Pursuit Attractions and Hospitality Q4 2021 Earnings Call Transcript

Quartr
Provided by Quartr
February 10, 2022

Key Takeaways

  • Positive Sentiment: Pursuit delivered a strong recovery in 2021 with adjusted EBITDA of $42.7 million versus a loss in 2020, and Q4 revenue of $23.4 million exceeded pre-pandemic levels by nearly 8%.
  • Positive Sentiment: GES’s Q4 revenue grew 38% sequentially to $160 million, achieving an adjusted EBITDA margin on par with Q4 2019 despite 43% lower revenue following cost-structure transformations.
  • Positive Sentiment: Pursuit opened three world-class attractions in 2021—including Sky Lagoon (Iceland), FlyOver Las Vegas and Golden Sky Bridge—and is on track to open an 88-room hotel in Jasper this summer.
  • Neutral Sentiment: Viad ended 2021 with $62 million in cash, $87 million available on its revolver and total liquidity of $149 million, supporting up to $80 million in 2022 CapEx and potential acquisitions.
  • Neutral Sentiment: Q1 2022 is expected to generate negative EBITDA and a free cash outflow of $20–25 million due to seasonality and investments in staffing, but full-year EBITDA is forecast at or above 2019 levels for Pursuit and breakeven for GES.
AI Generated. May Contain Errors.
Earnings Conference Call
Pursuit Attractions and Hospitality Q4 2021
00:00 / 00:00

There are 9 speakers on the call.

Operator

Good evening. Thank you for attending today's Viad Corp 4th Quarter 2021 Earnings Call. My name is Selena, and I will be your moderator. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I would now like to pass the conference over to our host, Carrie Long with Beyond.

Operator

Please go ahead. Good afternoon, and thank you for joining us for Viad's 2021 Q4 and full year earnings conference call. During the call, you'll hear from Steve Moster, our President and CEO and President of GES David Barry, our President of Pursuit and Ellen Ingersoll, Archdi's Financial Officer. Certain statements made during the call which are not historical facts may constitute forward looking statements. Information concerning business and other risk factors that could cause actual results to materially differ from those in the forward looking statements can be found in our annual, quarterly and other for the SEC.

Operator

During the call, we'll be referring to certain non GAAP measures, including income or loss before other items and adjusted EBITDA. Important disclosures regarding these measures, including reconciliations to net income or loss attributable to Viad can be found in Table 2 of our earnings press release, which is available on our Web at viad.com. With that, I'd like to turn the call over to Steve.

Speaker 1

Thank you, Carrie, and good afternoon, everyone. Thanks for joining During the call, we'll discuss our business performance during the 2021 Q4 and full year, provide some insight into the recovery of our industries and review our financial position. David will provide business updates for Pursuit shortly, and after that, I'll share some Business updates for GES. Helen will cover our financial results towards the end of

Speaker 2

the call. Before I turn

Speaker 1

the call over to David, I'd like to thank our Our team for their remarkable job meeting the needs of our clients and guests with excellent service and operational execution this year. I'm proud of what we've accomplished in this very dynamic operating environment with COVID restrictions, global supply chain issues and labor shortages. In addition to delivering extraordinary experiences for our customers as business activity accelerated, we transformed our Cost structure at GES opened 3 new world class pursuit attractions and enhanced our financial flexibility with a new credit facility that has enabled us To continue investing in exciting growth opportunities. I'm pleased with our performance and the actions we've taken to position our company For incredible success into the future as our businesses and industries continue to recover with pent up demand for And now I'd like to turn the call over to David to discuss what's happening across Pursuit.

Speaker 2

David? Thanks, Steve. Thank you all for joining us. Pursuit's recovery continues in full swing. We're pleased with how the business rebounded in 2021 and are optimistic about what lies ahead for 2022.

Speaker 2

Before getting into the details, I'd just like to start with gratitude and recognition from my pursuing colleagues, from our frontline team members serving guests, To our managers and senior leaders who've worked so incredibly hard through difficult conditions, we've been living in a very fluid operating environment for 22 months $52,400,000 improving from a loss of $9,700,000 in 2020 to a positive $42,700,000 in 2021. This rebound is evidence that the world is healing, that the tourism industry is in recovery and the guest demand for high quality experiential travel And hospitality experiences remain strong. For the seasonally slow 4th quarter, Pursuit delivered revenue of $23,400,000 Compared to just $9,200,000 in Q4 2020. And we exceeded pre pandemic 2019 4th quarter revenue by nearly 8% As our 2 new year round attractions Sky Lagoon in Reykjavik and FlyOver Las Vegas and our new night rise experience at Advanced Gondola Helped to offset challenges driven by the pandemic, including the omicron variant, which spiked in December and adversely impacted holiday season operations. Despite ongoing COVID related challenges, our teams persevered.

