Q3 2020 Viad Corp Earnings Call
Yeah.
[music].
At this time, all participants are any listen only mode. After the speakers presentation, there will be a question and answer session.
The question during the session you will need to press star one on your telephone.
Please be advised that todays conference is being recorded.
You require any further assistance. Please press star zero I would now like to hand, the conference over to your speaker today, Harry Long Investor Relations. Thank you. Please go ahead.
Good afternoon, and thank you for joining us for V 2023rd quarter earnings Conference call.
During the call you'll hear from Steve Moster, our president and CEO and also the president of GE yet.
David Barry our president of pursuit, and Ellen Ingersoll, our Chief Financial Officer Burton.
Certain statements made during the call, which are not historical facts may constitute forward looking statements.
Our nation 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 current reports filed with the SEC.
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. It is available on our website at <unk> 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 today's call I hope, you're all staying safe and healthy.
Afternoons call you provided insight into our businesses and how we're navigating the COVID-19 pandemic and will review, our third quarter results and liquidity position.
Clearly the pandemic continues to impact our industry is in a material way.
Grateful for the extra efforts each of our team members are making to help.
Our country forward.
As David will discuss shortly pursuit was EBITDA reopened each of its geographies and generate positive EBITDA during the quarter with several surprising bright spots.
And as I'll cover in more detail later GDS continued to take important steps to preserve liquidity and create a lower more variable cost structure that will benefit us in the future.
While our third quarter results were far below the same period last year I'm pleased with how we performed in this unprecedented time and I'm happy to report that we finished the quarter with a strong liquidity position.
Oh and will cover our financial results and liquidity towards the end of the call, but first let's start with some business highlights.
Like to turn the call over to David to provide more color on whats happening across pursued David.
I see that pursuit, we know the collecting memories is more important than collecting things and if this quarter taught us anything it's that the demand for iconic unforgettable and inspiring experiences and strong even in the middle of a global pandemic.
We delivered strong results in Q3 beyond our initial Colgate expectations, demonstrating the resiliency of our business model the strength of our refresh build buy strategy and the value of experiences over things.
Each of our worldwide operating geography successfully reopened and delivered positive third quarter EBITDA right.
Remarkably they did so while serving a largely local and regional guest demographic as international borders remain close in long haul destination tourism was limited due to the pandemic.
We are so thankful for the hard work and dedication of our team members, who proved their ability to deliver an outstanding guest experience, while maintaining the highest standards of care with safety.
Our operating and support teams contended with a highly dynamic environment and have emerged as a faster more responsive unit. This team is now even more capable of adapting to rapidly changing circumstances.
So let me spend a few minutes talking about our performance across pursuit.
Starting in Alaska other pandemic adversely impacted inbound tourism, we managed to get open and remain open at each of our experiences throughout the summer we.
He served a small but engaged population of domestic long haul and local Alaskan guest and had a strong finish with a late season surge at our Kenai fjords tours and sell Keaton Alaskan watch.
Down the Montana, we clearly benefited from a strong and healthy drive market in saw solid visitation from the western United States is 62% of our visitors being domestic long haul travellers.
Although the east side of Glacier National Park remain closed for the season, we benefited from our recent investments in West Glacier village and the concentration of gas in and around the west entrance to the park.
Performance outpaced 2019 at the majority of our West Glacier business.
The West Glacier RV Park, and cabin village performed strongly year over year with volumes up 45% from 2019.
Retail results were particularly strong exceeding prior year revenue by 54%.
Average daily rates exceeded prior year at four of our Glacier Park collection hotels with average KBR across all property 201 dollar.
Revpar at two properties was up between four and $40 and hotel occupancy for the quarter was 72%.
Moving north the Banff and Jasper, we saw relatively strong occupancy rates at our 10 hotels.
Several properties generating year over year growth, the strong revpar and average daily rate.
Specifically four of our seven hotels and Jasper So 80 ours above prior year at an average increase of 15%.
Average 80 are across all seven Jasper properties in Q3 was $229 Canadian and the Jasper hotels in aggregate saw 68% occupancy in the quarter with most weekends selling out.
You don't make a guess that visitors happy at our attractions is such an important part of our DNA mid summer. We've received outstanding guest feedback, which is reflected in our net promoter scores NPS increased 2.5% from the prior year and now sits in the low seventies.
