Vail Resorts Inc (MTN) 2020 Q2 法說會逐字稿

Good day, and welcome to the Vail Resorts Second Quarter Fiscal 2020 Earnings Conference Call. Today's conference is being recorded.

At this time, I'd like to turn the conference over to Mr. Katz. Please go ahead, sir.

Thank you. Good afternoon, everyone. Welcome to our Second Quarter Fiscal 2020 Earnings Conference Call. Joining me on the call this afternoon is Michael Barkin, our Chief Financial Officer.

Before we begin, let me remind you that some information provided during this call may include forward-looking statements that are based on certain assumptions and are subject to a number of risks and uncertainties as described in our SEC filings, and actual future results may vary materially. Forward-looking statements in our press release issued this afternoon, along with our remarks on this call are made as of today, March 9, 2020. We undertake no duty to update them as actual events unfold.

Today's remarks also include certain non-GAAP financial measures. Reconciliations of these measures are provided in the tables included with our press release, which along with our quarterly report on Form 10-Q were filed this afternoon with the SEC and are also available on the Investor Relations section of our website at www.vailresorts.com.

So with that said, let's turn to our second quarter fiscal 2020 results. Overall, the season has had both areas of challenge and areas of strong performance. Whistler Blackcomb and Stevens Pass, our resorts in the Pacific Northwest, experienced the lowest snowfall in over 30 years through December 31, 2019, resulting in very poor results through the early season and critical holiday period. Visitation at those resorts continue to be challenging and below our expectations in January with Whistler Blackcomb experiencing a weaker-than-expected recovery in North American and international destination visitation. In total, visitation across our Pacific Northwest resorts was down 14% compared to the prior year for the second quarter.

After a challenging start in the early season, destination guest visitation at our western U.S. resorts improved significantly during the holiday period and was in line with our expectations. The improvement continued through January, though Colorado was modestly below our expectations for the post-holiday period, partially offset by strong performance at our Park City resort.

Finally, our Northeast resorts are off to a great start to the season, supported by the continued benefit from our expanded Northeast network, which has been partially offset by challenging weather variability across the Midwest resorts. Including results from Peak Resorts, total lift revenue increased 8.2%, driven by an 8.8% growth in skier visitation. Total effective ticket price decreased 0.5% in the second quarter compared to the prior year, with price increases in both our lift ticket and season pass products offset by the inclusion of results from Peak Resorts, which generates a lower effective ticket price. Excluding season pass holders and Peak Resorts, effective ticket price increased 4% compared to the prior year. Ski school, dining and retail and rental revenues increased 11.4%, 15.8% and 4.1% compared to the prior year, respectively, primarily driven by the inclusion of Peak Resorts.

Now I would like to turn the call over to Michael to further discuss our financial results and our season-to-date metrics.

Thanks, Rob, and good afternoon. As Rob mentioned, the season has had areas of challenge and strong performance. In the second fiscal quarter, resort net revenue was $924.4 million, an increase of 8.8% compared to the prior year. Resort Reported EBITDA was $378.3 million, an increase of 5.7% compared to the prior year.

Fiscal 2020 second quarter Resort Reported EBITDA included $1.9 million of acquisition and integration-related expenses and approximately $1 million of favorability from currency translation, which the company calculated on a constant currency basis by applying current period foreign exchange rates to the prior period results.

Net income attributable to Vail Resorts was $206.4 million or $5.04 per diluted share for the second quarter of fiscal 2020 compared to net income of $206.3 million or $5.02 per diluted share for the same period in the prior year. Fiscal 2020 second quarter net income included the after-tax effect of acquisition and integration-related expenses of approximately $1.4 million.

Our balance sheet remains very strong. We ended the second quarter with $126.8 million of cash on hand, and our net debt was 2.4x trailing 12 months Total Reported EBITDA, though it is important to note that this ratio only includes Peak Resorts results for the period between closing and quarter end, and we expect that ratio to decline as we incorporate a full year of results from Peak Resorts.

Turning now to our season-to-date metrics for the period from the beginning of the ski season through Sunday March 1, 2020 and for the prior year period through Sunday, March 3, 2019. The reported ski season metrics are for our North American destination mountain resorts and regional ski areas, including the results of Peak Resorts in both periods and excluding the results of our Australian ski areas in both periods. The reported ski season metrics include growth for season pass revenue based on estimated fiscal 2020 North American season pass revenue compared to fiscal 2019 North American season pass revenue. And the metrics are adjusted to eliminate the impact of foreign currency by applying current period exchange rates to the prior period for Whistler Blackcomb's results. This is interim period data and is subject to fiscal quarter end review and adjustments.

