Viad Corp (VVI) 2021 Q4 法說會逐字稿

Good evening. Thank you for attending today's Viad Corp Fourth Quarter 2021 Earnings Call. My name is Selena, and I will be your moderator. (Operator Instructions) I would now like to pass the conference over to our host, Carrie Long with Viad. Please go ahead.

Good afternoon, and thank you for joining us for Viad's 2021 Fourth Quarter and Full Year Earnings Conference Call. During the call, you'll hear from Steve Moster, our President and CEO and 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 income or loss before other items and adjusted EBITDA. Important disclosures regarding these measures, including reconciliations to net income or loss attributable to Viad, can be found in Table 2 of our earnings press release, which is available on our website at viad.com.

With that, I'd like to turn the call over to Steve.

Thank you, Carrie, and good afternoon, everyone. Thanks for joining us. During the call, we'll discuss our business performance during the 2021 fourth quarter and full year, provide some insight into the recovery of our industries and review our financial position. David will provide business updates for Pursuit shortly. And after that, I'll share some business updates for GES. Ellen will cover our financial results towards the end of the call. Before I turn the call over to David, I'd like to thank our entire team for their remarkable job meeting the needs of our clients and guests with excellent service and operational execution this year. I'm proud of what we've accomplished in this very dynamic operating environment with COVID restrictions, global supply chain issues and labor shortages.

In addition to delivering extraordinary experiences for our customers as business activity accelerated, we transformed our cost structure at GES, opened 3 new world-class Pursuit attractions and enhanced our financial flexibility with a new credit facility that has enabled us to continue investing in exciting growth opportunities. I'm pleased with our performance and the actions we've taken to position our company for incredible success into the future as our businesses and industries continue to recover with pent-up demand for iconic and unforgettable leisure experiences and in-person live events.

And now I'd like to turn the call over to David to discuss what's happening across Pursuit. David?

Thanks, Steve. Thank you all for joining us. Pursuit's recovery continues in full swing. We're pleased with how the business rebounded in 2021 and are optimistic about what lies ahead for 2022. Before getting into the details, I'd just like to start with gratitude and recognition from my Pursuit colleagues, from our frontline team members serving guests to our managers and senior leaders who worked so incredibly hard through difficult conditions. We've been living in a very fluid operating environment for 22 months and have succeeded in delivering strong guest experiences at Pursuit's iconic locations.

Pursuit adjusted EBITDA increased $52.4 million, improving from a loss of $9.7 million in 2020 to a positive $42.7 million in 2021. This rebound is evidence that the world is healing, that the tourism industry is in recovery and that guest demand for high-quality experiential travel and hospitality experiences remain strong. For the seasonally slow fourth quarter, Pursuit delivered revenue of $23.4 million compared to just $9.2 million in Q4 2020. And we exceeded pre-pandemic 2019 fourth quarter revenue by nearly 8% as our 2 new year-round attraction, Sky Lagoon in Reykjavik and FlyOver Las Vegas and our new Nightrise experience at the Banff Gondola helped offset challenges driven by the pandemic, including the Omicron variant, which spiked in December and adversely impacted holiday season operations.

Despite ongoing COVID-related challenges, our teams persevere. We remained open for business throughout the quarter while delivering healthy results. In Jasper, as part of our continued Refresh, Build, Buy growth strategy, we initiated a multiyear road map to invest in a variety of upgrades across the lodging portfolio and the benefit to the guest experience was immediately clear. All 7 hotels saw meaningful year-over-year increases in guest feedback scores. In Banff, as a testament to the quality of our experiences and the dedication of our team members, we saw record net promoter scores at several attractions, including the Glacier Adventure, Glacier Skywalk and Brewster sightseeing tours.

Several of our lodging properties in Montana saw record guest feedback scores with the historic Glacier Park Lodge, Belton Chalet and West Glacier RV Park & Cabin village, all delivering new high. Finally, in Iceland, we were pleased with the success of our holiday gift ticket program at Sky Lagoon. We sold over 29,000 holiday gift ticket packages, which equates to roughly 8% of the total Icelandic population receiving a Sky Lagoon gift product for Christmas.

In terms of financial results, starting with attractions, you're all aware that international border closures remain in place well into the 2021 peak summer season, which impacted overall visitation. And despite these short-term impacts to visitation, we're very encouraged by the growth of our revenue per customer metrics. For the year, effective ticket price or attraction ticket revenue per guest increased 11% from 2019 levels on a same-store basis, including only the attractions we had in the entirety of both years.

