Greetings and welcome to the Intrawest Resorts Holdings’ Fiscal 2016 Second Quarter Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Liz Derosier. Thank you. You may begin.

Thank you. Good morning, everyone and welcome to the Intrawest Resorts Holdings fiscal 2016 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 3, 2016. 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 total segment revenue for our fiscal 2016 second quarter of $103.2 million and an adjusted EBITDA loss of $6.9 million. While our Colorado resorts and CMH saw a strong start to the ski season, our eastern resorts experienced unprecedented warmth in November and December that delayed resort openings and limited the amount of train available over the holiday period. Two of our resorts were not even opened for the entirety of the December holiday period. It was the warmest December on record with temperatures in the Northeast approximately 50% above the 100-year historical average. Despite the extremely challenging Eastern weather, our second quarter results, although unfortunate were much more resilient than many expected. I believe this was the result of the measures we have taken to insulate our business from weather risk such as building a robust season pass and frequency product program, investing in extensive snowmaking capabilities and constructing a geographically diverse portfolio of premier resorts. I am happy to report that as of this past weekend, we now have over 90% of trails opened at our eastern resorts in addition to 100% at our Colorado resorts. Temperatures dropped in the east during early January and with over 85% snowmaking coverage, we were able to quickly open more trails to facilitate a successful Martin Luther King holiday. With our eastern resorts’ close proximity to major metropolitan markets we saw an immediate response when conditions improved. Our guests made close in reservations and we saw substantial pickup in arrivals at our resorts. We believe this validates that there remains pent-up demand in the market for skiing in the east. In Colorado, Steamboat and Winter Park opened earlier than expected in November and having enjoyed consistent snowfall and visitation growth. Snowfall…

Thank you, Tom and good morning everyone. As Tom mentioned, total segment revenue for the second quarter was $103.2 million, down 14% and adjusted EBITDA was negative $6.9 million compared to about breakeven in the prior year period. Unfavorable conditions in the East had the largest impact on our second quarter results partially offset by a strong start to the ski season at our Colorado resorts and at CMH. While the continued weakening of the Canadian dollar relative to the U.S. dollar negatively impacted total segment revenue by approximately $6.5 million, it positively impacted adjusted EBITDA by approximately $1 million as it was in last quarter. In the Mountain segment, second quarter revenue decreased by 16.1% to $79.4 million. Skier visits across our six mountain resorts were down 26.9% as a result of the unseasonably warm temperatures and lack of snowfall in the East where skier visits were down 61.8%. This was partially offset by good conditions in Colorado where skier visits were up 6.4%. In net the challenges in the East outweighed the growth in Colorado resulting in decreased revenue across all lines of business within the Mountain segment. Mountain adjusted EBITDA was negative $5.1 million compared to positive $2.5 million in the prior year period, again the result of unfavorable conditions in the East partially offset by a strong start in Colorado. Additionally, our Eastern resort operations teams diligently managed labor and operating expenses in response to the reduced terrain and visitation levels. In the Adventure segment revenue for the quarter increased by $2.1 million or 20.7% and Adventure adjusted EBITDA for the quarter increased by $1.3 million or 27.6%. This growth was primarily driven by CMH which grew revenue $2.3 million due to increased guest nights and higher yields. In the Real Estate segment revenue for the…

Thank you. Ladies and gentlemen, we will now be conducting our question-and-answer session. [Operator Instructions] Our first question comes from the line of Chris Woronka from Deutsche Bank. Please go ahead.

Hi, good morning guys. Maybe you can talk a little bit about how much of your – how many of your visitors in the East typically buy say before the Christmas holiday versus after in terms of the season pass and frequency products?

Typically they buy later and they typically don’t buy season passes until around October and then it trickles off right around the Christmas holiday. The frequency products they will continue all the way through the spring and you will see a pick-up in that over time.

Okay. And then maybe you just touched a little bit on how the – how some of these partner resorts are fairing relative to your expectations in terms of kind of getting that cross pollinization that you guys have been trying to do?

Are you referring more to the M.A.X Pass or Rocky Mountain Super Pass Plus, which pass?

Yes. Probably more on the M.A.X Pass?