This summer we proved our ability to successfully launch new iconic experiences. Despite the ongoing challenges of the pandemic and as you may recall from prior earnings calls, we slow ruled certain capital projects, putting some on the shelf and rushed others to completion when the pandemic kit.
And this strategy has proven to be the right plan for the time and has provided the most immediate returns to the business.
In July we completed the refresh of the farm Inphi restaurant located in the lobby of the Elk and have the hotel and death.
We couldn't be prouder of the guest response to the refreshed experience.
As farm in fire has vaulted to number two of 105 restaurants advance on trip advisor second only the pursuits on number one rank skyview stroke located at the top of the Banff gondola.
In August we launched open top touring our newest attraction, where guests can enjoy a 90 minute tour. The most scenic and on firing spots around bats, while onboard a custom vehicle vintage inspired to have the look and feel of the 19 thirties touring car.
It's a new concept that we're really excited about and one that we think has the potential for extension into other iconic markets around the world.
Finally, turning to our flow retraction in September we celebrated our first birthday of flavor, Iceland and I'm pleased to report that we have rocketed to the near top of guest ratings at the number two attraction on trip advisor for great things to do in Reykjavik.
Speak to the strength of our team and hospitality culture.
As we ramp down operations in the fourth quarter, we're focused on planning for 21 and are encouraged by what we're seeing by way of pacey booking trends.
And many of our locations where pacing ahead at the same time last year in the coming season as many guests to cancel twenty-twenty itineraries have rebooked for the summer of 2021.
Rev. Foreign ADR transfer 21, a relatively strong and at some properties are outpacing pre pandemic level.
And all of which gives us confidence that will emerge from the pandemic in a position of strength.
We remain positive that many of the current pandemic related travel restrictions will be lifted head of next summer's peak tourism season.
There's so much to be excited about in the coming year, not the least of which are two major projects that we look forward to bringing online and the 21 season.
On September 1st we restarted construction on our Las Vegas attraction fly over to Las Vegas and are on track for a fall 21 opening on the strip directly opposite Italy. The Park M. G M and the T Mobile arena.
Filming a fly over the wild West is well underway, we expect to meet all production and construction deadline.
Back in Iceland, our team and Sky Lagoon has made great progress and we're on track for a late spring 21, opening which we anticipate could be well timed is the travel world begins its return to a more normal cadence.
And you can see our progress on this very innovative attraction at Sky Lagoon Dot com.
And clothing, where.
We're proud of our efforts to manage cash flow make the necessary adjustments or operating structure, an investment by remaining focused on an outstanding staff and cursed experience.
Or as confident as ever and the strength of our business model or refresh billed by strategy and are very talented team.
As you know, we doubled revenue and EBITDA and the 48 months prior to Covid. So we're focused ahead to 2021 and resuming pursuits exciting growth journey Steve.
Steve back to Ya.
Thanks, David now switching over to G E S.
This event industry has been acutely affected by COVID-19, pandemic then G. S is no exception.
I'm incredibly proud of the team for taking very difficult yet necessary actions to ensure we not only survive but come out stronger on the other side.
When the pandemic head and we began to see widespread event cancellation and postponements reacted quickly to reduce controllable costs to minimum necessary levels. We also made the decision to accelerate some transformational changes that provide both near and longer term benefit by freeing up capital reducing.
Our fixed costs, and bringing greater flexibility into our service delivery model.
By the end of the third quarter, we had eliminated about 80% of our wages and discretionary costs total SG&A expenses for the third quarter, where approximately 60% lower year over year, and we continue to optimize our cost structure by making permanent changes to our delivery network and client service orientation.
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During the quarter, we made significant progress in transforming our office and warehouse delivery network.
Across the company, we are changing the way, we operate to reduce our physical footprint and drive down fixed facility costs.
We are eliminating warehouse space by consolidating into fewer facilities and expanding the range of our major warehouse hubs to service more markets at a lower overall cost.
And we're shifting to an office light model with more people working from home or remotely.
G S as long employed a hub and spoke model for supporting events around the country. So this is really just taking that approach to the next level.
In San Diego, we completed for sale of a production warehouse and stand ready to service clients in San Diego, primarily from our Los Vegas hub.
We also exited three least facilities during the quarter and announced plans to exit for more by year end.
