Pursuit Attractions and Hospitality, Inc. (PRSU) Q1 2020 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by, and welcome to the Viad Corp's First Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. After speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Carrie Long, Executive Director of Finance and Investor Relations. Thank you. Please go ahead.

Good afternoon, and thank you for joining us for Viad's 2020 first quarter earnings conference call. During the call, you'll be hearing from Steve Moster, our President and CEO; David 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 current reports filed with the SEC. During the call, we'll be referring to certain non-GAAP measures, including loss before other items, adjusted segment EBITDA and adjusted segment operating income or loss. Important disclosures regarding these measures, including reconciliations to net loss attributable to Viad can be found in Table 2 of our earnings press release, which is available on our website at www.viad.com. Now I'd like to turn the call over to Steve.

Thank you, Carrie, and good afternoon, everyone. Thank you for joining us on today's call. I hope you all are staying safe and healthy. On this afternoon's call, I'll briefly discuss our first quarter business results and our financial position to weather these unprecedented times, give you an overview of how we are taking necessary steps to ensure adequate liquidity to provide the company with safe passage through the COVID crisis and resume our trajectory of growth on the other side and provide insight as to what we're seeing that will impact the remaining quarters of 2020. Following my opening comments, I'll hand the call over to David Barry to discuss our Pursuit business, and then I'll come back on to cover the GES business. We will end our prepared remarks with Ellen providing a financial update including our liquidity position, preliminary financial results and pending noncash impairment charge. Before turning to the business, I first and foremost, want to commend our team members at Viad for their resiliency, positivity and dedication during these challenging times. Like many businesses, we've had to make tough decisions by way of employee furloughs and wage reductions in order to protect our financial position in this unprecedented operating environment. Nevertheless, our team members have not missed a beat in acting quickly to help maintain the health and safety of our clients, guests and the communities we operate in as our number one priority. For that, myself and the entire executive team express our sincere thanks. Now moving into our business. The first 2 months of the quarter were largely in line with our expectations. In March, we began to experience some operational impacts as the spread of COVID-19 began to reach all corners of the world, including some event postponement and cancellations. There were some signs of reprieve as CONEXPO-CON/AGG took place in early March with less than 3% of the floor space affected by exhibitor cancellations and attendee registrations of more than 100,000. However, by the end of March, travel and live event activity had essentially halted and with continued travel restrictions and social distancing guidelines in place, we are anticipating a very weak second quarter for 2020. In response, we took swift and effective steps to bolster our company's liquidity and financial position. We drew on our revolving line of credit to increase our cash position, and we've obtained a waiver of our financial covenants for the second quarter. We implemented aggressive cost-reduction actions, including furloughs, mandatory unpaid time off and salary reductions for all employees across the company. Our executive management team voluntarily reduced its base salaries by 20% to 50%, and each of our nonemployee members of our Board of Directors has agreed to reduce his or her cash retainer by 50% for payments typically made to them in second quarter of 2020. We have limited all nonessential capital expenditures and discretionary spending. We have suspended future dividend payments and share repurchases. And finally, we've made changes to our executive management team to reduce costs and prioritize client facing team members. In addition to some other terminations, Jay Altizer, President of GES, will be leaving the company, and I will be taking over the leadership of GES. As many of you know, this is a position I know well, having led GES before bringing Jay on board about two years ago. I'd like to thank Jay for his great work leading the team at GES to identify and pursue various margin driving opportunities. During the last two years, GES has undergone significant streamlining to improve the cost structure and create a more nimble organization, putting us in a much better position today to navigate the current environment. While these are extremely difficult steps to take, these actions are necessary to ensure that Viad and GES can out last the challenging road ahead. I firmly believe the management team that's in place today is the right one to steer the company through these challenging times. We have successfully navigated past periods of disruption with strict focus on cash flow and liquidity, a proven playbook that we are once again turning to. And as with other prior macro shocks, we believe this one presents us with an opportunity, if not a mandate, to rethink and reimagine how we run our business so that we can emerge in a stronger, more flexible position. With that, I'd now like to turn the call over to David Barry, President of Pursuit. David?

