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Edited Transcript of SKIS earnings conference call or presentation 27-Jun-19 2:00pm GMT

Q4 2019 Peak Resorts Inc Earnings Call

Park City Jul 23, 2019 (Thomson StreetEvents) -- Edited Transcript of Peak Resorts Inc earnings conference call or presentation Thursday, June 27, 2019 at 2:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Christopher J. Bub

Peak Resorts, Inc. - VP, CFO & Corporate Secretary

* Jesse K. Boyd

Peak Resorts, Inc. - VP of Operations

* Timothy D. Boyd

Peak Resorts, Inc. - Chairman, CEO & President

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Conference Call Participants

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* Barton Evans Crockett

B. Riley FBR, Inc., Research Division - Former MD & Analyst

* Brad J. Boyer

Stifel, Nicolaus & Company, Incorporated, Research Division - Analyst

* Norberto Aja

Jaffoni & Collins, Inc. - MD

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Presentation

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Operator [1]

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Good morning. My name is Jason, and I will be your conference operator today. At this time, I would like to welcome everyone to the Peak Resorts Fiscal 2019 Quarterly Earnings Conference Call. (Operator Instructions) Thank you.

Norberto Aja from Investor Relations, you may begin your call.

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Norberto Aja, Jaffoni & Collins, Inc. - MD [2]

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Thank you, operator, and good morning, everyone. Thank you for joining us for the Peak Resorts Fiscal 2019 Fourth Quarter Conference Call. On the call with me today are Tim Boyd, our President and Chief Executive Officer; Chris Bub, our Vice President and Chief Financial Officer; and Jesse Boyd, our Vice President of Operations.

We'll be started in just a minute with management's presentation and comments, but before doing so let me read the safe harbor disclosure. Today's conference call contains forward-looking statements within the meaning of the safe harbor provision of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words, such as anticipate, intend, plan, goal, believe, estimate, expect, future, likely, may, should, will and other similar references to future periods. Examples for forward-looking statements, include among others statements we make regarding guidance relating to revenue and reported EBITDA, expected operating results, such as revenue growth and profitability, cash balances, market demand, cost efficiencies and financial results. Forward-looking statements are neither historical facts nor assurance of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions.

Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial conditions to differ materially from those indicated in the forward-looking statements on today's call include, among others, the risks described in today's news announcement and in the company's filings with the Securities and Exchange Commission, including in the company's reports on Form 10-K and Form 10-Q.

Any forward-looking statements made by us on today's call is based solely on information currently available to us and speaks only as of the date on which it is made, June 27, 2019. We undertake no obligation to publicly update any forward-looking statement that may be made from time to time, whether as a result of new information, future developments or otherwise. Today's call and webcast will include non-GAAP financial measures within the meaning of the SEC Regulation G. When required, a reconciliation of all non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP can be found in today's press release as well as in the company's website.

With that, I now like to turn the call over to Mr. Tim Boyd, President and Chief Executive Officer of Peak Resorts. Please go ahead, Tim.

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Timothy D. Boyd, Peak Resorts, Inc. - Chairman, CEO & President [3]

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Thanks, Norberto, and good morning, everyone. Thanks for joining us on the call today to review our fiscal 2019 fourth quarter and full year financial results.

Joining me is Chris Bub, our CFO; and Jesse Boyd, our VP of Operations.

Our successful fiscal 2019 fourth quarter concluded a record fiscal 2019 for Peak Resorts, a year in which we dramatically increased the scale of our business through the acquisition of Snow Time and completed significant capital projects at 2 of our largest resorts. Thanks to the hard work of our teams, we accomplished these goals while delivering an exceptional experience for our guests.

For the 2019 fiscal year, revenue increased 40% to $184.4 million, while reported EBITDA nearly doubled compared to the prior year to $49.8 million. In the fourth quarter of fiscal 2019, Peak Resorts generated quarterly revenue and reported EBITDA that also reached all-time highs. This was largely the result of both our acquisition of the 3 Snow Time resorts, which expanded our portfolio to 17 resorts across the Midwest, Mid-Atlantic and Northeast as well as organic growth driven by the initiatives we've undertaken over the past 12 to 24 months across our resorts.

