Q2 2020 Viad Corp Earnings Call

[music].

Ladies and gentlemen, thank you for standing by and welcome to that the odd second quarter 2020 earnings Conference call.

At this time all participants are in the listen only mode.

After the speakers presentation, there will be a question answer session.

Try asking question during the session you will need to press star one on your telephone.

Please be advised the today's conference is being recorded.

If you're right any further assistance. Please press star Zero I would now like they had the conference over to speaker today carry law. Please go ahead.

Good morning, and thank you for joining us or be odd.

22nd quarter earnings conference call during the call you'll be hearing from Steve Monster, Our president and CEO, even Barry our president of pursuit 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 in our annual quarterly and other credit reports filed with the FCC.

During the call, we'll be referring to certain non-GAAP measures, including loss or income before other items adjusted segment EBITDA and adjusted segment operating income or loss.

Important disclosures regarding these measures, including reconciliations to net loss or income attributable to the odd can be found in table two of our earnings press release, which is available on our website at www Dot dot dot com with that I'd like to turn the call over to Steve.

Thank you Kerry and good morning, everyone. Thank you for joining us on todays call I hope, you're all staying safe and healthy on this morning's call will discuss the important steps, we've taken to ensure adequate liquidity and financial flexibility our current financial position insight into our businesses. During this unprecedented.

Time, and our second quarter results.

Following my opening comments I'll hand, the call over to element to discuss our liquidity and financial position.

Come back on briefly and then turn the call over to David to discuss our pursuit business and then I will cover the Rgs business.

We will end our prepared remarks with Ellen explaining our second quarter results.

First and foremost I'd like to thank our employees for the extra effort they are making to move the company forward. During this challenging time.

We've had to make difficult decisions to ensure our business can outlasts. The cobot 19 pandemic and what may be an extended period of time with minimal revenue.

I appreciate everything that our teams are doing for our businesses in their dedication to our clients and guess.

Yesterday after market close we announced some important transactions that will help ensure VR is sufficiently capitalized to withstand this downturn and continue pursuits refresh build by strategy.

More specifically, we have secured additional capital of up to $180 million from Crestview partners as well as longer term financial covenant relief on our existing credit facility for the next eight fiscal quarters.

Chris do you is a valuable strategic partner for us with strong industry knowledge and operating experience on both sides of our businesses.

Notably Crestview operating executive Kevin Rabbitt has direct experience, leading G.S. as its president from 2006 through 2009.

I look forward to working with Kevin and Crestview partner, Brian Cassidy do have both joined our board of directors.

They believe in the strength in the resiliency of our businesses and support our long term strategy.

[noise] with crest fuse investment in occurred credit facility Amendment complete I believe we now have the financial strength and flexibility needed to navigate through this unprecedented time and execute on our strategic objectives to enhance the margins that G.S. and scale pursued I'm confident that all of our stakeholders will benefit from.

Their investment.

Now I'd like to turn the call over to elements to discuss our liquidity and financial position in more detail.

Thanks Pete.

We've taken the appropriate actions to protect their business as we navigate this unprecedented time and to preserve the optionality to invest for continued growth.

We expect good investment opportunities will rise.

Over the last few months, we've worked with our outside advisers and lenders to evaluate all financing options available to us.

The best solution to meet both our near term liquidity needs and to provide the flexibility and financial strength necessary to execute against our longer term strategic goals.

What's the convertible preferred equity placement with Chris you.

Chris use initial investment was 135 million and we can increase that amount to a total of 180 million. During the next 12 months at the same terms at the initial investment.

The preferred stock carries a 5.5 per cent dividend, which is payable at our option in cash or any kind.

The preferred stock is convertible into shares of the I'd common stock at a conversion price of 21 25 per share.

Which represents a premium of 42% toward 10 trading day volume weighted average price.

On an as converted basis, Chris you own approximately 23.7% a pro forma common shares outstanding with its initial investment of $135 million.

In connection with the equity investment from Chris You. We were also able to negotiate a longer term amendment to our credit facility that provides us with financial Covenant relief until the third quarter of 2022.

