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Published: 2023-12-07 00:00:00 ET

mtn-20231031

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

Vail Resorts, Inc.

(Exact Name of Registrant as Specified in Its Charter)


Delaware		51-0291762
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

390 Interlocken Crescent
Broomfield,	Colorado	80021
(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 class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.01 par value	MTN	New 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 I	FINANCIAL INFORMATION	Page

Item 1.	Financial Statements (unaudited).
	Consolidated Condensed Balance Sheets as of October 31, 2023, July 31, 2023 and October 31, 2022	2
	Consolidated Condensed Statements of Operations for the Three Months Ended October 31 , 2023 and 2022	3
	Consolidated Condensed Statements of Comprehensive Loss for the Three Months Ended October 31, 2023 and 2022	4
	Consolidated Condensed Statements of Stockholders’ Equity for the Three Mon ths Ended October 31, 2023 and 2022	5
	Consolidated Condensed Statements of Cash Flows for the Three Months Ended October 31 , 2023 and 2022	6
	Notes to Consolidated Condensed Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	32

PART II	OTHER INFORMATION

Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3.	Defaults Upon Senior Securities	33
Item 4.	Mine Safety Disclosures	33
Item 5.	Other Information	33
Item 6.	Exhibits	34

Vail Resorts, Inc.

Consolidated Condensed Balance Sheets

(In thousands, except per share amounts)

(Unaudited)


	October 31, 2023		July 31, 2023		October 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	728,859	$	562,975	$	1,180,942
Restricted cash	11,532		10,118		20,121
Trade receivables, net	105,546		381,067		118,491
Inventories, net	157,707		132,548		139,926
Other current assets	130,861		121,403		162,187
Total current assets	1,134,505		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 investment	86,465		90,207		95,608
Goodwill, net (Note 7)	1,668,028		1,720,344		1,688,731
Intangible assets, net	300,457		309,345		307,410
Operating right-of-use assets	187,128		192,289		192,230
Other assets	38,832		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 payable	16,663		83,514		84,372
Long-term debt due within one year (Note 5)	69,659		69,160		67,811
Total current liabilities	1,362,847		1,130,695		1,342,705
Long-term debt, net (Note 5)	2,732,037		2,750,675		2,769,698
Operating lease liabilities	165,462		168,326		176,585
Other long-term liabilities	285,454		286,261		234,301
Deferred income taxes, net	286,036		276,137		205,859
Total liabilities	4,831,836		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 capital	1,126,033		1,124,433		1,106,813
Accumulated other comprehensive loss	(78,376)		(10,358)		(68,908)
Retained earnings	619,727		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’ equity	633,031		1,003,947		1,264,879
Noncontrolling interests	295,149		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.

Vail Resorts, Inc.

Consolidated Condensed Statements of Operations

(In thousands, except per share amounts)

(Unaudited)


	Three Months Ended October 31,
	2023		2022
Net revenue:
Mountain and Lodging services and other	$	182,834	$	210,386
Mountain and Lodging retail and dining	71,442		68,948
Resort net revenue	254,276		279,334
Real Estate	4,289		113
Total net revenue	258,565		279,447
Operating expense (exclusive of depreciation and amortization shown separately below):
Mountain and Lodging operating expense	255,576		242,286
Mountain and Lodging retail and dining cost of products sold	31,295		35,085
General and administrative	108,025		98,799
Resort operating expense	394,896		376,170
Real Estate operating expense	5,181		1,382
Total segment operating expense	400,077		377,552
Other operating (expense) income:
Depreciation and amortization	(66,728)		(64,614)
Gain on sale of real property	6,285		—
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, net	859		346
Investment income and other, net	3,684		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 taxes	65,160		58,006
Net loss	(183,047)		(143,560)
Net loss attributable to noncontrolling interests	7,535		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.

Vail Resorts, Inc.

Consolidated Condensed Statements of Comprehensive Loss

(In thousands)

(Unaudited)


	Three Months Ended October 31,
	2023		2022
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 interests	34,081		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.

Vail Resorts, Inc.

Consolidated Condensed Statements of Stockholders’ Equity

(In thousands)

(Unaudited)


	Common Stock		Additional Paid in Capital	Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Treasury Stock		Total Vail Resorts, Inc. Stockholders’ Equity		Noncontrolling Interests		Total 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 taxes	1			(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 taxes	1			(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.

Vail Resorts, Inc.