Attractions performance in the fourth quarter also benefited from the launch of Nightrise, a new attraction within an attraction at the top of the Banff Gondola. We created this in partnership with the indigenous Stoney Nakoda Nation. Nightrise is a multimedia light art and sensory experience that connects the guests to the story of the land, stars and night. Nightrise is a great example of continuous improvement, specifically taking a great experience like the Banff Gondola and creatively making it even better. Launching in early December, the exciting addition of Nightrise drove a 4% increase in Q4 effective ticket price at the Gondola from 2019, while also increasing ancillary revenue yields for food and beverage and retail by 13% and 44%, respectively.

In Vancouver, FlyOver Canada's strong third quarter results continued into Q4 as pent-up demand for the lenders of the FlyOver experience drove a strong ticket sales and ancillary revenue from guests. And as mentioned, FlyOver Las Vegas saw its first full quarter of operations, delighting Las Vegas visitors with the sensation of flying over the American Southwest and earning a rating of 4.5 out of 5 stars on both Google and TripAdvisor.

Over to lodging. The hotel property saw significant year-over-year increases. For the quarter, same-store room revenue increased 49% and RevPAR grew by 35%. Relative to the fourth quarter of 2019, occupied rooms increased 4%. For the full '21 fiscal year, year-over-year hotel occupancy increased by 5%, rooms revenue by 109% and RevPAR by 42% on a same-store currency adjusted basis.

As many of you know, Pursuit's attraction from lodging businesses segments are complemented by the vertical integration of food and beverage and retail offerings. What many of you may not know is that there are now 44 food and beverage businesses and 45 retail stores across Pursuit. And as we've grown, they've become meaningful contributors to revenue and EBITDA. We're constantly working to improve our menus, merchandizing in the overall guest experience and are pleased with the financial growth we're seeing in these categories.

In food and beverage, we delivered revenue of approximately $29 million in 2021 for a year-over-year increase 180%. We believe that high-quality F&B is an important part of the hospitality experience, whether it's that perfect cup of coffee before your morning hike or the opportunity to sit down for dinner together as a family. And we're pleased to report that 2021 same-store F&B yields in our hotels measured by revenue per occupied room increased 32% from 2019. Guest satisfaction scores are continuing to improve in food and beverage, and the best part is we get to see guest comments and ratings daily.

Today, in Montana, Alaska and the Banff Jasper Collection, we have 8 restaurants in the top 5 rankings on TripAdvisor in their region. And finally, we're very excited about the growth in our retail business. For 2021, we delivered retail revenue of approximately $25 million, which more than doubled from the prior year. And as compared to 2019, retail yields increased 62% of our attraction and 70% at our lodging properties on a same-store basis.

So now let's turn our attention to the year ahead. It is clear to us based on early season booking trends and advanced reservations, people are ready to travel and will not be dissuaded from doing so. We're confident that borders will remain open and that Pursuit will be able to welcome guests to Western Canada, Alaska, Montana, Las Vegas and to Iceland throughout 2022. While we're still early in the booking cycle, lodging reservations for 2022 advance and Jasper are pacing ahead of the same reporting period in the prior year by 89% and 43%, respectively. And for the critical third quarter, our Banff hotels are ahead of pace when compared to 2019.

Across the 10 hotel portfolio, average daily rate is trending at 7.5% from 2021. In Pursuit's Glacier Park collection, 2022 lodging room nights on the books are pacing 32% ahead of the same time last year and 60% ahead of 2019 on a same-store basis. Relative to the prior year, ADR growth is approximately 10%. We're also seeing healthy pacing in Alaska with 2022 room nights up 14% compared to the same period last year and up 6% compared to the pre-pandemic 2019 levels with ADR growth of 4%. In Iceland, inbound visitation for the country continues to grow relative to 2021 levels, and we anticipate a stronger tourism season this summer. We're already hard at work preparing for a notable year-over-year increase in guest volumes at both FlyOver Iceland and Sky Lagoon.

And as we remain steadfast in our view that the future for our company and our industry is great, we have and will continue to invest in Refresh, Build, Buy opportunities around the world. Our plan for 2022 includes several important investments to improve the guest experience at our location. Some examples, just to name a few, include a new mountain poster at the Golden Skybridge in Golden BC, a stunning new flyover film featuring the inspiring topography of the Canadian Rockies that will show in all locations and during restaurant contests in the Banff Jasper Collection.

