Q4 2022 Viad Corp Earnings Call
Speaker 2: We.
Speaker 3: to earnings conference call.
Speaker 4: All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, followed by the number 1 on your telephone keypad. If you would like to withdraw your question, again, press the star 1.
Speaker 5: Carry long. You may begin your conference.
Speaker 6: Good afternoon and thank you for joining us for VIA's 2022 fourth quarter and full-year earnings conference calls.
Speaker 7: We issued our earnings press release after market closed today, along with an earnings presentation which are both available on our website at vod.com.
Speaker 8: We will be referencing specific pages from the presentation during the call as we discuss their business performance and outlook.
Speaker 9: I also want to point out that our earnings press release and presentation contain important disclosures regarding non- GAAP measures that we will be referring to during the call, including adjusted EBITDA and net income or loss before other items. During the call you will hear from Steve Monster, our President and CEO and President of UA Lisa II.
Speaker 10: David Barry, our President of Pursuits, and Ellen Ingersoll, our Chief Financial Officer.
Speaker 11: Before returning to call over to Steve, I want to remind everyone that certain statements made during the call which are not historical facts may constitute forwardlifting statements.
Speaker 12: Information concerning business and other risk factors that could cause actual results to materially differ from those in the forward-looking statement can be found in our annual, quarterly, and other current reports filed with the SEC. And with that, I will turn the call over to Steve.
Speaker 13: Good afternoon and thank you for joining us. To start the call, I'd like to thank our team members around the world for their continued dedication and efforts, which are reflected in our fourth quarter and full year results.
Speaker 14: Starting on page four, I want to provide my highlights on the quarter and our path forward. David, Ellen and I will expand on these highlights later in the call to give you more clarity on what we're seeing in each business.
Speaker 15: First, I'm very pleased with our performance in 2022. Pursuit achieved record revenue in the year due to the continued recovery of the adventure travel industry and the steady investments we've made to drive growth through our Refresh built by initiatives.
Speaker 16: GES significantly outperformed our expectations in 2022 as the live event industry came roaring back from pandemic levels. Second, in 2022, VIA delivered strong results through our strategic focus on scaling pursuit and improving the profitability of GES.
Speaker 17: despite several macro external forces. During the year, Pursuit continued its growth trajectory with the addition of a high quality attraction experience to our Glacier Park collection and a remarkable new hotel in downtown Jasper, as well as made headway on other exciting growth investments including...
Speaker 18: Existing client wins.
Speaker 19: And lastly, I'm excited about the path ahead for VIAID businesses.
Speaker 20: I expect growth to continue in 2023 and beyond based on fewer border restrictions on international travel, the acceleration of pursuits, new experiences, and the full recovery of our businesses.
Speaker 21: And now I'd like to turn the call over to Ellen to discuss our fourth quarter and full year performance in more detail. Ellen?
Speaker 22: Thanks, Steve. Before we jump into our current quarter results, I'd like to spend a few minutes covering an 8K that we filed just prior to our earnings press release this afternoon.
Speaker 23: During our UN Clothes Review procedures, we identified a narrow relating to our accounting for a finance-least obligation at Sky Lagoon.
Speaker 24: That lease liability is recorded on SkyLegans balance sheet and Icelandic Krona, but is payable in US dollars and therefore requires remeasurement on a monthly basis with any changes in valuation being recorded as non-cash for an exchange gains or losses.
Speaker 25: This re-measurement had not been taking place prior to December 31, 2022. As a result, the lease liability that we reported as of September 30, 2022 was understated by $5 million.
Speaker 26: With a corresponding understatement of cost of services of $5 million and overstatement of net income attributable to the ad of $2 million relating to the FX loss that should have been recorded.
Speaker 27: We plan to file an amended and restated form 10Q for the 2022-3rd quarter to correct this accounting error.
Speaker 28: To read measurement of this lease liability resulted in an FX gain of 804,000 during the fourth quarter, bringing the 2022 full year FX loss to $4.2 million.
Speaker 29: FX gains and losses are included in cost of services on our income statement.
Speaker 30: And we have and will be excluding these non-cash gains and losses from our non- GAAP measures of adjusted EBITDA and net loss or income before other items.
Speaker 31: Now, on to our fourth quarter results. As shown on page 6, we delivered consolidated revenue of $248 million during the fourth quarter.
Speaker 32: This is up 35% or 64.5 million year over year, driven by 46% growth at pursuit and 34% growth at GES.
Net loss attributable to V.O.D. was 5.7 million as compared to the loss of 22.5 million in the 2021 4th quarter.
During the quarter, we completed the sale of Arms Services, a non-core business within GES.
for approximately $30 million.
and recorded a gain on that sale of $19.6 million.
Excluding that gain in certain other items, our net loss attributable to VAD was 25.5 million to the quarter, as compared to a net loss before other items of 22.5 million in the prior year for quarter.