During this covenant waiver period, we are required to maintain minimum liquidity of 125 million with a step down to 100 million at December 31, 20 Twond.

Additionally, we're precluded from paying dividends in cash, which means that all dividends earned on the newly issued preferred shares will be paid in kind during the winter period.

After that we cannot to pay preferred dividends in cash.

Finally during the waiver period, our interest rate on borrowings under the revolver will be equal to LIBOR, plus 350 basis points.

With a LIBOR floor of 1% for the duration of our credit agreement.

In addition, these transactions we have taken various additional steps to solidify our financial position, including furloughs eliminations of position salary reductions and suspensions for one k. contributions across the company.

We also eliminated all nonessential spending significantly reduced capital expenditures and suspended future dividends and share repurchases.

During may we cashed out some legacy life insurance policies with cash surrender values totaling $25 million and in July we completed the sale the G.S. warehouse for $17 million.

After fully drawing on our revolver at the beginning of April we entered the second quarter with 162 million as cash and we limited or subsequent cash flow during the second quarter, two about $8 million too aggressive cost reduction.

Diligent working capital management, the monetization of $25 million worth of cash surrender value life insurance policies.

And phase reopening a prestigious experiences.

We ended the second quarter with cash of 154 million on a pro forma basis factoring in the total hundred 80 million investment commitment from Chris you and the $17 million and proceeds received in July from our sale of the G.S. warehouse.

But fees and expenses related to the equity raid and credit facility Amendment, our liquidity position at June Thirtyth, what it's been approximately $340 million.

This level of liquidity combined with our ongoing efforts to aggressively managed costs and working capital puts us in a solid position to endure what may be a slow recovery within the event industry and a gradual returned to normal levels at leisure travel, while also enabling important investments to fuel pursuits refresh.

Sales by strategy.

Well, we're not in position to reestablish guidance at this time during due to the evolving uncertain nature of cobot 19, and its impact on our industries and businesses I would like to comment briefly on our liquidity outlook.

During the quarter, we expect in operating cash outflow in the range of $25 million to $30 million not including the transactions mentioned above.

This is based on a modest in steady level of visitation at pursued in the expectation that GE EPS will continue to have minimal revenue.

As we move into pursued seasonally slow fourth quarter and if she yes remains at a minimal level of revenue our fourth quarter operating cash burn could approximate $35 million to $40 million.

We will continue to pull all available levers to minimize our operating cash outflows well revenue remains challenged.

And we will be judicious regarding our level of capital expenditures in total we expect to spend up to $20 million on capital projects during the back half of this year.

Focused on essential maintenance Capex and reactivating the development of pursuits, new flavor Las Vegas attraction to stay on track with a 2021 opening.

It would those outflows and the 480 million commitment from Crestview, our pro forma liquidity position at year end would be in the range of $250 million to $260 million.

I would like to now hand, the call back over to see.

Thanks, Ellen now moving on to our businesses. The second quarter was unlike any quarter that we've ever experience, we made swift and difficult decisions with an immediate focus on cash flows and the health and safety of our team members clients guest and communities as the Cobot 19 pandemic drove show cancellations.

And postponements at GBS and necessitated property closures across pursued.

Pursuit has since we opened for business, albeit at significantly lower levels in a normal year, while Gs remains at hibernation levels as in person event activity has yet to resume.

I'd like to now turn the call over to David to provide more color on whats happening across pursued David.

Thanks, Steve.

Let me begin by discussing a recent accident at the Columbia Icefield on July 18, one of our Isix for off road vehicles was involved in an accident on its way to the out the basket Glacier.

Following the tragic accident, we have pursued are focused on three very clear and important.

Priorities.

First see investigation into the cause of this accident. This includes conducting our own internal review with a panel of engineering and safety experts in support of the overall investigation.

Third we are taking care of our team at pursuit, whose dedication to colleagues gas than first responders is truly up in honorable.

With respect to time in space needed for this process, we paused operations at the Columbia I feel that venture while the investigation is underway.

Glacier Skywalk Glacier view Lodge and the Discovery Center itself, we opened for Operation July 24.

Training and passenger safety had been the hallmarks of our operation for more than 39 years of operating the Columbia Icefield.

