Pursuit Attractions and Hospitality, Inc. (PRSU) Q4 2020 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the Viad Corp. Fourth Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] I would now like to turn the conference over to your host, Ms. Carrie Long, Executive Director of Finance and Investor Relations. Please go ahead, ma'am.

Good afternoon and thank you for joining us for Viad's 2020 fourth quarter and full year earnings conference call. During the call, you will hear from Steve Moster, our President and CEO and the President of GES; 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 or income before other items, and adjusted segment EBITDA. Important disclosures regarding these measures, including reconciliations to net income or loss attributable to Viad can be found in table two of our earnings press release, which is available on our website at www.viad.com. With that, 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're all staying safe and healthy. On this afternoon's call, we'll discuss our business performance during the 2020 fourth quarter and full year, provide some insight into the gradual recovery of our industries, and review our liquidity position. David will provide business updates for Pursuit shortly, and after I will share business updates for GES. Ellen will cover liquidity and financial results towards the end of the call. Before I turn the call over to David, I'd like to thank our employees who have worked incredibly hard during this challenging year. I'm very proud of our team's performance and I appreciate their dedication to our businesses, guests, and clients. In this upcoming year of recovery, I'm confident that the strength, drive, creativity, and flexibility of our team will once again help us succeed. I'd like to turn the call over to David to discuss what's happening across Pursuit. David?

