VAIL RESORTS INC

Previous wording

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended July 31, 2023 (“Form 10-K”) and the Consolidated Condensed Financial Statements as of January 31, 2024 and 2023 and for the three and six months then ended, included in Part I, Item 1 of this Form 10-Q, which provide additional information regarding our financial position, results of operations and cash flows. To the extent that the following MD&A contains statements which are not of a historical nature, such statements are forward-looking statements, which involve risks and uncertainties. See “Forward-Looking Statements” below. These risks include, but are not limited to, those discussed in our filings with the Securities and Exchange Commission (“SEC”), including the risks described in Item 1A. “Risk Factors” of Part I of our Form 10-K, which was filed on September 28, 2023.

Current wording

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended July 31, 2023 (“Form 10-K”) and the Consolidated Condensed Financial Statements as of April 30, 2024 and 2023 and for the three and nine months then ended, included in Part I, Item 1 of this Form 10-Q, which provide additional information regarding our financial position, results of operations and cash flows. To the extent that the following MD&A contains statements which are not of a historical nature, such statements are forward-looking statements, which involve risks and uncertainties. See “Forward-Looking Statements” below. These risks include, but are not limited to, those discussed in our filings with the Securities and Exchange Commission (“SEC”), including the risks described in Item 1A. “Risk Factors” of Part I of our Form 10-K, which was filed on September 28, 2023.

Previous wording

In the Mountain segment, the Company operates the following 41 destination mountain resorts and regional ski areas (collectively, “Resorts”):

Current wording

In the Mountain segment, the Company operates the following 42 destination mountain resorts and regional ski areas (collectively, “Resorts”), including Crans-Montana Mountain Resort, which was acquired subsequent to April 30, 2024 (see below for additional information):

Previous wording

Additionally, the Mountain segment includes ancillary services, primarily including ski school, dining and retail/rental operations, and for our Australian ski areas, including lodging and transportation operations. Mountain segment revenue is seasonal, with the majority of revenue earned from our North American and European ski operations occurring in our second and third fiscal quarters and the majority of revenue earned from our Australian ski operations occurring in our first and fourth fiscal quarters. Our North American and European Resorts typically experience their peak operating season for the Mountain segment from mid-December through mid-April, and our Australian ski areas typically experience their peak operating season from June to early October. Consequently, our first and fourth fiscal quarters are seasonally low periods as most of our North American and European ski operations are generally not open for business, and the activity of our Australian ski areas’ peak season and our North American and European summer operating results are not sufficient to offset the losses incurred during these seasonally low periods. Revenue of the Mountain segment during the first and fourth fiscal quarters is primarily generated from summer and group related visitation at our North American and European destination mountain resorts, retail/rental operations and peak season Australian ski operations. Our largest source of Mountain segment revenue is the sale of lift tickets (including pass products), which represented approximately 60% and 58% of Mountain segment net revenue for the three months ended January 31, 2024 and 2023, respectively.

Current wording

Additionally, the Mountain segment includes ancillary services, primarily including ski school, dining and retail/rental operations, and for our Australian ski areas, including lodging and transportation operations. Mountain segment revenue is seasonal, with the majority of revenue earned from our North American and European ski operations occurring in our second and third fiscal quarters and the majority of revenue earned from our Australian ski operations occurring in our first and fourth fiscal quarters. Our North American and European Resorts typically experience their peak operating season for the Mountain segment from mid-December through mid-April, and our Australian ski areas typically experience their peak operating season from June to early October. Consequently, our first and fourth fiscal quarters are seasonally low periods as most of our North American and European ski operations are generally not open for business, and the activity of our Australian ski areas’ peak season and our North American and European summer operating results are not sufficient to offset the losses incurred during these seasonally low periods. Revenue of the Mountain segment during the first and fourth fiscal quarters is primarily generated from summer and group related visitation at our North American and European destination mountain resorts, retail/rental operations and peak season Australian ski operations. Our largest source of Mountain segment revenue is the sale of lift tickets (including pass products), which represented approximately 62% of Mountain segment net revenue for both the three months ended April 30, 2024 and 2023, and approximately 59% and 58% of Mountain revenue for the nine months ended April 30, 2024 and 2023, respectively.

Previous wording

Lift revenue is driven by volume and pricing. Pricing is impacted by absolute pricing, as well as both the demographic and geographic mix of guests, which impacts the price points at which various products are purchased. The demographic mix of guests that visit our North American Resorts is divided into two primary categories: (i) out-of-state and international (“Destination”) guests and (ii) in-state and local (“Local”) guests. The geographic mix depends on levels of visitation to our destination mountain resorts versus our regional ski areas. For the three months ended January 31, 2024, Destination guests comprised approximately 55% of our North American destination mountain resort skier visits (excluding complimentary access), while Local guests comprised approximately 45% of our North American destination mountain resort skier visits (excluding complimentary access), which compares to 54% and 46%, respectively, for the three months ended January 31, 2023. Skier visitation at our regional ski areas is largely comprised of Local guests. Destination guests generally purchase our higher-priced lift tickets (including pass products) and utilize more ancillary services such as ski school, dining and retail/rental, as well as lodging at or around our mountain resorts. Additionally, Destination guest visitation is less likely to be impacted by changes in the weather during the current season, but may be more impacted by adverse economic conditions, the global geopolitical climate, travel disruptions or weather conditions in the immediately preceding ski season. Local guests tend to be more value-oriented and weather-sensitive.

