Q1 2020 Viad Corp Earnings Call
Time, all participants are to listen only mode. After the speakers presentation. There will be a question answer session to ask a question during the session, we'll need to press star one on your telephone. Please be advised that today's conference is being recorded if group or any persistence. Please press star zero I'd now like to hand, the conference over to your speaker today very long.
Executive director of Finance and Investor Relations. Thank you. Please go ahead.
[music] good afternoon, and thank you for joining us for beyond 2021st quarter earnings Conference call.
During the call you'll be hearing from Steve Moster, our president and CEO, David Barry our president of pursuits, and Ellen Ingersoll, Our Chief 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 at our annual quarterly and other current reports filed with the FCC.
During the call, we'll be referring to certain non-GAAP measures, including locks us whether items adjusted segment EBITDA and adjusted segment operating income or loss.
Horton disclosures regarding these measures, including reconciliations to net loss attributable to the odd can be found and people to our earnings press release, which is available on our website at www Dot Dot com now I'd like to turn the call over to Steve.
Thank you Kerry and good afternoon, everyone. Thank you for joining us on todays call I Hope you all are staying safe and healthy.
That's good news call I'll briefly discuss our first quarter business results and our financial position to whether these unprecedented times give you an overview of how we are taking necessary steps to ensure adequate liquidity to provide the company with safe passage through the Cobrand crisis and resume our trajectory of grow.
On the other side and provide insight as to what we're seeing that will impact the remaining quarters of 2020.
Following my opening comments I'll hand, the call over to David buried to discuss our pursuit business and then I'll come back on to cover the GDS business.
And our prepared remarks, with Alan providing a financial update including our liquidity position preliminary financial results and pending noncash impairment charge.
Before turning to the business at first and foremost want to commend our team members at the odd for their resiliency positivity and dedication during these challenging times.
Like many businesses, we've had to make tough decisions by way of employee furloughs and wage reductions in order to protect our financial position in this unprecedent operating environment.
Nevertheless, our team members have not missed a beat and acting quickly that help maintain health and safety of our clients gas and the communicate communities, we operate and as our number one priority for that myself and the entire executive team Express our sincere. Thanks.
Now moving into our business. The first two months to the quarter were largely in line with our expectations in March we began to experience some operational impacts as the spread of Cobot 19 began to reach all corners of the world, including some event postponement and cancellations.
There were some signs of retreat at Conexpo Carnegie took place in early March with less than 3% a floor space affected by exhibitor cancellations and attendee registrations of more than 100000.
However by the end of March travel and lives event activity, how to essentially culture and wouldn't continue travel restrictions and social distancing guidelines in place we are anticipating a very weak second quarter for 2020.
In response, we took swift and effective steps to bolster our company's liquidity and financial position.
Drew on our revolving line of credit to increase our cash position, we've obtained a waiver of our financial covenants for the second quarter.
We implemented aggressive cost reduction actions, including furloughs mandatory on paid time off in salary reductions for all employees across the company.
Our executive management team voluntarily reduced its base salaries by 20% to 50%.
In each of our non employee members of our board of directors has agreed to reduce his or her cash retainer like 50% for payments typically made to them in the second quarter of 2020.
We have eliminated all non essential capital expenditures and discretionary spending.
We have suspended future dividend payments and share repurchases.
And finally, we've made changes to our executive management team to reduce cost and prioritize client facing team members.
In addition to some other terminations Jay Altizer, President of GDS will be leaving the company and I'll be taking over the leadership of GE, yes. As many of you know this is a position I know well, having led she asked before bringing Jay onboard about two years ago.
I'd like to thank Jay for his great work, leading the team at GE asked to identify and pursue various margin driving opportunities.
During the last two years G.S. has undergone significant streamlining to improve the cost structure and create a more nimble organization, putting us in a much better position today to navigate the current environment.
While these are extremely difficult steps to take these actions are necessary to ensure that via a lot ngs can outlasts the challenging road ahead.
I firmly believe the management team that's in place today is the right one to steer the company through these challenging times.
We have successfully navigated past periods of disruption with strict focus on cash flow in liquidity, a proven playbook that we're once again turning to.