Our solid results also benefited from the work done by our operating teams to continually find ways to be more efficient and effective in everything that we do. As a result, fiscal 2019 fourth quarter revenue grew by 53% to $85.5 million and reported EBITDA grew by 72% to $36.9 million. At the same time, revenue and reported EBITDA were up by 11% and 14% in the quarter, respectively, on an organic basis.

When we took Peak public in late 2014, we told investors that we would grow the business in 3 key ways, by leveraging our existing assets to drive visitation and spend per visit and by improving operating efficiencies to drive reported EBITDA, and then finally by pursuing strategic transactions and infrastructure investments to expand and improve our mountain portfolio. Nearly 5 years later, I believe you will agree with me that we're delivering on these goals and that we have successfully positioned Peak for further growth along each of these avenues.

Now that we've concluded a full ski season of ownership, the addition of Liberty, Roundtop and Whitetail to our portfolio late in calendar 2018 has been a great success for our company. Each of the 3 resorts delivered healthy revenue and improved profitability through the 2018/'19 ski season, despite the fact that we have barely begun to implement our operating strategies, our customer-centric initiatives. The ski season at Liberty, Roundtop and Whitetail got underway a bit later due to late November and early December warm weather, leading to roughly 15 to 20-day decline in operating days at each resort. And in spite of this significant headwind, we were able to grow reported EBITDA contribution from the 3 resorts over the prior year. We're very pleased with the results from Liberty, Roundtop and Whitetail so far, and we're excited to complete several capital projects and more fully implement our operating strategies to position them for further growth in the upcoming ski seasons. We believe these will allow the 3 resorts to become a more significant contributor to our financial performance in the fiscal 2020 and beyond.

Our acquisition of Hunter back in the early 2016 also reflects the success we are having across our operational and strategic initiatives, particularly with the addition of the Hunter North terrain expansion at the beginning of the 2018/'19 ski season. The expanded footprint of Hunter, including more parking availability, increased uphill lift capacity and roughly 25% more terrain allowed us to drive a healthy increase in visitation this past season and more efficiently be able to handle visitors across what we believe is the jewel of the Catskill and one of New York metropolitan area's premier ski destinations. We fully expect the benefits from the Hunter North expansion to further ramp up over a period of several years and believe that Hunter will be a source of growth in the seasons ahead.

Looking at the 2018/'19 ski season as a whole, our results benefited from the ongoing efforts to leverage our existing assets and drive visitation. These efforts started on day 1 as we open both Mount Snow and Wildcat on October 27, our earliest ever opening day for each resort. At Mount Snow, visitation was up yet again and the addition of the new Carinthia Base Lodge allowed us to provide a markedly better experience for our guests. It also allowed us to improve the overall access to our flagship resort and generally transform the on-mountain experience. At Mount Snow as well as at Hunter and many of our other resorts, we took an aggressive approach to snowmaking as we leveraged our extensive and increasingly efficient infrastructure to lay down base coverage and resurface terrain after periods of variable weather, delivering great conditions throughout the year.

Overall, I characterized the weather throughout the 2018/'19 season as average, and believe that our operating results highlight our ability to provide guests with predictable conditions throughout the winter even in the face of less-than-ideal weather. I said this last quarter and I'll say it again today, we've gotten to the point where our educated guests know that they can expect a certain level of conditions and enjoy a world-class experience regardless of the weather. As a leading provider of drive to skiing and riding throughout the Northeast, Mid-Atlantic and Midwest, Peak can deliver a great experience all winter long and the fact that the vast majority of our customers can easily access our mountains by car sets us up from other operators. A key to driving the visitation to our resorts in the Northeast and the Mid-Atlantic is the Peak Pass, our unique multimountain season pass. Despite the various competitive incursions into the Northeast market, we've not seen any meaningful impact on our ability to grow our Peak Pass sales. In fact, the truth was very much the opposite, as season pass sales increased by 18% on a unit basis and by approximately 20% on a revenue basis for the 2018/'19 ski season.