Most of these least facilities, we're at or near the end of their lease so the timing to vacate was fairly ideal.
There are additional facilities that we intend to address going forward as we continue to create a lower and more variable cost structure.
Hand in hand with facility reductions comes the transformation of our clients service orientation, which further supports a lower and more variable cost structure that is also a highly responsive to the needs and expectations of our clients during.
During the third quarter, we simplified our services and EMEA by shutting down our UK based audio visual service business and will instead utilized third parties to support the needs of our clients in the UK market.
We expect to outsource additional services across the company that we have historically done in house.
Additionally, we are developing or freelance model that will enable us to draw from a flexible talent pool for operations in customer service personnel as needed to support our clients.
These changes will allow us to reduce facility and other overhead costs and give us the ability to flex up costs and a variable manner as demand returns and grows.
I'm very excited about the changes were making to transform ges into a much leaner and more flexible organization through.
Through the actions we took in the third quarter exiting various facilities in closing our UK business, we've raised over $17 million in cash proceeds.
And we've removed more than $8 million, an annualized costs from our network.
Our new facility network and service delivery model will provide a nice tailwind for us with improved profitability and more flexibility as the live event industry recovers.
Where we said today the road to industry recovery remains unclear.
Live events market is reopening in some places around the world, including China parts of Europe, and the middle East as well as select cities in the U S. However, the U K has pushed back the reopening of live events until March of 2021 and.
And in the U S. Organisers remain cautious about their ability to hold large scale events. Despite strong demand from exhibiting companies to participate in a face to face form.
The extended impact of the pandemic on our industry is affecting the competitive landscape and.
And we're seeing other industry suppliers struggle to stay in business.
Recent survey conducted by exhibitor immediate group reveal that nearly 40% of industry suppliers are either uncertain about their future or expect to go out of business.
This will be an opportunity for stronger well funded companies like ges to gain market share, particularly in the corporate space where are competitive said is highly fragmented.
We remain optimistic on the longer term prospects for our industry and our business.
Although many organizers are still making the difficult decision to cancel or postpone events. Many have reported stronger than expected exhibit space sales prior to canceling.
In recent surveys of exhibitors and attendees show a strong interest in returning to live in person events, if appropriate safety precautions are taken.
We believe this demonstrates the overall strength of the live event category.
I'm also encouraged by our business development activity during this time.
Our exhibition bookings for 2021 are pacing in line with 2019, and we've seen a notable increase in the value of Rfps for corporate clients.
While we expect early 2021 will continue to be challenged by ongoing COVID-19 concerns and restrictions our clients are looking ahead and preparing for the return of live events.
We firmly believe that the market will recover and GDS will be in a new position of strength with a transformed highly flexible cost structure and strong client service orientation.
As we continue to navigate the near term uncertainty we.
We are keeping a close rain uncontrollable costs, while we drive important structural change across the business.
When in person event activity resumes, we will be ready to deliver for our clients and shareholders and a new more profitable way and.
And now I'll turn the call over to Ellen to discuss our third quarter results in more detail Ellen.
Thanks, Steve the third quarter with Harry challenging, but our efforts to maximize revenue pursued the space travel restrictions and our continued actions to transform to key S cost structure helped us finished the corner with a strong liquidity position.
Revenue is $63 1 million down 18.2% from 2019 third quarter, primarily due to the COVID-19 pandemic.
Jesse segment, EBITDA was $8.1 million down $64.2 million from the 2019 third quarter and adjusting segment operating losses, five 8 million versus income of $56 million in the 2019 third quarter.
Net loss attributable to the AD was $38 million vs net income of $31.4 million and the 2019 third quarter.
At 2020 net loss included restructuring charges at 11.3 million primarily related to transformation efforts at tes to significantly reduce costs and create a lower and more flexible cost structure.
Net loss before other items for $16 4 million versus net income of $31.7 million in the 2019 quarter.
Non-GAAP measure excludes impairment and restructuring charges acquisition integration and transaction related costs attractions startup costs and other nonrecurring expenses as applicable.
Okay, Yes revenue is $14.3 million and approximately $93 5%.
The climate is largely a result of cancellations and postponements as well as negative chair rotation of approximately $39.
They are ready earned during the quarter was primarily driven by compensation for work completed on cancelled shows and storage as well as virtual and hybrid events.