And as with other prior macro shocks. We believe this one presents us with an opportunity if not a mandate to rethink and re imagine how we run our business. So that we can emerge and a stronger more flexible position.
With that I'd now like to turn the call over to David Barry President of pursuit David.
Thanks, Steve afternoon, everyone.
So pursue came into the year with lots of momentum and we saw very strong start to 2020.
At the end of February revenue and EBITDA were well ahead of plan with revenue up significantly from the prior year, that's largely due to our acquisition of a controlling stake and Mellberg lodges and outstanding results could fly over Iceland.
By the middle of March, though the effects of the global health crisis, and pandemic, we're becoming more clear so working with regional health authorities in three countries. We moved quickly both facilities and organize teams into to work streams.
One thing shutdown mode, and the other being post crisis recovery.
More than anything this decision organize our teams along multiple workflows has given us the bandwidth move quickly in a crisis and make good decisions.
In the past 61 days, we supported our communities through the donation of people you need to regional health authorities, and we fed literally thousands of team and community members through a volunteer driven Neal program.
Like all of you we stand strongly behind emergency responders doctors, and especially nurses, who are working bravely help those who are sick and we offer our sympathies to those who have lost loved ones.
It's obvious to point out that most of our second quarter bookings were impacted by governmental stay at home orders and the overall reduction in domestic and international travel, resulting in large numbers of cancellations.
We're not isolated from the global impacts on travel and hospitality, we find ourselves among many find brands in companies that are facing the same challenges.
That said, we see green shoots in this environment and thankful that the acute impacts felt were in our slower Q2 timeframe and thus far have not extended a significantly into our more important Q3.
Thank you first is and always has been our number one core values.
It was never a question of if we would be reopening.
More importantly, how.
Last week, we launched pursuit safety promise, which was constructed using material from the CDC and regional health authorities.
As guest return to our iconic locations and our team members are present to host them. We've taken steps to ensure we can do that safely.
You can see all about that specifics on the pursue website.
Okay. So fast forward 60 days looking to our iconic locations and flyover experiences.
We're seeing the world begin to open back up.
Fiber Iceland reopened last week in Reykjavik, we expect to benefit from the over 30000 units pre sold product already in the hands of our Icelandic guest in that market.
And for our first we kind of operation, we handle we surpassed our visit projection, while maintaining safe environment for visitors.
We appreciate the supported the Icelandic government as they've moved quickly to support both workers and businesses in this unprecedented global pandemic.
As travel restarts, we believe Iceland thoughtful management of this public health crisis, and renowned reputation as a safe destination.
Our position in the country and our fly over Iceland experience well.
So lets travel to Canada, Western Canada, and we expect the began safely opening facilities in Bath National Park in Jasper National Park at the beginning of June.
We expect visitation.
To be below 2019 levels with less international visitors. However, we do anticipate more Canadians traveling within the country than usual.
Today, we have bookings in late June well into the third and fourth quarters in 2020 and continue to take more every day.
For the weekend. He made can we were net positive for bookings, meaning we took more new reservations and cancellations at both the Mount Royal Hotel and the Glacier new launch.
They didn't government has been very industry focus has an active several programs that had been super helpful, including wage subsidies of up to 75% for team members and I've called the cues program. This has been extended to August.
As well as having from rent abatements within National Parks.
We had north to the great state of Alaska, We expect the National Parks, and Denali and Kenai Fjords will open for summer 2020.
When they do we'll be there to safely host guest in staff.
Our properties and attractions will open in Alaska on a staggered basis beginning mid June.
Because we expect business levels to be impacted by the partial cancellation of many crews departures from the lower 48, we'll be prepared to adapt our properties and attractions accordingly.
So that means will shrink and expand the operating capacity of our experiences based on demand.
Down the West coast to Vancouver talking about Vancouver for second Vancouver, Obviously expects the international visitation will be down from historical levels, but we do expect more Canadians will visit Vancouver, and enjoy the culture and beauty of that amazing city, including five or 10.
And next south to Montana, we expect to begin opening our facilities around Glacier National Park in June.
Over 90% of guests to this area or self driving Americans and so with record low gas prices and the overall safety allure of the family Road trip, we anticipate attendance in glacier will be less impacted another location.
In terms of future projects, we've made great progress on Sky Lagoon in Iceland and are on track for late spring 2021 opening.