Thanks, Steve. Afternoon, everyone. So Pursuit came into the year with lots of momentum, and we saw a very strong start to 2020. At the end of February, revenue and EBITDA were well ahead of plan, with revenue up significantly from the prior year. And that's largely due to our acquisition of a controlling stake in the Mountain Park Lodges and outstanding results at FlyOver Iceland. By the middle of March, though, the effects of the global health crisis and pandemic were becoming more clear. So working with regional health authorities in three countries, we moved quickly to both facilities and organized teams into two work streams, one being shutdown mode and the other being post-crisis recovery. More than anything, this decision to organize our teams along multiple workflows has given us the bandwidth to move quickly in a crisis and make good decisions. In the past 61 days, we've supported our communities through the donation of PP&E to regional health authorities, and we fed literally thousands of team and community members through a volunteer driven meal program. Like all of you, we stand strongly behind emergency responders, doctors and especially nurses who are working bravely to help those who are sick, and we offer our sympathies to those who have lost loved ones. And It's obvious to point out that most of our second quarter bookings were impacted by governmental stay-at-home orders and the overall reduction in domestic and international travel, resulting in large numbers of cancellations. We're not isolated from the global impact on travel and hospitality, we find ourselves among many fine brands and companies that are facing these same challenges. That said, we see green shoots in this environment and are thankful that the acute impacts felt were in our slower Q2 time frame and thus far have not extended as significantly into our more important Q3. Safety first is and always has been our No. 1 core value. It was never a question of if we would be reopening, but more importantly, how? Last week, we launched Pursuit Safety Promise, which was constructed using material from the CDC and regional health authorities. As guests return to our iconic locations and our team members are present to host them, we've taken steps to ensure that we can do that safely. And you can see all about that on the specifics on the Pursuit website. OK. So fast forward 60 days, looking to our iconic locations and FlyOver experiences, we're seeing the world begin to open back up. FlyOver Iceland reopened last week in Reykjavik, and we expect to benefit from the over 30,000 units of presold product already in the hands of our Icelandic guests in that market. And for our first weekend of operation, we handily surpassed our visit projection while maintaining a safe environment for visitors. We appreciate the support of the Icelandic government as they've moved quickly to support both workers and businesses in this unprecedented global pandemic. As travel restarts, we believe Iceland's thoughtful management of this public health crisis and renowned reputation as a safe destination, will position the country and our FlyOver Iceland experience well. So let's travel to Canada, Western Canada, and we expect to begin safely opening facilities in Banff National Park and Jasper National Park at the beginning of June. We expect visitation to be below 2019 levels with less international visitors. However, we do anticipate more Canadians traveling within the country than usual. To date, we have bookings in late June, and well into the third and fourth quarters of 2020. We continue to take more every day. For the week ending May 10, we were net positive for bookings, meaning we took more new reservations than cancellations at both the Mount Royal Hotel and the Glacier View Lodge. Canadian government has been very industry-focused, has enacted several programs that have been super helpful, including wage subsidies of up to 75% for team members, and that's called the CEWS program. And this has been extended to August, as well as everything from rent abatements within National Parks. We head north to the great state of Alaska, we expect the National Parks in Denali and Kenai Fjords will open for summer 2020. When they do, we'll be there to safely host guests and staff. Our properties and attractions will open in Alaska on a staggered basis beginning mid-June, because we expect business levels to be impacted by the partial cancellation of many cruise departures from the lower 48. We'll be prepared to adapt our properties and attractions accordingly. So that means we'll shrink and expand the operating capacity of our experiences based on demand. Down the West Coast of Vancouver, talk about Vancouver for a second. Vancouver obviously expects that international visitation will be down from historical levels, but we do expect more Canadians will visit Vancouver and enjoy the culture and beauty of that amazing city, including FlyOver Canada. And next, south of Montana, we expect to begin opening our facilities around Glacier National Park in June. Over 90% of guests to this area are self-driving Americans, and so with record low gas prices and the overall safety allure of a family road trip, we anticipate attendance in Glacier will be less impacted than other locations. In terms of future projects, we've made great progress on Sky Lagoon in Iceland and are on track for a late spring 2021 opening. The team has been working hard on FlyOver Las Vegas. And we've made great strides on the development of the creative product that will be shown in 2021. But finally, we believe that the power of iconic locations will not be dimmed. And looking back throughout history and now looking ahead into 2021, Pursuit is well positioned to benefit from the pent-up perennial demand for iconic, unforgettable and inspiring experiences. So back over to Steve to talk about GES.