He is adjusted segment EBITDA, which included again of $13.5 million from San Diego facility with negative 11, 6 million and from negative $2.8 million into 2019 third quarter.
As Steve discuss Tes's, taking significant strides to improve their cost structure and emerge within lower breakeven point post COVID-19.
Tes's highly variable cost structure has allowed us to make swift and significant cost reductions during the pandemic.
And the third quarter, we reduced SG&A cost year over year by about 60% by eliminating wages and discretionary costs as well as changing our facility footprint.
At their facility leases and we'll be able to further reduce fixed costs.
At pursuit revenue is $48 8 million down approximately 63, 9% this.
This decrease was primarily driven by lower visitation due to ongoing border closures and other restrictions from COVID-19.
Proceed adjusted segment EBITDA was positive $19 7 million versus $75 $1 million in the 2019 third quarter.
Across per se it we need temporary changes treaties calories and use less seasonal workers by maximizing their roles are full time employees to control costs. The.
They performed breakeven analysis at the property level to determine appropriate opening and closing date and we carefully manage costs based on expected demand to ensure we were EBITDA positive during this peak quarter.
Three are prudent efforts to maximize profitability at pursuit and reduce operating costs that tes eliminated our third quarter operating cash outflow to approximately $14 $7 million.
This outflow is lower than our prior guidance largely due to favourable working capital as well is stronger than expected EBITDA FERC during the quarter.
Our cash flow from investing activities with an inflow of approximately nine 6 million, which.
Which included proceeds of about $17 $1 million from the sale Tes's, San Diego area warehouse, and other assets, which more than offset capital expenditures of approximately $7.5 million.
The capital expenditure during the quarter were mainly in pursuit for the flavor Las Vegas attraction.
As of September 30th 2020, or that totaled $259 1 million down from $475.1 million at the end of the second quarter.
During the quarter, we repaid $217 million of our outstanding revolve are balanced, bringing the total amount outstanding down to 235 million as of September 30th 2020.
The remaining get balance at the end of the quarter primarily comprises financing lease obligations.
A revolver that matures in October 2023, the longer term amendment to our $450 million revolving credit facility, which would be security in August provided that the financial tevye really until the third quarter of 2022.
During this covenant waiver period, where required to maintain minimum liquidity at $125 million with a step down to $100 million at December 31, 2020.
We ended the third quarter with cash $56 $5 million and available capacity on a revolving credit facility of 209 8 million.
Last quarter, we announced at Kresge partners made an initial investment of $135 million and newly issued perpetual convertible preferred stock with a delayed dry commitment of up to an additional 45 million.
As of September 30th 2020 are total available liquidity was approximately $311 million, including cash revolve our capacity and the delayed draw commitment from Crestview partners.
The actions that we've taken too aggressively reduced cost secure additional capital and Mandar credit facility have preserved cash strengthened our liquidity position and provided financial flexibility needed to ensure that we can do or a pandemic.
Although we are not reissuing financial guidance at this time I'd like to briefly comment on our liquidity outlook.
The fourth quarter will be seasonally slow for pursue and assuming tes remains at a minimal level of revenue. We expect our operating cash burn will approximate 45 to 50 million.
We expect to spend about $10 million on capital projects during the fourth quarter, primarily on the continued development of proceeds fly over the last Vegas attractions.
With our total available liquidity at the end of the third quarter of 311 million and the fourth quarter estimated outflows. We continue to track toward a pro forma liquidity position eight year end of 250 million or more.
We believe that disposition will protect our business as we navigate through this unprecedented time.
Going forward, we will continue to minimize our operating costs, while revenues remain challenge and be judicious regarding our level of capital expenditures.
Our primary focus for capital is first to withstand the pandemic and secondarily to complete the development of the already started perceived growth projects Flavorless Vegas and Sky looking.
During 2021, we expect to spend approximately $20 million on slaver, Las Vegas, and minimal startup capital on Skyler again to complete these projects on time for their plan 2021 opening date.
And we continue to evaluate other growth opportunities that fit with proceeds professional advice strategy that we can act on when the time is right from a liquidity perspective.
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 COVID-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.
We believe we are well positioned to endure the strain of the pandemic and long term to once again be an opportunistic acquire of other businesses in our space that had been disrupted by the pandemic.
