Pursuit Attractions and Hospitality, Inc. (PRSU) Earnings Call Transcript & Summary

Good afternoon. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to Pursuit's 2026 Second Quarter Earnings Conference Call. [Operator Instructions] Carrie Long, you may begin the conference.

Good afternoon, and thank you for joining us for our 2026 second quarter earnings conference call. During the call, led by David Barry, our President and CEO; and Bo Heitz, our Chief Financial Officer, we will reference our earnings presentation, which is available on the Investors section of our website. We encourage investors to monitor the Investors section of our website in addition to our press releases, filings submitted with the SEC and any public conference calls or webcast. Before I turn the call over to David, I would like to draw your attention to important disclaimers on Pages 2 and 3 of our presentation regarding non-GAAP financial measures and the use of forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Page 2 identifies forward-looking statements and discusses risks and other important factors that could cause results to differ from those expressed in such statements, and Page 3 identifies and defines the non-GAAP financial measures we use and reconciliations to the most directly comparable GAAP financial measures are provided in the appendix of the presentation and in our earnings release. And with that, I am pleased to turn the call over to David, who will start on Page 4.

Thanks, Carrie, and thank you all for joining us. We're excited to review our 2026 second quarter results and share our view to continued significant long-term growth and value creation. Let's start with 3 key highlights that demonstrate our strategy is working and show the momentum in our business. First, we delivered exceptional guest experiences and record second quarter results. Revenue grew 14% with strong contributions from Tabacón and continued growth across our existing geographies. Second, we completed 2 strategic transactions at compelling valuations that advance our growth strategy. The acquisition of Eagle Wing Tours, a leading sightseeing attraction in Victoria, British Columbia, strengthens our portfolio and reflects our approach to disciplined capital deployment. And we completed the sale of our non-core Flyover business, bolstering our balance sheet for future growth investments more aligned with our strategy and Vision 2030 targets. And third, we're increasing our full year 2026 guidance to incorporate incremental contributions from our recent strategic transactions. Our demand indicators remain positive, and we expect to deliver 14% adjusted EBITDA growth year-over-year at the midpoint. Turning to Page 6, I'll spend a moment on the sale of Flyover and what that does for our business. This transaction has been years in the making and is the final chapter in Pursuit's transformational story of becoming a pure-play attractions and hospitality growth engine. With the sale complete, we further sharpen our singular focus on delivering great guest experiences where nature is our content and driving growth through sightseeing attractions and hospitality experiences in iconic destinations with an even stronger balance sheet to support our growth into the future. This is a clear example of focused portfolio management. It simplifies the business, strengthens our financial position and allows us to invest behind the opportunities with the greatest long-term value creation potential. We wish the talented Flyover team great success in their future growth journey with their new owner, Brogent Technologies. Next, let's turn to Page 7 to briefly reinforce what makes Pursuit special. Simply put, Pursuit is in a category of one. We own and operate unforgettable and inspiring experiences in some of the world's most iconic destinations with a portfolio of 14 sightseeing attractions and 29 distinctive lodging properties across 4 countries. Page 8 highlights our differentiated model. Pursuit's assets are one-of-a-kind experiential infrastructure that connect guests to extraordinary places. Our demand is anchored to destinations with perennial global appeal. And importantly, we operate in supply-constrained markets where development is regulated and difficult to replicate. We build on these dynamics with an integrated operating model and a strong culture of guest-obsessed hospitality, experience design and our own unique growth mindset. By connecting attractions, lodging, dining, retail and transportation, we create a seamless guest journey that drives visitation, guest satisfaction, yield and sustainable and scalable cash flow growth. Pursuit has a compelling position that is aligned to the global travel trends as shown on Page 9. Increasingly, people all over the world are prioritizing experiences over things and building trips around must-do bucket list moments, exactly what Pursuit delivers. Outdoor adventure, wellness, curated travel, group demand, flexible work and the desire to unplug all support our iconic nature immersive experiences. And for Pursuit, AI is an enabler, not a disruptor. AI can help plan your trip, but never take your vacation for you. We build upon our compelling positioning with a consistent proven growth strategy that drives shareholder value. As shown on Page 10, we have a long track record of deploying capital into growth investments that deliver strong returns for shareholders. From 2014 through 2025, we invested approximately $578 million across major growth projects and acquisitions that generated approximately $102 million of adjusted EBITDA in 2025. That's an effective EBITDA multiple of roughly 6x. This is a proven and repeatable playbook. Disciplined investments in one-of-a-kind experiences and iconic destinations with a strong cultural and strategic fit drive strong investment outcomes and strong growth. Page 11 shows the growth journey that we've been on over the past 10 years and the expected continuation of that journey into the future. From 2015 to 2025, Pursuit delivered a 15% revenue CAGR through a combination of growth investments in iconic assets, a relentless focus on the guest experience and an ever-present growth mindset. As we go forward, we're replicating that success using the same proven playbook with an even sharper focus and a stronger balance sheet to deliver compelling growth and exceptional hospitality, which brings me to our Vision 2030 targets on Page 12. Pursuit is on a path to once again deliver a double-digit revenue CAGR through 2030 with meaningful EBITDA growth and margin expansion. By 2030, we expect to deliver over $265 million of adjusted EBITDA, which is more than double 2025 levels. And these Vision 2030 targets aren't merely aspirational. They are the next chapter of a strategy that's already working. This strategy comes to life through our 4 growth levers that are shown on Page 14. First, we work to improve performance across every business, leveraging perennial demand and maintaining an unwavering focus on the guest experience. Second, we invest organically to elevate experiences, expand capacity and drive attractive returns. Third, we pursue strategic acquisitions that strengthen our portfolio. And finally, we repurchased shares opportunistically when valuations are compelling. These levers work and our track record proves it. And as shown on Page 15, our strong balance sheet allows us to invest across all 4 of these levers at the same time when returns are compelling. Pro forma for the sale of Flyover and the acquisition of Eagle Wing Tours, our June 30 net leverage ratio was approximately 1x, which is well below our target range of 2 to 3.5x. And we had substantial immediate balance sheet liquidity of about $220 million, also on a pro forma basis. This balance sheet strength, combined with continued adjusted EBITDA growth gives us the financial flexibility to simultaneously invest in high-return organic growth projects, one-of-a-kind strategic acquisitions and opportunistic share repurchases. Now I'll walk you through the progress we're making on each one of our growth levers, starting on Page 16. We're improving performance across our existing experiences. During the first half of 2026, we drove a 6% increase in attraction