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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 2023
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission File Number: 001-09614
https://cdn.kscope.io/a23fa1b167f877fdd0bc83416014263b-vaila07.jpg
Vail Resorts, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware51-0291762
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification No.)
390 Interlocken Crescent
Broomfield,Colorado80021
(Address of Principal Executive Offices)(Zip Code)
(303) 404-1800
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $0.01 par valueMTNNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.      Yes      No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).      Yes      No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer   Accelerated filer 
Non-accelerated filer   Smaller reporting company 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).      Yes     No
As of December 4, 2023, 37,966,630 shares of the registrant’s common stock were outstanding.



Table of Contents
 
PART IFINANCIAL INFORMATIONPage
Item 1.Financial Statements (unaudited).
Item 2.
Item 3.
Item 4.
PART IIOTHER INFORMATION
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.

1


Vail Resorts, Inc.
Consolidated Condensed Balance Sheets
(In thousands, except per share amounts)
(Unaudited)
October 31, 2023July 31, 2023October 31, 2022
Assets
Current assets:
Cash and cash equivalents$728,859 $562,975 $1,180,942 
Restricted cash11,532 10,118 20,121 
Trade receivables, net105,546 381,067 118,491 
Inventories, net157,707 132,548 139,926 
Other current assets130,861 121,403 162,187 
Total current assets1,134,505 1,208,111 1,621,667 
Property, plant and equipment, net (Note 7)
2,344,601 2,371,557 2,313,061 
Real estate held for sale or investment86,465 90,207 95,608 
Goodwill, net (Note 7)
1,668,028 1,720,344 1,688,731 
Intangible assets, net300,457 309,345 307,410 
Operating right-of-use assets187,128 192,289 192,230 
Other assets38,832 55,901 62,159 
Total assets$5,760,016 $5,947,754 $6,280,866 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities (Note 7)
$1,276,525 $978,021 $1,190,522 
Income taxes payable16,663 83,514 84,372 
Long-term debt due within one year (Note 5)
69,659 69,160 67,811 
Total current liabilities1,362,847 1,130,695 1,342,705 
Long-term debt, net (Note 5)
2,732,037 2,750,675 2,769,698 
Operating lease liabilities165,462 168,326 176,585 
Other long-term liabilities285,454 286,261 234,301 
Deferred income taxes, net286,036 276,137 205,859 
Total liabilities4,831,836 4,612,094 4,729,148 
Commitments and contingencies (Note 9)
Stockholders’ equity:
Preferred stock, $0.01 par value, 25,000 shares authorized, no shares issued and outstanding
   
Common stock, $0.01 par value, 100,000 shares authorized, 46,851, 46,798 and 46,789 shares issued, respectively
469 468 468 
Additional paid-in capital1,126,033 1,124,433 1,106,813 
Accumulated other comprehensive loss(78,376)(10,358)(68,908)
Retained earnings619,727 873,710 705,923 
Treasury stock, at cost, 8,885, 8,648 and 6,466 shares, respectively (Note 11)
(1,034,822)(984,306)(479,417)
Total Vail Resorts, Inc. stockholders’ equity633,031 1,003,947 1,264,879 
Noncontrolling interests295,149 331,713 286,839 
Total stockholders’ equity 928,180 1,335,660 1,551,718 
Total liabilities and stockholders’ equity$5,760,016 $5,947,754 $6,280,866 
The accompanying Notes are an integral part of these unaudited consolidated condensed financial statements.
2


Vail Resorts, Inc.
Consolidated Condensed Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
 
Three Months Ended October 31,
 20232022
Net revenue:
Mountain and Lodging services and other$182,834 $210,386 
Mountain and Lodging retail and dining 71,442 68,948 
Resort net revenue254,276 279,334 
Real Estate4,289113 
Total net revenue258,565 279,447 
Operating expense (exclusive of depreciation and amortization shown separately below):
Mountain and Lodging operating expense255,576 242,286 
Mountain and Lodging retail and dining cost of products sold31,295 35,085 
General and administrative108,025 98,799 
Resort operating expense394,896 376,170 
Real Estate operating expense5,181 1,382 
Total segment operating expense400,077 377,552 
Other operating (expense) income:
Depreciation and amortization(66,728)(64,614)
Gain on sale of real property6,285  
Change in estimated fair value of contingent consideration (Note 8)
(3,057)(636)
Loss on disposal of fixed assets and other, net(2,043)(6)
Loss from operations(207,055)(163,361)
Mountain equity investment income, net859 346 
Investment income and other, net3,684 2,886 
Foreign currency loss on intercompany loans (Note 5)
(4,965)(6,135)
Interest expense, net(40,730)(35,302)
Loss before benefit from income taxes(248,207)(201,566)
Benefit from income taxes65,160 58,006 
Net loss(183,047)(143,560)
Net loss attributable to noncontrolling interests7,535 6,589 
Net loss attributable to Vail Resorts, Inc.$(175,512)$(136,971)
Per share amounts (Note 4):
Basic net loss per share attributable to Vail Resorts, Inc.$(4.60)$(3.40)
Diluted net loss per share attributable to Vail Resorts, Inc.$(4.60)$(3.40)
Cash dividends declared per share$2.06 $1.91 
The accompanying Notes are an integral part of these unaudited consolidated condensed financial statements.
3


Vail Resorts, Inc.
Consolidated Condensed Statements of Comprehensive Loss
(In thousands)
(Unaudited)

Three Months Ended October 31,
 20232022
Net loss$(183,047)$(143,560)
Foreign currency translation adjustments(92,094)(117,808)
Change in estimated fair value of hedging instruments, net of tax(2,470)8,007 
Comprehensive loss(277,611)(253,361)
Comprehensive loss attributable to noncontrolling interests34,081 36,559 
Comprehensive loss attributable to Vail Resorts, Inc.$(243,530)$(216,802)
The accompanying Notes are an integral part of these unaudited consolidated condensed financial statements.
4


Vail Resorts, Inc.
Consolidated Condensed Statements of Stockholders’ Equity
(In thousands)
(Unaudited)
Common StockAdditional Paid in CapitalAccumulated Other Comprehensive Income (Loss)Retained EarningsTreasury StockTotal Vail Resorts, Inc. Stockholders’ EquityNoncontrolling InterestsTotal Stockholders’ Equity
Vail Resorts
Balance, July 31, 2022$467 $1,184,577 $10,923 $895,889 $(479,417)$1,612,439 $235,045 $1,847,484 
Comprehensive loss:
Net loss— — — (136,971)— (136,971)(6,589)(143,560)
Foreign currency translation adjustments— — (87,838)— — (87,838)(29,970)(117,808)
Change in estimated fair value of hedging instruments, net of tax— — 8,007 — — 8,007 — 8,007 
Total comprehensive loss(216,802)(36,559)(253,361)
Stock-based compensation expense— 6,345 — — — 6,345 — 6,345 
Issuance of shares under share award plans, net of shares withheld for employee taxes1 (4,043)— — — (4,042)— (4,042)
Dividends (Note 4)
— — — (77,018)— (77,018)— (77,018)
Cumulative effect of adoption of ASU 2020-06— (80,066)— 24,023 — (56,043)— (56,043)
Estimated acquisition date fair value of noncontrolling interests (Note 6)— — — — — — 91,524 91,524 
Distributions to noncontrolling interests, net— — — — — — (3,171)(3,171)
Balance, October 31, 2022$468 $1,106,813 $(68,908)$705,923 $(479,417)$1,264,879 $286,839 $1,551,718 
Balance, July 31, 2023$468 $1,124,433 $(10,358)$873,710 $(984,306)$1,003,947 $331,713 $1,335,660 
Comprehensive loss:
Net loss— — — (175,512)— (175,512)(7,535)(183,047)
Foreign currency translation adjustments— — (65,548)— — (65,548)(26,546)(92,094)
Change in estimated fair value of hedging instruments, net of tax— — (2,470)— — (2,470)— (2,470)
Total comprehensive loss(243,530)(34,081)(277,611)
Stock-based compensation expense— 6,796 — — — 6,796 — 6,796 
Issuance of shares under share award plans, net of shares withheld for employee taxes1 (5,196)— — — (5,195)— (5,195)
Repurchases of common stock (Note 11)
— — — — (50,516)(50,516)— (50,516)
Dividends (Note 4)
— — — (78,471)— (78,471)— (78,471)
Distributions to noncontrolling interests, net— — — — — — (2,483)(2,483)
Balance, October 31, 2023$469 $1,126,033 $(78,376)$619,727 $(1,034,822)$633,031 $295,149 $928,180 
The accompanying Notes are an integral part of these unaudited consolidated condensed financial statements.
5


