Greetings and welcome to the Intrawest Resorts Holdings’ Fiscal 2017 Second Quarter Earnings Call. At this time all participants are in a listen-only mode. A question and answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host Ms. Liz Derosier, Vice President of Corporate Finance. Thank you. You may begin..

Thank you. Good morning, everyone, and welcome to the Intrawest Resorts Holdings fiscal 2017 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 2, 2017. This and the presentation that accompanies today’s call are located in the Investor Relations area on our website at intrawest.com.

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

Thank you, Liz and welcome everyone. This morning we reported results for our fiscal 2017 second quarter ended December 31, 2016, including record second quarter adjusted EBITDA. Our total segment revenue increased by $17.4 million to $120.6 million, up 16.8% from the prior year period, and adjusted EBITDA was up $14 million to $7.1 million.

This growth was largely driven by our Mountain segment which benefited from a return to historical average weather conditions in the East as well as increased revenue from season pass and frequency products. In combination these drivers supported a $13.6 million increase in Mountain adjusted EBITDA.

Our adjusted EBITDA for the quarter not only represents significant growth compared to the prior year period which was impacted by below average conditions in the East. It also represents a new record for our company since fiscal 2011 which was the first year for which we provided results publicly.

We exceeded our previous best which was in fiscal 2014 by more than $6.7 million of adjusted EBITDA. And on a same-store basis, controlling for assets and currency, we beat our previous best by more than $7.6 million.

This substantial growth is primarily the result of our continued focus on growing pre-committed revenue streams, increases in yields, our ability to manage costs and the impact of our growth capital investments.

We're now in peak ski season and remain encouraged by conditions at our resorts, our record performance to date and the continued strength of our season pass and frequency product sales as well as CMH reservations. As of January 29, season pass and frequency sales are pacing more than 12% ahead of the same time last year.

We are very pleased that we have maintained the sales pace since our last call in November. CMH bookings for this season have also remained strong. Sales winter reservations are more than 6% ahead of the same time last year. We are especially encouraged by this growth as it builds on a record season at CMH last year.

At this time in the season, season pass and frequency product sales and CMH reservations are substantially complete. And based on these factors I am confident we are well positioned for the remainder of the ski season.

As our free cash flow builds and we continue to deleverage the balance sheet, we are actively engaged in assessing and investing in high return growth projects, targeting mid-teens returns.

In calendar year 2017 we expect to invest between $46 million and $50 million in capital expenditures of which $10 million to $12 million will be growth in discretionary capital and $36 million to $38 million will be maintenance capital. There are three projects in particular that I am excited to share with you.

Furthering our commitment to develop summer activities which we have successfully established at Blue Mountain and most recently at Steamboat, we plan to install an immersive outdoor forest tour and multi-media light show at Tremblant.

With Tremblant’s existing summer visitation of more than 1 million guests and its estate base, we are confident that we have significant built-in demand for this new summer attraction. Our 2017 capital plan also includes the second phase of our investment in technology and data analytics.

We remain focused on gaining a more holistic view of each customer’s preferences and spending history so that we can deliver more tailored offers of vacations and products that better match their interests.

This winter we went live with Mobile Register and Reload functionality enabling guests to automatically load additional days to their existing lift fast media, from their mobile device and access the lifts directly without waiting in ticket lines.

This next phase will continue to integrate the Colorado online sales platform by better integrating our hotel, lift ticket and on-resort point of sale systems for an improved customer experience and move us closer to our goal of a single piece of media for all on-resort activities.

Lastly, we have begun work to assess the feasibility of building a new CMH lodge in one of our largest tenures, the McBride tenure. We are investing capital during calendar year 2017 to begin work related to final site selection, permitting, engineering and biological studies.

And if approval is obtained from the government, we will also begin site preparation on the potential new lodge location. Demand for CMH continues to be strong and this lodge would increase capacity to help meet the excess demand for this truly unique product.

If we determine the lodge is viable and economically attractive project, we could be ready to build the new lodge as soon as calendar year 2018. I'd now like to turn the call over to Travis for a more detailed discussion of our fiscal 2017 second quarter segment operating results..

Thank you, Tom and good morning everyone. As Tom mentioned, total segment revenue for the second quarter was $120.6 million, up 16.8% and adjusted EBITDA was $7.1 million, up $14 million.

The Mountain segment was the largest driver of this growth with skier visits up 27.1% over the prior year period as conditions at our eastern resorts were more in line with historical averages versus the unseasonably warm weather and lack of snowfall experience during the prior year period.

