Greetings and welcome to the Intrawest Resorts Holdings Second Quarter Fiscal Year 2015 conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star, zero on your telephone keypad.

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Liz Derosier of ICR. Thank you, you may begin..

Thank you. Good morning everyone and welcome to the Intrawest Resorts Holdings’ Fiscal 2015 Second Quarter Earnings conference call. After our prepared remarks, there will be a brief question and answer session.

I would like to remind you that some of the comments made by management during the conference call contain forward-looking statements that are subject to risks and uncertainties that could cause actual results to vary, which are discussed in our public filings filed with the SEC, including reports filed under the Securities Exchange Act of 1934.

We caution you not to put undue reliance on forward-looking statements. Forward-looking statements made during this call speak only as of the date of this call and we undertake no duty to update or revise these statements.

In addition, some of the comments made on this call may refer to certain measures such as adjusted EBITDA, which are non-GAAP measures. Although adjusted EBITDA is not a substitute for net income or other GAAP measures, management believes adjusted EBITDA is useful in measuring the operating performance of our business.

For a full reconciliation of adjusted EBITDA to GAAP results in accordance with Regulation G, please see our press release furnished as an exhibit to our Form 8-K dated February 6, 2015. This and the presentation that accompanies today’s call are located in the Investor Relations area on our website at www.intrawest.com.

Our call today will include remarks from Tom Marano, Chief Executive Officer, and Travis Mayer, Chief Financial Officer. Now I will turn the call to Intrawest’s CEO, Tom Marano..

Thank you, Liz, and welcome everyone. Having joined Intrawest about two and a half months ago, I have had the opportunity to tour several of our resorts and see their flow and rhythm during peak and non-peak operating periods. I have also had the opportunity to spend time with all of our leaders across the company.

This process has been incredibly informative and have left me even more enthusiastic about Intrawest’s prospects than I was when I accepted the position as CEO.

With Travis Mayer taking on the Chief Financial Officer role, Sky Foulkes’ promotion to Chief Operating Officer, and other strong leaders throughout the company, I am convinced that this is the right mix of fresh eyes and existing talent to grow the business.

My interactions these past few months have further reinforced my view of the quality and value of our staff. In conversations with our guests, I have learned that they find our staff to be friendly and highly knowledgeable, which enhances a guest experience at an Intrawest resort.

From these conversations, I also discovered that many guests are not aware of our entire portfolio of assets and seemingly are quite open to exploring our other destinations. This is a huge opportunity for us and plays into our strategy to better cross-market our resorts in part through multi-resort season passes.

As part of this strategy, we have begun to incent our staff to cross-sell CMH trips as well as east-to-west trips in the United States, and cross-border travel between our Canadian and U.S. operations. While currency translation adjustments from a stronger U.S.

dollar affect our GAAP results, similar to other companies with foreign operations, a weaker Canadian dollar makes our Canadian resorts and CMH more affordable for U.S. customers. We also have the ability to grow by investing in growth capital projects as well as strategically restarting the real estate development business.

As we continue to grow our customer base and increase skier visits, I believe there are opportunities to improve and expand our lodging and food and beverage options that will generate attractive returns. Our intent with these growth investments is to deliver double-digit returns and to continuously improve the guest experience.

Looking externally, I see an industry ripe for further consolidation and I believe that with discipline we can grow by acquiring complementary resorts through transactions that have an attractive IRR or are strategic to our business.

Above all else, I look forward to spending the remainder of the ski season speaking with our guests and identifying additional strategies that will enhance revenue and grow the business.

I believe that I bring a fresh perspective, a sense of urgency, and valuable finance and negotiation skills that complement the knowledge and existing skills of the team here at Intrawest.

With one holiday season under my belt, I am encouraged by our fiscal second quarter results which showed signs of growth in many of our important metrics and yielded roughly breakeven adjusted EBITDA, in line with our expectations and previous guidance. Ski operations in our mountain and adventure segments opened in November and December.