We continue to refine our marketing and data analytics initiatives around our season pass sales, and I believe these efforts have truly established the Peak Pass as the best multimountain pass offering for the vast majority of skiers and riders in the Northeast and the Mid-Atlantic. It's also important to note that the introduction of the Peak Pass to our new customers at Liberty, Roundtop and Whitetail has gone quite well, as we've experienced strong Peak Pass sales for our customers who call these mountains their home. While growing our business and ensuring that we provide a best-in-class experience, we also work diligently to operate in the most efficient manner possible. As labor and other costs continue to rise across our business, we are mindful that we must balance team member availability with guest demand to meet our guest needs when they arrive at one of our mountains.

As I noted earlier, we will spend much of the summer working at Liberty, Roundtop and Whitetail to further implement our operating strategies. But this does not mean that the rest of our resorts will continue operating as they did this past season. We're also going to continue to challenge our general managers at our other 14 resorts to further refine their operations to ensure that we grow profitably and not just for the sake of revenue growth.

Fiscal 2019 was a year in which we dramatically changed our business as we position ourselves for future success. We delivered remarkably improved operating results both organically and through the Snow Time acquisition. We increased our overall visitation and provided our guests with a great experience through the 2018/'19 ski season. We also created a foundation for long-term value creation for our shareholders. I know that you've heard this before, but Peak Resorts is confident now that we have the right mountains, the right amenities, the right passes and the right market positioning to continue to grow. I also know that I -- our entire team deserves our thanks for a job well done in fiscal 2019. We are truly excited to the future and look forward to a great upcoming 2019/'20 ski season and fiscal 2020.

Now with that, I'm going to turn the call over to Jesse for some additional comments. Jesse?

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Jesse K. Boyd, Peak Resorts, Inc. - VP of Operations [4]

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Thanks, Tim. Before handing the call over to Chris for a review of our financials, I want to briefly comment on the 2018/2019 ski season, our 2 days season pass sales for the 2019/2020 season and some of the improvements we are undertaking in our resorts this summer. As Tim mentioned, we had an exciting 2018/2019 ski season, which featured our earliest ever openings, some later-than-normal closing and good snow conditions throughout. In particular, the season saw Peak Resorts debut a new base lodge at Mount Snow, open significant new terrain at Hunter Mountain, began the full integration of 3 resorts into our operating platform and sell more Peak Passes than ever before. The season also saw Peak Resorts drive all-in skier visits to more than 2.1 million, and tubing visits to more than 300,000 across our 17 resorts. Furthermore, the season saw revenue per skier visit and revenue per visit rise to respective all-time highs.

Importantly, we achieved this success despite often challenging weather conditions. From extreme cold, which kept visitation light at times, to warm and rainy periods, which forced us to resurface significant amounts of terrain, Peak Resorts demonstrated to our guests that they will find optimum and consistent conditions whenever they visit. This is because of our snowmaking and grooming infrastructure and our talented snowmaking and grooming teams are among the best in the industry, and we are committed to doing the work necessary to provide great, consistent experience even when the weather isn't fully cooperating.

To put a bit more perspective around the skier visit metrics, our total skier visits in fiscal 2019 were up roughly 28% over the prior year, including the 3 Snow Time resorts. If we exclude those 3 resorts, our total skier visits were up approximately 7%. This compares favorably to our industry-wide visits in the Northeast, Mid-Atlantic and Midwest, which were up approximately 4% for the season and clearly demonstrates that Peak Resorts is taking share and growing at a rate that exceeds the market.

Moving on to the Peak Pass. As we have reported, total Peak Pass sales for the 2018/2019 season were up year-over-year by approximately 18% on unit basis and by approximately 20% on a revenue basis. These were very good results for the recently concluded season, and we're pleased with the continued interest in our multimountain pass program. Since introducing our 2019/2020 Peak Pass offerings back in early March, offerings which include access to Liberty, Whitetail and Roundtop in Pennsylvania as well as our Ohio resorts, sales have been very strong. We reported that overall season pass sales for the 2019/2020 season, including the sales of the Peak Pass, were up year-over-year by approximately 21% on a unit basis and by approximately 20% on a revenue basis through the discounted sales window which closed at the end of April. Importantly, that momentum has carried forward into early summer.