Speaker 2

We remained open for business throughout the quarter while delivering healthy results. In Jasper, as part of our continued refresh build by growth strategy, we initiated a multi year roadmap to invest in a variety of upgrades across the lodging portfolio And the benefit to the guest experience was immediately clear. All 7 hotels saw meaningful year over year increases in guest feedback scores. In Banff, As testament to the quality of our experiences and the dedication of our team members, we saw record net promoter scores at several attractions including the Glacier Adventure, Glacier Skywalk and Brewster Sightseeing Tours. Several of our lodging properties in Montana saw record guest feedback scores With the historic Glacier Park Lodge, Delton Chalet and West Glacier RV Park and Cabin Village all delivering new highs.

Speaker 2

Finally in Iceland, we were pleased with the success of our holiday gift ticket program at Sky Lagoon. We sold over 29,000 holiday gift ticket packages, Which equates to roughly 80% of the total Icelandic population receiving a Sky O'Dooing gift product for Chris. In terms of financial results, starting with attractions, you're all aware that international border closures remain in place well into the 2021 peak summer season, Which impacted overall visitation. And despite these short term impacts to visitation, we're very encouraged by the growth of our revenue per customer metrics. For the year, effective ticket price or attraction ticket revenue per guest Increased 11% from 2019 levels on a same store basis, including only the attractions we had in the entirety of both years.

Speaker 2

Attraction's performance in the 4th quarter also benefited from the launch of Nite Ride, a new attraction within an attraction at the top of the Banff Gondola. We created this in partnership with the indigenous Stoney Nakota Nation. NightRise is a multimedia, light art and sensory experience That connects the guests to the story of The Land, Stars and Night. Nightrise is a great example of continuous improvement, Specifically taking a great experience like the Vamp Gondola and creatively making it even better. Launching in early December, the exciting addition of NightRise drove a 4% increase in Q4 affected ticket price at the gondola from 2019, while also increasing ancillary revenue yields for food and beverage And retail by 13% 44%, respectively.

Speaker 2

In Vancouver, FlyOver Canada's strong third quarter results continued into Q4 The pent up demand for the wonders of the FlyOver experience drove strong ticket sales and ancillary revenue per guest. And as mentioned FlyOver Las Vegas saw its first Full quarter of operations, delighting Las Vegas visitors with the sensation of flying over the American Southwest and earning a rating of 4.5 Five stars on both Google and TripAdvisor. Over to lodging, the hotel properties saw significant year over year increases. For the quarter, same store room revenue increased 49% and RevPAR grew by 35%. Relative to the Q4 of 2019, Occupied rooms increased 4%.

Speaker 2

For the full 2021 fiscal year, year over year hotel occupancy increased by 5%, Rooms revenue by 109% and RevPAR by 42% on a same store currency adjusted basis. As many of you know, Pursuit's Attractions and Lodging Businesses segments are complemented by the vertical integration of food and beverage And retail offerings. What many of you may not know is that there are now 44 food and beverage businesses And 45 retail stores across Pursuit. And as we've grown, they've become meaningful contributors to revenue and EBITDA. We're constantly working to improve our menus, merchandising in the overall guest experience and are pleased with the financial growth we're seeing in these categories.

Speaker 2

In Food and Beverage, we delivered revenue of approximately $29,000,000 in 2021 for a year over year increase of 180%. We believe that high quality SMB is an important part of the hospitality experience, whether it's that perfect cup of coffee before your morning hike for the opportunity to sit down for dinner together as a family. And we're pleased to report that 2021 same store F and D yields at our hotels, Measured by revenue per occupied room increased 32% from 2019. Guest satisfaction scores are continuing to improve In Food and Beverage and the best part is we get to see guest comments and ratings daily. Today in Montana, Alaska and the Van Jasper collection, we have 8 restaurants in the top five rankings on TripAdvisor in their region.

Speaker 2

And finally, we're very excited about the growth in our retail business. For 2021, we delivered retail revenue of Approximately $25,000,000 which more than doubled from the prior year. And as compared to 2019, Retail yields increased 62% at our attraction and 70% at our lodging properties on a same store basis. So now let's turn our attention to the year ahead. It is clear to us based on early season booking trends and advanced reservations, People are ready to travel and will not be dissuaded from doing so.

Speaker 2

We're confident that borders will remain open In the pursuit, we'll be able to welcome guests to Western Canada, Alaska, Montana, Las Vegas and to Iceland throughout 2022. While we're still early in the booking cycle, lodging reservations for 2022 Advent and Jasper are pacing ahead of the same reporting period in the prior year By 89% 43%, respectively. And for the critical Q3, our Vant Hotels are ahead of pace when compared to 2019. Across the 10 hotel portfolio, average daily rate is trending at 7.5% from 2021. In Pursuit's Glacier Park Collection, 2022 lodging room nights on the books are pacing 32% ahead of the same time last year And 60% ahead of 2019 on a same store basis.