The team has been working hard on flyover Las Vegas, and we've made great strides on the development of the creative product that will be shown in 2021.
Finally, we believe that the power of iconic locations will not be Dan.
And looking back throughout history, and now looking ahead into 2021.
Pursuit is well positioned to benefit from the pent up perennial demand for iconic unforgettable and inspiring experiences.
So back over to Steve to talk about yet.
Thanks, David through February GE has performed well with overall results tracking slightly ahead of forecast we were looking for it to a tremendous year with strong momentum on the corporate side and an incremental $100 million of revenue from three non annual events all set to to take place this year.
Fortunately the first of the major non annual events Conexpo Connie took place as scheduled in early March before wide sweeping stay at home orders and other restrictions went into place as a result cope with 19.
As event activity essentially halted we drew upon our logistical capabilities to help our communities in the battle against Cobot, we partnered with facilities other contractors and members of the trade to convert for large exhibition centers in Chicago, London, New York City in Edmonton, Canada, It's a temporary hospitals or.
Filters.
This was a round the clock work completed in a very short time, and we're proud of our employees for their drive and commitment to this important work.
Where we sit today then activity has largely been canceled or postpone through July exactly when large scale events will resume remains unclear and will ultimately be determined by the lifting of restrictions by local authorities and at the discretion of the event organizers.
Just yesterday morning, Exco, one of our three major non annual event that was scheduled to take place in Las Vegas. The September officially announced that it was postponing until September 2021.
And based on a re opening plan recently announced in Illinois. It appears unlikely that I MTS will be able to take place as previously scheduled for this September in Chicago.
That said.
We do still have events on the books for the third and fourth quarter, including the international Woodworking Fair biannual event that is set to take place in Atlanta. This August.
We continue to receive and win RFP is for client work in late 2020 and 2021. So there are a definite signs that the live event industry is ready for come back as circumstances permit.
We're closely monitoring commentary and decisions made by local governments to understand how they intend to handle the reintroduction of exhibitions and conventions in their economic reopening plans.
While we wait for those decisions, we have effectively hibernate and GE, yet by leveraging its high variable cost model to minimize operating costs, while retaining the ability to reactivate parts of the company as business return.
We expect certain sectors will return faster than others, including pharma and technology, which are two of our strongest verticals on the corporate side of our business.
We are taking this opportunity to design and build a better business one that's more profitable less asset intensive and more focused on our clients future needs. Our focus continues to be on transforming our exhibition business, which is the largest part of our revenue today and driving share gains in our corporate there.
And it's while smaller competitors struggle to stay alive. During this challenging time.
When we begin to restart yes.
We will do so with the future in mind and expect to emerge leaner more nimble and more client focused.
And now I'd like to turn the call over to Alan to discuss our financials in detail Ellen.
Thanks, Steve as a service business, we have a highly variable largely labor based cost structure, which allowed us to act very quickly when the covered 19 restrictions pecans began occurring.
Both business segments were able to flex down very quickly as conditions, we can.
I perceive we immediately reduce more than half of our costs and still have additional cost levers to pull if conditions, you're not begin to improve in coming months.
We expanded contract the operating capacity of her experiences based on fluctuating basis levels, which is a core competency for us given the normal seasonal demand patterns that this business.
Yes, more than two thirds of our costs are entirely variable with an even larger percentage it would it be quickly adjusted based on business demand.
We essentially entered a hibernation mode until against return, reducing or semi variable cost by approximately 70%.
And we stand ready to quickly turned the pocket back on defense return.
In addition to reducing our costs, we took a variety of other steps to preserve cash.
We significantly reduced or eliminated planned capital expenditures, including both nonessential maintenance and small growth capital projects and we slowed the pace of the to pursue flavor projects in development.
We amplified our focus on working capital management, we engaged unproductive dialogues with landlords and local tax jurisdictions to eliminate or defer spending where possible and we receive some benefits from various government relief programs, including wage subsidies offered in Canada, UK and the Netherlands.
Well, yes, parateks deferrals available under the carriers Act.
We believe we have an adequate cash position and balance sheet to weather the near term impact of covered 19.