Thanks, David. Through February, GES performed well with overall results tracking slightly ahead of forecast. We were looking forward to a tremendous year with strong momentum on the corporate side and an incremental $100 million of revenue from 3 non-annual events all set to take place this year. Fortunately, the first of the major non-annual events, CONEXPO-CON/AGG took place as scheduled in early March before wide sweeping stay-at-home orders and other restrictions went into place as a result of COVID-19. As event activity essentially halted, we drew upon our logistical capabilities to help our communities in the battle against COVID. We partnered with facilities, other contractors and members of the trade to convert 4 large exhibition centers in Chicago, London, New York City and Edmonton, Canada into temporary hospitals or shelters. This was around the clock work completed in a very short time, and we're proud of our employees for their drive and commitment to this important work. Where we sit today, event activity has largely been canceled or postponed through July. Exactly when large-scale events will resume remains unclear and will ultimately be determined by the lifting of restrictions by local authorities and at the discretion of the event organizers. Just yesterday, MINExpo, 1 of our 3 major non-annual events that was scheduled to take place in Las Vegas in September, officially announced that it was postponing until September 2021. And based on a reopening plan recently announced in Illinois, it appears unlikely that IMTS will be able to take place as previously scheduled for this September in Chicago. That said, we do still have events on the books for the third and fourth quarter, including the International Woodworking Fair, a biannual event that is set to take place in Atlanta this August. And we continue to receive and win RFPs for client work in late 2020 and 2021. So there are definite signs that the live event industry is ready for a comeback as circumstances permit. We are closely monitoring commentary and decisions made by local governments to understand how they intend to handle the reintroduction of exhibitions and conventions in their economic reopening plans. While we wait for those decisions, we have effectively hibernated GES by leveraging its high variable cost model to minimize operating costs, while retaining the ability to reactivate parts of the company as business returns. We expect certain sectors will return faster than others, including pharma and technology, which are 2 of our strongest verticals on the corporate side of our business. We are taking this opportunity to design and build a better business, one that's more profitable, less asset-intensive and more focused on our clients' future needs. Our focus continues to be on transforming our exhibition business, which is the largest part of our revenue today and driving share gains in our corporate business, while smaller competitors struggle to stay alive during this challenging time. When we begin to restart GES, we will do so with the future in mind and expect to emerge leaner, more nimble and more client focused. And now I'd like to turn the call over to Ellen to discuss our financials in detail. Ellen?