Our consolidated adjusted evita of negative 2 million improved by 1.8 million year over years. It was in line with our prior guidance.
GES suggested EBITDA of 12.7 million increased 3.1 million year over year and surpassed the high end of our prior guidance range as we continued to see strengthening and live of an activity in great execution by the GES team.
Pursuit adjusted EVDA was negative 11.3 million and came in slightly below prior year and our prior guidance range, primarily due to higher than anticipated expenses in the seasonally slow quarter.
Turning to pursues year-over-year performance on page 7, fourth quarter revenue of 34.1 million grew 10.8 million year-over-year, with same-store revenue growth of 5.9 million or 32 percent, and 4.8 million of revenue growth from new experiences that we opened or acquired during 2021 and 2020.
order of adjusted EBITDA was negative $11.3 million as compared to negative $9.9 million in the prior year.
The decline of $1.4 million was driven primarily by higher expenses versus the prior year, including insurance and compensation related expenses, as well as COVID wage subsidies received in 2021 that did not repeat in 2022.
The new experiences we opened are required during 2021 and 2022, delivered positive adjusted of approximately 800,000 during the quarter.
which is a $1.6 million improvement versus the prior year reflecting the continued ramping of Skye Lagoon and Flyer Las Vegas.
As well as the addition of the Forest Park Hotel, partially offset by seasonal losses from Glacier Rafft Company and Golden Skibridge.
Now switching over to GES's fourth quarter results on page 8.
GES delivered total revenue of $213.9 million.
Biro revenue grew 31.8% or 17.4 million, and GES Exhibitions revenue grew 32.7% or 35.4 million.
As Steve will review later, we continue to see strong levels of recovery toward pre-pandemic live event activity.
GES's fourth quarter adjusted EBITDA improves by $3.1 million year over year, reflecting the increase in revenue as well as higher cost to support the more robust business activity.
At the end of 2021 and into early 2022, GES was running with a very lean cost structure as we cautiously rebuilt the workforce as revenue returned.
By the third quarter, we had returned to a normalized workforce level for GES exhibitions, and we are continuing to prudently add talent within Spyro.
We remain acutely focused on maximizing profitability and cash flows within GES.
Now switching over to our full year results on page 9.
VIAB's full year revenue more than doubled versus 2021, and Consolidated Adjusted Evita reached $116.1 million, up from $1.3 million in 2021. While not everything went as planned this year, we are extremely pleased with how well our team's executed.
to deliver strong results in customer service as our industries saw a rapid improvement from the suppressed levels of activity during the pandemic.
Pursuit full year revenue grew 60% and reached a record level of nearly $300 million.
Full-year adjusted evata was 67.9 million up 25.3 million year-over-year.
New experiences acquired or opened during 21 and 22 contributed revenue of $43.2 million, adjusted EBITDA of $6.9 million, and an adjusted EBITDA margin of 16%.
We expect the contributions from these new experiences and their margins will continue to grow in 2023 and beyond.
On a same survey, this pursues suggested EBITDA that improved by $21.6 million on a revenue increase of $84.7 million or $49%.
And same story just to either demarcant improved by 80 basis points.
March and expansion versus 2021 was constrained by several factors, which we primarily view as
including the mix of guests, staffing related challenges, and other cost increases that we were not fully able to offset through price increases.
At GES, we delivered an adjusted EBITDA improvement of $91.6 million versus 2021 on a revenue increase of $507.7 million.
Full-year adjusted EBITDA margin was 7.4% as we leverage TEF's lower-cost structure to drive strong flow through as revenue increased nearly 160% year-over-year.
GS margins were particularly strong during second quarter as revenue returned far more quickly than we had anticipated in our staffing levels.
We experienced deceleration of margins during the third quarter as we continued rebuilding our service teams for the sustained level of business activity. Margin's improved slightly during the fourth quarter as we maintain a sharp focus on cost management and cash flow. Now I'll quickly cover some balance sheet and cash flow items before we dive more deeply into business highlights.
We ended the fourth quarter with total liquidity of approximately 146 million, comprising 60 million and cash and 87 million of capacity available on our revolving credit facilities.
Our cash flow from operations during the full year with an inflow of approximately 72 million.
Our capital expenditure is totaled about 67 million for the full year, and we're mainly at pursuit including growth capex for the Forest Park Hotel, the Mountain Coastal at Golden Scarbridge and Flyover Chicago.
Our capital expenditures totaled about 12 million for the quarter and were mainly at pursuit, including growth catbacks for flyover Chicago. On December 15, we completed the sale of the assets of on services, a U.S.-based audiovisual services business that operates as part of GES, for cash proceeds of approximately $30 million. This transaction enhances our balance sheet and builds on the strategic transformational changes that we have implemented at GES over the past few years by further simplifying GES's operating model.