Total lift revenue, including an allocated portion of season pass revenue for each applicable period, was up 0.8% compared to the prior year season-to-date period. Our ski school revenue increased 2.8%, dining revenue decreased 1.4% and resort retail and rental revenue decreased 0.6%, all compared to the prior year season-to-date period. Total skier visits were down 5.2% compared to the prior year season-to-date period.

Based on results through March 1, 2020 and indicators for the remainder of the year as of that date and excluding any identified impact from coronavirus, we estimate the Resort Reported EBITDA for fiscal 2020 was expected to be approximately $20 million below the midpoint of the guidance range previously issued on January 17, 2020, driven primarily by the continuation of challenging visitation trends at our Pacific Northwest resorts throughout January and February and secondarily from results of our Colorado resorts that were modestly below our expectations in January and February, partially offset by strong performance at our Park City resort.

Given the uncertainty surrounding the impact of the coronavirus on the broader U.S. travel market and any specific impact to the performance of our company, we are not issuing guidance at this time for fiscal 2020 and are withdrawing our previous guidance issued on January 17, 2020.

In the week ended March 8, 2020, we saw a marked negative change in performance from the prior week, with destination skier visits modestly below expectations, and we expect this trend to continue and potentially worsen in upcoming weeks. We intend to provide updated commentary on our results by March 18, 2020.

I'll now turn the call back over to Rob.

Thanks, Michael. We remain confident in the strong cash flow generation and stability of our business model. We will continue to be disciplined stewards of our capital and remain committed to strategic, high-return capital projects, continuous investment in our people, strategic acquisition opportunities and returning capital to our shareholders through our quarterly dividend and share repurchase plan.

We are pleased to announce that the Board of Directors declared a quarterly cash dividend on Vail Resorts' common stock of $1.76 per share, payable on April 9, 2020, to shareholders of record on March 26, 2020. Given the current market instability caused by the coronavirus, we are deferring our decision on the dividend increase until June.

Moving to our calendar year 2020 capital plan, we remain committed to reinvesting in our resorts, creating an experience of a lifetime for our guests and generating strong returns for our shareholders. The company expects to invest approximately $155 million to $160 million, excluding onetime items associated with integrations, the onetime Triple Peaks and Stevens Pass transformation plan, onetime Peak Resorts capital improvements, real estate-related capital and $4 million of reimbursable investments associated with insurance recoveries that we had originally expected to occur in calendar 2019.

As previously announced, the calendar year 2020 capital plan includes a rare opportunity to expand with a 250-acre lift served terrain expansion in the signature McCoy Park area of Beaver Creek, further differentiating the resort's high-end family-focused experience.

We also plan to add a new 4-person high-speed lift at Breckenridge, to serve the popular Peak 7, a replacement of the Peru lift at Keystone with a 6-person high-speed chair lift, subject to government approvals, and a significant 250-seat increase in the seating capacity at the Rendezvous Lodge Restaurant on Blackcomb Mountain.

We remain highly focused on investments that will further our company-wide data-driven approach, including the second phase of implementing our automated digital marketing platform, that will allow us to aggregate a more holistic view of the guests that will drive improvements in personalization and engagement across all lines of business, including ski school and rentals.

We're also planning to completely revamp and upgrade our digital ski rental online platforms and our EpicMix mobile app, which will offer new functionality and an improved user experience. We plan to continue to invest in corporate infrastructure and technology to improve our scalability and efficiency, including the first phase of implementation of an automated workforce planning system to optimize our labor scheduling and improved financial systems to enhance business analytics.

We are planning to complete the $3 million initial phase of a 2-year $15 million investment program across Peak Resorts. We're also planning to complete the second and final phase of a 2-year $35 million investment program for Crested Butte, Okemo and Stevens Pass and planning to spend approximately $24 million on integration activities primarily related to Peak Resorts.

Including onetime items associated with integrations, the onetime Triple Peaks and Stevens Pass transformation plan, onetime Peak Resorts capital improvements, real estate-related capital and $4 million of reimbursable investments associated with insurance recoveries that we had originally expected to occur in calendar 2019, we expect our total capital plan to be approximately $210 million to $215 million.

Turning now to season pass sales, which we recently launched for the 2020, 2021 North American ski season. Vail Resorts is committed to providing the best value in skiing for all skiers and riders through its transformational Epic Pass and Epic Day Pass advanced commitment products. Last year, we launched the Epic Day Pass, giving all skiers and riders the same value and flexibility available to season pass holders, even if they only plan to ski or ride one day. The Epic Pass provides unparalled -- Epic Day Pass provides unparalleled value to all skiers and riders through a discount of up to 50% of the lift ticket window prices by purchasing in advance of the ski season. We were very pleased with the success of the Epic Day Pass launch last year and expect to see continued growth in this product in its second season as we convert existing lift ticket purchasers and new prospective guests into advanced commitment products.