At March 31st our cash balance was 130.5 million and in early April we drew the remaining 33 million down on our revolver, bringing our total cash at the beginning of the second quarter, two approximately 163 million.
Given the Swift and deep cost savings actions, we've taken we have significantly reduce your operating costs and expect our cash outflow during the second quarter will approximate $40 million.
This assumes continued collection of outstanding receivables minimal new revenue and no postponed events coming back in the quarter.
As it relates to our revolving credit facility, we were in compliance with all financial covenants at the end of the first quarter.
We've already received a waiver of financial covenants for the second quarter.
This waiver combined with our cash position gives us an important breathing room to negotiate longer term covenant relief and lineup additional sources of capital as we prepare for covenant package to persist into the third quarter and perhaps yeah.
We're working closely with her lender group and outside advisors to ensure that they had a sufficiently capitalized to withstand this downturn and emerge in a position of strength.
With pursuit poised to continue its pre cobot growth trajectory.
As David mentioned, we believe expansion of trips will rebound more quickly than large events and this economic downturn may ultimately bring interesting investment opportunities, we hope to be able to pursue.
Now switching over to our preliminary first quarter results, which were in line with our pre announcement in mid March.
First let me comment on the preliminary nature of these results the impact of Cobot 19 has necessitated additional asset impairment testing, which we're currently working through.
The preliminary results showed an earnings release and that I will comment on shortly therefore do not include non cash impairment charges and the corresponding tax effects.
We do not expect a noncash impairment charges to impact cash flow debt covenants or ongoing operations.
However, however, we do expect the impairment charges chevin material impact in the final GAAP financial results presented in our form 10-Q, which we expect to trial no later than June 15 2020.
Luminary revenue was 306 million up 7.1% from the 2019 first quarter, primarily due to positive show rotation of approximately $57 million at GE, yes.
Actually I sat Fi show postponements and cancellations due because of 1910 genic.
January and February were in line with our original expectations, while March was impacted by postponements and cancellations, resulting from virus concerns, causing us to reduce our original guidance for the first quarter and withdraw our full year guidance.
GBS revenue was 292.5 million up 17.6 million or 6.4%.
This growth was largely due to the occurrence of a non annual connects the Kinect trade show in early March before the cobot effects were fully felt.
Pursuit revenue was 13.5 million up 2.9 million or 26.8%.
This is seasonally slow quarter, 4%, although we began to feel the effects of Coke 19. During late March pursuit finished the quarter with higher revenues in 2019, largely due to strong presented results from our acquisition of Mountain Park Rogers and our new flyover ice an attraction.
Preliminary net loss attributable to the AD was 10.6 million versus 17.8 million in the 2019 first quarter.
And preliminary net loss before other items was 8.5 million versus a loss of 10.2 million in the 2019 first quarter.
This non-GAAP measure excludes impairment and restructuring charges acquisition integration and transaction related costs and attraction startup costs as well as illegal settlement recorded in the 2019 first quarter.
Preliminary adjusted segment operating loss was 8.4 million versus a loss of $11 million into 2019 first quarter.
Adjusted segment EBITDA was 6.9 million up 4.7 million from the 2019 first quarter.
The increase in adjusted segment EBITDA was primarily due to higher revenue T S and the elimination of performance based incentives.
Partially offset by increased seasonal operating losses at proceed driven by the June 2019 acquisition, if not PERC lodges and the opening a flavor Iceland.
Yes adjusted segment EBITDA was 19.1 million up from 10.9 million in the 2019 first quarter and proceed adjusted segment EBITDA was negative 12.2 million versus negative 8.8 million into 2019 first quarter.
The second quarter will be extremely difficult, but are quick moved to reduce variable expenses into increased liquidity will help protect our financial position.
We've essentially been in hibernation notes since early in the second quarter.
Turning the lowest level of expenses, we prudently can while we wait for the slow resumption of travel and events.
After sit as you know the seasonally strongest period is June through September.
And as David said, we believe the business will be the first to recover and are beginning to see signs in this.
He asked is expected to take longer although we are hopeful that as certain locations begin to lift restrictions events will start to take place again during the third quarter.
We've controlled the factors, we can control we've reduced expenses prudently manage your balance sheet and maintained very close contact with our lending partners.