Thanks, Steve. As a service business, we have a highly variable, largely labor-based cost structure, which allowed us to act very quickly when the COVID-19 restrictions began occurring. Both business segments were able to flex down very quickly as conditions weakened. At Pursuit, we immediately reduced more than half of our costs and still have additional cost levers to pull if conditions do not begin to improve in the coming months. We can expand and contract the operating capacity of our experiences based on fluctuating business levels, which is a core competency for us, given the normal seasonal demand patterns of this business. At GES, more than 2/3 of our costs are entirely variable with an even larger percentage able to be quickly adjusted based on business demand. We essentially entered a hibernation mode until events return, reducing our semi-variable cost by approximately 70%, and we stand ready to quickly turn the faucet back on as events return. In addition to reducing our costs, we took a variety of other steps to preserve cash. We significantly reduced or eliminated planned capital expenditures, including both nonessential maintenance and small growth capital projects, and we slowed the pace of the two Pursuit FlyOver projects in development. We amplified our focus on working capital management, we engaged in productive dialogues with landlords and local tax jurisdictions to eliminate or defer spending where possible and we received some benefits from various government relief programs, including wage subsidies offered in Canada, the U.K. and the Netherlands, as well as U.S. payroll tax deferrals available under the CARES Act. We believe we have an adequate cash position and balance sheet to weather the near-term impacts of COVID-19. At March 31, our cash balance was $130.5 million, and in early April, we drew the remaining $33 million down on our revolver, bringing our total cash at the beginning of the second quarter to approximately $163 million. Given the swift and deep cost savings actions we've taken, we have significantly reduced our operating costs and expect our cash outflow during the second quarter will approximate $40 million. This assumes continued collection of outstanding receivables, minimal new revenue and no postponed events coming back in the quarter. As it relates to our revolving credit facility, we were in compliance with all financial covenants at the end of the first quarter, and we have already received a waiver of financial covenants for the second quarter. This waiver, combined with our cash position, gives us important breathing room to negotiate longer-term covenant relief and line up additional sources of capital as we prepare for COVID impacts to persist into the third quarter and perhaps beyond. We are working closely with our lender group and outside advisers to ensure that Viad is sufficiently capitalized to withstand the downturn and emerge in a position of strength, with Pursuit poised to continue its pre-COVID growth trajectory. As David mentioned, we believe experiential trips will rebound more quickly than large events, and this economic downturn may ultimately bring interesting investment opportunities we hope to be able to pursue. Now switching over to our preliminary first quarter results, which were in line with our pre-announcement in mid-March. First, let me comment on the preliminary nature of these results. The impact of COVID-19 has necessitated additional asset impairment testing, which we are currently working through. The preliminary results shown in our earnings release and that I will comment on shortly, therefore, do not include noncash impairment charges and the corresponding tax effects. We do not expect the noncash impairment charges to impact cash flow, debt covenants or ongoing operations. However, we do expect the impairment charges to have a material impact on the final GAAP financial results presented in our Form 10-Q, which we expect to file no later than June 15, 2020. Preliminary revenue was $306 million, up 7.1% from the 2019 first quarter primarily due to positive share rotation of approximately $57 million at GES, partially offset by show postponements and cancellations due to the COVID-19 pandemic. January and February were in line with our original expectations, while March was impacted by postponements and cancellations resulting from virus concerns, causing us to reduce our original guidance for the first quarter and withdraw our full-year guidance. GES revenue was $292.5 million, up $17.6 million or 6.4%. This growth was largely due to the occurrence of a nonannual CONEXPO-CON/AGG trade show in early March before the COVID effects were fully felt. Pursuit revenue was $13.5 million, up $2.9 million or 26.8%. This is a seasonally slow quarter for Pursuit and although we began to feel the effects of COVID-19 during late March, Pursuit finished the quarter with higher revenue than 2019, largely due to strong pre-COVID results from our acquisition of Mountain Park Lodges and our new FlyOver Iceland attraction. Preliminary net loss attributable to Viad was $10.6 million versus $17.8 million in the 2019 first quarter. And preliminary net loss before other items was $8.5 million versus a loss of $10.2 million in the 2019 first quarter. This non-GAAP measure excludes impairment and restructuring charges, acquisition, integration and transaction-related costs, and attraction start-up costs, as well as a legal settlement recorded in the 2019 first quarter. Preliminary adjusted segment operating loss was $8.4 million versus a loss of $11 million in the 2019 first quarter, and adjusted segment EBITDA was $6.9 million, up $4.7 million from the 2019 first quarter. The increase in adjusted segment EBITDA was primarily due to higher revenue at GES and the elimination of performance-based incentives partially offset by increased seasonal operating losses at Pursuit driven by the June 2019 acquisition of Mountain Park Lodges and the opening of FlyOver Iceland. GES adjusted segment EBITDA was $19.1 million, up from $10.9 million in the 2019 first quarter. And Pursuit adjusted segment EBITDA was negative $12.2 million versus negative $8.8 million in the 2019 first quarter. The second quarter will be extremely difficult, but our quick move to reduce variable expenses into increased liquidity will help protect our financial position. We've essentially been in hibernation mode since early in second quarter, maintaining the lowest level of expenses we prudently can, while we wait for the slow resumption of travel and events. At Pursuit, as you know, the seasonally strongest period is June through September. And as David said, we believe the business will be the first to recover and are beginning to see signs of this. GES is expected to take longer, although we are hopeful that as certain locations begin to lift restrictions, events will start to take place again during the third quarter. We've controlled the factors we can control. We've reduced expenses, prudently managed our balance sheet and maintained very close contact with our lending partners. We are in a good financial footing to manage through a brutal second quarter and hope to emerge in the third quarter with growing visitation and bookings at Pursuit and the cessation of cancellations for future events at GES. And now I'll hand the call back to you, Steve, for your concluding remarks.