This year, we are transforming the breadth of value offered with our pass products by providing our pass holders truly epic discounts on their mountain experience with the introduction of Epic Mountain Rewards. For the 2020, 2021 North American ski season, pass holders will receive 20% off food and beverage, lodging, group ski and ride school lessons, equipment rentals and more, creating incremental savings of potentially hundreds of dollars per day for a family of 4. No other major pass product provides this level of across-the-board savings for skiers and riders and with no sign-up, no point tracking and no blackout dates, Epic Mountain Rewards is designed to be as simple as possible.

Vail Resorts is uniquely positioned to offer this kind of across-the-board value to our guests through our integrated network of 37 owned and operated resorts. The company expects the new offering will continue to drive conversion of our guests from purchasing lift tickets to purchasing an advanced commitment pass product, where we see higher guest return rates and guest satisfaction.

The company is also delivering more value to our guests in key regional markets through the introduction of the Northeast Value Pass and Whistler Blackcomb Day Pass. The Northeast Value Pass offers unlimited skiing in the Northeast for $599 for adults and $419 for college students, with holiday restrictions at our Vermont and New York resorts and up to 10 days of access at Stowe. The Whistler Blackcomb Day Pass is a discounted product sold in Canadian dollars that provides exclusive access to one of the world's premier mountain destinations. This new customizable pass offers from 1 day to 10 days of access and is ideal for skiers and riders who may not need the unlimited access offered on a traditional season pass, but are interested in the value of this advanced commitment offering. By purchasing in advance of the ski season, Whistler Blackcomb guest can ski and ride for up to 50% off lift ticket window prices, providing all guests with the value, flexibility and convenience that comes from being a pass holder. The company expects both new passes will continue to drive conversion of our guests for purchasing lift tickets to purchasing an advanced commitment product.

Finally, important to highlight in the current moment that we remain focused on the health and safety of our guests and employees as we address the potential impacts of the coronavirus. We are in contact with and following all recommendations and precautions from state and local health officials. Our resorts are fully open and operating normally with good conditions.

We understand that the current macroeconomic and business environment creates uncertainty for all of our stakeholders, and it's a good time to remind everyone that the company remains on very sound financial footing with an incredible pass program, world-class resorts and the resources to ensure that we continue to make the right long-term investments and do not let any temporary dislocation in the broader markets take us away from those efforts. Most importantly, we have an incredibly committed team of people who understand how to provide an experience of a lifetime to our guests and to each other, even when dealing with external challenges. In many ways, we do this every day. But of course, this has been a trying time for many of our employees, and we very much appreciate their incredible engagement and dedication. It's what lies at our success.

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

(Operator Instructions) We'll take Ostein from Felicia Hendrix from Barclays.

Rob, I just wanted to start on the decision to kind of hold off on raising your dividends. Just given the strength of your balance sheet and at the end of your prepared remarks there, you kind of highlighted how strong the business is. You guys are always conservative and prudent, but just wanted to hear a little bit more about the decision there.

Yes. I think as we went into that decision, and I think the Board was obviously looking at the macroeconomic trends, which seem to be shifting by the day, the marketplace is shifting quickly. I think also a sense that, obviously, the coronavirus impacts are certainly being felt, particularly within the travel industry, and that's obviously the industry we're in. And so I think there was a sense that we could -- we've had a very consistent track record of increasing the dividend, but we could wait a quarter to see how this plays out before making any definitive decision on an increase or the amount of increase.

Okay. And so really, it would just be kind of like a change in the overall environment, so you would look back -- and so it would look more wise to make that decision? Is that really what you're waiting for?

Yes, I think understanding -- I think there's obviously a lot of movement right now in the -- both in the -- obviously, in the financial markets, but also just in the economic markets for travel. And so I think, my guess is probably within a few weeks or a month, it will be -- things will actually be a little bit more clear probably to everyone. And certainly, by the time we get to the June quarter, I think the Board felt like they would be making a decision with a lot more information than they were making today. And today, obviously, it's tougher to set that increase without really an understanding of where the economic environment is going to go. And I think, given that it's -- at the moment, at least, seems to be changing by the day.

Yes, that's really fair. And then with that in mind, I'm totally understandable that you would withdraw your guidance given the uncertainty. But with the little of the ski season left to go, just wondering also why you are -- have made that decision. Just wondering, and this isn't what it said in the press release to what you said, but are you just suddenly seeing like significant drop off. Could you anticipate closing resorts early? Are there certain areas that are holding up better than others? Any kind of color that you could give to us that -- behind that decision?