Vail Resorts, Inc.
Consolidated Condensed Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended October 31,
 20232022
Cash flows from operating activities:
Net loss$(183,047)$(143,560)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization66,728 64,614 
Stock-based compensation expense6,796 6,345 
Benefit from income taxes(65,160)(58,006)
Other non-cash expense, net8,217 8,615 
Changes in assets and liabilities:
Trade receivables, net272,313 264,285 
Inventories, net(26,789)(31,924)
Accounts payable and accrued liabilities(773)2,508 
Deferred revenue308,950 279,221 
Income taxes payable(17,052)(20,460)
Other assets and liabilities, net(41,684)(38,647)
Net cash provided by operating activities328,499 332,991 
Cash flows from investing activities:
Capital expenditures(53,379)(124,099)
Return of deposit for acquisition of business 114,506 
Acquisition of business, net of cash acquired (38,567)
Investments in short-term deposits (86,756)
Maturity of short-term deposits52,437  
Other investing activities, net6,507 385 
Net cash provided by (used in) investing activities5,565 (134,531)
Cash flows from financing activities:
Repayments of borrowings under Vail Holdings Credit Agreement(15,625)(15,625)
Employee taxes paid for share award exercises(5,195)(4,043)
Dividends paid(78,471)(77,018)
Repurchases of common stock(50,000) 
Other financing activities, net(4,317)(7,942)
Net cash used in financing activities(153,608)(104,628)
Effect of exchange rate changes on cash, cash equivalents and restricted cash(13,158)(18,876)
Net increase in cash, cash equivalents and restricted cash167,298 74,956 
Cash, cash equivalents and restricted cash:
Beginning of period573,093 1,126,107 
End of period$740,391 $1,201,063 
Non-cash investing activities:
Accrued capital expenditures$38,275 $21,069 
The accompanying Notes are an integral part of these unaudited consolidated condensed financial statements.
6


Vail Resorts, Inc.
Notes to Consolidated Condensed Financial Statements
(Unaudited)

1.Organization and Business
Vail Resorts, Inc. (“Vail Resorts”) is organized as a holding company and operates through various subsidiaries. Vail Resorts and its subsidiaries (collectively, the “Company”) operate in three reportable segments: Mountain, Lodging and Real Estate. The Company refers to “Resort” as the combination of the Mountain and Lodging segments.
In the Mountain segment, the Company operates the following 41 destination mountain resorts and regional ski areas:

https://cdn.kscope.io/a23fa1b167f877fdd0bc83416014263b-Updated map 08.15.23 JPEG.jpg

*Denotes a destination mountain resort, which generally receives a meaningful portion of skier visits from long-distance travelers, as opposed to the Company’s regional ski areas, which tend to generate skier visits predominantly from their respective local markets.

Additionally, the Mountain segment includes ancillary services, primarily including ski school, dining and retail/rental operations, and for the Company’s Australian ski areas, including lodging and transportation operations.
In the Lodging segment, the Company owns and/or manages a collection of luxury hotels and condominiums under its RockResorts brand; other strategic lodging properties and a large number of condominiums located in proximity to the Company’s North American mountain resorts; National Park Service (“NPS”) concessioner properties including the Grand Teton Lodge Company, which operates destination resorts in Grand Teton National Park; a Colorado resort ground transportation company and mountain resort golf courses.

The Company’s Real Estate segment primarily owns, develops and sells real estate in and around the Company’s resort communities.
The Company’s mountain business and its lodging properties at or around the Company’s mountain resorts are seasonal in nature, and typically experience their peak operating seasons primarily from mid-December through mid-April in North America and Europe. The peak operating season at the Company’s Australian resorts, NPS concessioner properties and golf courses generally occurs from June to early October.

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2.     Summary of Significant Accounting Policies
Basis of Presentation
Consolidated Condensed Financial Statements — In the opinion of the Company, the accompanying Consolidated Condensed Financial Statements reflect all adjustments necessary to state fairly the Company’s financial position, results of operations and cash flows for the interim periods presented. All such adjustments are of a normal recurring nature. Results for interim periods are not indicative of the results for the entire fiscal year, particularly given the significant seasonality to the Company’s operating cycle. The accompanying Consolidated Condensed Financial Statements should be read in conjunction with the audited Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2023. Certain information and footnote disclosures, including significant accounting policies, normally included in fiscal year financial statements prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) have been condensed or omitted. The Consolidated Condensed Balance Sheet as of July 31, 2023 was derived from audited financial statements.
Use of Estimates — The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the balance sheet date and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.
Fair Value of Financial Instruments — The estimated fair values of the 6.25% Notes and the 0.0% Convertible Notes (each as defined in Note 5, Long-Term Debt) are based on quoted market prices (a Level 2 input). The estimated fair value of the EPR Secured Notes and the NRP Loan (both as defined in Note 5, Long-Term Debt) have been estimated using analyses based on current borrowing rates for comparable debt instruments with similar maturity dates (a Level 2 input). The carrying values, including any unamortized premium or discount, and estimated fair values of the 6.25% Notes, 0.0% Convertible Notes, EPR Secured Notes and NRP Loan as of October 31, 2023 are presented below (in thousands):
October 31, 2023
Carrying ValueEstimated Fair Value
6.25% Notes$600,000 $596,022 
0.0% Convertible Notes$575,000 $501,883 
EPR Secured Notes$132,102 $158,129 
NRP Loan$34,489 $28,359 
The carrying values for all other financial instruments not included in the above table approximate their respective fair value due to their short-term nature or the variable nature of their associated interest rates.

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3.     Revenues
Disaggregation of Revenues
The following table presents net revenues disaggregated by segment and major revenue type for the three months ended October 31, 2023 and 2022 (in thousands):
Three Months Ended October 31,
 20232022
Mountain net revenue:
Lift$45,390 $59,540 
Ski School7,178 8,927 
Dining18,077 19,442 
Retail/Rental33,474 40,344 
Other68,336 73,464 
Total Mountain net revenue$172,455 $201,717 
Lodging net revenue:
Owned hotel rooms$25,177 $23,565 
Managed condominium rooms12,003 12,859 
Dining 18,083 16,829 
Golf6,376 5,890 
Other16,723 14,797 
78,362 73,940 
Payroll cost reimbursements3,459 3,677 
Total Lodging net revenue $81,821 $77,617 
Total Resort net revenue$254,276 $279,334 
Total Real Estate net revenue4,289 113 
Total net revenue$258,565 $279,447 

Contract Balances
Deferred revenue balances of a short-term nature were $872.4 million and $572.6 million as of October 31, 2023 and July 31, 2023, respectively. For the three months ended October 31, 2023, the Company recognized approximately $56.5 million of revenue that was included in the deferred revenue balance as of July 31, 2023. Deferred revenue balances of a long-term nature, comprised primarily of long-term private club initiation fee revenue, were $107.9 million, $109.7 million and $115.6 million as of October 31, 2023, July 31, 2023 and October 31, 2022, respectively. As of October 31, 2023, the weighted average remaining period over which revenue for unsatisfied performance obligations on long-term private club contracts will be recognized was approximately 15 years.

