Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)

Executives

David Wilcox - Manager, Finance and Investor Relations

Dave Brownlie - President and Chief Executive Officer

Jeremy Black - Senior Vice President and Chief Financial Officer

Analysts

Mona Nazir - Laurentian Bank

George Doumet - Scotiabank

Irene Nattel - RBC Capital Markets

Derek Lessard - TD Securities

Mark Petrie - CIBC

Theoni Pilarinos - Raymond James

Marcelo Lima - Heller House

Dimitre Genov - Noster Capital

Whistler Blackcomb Holdings Inc. (OTC:WSBHF) Q3 2014 Earnings Conference Call August 15, 2014 10:30 AM ET

Operator

Thank you for standing by. This is the Chorus Call conference operator. Welcome to the Whistler Blackcomb Holdings’ Fiscal 2014 Third Quarter Conference Call. As a reminder, all participants are in a listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. (Operator Instructions)

At this time, I would now like to turn the conference over to David Wilcox, Manager of Finance and Investor Relations. Please go ahead.

David Wilcox

Thanks, Brock. Good morning, and welcome to the Whistler Blackcomb Holdings’ fiscal 2014 third quarter conference call and webcast. If you have not yet received a copy of our press release, you can find it by visiting the Investors section on our website. Following the completion of our call, a replay will be archived on our website for a period of 30 days.

On the call today are Dave Brownlie, our President and CEO and our Jeremy Black, our new Senior VP and CFO. Dave and Jeremy will be providing some commentary regarding our fiscal 2014 third quarter results and other recent developments. Once we have concluded our prepared remarks, we will open the call for questions.

Before I turn the call over to Dave, I would like to point out that certain statements in this conference call constitute forward-looking information within the meaning prescribed by Canadian Securities Laws. Forward-looking statements relate to our current expectations and views of future events. These forward-looking statements include among other things, statements relating to our expectations regarding our cash flows, revenues, expenses, capital expenditures, net income, dividends, taxes and guest visits among others. Such forward-looking statements are subject to uncertainties, risks and other factors, including those listed in our most recently filed annual information form, which is available on SEDAR.

Many of these factors are beyond our control and each contributes to the possibility that our forward-looking statements may not occur or the actual results, performance or achievements may differ materially from those expressed or implied by such statements. Forward-looking statements made in this conference call relate only to events or information as of the date of this call. Except as required by law we will not publicly revise or update any forward-looking statement.

And finally, on today’s call, we will be referring to adjusted EBITDA and effective ticket price, or ETP, which are non-GAAP measures. Adjusted EBITDA excludes items that we do not consider part of our normal operation, such as non-cash gains or losses on disposals of fixed assets, acquisition-related expenses, impairment or restructuring charges and reversals and other significant event driven amounts. Please refer to our press release for more information regarding our definition of adjusted EBITDA and ETP, reconciliation to the closest GAAP measures, net earnings and revenue and for further disclosure regarding our non-GAAP measures.

And with that, I will turn the call over to Dave Brownlie.

Dave Brownlie

Thanks, Dave. Good morning and thank you for joining us on our call today. The 2013/14 ski season proved to be a real testament to the resiliency of our business and the hard work of our employees. We have worked hard to protect Whistler against variable weather conditions through state-of-the-art snowmaking and grooming investments and the development of our pre-committed sales strategy. This ski season clearly demonstrates the results of our efforts as we are able to deliver strong revenue and EBITDA growth to June 30, 2014 despite challenging early season conditions. Our summer business has also performed well to-date and we have seen good visitation momentum so far this year.

I will now provide an overview of our performance for the quarter and year-to-date and Jeremy will discuss our financial highlights in a few minutes. Skier visits for the third quarter this year were up 10% over the comparative quarter last year, primarily due to the timing of Easter holiday period, which was in the third quarter this year and the second quarter of last year. Skier visits for the 2013/14 ski season were 5% below last season due mainly to lower visitation in the first quarter of this year, which is attributable to below average early season snowfall. Other visits for the third quarter and nine months ended June 20 increased by 20% and 16% respectively compared to the same periods in the prior year as our summer business continued to gain traction with both regional and destination visits. Our visits are comprised of sightseeing, hiking, bike park, and summer glacier skiing visits.