Yes, I would say, I think it's absolutely true that there is not much -- many weeks left in the ski season. Obviously, they are big weeks for us, spring break and Easter. But of course, then we will -- we won't be really -- our ski resorts really won't be operating in any major way after Easter. But at the moment, we are not and all changing any of our operating schedules and plan to keep all of our resorts open. They're all opened and operating normally. You do not expect any change whatsoever and the experience that we want to provide to our guests, and we'll be doing that. But certainly, as we looked over the last week, I think following the previous week's turbulence, coronavirus, we started to see declines. Coming off of, I think, some strength and actually some pretty positive indicators that we were seeing for March, all of a sudden, a lot of those trends started to change, and we talked about seeing modest declines on visits. And I think that, in our minds, as the week went on, continue to worsen a bit. And so a little bit unclear to us where we'd be sitting. It's also, though, to your point about the fact that the ski season is coming to a close in a handful of weeks, it is why we said that we would provide an update on current performance by the March 18 because we feel like we'll probably have some better sense. We may not have a final sense by then either.

And then I think another piece for us is just a little bit of uncertainty as to how this will affect the Northern hemisphere summer, where we will have, right, our Australian resorts coming online, we'll have Grand Teton Lodge Company certainly coming online. Obviously, all of that much less impactful than our North American ski resorts, but still, yes, they'll continue to be some -- certainly a lot more uncertainty than just a few weeks ago.

That's super helpful. And the last one for me is just on at Whistler. You attributed the shortfalls across -- the shortfall for snowfall early season and then kind of the lag effect from that. But just wondering if you could talk us through how the demand has been from your Japanese clients out there? And if that's been part of it?

Yes, I don't have a specific data to give you on Japan, but no doubt that the international business there has been soft. I think that -- I think we were hopeful to see more quick recovery and a pickup and just -- I really did not see that occur. And so that continues to be, by far, the biggest drag for us for this season.

We'll hear now from Shaun Kelley with Bank of America.

Rob, just maybe starting with kind of a high-level strategic question. But we've seen, obviously, a fairly quick reaction across some other global stock markets or, obviously, even in most of the travel landscape now, some data around how quickly some of the behavior started to change around kind of travel in the virus. I mean but -- what's your instinct as both the CEO and then your experience in your own industry, especially as we look forward more to the possible implications for pass sales?

So do you think this is going to change purchasing behavior at all? And just how do you think about it? Because on the one side, we have a very sort of insulated and kind of thoughtful customer that you're able to drive a lot of renewal from. And on the other side, it's also a very high-end expense purchase for a lot of people. So can you help us think about just probably -- we understand the operating impact upfront but also just thinking about a little bit of the kind of the medium term here from a pass sales perspective?

Yes. I guess, I would say this, I think -- again, I'll caveat all of this by saying we're pretty early in understanding all the travel dynamics. But I would say, I think, yes, we'll be faced with 2 different dynamics. One dynamic will be just issues around travel itself because of coronavirus. I think on that front, obviously, we're not going to be immune to that. I'm sure we're not. At the same time, we do have a heavily domestic-focused business. And I think relative to other parts of travel, I think that probably will inure to our benefit. I think our season pass program is a huge strength at a time like this. And so I think that will inure to our benefit as we go through whatever we go through. But again, we won't be immune to it.

I think the second piece is the economic impact of this. And again, on that, I would say, I also feel like, again, we should fare relatively better than many other parts of travel, we have better supply-demand characteristics in our industry, we have continued to invest. I think our season pass program and now our Epic Mountain Rewards effort really is about delivering value. And I think we will be absolutely pushing this message. And I think very much like the Epic Pass when it was introduced back in 2008 was a terrific opportunity for the company as we went through the 2008, 2009 recession, I think, today, obviously, our pass program is much, much larger. The Epic Mountain Rewards program, I think, will be that much stronger. Our data is much stronger. The geographic piece that we have right now. I mean we're just going -- if we're going through some kind of slowdown of some sort, I feel very good about the position that the company is in. And I do think the pass will continue to remain incredibly attractive to people. No doubt, obviously, in a moment like this, I'm sure, for some buyers, there'll be issues with making any purchases. But again, I think the -- there will be a short-term impact from coronavirus and then a longer-term piece. And I feel -- I'm not quite sure exactly what happens in the short term. But in the longer term, I actually feel the company is perfectly positioned for that, even if there are challenges.