Costs to Obtain Contracts with Customers
Costs to obtain contracts with customers are recorded within other current assets on the Company’s Consolidated Condensed Balance Sheets, and were $21.8 million, $5.1 million and $19.7 million as of October 31, 2023, July 31, 2023 and October 31, 2022, respectively. The amounts capitalized are subject to amortization generally beginning in the second quarter of each fiscal year, commensurate with the recognition of revenue for related pass products, and will be recorded within Mountain and Lodging operating expense on the Company’s Consolidated Condensed Statements of Operations.

4.    Net Loss per Share
Earnings per Share
Basic EPS excludes dilution and is computed by dividing net loss attributable to Vail Resorts stockholders by the weighted-average shares outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised, resulting in the issuance of shares of common stock that would then share in the earnings of Vail Resorts.
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In connection with the Company’s acquisition of Whistler Blackcomb in October 2016, the Company issued consideration in the form of shares of Vail Resorts common stock (the “Vail Shares”), redeemable preferred shares of the Company’s wholly-owned Canadian subsidiary Whistler Blackcomb Holdings Inc. (“Exchangeco Shares”) or cash (or a combination thereof). Effective September 26, 2022, all Exchangeco Shares had been exchanged for Vail Shares. Both Vail Shares and Exchangeco Shares have a par value of $0.01 per share, and Exchangeco Shares, while they were outstanding, were substantially the economic equivalent of the Vail Shares. The Company’s calculation of weighted-average shares outstanding as of October 31, 2022 included the Exchangeco Shares, but there were no Exchangeco Shares that remained outstanding as of October 31, 2022.

Presented below is basic and diluted EPS for the three months ended October 31, 2023 and 2022 (in thousands, except per share amounts):
 Three Months Ended October 31,
 20232022
 BasicDilutedBasicDiluted
Net loss per share:
Net loss attributable to Vail Resorts$(175,512)$(175,512)$(136,971)$(136,971)
Weighted-average Vail Shares outstanding38,117 38,117 40,296 40,296 
Weighted-average Exchangeco Shares outstanding  2 2 
Total Weighted-average shares outstanding38,117 38,117 40,298 40,298 
Effect of dilutive securities—  —  
Total shares38,117 38,117 40,298 40,298 
Net loss per share attributable to Vail Resorts$(4.60)$(4.60)$(3.40)$(3.40)

The Company computes the effect of dilutive securities using the treasury stock method and average market prices during the period. The number of shares issuable upon the exercise of share-based awards excluded from the calculation of diluted EPS because the effect of their inclusion would have been anti-dilutive totaled approximately 0.3 million and 0.2 million for the three months ended October 31, 2023 and 2022, respectively.

In December 2020, the Company completed an offering of $575.0 million in aggregate principal amount of 0.0% Convertible Notes (as defined in Note 5, Long-Term Debt). The Company is required to settle the principal amount of the 0.0% Convertible Notes in cash and has the option to settle the conversion spread in cash or shares. The Company uses the if-converted method to calculate the impact of convertible instruments on diluted EPS when the instruments may be settled in cash or shares. If the conversion value of the 0.0% Convertible Notes exceeds their conversion price, then the Company will calculate its diluted EPS as if all the notes were converted into common stock at the beginning of the period. However, if reflecting the 0.0% Convertible Notes in diluted EPS in this manner is anti-dilutive, or if the conversion value of the notes does not exceed their conversion price for a reporting period, then the shares underlying the notes will not be reflected in the Company’s calculation of diluted EPS. For the three months ended October 31, 2023 and 2022, the price of Vail Shares did not exceed the conversion price and therefore there was no impact to diluted EPS during those periods.

Dividends
During the three months ended October 31, 2023 and 2022, the Company paid cash dividends of $2.06 and $1.91 per share, respectively ($78.5 million and $77.0 million, respectively). On December 6, 2023, the Company’s Board of Directors approved a cash dividend of $2.06 per share payable on January 9, 2024 to stockholders of record as of December 26, 2023.

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5.    Long-Term Debt
Long-term debt, net as of October 31, 2023, July 31, 2023 and October 31, 2022 is summarized as follows (in thousands):
MaturityOctober 31, 2023July 31, 2023October 31, 2022
Vail Holdings Credit Agreement term loan (a)
2026$1,000,000 $1,015,625 $1,062,500 
Vail Holdings Credit Agreement revolver (a)
2026   
6.25% Notes2025600,000 600,000 600,000 
0.0% Convertible Notes (b)
2026575,000 575,000 575,000 
Whistler Credit Agreement revolver (c)
2028  11,011 
EPR Secured Notes (d)
2034-2036
114,162 114,162 114,162 
NRP Loan203637,269 40,399 36,430 
Employee housing bonds
2027-2039
52,575 52,575 52,575 
Canyons obligation2063364,825 363,386 359,052 
Whistler Blackcomb employee housing leases204227,984 29,491  
Other
2023-2036
33,971 35,011 36,587 
Total debt2,805,786 2,825,649 2,847,317 
Less: Unamortized premiums, discounts and debt issuance costs (b)
4,090 5,814 9,808 
Less: Current maturities (e)
69,659 69,160 67,811 
Long-term debt, net$2,732,037 $2,750,675 $2,769,698 

(a)As of October 31, 2023, the Vail Holdings Credit Agreement consists of a $500.0 million revolving credit facility and a $1.0 billion outstanding term loan. The term loan is subject to quarterly amortization of principal of approximately $15.6 million, in equal installments, for a total of 5% of principal payable in each year and the final payment of all amounts outstanding, plus accrued and unpaid interest is due upon maturity in September 2026. The proceeds of the loans made under the Vail Holdings Credit Agreement may be used to fund the Company’s working capital needs, capital expenditures, acquisitions, investments and other general corporate purposes, including the issuance of letters of credit. Borrowings under the Vail Holdings Credit Agreement, including the term loan, bear interest annually at the Secured Overnight Financing Rate (“SOFR”) plus a spread of 1.60% as of October 31, 2023 (6.92% as of October 31, 2023). Interest rate margins may fluctuate based upon the ratio of the Company’s Net Funded Debt to Adjusted EBITDA on a trailing four-quarter basis. The Vail Holdings Credit Agreement also includes a quarterly unused commitment fee, which is equal to a percentage determined by the Net Funded Debt to Adjusted EBITDA ratio, as each such term is defined in the Vail Holdings Credit Agreement, multiplied by the daily amount by which the Vail Holdings Credit Agreement commitment exceeds the total of outstanding loans and outstanding letters of credit (0.30% as of October 31, 2023). The Company is party to various interest rate swap agreements which hedge the cash flows associated with the SOFR-based variable interest rate component of $400.0 million in principal amount of its Vail Holdings Credit Agreement until September 23, 2024, at an effective rate of 1.38%.

(b)The Company issued $575.0 million in aggregate principal amount of 0.0% Convertible Notes due 2026 (the “0.0% Convertible Notes) under an indenture dated December 18, 2020. As of October 31, 2023, the conversion price of the 0.0% Convertible Notes, adjusted for cash dividends paid since the issuance date, was $381.27.