Thanks, Ellen. In closing, the spread of COVID-19 affected our overall results for first quarter and we anticipate continued impact in the near term as planned events further unfold, air travel remains at a bare minimum for the time being, and the state-by-state regulations continue to shift. We expect GES will experience a patient Rebound, whereas Pursuit will see more benefit in the short-term as stay-at-home orders are lifted and domestic regional travel resumes. As Ellen shared previously, we have taken swift steps to bolster our near term liquidity, and we are prepared to take other prudent steps to ensure we weather the storm. We have an experienced management team that have navigated through previous downturns and are more than capable of leading this company through this uncertain time. We see the current environment as an opportunity to re-imagine the demand side of our 2 business segments and map out where we believe to be the most profitable pockets of opportunity and growth as we exit this downturn. We anticipate making some strategic changes to the business in order to better facilitate the evolving needs of our clients, better serve our guests and provide significant value for our stakeholders as we improve our competitive position in a post COVID-19 universe. And we believe in the longevity and resiliency of our business, exhibitions, conferences and corporate events are a vital part of the economic engine, facilitating sales, networking and education and a relatively low-cost and high-impact way. The replacement of live events by virtual events has been tested in the past and will likely be tested again. But even in the most productive of virtual worlds, we do not believe that face-to-face meetings will go away. They may change and our industry will change along with it. In our GES business, we will focus on shrinking our footprint and choosing which markets we want to be in and which ones we don't. On the Pursuit side, iconic location and experiences cannot be replaced, and people will not choose to stay at home indefinitely. We will once again venture out to explore the world in its amazing places perhaps with pent-up demand. And at Pursuit, we will be there to welcome our guests, who coming out of quarantine, will be ready for new, unforgettable experiences. More than ever, we believe that experiences will be more valuable than things. And with that, we'll open up the call for questions.

[Operator Instructions] Our first question comes from Kartik Mehta.

Steve and Ellen, it sounds like from the commentary you gave that you expect second quarter to be kind of a trough in terms of revenue and cash usage. Is that accurate?

Yes, Kartik, I think that's accurate, given what we're seeing now, it's minimal revenue in the second quarter given the impacts of COVID-19.

And then on the Pursuit side, is it, if you look at bookings today, I think you gave a number that I think you looked at as a May 10, but May 10 of this year versus May 10 of last year, what percentage of bookings compared to last year are you at?

Kartik, I'll let David Barry talk a little bit about the Pursuit bookings.

Yes. So I'm hesitant to give a whole bunch of guidance in terms of the future because this is a period of demand for us and lots of booking pace. So we went through a period of cancellations where you can imagine the weeks from March 15, 16 on. And then it stabilized and we're starting to come out the other side. So we expect that there'll be a range depending on the property, Glacier, obviously less because it's more drive market. Our international visitation in places is more affected. But we're still -- I think in the last 10 days or so turning the corner in terms of taking more bookings than we're having cancellations.

Yes, and then maybe just a follow-on. What about from a price standpoint? Obviously, not the tractions because maybe that's not relevant, but the property, have you had to reduce price or provide promotions? And so if you looked at year-over-year, where will revenue be for the properties compared to last year.

Yes. I'll deal with the price point. Revenue will be a look and see. But what's interesting with price is, the fundamental principle for us and for anyone that's followed us since 2015, we've been very focused on -- if you could have a great product, you can charge a fair price for it. There will be downward pressure in the industry for all players because people want to get moving again. And so you'll see a combination of things, whether it be airline or hotel times. But we spend a lot of time and energy on price, and we will fluctuate based on demand. So if a certain property is obviously in higher demand, and we see an opportunity to price accordingly, we will. If there are times where we want to generate traffic, we'll be focused on that. The key is the quality of the experience and the value and being able to charge a fair price for it.

