Pursuit Attractions & Hospitality, Inc. quarterly report, Q2 FY2020

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Business context and reporting period

This is Viad Corp’s Form 10-Q for the quarter and six months ended June 30, 2020. The filing covers Viad’s three reportable segments—GES North America, GES EMEA, and Pursuit—rather than a standalone filing by Pursuit Attractions & Hospitality, Inc. Viad provides live-event services through GES and attractions, lodging, transportation, and related travel services through Pursuit.

Financial performance and liquidity

Amounts below are in U.S. dollars; figures are rounded to millions unless stated otherwise.

  • Second-quarter revenue: $30.9 million, down 92.3% from $402.3 million in Q2 2019. GES revenue was $25.6 million and Pursuit revenue was $5.3 million.
  • Six-month revenue: $336.9 million, down 51.0% from $687.9 million. GES contributed $318.1 million and Pursuit $18.8 million.
  • Net results: Q2 net loss attributable to Viad was $206.3 million, versus income of $13.8 million a year earlier; diluted loss per share was $10.19. For the first half, the attributable net loss was $292.9 million versus a $4.0 million loss in 2019; diluted loss per share was $14.49.
  • Operating performance: Segment operating loss was $49.8 million in Q2 versus income of $46.6 million in Q2 2019, and a $59.2 million loss for the first half versus income of $35.3 million. GES and Pursuit both reported segment operating losses in Q2. These are company-defined non-GAAP measures.
  • Cash flow: Operating activities used $31.2 million in the first half, compared with providing $39.5 million in 2019. Investing activities used $3.1 million; financing activities provided $128.7 million, principally reflecting borrowings. Capital expenditures were $32.5 million.
  • Cash and debt: Cash and equivalents were $154.2 million at June 30, compared with $62.0 million at year-end. Total debt and finance lease obligations were $473.5 million, including $450.0 million of debt net of issuance costs. Long-term debt and finance lease obligations were $469.8 million.
  • Margins and liquidity: The filing does not present a consolidated gross-margin figure. Liquidity was supported by drawing the remaining available capacity under the revolving facility, cost reductions, and $24.8 million of life-insurance proceeds. Current assets were $235.1 million and current liabilities $119.3 million at June 30.

Material changes versus the prior comparable period

  • COVID-19-related event cancellations and postponements and temporary closures of Pursuit properties drove the sharp revenue decline. GES event activity remained largely shut down; Pursuit began reopening attractions and lodging in May, with most operations phased back in during June and July.
  • Viad recorded $114.0 million of impairment charges in Q2 and $202.4 million in the first half. The Q2 charge included a full impairment of the remaining GES goodwill; at June 30, $95.2 million of goodwill remained, all associated with Pursuit. First-quarter charges included $72.7 million of goodwill and $15.7 million of intangible assets.
  • Q2 interest expense increased to $5.2 million from $3.0 million, primarily because of higher debt balances. First-half interest expense was $9.2 million versus $5.9 million.
  • At June 30, the company had an allowance against deferred tax assets of $25.5 million; the filing attributes the negative effective tax rates in 2020 to this allowance and the lack of tax benefits on certain impairments and losses.

Outlook, risks, contingencies, and unusual items

  • Outlook: Viad gave no specific revenue or earnings guidance. Management said the duration and financial effects of the pandemic could not be fully estimated. It expected events to return gradually as restrictions eased, while noting that further closures could occur. FlyOver Canada Toronto was delayed to an anticipated 2023 opening; FlyOver Las Vegas and Sky Lagoon remained planned for 2021.
  • Financing after quarter-end: On August 5, 2020, Crestview Partners invested $135 million net of approximately $9 million in fees in perpetual convertible preferred stock bearing a 5.5% dividend, with up to $45 million of additional investment subject to conditions and shareholder approval. The stock is convertible at $21.25 per common share. The proceeds were intended to repay some revolving debt and support liquidity, capital expenditures, and general purposes.
  • Debt covenant relief: An August 5 amendment waived financial covenants through Q3 2022 and imposed minimum-liquidity requirements of $125 million, stepping down to $100 million on December 31, 2020. It also restricts cash dividends, unsecured debt issuance, and use of the facility’s expansion feature during the waiver period. Management said the financing, available cash, and covenant relief were expected to fund operations for at least 12 months and alleviate the previously disclosed substantial doubt about going concern.
  • Other liquidity actions: Viad sold a GES warehouse in July for $17.0 million. It had suspended future dividends and share repurchases, reduced discretionary spending and capital expenditures, and taken workforce cost actions. Cash dividends were prohibited under the August covenant amendment during the waiver period.
  • Accident and contingencies: On July 18, a Pursuit Ice Explorer accident en route to Athabasca Glacier caused three fatalities and multiple serious injuries. Viad reported cooperating with authorities and said it believed insurance, subject to customary deductibles, was sufficient; actual exposure remains uncertain. The filing also discloses up to $76.2 million of potential payments under lease-related guarantees and ongoing legal, environmental, self-insurance, pension, and labor-related exposures.
  • Key risks: Further pandemic-related restrictions, slow recovery in events and travel, consumer demand, seasonality, foreign exchange and interest-rate movements, potential additional impairments, and labor and pension costs could adversely affect results and liquidity.

Important facts for investors to verify

  1. Confirm the filing entity: the supplied filing is Viad Corp’s 10-Q, with Pursuit reported as one segment—not a standalone Pursuit Attractions & Hospitality filing.
  2. Track operating recovery by segment, especially GES event schedules and Pursuit reopening, visitation, occupancy, and revenue per visitor.
  3. Monitor liquidity against the amended $125 million minimum (reducing to $100 million at year-end), debt repayments, borrowing costs, and the terms or availability of the additional preferred investment.
  4. Assess whether further impairment charges or deferred-tax valuation allowances arise as recovery forecasts change.
  5. Follow developments and potential financial or reputational effects from the July Ice Explorer accident, including insurance coverage and claims.