Consolidated Condensed Statements of Cash Flows

(In thousands)

(Unaudited)


	Three Months Ended October 31,
	2023		2022
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 amortization	66,728		64,614

Stock-based compensation expense	6,796		6,345
Benefit from income taxes	(65,160)		(58,006)


Other non-cash expense, net	8,217		8,615
Changes in assets and liabilities:
Trade receivables, net	272,313		264,285
Inventories, net	(26,789)		(31,924)
Accounts payable and accrued liabilities	(773)		2,508
Deferred revenue	308,950		279,221

Income taxes payable	(17,052)		(20,460)
Other assets and liabilities, net	(41,684)		(38,647)
Net cash provided by operating activities	328,499		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 deposits	52,437		—

Other investing activities, net	6,507		385
Net cash provided by (used in) investing activities	5,565		(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 cash	167,298		74,956
Cash, cash equivalents and restricted cash:
Beginning of period	573,093		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.

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:

*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.

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 Value		Estimated 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.

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,
	2023		2022
Mountain net revenue:
Lift	$	45,390	$	59,540
Ski School	7,178		8,927
Dining	18,077		19,442
Retail/Rental	33,474		40,344
Other	68,336		73,464
Total Mountain net revenue	$	172,455	$	201,717
Lodging net revenue:
Owned hotel rooms	$	25,177	$	23,565
Managed condominium rooms	12,003		12,859
Dining	18,083		16,829

Golf	6,376		5,890
Other	16,723		14,797
	78,362		73,940
Payroll cost reimbursements	3,459		3,677
Total Lodging net revenue	$	81,821	$	77,617
Total Resort net revenue	$	254,276	$	279,334
Total Real Estate net revenue	4,289		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.

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,
	2023				2022
	Basic		Diluted		Basic		Diluted
Net loss per share:
Net loss attributable to Vail Resorts	$	(175,512)	$	(175,512)	$	(136,971)	$	(136,971)
Weighted-average Vail Shares outstanding	38,117		38,117		40,296		40,296
Weighted-average Exchangeco Shares outstanding	—		—		2		2
Total Weighted-average shares outstanding	38,117		38,117		40,298		40,298
Effect of dilutive securities	—		—		—		—
Total shares	38,117		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.

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):


	Maturity	October 31, 2023		July 31, 2023		October 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% Notes	2025	600,000		600,000		600,000
0.0% Convertible Notes (b)	2026	575,000		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 Loan	2036	37,269		40,399		36,430
Employee housing bonds	2027-2039	52,575		52,575		52,575
Canyons obligation	2063	364,825		363,386		359,052
Whistler Blackcomb employee housing leases	2042	27,984		29,491		—
Other	2023-2036	33,971		35,011		36,587
Total debt		2,805,786		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.

(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
2025	675,755
2026	643,543
2027	851,151
2028	4,655
Thereafter	579,261
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.

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 interests	91,524
Total estimated purchase consideration	$	246,889

Allocation of total estimated purchase consideration:
Current assets	$	119,867
Property, plant and equipment	176,805
Goodwill	3,368
Identifiable intangible assets and other assets	7,476
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.

7. Supplementary Balance Sheet Information

The composition of property, plant and equipment follows (in thousands):


	October 31, 2023		July 31, 2023		October 31, 2022
Land and land improvements	$	790,550	$	796,730	$	780,977
Buildings and building improvements	1,626,566		1,643,517		1,574,931
Machinery and equipment	1,781,980		1,792,378		1,594,588
Furniture and fixtures	302,646		298,725		316,350
Software	151,809		152,033		139,522
Vehicles	86,173		87,298		82,239
Construction in progress	185,229		134,113		221,990
Gross property, plant and equipment	4,924,953		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, 2023		July 31, 2023		October 31, 2022
Trade payables	$	161,581	$	148,521	$	162,366
Deferred revenue	872,418		572,602		787,514
Accrued salaries, wages and deferred compensation	33,733		38,908		41,239
Accrued benefits	57,340		60,466		44,008
Deposits	42,880		37,798		35,491
Operating lease liabilities	38,332		36,904		35,331
Other liabilities	70,241		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):


	Mountain		Lodging		Goodwill, 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.

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
Description	Total		Level 1		Level 2		Level 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
Description	Total		Level 1		Level 2		Level 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
Description	Total		Level 1		Level 2		Level 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 value	3,057		636
Balance as of October 31, 2023 and 2022, respectively	$	59,300	$	24,100

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.