We safely guided over 60 million passengers across this terrain.

We await the completion of the investigation the determination of the cause of the accident. It will be very focused on all recommendation.

Turning now to our business update for Q2 in the first month of operations in Q3, it's clear to everyone around the world. If the challenges of the coded 19 pandemic have been far reaching.

Despite the significant challenges of being shutdown across all of pursuit. We were successful in reopening most of our hospitality in attractions businesses by early July.

Starting first with an update on Iceland.

Raceland reopened may eight thanks in part to Iceland superb handling of the pandemic.

Our average daily visits increased 87% from May to June and again by 24% from June to July consistently outperforming our forecast.

As I phone has reopened its borders to get from mainland Europe visitation is slowly increasing from you and the country's major airline has reached important agreements with its workers, which will assist in the return to travel for the country.

We expect momentum to continue to build that fiber, Iceland and our guest feedback scores remain excellent.

Also in Iceland construction Skylanders is tracking ahead of schedule with opening expected the late spring of 2021.

As a reminder, pursued as the operating.

Partner and our real estate partner is the lead on the attractions construction.

And we're excited to watch this new attractions take shape and so look forward to welcoming gets from around the world through our newest iconic and unforgettable experience.

And if you'd like to have a look you can visit the project that skylanders dotcom.

Moving across the North bullets had to Alaska. This season in Alaska has been slower than we would've liked due to a temporary pause on cruise ship arrival and significantly reduced air traffic into the state.

Nevertheless, our team on the ground has done a remarkable job of opening in running five hotels, and our attractions and Kenai fjords and Denali National parks.

The variable nature of our cost structure allows us to remain open despite lower business volumes.

We expect reduced level of visitation to continue throughout the season as we cater to a drive market and local guest base.

Indication for the 21 season are trending upwards with 2021 bookings ahead of where we typically are at this stage of the sales cycle.

Basically our focus in Alaska has to be very attentive to costs given the reduced demand.

We'll stay focused on these operational efficiencies and our preparation for the 21 season.

In Montana Glacier Park collection, we have a combination of positive trends in early results as well as some continued regulatory closures visitors to our Glacier Park collection are primarily from the drive markets in the Western States.

Great American Road trip is underway this summer and glaciers viewed as a safe drive destination.

I think in West Glacier village at the Western entrance of Glacier National Park were in full operation.

So let's make sure RV Park is seeing record numbers, finishing July at 97% occupancy and August is facing strongly up 23% year over year.

We're planning to extend the season in the RV Park later into the fall based on high demand.

Retail sales are also performing well throughout the Glacier Park collection of 26% year over year, and we've just opened our new mini golf contraction golfing to the Sun and it's a family friendly brand new attraction that really well done and to fix the famous sites and landmarks within Glacier National Park.

Glacier National Park itself remains closed at the East Glacier entrance due to a government imposed closure, which in turn affects our operations at St_mary village and Glacier Park launch these properties together with the other beside properties not operated by pursuit remain close to this season.

Moving north to the Canadian Rockies in the Banff Jasper collection, we launched pursuit rewards new program offering visitors the opportunity to unlock exclusive deals on our attraction hotels restaurants and retail experiences throughout the summer.

And we've seen strong uptake with over 18000 guest joining the program over the last seven weeks.

Based on the success of the pursuit rewards loyalty program and the Vamp Jasper collection, we intend to roll this out pursuit wide in 2021.

While visitation to the Banff and Jasper has been below historical levels due to the impacts of the pandemic. We continue to host guests at our attractions in hospitality experiences.

And we're particularly pleased with the strong regional demand for lodging properties.

Across our 10 hotels occupancy increased 29% from June to July.

In Jasper seven hotels and are running at occupancy levels above 70% during the week, while consistently selling out of available inventory on the weekend.

Looking ahead, while the U.S., Canada border remains closed in the near term, we anticipate continued demand from Canadian staying closer to home.

In Vancouver, we reopened flyover, Canada on June and keep and and watch visitation increase each week since reopening.

And we're showing both flyover, Canada and fly over Iceland in Vancouver, and especial joint promotion through the balance of the summer season and are looking forward to the debut of our Halloween content in October.