Although this season’s total skier visits of 1,950,000 fell short of last season’s visitation of just over 2,040,000, we were pleased with the overall growth in destination visits for the 2013/14 season as a whole. This year, we welcomed approximately 59% of our visits from the regional market and 41% from the destination markets, which compares to 62% and 38% respectively last year. For 2014, we experienced modest growth compared to last year from most of our key destination markets. Our participation in the Mountain Collective Pass program was a positive driver of visits during the 2013/14 season and we are excited about enhancements to the Mountain Collective product with the addition of Lake Louise, Sunshine Village and Norquay for the 2014/15 ski season as well as the partnerships with Thredbo Alpine Resort in Australia and Valle Nevado in Chile for this summer.

The increased proportion of destination visits this year had a positive effect on our per visit, which Jeremy will discuss in a few minutes mainly because these guests are more inclined to participate in higher yielding snow school lessons and rent equipment. Our summer business is in full swing and we are pleased by the positive momentum so far this year. Our other visits for the year to August 11 are just over 400,000, 405,000, which is 7% above the same period last year. Our Crankworx Mountain Bike Festival is currently underway and is on track to be even bigger than last year’s very successful festival. Other events in Whistler this summer have included Ironman Canada, Tough Mudder, Wanderlust, and various large music festivals in the corridor that have been very effective to bringing guests to Whistler.

Regarding our CapEx program, during the first nine months of this year, we invested $20 million – just over $20 million, $20.6 million in capital, including the remaining costs for the new Harmony and Crystal lifts and associated train and snow making improvements, the Whistler Village Gondola upgrade, the RFID gated access and ERP projects as well as maintenance capital expenditures. As of August 11, we have incurred approximately half of those costs associated with the $12 million in CapEx for the Whistler Village Gondola upgrade, RFID and ERP capital projects that we announced in February this year. And I am pleased to report that we are on schedule and on budget. We expect the new Gondola cabins and the RFID gates to be ready for the 2014/15 ski season and we are excited about the positive impact that these projects will have on guest experience for both our ski and non-ski visitors.

Looking ahead to next ski season, sales from this year’s spring campaign for 2014/15 seasons pass and frequency cards increased by 21% to $14.6 million compared to last year’s campaign. This growth was driven by both increased units and price on our pass and card products. Our pass and card program is an important part of our pre-commitment sales strategy and provides a stable and reliable source of revenue and cash flow. The results of our spring campaign are also a positive early indicator for the upcoming ski season.

With that, I will pass the call over to Jeremy Black for some highlights of our financial results.

Jeremy Black

Thanks, Dave and thank you for joining us on the call today. Hopefully, you have seen our third quarter financial statements and MD&A, which were both filed on SEDAR last in the day yesterday and are available in the Investors section on our website. Rather than repeat what we have presented in our MD&A, I will instead draw out some of the highlights from the quarter and year-to-date periods ended June 30, 2014. We were pleased to report that our revenue increased by 5% to $223 million during the first nine months of this year, especially considering the challenging start to the ski season. We attribute the revenue growth to a 9% increase in our revenue per visit and a 16% increase in other visits compared to the equivalent period last year. And this was offset by a 5% decline in skier visits as a result of the early season conditions.

Revenue for the quarter ended June 30, 2014 increased 16% to $35 million mainly as a result of a 10% increase in skier visits, a 20% increase in other visits, and a 3% lift in revenue per visit to $87.81 per visit. For both the quarter and nine months ended June 30, the increase in revenue per visit was primarily attributable to increased spending in our snow school and retail and rental businesses, which increased 28% and 39% respectively for the quarter and increased 8% and 17% respectively for the nine months ended June 30 compared to the equivalent periods last year. The improvement in our retail and rental businesses was partly attributable to the Affinity acquisition that we completed in September 2013 as well as the higher proportion of destination visits that we enjoyed this year. Our snow school business benefited from enhanced products and improved programming initiatives, higher prices and the higher proportion of destination visits in 2014.

Our effective ticket price, or ETP, made up 53% of our revenue per visit for the ‘14/15 ski season – ‘13/14 ski season and increased 8% to $55.77 per skier visit compared to the last year. The growth was mainly as a result of pricing increases across all of our lift products, the mix of products sold and reduced utilization of pass and card products, which drove a higher yield per visit for these guests for the nine months ended June 30. ETP for the quarter ended June 30, 2014 increased 2% to $47.58 compared to the third quarter last year. ETP growth for the quarter was offset by increased pass and card utilization in Q3 mainly because regional skier visits were quite strong and this contributed to a lower yield per pass and card visit for the period.