Current wording

Lift revenue is driven by volume and pricing. Pricing is impacted by absolute pricing, as well as both the demographic and geographic mix of guests, which impacts the price points at which various products are purchased. The demographic mix of guests that visit our North American Resorts is divided into two primary categories: (i) out-of-state and international (“Destination”) guests and (ii) in-state and local (“Local”) guests. The geographic mix depends on levels of visitation to our destination mountain resorts versus our regional ski areas. For both the 2023/2024 and 2022/2023 North American ski seasons, Destination guests comprised approximately 57% of our North American destination mountain resort skier visits (excluding complimentary access), while Local guests comprised approximately 43% of our North American destination mountain resort skier visits (excluding complimentary access). Skier visitation at our regional ski areas is largely comprised of Local guests. Destination guests generally purchase our higher-priced lift tickets (including pass products) and utilize more ancillary services such as ski school, dining and retail/rental, as well as lodging at or around our mountain resorts. Additionally, Destination guest visitation is less likely to be impacted by changes in the weather during the current season, but may be more impacted by adverse economic conditions, the global geopolitical climate, travel disruptions or weather conditions in the immediately preceding ski season. Local guests tend to be more value-oriented and weather-sensitive.

Previous wording

Lift revenue consists of pass product lift revenue (“pass revenue”) and non-pass product lift revenue (“non-pass revenue”). For the three months ended January 31, 2024 and 2023, approximately 74% and 70%, respectively, of our total lift revenue recognized was derived from pass revenue. Pass revenue recognized year to date, which is primarily recognized in our second fiscal quarter, represents approximately 50% and 51%, of our total North American pass product revenue for the 2023/2024 and 2022/2023 North American ski seasons, respectively, with the remaining North American pass revenue almost entirely recognized as lift revenue in our third fiscal quarter ending April 30. The decrease in the portion of pass product revenue recognized year to date compared to the prior year to date period is primarily the result of unfavorable early season conditions in the current year, which were impacted by limited natural snow and variable temperatures that resulted in delayed openings, compared with strong conditions in the prior year. This variability in Resort opening dates resulted in an approximately $14 million reduction of recognized pass revenue for the three months ended January 31, 2024 compared to what we would have recognized had our Resorts been able to open on the same schedule as they did in the prior year. This is a timing difference that will largely reverse during our third fiscal quarter.

Current wording

Lift revenue consists of pass product lift revenue (“pass revenue”) and non-pass product lift revenue (“non-pass revenue”). For the nine months ended April 30, 2024 and 2023, approximately 66% and 61%, respectively, of our total lift revenue recognized was derived from pass revenue.

Previous wording

The performance of our lodging properties (including managed condominium rooms) proximate to our Resorts, and our Colorado resort ground transportation company, are closely aligned with the performance of the Mountain segment and generally experience similar seasonal trends, particularly with respect to visitation by Destination guests. Revenues from such properties represented approximately 94% of Lodging segment net revenue (excluding Lodging segment revenue associated with the reimbursement of payroll costs) for both the three months ended January 31, 2024 and 2023. Management primarily focuses on Lodging net revenue excluding payroll cost reimbursements and Lodging operating expense excluding reimbursed payroll costs (which are not measures of financial performance under GAAP) as the reimbursements are made based upon the costs incurred with no added margin and as such, the revenue and corresponding expense do not affect our Lodging Reported EBITDA, which we use to evaluate Lodging segment performance. Revenue of the Lodging segment during our first and fourth fiscal quarters is generated primarily by the operations of our NPS concessioner properties (as their peak operating season generally occurs during the months of June to October), as well as golf operations and seasonally low operations from our other owned and managed properties and businesses.

Current wording

The performance of our lodging properties (including managed condominium rooms) proximate to our Resorts, and our Colorado resort ground transportation company, are closely aligned with the performance of the Mountain segment and generally experience similar seasonal trends, particularly with respect to visitation by Destination guests. Revenues from such operations represented approximately 96% and 94% of Lodging segment net revenue (excluding Lodging segment revenue associated with the reimbursement of payroll costs) for the three months ended April 30, 2024 and 2023, respectively, and 79% and 81% of Lodging segment net revenue (excluding Lodging segment revenue associated with the reimbursement of payroll costs) for the nine months ended April 30, 2024 and 2023, respectively. Management primarily focuses on Lodging net revenue excluding payroll cost reimbursements and Lodging operating expense excluding reimbursed payroll costs (which are not measures of financial performance under GAAP) as the reimbursements are made based upon the costs incurred with no added margin and as such, the revenue and corresponding expense do not affect our Lodging Reported EBITDA, which we use to evaluate Lodging segment performance. Revenue of the Lodging segment during our first and fourth fiscal quarters is generated primarily by the operations of our NPS concessioner properties (as their peak operating season generally occurs during the months of June to October), as well as golf operations and seasonally low operations from our other owned and managed properties and businesses.

Previous wording

•The timing and amount of snowfall can have an impact on Mountain and Lodging revenue, particularly with regard to skier visits and the duration and frequency of guest visitation. To help mitigate this impact, we sell a variety of pass products prior to the beginning of the ski season, which results in a more stabilized stream of lift revenue. Additionally, our pass products provide a compelling value proposition to our guests, which in turn create a guest commitment predominately prior to the start of the ski season. Pass revenue increased approximately $34.3 million, or 8.3%, for the three months ended January 31, 2024 compared to the same period in the prior year, primarily due to increased pass product sales for the 2023/2024 North American ski season compared to the 2022/2023 North American ski season, partially offset by the impact of delayed Resort opening dates in the current year (as discussed above). Deferred revenue related to North American pass product sales was approximately $457.0 million as of January 31, 2024 (compared to approximately $398.0 million as of January 31, 2023).

