PRSU - NYSE

Good afternoon. My name is Cameron, and I will be your conference operator today. At this time, I would like to welcome everyone to Pursuit's '25 Second Quarter Earnings Conference Call. [Operator Instructions] Thank you. Carrie Long, you may begin the conference.

Good afternoon, and thank you for joining us for Pursuit' 2025 Second Quarter Earnings Conference Call. Our earnings presentation, which we will reference during the call, 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. On the call, you will hear from David Barry, our President and CEO; and Bo Heitz, our Chief Financial Officer. Today's call will contain forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Please refer to the disclaimer on Page 2 of our presentation for identification of forward-looking statements and for a discussion of risks and other important factors that could cause results to differ from those expressed in such statements. During the call, we will also discuss non-GAAP financial measures. Definitions of those measures are provided on Page 3 and reconciliations to the most directly comparable GAAP financial measures are provided in the appendix of the presentation and in our earnings release. And now I'd like to turn it over to David, who will start on Page 4 of our presentation.

Thanks, Carrie, and thank you all for joining us as we review our strong 2025 second quarter results. We delivered double-digit year-over-year growth across revenue, income from continuing operations and adjusted EBITDA. This growth included significant increases in both visitors and revenue per visitor, reflecting continued healthy demand for our differentiated and authentic guest experiences and helped drive strong flow-through to adjusted EBITDA. Our Refresh, Build, Buy strategy continues to be a powerful growth engine that generates meaningful returns. With our recent strategic Costa Rica acquisition, which I'll cover in more detail shortly, we continue to strengthen our global footprint and unlock meaningful long-term growth opportunities. We're excited to be in our peak summer season, delivering exceptional guest experiences, and I'm encouraged by our solid first half of '25 results and continued positive demand indicators across our business. We're pleased to announce that we are raising our full year guidance with stronger double-digit growth expected in both revenue and adjusted EBITDA. All right. So let's begin on Page 6 with a reminder of what drives our success. Pursuit delivers authentic unforgettable experiences in iconic destinations that global travelers are prioritizing. We appeal to a broad range of visitors, no special skills required, just a love for a beautiful view. Our portfolio includes 17 world-class site-seeing attractions and 29 distinctive lodges, all located in some of the most iconic places in the world. We've built a leadership position in markets with high barriers to entry and perennial demand. We're supported by a team of approximately 4,350 passionate and dedicated individuals who deliver exceptional guest experiences every day. And we have a powerful strategy to deliver significant growth through reinvesting and improving our existing businesses while deploying capital to drive acquisition-focused growth in new opportunities that meet our criteria. As highlighted on Page 7, this disciplined strategy and our strong execution has enabled us to more than triple our revenue over the last decade while delivering strong returns on our investments. The Pursuit team has a growth mindset. We're driving consistent growth across our existing experiences fueled by strong demand and a relentless focus on guest and team member experience. Through strategic inventory management, targeted guest programming, focused pricing strategies and the value of integrated collections, we're filling white space and maximizing yield. Importantly, we're scaling effectively and efficiently by maintaining cost discipline and unlocking operating leverage, ensuring that our growth is both sustainable and margin accretive. In addition, we continue to pursue compelling growth investment opportunities that complement and accelerate our strategy, both within our existing markets and in new iconic and compelling geographies. As we show on Slide 8, over the past decade, we have established a strong track record of value creation through our Refresh, Build, Buy strategy. From 2014 to 2023, we completed 13 major growth investments, ranging from refreshing the Banff Gondola, transforming it into a top-rated must-do experience to creating Iceland's world-class Sky Lagoon geothermal attraction to buying numerous irreplaceable, one-of-a-kind attractions and hospitality experiences. These investments represented approximately $460 million in capital deployed, generating a strong return and elevating guest experiences. We've continued to build on this momentum with 4 additional acquisitions further expanding our portfolio and reinforcing our commitment to disciplined high-impact growth. So whether refreshing existing experiences, building new experiences or buying one-of-a-kind experiences, our strategy continues to deliver meaningful results and position Pursuit for long-term success. Now let's discuss our most recent by growth investment in more detail, starting on Page 9. On July 1, we completed the acquisition of Tabacon Thermal Resort & Spa, which marks a significant milestone in our growth journey. This iconic year-round destination in Costa Rica's Arenal region combines 2 geothermal hot spring attractions, a luxury hotel, a renowned spa and signature culinary