Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Vail Resorts Fiscal 2013 First Quarter Results Conference Call. [Operator Instructions] This conference is being recorded today, December 4, 2012. I would now like to turn conference over to Rob Katz, CEO of Vail Resorts. Please go ahead, sir.

Thank you. Good morning, everyone. Welcome to our Fiscal First Quarter 2013 Earnings Conference Call. Joining me on the call this morning is Jeff Jones, our Chief Financial Officer. Before we start, let me remind you that some information provided during the 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 morning, along with our remarks today, are effective only today, December 4, 2012, 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 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 first quarter fiscal 2013 results. The first fiscal quarter is historically a loss quarter since our mountain resorts are not open for winter ski operations during the period. The quarter is driven primarily by our late summer mountain activities, dining, retail and lodging operations and administrative expenses for our year-round employees. In the first quarter of fiscal 2013, we observed improving trends in our summer business in both our Mountain and Lodging operations from improved summer visitation in our mountain resorts, driving increased summer activities revenue, higher lodging RevPar and improved dining revenues. Our Lodging business also benefited from increased group business at Keystone, as well as the addition of a new national park property, Flagg Ranch. This was partially offset by lower results at our Grand Teton…

Thanks, Rob. Good morning, everyone. This morning, we released our financial results for first quarter of fiscal 2013 ended October 31, 2012, and filed our quarterly report on Form 10-Q with the Securities and Exchange Commission, which you can find available now at our vailresorts.com website. Now turning to the highlights of our results. Overall, as Rob mentioned, we're very pleased with the improving trends in our summer business in both our Mountain and Lodging operations. In our Mountain segment, strong summer visitation supported revenue growth in summer activities and dining operations, including group and wedding business. Dining revenues increased $0.7 million or 12.9% in the first quarter of fiscal 2013 compared to the same period in the prior year, with the addition of Kirkwood contributing $0.4 million to total dining revenues. Retail/rental revenues decreased by 0.9% compared to the same period in the prior year, primarily due to lower sales at pre-ski season sales events compared to the prior year's record sales from these events, partially offset by strong growth from our online retail business, O2 Gear Shop. First quarter Mountain reported EBITDA worsened to a loss of $55.2 million in fiscal 2013 from a loss of $48.5 million in fiscal 2012, primarily driven by the impact of seasonal losses from the Kirkwood and Skiinfo acquisitions, as well as normal expense increases. In our Lodging segment, net revenue, excluding payroll cost reimbursement for managed hotel properties increased $3.5 million or 7.6% for the 3 months ended October 31, 2012, compared to the 3 months ended October 31, 2011. This was primarily driven by incremental room revenue from Flagg Ranch, which we were awarded in November, 2011, and increasing group business, primarily in our Keystone resort and increased dining revenue, partially offset by a decrease in GTLC transient revenue due…

Thanks, Jeff. I wanted to conclude today by looking ahead to the upcoming year. All 7 of our mountain resort properties are now open and ramping up operations as we prepare for the holiday season. We've seen tremendous conditions in Tahoe with numerous storms bringing heavy snowfall to the area and allowing us to open all of our Tahoe resorts early and offering significantly more terrain than at this time in years past. In fact, a new storm has just rolled into the Tahoe area over the past few days and has brought an additional 3 to 5 feet of snow to our resort in Tahoe. In Colorado, things have been drier and warmer than normal. However, it's important to remember that it still very early in the season with plenty of time for conditions to improve for the holidays. With the recent christening of the new gondola, we are underway with the 50th anniversary season of Vail Mountain, named Gondola One, as a tribute to Vail's original gondola that was the first gondola in Colorado when it opened in 1962. The new 10-person, state-of-the-art gondola, with heated cabins and WiFi, is the first of its kind in North America and is the fastest gondola of its type in the world. With the new gondola and with events all year long that celebrate this milestone anniversary, this year is sure to be a memorable season for Vail. This year at Keystone, we are excited to offer Kids Ski Free, which allows children 12 and under to ski for free for the duration of their stay when staying 2 or more nights in Keystone's owned or operated lodging. Keystone's offer is a rarity in the ski industry with no blackout days, giving families the freedom to take advantage of the special…

[Operator Instructions] Our first question is from the line of Shaun Kelley with Bank of America.

This is actually Andrew Didora in for Shaun. Can you tell us how your -- would you guys be able to tell us how your holiday bookings are trending versus last year and maybe give us a sense of how they've changed since you last issued guidance back in September?

I don't think we're going to be breaking out bookings by period, but what I would say is that bookings are slightly worse than when we were last talking about bookings in September. I don't -- it's not -- they're not hugely different, but I would say we're seeing some negative trends, more so in Colorado. And that's what why we updated and shared the kind of color on the guidance that we did today.