As Tim noted, we have seen very good response to the Peak Pass from customers at Liberty, Whitetail and Roundtop. Since our acquisition of these resorts, we made the decision to simplify their season pass structure by adding them to the Peak Pass platform. While changed customer buying patterns inevitably creates growing pains, our newest customers are recognizing that the Peak Pass is a great value and provides them with flexibility to ski at those 3 mountains as well as our other 2 mountains in Pennsylvania and also our Northeastern resorts.

As we look forward to fiscal 2020 and the 2019/2020 ski season, our work to improve continues. We are currently undertaking roughly $3.5 million in snowmaking enhancements at Liberty, Whitetail and Roundtop, which should provide us with more capacity to handle adverse weather, while improving the efficiency of our snowmaking infrastructure. We are also enhancing the F&B offerings at Whitetail, particularly as we will enter the upcoming ski season with the ability to serve alcoholic beverages at the resort, thanks to a liquor license that was awarded to us by Montgomery Township in Pennsylvania. We also recently completed the construction and opened our new zip line at Hidden Valley in Missouri. This new amenity at Hidden Valley has received very good interest, and we believe the zip line will allow Hidden Valley to become a true 4 season resort.

Regarding our 637 skiable acres across Attitash, Crotched and Wildcat in New Hampshire, we are also underway on various projects to improve both the on- and off-mountain experience for our guests, including upgrades to our large areas and lifts. We've also implemented a number of operational changes across our New Hampshire resorts that we are confident will yield positive results going forward. Collectively, these 2 resorts enjoyed their best season in the last 5 to 7 years, with Wildcat having a record 2018/2019 season. As you would imagine, there are too many projects to list here that will keep our teams busy, refining our F&B program, adding snowmaking capacity, upgrading snow guns to new high-efficiency models, updating our rental fleet and deploying new technology around our marketing, social media and sales initiatives. These behind-the-scenes projects are not as eye-catching as new base lodges or terrain expansion, but they are always vital to our long-term success.

Looking forward to the summer, we have scheduled a wide variety of events to leverage the amazing resources across our resorts to continue to generate revenue during the seasonably slower part of the year for us, including food and beer festivals, concerts, outdoor entertainment and events, and on-mountain activities, such as zip lines and mountain biking. We continue to put a great deal of effort and investment towards making our mountains year-round destination, and we are pleased to see that we're making progress on this front.

All in, I think you'll agree that Peak Resorts is well positioned for the 2019/2020 ski season and those to follow.

With that, I will now turn the call over to Chris Bub to review our financial results in greater detail. Chris?

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Christopher J. Bub, Peak Resorts, Inc. - VP, CFO & Corporate Secretary [5]

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Thanks, Jesse, and good morning, everyone. Fiscal 2019 fourth quarter revenue reached a record $85.5 million, an increase of 53% from $56 million in the comparable prior year quarter. While the inclusion of Snow Time properties in our results was the largest contributor to our strong quarterly performance, we did record roughly 11% organic revenue growth across our legacy resorts. That revenue growth can be seen across all revenue categories, including a 58% increase in lift and tubing tickets, 34% rise in food and beverage, 105% increase in equipment rental revenue, an 81% increase in ski instruction revenue and a 36% increase in retail revenue on a year-over-year fourth quarter basis. This increase is not only from Snow Time but includes organic growth as well.

The only exception was the hotel and lodging revenue, which was down roughly 6% as a result of our strategic and economically prudent decisions to exit our management of the Attitash hotel. These results showcase the success and high returns associated with our initiatives and investments across the resorts. Guests today expect much more than just an enjoyable experience as they make their way down the mountain. Today, they expect and frankly demand varied food and beverage outlets, an expansive retail offering, first-class instruction, easily accessible equipment rental, efficient mountain access and well-maintained facilities.

Resort operating costs increased 34% or $10.7 million to $42.7 million for the fiscal 2019 fourth quarter. Excluding the 3 resorts recently acquired, resort operating costs were up approximately 1% year-over-year. Labor costs were up 30% year-over-year, driven entirely by the inclusion of Liberty, Whitetail and Roundtop in the consolidated totals. Excluding these resorts, labor costs were actually down year-over-year as we effectively managed head count throughout the quarter and at the end of the season.