Speaker 2

Relative to the prior year, ADR growth is approximately 10%. We're also seeing healthy pacing in Alaska with 20 22 room nights up 14% compared to the same period last year and up 6% compared to the pre pandemic 2019 levels with ADR growth of 4%. In Iceland, inbound visitation to the country continues to grow relative to 2021 levels And we anticipate a stronger tourism season this summer. We're already hard at work preparing for a notable year over year increase in guest volumes at both FlyOver Iceland And Sky Lagoon. And as we remain steadfast in our view that the future for our company and our industry is bright, We have and will continue to invest in Refresh, Build, Buy opportunities around the world.

Speaker 2

Our plan for 20 22 includes several important investments to improve the guest experience at our location. Some examples just to name a few include a new mountain coaster at Golden Sky Bridge in Golden, D. C, a stunning new flyover film featuring the inspiring topography of the Canadian Rockies that we'll show in all locations And tuning restaurant concepts in the Banff Jasper collection. Last quarter, we told you that construction had begun on the Forest Park Hotel, a new 88 room in the heart of Jasper National Park. And today I'm pleased to report that construction is on schedule and we are on track for an early summer opening.

Speaker 2

We continue to see high volumes of acquisition opportunities in multiple geographies and our development team is hard at work assessing these opportunities for the next great Pursuit experience. In closing, I'll reiterate that we're proud of our 2021 results and are especially thankful for our 3,000 seasonal and year round team members They're bringing their best every day to deliver on our mission of connecting guests and staff to iconic places through unforgettable inspiring experiences. We remain focused on the continuation of our growth trajectory to increasing the breadth and quality of our offerings to working hard to become an employer of choice in the hospitality industry And to achieving new heights and guest satisfaction. We're confident that we're poised to accelerate out of the pandemic and we look forward to welcoming guests from near and far Steve, back to you.

Speaker 1

Thanks, David. Now switching over to GBS. 2021 was a significant turning point as the event industry reopened and activity began to accelerate during the Q3. Along with this, we saw a steep jump in GES's revenue. From September through December, we averaged More revenue per month than we realized during the entire first half of twenty twenty one.

Speaker 1

Our teams effectively went from 0 to 60 miles an hour I want to extend a big thank you to all of the GES team members who made this happen by working diligently with lean staffing and tight schedules to support events around the world while prudently managing our profitability. GES finished the year with strong revenue On a sequential quarter basis, revenue grew 38 percent to $160,000,000 in the 4th quarter as live event activity continued to improve. We produced over 500 events and projects in geographies around the world, including AUSA's Annual Meeting and Expo, Process Expo, Money 2020 and hybrid events for GE Healthcare and banking software solution provider, Tenemos. Some events that took place during the Q4 were near or above pre pandemic levels, while others remained significantly below. For events that took place, the average revenue decline was about 35% compared to pre pandemic, Which is an improvement from about 50% last quarter.

Speaker 1

We believe that this is a strong indication that the recovery of live events is well underway. As revenues continue to recover to pre pandemic levels, we are benefiting from the cost structure changes we made during the past 2 years. As discussed on prior calls, we took advantage of the pause in event activity during the height of the pandemic to make transformational changes that variabilize more costs And permanently reduced fixed costs through network rationalization. Primarily as a result of these actions, we delivered a 4th quarter adjusted EBITDA margin that was comparable to the 2019 Q4 even though revenue was 43% lower. These results demonstrate that our new operating model is working and especially impressive in light of the headwinds presented by labor shortages and increased As compared to 2020, our 4th quarter adjusted EBITDA improved by $32,500,000 This represents a flow through on incremental revenue of more than 20% as we carefully manage Our new low cost model has been tested and is proving to be successful.

Speaker 1

Now let me pivot to talk about another area of success we're seeing in the business, Brand experiences. Earlier, I mentioned events that we produce for corporate clients GE Healthcare and Tynamos. These are just two great examples of the work we're doing within brand experiences. CE Healthcare has been a client of ours for the last 5 years. We recently worked with them to provide an event solution that crossed physical and digital realms to offer both an in person and virtual experience.

Speaker 1

The event was attended by thousands of people and received extremely positive feedback. Cenomos partnered with us to Produced their 2022 sales kickoff event in Barcelona. The event included 680 in person attendees Along with online streaming to 1200 staff members around the globe. The event was a great success offering flexibility for the Sales team able to travel in from around the globe or attend virtually with flawless event streaming. There was an overwhelming positive feedback from both the in person and remote attendees.