Our second quarter results also reflect the success of our initiatives to reduce the fixed portion of our cost structure and included $2.2 million reduction in general and administrative expenses. The US to Canadian dollar exchange rate during the quarter was similar to the prior year period and did not materially impact the comparability of results.

In the Mountain segment, second quarter revenue increased by 24.7% to $99 million primarily driven by the 27.1% skier visit growth. We enjoyed growth throughout all lines of business within the Mountain segment with lift revenue up 30%, retail and rental up 34.4%, lodging up 21.3%, food and beverage up 19.5% and ski school up 19.3%.

Season pass and frequency product revenue for the quarter increased 23% and comprised 48% of lift revenue versus 50.7% in the prior year period.

The mix shift in lift revenue relative to the prior year period is consistent with expectations as ticket visits and associated revenue returned to more normal levels with the weather improvement at our eastern resorts.

Despite a return to more normal level of season pass usage at our eastern resorts with the improved conditions, which technically puts downward pressure on effective ticket price and revenue per visit, we drove an ETP increase of 2.4% and held the revenue per visit flat to the prior year period.

We believe that strengthened yield demonstrates our continued pricing power given the excellent experience we provide and our recent capital improvements. Mountain adjusted EBITDA was $8.5 million compared to negative $5.1 million in the prior year period, again primarily the result of normalized conditions in the east.

In the Adventure segment, revenue for the quarter increased by $900,000 or 7.5% and Adventure adjusted EBITDA for the quarter increased by $600,000 or 17.8%.

This growth was primarily driven by ancillary aviation services where revenue grew by $600,000 largely due to an increase in billable hours and helicopter part sales in our maintenance repair and overhaul business.

CMH had a successful start to the season but it had a limited amount of business in the quarter as most of the lodges don't open for the season until mid to late December. In the Real Estate segment, revenue for the quarter decreased by $3.2 million or 27.9% and Real Estate adjusted EBITDA for the quarter decreased by $200,000 or 13.5%.

Excluding IRCG from all periods, Real Estate segment revenue increased approximately $1 million or 13.7% and Real Estate adjusted EBITDA increased $500,000 or 54.4%. This growth was primarily driven by higher occupancy at our Intrawest Hospitality & Management properties in Maui, Hawaii and Mammoth Lakes, California.

Net loss attributable to Intrawest Resort Holdings improved by $8.6 million compared to the prior year period, primarily due to improved operating results partially offset by a $5.4 million decrease in other income related to a favorable litigation settlement in the prior year period that did not recur this year.

Capital expenditures for the quarter were $21.6 million versus $22.7 million in the prior year period. In total for calendar year 2016 capital expenditures were $47.7 million net of $6 million of reimbursements from third parties and including $3.3 million of expenditures incurred but not yet paid as of December 31.

The third quarter reimbursements include $4.3 million from insurance proceeds related to two damaged helicopters and $1.7 million of grants to support the return of the Winter Park express train. Our calendar year 2016 capital expenditures were in line with our previously provided guidance.

I would like to finish with a discussion of guidance for our full fiscal year 2017. Year-to-date our business has performed in line with our expectations and our outlook for the remainder of the fiscal year remains within our original fiscal 2017 guidance range.

We expect total segment revenue for the full fiscal year 2017 to be in the range of $555 million to $585 million and adjusted EBITDA in the range of $129 million to $136 million. Net income attributable to Intrawest Resorts Holdings is expected to be in the range of $20 million to $30 million. With that operator, we’d be happy to take any questions..

[Operator Instructions] Our first question comes from the line of Shaun Kelley with Bank of America..

Hi guys, it’s Eli Lenzen [ph] for Shaun today. Just to lead off, given where the season passes are and that this is the strongest early season in quite some time.

Why not go ahead and raise the full year guidance?.

Good morning. Thanks for the question. The quarter was definitely a strong quarter but consistent with what we expected when we provided the previous guidance and the outlook for the rest of the year, it also came in line with what we expected when we provided the previous guidance. So at this point there's no reason to adjust that..

Also, it sounds like snow was particularly solid around key peak holiday period.

But what are your thoughts about snowfall in January so far outside of the peak period? Is it pretty consistently good or has it fallen behind than Christmas, New Year's, especially in northeastern Canada?.

To be quite honest, we've had a very good January snow wise and you're right the snow did come at key times around the holidays. But we've got so much of it that we've got a really solid base. In fact, total snowfall is actually well ahead of last year and in some cases well ahead of 2015..