This early part of the ski season includes most of the Christmas holiday period, yet it historically represents only between 20 and 25% of total skier visits. We enjoyed a strong opening in Colorado but experienced some challenging early season weather and conditions in the east and at CMH.

Our eastern resorts had less than 60% of terrain open going into the Christmas holiday period; however by early January, we had approximately 90% of trails open in the east. As a reminder, in September of this year, we acquired the 50% interest in Blue Mountain Resort that we previously did not own.

As a result, for comparative purposes, I will mention several metrics that exclude Blue Mountain from both periods to provide a same store view of our results. Excluding Blue, skier visits increased 2.2% in the fiscal second quarter relative to the prior year period.

The second year of consecutive growth despite challenging early season conditions in fees this year demonstrates the power of the geographic diversity of our portfolio and the growing popularity of our pass programs. Total segment revenue for the quarter increased 18.3% with the largest growth coming from the mountain segment.

Mountain segment revenue grew 24.6% primarily due to the inclusion of Blue Mountain’s revenue in our second quarter results. Excluding Blue Mountain, same store mountain revenue increased $3.6 million or 4.7%.

This growth was largely driven by skier visits, select price increases across all of our products, as well as increased season pass and frequency product sales. Excluding Blue, retail and rental revenue for the quarter increased $1.3 million or 11.6%. Ski school revenue grew $900,000 or 14% over the prior year period.

The growth in these guest services reflects our successful pricing strategy while still offering value that is recognized and appreciated by our guests. In food and beverage, we opened a new on-mountain restaurant at Winter Park called Lunch Rock.

The restaurant builds on the success in the food and beverage program started last year with the new Four Points restaurant at Steamboat. These investments and our broader initiative to improve the F&B offerings contributed to a 5% increase in F&B revenue per skier visit at our Colorado resorts for the quarter.

These projects also demonstrate an opportunity for high return on capital investments at our resorts with the potential to further enhance the guest experience and increase revenue per visit. Looking ahead to the rest of our ski season, we are encouraged by our season pass and frequency product sales.

As of February 1, season pass and frequency product sales were up approximately 16% compared to the same time last year. That was driven by a 7% increase in the number of units sold and a 9% increase in average yield per unit sold, net of our estimated payments to our partner resorts.

This increase in yield per pass sold is the result of our pricing strategy and a shift in the mix of passes sold to higher value products, including our multi-resort products. Our 16% growth to date this year builds on the over 18% growth in season pass and frequency product sales achieved last year.

While we have experienced season pass and frequency product growth throughout our portfolio of resorts, Colorado season pass sales have been especially strong.

We believe the significant growth in Colorado demonstrates the value of our product offerings and the benefits of our strategic alliances, allowing guests more days of skiing at not only our owned resorts, Winter Park and Steamboat, but also at our partner resorts, Copper Mountain, Crested Butte, and Eldora Mountain.

We have also enjoyed success from the new Intrawest Passport which provides purchasers the ability to ski six days at each of the Intrawest resorts. As part of our cross-selling initiatives, one of our primary goals is to motivate our eastern guests to visit our western resorts.

Looking forward, we believe there is additional opportunity to grow our season pass program through complementary acquisitions and addition pass alliances with third party resorts. We also believe there is additional opportunity to use season passes to build loyalty and increase cross-selling within our portfolio of resorts and CMH.

I’d now like to turn the call over to Travis for a more detailed discussion of our segment operating results..

Thanks Tom, and good morning.

As Tom mentioned, since the transaction in September when we acquired the remaining 50% of Blue Mountain that we did not previously own, Blue’s results have been included in our consolidated financials; therefore, our results for our fiscal second quarter include 100% of the skier visits, revenue and EBITDA from Blue Mountain whereas in the prior year period, our then-50% interest in Blue Mountain was accounted for under the equity method and our results included only 50% of Blue’s EBITDA and none of Blue’s skier visits or revenue.