And then maybe just to turn to the numbers for one specific one. You obviously called out in the release that Colorado was modestly below expectations in January. I think it was sort of in the post-holiday period that you specifically mentioned. Can you just give a little bit more color there? Because obviously, you provide your update as of January 17, it doesn't leave a lot of time, at least as it relates to the kind of remaining period for the end of the quarter. But I mean some of this, I know is factoring in probably behavior that continued on into February. So can you just help us kind of isolate like what changed? Or what was going on there? Because it seemed like, at least in what we had through January 17, Colorado was not an issue.

No, I agree. And I think, we felt, looking over the holiday period, we were not seeing an issue in Colorado. And I think, obviously, had some disappointment about the early season, not being as strong as the previous season, but the truth is I think we felt very good going into it. And then as we came out of it, I think we saw Park City continue to perform very well and then we did see some sluggishness. It's hard to say exactly what that was. Is that overall travel industry sluggishness that I think has continued throughout this year, even before we got the coronavirus is that the ski industry kind of comping a better year last year. I'd say across our resorts, we saw more strength in Beaver Creek and in Keystone and softer results in Vail and Breckenridge. So it wasn't really completely across the board, but it was enough that it added to the issue -- the primary issue, again, was Whistler Blackcomb, but this -- there was definitely a gap there as well that added to our performance. I'd say, in the totality of the year, not that significant, but certainly, in terms of what we were expecting coming out of the holidays, it was meaningful.

And I'd also say that as we were going into the March period, Vail had some of the strongest indicators of any of our resorts going into both March and Easter. At this point, not sure that we'll get a chance to test those out and see what those would have been. But there's also one of the things we highlighted in the Q is, we have seen a real shift in visitation from Q2 to Q3. We've actually -- we're now allocating pass revenue more to Q3 than Q2 and you get more information on that in the Q, but -- and that's because we have seen right visitation coming later in the season. We saw this last year, too, with a very strong finish to the season, particularly in Colorado. So there could be some of that shifting, but at this point, I'm not sure we'll be able to completely assess that given coronavirus.

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

Want to ask you and, I know, again, still early in the process with the virus fallout. But at some point, would you guys make a decision to extend kind of the early season purchase date or maybe throw in additional plans? Or what's going to be kind of your indicator to think you might have to offer something new or different this year?

Well, I think we feel that Epic Mountain Rewards is very new and very different, right? It really -- it offers a 20% discount to pass holders on food, group ski, school, lodging and rentals. It's a pretty powerful offer, and we absolutely intend to ensure that our guests understand that, both our existing guests and prospective guests. So we feel like this is -- again, given the current, obviously, this program has been in planning for a while, but we think it's perfect because we actually wanted to lean into a much stronger value message for the pass. So we feel very good about that. We have no plans at this point to change any of our dates of deadlines. But I guess, certainly, like everything in the world right now things are moving quickly. So always hard to tell. But at this point, no change to the operations of any of our resorts or any of our normal pass deadlines.

Okay. Fair enough. Appreciate that. And then the follow-up was kind of on that new -- the perk, 20% discount for pass holders. Is that -- I guess, the question is really, how do we think about that financially in terms of how you underwrote? What would you guys hope in terms of more volume, more pass sales, et cetera, just what the financial impact might be the way you initially saw it going?

Yes, I think we feel that there's a couple of pieces. Obviously, there's the discount itself. And obviously, for existing pass holders who are currently using those products, there'll be a discount that's a cost to us, obviously. Now I think pass holders, and we've shared this before with folks tend to purchase less of these ancillary products than lift ticket buyers and especially many of our local pass holders don't have the same engagement rate with a lot of these businesses that our destination guests do. And so in some ways, we feel like there's also going to be incrementality on this in terms of actually this discount providing an incentive for people to actually engage with ski school, rental and F&B to either when they haven't before or obviously just upsell in the moment in terms of buying more product. And so we think when you look at those 2 things, plus the opportunity to drive more people into the program to convert existing lift ticket buyers into the program, to take prospects, new people to Vail Resorts into the program, we think all of that is a real positive.

And then I think on the lodging side, it's a great offer in terms of the 20%, but it also -- right, it does need to be a direct booking to the company when you -- to get that. So obviously that eliminates for us a lot of the OTA and other indirect commissions that we have to pay. And in many of these businesses, like rental, like lodging, we are competing in the marketplace and this gives us a very compelling opportunity for that. And I think on the group ski school and on food, we really have an opportunity, I think, to drive capture. So again, we looked at it, obviously, felt like it was a very compelling proposition.

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

Rob, just wanted to follow-up on Felicia's question on kind of the balance of the season. Is there any way you can help us just from a kind of a framework standpoint. Think about what's lapsed in terms of visitation or profitability from kind of the week of March 8 on?