Production of content for fiber Las Vegas is underway with spectacular footage being filmed across the southwest and we're on track for fall 2021 opening of this new attraction there will be situated in a prime location on the Las Vegas strip opposite the T Mobile arena.

Across our pursuit I'm incredibly grateful for their dedication and grid of our team who are operating our businesses with great energy and dedication in this new global dynamic.

Finally, we're confident that together with our existing shareholders and now new shareholders from Crestview partners, we're well positioned to grow and a global travel and hospitality market through our refresh build by strategy.

Back to you.

Thanks, David now switching over to GTS without a doubt the cobot pandemic is having an unprecedented impact on the exhibition in events industry.

And while the road to recovery for our industry is not clear we do know that this time of disruption presents us with an opportunity if not a mandate to accelerate the transformation of GDS.

Over the past several years, we have been progressive we simplifying and shifting the operational and client focus of the business towards higher margin and higher growth areas. During this time, we have had to balance the tension between driving transformational change and maintaining that consistent and high service levels that are long term CLI.

Since I've come to expect that tension has largely abated, while the pandemic has halted in person events.

And while we're capitalizing on this unique window in time to rapidly reorient and simplify the GDS business.

We are honing our business to focus on the most attractive segments of the market with a reduced physical footprint and a more variabilized cost structure.

We have already taken the difficult, but necessary action to reduce our head count and transition many employees from full time to flex time.

And we are accelerating of facility downsizing and inventory rationalization strategy that was already in motion Prieto bid.

As Alan mentioned, we completed the sale of our San Diego area warehouse facility during July and will transition to servicing events in that market from other west coast locations. When the profit profile makes sense, our footprint reduction go hand in hand, with our inventory rationalization strategy by streamlining our pro.

Correct offering we reduced our carrying cost and complexity and can offer greater consistency to our clients wherever they are events take place.

All of these efforts are driving a more variable cost structure for GDS. This will enable us to deliver stronger margins on what may likely be a lower overall level of revenue as the industry recovers from the pandemic and as we make deliberate decisions regarding the customer segments and end markets, we will serve going.

Forward.

As we work through these more transformational changes many of which have an immediate financial benefit. We are also intensely focused on navigating the near term environment working closely with our valued clients and diligently managing cash flow.

Our clients still see great value in face to face events and like us are eager to see in person events resume.

As our clients await a return to face to face events. They are turning to virtual events to connect with their customers colleagues and other stakeholders and we're right there to support them.

We're excited to be working with northwestern mutual to deliver it's August meeting in a hybrid format that combines small physical gatherings with a live media broadcast.

To execute on this we will be delivering video production scriptwriting onset studio builds and directing the backend streaming technology.

We're pivoting and pivoting quickly to help our clients solve their cobot event challenges with a win win outcome.

I'm proud of the GDS team for quickly finding innovative ways to service and support our clients. While also keeping our costs at the lowest practical levels.

As I mentioned earlier the road to recovery for our industry is unclear.

Around the World, we are starting to see event activities slowly come back in certain areas. China has started to hold in person trade shows in the UK government declared that exhibitions can restart on October onest.

In Germany has excluded trade shows an exhibition from its restrictions on mass gatherings.

At the same time here in the U.S., we continue to see events cancel and postponed in response to the ongoing pandemic.

With our scale and resources GDS is in a better positioned than many of our industry competitors.

And we anticipate opportunities to gain additional share in the fragmented and higher margin corporate event market as clients look to partner with businesses that can provide a safe haven during this unprecedented time.

We are confident ngs his ability to whether this period of uncertainty and excited about the longer term opportunities as we redesign and strengthen our business.

When in person event activity resumes, we will be ready to deliver for our clients and shareholders in a new and more profitable way.

Now I'll turn the call over to Ellen to discuss our second quarter results in detail Ellen.

Thanks, Steve the second quarter with extremely difficult, but our swift actions to reduce expenses and to increase liquidity help protect our financial position.

Revenue was 30.9 million down 92.3% from the 2019 second quarter, primarily due to decode 19 pandemic.

