Good day, and welcome to the Vail Resorts’ Fourth Quarter and 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, Chief Executive Officer. Please go ahead, sir.

Thank you. Good morning, everyone. Welcome to our fiscal 2015 year end 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, September 28, 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 annual report on Form 10-K 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 fiscal 2015 results. We achieved another year of strong resort revenue and resort reported EBITDA growth as we continue to leverage our network of world class resorts and the connection they create with our guests. We are very pleased to complete the year with resort reported EBITDA excluding Perisher results and the non-cash gain on the Park City litigation settlement of $342 million which was within our original guidance range and in line with our updated guidance for March. The results reflect the benefit of our geographic diversification and our season pass products that allowed us to deliver these results despite the challenging conditions throughout the season at our resorts in Tahoe and in Utah this spring. Our season pass revenue growth of 20.9%, excluding Perisher continues to…

Thanks, Rob and good morning. As Rob mentioned, we are very pleased with the results from fiscal 2015 and we are excited about the opportunities for Vail Resorts in fiscal 2016. For fiscal 2015, resort net revenue was $1.4 billion, an increase of 12.7% compared to the prior fiscal year. Resort reported EBITDA, excluding the non-cash gain on the Park City litigation settlement, increased to $349.4 million for fiscal 2015, a 30% increase compared to the prior fiscal year. Perisher contributed $7.4 million of resort reported EBITDA in the period from the acquisitions closing on June 30 to the end of fiscal 2015, which includes $5.7 million of transaction duty and transition costs. Mountain reported EBITDA, excluding Perisher results and the non-cash gain on the Park City litigation settlement, increased $68.2 million, or 27.1% to $320.3 million compared to the prior fiscal year. Our mountain results benefited from the acquisition of Park City, strong guest spending on ancillary services, and the continued success of our targeted marketing efforts in driving increased destination visitation, particularly to our Colorado resorts and in season pass sales growth. The growth was offset by the challenging conditions we faced throughout the season at our Tahoe resorts and the spring in Utah. Lodging reported EBITDA increased 29.6% to $21.7 million for fiscal 2015 compared to the prior fiscal year. Lodging segment net revenue increased $12.3 million, driven by a 250 basis point improvement in occupancy and a 5.3% increase in average daily rate resulting in a 12% improvement in revenue per available room at our owned and managed properties. Real estate reported EBITDA improved $0.1 million to a loss of $6.9 million for fiscal 2015 compared to the prior fiscal year. We continue to see positive momentum and strong demand in the resort real estate markets…

Thanks Michael. We are proud of our fiscal 2015 results and the transformational changes that took place for our company this year and I would like to thank everyone at Vail Resorts for making that possible. The passion of our employees is what lies at the core of our success and all of our efforts to re-imagine the mountain resort experience. Our commitment to continuing to deliver an experience of a lifetime to our guests remained unwavering – remains unwavering and over the past few months, we have made significant capital improvements across our network of resorts, including significant investments in Utah as well as lift and snowmaking making improvements at our other resorts along with technology investments that will benefit our entire company. We believe investments of this nature are a true differentiator for our guests, a key driver of our growth and critical to our long-term success. We are very excited about the upcoming ski season and welcoming guests to all of our resorts. At this time, Michael and I would be happy to answer your questions. Operator, we are now ready for questions.

Thank you. [Operator Instructions] We will go first to Joel Simkins at Credit Suisse.

Hey, guys. It’s Ben on for Joel.

Hi, Ben.

Hey, can you talk about what you are doing to actively incent consumers in Australia to come to the U.S. this year?

Sure. So obviously, I mean we have had an effort obviously over many years, of course to reach out to consumers across Australia. Australia is one of our top markets before we did the Perisher acquisition. But what we now have is obviously a significant number of season pass holders. And obviously – so we have data on them, we know how to contact them, we can have a more thoughtful dialogue with them. And right now we – obviously many of these pass holders are going to get an incredible deal by essentially skiing in the United States for free. And so now our job is to basically go out and convince them to come here this season. And doing that through both obviously reminding them of the great offer that they now have through their season pass and then also as we always do using packages and special offers to try and bring them here. I think we really we have had a quantum improvement in the way that we can approach Australian guests and while there is no doubt that the currency headwinds will be something we have to get over. We think it puts us way ahead of where we would be had we not done this acquisition.