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.

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,
	2023		2022
Net revenue:





Mountain	$	172,455	$	201,717
Lodging	81,821		77,617
Total Resort net revenue	254,276		279,334
Real Estate	4,289		113
Total net revenue	$	258,565	$	279,447
Segment operating expense:
Mountain	$	312,839	$	294,196
Lodging	82,057		81,974
Total Resort operating expense	394,896		376,170
Real Estate	5,181		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 Estate	5,393		(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 amortization	66,728		64,614

Change in estimated fair value of contingent consideration	3,057		636
Loss on disposal of fixed assets and other, net	2,043		6
Investment income and other, net	(3,684)		(2,886)
Foreign currency loss on intercompany loans	4,965		6,135
Interest expense, net	40,730		35,302
Total Reported EBITDA	$	(134,368)	$	(97,759)

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.

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”):

*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.

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.

•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,
		2023		2022
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)

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)
	2023		2022
Mountain net revenue:
Lift	$	45,390	$	59,540	(23.8)	%
Ski school	7,178		8,927		(19.6)	%
Dining	18,077		19,442		(7.0)	%
Retail/rental	33,474		40,344		(17.0)	%
Other	68,336		73,464		(7.0)	%
Total Mountain net revenue	172,455		201,717		(14.5)	%
Mountain operating expense:
Labor and labor-related benefits	112,049		108,045		3.7	%
Retail cost of sales	17,821		20,741		(14.1)	%

General and administrative	93,168		83,289		11.9	%
Other	89,801		82,121		9.4	%
Total Mountain operating expense	312,839		294,196		6.3	%
Mountain equity investment income, net	859		346		148.3	%
Mountain Reported EBITDA	$	(139,525)	$	(92,133)	(51.4)	%

Total skier visits	658		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.

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.

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)
	2023		2022
Lodging net revenue:
Owned hotel rooms	$	25,177	$	23,565	6.8	%
Managed condominium rooms	12,003		12,859		(6.7)	%
Dining	18,083		16,829		7.5	%

Golf	6,376		5,890		8.3	%
Other	16,723		14,797		13.0	%
	78,362		73,940		6.0	%
Payroll cost reimbursements	3,459		3,677		(5.9)	%
Total Lodging net revenue	81,821		77,617		5.4	%
Lodging operating expense:
Labor and labor-related benefits	37,475		36,915		1.5	%
General and administrative	14,857		15,510		(4.2)	%
Other	26,266		25,872		1.5	%
	78,598		78,297		0.4	%
Reimbursed payroll costs	3,459		3,677		(5.9)	%
Total Lodging operating expense	82,057		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.

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)
	2023		2022
Total Real Estate net revenue	$	4,289	$	113	3,695.6	%
Real Estate operating expense:
Cost of sales	3,607		—		nm
Other	1,574		1,382		13.9	%
Total Real Estate operating expense	5,181		1,382		274.9	%
Gain on sale of real property	6,285		—		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)
	2023	2022







Interest expense, net		$	(40,730)		$	(35,302)		15.4	%
Benefit from income taxes		$	65,160		$	58,006		12.3	%
Effective tax rate		26.3		%	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.

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,
	2023		2022
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 amortization	66,728		64,614

Loss on disposal of fixed assets and other, net	2,043		6
Change in fair value of contingent consideration	3,057		636
Investment income and other, net	(3,684)		(2,886)
Foreign currency loss on intercompany loans	4,965		6,135
Interest expense, net	40,730		35,302
Total Reported EBITDA	$	(134,368)	$	(97,759)

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)
Total Reported EBITDA	$	(134,368)	$	(97,759)

The following table reconciles long-term debt, net to Net Debt (in thousands):


	October 31,
	2023		2022
Long-term debt, net	$	2,732,037	$	2,769,698
Long-term debt due within one year	69,659		67,811
Total debt	2,801,696		2,837,509
Less: cash and cash equivalents	728,859		1,180,942
Net Debt	$	2,072,837	$	1,656,567

LIQUIDITY AND CAPITAL RESOURCES

Changes in significant sources of cash for the three months ended October 31, 2023 and 2022 are presented by categories as follows (in thousands).