GBS revenue was 25.6 million down almost 93%.

This decline was largely a result of show cancellations and postponements as well as negative share rotation of approximately $51 million.

The revenue earned during the quarter was primarily driven by compensation for work completed on capital Cios and the conversion of convention centers into temporary hospitals in early April.

Pursuit revenue was 5.3 million down approximately 90.5%.

This decrease was the result of our properties being close for the majority of the quarter.

Net loss attributable to the Atwood 206.3 million versus net income at 13.8 million in the 2019 second quarter.

The 2020 net loss included non cash impairment charges of 114 million related to the write off of all remaining goodwill at CES.

Our 2020 loss also included unfavorable tax matters at 37.9 million, representing a valuation allowance as 25.5 million against deferred tax asset and a reversal of the 12.4 million tax benefit recorded on impairment charges during the first quarter.

Net loss before other items was 52.5 million versus net income of 29.2 million in the 2019 second quarter.

This non-GAAP measure excludes impairment and restructuring charges acquisition integration and transaction related costs and attraction startup costs as well as the pension plan withdrawal liability recorded in the 2019 second quarter.

Adjusted segment operating loss was 48.9 million versus income of 47.3 million in the 2019 second quarter.

And adjusted segment EBITDA loss was 35.1 million down 96.8 million from the 2019 second quarter.

The decrease in adjusted segment EBITDA was primarily due to lower revenue, yes superseded from the cobot 19 pandemic.

GDS adjusted segment EBITDA was negative 25.2 million down from positive 44.3 million ended 2019 second quarter and precision adjusted segment EBITDA was negative 9.9 million versus positive 17.4 million in mid 2019 second quarter.

Our cash flow from operations with an outflow of 26.5 million, which included favorable changes in working capital of approximately 17 million.

Our cash flow from investing activities with an inflow of 20.1 million with proceeds of 29.3 million from insurance policy and the sale of assets upsetting capital expenditures of 9.3 million.

Our return capital during the quarter was 2 million representing the regular quarterly dividend declared in February.

And as we've previously discussed future dividend payments had since then suspended.

Before turning the call back to Steve I would like to comment briefly on the tragic accident at the ice fields.

Thoughts are with all of those involved and as David mentioned, we are fully supporting the investigative efforts to understand the costs of the accident.

We immediately reported the accident to our relevant insurance carriers, who are also supporting the investigation.

Subject to customary deductibles, we believed that our insurance is sufficient to cover potential losses related to this accident.

Given the evolving uncertain nature of covered 19, it is impossible to predict how the pandemic and government reactions.

Well continue to impact the events industry and the broader travel market. Accordingly, we will not be reissuing financial guidance at this time.

And I would now like to hand, the call over to Steve for his concluding remarks.

Thanks, Ellen clearly the current environment is challenging for our industries and our business. Our teams are responding admirably to the temporary pressures caused by the pandemic to navigate successfully through this period and find new opportunities in the turbulence.

Prior to October 19, our company was on an exciting path, creating strong shareholder value and consistently delivering profitable growth.

We have a proven track record of generating significant free cash flow and reinvesting it for high returns.

With the backing of crest view and recent credit facility Amendment, we are well positioned to endure the strain of the pandemic and longer term be an opportunistic acquirer of other businesses in our space that have been disrupted by the pandemic.

Our businesses have been tested by downturns in the past and persevered.

Pursuits iconic assets and world class hospitality service create inspiring and unforgettable experiences that cannot be replicated.

Yes is live face to face events provide meaningful value to the business that cannot be replaced by virtual events.

We remain committed to delivering extraordinary experiences to our clients and guess and creating long term value for our shareholders.

Thank you again to our hardworking and dedicated employees, who make all of this possible. Thank you to our shareholders for your continued support in the audit and with that we'll open up the call for questions.

Thank you as a reminder to ask a question you will need to press star one on your telephone to.

To withdraw your question press the pound Keith.

Please standby will weaken bio mcewen a roster.

Your first question comes from line of Tyler the Tory from Janney. Your line is open.