At December 31, our debt totaled approximately $482 million, including $395 million on our term loan fee, financing lease obligations of approximately $65 million,
An $11 million construction loan to help fund the development of a forest park hotel and other debt of approximately $11 million.
Additional details can be found in the appendix of our earnings presentation.
And now I'll turn the call over to Data to discuss pursuits.
Thank you, Ellen. We're proud to have delivered record quarterly revenue in each of the four quarters of 2022, along with 59% over your growth and full-year adjusted EBITDA.
The financial results were not as strong as we projected entering 2022.
we continue to experience travel restrictions and the temporal effects of the COVID pandemic which impacted same store results and the first full year of operations at our newer experiences.
And we saw slower than expected ramping of flyover Las Vegas as our marketing efforts continued to take hold and increase awareness of this new attraction on Las Vegas Boulevard.
COVID has thrown many headwinds our way over the past several seasons and we're pleased to be seeing some meaningful relief on that front.
Our performance is on track to strongly improve in 2023, and we're looking forward to delivering record revenue and adjusted EBITDA in the year to come.
But more to come on that shortly. First, let's take a review of our 2022 performance.
Stage 11 of our earnings presentation reflects our ongoing commitment to a fresh bill by strategy and its impact on a revenue growth.
The 11-new experiences that we've opened or acquired from 2019 through 2022 collectively delivered 88.1 million in revenue in 2022, which is nearly 30% of pursuits total revenue for the year.
As guest awareness continues to build and visitation from long haul destination markets continues to return, we anticipate further growth in margin expansion at these iconic experiences.
Refresh Build Buy is also about improving performance at existing experiences and we've been successful driving revenue growth at the experiences that were part of pursuit prior to 2019.
On a same-store basis, versus 2019, pursuit grew full year 2022 revenue by 5.5%, despite pandemic-related headwinds, as we remain focused on elevating the guest experience and price optimization.
Relative to 2019, we drove stronger same-store revenues through lodging, food and beverage, and retail, while same-store ticket revenue from our attractions remained below 2019 levels due to their greater alliance on Long Hall International Group leisure travel.
Page 12 in the deck covers attractions performance for full year 2022. On a same store basis our attractions visits reached 85% of 2019 levels. However, 2022 overall ticket revenue of $115 million grew by approximately 36% versus 2019 as we invested in new attractions and drove higher effective ticket prices.
We're thrilled to have welcomed a record total of 2.9 million attraction visitors during 22, with 88% growth in overall ticket revenue as compared to 21.
And we're looking forward to additional upside from the gradual return of international visitors for major Pacific markets and other destination markets in 2023 and beyond.
Page 13 covers fourth quarter attractions performance, and I just like to highlight that we saw continued acceleration at our newer year round attraction.
At Flyber Las Vegas, we've made important inroads into attractions ticket distribution networks that are fueling growth.
Q4 visits increased 21% from the third quarter and 35% from the same period in 2021. And we're proud to have won multiple awards for the experience, including Silver for Best Immersive Experience by BestofLasVegas.com.
Sky Lagoon and Iceland also delivered strong fourth quarter results with visitors increasing 61% from the prior period or from the same period prior year.
Now, we'll cover results and performance metrics at our lodging properties, which we referenced on page 14 of our earnings presentation.
2022 rooms revenue of $77 million grew by 34% year over year and by 31% compared to 2019.
The year of year growth was driven by higher occupancy, which nearly returned to 2019 levels, as well as higher ADRs.
The growth versus 2019 was driven by our investments to expand and refresh our lodging portfolio with additional rooms and higher ADRs.
On a same store basis, Revpar increased 35% year over year and 10% versus 2019, reflecting increases in both occupancy and average daily rate.
On page 15, that shows our lodging performance remains strong during the 2022-4th quarter. Rooms revenue at our year-round properties in BAMF, Jasper and Montana increased 17% year-over-year. In similar to our attractions, we see the continuation of a strong year-over-year growth into the first quarter of 2023.
Moving on to our ancillary revenue streams, Pursuit Food and Beverage Businesses delivered revenue of $47.3 million in 2022 and continues to be an integral part of the hospitality experience.
We made strategic investments to improve the culinary experience at restaurants located within our hotels throughout the year and again delivered healthy year over year growth of 63%.
2022 also saw strong revenue growth in our retail business, which increased 33% year over year to 33.5 million. And we view retail as a key growth lever into the future, and driving retail growth is an important part of our focus on returning to historical margins.
All right, so now let's turn our attention to the year ahead. We continue to see performance at our newer experiences accelerate and that coupled with the return of international leisure travel guests and healthy early season booking indicators has us optimistic for a strong and successful 2023. We see no dent in the armor.
in terms of demand for the 23 season as booking pace remains strong.