experiences, all set within 570 acres of pristine terrain. It's a rare best of both worlds opportunity, blending high-margin attraction-based experiences with premium hospitality. With its unique location and natural thermal features, Tabacon benefits from strong competitive barriers and strengthens our geographic and seasonal diversification. Costa Rica is an established global tourism destination with many of the largest hospitality brands in the world drawn to the country's stability, perennial demand and highly educated bilingual workforce. Tabacon serves as an ideal anchor for building a broader Costa Rica collection with meaningful scale, and we see significant long-term upside as we apply Pursuit's proven growth playbook. Continuing to Page 10, Tabacon represents truly world-class attraction and hospitality experiences in one of Costa Rica's most popular travel destinations. Nestled at the base of the Arenal Volcano and adjacent to over 900 acres of pristine rainforest reserve, Tabacon offers exclusive access to the country's largest network of naturally flowing hot springs through both the Tabacon and Choyin Termal River attractions. The renowned 5-star luxury full-service resort has 105 rooms and year-end occupancy exceeding 80% with over 30,000 room nights annually. Supported by a proven Costa Rican leadership team with a strong track record of growth and hospitality excellence, the property is well positioned to drive incremental visitation and long-term value, which is highlighted on Page 11. We see a clear path to near-term growth at Tabacon through targeted operational enhancements and the benefit of recent investments, including the launch of the Choyin River Termal attraction in March of 2024. With strong demand and ample Hot Springs capacity, we'll be actively deploying strategies that we expect will drive Tabacon adjusted EBITDA multiple down below 9x by year 3. Beyond an incremental to these operational gains, we're also evaluating meaningful Refresh and Build investments across the 570 acres of acquired Terrain as well as potential buy investment opportunities for additional attractions and hospitality businesses in Costa Rica at attractive valuations to build a collection that will drive long-term value. Next, switching back to North America on Page 12. We're excited to announce another new refreshed growth project the makeover of our Growth Mountain Lodge in Whitefish, Montana, which will transform and reposition this property in a high-demand affluent market near Glacier National Park. This investment will significantly elevate the guest experience through a renovation of 73 year-round guest rooms, corridors in the pool area, creating a more compelling upscale offering. We're also constructing a new wedding and events pavilion to grow market share in that segment. These enhancements are designed to increase demand, elevate the guest experience and support higher ADRs. The project is on track for completion in 2026 with additional opportunities for incremental lodge improvements in future phases. Looking ahead on Page 13, we continue to have a compelling pipeline of both organic growth projects and acquisition opportunities to power our growth into the future. On the organic side, we've identified over $200 million in Refresh and Build investments that we believe can be executed over the next 5 years. These are focused on our existing high-performing experiences and include potential transformational future projects we're exploring like reimagining the Apgar Village properties in Glacier National Park and refreshing the Jasper SkyTram, which is the only aerial sightseeing experience in one of the world's most beautiful and well-visited national parks. In 2025, we expect to invest between $38 million and $43 million towards organic growth projects, including the Refresh investments at our Forest Park Hotel in Jasper and our Grass Mountain Lodge in Montana. Additionally, we invested in 2 new Ice Odyssey all- terrain vehicles to expand the premium tour experience on the Athabasca Glacier at the Columbia Icefield attraction in Jasper. And these growth projects are all designed to meet the demand from the mass affluent leisure travelers that are visiting our markets. We view Refresh and Build investments as one of our most efficient uses of capital, making guest experiences better, creating yield opportunities and improving performance across our businesses. Raising quality makes our guests happier, and it drives our business performance. We have the flexibility to pace these investments in alignment with our second growth lever, which is strategic acquisitions of one-of-a-kind forever businesses. Our pipeline remains robust with opportunities in both existing geographies and in new iconic destinations. So our capital allocation strategy remains anchored in our proven Refresh, Build, Buy framework designed to drive long-term value creation and scale Pursuit in a thoughtful and sustainable way. That said, we also believe it makes sense to use our strong balance sheet to opportunistically buy back our own shares if the market fails to recognize our value. And I'm pleased to say that our Board recently approved a new share repurchase authorization for up to $50 million of Pursuit's common stock, reflecting our confidence in Pursuit's long-term growth trajectory. With a strong balance sheet and ample financial capacity, we're well positioned to pursue investments that enhance our guest offering, expand our footprint and deliver compelling returns. And now I'll ask Bo to review our financial results and outlook for the balance of 2025.