Our businesses have been tested by downturns in the past and and persevered.
We believe that collecting memories, it's far more important than collecting things and that virtual events cannot replace the rich connections created by in person interactions.
Pursuits iconic assets and World class hospitality service create inspiring an unforgettable experiences that cannot be replicated.
Gs's live with face to face events provide a powerful and cost effective means to drive business growth.
We remain committed to delivering extraordinary experiences to our guests and clients and to creating longterm value for our shareholders.
Thank you again to our hard working and dedicated employees, who make all of this possible. Thank you to our shareholders for your continued support and beyond and with that we'll open up the call for questions.
Thank you as a reminder to ask a question you'll need to press star one on your telephone to withdraw your question crashed the calendar asking for your standby, while we compiled Q&A roster.
Our first question comes from the line of Tyler Vittorio Jeannie capital markets. Please go ahead you line is open.
Good afternoon, and thanks for taking my my questions here, just a couple for me I'll start with.
Side of things and Steve I appreciate the the details and the commentary in your remarks, there in terms of giving us a leg of the land, but and what are you looking out fourthquarter.
The first half of next year.
Really much activity.
In terms of of exhibitions or conferences and when you are.
Look at some of the bigger events.
It seems like the hurdle is really restrictions.
Some of the survey data.
I'm not sure that she started so is that really kind of the biggest issue would just gotta gotta move past. The most of them have some of the restrictions lifted in terms of in terms of gatherings or or anything else that we should be keeping an eye on as well.
Thanks for the question Tyler Hope you're doing well.
In terms of.
Well before there's been.
And the fourth quarter third and fourth quarter, we've seen larger events.
Cancel or postpone and move into 2021.
We are seeing that trend continues into the first quarter of 2021.
Weapons.
Why is.
Underlines in Maine.
For some of those events so.
Specifically to some of our clients.
And understand when they stole a in terms of the floor space to exhibitors for exhibiting companies have been surprised at the strength of the demand and the real reason for canceling.
On the phone.
It is.
Uncertainty around whether or not.
Local restrictions will allow them to happy about them or not so I think there is.
It's not universal across all events.
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Some strong underlying demand, but I think once restrictions are lifted will.
Best will come back and get a good position.
During this period of time.
The third and fourth quarter.
First quarter, we RSV smaller events take place.
Few of US recently in Dallas in Atlanta.
<unk> schedule here in a little bit coming up in Las Vegas, 30, smaller in scale and so they don't have the.
I'll make impact that from the law of investigator, but I'm encouraged by.
What I see in terms of the small events and our ability and organizers ability to producers.
In the same way.
We're worlds demonstrate or market.
How might be able to do it on a larger scale. So.
Long answer encouraged by what I see I really think that once the restrictions are.
E R.
We are we take a chance and do things on a larger scale with safety precautions in place I think of the name.
I'm back.
Okay.
Switching gears.
To pursuits.
You know obviously quite strong the result there.
I didn't curiosity.
It was the the incident at the ice does that have a negative impact on results and a quarter and a slight upward quantifier. If it did it could there be any lingering compactors the next year from that.
I think tolerance, David Thank you for.
Thank you for the comment and it's an interesting one we have have felt obviously because we closed the attraction following the accident to allow the investigation to proceed. So there is an impact and we can quantify that for you I don't have that city right in front of me vent will quantify that as we go forward.
What we're doing right now is supporting the ongoing investigation.
Which obviously takes time and it's a multi agency investigation, we're supporting the victims of the accident with everything that we can in terms of whether that'd be financial support in an interim we're working hard with our insurers in a variety of others.
To ensure that supported there and then we're also supporting our team so.
We do expect that the results of the investigation as they are completed will be sharing those and that will have those completed before the end of.
The winter period and being in a position that will be.
Focused on our operation for next spring.
And you know 18 million guests over 40 years and really very.
Very strong record of safety in dealing with first.
Sure we're clear on the cause which would be a result of the investigation and then moving forward.
To make whatever improvements come out of that.
Okay, I appreciate that and I'm also interested.
I know you can't give guidance and when you look at the fourth quarter, It's obviously, Susan my slow but.
By August September there was momentum building across the portfolio pursuits.