Last quarter, we told you that construction has begun on the [first part] of hotel, a new 88-room hotel in Downtown Jasper in the heart of Jasper National Park. And today, I'm pleased to report that construction is on schedule, and we are on track for an early summer opening. We continue to see high volumes of acquisition opportunities in multiple geographies and our development team is hard at work assessing these opportunities for the next great Pursuit experience.

In closing, I'll reiterate that we're proud of our 2021 results and are especially thankful for our 3,000 seasonal and year-round team members that bring their best every day to deliver on our mission of connecting guests and staff to iconic places through unforgettable inspiring experiences. We remain focused on the continuation of our growth trajectory, to increasing the breadth and quality of our offerings, to working hard to become an employer of choice in the hospitality industry and to achieving new heights in guest satisfaction. We're confident that we're poised to accelerate out of the pandemic, and we look forward to welcoming guests from near and far as the world more fully reopens to travel.

Steve, back to you.

Thanks, David. Now switching over to GES. 2021 was a significant turning point as the event industry reopened and activity began to accelerate during the third quarter. Along with this, we saw a steep jump in GES's revenue. From September through December, we averaged more revenue per month than we realized during the entire first half of 2021. Our teams effectively went from 0 to 60 miles an hour with a new leaner cost structure and did a fantastic job delivering safe, extraordinary experiences for our clients.

I want to extend a big thank you to all of the GES team members who made this happen by working diligently with lean staffing and tight schedules to support events around the world while prudently managing our profitability. GES finished the year with strong revenue growth. On a sequential quarter basis, revenue grew 38% to $116 million in the fourth quarter as live event activity continued to improve. We produced over 500 events and projects in geographies around the world, including AUSA's Annual Meeting & Expo, Process Expo, Money20/20 and hybrid events for GE Healthcare and banking software solution provider Temenos.

Some events that took place during the fourth quarter were near or above pre-pandemic levels, while others remain significantly below. For events that took place, the average revenue decline was about 35% compared to pre-pandemic, which is an improvement from about 50% last quarter. We believe that this is a strong indication that the recovery of live events is well underway. As revenues continue to recover to pre-pandemic levels, we are benefiting from the cost structure changes we made during the past 2 years. As discussed on prior calls, we took advantage of the pause in event activity during the height of the pandemic to make transformational changes that variabilize more costs and permanently reduced fixed costs through network rationalization.

Primarily as a result of these actions, we delivered a fourth quarter adjusted EBITDA margin that was comparable to the 2019 fourth quarter, even though revenue was 43% lower. These results demonstrate that our new operating model is working and especially impressive in light of the headwinds presented by labor shortages and increased transportation costs. As compared to 2020, our fourth quarter adjusted EBITDA improved by $32.5 million. This represents a flow-through on incremental revenue of more than 20% as we carefully manage variable costs against event activity. Our new low-cost model has been tested and is proving to be successful.

Now let me pivot to talk about another area of success we're seeing in the business, brand experiences. Earlier, I mentioned events that we produced for corporate clients, GE Healthcare and Temenos. These are just 2 great examples of the work we're doing within brand experiences. CE Healthcare has been a client of ours for the last 5 years. We recently worked with them to provide an event solution that crossed physical and digital realms to offer both an in-person and virtual experience. The event was attended by thousands of people and received extremely positive feedback.

Temenos partnered with us to produce their 2022 sales kickoff event in Barcelona. The event included 680 in-person attendees, along with online streaming to 1,200 staff members around the globe. The event was a great success, offering flexibility for the sales team able to travel in from around the globe or attend virtually with flawless event streaming. There is an overwhelming positive feedback from both the in-person and remote attendees.

Our brand experience team does a remarkable job delivering a broad range of unique and impactful experiences for our clients, including corporate meetings and events, digital experiences, brand and sports activation, product launches, strategic exhibition program management, corporate customer centers and consumer pop up events. We have a significant opportunity to expand in this large fragmented market at attractive margins and are positioning GES for ongoing success in this area by making investments to strengthen our team and go-to-market strategy approach.