Current wording

•Overall weather conditions, including the timing and amount of snowfall, can have an impact on Mountain and Lodging revenue, particularly with regard to skier visits and the duration and frequency of guest visitation. To help mitigate this impact, we sell a variety of pass products prior to the beginning of the ski season, which results in a more stabilized stream of lift revenue. Additionally, our pass products provide a compelling value proposition to our guests, which in turn create a guest commitment predominately prior to the start of the ski season. In March 2024, we began our season pass sales program for the 2024/2025 North American ski season. Pass product sales through May 28, 2024 for the upcoming 2024/2025 North American ski season decreased approximately 5% in units and increased approximately 1% in sales dollars as compared to the period in the prior year through May 30, 2023. Pass product sales are adjusted to eliminate the impact of foreign currency by applying an exchange rate of $0.73 between the Canadian dollar and U.S. dollar in both periods for Whistler Blackcomb pass sales. We cannot predict if these trends will continue through the 2024 North American pass sales campaign or the overall impact that pass sales will have on lift revenue for the 2024/2025 North American ski season.

Previous wording

•The economies in the countries in which we operate and from which we attract our guests may be impacted by economic challenges associated with rising inflation, increasing or elevated interest rates, geopolitical conflicts and financial institution disruptions and/or fluctuating commodity prices that could adversely impact our business, including decreased guest spending or visitation or increased costs of operations. Skiing, travel and tourism are discretionary recreational activities that can entail a relatively high cost of participation. As a result, economic downturns and other negative impacts to consumer discretionary spending may have a pronounced impact on visitation to our Resorts. We cannot predict the extent to which we may be impacted by such potential economic challenges, whether in North America or globally.

Current wording

•The economies in the countries in which we operate and from which we attract our guests may be impacted by economic challenges associated with rising inflation, prolonged elevated interest rates, geopolitical conflicts and financial institution disruptions and/or fluctuating commodity prices that could adversely impact our business, including decreased guest spending or visitation or increased costs of operations. Skiing, travel and tourism are discretionary recreational activities that can entail a relatively high cost of participation. As a result, economic downturns and other negative impacts to consumer discretionary spending may have a pronounced impact on visitation to our Resorts. We cannot predict the extent to which we may be impacted by such potential economic challenges, whether in North America or globally.

Previous wording

•As of January 31, 2024, we had $812.2 million of cash and cash equivalents, as well as $409.0 million available under the revolver component of our Eighth Amended and Restated Credit Agreement, dated as of August 15, 2018 and as amended most recently on August 31, 2022 (the “Vail Holdings Credit Agreement”), which represents the total commitment of $500.0 million less certain letters of credit outstanding of $91.0 million. Additionally, we have a credit facility which supports the liquidity needs of Whistler Blackcomb (the “Whistler Credit Agreement”). As of January 31, 2024, we had C$296.6 million ($220.6 million) available under the revolver component of the Whistler Credit Agreement, which represents the total commitment of C$300.0 million ($223.2 million) less letters of credit outstanding of C$3.4 million ($2.6 million). We believe that our existing cash and cash equivalents, availability under our credit agreements and the expected positive cash flow from operating activities of our Mountain and Lodging segments less resort capital expenditures will continue to provide us with sufficient liquidity to fund our operations.

Current wording

•As of April 30, 2024, we had $705.4 million of cash and cash equivalents, as well as $409.4 million available under the revolver component of our Ninth Amended and Restated Credit Agreement, dated as of April 24, 2024 (the “Vail Holdings Credit Agreement”), which represents the total commitment of $500.0 million less certain letters of credit outstanding of $90.6 million. Additionally, we have a credit facility which supports the liquidity needs of Whistler Blackcomb (the “Whistler Credit Agreement”). As of April 30, 2024, we had C$296.6 million ($215.5 million) available under the revolver component of the Whistler Credit Agreement, which represents the total commitment of C$300.0 million ($217.9 million) less letters of credit outstanding of C$3.4 million ($2.4 million). We believe that our existing cash and cash equivalents, availability under our credit agreements and the expected positive cash flow from operating activities of our Mountain and Lodging segments less resort capital expenditures will continue to provide us with sufficient liquidity to fund our operations. Additionally, on May 8, 2024, we completed an offering of $600.0 million in aggregate principal amount of 6.50% senior notes due 2032 in a private placement conducted pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended, and used the net proceeds, along with cash on hand, to fund the redemption of our $600 million 6.25% Notes due 2025 at a redemption price equal to 100% of their principal amount and all related fees, expenses and accrued but unpaid interest on May 15, 2024. The 6.50% senior notes due 2032 are guaranteed on a senior subordinated basis by certain of the Company’s domestic subsidiaries.

Previous wording

•On November 30, 2024, we announced that we had entered into an agreement to acquire Crans-Montana Mountain Resort (“Crans-Montana”) in Switzerland from CPI Property Group. Pursuant to the terms of the agreement, we will acquire (i) an 84% ownership stake in Remontées Mécaniques Crans Montana Aminona SA, which controls and operates all of the lifts and supporting mountain operations, including four retail and rental locations; (ii) an 80% ownership stake in SportLife AG, which operates one of the ski schools located at the resort; and (iii) 100% ownership of 11 restaurants located on and around the mountain. Subject to closing adjustments, the enterprise value of the resort operations is expected to be CHF 118.5 million. We expect to fund the purchase price for the acquired ownership interest of the resort operations through cash on hand when the transaction closes. We plan to include access to Crans-Montana on select Epic Pass products for the 2024/2025 ski season. We cannot predict the ultimate impact the acquisition of Crans-Montana will have on our future results of operations.