We are in good financial footing to manage through a brutal second quarter and hope to emerge in the third quarter with growing visitation and bookings at pursuit.
And the cessation of cancellations for future events at GE, yes.
And now I'll hand, the call back to Steve for your concluding remarks.
Thanks, Alan in closing the spread of Cobot 19 affected our overall results for the first quarter and we anticipate continued impacts in the near term as planned events further unfold air travel remains in a bare minimum for the timing and the state by state regulations continue to shift.
We expect GTS will experience a patient rebound, whereas pursuit, we'll see more benefit in the short term as stay at home orders are lifted and domestic regional travel resumes.
As Ellen shared previously we have taken swift steps to bolster our near term liquidity and we're prepared to take other prudent steps to ensure we weathered the storm.
We haven't experienced management team that have navigated through previous downturns and are more than capable of leading this company through as it's uncertain time.
We see the current environment has an opportunity to reimagine the demand side of our two business segments and map out where we believe to be the most profitable pockets of opportunity and growth as we exit this downturn.
We anticipate making some strategic changes to the business in order to better facilitate the evolving needs of our clients better serve our guests and provide significant value for our stakeholders as we improve our competitive position in a post cobot 19 universe.
And we believe in the longevity and resiliency of our business.
Exhibitions conferences in corporate events are vital part of the economic engine.
Facilitating sales networking and education in a relatively low cost in high impact way.
The replacement of live events by virtual events has been tested in the past and will likely be tested again, but even in the most productive a virtual worlds. We did not believe that face to face meetings will go away. They maybe they may change and our industry will change along with it.
In Rgs business, we will focus on shrinking our footprint and choosing which markets, we want to begin and which ones we don't.
On the pursuit side iconic location experiences cannot be replaced.
And people will not choose to stay at home indefinitely.
We will once again venture out to explore the world and it's amazing places, perhaps with pent up demand and that pursued we will be there to welcome our guest.
Who coming out of corn team will be ready for new unforgettable experiences.
More than ever we believe that experiences will be more valuable than things and with that we'll open up the call for questions.
[laughter] as a reminder to ask a question really to press star one on your telephone to withdraw your question press the pound or Husky. Our first question comes from Kartik Mehta. Your line is open.
Hey, good evening.
Stephen Ellen it sounds like from their commentary you gave that you expect second quarter to be kind of a trough in terms of revenue and cash usage is that accurate.
Yeah, Kartik I think that's accurate given what we're seeing now.
Minimal revenue in the second quarter.
Given the impacts of covered 19.
And then on the pursuit side.
Is it if you look at bookings today I think you gave a number that I think you looked at as of May tens, but may 10th of this year versus may tend of last year, what percentage of bookings a fall for compared to last year are you at.
Hi, Kartik I'll, let David very talk a little bit about the pursuit bookings.
Yes.
Hesitant to give a whole bunch of guidance in terms of the future. Because this is a period of of demand for us and lots of booking pace. So we went through a period of cancellations, where you can imagine the weeks from March 15th fixed fees on and then it's stabilized and we're starting to come out the other side. So we.
Expect that there'll be a range depending on the property Glacier, obviously less because it's more drive market our international visitation in places is more affected but we're still I think in the last 10 days or so turning the corner in terms of taking more bookings that were having cancellations.
And then maybe just a follow on hey, what about fuel price standpoint.
Obviously, not the attractions because maybe that's not relevant puts the properties have you had to reduce price or provide promotion and so if you looked at year over year, where we will.
Revenue be.
Before the properties compared to last year.
Yeah, I'll deal with the price point revenue, we don't will be a look and see but what's interesting with prices. The the fundamental principle for us and for anyone that's followed us since 2015, we've been very focused on.
If you could have a great product you can charge a fair price for it there will be downward pressure in the industry for all players because people want to get moving again, and so you'll see a combination of things whether it be airline for hotel times, but we spend a lot of time and energy on price and we will fluctuate based on demand. So if a certain property is obviously an.
Higher demand and we see an opportunity to price Accordingly, we will if there are times and we're going to generate traffic will be focused on that.
The key is is the quality of experience in the value and being able to charge a fair price for it.
And just just to make sure I understood I guess, where are you today versus last year I have you had to.