With Jeff Stelmach at the home of our brand experience service line, we have aggregated GES's marketing services to create an integrated marketing agency. Through a series of investments, efficiencies and additions of talent, we are creating the ability to sell marketing services horizontally across our existing clients. And we're enhancing our breadth of services as we compete for new logos and capture incremental marketing spend across new segments of the industry, such as B2C experiential activation and virtual and hybrid B2B meetings. We have many new business wins and renewals to celebrate, including CloudBees SaaS, Fannie Mae, Taka, John Deere, HomeStar, National Indian Gaming Association and World System Builder.

I'm proud of our talented team across GES providing quality work and incredible service to our clients and customers. We have a lot to be optimistic about as we enter 2022. However, the industry recovery remains dynamic. Last quarter's uncertainties from the Delta variant have been replaced with new concerns from the Omicron variant, which is impacting corporate travel policies and near-term business travel. Experts are cautiously optimistic that a swift decline in Omicron cases will follow the rapid peak we are experiencing. And we're starting to see this in certain places with easing of COVID restrictions and renewed demand for face-to-face events.

We're encouraged by what we're seeing and hearing within the event industry. While we've seen some postponement in cancellations, primarily in the first quarter, schedules for the balance of the year look quite strong, and we're preparing for an acceleration of activity as we head into March. Both organizers and exhibitors prefer to have face-to-face events and more are motivated to move an event rather than cancel or pivot to virtual.

In preparation for a busier year in 2022, we are rebuilding our workforce with experienced personnel to ensure we are well positioned to service the expected increase in event activity. We're excited to bring back more employees to continue creating the world's most meaningful and memorable experiences for marketers, organizers and event attendees. With a fuller exhibition team and the decisions we've made to add talent and increased marketing efforts to grow in our brand experiences, GES's revenue flow-through will temporarily be impacted, particularly in the early months due to the event seasonality and Omicron variant uncertainties.

As the industry continues to recover and activity resumes throughout the year, our profitability will improve. Our clients and customers are committed to the return of live events. The value created from face-to-face live events is irreplaceable as it is a powerful way to generate sales, drive brand awareness and loyalty and interact with attendees. We see a bright future ahead as we continue down the path to recovery.

And now I'd like to turn the call over to Ellen to discuss our financial results in more detail. Ellen?

Thanks, Steve. I'm pleased to report that we delivered positive full year EBITDA from the continued recovery of both Pursuit and GES. I'm encouraged by the accelerated activity in leisure travel and the in-person events this year as our industries were reignited. At GES, we realized revenue of $160.2 million during the quarter, which improved about 38% from the third quarter and reached 57% of the amount generated in the pre-pandemic 2019 fourth quarter due to increased face-to-face live event activity and the return of large-scale events that were canceled or postponed for most of 2020 and into the first half of 2021.

GES segment adjusted EBITDA was positive $9.6 million, which improved by approximately $32.5 million as compared to the prior year, driven by the increase in revenue and the cost structure improvements that we've implemented. At Pursuit, we realized revenue of $23.4 million during the seasonally slow fourth quarter, which increased $14.2 million from the 2020 fourth quarter and exceeded the revenue amount generated in the pre-pandemic 2019 fourth quarter. The 3 new attractions that we opened during 2021 is Sky Lagoon, Golden Skybridge and FlyOver Las Vegas collectively contributed an incremental $5.1 million of revenue during the quarter. The net EBITDA contribution from these new attractions was not meaningful during the seasonally slower and COVID impacted fourth quarter as they continue to ramp up.

Pursuit's overall segment adjusted EBITDA was negative $9.9 million for the quarter, which decreased as compared to the prior year, primarily due to higher labor costs and lower wage subsidies from the Canadian government. For the full year, GES's adjusted EBITDA improved by $10.2 million as compared to 2020 on a revenue decrease of $18.3 million as we dramatically reduced our costs in response to the slowdown in event activity caused by the pandemic. Pursuit's full year adjusted EBITDA increased by $52.4 million on a revenue increase of $110.2 million as leisure travel accelerated across Pursuit's high-margin experiences.

Our net loss attributable to Viad was $22.5 million for the quarter and $92.7 million for the full year. And our loss before other items was $22.5 million for the quarter and $81.6 million for the full year, which excludes restructuring charges, attraction start-up costs, acquisition, integration and transaction-related costs and other nonrecurring expenses as applicable. Our cash flow from operations was an outflow of approximately $35 million for the quarter and $38 million for the full year. Our operating cash outflow for the quarter was greater than our prior guidance, primarily due to working capital changes. Our team did an excellent job closely managing our costs and maximizing our cash generation wherever possible during the year.