For our Canadian experiences, 2023 will be our first season in three years that will not be constrained by COVID restrictions, testing and quarantine risk.
And all of these testing and quarantine restrictions to enter Canada were finally lifted on October 1, 2022.
And this is already showing a positive impact, and although still early in the 23 year, we're seeing improvement in your over-year pacing in each operating geography.
Through January , Pursuit revenue is pacing well ahead of the same period in 2022.
Canada is seen as a safe destination and is enjoying strong visitation from the United States in the current ski season.
Demand for pursuits Alaska and Montana product is also strong. The strong return of cruise line arrivals plan for summer 23 in Alaska and continued demand for iconic glacier national park and the great state of Montana.
While still early in the booking cycle, we're pleased with our early season booking space, which lends confidence to our full-year expectations.
We expect our attractions visitation will improve to approximately 95% of 2019 levels on a same-store basis.
Demand from Western European operators and the UK market is strong for all of our destinations from Iceland to Western Canada and the Western United States.
As China reopens to the world, we expect to see a slow increase in inbound visitation to Western Canada during 2023, and this specifically will come in two segments visiting friends and relatives, NFIT.
China's reopening was late for tour and travel partners to resume their historical programs given the short notice for 23 bookings.
Pre-pandemic China exported 155 million tourists to the world, and we expect it will take two seasons for outbound visitation to return to full momentum.
We do see very strong demand from Chinese operators for the 24 season.
In Iceland, our research suggests that Iceland will benefit from an increase in international visitation relative to pre-pandemic 2019 levels.
We anticipate this increase to be about 8% in the first half of the year, which will in turn benefit both Sky Lagoon and fly over Iceland.
So we're acutely focused on three important and related success factors in 2023.
Revenue growth, margin expansion, and winning the War for Talent.
So starting with revenue growth, I just highlighted the strong and improving demand trends we're experiencing.
With that backdrop, we are sharply focused on ensuring that our new experiences, as well as those that have been slower to recover from the pandemic, regain traction, and perform to our expectations throughout the year.
This means maintaining a heavy focus on driving guest awareness and visitation that are new experiences, including flyover Las Vegas and the Golden Sky Bridge.
It also means executing strategies and tactics for regaining pre-pandemic visitation volumes at certain attractions that are more dependent on long-haul international guest volumes, such as the Columbia Ice Seal Glacier Adventure and Skywalk.
Margin Expansion is another critical focus area and I'd like to take a minute and share our view on how we expect Margin to recover in 2023 and beyond.
As Ellen touched on earlier, our 2022 adjusted EBITDA margin of 22.7% was constrained by pandemic headwinds on cost and mix of guests as well as the ramping of our new experiences.
In 2023, we expect to see meaningful margin expansion driven primarily by increased visitation at our high margin attractions, but not a full return to pre-pandemic levels.
As you know, our attractions are built for volume, meaning that profitability increases significantly when guest visitation is high. And fixed cost breakeven is achieved.
The revenue from every incremental guess flows at a very high rate to our bottom line.
Additionally, staffing pressures are easing, and we're actively ratcheting back the extraordinary measures put in place due to the pandemic labor shortages and disruptions to the foreign worker programs in both Canada and the US.
Beyond 23, we expect margins will once again exceed 30%.
There are a few key drivers of margin expansion in 2024 and beyond that we're focused on.
First is achieving attractions visitation in line with 2019 on a same-store basis.
Three of the seven attractions that we owned and operated in full in 2019 are not expected to return to 2019 levels in 2023, and recapturing that guest volume is a critical part of our margin recovery strategy.
Contracting pace and demand are the best indicators of future years. And we're pleased to report that our travel trade partners across the world are returning in earnest by historic levels of contracting.
and we see strong interest for 24 and 25 seasons as China shifts its COVID policies and begins to reopen.
Our second driver relates back to my comments about ensuring that our businesses perform and our long-range plan anticipates continued growth at our newer attractions and specifically Flyover Las Vegas and the Golden Skybridge in 24 and beyond. We also expect to launch Flyover Chicago in the first half of 24 and we expect Flyover Chicago to be accretive to pursue its Ida Dom Margin. The Redone Alpha crossed all steps and led in critical shifts and emails, 2 movies over the past 24 continues developing. All Maori FIRI Images on Saturday'sici, Theta City Budgetes Usas Special
And the third driver, specifically on margin, is really a careful focus on labor and expense management.
Now, it brings me to our final critical success factor for 2023, winning the war for talent. Our early season hiring metrics are trending positively, and we're starting to see normalization across the talent acquisition ecosystem, including an increase in the number of seasonal team members who are returning to pursue for another summer.
and in the availability of the international workforce supply. In addition, with a vision to be the world's leading provider of attraction and hospitality experiences, we will execute against a number of important investments centered on improving the guest and team member experience at several locations. Some examples include a refresh of the original founders' cabins.
and the Pines Restaurant at Pyramid Lake Lodge in Jasper, upgrades to our workforce housing facilities, and exciting new content for our flyover attractions.
