On Friday, Intrawest Resorts Holdings (SNOW) will sell 15.6 million shares in an IPO offering the public 34.7% of the company. Some of the holdings will come from existing shareholders, while the other portion will come directly from the company. Shares are expected to price in a range of $15 to $17. There will be 45 million shares outstanding after the IPO.
Intrawest was taken private back in 2006 for $2.8 billion by Fortress Investment Group (FIG). Intrawest now owns or has interest in seven four-season mountain resorts with over 11,000 skiable acres and 1,150 acres of available land for real estate development. The resorts saw over 6 million visitors in 2013, including visitors from all 50 states and over 100 different countries.
Here is a look at the properties:
Property (# owned)
Skiable Terrain (acres)
Winter Park (100%)
Blue Mountain (50%)
Mammoth Mountain (15%)
Many of these names are recognizable to people who ski or snowboard across North America. Winter Park is the longest operating (since 1939) mountain resort in Colorado. Stratton is considered the birthplace of snowboarding. Intrawest owns three of the top ten mountain resorts in the United States in terms of visitors. In Canada, Intrawest also owns two of the top three most visited mountain resorts.
Along with the mountain resorts, Intrawest also has an adventure travel business. As the owner of Canadian Mountain Holidays, Intrawest is the owner of the largest heli-skiing business in the world. Canadian Mountain Holidays provides helicopter accessed skiing to 11 lodges, including nine owned by the company. In this business segment, Intrawest also owns 40 helicopters through a partnership with Alpine Helicopters.
Intrawest's real estate business is its smallest revenue driver, but potentially its biggest opportunity as it can monetize its key assets surrounding its properties. In 2013, the 1,150 acres had an appraised value of $153.4 million. The company's real estate is located near its Steamboat, Winter Park, Tremblant, Stratton and Snowshoe properties.
In fiscal 2013, Intrawest saw revenue of $524.4 million. The company also reduced long-term debt to $584.5 million, from a previous $2 billion level. Here is the breakdown of revenue by segment:
· Mountain: $339.0 million (65.5% of total)
· Adventure: $113.6 million (22.0% of total)
· Real Estate: $64.7 million (12.5% of total)
The company recognizes the following as its strengths:
· Geographically diversified market leading mountain resort company
· North America's premier mountain adventure company
· Strong competitive position with high barriers to entry
· Customer base with significant discretionary income
· Significant and expanding base of season pass holders
· Experienced management team
The company's growth strategies consist of:
· Increase revenues: increase prices at resorts and CMH, grow visitation at mountain resorts and CMH, targeted growth capital investment
· Continue to improve operating efficiency
· Pursue strategic acquisitions and operating relationships
· Monetization of real estate
While Intrawest depends on good winter seasons and a strong economy, I believe the company's geographical diversification, real estate assets and recent investments create a good long-term opportunity for shareholders.
Intrawest has locations across several mountain ranges in North America. The two resorts in Colorado do seem to make the company slightly dependent on that region, but no one resort accounted for more than 16% of revenue in fiscal 2013. This means that the two Colorado resorts made up less than 32% of total company revenue. The company's locations are also all in close proximity (150 miles) to major airports of New York City, Boston, Washington D.C., Pittsburgh, Denver, Los Angeles, Montreal and Toronto.
Intrawest has increased the value of several properties and also increased consumer spending by offering additional activities. Several resorts now feature golf courses, winter tubing and biking trails. These additional items help increase revenue during non-peak seasons and also extend the average revenue spent per visitor.
There are a lot of IPOs taking place over the next two weeks and this could be one of the less followed ones. If shares price below their expected range, I would consider buying for the upcoming growth in Intrawest.
*Information from a prospectus found at Retail Roadshow