Current wording

•On May 2, 2024, we acquired Crans-Montana Mountain Resort (“Crans-Montana”) in Switzerland from CPI Property Group for a cash purchase price of CHF 97.2 million ($106.8 million), after adjustments for certain agreed-upon items. We acquired (i) an 84% ownership stake in Remontées Mécaniques Crans Montana Aminona SA, which controls and operates all of the lifts and supporting mountain operations, including four retail and rental locations; (ii) 100% ownership of SportLife AG (increased from the previously announced ownership stake of 80%), which operates one of the ski schools located at the resort; and (iii) 100% ownership of 11 restaurants located on and around the mountain. The acquisition was funded with cash on hand. We plan to include unlimited and unrestricted access to Crans-Montana on the Epic Pass for the 2024/2025 ski season, as well as provide access on other pass products. We cannot predict the ultimate impact the acquisition of Crans-Montana will have on our future results of operations.

Previous wording

Below is a summary of operating results for the three and six months ended January 31, 2024, compared to the three and six months ended January 31, 2023 (in thousands):

Current wording

Below is a summary of operating results for the three and nine months ended April 30, 2024, compared to the three and nine months ended April 30, 2023 (in thousands):

Previous wording

Mountain Reported EBITDA increased $21.5 million, or 5.4%. The increase was primarily attributable to an increase in North American pass product revenue, driven by an increase in pass product sales for the 2023/2024 North American ski season compared to the prior year, partially offset by the timing of recognition of pass product revenue, which resulted in an approximately $14 million decrease due to delayed openings for a number of our Resorts in the current year as a result of challenging early season conditions across our North American Resorts in all regions compared to strong early season conditions in the prior year. The challenging conditions also led to a decline in both Local and Destination skier visitation, which resulted in decreases for non-pass revenue and other ancillary lines of business, which were partially offset by decreases in labor and labor-related benefits and other variable expenses. Mountain segment results also include $2.1 million and $0.3 million of acquisition and integration related expenses for the three months ended January 31, 2024 and 2023, respectively.

Current wording

Mountain Reported EBITDA increased $31.7 million, or 5.2%. The increase was primarily attributable to an increase in North American pass revenue, driven by an increase in pass product sales for the 2023/2024 North American ski season compared to the prior year, as well as the timing of recognition of pass revenue, which resulted in an approximately $14 million increase for the three months ended April 30, 2024 due to delayed opening for a number of our Resorts in the current year, which shifted the recognition of pass revenue into the third fiscal quarter as compared to the prior year (and which offsets against the decrease recognized in the three months ended January 31, 2024). Additionally, the increase was driven by strong growth in spending per visit in our ski school and dining ancillary lines of business compared to the prior year. These increases were partially offset by the impact of challenging conditions at our North American resorts for a large portion of the season, which led to a decline in both Local and Destination skier visitation and resulted in decreases for non-pass revenue and retail/rental revenue, as well as broader industry normalization post-COVID following record visitation in the U.S. during the 2022/2023 ski season, and increases in general and administrative expenses and other variable expenses associated with increased revenues. Mountain segment results also include $1.3 million and $0.1 million of acquisition and integration related expenses for the three months ended April 30, 2024 and 2023, respectively.

Previous wording

Lift revenue increased $10.9 million, or 1.8%, primarily due to an increase in pass revenue of 8.3%, which was primarily driven by an increase in pass product sales for the 2023/2024 North American ski season. This increase was partially offset by a decrease in non-pass revenue of 13.1%, driven by a decrease in skier visitation across all regions, which was impacted by limited natural snow and variable temperatures that resulted in delayed openings and reduced terrain offerings as compared to the prior year, and particularly impacted our resorts in the Eastern U.S. and Tahoe, partially offset by an increase in non-pass ETP of 10.8%.

Current wording

Lift revenue increased $35.6 million, or 5.0%, primarily due to an increase in pass revenue of 13.7%, which was primarily driven by an increase in pass product sales for the 2023/2024 North American ski season. This increase was partially offset by a decrease in non-pass revenue of 5.7%, driven by a decrease in skier visitation across all regions, which was impacted by challenging conditions at our North American resorts for a large portion of the season, as non-pass visitation was slow to improve and did not return to normal historical guest behavior in March and April once conditions did improve, particularly at Whistler Blackcomb, and broader industry normalization post-COVID following record visitation in the U.S. during the 2022/2023 ski season, partially offset by an increase in non-pass ETP of 9.9%.

Previous wording

Ski school revenue increased $3.2 million, or 2.6%, primarily driven by increased revenue at our resorts in Colorado and Park City, which benefited from an increase in guest spending per visit. Dining revenue decreased $3.8 million, or 4.4%, primarily due to decreased revenue from on-mountain dining venues at our resorts in the Eastern U.S. and Tahoe, partially offset by an increase in guest spending per visit. Retail/rental revenue decreased $23.8 million, or 14.9%, for which retail sales decreased $15.9 million, or 17.2%, and rental sales decreased $7.9 million, or 11.6%. The decrease in both retail and rental revenue was primarily driven by a decrease in skier visitation, as well as our exit of certain leased store operations which we operated in the prior year, which resulted in a reduction in revenue of approximately $8.4 million.

Current wording

Ski school revenue increased $16.1 million, or 11.1% and dining revenue increased $7.8 million, or 7.7%, which each benefited from an increase in guest spending per visit across our North American resorts, as well as initiatives to increase guest capture of ancillary spending. Retail/rental revenue decreased $11.7 million, or 8.7%, for which retail sales decreased $6.6 million, or 10.0%, and rental sales decreased $5.1 million, or 7.5%. The decrease in both retail and rental revenue was primarily driven by our exit of certain leased store operations which we operated in the prior year, which resulted in a reduction in revenue of approximately $7.8 million, as well as a decrease in skier visitation which impacted sales at our on-mountain retail outlets and the impact of broader industry-wide customer spending trends which negatively impacted retail capture.

