Peak Resorts' (SKIS) CEO Tim Boyd on Q3 2018 Results - Earnings Call Transcript

Peak Resorts, Inc. (NASDAQ:SKIS) Q3 2018 Earnings Conference Call March 8, 2018 4:30 PM ET

Executives

Norberto Aja – Investor Relations

Tim Boyd – President and Chief Executive Officer

Jesse Boyd – Vice President-Operations

Chris Bub – Vice President and Chief Financial Officer

Analysts

Barton Crockett – B. Riley FBR

Brad Boyer – Stifel

Michael Bellisario – Baird

Chad Edmonson – Lee-Way Financial

Operator

Good afternoon. My name is Christine and I will be your conference operator today. At this time, I would like to welcome everyone to the Peak Resorts’ Fiscal 2018 Q3 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer session. [Operator Instructions] Thank you.

Norberto Aja, Investor Relations, you may begin your conference.

Norberto Aja

Thank you, operator and good afternoon everyone. Thank you for joining the Peak Resorts fiscal 2018 third quarter conference call. On the call with me today are Tim Boyd, President and CEO; Chris Bub, Vice President and Chief Financial Officer; and Jesse Boyd, Vice President of Operations.

After this introduction, management will offer some thoughts on the fiscal third quarter results, as well as the company’s outlook for the reminder of the 2017-2018 ski season before opening the calls for questions. We’ll get started in just a minute with management’s presentation and comments. But before doing so, please 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, intent, plan, goal, belief, estimate, expect, future likely, may, should, will and other similar references to future periods. Examples of forward-looking statements include among other statements we make regarding guidances 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 assurances of performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business. Our 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 and 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 today include among the others the risk described in today’s news announcement and in the company’s filings with the Securities and Exchange Commission including the company’s reports on Form 10-k and Form 10-Q.

Any forward-looking statement made by us in today’s conference call is based solely on information currently available to us and speaks only as of the date in which it is made. We undertake no obligation to publicly update any forward-looking statements that maybe 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 SEC Regulation G. When required a reconciliation of all non-GAAP financial measures to the most directly comparable financial measures calculated in percent in accordance with the GAAP can be found in today’s press release as well as in the company’s website.

With that, I’d now like to turn the call over to Mr. Tim Boyd, President and CEO of Peak Resorts. Please go ahead, Tim.

Tim Boyd

Thank you, Norberto and good afternoon everyone. Thank you for joining us on the call today to review our fiscal 2018 third quarter results. Joining me today, as Norberto mentioned is Chris Bub, our CFO; and Jesse Boyd, our VP of Operations.

In the fiscal 2018 third quarter, Peak Resorts generated all-time record quarterly revenue and reported EBITDA. We grew revenue by over 5% to $59.3 million and recorded EBITDA by 5% to $21 million. We are very pleased with the performance in the quarter given a challenging operating environment. To provide some perspective on that operating environment, we started the season with some of our earliest openings on record. But since that time we experienced incredibly volatile weather pattern, which negatively impacted conditions across much of our resort portfolio particularly in the Northeast.

As an example over the course of the quarter we saw 100 degree swing between our lowest measured temperature of about 25 below zero during the New Year’s Eve weekend and our highest measured temperature of over 70 degree in late January. This volatility in temperatures has a significant impact on many mountains. But our commitment to snowmaking and grooming along with the tireless work of our teams, allowed us to smooth out much of the weather variability and provide our guests with a high-quality, on and off mountain experience that they’ve come to expect from us.

Our mountains in the Northeast got off to a great start this season as favorable weather in late October and into November allowed us to turn on our snowmaking equipment and establish a strong base across much of our terrain. Mount Snow saw one of its earliest openings on record, thanks to our enhanced snowmaking capabilities made possible by the West Lake Water project which was completed last fall.