(c)Whistler Mountain Resort Limited Partnership (“Whistler LP”) and Blackcomb Skiing Enterprises Limited Partnership (“Blackcomb LP” and together with Whistler LP, the “WB Partnerships”) are party to a credit agreement consisting of a C$300.0 million credit facility which was most recently amended on April 14, 2023, by and among Whistler LP, Blackcomb LP, certain subsidiaries of Whistler LP and Blackcomb LP party thereto as guarantors, the financial institutions party thereto as lenders and The Toronto-Dominion Bank, as administrative agent. The Whistler Credit Agreement has a maturity date of April 14, 2028 and uses rates based on SOFR with regard to borrowings under the facility made in U.S. dollars. As of October 31, 2023, there were no borrowings under the Whistler Credit Agreement. The Whistler Credit Agreement also includes a quarterly unused commitment fee based on the Consolidated Total Leverage Ratio, which as of October 31, 2023 is equal to 0.39% per annum.

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(d)In September 2019, in conjunction with the acquisition of Peak Resorts, Inc. (“Peak Resorts”), the Company assumed various secured borrowings (the “EPR Secured Notes”) under the master credit and security agreements and other related agreements, as amended, (collectively, the “EPR Agreements”) with EPT Ski Properties, Inc. and its affiliates (“EPR”). The EPR Secured Notes include the following:
i.The Alpine Valley Secured Note. The $4.6 million Alpine Valley Secured Note provides for interest payments through its maturity on December 1, 2034. As of October 31, 2023, interest on this note accrued at a rate of 11.72%.
ii.The Boston Mills/Brandywine Secured Note. The $23.3 million Boston Mills/Brandywine Secured Note provides for interest payments through its maturity on December 1, 2034. As of October 31, 2023, interest on this note accrued at a rate of 11.41%.
iii.The Jack Frost/Big Boulder Secured Note. The $14.3 million Jack Frost/Big Boulder Secured Note provides for interest payments through its maturity on December 1, 2034. As of October 31, 2023, interest on this note accrued at a rate of 11.41%.
iv.The Mount Snow Secured Note. The $51.1 million Mount Snow Secured Note provides for interest payments through its maturity on December 1, 2034. As of October 31, 2023, interest on this note accrued at a rate of 12.32%.
v.The Hunter Mountain Secured Note. The $21.0 million Hunter Mountain Secured Note provides for interest payments through its maturity on January 5, 2036. As of October 31, 2023, interest on this note accrued at a rate of 9.03%.
In addition, Peak Resorts is required to maintain a debt service reserve account which amounts are applied to fund interest payments and other amounts due and payable to EPR.

(e)Current maturities represent principal payments due in the next 12 months.

Aggregate maturities of debt outstanding as of October 31, 2023 reflected by fiscal year (August 1 through July 31) are as follows (in thousands):
Total
2024 (November 2023 through July 2024)$51,421 
2025675,755 
2026643,543 
2027851,151 
20284,655 
Thereafter579,261 
Total debt
$2,805,786 

The Company recorded interest expense of $40.7 million and $35.3 million for the three months ended October 31, 2023 and 2022, respectively, of which $1.6 million was amortization of deferred financing costs in both periods. The Company was in compliance with all of its financial and operating covenants required to be maintained under its debt instruments for all periods presented.

In connection with the acquisition of Whistler Blackcomb, VHI funded a portion of the purchase price through an intercompany loan to Whistler Blackcomb, which was effective as of November 1, 2016, and requires foreign currency remeasurement to Canadian dollars, the functional currency for Whistler Blackcomb. As a result, foreign currency fluctuations associated with the loan are recorded within the Company’s results of operations. The Company recognized approximately $5.0 million and $6.1 million, respectively, of non-cash foreign currency losses on the intercompany loan to Whistler Blackcomb for the three months ended October 31, 2023 and 2022 on the Company’s Consolidated Condensed Statements of Operations.

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6.    Acquisitions
Andermatt-Sedrun
On August 3, 2022, through a wholly-owned subsidiary, the Company acquired a 55% controlling interest in Andermatt-Sedrun Sport AG (“Andermatt-Sedrun”) from Andermatt Swiss Alps AG (“ASA”). The consideration paid consisted of an investment of $114.4 million (CHF 110.0 million) into Andermatt-Sedrun for use in capital investments to enhance the guest experience on mountain (which was prepaid to fund the acquisition and was recorded in other current assets on the Company’s Consolidated Condensed Balance Sheet as of July 31, 2022) and $41.3 million (CHF 39.3 million) paid to ASA (which was paid on August 3, 2022, commensurate with closing). As of August 3, 2022 the total fair value of the consideration paid was $155.4 million (CHF 149.3 million).
Andermatt-Sedrun operates mountain and ski-related assets, including lifts, most of the restaurants and a ski school operation at the ski area. Ski operations are conducted on land owned by ASA as freehold or leasehold properties, land owned by Usern Corporation, land owned by the municipality of Tujetsch and land owned by private property owners. ASA retained a 40% ownership stake, with a group of existing shareholders comprising the remaining 5% ownership stake. ASA and the other noncontrolling economic interests contain certain protective rights pursuant to a shareholder agreement (the “Andermatt Agreement”) and no ability to participate in the day-to-day operations of Andermatt-Sedrun. The Andermatt Agreement provides that no dividend distributions be made by Andermatt-Sedrun until the end of the fiscal year ending July 31, 2026, after which time there shall be annual distributions of 50% of the available cash (as defined in the Andermatt Agreement) for the most recently completed fiscal year. In addition, the distribution rights are non-transferable and transfer of the noncontrolling interests are limited.
The following summarizes the purchase consideration and the purchase price allocation to estimated fair values of the identifiable assets acquired and liabilities assumed at the date the transaction was effective (in thousands):
Acquisition Date Estimated Fair Value
Total cash consideration paid by Vail Resorts, Inc.$155,365 
Estimated fair value of noncontrolling interests91,524 
Total estimated purchase consideration$246,889 
Allocation of total estimated purchase consideration:
Current assets$119,867 
Property, plant and equipment176,805 
Goodwill3,368 
Identifiable intangible assets and other assets7,476 
Assumed long-term debt(44,130)
Other liabilities(16,497)
Net assets acquired$246,889 
Identifiable intangible assets acquired in the transaction were primarily related to a trade name. The process of estimating the fair value of the property, plant, and equipment includes the use of certain estimates and assumptions related to replacement cost and physical condition at the time of acquisition. The excess of the purchase price over the aggregate estimated fair values of the assets acquired and liabilities assumed was recorded as goodwill. The goodwill recognized is attributable primarily to expected synergies, the assembled workforce of the resort and other factors, and is not expected to be deductible for income tax purposes. The operating results of Andermatt-Sedrun are reported within the Mountain segment prospectively from the date of acquisition.