Our capital expenditures totaled about $13 million for the quarter and $58 million for the full year. Our investments during the year were mainly at Pursuit and included growth CapEx for the FlyOver Las Vegas attraction and our new 88-room hotel in Jasper. During the quarter, we paid cash dividends of approximately $2 million on our convertible preferred equity and a $1 million principal payment on our term loan B. On December 31, 2021, our debt totaled approximately $474 million, including $399 million on our term loan B, financing lease obligations of approximately $63 million and approximately $12 million in other debt.

We ended the year with approximately $62 million in cash and cash equivalents, and we had approximately $87 million of capacity available on our revolving credit facility for a total liquidity of nearly $150 million. We are in an excellent position to continue our growth journey with our strong liquidity, financial flexibility and improving industry demand. We have a solid platform that can scale with us as we execute against our exciting Refresh, Build, Buy growth strategy at Pursuit, including the new 88-room hotel in Jasper. We are actively evaluating other high-margin growth opportunities, including acquisitions and iconic locations.

Now before I turn it back to Steve for concluding remarks, I'd like to briefly comment on our financial outlook. As we head into 2022, we believe that Pursuit's same-store revenue will recover faster than GES due to expectations that leisure travel will return more quickly than business travel. Pursuit will also benefit from incremental revenue from new experiences, for those that it did not exist and those that did not have a full year in 2019. We believe that Pursuit's full year 2022 EBITDA will be at or above 2019 levels, even without full recovery from international leisure travel driven by the new experiences.

We expect Pursuit's EBITDA margin in 2022 will remain lower than pre-pandemic levels as international leisure travel more gradually recovers. Long-haul international visitors help drive strong visitation at our high-margin attractions, which are still operating well below pre-pandemic visitor levels. 2021 same-store attraction visitors were down about 54% from 2019. The upside of this is, we see a lot of EBITDA and margin growth opportunity from just getting back to more normal levels of visitation. As international travel picks up in 2022 and beyond, we expect Pursuit's margin will once again return north of 30%.

At GES, we have a strong backlog of contracted events and an expanded roster of corporate clients. However, we anticipate event activity will continue to be well below pre-pandemic levels, especially during the first part of the year due to volatility from the COVID variant. Based on our current schedule and strong demand from our brand experience's clients, we expect event activity will accelerate again beginning in March. And we anticipate that even if event activity remains well below 2019 levels, GES will deliver full year adjusted EBITDA that is above breakeven during 2022. With the new more variable cost structure in place at GES, we have lowered our breakeven point for that business and expect to realize margin expansion as revenue continues to recover.

During the first quarter of 2022, we currently expect both GES and Pursuit to generate negative EBITDA. With the personnel brought back to support the continued return of events, the investments we need to grow in experiential marketing and the slower show schedule in the first few months of the year, GES's EBITDA will be negative until activity ramps up. Pursuit historically has negative EBITDA during its traditionally slow tourism season. And although we expect to see higher revenue due to our new experiences, we do not expect these new experiences to have a meaningful impact on EBITDA during the seasonally slow first quarter. As we get closer to peak season, Pursuit's EBITDA will return to positive.

We currently expect a free cash outflow during the first quarter of 2022 in the range of $20 million to $25 million. This assumes an operating outflow somewhere in the range of $5 million to $10 million and capital expenditures of approximately $15 million, and this includes growth CapEx for our new 88-room hotel in Jasper. We will also make our quarterly term loan B principal payment of $1 million and expect to pay approximately $2 million in cash dividends on our convertible preferred equity.

For the full year, we expect capital expenditures of approximately $75 million to $80 million, primarily at Pursuit and including growth CapEx for the construction of the 88-room hotel in Jasper ahead of its summer open. These expectations are subject to the impact of COVID, including the Omicron variant. We will continue to carefully manage our cash flows and be strong stewards of our capital to maximize shareholder value. It is evident that there is pent-up demand for our industries. We remain focused on positioning the company for great success and growth as our businesses continue to recover in 2022 and beyond.

And with that, I'll turn the call back over to Steve for some concluding remarks.

Thanks, Ellen. Our company is well positioned to reemerge from the pandemic in a position of strength with pent-up demand for our industries on both sides of the business, new world-class experiences at Pursuit and a transformed more profitable GES. I'm encouraged by the progress that we've made this year and optimistic about the recovery in leisure travel at Pursuit and live event activity at GES as we head into 2022. We remain focused on our strategy to create extraordinary experiences and strong returns for our shareholders.