effective ticket price and a 9% increase in lodging RevPAR on a same-store basis. This is the hospitality profit chain hard at work. Strong team member engagement drives guest satisfaction and drives growth. Next, on Page 17, we highlight a few recent examples of how our growth mindset and relentless focus on the guest experience is driving incremental visitation to our attractions. Across Pursuit, we continually find ways to offer new differentiated experiences that create more reasons for guests to visit. For example, strategic programming initiatives at our attractions require little to no capital investment and help fill white space, maximizing capacity utilization and flow-through. Our newly launched Rockies Rangers program for kids is bringing families deeper into our Canadian attractions through interactive exploration, education and achievement-based experiences. At the Banff Gondola, Bloom & Brunch and the Sunset Festival are expanding morning and evening visitation with unique mountaintop experiences, live music and great dining. And at Lake Minnewanka, Beer Voyage is driving growth and evening visitation through a premium cruise experience with rotating local craft beer tastings. These are 3 great examples of our growth mindset and using experience design to drive results. Now let's move on to our second growth lever, investing in ourselves through organic growth projects on Page 18. We have a pipeline of more than $300 million of organic growth investment opportunities from 2026 through 2030. These are low-risk investments in well-instrumented businesses that we already own, know and operate. By 2030, we expect these investments will contribute more than $40 million of incremental adjusted EBITDA at an estimated effective multiple of less than 7x. As these investments are completed, additional organic growth investments under development in our internal pipeline will continue to come forward in the natural cycle of our business. On Page 19, our Golden Skybridge attraction is a powerful example of our organic growth investment playbook in action. What started as sightseeing suspension bridges has become a multi-experience adventure park that continues to scale. On August 1, we opened a new net park at Golden Skybridge that adds another compelling reason to visit. The team keeps elevating the guest journey, and it's driving stronger revenue per visitor and improved Net Promoter Scores. Pages 20 to 29 include many exciting growth investment examples across Pursuit that help demonstrate the strength of our pipeline. I'll cover a few of them now, and I encourage you to review them in more detail after the call. At the Jasper SkyTram and the Banff Gondola, we're planning to elevate the arrival and the summit journey with new modernized lifts and expanded amenities to strengthen their positions as must-do experiences in Jasper and Banff National Parks. In Denali, we're preparing to relaunch the high-margin Denali Backcountry Adventure attraction in 2027. This premium wildlife safari tour will take guests deep inside Denali National Park for a bucket list nature-focused backcountry experience. The park road repairs are completed and the road has reopened for industry permit holders in anticipation of summer '27 operations. Denali is one of the few U.S. national parks where road access is for outfitters and permit holders only. To see Denali's incredible wildlife, you must travel with an experienced provider or the National Park Service. By offering the best guest experience, we know we can meet pent-up demand for this iconic attraction. We're also adding Lake Cruise capacity in 2027 with a new 56-passenger boat at Maligne Lake in Jasper and redeployment of an existing boat to Lake Minnewanka in Banff to meet strong demand at these iconic attractions. On the lodging side, we have 2 properties well underway with renovations that will reposition them in their respective markets for stronger occupancy and ADR. In Jasper, the Forest Park Hotel's Woodland Wing is nearing completion with a phased renovation that already demonstrated a 22% ADR lift for renovated rooms. And at Grouse Mountain Lodge in Whitefish, Montana, we've just finished the first phase of room renovations with a new 300-person event center opening August 15 and full hotel transformation to be completed in summer 2027. We're also excited to be moving forward with investments to elevate the guest experience at Lobstick Lodge and Pyramid Lake Lodge in Jasper and to expand our lodging offering near Glacier National Park. Lobstick will undergo a full renovation to up-level the property and Pyramid Lake Lodge will see the addition of wellness-focused guest amenities, including outdoor hot tubs and sauna with picturesque views of Pyramid Lake. In East Glacier, we're adding 41 elevated cabins in an absolute showstopper location with idyllic views into Glacier National Park. Now let's move forward to our third growth lever, expanding our portfolio with disciplined strategic acquisitions on Page 30. We have a robust pipeline of forever asset opportunities, but we remain highly selective. We're focused only on businesses that are iconic, unforgettable and inspiring located in destinations with perennial demand and limited supply, supported by attractive EBITDA margins, exceptional guest experiences and a clear path to exceed our 15% IRR hurdle rate. Eagle Wing Tours is a great example, a leading sightseeing attraction in an iconic destination that fits our strategy, our values and our disciplined investment criteria. And Tabacón continues to validate this approach, contributing strong performance and demonstrating what happens when we combine exceptional assets with guest-obsessed execution. Let's look at how Eagle Wing Tours fits into our growth strategy on Page 31. On July 14, we acquired a leading whale watching and marine wildlife experience in Victoria, British Columbia for roughly 6.5x adjusted EBITDA. Eagle Wing provides an unforgettable guest experience to about 50,000 guests annually and brings us into the Vancouver Island market, an iconic resilient tourism destination with annual visitation of about 5 million. Eagle Wing fits our strategy and investment criteria, perennial demand, limited supply, attractive returns and clear upside through Pursuit's platform. We're thrilled to welcome the Eagle Wing team and are excited to support their continued growth as part of Pursuit. Now on Page 32, our acquisition of Tabacón has reached its first-year mark under Pursuit's ownership, and we're incredibly proud of its performance. This is a truly irreplaceable asset, an experience-driven resort rooted in place with world-class thermal river attractions at the base of Costa Rica's Arenal Volcano with a fantastic team that is delivering at a very high level. We're seeing strong thermal river attraction visitation and lodging performance, high guest satisfaction and continued traction from targeted enhancements like the improved arrival experience and Hot Springs Pura Vida rebrand. Tabacón continues to validate our disciplined strategic acquisition strategy. For the trailing 12 months, adjusted EBITDA growth has driven the effective purchase multiple down to nearly 9x, and we have additional opportunities ahead. We've just announced the creation of 3 new premium villas to meet demand from luxury and multifamily travelers in the Arenal region. And looking ahead, we see meaningful upside across the 570-acre property and are pursuing additional growth investment opportunities to expand Tabacón and build a broader Costa Rica collection of iconic experiences. Next, I'll briefly touch on our fourth growth lever on Page 33, investing in our own shares at attractive valuations. To date, we've repurchased $43 million worth of shares at an average price of $35.72. Based on recent trading levels, this represents a strong return on investment of more than 40%. We have approximately $57 million remaining in our $100 million share repurchase authorization, and we remain committed to opportunistic repurchases when we see a compelling return relative to our other investment opportunities. And with that, I'll turn it over to Bo, who will walk you through our second quarter financial highlights and 2026 outlook, starting on Page 35.

