to figure out how much of an acceleration, deceleration based on February and early March? And then moving to the real estate front, you sold the property in Breckenridge and it's being turned into a Marriott Residence Inn. Can you remind us what that property used to be and why a Residence Inn versus some other brand? And then maybe following up on that, you mentioned how you are seeing some pickup on the real estate front with people looking to develop land. Any idea when we'll start to move dirt or how advanced talks are right now? Thank you.

Sure. So no, we're not giving -- we're not going to be providing additional metrics for that cutoff period. And obviously, we did give very comparable metrics right at the end of the holiday period and then the March 8, so we kind of feel like we have given -- what I would say is the trends are largely in line. A lot of the -- some of the slowdown like was driven by Tahoe, which candidly from -- although we obviously were seeing some of that through the holiday period -- the slowdown versus last year really accelerated. So obviously, that was a major impact to decelerating the metrics from right after the holidays to March 8.

And the other piece that you would see in between January 31 and March 8 is the impact of Vail and Beaver Creek, which we highlighted as well. But we're not going to give additional specificity on that cutoff and in some respects, what I would say is the metrics really actually tend to follow more how we look at the business than an artificial January 31 cutoff in the middle of -- that's not necessarily a holiday period, so that's why we try and follow this path.

On the real estate side, the parcel that we sold actually was a hotel that the Company owned and operated along -- Vail Resorts -- owned and operated a long time ago. It actually had not had a lot of capital in it and candidly had been closed and it had been sitting largely idle for a number of years. We were approached by an investor who felt like there was a real opportunity to actually convert and create this hotel opportunity and we think actually it's a terrific piece for Breckenridge. This was what they felt was the best financial opportunity for them and actually having a Marriott obviously with their brand power and obviously all of the loyalty points that they have, much like when we put in the Doubletree to our own hotel in Breckenridge, we think this is a huge positive, a huge plus. Obviously also was a land sale that we were able to monetize.

And what I would say on the land, it is hard for us -- each of the land sales that we make are individually negotiated transactions unlike the condo inventory that we are selling. It is very hard to give specificity as to when we could see it, but we wanted to let people know that the level of our conversations with all of these people has increased dramatically, I would say, over the last 12 months. And so we feel -- and actually our Company has really been much more clear that we are looking for outside developers to come in and that we would monetize the sites more through land sale or future participation, but that our Company would not be the vertical developer on those sites. And so we really have attracted a fair amount of attention at all the resorts where we have opportunities and certainly we would expect to announce and certainly over the next 12 months, it would be our expectation to have some announcements on that front, but exactly when, hard to say.

That's helpful. Thank you.

Steve Wieczynski, Stifel.

Rob, going back to the season pass question, you have now had Afton and Mt. Brighton under your belt for a while at this point and can you kind of give us an update in terms of what you are seeing from that region in terms of a pickup in pass sales is the regional model, is that still something on the table for you guys in terms of finding markets that might be underpenetrated from a pass perspective and kind of going and looking at assets in those markets?

Yes, so we have been incredibly pleased with the performance of those markets on season pass and they have been our fastest performing markets if you look over since our acquisition date and we feel very, very good about it. I think the good news/bad news there is it does -- like I was saying earlier about season pass -- it is not as though you go into a market like Minneapolis and all skiers in Minneapolis all of a sudden buy your pass. It is a year-by-year process and so what we're seeing is very healthy and strong growth in those markets year-after-year and we think that provides a terrific pathway as we look over the next few years in those markets to really augment the growth in our overall program.

And yes, we would absolutely be very interested in continuing that. What I would say is that it is, like all of our acquisitions, we can't just go into a market and build a ski resort and we don't want to go into a market and have the wrong ski resort. We are going to be patient and thoughtful about the right deal, the right resort, the right urban area with the right demo and opportunity for us to mine those guests to obviously take Western vacations. So I think like anything else, we are aggressive, but not in a rush.

Okay, got you. And then second question, you talked about this a little bit earlier, but I guess when you look at the spend if people kind of came to the resorts, it was extremely strong and I don't know if there is any way you can break down, but was that pickup more from a domestic traveler, or was that more from an international traveler? Is there any way you can walk us through that?

Again, not with any real specificity. What I would say is we saw increases across the board. Our international traveler is on average always spending more and we did see growth in the international markets, so from that standpoint that actually absolutely helped our results and our yields. But the US market is very strong as well and I think that is always going to be the most important market to us and I think the results we are seeing absolutely speak to the strength of the US economy, the strength of the upper income vacation traveler here as well. So again that is certainly the primary driver, but so far this season the international visitor has also added to that.

Okay, great. Thanks, Rob.

It appears that there are no further questions at this time. Mr. Katz, I would like to turn the conference back to you for any additional or closing remarks.

Thank you, operator. This concludes our second-quarter fiscal 2015 earnings call. Thanks to everyone who joined us on the conference call today. Please feel free to contact Michael or me directly should you have any further questions. Thank you for your time this morning and goodbye.

This does conclude today's conference. We thank you for your participation. You may now disconnect.