Are you going to stay with that continued into October to go a little bit stronger I mean, the guy no one of the hotels.
Hotels attraction because the seasonality.
<unk> closed down, but I'm, but I'm just curious cause some of that momentum other areas in the portfolio fly.
Fly over a nightclub et cetera.
Continue.
Strengthen.
Cause we wanted to October.
We're quite excited with showing Halloween and fly over Canada, and as I mentioned in the call.
Content is really important so having something to show and then we will continue to November I'm, showing both Y a R Canada and fly over Iceland in a dual feature our hotels in Banff and Jasper will remain open.
The dance gondola continues an operation transportation parts of the transportation business are obviously operating through the fourth quarter, and then retail and food and beverage, we're encouraged and a base way by the yields we're seeing in retail and food and then this is traditionally a time, where our visit our visitors in Western Canada are more <unk>.
<unk> local and who's the slower time for destination visitors. So I do think folks are second being at home and working on ways to get out and experience things and do it in and safe environment.
I'll mentioned is that the airport in Calgary is doing a test program, which begins in early November.
Will allow travelers unfortunately, the us Canadian border remains closed but for international visitation.
Folks will be able to take upon arrival.
Coronavirus test and then there's a subsequent testing protocol in the days following I believe it's within six days, where they are tested again and if they're tests are negative than they are able to not quarantine for the mandatory 14 days. So we're beginning to see these test programs as well, we're airports and travel authorities.
The March to the return of the leader travel market I think has begun you see it whether that's what's going on in Hawaii or some of these programs that are opening up. So we remain cautiously optimistic we're attendance to the various changes and working on delivering the best guest experiences that we can.
Okay, and then moving on to the attraction in Las Vegas, with a new attraction.
Iceland I think it's a positive and interesting you guys are moving forward in terms of opening that next year, but nobody has a crystal ball and I understand it's difficult to know what the environment might look like next year, but would you expect to be.
Operating both of those profitably once they once they open up and I'm just I'm just trying to think strategically your your thought process in terms of pushing forward opening those knowing that there's there's still a lot of uncertainty in terms of what traveled look like next year.
While there is uncertainty I think what fortuitous on our part is.
That were in the middle of construction in the toughest time.
And so one of the benefits of that is that we continue to.
Be able to put our energy and effort into the construction in.
It's not like we had to close an existing attraction to be building needs are doing a refresh project. So these are new attractions that are high margin.
We expect that if.
People are able to travel and visitation is there that will be able to operate profitably and we're targeting late spring for Sky Lagoon, and obviously the fall for a fly over Las Vegas.
Okay.
Couple of other questions.
Just.
The third quarter can you say what the.
Cash burn was.
The GDS business and then I know you gave some some numbers in terms of the overall calf furniture, the company and the and the fourth quarter what.
What is implied in that potential <unk> asking.
If we move into until next year, we still minimal level of.
Avenue would you would you expect that.
Cash, earning level to maintain relatively consistent.
Taliban cast-iron in the fourth quarter picky about half of the paddle Thursday at that happened.
Mm consistent in the third quarter and the fourth quarter well it must be the same.
The first corner, if we have about.
Revenue at Tes, they'll look about the same first Carter.
It all depends on the amount of revenue.
Yet.
Okay, Okay alright.
And then another housekeeping question.
Can you clarify.
Impact from convertible preferred at the current stock price. So I'm just trying to understand how you guys are are accounting for that in your in your financial muscle milk.
Sure Council technical your.
Above that that convertible price.
So the convertible is going to be Sharon kind of it won't between the rebuilding exactly on the balance sheet.
130 591.
Uh huh.
The deal and then dividends once declared will be shown to equity just like normal dividend smoking.
And you want to do capital.
The covenant later.
September 22.
Okay.
Okay.
I think that's a call look out for me so I'll leave it I appreciate all the all the details very helpful. Thank you.
But.
And our next question comes from the line of Barry Haynes Sage asset management. Please go ahead. Your line is open.
Thanks, so much for taking my questions.
And a few first one could you just remind us in normal times, what ges's market shares typically.
Ballpark.
Sure It is.
Very by geography, it's roughly 30% of the U S for exhibition.
45% and.
Canada, and then 55% in the UK market.
Okay, and then just a follow up since you mentioned that.
And number competitors may I get up to 40%, but whatever number.
