Viad(VVI) - 2020 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for Q2 2020 was $30.9 million, down 92.3% from Q2 2019, primarily due to the COVID-19 pandemic [49] - GES revenue was $25.6 million, down almost 93%, largely due to show cancellations and postponements [49] - Pursuit revenue was $5.3 million, down approximately 90.5% as properties were closed for most of the quarter [50] - Net loss attributable to Viad was $206.3 million compared to net income of $13.8 million in Q2 2019 [50] - Adjusted segment EBITDA loss was $35.1 million, down $96.8 million from Q2 2019 [53] Business Line Data and Key Metrics Changes - GES adjusted segment EBITDA was negative $25.2 million, down from positive $44.3 million in Q2 2019 [53] - Pursuit adjusted segment EBITDA was negative $9.9 million versus positive $17.4 million in Q2 2019 [53] - Cash flow from operations was an outflow of $26.5 million, with favorable changes in working capital of approximately $17 million [54] Market Data and Key Metrics Changes - The second quarter was characterized by significant disruptions in the events industry due to COVID-19, leading to a mixture of cancellations and postponements of events [63] - In-person event activity is slowly resuming in certain regions, with China and the UK starting to hold events again [46] Company Strategy and Development Direction - The company is focused on ensuring adequate liquidity and financial flexibility to navigate the downturn and execute on its Refresh, Build, Buy strategy [8][10] - GES is undergoing transformation to focus on higher-margin and higher-growth areas, reducing its physical footprint and transitioning to a more variable cost structure [40][43] - Pursuit is reopening its hospitality and attraction businesses, with a focus on regional guests and pent-up demand for experiences [27][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence that face-to-face events will return, albeit with some components of virtual events integrated [64][65] - The company is not in a position to reestablish guidance due to the evolving nature of COVID-19 and its impacts [56] - Management is optimistic about the long-term opportunities for growth and market share gains in the corporate event market as competitors may not survive the downturn [94] Other Important Information - The company secured additional capital of up to $180 million from Crestview Partners and negotiated financial covenant relief on its credit facility [8][13] - The company ended Q2 with $154 million in cash, and pro forma liquidity position at June 30 would have been approximately $340 million [17] Q&A Session Summary Question: Can you talk about larger shows and their rescheduling or cancellations? - Management noted a mixture of cancellations and postponements, with some events like IMTS canceled for 2020 and MINExpo postponed to 2021 [63] Question: What does the future of the live events industry look like? - Management is confident that face-to-face events will return, with a blend of virtual components likely to persist [64][65] Question: What are the spending trends for visitors this year compared to last year? - Management observed that in some regions, average daily rates (ADR) are up compared to the previous year, indicating a shift in visitor demographics [68][71] Question: Are there any other asset sales planned in the GES portfolio? - Management indicated that while they are optimizing their footprint, significant additional asset sales are not expected [72] Question: What opportunities for growth capital are being considered? - Management emphasized the priority of surviving the pandemic while looking for opportunistic acquisitions in the future [73] Question: What is the anticipated cash burn for GES? - Management indicated that minimal revenue levels would result in a cash burn of about $20 million for the quarter [85] Question: How dependent are the businesses on air travel recovery? - Management noted that leisure travel is expected to recover faster than business travel, but events can still be held at smaller scales [88] Question: Are there potential cost improvements in the future? - Management is focused on reducing fixed assets and optimizing headcounts to control costs better moving forward [89] Question: What is the financial impact of virtual events compared to face-to-face events? - Management stated that virtual events generate about 1/10 of the revenue compared to face-to-face events [92]