Hi, Good morning, Thanks for taking my questions I wanted to start on GBS side of things first can you talk a little bit more about what you're seeing in terms of some of the larger shows whether they're rescheduling, so 2021 versus how many shows our our outright cancelled.

[music].

Good morning, Tyler Thanks for the question.

What we've seen is a mixture of both cancellations and postponements into 2021. So good example of that they're going to last call we talked about.

Two of our large non annuals that were to occur in 2020.

Hi, MTS and mine Expo Idmcs decided to cancel the event for 2020 and then they will go back into their regular schedule, which would be 2022.

And then on mine Expo, that's an event that happens every four years.

Postponed that to roughly the same time busy month in 2021.

So we're seeing a mixture of both.

Cancellations and postponements of 2020 events.

So far this year.

Okay. Okay, and then I'm also wondering if you can.

Provide your thoughts in terms of what the live events industry looks like in the future obviously lots of moving pieces here.

But you are you confident that's this is a business that can return to normal eventually.

Yes, Hi, I'm, absolutely confident that face to face events will come back in the future now what we're seeing.

In the near term is that before moving to either virtual events for hybrid events.

Spoke a little bit on the call about northwestern mutual which is one of the events were working with selected to go down the hybrid.

Path, where they have small gatherings and yet they also reach a broader audience through their virtual platform.

I think that going forward.

The face to face events will always have.

Some component of a virtual event tied to it I think.

That allows these.

Marketers and show organizers to meet to reach a much broader audience and so I think will change a little bit going forward, but I do believe in the power face to face meetings and confident that that will come back.

Okay, and I'm switching gears to the pursuit.

Got it things obviously, the biggest mix has changed a little bit this year versus last year.

So a couple of questions on that first can you just talk about what have been more maybe different Susan and spending trends between whose business. Your properties. This year versus last year and then given the mix has changed and those customers are coming from little bit different places have you adjusted how you're thinking about marketing and revenue management.

Yes so.

Yeah, I can jump in so Tyler just got a couple of interesting things that we're seeing so one is obviously in each geography.

Your your basis for visitation is more regional and so if you think of glacier, you've got guests coming from really across the western United States.

What we're seeing in that geography is that in actual certain circumstances certain lodging properties are 80, our is actually up from prior year.

And then retail sales as I mentioned in my remarks tracking positively ahead.

In terms of adjusting then looking at other geographies Vancouver, Obviously flyover, Canada is more local based and Canadians traveling that are visiting Vancouver to that Jasper collection is the same as interprovincial travel starts to ease.

Alaska's, primarily alaskans and those that were able to drive there and then Iceland is just opening up now over the last few weeks to the EU countries. So in terms of marketing approach, maybe just speak to that for a second.

We've really tried to focus on what motivates people, what gets them out and moving Theres a lot of pent up demand for people to have different experiences. So that was one of the reasons to we always plan to test pursuit rewards and the opportunity then too.

Launch a program see quickly 18000 folks sign up for it in one test geography, and then using that platform to communicate.

Deals and obviously, there's times of the week, where you may have more inventory and you're going to be more price focused but there's other times, where you're able to.

Maintain strong yield we have two of our properties and Jasper friends and subtract ahead and 80 are this year.

Average daily rate compared to prior.

Okay.

That's very helpful on them.

Couple of questions you mentioned, the noncore asset sales so the warehouse in San Diego.

Is there anything else and did you ask portfolio that would make sense in terms of possibly selling and.

Would you ever think about selling anything on the pursuit side of things as well.

Yes, Tyler we're looking at the Gs footprint and trying to maximize.

Where which facilities, we need and which ones we drilled the majority of our facilities are leased.

So I wouldn't expect.

Significant sale of other assets from the GSM portfolio.

We did do a small sale if you remember we've had some b to C touring exhibitions.

One around avatar, and a couple or smaller ones, which we have sold.

That was that's already taking place in the second quarter.

But I don't see any other asset sales going forward.

Purchase optimization of our footprint.

Okay, Okay, and then but for the last question for me would view with the agreement that you reached yesterday. There is obviously an opportunity for additional growth capital amending your prepared remarks, you mentioned.

Your acquisition spots with businesses that are disrupted by the pandemic. So can you elaborate a little bit more on that possibly.