Got it. That’s helpful. And then one more we have seen a few head-ons recently regarding softening the consumer, especially in lodging, your forward guidance in pass sales clearly do not reflect this, I was curious do you have any comments in this front and just how you would describe the strength of your consumer – the customer?

Yes. I mean again at this point, we are not seeing any softening in consumer interest. I think we had a fairly strong summer season as well. I did not see that – we are not seeing that in our bookings or in our pass sales. I think one of the benefits that we have obviously is other parts of the travel industry one of the things they are struggling with is not just the demand side, but the supply side. And so as people build new rooms obviously that starts to bring down some of their metrics and one of the benefits we have right now is that there has not been any new supply added to the mountain resort industry and so that we get to – and the fact that we continue to improve the experience at our resorts, the fact that we continue to improve all of our marketing efforts, our season pass is that much more attractive to people this year versus last year. I think all of that leads into some of the numbers you are seeing and some of our expectations for this upcoming season.

Got it. That’s really helpful. That’s all for me. Thanks a lot.

We will move next to Joe Edelstein with Stephens Inc.

Hi, good morning, Rob and Michael.

Hi, Joe.

I was curious just about the mix from your destination guests just what did that look like as a percentage for your overall year as you look back and then also curious if you have broken that down ever by country and kind of where you are seeing the biggest gains?

So, what I say is our destination guests last year were very strong and we saw that particularly in Utah and in Colorado obviously, in Tahoe was a very tough year. So, destination visitation there was down as we have already reported. When you look at our international visitation that ranges anywhere from 12% to 15% of our total skier visits…

Total destination.

Sorry, total destination visits. And we saw I’d say last year we saw growth in almost every market. I think with the currency changes that we are seeing for this year is the strong U.S. dollar, I think that puts a lot more pressure on the Canadian and on the UK market for us. I think we still are seeing good growth and good strength in the Mexican market and obviously with our acquisition of Perisher and the season passes that are out there, we still have high expectations from the Australian market. I think the Brazilian market in addition to the currency issue obviously they are having their own economic issues. So, I think that will present a challenge. But when you add all that up with our U.S. destination business, we still feel very positive about the upcoming season.

Yes, I appreciate that comments there. And Michael, I believe you said that Perisher is likely to come in a little bit better than what you had previously thought at least in terms of Australian dollars. Did you give that amount and we can obviously watch the FX rates going forward off of that number then?

Yes. So, nothing specific on that, but certainly given the success of season pass sales and the results that we have seen from Perisher during their ski season this year, we certainly feel optimistic relative to the previous guidance we provided.

Thanks. And if I could ask just one more and maybe come back to the lodging segment, it did perform better than what we were looking for this quarter and the guidance does look like it’s going to come in a bit above where we were modeled as well. So, can you maybe just even breakdown some of the key assumptions there, the ADR, RevPAR you kind of spoke to some of the strengths at least this past quarter – past year, but anything going forward would be helpful there?

Yes. So, we don’t give specific guidance on that, but I would say that our expectation is that we will outperform many of the industry benchmarks that we are seeing. And again that’s based on the bookings we are seeing today. Again, I think that’s based on the supply demand equation that we see, not only in the mountain resort industry, but obviously even in our lodging business as well. There has not been anywhere near the supply added to the lodging business in mountain resorts as there has been in other parts of the hotel industry. So at this point, again, with the economy staying where it is, we feel like we would outperform the other benchmarks out there both for upper and luxury.

It sounds guest then. Good luck this next year.

Thanks.

We will take our next question from Shaun Kelley at Bank of America Merrill Lynch.