We continue to seek and evaluate investment opportunities in multiple geographies for the next great pursuit experience.
So in closing we believe that 2023 will mark the return.
of a more normal operating environment across all of our geographies, and we very much look forward to welcoming a record number of guests to pursue its iconic, unforgettable, and inspiring experiences.
Stay back to you.
Thanks, David. Now let me switch gears and talk about the GES business, which includes both GES exhibitions and our marketing agency, Spyro.
During the fourth quarter, GES continued to perform better than expected as revenue continued to recover above our expectations.
In addition to delivering strong top-line growth, GES drove a substantial increase in profitability during the fourth quarter, with adjusted EBITDA of 1.7 million above the high end of our guidance range for the quarter.
First, I'd like to talk about the performance at GES exhibitions, which provides trade show services to leading event organizers in North America, Europe , and United Arab Emirates.
During the fourth quarter, GES exhibitions delivered $143.6 million in revenue and $6.9 million in EBITDA. Like prior quarters, the strong results were driven by a faster than expected recovery.
During the fourth quarter, GFX admissions continued to experience improvement in the size of events produced.
As shown on page 18, U.S. same show revenue reached 93 percent of 2019 levels, up from 91 percent in the third quarter.
I'm very encouraged by the pace of recovery of trade shows at GS Exhibitions. The rapid recovery relative to 2021 illustrates the resilience, strength, and value of trade shows as a major component of today's corporate marketing channels.
The recovery, however, has not been uniform as there continues to be significant variability in the pace of recovery across a broad set of trade shows with individual shows performing between 70 and 140 percent of their pre-pandemic size.
As the lower performing shows fully recover, this will be a tailwind for the GS Exhibitions Performance.
Next, I'd like to discuss the fourth quarter of Spyro, our experiential marketing agency, which serves as the agency of record for Fortune 1000 corporate clients.
During the fourth quarter, Spyro delivered $72.1 million in revenue and $5.8 million in EBITDA. Like the trade show side of GES, Spyro saw a strong level of marketing spend from our corporate clients, which are concentrated in the pharmaceutical, medical, aerospace and defense.
industrial and technology industries. During the fourth quarter, Spyro Marketing Client spent approximately 90% of the level spent in 2019 on a same store basis.
During the quarter, Spyro won several new clients including Dentsply Sirona and Hasboro, which will have an impact in 2023 and beyond.
Our first project for Denspli-Serona will be producing their 2023 implant world summit in Athens, Greece for Denspli's top implant dentist, Parodontist and implant surgeon
These new client wins demonstrate the strength of Spire's creative, strategic, and production talent on an international stage.
The fourth quarter finished a rewarding but challenging year for the GPS business.
From an uncertain start with Omicron driven cancellations and postponements in the first quarter, we experience a rapid acceleration in live event activity beginning in the second quarter.
Revenue recovered much faster than expected, while the business fought through labor shortages, supply chain challenges, and high levels of uncertainty.
Now I'd like to give you some insights into our expectations for the new year and Ellen will cover our guidance later in the call. In 2023, I expect GSX-abitions same show revenue to stay in line with what we experienced in 2022 at close to 90% of 2019 levels. While medium and large corporations quickly return to trade shows in 2022, we have not yet seen significant participation from international companies and smaller domestic companies. Given the strength of trade shows, I anticipate these companies will participate again in the future.
but not until late 2023 or early 2024. Additionally, GES exhibitions will experience year-of-year revenue headwind in 2023 of approximately $20 million from our sale of on-services and approximately $30 million from what we call negative shell rotation driven by the timing of major non-annual shows.
Show rotation will turn positive in 2024, bringing an expected year-over-year increase in revenue of approximately $60 million for GS exhibitions.
At Spyro, I expect client marketing spending will be similar to 2022 levels at roughly 90% of 2019. Additionally, I anticipate growth from new clients won in 2022 that will start their 2023 marketing programs with Spyro.
We have seen great success in winning new business from new clients and existing clients, and intend to prudently invest in additional resources to service our clients and drive continued growth with expanded capabilities.
And now I will turn the call over to Ellen to talk a little bit about our financial outlook.
Thanks Steve.
We expect continued growth in 2023 and are focused on maximizing performance from our existing businesses.
As shown on page 21, we expect pursuits adjusted e-data for the full 2023 year, to be in the range of 85 to 95 million, as compared to 67.9 million in 2022. Reven is expected to increase between 10 and 15 percent year-over-year.