We also benefited in the quarter from the removal of the Attitash hotel from our operating results. As I noted last quarter, managing labor cost is one of the most important things we can do as a company. Our efforts to closely match seasonal needs with head count has allowed for increased efficiency and lower cost, which has helped to offset the pressure of increased minimum wages. Managing labor will remain critical to our go-forward strategy, and we are working diligently with all of our resort teams on our hiring plans for the upcoming 2019/2020 season.

The 21% year-over-year increase in power and utilities expense for the fourth quarter was mainly driven by the addition of the 3 Snow Time properties as well as our continued snowmaking efforts to ensure that conditions remained at the highest possible level to round out the 2018/2019 season. Other resort operating costs were up 49%, mainly due to the inclusion of the Snow Time properties and increased information technology, commission, insurance and repairs and maintenance expenses to a lesser extent.

Before we move on and just to provide a little bit more color, our resort operating costs relative to our top line results represented 50% of revenue in the fiscal 2019 fourth quarter. This compares to 57% last year and 56% in the fourth quarter of fiscal 2017. Both general and administrative expenses and depreciation and amortization were up significantly in the fourth quarter of fiscal 2019 to $4.7 million and $6.1 million, respectively. The increase in G&A was driven primarily by increased compensation expense as a result of our strong financial performance this year as well as by professional service fees associated with the Snow Time acquisition. Depreciation and amortization was also up as a result of these acquisitions as well as the Carinthia Base Lodge and Hunter North terrain expansion projects, which were completed in this fiscal year. Income taxes were roughly $8 million in the fiscal 2019 fourth quarter compared to $4.3 million in the prior year period driven by higher pretax income.

For the fiscal 2019 fourth quarter, Peak Resorts generated record reported EBITDA of $36.9 million compared to reported EBITDA of $21.5 million in the year-ago period. As with our revenue performance for the quarter, while the inclusion of the 3 Snow Time resorts was the biggest driver of the year-over-year growth, we saw reported EBITDA grow by approximately 14% on an organic basis.

Now turning to our financial position. As of April 30, 2019, the company had cash and cash equivalents of $30.2 million and total outstanding debt of $229.8 million, which includes $12.4 million drawn against our revolving line of credit and long-term debt of $217.4 million. Interest expense of $4.5 million for the fiscal 2019 fourth quarter was up approximately $900,000 compared to the prior fiscal year fourth quarter. This was mainly due to the inclusion of the new deck we've added to the Snow Time acquisition. We allocated $2.1 million to capital expenditures in the fiscal 2019 fourth quarter. This included $1.1 million related to the Carinthia Base Lodge project, $100,000 related to the Hidden Valley zip line project and maintenance capital of approximately $900,000.

Looking ahead to fiscal 2020, we currently have underway a $3.5 million snowmaking enhancement project at Liberty, Whitetail and Roundtop, which we expect will be completed before the start of the upcoming ski season. Aside from that major project, our efforts will be focused on maintenance capital spending to further enhance services across our portfolio, which should serve to improve cash flow throughout the year.

In summary, as we conclude fiscal 2019 with the strongest revenue and reported EBITDA performance in the company's history, we enter fiscal 2020 in a position where we can effectively execute our growth strategy and support our guest-centered operating approach, while continuing our practice of returning capital to shareholders through our regular quarterly dividend. At the same time, our teams will continue to deliver that great guest experience our customers have come to expect, while carefully managing cost and operating more efficiently in everything that we do.

With that, let's turn the call over to the operator for questions. Operator?

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Questions and Answers

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Operator [1]

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(Operator Instructions) Your first question comes from the line of Brad Boyer from Stifel.