Hey, good afternoon guys. Just wanted to see if I could touch briefly on I think Rob in the prepared remarks you gave some good detail about growth from some of your regional guests and I know you said to lead off the destination guests for season pass was really the driver, but if I go back to what you said I think I caught it and you said strong in Utah, solid in Colorado and modest in Tahoe, but modest declines in Tahoe, but better than expected. Is that the right characterization of each of those three regions?

Yes. I would say – yes, I think we were really pleased with all of our segments candidly and – but I think Colorado is obviously a part with destination right the largest market, but obviously the most mature market and so we saw pretty strong growth from Colorado market, which I think reflects the kind of offering we have here, the marketing efforts and also the fact that the economy in Denver and in Colorado is very strong. I think the addition of Park City has been incredibly well received in Utah. So, we are seeing very strong growth there. And in Tahoe where I think obviously we had more modest expectations, because of the snowfall last year, I think even though we are seeing declines, they are less than what we would have expected, which I think reflects the commitment and the loyalty that people have there, I am sure reflects in part the fact that there is an expectation at this point that this season could be relatively strong. But I think skiers and riders out in that market Bay Area the economy there is still strong. I think they know that in a huge season they want to have that pass and they want to have that connection and I think we are seeing that play out right now.

Great. And then just sort of the follow-up on this topic then, could you talk a little bit about penetration rates for season pass in Utah versus Colorado? I mean, Colorado obviously has had a strong season pass culture that’s been adopted probably 15 plus years at this point. But where do you think Utah sits in them and is there meaningful room to kind of increase penetration of the pass even from here at least to the local and Salt Lake City community?

Yes. So, I would say, yes, the penetration within the Utah market is much, much lower than it is in Colorado and to your perspective is much smaller than the Colorado market. So, what I would say is that we definitely – we do believe that there is upside, continued upside in the Utah market though I would say if I was ranking the different markets, I would say the destination market is by far our top priority where we have even more penetration opportunity and obviously it’s a much larger market. So, I would say, the Utah market I think provides more opportunity, but it doesn’t compare to I think the opportunity that we have – that we have throughout the rest of the markets around the world. And even within Colorado, the Colorado market is so much bigger that the gains that we can drive just with the strong economy there can actually even outweigh increasing penetration in Utah.

Great. That’s it from me guys. Thank you very much.

Thanks.

We will move next to Anthony Powell at Barclays.

Hi, good morning guys. On the real estate, you have done very well this year to close lot of Ritz units and One Ski Hill Place units and you are almost done there. What does that look like going forward? Would you do ever Vail or are we going to restarting that, you are solving puzzles, how do you expect that do this to kind of evolve over the next few years?

Well, I think we have a handful of units in both of the existing projects that obviously we still have to sell. I would say we have some other kind of real estate inventory of various resorts, which are now starting to move. We have been seeing sales at Red Sky branch, the golf course just outside of Beaver Creek. But then we have development land parcels, so you have started to see us sell some of these development parcels again. And we have conversations ongoing in almost every one of our markets on these parcels. So, what I think you will start to see is kind of little bit more lumpy sales of these parcels, but the big benefit from these sales is not only obviously the cash we may get in, but is the upgrade that we can make to the resorts. So, typically with these sales and with these projects, we get new restaurants, new retail stores, new guest-facing ticket windows or ski school areas for people to check-in and book. And so really what we see is that we don’t see our real estate business ever returning to where it was in the last cycle. We feel like it continues to generate cash, but be much more modest, but the big benefit comes with the improvements that get driven at the resorts.

Alright, great. Thank you. That’s it from me. Good results.

Thanks.

We will go next to Afua Ahwoi at Goldman Sachs.

Hi, good morning. Just a few questions from me. First, on the costs that I continue to take on maybe can you give us some buckets of where those are coming from and what do you think that looks like in the next few years, how much they continue to take out? And then on your growing cash balance over the next few years if you were to prioritize or at least give us a view on what you are prioritizing in terms of use of cash, whether it’s share buyback, dividend increases, acquisitions, where would that bucket fall?