Thanks, Steve. Three really important words for Pursuit; resilience, continuity, and growth. So, I want to start with a heartfelt thank you to all of our Pursuit team members, our guests, and our business partners around the world, all of whom have played a critical role in helping us navigate the many challenges of this past year. Against all odds, we were successful in delivering another season of iconic, unforgettable, and inspiring experiences, while maintaining a keen eye on our safety promise. So, let me begin the discussion of our business performance and outlook by covering our results from the fourth quarter of 2020, which as a reminder is always a contrast from our EBITDA-positive performance across all geographies in Q3. Our last quarter of the year is a seasonally slow quarter for Pursuit, as most of our operations in Alaska and Montana are closed for winter. In Banff and Jasper, we continue to see solid demand from the regional and local markets as international borders remained closed and visitation to Western Canada from long haul international markets was extremely limited. We're particularly pleased with our lodging business in Jasper, and during the fourth quarter the seven properties delivered nearly 27,000 room nights, and so our year-over-year increase in average daily rates at multiple properties. In aggregate, the properties delivered positive fourth quarter EBITDA achieving sold out status on many nights during the holidays and surpassing our expectations for the period, and we've seen that positive trend continue through January. In Banff, we continue to welcome guests to the Banff Gondola, the number 2 ranked Mount Royal Hotel, the Elk and Avenue Hotel, and so the new Farm & Fire restaurants, which remains as the number 2 restaurant in Banff on TripAdvisor second only to our own number 1 Sky Bistro. Switching gears to FlyOver attractions at FlyOver Canada and Vancouver, the new Halloween contest that we launched in October was met with positive guest reviews driving a 50% increase from our internal forecast for October visitation and increased net promoter score of 16 points from the prior month. In Iceland, our operating team improved once again their resiliency and responsiveness working tirelessly to maximize operating hours and manage ride capacities in the face of constantly evolving restrictions from local health officials, all the while remaining focused on an outstanding guest experience. In sum, while our business results were far from what we originally envisioned, we're proud of the resiliency of our business model and believe more than ever in the power of iconic experiences. Teams around the world rose to the occasion to weather the worst of the pandemic and supported each other through these challenging times whether leveraging our food and beverage operations to deliver nearly 20,000 community meals or the personal sacrifice made by many team members through temporary wage reduction. The Pursuit team did what was needed and more to manage through the challenges and prepare the organization to restart and continue our growth journey. We're optimistic that the worst is behind us. So, let's take a few minutes to talk about what we're seeing in the year ahead. We expect that while the world inches towards normalcy, we'll continue to serve a largely local and regional demographic through the first half of 2021 as we await the reopening of international borders. That said, we firmly believe the pent-up demand for travel and for Pursuit experiences is very real. Now more than ever, we remain confident that as soon as our guests can move freely, the demand for our safe destinations and experiences will return to pre-pandemic levels sooner rather than later, and that the iconic nature of Pursuit experiences will put us at the forefront of the travel recovery. Our view on Pursuit's recovery is encouraged by the fact that our locations and that's why that we're talking to Western Canada, Montana or Alaska are all considered safe destinations. In Iceland, the government continues to make strides towards completing vaccinations and we're optimistic that this coupled with the acceleration of vaccines in the U.K. lends itself to a potentially stronger summer tourism season in Iceland once borders are open. As we look forward into '21 starting in Montana, we're encouraged by how the third quarter of '21 is pacing ahead relative to the same period in '19. Reminder, Montana is primarily a drive market destination. It's less reliant on long-haul visitation, and we're positioned very well for the coming season. We're seeing strength in rate growth for our cabins and RV site products, both of which are trending 10% to 15% ahead of the same period last year. Now, up to Alaska. We expect a more gradual return to pre-pandemic business volumes as visitors are more relying on inbound air inclusive volume to Alaska. And Alaska is a true bucket list destination, and it will benefit from pent-up consumer demand for travel in the longer term. We are disappointed to learn this week of the Canadian government's ban on cruise ships over 100 passengers from its waters for the '21 season, which will have some impact on business in Alaska. However, we are seeing solid third quarter pacing at several of our Alaska-based hotels and attractions. In Banff and Jasper, the province of Alberta is seeing a steady decline in COVID cases, and we expect an easing of the restrictions put in place in December. Earlier, I mentioned the strength of the hotel business in Jasper in the fourth quarter, and we're very pleased with how that's continued into the first quarter of the New Year, and I'll stress it's still very early days and that our sample size is small, but we remain enthusiastic about how we're trending for the first quarter of '21 as recent weekend occupancies have eclipsed 90%. In Vancouver, in compliance with provincial health restrictions, we closed FlyOver Canada temporarily back in early December. We remain closed due to government restrictions and look forward to the short-term closure order coming to an end. We'll be open soon and have a fantastic content calendar lined up for the '21 year. Back over Iceland; FlyOver Iceland remains near the top of TripAdvisor's list and things to do in Reykjavik, and continues to deliver outstanding guest reviews. When Iceland opens its borders to international guests, our attraction is well positioned for success. Not unlike last year, our holiday period saw significant volume of gift tickets sold, the vast majority of which will be redeemed through the balance of the year. And while it may feel like much of the world has been on pause, we at Pursuit have been hard at work continuing our exciting growth journey. So let me give you an update on our two new world-class attractions we're opening in 2021. Starting first in Iceland; we're thrilled to be delivering Sky Lagoon in the second quarter. Recently featured in Conde Nast Traveller, Sky Lagoon is one of the largest tourism projects in Iceland history featuring a geothermal spot with a 260 foot Infinity edge overlooking the Atlantic Ocean all within minutes of Downtown Reykjavik. As spa and wellness-related activities are immensely popular for locals and visitors alike, we think this experience is going to be a game changer in terms of Iceland-based attractions. Now, back to the States. We're on-track to open FlyOver Las Vegas in the second half of the year. With an ideal location on Las Vegas Boulevard across the street from the Park MGM and the T-Mobile Arena, we're bringing the amazing story of the American West to Vegas. Filming is nearly complete and I can promise that the experience will be spectacular. We also think that as a destination, Las Vegas will be one of the first places to benefit from pent-up demand, and we intend to capitalize on that timing with the opening of FlyOver Las Vegas in early fall of 2021. In closing, we're proud of the decisions we've made and the actions we've taken to manage through an unprecedented 2020. I'd just like to reiterate our thanks to the team members, guests and partners around the world who helped to make it happen. Despite any short-term impacts from pandemic-related issues, our outlook on the future is bright. As we said to you last quarter at Pursuit, we believe that collecting memories is more important than collecting things and the power of iconic places will continue to benefit from perennial demand, and we're poised and we're ready to go. Steve, back to you.