And just to make sure I understood, I guess where are you today versus last year? Have you had to take down -- have you had to take price down to kind of get people to start booking and start thinking about some of these places?

It's really dependent on property. And so in some cases, yes, in other cases, no. And then if you look on the Pursuit collection website, you can see a wide range of pricing depending on property, time of year and so on. And so if you go back a generation ago, people would set a price and keep it for a season, our prices change daily based on demand. So they're really dynamic, and they move a lot up and down depending on what's happening on a particular arrival day.

Your next question comes from Tyler Batory with Janney Capital Markets.

I appreciate all the detail thus far. Just a few follow-up questions for me. And I want to start first on the liquidity discussion. You mentioned binding up some additional sources of capital. Is everything on the table here? Just can you talk broadly about potentially some of the options that you're looking at?

Tyler, yes, we're working with a great group of advisers on looking at some other financing alternatives. I can't go into kind of the details on that right now, but we are looking at anything that would work for us and in the future to go forward and get us through to the other side of this challenging environment.

Okay. Okay. Great. And then just on the cash outflow of $40 million that you talked about, can you provide a few more details in terms of the assumptions to get to that number? I mean, does that include CapEx and interest as well? Just trying to get a sense of what you were looking at to get to that $40 million number?

Sure. So the $40 million cash burn in Q2, it is all that. It's all of our cash burn. It does include interest payments and includes minimal CapEx that we've been spending. And it also includes some receivable collections from Q1 revenue.

Okay. And just in terms of the Capex, how much did you guys spend in the first quarter? How much are you expecting to spend the rest of the year? And then you've talked about minimal amounts of spending. I mean, how long can you spend at a fairly low level, I mean, through 2021? Or do you think there could be a little bit of a ramp-up in the next couple of quarters potentially?

So from the CAPEX perspective, we've minimized maintenance CAPEX to only essential maintenance CAPEX. And then we also have some CAPEX that we were in the middle of on certain of the perceived growth projects. So we've minimized all of the CAPEX spend unless it's essential.

Yes. Tyler, the way to think about it is, as Ellen said, we brought our CAPEX spend down to a minimum, just those items that ensure the safety and health of our guests and our employees. And we've put a pause, as David had mentioned, on our FlyOver construction. And so those two projects are on pause, hoping to resume later.

Okay. Okay. That's helpful. And then just on the Pursuit side of things, and again, I appreciate the detail you've provided so far. How should we think about breakeven rates at Pursuit, just given some of the operational changes you made to address some of the safety issues that are out there, both on the hotel side of things and then in terms of capacity on some of the attractions as well?

Yes. Good question. So what's interesting is, you think about it as an accordion. So you're going to move costs down and you're going to shrink facilities. So when you check into a hotel, for instance, you may think the entire hotel is open, but we might be operating one main corridor of that hotel or with social distancing having guests in two corridors, but we're able to scale up and scale down based on demand. So we have a very specific breakeven view into each of our businesses. And we focus on it and manage accordingly. And so we're able to adjust on the cost side and ensure that we're not operating something as a waste of time, that we're very focused on having it be productive.

Okay. Okay. Perfect. And then just on the GES side of things, can you provide a little bit more detail in terms of how cancellations and refunds work? I mean you mentioned MINExpo being postponed until 2021, maybe IMTS not happening at all. Just how are things going to work in terms of some of these shows getting pushed off in terms of your cash and revenue recognition?

Sure. And, Tyler, I'll talk about the cancellations we saw in the first quarter, as well as some of the activity we're seeing in the balance of the year. So typically, what happens in a cancellation, we're at some stage of preparing to open the event or the trade show, and typically in a cancellation, you're able to recoup the cost of that work that went into the preparation. And of course, in March, we had some events that were canceled the day before they were opening. And therefore, we had a fair amount of work put into those events. There are other ones where they're able to cancel far enough in advance that if there's less work involved and therefore, less to recoup. But that's typically how the contracts work.