	Three Months Ended October 31,
	2023		2022
Net cash provided by operating activities	$	328,499	$	332,991
Net cash provided by (used in) investing activities	$	5,565	$	(134,531)
Net cash used in financing activities	$	(153,608)	$	(104,628)

Three months ended October 31, 2023 compared to the three months ended October 31, 2022

We generated $328.5 million of cash from operating activities during the three months ended October 31, 2023, a decrease of $4.5 million compared to $333.0 million generated during the three months ended October 31, 2022. The decrease in operating cash flows was primarily a result of decreased Mountain segment results for the three months ended October 31, 2023

compared to the prior year, partially offset by an increase in pass and other product sales and receivable collections of approximately $37.8 million.

Cash provided by (used in) investing activities for the three months ended October 31, 2023 increased by $140.1 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 October 31, 2022, of which $52.4 million matured in the current year; (ii) a decrease in capital expenditures of approximately $70.7 million as compared to the prior year, driven by our significant investment in lift upgrades in 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.

Cash used in financing activities increased by $49.0 million during the three months ended October 31, 2023 compared to the three months ended October 31, 2022, primarily due to an increase in repurchases of common stock of $50.0 million.

Significant Sources of Cash

We had $728.9 million of cash and cash equivalents as of October 31, 2023, compared to $1,180.9 million as of October 31, 2022, and the decrease was primarily due to increased activity during the last twelve months associated with our share repurchase program. 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).

In addition to our $728.9 million of cash and cash equivalents at October 31, 2023, we had $419.8 million available under the revolver component of our Vail Holdings Credit Agreement as of October 31, 2023 (which represents the total commitment of $500.0 million less outstanding letters of credit of $80.2 million). Additionally, we had C$296.6 million ($213.9 million) available under the revolver component of our Whistler Credit Agreement (which represents the total commitment of C$300.0 million ($216.3 million) less certain outstanding letters of credit of C$3.4 million ($2.4 million)). We expect that our liquidity needs in the near term will be met by continued use of our existing cash and cash equivalents, operating cash flows and borrowings under both the Vail Holdings Credit Agreement and Whistler Credit Agreement, if needed. The Vail Holdings Credit Agreement and the Whistler Credit Agreement provide adequate flexibility with any new borrowings currently priced at the Secured Overnight Financing Rate plus 1.60% and Bankers Acceptance Rate plus 1.75%, respectively.

Significant Uses of Cash

Capital Expenditures

We have historically invested significant amounts of cash in capital expenditures for our resort operations, and we expect to continue to do so, subject to operating performance particularly as it relates to discretionary projects. Currently planned capital expenditures primarily include investments that will allow us to maintain our high-quality standards for the guest experience, as well as certain incremental discretionary improvements at our Resorts, throughout our owned hotels and in technology that can impact the full network. We evaluate additional discretionary capital improvements based on an expected level of return on investment.

We currently anticipate we will spend approximately $180 million to $185 million on resort capital expenditures during calendar year 2023, excluding one-time investments related to integration activities, deferred capital associated with the Keystone and Park City projects, $4 million of reimbursable investments associated with insurance recoveries, and $9 million of growth capital investments at Andermatt-Sedrun. Including these one-time items, our total capital plan for calendar year 2023 is expected to be approximately $204 million to $209 million. Included in these estimated capital expenditures are approximately $112 million to $117 million of maintenance capital expenditures (excluding Andermatt-Sedrun), which are necessary to maintain appearance and level of service appropriate to our resort operations. We currently plan to utilize cash on hand, borrowings available under our credit agreements and/or cash flow generated from future operations to provide the cash necessary to complete our capital plans.

We had spent approximately $162 million for capital expenditures in calendar year 2023 as of October 31, 2023, leaving approximately $42 million to $47 million to spend in the remainder of calendar year 2023.

We expect our capital plan for calendar year 2024 will be approximately $189 million to $194 million, excluding $13 million of incremental capital investments in premium fleet and fulfillment infrastructure to support the official launch of My Epic Gear

for the 2024/2025 winter season at 12 destination mountain resorts and regional ski areas across North America, $11 million of growth capital investments at Andermatt-Sedrun and $1 million of reimbursable capital. Including My Epic Gear and one-time investments, our total capital plan for calendar year 2024 is expected to be approximately $214 million to $219 million. We currently plan to utilize cash on hand, borrowings available under our credit agreements and/or cash generated from future operations to provide the cash necessary to complete our capital plans.