The inclusion of 100% of Blue’s revenue in the most recent fiscal second quarter created substantial revenue growth relative to the prior year period; however, the impact from including the additional 50% of Blue’s EBITDA this quarter was minimal relative to the prior year period as our mountain adjusted EBITDA for our fiscal second quarter is historically about breakeven.

For comparative purposes, I will reference metrics that exclude Blue in all periods, as appropriate. In the fiscal second quarter, we had total segment revenues of $120.1 million, which represents 18.3% growth over the prior year period. Excluding Blue, total segment revenue grew 3.5%.

We are pleased with this same store revenue growth given the challenging early season weather and conditions in the east relative to last year. Our total adjusted EBITDA for the quarter was approximately $100,000 compared to $1.7 million in the prior year period.

Our adjusted EBITDA for the quarter, while in line with our expectations, was lower than the prior year period largely due to higher corporate costs and higher helicopter maintenance expenses. Corporate costs increased primarily due to strengthening of our public company infrastructure, including additional headcount and IT services.

As compared to the second quarter of the prior year, the Canadian dollar weakened by approximately 8% versus the U.S. dollar, negatively impacting total segment revenue by approximately $3.8 million; however, since it was a nearly breakeven quarter, the impact on total adjusted EBITDA was minimal.

Turning to our segment results, mountain segment revenue, excluding Blue, for the second fiscal quarter increased by $3.6 million or 4.7%. Mountain adjusted EBITDA declined by approximately $600,000 primarily due to an increase in allocated corporate costs.

Excluding Blue Mountain, lift revenue, which is the largest component of mountain revenue, increased by $1.8 million or 5.6%. Same store revenue from lodging, ski school, retail and rental, and food and beverage increased by $2.6 million or 7.3%.

Our mountain revenue growth was primarily due to increased season pass and frequency product sales, increased prices and a 2.2% increase in skier visits. Revenue from season pass and frequency products for the quarter increased by 10.7% and comprised 45.6% of total lift revenue versus 42.7% in the prior year period.

This growth in season pass and frequency product sales helped to mitigate the challenging conditions in the east during the early season. Effective ticket price, excluding Blue Mountain, increased by 4%.

The ETP growth reflects both an increase in the average amount of revenue per day ticket visit and the average amount of revenue per seasons pass and frequency card visit. Total amount of revenue per skier visit increased by 2.6%.

The increases in revenue per visit from both lift and ancillary guest services are the result of successful pricing strategies. We have recently taken some time to reexamine our key performance indicators with the goal of providing more useful metrics to investors.

As a result, we have updated the definition of both our ETP and mountain revenue per visit metrics to include only revenues from months when our ski resorts are open for operation specifically from November 1 through April 30.

For a more complete description of the revised definition of ETP and mountain revenue per visit, please review the Key Business Metrics section in the Form 10-Q that we filed this morning with the SEC. In the adventure segment, revenue for the fiscal second quarter decreased by $1.3 million or 11.2%.

This was primarily due to postponed trips to CMH resulting from limited early season snowfall and warm temperatures. Adventure adjusted EBITDA for the quarter decreased by $1.7 million.

This was primarily due to increased helicopter maintenance expenses and allocated corporate expense partially offset by expense savings at CMH associated with the trip postponements.

In the real estate segment, revenue for the fiscal second quarter increased by $1.2 million or 8.8%, mainly as a result of additional payments on financed sales of points at our vacation co-op business.

Real estate adjusted EBITDA for the quarter grew by approximately $800,000 or 49.6% largely as a result of an approximately $500,000 increase in our pro rata share of the EBITDA from our equity method investments in Mammoth Hospitality Management, which benefited from improved weather conditions in Mammoth Lakes, California, and the Fairmont Chateau in Tremblant.

On a GAAP basis, our net loss improved by $90 million compared to the prior year period. This improvement was largely a result of lower interest expense due to our restructuring and refinancing in December of 2013. Capital expenditures during the fiscal second quarter were $3.1 million lower than the prior year period.

