Investors were hoping for good news from Vail Resorts (NYSE:MTN) when the ski resort giant issued its fiscal first-quarter earnings report. That period includes some of its slowest sales months, because properties in North America are closed for ski business. However, Vail's Q1 announcement always sets the tone for the start of the core winter season.

In a conference call following the report, CEO Robert Katz and his team talked about Vail's optimism about ski visitations while issuing a more detailed outlook for the full 2020 fiscal year. Below are a few highlights from that presentation.

A skier makes her way down the mountain.

Image source: Getty Images.

A solid quarter

According to Katz, "Overall we are pleased with our results in the first fiscal quarter. Our Australian resorts delivered a strong performance with another record year at Perisher on an Australian dollar basis and very strong results in our first year of operations in Falls Creek and Hotham."

Vail posted a net loss for the quarter, as is its custom during the warmer months in North America. But its Australian properties were in peak season and enjoyed strong ski visitation and spending metrics. Management also highlighted their continued efforts to build summer-season activities on many of Vail's North American mountains, with Whistler Blackcomb in Canada seeing solid demand from mountain biking and sightseeing enthusiasts. These successes allowed sales to rise to $263 million for the quarter, or a bit more than investors had been expecting.

Season pass updates

"As we approach the end of our selling period, season pass sales for the North American ski season are up approximately 17% in sales dollars and approximately 22% in units," Katz said.

As it neared the end of its pre-season pass selling period, Vail's pass sales increase stood at 17% in terms of revenue and 22% in terms of volume. The gap between those two numbers was driven by its new Epic day pass product that caters to less frequent visitors at a lower price. The higher volume overall is thanks to Vail's larger resort portfolio, which has allowed its season passes to incorporate more mountains across popular regions like the Northeast and the Rocky Mountains.

Management said they were happy with all the pass sale metrics, particularly the new Epic day pass product that could materially boost its addressable market of casual skiers.

A good start to the season

Katz said: "We are thrilled to welcome guests to all of our resorts as the 2019/2020 North American ski season kicks off with several transformational enhancements to the guest experience at our resorts."

Vail can't control the weather, which is the biggest variable affecting the consumer stock's ski demand. Yet it poured cash into several experience-boosting initiatives in recent months, including adding snowmaking capabilities, upgrading lifts, and adding new lift rides.

The most direct result of these capital improvements investors saw was the earlier openings for Rocky Mountain resorts like Vail and Keystone, which had its earliest season launch in two decades. These wins provide solid momentum heading into the peak season and remove a major source of variability from Vail's broader results.

Spending more money

"We remain committed to reinvesting in our resorts, creating an experience of a lifetime for our guests and generating strong returns for our shareholders," said Katz.

Vail is spending hundreds of millions on capital improvements across its properties this year and thereby taking full advantage of its unique size in the industry. These upgrades include a new 250-acre expansion in the Beaver Creek resort and additional lifts at Breckenridge and Whistler Blackcomb. Skiers should respond to these improvements by returning more frequently and staying longer in resort lodging properties, which gave executives confidence to affirm their full-year growth outlook. Still, management took care to remind investors that most of the peak volume days lie ahead. That's why shareholders will be tuning in to Vail's mid-season update, set for January 17.

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