Debt

As of October 31, 2023, principal payments on the majority of our long-term debt ($2.1 billion of the total $2.8 billion debt outstanding as of October 31, 2023) are not due until fiscal year 2026 and beyond. As of both October 31, 2023 and 2022, total long-term debt, net (including long-term debt due within one year) was $2.8 billion. Net Debt (defined as long-term debt, net plus long-term debt due within one year less cash and cash equivalents) increased from $1.7 billion as of October 31, 2022 to $2.1 billion as of October 31, 2023. The increase was primarily associated with the use of cash to fund share repurchases under our share repurchase program during the last twelve months.

As of October 31, 2023, the Vail Holdings Credit Agreement provides for (i) a revolving loan facility in an aggregate principal amount of $500.0 million and (ii) a term loan of $1.0 billion. We expect that our liquidity needs in the near term will be met by continued use of our existing cash and cash equivalents, operating cash flows and borrowings under both the Vail Holdings Credit Agreement and Whistler Credit Agreement, if needed.

Our debt service requirements can be impacted by changing interest rates as we had approximately $0.7 billion of variable-rate debt outstanding as of October 31, 2023. A 100-basis point change in our borrowing rates would cause our annual interest payments to change by approximately $6.5 million. Additionally, the annual payments associated with the financing of the Canyons Resort transaction increase by the greater of CPI less 1%, or 2%. The fluctuation in our debt service requirements, in addition to interest rate and inflation changes, may be impacted by future borrowings under our credit agreements or other alternative financing arrangements we may enter into. Our long term liquidity needs depend upon operating results that impact the borrowing capacity under our credit agreements. We can respond to liquidity impacts of changes in the business and economic environment by managing our capital expenditures, variable operating expenses, the timing of new real estate development activity and the payment of cash dividends on our common stock.

Dividend Payments

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. During the three months ended October 31, 2023, we paid cash dividends of $2.06 per share ($78.5 million). During the three months ended October 31, 2022, we paid cash dividends of $1.91 per share ($77.0 million). We funded these dividends with available cash on hand. The amount, if any, of dividends to be paid in the future will depend on our available cash on hand, anticipated cash needs, overall financial condition, restrictions contained in our Vail Holdings Credit Agreement, future prospects for earnings and cash flows, as well as other factors considered relevant by our Board of Directors.

Share Repurchase Program

Our share repurchase program is conducted under authorizations made from time to time by our Board of Directors. On March 9, 2006, our Board of Directors initially authorized the repurchase of up to 3,000,000 shares of Vail Resorts common stock (“Vail Shares”) and later authorized additional repurchases of up to 3,000,000 Vail Shares (July 16, 2008), 1,500,000 Vail Shares (December 4, 2015) and 2,500,000 Vail Shares (March 7, 2023), for a total authorization to repurchase up to 10,000,000 Vail Shares. During the three months ended October 31, 2023, we repurchased 237,056 shares (at an average cost of $210.92) for a total cost of approximately $50.0 million, excluding accrued excise tax. We funded the share repurchases with available cash on hand. We did not repurchase any Vail Shares during the three months ended October 31, 2022. Since inception of this stock repurchase program through October 31, 2023, we have repurchased 8,885,358 Vail Shares at a cost of approximately $1,029.5 million. As of October 31, 2023, 1,114,642 Vail Shares remained available to repurchase under the existing repurchase authorization. Vail Shares purchased pursuant to the repurchase program will be held as treasury shares and may be used for the issuance of shares under our share award plan. Repurchases under the program may be made from time to time at prevailing prices as permitted by applicable laws, and subject to market conditions and other factors. The timing as well as the number of Vail Shares that may be repurchased under the program will depend on several factors, including our future financial performance, our available cash resources and competing uses for cash that may arise in the future, the restrictions in our Vail Holdings Credit Agreement, prevailing prices of Vail Shares and the number of Vail Shares that become available for repurchase at prices that we believe are attractive. The share repurchase program has no expiration date.