Thanks, David. Now switching over to GES. First and foremost, I'd like to say thank you to our GES team members, clients and partners for their commitment and support during this unprecedented year. Our industry has been tested like never before and our team has risen to the challenge to drive structural changes that have freed up capital, reduced our fixed costs and positioned GES to flex up when revenue returns with a more variable cost structure and improved margin. In a year that we would normally be bustling to service over 4,000 global events, we were presented with an opportunity to accelerate some important strategic goals, growth in our corporate business and margin improvement within our exhibition business. Gaining share within the higher margin corporate client segment of the market has been a key part of our growth strategy at GES. The pandemic has created disruption in this highly fragmented market and opened doors to new prospects as corporate clients search for stronger providers. As an established and trusted partner in this space, we continue to expand our corporate client roster with the addition of new corporate clients like Boomi, a Dell company, Temenos, 10 Genomics, Tetra Pak, AM General, Hartz Mountain, Wylo and the London Stock Exchange. While many of our corporate clients have transitioned to fully virtual events for the first half of 2021, we are actively working with our clients on the hybrid and face-to-face events that are scheduled to produce in the second half of this year. On the exhibition side, we've used the temporary halt in the face-to-face event production to transform our largest business into a leaner, more nimble competitor in the marketplace. Through facility rationalizations, we reduced our annual fixed cost by about $10 million and we've scaled back our semi-variable cost by about 70% in response to the current revenue environment. This reduction largely came from reduced wages, which we expect to begin scaling back up gradually and on a more variable basis during 2021. I'll elaborate a bit more on this in a moment, but first let me address some more permanent fixed cost reductions that we've achieved. By expanding the range of our major warehouses to service existing markets, we were able to eliminate several high cost facilities. In total, we exited 21 leased facilities across our warehouse and office network during 2020, and we sold our San Diego area production warehouse. These locations will now be serviced by other GES network facilities. Last month, we completed a sale leaseback transaction for our final GES-owned facility located in the Orlando market and received about $14 million in cash proceeds. As additional leases come to their end at our other facilities, we will compare the value of our physical presence in those markets to the cost and potentially find additional opportunities to improve our cost structure. Additionally, we've outsourced capital intensive services which has enabled us to make further reduction to our facility footprint. In the third quarter, we closed our U.K.-based audio-visual services business and will instead utilize third-parties to support the AV needs of our clients in the U.K. market. In the fourth quarter, we entered into an agreement with a third-party to outsource the management, cleaning and storage of aisle carpeting that we use at events. This enables us to shrink our warehouse space that was previously dedicated to running in-house carpet depots. As we prepare for the gradual return of face-to-face events, we want to be able to scale our labor cost up in a more variable manner based on demand for our services. To accomplish that we partnered with a third-party staffing agency, Epic Personnel Partners to rollout an industry-wide flex talent pool program. Through this program, we can offer flexible, temporary work opportunities for experienced exhibition professionals starting in key locations where shows are expected to occur. Thousands of experienced and talented trade show personnel lost employment due to the pandemic and with this program, GES along with other leading industry suppliers can offer a broader opportunity for flexible employment. We will now be able to flex up and down our operation and client service employees around event activity as it returns and carefully manage our costs. In terms of the revenue landscape, it's encouraging to see certain markets open and smaller scale events taking place. And while the distribution of the vaccine has boosted confidence, the exhibition schedule for 2021 is still evolving as organizers attempt to gauge when it will be possible to safely hold face-to-face events. The schedule is shifting to be more back half-weighted this year, with the potential of some improvement in the second quarter. For the first quarter, there are some smaller events that are set to occur, including fashion shows in Dallas and Orlando. That said, we expect our revenue during the first quarter will remain near minimal levels due to the ongoing restrictions and concerns related to COVID. For the second quarter, we could see some revenue improvement but expect it will remain limited. Many events have already postponed or canceled given the level of uncertainty with the pandemic, while others are still navigating to determine how or if they can safely produce an event. The second half of the year is more promising, reflecting organizers' greater level of confidence that events will be able to occur. We are cautiously optimistic that bookings for the third and fourth quarter will continue to solidify with ongoing vaccinations. And given the pent-up demand that we're seeing for face-to-face events, it's possible that the back half of this year could see a greater number of events than a typical year although perhaps a smaller size than pre-pandemic levels. As we prepare for the recovery of our industry, we are maintaining our strong relationships with exhibition and corporate clients as we support them in new ways, virtually and through some hybrid events. GES remains a global leader in exhibitions and a trusted experiential partner for the world's top brands. Through this temporary period of hibernation, our ability to capture new business wins is a testament to the talent of our team and the superior experiential services that we provide. As in-person event activity is restored, GES will be ready to turn back on with more flexible cost structures and lower break-even points due to the permanent changes that we've implemented. I'm excited about the future for GES as a stronger and more profitable business that will once again generate strong cash conversion for our shareholders. Now, I'll turn the call over to Ellen to discuss our liquidity and financial results in more detail. Ellen?