And then second, I guess, as you look out and if we do see some kind of larger impacts in terms of skier visitation, can you maybe just walk us through what kind of levers do you have on the mountain to maybe manage a bigger pullback in visitation?

Yes, I think I can't really give guidance to parse through kind of different points in the season. Obviously, I think you have a sense for, historically, Q2 and Q3. So you can obviously look at that. But I would say, spring break and Easter is an important time period for us. So I think it is -- it's true that this is happening towards the end of our season, but it's also still impacting an important part of the season.

Yes, I really wouldn't see -- we are going to be providing a full comprehensive experience at all of our resorts. Throughout this time period, we are not going to be pulling back on any component of it. I think if we do see some pullback on the revenue side, a lot of that will fall to the bottom line. It's just -- obviously, we want to ensure that whoever comes to our resorts has an outstanding experience. So at this point, not something that we're looking to. And again, I think we're also anticipating that, yes, our resorts are going to continue to fully operate normally and providing the best experience possible to our guests.

Great. And then just on that $11 million shift in the pass allocation. I think that was the sales. Is it fair to think of that drops straight down to profits? Or is there some offset there?

Yes, yes, largely drops through. I mean this is incremental -- not incremental, it's how we allocate our pass revenue. And so it's really just a shift between Q2 and Q3. Doesn't affect the overall year, but really it's just, as Rob said, a reflection of the historical shift in visitation that we've seen moving more visits into the spring break and Easter period.

We'll now take our next question from Robert Aurand with KeyBanc Capital Markets.

Rob Aurand on for Brett Andress today. I guess, just to start, you talked about the slowdown during the weekend in March 8. Was there any difference to call out between destination and non-destination resorts?

I would say actually -- and maybe this was mentioned earlier, and I don't know that I fully answered it. But yes, we're not -- it is not the exact amount of impact across every single resort. So we are definitely seeing fluctuations. But in part, that's just normal fluctuations between our regions. And so I don't want to get into kind of parsing it apart. But I think overall, we're definitely seeing certainly on the destination visit side, right, that kind of modest decline, and then -- but something that's been increasing as the days go on. And in our minds, just given some of the media itself and the chatter, we expect to likely continue and obviously, potentially get worse, we don't know at this point yet.

Okay. And then can you give us any color on the forward booking trends you're seeing? And I guess, the extent you're seeing cancellations and to the extent you are seeing cancellations kind of domestic cancellations versus international cancellations?

Yes. I think at the same time that we -- from -- if I look back to last weekend, so that kind of March 1, 2 time period, also saw kind of a slowdown in bookings, an increase in cancellations, both. Now I would say the trending also, yes, definitely went was markedly more negative, for sure. And the absolute numbers compared to kind of occupancy over the next couple of weeks is not huge either. Because, obviously, as you would imagine, by this point in the year, we do have, right, a fair amount of occupancy already booked into most of our properties. So -- but certainly, the trending doesn't look good. And -- but I -- I would imagine if that continued, yes, it will have a bigger impact as you get later into March and into Easter, if it continues. And again, I don't know whether it will.

We'll now take our next question from Alex Maroccia with Berenberg.

Let's first start to see the damage to areas around the Australian resorts as well as some of your peers. Given the loss of the infrastructure and the evacuations in that area, are you seeing any issues that could come early in the 2020 season?

Whether it's an inability to prepare properly or just a lack of demand?

No, we're not seeing any -- don't expect any operational issues from the fires down there in their summer and expect to, yes, be fully operational and ready to go for the ski season.

On the demand side, I think at this point, in the absence of coronavirus and oil prices and things like that, certainly, I think we might there have been some economic activity impact for all of Australia because of the fires potentially. But I don't think we were thinking that was going to be a huge issue going into June, July and August. I think at this point, harder for me to tell exactly how the current economic environment is going to around coronavirus and natural resources, how that will affect Australia. I think that's just too early to tell at this point.

All right. That all makes sense. And then secondly, Peak Resorts mountain saw a pretty minimal amount of snow this winter. Can you discuss if there are any major increases in costs associated with snow making? And then if you saw any swings in attendance at some of the larger mountains?

Yes. Actually, we're quite pleased with how we've done with Peak and its first year. Obviously, we're still in the process of integrating the resorts. So in that process, but certainly pleased with how it did relative to the portfolio of resorts that make up Peak, certainly, a strong year, as we call it out in terms of the Northeast resorts, including our existing resorts in the Northeast offset a bit by, yes, a weaker snowfall, as you mentioned, in the Midwest that had some more operational disruptions that offset some of that favorability in the Northeast.

We'll hear now from Patrick Scholes with SunTrust.