Previous wording

Other revenue mainly consists of other mountain activities revenue, employee housing revenue, guest services revenue, commercial leasing revenue, marketing revenue, private club revenue (which includes both club dues and amortization of initiation fees), municipal services revenue and other recreation activity revenue.

Current wording

Other revenue mainly consists of other mountain activities revenue, employee housing revenue, guest services revenue, commercial leasing revenue, marketing revenue, private club revenue (which includes both club dues and amortization of initiation fees), municipal services revenue and other recreation activity revenue. Other revenue increased $3.5 million, or 6.7%, primarily driven by other mountain activities revenue as a result of an increase in guest spending per visit across our North American resorts.

Previous wording

Mountain segment operating results for the six months ended January 31, 2024 and 2023 are presented by category as follows (in thousands, except ETP):

Current wording

Mountain segment operating results for the nine months ended April 30, 2024 and 2023 are presented by category as follows (in thousands, except ETP):

Previous wording

Mountain Reported EBITDA decreased $25.9 million, or 8.4%. The decrease was primarily driven by: (i) our Australian operations, which experienced weather-related challenges that impacted terrain during the 2023 Australian ski season, compared to record visitation and favorable snow conditions in the prior year season; (ii) challenging conditions at our Resorts across all regions during the 2023/2024 North American ski season compared to the strong early season conditions in the prior year, leading to a decline in both Local and Destination skier visitation, which resulted in decreases for non-pass revenue and other ancillary lines of business, partially offset by a decrease in labor and labor-related benefits; and (iii) a decrease in summer revenue at our North American Resorts, primarily as a result of decreased summer visitation from lower demand for summer mountain travel and weather related challenges compared to the prior year. Mountain Reported EBITDA also decreased as a result of an increase in general and administrative expenses (which includes the incremental impact of our prior year investments in employee wages), an increase in repairs and maintenance expense and the impact of inflation. The decrease was partially offset by an increase in pass product sales for the 2023/2024 North American ski season compared to the prior year, partially offset by the timing of recognition of pass product revenue, which resulted in an approximately $14 million decrease due to delayed openings for a number of our Resorts in the current year. Mountain segment results also include $4.0 million and $2.9 million of acquisition and integration related expenses for the six months ended January 31, 2024 and 2023, respectively.

Current wording

Mountain Reported EBITDA increased $5.8 million, or 0.6%. The increase was primarily driven by an increase in pass revenue, driven by an increase in pass product sales for the 2023/2024 North American ski season compared to the prior year, as well as strong growth in spending per visit in our ski school and dining businesses compared to the prior year. These increases were partially offset by: (i) challenging conditions at our North American resorts for a large portion of the 2023/2024 ski season compared to the prior year, as well as broader industry normalization post-COVID following record visitation in the U.S. during the 2022/2023 ski season, which led to a decline in both Local and Destination skier visitation and resulted in decreases for non-pass revenue and retail/rental revenue, partially offset by a decrease in labor and labor-related benefits due to disciplined cost management in response to decreased skier visits, and other decreased variable expenses; (ii) our Australian operations, which experienced weather-related challenges that impacted terrain during the 2023 Australian ski season, compared to record visitation and favorable snow conditions in the prior year season; and (iii) a decrease in summer revenue at our North American Resorts, primarily as a result of decreased summer visitation from lower demand for summer mountain travel and weather related challenges compared to the prior year. Mountain Reported EBITDA also decreased as a result of an increase in general and administrative expenses (which includes the incremental impact of our prior year investments in employee wages), an increase in repairs and maintenance expense and the impact of inflation. Mountain segment results also include $5.3 million and $3.0 million of acquisition and integration related expenses for the nine months ended April 30, 2024 and 2023, respectively.

Previous wording

Other revenue mainly consists of summer visitation, other mountain activities revenue, employee housing revenue, guest services revenue, commercial leasing revenue, marketing and internet advertising revenue, private club revenue (which includes both club dues and amortization of initiation fees), municipal services revenue and other recreation activity revenue. Other revenue also includes Australian resort lodging and transportation revenue. Other revenue decreased $5.1 million or 4.1%, primarily driven by our Australian operations, which experienced weather-related challenges that impacted terrain in the current year, compared to record visitation and favorable snow conditions in the prior year. Other revenue at our North American Resorts also declined as a result of decreased summer visitation from lower demand for summer mountain travel and weather related challenges compared to the prior year.

Current wording

Other revenue mainly consists of summer visitation, other mountain activities revenue, employee housing revenue, guest services revenue, commercial leasing revenue, marketing and internet advertising revenue, private club revenue (which includes both club dues and amortization of initiation fees), municipal services revenue and other recreation activity revenue. Other revenue also includes Australian resort lodging and transportation revenue. Other revenue decreased $1.5 million, or 0.9%, primarily driven by our Australian operations, which experienced weather-related challenges that impacted terrain in the current year, compared to record visitation and favorable snow conditions in the prior year.

Previous wording

Operating expense decreased $16.9 million or 1.9%, which was primarily attributable to reduced labor hours at our North American Resorts in the current year as a result of challenging early season weather conditions, including limited natural snow and variable temperatures that resulted in delayed openings and reduced terrain offerings which impacted our ability to operate at full capacity, as well as disciplined cost management. Additionally, operating expense includes $4.0 million and $2.9 million of acquisition and integration related expenses for the six months ended January 31, 2024 and 2023, respectively.

Current wording

Operating expense increased $3.7 million, or 0.3%, which was primarily attributable to an increase in general and administrative expenses and repairs and maintenance expense, partially offset by reduced labor hours at our North American Resorts in the current year as a result of challenging weather conditions that existed for a large portion of the season, which impacted our ability to operate at full capacity, as well as disciplined cost management. Additionally, operating expense includes $5.3 million and $3.0 million of acquisition and integration related expenses for the nine months ended April 30, 2024 and 2023, respectively.