Thanks, Steve. As we look back on 2020, I'm extremely proud of what our team was able to accomplish during an unprecedented tough year. We took swift actions as the COVID-19 pandemic began developing and affecting our businesses. GES was impacted by face-to-face event cancellations and postponements and Pursuit temporarily closed its properties in mid-March through most of the second quarter of 2020 as well as experienced lower visitation due to continued border closures and other travel restrictions. Our immediate focus was to aggressively reduce costs to preserve cash, secure additional capital to strengthen our liquidity position and amend our credit facility to provide financial flexibility. We had to make difficult but necessary decisions to implement furloughs, layoffs, mandatory unpaid time-off and salary reductions for all employees across the company. All discretionary spending was eliminated and we reduced the maintenance capital expenditures to essential levels, while pausing spending on most growth projects. We raised approximately $47 million in cash proceeds from the disposition of certain assets including $25 million in May, related to the cash surrender value of life insurance policies and $17 million in July from the sale of a GES warehouse that we vacated in connection with our facility downsizing efforts. In early August, we announced that we secured a $180 million investment from the private equity firm Crestview Partners, which made the initial investment of $135 million in newly-issued perpetual convertible preferred stock with the delayed draw commitment of up to an additional $45 million. These critical actions have bolstered our financial position and protecting our future with total available liquidity at the end of the year of approximately $260 million, including cash, revolver capacity and the delayed draw commitment from Crestview Partners. We ended the year with debt of $296.4 million, primarily on our revolving credit facility and cash of $39.5 million. Our revolver debt matures in October 2023, and the longer term amendment that we secured in early August provides us with financial covenant relief until the third quarter of 2022. And as a reminder, during this covenant waiver period, we are required to maintain minimum liquidity of $100 million as of December 31, 2020. The 2020 fourth quarter was a challenging quarter for our businesses as the pandemic continued to impact our industries causing limited event activity for GES and hindering visitation during an already seasonally slow quarter for Pursuit. At GES, we realized revenue of $18.7 million as we supported our clients' primarily with virtual and hybrid events during the pandemic. This was down approximately 93% from the 2019 fourth quarter largely as a result of face-to-face event cancellations and postponements. GES adjusted segment EBITDA, which excluded a non-cash restructuring related inventory write-up of $5.3 million to transform the carpet depot to an outsourcing model was negative $22.8 million. At Pursuit, we experienced a smaller year-over-year revenue decline of approximately 58% as we were able to drive visitors from our local and regional markets while international travel remained restricted. Pursuit's fourth quarter revenue was $9.2 million and adjusted segment EBITDA was negative $7.4 million. And net loss attributable to Viad was $50.5 million for the quarter, and our net loss before other items was $42.8 million, which excludes restructuring-related charges, attraction start-up costs and other non-recurring expenses as applicable. We continue to keep a sharp focus on maintaining a strong liquidity position during the fourth quarter, with GES making additional progress transforming its cost structure and Pursuit managing its costs closely. In total, our liquidity position decreased by approximately $50 million during the quarter, which included funding for Pursuit's new FlyOver Las Vegas attraction that is scheduled to open in the third quarter. We limited our operating cash outflow to approximately $38 million for the quarter, which is about $13 million per month. And our capital expenditures totaled approximately $13.5 million and were mainly at Pursuit for the FlyOver Las Vegas attraction. Although, we are not issuing financial guidance at this time, I'd like to briefly comment on our liquidity and financial outlook. We expect, the 2021 first quarter will continue to see minimal revenue from GES and be seasonally slow for Pursuit with ongoing travel restrictions. With that backdrop, we expect our operating cash burn to approximate $45 million to $50 million for the quarter. We expect to spend about $15 million on capital projects primarily on the continued development of Pursuit's FlyOver Las Vegas attraction, which will mostly be offset by proceeds of approximately $14 million received during January 2021, from the sale of a GES warehouse located in the Orlando area. With our total available liquidity at year end of approximately $260 million and the first quarter estimated outflows, we expect our pro forma liquidity position at the end of the 2021 first quarter to be approximately $210 million or more. We believe that this position will provide sufficient financial flexibility and strength to endure the remaining pandemic impacts while making select growth investments at Pursuit. We expect that our cash burn will slow as we move through the second quarter. Pursuit will begin to enter it's busier tourism season and open its new Sky Lagoon attraction in Iceland. With continued rollout of COVID vaccines, we could see more pandemic-related restrictions left. But even if we assume there is no improvement relative to what we are currently experiencing, we expect a sufficient liquidity above our bank required $100 million minimum level. Moving into the third quarter, we expect to pursue and once again be cash flow positive, and likely with a larger inflow than last year's third quarter with two new world-class attractions online. Additionally, our current level of contracted events at GES, which includes the previously rescheduled suggests that we could also see positive cash flow from GES return during the third quarter, and of course this largely depends on improvements in the pandemic landscape. Without a doubt visibility remains challenging in this environment. But the last year strengthened our team and we're ready to respond to shifting restrictions and pent-up demand as we move through this year. We are fortunate to have a solid liquidity position with the ability to selectively invest in compelling growth opportunities at Pursuit, including approximately $20 million to complete FlyOver Las Vegas and minimal start-up capital to complete Sky Lagoon for their planned 2021 opening date. And we continue to evaluate other growth opportunities that align with Pursuit's Refresh-Build-Buy strategy that we can pursue when it makes sense from a liquidity perspective. And with that, I'll turn the call back over to Steve for some concluding remarks.