We were able to open with 180 skiable acres on November 11 and operate the most terrain across the Northeast to the Thanksgiving holiday weekend. Wildcat, one of the best-known alpine ski resorts in New England also opened on November 11, and has delivered good conditions throughout the season as it celebrated its 60th anniversary. Since the end of Thanksgiving holiday weekend, our Northeast mountain portfolio has been subject to significant weather volatility with new record high and low temperatures.

In spite of these challenges, our operating teams have worked extremely hard to deliver the best possible conditions for our guests by making snow, maintaining our trails safely and efficiently operating our lifts and assisting our guests with their needs. Visitation in our flagship Mount Snow resort has been very strong this season despite the often less than ideal weather, particularly in January.

A perfect example of the benefits of our expanded snowmaking capacity at Mount Snow is our performance over the Martin Luther King holiday weekend. While we were in great shape heading into that weekend, a warm front moved in bringing significant rain in midweek, which really impacted conditions. However, in just a couple of days with our new snowmaking system, we were able to resurface a large portion of the mountain and execute on a very good holiday weekend.

Since opening in November, our guests has told us timed again that they are coming to Mount Snow, Hunter and Attitash, among others because of the investments and improvements we are making on and off the mountain and how they very favorably compare to other resorts across the Northeast. Our ability to offset much of the weather impact and the positive feedback from the guests provides us with added confidence that our resorts are favorably positioned to capture market share, in which it was one of the largest ski markets in the country and we are working very hard to provide the guests with the service that they expect.

In the Midwest we are enjoying a very strong season and saw favorable weather throughout most of the fiscal 2018 third quarter. The 3% and 28% year-over-year increase in lift and equipment rental revenue during the quarter was driven primarily by strong business across our Midwest portfolio. It’s important to note that our guest in the Midwest rent equipment at a far higher rate than our guests in the Northeast, and the equipment and rental revenue increase is an indication in our Midwest resorts performed well.

Now turning to the Peak Pass. Results for the 2017 and 2018 ski season were very encouraging, with overall sales up 16% on unit basis versus the prior year. Including a 23% rise in unit sales of the Drifter Pass for our 18 to 19-year-olds. Importantly, Drifter Pass sale represented about 37% of the overall total pass sales for the year, which we believe is an incredible endorsement of the value of the pass and the feel of our mountains.

With the Peak Pass, our guests who purchase a single pass, get access to seven resorts with unique attributes and a great variety of terrain, ability levels and resort personality. In addition, the success of our Peak Pass proved that customers appreciate our uncomplicated, easy-to-use unlimited offerings to ski anywhere at any time at a competitive price. This business has become an attractive subscription model that provides Peak Resorts with a far more predictable source of recurring revenue.

In an environment where multi-mountain season passes are increasingly important, we believe the value of our Peak Pass stands above the rest in the Northeast. Peak Resorts remains committed to delivering a great skiing and riding experience for all of our guests, along with the understandable value-added season pass offering. We believe this commitment and our results for the 2017-2018 ski season to date supports our goal of enhancing shareholder value and we are excited about the future as it holds for our company, our shareholders and most importantly, our guests. I’m in deep gratitude for the hard work of our entire teams as they serve our guests each and everyday with the best in skiing and riding.

With that, now I’m going to turn the call over to Jesse for some comments on our ongoing projects across our portfolio and yesterday’s announcement around the Peak Pass for the 2018-2019 season. Jesse?

Jesse Boyd

Thanks, Tim. Before handing the call over to Chris for a review of the financials, I wanted to briefly comment on the Peak Pass for the 2018-2019 seasons, as well as on the major development projects underway across our mountain portfolio. As some of you may be aware, just yesterday, we introduced our 2018-2019 Peak Pass.

We raised pricing on some tiers, including the top pass which went up about $30. At the same time, we maintained pricing for the Drifter Pass as we intend to continue to target this critical demographic with a pass that provides a strong sense of value. The Northeast is known for generational mountain loyalty and the ongoing success of the Drifter Pass is allowing us to lock in customers at a time in their lives where they are selecting their home mountain for years to come.