For Pursuit, we will continue to significantly scale the business and drive growth through our proven Refresh, Build, Buy strategy as well as take advantage of economic disruption and opportunity in the space. 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 more flexible cost structure and focus on higher-margin clients and services. We have a clear path to accelerate growth and significantly enhance shareholder returns. Our liquidity position is strong, and we have the financial flexibility to sustain and continue investing in our future.

We have high-quality businesses with leading market positions in experiential leisure travel and experiential B2B events. We plan to capitalize on the pandemic disruptions to strengthen our leading market position. Our growth strategy has been proven to be successful, driving strong returns pre-pandemic, and there are tremendous opportunities to continue investing for long-term growth. I'm excited about the bright future that lies ahead for our company. I want to thank our hard-working and dedicated employees who make this all possible and thank our shareholders for their continued support in Viad.

And with that, we'll open up the call for questions.

(Operator Instructions) The first question comes from Kartik Mehta with Northcoast Research.

Ellen, I just want to make sure I understood on the cash flow. Would you -- what do you anticipate in terms of cash flow for the year? And did I get the numbers right? Do you expect an outflow of $20 million to $25 million in the first quarter?

Yes, that's correct. An outflow of $20 million to $25 million in the first quarter, including $5 million to $10 million operating cash flow and outflow and then about $15 million in CapEx. And for the year, the only guidance we gave was on the CapEx side, $75 million to $80 million total CapEx.

So I'm assuming since you're anticipating at or near EBITDA levels we pursued and breakeven for GES, you'd anticipate breakeven a little bit more free cash flow. Is that fair?

Well, the cash flow in the third quarter, especially will be greater, but yes. Depending on working capital and so we do expect greater than breakeven on GES and the positive levels for Pursuit.

All right. Steven, just on GES. I know you've talked about getting the revenue down -- breakeven level down lower. I'm wondering, based on your guidance for 2022 on breakeven, what that means in terms of revenue compared to 2019? I'm just wondering all the work you've done, how much progress that you've made? And what's your expectations are based on what you're seeing for revenue for GES?

Yes. Yes. It's a good question. I'm really happy with how the business has performed based on the changes that we made during the pandemic. I think during our remarks, I talked a little bit about how the fourth quarter of '21 had similar margin profile to what we did in the fourth quarter of '19. But yet, we had half as much revenues. We were down about 43% in terms of revenue. And I also looked at the difference between Q3 of 2021 and Q4 of 2021, where we had stronger than 20% flow-through on that incremental revenue. So when I look at the changes that we've made, it's clear that we're improving the profitability, and I'm encouraged by the signs that I see now.

To answer your question directly on breakeven, there's a lot of moving parts right now in terms of the mix of revenue, the quality of that revenue coming through. But if I look out through the course of the year, it's somewhere in the neighborhood of $50 million of revenue per month in that breakeven area. So Again, as Ellen mentioned, we anticipate being greater than breakeven on a full year basis, but I would put the breakeven somewhere around $50 million a month.

That's helpful. And then just one last question on Pursuit. I'm assuming you're being helped by kind of price increases because of inflation and all of these new attractions you're seeing. Is your expectations for Pursuit EBITDA going back to pre-pandemic levels, mean that your revenue will go back? Or are you anticipating the ability to get to those EBITDA levels even with lower revenue?

Actual revenue improvement in EBITDA performance within the range. So the biggest encouragement we see, biggest momentum we see is in booking pace, which is very, very strong for the coming season.

Okay. So I apologize. So you said you anticipate revenue to kind of be at or better than pre-pandemic levels. Did I -- I don't want to put words in your mouth, but I just want to make sure I got that right.

Yes. And what we're indicating [pre-pandemic] (inaudible)

I apologize. Hello?

That is correct, Kartik. David, did you have anything else to add to that?

No.

The next question comes from Tyler Batory with Janney.

Appreciate all the detail thus far here. Yes, I want to start on the GES side of things. You gave the guidance down 50% in Q1. Steve, can you please share any details or observations from Q1 so far? Did you see more shows canceled than you expected in January? What are people saying about the shows that did happen? Have you seen any cancellations or postponements for February or March as well?