I apologize if I missed it. Are you able to quantify what EBITDA impact would be from now to the end of the ski season, saying that's April 19 in Vail? If the trends from the virus that you've seen over the past week were to continue to that point?

Yes. I think we're intentionally not commenting on guidance for the rest of the season or the rest of the year for that matter because of the uncertainty in that, it's -- I don't think there's -- there's not a simple way to take the trend from the last week and understand and parse it well enough. Because even in the last week, I think we saw it shifting. And I think it will definitely take us a little more time to assess that. I think we're hopeful to provide more color around this before the -- before March 18. But again, I don't even -- at that point, obviously, it will somewhat depend on what's happening. But at the minimum, we'll be able to provide a little bit more color, like we have today on kind of the actual results we're seeing.

Okay. And then a second question here. About a month ago, there was some negative press, and there is online video showing what would appear to be excessive lift lines at some of your chairs at Vail. Do you see that as sort of a onetime, one-off event? Or are you going to be taking any steps or specifically what in the future to prevent that? Or does just the limitation of how many cars per day can go through the tunnel sort of take care of that problem with overcrowding itself?

Yes. No, I think -- obviously, we're very aware of that situation. And I think there were 2 kind of different pieces to it. One piece was a long line earlier in the morning at the Gondola One, huge powder day, people kind of lining up early to get on and go up skiing. That line really dissipated relatively quickly, not that long into the day. I think that's something that the Gondola One is a very high capacity envelope. We feel good about that. And on huge powder days, sometimes we're going to get a little bit of that line, not as concerning. I think the line at Chair 5 was definitely a, yes, not a great guest experience, that's probably an understatement. Obviously, not something that we want to have happened for any of our guests. At the same time, we have, again, this huge powder day and unfortunately, didn't have the opportunity to open more of our terrain. So we only have that area open -- a lot of our guest service folks were kind of up as people were skiing down trying to alert them that the line was going to be pretty big when they got to the bottom. And I think our takeaway from that is, yes, that was a very one-off situation. Really, the snow cycle that created that was one of a handful over the last decade or more in terms of the intensity of it. And -- but I do think we take away from a guest commutation. I think we have a responsibility to be upfront with our guests. And I think one of the things we're currently talking about is how do we have a singular effort that make sure that every guest knows exactly what to expect when and where. And that's something that we're going to absolutely be continuing to improve upon, and we'll make sure we'll be more dialed in for next year.

We'll move on to David Katz with Jefferies.

Thank you for the info. The candor, as always, is greatly appreciated. As we're sitting here trying to work with our model for the rest of this year, can you help us just talk about what aspects within the Mountain segment, the breakdown between fixed and variable expenses and help us think through that aspect of it?

Sure. I think, obviously, for us, we have a -- I think, we have a number of pieces to it. So obviously, we've got the revenue piece. To the extent that goes down, we have things like credit card fees and U.S. fire service fees that will come down as that goes down. If we have lower ski school usage, then obviously, the ski school labor piece would come down if we have lower retail sales or lower food sales and obviously, we'll have savings on cost of goods. But a lot of the other components of the resort are either actually fixed, like utilities or overhead are essentially fixed, which is most of our seasonal population that we need to really open the mountain. And so there's not a ton that we would do to reduce any of that because we want to ensure that we have the best experience for our guests. And that's something that we do all season long, and we're not going to pull back from that at all. And -- so I do see, as you look through it, we also obviously have a large component of our revenue that season pass revenue. And so that portion of the revenue is really fixed as well and some have locked in. And so really, the question is, yes, our paid lift ticket revenue kind of daily lift ticket revenue plus any ancillary uptick when people are there. Is that helpful to provide a basic overview?

It is helpful. Can I -- if you don't mind, I'd like to just follow it up a bit more directly. It sounds as though more than half, meaningfully more than half of the total cost base that we look at is of a more fixed nature with the remainder being variable with whatever revenue we wind up with?

Yes. I think to -- yes, to put a finer point on it, yes, I think as Rob articulated, there's aspects of our cost structure which are outlined in our financial statements, including cost of goods sold that are highly variable. But for the most part, the remainder of our labor is not outside of some circumstances with businesses like ski school or otherwise. But as Rob articulated, the majority of our cost structure is labor. And yes, a good portion of that in the short term is a, yes, is a fixed cost of running the operations.

We'll hear now from Marc Torrente with Wells Fargo Securities.

So prior to the impact of coronavirus, how was international visitation broadly trending maybe from the major source markets, Japan, Asia, Australia and South America?