Thanks, Ellen. This year has clearly been extremely challenging for our industries, businesses and employees. We acted quickly early in the year to make difficult decisions for the company to ensure that we could withstand the pandemic. Our leadership team remains focused on navigating the company through these unchartered waters to ensure that we make it safely to shore. Although we are not on the other side of this trying environment yet, I can see light at the end of the tunnel and the bright future that we have ahead of us. I'm uplifted by the progress made by the vaccination and I'm hopeful that with increased distribution, safety can be restored and restrictions can be lifted. Our businesses are well-positioned to persevere and recover as they had with previous downturns. Pursuit's iconic assets and world-class hospitality services create inspiring and unforgettable experiences that cannot be replicated. We believe that there will be pent-up demand to travel and share remarkable experiences in the picturesque destinations that Pursuit is located in. GES' live face-to-face events provide a powerful and cost effective way to drive business growth from transacting business to building brand loyalty. We believe that virtual events cannot replace the rich connections created through in-person interactions and GES can create the most meaningful experiences for marketers, organizers and attendee. We are eager to get back to building on the exciting growth success that we had prior to COVID-19 and are confident that our long-term strategies for our businesses post-pandemic will lead to strong shareholder value creation as proven over the past five years. We will continue to drive growth through reinvesting in high return Refresh-Build-Buy projects at Pursuit as well as improved profitability through a more flexible cost structure and emphasis on higher margin services at GES. We remain committed to delivering extraordinary experiences to our guests and our clients and to create long-term value for our shareholders. Thank you, again, to our hardworking and dedicated employees who make all of this possible, and thank you to our shareholders for your continued support in Viad. And with that, we'll open up the call for questions.

[Operator Instructions] We have your first question from Tyler Batory from Janney. Your line is open.

Thank you. Good afternoon. So a few questions from me and I want to start on GES, if I could hear and see the commentary on that business for 2021, especially the second half of the year quite positive, so just wondering if you could tease that out a little bit more, discuss what might be on the books right now for the second half of the year. I know there were some bigger shows that were rescheduled to the second half of the year. What's your confidence level in terms of some of those happening, and then any other details you could provide just on the outlook for the third and the fourth quarter of 2021 in GES, I think would be helpful.

Sure. Thanks Tyler, good question. So obviously we're seeing some postponements and cancellations in the first half of the year, but the back half of the year has remained relatively consistent and -- so those postponements were pushed into Q3 and Q4. So -- and then one of them that I mentioned during my comments was MINExpo, which was pushed from 2020 into 2021. So, we feel pretty good about the number of events that we have in the back half of the year, and we do believe that they'll be a little bit smaller in nature in terms of their size and our revenue, and the number of shares we think is going to be slightly higher than what we've had in previous years in the back half of the year.