Yes. So it's a great question. So it was kind of late November and into December during kind of the peak of Omicron when we started seeing cancellations for events that were to take place in the first quarter. Most of them were in the January -- in the month of January, a little bit in the month of February. It's really the pace of any postponements or cancellations has declined dramatically. I haven't heard of any here for the last 4 weeks or so. So I believe that the pace of cancellations this moment has died down dramatically, and I expect that to continue.

I will say, I did have the opportunity to attend a couple of events in January. One was the Production & Processing Expo in Atlanta. It's one of our larger events in the month. And albeit the show was a little bit smaller, there was a tremendous amount of enthusiasm on the floor from exhibitors and attendees. When I looked at some of the metrics for that event, they were very similar to pre-pandemic levels just on a smaller scale, and that's very encouraging for the business and for me. So there are some very positive trends that are pointing to greater success as we get further away from 2021.

Okay. Great. That's helpful. And I think in the past, one of the things that we talked about in this business is more shows happening but smaller in size. I mean is that something that occurred like you expected in Q4? Would you expect that trend to continue in 2022 as well?

As we mentioned in our comments, the events in the fourth quarter were smaller than their pre-pandemic size. They were down about 35% or so. We did see a higher number of events, and that's mainly a phenomenon that would only happen in 2021 because there were so many events from the first half of 2021 that were postponed into the back half. I do not anticipate seeing that number of events happen again in 2022 in the second half. It will return. And if it (inaudible) so far that's returned to more normal scheduling of events.

Okay. Okay. Great. That's helpful. Switching gears to the Pursuit side of things and some very optimistic commentary there. I'm just curious on the travel trade group side of things, specifically in Banff Jasper. Are you having those conversations? I mean when do those folks usually start to look to book for the summer? And I think, David, you cited some very strong booking statistics in Banff Jasper. Does that include any travel trade business? Or is that mostly just individuals making the bookings in advance?

Thanks, Tyler. I can tell you, travel trade is alive and well. It is a bit country specific. And so generally from certain Asian destinations, that's going to recover more slowly because of policies that the countries have put in place. But other than that, we see the world beginning to travel again. And we have strong pickup from tour and travel partners, certainly from Western Europe, certainly from beginning from Australia as they had just opened and are moving to opening both inbound and outbound. So we're seeing encouraging signs for tour and travel, and people are committing to space, a lot of space is deposited. So our pacing is very, very strong.

Okay. Excellent. And then just the last question for me. I'm interested from a capital allocation perspective your views on -- in your investment capacity right now. I mean I know you talked about $75 million to $80 million CapEx. You have a number of projects going on in the portfolio. If you saw an opportunity to go out and buy something, do you think you have the ability to pull the trigger on something significant? And I know you're probably not too much detail you can share. But just curious what the pipeline looks out there for potential transactions, specifically in the Pursuit side of things.

Well, I'll speak on pipeline, and I'll let Ellen speak to capacity. I think what's interesting is that there is lots of activity. There's lots of interesting things, and we're trying to be smart and be thoughtful and spend our time looking at the various opportunities and how they might grow the business. And Ellen or Steve, if you want to speak to capacity.

Yes. Tyler, in terms of capital allocation, I think, first, I would say I'm really happy with the decisions we made during the pandemic to continue to invest in new opportunities and some development projects. So we're seeing the benefit of that as we go into 2022. And our philosophy around capital allocation is going to continue to be the same, which is we will look for opportunities on the Pursuit side of the business where we can allocate capital. We ended the year close to $150 million of liquidity. So we have the ability to do reasonable sized acquisitions or development projects. Ellen spoke to a little bit about what we've already committed to in terms of projects that are in 2022. But we have our eyes open for new opportunities. And for the right deal, we'll find a way to make it happen.

The next question comes from Bryan Maher with B. Riley.

Steve, Ellen and David, and thanks for those comments so far. Just a couple of questions from me. How should we be thinking about wage pressure and other inflationary costs on Pursuit's ability to drive margin improvements kind of as we move through 2022?

I think what's important is, in a war for talent, if you fight hard with a strong culture and work hard to bring people on board. So one, we're quite focused on creating the kind of environment where people want to work, that it's a rewarding place to work. And that's a combination of everything from good leadership to good facilities to the right programs, the right recruitment efforts and so on around the world. Following that, then as our visitation numbers return and our mix of guests evolves, our margin, we believe, will return strongly. So we're focused on that and doing the right things to make sure we are staffed well ahead of the game.