Furthermore, in Ohio we introduced a new offering, the Peak Ohio Pass, which will allow for unlimited skiing and riding in all of our Ohio mountains for one price. We are also offering our Ohio customers the chance to upgrade to a full Peak Pass, which will allow them to ski at their home mountains in Ohio and also visit the Northeast where they can get updated mountain experience at places like Hunter, Mount Snow, Attitash and Wildcat.

We heard from our Ohio customers that the Northeast is a reasonable drive for them and we have acted accordingly. We believe this offering will serve to be extremely popular. At Mount Snow, construction of the new Carinthia Lodge remains on schedule, and we expect to open the lodge in time for the 2018-2019 ski season. Once completed, the lodge will serve as a gateway for guests to get on and off the mountain and as the anchor for residential development at Carinthia.

We are also confident that the lodge will become an important revenue stream for us as it will include amenities such as a full-service restaurant, a cafeteria, two bars, a coffee counter, a new ski rental shop, tuned shop, lift ticket sales windows, a ski school sales office, retail and convenience stores and various other services. At Hunter, we continue to work through the approval process for our planned terrain expansion. Our expectation is to begin the clearing process this spring, which should position us to have an expanded mountain terrain representing a 25% to 30% increase in skiable acreage open for the 2018-2019 ski season.

Finally, at Hidden Valley, we received approval for the proposed zip line project and are working to secure building permits. This project is critical to the long-term health and viability of Hidden Valley as it adds a summer offering at the mountain, which we believe will prove to be very popular with the community.

I’d like to take this opportunity to thank our customers and friends in the St. Louis area for their support, and we look forward to serving you in the years ahead. It is important to remember that investing in our resorts, be it through the maintenance of key on-mountain infrastructure such as lifts or through off-mountain amenities such as our lodges, allows Peak Resorts to enhance our guests’ enjoyment. With investments in snowmaking capabilities that we believe are the most advanced and efficient, available, we strive to ensure our guests enjoy the best possible ski and boarding conditions at our mountains regardless of the weather. This is a core tenet of our strategy and a vital component to our long-term success.

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

Chris Bub

Thanks, Jesse, and good afternoon, everyone. Record fiscal 2018 third quarter revenue of $59.3 million increased 5.1% year-over-year from $56.4 million in the comparable prior year quarter. As Tim and Jesse highlighted, while the 2017-2018 ski season take it off to a good start for the quarter, significant weather variation did have an impact on our revenue, particularly across the Northeastern portion of our mountain portfolio.

Revenue growth was driven by a 28.2% increase in equipment rental revenue, a 3.4% rise in food and beverage revenue, and 3% growth in lift ticket and tubing revenues. Given the market dynamics, the strong equipment rental revenue results in the quarter are highly indicative of a healthy visitation and usage across our Midwestern portfolio of mountains as few of our guests in these markets owns ski and snowboard equipment relative to our guest in the Northeast. And despite weather driven weakness across much of our Northeastern portfolio, overall Northeast revenue was up, principally due to strong Peak Pass sales and the overall appeal of our resort offerings.

Resort operating costs increased 6.9% or $2.3 million to $36.0 million for the fiscal 2018 third quarter. Labor costs were up 3.2% year-over-year driven by higher wages across our resorts due to early openings. In fact, Mount Snow opened early enough results to nearly full extra wage cycle as a resort, which we believe is a good problem to have. The 18.5% increase in other operating expenses in the quarter included a number of key drivers, including timing of certain advertising and marketing campaigns to support our customer outreach and go-to market initiatives, and increased maintenance and supply costs. These two items were driven primarily by our continued efforts to catch up on deferred maintenance projects across the resort portfolio.