Covenants and Limitations

We must abide by certain restrictive financial covenants under our credit agreements. The most restrictive of those covenants include the following covenants: for the Vail Holdings Credit Agreement, Net Funded Debt to Adjusted EBITDA ratio, Secured Net Funded Debt to Adjusted EBITDA ratio and the Interest Coverage ratio (each as defined in the Vail Holdings Credit Agreement); for the Whistler Credit Agreement, Consolidated Total Leverage Ratio and Consolidated Interest Coverage Ratio (each as defined in the Whistler Credit Agreement); and for the EPR Secured Notes, Maximum Leverage Ratio and Consolidated Fixed Charge Ratio (each as defined in the EPR Agreements). Additionally, the New Regional Policy loan between Andermatt-Sedrun and the Canton of Uri and Canton of Graubünden dated June 24, 2016 includes restrictive covenants requiring certain minimum financial results (as defined in the agreement). In addition, our financing arrangements limit our ability to make certain restricted payments, pay dividends on or redeem or repurchase stock, make certain investments and make certain affiliate transfers, and may limit our ability to enter into certain mergers, consolidations or sales of assets and incur certain indebtedness. Our borrowing availability under the Vail Holdings Credit Agreement is primarily determined by the Net Funded Debt to Adjusted EBITDA ratio, which is based on our segment operating performance, as defined in the Vail Holdings Credit Agreement. Our borrowing availability under the Whistler Credit Agreement is primarily determined based on the commitment size of the credit facility and our compliance with the terms of the Whistler Credit Agreement.

We were in compliance with all restrictive financial covenants in our debt instruments as of October 31, 2023. We expect that we will meet all applicable financial maintenance covenants in effect in our credit agreements through the next twelve months. However, there can be no assurance we will meet such financial covenants. If such covenants are not met, we would be required to seek a waiver or amendment from the banks participating in the credit agreements. There can be no assurance that such waivers or amendments would be granted, which could have a material adverse impact on our liquidity.

OFF BALANCE SHEET ARRANGEMENTS

We do not have off balance sheet transactions that are expected to have a material effect on our financial condition, revenue, expenses, results of operations, liquidity, capital expenditures or capital resources.

CRITICAL ACCOUNTING POLICIES

There were no significant changes to our critical accounting policies and estimates as reported in our Form 10-K for the fiscal year ended July 31, 2023.

FORWARD-LOOKING STATEMENTS

Except for any historical information contained herein, the matters discussed or incorporated by reference in this Form 10-Q contain certain forward-looking statements within the meaning of the federal securities laws. These statements relate to analyses and other information available as of the date hereof, which are based on forecasts of future results and estimates of amounts not yet determinable. These statements also relate to our contemplated future prospects, developments and business strategies.

These forward-looking statements are identified by their use of terms and phrases such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “will” and similar terms and phrases, including references to assumptions. Although we believe that our plans, intentions and expectations reflected in or suggested by such forward-looking statements are reasonable, we cannot assure you that such plans, intentions or expectations will be achieved. Important factors that could cause actual results to differ materially from our forward-looking statements include, but are not limited to:

•the economy generally, and our business and results of operations, including the ultimate amount of refunds that we would be required to refund to our pass product holders for qualifying circumstances under our Epic Coverage program;

•prolonged weakness in general economic conditions, including adverse effects on the overall travel and leisure related industries;

•risks associated with the effects of high or prolonged inflation, rising interest rates and financial institution disruptions;

•unfavorable weather conditions or the impact of natural disasters or other unexpected events;

•the willingness or ability of our guests to travel due to terrorism, the uncertainty of military conflicts or public health emergencies, and the cost and availability of travel options and changing consumer preferences, discretionary spending habits or willingness to travel;

•risks related to travel and airline disruptions, and other adverse impacts on the ability of our guests to travel;

•risks related to interruptions or disruptions of our information technology systems, data security or cyberattacks;

•risks related to our reliance on information technology, including our failure to maintain the integrity of our customer or employee data and our ability to adapt to technological developments or industry trends;

•our ability to acquire, develop and implement relevant technology offerings for customers and partners;

•the seasonality of our business combined with adverse events that may occur during our peak operating periods;

•competition in our mountain and lodging businesses or with other recreational and leisure activities;

•risks related to the high fixed cost structure of our business;

•our ability to fund resort capital expenditures;

•risks related to a disruption in our water supply that would impact our snowmaking capabilities and operations;

•our reliance on government permits or approvals for our use of public land or to make operational and capital improvements;

•risks related to federal, state, local and foreign government laws, rules and regulations, including environmental and health and safety laws and regulations;

•risks related to changes in security and privacy laws and regulations which could increase our operating costs and adversely affect our ability to market our products, properties and services effectively;

•potential failure to adapt to technological developments or industry trends regarding information technology;

•our ability to successfully launch and promote adoption of new products, technology, services and programs;

