Pursuit Attractions & Hospitality, Inc. quarterly report, Q2 FY2021

Business context and reporting period

The filing is Viad Corp’s unaudited Form 10-Q for the quarter and six months ended June 30, 2021. The filing identifies Viad—not Pursuit Attractions & Hospitality, Inc.—as the registrant. Viad operates GES, a live-events business, and Pursuit, an attractions and hospitality business.

Financial performance and position

Amounts below are in millions of U.S. dollars unless otherwise noted.

Q2 revenue rose year over year as Pursuit reopened and visitation recovered; GES revenue was nearly flat. For the first half, revenue fell sharply because 2020 included substantial pre-pandemic GES activity, while live events remained largely shut down in early 2021. The six-month GES segment loss widened to $46.8 million from $21.2 million; Pursuit’s segment loss narrowed to $26.4 million from $38.0 million. Q2’s smaller consolidated loss versus 2020 primarily reflects the absence of the prior-year impairment charges, not a return to profitability. The filing does not present a consolidated gross-margin figure.

At June 30, 2021, cash and cash equivalents were $37.0 million ($40.0 million including restricted cash), current assets were $108.3 million, and current liabilities were $135.3 million. Debt and finance lease obligations totaled $397.3 million, including $331.1 million of debt and $66.2 million of finance leases. Total stockholders’ equity was $102.6 million; Viad stockholders’ equity was $18.8 million. The company reported $113.5 million of remaining capacity under its existing credit facility and said it complied with the facility amendment’s $100 million minimum-liquidity requirement.

Material changes and notable items

• Compared with Q2 2020, Q2 2021 revenue increased by $31.2 million and segment operating loss improved by $14.8 million. The prior-year quarter included $114.0 million in impairment charges; none were recorded in Q2 2021.
• During the first half, Pursuit revenue increased to $46.1 million from $18.8 million, while GES revenue declined to $44.1 million from $305.9 million. The company reported a $9.1 million gain from the sale of a GES warehouse, partly offsetting GES operating pressures.
• Pursuit opened Sky Lagoon in Iceland in April and acquired a 60% interest in Golden Skybridge in March; Golden Skybridge opened in June. The acquisition added approximately $11.8 million of preliminary goodwill.
• Contract liabilities increased to $46.5 million from $18.6 million at year-end, reflecting customer deposits and other contract-related balances.
• Viad’s 2020 comparative GES revenue and cost of services were corrected for an immaterial gross-to-net accounting error. The correction reduced each by $0.8 million for Q2 2020 and $12.1 million for the first half of 2020, with no effect on earnings or cash flows.

Outlook, risks and contingencies

• Management reported early signs of recovery in tourism and live events, including larger in-person events beginning in June and anticipated Canadian border reopening. It remained cautious about COVID-19 variants and the uncertain pace of recovery. No formal revenue or earnings guidance was provided.
• Management expected existing liquidity to fund operations and capital commitments for at least 12 months, including approximately $62 million of capital expenditures for maintenance and growth investments.
• On July 30, 2021, after quarter-end, Viad refinanced its $450 million facility with a $500 million senior secured facility: a $400 million term loan due in 2028 and a $100 million revolver due in 2026. The term loan bears interest at LIBOR plus 5.00%, subject to a 0.50% floor. New liquidity and financial covenants apply, with financial covenant testing scheduled to begin in September 2022.
• The company continued to report operating losses and negative operating cash flow. Risks include renewed pandemic disruption, travel restrictions, event cancellations, seasonality, foreign-exchange movements, union negotiations, pension obligations, and the integration and performance of acquisitions. Goodwill impairment remains a risk if future cash-flow assumptions deteriorate.
• A July 2020 accident involving a Pursuit Ice Explorer caused three fatalities and multiple serious injuries. Viad is cooperating with the investigation and believes insurance coverage is sufficient, subject to deductibles. It also disclosed $2.3 million in environmental remediation liabilities and up to $130.2 million of potential payments under lease and equipment guarantees.
• Viad’s convertible preferred stock carries a 5.5% cumulative quarterly dividend, paid in-kind during the first half of 2021. Common dividends and share repurchases remained suspended.

Most important facts for investors to verify

• Confirm the correct issuer and investment exposure: this is Viad Corp’s consolidated filing, with both GES and Pursuit operations.
• Track the recovery in GES events and Pursuit travel, particularly the effect of border restrictions and COVID-19 developments on demand and cash burn.
• Review the post-quarter refinancing’s final balances, interest expense, covenant requirements, and available liquidity; the filing describes terms but not post-refinancing results.
• Assess the funding needs of the approximately $62 million capital-expenditure plan alongside operating cash use, debt, finance leases, and preferred-stock dividends.
• Monitor the Ice Explorer claims and related insurance coverage, lease guarantees, and potential future impairment exposure.