Pursuit Attractions & Hospitality, Inc. (PRSU)

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with the consolidated financial statements and related notes. The MD&A is intended to assist in understanding our financial condition and results of operations. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated due to various factors discussed under “Risk Factors,” “Forward-Looking Statements,” and elsewhere in this 2024 Form 10-K.

Overview

We are an attractions and hospitality company that owns and operates a collection of inspiring and unforgettable experiences in iconic destinations in the United States, Canada, and Iceland. Our elevated hospitality experiences include 15 world-class point-of-interest attractions and 28 distinctive lodges, along with integrated restaurants, retail and transportation that enable visitors to discover and connect with stunning national parks and renowned global travel locations.

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Recent Developments

Sale of the GES Business and Viad Corp Transformation into Pursuit

After a strategic review of the Company’s operations, with the goal of increasing shareholder value, Pursuit (formerly known as Viad Corp) entered into a Purchase Agreement with Truelink Capital on October 20, 2024 pursuant to which Truelink Capital agreed to purchase all of the outstanding equity interests held by the Company in its subsidiaries comprising the GES Business. The aggregate purchase price was $535 million, consisting of a base purchase price of $510 million, subject to customary adjustments for cash, indebtedness, working capital and transaction expenses, and a deferred purchase price of $25 million payable by Truelink Capital to the Company one year after the closing date.

On December 31, 2024, we completed the sale of the GES Business to Truelink Capital and relaunched Viad Corp as Pursuit Attractions and Hospitality, Inc., a standalone attractions and hospitality company with a singular focus on delivering unforgettable experiences in iconic destinations. We began trading under a new NYSE ticker symbol, PRSU, on January 2, 2025.

We determined that the sale of the GES Business met the criteria under ASC 205-20, Presentation of Financial Statements – Discontinued Operations, to be classified as a discontinued operation as the sale represents a strategic shift that will have a significant effect on our operations and financial results. Accordingly, we have accounted for the GES Business as a discontinued operation in this 2024 Form 10-K. Unless otherwise noted, this MD&A relates to our continuing operations and does not include the operations of the GES Business. Refer to Note 5 – Discontinued Operations of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2024 Form 10-K) for further information.

Repayment of the 2021 Credit Facility and Termination of the Interest Rate Cap

On December 31, 2024, in connection with the sale of the GES Business, we terminated and repaid in full all outstanding obligations (approximately $393 million) due under our previous $500 million credit facility with Bank of America, N.A. as administrative agent (the “2021 Credit Facility”) and all related liens and security interests were terminated, discharged and released. The repayment of the 2021 Credit Facility led to the termination of the related interest rate cap, which managed our exposure to interest rate increases on $300 million in SOFR-based borrowings under the 2021 Credit Facility. Refer to Note 13 – Debt and Finance Lease Obligations and Note 14 – Derivative of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2024 Form 10-K) for further information.

2025 Credit Agreement

On January 3, 2025, we entered into a Credit Agreement (the “2025 Credit Agreement”), along with Brewster Inc., an Alberta corporation and a co-borrower. The 2025 Credit Agreement provides for a $200 million revolving credit facility (the “2025 Revolving Credit Facility”), with a maturity of January 3, 2030. Proceeds from the 2025 Revolving Credit Facility will provide us with additional funds for operations, growth initiatives, acquisitions and other general corporate purposes. Refer to Note 27 – Subsequent Events of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2024 Form 10-K) for further information.

Conversion of Preferred Stock

On December 31, 2024, we effected the mandatory conversion (the “Conversion”) of all outstanding shares of the Convertible Series A Preferred Stock, par value $0.01 per share (the “Convertible Preferred Stock”) into approximately 6.7 million shares of our common stock, par value $1.50 per share. Our right to effect the Conversion was achieved on December 6, 2024, as a result of our common stock exceeding a volume-weighted-average price in excess of $42.50 for 20 out of 30 consecutive trading days pursuant to the terms of the Certificate of Designations governing the Convertible Preferred Stock. Following the Conversion, we had approximately 28 million shares of common stock issued and outstanding.

Impairment of Long-Lived Assets and Goodwill

As a result of our most recent long-lived assets and goodwill impairment analysis performed as of October 31, 2024, we determined that the carrying value of certain assets at our Las Vegas Flyover attraction asset group were not recoverable and were in excess of fair value and we recorded asset impairment charges of $27.5 million. Additionally, we recorded a non-cash goodwill impairment charge of $14.0 million associated with our Flyover attractions reporting unit. Refer to Note 8 – Property and Equipment, Net and Note 10 – Goodwill and Other Intangible Assets, Net of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2024 Form 10-K) for further information.

Acquisition of Jasper SkyTram

On December 31, 2024, we acquired the Jasper SkyTram attraction in Jasper National Park for total cash consideration of $23.7 million Canadian dollars (approximately $16.5 million U.S. dollars). The Jasper SkyTram ascends 2,263 meters (8,081 feet) up Whistlers Mountain while taking in 360-degree national park views. On-site amenities include an interpretive boardwalk, easy access to hiking

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trails, and light culinary offerings. Refer to Note 4 – Acquisitions of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2024 Form 10-K) for further information.

Jasper Wildfires

On July 22, 2024, Jasper National Park was closed and evacuated due to wildfire activity, and a wildfire entered the Jasper townsite on July 24, 2024. All of our hotels and attractions in and near the Jasper townsite, as well as our Pyramid Lake Lodge, Miette Mountain Cabins, and Maligne Lake Cruise were not reached by the wildfire and remain intact except for our Wilderness Kitchen, a restaurant and retail operation located about three miles outside the town of Jasper. The town of Jasper re-opened to residents and local businesses on August 16, 2024. All of our hotels in Jasper are open. During 2024, we recorded an asset impairment charge of $3.8 million against the net book value of the Wilderness Kitchen. This loss is covered by our property insurance and accordingly, we recorded an offsetting impairment recovery of $3.8 million. We also recorded an impairment charge of $0.6 million against intangible assets (trademark and favorable lease) of the Wilderness Kitchen.

Our Columbia Icefield Adventure and Columbia Icefield Skywalk attractions re-opened on August 9, 2024. Maligne Lake Road re-opened on October 12, 2024, after the peak summer season. Due to this road closure, the Maligne Lake Cruises did not reopen during the remainder of the 2024 season but will reopen for the 2025 season.

We incurred total costs at our properties affected by the Jasper wildfires of approximately $21.5 million, all of which are deemed probable of recovery through our insurance. During 2024, we received approximately $13 million in insurance proceeds as a partial settlement relating to the losses, with an additional amount of approximately $3.9 million received subsequent to December 31, 2024. As of December 31, 2024, the remaining balance in the insurance receivable of approximately $8.5 million represents costs that are deemed probable of recovery. We continue to work with our insurance carriers to receive the full amount due to us, including business interruption losses, which is ongoing.

Change in Reportable Segments

We previously disclosed three reportable business segments: Pursuit, Spiro, and GES Exhibitions. Spiro and GES Exhibitions were referred to collectively as “GES.” The operating results of GES have been included within discontinued operations due to the sale of the GES Business. As a result, we are managed on a consolidated basis for purposes of assessing performance and making operating decisions. Accordingly, we are deemed to be one operating segment in this 2024 Form 10-K. Refer to Note 25 – Segment Information of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2024 Form 10-K) for further information.

Results of Operations

The following table presents total revenue by lines of business:

(1)
Revenue by line of business does not agree to Note 2 – Revenue and Related Contract Liabilities of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2024 Form 10-K) as the amounts in the above table include product revenue from food and beverage and retail operations within each line of business.

2024 compared with 2023

Attractions revenue increased $18.0 million due primarily to a 6.1% increase in the number of visitors as well as higher revenue per attraction visitor of 3.1%. Our Sky Lagoon attraction in Iceland experienced particularly strong demand with increased revenue of $9.8 million. Our Flyover Chicago attraction contributed revenue of $8.5 million during its first year of operations commencing on March 1, 2024.

Hospitality revenue decreased $0.9 million due to a 4.7% decrease in Revenue per Available Room (“RevPAR”) as a result of fewer room nights sold due to the Jasper wildfires.

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2023 compared with 2022

Attractions revenue increased $36.9 million, or 24.0%, due primarily to a 20.8% increase in the number of visitors driven by stronger international tourism to Western Canada and Iceland, as well as higher revenue per attraction visitor of 2.7%.

Hospitality revenue increased $13.7 million, or 10.5%, due primarily to a 7.3% increase in RevPAR driven by revenue management efforts and increased guest demand in Western Canada, as well as higher ancillary revenue and an increase in room nights available of 3.9% with the addition of the Forest Park Alpine Hotel, which opened in August 2022.

Performance Measures

We use the following key business metrics to evaluate the performance of Pursuit’s attractions business:

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Number of visitors. The number of visitors allows us to assess the volume of tickets sold at each attraction during the period.

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Revenue per attraction visitor. Revenue per attraction visitor is calculated as total attractions revenue divided by the total number of visitors at all Pursuit attractions during the period. Total attractions revenue includes ticket sales and ancillary revenue generated by attractions, such as food and beverage and retail revenue. Total attractions revenue per visitor measures the total spend per visitor that attraction properties are able to capture, which is important to the profitability of the attractions business.