•risks related to our workforce, including increased labor costs, loss of key personnel and our ability to maintain adequate staffing, including hiring and retaining a sufficient seasonal workforce;

•a deterioration in the quality or reputation of our brands, including our ability to protect our intellectual property and the risk of accidents at our mountain resorts;

•risks related to scrutiny and changing expectations regarding our environmental, social and governance practices and reporting;

•our ability to successfully integrate acquired businesses, including their integration into our internal controls and infrastructure; our ability to successfully navigate new markets, including Europe; or that acquired businesses may fail to perform in accordance with expectations;

•risks associated with international operations;

•fluctuations in foreign currency exchange rates where the Company has foreign currency exposure, primarily the Canadian and Australian dollars and the Swiss franc, as compared to the U.S. dollar;

•changes in tax laws, regulations or interpretations, or adverse determinations by taxing authorities;

•risks related to our indebtedness and our ability to satisfy our debt service requirements under our outstanding debt including our unsecured senior notes, which could reduce our ability to use our cash flow to fund our operations, capital expenditures, future business opportunities and other purposes;

•a materially adverse change in our financial condition;

•adverse consequences of current or future litigation and legal claims;

•changes in accounting judgments and estimates, accounting principles, policies or guidelines; and

•other risks and uncertainties included under Part 1. Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended July 31, 2023.

All forward-looking statements attributable to us or any persons acting on our behalf are expressly qualified in their entirety by these cautionary statements.

If one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, our actual results may vary materially from those expected, estimated or projected. Given these uncertainties, users of the information included or incorporated by reference in this Form 10-Q, including investors and prospective investors, are cautioned not to place undue reliance on such forward-looking statements. Actual results may differ materially from those suggested by the forward-looking statements that we make for a number of reasons including those described above and in Part I, Item 1A. “Risk Factors” of our Form 10-K. All forward-looking statements are made only as of the date hereof. Except as may be required by law, we do not intend to update these forward-looking statements, even if new information, future events or other circumstances have made them incorrect or misleading.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk. Our exposure to market risk is limited primarily to the fluctuating interest rates associated with variable rate indebtedness. As of October 31, 2023, we had approximately $0.7 billion of variable rate indebtedness (after taking into consideration $400.0 million in interest rate swaps which converts variable-rate debt to fixed-rate debt), representing approximately 23.3% of our total debt outstanding, at an average interest rate during the three months ended October 31, 2023 of approximately 6.8%. Based on variable-rate borrowings outstanding as of October 31, 2023, a 100-basis point (or 1.0%) change in our borrowing rates would result in our annual interest payments changing by approximately $6.5 million. Our market risk exposure fluctuates based on changes in underlying interest rates.

Foreign Currency Exchange Rate Risk. We are exposed to currency translation risk because the results of our international entities are reported in local currency, which we then translate to U.S. dollars for inclusion in our Consolidated Condensed Financial Statements. As a result, changes between the foreign exchange rates, in particular the Canadian dollar, Australian dollar and Swiss franc compared to the U.S. dollar, affect the amounts we record for our foreign assets, liabilities, revenues and expenses, and could have a negative effect on our financial results. Additionally, we also have foreign currency transaction exposure from an intercompany loan to Whistler Blackcomb that is not deemed to be permanently invested, which has and could materially change due to fluctuations in the Canadian dollar exchange rate. The results of Whistler Blackcomb are reported in Canadian dollars, the results of our Australian resorts are reported in Australian dollars and the results of Andermatt-Sedrun are reported in Swiss francs, each of which we then translate to U.S. dollars for inclusion in our Consolidated Condensed Financial Statements. We do not currently enter into hedging arrangements to minimize the impact of foreign currency fluctuations on our operations.

The following table summarizes the amounts of foreign currency translation adjustments, representing losses, and foreign currency loss on intercompany loans recognized in comprehensive loss (in thousands).


	Three Months Ended October 31,
	2023		2022
Foreign currency translation adjustments	$	(92,094)	$	(117,808)
Foreign currency loss on intercompany loans	$	(4,965)	$	(6,135)

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Management of the Company, under the supervision and with participation of the Chief Executive Officer (the “CEO”) and Chief Financial Officer (the “CFO”), evaluated the effectiveness of the Company’s “disclosure controls and procedures” as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Act”), as of the end of the period covered by this Quarterly Report on Form 10-Q.