Previous wording

Labor and labor-related benefits decreased 5.4%, primarily attributable to reduced labor hours at our North American Resorts in the current year as a result of challenging early season weather conditions that impacted our ability to operate at full capacity, as well as disciplined cost management. Retail cost of sales decreased 14.4%, compared to a decrease in retail sales of 16.8%, reflecting decreased margins on retail products driven by higher sales of discounted inventory. Resort related fees increased 2.3% primarily as a result of an increase in revenues on which those fees are based. General and administrative expense increased 4.9%, primarily due to an increase in corporate overhead costs across nearly all corporate functions (which includes the incremental impact of our prior year investments in employee wages, which went into effect in October 2022), as well as an increase in marketing expense to drive incremental 2023/2024 North American pass product sales. Other expense increased 1.7%, primarily due to increased repairs and maintenance expense ($3.6 million), property taxes ($2.3 million), acquisition and integration related expenses ($1.1 million), tax and licensing fees ($1.0 million) and employee housing expenses ($1.0 million), including the impact of inflation, partially offset by decreased variable expenses associated with decreased revenues, including dining cost of sales ($3.8 million) and fuel ($1.8 million).

Current wording

Labor and labor-related benefits decreased 2.6%, primarily attributable to reduced labor hours at our North American Resorts in the current year as a result of challenging weather conditions that existed for a large portion of the season, which impacted our ability to operate at full capacity, as well as disciplined cost management. Retail cost of sales decreased 9.3%, compared to a decrease in retail sales of 14.4%, reflecting decreased margins on retail products driven by higher sales of discounted inventory. Resort related fees increased 3.6% primarily as a result of an increase in revenues on which those fees are based. General and administrative expense increased 5.9%, primarily due to an increase in allocated corporate overhead costs across nearly all corporate functions (which includes the incremental impact of our prior year investments in employee wages, which went into effect in October 2022, and the impact of updated allocations of general and administrative expenses between segments which offsets primarily with decreases in the Lodging segment). Other expense increased 3.2%, primarily due to increased repairs and maintenance expense ($4.2 million), property taxes ($3.5 million), professional services expense ($2.7 million), utilities expense ($2.3 million) and acquisition and integration related expenses ($2.3 million), including the impact of inflation, partially offset by decreased variable expenses associated with decreased revenues, including dining cost of sales ($3.0 million).

Previous wording

Mountain equity investment (loss) income, net primarily includes our share of (loss) income from the operations of a real estate brokerage company.

Current wording

Mountain equity investment income, net primarily includes our share of income from the operations of a real estate brokerage company.

Previous wording

Lodging Reported EBITDA increased $8.8 million, or 216.1%. Revenue from managed condominium rooms decreased $3.0 million, or 9.7%, primarily due to decreased demand, including the impact of decreased skier visitation driven by challenging weather conditions, as well as a reduction in our inventory of available managed condominium rooms proximate to our mountain resorts.

Current wording

Lodging Reported EBITDA decreased $0.6 million, or 3.7%. Revenue from managed condominium rooms decreased $3.0 million, or 7.9%, primarily due to a reduction in our inventory of available managed condominium rooms proximate to our mountain resorts, as well as decreased demand, including the impact of decreased skier visitation driven by challenging weather conditions at our North American resorts for a large portion of the season compared to the prior year. Other revenue decreased $2.2 million or 17.4%, primarily due to decreases in ancillary and other revenues.

Previous wording

Operating expense (excluding reimbursed payroll costs) decreased 13.8%. Labor and labor-related benefits decreased 16.1%, primarily due to a reduction in labor hours associated with decreased demand, as well as lower staffing required to support a reduced inventory of managed condominium rooms. General and administrative expense decreased 15.0% compared to the prior year, primarily due to a decrease in corporate overhead costs across nearly all corporate functions. Other expense decreased 8.6%, primarily due to the receipt of property tax refunds during the three months ended January 31, 2024.

Current wording

Operating expense (excluding reimbursed payroll costs) decreased 7.5%. Labor and labor-related benefits decreased 10.2%, primarily due to lower staffing required to support a reduced inventory of managed condominium rooms and a reduction in labor hours as a result of decreased demand.

Previous wording

Lodging segment operating results for the six months ended January 31, 2024 and 2023 are presented by category as follows (in thousands, except ADR and RevPAR):

Current wording

Lodging segment operating results for the nine months ended April 30, 2024 and 2023 are presented by category as follows (in thousands, except ADR and RevPAR):

Previous wording

Lodging Reported EBITDA increased $12.9 million, or 153.2%, driven by a decrease in labor and labor-related benefits primarily associated with strong cost management in the current year, as well as a decrease in general and administrative expense.

Current wording

Lodging Reported EBITDA increased $12.3 million, or 153.6%, driven by a decrease in labor and labor-related benefits primarily associated with strong cost management and lower staffing required to support a reduced inventory of managed condominium rooms, as well as a decrease in general and administrative expense.

Previous wording

Revenue from owned hotel rooms increased $1.7 million, or 4.6%, primarily due to an increase in ADR at GTLC. Revenue from managed condominium rooms decreased $3.9 million, or 8.8%, primarily due to decreased demand, including the impact of decreased skier visitation driven by challenging weather conditions, as well as a reduction in our inventory of available managed condominium rooms proximate to our mountain resorts. Dining revenue increased $1.7 million, or 5.6%, and other revenue increased $1.6 million, or 6.2%, each primarily due to improved park visitation at GTLC, driven by positive weather conditions which enabled increased ancillary product sales.