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7.    Supplementary Balance Sheet Information
The composition of property, plant and equipment follows (in thousands):
October 31, 2023July 31, 2023October 31, 2022
Land and land improvements$790,550 $796,730 $780,977 
Buildings and building improvements1,626,566 1,643,517 1,574,931 
Machinery and equipment1,781,980 1,792,378 1,594,588 
Furniture and fixtures302,646 298,725 316,350 
Software151,809 152,033 139,522 
Vehicles86,173 87,298 82,239 
Construction in progress185,229 134,113 221,990 
Gross property, plant and equipment4,924,953 4,904,794 4,710,597 
Accumulated depreciation(2,580,352)(2,533,237)(2,397,536)
Property, plant and equipment, net$2,344,601 $2,371,557 $2,313,061 

The composition of accounts payable and accrued liabilities follows (in thousands):
October 31, 2023July 31, 2023October 31, 2022
Trade payables$161,581 $148,521 $162,366 
Deferred revenue872,418 572,602 787,514 
Accrued salaries, wages and deferred compensation33,733 38,908 41,239 
Accrued benefits57,340 60,466 44,008 
Deposits42,880 37,798 35,491 
Operating lease liabilities38,332 36,904 35,331 
Other liabilities70,241 82,822 84,573 
Total accounts payable and accrued liabilities$1,276,525 $978,021 $1,190,522 

The changes in the net carrying amount of goodwill by segment for the three months ended October 31, 2023 are as follows (in thousands):
MountainLodgingGoodwill, net
Balance at July 31, 2023$1,675,338 $45,006 $1,720,344 
Effects of changes in foreign currency exchange rates(52,316) (52,316)
Balance at October 31, 2023$1,623,022 $45,006 $1,668,028 

8.    Fair Value Measurements
The Company utilizes FASB-issued fair value guidance that establishes how reporting entities should measure fair value for measurement and disclosure purposes. The guidance establishes a common definition of fair value applicable to all assets and liabilities measured at fair value and prioritizes the inputs into valuation techniques used to measure fair value. Accordingly, the Company uses valuation techniques which maximize the use of observable inputs and minimize the use of unobservable inputs when determining fair value. The three levels of the hierarchy are as follows:

Level 1: Inputs that reflect unadjusted quoted prices in active markets that are accessible to the Company for identical assets or liabilities;

Level 2: Inputs include quoted prices for similar assets and liabilities in active and inactive markets or that are observable for the asset or liability either directly or indirectly; and

Level 3: Unobservable inputs which are supported by little or no market activity.

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The table below summarizes the Company’s cash equivalents, restricted cash, other current assets, interest rate swaps and Contingent Consideration (defined below) measured at estimated fair value (all other assets and liabilities measured at fair value are immaterial) (in thousands).
 Estimated Fair Value Measurement as of October 31, 2023
DescriptionTotalLevel 1Level 2Level 3
Assets:
Money Market$101,903 $101,903 $— $— 
Commercial Paper$2,401 $— $2,401 $— 
Certificates of Deposit$138,614 $— $138,614 $— 
Interest Rate Swaps$13,931 $— $13,931 $— 
Liabilities:
Contingent Consideration $59,300 $— $— $59,300 
 Estimated Fair Value Measurement as of July 31, 2023
DescriptionTotalLevel 1Level 2Level 3
Assets:
Money Market$170,872 $170,872 $— $— 
Commercial Paper$2,401 $— $2,401 $— 
Certificates of Deposit$144,365 $— $144,365 $— 
Interest Rate Swaps$17,229 $— $17,229 $— 
Liabilities:
Contingent Consideration $73,300 $— $— $73,300 
 Estimated Fair Value Measurement as of October 31, 2022
DescriptionTotalLevel 1Level 2Level 3
Assets:
Money Market$509,165 $509,165 $— $— 
Commercial Paper$2,401 $— $2,401 $— 
Certificates of Deposit$106,790 $— $106,790 $— 
Interest Rate Swaps$22,991 $— $22,991 $— 
Liabilities:
Contingent Consideration$24,100 $— $— $24,100 

The Company’s cash equivalents, restricted cash, other current assets and interest rate swaps are measured utilizing quoted market prices or pricing models whereby all significant inputs are either observable or corroborated by observable market data. The estimated fair value of the interest rate swaps are included within other current assets on the Company’s Consolidated Condensed Balance Sheet as of October 31, 2023 and included within and other assets as of July 31, 2023 and October 31, 2022.

The changes in Contingent Consideration during the three months ended October 31, 2023 and 2022 were as follows (in thousands):
Balance as of July 31, 2023 and 2022, respectively$73,300 $42,400 
Payments(17,057)(18,936)
Change in estimated fair value3,057 636 
Balance as of October 31, 2023 and 2022, respectively$59,300 $24,100 

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The lease for Park City provides for participating contingent payments (the “Contingent Consideration”) to the landlord of 42% of the amount by which EBITDA for the Park City resort operations, as calculated under the lease, exceeds approximately $35 million, as established upon the Company’s acquisition of the resort, with such threshold amount subsequently increased annually by an inflation linked index and an adjustment equal to 10% of any capital improvements or investments made under the lease by the Company. Contingent Consideration is classified as a liability, which is remeasured to fair value at each reporting date until the contingency is resolved.
The Company estimated the fair value of the Contingent Consideration payments using an option pricing valuation model. The estimated fair value of Contingent Consideration includes future period resort operations of Park City in the calculation of EBITDA on which participating contingent payments are made, which is determined on the basis of estimated subsequent year performance, escalated by an assumed annual growth factor and discounted to present value. Other significant assumptions included a discount rate of 11.1%, and volatility of 17.0%, which together with future period Park City EBITDA, are all unobservable inputs and thus are considered Level 3 inputs. The Company prepared a sensitivity analysis to evaluate the effect that changes on certain key assumptions would have on the estimated fair value of the Contingent Consideration. A change in the discount rate of 100 basis points or a 5% change in estimated subsequent year performance of the resort would result in a change in the estimated fair value within the range of approximately $10.1 million to $13.7 million.
During the three months ended October 31, 2023, the Company made a payment to the landlord for Contingent Consideration of approximately $17.1 million and recorded an increase of approximately $3.1 million, primarily related to the estimated Contingent Consideration payment for the fiscal year ending July 31, 2024. These changes resulted in an estimated fair value of the Contingent Consideration of approximately $59.3 million, which is reflected in other long-term liabilities in the Company’s Consolidated Condensed Balance Sheet.

9.    Commitments and Contingencies
Guarantees/Indemnifications
As of October 31, 2023, the Company had various letters of credit outstanding totaling $84.1 million, consisting of $53.4 million to support the Employee Housing Bonds; $6.4 million to support bonds issued by Holland Creek Metropolitan District; and $24.3 million primarily for workers’ compensation, a wind energy purchase agreement and insurance-related deductibles. The Company also had surety bonds of $9.5 million as of October 31, 2023, primarily to provide collateral for its U.S. workers compensation self-insurance programs.
In addition to the guarantees noted above, the Company has entered into contracts in the normal course of business that include certain indemnifications under which it could be required to make payments to third parties upon the occurrence or non-occurrence of certain future events. These indemnities include indemnities related to licensees in connection with third-parties’ use of the Company’s trademarks and logos, liabilities associated with the infringement of other parties’ technology and software products, liabilities associated with the use of easements, liabilities associated with employment of contract workers and the Company’s use of trustees and liabilities associated with the Company’s use of public lands and environmental matters. The duration of these indemnities generally is indefinite and generally do not limit the future payments the Company could be obligated to make.
As permitted under applicable law, the Company and certain of its subsidiaries have agreed to indemnify their directors and officers over their lifetimes for certain events or occurrences while the officer or director is, or was, serving the Company or its subsidiaries in such a capacity. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited; however, the Company has a director and officer insurance policy that should enable the Company to recover a portion of any amounts paid.
Unless otherwise noted, the Company has not recorded any significant liabilities for the letters of credit, indemnities and other guarantees noted above in the accompanying Consolidated Condensed Financial Statements, either because the Company has recorded on its Consolidated Condensed Balance Sheets the underlying liability associated with the guarantee, the guarantee is with respect to the Company’s own performance and is therefore not subject to the measurement requirements as prescribed by GAAP, or because the Company has calculated the estimated fair value of the indemnification or guarantee to be immaterial based on the current facts and circumstances that would trigger a payment under the indemnification clause. In addition, with respect to certain indemnifications, it is not possible to determine the maximum potential amount of liability under these potential obligations due to the unique set of facts and circumstances likely to be involved in each particular claim and indemnification provision. Historically, payments made by the Company under these obligations have not been material.
As noted above, the Company makes certain indemnifications to licensees for their use of the Company’s trademarks and logos. The Company does not record any liabilities with respect to these indemnifications.
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Additionally, the Company has entered into strategic long-term season pass alliance agreements with third-party mountain resorts in which the Company has committed to pay minimum revenue guarantees over the remaining terms of these agreements.