Do you want to…

Yes. I think thus far the M.A.X Pass, the initial sales were kind of in line with what we expected for the first year. The cross pollination question is a little bit tougher to answer because at least 50% of the resorts are in East Coast and with the slow start to the ski season in the East Coast we don’t have a great view on how people are going to use the passes. But I think as we get through this next quarter, we will have a better view on how people use it and what resorts they ascribe value to.

Okay, fair enough. And then just maybe a quick word on the acquisition environment, do you think anything has changed since last call in terms of things you look at or what might be out there seller expectations that kind of stuff?

No, not at all. We are obviously still in the market. We have received several calls regarding opportunities potentially in the East, also some elsewhere in the country. Most of these resorts have indicated publicly that there is an interest in selling, but no there is definitely some opportunity out there, but it’s going to be on a case by case basis and it has to really fit our strategic goals, which is resorts near reasonable driving distance to urban markets or solid destination locations.

Okay, very good. Thanks, guys.

Thank you. Our next question comes from the line of Joel Simkins from Credit Suisse. Please go ahead.

Hey, guys. It’s Ben on for Joel. You touched on this, but can you provide a little more color on how the board went about evaluating the tender decision for M&A or further de-leveraging in light of current trading liquidity?

Sure.

And then it seems like in times of poor snowfall, it seems like you maybe more inclined than ever to diversify the portfolio. We obviously saw the benefit of that this quarter from Colorado, so just any color there would be appreciated?

Sure. I am going to redirect you back to Slide 3 from the presentation. I think that’s now back up on the screen. There are couple of things that factored into this. First of all, with the closing of the – with the anticipated closing of the clubs which ultimately closed, we knew we had a large amount of liquidity available. So, we were not concerned that if we saw an acquisition we wanted to do, we would be able to fund that. With respect to the rationale behind the tender offer, if you just consider the fact that stock was trading below $7 a share, we thought that, that was just extremely cheap. If you take a look at the bottom of the page, you will see we highlighted the multiples if you actually totally disregarded the value of the real estate. So, if you do that, you basically are potentially in a situation where you would be looking at the stock trading at a 7 multiple. We think that is an extremely good buy for our shareholders. So, that was presented to the board and they agreed with us.

Got it. That’s helpful. Yes, that’s definitely been an issue if you have looked at before just excluding the land value. And then lastly when you would look historically, when you have very poor ski seasons in certain regions of the country, does it ever present an opportunity to acquire assets at lower valuations given the depressed EBITDA, obviously the multiples would float around, but do you have sellers that are more inclined to sell or just that again given lower EBITDA growth, there are some good deals out there?

Yes. As I mentioned even over the holiday period, I was getting phone calls from folks. I think when you have an event like we had this past year, where you are talking the temperature equivalent of the 100-year storm? I think that is definitely something that is weighing on the minds of some of the folks out there, some of the smaller resorts that don’t have diversification. And I think that will play out over the next couple of months. Whether they decide to hang on for another year, because they don’t like multiples, hard to tell, but definitely got a fair amount of calls. And from a historical perspective, my colleagues are indicating to me that, that has happened in the past.

Awesome. That’s all for me. I appreciate the color.

Thank you. Our next question comes from the line of Barry Jonas from Bank of America. Please go ahead.

Hi, guys. Good morning. Just wanted to drill down into the guidance a little more for implied second half, essentially is Colorado mountain down in Q3, if you exclude better demand in adventure?

Yes, I will take the guidance question. I think the answer is yes, on the margin. The reality is the snowmaking condition of the temperature in the Houston really firm up until we got into January. So, I don’t want to provide too much color, because we don’t obviously have numbers to disclose at this point about January, but there is a view on what happened in January baked into the guidance certainly. Things continue to be great in Colorado which will provide a little bit of an offset, but not entirely.

Got it. Okay, thank you.

Thank you. Our next question comes from the line of Afua Ahwoi from Goldman Sachs. Please go ahead.

Hi, thank you. Couple of questions from me. First, your guidance, I believe you said assumes normal weather conditions across the portfolio for the remainder of the ski season. So, does that mean you expect the East Coast to perform normally this late in the season and if that’s the case why would that be? And then on the IRCG sale, the EBITDA cadence, I think in one of the presentations you have put up after the deal was announced, you said it was roughly $8 million in EBITDA to fiscal ‘15. So, how come we are only lowering the guidance by $2.3 million for the impact? We would have thought it would be closer to half of that value.