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Effective ticket price. Effective ticket price is calculated as revenue from the sale of attraction tickets divided by the total number of visitors at all comparable Pursuit attractions during the period.

We use the following key business metrics, common in the hospitality industry, to evaluate Pursuit’s hospitality business:

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Revenue per Available Room. RevPAR is calculated as total rooms revenue divided by the total number of room nights available for all comparable Pursuit hospitality properties during the period. Total rooms revenue does not include non-rooms revenue, which consists of ancillary revenue generated by hospitality properties, such as food and beverage and retail revenue. RevPAR measures the period-over-period change in rooms revenue per available room for comparable hospitality properties. RevPAR is affected by average daily rate and occupancy, which have different implications on profitability.

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Average Daily Rate (“ADR”). ADR is calculated as total rooms revenue divided by the total number of room nights sold for all comparable Pursuit hospitality properties during the period. ADR is used to assess the pricing levels that the hospitality properties are able to realize. Increases in ADR lead to increases in rooms revenue with no substantial effect on variable costs, therefore having a greater impact on margins than increases in occupancy.

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Occupancy. Occupancy is calculated as the total number of room nights sold divided by the total number of room nights available for all comparable Pursuit hospitality properties during the period. Occupancy measures the utilization of the available capacity at the hospitality properties. Increases in occupancy result in increases in rooms revenue and additional variable operating costs (including housekeeping services, utilities, and room amenity costs), as well as increases in ancillary non-rooms revenue (including food and beverage and retail revenue).

The following table provides our key performance indicators for the years ended December 31, 2024 and 2023:

(1)
Same-Store metrics include only attractions and lodging properties that we operated at full capacity, considering seasonal closures, for the entirety of the 2024 and 2023 periods presented. Attractions and lodging properties that were temporarily closed due the Jasper wildfire are excluded. For experiences located outside the United States, financial metric comparisons to the prior year are expressed on a constant U.S. dollar basis.

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Attractions. The increase in the number of attraction visitors during 2024 was primarily driven by higher visitation at the Flyover Chicago attraction, which opened on March 1, 2024, and Sky Lagoon in Iceland. The increase in same-store effective ticket price during 2024 was driven primarily by revenue management efforts.

During 2024, attractions ticket revenue on a same-store basis increased $19.1 million on a 2.1% increase in visitors and a 13.4% increase in effective ticket price.

Hospitality. The decrease in RevPAR during 2024 was primarily driven by a decrease in rooms revenue as a result of the Jasper wildfires, offset in part by an increase in ADR.

During 2024, rooms revenue on a same-store basis increased $5.7 million on an 8.6% increase in RevPAR and a 0.4% increase in room nights available.

Refer to “–Recent Developments” above for additional information on the Jasper wildfires.

The following table provides our key performance indicators for the years ended December 31, 2023 and 2022:

(1)
Same-Store metrics include only attractions and lodging properties that Pursuit operated at full capacity, considering seasonal closures, for the entirety of both periods presented. For experiences located outside the United States, financial metric comparisons to the prior year are expressed on a constant U.S. dollar basis.

Attractions. The increase in number of attractions visitors during 2023 was primarily driven by strengthening international tourism to Western Canada and Iceland. The increase in same-store effective ticket price during 2023 was driven by revenue management efforts.

Attractions ticket revenue on a same-store basis increased $30.9 million on a 21.1% increase in visitors and a 5.8% increase in effective ticket price during 2023.

Hospitality. The increase in room nights available during 2023 was primarily driven by the addition of the Forest Park Hotel, which opened in August 2022. The increase in RevPAR during 2023 was due to increases in ADR and occupancy primarily driven by revenue management efforts and increased guest demand in Western Canada.

During 2023, rooms revenue on a same-store basis increased $6.5 million on a 9.1% increase in RevPAR and a 0.2% decrease in room nights available.

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Other Expenses

** Change is greater than +/- 100%.

2024 compared with 2023

Cost of services and products – The increase in cost of services and products in primarily due to higher depreciation expense of $5.4 million, an increase in operating costs to support higher business volume, as well as start-up costs to open the Flyover Chicago attraction.

Interest expense, net – In connection with the sale of the GES Business, we terminated and repaid in full all outstanding obligations (approximately $393 million) due under our previous 2021 Credit Facility and all related liens and security interests were terminated, discharged and released. The increase in interest expense is primarily due to higher revolving credit balances, the write-off of debt issuance costs related to the $170 million revolving credit facility, and lower capitalized interest.

We allocated interest expense to discontinued operations for the 2021 Credit Facility and the related debt issuance costs that were not directly attributable to the GES Business. All of the interest expense and related debt issuance costs of the $400 million term loan were allocated to discontinued operations, and interest expense and debt issuance costs related to the $170 million revolving credit facility were allocated based on a ratio of net assets of the GES Business to the sum of our consolidated net assets and consolidated debt. We allocated interest expense to discontinued operations of $39.1 million in 2024 and $42.4 million in 2023.

Restructuring charges – The restructuring charges in 2024 were primarily due to the transition of certain key positions as a result of the sale of the GES Business.

Impairment charges – On July 2, 2019, we executed a facility lease with the intent of building a new Flyover attraction, Flyover Canada Toronto. Effective August 6, 2024, this facility lease was terminated. During 2024, we recorded an asset impairment charge of $5.5 million related to site-specific engineering plans developed for this attraction.

Additionally, during July 2024, a wildfire entered Jasper National Park and our Wilderness Kitchen was lost to the wildfire. During 2024, we recorded an asset impairment charge of $3.8 million against the net book value of the Wilderness Kitchen. This loss is covered by our property insurance and accordingly, we recorded an offsetting impairment recovery of $3.8 million. We also recorded an impairment charge of $0.6 million against intangible assets (trademark and favorable lease) of the Wilderness Kitchen. See –Recent Developments - Jasper Wildfires above for additional information.

As a result of our most recent long-lived assets and goodwill impairment analysis performed as of October 31, 2024, we recorded a non-cash impairment charge of $27.5 million on certain assets at our Flyover Las Vegas asset group and a non-cash goodwill impairment charge of $14.0 million associated with our Flyover attractions reporting unit.

Income tax expense – The effective income tax rates were a negative 13.9% for 2024 and 47.4% for 2023. The effective tax rates differed from the 21% federal rate as we do not recognize a tax benefit primarily on losses in the United States where we have a valuation allowance.

Income from discontinued operations, net of tax – On December 31, 2024, we completed the sale of the GES Business. The operating results of the GES Business have been included within discontinued operations for all periods presented. The increase in income from discontinued operations from the prior period was primarily due to the gain on sale of $421.9 million. Refer to “–Recent Developments - Sale of the GES Business” above and Note 5 – Discontinued Operations of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2024 Form 10-K) for further information.

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2023 compared with 2022

Cost of services and products – The increase in cost of services and products in primarily due to an increase in operating costs to support higher business volume.

Interest expense, net – The increase in interest expense was primarily due to higher interest rates in 2023. We allocated interest expense to discontinued operations of $42.4 million in 2023 and $30.6 million in 2022.

Income tax expense – The effective income tax rates were 47.4% for 2023 and 1,129.4% for 2022. We generated higher income in 2023 than 2022 in our tax jurisdictions without a valuation allowance and were not able to recognize a benefit on losses in our jurisdictions with a valuation allowance.

Income from discontinued operations, net of tax – The operating results of the GES Business have been included within discontinued operations for all periods presented. The decrease in income from discontinued operations from the prior period is primarily due to the gain on sale from business in 2022.

Liquidity and Capital Resources

We believe that our existing sources of liquidity will be sufficient to fund operations and projected capital outlays for at least the next 12 months and the longer term.

When assessing our current sources of liquidity, we include the following:

(1)
As of December 31, 2024, we held $26.4 million of our cash and cash equivalents outside of the United States.

(2)
On December 31, 2024, in connection with the sale of the GES Business, we terminated and repaid in full all outstanding obligations (approximately $393 million) due under our previous 2021 Credit Facility and all related liens and security interests were terminated, discharged and released.

On January 3, 2025, we entered into the 2025 Credit Agreement with Bank of America, N.A., as administrative agent, and the other lenders named in the agreement. The 2025 Credit Agreement provides for the $200 million revolving 2025 Revolving Credit Facility, available in U.S. dollars, Canadian dollars, Euros and Pounds sterling, with a maturity of January 3, 2030. Proceeds from the 2025 Revolving Credit Facility will provide us with additional funds for operations, growth initiatives, acquisitions, and other general corporate purposes. Refer to Note 27 – Subsequent Events of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2024 Form 10-K) for further information.

Cash provided by operating activities, supplemented by our existing cash and cash equivalents and availability under our 2025 Revolving Credit Facility, are our primary sources of liquidity for funding our business requirements. During the year ended December 31, 2024, net cash provided by operating activities attributable to continuing operations was $56.9 million.

Our short-term and long-term funding requirements include debt obligations, maintenance capital expenditures, working capital requirements, and potential acquisitions and strategic investments as we focus on scaling our investments in high-return unforgettable, inspiring experiences with high return potential through our Refresh, Build, Buy growth strategy. Our projected capital outlays can be adjusted for changes in the operating environment.

Capital Expenditures

As of December 31, 2024, we have planned capital expenditures of approximately $70 million to $75 million for the next 12 months, including approximately $38 million to $43 million on select growth projects. We intend to continue making selective investments to advance our Refresh, Build, Buy growth strategy while maintaining a solid liquidity position.