Self-Insurance
The Company is self-insured for claims under its U.S. health benefit plans and for the majority of workers’ compensation claims in the U.S. Workers compensation claims in the U.S. are subject to stop loss policies. The self-insurance liability related to workers’ compensation is determined actuarially based on claims filed. The self-insurance liability related to claims under the Company’s U.S. health benefit plans is determined based on analysis of actual claims. The amounts related to these claims are included as a component of accrued benefits in accounts payable and accrued liabilities (see Note 7, Supplementary Balance Sheet Information).

Legal
The Company is a party to various lawsuits arising in the ordinary course of business. Management believes the Company has adequate insurance coverage and/or has accrued for all loss contingencies for asserted and unasserted matters deemed to be probable and estimable losses. As of October 31, 2023, July 31, 2023 and October 31, 2022, the accruals for the above loss contingencies were not material individually or in the aggregate.

10.    Segment Information
The Company has three reportable segments: Mountain, Lodging and Real Estate. The Company refers to “Resort” as the combination of the Mountain and Lodging segments. The Mountain segment includes the operations of the Company’s mountain resorts/ski areas and related ancillary activities. The Lodging segment includes the operations of the Company’s owned hotels, RockResorts, NPS concessioner properties, condominium management, Colorado resort ground transportation operations and mountain resort golf operations. The Real Estate segment owns, develops and sells real estate in and around the Company’s resort communities. The Company’s reportable segments, although integral to the success of the others, offer distinctly different products and services and require different types of management focus. As such, these segments are managed separately.
The Company reports its segment results using Reported EBITDA (defined as segment net revenue less segment operating expenses, plus segment equity investment income or loss, and for the Real Estate segment, plus gain or loss on sale of real property). The Company reports segment results in a manner consistent with management’s internal reporting of operating results to the chief operating decision maker (Chief Executive Officer) for purposes of evaluating segment performance.
Items excluded from Reported EBITDA are significant components in understanding and assessing financial performance. Reported EBITDA should not be considered in isolation or as an alternative to, or substitute for, net loss, net change in cash and cash equivalents or other financial statement data presented in the accompanying Consolidated Condensed Financial Statements as indicators of financial performance or liquidity.
The Company utilizes Reported EBITDA in evaluating the performance of the Company and in allocating resources to its segments. Mountain Reported EBITDA consists of Mountain net revenue less Mountain operating expense plus Mountain equity investment income or loss. Lodging Reported EBITDA consists of Lodging net revenue less Lodging operating expense. Real Estate Reported EBITDA consists of Real Estate net revenue less Real Estate operating expense plus gain or loss on sale of real property. All segment expenses include an allocation of corporate administrative expense. Assets are not used to evaluate performance, except as shown in the table below. The accounting policies specific to each segment are the same as those described in Note 2, Summary of Significant Accounting Policies.

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The following table presents financial information by reportable segment, which is used by management in evaluating performance and allocating resources (in thousands):
Three Months Ended October 31,
 20232022
Net revenue:
Mountain$172,455 $201,717 
Lodging81,821 77,617 
Total Resort net revenue254,276 279,334 
Real Estate4,289 113 
Total net revenue$258,565 $279,447 
Segment operating expense:
Mountain$312,839 $294,196 
Lodging82,057 81,974 
Total Resort operating expense394,896 376,170 
Real Estate5,181 1,382 
Total segment operating expense$400,077 $377,552 
Gain on sale of real property$6,285 $ 
Mountain equity investment income, net$859 $346 
Reported EBITDA:
Mountain$(139,525)$(92,133)
Lodging(236)(4,357)
Resort(139,761)(96,490)
Real Estate5,393 (1,269)
Total Reported EBITDA$(134,368)$(97,759)
Real estate held for sale or investment$86,465 $95,608 
Reconciliation from net loss attributable to Vail Resorts, Inc. to Total Reported EBITDA:
Net loss attributable to Vail Resorts, Inc.$(175,512)$(136,971)
Net loss attributable to noncontrolling interests(7,535)(6,589)
Net loss(183,047)(143,560)
Benefit from income taxes(65,160)(58,006)
Loss before benefit from income taxes(248,207)(201,566)
Depreciation and amortization66,728 64,614 
Change in estimated fair value of contingent consideration3,057 636 
Loss on disposal of fixed assets and other, net2,043 6 
Investment income and other, net(3,684)(2,886)
Foreign currency loss on intercompany loans4,965 6,135 
Interest expense, net40,730 35,302 
Total Reported EBITDA$(134,368)$(97,759)

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11.     Share Repurchase Program
On March 9, 2006, the Company’s Board of Directors approved a share repurchase program, authorizing the Company to repurchase up to 3,000,000 Vail Shares. On July 16, 2008, December 4, 2015 and March 7, 2023, the Company’s Board of Directors increased the authorization by an additional 3,000,000, 1,500,000 and 2,500,000 Vail Shares, respectively, for a total authorization to repurchase up to 10,000,000 Vail Shares. The Company repurchased 237,056 Vail Shares during the three months ended October 31, 2023 (at a total cost of approximately $50.0 million, excluding accrued excise tax). The Company did not repurchase any Vail Shares during the three months ended October 31, 2022. Since inception of its share repurchase program through October 31, 2023, the Company has repurchased 8,885,358 Vail Shares for approximately $1,029.5 million. As of October 31, 2023, 1,114,642 Vail Shares remained available to repurchase under the existing share repurchase program, which has no expiration date. Vail Shares purchased pursuant to the repurchase program will be held as treasury shares and may be used for the issuance of Vail Shares under the Company’s employee share award plan.

12.     Subsequent Event
On November 30, 2023, the Company announced that it had entered into an agreement to acquire Crans-Montana Mountain Resort in Switzerland from CPI Property Group. Pursuant to the terms of the agreement, the Company 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. The Company expects to fund the purchase price for the acquired ownership interest of the resort operations through cash on hand.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Vail Resorts, Inc., together with its subsidiaries, is referred to throughout this Quarterly Report on Form 10-Q for the period ended October 31, 2023 (“Form 10-Q”) as “we,” “us,” “our” or the “Company.”

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 October 31, 2023 and 2022 and for the three 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.

The MD&A includes discussion of financial performance within each of our three segments. We have chosen to specifically include segment Reported EBITDA (defined as segment net revenue less segment operating expense, plus segment equity investment income or loss, and for the Real Estate segment, plus gain or loss on sale of real property) in the following discussion because we consider this measurement to be a significant indication of our financial performance. We utilize segment Reported EBITDA in evaluating our performance and in allocating resources to our segments. Net Debt (defined as long-term debt, net plus long-term debt due within one year less cash and cash equivalents) is included in the following discussion because we consider this measurement to be a significant indication of our available capital resources. We also believe that Net Debt is an important measurement as it is an indicator of our ability to obtain additional capital resources for our future cash needs. Resort Reported EBITDA (defined as the combination of segment Reported EBITDA of our Mountain and Lodging segments), Total Reported EBITDA (which is Resort Reported EBITDA plus segment Reported EBITDA from our Real Estate segment) and Net Debt are not measures of financial performance or liquidity defined under accounting principles generally accepted in the United States (“GAAP”). Refer to the end of the Results of Operations section for a reconciliation of net loss attributable to Vail Resorts, Inc. to Total Reported EBITDA and Resort Reported EBITDA, and long-term debt, net to Net Debt.