Based upon their evaluation of the Company’s disclosure controls and procedures, the CEO and the CFO concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, the disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Act is accumulated and communicated to management, including the CEO and the CFO, as appropriate, to allow timely decisions regarding required disclosure and are effective to provide reasonable assurance that such information is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms.

The Company, including its CEO and CFO, does not expect that the Company’s controls and procedures will prevent or detect all error and all fraud. A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

Changes in Internal Controls over Financial Reporting

On August 3, 2022, we completed our acquisition of Andermatt-Sedrun. In accordance with the SEC’s general guidance for recently acquired businesses, our assessment of and conclusion on the effectiveness of our internal control over financial reporting as of the fiscal year ended July 31, 2023 did not include certain elements of the internal controls of Andermatt-Sedrun. However, as of October 31, 2023, Andermatt-Sedrun is now included within our assessment of and conclusion on the effectiveness of our internal control over financial reporting.

Excluding Andermatt-Sedrun, there were no changes in the Company’s internal control over financial reporting that occurred during the three months ended October 31, 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are a party to various lawsuits arising in the ordinary course of business. We believe that we have adequate insurance coverage and/or have accrued for all loss contingencies for asserted and unasserted matters and that, although the ultimate outcome of such claims cannot be ascertained, current pending and threatened claims are not expected, individually or in the aggregate, to have a material adverse impact on our financial position, results of operations and cash flows.

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors we previously disclosed in our Form 10-K, which was filed on September 28, 2023 as of and for the year ended July 31, 2023.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Repurchase of Equity Securities

The following table sets forth our purchases of Vail Shares during the first quarter of fiscal 2024:


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (1)
August 1, 2023 - August 31, 2023	—	$	—	—	1,351,698
September 1, 2023 - September 30, 2023	—	$	—	—	1,351,698
October 1, 2023 - October 31, 2023	237,056	$	210.92	237,056	1,114,642
Total	237,056	$	210.92	237,056	1,114,642


(1)			The share repurchase program is conducted under authorizations made from time to time by our Board of Directors. The Board of Directors initially authorized the repurchase of up to 3,000,000 Vail Shares (March 9, 2006), and later authorized additional repurchases of up to 3,000,000 Vail Shares (July 16, 2008), 1,500,000 Vail Shares (December 4, 2015) and 2,500,000 Vail Shares (March 7, 2023), for a total authorization to repurchase up to 10,000,000 Vail Shares. As of October 31, 2023, 1,114,642 Vail Shares remained available to repurchase under the existing repurchase authorization. Repurchases under these authorizations may be made from time to time at prevailing prices as permitted by applicable laws, including under plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, and subject to market conditions and other factors. These authorizations have no expiration date.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Director and Officer Rule 10b5-1 Trading Arrangements

During the three months ended October 31, 2023, none of the Company’s directors or “officers” (as defined in Rule 16a-1(f) under the Exchange Act) adopted, modified or terminated “Rule 10b5-1 trading arrangements” or “non-Rule 10b5-1 trading arrangements” (each as defined in Item 408 of Regulation S-K).

ITEM 6. EXHIBITS

The following exhibits are either filed or furnished herewith or, if so indicated, incorporated by reference to the documents indicated in parentheses, which have previously been filed or furnished with the Securities and Exchange Commission.


Exhibit Number			Description

10.1			Form of Separation Agreement and General Release by and between Ryan Bennett and Vail Resorts, Inc. dated October 12, 2023.

10.2*			Vail Resorts, Inc. Management Incentive Plan (amended September 13, 2023).

31.1			Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2			Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32			Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS			XBRL Instance Document - the instance document does not appear in the interactive data file as its XBRL tags are embedded within the inline XBRL document.

101.SCH			XBRL Schema Document.

101.CAL			XBRL Calculation Linkbase Document.

101.DEF			XBRL Definition Linkbase Document.

101.LAB			XBRL Label Linkbase Document.

101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document.

104			The cover page from this Quarterly Report on Form 10-Q, formatted in inline XBRL.

*Management contracts and compensatory plans and arrangements.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		Vail Resorts, Inc.

Date: December 7, 2023	By:	/s/ Angela A. Korch
		Angela A. Korch
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)

Date: December 7, 2023	By:	/s/ Nathan Gronberg
		Nathan Gronberg
		Vice President, Controller and Chief Accounting Officer
		(Principal Accounting Officer)