Yes. I think on the cost side, I think what we have been very focused on is the financial discipline of growing our business while keeping our cost structure in check and appropriate for the size of the business. And so our margin expansion over the last two years as we mentioned has been over 500 basis or what we expect will be over for fiscal 2016 over 500 basis points of improvement in 2 years. And so it’s really a focus on growing the business and then keeping our cost structure as in check and as disciplined as possible to ensure that we are driving as much flow through as we can appropriate for the business’ growth.

Yes. And I would say on the capital allocation piece, I think the Board continuously looks at that. And there is no doubt that as we continue to pay down debt I think that becomes a higher priority for the Board and it’s something they are looking at very carefully. And I think, we look at all avenues obviously. We do have a buyback in place. We have obviously continued to increase our dividend pretty significantly over the last number of years. And I think we have made a commitment that to returning capital to shareholders and not letting our leverage get too low for the kind of business that we are in at the same time obviously we are going to preserve flexibility for potential acquisitions or potential investments. But obviously with the size of our company and the kind of cash flow that we are generating, I think that balance is definitely shifting where the return of capital competes can become a bigger part of what we are doing.

Got it. And actually just a follow-up on that on the Tahoe and Utah given that your guidance you have said you expect sort of normal conditions, if you were to quantify what would that mean for a recovery in those markets, is it sort of in line with typical recovery, a little more conservative, just trying to get a sense of maybe what’s embedded in your guidance from the recovery point from those two markets?

I would say for Tahoe, we did put out information for fiscal ‘15 as to what the revenue mix was versus expectation. And I would say that we are expecting to make up a chunk of that, but not all of it in fiscal 2016. So I would say our expectations for Tahoe going into this year are certainly an increase over last year. But the expectations of lower than the expectations that we have last year and that’s just to reflect whatever potential overhang may exist in the market. I said for Utah, the shift there is probably a smaller portion versus the benefit that we see coming to Utah from combining the two resorts and the kind of guest impact that can make. So I would say, it’s hard to quantify that certainly a piece of the growth that we expect for fiscal 2016, but it’s not – but I would say the bigger story in Tahoe is definitely the combination in Utah. Sorry, bigger story in Utah is definitely the combination of the two resorts and the impact that will have.

And we are as we said in our prepared remarks maintaining the level of guidance that we had put out before last season for the combined resorts are essentially sticking with what we thought we would be able to achieve from the combination originally.

And that’s for Utah.

Correct.

Yes, got it, alright. Thank you.

Thanks.

We will take our next question from Matthew Brooks at Macquarie.

Good morning guys. You mentioned in your comments a few times I think that Canada and UK were weaker, but Mexico is stronger, can you elaborate a little bit more on that, what were the sources of weakness and strength in those markets relative to the currency?

Well, I guess what I would say is obviously the U.S. dollar is strong versus almost every market. So I think it impacts every market. I think we – but how that translates into advanced bookings has been we have seen differences. So I think with Canada and the UK obviously little bit more price sensitive guests. And I would say that we are seeing more sluggish bookings from those two markets, more sluggish pass sales in those two markets. And yet we are seeing strength in the Mexican market. So I can’t really quantify that, because we don’t give specific details on individual markets. But I would say, it’s not that surprising to us. I think when we have talked about currency in the past, I think we have said that we felt broadly the Latin American market was more resilient, a little bit more protected I think from some of those gyrations where I think certainly Canada and the UK and even Australia is more impacted by them. But obviously, with the Perisher acquisition we have a unique opportunity to drive growth there that doesn’t exist in the UK and Canada.

Okay. And just sort of a follow-up, your forward bookings for Australia to the U.S. are they better or worse than what you thought [ph]?

Are they – I would…

And you would have had some expectation of what they would be and then you can see what they are at this point?

So what I would say is they are definitely outperforming what we would expect given the currency. But I would say that there is no doubt that the currency is still impacting the Australian market. But I think we are definitely seeing the strength of this acquisition and it is outperforming very clearly I think markets like the UK and Canada. And candidly we do ultimately have expectations of growth from that market. I don’t know that we could see the same from the UK and Canada at this point.