These lower capital expenditures were attributable to a difference in the timing of projects relative to last year. I would like to finish with a discussion of our guidance for our full fiscal year 2015.

Year-to-date, our businesses have performed in line with our expectations, and on a local currency basis our outlook for the remainder of the fiscal year remains within our original fiscal 2015 guidance range.

As a reminder, approximately 46% of our operations are conducted in Canada, so we are subject to foreign currency translation adjustments from changes to the U.S. to Canadian dollar exchange rate. Our original guidance provided back in November assumed a U.S. to Canadian dollar exchange rate of 1.10.

The exchange rate averaged 1.11 in the third and fourth fiscal quarters of fiscal 2014 and in the first six months of fiscal 2015, and it is currently at approximately 1.26. As a result of the recent weakening of the Canadian dollar, we would like to update our guidance to reflect a U.S.

to Canadian dollar exchange rate of 1.26 through our third and fourth fiscal quarters. As a point of reference, our third fiscal quarter has historically accounted for approximately 140% of full-year adjusted EBITDA.

This revised guidance includes total segment revenue for the full fiscal year 2015 in the range of $552 million to $577 million, and segment adjusted EBITDA in the range of $103 million to $108 million. GAAP net loss is now expected to be in the range of $19 million to $9 million.

Actual results could differ due to additional changes to the exchange rate or other factors, in particular a deterioration in weather could impact results as January has been a dry month for the western United States. Again for clarity, this revised guidance assumes a U.S.

to Canadian dollar exchange rate of 1.26 for our third and fourth fiscal quarters. With that, we would be happy to take your questions..

[Operator instructions] Thank you. Our first question comes from the line of Shaun Kelley with Bank of America Merrill Lynch. Please proceed with you question..

Hey guys, this is actually Danny on for Shaun. So just a quick question. Your updated guide, it says it was predicated on normal weather conditions, but we noted that snowfall across much of your portfolio is actually down versus last year, and you kind of touched on that a little bit.

That being said, is it fair to assume that we’re still within normal volatility ranges that you’re used to seeing at this point of the season, or maybe if you could just elaborate on that a little bit. Thanks..

Yes, this is Travis speaking. Thus far, we’re actually relatively close to the average historical snowfall at our resorts. We have a couple exceptions - Steamboat has been a little bit dry year-to-date, as has Mont Tremblant, but for the most part we’re pretty close to the long-term averages.

We sort of contemplated that when we put together the guidance and the ranges that we just described, and we also took into account the fact that we’ve had quite a bit of snow the last week, which has, I think, helped reprogram the SNOW message and improved the conditions across the portfolio..

Yeah, I would add the past week has actually been very good. We’ve seen 15 inches at Steamboat, more than 10 inches at Winter Park. I think everybody in the northeast should get in their car and go up to Stratton, which has had 33 inches in the past seven days, and they’re expecting more snow over the next few days.

Snow Shoes has 13 inches, Tremblant has 11. We’ve got really good bases, and I think one of the things you have to consider, if you’re driving to a resort, especially in the east, you’re still going to go. It’s more things like really cold weather that will keep you away, because we have invested heavily in snow making equipment.

Recently, we haven’t had to use it in the Vermont area and in the other parts of the northeast, but there’s good conditions out there now, so really we’re comfortable with not reflecting any concerns..

Great, thank you. Just one last question on SG&A, you did call out higher expenses in the quarter.

Maybe if you could just help us quantify--you know, in the change of the guidance, you didn’t talk about the FX impact, but how much of that is going to be the FX, and the increase in SG&A, is it just timing related or are we looking more at something on a full-year increase?.

The guidance we have provided has SG&A consistent with the assumption we used in the previous guidance, so there’s really no change on that front. Really the only significant change to the guidance is the FX. Like we said before, on a local currency basis we’re still in the original range..

Great, thank you very much..

Our next question comes from Asua Ahwoi with Goldman Sachs. Please proceed with your question..