I might assume for that.
You.
Expect to get your pro rata share of that exited business or has any reason that would you know.
You would do better than that are worse than that just.
True.
That issue.
And I think.
And the expiration side side of the I don't see a tremendous shift and market share.
And the ushers too large table.
Player the majority of the chair.
Company called premium.
But where do you see a market share theme is on the corporate side of our business, where it is a highly fragmented market.
There are a number of players but.
Alrighty.
Into bankruptcy and.
We suspect or several that are teetering on the edge, that's where I believe there's a more of an opportunity for market share everything.
Okay and interest final on this just roughly the mix within your business between the exhibition side in the corporate side.
Norton down in normal times.
Normal lives you're probably at.
50 535.
Great, Okay, and I had.
One question on pursuit.
If.
If we think about 21, just from a directional point of view and and if you think of 19 is sort of a good normal year and 20, it's obviously a very disruptive year.
You know if you sort of start thinking that the 21 is somewhere in the middle of those two.
There.
A way to just Directionally think about.
Is it sort of in the middle is it a little closer to nine.
Nine two or is it a little closer to the 20th so just kind of looking for some directional color there if that's possible in pursuit.
It's tough to call it to be honest and we're not really going to provide a view of the future right now, but as we get a better sense will be able to share that I can tell you that we're ahead.
And pacing, which is positive, but there's a lot of movement from existing as I mentioned in my remarks, there's a lot of movement from existing booking 220 that move forward to 21, and so it's early games and as we know more I think we'll be in a better position to share that.
Okay is is that the.
The patient is ahead.
21 versus 20 and can you relate it's 19 at all.
And your patient early early stages and depending on the pockets. There are some pockets that are pacing positive 219, as well and remember at this time last year for the 20th season. There was no view the Corona virus. So.
Take the pacing is is positive to both years, but again as I mentioned in the very early days, so I'd be cautious with extrapolating that further until we get a better view.
Sure no that makes total sense.
Less.
Question I had was just on the.
Pursuit on the new projects.
Could you give us.
Sort of normal or I see that you would look too or some sort of marines that you will too before going forward with those investments and.
If I were to think in terms of the day.
We are back in a normal environment and.
You know, we're thinking of a a five year average.
How much money would you expect to invest.
And attractions like that you know per year or.
Again on an average normal thanks.
Yeah, I think from a liquidity standpoint, one of the important things is that we're we're not going to speculate as the world is still I think a little bit upside down working it's way to get right side up.
And traditionally we've communicated are.
Investment hurdle rates internally that definitely stronger than our 15% IRR and a strong return on invested capital, but I don't want to speculate into the future as I think we're still so much influx, but I can say that we've got so many tremendous opportunities just internally in terms of our refresh bill by projects and also we've been very attentive to what were.
Looking at.
Industrywide and so you want to be opportunistic and at the at the same time you are focused on being super prudent in terms of your own.
Liquidity needs and so on so I think that will become more clear also as we go forward and I'm, sorry, I don't mean that to sound like a dodgy answer, but it's hard to have a crystal ball with these strange times.
No great. That's why I appreciate all the the insight thanks very much.
Okay great.
And again, if you would like to ask a question. Please press star one on your telephone keypad.
And our next question comes from the line.
Check Mecca of not cost research. Please go ahead you line is open.
Hi, This is Alex I'm filling in for Kartik, Thanks for taking our questions.
Oh.
What are your expectations for the trade show environment next year, and then we're specifically what percentage of exhibitors in attendance would you expect next year for the industry.
Yes, I think but.
Obviously, the a lot of the events in 2023rd and fourth quarter postponed.
First early cancel.
11 20.
2021.
We see that same level activity in the first quarter of 2021, where there are some canceled.
Cancellation.
But I do think in the back half of the year as people postponed events. The number of a big increase in the back half of the year and be somewhere.
Concentrated Q3 or.
Versus.
Pretty.
Covid error.
In terms of.
Specifically.
Or a percentage.
Hobbies.
Events come back as I mentioned during my comments and during the prior question.
We believe that there is strong underlying demand for events.
Into a number of our clients.
See what they've been able to sell in terms of their force base quarter and both in 2020.
One I am encouraged.
The level of response that they have.
The only thing other than.
Is that.