Thanks, David. As highlighted earlier, we had a positive first half of the year. Our second quarter revenue grew 14% to reach a record level of $133.5 million. This growth was primarily driven by strong performance at Tabacón, which was acquired in July 2025 as well as continued growth across our existing geographies. Adjusted EBITDA improved by $3 million year-over-year to $32.7 million, primarily driven by higher revenue. And adjusted net income grew to $14 million as compared to $10.1 million in the prior year, primarily due to higher adjusted EBITDA. Additionally, during the 2026 second quarter, we reported a pretax gain of $4.6 million from business interruption insurance proceeds received related to lost profits in 2024 from the Jasper wildfire. This amount was excluded from our adjusted EBITDA and adjusted net income due to its nonrecurring nature. Total insurance proceeds received since the 2024 Jasper wildfire are approximately $29 million. Now let's look at our attractions performance on Page 36. Second quarter attraction ticket revenue reached $55 million, reflecting a 3% year-over-year increase, primarily driven by strong performance at Tabacón. As we mentioned last year, the 2025 second quarter experienced near ideal weather conditions, which enabled exceptionally strong growth in attraction visitation and revenue last year. In contrast, this year's second quarter was impacted by a higher portion of poor weather days, which hampered sightseeing visitation. Our ability to drive 6% growth in year-over-year same-store effective ticket price helped to offset softer attraction visitation, which illustrates the power of guest experience in driving yield. Next, let's turn to our strong hospitality performance on Page 37. Second quarter room revenue totaled $33 million, reflecting a 27% year-over-year increase, driven by strong performance at Tabacón and improvement in same-store ADR and occupancy. This same-store hospitality performance, which is less impacted by inclement weather days, highlights the continued strong demand for our iconic locations. Same-store constant currency RevPAR, which excludes Tabacón, grew 10% as compared to 2025. Turning to our demand indicators on Page 38. Our lodging pacing for 2026 across both Canada and the U.S. continues to support our view for continued strong demand. Revenue on the books for our lodging properties is pacing ahead of the same time last year. Lodging pace is an important indicator of overall demand for the destination, which also bodes well for our high-margin attractions. With that view into demand backdrop, let's look at our 2026 financial outlook on Page 39. We're increasing our full year revenue and adjusted EBITDA guidance to incorporate incremental contributions from the Eagle Wing Tours acquisition and from Flyover prior to the recently completed sale of that business, partially offset by an unfavorable change in exchange rate assumptions. As David mentioned earlier, we are now expecting year-over-year adjusted EBITDA growth of 14% at the midpoint with a range of $128 million to $138 million. This reflects an increase of $5 million relative to our prior guidance range, including approximately $6 million from incremental Flyover contribution prior to the sale of that business, approximately $1 million to $2 million from the Eagle Wing Tours acquisition and approximately negative $2 million from revised exchange rate assumptions. Outside of these adjustments, our full year outlook for strong underlying business performance remains unchanged, and our continued positive indicators of consumer demand across our experiences and destinations for the upcoming peak summer season give us confidence in our ability to deliver. And with that, David, I'll turn it back to you.