Great. And then just, I guess, maybe taking -- looking at a more bigger picture approach. I guess, the booking patterns that you're seeing seems to be a bit different than what we're hearing out of some of the hotel companies talking about group bookings up in the mid- to high-single digits. Do you feel like your booking trends are being affected by anything specific in the macro? Or do you think it's a little bit more snowfall related to date?

Yes, I think we do feel that it's related to weather and a little bit of a hangover from last year. I think if you look at some of what we announced about the summer, our Lodging booking trends, our group business at Keystone would follow a lot of what you were just sharing for some of your other companies. I think there's a bit of a hangover. And with a little bit of a drier early season, we're not that surprised to see a little bit of sluggishness in those bookings. We're also quite confident that we look at the entire season, that with normal weather patterns coming back, that the booking pattern will continue. It's also important to remember that last year, some of our issues really were not booking related in terms of people who were staying in lodging. It was how many days they were skiing when they were out. So we feel, again, not shocking that with a little bit drier early season, and I think people thinking back to last season, that they're going to delay a little bit in their bookings. But that's -- at the moment, it's hard to always tell but that's where we will put more of the emphasis on -- from an explanation perspective.

The next question is from the line of Felicia Hendrix with Barclays.

Jeff, you've been a legend. We'll miss you.

Thanks, Felicia.

Sure. So just changing topics for a second. A lot of investors, including us, would have hoped that last night's announcement regarding Whistler would have come from you. So Rob, I'm just wondering if you have any comments on that transaction. Were you involved with the process at all? I do understand that the multiple paid is expensive, but Whistler is a marquee asset. So wondering if you could comment there and then also some views on if you think there's other M&A opportunity out there?

Sure. Yes, I guess what I'd say -- maybe I'll say 3 things. One, Whistler, obviously, is a terrific mountain resort. And so we, obviously, certainly feel like it's a terrific asset in the industry. I'm not going to comment on that specific transaction, but I'll comment generally. I would say for us and given our approach to the business, it would be more difficult for us to take a minority stake in a publicly traded company and achieve kind of the revenue, pass, marketing, cost synergies that we typically like to bring to bear. I guess I wouldn't say we'd never do it. But I would say that, that those structural situation, I think, makes it very difficult for us. And as we said on many occasions, our company strategy is not necessarily to take ownership of high-quality resorts just to own them. It's really to acquire resorts that we feel we can drive significant strategic value. And to do that in a minority position without control in a publicly-traded company is always going to be a much tougher effort. So -- but again, I'm not commenting on that transaction, but I'd say in general, I don't think you'll see us doing those types of deals in the future. On M&A in general, absolutely. I think we are continuing kind of our standard approach, which is an aggressive approach. I would say that I think we're very focused on looking for opportunities where we feel they can help drive our pass sales business. And I think, as we look going into the season, again, while pass sales slowed a little bit, I would say that the -- going into this season obviously with 4%, 5% units and 8% revenue growth on something that was 40% of our lift ticket revenue last year is a tremendous strength. And I would say that, I think, any time that we think there are acquisitions out there, big or small, like Kirkwood, where we feel they can help drive our business, I mean, that's something we're going to look hard at.

That's helpful. And just kind of segueing from that a bit, in the absence of kind of doing anything in the near term, your liquidity is extremely strong. And I know that this is a board decision, but can you perhaps comment on your thoughts on maybe using some of that liquidity to increase dividends, maybe a special dividend given the timing what's going on now politically, stock buybacks? How are you thinking about perhaps mitigating some of the near-term weakness that you see with generating value for shareholders with your liquidity?

I think, absolutely. I think that you've seen us over the years absolutely focused on both our dividends and our repurchases. And I think that's something that we'll keep a close eye on as we go forward. I think we tend to take a long-term view on both of those efforts, and I think that has played out over the last 5 years. So I don't think we necessarily look to react quickly to one thing or another. But I think our view is that the best thing for shareholders is to instead of jumping from one thing to another, take a methodical approach. And I think you're going to see us absolutely continue to do that both with dividend increases, potentially special dividends, and with a buyback. I think we have seen some other companies try and react to this "political" situation or tax situation. I think we did move our dividend payment date up into this year for that reason. But again, I think, we're taking a little bit longer-term view rather than trying to react to something in the next few weeks.

Okay, that's fair. And then just finally, this thing on Keystone's promotion that you had mentioned is interesting. Just wondering, is that something that you planned all along? Or is that more of a reaction to just try to stimulate some business in the time frame that we're in now?

No, this is something that we planned all along. I think it's really related to our repositioning of Keystone and highlighting the family part of its business and the affordable part of its business. And so to us, obviously, allowing kids to ski free has a terrific message, very much supporting the overall brand that we're trying push forward. It also -- given that you do need to stay in our lodging for it, obviously, that helps drive that business. And quite frankly, we do find that people, if they have the opportunity to bring their kids, especially if they're saving a little money on the lift ticket, it makes them more likely to put their kids in ski school. Obviously, that's a terrific opportunity for us as well. We've seen a good pick up. I mean, I think Keystone right now on bookings is our best-performing resort. And I think we absolutely attribute it to that promotion, which we launched a few months ago. So that was not something that was launched recently.