Okay, that's great to hear. And then in terms of the cost structure, obviously, you guys have made a lot of progress, you made a lot of changes there on GES. What might the flow through look like out of the gate as some of these events start to ramp back up, and then ultimately once things normalize, what sort of margin are you targeting in that business?

Yes, I'm really pleased with the level of work that we've done in terms of the transformation of the GES business, and specifically the exhibition business. And I believe that we will hit a lower breakeven point in terms of total revenue. I believe that overall, the business can reach its targets that we put out in the past that it would be more profitable than where we were at kind of a steady state pre-pandemic, but we'll have to see how that revenue ramps back over time.

Okay, okay, very helpful. And then just to switch gears to Pursuit. David, I appreciate all the commentary that you gave, wanted to ask a little more specifically about summer 2021 bookings, what the pace looks like right now? And I'm also just interested, are you seeing -- is this mostly locals that are making some of these reservations and are you accepting travel trade, long haul, international reservations in places like Banff and are you doing much marketing for the summer of 2021 or is most of what you have on the books more organic demand, if you will?

Yes, let me answer that and I'll try to follow the series of questions. So one, we're happy to take anyone's reservation that they would like to make, doesn't matter where they're from. But we're seeing -- view into the future and I'll kind of go by area. I'm not going to give specific guidance on the pacing other than we're quite encouraged by what we see in Montana and it's just very, very, very encouraging to see it. Demand for our RV and cabin product is very strong and so that's pacing ahead, and without going into specifics across the whole geographies I can tell you specifically for that category, we're probably 500,000 ahead in revenue pace compared to this time last year. So, the other is Alaska. Many folks had to postpone their trip last summer, and they are encouraged, they're planning their trips. A large percentage of our population of folks that visit Alaska in their view, they're going to be through their vaccine programs by that point, they are ready to travel. The call center teams across Pursuit are doing a phenomenal job because you can imagine, right, Mr. and Mrs. Smith are calling, and they've moved their trip three times but they're excited to come this summer. That said, that requires that borders open and travel within the U.S. domestically will be fine, but the border between Canada and the U.S., it would be helpful for it to open. As Iceland accelerates its vaccination program and the same at the U.K., that's a natural travel corridor. So we're cautiously optimistic. There is a lot of wood to chop yet in terms of getting borders open and seeing that return to travel. Particularly for '22 though it's exciting to see that energy because the focus and attention on the '22 year again, we're quite encouraged by that as well. And remember, we're contracting the travel trade to two years out or three years out depending on the market.

Okay, and then in terms of the marketing spend and trying to ramp up bookings I mean, I would imagine that you want to wait until the borders reopen to really step on the gas for that or maybe perhaps because there is some pent-up demand perhaps you don't need to spend as much as you might otherwise would have to try to drive some of the bookings.

Yes, we're trying to be surgical, to be honest in the sense that -- so right now we have a super productive campaign working for Alaska, which again travel from the lower 48 to Alaska, those planes will fly. Even if not all the cruise ships sail, those planes will fly. So, we're encouraged by that. We're quite encouraged by Jasper. I mean Jasper is a really interesting -- was a -- and a great acquisition for us when we acquired the Mountain Park Lodges group and have that controlling interest. So, the Jasper has been a real producer and we're seeing strong response to regional campaigns there as well. So, we're trying to be surgical and we're trying to follow the rhythm and pay attention to booking patterns and a variety of other things to keep interesting momentum moving. Website visitation is strong, consumer inquiries are strong, call centers are again doing a great job responding to guests that are working on planning for this summer. I think so many people have spent so much time at home that they're ready to do something this summer and they're excited about doing it.

Okay, great. And a question probably for Ellen, I think. Just on the operating cash outflow, you're $38 million in the fourth quarter, the original guidance is $45 million to $50 million, can you talk a little bit more about the delta there on the operating cash flow?

Yes, the operating cash flow was a bit lower due to favorable working capital and we saw that in Q3, we saw that in Q4 and we expect it probably it's less in Q1, which is why we touched Q1 at $45 million to $50 million and $38 in Q4. It's mainly work to make for capital for Q4.