And then just one last question. I know you mentioned the building the CMH lodge, you said it could potentially start building in 2018.

What would be the timeline on the completion and then what impact do you think we could see on that segment’s profitability?.

Because of the tight construction window and the type of construction we're looking at, you’d really try and get it done within one season. That's also part of feasibility, there's a variety of ways you could construct this. So it's not something that would span over many years, it would be something that would be very quick..

Thank you. Our next question comes from the line of Matthew Brooks with Macquarie..

Good morning guys.

I thought the first question would be this one, but can you comment on the media reports that you started the sale process?.

Hey Matt, we really don’t comment on market speculation or rumors. So, sorry but we can’t do that..

Okay. Can I ask some follow-ups? Visits to your Colorado resorts, can you say anything about how they are this season compared to last year? They had a bit of a slower start to the season over there..

Sure. I mean for the quarter we had -- most of the growth certainly came from the East Coast relative to the prior year period just by virtue of them, it being a good start to season this year and last year being pretty tough with the challenging conditions.

We also had growth in Colorado but that growth was much smaller relative to the east coast increase. Consistent with a lot of other folks out here, the month of December started a little bit lean. But then we got really good conditions before the key Christmas holiday and things actually went pretty well..

And I think also the kids ski free promotion really helped, definitely you saw our pass sales were up so much..

And like you said January has been really good, like some places getting a ton of snow, are you near a point where you might be able to extend the season for some years, because I think I've seen that Keystone, for example, has already extended maybe a week or two?.

I think it’s a little too early to do that, we wouldn’t make that kind of decision for another couple of months..

And last one for me.

Can you give any color on Mammoth and how that's going this year and anything you can say about how that asset is going generally?.

I really can't comment on Mammoth, we’re a minority equity holder and that just wouldn't be appropriate for me to comment on them. I know the West Coast is getting tons of snow there..

Thank you. Our next question comes from the line of Chris Woronka with Deutsche Bank..

Hey good morning guys. Want to ask you on the ancillary spend, and I know that those numbers get kind of wacky when you have big changes in skier visits and you’re still able to hold it flat on a reported basis.

But is there any way to kind of figure out? I assume you had some pretty good ancillary growth if you adjust kind of maybe the season passes out? Is there any way to kind of think about that?.

I don't know if there is really -- I don't completely understand the question.

But I think there isn’t a really clean way to adjust the season’s passes out per se but we did have strong ancillary growth across all lines of business with ski schools up around 20, food and beverages up around 20%, lodging up around 20% and then retail and rental up almost 35% -- because Blue and Snowshoe have huge rental operations and they were largely closed last December and those rental operations were back online which kind of drove outsized growth within that line of business.

That sounds -- yes, big visit growth and then also large growth in the ancillary revenues as well..

And then I know it's still kind of early days on what you're doing with the customer, some of the data collection but based on kind of what you've seen I guess the season so far versus last season, is there any kind of discernible trend in terms of you getting more of that cross visitor that you've been working hard on getting?.

I think what's really helping us is how to market better to them even within resorts. So as far as their visitation is concerned, we now have enough information that we can encourage them with an offer to come up for another trip. We find if they come four or more times their probability of renewing is greater for next season.

Whereas if they come up say three times the chances of them getting another pass next year is quite a bit lower. I also think that the convenience we're providing is pretty remarkable.

Even before we were actively announcing the ability to register and reload, people were finding the application themselves and were registering reloading, and we're seeing some very good numbers there..

Very good and then you guys had some pretty solid margin performance this quarter.

Are there any -- do you see any pressures in terms of labor availability or anything like that -- something we’ve been seeing a little bit more of in the broader hospitality space?.

That's actually a really good question. We were very concerned about that going into the season. But we actually have not seen anything dramatic at any of our locations. We do have to bring in farm workers for some of our F&B operations -- but we’d had no problem with the programs.

And then as far as domestic US employees, again we're not really feeling any dramatic tension points but we were concerned about it and it hasn’t played out..

Okay, great.

Just finally for me, I guess for Travis, the guidance is unchanged from your initial guidance but can we assume that the segment guidance is also the same, are there any puts and takes in there?.

I don’t think any meaningful. End of Q&A.

[Operator Instructions] At this time there seems to be no further questions. I will turn it back to you CEO, Mr Tom Marano for closing remarks..

Guys, thank you very much. Again we're really pleased with these results and we’re constructive on the rest of the season. But I want to thank you for your time and let's keep our heads think and smile [ph]..

This concludes today’s conference. Thank you for your participation. You may disconnect your lines..