Okay. We'll leave it there. Thank you very much.

Your next question comes from Steve O'Hara with Sidoti & Company. Your line is open.

Yeah. Thanks for taking my question. I guess just on the cash burn, I guess maybe can you just talk about the potential rate of that in 3Q, maybe assuming kind of a similar state for GES? And then if you see kind of a gradual return to normal within Pursuit? What does that look, I assume it gets a little bit better. Is that the case? Or might that be the case?

Steve. Yes. Well, given this rapidly changing environment, and Steve talked about some of the shows canceling at GES. And I'm really not in a position to give guidance now on cash burn as well as revenue or EBITDA. So let me just tell you what we're doing, though. I mean, we're pulling all levers to reduce costs. So as the revenue comes back on, the cost will come back on, but not before. And we're having productive conversations with our lenders and making sure that we have the adequate liquidity. As you saw, we did a Q2 waiver of our financial covenants we finally saw on Friday and now we're working with our lenders on a longer-term amendment. So we're doing everything we can on the liquidity side, but I really, I'm not in a position to give kind of guidance for Q3, Q4 at this time.

Okay. But I mean there's nothing, there's no reason to think it would get worse in 3Q for GES? But maybe Pursuit as long as that improves a little bit. I mean there's nothing in there that would make you think that 3Q would be worse maybe?

Steve, I think the way to answer it is that we see business in both Pursuit and at GES. We do have events that are scheduled in Q3 and Q4. And obviously, David talked about sort of the demand side at Pursuit. We're constantly evaluating what our operating costs are, and we're making adjustments as we go along. So we'll be judicious in how we bring back labor and when in order to minimize the impact of that. But at this point, things are moving quickly. The landscape is changing and would prefer not giving a forecast for Q3 or 4.

Okay. All right. No, that's fine. And then, I mean, when you say kind of emerge stronger and making, I think, strategic changes to emerge stronger and better meet the marketplace, can you just talk about maybe some of the things that you're contemplating right now?

Sure. And I'll speak specifically at GES. It's more than a year ago, we kind of took a white paper exercise to think about what the business should look like going into the future. And we started, I think, we talked a little bit about our simplified grow, transform strategy, which came out of that white paper or white sheet exercise. So we've always had somewhat of a hub-and-spoke model to our business. And we think there's opportunity to continue to move more towards the hub and spoke. And what that would do for us, Steve, is lower our overall operating expense, both in terms of facilities as well in terms of headcount. So it's a little bit of a, it's going back to what we've had before, which is hub and spoke, but just leveraging that in other services.

Okay. Okay. And then maybe just lastly, how do you think about, I mean, it seems like your businesses have been kind of squarely hit almost like the airlines have been. And I'm just wondering, how do you think about managing, I mean, obviously, you've got to get through the current period. But I mean, how do you think about managing the business longer-term with these types of risks out there now? I mean is it -- you kind of manage the business the way you did, but then you can't really manage for -- hopefully, once in 100-year event? Or maybe you can talk about that a little bit, too.

Sure. We have two amazing businesses. And at Pursuit, these iconic locations are not going away. They're going to be here forever, and we'll be there ready to welcome guests. And these things are -- the assets we own within the Pursuit business are irreplaceable. A Strong competitive modes. And we believe that coming out on the other side of the pandemic that these assets are going to be stronger than ever. In terms of GES, again, face-to-face events have been tested over time, and they've always been resilient. We believe in the value of face-to-face meetings, and we believe that those will come back as well. We work with 70% of the Fortune 1,000 companies on their events and their participation in face-to-face meetings. And what I hear coming from clients over the last few weeks is that, they're excited to come back and that they're starting to plan their events for later this year and into 2021. So we believe that we can take this opportunity, specifically on the GES side to reimagine how we operate and execute events, but we have a strong belief that both of these businesses are incredibly valuable and will return.