Speaker 1

Our brand experience team does a remarkable delivering a broad range of unique and impactful experiences for our clients, including corporate meetings and events, digital experiences, Brand and sports activation, product launches, strategic exhibition program management, corporate customer centers And consumer pop up events. We have a significant opportunity to expand in this large fragmented market At attractive margins and are positioning GES for ongoing success in this area by making investments to strengthen our team And go to market strategy approach. With just Zelnick at the home of our brand experience service line, We have aggregated GES's marketing services to create an integrated marketing agency. Through a series efficiencies and additions of talent, we are creating the ability to sell marketing services horizontally across our And we're enhancing our breadth of services as we compete for new logos and capture incremental marketing spend across new segments of the industry such as B2C experiential activation and virtual and hybrid B2B meetings. We have many new business wins and renewals to celebrate, including CloudD, SaaS, Fannie Mae, Taco, John Deere, HomeStar, National Indian Gaming Association and World System Builder.

Speaker 1

I'm proud of our talented team across GDS providing quality work and incredible service to our clients and customers. We have a lot to be optimistic about as we enter 20 However, the industry recovery remains dynamic. Last quarter's uncertainties from the Delta variant Have been replaced with new concerns from the Omicron variant, which is impacting corporate travel policies and near term business travel. Experts are cautiously optimistic that a swift decline in Omicron cases will follow the rapid peak we are experiencing. And we're starting to see this in certain places with easing of COVID restrictions and renewed demand for face to face events.

Speaker 1

We're encouraged by what we're seeing and hearing within the event industry. While we've seen some postponement and cancellations, Primarily in the Q1, schedules for the balance of the year look quite strong and we're preparing for an acceleration of activity as we head into March. Both organizers and exhibitors prefer to have face to face events and more are motivated to move an event rather than cancel or pivot to virtual. In preparation for a busier year in 2022, we are rebuilding our workforce with experienced personnel to ensure we are well positioned To service the expected increase in event activity, we're excited to bring back more employees to continue creating the world's most meaningful and memorable experiences For marketers, organizers and event attendees, with a fuller exhibition team and the decisions we've made to add And increased marketing efforts to grow in our brand experiences, GES's revenue flow through will temporarily be impacted, Particularly in the early months due to the event seasonality and omicron variance uncertainties. As the industry continues to recover And activity resumes throughout the year, our profitability will improve.

Speaker 1

Our clients and customers are committed to the return of live events. The value created from face to face live events is irreplaceable as it is a powerful way to generate sales, Drive brand awareness and loyalty and interact with attendees. We see a bright future ahead as we continue down the path to recovery. And now I'd like to turn the call over to Ellen to discuss our financial results in more detail. Ellen?

Speaker 3

Thanks, Steve, I'm pleased to report that we delivered positive full year EBITDA from the continued recovery of both Pursuit and GES. I'm encouraged by the accelerated activity in leisure travel and the in person events this year as our industries were reignited. At GES, we realized revenue of $160,200,000 during the quarter, which improved about 38% in the Q3 and reached 57% of the amount generated in the pre pandemic 2019 Q4 Due to increased face to face live event activity and the return of large scale events that were canceled or postponed for most of 2020 and into GES segment adjusted EBITDA was positive $9,600,000 Which improved by approximately $32,500,000 as compared to the prior year driven by the increase in revenue and the cost structure improvements that we've implemented. At Pursuit, we realized revenue of $23,400,000 during the seasonally slow 4th quarter, Increased $14,200,000 from the 20 24th quarter and exceeded the revenue amount generated in the pre pandemic 2019 Q4. The 3 new attractions that we opened during 2021, the Sky Lagoon, Golden Sky Bridge and FlyOver Las Vegas, Collectively contributed an incremental $5,100,000 of revenue during the quarter.

Speaker 3

The net EBITDA contribution from these new attractions was not meaningful during the seasonally slower and COVID impacted Q4 as they continue to ramp up. Pursuit's overall segment adjusted EBITDA was negative $9,900,000 for the quarter, which decreased as compared to the prior year, primarily due to higher labor costs and lower wage subsidies from the Canadian government. For the full year, GDS' Adjusted EBITDA improved by $10,200,000 as compared to 2020 on a revenue decrease of $18,300,000 As we dramatically reduced our costs in response to the slowdown in event activity caused by the pandemic. Pursuit's full year adjusted EBITDA increased by $2,400,000 on a revenue increase of $110,200,000 as leisure travel accelerated across Pursuit's high margin experiences. Our net loss attributable to Viad was $22,500,000 for the quarter $92,700,000 for the full year And our loss before other items was $22,500,000 for the quarter $81,600,000 for the full year, Which excludes restructuring charges, attraction startup costs, acquisition, integration and transaction related costs and other non recurring expenses as applicable.

Speaker 3

Our cash flow from operations was an outflow of approximately $35,000,000 for the quarter And $38,000,000 for the full year. Our operating cash outflow for the quarter was greater than our prior guidance, primarily due to working capital changes. Our team did an excellent job closely managing our costs and maximizing our cash generation wherever possible during the year. Our capital expenditures totaled about $13,000,000 for the quarter $58,000,000 for the full year. Our investments during the year were mainly at Pursuit And included growth CapEx for the FlyOver Las Vegas attraction and our new 88 room hotel in Jasper.