Other Obligations

We have additional obligations as part of our ordinary course of business, beyond those committed for debt obligations and capital expenditures. Refer to Note 22 – Leases and Other and Note 20 – Pension and Postretirement Benefits of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2024 Form 10-K) for further information. The expected timing of payments of our obligations

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is estimated based on current information. Timing of payments and actual amounts paid may be different, depending on changes to agreed-upon amounts for certain obligations.

Cash Flows

Operating Activities

2024 compared with 2023

Net cash provided by operating activities attributable to continuing operations decreased $23.8 million primarily due to changes in working capital.

2023 compared with 2022

Net cash provided by operating activities attributable to continuing operations increased $29.0 million due to improved working capital.

Investing Activities

2024 compared with 2023

Net cash provided by investing activities attributable to continuing operations increased $431.6 million primarily due to the proceeds from the sale of the GES Business of $428.8 million.

2023 compared with 2022

Net cash used in investing activities attributable to continuing operations decreased $19.8 million primarily due to cash paid for the Glacier Raft Company acquisition in April 2022 of $25.5 million, offset in part by an increase in capital expenditures in 2023.

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Financing Activities

2024 compared with 2023

Net cash used in financing activities attributable to continuing operations increased $364.9 million primarily due to net debt payments of $382.0 million during 2024 compared to $20.5 million during 2023. On December 31, 2024, in connection with the sale of the GES Business, we terminated and repaid in full all outstanding obligations (approximately $393 million) due under the 2021 Credit Facility.

2023 compared with 2022

Net cash used in financing activities attributable to continuing operations increased $30.9 million primarily due to net debt payments of $20.5 million during 2023 compared to net debt proceeds from borrowings of $6.9 million during 2022.

Debt and Finance Obligations

Refer to Note 13 – Debt and Finance Obligations of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2024 Form 10-K) for further discussion all of which is incorporated by reference herein.

Guarantees

Refer to Note 23 – Litigation, Claims, Contingencies, and Other of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2024 Form 10-K) for further discussion all of which is incorporated by reference herein.

Share Repurchases

Our Board of Directors previously authorized us to repurchase shares of our common stock from time to time at prevailing market prices. As of December 31, 2024, 546,283 shares remained available for repurchase under all prior authorizations. In March 2020, our Board of Directors suspended our share repurchase program. The Board of Directors’ authorization does not have an expiration date.

Additionally, we repurchased shares related to tax withholding requirements on vested restricted share-based awards.

Critical Accounting Estimates

The consolidated financial statements are prepared in accordance with United States generally accepted accounting principles. We are required to make estimates and assumptions that affect our reported amounts of assets, liabilities, revenue, and expenses. Critical accounting estimates are those estimates that are most important to the portrayal of our financial position and results of operations, and that require us to make the most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. We identified and discussed with our Audit Committee the following critical accounting estimates and the methodology and disclosures related to those estimates:

Goodwill, Other Intangible Assets, and Long-Lived Assets — Goodwill and other intangible assets with indefinite useful lives are not amortized, but instead are tested for impairment at least annually. Intangible assets and long-lived assets with finite lives are amortized over their respective estimated useful lives and are reviewed for impairment if an event occurs or circumstances change that would indicate the carrying value may not be recoverable through future operations.

Goodwill is tested for impairment at the reporting unit level on an annual basis as of October 31, and between annual tests if an event occurs or circumstances change that would more-likely-than-not reduce the fair value of a reporting unit below its carrying value. Our reporting units are defined, and goodwill is tested, at either an operating segment level or at the component level of an operating segment,

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depending on various factors, including the internal reporting structure of the operating segment, the level of integration among components, the sharing of assets and other resources among components, and the benefits and likely recoverability of goodwill by the component’s operations.

For purposes of goodwill impairment testing, we use a discounted expected future cash flow methodology (income approach) to estimate the fair value of our reporting units. The estimates and assumptions regarding expected future cash flows (the most significant being revenue and EBITDA margins), discount rates, and terminal values require considerable judgment and are based on market conditions, financial forecasts, industry trends, and historical experience.

The most critical assumptions and estimates in determining the estimated fair value of our reporting units relate to the amounts and timing of expected future cash flows for each reporting unit and the reporting unit cost of capital (discount rate) applied to those cash flows. We estimate the assumed reporting unit cost of capital rates (discount rates) using a build-up method based on the perceived risk associated with the cash flows pertaining to the specific reporting unit. In order to assess the reasonableness of our fair value estimates, we perform a reconciliation of the aggregate fair values of our reporting units to our market capitalization.

As noted above, the estimates and assumptions regarding expected future cash flows, discount rates, and terminal values require considerable judgment and are based on market conditions, financial forecasts, industry trends, and historical experience. These estimates have inherent uncertainties, and different assumptions could lead to materially different results. Our goodwill balance was $103.3 million as of December 31, 2024 and $123.9 million as of December 31, 2023. The discount rates used in our most recent impairment analysis ranged from 11% to 15%.

Goodwill was assigned to, and tested at, the reporting unit level. As a result of our most recent impairment analysis performed as of October 31, 2024, we recorded a non-cash goodwill impairment charge of $14.0 million associated with our Flyover attractions reporting unit. No impairment existed for our remaining reporting units with reported goodwill. The excess of the estimated fair value over the carrying value for our reporting units with reported goodwill (expressed as a percentage of the carrying value) under step one of the impairment test for the Banff Jasper Collection and the Alaska Collection was significant and Glacier Park Collection was 11%. We will continue to closely monitor actual results versus expectations as well as whether and to what extent any significant changes in current events or conditions result in corresponding changes to our expectations about future estimated cash flows and discount rates. If our adjusted expectations of the operating results of our reporting units do not materialize, or the discount rate increases (based on increases in interest rates, market rates of return or market volatility), it is possible that we may be required to record additional goodwill impairment charges in the future, which may be material.

If an impairment indicator related to intangible assets and long-lived assets with finite lives is identified, or if other circumstances indicate an impairment may exist, we prepare projections of the undiscounted future cash flows expected to be generated from the underlying asset group and the cash flows resulting from the asset groupings eventual disposition. If the projections indicate that the underlying asset grouping is not expected to be recoverable, we perform a measurement of impairment and we recognize any carrying value in excess of fair value as an impairment charge.

As of October 31, 2024 (the same date that we tested goodwill for impairment), we identified indicators of impairment associated with the Las Vegas Flyover attraction asset group, and as a result, performed an undiscounted cash flow analysis. With the assistance of a third-party valuation specialist, we determined that the sum of the undiscounted cash flows was less than the carrying value. In determining the fair value of the asset group, we used a discounted cash flow analysis using the income approach. The significant assumptions used in determining the fair value of the asset group are similar to the significant assumptions used in determining the fair value of our reporting units. Based on this analysis, we recorded asset impairment charges of $27.5 million for the amount of the carrying value in excess of the fair value, which was allocated, on a pro rata basis, to the asset group’s long-lived assets.

Income taxes — We are required to estimate and record provisions for income taxes in each of the jurisdictions in which we operate. Accordingly, we must estimate our actual current income tax liability, and assess temporary differences arising from the treatment of items for tax purposes, as compared to the treatment for accounting purposes. These differences result in deferred tax assets and liabilities, which are included in the Consolidated Balance Sheets. We use significant judgment in forming conclusions regarding the recoverability of our deferred tax assets and evaluate all available positive and negative evidence to determine if it is more-likely-than-not that the deferred tax assets will be realized. To the extent recovery does not appear likely, a valuation allowance must be recorded. We had gross deferred tax assets of $59.6 million as of December 31, 2024 and $80.8 million as of December 31, 2023. We had a valuation allowance against gross deferred tax assets of $43.6 million as of December 31, 2024 and $72.5 million as of December 31, 2023.

While we believe that the deferred tax assets, net of existing valuation allowances, will be utilized in future periods, there are inherent uncertainties regarding the ultimate realization of these assets. It is possible that the relative weight of positive and negative evidence regarding the realization of deferred tax assets may change, which could result in a material increase or decrease in our valuation allowance. Such a change could result in a material increase or decrease to income tax expense/benefit in the period the assessment was made.

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We record uncertain tax positions on the basis of a two-step process: first we determine whether it is more-likely-than-not that the tax positions will be sustained on the basis of the technical merits of the position; and, if so, we recognize the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority.

Pension and postretirement benefits — Our pension plans use traditional defined benefit formulas based on years of service and final average compensation. Funding policies provide that payments to defined benefit pension trusts shall be at least equal to the minimum funding required by applicable regulations. We presently anticipate contributing $1.3 million to our funded pension plans and $0.7 million to our unfunded pension plans in 2025. During 2024, we communicated the termination of the Giltspur, Inc. Employees’ Pension Plan, which was frozen in 1996, to applicable participants. The termination of the plan, which had $9.3 million in assets and $10.4 million in estimated obligations on a termination accounting basis as of December 31, 2024, is expected to be completed in the first half of 2025. During 2024, we communicated the termination of the Retirement Plan for Management Employees of Brewster Inc, which was frozen in 2024, to applicable participants. The termination of the plan, which had $5.5 million in assets and $5.5 million in estimated obligations on a termination accounting basis as of December 31, 2024, is expected to be completed in the second half of 2025.