Primarily driven by the lifting of all COVID restrictions at the Canadian border, acceleration of new experiences and ongoing focus on improving the guest experience through our refresh bill by gross strategy.
For the seasonally slow first quarter, we expect Pursuit's adjusted EBITDA loss to be in the range of $14 to $11 million as compared to $11.5 million in 2022. Revenue is expected to be in the range of $28 to $32 million, up from $23.8 million in 2022.
With continued improvements in international leisure travel, removal of border restrictions into Canada and all signs pointing to much stronger visitation in 2023, pursuit is entering the year with higher staffing levels as compared to the same time last year when the world was just beginning to relax restrictions.
and facing concerns relanning to the Omicron variant. We anticipate that pursuits full-year adjusted even in margins will expand as our attraction visitation continues to recover.
The performance of our newer experiences improves and pandemic era cost pressures ease.
Now, turning to GDS from page 22.
We expect to ES is adjusted either to the 2023 full year to be in the range of 48 to 58 million as compared to 61 million in 2022.
Revenu is expected to decrease about 5% year over year, primarily due to headwarns from sale of on-services, which contributed about 50 million in revenue in 2022, and negative share rotation revenue of about 30 million.
We expect GES's full-year adjusted even a margin will be temporarily impacted in 2023 due to the year-ever-year decline revenue and investments to fuel Spyro's growth in 23 and beyond.
As Steve mentioned, we anticipate GES-X edition, same show revenue, and Spyro, client-market spend to remain at about 90% of 2019 pre-pandemic levels.
We're also expecting growth from new client wins at Spyro.
For the first quarter, we expect GES's adjusted EBITDA to be in the range of 8 to 11 million as compared to 2.7 million in 2022.
Reven is expected to be in the range of 195 to 215 million, reflecting a relatively easy comparison to 153.6 million in the Amicron Impactive First Quarter of 2022.
The stronger first quarter performance and new wins of Spyro will mostly offset the expected headwinds during the balance of the year.
We expect the show rotation headwind to be most pronounced during the third quarter with about $50 million in revenue rotating out.
We expect modest positive rotation in each of the first, second, and fourth quarters.
Now, on to cash flow outlook. For the full year, we currently expect an operating cash inflow of $65 to $75 million.
with a first quarter outflow in the range of 5 to 10 million.
We expect full-year capital expenditures of 75 to 85 million, including 15 to 20 million in the first quarter.
This level of cat-backs reflects our commitment to pursue refresh bill by growth strategy with growth cat-backs for key projects, including fly-over Chicago. In connection with our 2023 cat-mox-pennedter outlook, I'd also like to provide a quick update on our proposed fly-over project in Toronto, Ontario.
As we've mentioned previously, the permitting and approval process for this project has experienced significant COVID and other related delays since the original project inception in 2019.
The final permits and project approvals remain pending with the city of Toronto.
At this time, we expect to incur minimal capital expenditures related to the Fly Over Toronto project in 2023, and we no longer expect to open this attraction in 2024 as we had previously anticipated.
We will provide further updates regarding Claro v. Serrano as and when available.
And now I'll turn the call back over to Steve for some concluding remarks.
Thanks, Ellen. I'm very proud of what we accomplished in 2022, and I'm thrilled about the growth that lies ahead in 2023 and beyond on both sides of the business with our new world-class experiences that pursue and a stronger, more profitable GES.
As we look ahead to 2024, Pursuit is well positioned for solid top-line growth and margin expansion from a more fulsome recovery of long-haul international travel trade visitation, the continued ramping of our new experiences, and the opening of Flyover Chicago.
For GES, we expect strong tailwinds in 2024 from positive show rotation of approximately $70 million and an anticipated full recovery of show sizes and corporate client marketing budgets.
GES is expected to reach its target of greater than 8% adjusted EBITDA margin in 2024.
We remain committed to our strategy to create extraordinary experiences and strong returns for our shareholders.
For pursuit, we continue to selectively invest in high return growth opportunities to advance our proven refresh bill by strategy.
For GES, we will build on the progress we've made to date to improve the margin profile and resume generating strong cash flow through our lower cost structure and focus on higher margin clients and services.
I want to thank our hardworking and dedicated employees and our shareholders for your continued support in VIAID. And with that, we'll open up the call for questions.
At this time, I would like to remind everyone in order to ask a question, press star then the number one on your telephone keypad. You'll pause for just a moment to compile the Q&A roster.
Your first question comes from the line of CAR TIC, META with North Coast Research. Your line is now open. Thanks. See, just a couple questions on pursuit. Maybe I don't know if it's too early, but just your outlook. I don't really know whether I'm right or not.
2023 from early reservations or early demands for some of the properties.
would be helpful. Yeah.