Speaker 3

During the quarter, we paid cash dividends of approximately $2,000,000 on our convertible preferred equity and a $1,000,000 principal payment on our On December 31, 2021, our debt totaled approximately $474,000,000 Including $399,000,000 on our term loan fee, financing lease obligations of approximately 63 $12,000,000 in other debt. We ended the year with approximately $62,000,000 in cash and cash equivalents And we had approximately $87,000,000 of capacity available on our revolving credit facility for a total liquidity of nearly 150,000,000 We are in an excellent position to continue our growth journey with our strong liquidity, financial flexibility and improving industry demand. We have a Solid platform that can scale with us as we execute against our exciting refresh buildbuy growth strategy at Pursuit, Including the new 88 room hotel in Jasper. We are actively evaluating other high margin growth opportunities including acquisitions on its location. Now before I turn it back to Steve for concluding remarks, I'd like to briefly comment on our financial outlook.

Speaker 3

As we head into 2022, we believe that Pursuit same store revenue will recover faster than GES Due to expectations that leisure travel will return more quickly than business travel. Pursuit will also benefit from incremental from new experiences, both those that did not exist and those that did not have a full year in 2019. We believe that Pursuit's full year 2022 EBITDA will be at or above 2019 levels. Even without full recovery from international leisure travel, driven by the new experiences. We Specs Pursuit's EBITDA margin in 2022 will remain lower than pre pandemic levels as international leisure travel more gradually recovers.

Speaker 3

Long haul international visitors help drive strong visitation at our high margin attractions, which are still operating well below pre pandemic visitor levels. 2021 same store attraction visitors were down about 54% from 2019. The upshot of this is we see a lot of EBITDA And margin growth opportunity from just getting back to more normal levels of visitation. As international travel picks up in 2022 and beyond, we Expect Pursuit's margin will once again return north of 30%. At GES, we have a strong backlog of contracted events and an expanded roster of corporate clients.

Speaker 3

However, we anticipate event activity will continue to be well below pre pandemic levels, especially during the 1st part of the year due to volatility from the COVID variant. Based on our current show Schedule and strong demand from our Brand Experiences clients, we expect event activity will accelerate again beginning in March. And we anticipate that even if event activity remains well below 2019 levels, GES will deliver Full year adjusted EBITDA that is above breakeven during 2022. With the new more variable cost structure in place at GES, We have lowered our breakeven point for that business and expect to realize margin expansion as revenue continues to recover. During the Q1 of 2022, we currently expect both GES and Pursuit to generate negative EBITDA.

Speaker 3

With the personnel we brought back To support the continued return of events, the investments we made to grow in experiential marketing and the slower show schedule in the 1st few months of the year, GES' EBITDA will be negative until activity ramps up. Pursuit historically has negative EBITDA during its traditionally slow tourism season. And although we expect to see higher revenue due to our new experiences, We do not expect these new experiences to have a meaningful impact on EBITDA during the seasonally slow Q1. As we get closer to peak season, Pursuit's EBITDA will return to positive. We currently expect a free cash outflow during the first quarter of 2022 in the range of $20,000,000 to $25,000,000 This assumes an operating outflow of somewhere in the range of $5,000,000 to $10,000,000 And capital expenditures of approximately $15,000,000 and this includes growth CapEx for our new 88 room hotel in Jasper.

Speaker 3

We will also make our quarterly Term Loan B principal payment of $1,000,000 and expect to pay approximately $2,000,000 in cash dividends on our convertible For the full year, we expect capital expenditures of approximately $75,000,000 to $80,000,000 primarily at Pursuit and including growth CapEx for the construction of the 88 room hotel in Jasper ahead of its summer open. These expectations are subject to the impact of COVID, including the We will continue to carefully manage our cash flows and be strong stewards of our capital to maximize It is evident that there is a sense of demand for our industries. We remain focused on positioning the company for great success and growth as our businesses continue to recover in 2022 and beyond. And with that, I'll turn the call back over to Steve for some concluding remarks.

Speaker 1

Thanks, Ellen. Our company is well positioned to reemerge from the pandemic in a position of strength With pent up demand for our industries on both sides of the business, new world class experiences at Pursuit and a transformed more profitable GES, I'm encouraged by the progress that we've made this year and optimistic about the recovery in leisure travel at Pursuit And live event activity at GES as we head into 2022. We remain focused on our strategy to create extraordinary Experiences and strong returns for our shareholders. For Pursuit, we will continue to significantly scale the business and drive growth through our proven refresh, Build, buy strategy as well as take advantage of economic disruption and opportunity in the space. For GES, we will build on the progress we've made to date to improve the margin profile and resume generating Strong cash flow through our more flexible cost structure and focus on higher margin clients and services.