Current wording

Revenue from owned hotel rooms increased $1.6 million, or 3.1%, primarily due to an increase in revenue at GTLC as a result of higher ADR. Revenue from managed condominium rooms decreased $6.9 million, or 8.4%, primarily due to a reduction in our inventory of available managed condominium rooms proximate to our mountain resorts, as well as decreased demand, including the impact of decreased skier visitation driven by challenging weather conditions at our North American resorts for a large portion of the season compared to the prior year.

Previous wording

Operating expense (excluding reimbursed payroll costs) decreased 6.8%. Labor and labor-related benefits decreased 7.6%, primarily due to a reduction in labor hours associated with decreased demand, as well as lower staffing required to support a reduced inventory of managed condominium rooms. General and administrative expense decreased 10.2%, primarily due to a decrease in corporate overhead costs across nearly all corporate functions. Other expense decreased 3.0%, primarily due to the receipt of property tax refunds during the three months ended January 31, 2024.

Current wording

Operating expense (excluding reimbursed payroll costs) decreased 7.0%. Labor and labor-related benefits decreased 8.4%, primarily due to lower staffing required to support a reduced inventory of managed condominium rooms and a reduction in labor hours as a result of decreased demand. General and administrative expense decreased 8.8%, primarily due to a decrease in allocated corporate overhead costs across nearly all corporate functions, including the impact of updated allocations of general and administrative expenses between segments which offsets primarily with increases in the Mountain segment. Other expense decreased 3.4%, primarily due to the receipt of property tax refunds during the three months ended January 31, 2024, as well as decreases in variable expenses associated with the decrease in revenue at our managed condominium properties.

Previous wording

We did not close on any significant real estate transactions during the three months ended January 31, 2024. During the three months ended January 31, 2023, we closed on the sale of a land parcel in Keystone for $7.5 million, which was recorded within Real Estate net revenue, with a corresponding cost of sale of $5.1 million.

Current wording

We did not close on any significant real estate transactions during the three months ended April 30, 2024 and 2023.

Previous wording

During the six months ended January 31, 2024, we closed on the sale of a land parcel in Keystone, CO for $4.2 million, which was recorded within Real Estate net revenue, with a corresponding cost of sale of $3.6 million. Additionally, we recorded a gain on sale of real property for $6.3 million related to a land parcel sale in Beaver Creek, CO, which closed for proceeds of $6.5 million during the six months ended January 31, 2024. During the six months ended January 31, 2023, we closed on the sale of a land parcel in Keystone for $7.5 million, which was recorded within Real Estate net revenue, with a corresponding cost of sale of $5.1 million.

Current wording

During the nine months ended April 30, 2024, we closed on the sale of a land parcel in Keystone, CO for $4.2 million, which was recorded within Real Estate net revenue, with a corresponding cost of sale of $3.6 million. Additionally, we recorded a gain on sale of real property for $6.3 million related to a land parcel sale in Beaver Creek, CO, which closed for proceeds of $6.5 million during the nine months ended April 30, 2024. During the nine months ended April 30, 2023, we closed on the sale of a land parcel in Keystone for $7.5 million, which was recorded within Real Estate net revenue, with a corresponding cost of sale of $5.1 million.

Previous wording

Other operating expense for both the six months ended January 31, 2024 and 2023 was primarily comprised of general and administrative costs, such as labor and labor-related benefits, professional services and corporate overhead costs.

Current wording

Other operating expense for both the nine months ended April 30, 2024 and 2023 was primarily comprised of general and administrative costs, such as labor and labor-related benefits, professional services and allocated corporate overhead costs.

Previous wording

In addition to segment operating results, the following material items contributed to our overall financial results for the three and six months ended January 31, 2024 and 2023 (in thousands):

Current wording

In addition to segment operating results, the following material items contributed to our overall financial results for the three and nine months ended April 30, 2024 and 2023 (in thousands):

Previous wording

Interest expense, net. Interest expense, net for the six months ended January 31, 2024 increased $7.6 million compared to the same period in the prior year, primarily due to an increase in variable interest rates associated with the unhedged portion of our term loan borrowings under the Vail Holdings Credit Agreement.

Current wording

Interest expense, net. Interest expense, net for the nine months ended April 30, 2024 increased $8.4 million compared to the same period in the prior year, primarily due to an increase in variable interest rates associated with the unhedged portion of our term loan borrowings under the Vail Holdings Credit Agreement.

Previous wording

Provision for income taxes. At the end of each interim period, the Company estimates the annual effective tax rate and applies that rate to its ordinary quarterly earnings. The tax expense or benefit related to significant, unusual or extraordinary items that will be separately reported or reported net of their related tax effect are individually computed and recognized in the interim period in which those items occur. In addition, the effects of changes in enacted tax laws or rates or tax status are recognized in the interim period in which the change occurs. The effective tax rate for the three and six months ended January 31, 2024 was 27.6% and 32.3%, respectively, compared to 26.4% and 21.5% for the three and six months ended January 31, 2023, respectively.

Current wording

Provision for income taxes. At the end of each interim period, the Company estimates the annual effective tax rate and applies that rate to its ordinary quarterly earnings. The tax expense or benefit related to significant, unusual or extraordinary items that will be separately reported or reported net of their related tax effect are individually computed and recognized in the interim period in which those items occur. In addition, the effects of changes in enacted tax laws or rates or tax status are recognized in the interim period in which the change occurs. The effective tax rate for the three and nine months ended April 30, 2024 was 25.3% and 26.2%, respectively, compared to 26.6% and 25.7% for the three and nine months ended April 30, 2023, respectively.