The next question is from the line of Will Marks with JMP Securities.

Jeff, best of luck to you.

Thank you.

Thank you for everything. I wanted to follow up and a little bit of it is beating a dead horse. But on the guidance, with only a very small part of the season over, your lowering the guidance seems -- doesn't seem right in that you have -- you try to model a fairly wide range. So with that said, is the disappointment more in the weather, pass sales, bookings? I think it sounds like it's a little of everything, but maybe you can expand a little bit?

Sure. I think -- when we issued the guidance back in September, I think one of the key things that we said was that it was absolutely predicated on normal weather. And I think what you're hearing us say today is that while we think right now, obviously, in Tahoe we have great weather. In Colorado, it's a little below normal because it's drier and warmer. And I think our view is that while that may not, in any way, affect the actual conditions for most of the season, it can affect some bookings. And so I think we're being upfront and transparent with the fact that we do see that as an impact. What we're also saying is that we're going to readdress our guidance at the end of the holiday period. But commenting on that, given what we're seeing at the moment, yes, absolutely, it could be more difficult. So I think what we felt like was, we're going to be -- and I would agree with you that trying to come up with a new range today, given that we're still early in the season, it would be a challenge. But I think also being transparent, that we're seeing some trends that could affect the range, as I think what we're supposed on these calls. And ultimately, I think because we're giving a little bit of that color, we made the decision that we would positively say to everyone that we will readdress guidance after the holidays, which is not something we always do. And what that will ultimately be will depend upon how our results pan out for the holidays. But you're right, we are very early. And I would say probably to this, without thinking of the hangover from last year, I think our view of where we are right now would be different. Does that make sense?

Yes, that's perfect. A couple other things. One on KSL. This is probably a tough one. But if we think back of when Intrawest was roughly 10 ski resorts, when that broke up essentially, did you see -- can you tie any increase in your pass sales to that? I know you're probably not trembling about it, a new competitor combining a bunch of results -- or resorts. But did you see any change after that?

No. But Intrawest really has not had a comprehensive destination season pass product that combined all those different resorts. I mean -- and I think in Colorado, the products that they have, have largely remained the same, so that hasn't changed. I would say this, I think it would seem logical that if other people came out with competitive season passes that that would be a negative for us. But candidly, I would make the counterargument, which is I think our bigger opportunity is that the ski market starts to realize that the way they should ski is buying a season pass. And I actually think the more competitive products that are out there, the more people -- more companies that are out there making that point to guests, I think that will help kind of continue to increase overall season pass penetration. And I'm quite comfortable that our collection of resorts and what we offer will always be incredibly competitive. And so to me, if ultimately this purchase by KSL -- and again, we haven't heard anything in terms of what they're going to do but if they do come out with some better products, things like the Mountain Collective that other -- that I think people heard about, we think that's a positive and I think ultimately speak to the fact that our strategy is the right strategy for creating long-term growth and stability in the industry, and the fact that others follow along, I think, is overall good for the business.

Okay, great. I have one final question. Just on -- I'm curious what you're seeing from the international guest at this point, if you care to comment?

I think we're seeing continued strength. And so I think we feel like that continues to be a very good part of our business. And I think that's probably right now most obviously reflected in the international pass sales, which were one of our best-performing segments when you look at each one of our markets.

The next question is from the line of Steve Wieczynski with Stifel, Nicolaus.

This is actually Brad in for Steve. I want to echo the sentiments that everyone have expressed with Jeff for all the help you provided. Just a couple of questions here. One, I was reading earlier today that the Vail City Council was to review some Ever Vail plans later this evening, I believe. Should we infer from that, that you guys are any further along in breaking ground on any new real-estate-type projects?

No. And the reason for that is I think that the timing of when we would start Ever Vail has not, at this moment, been dictated by the approval process within the local community. That's a very important process. We're hopeful that we may get to a good outcome maybe after tonight or shortly thereafter. But I would say that the timing of Ever Vail has really been dictated as much by the market. So even if the town of Vail had approved this project a year ago, we would not have started it because we need to see a greater velocity of sales in Vail. And I think the second-home resort market has to come back further for us to launch a project with the size of Ever Vail. With that said, there's no question that having an approval is a positive event because it allows us and, candidly, the community to react more quickly when the market does come back. And I think when you look over the last cycle, including a lot of success that our company had getting going early, starting first in the cycle is one of the most critical things for success. And I think on the Real Estate side, I think we feel like our company has good opportunities, how we finance them, how we invest them, all that left to be seen. But I think no question that it helps our resorts and communities to get going early, so we're pleased with any progress we can make on that front.