We have defined benefit postretirement plans that provide medical and life insurance for certain eligible employees, retirees, and dependents. The related postretirement benefit liabilities are recognized over the employees’ service period. In addition, we retain the obligations for these benefits for retirees of certain sold businesses. While the plans have no funding requirements, we expect to contribute $0.5 million to the plans in 2025.

The discount rates used in determining future pension and postretirement benefit obligations are based on rates determined by actuarial analysis and management review and reflect the estimated rates of return on a high-quality, hypothetical bond portfolio whose cash flows match the timing and amounts of expected benefit payments. Refer to Note 20 – Pension and Postretirement Benefits of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2024 Form 10-K) for further information.

Share-based compensation — We grant share-based compensation awards to our officers, directors, and certain key employees pursuant to the 2017 Viad Corp Omnibus Incentive Plan, which has a 10-year term and provides for the following types of awards: (a) incentive and non-qualified stock options; (b) restricted stock awards and restricted stock units; (c) performance units or performance shares; (d) stock appreciation rights; (e) cash-based awards; and (f) certain other stock-based awards.

Share-based compensation expense recognized in the consolidated financial statements was $11.2 million in 2024, $9.0 million in 2023, and $7.8 million in 2022. We recorded total tax benefits related to such costs of $0.2 million in 2024 and $0.1 million in 2023 and $0.1 million in 2022. No share-based compensation costs were capitalized during 2024, 2023, or 2022.

We account for share-based awards that will be settled in shares of our common stock as equity-based awards. We measure share-based compensation expense of equity-based awards at fair value on the grant date on a straight-line basis over the vesting period. The estimated number of awards to be achieved related to a performance condition is updated each reporting period based on the number of units expected to vest. The fair value of share-based awards that contain a performance goal based on a market condition such as total shareholder return is estimated using a Monte Carlo simulation. A Monte Carlo simulation requires the use of several assumptions, including historical volatility and correlation between our stock price and the price of the common shares of a comparator group, a risk-free rate of return, and an expected term.

The fair value of stock option grants is estimated on the date of grant using the Black-Scholes stock option pricing model. The Black-Scholes model requires the use of several assumptions, including expected volatility, a risk-free interest rate, a forfeiture rate, and expected life. We measure share-based compensation for performance-based options on a straight-line basis over the performance period and the underlying shares expected to be settled are adjusted each reporting period based on estimated future achievement of the respective performance metrics. Service-based options are recognized on a straight-line basis over the requisite service period on a graded-vesting schedule.

Refer to Note 3 – Share-Based Compensation of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2024 Form 10-K) for further information.

Impact of Recent Accounting Pronouncements

Refer to Note 1 – Overview and Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2024 Form 10-K) for further information.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with the consolidated financial statements and related notes. The MD&A is intended to assist in understanding our financial condition and results of operations. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated due to various factors discussed under “Risk Factors,” “Forward-Looking Statements,” and elsewhere in this 2023 Form 10-K.

Overview

We are a leading provider of extraordinary experiences, including hospitality and leisure activities, experiential marketing, and live events. We operate through three reportable segments: Pursuit, Spiro, and GES Exhibitions. Spiro and GES Exhibitions are both live event businesses and are referred to collectively as “GES.”

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Results of Operations

A discussion related to our results of operations for 2023 compared to 2022 is presented below. A discussion related to our results of operations for 2022 compared to 2021 can be found in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 28, 2023, and is incorporated herein by reference.

Financial Highlights

(1)
Refer to Note 24 – Segment Information of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2023 Form 10-K) for a reconciliation of the non-GAAP financial measure, segment operating income, to the most directly comparable GAAP measure.

•
Total revenue increased $111.4 million, primarily due to increased revenue at GES of $60.4 million attributable to improved demand for exhibition management and experiential marketing services, offset in part by the sale of substantially all of the assets of GES’ United States audio-visual production business, ON Services, in December of 2022, which contributed revenue of $50.9 million during 2022, and negative show rotation of approximately $23 million. Pursuit revenue increased $51.0 million, which was driven primarily by stronger international visitation.

•
Net income attributable to Viad decreased $7.2 million, primarily due to a pre-tax gain on sale of ON Services of $19.6 million in 2022 as well as higher interest expense, net, of $13.1 million and higher income tax expense of $8.8 million, offset in part by higher segment operating income.

•
Segment operating income increased $39.5 million, primarily due to higher revenue at GES and Pursuit.

Analysis of Revenue and Operating Results by Reportable Segment

Pursuit

The following table presents a comparison of Pursuit’s reported revenue and segment operating income for the years ended December 31, 2023 and 2022.

** Change is greater than +/- 100%

(1)
Revenue by line of business does not agree to Note 2 – Revenue and Related Contract Costs and Contract Liabilities of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2023 Form 10-K) as the amounts in the above table include product revenue from food and beverage and retail operations within each line of business.

(2)
Refer to Note 24 – Segment Information of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2023 Form 10-K) for a reconciliation of the non-GAAP financial measure, segment operating income, to the most directly comparable GAAP measure.

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Pursuit revenue increased $51.0 million primarily due to increases in attractions revenue of $36.9 million and hospitality revenue of $13.7 million. The growth in attractions revenue was driven primarily by stronger international tourism to Western Canada and Iceland, as well as higher revenue per attraction visitor of 2.7%. The growth in hospitality revenue was driven primarily by revenue management efforts to drive stronger Revenue per Available Room (“RevPAR”) and increased guest demand in Western Canada, as well as higher ancillary revenue and an increase in room nights available of 3.9% with the addition of the Forest Park Alpine Hotel, which opened in August 2022.

Pursuit segment operating income increased $29.4 million primarily due to the increase in revenue, offset in part by the increase in operating costs to support higher business volume during 2023.

Performance Measures

We use the following key business metrics to evaluate the performance of Pursuit’s attractions business:

•
Number of visitors. The number of visitors allows us to assess the volume of tickets sold at each attraction during the period.

•
Revenue per attraction visitor. Revenue per attraction visitor is calculated as total attractions revenue divided by the total number of visitors at all Pursuit attractions during the period. Total attractions revenue includes ticket sales and ancillary revenue generated by attractions, such as food and beverage and retail revenue. Total attractions revenue per visitor measures the total spend per visitor that attraction properties are able to capture, which is important to the profitability of the attractions business.

•
Effective ticket price. Effective ticket price is calculated as revenue from the sale of attraction tickets divided by the total number of visitors at all comparable Pursuit attractions during the period.

We use the following key business metrics, common in the hospitality industry, to evaluate Pursuit’s hospitality business:

•
Revenue per Available Room. RevPAR is calculated as total rooms revenue divided by the total number of room nights available for all comparable Pursuit hospitality properties during the period. Total rooms revenue does not include non-rooms revenue, which consists of ancillary revenue generated by hospitality properties, such as food and beverage and retail revenue. RevPAR measures the period-over-period change in rooms revenue per available room for comparable hospitality properties. RevPAR is affected by average daily rate and occupancy, which have different implications on profitability.

•
Average Daily Rate (“ADR”). ADR is calculated as total rooms revenue divided by the total number of room nights sold for all comparable Pursuit hospitality properties during the period. ADR is used to assess the pricing levels that the hospitality properties are able to realize. Increases in ADR lead to increases in rooms revenue with no substantial effect on variable costs, therefore having a greater impact on margins than increases in occupancy.

•
Occupancy. Occupancy is calculated as the total number of room nights sold divided by the total number of room nights available for all comparable Pursuit hospitality properties during the period. Occupancy measures the utilization of the available capacity at the hospitality properties. Increases in occupancy result in increases in rooms revenue and additional variable operating costs (including housekeeping services, utilities, and room amenity costs), as well as increases in ancillary non-rooms revenue (including food and beverage and retail revenue).

The following table provides Pursuit’s key performance indicators:

(1)
New experiences comprise the following attraction and lodging property that were opened or acquired after January 1, 2022: the Glacier Raft Company (acquired April 2022) and Forest Park Alpine Hotel (opened August 2022).

(2)
Same-Store metrics include only attractions and lodging properties that Pursuit operated at full capacity, considering seasonal closures, for the entirety of both periods presented. For experiences located outside the United States, financial metric comparisons to the prior year are expressed on a constant U.S. dollar basis.

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(3)
Foreign exchange rate variance effects (or “FX Impact”) represents the adjustments necessary to express prior financial metrics on a constant U.S. dollar basis, using the current year quarterly average exchange rates for previous periods to eliminate the impact of changes in exchange rates for same-store Pursuit experiences located outside of the United States.

Attractions. The increase in number of attractions visitors during 2023 was primarily driven by strengthening international tourism to Western Canada and Iceland. The increase in same-store effective ticket price during 2023 was driven by revenue management efforts.

Attractions ticket revenue on a same-store basis increased $30.9 million on a 21.1% increase in visitors and a 5.8% increase in effective ticket price during 2023.

Hospitality. The increase in room nights available during 2023 was primarily driven by the addition of the Forest Park Hotel, which opened in August 2022. The increase in RevPAR during 2023 was due to increases in ADR and occupancy primarily driven by revenue management efforts and increased guest demand in Western Canada.

During 2023, rooms revenue on a same-store basis increased $6.5 million on a 9.1% increase in RevPAR and a 0.2% decrease in room nights available.