Yes. And has your team down in Australia given any guidance of whether they think is it they are impacted by the weak economy, the Australian economy is not doing so well, has that impacted the high end travelers down there?

So at this point, I think the currency impact is probably the bigger one. Candidly, we are not seeing the – yet we are not seeing or can’t pick out I would say the impact of the Australian economy in the numbers that we are seeing. I would also say that obviously the economy over the winter in Australia, which was July and August we saw pretty strong results at Perisher and did not see any impact from any kind of economic sluggishness in Australia. So we are pretty – I think we walked away from July and August feeling like that Perisher customer is still wanting to travel and so that strongly bodes well for the U.S. And I think it makes, one it’s important to point out and it may seem obvious, but we are selling a pass in Australia, the Epic Australia Pass before the Perisher Freedom Pass that is priced in Australian dollars. And so I mean, not really is the Australian guest getting the opportunity to ski in the U.S. and in Australia on one pass, but it’s a pass that’s priced in Australian dollars. So we do feel like that really adds to the opportunity that we have from Australia. Again really does contrast in all the metrics that we are seeing and in our expectations versus let’s say the UK and Canada.

Okay, that’s really good. Another small question I know it’s not a big part of the business, your golf business that’s about 10%, is that just because you had some more visitors playing more golf, can you add any small bit of color there?

Yes. So it’s definitely a very small part of the business. But I would say it’s we saw very strong activity and tourism in our mountain resorts over the summer. And I would say that the golf business directly flows from that rather than golf trends on their own. Obviously there is some of that. But I would say really that’s a sign that goes along with some of our other numbers. Lodging business is well that highlights the strength of summer tourism into our mountain resorts.

Okay. Thank you very much.

We will go next to Chris Agnew with MKM Partners.

Thanks very much. Good morning, just wondering to follow-up on international inbound demand, what is the level of visibility you have at this stage of the year and what’s your level of confidence in the international trends that you talked about? Thanks.

I would say that we ultimately, I mean we have I would say a relatively small window. I mean we are still relatively early even though the international guest tends to book in advance we are still relatively early in that booking cycle. And obviously, we can see season pass sales, we can see bookings that come to our center reservation systems and then we can see bookings into our own lodging properties. But that does not provide a full picture for each one of our resorts and so I would say our window into the international business is limited just like it is for some of the other. That said, we believe it’s enough that these trends that we are talking about are real and certainly not just anomalies and makes sense and they actually go – they very much follow what we would had expected given these currency dynamics. Now how that will play out over the rest of the year, obviously season, really depends upon how currency moves from where we are and then ultimately have the economies in these various international destinations play out. But again, I think if you would have – if you would just told us the currency six months ago, I think saying yes weakness in Canada and the UK, strength in Mexico and relative strength in Australia that actually would have been our guests. And so I think we feel like those are probably headed in the right direction. But again obviously, lots can change between now and as the season unfolds.

Thanks. And then the final question just on the Epic Discovery, what are the opportunities to expand that maybe to other resorts and what and how will you consider additional investments? Thanks.

Sure. So, I would say our focus right now is on Vail Heavenly and Breckenridge. In terms of adding new activities, we have spent a lot of time in the planning for those resorts and we really feel like there is a huge opportunity over the next couple of years to drive significant EBITDA from those two resorts. And I think what we said a number of years ago, we still believe, which is the other resorts, Keystone, Beaver Creek, Northstar, we think there is an opportunity to add select new activities, which would be impactful, but nowhere near the same impact as Vail Breckenridge and Heavenly. And in Park City Canyons, I would say there we have – first of all, Park City is even before we purchased it was much further along, because it’s on private land, much further along than any of our other resorts in terms of its summer business. And we do think there is opportunity to do even more Park City, but right now our focus is on the combined resort and obviously bringing the two brands together and the experience together.

Thank you.

Thanks.

And that does conclude today’s question-and-answer session. At this time, I will turn the conference back over to management for any closing remarks.

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