If you take downward have you had to take price down to kind of get people to start booking in start thinking about some of these.
Places.
It's really dependent on property and so in some cases, yes in other cases, no and then if you. If you look on the pursue collection website, you can see a wide range of pricing depending on property time of year and so on and so.
If you go back you know generation ago people would set a price and keep it for a season our prices change daily based on demand. So there really dynamic and they move a lot up and down depending on what's happening on a particular arrival day.
Thank you very much I really appreciate it.
Thanks Kartik.
[laughter].
Your next question comes from Tyler you Tory with Janney capital markets. Your line is open.
Hi, Thank you good afternoon upper on doing well I appreciate all the detail. Thus far just if you follow up questions for me and I want to start first on the liquidity discussion you mentioned binding up some additional sources of capital.
Yes, everything on the table here just can you talk broadly about potentially some of the options that you're looking at.
Hi, Taylor, Yes, we're working with.
Okay, Great receptivity advisors on looking at some other financing alternatives I can't go into kind of the details on that right now, but we are looking at anything that would work for us in the future to go forward and get US 30, the other side of this this challenging environment.
Okay. Okay, great and then just on the job the cash outflow of $40 million that you talked about.
Can you provide a few more details in terms of the assumptions.
So that number it means that includes capex and interest as well just trying to do a sense of what you were looking out, but that's about $40 million number.
Sure. So the 40 million cash burn in Q2. It is that it's all of our cash burn it does include.
Interest payments included.
Minimal capex that we've been spending and they'll census receivable collection to from Q1 revenue.
Okay, and just in terms of the Capex, how much did you gotta spend in the first quarter. How much are you expecting to spend the rest of year and you've talked about minimal amounts of spending I mean, how long can you spend a fair to be low level I mean through 2021 or do you think there could be a little bit of a ramp up.
The next couple of quarters potentially.
Oh, sorry, Capex perspective, Weve minimized maintenance capex to only a central maintenance Capex and then we also have some capex that we were in the middle of on certain per se perhaps projects.
So we minimize the Oh, the Catholic Capex spend unless it's essential.
That's how is the way to think about it is.
Alan said, we brought our capex spend down to the minimum.
The stat.
Dumps that ensure the safety and health of our test at our employees.
And we've put a pause as David mentioned on.
Our flyover construction. So there's two projects are are on pause hoping to resume later.
Okay. Okay. That's helpful. And then just on the pursuit side of things and I. Appreciate the detail you provided so far.
How should we think about breakeven rates and pursue were just given some of the operational changes you've made you made it to address some of the safety issues that are out there both on the hotel and side of things to men in terms of capacity on some of the attractions as well.
Yes. Good question. So what's interesting is do you think about it as an accordion.
So you're going to move costs down and you're going to shrink facility. So when you check into a hotel for instance, you may think the entire hotel is open but we might be operating one main court or if that hotel or with social distancing, having guests into corridors, but we're able to scale up in scale down based on demand. So we have a very specific breakeven.
View into each of our businesses.
And we focus on it and manage accordingly, and so we're able to adjust I'm on the cost side and ensure that we're not operating something.
Waste of time that we're very focused on having it be productive.
Okay. Okay, perfect and then just on the GI side of things I'm can you provide a little bit more detail in terms of how cancellations and refunds work I mean, you mentioned a mine xplore being postponed until 2021, maybe RMC OS.
Not happening at all just just what Wasnt what is going to how how are things going to work in terms of somebody shows getting getting pushed off in terms of your passion and revenue recognition.
Sure and Tyler I'll talk about you know the cancellations, we saw in the first quarter as well as some of the activity. We're seeing the balance of the year. So typically what happens in a cancellation we're at some stage of preparing.
Open.
That's where the trade show and typically in a cancellation you're able to recruit.
Cost of that work that went into the preparation of course.
When I mean in March we had some events that were canceled the day before they were opening and therefore, we had a fair amount of work put into those events. There are other ones, where they're able to cancel far enough at an advanced that yeah, theres lots work involved and therefore less to recoup, but that's typically how the costs.
Contracts work.
Okay medical leave it there thank you very much.
Thanks, Alex.
Your next question comes from Steve O'hara with Sidoti Your line is open.
Hi, Thanks for taking my question.
Okay.