Thanks, David. I'll start on Page 15 with our second quarter financial highlights. We delivered revenue of $116.7 million in the second quarter, which was up approximately 15% year-over-year. This growth was driven by continued momentum in guest demand and the compelling value of our experiences. Attractions ticket revenue growth, which I'll cover in more detail shortly, was particularly strong with healthy increases in both visitors and effective ticket prices. Net income attributable to Pursuit was $5.6 million as compared to $29.3 million in the prior year. The year-over-year change was primarily driven by the sale of GES in 2024. Income from continuing operations attributable to Pursuit was $4.5 million as compared to a loss from continuing operations of $0.4 million in the prior year. During the 2025 second quarter, we completed a legacy pension termination to improve long-term financial flexibility, resulting in a largely noncash pretax charge of approximately $5.4 million. Our adjusted net income, which excludes results of discontinued operations and other nonrecurring expenses, including the legacy pension termination charge, was $10.1 million as compared to $0.2 million in the prior year. The year-over-year growth primarily reflects higher adjusted EBITDA. Adjusted EBITDA increased by $9.8 million to $29.7 million, up nearly 50% year-over-year, primarily driven by significant revenue growth with strong margin flow-through, supported by a favorable mix of higher-margin attraction revenue and continued cost discipline. Now let's look at our second quarter attractions performance on Page 16. Attraction ticket revenue reached $53.2 million, reflecting a 22% year-over-year increase driven by higher effective ticket prices and increased visitors. Same-store constant currency effective ticket pricing, which excludes the recently acquired Jasper SkyTram, grew by 11% compared to 2024. We continue to see strong demand for our one-of-a-kind attractions. The Banff Gondola had standout performance during the quarter, and the Sky Lagoon continues to deliver strong growth in effective ticket price, primarily fueled by the expansion of the premium ritual experience, which was completed in August 2024. Next, let's turn to our second quarter hospitality performance on Page 17. Lodging room revenue totaled $26 million, reflecting a 6% year-over-year increase driven by higher ADRs and occupancy levels. Same-store constant currency RevPAR, which excludes the Forest Park Hotel's Woodland Wing and the recently acquired Apgar Lookout Retreat grew 9% as compared to 2024. Our lodging properties are located in renowned experiential travel destinations with market compression and provide guests access to these beautiful places. All of our collections delivered growth in room revenue during the quarter. Room revenue was slightly offset by fewer rooms being available at the Forest Park Hotel's Woodland Wing, where large-scale renovations were underway on approximately half of the property's rooms. I am pleased to report that the first phase of these guest room renovations were complete for the start of the third quarter, and the next phase will commence during our off-peak season to minimize disruption during our peak summer season. Page 18 provides a view of our continued strong room booking pace for 2025. The charts on this page show our room revenue on the books for confirmed reservations as of August 4 across 3 years. Our U.S. lodging properties are pacing approximately 6% ahead of the same time last year, and our Canadian properties are up approximately 25% year-over-year. As a reminder, the 2024 Jasper room revenue on the books includes the impact of the wildfire, which started evacuations in Jasper National Park on July 22, 2024. Relative to 2023, our Canadian properties are up approximately 18% or 22% when adjusting for the impact of rooms taken offline for renovation at the Forest Park Hotel's Woodland Wing. This pacing supports our expectation that we will see strong perennial demand across our locations this year and a return to more normal levels of revenue across our Jasper properties. Let's turn to our 2025 outlook on Page 19. Based on continued demand for our authentic experiences, improved exchange rate trends and the recent acquisition of Tabacon, we are raising our 2025 full year guidance. We now expect full year adjusted EBITDA of $108 million to $118 million, an increase of $10 million from our prior guidance range. The $10 million adjusted EBITDA guidance increase includes approximately $7 million from revised exchange rate assumptions and approximately $3 million from the Tabacon acquisition. This new guidance range represents substantial adjusted EBITDA growth of $31 million to $41 million relative to 2024. We expect the significant year-over-year growth to be primarily driven by continued strong demand and execution across our operations, the recovery of leisure travel to Jasper and contributions from our recent acquisitions. This guidance accounts for certain assumptions, which are set forth in our earnings press release. With the anticipated rebound in Jasper, our continued focus on delivering exceptional guest experiences and the strength of our balance sheet, we are well positioned to drive sustained growth and strategically invest in high-return Refresh, Build, Buy opportunities. And with that, I'll turn it back to David.