Okay, great. And then, just the last question here. Steve, I know we've talked about this in similarly every quarter, but just wondering if you could provide an update on M&A. I mean, if you have any thoughts on what's out there? What the pipeline looks like? What the opportunities might be -- any change, and the environment over the past couple of months? Any thoughts around those topics would be helpful.

Yeah, I think pandemic has caused disruption in both of our industries and that creates opportunity from the M&A pipeline perspective. We've talked about before that our focus is continuing to sale Pursuit and focus on the Refresh, Build, Buy strategy that's worked well for us over the years. And, we think that there's opportunities that that will come our way over time. And so, we're committed to that in a balancing liquidity plus our ability to invest in our future. And so, we're encouraged by what we see, and that's all I can say about it.

Okay, very good and that's good for thank you very much for the detail. Appreciate it.

Thanks, Tyler.

We have your next question from Kartik Mehta from Northcoast Research. Your line is open.

Thank you. Steve, I wanted to ask airport 2021 outside of MINExpo, are you anticipating any other show rotation positive or negative?

Good question, Kartik. In 2020, we had the three non-annual events that were scheduled to take place. Fortunately, CONEXPO was able to take place in the early part of 2020. The other two events MINExpo and IMTS did not take place. MINExpo did postpone until this year same timeframe and IMTS because of its rotation, decided to cancel this as well and just hold their 2022. So there are smaller pieces that, but those are the three large ones and that's not where they fall out for 2021.

What's the normalized revenue would have anticipated from MINExpo? I know, the show is going to be a little bit smaller. And you don't -- at this point probably hard to tell what attendance and everything will be like but in a normal year what's MINExpo's in terms of revenue generation?

Yeah. First, we don't get into individual show economics may for a bunch of reasons, but it is one of our three largest non-annual events, we talked about in 2020 that those 3 large annual events we drive $100 million of incremental revenue, I would argue that MINExpo is one of the smaller of the three and so that gives you some guidance in terms of the scale of it.

And then just on the Pursuit side, obviously you talked a little bit on the GES side in terms of margins and other companies position once revenue return. But on Pursuit, have you been able to make some changes? Could you see Pursuit also follow a similar pattern look where margins could be better than they happened in the past, or just the type of business Pursuit is that's not necessarily possible?

Well, I think, you look at it, anything's possible. But the effort and energy that you put into, I mean, we did, we've benefited from strong margin performance across Pursuit and it will rebuild itself as our business returns and we get through the short-term sort of pandemic effect, we do view those 22, 23, 24 that we have a strong return to traditional margin levels and are encouraged by that and expect that the business -- the world is poised for an economic recovery and certainly the Pursuit business is price for on our coverage. So, we're enthusiastic about that.

Thank you very much. Appreciate it.

Thanks.

We have your next question from Barry Haimes from Sage Asset Management. Your line is open.

Thanks so much for taking my question. First one is, on Capex. Ellen, I think you gave the numbers for the first quarter, but if you look at 2021 full year, could you tell us how much Capex to finish the two projects? And then, what the maintenance Capex number would be? So, just a feel for full year Capex, that's first question. Thanks.

Sure. The Capex on FlyOver Las Vegas is about $20 million. So, for 2021 Scott minimal to all the Capex is put in 2019 and maintenance Capex, we haven't given guidance on that full year, that will be a tip what percent of revenue which Pursuit in these 6% to 7% and for GES about 2%.

Versus a normal year revenue on those two. Right?

That's correct. And then Pursuit will have other growth projects throughout the year as well from a Capex perspective.

Okay, great, that's very helpful. And then, GES question, you guys talked about how the second half is looking okay so far. But, as we progressed through the year, when do people actually have to make the decision, how far in advance, so you know if I've kind of show lined up for July or August or September or October. How far advanced is the call generally made on the part of the client?

Their decision. Really, it does vary by client, but I think you're safe to assume within two to three months about advancing place thinking to make a decision because that's when the exhibitors will start spending money towards out of that. And typically, they want to make sure that that doesn't happen, the events not to take place. So, you think about two to three months before the event takes place.