Hi, I guess just on the cash burn.
No.
If you I guess, maybe can you just talk about the potential rate of that in Threeq, you may be assuming kind of a similar state for GE, Yes, and then.
If you see kind of a gradual return to normal within pursued what does that look like assume it gets a little bit better.
Is that the case or might that be the case.
Hi, Steve Yeah, well, given this rapidly changing environment I mean, Steve talked about some of it.
Shows canceling it yes, I'm really not positioned against guidance now on cash burn as well as revenue or EBITDA. So.
Let me just tell you what we're doing though I mean, we're pulling all levers to reduce costs. So as the revenue kind of back on the cost will come back out about not before and.
We're having productive conversations with our lighters and making sure that we have the adequate liquidity actually so we get a Q2 waiver of our financial covenants.
We finalized guys Friday and now we're working with our lender Sally a longer term amendment. So.
We're doing everything we can liquidity side, but it's really a lot of traditional give kind of guidance.
For Q3 Q4 at this time.
Okay, and but I mean, there's nothing.
There's no reason to think it would get worse in.
Threeq you.
For GPS.
But may be.
Pursued as long as that improves a little bit I mean, it has nothing in there that would make you think that.
Thank you would be worse maybe.
Steve I think the way to answer it is that we see business and so.
Oppose pursued and achieve yes, we do have events that are scheduled in Q3 in Q4, and obviously David talked about some of the demand side at pursue we're constantly evaluating.
What our operating costs are and we're making adjustments as as we go along so that won't be judicious and how we bring back labor and when.
Or to minimize the impact of that but at this point.
Things are moving quickly add the landscape is changing and would prefer not giving a forecast for Q3 or four.
Okay, all right that's fine.
And then.
I mean.
When you say kind of.
Emerged stronger and making I think strategic changes.
You know to merge emerged stronger and better meet the marketplace can you just talked about maybe sort of the things that you're contemplating right now.
Sure and I'll speak specifically I guess.
More than a year ago, we kind of took a white paper exercise to think about what the business should look like going into the future and.
We started I think we talked a little bit about our simplify grow transform a strategy, which came out about white paper or white sheet exercise. So we've always had somewhat of a hub and spoke model to our business and we're thinking we think theres opportunities to continue to.
Move more towards the hub and spoke and what that would do for US Steve is lower overall operating expense both in terms of.
Facilities as well as in terms of headcount.
So it's a little bit of a.
It's going back to what we've had before which is hub and spoke but just leveraging that in other parts and other services.
Okay. Okay.
And then maybe just lastly, how do you think about.
I mean, it seems like your businesses have been.
And of squarely hit.
Almost like the airlines have been.
And I'm just wondering how do you think about managing I mean, obviously going to get through the current period, but I mean, how do you think about managing the business longer term.
With these types of risks out there now.
I mean is if you kind of manage the business.
The way you did but then you can't really managed for 100, hopefully wants and 100 your event or maybe you could talk about that a little bit too. Thanks.
Sure.
Two amazing businesses Adams pursued.
These iconic locations are not going away.
They're going to be here forever, and we'll be there ready to welcome gas added. These things are the assets, we own within the pursuit business our irreplaceable.
Strong competitive modes, and we believe that.
Coming out on the other side of the Pandemics that these assets are going to be stronger than ever.
In terms of GDS again face to face events have.
Been tested over time, and they've always been resilient.
We believe and the value of face to face meetings.
We believe that those will come back as well, we work with 70% of the Fortune 1000 companies on Theravance and their participation in face to face meetings, and what I hear coming from clients.
Over the last few weeks.
There are excited to come back and that they are starting to plan their events for later this year and into 2021 so.
We believe that we can take this opportunity specifically on the GDS side to Reimagine, how we operate and execute offense, but we have us strong belief that both of these businesses.
Our incredibly valuable and we'll return.
Okay. All right. Thank you very much older file on a pile on and just give you a set out in the pursue side. So.
Interesting is think of what we've learned right. This is day 61 of working from home I think all of us whether it.
Within the business or when this on the call. We've all learned some things about working for home.
You know what time do you have a glass of wine in the afternoon and what do you have so you're going to think about that but more importantly is you learn about efficiency and so I'll give you. An example, real time of breakeven efficiency and then really understanding the flexing of facilities and we were really good at that before because of the strength of margin, but we're going to be five to.