Thanks, Bo. As we move through our peak summer season, Pursuit is operating with strong momentum, clear priorities and a sharp focus on execution. None of this happens without the Pursuit team. So please join me in recognizing our team members for their positive energy, relentless commitment and exceptional hospitality. They bring our experiences to life every day and are central to the value we create for guests and shareholders. To our shareholders, thank you for your continued support. We have the assets, strategy, balance sheet and team to keep advancing our long-term growth plan. And with that, let's open up the line for questions.

[Operator Instructions] Your first question comes from the line of Jeff Stantial with Stifel.

Maybe starting off on the quarter, really strong same-store metrics and revenue growth, but flow-through on that was a little bit light compared to historical. It looks like EBITDA margin is down about 90 bps or so year-on-year. Bo, could you just add a little bit of color there? Is that mix shift with the better growth in lodging and outside of Canada? Or how should we think about the margin performance in the quarter, both year-on-year and maybe relative to your expectations heading in?

Yes, Jeff, I think you're picking up on the main point there, which is that the attraction side of this business is an incredibly high-margin, high flow-through type of business. And so given that we had some of the weather challenges that disproportionately impacted our attraction side of the business, that put a drag on the margin side. And on the flip side of that, the lodging business performed really well, traditionally a lower-margin business relative to attractions. So that created the margin degradation that you're alluding to.

