IPO Report: Intrawest Resort Holdings (SNOW)

Intrawest Resort Holdings ($SNOW) owns interests in seven mountain resorts, runs a adventure helicopter skiing business and also runs a real estate business with 1,150 acres available for real estate development.

Six other companies were scheduled to IPO this week.  The full IPO calendar is available at IPOpremium.com

SNOW scheduled a $250 million IPO on the NYSE with a market capitalization of $729 million at a price range midpoint of $16 for Friday, January 31, 2014.

. Manager, Joint managers: Goldman Sachs, Credit Suisse, Deutsche Bank, BofA Merrill Lynch

. Co-Managers: JMP Securities, KeyBanc Capital Markets, Stephens Inc.

. SEC Documents

Valuation

Glossary

Conclusion
Compared to MTN, SNOW’s IPO is priced at price-to-sales and price-to-book value discount, but is priced at a big price-to-earnings premium.  The SNOW kicker is its 1,150 acres available for real estate development.

The rating on SNOW is avoid at the price range mid-point, partially because there is no immediatey visible growth plan except for real estate development.

Business

SNOW is a North American mountain resort and adventure company, delivering distinctive vacation and travel experiences to its customers for over three decades.

Mountain resorts

SNOW owns interests in seven four-season mountain resorts with more than 11,000 skiable acres and more than 1,150 acres of land available for real estate development.

SNOW’s mountain resorts are geographically diversified across North America’s major ski regions, including the Eastern United States, the Rocky Mountains, the Pacific Southwest and Canada, which SNOW believes helps reduce its financial exposure to any single geographic area as weather patterns and economic conditions vary across these regions.

SNOW’s mountain resorts are located within an average of approximately 160 miles of major metropolitan markets with high concentrations of affluent skiers and major airports, including New York City, Boston, Washington D.C., Pittsburgh, Denver, Los Angeles, Montreal and Toronto.

During fiscal 2013, SNOW’s portfolio of resorts received more than six million visitors from all 50 states and more than 100 countries.

Adventure travel
SNOW also operates an adventure travel business, the cornerstore of which is CMH, the leading heli-skiing adventure company in North America.

CMHprovides helicopter accessed skiing, mountaineering and hiking to more skiable terrain than all lift accessed mountain resorts combined.

Real estate
Additionally, SNOW operates a comprehensive real estate business through which SNOW manages, markets and sells vacation club properties; manages condominium hotel properties; and sells and markets residential real estate.

Competition

SNOW’s resorts directly compete with other mountain resorts in their respective local and regional markets, as well as with other major destination resorts. SNOW’s individual mountain resorts primarily compete as follows:

Steamboat’s primary competition is from Breckenridge Ski Resort in Colorado, Park City Mountain Resort in Utah and other large international ski destinations.

Winter Park’s primary competition is from Copper Mountain Resort, Keystone Resort and other ski resorts located in Colorado’s Front Range.

Tremblant’s primary competition is from Mont-Sainte-Anne, Mont Blanc, Le Massif and Mont Saint-Sauveur, all located in Quebec, other resorts in the Laurentian Mountains, and both Jay Peak and Stowe Mountain in Northern Vermont.

Stratton’s primary competition is from other mid-to-large size ski resorts in Southern Vermont, including Okemo, Mount Snow and Killington Resort.

Snowshoe’s primary competition is from ski resorts in the mid-Atlantic, such as Seven Springs Mountain Resort located in Pennsylvania, and Bryce Resort and Wintergreen Resort, both located in Virginia.

BlueMountain’s primary competition is from Horseshoe Valley Resort and Mount St. Louis, both located in Ontario, and Holiday Valley Resort in western New York.

Seasonality

SNOW’s business is highly seasonal. Although each of its mountain resorts and CMH operates as a four-season business, SNOW generates the highest revenues during its second and third fiscal quarters, which is the peak ski season.

As a result of the seasonality of its business, SNOW mountain resorts and CMH typically experience operating losses during the first and fourth quarters of each fiscal year.

In addition, throughout its peak quarters, SNOW generates the highest daily revenues on weekends, during the Christmas/New Year’s and Presidents’ Day holiday periods and, in the case of its mountain resorts, during school spring breaks.

5% stockholders

Intrawest Europe Holdings S.à r.l.(1) 100%

Use of proceeds

SNOW expects to net $43.6 million from its IPO. Proceeds are allocated as follows:

working capital and other general corporate purposes, which may include potential investments in, and acquisitions of, ski and adventure travel businesses and assets. No material acquisitions are probable at this time.