Yes, I think in the U.S. that the international business has declined over the last number of years, largely because of a strong U.S. dollar, travel restrictions and challenges, I think, being another component. So I think it was soft, but not a material driver of our U.S. performance. I think it was definitely a decline this year. A large part of that has been the weather. I think another component of it has been that we've definitely seen as the cost in Whistler, but not really -- partially lift tickets, but really about the total vacation costs with lodging and other pieces. We've definitely seen some shifting there. But I would say the primary driver on international visitation to the company is Whistler and the primary driver of that was really conditions.

Okay. And then when you have these less favorable conditions in a particular season, how does that impacts visitation and the comparable period for the next year or the year after that?

I think we've seen a variety of different examples going back. I think we have seen, I think, of Tahoe, as a good example, which had some very challenging year like in 2014, 2015, and but then with good conditions came roaring back and we saw all of the demand come back. So we do tend to see a pretty strong rebound from that. I think sometimes there could be a lag effect as it relates to advanced bookings or pass sales, things like that. But again, we have tended to, again, historically navigate through that without really seeing that immediate impact.

I do think one of the things that we are seeing though is that early season versus late season, which is there does seem to be some migration from the early season to the late season which, I think, absolutely could be about conditions, which, obviously, over the last number of years have been much more reliable on the late season. With coronavirus, not sure, we're going to be able to assess that again exactly this year. But certainly, when you look back over the last couple of years, that's been a constant trend. But again, have not seen any longer-term degradation because of bad conditions in one region or another.

Okay, great. And then just lastly, you did provide some commentary on capital allocation going through this market volatility. I don't think you repurchased any shares during the quarter. But should we expect you guys to step in more here? And then does any of this change your view on M&A near term?

Yes, I think on -- obviously, every quarter, we assess that with the Board. And so we'll be doing that again this quarter, but I really can't comment beyond that. And no, I think we remain -- one of the things we wanted to make sure it comes across is remain fully committed to investing in our resorts for the long term and strategic opportunities when they make sense, and we're going to continue to be aggressive on that front. Obviously, disciplined and thoughtful on value and all the rest of it, just like we always are. And -- but obviously, we're going to look for those unique opportunities and absolutely still pursue them.

We'll take our next question from -- our final question from Brad Boyer with Stifel.

So just to expand on the M&A question, Rob. As we look at it here, historically, over the last several years, this has been a pretty good seasonal time to get involved with the stock. And I think some of that coincides with the fact that you guys execute a lot of your M&A in the off-season period. So as you assess sort of the landscape today, you obviously -- you've built out the lower end by kind of going in and doing the Peak deal last year and getting closer to the customer. You guys are in almost every major ski market here in North America today. Could you just give us a sense of if there -- if anything out there sort of looks like a strategic priority on the M&A front here as we look at it today?

Are there any regions where you'd like to have more exposure -- would you like to have more exposure in sort of the regional ski business? Just any additional color you could provide around that would be helpful.

Yes, I think that there's definitely going to be, I think, strategic opportunities, select opportunities in North America, whether it could be a destination resort or it could be a regional resort, obviously, that's something, you're right, I think we're also very cognizant of the fact that we have a very strong network right now, and a lot of our focus actually is on integrating and ensuring that we get the maximum benefit of the network that we already have. But there's no doubt that there are a handful of opportunities we would always pursue. We still remain very focused on opportunities in Japan or opportunities in Europe. And so all of that is still very true. But yes, we're going to remain disciplined and disciplined and focused in the context of whatever the environment is that we're operating in. But I would say that a lot of our -- kind of where we're putting a lot of our attention is actually really leveraging the network that we've built, moving people to advance commitment and kind of this business shift that we've been going through over the last number of years, is there's some huge -- we've seen huge benefits over a number of years and moving kind of from where we were in season pass a number of years ago to where we are today, but there's a whole kind of new set of benefits that we can actually get by moving to kind of a whole another level. And we think even in a more challenging economic or travel environment, we think that opportunity still exists and still represents a major opportunity for us because of the focus that people will have on value and our ability to deliver on that. And so we'll be thoughtful about M&A as to where it can really help in that strategy, just like we always have been.

Helpful. And then, Michael, just as a housekeeping item. Could you remind us what you have left on the existing authorization on the buyback front? That's all for me.

Yes. I'll have to go look that up and get back to you on the specific number of shares. It's actually just to follow up on that. We have about 1.5 million shares remaining.

And that does conclude today's question-and-answer session. I'd like to turn the conference back over to Mr. Katz for any additional or closing remarks.

Thank you, operator. This concludes our fiscal second quarter 2020 earnings call. Thanks to everyone who joined us today on the conference call. Please feel free to contact me or Michael directly, should you have any further questions. Thank you for your time this afternoon, and goodbye.

Thank you. That does conclude today's conference. Thank you all for your participation. You may now disconnect.