Not sure what you're seeing out there are opportunities you might be looking at.

Yes, and the first thing that we're focused on is making sure that we can outlast the endemic and survive the current environment.

That said, we obviously want to complete some projects that we have currently in development.

As David mentioned flyover, Las Vegas, and Scotland June which will both be opening in 2021.

We will continue to look opportunistically across the landscape of proceed and see if there are other assets that may make sense, but our priorities are on outlets in the pandemic and putting us in good position for future.

[music].

Okay very good I'll leave it there thank you.

Thanks.

Your next question comes from line of Kartik Mehta.

With Northcoast research.

Your line is open.

Good morning.

Steve as you plan.

Obviously, you provided some outlook for the second half in terms of cash burn, but as you plan for the endemic and as you plan for raising the money.

At what point are you anticipating the guys.

Starts seeing it did improvement maybe we get back to some face to face trade shows.

Yep purchase we haven't given a forecast for the balance of 2020 or into 2021.

As we look we obviously the landscape is changing pretty rapidly. So the plans you make one day our obsolete by the next day.

So we're playing it.

Yes, save we have a conservative after we looked at.

The capital raise and the amendment, we had some conservative scenarios that.

We felt.

We felt would be the best to use in terms of our plant, adding and.

But.

Currently we haven't given any forecasts and given the uncertainty in the market. We're not available to do that at this point Kartik I just mentioned that with the equity raise in the amendment terms that we that we have adequate liquidity for several quarters. So the waiver period goes through Q3 at 2022.

Okay, and Ellen is that assuming the 135 million or are you. If you need be is that assumed 180 million.

If you needed to.

We extend out further.

Yes, I mean, we've looked at we've looked at the fit totaled 280, because the 45 million is basically in the same terms as well update side. So in in liquidity plan, we look at it like that.

And then.

As you look at the pursuit business.

Are you I guess what are they are there a cancellation rates are we to look at maybe some fundamentals or maybe some leading indicators as to how well that business is doing or maybe what the outlook is over the next couple of months.

Thanks, Kartik I mean, what's interesting is.

Early on if you think of through March and April and into May folks, who had travel plans.

Obviously shifted their travel plans and there were a lot of cancellations that flow of cancellations has obviously ed and.

We're in a situation, where we have regional guests that are traveling in a positive way and we have lots of interest.

Tour and travel partners around the World you know we work in.

80 countries with a variety of different toward travel partners, who package and put itineraries together to all of our destination. So the cycle for 21 is underway and that will continue without sharing specific numbers I'll give you. An example in Alaska, our sales and marketing efforts are ahead of where we typically are at this point in the sales cycle we've.

In the market early for both travel trade and consumer direct guests and 21. The call center teams have done a great job with the folks that wanted to move from one time to another.

And so.

We're starting to see obviously movement in interest on that dependent on how the world opens backup we're not going to give a further view in terms of forecasting and guidance just because of the volatility of it but it gives us.

Sense and how things are continuing.

And then just one last question on.

I know you said the convertible has obviously an option to do cash or pick dividends and right now do you need to do pick dividends until you get through some of those I'm wondering what you've established as some of the hurdles as far as far as determining if you'll go cash for pick.

Well, we have quite some time to figure that out because we threw the covenant waiver period, we can't do cash dividends. So we'll determine that.

As we get closer to the ending at that period.

Thank you. Thank you very much.

Thanks.

Your next question comes from line of Steve O'hara from will Siddhanti. Your line is open.

Hi, good morning, Thanks for taking the questions.

Morning.

Just can you just.

Yes, I know you talked about I think your cash Brian potentially in the fourth quarter.

Could you.

Is it possible to maybe clarify that in terms of GDS.

No Gs is kind of bare bones right now you focusing on virtual event, but what's what does that business. What are the cost to kind of keep that business at that level kind of on a quarterly basis.

With.

The cost cuts you've done is there way to frame that.

Sure. So if we're looking at minimal levels at revenue, it's about 80 million cash burn.

I'm sorry, how much.

Did that 20 million cash burn for the quarter.

Okay. Thank you.