We're optimistic that some of the restrictions will be lifted band.
Beyond or we.
Way operating larger.
In the same manner.
Just earlier this week there was an announcement from the lack of.
And.
You had indicated that he would try to come up with a plan.
Hold larger scale of that in the first quarter of 2021 so.
There are some encouraging news and hopefully be able to come to fruition.
Very good news for the industry as a whole.
Okay, Great and then just for a ball is there any additional cost measures that you could take the fundamentals don't improve until late next year.
Yeah, a little bit cough measures of the costs take alpha we've talked about average David call really this reflects what we've gotten off into the quarter.
You mentioned the number of facilities that we have.
Covid.
Or are near exiting there are other opportunity alive.
In the future quarters.
And we will take those.
Going forward.
Alright, great. Thank you.
Thank you.
Our next question comes from the line of steep O'hara Cydonia Company. Please go ahead you line is open.
Hi, good afternoon, and thanks for taking the question.
Okay.
Hi.
Just going back to the.
[laughter] occupancy rate within pursuit, I guess I mean, it seems pretty high is that kind of based on the kind of fall hotel or is that based on kind of a social distance.
Hotel lay out or rooms clothes or something like that.
Hotel speak.
Okay. Okay, I'll write that says that's better than what I expect us yeah, and what's exciting to for us.
Talking to colleagues across the industry, obviously, the city hotels in the world being more challenge.
Folks were able to in other markets get occupancy, but much tougher to get right.
Looking at Jasper and saying all right running.
68.
Percent occupancy that 229 Bucks.
It's very very positive. So we're we're quite pleased with how lodging performed.
Yes, Okay. That's that's helpful.
And then just maybe go into.
The borders and things like that.
Can you just remind me what the.
With the closure I think you said a lot or some international market starting to reopen with Canada and it sounds like the U S. As in one of them based on what you said or maybe that's just a b.
More than borders posed to air travel.
I know Hawaii, just restarted their program I think October 15th tons of Japan might be added to that as well but.
Are there plans in place to kind of have those kinds of things were within 72 hours of your tested you can kind of avoid quarantine.
And then what's kind of the main hold back with the U S. At this point.
Kind of a level of infection right or something more diplomatic.
Let me, let me cover the the U S. Canada border closures. So the way that it works is that there's obviously the border remains closed for leisure travel there's essential travel that's happening sure a health care worker or someone with a justifiable reason for essential travel.
Canadian to return to Canada from abroad have a 14 day quarantine and then there's the pilot program that I mentioned earlier on this call, which is one airport in Canada in Calgary.
Beginning of testing program for international visitors the borders that remain open between Canada and the rest of the world I'd have to go check the Canadian government.
Website to give you a really precise information, but other borders are open.
The border with the United States remains closed and it's sort of on a month to month basis of the closure has been extended until November 21.
And then some time I expect in November we will get a sense for how that continues.
Looking forward, though I think that by the end of the first quarter.
We expect that the borders we'll be more open and that the testing protocols.
We will have accelerated in a variety of places all around the world because every country's working on it and obviously the impact of air travel and international visitation and so on and Hawaii is a good example.
Iceland has been a very proactive example, other countries and so on so.
It's something we're watching very closely and we're keeping a rely on in and we'll share what we know as we know it.
Okay.
It's helpful and then maybe just.
Following up on Tyler's question with the convertible.
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Is there what's the.
Maybe its profit level that you'd have to report relative to the stock price and.
To begin to include.
The convertible sick.
Securities into the.
Diluted share count as it you have to get to a certain profit level.
And then the stock price has to be above X.
Can you just walk through how that works maybe.
On the potential for dilution in the future.
Swimming is profit supported.
Yes.
21 25.
Advil.
You're asking.
Once can very thankful for one of us today.
Followed by confession price.
E as something very good prices 21, 25, so anything about that.
Okay. So anything above that you start to show it in the share count assuming there is a profit under list chairs.
Yeah.
Cable net pressuring Steve are may ETS, but we don't actually Sarah.
Shelley.
Well I will take a look at it.
Yeah, you can see the table.
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Okay.
Okay, Great alright, thank you very much.
Thank you.
Okay no further questions in the queue.
Alright, Thank you everybody for joining us on the earnings call today, and we look forward to talking to you next quarter.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
Uh-huh.
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