Our operating expenses for the first nine months of fiscal 2014 increased by 6% over the comparable period in 2013 primarily as a result of the higher volume of snow school lessons and increased retail rental activity. The Affinity acquisition also contributed to increased operating costs. Operating expenses as a percentage of revenue for the nine months ended June 30, 2014 were 49.7% of revenue compared to 49.5% last year and demonstrate the success of our cost containment efforts in response to the challenging early season this year.

Adjusted EBITDA for the nine months ended June 30 this year increased 5% to $90.5 million compared to the equivalent period last year. The growth in EBITDA was attributable to increased revenue and disciplined cost management. Our adjusted EBITDA margin for the nine months ended June 30, 2014 was 40.5% compared to 40.5% for the equivalent period last year. Adjusted EBITDA for the third quarter this year grew by 23% to $2.4 million.

Looking below our adjusted EBITDA, interest expense for the nine months ended June 30, 2014 reflected a 33% reduction in cash interest costs to $7.7 million as a result of the lower rates applicable to our new credit facility and net long-term debt repayments of $36 million. We also achieved a 51% reduction in our interest expense for Q3. Our long-term debt was $225 million at June 30, 2014 compared to $261 million last year. Going forward, we will continue to manage our working capital to optimize interest expense. These efforts will result in some variability from quarter-to-quarter in the principal outstanding under our credit facility and more effective deployment of our cash balances.

Our net earnings of $29.5 million for the nine months ended June 30, 2014 increased 5% compared to the equivalent period last year largely as a result of increased EBITDA and decreased interest expense offset in part by certain one-time items recorded in the first quarter, including the $5.5 million prepayment penalty and $2.8 million write-off of unamortized debt issuance cost in connection with our refinancing in Q1 this year.

Before I turn the call back to Dave, I also want to report that yesterday our Board of Directors declared our third quarter dividend of $0.24375 per share, which will bring our total dividend payments during the fiscal year to $37 million.

With that, I will pass the call back to Dave Brownlie.

Dave Brownlie

Thanks, Jeremy. The resiliency of our business and the commitment of our employees for 2013/14 ski season allowed us to generate a strong EBITDA result to June 30. Our summer business is also performing well and we are seeing good momentum in our other visits to-date. With Crankworx underway and the RBC Grand Fondo in early September, we are expecting the village to be busy through the end of our fiscal year. As we look ahead, our increased 2014/15 pass and card sales and the progress on the Whistler Village Gondola upgrade and radiofrequency gates project combined with the investment in two new lifts last year positioned us well for the upcoming ski season.

With that overview, I will pass the call over to the operator for questions.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) The first question today comes from Mona Nazir of Laurentian Bank. Please go ahead.

Mona Nazir - Laurentian Bank

Good morning, gentlemen.

Dave Brownlie

Good morning.

Mona Nazir - Laurentian Bank

On the cost side, the 17% increase in OpEx specifically labor, foodservices and other, we expect it to go up, but just looking back at the average increase in OpEx, it’s around 3%. I know on the G&A front, you stated it was more of timing of marketing expenses, but everything else, could you just shed some light on why it was a bit higher than I anticipated?

Jeremy Black

Sure, Moni, it’s Jeremy here. If you look at the quarter this year compared to the quarter last year, you see a 16% increase in revenue. That 16% increase in revenue is going to drive increased labor and benefit costs, increased foodservice costs as well as certain other increases in costs that are more volume driven. And when you kind of peel it back, that’s the biggest contributor to cost increases, the increase in volume. Ski school lessons, for example, is a really good example of how that increase in revenue drives increased labor cost.

Mona Nazir - Laurentian Bank

Okay. Shouldn’t there be some economies of scale, because when your revenues have increased 5%, 6% OpEx has still increased more minimal, but could we look at it as like almost like a 1% revenue increase will increase OpEx by about 1%?

Jeremy Black

Yes. We don’t have a metric like that.

Mona Nazir - Laurentian Bank

Okay.

Jeremy Black

Okay, but just look at snow school for example, 27%, almost 28% increase in revenue, retail/rental almost 39% increase in revenue, that’s going to drive increased operating costs.

Mona Nazir - Laurentian Bank

Okay. And just on the effective ticket price increase, it was up about 1.7%. Average ticket price growth is around 3% as outlined in your presentation. Did you expect to put through more of an increase this quarter and where can we expect this to go forward? Is the 3% increase still fair? I know you don’t give guidance.