I'll pile on and just give you a sense on the Pursuit side. So what's interesting is, think of what we've learned, right? This is day 61 of working from home. I think all of us, whether it's within the business or anyone that's on the call, we've all learned some things about working from home. It's like what time do you have a glass of wine in the afternoon? And what do you have for lunch. So you can think about that. But more importantly, is you learned about efficiency and so I'll give you an example real-time of breakeven efficiency and then really understanding the flexing of facilities. And we were really good at that before because of the strength of margin. But we're going to be five times better than that going forward because we've been really figuring it out in different detail. The other thing is, as the world opens, it's going to open differently. So Iceland is opening to the world on the 15th of June. And even if you saw that in the news, one of the interesting things with that is, you'll get your COVID-19 test at the airport when you land. And if you clear, then you're free to go on to be a tourist. And if you can't, well, then there'll be some form of quarantine for you and so on. So the merging of science, data, the way tracking is going to work, the way the information is going to work. If you go look at Disney and Shanghai and what they're doing from application and the health code and all of those things. So the businesses are going to adapt quickly. We're all going to learn. And then in each of these situations, if you look back over history, in the history of Brewster, there's been -- in 110 years, there's been 22 different economic cycles. And we went alive in 1918. So as a group, we don't have a ton of experience on pandemics, nobody else does either. But we've learned a bunch in terms of how these businesses return quickly. So people do want to go see iconic locations, and they're going to go to safety, which, if you look over the history, we've seen it multiple times, where the safer destinations return more quickly. So we've learned a bunch of things there, and I think we just get more efficient and better as we go.

[Operator Instructions] Our next question comes from Barry Haimes with Sage Asset Management.

I had a few questions. First, on the Pursuit side, overall, is there a rough sense of what percent of tours arrived by car versus Fly?

It really depends on the destination. And so if you think of some state glacier in Montana, it's probably 98% drive traffic, primarily coming from the western part of the United States. In other geographies, and if you look at Banff Jasper, 50% generally is international visitation and the other half comes from within the country. So each one is dependent on its particular orientation.

Okay. So I mean, overall, is it 50-50 or two-thirds, one-third in one direction? Just a rough feel when you put that together?

I think for your estimate 50-50. 50-50 is a safe estimate.

Great. And then also on Pursuit, to get a feel for where we are right now after some of the cancels and now we're starting to get some new bookings. If you were to look at occupancy rate as you're booked now for, let's say, the summer, July, August, and then compare that to a year ago, any feel for what that might look like?

No. Not that I'm willing to share right now. So a good question. What's interesting is, we're seeing, obviously, the situation evolves and starting to gain momentum back. And you can see it in everything from web searches to how are people looking at particular information about vacations. And so I believe that we will continue now to build upon what we have. And that will continue through the summer months.

Okay. Fair enough. And one on GES. You alluded to the fact that there might be some weak competitors out there, maybe some changes in industry structure. Could you give us a sense of what percent of that industry are in the hands of large players like yourselves versus what percent might be still accounted for more small, medium-sized folks that might be a little bit more at risk?

Sure, Barry. What I would tell you is, you have to think about it in two different parts. A part of our business is where we're a general contractor, and there are primarily two large players in that space. The other side of our business is really more of an agency, where we work with corporate clients directly. And that's a much more fragmented industry, and that's where I have seen weaker players go out of business. Really in our conversations with some corporate clients, and over the last three weeks, we've been able to win new corporate clients based on some of the activity that's happening, weaker players that are not going to emerge out of the pandemic and corporate clients fleeing to safety, to larger corporations that will weather the storm and come out the other side. So I have a feeling that the industry is going to look a lot different than it went in to the pandemic, and I think that's both on the general contracting side and on the agency side of our business.

Got it. And just to make sure I'm 100% clear that the contractor side, you're talking about the exhibit construction?

The contracting side is more of the production of the event.

It's the other way?

The agency side is both construction of their exhibit programs, as well as corporate events.

Got it. There are no further questions at this time. I'll now turn the call back to the presenters for closing remarks.

Well, listen, I want to thank everybody for their time today and their interest in Viad. I know these are challenging times. I hope that you and your families are safe and healthy. And we'll talk to you soon as we update our investor group. Thank you.

This concludes today's conference call. You may now disconnect.