Thank you, Bo. As we move through what is shaping up to be a strong peak summer season, our teams across Pursuit are fully engaged in delivering exceptional experiences to guests in the iconic places we operate. I want to thank our team members for their passion, dedication and growth mindset. You are amazing. They continue to create unforgettable memories for our guests every day. And to our shareholders, thank you for your continued support as we advance Pursuit's exciting growth journey. With that, let's open it up for questions.

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

Maybe just starting off on the guidance revision. So $10 million raise and Bo, you mentioned the split $7 million for FX and then $3 million contribution from Tabacon. I guess, should we read that to imply that operating trends have more or less been in line with your expectations on a constant currency basis? Or has there been sort of upside year-to-date with maybe a bit more conservatism implied in the back half?

Thanks, Jeff. Yes. No, definitely more of the former on this. If you back up to where we were heading into this year, things were setting up really well for this business and had a lot of tailwinds we were expecting heading into that. There was the FX setup heading in. There was some of the geopolitical dynamics. There was the investments that we've been making in this business and the booking indicators that we were seeing at that point. When you look at the Q2 results, really, what you're seeing is that, that was coming in, in line with what we were expecting, which is to see really strong growth over that period. And I think that's fair to say that on a constant currency basis is the way to think about that. There was about $2 million of that $7 million FX impact that was realized in the year-to-date period. And then yes, frankly, as we even look a little further, July really was a continuation of that of seeing growth in line broadly with what we were expecting from -- at least from a demand perspective at this point. So I feel really good about the setup, I feel that we've reflected that in our guidance. And I think that's the right call it, like core guidance outside of those items to expect for the full year as a result of that.

That's great. And then shifting gears a little bit here and turning over to capital allocation. David or whoever wants to take this, could you just maybe add a little bit more color on the Board's decision to authorize a new buyback program? Specifically, how do you see the relative returns for Refresh, Build, Buy versus the implied yield of the current stock price? And then keeping in mind that this is going to be more of an opportunistic approach. Is there a velocity or an amount that we should think about as sort of a reasonable level, whether that's on a quarterly or an annual basis? And let me know if that sort of makes sense.

Thanks, Jeff. Yes, let me start, and then I'll hand it over to Bo. I think the way to think about the share repurchase is that if it is our view, which it is today that we are undervalued, that the market is undervaluing Pursuit, I think what's important is that the flexibility that a reauthorization provides us is really helpful. It is not a pivot. It's not all of a sudden we're abandoning Refresh, Build, Buy. It's actually the opposite and that our focus is on Refresh, Build, Buy and continuing to do what we do. And so if you look at it just globally first and you think, do we have a robust pipeline? We sure do. Do we have some terrific targets in markets with things that match our criteria, right, perennial demand, really iconic attractions and places, big barriers to entry, targets that we believe would be very accretive. And so our 2 main levers of growth continue to be organic Refresh investments within our existing businesses and then our growth through acquisitions. What's important, though, is that despite us telling a very compelling story and going out and sharing that with anyone that will listen, if the market continues to undervalue us, I think that there is an opportunistic moment, which is an ability to step in. And this was something that certainly, the leadership team together with the Board, we all came to the same conclusion. And so what we've done is, I think, taking the prudent step to prepare ourselves should we be in that situation. And Bo, I'm sure you've got some add-ons to that.