Thank you, good morning. Just one from me.

Given you have resorts both in Canada and the U.S., and you talk about the potential benefit that Canadian resorts should see from the weakening Canadian dollar, have you seen that? Is there any way you can quantify for us whether you’re seeing a shift from people wanting to go to your Canadian resorts versus some of your U.S.

ones? Then similarly from the international customer considering a North American ski vacation, are you seeing the Canadian resorts play more favorably versus the U.S.?.

Morning, Asua. This is Travis again. So it’s really early. The Canadian dollar just weakened over the course of the last month, and the reality is that international guests book their trips generally a little way in advance, so we expect an impact perhaps later in this fiscal year, and then particularly at CMH for next year.

But at this point, it’s too early to really have any numbers that would be useful to you..

Our next question comes from the line of Joel Simkins with Credit Suisse. Please proceed with your question..

Hey, good morning. Tom, I know you’re early in the tenure here. Obviously you talked through a couple of low-hanging fruit opportunities on the cross-selling side.

Can you just tell us, given that you came from a real estate and finance background, kind of what you’re seeing in the real estate portfolio and what kind of green shoots we should be looking for as you guys try to unlock some of that value?.

Sure. I think there’s a lot of opportunity in this real estate portfolio. We’ve seen some good recovery in prices for resort condos. I don’t think they’re on fire at the moment, but the prices are starting to come back.

Since I’ve been here, I’ve seen a number of proposals that would involve anything from partnering with an outside partner to develop hotels, boutique hotels. I’ve seen opportunities that would potentially have themed hotels, and then we’ve also been evaluating some additional time share opportunities.

Typically what will happen is--and I am surprised at how many things keep coming across my desk. It’s probably because of my prior experience on the Street and relationships I have there.

My expectation is that we’re going to continue to evaluate all of these, and we really make our capital decisions in the third quarter, so I think there’s going to be some opportunities to do some interesting things down the road here, but we’re going to make those decisions on a case-by-case basis.

We’re in the process of evaluating these things now, and we’ll make decisions in the third quarter..

And in terms of the less chunky capex for next summer, how are you guys thinking about other sort of on-mountain venues? I know the Lunch Rock has gone pretty well for you so far, so are you thinking about ways to sort of roll that platform out across the portfolio?.

Yeah, we’re going to talk about this on the next earnings call in quite a lot of detail, but I think it is safe to say we’ve had a lot of success with the food and beverage program and the investments we’ve made both in facilities and improved menus and food quality. That’s a strategy that we would like to continue..

And again, I just want to reiterate, it’s not just food quality but it’s also atmosphere. It’s really creating something that makes people want to pay up to come to your resort, as well as spend money once they get there..

Sure. Then ballpark, can you just give us a sense of how significant fuel cost is for you, and if that’s sort of an opportunity for savings next year given that jet fuel is probably going to be a lot lower than it was when you were purchasing for the season..

Yeah, I’ll start with the last part. I think the answer is yes, it’s hopefully going to be a source of savings for next year.

We take deliveries for CMH, which is the biggest buyer with the Jet A for the helicopters, in September, but I don’t think we want to get into the business of disclosing individual expense items like that so we’re not going to give you a number..

Okay, that’s fair. Thank you..

As a reminder, ladies and gentlemen, if you would like to ask a question, press star, one on your telephone keypad. If you are using a speakerphone, you may need to pick up your handset before you press the star keys. Our next question comes from the line of Chris Woronka with Deutsche Bank. Please proceed with your question..

Hey, good morning, guys. Tom, just maybe a quick question on your thoughts. You talked a little bit about potentially some more alliances and also acquisitions.

You guys have obviously done the roll-up of Blue, you have done a few alliances in the past year, but are you kind of thinking more bigger, more volume or bigger in size, or just your general thoughts on how you’re going to go about this..

From my perspective, volume certainly is important because the more volume you put through, the more you make on the platform.