Before we move on, and just provide a bit more color on our resort operating costs relative to our top line results, they represented 61% of revenue in fiscal 2018 third quarter, compared to 60% last year and 66% in the third quarter of fiscal 2016. During the quarter, we took a non-cash fixed asset impairment charge of $1.6 million in connection with our decision to seize the commercial operations of a restaurant and certain hotel-like amenities within the condominium building located adjacent to Attitash.

We determined we would not be able to renew our management services agreement with the Condominium Association upon its upcoming expiration on April 30, 2018, and thus decided to terminate our rental management program and cease operations of hotel-like amenities.

General and administrative expenses in the fiscal 2018 third quarter were down $0.4 million year-over-year to $1.4 million, and depreciation and amortization increased by approximately $0.2 million to $3.4 million in the quarter. The decline in G&A expense versus the prior year was primarily driven by lower performance-based compensation.

As everyone is aware, Congress passed the 2017 Tax Act during the third fiscal quarter. Factoring this in, we recorded income tax expense of $3.4 million for the quarter and an income tax benefit of $8.2 million for the nine months ended January 31, 2018. This includes a discrete net tax benefit of $0.1 million associated with our deferred tax liabilities. We estimate that our federal and state tax rates through the remainder of fiscal year 2018 will be at a new lower rate of 27.4%. For fiscal 2018 third quarter, Peak Resorts generated record revenue, a record EBITDA and revenue. The EBITDA was $21 million compared to a reported EBITDA of $19.9 million in the year-ago period.

Now turning to our financial position. As of January 31, 2018, the company had cash and cash equivalents of $19.1 million and total outstanding debt of $181.5 million, which includes $12.4 million drawn against our revolving line of credit and long-term debt of $165 million. Interest expense of $3.5 million for fiscal 2018 third quarter was up roughly $0.2 million compared to the prior fiscal third quarter.

We allocated $8.1 million to capital expenditures in the fiscal 2018 third quarter, which included $5.6 million for the completion of the West Lake project and the ongoing construction of the Carinthia Lodge at Mount Snow. In summary, we believe Peak Resorts remains in a strong financial position and our results in the fiscal 2018 third quarter and to date in the fourth quarter, reflect that we are well positioned to perform even as the weather occasionally refuses to cooperate.

We are delivering great guest experiences across our mountain portfolio, thanks to our ever-outstanding snowmaking capacity, ongoing facility enhancement and deep commitment to service. We remain optimistic that we could finish this year strong and look forward to a good March and late season skiing in April.

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

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] Your first question comes from the line of Barton Crockett from B. Riley FBR. Your line is open.

Barton Crockett

Okay. Great. Thanks for taking the question. Could you guys tell us a little bit more about visitation so far this season? I mean, overall, is it up, and is there a big disparity between the Northeast and the Midwest?

Chris Bub

Yes. So we don’t give necessarily specific visitation number specifically on the quarter. We will traditionally put out our skier visit data at the end of our fiscal year. But I can tell you that from a quarter revenue standpoint, the Midwest was up about 20%. The Northeast was up, but it was up minimally.

Barton Crockett

Okay. When you say 20% that’s revenues or that’s visitors?

Chris Bub

Revenues.

Barton Crockett

Revenues, okay. And since the end of the quarter, since the end of January, obviously – February, March, have the times changed meaningfully, or is it still kind the same situation that you’re seeing from January?

Tim Boyd

I think that – well, it’s really only the month of February and I think that the trends to February were somewhat similar because February was still a pretty warm month. I think it was the second warmest February on record in New York City. So the February numbers is probably will be somewhat similar to that. And obviously, March we’re just getting into, so we don’t know exactly what that – what’s happening there and we’re off to a good start.

Barton Crockett

Okay. Now you guys – last year, as I recall, I think the Midwest resorts closed pretty early as things got very hot. Are we starting to get past the point where may be the growth can accelerate because last year they were closed, but maybe there’s still operating – and when do we kind of hit that point?