Speaker 1

We have a clear path to accelerate growth and significantly enhance shareholder returns. Our liquidity position is strong And we have the financial flexibility to sustain and continue investing in our future. We have high quality businesses with leading market position in experiential leisure travel and experiential B2B events. We plan to capitalize on the pandemic disruptions to Strengthen our leading market position. Our growth strategy has been proven to be successful, driving strong returns pre pandemic And there are tremendous opportunities to continue investing for long term growth.

Speaker 1

I'm excited about the bright future that lies ahead for our company. I want to thank our hardworking and dedicated employees who make this all possible and thank our shareholders for their continued support in Viad. And with that, we'll open up the call for questions.

Operator

The first question comes from Kartik Mehta with Northcoast Research. Please proceed.

Speaker 4

Good afternoon. Ellen, I just want to make sure I understood the cash flow. What do you anticipate in terms of cash flow for the year? And did I get the numbers right? You expect an outflow of $20,000,000 to $25,000,000 in the Q1?

Speaker 3

Yes, that's correct. An outflow of $20,000,000 to $25,000,000 in the Q1, including $5,000,000 to $10,000,000 operating cash flow and out And then about $15,000,000 in CapEx. And for the year, the only guidance we gave was on the CapEx side, dollars 75,000,000 to 80,000,000

Speaker 4

So I'm assuming since you're anticipating atornear EBITDA levels were pursued and breakeven for GES. You'd anticipate breakeven or a little bit more on free cash flow. Is that fair?

Speaker 3

Well, the cash flow in the Q3 especially will be greater, but yes, Depending on working capital and so we do expect greater than breakeven on GES and The positive levels for Pursuit.

Speaker 4

Stephen, just on GES, I know you've talked about getting the revenue breakeven level down lower. I'm wondering, based on your Guidance for 2022 on breakeven, what that means in terms of revenue compared to 2019? I'm just wondering all the work you've done, how much progress that you've made and what's your expectations are based on what you're seeing For revenue for GES?

Speaker 1

Yes. It's a good question. I'm really happy with How the business has performed based on the changes that we made during the pandemic. I think during our Remarks and talk a little bit about how the Q4 of 'twenty one At similar margin profile to what we did in the Q4 of 'nineteen, but yet we had half as much revenue. We were down about 43% in terms of revenue.

Speaker 1

And I also looked at the difference between Q3 of 2021 In Q4 of 2021 where we had stronger than 20% flow through on that incremental revenue. So when I look at the changes that we've made, It's clear that we're improving the profitability and I'm encouraged by the signs that I see now. To answer your question Directly on breakeven. There's a lot of moving parts right now in terms of the mix of revenue, the quality of that revenue coming through. But if I look out through the course of the year, it's somewhere in the neighborhood of $50,000,000 of revenue per month in that breakeven area.

Speaker 1

So Again, as Ellen mentioned, we anticipate being greater than breakeven on a full year basis, but I would put Breakeven somewhere around $50,000,000 a month.

Speaker 4

That's helpful. And then just one last question on Pursuit. I'm assuming you're being helped by kind of price increases because of inflation and all these new attractions you're seeing. Is your expectations for Pursuit EBITDA going back to pre pandemic levels mean that your revenue will go back Or are you anticipating the ability to get to those EBITDA levels even with lower revenue?

Speaker 2

Actual revenue improvements and EBITDA performance within the range. So the biggest Encouragement we see, biggest momentum we see is in booking pace, which is very, very strong for the coming season.

Speaker 4

Okay. So I apologize. So you said you anticipate revenue to kind of be At or better than pre pandemic levels. Did I I don't want to put words in your mouth, but I just want to make sure I got that right.

Speaker 2

Yes. And what we're indicating

Speaker 4

I apologize.

Speaker 3

That is correct, Kartik. David, did you have anything else to add to that?

Operator

Thank you, Kartik. The next question comes from Tyler Batory with Janney. Please proceed.

Speaker 5

Good afternoon. Thanks for taking my questions. Appreciate all the detail thus far here. I want to start on the GES SADA, thanks. You gave the guidance down 50% in Q1.

Speaker 5

Steve, can you please share any details or observations From Q1 so far, did you see more shows canceled than you expected in January? What are people saying about the shows that did happen? Have you seen any cancellations or postponements for February or March as well?

Speaker 1

Yes. So it's a great question. So it was kind of late November and into December during kind of the peak of Omicron when we started seeing cancellations For events that were to take place in the Q1, most of them were in the January in the month of January, a little bit in the month February. It's really the pace of any postponements or cancellations has declined dramatically. I haven't heard of any here for the last 4 weeks or so.