That's thanks, Patrick. I'll actually let David take this one. He's closest to it. Yeah, Cartic demand is positive. We're seeing increasing demand in all channels. What's interesting, everything from web traffic, which is up, you know, 20% year over year and up 70% from 2019. Demand specifically in Alaska, Montana.
Western Canada is all tracing well ahead so it feels good we're off to a good start.
Perfect. See, if you talk a little bit about show rotation and I'm wondering, is this just normal show rotation or have you seen something or a launch was canceled or changed because of the economic environment or just COVID?
No, Karthik, that's a good question. This is the normal cadence of the non-annual events that we see. What we laid out for 23 and for 24 is what we expect based on these non-annual events coming back into the calendar for those years.
And then just one last one, both on the pursuit side and on GES. Obviously, in the past, there were some issues with trying to find employees, and I think you addressed that a little bit on the call. I'm wondering, one, you do feel like you're fully staffed, and two, maybe what's happening to wage inflation and...
what you anticipated in 2023 from that.
Yeah, thanks Karthik. In terms of labor on the GES side of the business, we are successfully finding talented people to join the team. We are, you know, on the exhibition side, very close to, if not at, the staffing level that we need for this level of revenue.
And with Inspiro, we continue to selectively add people as we're building out the capabilities. So we're able to find the talent, which is of, you know, in 2022, there was a bit of a challenge in that, in the heart of the pandemic. So I feel like a lot of that's passed us and we're finding good quality candidates to join the team. And I'll let David talk a little bit about pursuit.
As encouraging, we continue to have strong demand. We're pacing ahead for the hiring of team members. We're able to put some of the incentives that we had put in place during the worst of the pandemic to get folks to work. We're able to put those back on the shelf, which is encouraging. Let it all help from a margin perspective.
The foreign worker programs in both the US and Canada are back in full swing. So that's quite encouraging because both the J-1s and then the longer Commonwealth visas, having them available really helps on a team level. So quite encouraged by the hiring pace, pacing ahead of where we've been historically and looking to a good season.
worker programs in both the US and Canada are back in full swing so that's quite encouraging because both the J1s and then the longer Commonwealth visas, having them available really helps on a team level. So quite encouraged by the hiring pace, pacing ahead of where we've been historically and looking to a good season. Thank you both, I appreciate it.
Thanks, Karthik. Your next question comes from the line of Brian Mayer with B.Reilly Securities. Your line is now open.
Good afternoon and thank you. The great people from me on the show rotation, you talk about the 90 annuals.
You have to have the third quarter's week, one, two, and four strong. Can you give us a little more granularity is to kind of what big commensurate exhibitions are not going to be, you know, in the year and maybe some that are being added, just some of the bigger ones to give us a little color.
Yeah, on the show rotation we had IMTS last third quarter. We won't have that this third quarter and international woodworking. We had last third quarter as well. The ones rotating in, I mean they're fairly small, our rotation in in Q1 and Q2.
And that is in the second quarter. And in 22, we had the Farnborough air show and that was in Q3.
Okay, and maybe a reminder is what big ones come back in in 2024?
Yes, sure. So in 2024, we have IMTS rotating back in again, and we have MINE Expo rotating back in as well as woodworking.
My next dose only every four years though, so we didn't have that in 22.
Got it. And then on the pursuit side, listening to the commentary and kind of seeing what you've been developing over the past couple of years, is it safe to say that there's no real new attractions currently expected for 2023 or that at least have been announced publicly?
Yeah, you're quite correct, but what's exciting is that we're I think going to be performing at higher levels with the increase in international visitation and obviously it's a more normal year. One of the challenges in 22 was that we expected border restrictions to lift early in the first quarter of 22 and they didn't lift till October the 1st.
Our visitation from the US was a bit throttled. We're just excited that this is the first year in three years that Brian were operating with no restrictions. Nobody's going to have to go into quarantine when they arrive. That's going to drive visitation throughout the whole summer. Right. I made some notes here. We're fine.
I think you'll end up seeing in 2023. I think you said maybe two years to come back, two seasons to come back. Relative to 2019 levels, where do you think you should shake out for this year?
It's a bit tricky to say, but think about it on a global level. China exports annually and it's a day with no restrictions about 155 million tourists. Leave China and go out into the world and experience stuff. This season is going to be late for tour and travel partners because they really didn't get the news till December . It's a bit tricky to say, but think about it on a global level.
And so what we expect will see will be an increase obviously in visiting friends and relatives and also FIT travelers leaving China. It's constrained with a couple of other things which is the aircraft lift is not back to traditional levels. So that's going to again have an impact. But we'll definitely see an increase. And what's most exciting is the contracting demand for 20 pull.
you can both weigh in for each of your segments. You know, given what we're seeing with, you know, macroeconomic uncertainty, rising interest rates, you know, various geopolitical issues around the world, are you seeing any spots of weakness, you know, even if it's just, you know, anecdotally in any parts of your business as yet?