Jeremy Black

We don’t give guidance. And I would encourage you to look at the nine-month period, not the three-month period. It’s really the true indicator of how ETP performed for the ski season and ETP was up 8% for the year-to-date. So, that’s the two indicators how ETP performed.

Mona Nazir - Laurentian Bank

Okay. And just wondering if you could speak about what’s driving the increase in season pass and frequency card sales, very solid number. Is that you are focused on the destination market that’s paying off, what area specifically, yes, just more commentary will be great?

Dave Brownlie

Yes, yes. I mean, clearly the seasons pass and frequency card programs are critical to pre-committed business. It’s largely a regional program and we increased a little bit of our marketing reach in that program. And I think it reflects the quality of the product and experience that people have here at Whistler Blackomb. And we are able to reach more people and bring new people into the program. So, we are definitely very pleased, in particular coming off maybe what was not the most positive of ski seasons, but we ended – with the last half we had great snow and good momentum and we are able to capitalize on that going into our spring campaign.

Mona Nazir - Laurentian Bank

Okay. And just lastly here, in regard to your summer CapEx plans, you have been – you have outlined some specific ideas and you have been talking about this, any thoughts on timing when you could announce some more specific spending and the possibilities that you have previously spoken about, are they still being considered or is there any change to your plan?

Dave Brownlie

We are regularly exploring growth opportunities and working towards those things and when the timing is right and we have everything in place and we are ready to move forward, certainly we will ensure that the public are the first to know about tax. Yes, we are certainly working hard on a number of initiatives and we are hoping that at some point we will be able to talk about them in more specific terms as we go forward. But as far as timing we are not giving any specific timeframe at this point.

Mona Nazir - Laurentian Bank

Okay. So it’s not that some of the things that you have mentioned before you have investigated them and then determined that’s not right, the plan is still in place?

Dave Brownlie

We have some great opportunities here at Whistler Blackcomb to ultimately grow our business and yes, there is still front and center in our mind and in our planning.

Mona Nazir - Laurentian Bank

Okay, perfect. Thank you.

Operator

Your next question comes from George Doumet of Scotiabank. Please go ahead.

George Doumet - Scotiabank

Hi, good morning gentlemen.

Dave Brownlie

Good morning.

George Doumet - Scotiabank

Some pretty really good encouraging top line trends coming out of the quarter, I think this is just under 40% growth in retail and rentals, can you maybe give us sense of how much of that was organic versus Affinity and are you guys seeing a lot more retail opportunities out there for acquisitions?

Dave Brownlie

We certainly we don’t differentiate between the – between the Affinity acquisition, but definitely it was positive. But in general what we are – we saw this winter certainly first of all the mix in that destination visitor here definitely driving more spend, but we are also seeing our regional customer as well spending a little bit more. And I think that reflects not only what we are doing in resort to try and drive that increased penetration of wallet, but also a general improvement I think in sort of the economic confidence of the people that are coming here and at seeing that – we are seeing that throughout our operations. So it definitely does lead to opportunity and we believe that we are going to see that strength continue into next year.

George Doumet - Scotiabank

Great. I appreciate that. The other visits were also very, very strong, I guess internally maybe breaking down to subcategories, you mentioned the glacier skiing, mountain biking, what categories scale better I mean your expectations and what categories are we hoping to see some more momentum next year?

Dave Brownlie

For next year, next year I mean we are seeing momentum on all categories quite frankly. But we don’t breakdown our visits at this point into those categories, but safe to say that we are pleased with certainly our site seeing, our mountain biking visits. The glacier skiing is an interesting, it’s a five week period again strong visitation but that piece of it is largely flat year in and year out.

George Doumet - Scotiabank

Okay, great. And I guess in – bookings just generally bookings for next year, I guess maybe just without giving specific numbers but just your sense internally how that’s trending and versus expectations?

Dave Brownlie

Yes. I mean certainly bookings for next year it’s way early on that front, but what we are seeing out there is certainly a positive in terms of how Whistler is positioned in the marketplace, the strength of our brand. And I think that – I guess that compelling reason of why people want to come here is its strong and so that’s the feedback that we are getting. We are seeing very, very early numbers which ultimately are positive, but they are very, very early at this point, so.