Tim Boyd

Yes. We actually have two of the resorts and actually, three of the resorts in the Midwest are closed. The one in St. Louis and Paoli are closed and Alpine Valley up in Cleveland is closed. But the other ones are still operating. And all of those – obviously, they were all closed by last year. So yes, we are going to get some added benefit from that. How much that is, it obviously is still – injury is out because there still open and operating. But yes, it should – it’s certainly should – that part it should certainly improve over last year.

Barton Crockett

Okay. That’s great. I appreciate all the color on the visitation, just one final question then I’ll get out of the way. There was this – a letter about variable about SEC correspondence that was put out right before your earnings release. One of the things mentioned was variable VIEs, and I was wondering if you could tell us – do you have any expectation or any communications with the SEC about them excepting your treatment of the VIEs I think in particularly the upcoming one you guys are hoping they’re not consolidated. And would consolidation or lack of consolidation have any meaning in terms of your debt covenants and interest – and some of the interest expense type of the covenants?

Chris Bub

Yes. Barton, this is Chris. Obviously, as we go through these programs, we have to do the certain accounting analysis that’s necessary to determine whether or not an entity would be available entity. And if so, whether or not it would be consolidated. We did have some correspondence with the SEC recently. I believe they do routine reviews of filings of public companies and they just want some clarification on our accounting guidance associated with the first offering of EB-5.

We responded to them with our accounting analysis, where we get determined during the first offering of EB-5, the debt offering, that we did not have a need to consolidate the entity because it was not a variable interest entity. And so from that standpoint, our accounting guidance was fed towards the first offering. At this point, when we talk about future offerings of EB-5, we have not finalized any of the official documents associated with our next offering, so just we really can’t comment on that until we can get the full operating pulled together, have all the documentation and then do a review with our auditors and the accountants and things like that.

Barton Crockett

But then would the determination there be meaningful for your debt covenants at any level?

Chris Bub

We don’t believe so. We would obviously be speaking with our lenders who are involved with this as well and make sure that everybody’s comfortable with the – if there was a consolidation on what that would look like, any impact that, that would have on any type of debt covenants.

Barton Crockett

Okay. All right, that’s great. Thank you very much.

Operator

Your next question comes from the line of Brad Boyer from Stifel. Your line is open.

Brad Boyer

Hey thanks guys. Thanks for taking my question. First one here is just around the resort margin in the quarter. I know, Chris, you called out some – it sounds like some accelerated sales and marketing efforts there. Just curious kind of how you’re thinking about that going forward. I mean, we saw some pretty healthy growth across the ancillary segments, some nice lift in the Midwest, which are generally your higher margin properties. I was just little surprised to see the resort margin kind of down slightly year-on-year. So just kind of curious how you’re thinking about that going forward?

Chris Bub

Yes. And obviously and I try to give a little bit of color there, too, because you’re right, from last year, I think expenses as comparison to revenue, it went to about 50%, up to 61%. Going back historically, even the year before in 2016, it was at 66%. So obviously, we do spend a lot of time looking at that and reviewing that. The marketing piece was actually something we just pushed out the marketing cost into the third quarter. It actually hit in the fourth quarter last of year, that was about $0.3 million of the change.

And so the reality is, that will actually flow back to us in the fourth quarter, and so that will be a little bit beneficial. The other thing that we’re dealing with is, obviously we kind of ran into some liquidity issues in the year before, in the years prior, and so we’re still playing a little bit of catch up specifically at the beginning of the quarter before we got operations going. We were still just playing a little bit of catch up with regards to some deferred maintenance. We really do feel like we have that under control now. We feel like as we move into the future, we’ll see that come down slightly as well as the repairs and maintenance and supply costs.

Some other color there as well in the other category, one of the things we’re also seeing is insurance costs have gone up slightly, and so we’re seeing that piece as well. So you have higher medical costs as well as just – when you think about all of the catastrophes that have happened across the United States just generally insurance property casualty stuff that is up. And so we’re dealing with that as well.