Tom is better than that going forward, because we've been really figuring it out in different detail. The other thing is as the world opens its going to open differently. So Iceland is opening to the world on the 15th of June and you know if you saw that in the news one of the interesting things with that is you'll get your cobot 19 test at the airport when you land and if you clear.
And then you're free to going to be a tourist and if you can't well and they'll be you know some form of quarantine for you and so on so that the merging of science data the way I'm tracking is going to work the way. The information is going to work. If you. If you go look at you know Disney in Shanghai, and what they're doing from application in the health code and all of those things so the businesses.
They're going to adapt quickly we're all going to learn and then in each of these situations. If you look back over history.
In the history of Brewster, there's been a 110 years, there's been 22 different economic cycles, and we weren't alive in 1918, so as a group you know we don't have a ton of experience on pandemics.
Nobody else does either but we've learned a bunch in terms of how these businesses returned quickly.
So people do want to go see iconic locations and they're going to go to safety, which if you look over the history, we've seen it multiple times, where the safer destinations return more quickly. So we've learned a bunch of things there and I think we just get more efficient and better as we go.
That's very helpful from both the thank you very much.
Thanks.
Again, if he would like to ask a question press star one on your telephone. Our next question comes from Barry Haimes with stage asset management. Your line is open.
Hi, Thanks, so much.
Had a few questions.
First on the pursuit side overall is there a rough sense of.
What percent of tourists arrives by car versus fly.
It really depends on the destination and so if you think of some take glacier.
In Montana, it's probably 98% drive traffic, primarily coming from the western part of the United States.
Other geographies and if you look at BAF Jasper.
50% generally is international visitation and the other half comes from within the country. So each one is dependent.
You don't want its particular particular orientation.
Okay. So I mean overall is it 50 50 or too. So that's one third in one direction just a rough rough feel when you think for your estimates 50, 50, 50 50 as a safe is the safest event.
Great. Thanks, so much and then.
Also on pursuit.
To get a feel for where we are right now after some of the cancels and now we're starting to get some new bookings. If you were to look at.
You can see rate.
As your book now for let's say the Summer July August and then compare that to a year ago in any feel for what that might look like.
No [laughter] not that I'm willing to share right now so but good question you know what's interesting is we're seeing obviously the situation evolve and starting to gain momentum back and you can see it in everything from web searches too how are people looking at particular information about vacations.
And so I believe that we will continue now to build upon what we have and ER and that will continue through the summer months.
Okay fair enough it wasn't one on sheet yes.
The you alluded to the fact that there might be some we competitors out there maybe some changes in industry structure.
Could you give us a sense of.
What percent of that industry or in the hands of large players like like yourselves versus.
What percent my personal accounted for wells more small medium sized folks that might be a little bit more at risk.
Sure very what I would say is there's really thinking about it in two different parts a part of our business is where we're a general contractor and there are two primarily to large players.
In that space. The other side of our business is really more of an agency, where we work with a corporate clients directly and that's a much more fragmented industry and that's where I would see and I have seen weaker players go out of business really and our conversations with some corporate clients.
Over the last three weeks, we've been able to win new corporate clients based on.
Some of the activity that's happening weaker players that are not going to emerge out.
Out of the pandemic and corporate clients fleet to safety to larger corporations that cap that will weather the storm and come out the other side so I.
I was feeling that the industry is going to look a lot different than that wed end to the pandemic and I think thats both on the general contracting side and on the on the agency side of our business.
Got it and just to make sure I'm absent clear that a contractor side, you're talking about the exhibit construction.
The contracting side is more of the production of the event the agency side or the other way.
The agency side is both construction of their exhibit programs as well as corporate events.
Got it thanks.
I think I.
I think that's it for me I appreciate to help thanks, so much.
Thanks right.
[laughter] there are no further questions at this time I'll now turn the call back to the presenters for closing remarks.
Well listen I want to thank everybody for their time today and their interest in VR. No. These are challenging times I hope that you in your families are states safe and healthy and we'll talk to you said and as we update our Investor group.
Thank you.
This concludes today's conference call you may now disconnect.
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