But it’s got to be an alliance or an acquisition that is also strategic and provides an attractive return, so the challenge is there’s lots of stuff that comes your way, you just have to evaluate each one on a case-by-case basis and make sure it’s accretive or very, very strategic at driving more activity to your resorts..

Okay, got you.

Just to go back to the real estate, following up on the earlier question, if there is future development, do you have a sense or a goal as to how much capital you guys might want to allocate to that, or are you really trying to keep it capital-light and only develop with third parties?.

We’ll actually do both. I think some of the smaller projects that can give us a nice quick hit and return, we’ll do ourselves. As far as really big projects, and there are potentials down the road for some big projects at several of the resorts, especially in the hotel business, we would do that with partners..

Okay, understood. Finally, thanks for the data point - you mentioned, I think, 45.6% of your lift revenue was from season pass and frequent use products.

Is there any general sense as to what you think that could get to if you wanted to strategically move it higher?.

I think it could continue to go up, but it’s a basic revenue management decision that you’re making a trade-off between giving people generally a discount on a per-day use basis versus getting them to pay ahead of time and getting them to commit to skiing a lot of days in the form of buying the pass.

So we will continue to make that trade-off where it’s appropriate, and the percentage could continue to go up a little bit..

Sure. Okay, very good. Thanks guys..

Thank you. Due to time constraints, our final question will come from the line of Joe Edelstein with Stephens. Please proceed with your question..

Hi, good morning..

Morning, how are you?.

Good, thank you.

Just to clarify, how big is the customer database today that you can access for the cross-selling purposes?.

The ski days database is around 2.5 million discrete people, and there’s a separate database at CMH that’s 130,000. There is in some cases overlapping between the two, but largely distinct.

For a point of reference, there is about 13 million active skiers and riders in North America, so the 2.5, if it represents a couple or a family, provides us access to a very large fraction of the active skiers and riders in North America..

I would also add to that that we are very focused on leveraging the social media that we already do, and with those efforts that we’re starting to develop to grow social media, we’re really hoping to drive even more contacts with people that may not be in our database. If you think about skiing, it’s a very social business.

People like to do it together, so we are going to try and leverage all of the typical social media platforms out there to drive more individual ticket sales and pass sales, and that’s something that I think we can do even better than we do today..

That sounds great. I had a separate question on the acquisition and just the overall industry level, but there was a recent conference, there was an industry exec who was calling for 150 smaller ski resorts to close over the next five to 10 years.

I was curious what’s your take on that, and really how does that impact your acquisition strategy? Would you prefer to move upscale, target the mid-tier group? How are you thinking about that today?.

I have a hunch I know who the industry executive is you’re talking about, and he’s a great friend.

But I think ultimately, although that’s a difficult message to deliver to some of the mom-and-pop operators around the country, I think it’s largely true that there is this tranche of the ski resorts that are challenged and are likely to probably go out of business at some point in the future.

I think for people who have premium assets in good markets, that’s actually a good thing, which is really--you could categorize all of our resorts in that bucket. So as some of these challenged resorts go out of business, the market is stable or slightly growing and there is more market share to be split between the big, healthy, attractive players.

So we think ultimately that’s a good trend for us. On the acquisition front, we have never really had any interest in buying any of those struggling resorts, so it doesn’t really have any impact there..

If you also think about the potential for alliances or shared pass programs, is the preference leaning more towards that direction, similar to what you’re doing with Copper, Eldora, and Crested Butte, compared to going through full acquisitions from this point? Is there a preference, or is it just case-by-case basis?.

Again, we’re actively looking at both. I’m just amazed at the sheer number of stuff that is coming across from not only an acquisition point of view but people who would like to get into the existing programs we have.

So we’re looking at both, and we’re going to try and do things that enhance the experience of our guests but also enhance the return to our shareholders..

That sounds great, and good luck..

Thank you..

All right, well everybody thank you very much. I’m sorry we’re time constrained here, but appreciate your dialing in..

Ladies and gentlemen, this does conclude today’s teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day..