George Doumet - Scotiabank

Great. Thanks a lot. One last one if I may on I guess in general your appetite for larger scale projects, has that been changing at all, has it been growing and if you guys are willing to go on the larger side of things, can you maybe give us a sense of your comfort zone in terms of leverage? That’s it. Thanks for me.

Dave Brownlie

Yes. No, we are – I will follow-up really on the previous comment as well. We believe that there are some great opportunities here at Whistler Blackcomb. We continued to work on those opportunities. And at some point, we believe that we will be in a position to bring them forward to the public and we are very, very optimistic as far as kind of leverage, I think can maybe pass the floor to Jeremy.

Jeremy Black

Yes, George. As you know, we have a pretty flexible financing package in place and this does give us lots of capacity to take on larger projects. So, in addition to the availability we have committed, we have further uncommitted availability that’s really just a matter of signing up for and meeting the minimum requirements. So, there is definitely capacity to undertake larger projects when those opportunities arise.

Operator

The next question comes from Irene Nattel of RBC Capital Markets. Please go ahead.

Irene Nattel - RBC Capital Markets

Thanks. Good morning gentlemen.

Dave Brownlie

Good morning.

Irene Nattel - RBC Capital Markets

Obviously, great success in signals of the early season or early season pass and frequency product, wondering magnitude of pricing increase that you are putting through there?

Dave Brownlie

Yes, interesting. If you look at the products that we put out there, we are on average maybe sort of in the 5% range, but you definitely have to kind of get in and look at the mix and those sorts of things, but yes, all-in-all looking at a 5% average pricing increase on those products.

Irene Nattel - RBC Capital Markets

That’s great. I mean, that’s a very, very healthy increase on top of last year. Are you finding that the positive word of mouth on the on-mountain upgrades that you have done or making it a little bit easier for you to put through pricings?

Dave Brownlie

It’s absolutely I think the stronger the experience that we can provide on the mountain, the more value the customer sees. And at this point, I think we continue to get strong feedback and that feedback is based on kind of the sales and the pre-sales. And I think people are pretty comfortable with the value offering that we provide. And so we believe that we can continue to move on our price as we continue to improve our experience on the mountain.

Irene Nattel - RBC Capital Markets

That’s great. And in your remarks, Dave, you noted that among the destination skiers, you saw growth pretty much across the board from all of your key markets, was there anywhere that there was a little bit more growth than you had anticipated? Any indications for next year around where you may want to double down a little bit on some of your marketing efforts?

Dave Brownlie

Yes. What I would say with regard to our destination market, what was interesting is again it reflects our pre-committed sales strategy is we really locked in a lot of business early and that was the kind of the strength of our business platform across all markets. I think I mentioned probably at the earlier call that the European market was a little bit flat for us, where we probably lost – out last year was that kind of in-season booking period from largely just before Christmas and then that January through February 15 and that was really where we were at ultimately a snow – really a snow disadvantage in the marketplace. So, we really see a big opportunity in that space as we go forward.

Irene Nattel - RBC Capital Markets

That’s great. Thank you very much.

Dave Brownlie

Thank you.

Operator

The next question comes from Derek Lessard of TD Securities. Please go ahead.

Derek Lessard - TD Securities

Yes, good morning everyone and most of my questions have been answered, but I maybe just want to circle back on the season pass, the early bookings for the season passes. You mentioned an increase in marketing reach, maybe if you can just add some color to that?

Dave Brownlie

Yes. I mean, you are always looking at your marketing programs and how you get at people and the reach in frequency and yes, we did some more things in terms of just impressions out there, largely in the digital world that we are very effective. We did make some slight adjustments to our programming in offering, which we also think added tremendous value for the customer and they responded well. So, yes, we are very pleased with the results.

Derek Lessard - TD Securities

Okay. And I know you don’t do this, but if I sort of split out your average ticket for the things like the site seeing, it seems like it was down just a little bit, maybe if you can add some color there?

Dave Brownlie

Sorry, I am not quite sure I understand the question.

Derek Lessard - TD Securities

Yes, it just goes, I mean I was just splitting out if I split the average ticket between the skiing and sort of the – I guess, the summer revenues, it looks like it was – it’s a little bit down for the summer activities?

Dave Brownlie

The actual ETP on the ticket or the?

Derek Lessard - TD Securities

Yes.

Dave Brownlie

Yes, I mean, it’s – again it’s a mix between kind of sightseeing, glacier skiing and mountain product, we kind of look at that. Our ETP to-date on those products has been somewhat flat, but as we sort of go forward we are seeing some positive momentum on that side, but we really don’t get into that level of detail.