And I guess the other thing is I mean.

The airline seem to be.

Pretty.

Pessimistic that air travel comes back.

Anytime soon into 2019 levels I mean, how how dependent are these businesses on air travel.

Going back as well so if the pandemic.

You know is over and people want to travel.

I think it might take some time for air travel to come back.

For them to kind of re.

Add capacity.

You mean, you you guys highly dependent on that.

That happening or are there enough that that are maybe.

Events and or destinations that are maybe less dependent on air travel.

Yes, so it really depends on the type of event I mean, each of that will draw some level of regional attendance.

And some level of international attendance. So it really depends on the event, but we believe that in general leisure travel will come back much quicker as David mentioned, we believe there is some pent up demand for that which will.

Hopefully support our pursuit business, we think that business travel may take a little bit longer to come back, but these events can still be held at smaller levels and fewer attendees and still be meaningful in terms of their impact to the exhibitors and the impact Fourg, yes.

Okay, and then is there any.

Maybe either on the.

On the labor side potentially or on the infrastructure side for either the businesses is there potential for any major.

You know cost improvements in the future as you know as leases and labor rates or maybe.

Move lower given kind of the unemployment levels and things like that.

Are you seeing like that and it kind of a potential benefit down the road.

Well you just.

Based on the comments I made earlier about the transformation as.

We're looking to reduce our fixed assets, mainly our facility networks.

And optimize.

Additionally, we've done some.

Any dramatic changes in terms of our headcount.

And so we're we're more control of those factors and positioning GDS odd to do well when business returns.

There are the unemployment levels relatively high we think that may help us in terms of contract negotiations and things like that but.

We're.

More control of our destiny and the cost structure and the network that we use.

Coming out of this.

Okay.

Alright, thank very much.

Thanks.

And again that star one if you would like to ask a question.

Your next question comes from the line of Barry Haimes from Sage Your line is open.

Thanks, very much and.

Congrats on all the.

Financing accomplishments in particular.

And getting a lot of sites open, but three questions related to cheat, yes, one is.

If a trade show goes virtual.

Can you give us any kind of a flavor of the operating profit opportunity compared to normal. So no is it a 10.

Quarter again, as any kind of a flavor.

Second question is.

For your major shows that are scheduled for the first quarter of 21.

Is there any update on.

The status of those at this point.

And then third in terms of.

Yes competitors.

Have you seen.

Any permanent closures, yet that would represent a possible market share opportunity. Thanks, so much.

Thanks Barry.

To answer the first question.

Ducking your virtual event.

Is.

Doesn't have the same financial impact to GDS as a face to face event.

When you get into larger events that are more hybrid and you're doing content generation.

That will actually help and.

Increase the revenue.

Not event to to ballpark. It I think virtual events are roughly and they vary but roughly about 110th of the size of.

They face to face event in terms of revenue.

Your second question was around what we're seeing in terms of activity for 2021.

And the first quarter 2021, and so what we've seen is a lot of our clients are very optimistic and excited to hold or event.

We already are still plan for that period of time, we have seen some activity in the industry overall not necessary our clients, but looking for postponing their event until later into the year or you may have seen one of the lower merger trade shows Cts, which is in early January.

Cancel their events out for 2021 so.

You are seeing.

Some events are still scheduled to go off as planned and other ones are looking for other dates within 2021.

And then very your third question was around.

What we see so the competitive landscape.

And how some of our competitors are faring through.

The downturn.

What I would say is we've seen a number of our competitors.

Similar action to what we have.

What we have done.

Given the prolong nature of this we do expect that.

Some of our competitors will not be able to outlasts. The pandemic, we do believe that.

I mentioned this during the call that on the corporate side, we think that theres an opportunity to gain share.

Given the disruption that this is causing to the industry.

So we do see it as an opportunity and one that we're ready to take advantage of.

Thanks, Rick.

Yeah.

And we have no further questions at this time.

Okay.

Thanks, everybody for your interest and beyond and we look forward to talking too in the next quarter. Thank you very much.

Okay.

Ladies and gentlemen, thank you for your participation. This concludes today's conference call you may now disconnect.

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