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Items excluded from Resort Reported EBITDA, Total Reported EBITDA and Net Debt are significant components in understanding and assessing financial performance or liquidity. Resort Reported EBITDA, Total Reported EBITDA and Net Debt should not be considered in isolation or as an alternative to, or substitute for, net loss, net change in cash and cash equivalents or other financial statement data presented in the Consolidated Condensed Financial Statements as indicators of financial performance or liquidity. Because Resort Reported EBITDA, Total Reported EBITDA and Net Debt are not measurements determined in accordance with GAAP and are thus susceptible to varying calculations, Resort Reported EBITDA, Total Reported EBITDA and Net Debt, as presented herein, may not be comparable to other similarly titled measures of other companies. In addition, our segment Reported EBITDA (i.e., Mountain, Lodging and Real Estate), the measure of segment profit or loss required to be disclosed in accordance with GAAP, may not be comparable to other similarly titled measures of other companies.

Overview
Our operations are grouped into three integrated and interdependent segments: Mountain, Lodging and Real Estate. We refer to “Resort” as the combination of the Mountain and Lodging segments.

Mountain Segment
In the Mountain segment, the Company operates the following 41 destination mountain resorts and regional ski areas (collectively, “Resorts”):
https://cdn.kscope.io/a23fa1b167f877fdd0bc83416014263b-Updated map 08.15.23 JPEG.jpg
*Denotes a destination mountain resort, which generally receives a meaningful portion of skier visits from long-distance travelers, as opposed to our regional ski areas, which tend to generate skier visits predominantly from their respective local markets.

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.

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Lodging Segment
Operations within the Lodging segment include: (i) ownership/management of a group of luxury hotels through the RockResorts brand proximate to our Colorado and Utah mountain resorts; (ii) ownership/management of non-RockResorts branded hotels and condominiums proximate to our North American Resorts; (iii) National Park Service (“NPS”) concessioner properties, including the Grand Teton Lodge Company (“GTLC”); (iv) a Colorado resort ground transportation company; and (v) mountain resort golf courses.

Revenue of the lodging segment during our first fiscal quarter 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. Lodging properties (including managed condominium rooms) at or around our mountain resorts, and our Colorado resort ground transportation company, are closely aligned with the performance of the Mountain segment and generally experience similar seasonal trends. 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.

Real Estate Segment
The principal activities of our Real Estate segment include the sale of land parcels to third-party developers and planning for future real estate development projects, including zoning and acquisition of applicable permits. We continue undertaking preliminary planning and design work on future projects and are pursuing opportunities with third-party developers rather than undertaking our own significant vertical development projects. Additionally, real estate development projects by third-party developers most often result in the creation of certain resort assets that provide additional benefit to the Mountain segment. We believe that, due to our low carrying cost of real estate land investments, we are well situated to promote future projects by third-party developers while limiting our financial risk. Our revenue from the Real Estate segment and associated expense can fluctuate significantly based upon the timing of closings and the type of real estate being sold, causing volatility in the Real Estate segment’s operating results from period to period.

Recent Trends, Risks and Uncertainties
Together with those risk factors we have identified in our Form 10-K, we have identified the following important factors (as well as risks and uncertainties associated with such factors) that could impact our future financial performance or condition:

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.

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 product sales through December 4, 2023 for the 2023/2024 North American ski season increased approximately 4% in units and approximately 11% in sales dollars as compared to the prior year through December 5, 2022. Pass product sales are adjusted to eliminate the impact of foreign currency by applying an exchange rate of $0.74 between the Canadian dollar and U.S. dollar in both periods for Whistler Blackcomb pass sales. We cannot predict the overall impact that sales of our pass products will have on total lift revenue or effective ticket price for the fiscal year ending July 31, 2024.

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Given that we operate in the travel and leisure industry, we are subject to risks related to public health emergencies, including the potential outbreak and spread of contagious disease. Public health emergencies may lead to adverse economic impacts in global and local economies, including the economies in which we operate, which may in turn impact consumer demand, the willingness or ability of guests to travel, guest visitation, staffing levels or financial results. We cannot predict the ultimate impact that any potential public health emergency may have on our guest visitation, guest spending, staffing capabilities, other related trends or overall results of operations.

As of October 31, 2023, we had $728.9 million of cash and cash equivalents, as well as $419.8 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 $80.2 million. Additionally, we have a credit facility which supports the liquidity needs of Whistler Blackcomb (the “Whistler Credit Agreement”). As of October 31, 2023, we had C$296.6 million ($213.9 million) available under the revolver component of the Whistler Credit Agreement, which represents the total commitment of C$300.0 million ($216.3 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.

RESULTS OF OPERATIONS

Summary
Below is a summary of operating results for the three months ended October 31, 2023, compared to the three months ended October 31, 2022 (in thousands):
 
Three Months Ended October 31,
20232022
Net loss attributable to Vail Resorts, Inc.$(175,512)$(136,971)
Loss before benefit from income taxes$(248,207)$(201,566)
Mountain Reported EBITDA$(139,525)$(92,133)
Lodging Reported EBITDA(236)(4,357)
Resort Reported EBITDA$(139,761)$(96,490)
Real Estate Reported EBITDA$5,393 $(1,269)

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Mountain Segment
Three months ended October 31, 2023 compared to the three months ended October 31, 2022
Mountain segment operating results for the three months ended October 31, 2023 and 2022 are presented by category as follows (in thousands, except effective ticket price (“ETP”)). ETP is calculated as lift revenue divided by total skier visits for each applicable period presented.
 Three Months Ended October 31,Percentage
Increase
(Decrease)
 20232022
Mountain net revenue:
Lift $45,390 $59,540 (23.8)%
Ski school7,178 8,927 (19.6)%
Dining18,077 19,442 (7.0)%
Retail/rental33,474 40,344 (17.0)%
Other68,336 73,464 (7.0)%
Total Mountain net revenue172,455 201,717 (14.5)%
Mountain operating expense:
Labor and labor-related benefits112,049 108,045 3.7 %
Retail cost of sales17,821 20,741 (14.1)%
General and administrative93,168 83,289 11.9 %
Other89,801 82,121 9.4 %
Total Mountain operating expense312,839 294,196 6.3 %
Mountain equity investment income, net859 346 148.3 %
Mountain Reported EBITDA$(139,525)$(92,133)(51.4)%
Total skier visits658 993 (33.7)%
ETP$68.98 $59.96 15.0 %
Mountain Reported EBITDA includes $5.8 million and $5.3 million of stock-based compensation expense for the three months ended October 31, 2023 and 2022, respectively.

Our first fiscal quarter historically results in negative Mountain Reported EBITDA, as most of our North American and European Resorts generally do not open for ski operations until our second fiscal quarter, which begins in November. The first fiscal quarter generally consists of operating and administrative expenses, summer activities (including dining), retail/rental operations and the winter operations of our Australian ski areas, for which the ski season generally occurs from June through early October.