Previous wording

The increase in the effective tax rate for the three and six months ended January 31, 2024 compared to the three and six months ended January 31, 2023 was primarily due to an increase in net unfavorable discrete items impacting the tax provision in the current period, including a reduction in deferred tax assets of $4.8 million. The increase in the effective tax rate for the six months ended January 31, 2024 compared to the six months ended January 31, 2023 was also due to a decrease in the impact of the lapse of the statute of limitations for an uncertain tax position compared to the prior year period ($6.3 million).

Current wording

The increase in the effective tax rate for the nine months ended April 30, 2024 compared to the nine months ended April 30, 2023 was primarily due to an increase in net unfavorable discrete items impacting the tax provision in the current period, including a decrease in the impact of the lapse of the statute of limitations for an uncertain tax position ($5.8 million) and a reduction in deferred tax assets ($4.8 million).

Previous wording

The following table reconciles net income attributable to Vail Resorts, Inc. to Total Reported EBITDA for the three and six months ended January 31, 2024 and 2023 (in thousands):

Current wording

The following table reconciles net income attributable to Vail Resorts, Inc. to Total Reported EBITDA for the three and nine months ended April 30, 2024 and 2023 (in thousands):

Previous wording

Changes in significant sources of cash for the six months ended January 31, 2024 and 2023 are presented by categories as follows (in thousands).

Current wording

Changes in significant sources of cash for the nine months ended April 30, 2024 and 2023 are presented by categories as follows (in thousands).

Previous wording

We generated $571.2 million of cash from operating activities during the six months ended January 31, 2024, a decrease of $34.3 million compared to $605.5 million generated during the six months ended January 31, 2023. The decrease in operating cash flows was primarily a result of an increase in income tax payments of approximately $36.0 million for the six months ended January 31, 2024 as compared to the prior year, driven by amounts in the prior year which offset our estimated payments made during the six months ended January 31, 2023, and did not recur in the current year period, including overpayments, net operating loss carryforwards and other deductions.

Current wording

We generated $681.0 million of cash from operating activities during the nine months ended April 30, 2024, a decrease of $45.9 million compared to $726.9 million generated during the nine months ended April 30, 2023. The decrease in operating cash flows was primarily a result of (i) an increase in income tax payments of approximately $32.2 million for the nine months ended April 30, 2024 as compared to the prior year, driven by overpayments, net operating loss carryforwards and other deductions in the prior year which offset our estimated payments made during the nine months ended April 30, 2023, and did not recur in the current year period, and (ii) an increase in cash interest payments.

Previous wording

Cash used in investing activities for the six months ended January 31, 2024 decreased by $139.9 million primarily due to (i) prior year short-term bank deposit investments of $86.8 million, which were invested in deposits with maturity dates of more than three months at the date of purchase and were therefore not reflected as cash equivalents as of January 31, 2023, of which $57.6 million matured in the current year and were either not reinvested or were reinvested in deposits with original maturities of three months or less; (ii) a decrease in capital expenditures of approximately $76.3 million as compared to the prior year, driven by our significant investments in lift upgrades during calendar year 2022; and (iii) $38.6 million of cash paid to Andermatt Swiss Alps AG upon closing the acquisition of Andermatt-Sedrun, net of cash acquired, on August 3, 2022. This increase was partially offset by the return of a cash deposit of approximately $114.5 million (CHF 110.0 million) originally made in July 2022 in conjunction with the acquisition of Andermatt-Sedrun, which closed on August 3, 2022. The cash deposit was invested into Andermatt-Sedrun, which is consolidated in our consolidated condensed financial statements subsequent to the acquisition being completed.

Current wording

Cash used in investing activities for the nine months ended April 30, 2024 decreased by $130.4 million primarily due to (i) prior year short-term bank deposit investments of $86.8 million, which were invested in deposits with maturity dates of more than three months at the date of purchase and were therefore not reflected as cash equivalents as of April 30, 2023, of which $57.6 million and $38.0 million matured during the nine months ended April 30, 2024 and 2023, respectively, and were either not reinvested or were reinvested in deposits with original maturities of three months or less; (ii) a decrease in capital expenditures of approximately $106.1 million as compared to the prior year, driven by our significant investments in lift upgrades during calendar year 2022; and (iii) $38.6 million of cash paid to Andermatt Swiss Alps AG upon closing the acquisition of Andermatt-Sedrun, net of cash acquired, on August 3, 2022. This increase was partially offset by the return of a cash deposit of approximately $114.5 million (CHF 110.0 million) originally made in July 2022 in conjunction with the acquisition of Andermatt-Sedrun, which closed on August 3, 2022. The cash deposit was invested into Andermatt-Sedrun, which is consolidated in our consolidated condensed financial statements subsequent to the acquisition being completed.

Previous wording

Cash used in financing activities increased by $49.8 million during the six months ended January 31, 2024 compared to the six months ended January 31, 2023, primarily due to an increase in repurchases of common stock of $50.0 million.

Current wording

Cash used in financing activities decreased by $269.7 million during the nine months ended April 30, 2024 compared to the nine months ended April 30, 2023, primarily due to a decrease in repurchases of common stock of $275.0 million.

Previous wording

We had $812.2 million of cash and cash equivalents as of January 31, 2024, compared to $1,295.3 million as of January 31, 2023, and the decrease was primarily due to approximately $550 million of share repurchases during the last twelve months. We currently anticipate that our Mountain and Lodging segment operating results will continue to provide a significant source of future operating cash flows (primarily generated in our second and third fiscal quarters).

Current wording

We had $705.4 million of cash and cash equivalents as of April 30, 2024, compared to $896.1 million as of April 30, 2023. We currently anticipate that our Mountain and Lodging segment operating results will continue to provide a significant source of future operating cash flows (primarily generated in our second and third fiscal quarters).