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Brad J. Boyer, Stifel, Nicolaus & Company, Incorporated, Research Division - Analyst [2]

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Congrats on a very solid quarter. I know all you guys put in a lot of hard work over the years, and it's nice to see the payoff here. So just wanted to throw that in there. First question for me. Obviously, we all did an outstanding job modeling this quarter out if you look at where the quarter came in relative to consensus. I guess as we look ahead to next year, I know you guys don't give guidance, but I thought it would be helpful in a public forum if you could maybe just talk about how you're thinking about growth for next year? Obviously, you had some pretty impactful capital investments this year at Hunter and Mount Snow. You brought in the deal at a very opportunistic time, basically getting all of the upside with none of the off-season losses, and I think every major geography in the country reported record skier visits this year. So with all that said, just could you give us some flavor on how we should be thinking about growth of off a pretty high level for next year?

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Christopher J. Bub, Peak Resorts, Inc. - VP, CFO & Corporate Secretary [3]

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Yes, Brad, this is Chris. I'll take that. Obviously, you're exactly right. The Snow Time acquisition was very strategic for us that we were able to safely not have the off-season included in there. When we look overall, we realized that about $7 million is what we were missing in EBITDA loss from the off-season associated with the Snow Time transaction. So when you're building a model something like that, you can factor that piece into our modeling. But again, we'll continue to push for organic growth from price increases in the 5% range as we had in previous years. We'll continue to look at that from a Peak tax pricing strategy standpoint as well.

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Timothy D. Boyd, Peak Resorts, Inc. - Chairman, CEO & President [4]

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I think also to add to that, Brad, the $7 million that we are talking about now from the normal off-season situation at Snow Time, we do expect going forward to be able to improve on that, just with some of our operating strategies that we will be implementing over time here. So we don't think that will be the full impact, but that would be -- that would have been the historical impact.

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Brad J. Boyer, Stifel, Nicolaus & Company, Incorporated, Research Division - Analyst [5]

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Okay. And then just to take a step further, I mean Tim, you've been around this business for a while now. I mean obviously if I'm hearing your commentary correctly, I mean it wasn't euphoria weather-wise across the portfolio this year, but again, everywhere it's kind of seen record visitation. This allowed the big major ski area associations to kind of come out with that data. Irrespective of what you guys are able to accomplish with past sales, I mean would you expect to be able to grow visits on top of this year, based on what you saw last year?

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Timothy D. Boyd, Peak Resorts, Inc. - Chairman, CEO & President [6]

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Yes, I think so. Again, I think the weather was average at best, actually snowfall was actually down a little bit. And I think one of the -- our major initiatives at the Snow Time markets especially is with the snowmaking. We think there is a real opportunity for us there in improving their snowmaking, not only to help us on the efficiency side but also on the productive side. And that particular market is so critical because the demand is really overwhelming there. So the snowmaking really becomes the critical point of your success there. And we think that there is just a lot more opportunity because we didn't get a late start there, and actually, the first part of the season there was actually pretty weak.

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Brad J. Boyer, Stifel, Nicolaus & Company, Incorporated, Research Division - Analyst [7]

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Okay. Very good. And then second part of my question here is just around capital investments. You kind of touched on this a little bit at the end there, Chris. It sounds like, should we be thinking about for next year you basically have the $3.5 million going in the snowmaking at Snow Time, and then above and beyond that? Are we back in that kind of 4% to 5% of revenue range for maintenance CapEx? Is that the right way to think about it for next year?

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Christopher J. Bub, Peak Resorts, Inc. - VP, CFO & Corporate Secretary [8]

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We're actually more in the 5% to 6% range for maintenance CapEx, is where we are playing at for the kind of future going forward with our new resorts.

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Brad J. Boyer, Stifel, Nicolaus & Company, Incorporated, Research Division - Analyst [9]

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Okay. So 5% to 6% plus the $3.5 million, basically?

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Timothy D. Boyd, Peak Resorts, Inc. - Chairman, CEO & President [10]

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No, the $3.5 million, about half of that, Brad, is really going to be part of the maintenance CapEx, the other of that $3.5 million. So only about half of that is going to be growth.