Okay. That's great. And then second, have you guys seen any change of late given the kind of soft start to the snow flying out in Colorado? Have you seen any change in the velocity of cancellations ahead of the holiday season? I don't know if you could comment at all on that.

I can't comment on that. But I'd say that I think what we're commenting on in our release, in our comments today is that the slight decline in bookings, I think, reflects the essence of what you're talking about. Cancellations -- I think, we really are focused on kind of that net booking amount. Cancellations of the holidays are not something that candidly goes up a lot because, obviously, there's a lot of protection in there for us just like any other hotel company around that time period. But there's no question that that dynamic plays out a little bit, I think, in some of the numbers you're seeing today. I also think it's important to remember obviously that when you look at the last year and you look at comps that we're going up again, from about this point forward, they get a lot easier obviously because last year was a tough year. And so what I would say, I think we feel very good about our ability to make significant progress over last year. I think the only question that we raise in our commentary today is just without kind of a great start to the weather pattern, even though it's not related to the conditions on the ground for the holidays, there's no question that it makes it a little bit more difficult to achieve the target we set out.

The next question is from the line of Tim Hamby with Janco Partners.

First question is about the Peak 6 expansion. I want to see if this final rejection of the appeals is the final approval you need? And if so, when will you begin working on the project? Do you still expect to have it complete by next season? And then a follow-up on that is just your expectations around the impact of the increased capacity there. Do you expect it to have more an impact of total skier visits or your ability to push prices through there at Breckenridge?

Our Peak 6, what I'd say is that there is a period after the forest service disposes of the appeal that someone is allowed to file a judicial action in the courts against our efforts. We don't know of anybody doing that, but that period has not expired. What I would say is that barring us being prevented from doing so by a court, we intend to start the project. We feel like we've been through a terrific process, lots of community input. We spent over 5 years kind of bringing this to we think a very successful conclusion for everybody. We believe it's a terrific opportunity for Breckenridge. That adds over 20% new terrain, a tremendous amount of intermediate pole skiing, very similar to the type of experience you'd have at China Bowl, Poppyfields at Vail. We think this is a real terrific addition to Breckenridge that we think helps Breckenridge. If you look out over the next decade, we think, absolutely, it will make a difference in their performance. So we think this is a huge success. There are not many terrain expansions of this size that happened anywhere in the ski industry, let alone, I think, in Colorado. And I think it's a testament to the great work by everybody. So ultimately, we intend to be under construction on this soon and have it ready for next year again, but I would have to acknowledge that there is most certainly the possibility of a court telling us not to, in which case, obviously, we would follow that.

Good luck to you going forward, Jeff. Thanks for all you've done.

Thank you.

The next question is from the line of Smedes Rose with KBW.

I just wanted to ask you on the Real Estate side. You mentioned that 4 Ritz-Carlton condos closed in the quarter. And were there any sales thus far in your fiscal second quarter either there or at Breckenridge?

Smedes, we haven't had any additional closings. But we do have at least one more deal under contract, another one that we anticipate getting the signed contract on in the next day or so, so good momentum, I think, from that standpoint on those continued Ritz units. And then I think you know we really launching our marketing and sales efforts as the season starts, both in Breckenridge and in Vail. But I think we've been very pleased, especially in the Vail movement and in the off-season, continued sales of the Ritz units, which really bodes well, I think, going into the season.

And then just has there been any changes just on the air lifts side either into Eagle or, I guess, Denver that have been positive? Or is it kind of the same amount of seats year-over-year? Any comments there on getting people in?

Yes, I think in Denver, no negatives there. I think, if anything, there's been continued expansion with Southwest. We have no service actually out of Tokyo. Even in the international side, I think we're starting to see again a momentum there. I'll throw my hat in the ring for trying to get a nonstop from Beijing one day. That would be very nice for Denver. But I think the good news is on DIA, that's continuing to really make good progress. And I think Eagle, we did see some flights come out of the Denver to Eagle connection, so I think there was kind of pull back in some of that capacity. Net-net, we don't -- overall, we actually feel comfortable with some of those changes, I think, to air lift coming into our resorts, so we don't see that as being a negative effect.

Ladies and gentlemen, that is all the time we have for questions. I will turn it back over to Mr. Rob Katz for any closing remarks.

Thank you, operator. This concludes our Fiscal First Quarter 2013 Earnings Call. Thanks to everyone who joined us on the conference call today. Please feel free to contact me or Jeff directly should you have any further questions. Thank you for your time this morning, and goodbye.

Ladies and gentlemen, this does conclude the conference call. If you'd like to listen to a replay of today's conference, please dial 1 (800) 406-7325 or (303) 590-3030, and entering the access code of 4575583. Thank you for your participation. You may now disconnect.