Two things that are powerful in that regard. One is the Commonwealth country visa program that allows Commonwealth, young people to go from one country to another. So Australians and New Zealanders and Brits coming to Banff Jasper at Western Canada to work. And then the return of the J-1 visa program in the United States is key to the success in Alaska and Montana. And both of those recruiting efforts are quite strong, and I feel confident that we're ahead of the game and ahead of the competition in terms of what we're doing. There will continue to be pressure, but I think we're well positioned to respond to it.

Great. And then just a second question for me. As it relates to Sky Lagoon and FlyOver Las Vegas, can you give us a little color on how visitation and pricing trends has been since those properties opened, particularly relative to your initial expectations? And then maybe more recently as we had dealt with Omicron, how your expectations evolve and how those properties are doing well to your evolving expectations?

Yes. We spoke earlier about the success at Sky Lagoon in terms of the gift product into the holiday season, which is kind of astounding. You think about the population of Iceland at 340,000 roughly, approximately, and to sell close to 30,000 gift products within the population. And that's a product that generally someone buys and bolts on to for the year. So it's not necessarily a destination product that a visitor to Iceland who is there during the holiday period would buy. So that's a great indication in terms of success. And we've had strong visitation periods.

And obviously, those have been tempered in times when we have greater restrictions imposed by health authorities. And definitely, the Omicron surge didn't help. But clearly, we're past that as all jurisdictions are in the process of either listing or preparing to list restrictions. So I won't get into specific visitation just yet in the sense that we're going to let the year evolve a little bit, but we're quite encouraged both by the pacing and all of the different geographies that gives us quite a bit of confidence in terms of how the year is going to unfold.

Great. And then maybe lastly for Ellen, I think you mentioned the $75 million CapEx number for the year, and I believe you gave a first quarter number. Can you show us how you think that that $75 million kind of paces throughout the quarters?

Sure. So first and second quarter pretty -- actually, all 4 quarters pretty evenly throughout the year, plus or minus a few million.

The next question comes from Barry Haimes with Sage Asset Management.

And thanks for all the hard work in 2021. Ellen, I had just a couple of questions to fill in a couple of the pieces to get to the free cash flow for 2022. Can you give us any help on depreciation and amortization for the year, on interest expense for the year and whether you anticipate cash taxes in 2022?

We haven't given any of that specific guidance. Let me see. On the cash taxes, we don't anticipate that. The D&A, we haven't given any guidance on. And what's the third? I'm sorry, Barry.

Interest expense (inaudible).

Interest. No guidance on the interest, but it's our current debt at the current rates, and we don't see anything -- I don't see anything changing that right now. So no update really on what we have currently.

So just to follow up on. So if I look at the fourth quarter numbers for both D&A and for interest expense, those would be approximate to take into 2022 then?

Yes, then you would need to feather in the CapEx and how that flows through. But I -- part of it is without the guidance on it.

The next question comes from Marc Riddick with Sidoti & Company.

I just like to go over -- some of my questions have already been answered. So I just wanted to follow up specifically on the hiring timing expectations and maybe what you're seeing there from a -- what you're expecting or modeling from a pricing dynamic as far as beyond notifying that you're going to need to do to prepare for the upcoming seasons there?

Marc, is that specific to Pursuit?

I believe there was a commentary on hiring within Pursuit, so I think that was what the commentary was, correct.

Yes. Well, as you know, our season kickoff. So we start to get obviously busier things start to pick up in April, May and then obviously, end of second quarter, we go into what we call more of our peak season. Obviously, we're staggering hiring to meet our demands and timing the onboarding of team members to when we have peak demand. It's a competitive hiring process, but I'm quite encouraged by where we are. We started much earlier than any other year. And as I mentioned earlier, we're quite focused on our programs to recruit across North America, for North American businesses and to encourage both the Commonwealth visa workers to come and spend time in Canada and then J-1s to come to the United States and work for a season and then return to their home country. So we're quite focused on that and encouraged by it, and we'll match up our staffing levels to the levels within our business to provide the level of service and support that's appropriate.

(Operator Instructions) There are no additional questions registered at this time. So I'll pass the conference back to the management team for closing remarks.

Thank you, and thanks for everybody for their time and interest in Viad. We look forward to giving you an update for the next quarter. Thank you very much.

That concludes the Viad Corp. Fourth Quarter 2021 Earnings Call. Thank you for your participation. You may now disconnect your lines.