Jeremy Black

I will also add that similar to my response to Mona earlier it is just a quarter and you have to look at a longer period of time.

Derek Lessard - TD Securities

No. Fair enough guys. Good quarter. Thanks.

Operator

Your next question comes from Mark Petrie of CIBC. Please go ahead.

Mark Petrie - CIBC

Hi, good morning. You sort of touched on this from the marketing standpoint, but just wondering kind of curious if coming off the challenging season like ’13, ’14, is that changes the way you prepare your operations or if it changes how you market to other, the local or the destination visitors?

Dave Brownlie

Really, it really depends on the type of season you are coming off of and I guess what view of the marketplace is. I mean the reality is as we did have the challenging start, we actually had tremendous conditions from certainly mid-February through right through to the end of the year. And when you look at our regional market I mean they are very astute to not only the current, the previous year that they were skiing in, but they are also very astute about what the future looks like and they respond very well to our product and really the history is that Whistler Blackcomb has great snow. In the destination market, it’s quite different. Although the destination market, lot of people look at Whistler as big mountain, big variety, big snow that first half of the season where we had maybe limited snowfall, but we had tremendous sunshine and the grooming in the vertical was actually really spectacular. And so the destination gets that we are here in particular in that kind of intermediate maybe high intermediate sort of range. They actually had an amazing experience and we got that feedback and ultimately we are seeing that in terms of the discussions with our long haul tour operators out there. So there is really no negative pushback that we can see in that market space at this time. So we are out there with as we were in prior years and we are working our strategies and we are pretty optimistic about what we see so far.

Mark Petrie - CIBC

And no change in terms of how you approach the year when you think about staffing and that kind of thing your operating costs?

Dave Brownlie

Well, as we always – we always maybe take a conservative outlook in terms of sort of planning for that cycle, but we also recognized that we need to be prepared to respond to the increase in volume. I mean the reality is if you look at kind of our average visitation over the last number of years there is a high likelihood that visitation will be higher for sure. I mean just from the regional market in terms of responding to really a more balanced snow year. So yes, we need to be prepared for that which is a good thing.

Mark Petrie - CIBC

And then you mentioned about your strategy just in terms of the destination market last year was particularly helped by your push to lock-in as much of your revenue sort of early on as possible, can you just I mean is that changing at all, are you going to try and push that even further forward or what’s your approach to that for the upcoming year?

Dave Brownlie

I think we have spoke about this consistently for the last number of years and our strategy is fairly simple. The earlier you buy and the more you buy, the better price you get and longer that we are committed to that strategy over the long-term the more the marketplace understands it and the more successful we will be. And I think that’s what we are seeing in that destination market and also in the regional market. And so yes we are continuing to stay focused on that. It’s also very key to handing that any weather variability that we do see by locking in that revenue and driving that pre-commitment.

Mark Petrie - CIBC

Okay, very helpful. Thank you.

Operator

Your next question comes from Theoni Pilarinos of Raymond James. Please go ahead.

Theoni Pilarinos - Raymond James

Hi guys.

Dave Brownlie

Good morning.

Theoni Pilarinos - Raymond James

Couple of questions first off you have the ERP going in and I think we heard that the first big milestone was going to be in November of this year, is that still on track for that date and how are things going there?

Jeremy Black

Hi, Theoni, it’s Jeremy here. So, the ERP project is expected to go live on October 1.

Theoni Pilarinos - Raymond James

Okay.

Jeremy Black

And yes, we are on track as you know data has been loaded up and things are going well. So, yes, we are still on track and under budget.

Theoni Pilarinos - Raymond James

And under budget, okay. And the 5% price increase, it sounds like it was based on feedback you had from visitors this year, but are you trying any of that to the Whistler Village Gondola upgrade or is that just part of the whole package?

Dave Brownlie

What’s really part of the whole package, it’s about the investment we made last year in terms of the two new lifts. It’s about the continued investment in not only the village gondolas, but also our gated access kind of program. And we have been investing for a number of years now and our customers are responding to it. Yes, so.

Theoni Pilarinos - Raymond James

Okay, great. And then the gated access program, it sounds like there is a lot of different options that can help visitors in further experience like pre-loading their card online, less lineups, be tracking their ski day, are you going to get your talking about that this season and informing or educating people on what you are going to offer or is this going to be kind of a slow or softer launch, where users show up and see that and move it later in more of those other features later on?