Speaker 1

So I believe that the pace of cancellation postponement has It's dying down dramatically, and I expect that to continue. I will say, I did have the opportunity to attend a couple of events in January. One was the Production and Processing Expo in Atlanta. It's one of our larger events in the month. And albeit the show was a little bit smaller, there was a tremendous amount of enthusiasm on the floor from exhibitors and attendees.

Speaker 1

When I looked at some of the metrics for that event, they were very similar to pre pandemic levels, just on a smaller scale. And that's very encouraging For the business and for me, there are some very positive trends that are pointing to greater success as we get further away

Speaker 5

Okay, great. That's helpful. And I think in the past, one of the things that we talked about in this business As more shows happening, but smaller in size, is that something that occurred like you expected in Q4? Will you expect that trend to continue In 2022 as well.

Speaker 1

As we mentioned in our comments, the events in 4th quarter were smaller than their pre pandemic size. They were down about 35% or so. We did see a higher number of And that's mainly a phenomenon that would only happen in 2021 because there were so many events from the first half of twenty twenty one that were postponed into the back half. I I do not anticipate seeing that number of events happen again in 2022 in the second half. It will return and at the West DSRs, it's returned to more normal scheduling of events.

Speaker 5

Okay. That's helpful. Switching gears to the Pursuit side of things and some very optimistic commentary there. I'm just I'm curious on the Travel Trade Group side of things, specifically in Ban Jasper. Are you having those conversations?

Speaker 5

I mean, when do those folks usually start to look The book for the summer and I think David you cited some very strong booking statistics in Banff Does that include any travel trade business or is that mostly just individuals making their bookings in advance?

Speaker 2

Thanks, Tyler. I can tell you travel trade is alive and well. It is a bit country specific. And so generally from certain Asian destinations that's going to recover more slowly because of policies that the countries have put in place. But other than that, we see the world beginning to travel again and we have strong pickup from tour and travel partners, certainly from Western Europe, certainly from Beginning from Australia as they have just opened and are moving to opening both inbound and outbound.

Speaker 2

So we're seeing encouraging signs for tour and travel And people are committing to space, a lot of space is deposited. So our pacing is very, very strong.

Speaker 5

Okay, excellent. And then just the last question for me. I'm interested from a capital allocation perspective, Your views on and your investing capacity right now, I mean, I know you talked about $75,000,000 to $80,000,000 CapEx, you have a number of projects going on in the portfolio. If you saw an opportunity to go out and buy something, do you think you have the ability to pull the trigger on something significant? And I know you're probably not too much detail you can share, but just curious what the pipeline looks out there for potential transactions, Specifically in the pursuit side of things.

Speaker 5

Yes. Well, I'll speak to pipeline and I'll let

Speaker 2

Ellen speak to Capacity. I think what's interesting is that there is lots of activity. There's lots of interesting things and we're trying to be smart and be thoughtful And I'll spend our time looking at the various opportunities and how they might grow the business. And Ellen or Steve, if you want to speak to capacity.

Speaker 1

Yes. Tyler, in terms of capital allocation, I think first I would say I'm really happy with the decisions we made during the pandemic to continue to invest And new opportunities and some development projects. So we're seeing the benefit of that as we go into 2022. And our philosophy around capital allocation is going to continue to be the same, which is we will look for opportunities on the Pursuit side of the business where we can allocate Capital, we ended the year close to $150,000,000 of liquidity. So we have the ability to do reasonable size Acquisitions or Development Projects, Ellen spoke to a little bit about what we've already committed to in terms of projects that are in 2022.

Speaker 1

But we have our eyes open for new opportunities and for the right deal, we'll find a way to make it happen.

Speaker 5

Okay, great. That's all for me. Appreciate the detail. Thanks, Tyler.

Operator

Thank you, Tyler. The next question comes from Brian Maher with B. Riley. Please proceed.

Speaker 6

Good evening, Steve, Alan and David and thanks for those comments so far. Just a couple of questions from me. How should we be thinking about Wage pressure and other inflationary costs on Pursuit's ability to drive margin improvement Kind of as we move through 2022.

Speaker 2

I think what's important is in a war for talent If you fight hard with a strong culture and work hard to bring people on board. So one, we're quite focused on creating the kind of environment where people want to work, that it's a rewarding place to work. And that's a combination of everything from good leadership To good facilities, to the right programs, the right recruitment efforts and so on around the world. Following that then, As our visitation numbers return and our mix of guests evolves, our margin we believe will return strongly. So We're focused on that and doing the right things to make sure we are staffed well ahead of the game.

Speaker 2

2 things that are powerful in That regard, one is the Commonwealth Country Visa Program that allows Commonwealth young people to go from one country to another. So Australians and New Zealanders and Brits coming to Banff and Jasper in Western Canada to work and then the return of the J-one visa program in the United States is key to the success in Alaska And Montana. And both of those recruiting efforts are quite strong and I feel confident that we're ahead of the game and ahead of the competition in terms of what we're doing. There will continue to be pressure, but I think we're well positioned to respond to it.