That's great. And then switching gears, looking at Slide, I think it's 38 in the deck. It looks like booking pace and ADR decelerated a little bit sequentially in Canada relative to your last update in May, though obviously still quite healthy overall. Whereas U.S., on the other hand, it looks like it accelerated sequentially. So David or Bo, can you just expand on this trailing couple of month trend? I think there is -- if I recall right, I think there is a tougher bookings comp around the June, July period in Canada, but just any other additional color you could provide would be great.

Sure, Jeff. So stepping back, we feel really good about our lodging booking pacing at this point in the year. We've had strong year-over-year growth in on-the-books revenue for both Canada and the U.S., as you noted. The healthy ADR growth we're seeing is positive. The rooms sold is pretty positive as well. And so what you're then getting to is the intra-year fluctuation side of this, which that's going to naturally happen in this business for two main reasons. One is just the mix dynamics. So what channel you sell through at what time of the year. And then also just the go-to-market strategy, which we're constantly pivoting and adjusting when we're pulling certain levers based on what we're seeing on the demand side. So -- when I look at these metrics, I take a step back and say a great directional indicator directly for the lodging and then indirectly for the nearby attractions, and we feel really good about where we are at this point in the year on that.

And if I could just squeeze in maybe one follow-up to that second question, which is, obviously, the forest fires and smoke has been a big talking point in the Northeast. I guess have you seen any impact up in Canada, whether it's in bookings or maybe day of visitation the attractions? Just any thoughts on impact from the smoke make its way across the country?

Yes, Jeff, it's interesting. It's temporal on days that we do have smoke. So we don't have fires close to any of our assets or any of our facilities. And smoke literally, as you know, travels thousands of kilometers. So when a day has a ton of smoke outside, what a guests do. And I think it reflects in our hospitality metrics that they'll dine more, they'll shop more, they spend time not potentially sightseeing as they're waiting for the smoke to clear and the weather to improve. So we've had some spotty days and effects throughout the second quarter. And as soon as the wind blows, the sky is clear boom, everyone is back out doing all the things that they came to do. So we're going to have these days. Smoke is a reality, but it's not something that is holding us back in terms of the full year and where we expect to end up.

Your next question comes from the line of Tyler Batory with Oppenheimer.

First one for me, just to put a finer point on the lodging commentary there. Can you talk a little bit more about what you're seeing from the travel trade business? Just curious what the mix looks like in terms of those customers versus those that are coming from other channels.

Yes. Travel trade, Tyler, continues to be strong. We did have some FIFA impact when you look at the second quarter. I mean we loved watching the games. It was fantastic and exciting and world event and people all over the world watching games. For our tour and travel partners, a lot of them facing pretty steep ticket or pretty steep hotel room increases in Vancouver and Toronto, which are both gateway cities for people putting together Canadian itineraries. So tour and travel demand shifted a little bit to later on in the season, and you can see it carrying through. So we see positivity for '27, for '28 and '29. China is returning slowly as more flights come online. So tour and travel remains healthy, and then we balance every single day between consumer direct, what the work we're doing with the OTAs and our tour and travel partners as we look to fill inventory and drive attraction visits.

Okay. Great. Follow-up question on the guidance probably for Bo here. Got a number of moving pieces in terms of Flyover, FX, you got the acquisition. Just trying to get a sense of if anything has really changed in terms of the underlying organic growth assumptions for the business and maybe there's any extra conservatism in Q3 or in the back half just in terms of what you're expecting.

Yes. So I'll start just on the -- what I would maybe call the core side of the business, which doesn't include some of those outside pieces that you were alluding to. For the full year, we're still tracking to our original core expectations. There's always some puts and takes with that as you get through a year. And so what I talked about earlier in terms of the Q2 period where there was definitely some challenging weather impacts in Canada, which that's relative to normal, but also especially compared to the prior year. At the same time, we had some businesses like Tabacón, which is performing exceptionally well and even beyond our expectations in year 1 around that, which I think is a good reminder of the power that comes from some of these acquisitions that can improve both geographical and seasonal diversification on it. But you take some of those pieces, you then look at the booking pacing that remains strong. And we still feel really good about just the core underlying part of the business. I mean, yes, there's still a lot of season left to go, and we're focused on delivering great guest experiences. We always say here, but inventory expires at midnight every day. And so we just now have a relentlessness to focusing on managing revenue and cost levers to adapt as the season progresses. Outside of the core piece of it, we did allude to, but there's Flyover, which the extended closing period did add about $6 million of incremental EBITDA. We have the Eagle Wing acquisition, which in the second half of the year, we're expecting about $1 million to $2 million of EBITDA. And all of that's partially offset by about $2 million of FX headwind.