Okay, great, that's helpful. And then one other GES question, normally in terms of what percent of the exhibitors and what percent of the attendees come from international versus domestic? Do you have any sort of rough gauge of that?

Yeah. To give you a rough gauge began it very by the marketplace in the industry that they're serving but it tends to be kind of 10% to 15%. Some will go significantly higher, some are significantly lower at much more reasonable. But I think the 10% to 15% is a fair estimate for new gross market.

Got it. Great. And my last question is, the issue of the Canadian is opening the border to the U.S., have you given any indication as to what the criteria are vis-a-vis COVID-19 or is it a total wildcard in terms of what they might decide when?

That's interesting, Barry, it's good question. So both governments, the U.S. government, the Canadian government work together. I mean, we're massive trading partners between both countries. There is a significant exchange of goods back and forth in transportation and so on. So, important to get the borders open at the same time, I think everyone is being as a 10 of as they possibly can on the acceleration of vaccines. So, we expect that North America will open first and I think that will be very helpful for us in the short term because it obviously -- people will be traveling within the North American sphere. So, lots of discussion going on. I think we're well-informed as to the progress and I think everyone is working to get things open as fast as they can safely.

Great, thanks very much for the input and lots of good look on the year.

Thanks, Barry.

Thank you.

We have your next question from Steve O'Hara from Sidoti & Company. Your line is open.

Hi, thanks for taking the question.

Thank you.

Hi. Just maybe starting GES, I guess just on the evolving structure, moving to more variable cost structure. Can you talk about maybe the offset of that down the road? Is there a little bit too if margins would have been axed under the old system, maybe there were the lowest net now it's kind of a peak, given obviously it's maybe not that relevant right now, but I'm just kind of wondering what the potential offset is to that change.

Yeah, that's a good question and what we've seen, what we're planning on is that, Q2 have a pretty substantial margin improvement as revenue comes back and we were fortunate earlier this week to be able to test it out on an event in Orlando, where some of the things I've mentioned in the past year around outsourcing certain high cost services. We were able to outsource those on this particular event. We are also able to implement the flexible labor tool that we talked about. And from some other automated processes that we've developed during the pandemic, very happy with how they rolled out in the margins that we were able to see on that particular event. So it's encouraging as we go forward, that the proof is taking place as we see some of these events come back. So we're encouraged by it. I don't think there is downside; it is us being smart about what work we do and what work we outsource.

Okay. And then just maybe on the overall landscape for that business, how you see that evolving. I mean are you becoming -- is it becoming more regional where you've kind of maybe you and the bigger competitors have to kind of take geographies and that's kind of the way it will be for a while until things return or is it you can -- because of the variable aspect, you're still able to kind of pick -- bid on things even if you're not a strong in one region or another.

We've talked about this before and worldwide, before we will be able to serve the same market that we have in the past, we made service that definitely differently and it operationally will do different things, but this doesn't really change habits from where we stand, what geographies we can compete in. So we're excited about it and yeah, it is -- nothing will change from a geography perspective.

Okay. And then maybe just as a follow -- last question. Can you just remind me what the cash burn was in 3Q in terms of -- what you had and if you have a much more solid Pursuit potentially and then maybe even GES, if MINExpo does happen? How quickly do you get the sense that that happens and is it kind of that two to three month window that you're talking about before?

Well, I'll let Ellen talk a little bit about cash flow Q3 2020 versus 2021, but in terms of MINExpo occurs, that is an event that's only held every four years. It's a major component of the buying process as companies look at some of the mining equipment that is for sale in the bat toe. We have -- there has been strong participation, strong interest from exhibitors even in 2020 for oil about. So we think that there is a lot of interest in the event taking place, and we believe that and I guess we'll be ready for that to happen this fall. Ellen, do you want to talk anything about the cash flow.

Yeah, so the Q3 cash burn was about $15 million, Steve and we haven't given guidance for Q3, but we're expecting positive cash flow in Q3. So -- but we haven't given guidance on the exact number.

Okay, all right, thank you very much.

Thanks, Steve.

I'm showing no further questions at this time. I would now like to turn the conference back to Mr. Steve Moster, President and CEO. Sir, please continue.

Thanks, Alexander. I appreciate everybody's time and interest in Viad and we look forward to talking to you again in the next quarter. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.