GES

The following table presents a comparison of GES’ reported revenue and segment operating income for the years ended December 31, 2023 and 2022:

(1)
Refer to Note 24 – Segment Information of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2023 Form 10-K) for a reconciliation of the non-GAAP financial measure, segment operating income, to the most directly comparable GAAP measure.

Spiro revenue increased $5.5 million primarily due to increased spending by existing clients and revenue from new clients and positive show rotation of approximately $7 million, offset in part by the sale of substantially all of the assets of ON Services in December of 2022, which contributed revenue of $27.6 million during 2022.

GES Exhibitions revenue increased $56.5 million, primarily due to same-show revenue growth of 18.6% and new event wins, offset in part by negative show rotation of approximately $30 million and the sale of substantially all of the assets of ON Services in December of 2022, which contributed revenue of $23.2 million during 2022.

Spiro segment operating income increased $0.6 million primarily due to the increase in revenue, offset in part by the ongoing investment in staff to support growth.

GES Exhibitions segment operating income increased $9.6 million, primarily due to the increase in revenue, offset in part by the restaffing of the workforce from pandemic levels.

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Other Expenses

** Change is greater than +/- 100%.

Gain on sale of ON Services – On December 15, 2022, we completed the sale of substantially all of the assets of ON Services. We recognized a gain on sale of approximately $19.6 million in 2022, which was adjusted downward by $0.2 million in 2023.

Interest Expense, net – The increase in interest expense was primarily due to higher interest rates in 2023.

Restructuring Charges – Restructuring charges during 2023 and 2022 were primarily related to our 2022 transformation and streamlining efforts at GES to significantly reduce costs and create a lower and more flexible cost structure focused on servicing our more profitable market segments.

Income Tax Expense – The effective income tax rates were 43.6% for 2023 and 28.8% for 2022. We generated higher income in 2023 than 2022 in our tax jurisdictions without a valuation allowance and were not able to recognize a benefit on losses in our jurisdictions with a valuation allowance.

Income (Loss) from Discontinued Operations – The loss from discontinued operations during 2023 was primarily due to legal matters related to previously sold operations.

Liquidity and Capital Resources

We believe that our existing sources of liquidity will be sufficient to fund operations and projected capital outlays for at least the next 12 months and the longer term.

When assessing our current sources of liquidity, we include the following:

(1)
As of December 31, 2023, we held $50.4 million of our cash and cash equivalents outside of the United States.

(2)
As of December 31, 2023, the available capacity includes our total Revolving Credit Facility size of $170 million less $57 million of outstanding borrowings and $5.0 million in outstanding letters of credit issued under the Revolving Credit Facility. As of December 31, 2022, the available capacity included our total Revolving Credit Facility size of $100 million less $13.3 million in outstanding letters of credit issued under the Revolving Credit Facility.

Cash provided by operating activities, supplemented by our existing cash and cash equivalents, is our primary source of liquidity for funding our business requirements. During the year ended December 31, 2023, net cash provided by operating activities was $104.7 million.

Our short-term and long-term funding requirements include debt obligations, maintenance capital expenditures, working capital requirements, and potential acquisitions and strategic investments as we focus on scaling Pursuit with investments in high-return unforgettable, inspiring experiences through its Refresh, Build, Buy growth strategy. Our projected capital outlays can be adjusted for changes in the operating environment.

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Debt Obligations

Effective July 30, 2021, we entered into the 2021 Credit Facility. The 2021 Credit Facility provided for a $400 million Term Loan B, with a maturity date of July 30, 2028, and a $100 million Revolving Credit Facility, with a maturity date of July 30, 2026. The proceeds of the Term Loan B, net of $14.8 million in related fees, were used to repay the $327 million outstanding balance under our prior $450 million revolving credit facility and to provide for financial flexibility to fund future acquisitions and growth initiatives and for general corporate purposes. On January 4, 2023, we entered into an interest rate cap agreement with an effective date of January 31, 2023. The interest rate cap manages our exposure to interest rate increases on $300 million in borrowings under the 2021 Credit Facility or other Secured Overnight Financing Rate (“SOFR”) based borrowings. Refer to Note 13 – Derivative of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2023 Form 10-K) for additional information.

The Revolving Credit Facility carries financial covenants. On March 28, 2023, we entered into the Second Amendment to the 2021 Credit Facility, which modified the interest coverage financial covenant. On October 6, 2023, we entered into the Third Amendment to the 2021 Credit Facility, which among other things, increased the principal amount of the Revolving Credit Facility by $70 million, bringing the total amount of revolving capacity to $170 million. In connection with the Third Amendment, we prepaid $70 million of the outstanding balance on our existing Term Loan B using $60 million from the Revolving Credit Facility and $10 million of cash from the Company’s balance sheet. The current credit spread on our Revolving Credit Facility is 200 basis points lower than the credit spread on the Term Loan B, which is 5.00% for SOFR borrowings. As of December 31, 2023, we were in compliance with all covenants under the Revolving Credit Facility. Refer to Note 12 – Debt and Finance Obligations of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2023 Form 10-K) for additional information.

Capital Expenditures

As of December 31, 2023, we have planned capital expenditures of approximately $65 million to $70 million for 2024, including approximately $20 million on select growth projects, such as the completion of FlyOver Chicago. We intend to continue making selective investments to advance Pursuit’s Refresh, Build, Buy growth strategy while maintaining a solid liquidity position.

Other Obligations

We have additional obligations as part of our ordinary course of business, beyond those committed for debt obligations and capital expenditures. Refer to Note 21 – Leases and Other and Note 19 – Pension and Postretirement Benefits of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2023 Form 10-K) for further information. The expected timing of payments of our obligations is estimated based on current information. Timing of payments and actual amounts paid may be different, depending on changes to agreed-upon amounts for certain obligations.

Cash Flows

Operating Activities

Net cash provided by operating activities increased $31.2 million primarily due to improved segment operating results at Pursuit and GES and improved working capital.

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Investing Activities

Net cash used in investing activities increased $11.6 million primarily due to proceeds from the sale of ON Services of $28.9 million in 2022 and an increase in capital expenditures in 2023, offset in part by cash paid for the Glacier Raft Company acquisition in April of 2022 of $25.5 million.

Financing Activities

Net cash used in financing activities increased $30.0 million primarily due to net debt payments of $22.5 million during 2023 compared to net debt proceeds from borrowings of $4.1 million during 2022.

Debt and Finance Obligations

Refer to Note 12 – Debt and Finance Obligations of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2023 Form 10-K) for further discussion all of which is incorporated by reference herein.

Guarantees

Refer to Note 22 – Litigation, Claims, Contingencies, and Other of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2023 Form 10-K) for further discussion all of which is incorporated by reference herein.

Share Repurchases

Our Board of Directors previously authorized us to repurchase shares of our common stock from time to time at prevailing market prices. As of December 31, 2023, 546,283 shares remained available for repurchase under all prior authorizations. In March 2020, our Board of Directors suspended our share repurchase program. The Board of Directors’ authorization does not have an expiration date.

Additionally, we repurchased shares related to tax withholding requirements on vested restricted share-based awards.

Critical Accounting Estimates

The consolidated financial statements are prepared in accordance with United States generally accepted accounting principles (“GAAP”). We are required to make estimates and assumptions that affect our reported amounts of assets, liabilities, revenue, and expenses. Critical accounting estimates are those estimates that are most important to the portrayal of our financial position and results of operations, and that require us to make the most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. We identified and discussed with our Audit Committee the following critical accounting estimates and the methodology and disclosures related to those estimates:

Goodwill and Other Intangible Assets — Goodwill and other intangible assets with indefinite useful lives are not amortized, but instead are tested for impairment at least annually. Intangible assets with finite lives are amortized over their respective estimated useful lives and are reviewed for impairment if an event occurs or circumstances change that would indicate the intangible asset’s carrying value may not be recoverable.

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Goodwill is tested for impairment at the reporting unit level on an annual basis as of October 31, and between annual tests if an event occurs or circumstances change that would more-likely-than-not reduce the fair value of a reporting unit below its carrying value. Our reporting units are defined, and goodwill is tested, at either an operating segment level or at the component level of an operating segment, depending on various factors including the internal reporting structure of the operating segment, the level of integration among components, the sharing of assets and other resources among components, and the benefits and likely recoverability of goodwill by the component’s operations.

For purposes of goodwill impairment testing, we use a discounted expected future cash flow methodology (income approach) to estimate the fair value of our reporting units. The estimates and assumptions regarding expected future cash flows (the most significant being revenue and EBITDA margins), discount rates, and terminal values require considerable judgment and are based on market conditions, financial forecasts, industry trends, and historical experience.

The most critical assumptions and estimates in determining the estimated fair value of our reporting units relate to the amounts and timing of expected future cash flows for each reporting unit and the reporting unit cost of capital (discount rate) applied to those cash flows. We estimate the assumed reporting unit cost of capital rates (discount rates) using a build-up method based on the perceived risk associated with the cash flows pertaining to the specific reporting unit. In order to assess the reasonableness of our fair value estimates, we perform a reconciliation of the aggregate fair values of our reporting units to our market capitalization.