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Brad J. Boyer, Stifel, Nicolaus & Company, Incorporated, Research Division - Analyst [11]

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Okay. Perfect. And then while we are on capital investment, I mean obviously, the one area in my mind that remains a huge opportunity for you guys is obviously to continue to build out the base area at Mount Snow. It's obviously very underbuilt relative to some of the competition down in Southern Vermont. I know we were previously talking about potentially EB-5 financed hotel addition over Carinthia. I'd have to think kind of based on where things are politically today that people aren't champing at the bit to initiate EB-5 offerings. So I mean beyond the EB-5 situation, could you just give us some sort of update as to how you're thinking about being able to kind of continue to build on the Carinthia lodge and continuing to evolve the base area amenities at Mount Snow?

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Timothy D. Boyd, Peak Resorts, Inc. - Chairman, CEO & President [12]

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Yes. I think probably -- obviously, as you alluded to, we're still looking for some additional guidance from the U.S. CIS on where they're going with the EB-5 program. We -- at this point in time, we're still kind of in a holding pattern waiting for that guidance, but we're exploring some other options of development at that -- at the Carinthia Base area. But at this point in time, that stuff is still really in the preliminary stages. So I really can't get specific on the commentary on that, but I also want to add that we still haven't given up on the EB-5 situation because if what the indications of the rule changes that they are talking about do actually come to fruition, it would probably be very beneficial to us being a rural-type project because the new rules that they're talking about implementing down the road would certainly favor the rural projects over the metropolitan projects. So we think that, that option is still out there, but we're also looking at backup options also.

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Brad J. Boyer, Stifel, Nicolaus & Company, Incorporated, Research Division - Analyst [13]

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Okay. Helpful. And then lastly for me, my favorite topic, M&A. If I look at the balance sheet today, you're levered right around 4.5x on a gross basis if my math is right. Obviously, I imagine the expectation post Snow Time is kind of continued to look for opportunities to grow. It seems like at least that the big destination resort level here, over the last several months, things have slowed down a little bit. Just curious to hear your updated thoughts on sort of what you're seeing out there? And if you just reiterate that the expectation is to continue to kind of look for ways to grow that would be helpful?

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Timothy D. Boyd, Peak Resorts, Inc. - Chairman, CEO & President [14]

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Yes. I think that, as we said in the past, we're constantly out there looking. And I think that our track record now with our most recent acquisitions being Hunter and Snow Time, we were looking for those strategic acquisitions that make a lot of sense that we can buy for the right multiple and obviously flip into our portfolio and get into our wheelhouse where we can improve those results even more. So we think there's still opportunities out there in our particular part of the industry where we are. We understand that with the bigger guys, that allow the big time operations, have already found a home, but that's really not in our wheelhouse. So we think there's still opportunity out there for us, and we continue to look at those. And if they make sense -- they make sense, but we're also -- we've been working on our balance sheet now as you mentioned we're at 4.5x, which is we're trying to drive that number down as we were as high as 6 at one time. So we think we are making progress in that direction, and we want to keep making progress in that direction. So we've got to balance that objective of keeping our balance sheet where we wanted and also continuing to make the M&A transaction. So it has to be something that fits both of those models for us.

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Operator [15]

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Your next question comes from the line of Barton Crockett from DCFstocks.

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Barton Evans Crockett, B. Riley FBR, Inc., Research Division - Former MD & Analyst [16]

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Can you hear me now?

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Timothy D. Boyd, Peak Resorts, Inc. - Chairman, CEO & President [17]

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Yes. We can hear you, Barton.

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Barton Evans Crockett, B. Riley FBR, Inc., Research Division - Former MD & Analyst [18]

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Okay. Great. Sorry about that. And I wanted to first just drill down a little bit more on the fourth quarter, which the organic growth there was particularly impressive. And I know, Tim, you described the weather backdrop for the year as average, maybe little bit weaker than average. But I was just wondering specifically in the quarter, I mean this quarter versus the year ago, was weather average last year in this quarter and average this year, so is it not really a factor or did weather have any role in that organic growth in the quarter?

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Timothy D. Boyd, Peak Resorts, Inc. - Chairman, CEO & President [19]

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No, I don't think it was the weather so much. It's just that we've had a lot of things. We really are starting to hit our stride here. Our Peak Pass sales have been growing. We've had kind of coming together of the West Lake in the Carinthia projects at Mount Snow. The Hunter North expansion was hugely successful for us. We -- it's actually running ahead of our ROI schedule by a significant number. It was very well received. And I think that it's just a combination of all of these different items coming together with Pass, the Hunter North expansion, the Mount Snow activities we have been -- initiatives we have been working on there. I think it's just a combination of all those things together is what's driving that new growth for us.