And obviously, one of the ways we’re going to deal with that is, as we looked at the Peak Pass, for instance, we’re looking at price – increasing the price on that. We’ve been stabilized for a couple of years now, we’ve got a good base there, and we feel like we’re able to increase pricing along that. And again, we’ll look at food and beverage and things like that as well to make sure we maintain a good cost structure.

Brad Boyer

Okay, that’s helpful. And then next question is for Tim, and obviously, there’s been a lot of talk in the industry of late of some emerging pass product. Just curious if you guys were approached at all to participate in some of these conglomerate-type pass products that are out there, and kind of what ways your thinking around whether you would or would not include some of your assets into one of those products?

Tim Boyd

I can’t comment whether we were approached or not, but I can certainly give – our view on these pass products. I mean, I think from our perspective, we feel very comfortable where we are right now with Peak Pass. We feel that it’s almost becoming unique on its own because it’s – especially in the Northeast, because it’s really the one big pass that’s unlimited. And it doesn’t have any other complications to it, which we think is important in terms of the public understanding and stuff.

The other thing is, too, is I think that before, the last two years we’ve experienced a lot of success with our Peak Pass, the Max Pass was already in existence in the Northeast. And even though the new Icon Pass, for example, has a stronger group of Western resorts in this year, that actually has much less Eastern resorts than the Max Pass had. And our passes perform in double-digit growth while that was in existence.

And I think what that really illustrates is the fact that a lot of these new pass products are really, in our view, are designed for the destination skier, which allows us kind of a nice runway because our pass is really targeted towards our local market. And I think that this is giving us an opportunity to continue to grow this pass going forward because I think clearly, in the Northeast especially – people that go skiing out west, it’s certainly something that a lot of people do. But the overwhelming majority is priority in the Northeast is which mountain do they ski at locally for the majority of the season.

And I think that’s where our pass comes to the top, and the fact that it’s an unlimited product for seven different resorts, that you can drive to all those resorts in. So I think the cost and convenience factor really give us the inside track here, and we’re real comfortable in doing that. And quite frankly, our perspective on the season pass is, one of the reasons – the benefits we liked about our pass is not only it’s unlimited nature, but it gets our customers come to our resorts. So our interest in farming our customers out to other resorts is really quite minimal. We don’t really see that as a high-value thing, especially from a local standpoint.

Brad Boyer

Okay. And then one last question, either for Tim or Jesse. Just curious, there were some news out last week, I believe regarding some issues with the Bluebird Express lift at Mount Snow. Just curious if you could comment if that’s – you’re seeing any kind of material impact from that lift being out of service, or if you’ve been able to accommodate guests otherwise? And that’s it for me. Thanks.

Jesse Boyd

Yes. Thanks Brad. Yes, about a week and half ago, we did lose the gearbox on Bluebird Express. It was on a Saturday afternoon, the nice thing at Mount Snow is we do have chair lift redundancy to the summit there, and we were able to still run our other detachable chair lift to the summit throughout the day, and the team worked really hard for the next four days to get a new gearbox formed into Colorado, and they worked 36 hours straight. And we actually reopened the Bluebird that following Thursday and [indiscernible]

Brad Boyer

Perfect. Thanks a lot guys.

Operator

[Operator Instructions] Your next question comes from the line of Michael Bellisario from Baird. Your line is open.

Michael Bellisario

Good afternoon guys.

Tim Boyd

Hi, Mike.

Michael Bellisario

I think, I may have missed it, what are the Peak Pass growth end up for the 2017-2018 ski season, that your 16% correctly?

Chris Bub

Correct. We’re 16% on unit and 15% on dollars.

Michael Bellisario

Got it. And then are you guys able to track and if you do, maybe you can provide some color to kind of ancillary revenue spend that you see from Peak Pass users and maybe trying to figure out how much those guests may be spend more than the one-off traveler coming to your resort?