As noted above, the estimates and assumptions regarding expected future cash flows, discount rates, and terminal values require considerable judgment and are based on market conditions, financial forecasts, industry trends, and historical experience. These estimates have inherent uncertainties, and different assumptions could lead to materially different results. Our goodwill balance was $123.9 million as of December 31, 2023 and $121.4 million as of December 31, 2022 and pertained to our Pursuit business. The discount rates used in our most recent impairment analysis ranged from 12% to 16%.

Pursuit’s goodwill was assigned to, and tested at, the reporting unit level. The results of our most recent impairment analysis performed as of October 31, 2023, indicated that no impairment existed for Pursuit’s reporting units with reported goodwill. The excess of the estimated fair value over the carrying value for the Banff Jasper Collection and the Alaska Collection was significant, Glacier Park Collection was 3%, and FlyOver was 5%. We will continue to closely monitor actual results versus expectations as well as whether and to what extent any significant changes in current events or conditions result in corresponding changes to our expectations about future estimated cash flows and discount rates. If our adjusted expectations of the operating results of our reporting units do not materialize, or the discount rate increases (based on increases in interest rates, market rates of return or market volatility), it is possible that we may be required to record goodwill impairment charges in the future, which may be material.

If an impairment indicator related to intangible assets is identified, or if other circumstances indicate an impairment may exist, we perform an assessment to determine if an impairment loss should be recognized. This assessment includes a recoverability test to identify if the expected future undiscounted cash flows are less than the carrying value of the related assets. If the results of the recoverability test indicate that expected future undiscounted cash flows are less than the carrying value of the related assets, we perform a measurement of impairment and we recognize any carrying amount in excess of fair value as an impairment. We periodically evaluate the continued recoverability of intangible assets which were previously evaluated due to an impairment indicator to determine if remeasurement is necessary.

Income taxes — We are required to estimate and record provisions for income taxes in each of the jurisdictions in which we operate. Accordingly, we must estimate our actual current income tax liability, and assess temporary differences arising from the treatment of items for tax purposes, as compared to the treatment for accounting purposes. These differences result in deferred tax assets and liabilities, which are included in the Consolidated Balance Sheets. We use significant judgment in forming conclusions regarding the recoverability of our deferred tax assets and evaluate all available positive and negative evidence to determine if it is more-likely-than-not that the deferred tax assets will be realized. To the extent recovery does not appear likely, a valuation allowance must be recorded. We had gross deferred tax assets of $119.9 million as of December 31, 2023 and $110.8 million as of December 31, 2022. We had a valuation allowance against gross deferred tax assets of $105.4 million as of December 31, 2023 and $101.6 million as of December 31, 2022.

While we believe that the deferred tax assets, net of existing valuation allowances, will be utilized in future periods, there are inherent uncertainties regarding the ultimate realization of these assets. It is possible that the relative weight of positive and negative evidence regarding the realization of deferred tax assets may change, which could result in a material increase or decrease in our valuation allowance. Such a change could result in a material increase or decrease to income tax expense/benefit in the period the assessment was made.

We record uncertain tax positions on the basis of a two-step process: first we determine whether it is more-likely-than-not that the tax positions will be sustained on the basis of the technical merits of the position; and, if so, we recognize the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority.

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Pension and postretirement benefits — Our pension plans use traditional defined benefit formulas based on years of service and final average compensation. Funding policies provide that payments to defined benefit pension trusts shall be at least equal to the minimum funding required by applicable regulations. We presently anticipate contributing $0.8 million to our funded pension plans and $0.8 million to our unfunded pension plans in 2024.

We have defined benefit postretirement plans that provide medical and life insurance for certain eligible employees, retirees, and dependents. The related postretirement benefit liabilities are recognized over the employees’ service period. In addition, we retain the obligations for these benefits for retirees of certain sold businesses. While the plans have no funding requirements, we expect to contribute $0.7 million to the plans in 2024.

The discount rates used in determining future pension and postretirement benefit obligations are based on rates determined by actuarial analysis and management review and reflect the estimated rates of return on a high-quality, hypothetical bond portfolio whose cash flows match the timing and amounts of expected benefit payments. Refer to Note 19 – Pension and Postretirement Benefits of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2023 Form 10-K) for further information.

Share-based compensation — We grant share-based compensation awards to our officers, directors, and certain key employees pursuant to the 2017 Viad Corp Omnibus Incentive Plan, which has a 10-year term and provides for the following types of awards: (a) incentive and non-qualified stock options; (b) restricted stock awards and restricted stock units; (c) performance units or performance shares; (d) stock appreciation rights; (e) cash-based awards; and (f) certain other stock-based awards.

Share-based compensation expense recognized in the consolidated financial statements was $11.5 million in 2023, $10.2 million in 2022, and $7.7 million in 2021. We recorded total tax benefits related to such costs of $0.2 million in 2023 and $0.1 million in 2022 and 2021. No share-based compensation costs were capitalized during 2023, 2022, or 2021.

We account for share-based awards that will be settled in shares of our common stock as equity-based awards. We measure share-based compensation expense of equity-based awards at fair value on the grant date on a straight-line basis over the vesting period. The estimated number of awards to be achieved related to a performance condition is updated each reporting period based on the number of units expected to vest. The fair value of share-based awards that contain a performance goal based on a market condition such as total shareholder return is estimated using a Monte Carlo simulation. A Monte Carlo simulation requires the use of several assumptions, including historical volatility and correlation between our stock price and the price of the common shares of a comparator group, a risk-free rate of return, and an expected term.

We account for share-based payment awards that will be settled in cash as liability-based awards. We measure share-based compensation expense of liability-based awards at fair value at each reporting date until the date of settlement based on the number of units expected to vest and, where applicable, the level of achievement of predefined performance goals. These awards are remeasured on each reporting date based on our stock price. The fair value of share-based awards that contain a performance goal based on a market condition such as total shareholder return is estimated using the Monte Carlo simulation. A Monte Carlo simulation requires the use of several assumptions, including historical volatility and correlation between our stock price and the price of the common shares of a comparator group, a risk-free rate of return, and an expected term.

The fair value of stock option grants is estimated on the date of grant using the Black-Scholes stock option pricing model. The Black-Scholes model requires the use of several assumptions, including expected volatility, a risk-free interest rate, a forfeiture rate, and expected life. We measure share-based compensation for performance-based options on a straight-line basis over the performance period and the underlying shares expected to be settled are adjusted each reporting period based on estimated future achievement of the respective performance metrics. Service-based options are recognized on a straight-line basis over the requisite service period on a graded-vesting schedule.

Refer to Note 3 – Share-Based Compensation of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2023 Form 10-K) for further information.

Self-Insurance Liabilities — We are self-insured up to certain limits for workers’ compensation and general liabilities, which includes automobile, product general liability, and client property loss claims. We have also retained and provided for certain workers’ compensation insurance liabilities in conjunction with previously sold businesses. We are also self-insured for certain employee health benefits. Provisions for losses for claims incurred, including actuarially derived estimated claims incurred but not yet reported, are made based on historical experience, claims frequency, and other factors. We have purchased insurance for amounts in excess of the self-insured levels.

Impact of Recent Accounting Pronouncements

Refer to Note 1 – Overview and Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2023 Form 10-K) for further information.

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Non-GAAP Measure

In addition to disclosing financial results that are determined in accordance with GAAP, we also disclose segment operating income (loss) as a non-GAAP financial measure. Our use of segment operating income (loss) is supplemental to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP. As not all companies use identical calculations, segment operating income (loss) may not be comparable to similarly titled measures used by other companies. We believe that our use of segment operating income (loss) provides useful information to investors regarding our results of operations for trending, analyzing, and benchmarking our performance and the value of our business.

“Segment operating income (loss)” is “net income (loss) attributable to Viad” before income (loss) from discontinued operations, corporate activities, net interest expense, income taxes, gains or losses from sales of businesses, restructuring charges, impairment charges, and certain other corporate expenses and charges that are not allocated to the reportable segments, and the reduction for income (loss) attributable to noncontrolling interests. Segment operating income (loss) is used to measure the profit and performance of our operating segments to facilitate period-to-period comparisons. Refer to Note 24 – Segment Information of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2023 Form 10-K) for a reconciliation of segment operating income (loss) to income (loss) from continuing operations before income taxes.

We believe segment operating income (loss) is a useful operating metric as it eliminates potential variations arising from taxes, debt service costs, impairment charges, restructuring charges, strategic dispositions, the reduction of income (loss) attributable to non-controlling interests, and the effects of discontinued operations, resulting in an additional measure considered to be indicative of our ongoing operations and segment performance. Although we use segment operating income (loss) to assess the performance of our business, the use of this measure is limited because this measure does not consider material costs, expenses, and other items necessary to operate, or resulting from, our business. As segment operating income (loss) does not consider these items, net income (loss) attributable to Viad should be considered as an important measure of financial performance because it provides a more complete measure of our performance.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following Management’s Discussion and Analysis (“MD&A”) should be read in conjunction with the consolidated financial statements and related notes. The MD&A is intended to assist in understanding our financial condition and results of operations. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated due to various factors discussed under “Risk Factors,” “Forward-Looking Statements,” and elsewhere in this 2022 Form 10-K.

Overview

We are a leading global provider of extraordinary experiences, including hospitality and leisure activities, experiential marketing, and live events. We operate through three reportable segments: Pursuit, Spiro, and GES Exhibitions.