Mountain Reported EBITDA decreased $47.4 million, or 51.4%, primarily driven by an increase in expenses at our North American Resorts, including increased labor costs and general and administrative expenses (which includes the incremental impact of our prior year investments in employee wages), increases in repairs and maintenance expense and professional services expense (including costs associated with our workforce planning tools implementation), and the impact of inflation. Mountain Reported EBITDA also decreased as a result of 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. Summer revenue at our North American Resorts also decreased primarily as a result of decreased summer visitation from lower demand for summer mountain travel and weather related challenges compared to the prior year.

Lift revenue decreased $14.2 million, or 23.8%, primarily due to a decrease in paid lift revenue at our Australian resorts as a result of reduced visitation from weather-related disruptions and unfavorable snow conditions in the current year, compared to record visitation and favorable snow conditions in the prior year.

Ski school revenue decreased $1.7 million, or 19.6%, and dining revenue decreased $1.4 million, or 7.0%, each primarily driven by decreased visitation at our Australian resorts, as a result of weather-related disruptions and unfavorable snow conditions in the current year, compared to record visitation and favorable snow conditions in the prior year. Retail/rental revenue decreased $6.9 million, or 17.0%, driven by a decrease in summer visitation at our North American Resorts, which drove decreased demand at our on-mountain retail locations, as well as a decrease in retail/rental revenue at our Australian stores.
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Other revenue mainly consists of summer visitation and 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 also includes Australian ski area lodging and transportation revenue. Other revenue decreased $5.1 million, or 7.0%, primarily driven by decreased sightseeing and other on-mountain summer activities revenue due to decreased summer visitation at our North American Resorts as a result of lower demand for summer mountain travel and weather related challenges compared to the prior year.

Operating expense increased $18.6 million, or 6.3%. Labor and labor-related benefits increased 3.7%, primarily due to normal wage adjustments and the incremental impact of our prior year investments in wages and salaries for North American employees, which went into effect in October 2022, but were in effect for the full quarter in the current year, partially offset by lower labor costs at our Australian ski areas. Retail cost of sales decreased 14.1%, compared to a decrease in retail sales of 15.5%, reflecting decreased margins on retail products driven by higher sales of discounted inventory. General and administrative expense increased 11.9% primarily due to an increase in allocated corporate overhead costs, including the incremental impact of our prior year investments in wages and salaries for North American employees, 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 9.4% primarily due to increase in repairs and maintenance expenses ($4.6 million), professional services ($2.8 million), which includes costs associated with our workforce planning tools implementation, and the impact of inflation.

Mountain equity investment income, net primarily includes our share of income from the operations of a real estate brokerage company.
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Lodging Segment
Three months ended October 31, 2023 compared to the three months ended October 31, 2022
Lodging segment operating results for the three months ended October 31, 2023 and 2022 are presented by category as follows (in thousands, except average daily rates (“ADR”) and revenue per available room (“RevPAR”)):
 Three Months Ended October 31,Percentage
Increase
(Decrease)
 20232022
Lodging net revenue:
Owned hotel rooms$25,177 $23,565 6.8 %
Managed condominium rooms12,003 12,859 (6.7)%
Dining18,083 16,829 7.5 %
Golf6,376 5,890 8.3 %
Other16,723 14,797 13.0 %
78,362 73,940 6.0 %
Payroll cost reimbursements3,459 3,677 (5.9)%
Total Lodging net revenue81,821 77,617 5.4 %
Lodging operating expense:
Labor and labor-related benefits37,475 36,915 1.5 %
General and administrative14,857 15,510 (4.2)%
Other26,266 25,872 1.5 %
78,598 78,297 0.4 %
Reimbursed payroll costs3,459 3,677 (5.9)%
Total Lodging operating expense82,057 81,974 0.1 %
Lodging Reported EBITDA$(236)$(4,357)94.6 %
Owned hotel statistics:
ADR$304.03 $277.25 9.7 %
RevPAR$158.97 $155.03 2.5 %
Managed condominium statistics:
ADR$233.92 $240.08 (2.6)%
RevPAR$50.78 $52.90 (4.0)%
Owned hotel and managed condominium statistics (combined):
ADR$269.31 $258.48 4.2 %
RevPAR$82.95 $81.36 2.0 %
Lodging Reported EBITDA includes $0.9 million and $1.0 million of stock-based compensation expense for the three months ended October 31, 2023 and 2022, respectively.
Lodging Reported EBITDA increased $4.1 million, or 94.6%. Revenue from owned hotel rooms increased $1.6 million, or 6.8%, primarily due to an increase in ADR at GTLC. Dining revenue increased $1.3 million, or 7.5%, and other revenue increased $1.9 million, or 13.0%, each primarily as a result of improved park visitation at GTLC, driven by positive weather conditions which enabled increased ancillary product sales.
Revenue from payroll cost reimbursement and the corresponding reimbursed payroll costs relate to payroll costs at managed hotel properties where we are the employer and all payroll costs are reimbursed by the owners of the properties under contractual arrangements. Since the reimbursements are made based upon the costs incurred with no added margin, the revenue and corresponding expense have no effect on our Lodging Reported EBITDA.
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Real Estate Segment
Our Real Estate net revenue is primarily determined by the timing of closings and the mix of real estate sold in any given period. Different types of projects have different revenue and profit margins; therefore, as the real estate inventory mix changes, it can greatly impact Real Estate segment net revenue, operating expense, gain or loss on sale of real property and Real Estate Reported EBITDA.

Three months ended October 31, 2023 compared to the three months ended October 31, 2022
Real Estate segment operating results for the three months ended October 31, 2023 and 2022 are presented by category as follows (in thousands):
 Three Months Ended October 31,Percentage
Increase
(Decrease)
 20232022
Total Real Estate net revenue$4,289 $113 3,695.6 %
Real Estate operating expense:
Cost of sales3,607 — nm
Other1,574 1,382 13.9 %
Total Real Estate operating expense5,181 1,382 274.9 %
Gain on sale of real property6,285 — nm
Real Estate Reported EBITDA$5,393 $(1,269)525.0 %

During the three months ended October 31, 2023 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 three months ended October 31, 2023. We did not close on any significant real estate transactions during the three months ended October 31, 2022.

Other operating expense for both the three months ended October 31, 2023 and 2022 was primarily comprised of general and administrative costs, such as labor and labor-related benefits, professional services and allocated corporate overhead costs.

Other Items
In addition to segment operating results, the following material items contributed to our overall financial results for the three months ended October 31, 2023 and 2022 (in thousands):
Three Months Ended October 31,Increase
(Decrease)
20232022
Interest expense, net$(40,730)$(35,302)15.4 %
Benefit from income taxes$65,160 $58,006 12.3 %
Effective tax rate26.3 %28.8 %(2.5) pts

Interest expense, net. Interest expense, net for the three months ended October 31, 2023 increased $5.4 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.

Benefit from 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 months ended October 31, 2023 was 26.3% compared to 28.8% for the three months ended October 31, 2022.

The decrease in the effective tax rate for the three months ended October 31, 2023 compared to the three months ended October 31, 2022 was primarily due to a decrease in favorable discrete items impacting the first quarter tax provision in the current period.

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Reconciliation of Segment Earnings and Net Debt
The following table reconciles net loss attributable to Vail Resorts, Inc. to Total Reported EBITDA for the three months ended October 31, 2023 and 2022 (in thousands):
 
 Three Months Ended October 31,
 20232022
Net loss attributable to Vail Resorts, Inc.$(175,512)$(136,971)
Net loss attributable to noncontrolling interests(7,535)(6,589)
Net loss(183,047)(143,560)
Benefit from income taxes(65,160)(58,006)
Loss before benefit from income taxes(248,207)(201,566)
Depreciation and amortization66,728 64,614 
Loss on disposal of fixed assets and other, net2,043 
Change in fair value of contingent consideration3,057 636