Tim Boyd

We really don’t have that kind of data, Mike. But generally, a rule of thumb that we’ve found kind of historically, and again, this is just ballpark over time, is usually, a pass holder will spend somewhere in the vicinity of 1.5 times to 2 times what the cost of their passes.

Michael Bellisario

Got it, that’s helpful. And then I know you commented on an earlier question, but maybe just an update on round two of the EB-5 project, timing and maybe source of uses of capital – and how you’re thinking about the balance sheet as you kind of embark on that project?

Tim Boyd

Well, right now, because the – we’re going to market with this thing, I can’t – we’re really not allowed to comment on it since it is a security offering. All we can really say is reiterate what’s going to happen and it’s going to be basically 102 ski-in/ski-out units at the Carinthia base area around the new ski lodge. That’s what the project’s going to be about. But other than that, I really can’t comment anymore on it.

Michael Bellisario

And maybe on timing, is it still fluid at this point, or you have a targeted…

Tim Boyd

I mean, we’re still anticipating the same kind of timeframe we’ve talked about in the past.

Michael Bellisario

Got it. And then last one for me on the acquisition front – maybe provide an update on what you’re seeing there now that the ski season is winding down and maybe any change in stellar motivation to move product?

Tim Boyd

Well – I mean, we actually had a lot of activity on the M&A front last year. We were actually in conversations with a lot of different people. We just couldn’t come to an agreement on a price. I think that we’ll be looking at a lot of those same opportunities and other ones in this upcoming season here as – after the ski season is over. But I think, in all honesty, I think the last years or so has impacted the M&A landscape with all the consolidation at the higher level resorts that’s gone on due to higher multiples that have been paid.

I think it had a negative effect on some of the smaller operators in what they use the value of their resorts at. And I think that the – as that gets whittled down here over time, I think that the – some of these people will come back down, so I think the reality were able to realize that their particular resort is not going to get the same – multiple as a trophy property would.

Michael Bellisario

That’s helpful. Thank you.

Operator

[Operator Instructions] Your next question comes from the line of Chad Edmonson from Lee-Way Financial. Your line is open.

Chad Edmonson

Hey guys. How is it going?

Tim Boyd

Hi, Chad. How are you?

Chad Edmonson

Doing well. I just had a quick question basically on the last that you just touched on Tim. My numbers just really quickly show that you guys have been net debt to trailing 12 EBITDA in the high 5’s. Given that you’re still looking at acquisition opportunities and you expect to do so again at the end of the season given, the seller’s reasonable multiples, how far up are you comfortable taking that level.

Jesse Boyd

This is Jesse. Usually, we said historically that we would look at 5 times to 7 times EBITDA is where we would feel comfortable at. I think that’s pretty consistent with what we’ve said in the past.

Chad Edmonson

Got it. That’s all for me. Thanks guys.

Tim Boyd

Thanks, Chad.

Operator

There are no further questions at this time. Mr. Tim Boyd, I’ll turn the call back over to you.

Tim Boyd

Thank you, operator. In closing, our Peak Resorts is better positioned than ever to provide our guests with a world-class skiing and riding experience. We’ve invested prudently and strategically to position our business to operate effectively even in less than optimal weather conditions and our success in the fiscal 2018 third quarter proves that out. Our entire team remains laser focused on creating shareholder value by driving home the advantages that our resorts offer from multiple hills which provide an entry point into the sport and a family-friendly entertainment option to larger resorts which offer industry-leading snowmaking and unforgettable terrain.

We thank you for your continued support and for the confidence you placed in us with your investment. If you have any questions or need any additional information, please contact our IR firm, JCIR at [phone]. And we look forward to speaking with you again when we report our fiscal 2018 fourth quarter results in July. Enjoy the rest of the ski season. Thank you.

Operator

This concludes today’s conference call. You may now disconnect.