No, you know, I'll speak to the GS side of the business and you know, we've been looking heavily into that kind of first quarter. We have visibility in the kind of first quarter, maybe early second quarter events that are coming up in client spend. And I currently don't see any...
any signs of a pullback in any way at this point. So if anything, you know, the momentum kind of continues from Q4 into Q1.
Yeah, very similar. I mean, we're not seeing any consumer price resistance as we continue to take rate in a variety of things. We're not seeing any signs of recession. And in fact, we're seeing things continue to accelerate. The great jobs report, historically low unemployment, consumer discretionary spend on high quality leisure travel experiences is really strong.
Pretty decent amount of variability there. Maybe a little bit surprising. Can you give a little bit more details on the types of shows that are doing better or worse? And for the shows that are still quite a bit down versus 2019, what needs to happen for those to improve? Yeah, and it is surprising. You know, it's been this way for the last several quarters where on average, the same show growth versus 19 has been relatively high kind of in the 90 plus percent or close to 90 and greater. But the variability has been there in each of the quarters and you know, each show has its own dynamics, but I can.
highlight a couple industries that are slower to recover versus others. And so auto, some of the auto shows are slower to recover. Certain sectors of retail are slower to recover as well. But we're optimistic.
I think I mentioned it during my talking points, but there is a large opportunity as that variability decreases that creates a tailwind for us in the future.
I also see fewer small US-based companies participating in 2022. And both of those, I think, will come back. It's a question of when. And I believe that will happen later in this year and into 2024.
Okay, great. And then the follow up question on the show rotation topic. I mean, when I think of show rotation, and there was a tradition of the big three shows for you guys, IMTS, Mynexco, and then Khanag as well. And I noticed that you guys are not participating in Khanag.
Can you address that a little bit more? I'm assuming that was a strategic decision, maybe lower profitability there, but maybe just talk about that decision if there's anything else going on in terms of competitive dynamics in the industry between you and your other major competitor out there.
Absolutely. You know, when we had a long relationship with AEM, which is the producer of ConExpo and had a long relationship with them, when we looked at the pricing that we would need in 2023.
You know, for us financially it didn't make sense from a margin perspective. Some of the changes that we've made in the organization allows to be a little bit more nimble and be more selective on what we're picking from a profitability perspective. And so we did propose pricing that got us to that level of profitability.
same for basis. I'm just kind of interested. I mean, how conservative could that be? I know you're missing the travel trade long haul from Asia, but the commentary seems very positive. Broadly speaking, the demands for a leisure travel seems quite strong. The restrictions in terms of getting.
to Canada have been removed. So I guess I'm just a little bit surprised that you're still only expecting 95% recovery in terms of the attraction to the patients.
Yeah, I think we're being cautious and it's important that we do be cautious. We've been surprised with things before. I think what we have is a number that's very achievable and we're focused on it. There's still a lot of parts of recovery that are not certain, but definitely while we feel momentum we're cautiously optimistic.
of on services, you know, it was small, but can you just talk a little bit more about, you know, the rationale behind that. And then I'm not sure, you know, in the M&A side of things, if there's anything else that might make sense for me, there's a sale perspective, or perhaps what you're looking at from an acquisition side of things as well. Yeah, that's a great question, Tyler. So...
You've seen some of the strategic decisions we've made within the GES portfolio. So we specifically have pulled out and organized the GES exhibition team and then also our marketing agency team Spyro. And in doing so, we've really had a laser focus on simplifying the...
the opportunity to sell the asset and feel good about that.
So, you know, when we look forward, a lot of our focus will be from a capital allocation perspective as seen in the past. We've been investing on the pursuit side of the business while we continue to improve the profitability on the GES side and we'll continue to do that.
Okay, great. That's all for me. Thank you for the detail.
Thanks, Salish.
Again, if you would like to ask a question, press star then the number one on your telephone keypad.
Your next question comes from the line of Barry Hames with Stage Asset Management.
Your line is now open.
Hi, thank you. I had just a quick question for Ellen. You mentioned that there were some wage subsidies, I think related to the COVID programs that you got in the fourth quarter of 21 that you didn't repeat in 22. Could you size how much that was in the fourth quarter of 21?
Sure, that was about 700,000 in 21. Got it. Okay. Thank you so much. Appreciate it. For the fourth quarter, Barry.
There are no further questions at this time. Steve Moster, I turn the call back over to you.
All right, thank you so much and thanks everybody for joining us today. You know, we look forward to giving you an update on the year and a month or an quarter. So take care and we'll talk soon.
All right, thank you so much. And thanks everybody for joining us today. You know, we look forward to giving you an update on the year in a month or an quarter. So take care and we'll talk soon. Disconclusity is called. You may now disconnect.
Please wait, the conference will begin shortly.