During the first quarter of 2022, we rebranded GES’ brand experiences business and introduced Spiro to the market to accelerate our growth by servicing the changing needs of today’s brand marketers across a broader spectrum of their experiential marketing needs. Spiro and GES Exhibitions are both live event businesses and are collectively referred to as “GES.”

Results of Operations

Financial Highlights

** Change is greater than +/- 100%

(1)
Refer to Note 23 – Segment Information of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2022 Form 10-K) for a reconciliation of the non-GAAP financial measure, segment operating income (loss), to the most directly comparable GAAP measure.

2022 compared with 2021

•
Total revenue increased $620.0 million, primarily due to increased revenue at GES of $507.7 million as live event activity at GES continued to improve and as certain previously canceled shows in 2021 took place during 2022, although on average at reduced capacities from pre-COVID-19 levels. Pursuit revenue increased $112.3 million, primarily due to increased visitation at Pursuit’s Canadian attractions, as well as incremental performance from Pursuit’s new experiences that were opened or acquired after January 1, 2021, which contributed revenue of $43.2 million during 2022 as compared to $15.6 million during 2021.

•
Net income attributable to Viad was $23.2 million during 2022 as compared to a net loss of $92.7 million during 2021. This improvement of $115.9 million was primarily due to higher revenue and a gain on sale of GES’ United States audio-visual production business, ON Services, of $19.6 million, offset in part by higher expenses.

•
Total segment operating income was $68.9 million during 2022 as compared to a loss of $47.0 million during 2021. This improvement of $115.9 million was primarily due to higher revenue at GES and Pursuit, offset in part by a non-cash foreign currency unrealized loss of $4.2 million related to a finance lease remeasurement in addition to a $9.1 million gain on sale of a GES warehouse in Orlando during the 2021 period.

2021 compared with 2020

•
Total revenue increased $91.9 million, primarily due to increased revenue at Pursuit of $110.2 million. Although Pursuit continued to be affected by pandemic-related restrictions in certain international geographies, overall revenue at Pursuit improved from 2020 as health and travel restrictions lessened and people felt more comfortable traveling. Visitation from domestic travelers increased at Pursuit’s Glacier Park Collection and the Alaska Collection. Additionally, Canada’s border reopened during the third quarter of 2021. There also was strong regional and national demand from Canadians as they were required to stay closer to home. GES revenue decreased $18.3 million as live events remained largely shut down during the

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first half of 2021. Large scale in-person events started to take place during the second half of 2021 with generally lower exhibitor participation and lower attendance than pre-pandemic occurrences.

•
Net loss attributable to Viad improved $281.4 million during 2021 as compared to 2020, primarily reflecting impairment charges of $203.1 million recorded during 2020 and higher restructuring charges of $7.4 million recorded during 2020 as compared to 2021, as well as improved segment operating results during 2021 of $69.2 million.

•
Total segment operating loss improved $69.2 million during 2021 as compared to 2020, primarily due to the increase in revenue at Pursuit, offset in part by the elimination of performance-based incentives in 2020 as a result of the COVID-19 pandemic and GES’ decrease in revenue.

Analysis of Revenue and Operating Results by Reportable Segment

Pursuit

The following table presents a comparison of Pursuit’s reported revenue and segment operating income (loss) for the years ended December 31, 2022, 2021, and 2020.

** Change is greater than +/- 100%

(1)
Revenue by line of business does not agree to Note 2 – Revenue and Related Contract Costs and Contract Liabilities of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2022 Form 10-K) as the amounts in the above table include product revenue from food and beverage and retail operations within each line of business.

(2)
Refer to Note 23 – Segment Information of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2022 Form 10-K) for a reconciliation of the non-GAAP financial measure, segment operating income (loss), to the most directly comparable GAAP measure.

2022 compared with 2021

Pursuit revenue increased $112.3 million driven by stronger leisure travel to Pursuit’s Canadian experiences, resulting from reduced COVID-19 restrictions as well as incremental performance from Pursuit’s new experiences. Visitation at Pursuit’s Canadian attractions increased nearly 90% as compared to 2021 when Pursuit’s operations were impacted by border restrictions and temporary government mandated closures at FlyOver Canada and FlyOver Iceland. Pursuit’s new experiences that were opened or acquired after January 1, 2021, including the Sky Lagoon (opened May 2021), the Golden Skybridge (opened June 2021), FlyOver Las Vegas (opened September 2021), the Glacier Raft Company (acquired April 2022), and the Forest Park Alpine Hotel (opened August 2022), contributed revenue of $43.2 million during 2022 as compared to those attractions acquired or opened in 2021 of $15.6 million.

Pursuit segment operating income increased $19.4 million primarily due to the increase in revenue, offset in part by a non-cash foreign currency unrealized loss of $4.2 million related to a finance lease remeasurement, higher operating costs, including insurance and compensation-related expenses during 2022, as well as COVID-19 wage subsidies received in 2021 of $11.3 million from the Canadian government’s emergency wage subsidy program that did not repeat in 2022.

2021 compared with 2020

Pursuit revenue increased $110.2 million, which reflected the continued strengthening of leisure travel demand during the second half of 2021 versus 2020 as pandemic-related restrictions lessened and as people started to feel more comfortable traveling. Pursuit was affected by consumer discretionary spending on tourism activities. Travel restrictions and border closures due to the COVID-19 pandemic negatively affected long-haul travelers to Canada and Iceland, which affected customer volumes and the results of operations. Pursuit’s seasonal attractions and properties were open starting in the second quarter of 2021 through the end of the year, although some operated at reduced capacities, whereas Pursuit’s properties and attractions were temporarily closed in 2020 from mid-March through

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most of the second quarter. The Glacier Park Collection and the Alaska Collection experienced increased visitation during the 2021 peak season from strong domestic leisure travel, which resulted in an increase in revenue from the Glacier Park Collection of $27.7 million and from the Alaska Collection of $31.1 million. Pursuit opened or acquired three new attractions in 2021, Sky Lagoon, the Golden Skybridge, and FlyOver Las Vegas, which contributed revenue of $15.6 million during 2021.

Pursuit segment operating income was $4.6 million during 2021 as compared to a loss of $42.3 million during 2020. This improvement was primarily due to the increase in revenue.

Performance Measures

We use the following key business metrics to evaluate the performance of Pursuit’s attractions business:

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Number of visitors. The number of visitors allows us to assess the volume of tickets sold at each attraction during the period.

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Revenue per attraction visitor. Revenue per attraction visitor is calculated as total attractions revenue divided by the total number of visitors at all Pursuit attractions during the period. Total attractions revenue includes ticket sales and ancillary revenue generated by attractions, such as food and beverage and retail revenue. Total attractions revenue per visitor measures the total spend per visitor that attraction properties are able to capture, which is important to the profitability of the attractions business.

•
Effective ticket price. Effective ticket price is calculated as revenue from the sale of attraction tickets divided by the total number of visitors at all comparable Pursuit attractions during the period.

We use the following key business metrics, common in the hospitality industry, to evaluate Pursuit’s hospitality business:

•
Revenue per Available Room. RevPAR is calculated as total rooms revenue divided by the total number of room nights available for all comparable Pursuit hospitality properties during the period. Total rooms revenue does not include non-rooms revenue, which consists of ancillary revenue generated by hospitality properties, such as food and beverage and retail revenue. RevPAR measures the period-over-period change in rooms revenue per available room for comparable hospitality properties. RevPAR is affected by average daily rate and occupancy, which have different implications on profitability.

•
Average Daily Rate. ADR is calculated as total rooms revenue divided by the total number of room nights sold for all comparable Pursuit hospitality properties during the period. ADR is used to assess the pricing levels that the hospitality properties are able to realize. Increases in ADR lead to increases in rooms revenue with no substantial effect on variable costs, therefore having a greater impact on margins than increases in occupancy.

•
Occupancy. Occupancy is calculated as the total number of room nights sold divided by the total number of room nights available for all comparable Pursuit hospitality properties during the period. Occupancy measures the utilization of the available capacity at the hospitality properties. Increases in occupancy result in increases in rooms revenue and additional variable operating costs (including housekeeping services, utilities, and room amenity costs), as well as increases in ancillary non-rooms revenue (including food and beverage and retail revenue).

The following table provides Pursuit’s key performance indicators:

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(1)
New experiences comprise the following attractions that were opened or acquired after January 1, 2021: Sky Lagoon (opened May 2021), the Golden Skybridge (acquired March 2021 and opened June 2021), FlyOver Las Vegas (opened September 2021), the Glacier Raft Company (acquired April 2022), and Forest Park Alpine Hotel (opened August 2022).

(2)
Same-Store metrics include only attractions and lodging properties that Pursuit operated at full capacity, considering seasonal closures, for the entirety of both periods presented. For experiences located outside the United States, financial metric comparisons to the prior year are expressed on a constant U.S. dollar basis.

(3)
Foreign exchange rate variance effects (or “FX Impact”) represents the adjustments necessary to express prior financial metrics on a constant U.S. dollar basis, using the current year quarterly average exchange rates for previous periods to eliminate the impact of changes in exchange rates for same-store Pursuit experiences located outside of the United States.

Attractions. The incremental increase in the number of visitors from new experiences that were opened or acquired after January 1, 2021 was primarily driven by Sky Lagoon and FlyOver Las Vegas, which contributed approximately 87% of the total increase. The increase in same-store visitors during 2022 as compared to 2021 was driven by higher visitation during 2022, as visitation was impacted in 2021 by border closures and travel restrictions as a result of the COVID-19 pandemic in addition to the temporary government mandated closures at FlyOver Canada and FlyOver Iceland.