Dave Brownlie

Yes. I mean, number one is key to the success of this project is making sure that it works very effectively from a customer perspective. And so that is clearly a focus of ours. On the business side, the number one kind of issue behind this is ensuring with gated access that everybody who is skiing and snowboarding on our mountain has a valid lift ticket. And so that’s another big part of the program. Then when you kind of get into the ability to reach out to people through customer information, reloading the future of potential gamification in terms of where connecting skier profiles with where they ski and ride on the mountain, those are all future opportunities that we are certainly excited about, but we are going to take an approach of learning this year once we get through the basics.

Theoni Pilarinos - Raymond James

Okay, sounds good. And I think someone kind of talked about the sightseeing visits being flat or you raised it and I am just wondering if you – do you think there is any impact from the Squamish Gondola opening at all?

Dave Brownlie

I would say the Sea-to-Sky Gondola is certainly helping bring more people into the corridor. Are there people going up that gondola and then maybe choosing not to come up our gondola, there is likely a small percentage, but it really is not having an impact on our business to any significant nature. We are actually quite pleased with the visitation that we are doing and the volumes that we see and we expect that to continue right through September.

Jeremy Black

Just point in clarification the other visits were up 20% for the quarter.

Theoni Pilarinos - Raymond James

Right. What was up 20%?

Jeremy Black

Other visits, which includes those sightseeing visits.

Theoni Pilarinos - Raymond James

Other visits, okay.

Jeremy Black

Yes, other visits includes sightseeing, Mountain Bike Park and summer glacier skiing.

Theoni Pilarinos - Raymond James

Okay. So if anything, it seems like it could have been a positive impact for you?

Dave Brownlie

I wouldn’t say it’s a positive impact. It will be a positive – it’s a positive impact over the longer term as it brings more marketing to the area and more people up the corridor and up the highway.

Theoni Pilarinos - Raymond James

Okay. And any update on MD, the master development agreement negotiations, I know you are kind of optimistically looking for year end, but maybe it’s been pushed out a bit. Can you guys give us a sense on how that’s progressing?

Dave Brownlie

Yes. We have certainly made good progress to-date certainly on the technical and legal aspects of our MDAs and master plans with regard to the exact timing of the execution. We really can’t speak for the province, but I think it’s a fair assumption that there has been some recent decisions with regard to the first nations in Canada and that’s kind of generating a significant amount of work for our provincial government and that’s resulting in some delays.

Theoni Pilarinos - Raymond James

Okay, that’s great. Thanks. I will just turn back in the queue since I have asked a lot of questions.

Dave Brownlie

Great, thank you.

Operator

The next question comes from Marcelo Lima of Heller House. Please go ahead.

Marcelo Lima - Heller House

Good morning, how are you, I just wanted to ask you a few questions on – could you just comment on the acquisition of Affinity Sports how is that performing?

Dave Brownlie

I guess we don’t provide that level of detail, but ultimately we are very pleased with the acquisition.

Marcelo Lima - Heller House

Okay. Could you characterize a little bit more your technology initiatives, could you talk a little bit about the ERP project and what benefits that’s going to bring to the mountain?

Jeremy Black

Sure, yes. It’s Jeremy here. So we are implementing an SAP product. We are starting with core financials as well as plant maintenance and materials management. We are replacing a JD Edwards system that is from the ‘90s. So it’s going to be a significant upgrade in technology from that perspective which allows us to streamline process, improve controls and all that sort of stuff. From an operational perspective, it’s unlikely to have guest impact, but it is critical to continue operating our business from a back office perspective in an efficient manner.

Dave Brownlie

Maybe just to add, if you are not familiar with the history when Whistler Blackcomb went public, we had information services agreement with Intrawest, which included the majority of our IT platforms, including our finance and accounting system, which is what we were on with JDE. We had a five-year transition period and so that was clearly an impetus to move to a new system here as we are really getting into the end of the year for and then ultimately getting ahead of that, so something that we absolutely had to do. We kind of wanted to execute on that ahead of time and ultimately we are going to get benefits from it in a whole bunch of ways on – from an internal basis moving to a more robust and appropriate product for Whistler Blackcomb.

Marcelo Lima - Heller House

And so this system obviously integrates all the passes, key rentals, food, lift etcetera?