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Barton Evans Crockett, B. Riley FBR, Inc., Research Division - Former MD & Analyst [20]

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Okay. All right. And you spoke a little bit about the EBITDA deficit from Snow Time in the summer, but I know that they do some summer activities there, so there is also some revenue. And Chris I was wondering if you could just give us a little bit of a sense of what the revenue norm is for those mountains that we can model off as we look ahead?

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Christopher J. Bub, Peak Resorts, Inc. - VP, CFO & Corporate Secretary [21]

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Yes, they do roughly $8 million to $10 million in the summer months. They do about $50 million is basically what they do on an annualized basis.

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Barton Evans Crockett, B. Riley FBR, Inc., Research Division - Former MD & Analyst [22]

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Okay. All right. And then one final also on Snow Time. This was your first season with them, and you're kind of ramping up your efforts. I was wondering if you could kind of rank maybe your first 3 or top 5 opportunities you think at Snow Time. And just kind of describe where their capabilities currently stand relative to what you have at your flagship Peak mountains in the Northeast and the time frame for really kind of getting Snow Time up to the Peak standards at your other mountains.

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Timothy D. Boyd, Peak Resorts, Inc. - Chairman, CEO & President [23]

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Well, I think, as I mentioned earlier, I think the first priority is we want to get their snowmaking up to the kind of levels that we operate our other resorts on. And we think that the investment we're going to be making this summer is going to do that. We think that it's, as I also mentioned earlier, in that Baltimore-Washington market, I mean snowmaking is so critical because obviously the weather isn't as good there as it is up in New England. But the market is extremely strong. It's extremely responsive. And we think that there is a real opportunity to really deliver an even better product than what they have delivered in the past. And we can -- we also believe that we can do it faster, which is obviously critical down there in that part of the country.

So we think that that's first and foremost our biggest opportunity. And then we also think that there is operating efficiencies that we're going to be able to change there that will be beneficial to us going forward. We think that, again, probably now that we've seen them operate for ski season, we think that that's going to be a real opportunity for us in improving their operational -- operations down there. And of course, we've got the Whitetail situation, where we now have a liquor license at Whitetail for the first time since it's been in existence. We're making some changes there to the building to accommodate the potential revenue opportunities we're going to get from having a revenue -- having a liquor license down there. And then we've also got a lot of potential system integration opportunities there and also pricing strategies there that we're going to be implementing that we think are going to be real opportunities for us. So I think listing on a priority basis, those will be some of the top ones that we'd be looking at for this upcoming year, that we think we can get implemented that are going to drive some more positive numbers for us down there.

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Operator [24]

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There are no further questions at this time. I turn the call back to Mr. Timothy Boyd for closing remarks.

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Timothy D. Boyd, Peak Resorts, Inc. - Chairman, CEO & President [25]

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Thank you, operator. I want to close this morning by reiterating what I said at the outset of the call. When we took this business public back at the end of 2014, we laid out a very specific long-term growth story built on leveraging our assets to drive more traffic and spend per visit and improving our operating efficiency and by also pursuing strategic transactions. Sitting here today, I think it is very clear that we have delivered on this story and that our team has positioned Peak to benefit from what we see a significant growth potential going forward.

We continue to invest in our mountains and invest in our infrastructure and our guest experience. Our guests clearly value the terrain our resorts offer, particularly as they buy our Peak Pass in growing numbers. And our loyal team members continue to deliver the best guest experience possible and create what is truly a memorable family atmosphere at our mountains. We are extremely excited by what the future holds and look forward to welcoming our guests back to our resorts later this year as we kick off the 2019/'20 season. We look forward to speaking with you again when we report our fiscal 2020 first quarter results.

If you have any questions or need any additional information in the meantime, please contact our IR relations firm, JCIR, at (212) 835-8500 and I thank you for your continued support and have a great summer.

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Operator [26]

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That concludes today's conference call. You may now disconnect.