The increase in same-store visitors during 2021 as compared to 2020 reflects the temporary closure of our attractions beginning in mid-March 2020 and extending through most of the second quarter of 2020 as a result of COVID-19 in addition to the reopening of the Canadian border during the third quarter of 2021, which accelerated visitation from international travelers. Revenue per attraction visitor increased due to higher effective ticket prices and ancillary revenue.

Hospitality. The increase in RevPAR during 2022 as compared to 2021 was primarily driven by higher occupancy and to a lesser extent by higher ADR driven by revenue management efforts.

Room nights available increased during 2021 as compared to 2020 as all of Pursuit’s properties were fully open during the 2021 peak season, whereas in 2020, Pursuit temporarily closed its properties in mid-March 2020 through most of the second quarter of 2020. The increase in RevPAR and ADR was primarily driven by Pursuit’s properties being open in 2021.

GES

During the first quarter of 2022, we changed our segment reporting as a result of operational changes and how our CODM reviews the financial performance of GES and makes decisions regarding the allocation of resources. Accordingly, GES’ new reportable segments are Spiro and GES Exhibitions. We reclassified prior periods to conform to the current-period presentation.

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The following table presents a comparison of GES’ reported revenue and segment operating income (loss) for the years ended December 31, 2022, 2021, and 2020:

** Change is greater than +/- 100%

(1)
Refer to Note 23 – Segment Information of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2022 Form 10-K) for a reconciliation of the non-GAAP financial measure, segment operating income (loss), to the most directly comparable GAAP measure.

2022 compared with 2021

Spiro and GES Exhibitions revenue increased $161.1 million and $348.4 million, respectively, primarily driven by increased live event activity at both GES Exhibitions and Spiro and the return of large-scale events that were canceled or postponed into the first half of 2021.

Spiro and GES Exhibitions segment operating income improved $32.7 million and $63.8 million, respectively, from operating losses in the prior year period primarily due to higher revenue, offset in part by higher costs to support increased business activity, as well as a $9.1 million gain on sale of a GES Exhibitions warehouse in Orlando in 2021.

2021 compared with 2020

Spiro revenue increased $14.6 million and GES Exhibitions revenue decreased $29.2 million. The net decrease at GES of $18.3 million was primarily due to show postponements and cancellations as a result of the COVID-19 pandemic beginning in mid-March 2020. During the first half of 2021, Spiro and GES Exhibitions serviced clients primarily with virtual and hybrid events while in-person events remained largely shut down. Larger-scale in-person events began to take place toward the end of the second quarter and during the second half of 2021 with generally lower exhibitor participation and lower attendance than pre-pandemic occurrences. Spiro revenue increased due to virtual and hybrid events during 2021, offset in part by shows completed during the first quarter of 2020 prior to the onset of the pandemic. GES Exhibitions revenue decreased due to large shows completed during the first quarter of 2020 prior to the onset of the pandemic, offset in part by virtual and hybrid events during 2021.

Spiro segment operating loss improved $31.7 million and GES Exhibitions segment operating loss increased $9.4 million. The net operating loss improvement at GES of $22.3 million during 2021 was primarily due to decreased operating costs through the reduction of head count and facilities, implementation of a flex workforce, and a continued focus on managing discretionary costs. GES Exhibitions segment operating loss increased due to a $9.1 million gain on sale of a warehouse in Orlando in 2021, offset by a $13.5 million gain on sale of a warehouse in San Diego in 2020.

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Other Expenses

** Change is greater than +/- 100%.

Corporate Activities – The increase in corporate activities expense during 2022 relative to 2021 was primarily due to higher performance-based compensation expense. The increase in corporate activities expense during 2021 relative to 2020 was primarily due to higher performance-based compensation expense as we reduced our estimated performance achievement to zero in 2020 as a result of the COVID-19 pandemic, offset in part by fees and expenses related to the equity raise and credit facility amendment in 2020.

Gain on Sale of ON Services – On December 15, 2022, we completed the sale of substantially all of the assets of GES’ United States audio-visual production business, ON Services. We recognized a gain on sale of $19.6 million.

Interest Expense, net – The increase in interest expense during 2022 relative to 2021 was primarily due to higher interest rates in 2022, offset in part by $3.0 million in capitalized interest recorded during 2022. The increase in interest expense during 2021 relative to 2020 was primarily due to higher interest rates and higher debt balances during 2021. Additionally, as a result of the refinance and the repayment of our then $450 million revolving credit facility, we recorded $2.1 million of interest expense related to the write-off of unamortized debt issuance costs during 2021.

Restructuring Charges – Restructuring charges during 2022, 2021, and 2020 were primarily related to facility closures and severance at GES. In response to the COVID-19 pandemic, we accelerated our transformation and streamlining efforts at GES to significantly reduce costs and create a lower and more flexible cost structure focused on servicing our more profitable market segments, as well as charges related to the closure of GES’ United Kingdom based audio-visual services business in 2020. Restructuring charges in 2020 also included the elimination of certain positions at our corporate office.

Impairment Charges – Impairment charges in 2022 of $0.6 million were related to certain software development costs that were no longer being utilized at GES. Impairment charges in 2020 were related to the deteriorating macroeconomic environment caused by the COVID-19 pandemic, which resulted in disruptions to our operations and the decline in our stock price. We recorded non-cash goodwill impairment charges of $185.8 million, a non-cash impairment charge to intangible assets of $15.7 million related to GES’ United States audio-visual production business, and a fixed asset impairment charge of $1.6 million.

Income Tax Expense – The effective income tax rates were 28.8% for 2022, 1.9% for 2021, and a negative 3.9% for 2020. The effective tax rate for 2022 was higher than the blended statutory rate primarily as a result of the higher mix of income earned in foreign jurisdictions where we do not have a valuation allowance. The effective tax rate for 2021 was lower than the blended statutory rate primarily as a result of excluding the tax benefit on losses recognized in the United States, the United Kingdom, and other European countries where we have a valuation allowance. The negative effective tax rate for 2020 was due to the recording of a $25.5 million valuation allowance against our remaining net deferred tax assets in the United States, United Kingdom, and other European countries, as well as no tax benefits on non-deductible goodwill impairments and losses recognized in those jurisdictions.

Liquidity and Capital Resources

We believe that our existing sources of liquidity will be sufficient to fund operations and projected capital outlays for at least the next 12 months and the longer term.

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When assessing our current sources of liquidity, we include the following:

(1)
As of December 31, 2022, we held approximately $49.2 million of our cash and cash equivalents outside of the United States, consisting of $20.6 million in Canada, $9.0 million in Iceland, $7.7 million in the Netherlands, $6.0 million in the United Arab Emirates, $3.9 million in the United Kingdom, and $2.0 million in other countries.

(2)
Includes our total revolving credit facility of $100 million less outstanding letters of credit of $13.3 million as of December 31, 2022 and $12.6 million as of December 31, 2021.

Cash provided by operating activities, supplemented by our total cash and cash equivalents, is our primary source of liquidity for funding our strategic business requirements. During the year ended December 31, 2022, net cash provided by operating activities was $73.4 million.

Our short-term and long-term funding requirements include debt obligations, capital expenditures, working capital requirements, and potential acquisitions and strategic investments as we focus on scaling Pursuit with investments in high-return unforgettable, inspiring experiences through its Refresh, Build, Buy growth strategy. Our projected capital outlays can be adjusted for changes in the operating environment.

Debt Obligations

Effective July 30, 2021, we entered into a $500 million credit facility (the “2021 Credit Facility”). The 2021 Credit Facility provides for a $400 million term loan with a maturity date of July 30, 2028 (“Term Loan B”) and a $100 million revolving credit facility with a maturity date of July 30, 2026. The $400 million in Term Loan B proceeds were offset in part by $14.8 million in related fees. The proceeds from the Term Loan B were used to repay the $327 million outstanding balance under our then $450 million revolving credit facility. The $100 million revolving credit facility and the remaining proceeds from the Term Loan B have been and will be used to provide for financial flexibility to fund future acquisitions and growth initiatives and for general corporate purposes. On March 23, 2022, we entered into an amendment to the 2021 Credit Facility, which modified the revolving credit facility’s financial covenants. We were in compliance with all covenants under the revolving credit facility as of December 31, 2022. Refer to Note 12 – Debt and Finance Obligations of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2022 Form 10-K) for additional information.

Capital Expenditures

As of December 31, 2022, we had planned capital expenditures of approximately $75 million to $85 million for 2023, including approximately $40 million on select growth projects, such as the development of FlyOver Chicago. We intend to continue making investments to advance Pursuit’s Refresh, Build, Buy growth strategy while maintaining a solid liquidity position.

Other Obligations

We have additional obligations as part of our ordinary course of business, beyond those committed for debt obligations and capital expenditures. Refer to Note 20 – Leases and Other and Note 18 – Pension and Postretirement Benefits of the Notes to Consolidated Financial Statements (Part II, Item 8 of this 2022 Form 10-K) for further information. The expected timing of payments of our obligations is estimated based on current information. Timing of payments and actual amounts paid may be different, depending on changes to agreed-upon amounts for certain obligations.

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Cash Flows

Operating Activities