Jeremy Black

No, it doesn’t. All of that – all of those transactions go through a different system that will interface with the new SAP system. So, point-of-sale system is separate from the SAP system at this point in time.

Marcelo Lima - Heller House

Okay. And how would you compare your other, I liked your app for example and the RFID systems and everything for the skier experience compared to what somebody would experience in Vail for example with the Epic Mix?

Dave Brownlie

How would we compare that? Quite frankly, quite differently, because what we have – we have an independent app that you can basically go on and download for free and it’s fully independent of anything, it kind of runs off of sort of GPS system on your smartphone. And so it’s quite different, measures vertical speed, tracks you sort of on the mountain, it’s quite different than what Vail offers. Our position is to develop our programs for our customers as a single mountain resort, the number one mountain resort in the world. But we are moving into that space now in a bigger way ultimately with opportunity with our radiofrequency gates. And as I said earlier, this year is all about customer service and control. And then in the future, we are all looking at – be looking at ways to integrate that into the guest experience as well.

Marcelo Lima - Heller House

So, currently the gates don’t have the RFID where those don’t know which lift you are in etcetera?

Dave Brownlie

Today, we do not have RFID.

Marcelo Lima - Heller House

Okay, so that’s coming for the next season, right. Okay.

Dave Brownlie

Next year, we will.

Marcelo Lima - Heller House

Okay, great. I was also curious about your potential growth projects, you mentioned that somebody else asked the question about potential growth projects and amount of leverage etcetera, what form would those growth projects take?

Dave Brownlie

I am – please clarify your question what form, I am not quite sure I understand.

Marcelo Lima - Heller House

Well, how would the company grow, would it be through building more lifts, building on an adjacent mountain, buying another resort, so what form could potential growth take?

Dave Brownlie

Yes. I think we have been fairly clear on our direction at this point. And our direction is to continue to improve the on-mountain core experience in the winter time and that is some of the more traditional things that you have talked about. I think there is also as we have talked about lots of opportunity in the non-ski space with investments in creating new opportunities and attractions after the people that are visiting this resort more on a year round basis and maybe less weather dependent and then we are always looking for complementary in-resort opportunities that I guess fit our business and are nice to fold into such as the Affinity space. So, as we look at that, I mean, there is a whole host of things within those three buckets. We continue to plan and look at and prepare in those areas to ultimately grow our business, but at this point, we spend our time looking at what we can do within Whistler in the corridor. If there are things that you cross our depths that are maybe outside of that corridor that we will look at if they make sense, but it’s not something that we are actively pursuing.

Marcelo Lima - Heller House

Alright, thanks a lot.

Operator

(Operator Instructions) Our next question comes from Dimitre Genov of Noster Capital. Please go ahead.

Dimitre Genov - Noster Capital

Hi, it’s only if you can break up the CapEx between growth CapEx and maintenance CapEx?

Jeremy Black

Yes. We haven’t provided that detail in any of our disclosure documents at this point in time, but our rough estimate that we provide to the market is roughly 5% of revenue is growth CapEx – sorry, it’s maintenance CapEx. So, if you look at the projects that are in progress, we had announced $12 million in growth projects in February and we are roughly halfway through those growth projects. So, that gives you indication of some of the growth capital.

Dimitre Genov - Noster Capital

Okay. If you can breakup again, apologies if I missed that sort of the breakup between – the breakdown between ski visits and non-ski visits, I know the amount was $393 million for the quarter, but if you can breakup the two parts?

Jeremy Black

Sorry, I didn’t understand your question.

Dimitre Genov - Noster Capital

If you can provide the breakdown between the ski visits and the non-ski visits in the quarter?

Dave Brownlie

Well, yes, for the quarter, I think it’s skier visits were $273,000, other visits were $120,000 to make up $393,000.

Dimitre Genov - Noster Capital

Okay, thank you.

Operator

There are no further questions at this time. I will now hand the call back over to Mr. Wilcox for closing comments.

David Wilcox

Thanks, Brock and thank you for joining us on the call this morning. If you would like to listen to the call again or missed a portion of the call, please visit our website for recording. Brock, back to you to end the call.

Operator

Thank you. This concludes today’s conference call. You may now disconnect your lines. Thank you for participating and have a pleasant day.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Whistler Blackcomb Holdings' (WSBHF) CEO Dave Brownlie on Q3 2014 Results - Earnings Call Transcript
This Transcript
All Transcripts