I will take the first one. I will take the second one first. So, with the pace of sales at IRCG in light of the bad summer with the fires up by the Worcester sales center, our lack of investment in new properties etcetera. That business we didn’t expect to make the same amount of money in fiscal ‘16 than it had in fiscal ‘15 which was the number we provided to you, I think it was $7.9 million of EBITDA last year. So, when we pulled out the EBITDA that we are going to lose from the disposition, which is basically from February 1 till the end of the year, it’s $2.3 million, which is as you noted less than five-twelfths of $7.9 million. So, that’s what’s going on with that one. What was the other question, again Afua?

The other question was just on the expectations for the East Coast to perform normally this late in the season?

Yes, I think when we say normally, I mean, there is obviously warm periods and cold periods in the East Coast during the normal winter. And we don’t expect it to be a perfect situation in the East Coast. So, the guidance assumes that the temperatures are sufficient for us to keep decent snowmaking and decent conditions for the rest of the winter. And based on where we are today with over 90% of our trails opened and kind of the outlook for the rest of the year, we think that’s an achievable expectation unless we get a cargo.

Got it. And then just the final one for me, when you say the East Coast resorts, are you lumping out the Canadian with the U.S. resorts? And has there been a difference in performance between those two, just to clarify?

The high level answer is yes, they are all more or less on the East Coast and it’s really varied by a week. Two weeks ago, we got three feet of snow at Snowshoe. So, with the weather patterns been erratic, it varies week to week, but we could try to factor in that type of variability.

Got it. But the Canadian ones are also sort of having an impact from the warmer weather?

Yes, absolutely.

Thank you.

Thank you. [Operator Instructions] Our next question comes from the line of Joe Edelstein from Stephens. Please go ahead.

Hey, guys. It’s John Brick in for Joe.

How you are doing?

Pretty well. Just wanted to touch on the FX and the Canadian exposure, have you guys gave any updated numbers on what percent of revenues from Canada?

Yes, we haven’t, but we can. I think when you pullout IRCG from where we expect fiscal ‘16 to land, so you kind of have a pro forma for the full year. We still expect about 40% of our revenue to come from the Canadian businesses and Canadian dollars and the remaining 60% to come from the U.S.

Okay.

And I know that’s the same split as before, but that’s just with how the mix is shaking out with the success we have had at CMH and some of the other stuff, still want to be in the same percentage.

Sure. And then so with that breakdown and the weakness in the Canadian dollar are you guys seeing a lot more USD customers go to Canada just because it’s way cheaper? Have you guys like marketed that or are you seeing to pickup or able to track? Any color there would be helpful.

Yes. At this point, because of the warm weather on the East, to be quite honest, there was not a huge amount of change. There were quite a few Canadians that stayed put and when things improved at Tremblant over the holidays, we saw those locals come to our resorts and so they are going down south. We also have marketed consistently the value and we have seen some folks make the move. CMH in particular, I have to tell you, people are really taking advantage of the currency situation there. It is a great deal right now and you see that in our booking numbers.

Yes. And then so it’s way more than CMH business than it is for the ski business, you are seeing U.S. customers take advantage of it?

At this point, I would say yes, but we continue to market it and as I have said things got colder in Canada towards the end of the holiday period – towards maybe around mid-week around – between Christmas and New Year. And I think if the currency stays where it is, I am optimistic we will get more people up there.

Yes, it makes sense. And then lastly just on the guidance, by my math it was lower by $13 million at the midpoint $7 million of which was the year-to-date results, $2 millionish was the club sale which leaves about $4 million broken down between FX and business operations, Travis you minus that and I missed it but did you guys quantify how much of that was FX?

Yes, we did. I think they are – probably the best way to think about it, it’s a little – around $12 million decline at the top end of the range – at the bottom end of the range wherever. $3 million is FX, Q3 is the removal of the IRCG EBITDA from February 1 onward. You get about a little over $5 million offset from the Adventure segment guidance going up. And then the rest is $12 million drop at the Mountain and that’s the combination of what we have incurred to-date and then like I said before the outlook for the beginning part of January in East.

Yes, okay. That makes sense. Thanks guys.

Thank you. Ladies and gentlemen, we have no further questions in queue at this time. I would like to turn the floor back over to management for closing comments.

Thank you, everybody for joining us. And we appreciate your time today.

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