Speaker 6

Great. And then just the second question for me, as it relates to Sky Lagoon and FlyOver Las Vegas, can you give us a little color on How visitation and pricing trends have been since those properties opened, particularly relative To your initial expectations and then maybe more recently as we had Delta and Omicron, how your expectations evolved And how those properties are doing relative to your evolving expectations? Yes.

Speaker 2

We spoke earlier about the At Sky Lagoon in terms of the gift product into the holiday season, which is kind of astounding. When you think about The population of Iceland is 340,000 roughly approximately and to sell close to 30,000 gift products within the population. And that's a product that generally someone buys and holds on to for the year. So it's not necessarily a destination product that a visitor to Iceland who's there during the holiday period would So that's a great indication in terms of success. And we've had strong visitation periods and obviously those have been tempered in times when we have Greater restrictions imposed by health authorities and definitely the omicron surge didn't help, but clearly we're past that as all jurisdictions are in the So I won't get into specific visitation just yet in the sense that We're going to let the year evolve a little bit, but we're quite encouraged both by the pacing and all of the different geographies that gives us Quite a bit of confidence in terms of how the year is going to unfold.

Speaker 6

Great. And maybe lastly for Alan, I think you You mentioned the $75,000,000 CapEx number for the year and I believe you gave a Q1 number. Can you share with us how you think that that $75,000,000 kind of paces throughout the quarters?

Speaker 3

Sure. So first and second quarter pretty actually all four quarters pretty evenly Throughout the year, plus or minus a few million.

Speaker 6

Okay, great. Thanks. That's all for me.

Speaker 1

Thanks, Brian.

Operator

Thank you, Brian. The next Question comes from Barry Haines with Sage Asset Management. Please proceed.

Speaker 7

Thanks, everybody, and thanks for all the hard work in 2021. Alan, I had just a couple of questions to fill in a couple of the pieces to get to the free cash flow for 2022. Can you give us any help on depreciation and amortization for the year, on interest expense for

Speaker 4

the year, And

Speaker 7

whether you anticipate cash taxes in 2022? Thanks.

Speaker 3

We haven't given any of that specific guidance. Let me see. On the cash taxes, We don't anticipate that. Just D and A, we haven't given any guidance on. And what's

Speaker 7

the 3rd? I'm sorry, Barry? Interest.

Speaker 3

No guidance on the interest, but it's our current debt at the current rates and we don't see anything I don't see anything changing that right now. So no update really on what we have currently.

Speaker 7

So just to follow-up, Ellen. So If I look at the 4th quarter numbers for both D and A and for interest expense, those would be proximate to take into 2022 then?

Speaker 3

Yes. Then you would need to feather in the CapEx and how that flows through. But Yes, yes, yes. It's hard without giving guidance on it.

Speaker 7

Okay. Thanks so much.

Speaker 3

Yes.

Operator

Thank you, Barry. The next question comes from Marc Riddick with Sidoti and Company. Please proceed.

Speaker 8

Yes. Hi. Good evening, everyone. I just wanted to go over some of my questions have already been answered, so I just wanted to follow-up Specifically on the hiring timing expectations and maybe what you're seeing there from a what you're expecting or modeling from a pricing Dynamic as far as the amount of hiring that you're going to need to do to prepare for the upcoming seasons there. Thank you.

Speaker 2

Hey, Mark. And is that specific to Pursuit?

Speaker 8

I believe there was commentary on hiring within Pursuit. So I think that was what the commentary was, correct?

Speaker 2

Yes. Well, as you know, our season kick off, so we start to get obviously busier. Things start to pick up in April, May and then obviously end of 2nd quarter, we go into what we call more of our peak season. Obviously, we're staggering hiring to meet our demand and timing the onboarding of team members So when we have peak demand. It's a competitive hiring process, but I'm quite encouraged by where we are.

Speaker 2

We started much earlier than any other year. And as I mentioned earlier, we're quite focused on our programs to recruit across North America for North American businesses And to encourage both the Commonwealth visa workers to come and spend time in Canada and then J-1s who come to the United States and work for a season and Return to their home country. So we're quite focused on that and encouraged by it and we'll match up our staffing levels to the levels within our business to provide the level of service and

Speaker 1

Welcome. Thanks Mark.

Operator

Thank you, Mark. There are no additional questions registered at this time. So I'll

Speaker 3

pass the conference back to

Operator

the management team for closing remarks.

Speaker 1

Thank you. And thanks for everybody for their time and interest in Viad. We look forward to giving you an update for the next quarter. Thank you very much.

Operator

That concludes the Viad Corp. 4th quarter 2021 earnings call. Thank you for your participation. You may now disconnect your line.

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