Yes. I mean I would largely echo what you said, David, but maybe to make it even a little more clear, definitely, I wouldn't view this as like a programmatic approach. It's very much on the opportunistic angle relative to what David said there. And at its core, we still feel really good about our Refresh, Build, Buy opportunities and have a pretty solid track record for delivering high returns on those investments. And so in any given quarter, we're assessing the repurchases as a lever of that, we're going to be looking at the returns that we'd expect there relative to what we can do with investments in ourselves and Refresh, Build, Buy opportunities. So I wouldn't guide you to a specific dollar amount within there because it is going to be something that's pretty nuanced relative to other priorities that we're evaluating at the same time.

That's great. And if I could just squeeze in one quick housekeeping question. Bo, could you just remind us on your pro forma run rate effective tax rate? Specifically, we're thinking more cash taxes, but we'll take GAAP as well, if you have it.

Sure. Yes. Happy to give you some color on that, Jeff. So effective tax rate, certainly something that can fluctuate in any given year, partly given on jurisdictions on where we're generating income. But currently, I'd say we're expecting for FY '25 to come in around 31% to 35% from an effective tax rate perspective. I think the important thing to remember as you think about that, we have a smaller U.S. operational footprint and broader U.S. corporate costs associated with that. So we typically generate a loss in the U.S. And in the U.S., we're also still carrying valuation allowances for our deferred tax assets. So that effectively means that we don't recognize tax benefits on U.S. pretax losses. So other jurisdictions, I'd say we generally are paying typical tax rates more in line with what you'd expect, but that overall structure does result in a blended effective tax rate that's higher than statutory tax rates.

And just to be clear, that's cash that's GAAP or are they both pretty equivalent?

I'm talking more from a GAAP perspective, but I think it's a reasonable proxy than anything else at this point.

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

A question on the results here. I really want to double-click on the ETP growth, which I thought was really quite strong. Did you do anything differently this quarter than in the past to drive that? And what sort of margin benefit could that have if you're able to maintain and even grow further some of that pricing into the future?

Yes. So I would be remiss not to start with this is a relentless focus within this business, right? Delivering strong guest experiences enables opportunity to drive strong yield growth. And I would say that's the overall story that you're seeing I think the biggest outlier within there that's driving outsized growth in that is on the Sky Lagoon side, which I know we've talked about in recent quarters, but we completed the Turf House expansion in late summer, early fall of last year. And as part of that, it was really shifting to only having a real premium option experience that we expanded the offering that enabled that. And so that's been driving strong ETP growth at that business that's carrying through as we complete our first year of operations after that expansion. So that's definitely an outsized driver there. I think the reality is what you're seeing more holistically in our Q2 results is when we have strong performance in particularly our attraction side of this business, it doesn't cost us much extra for that incremental volume or incremental yield. And so that translates to strong flow-through to an EBITDA and cash perspective. And it's part of the reason that we expect to be able to continue improving margins over time as a result of that. David, I don't know if you have anything else you want to add on that?

Yes. Tyler, I would add one thing, which is real credit to the team because I think their focus on a growth mindset. And by growth, I don't just mean the financial growth, but growth in guest experience, growth in experience design and the delivery of experience design and making things just fundamentally better across the company has a strong impact. And what that does, obviously, is then you're able to introduce new experiences, you're able to raise a price because you've justified it through quality. And I think you're seeing the impact of that. Bo's comments on flow-through are very appropriate and connected to the success that we've had. But just want to reinforce that growth mindset is something that when it happens across scale of visitors across 17 attractions, it's quite powerful.

Okay. Good detail there. And then a bigger picture question on the current portfolio, then we can get into the recent acquisition. When I look at leisure travel broadly and really consumer spending, too, I mean, there's been fits and starts in the past few months. I think it's been pretty choppy depending on the industry, depending on what you're looking at. But clearly, your business is doing exceptionally well. And I really would like you to hit on this, perhaps it's something I think the market is ignoring or maybe just overlooking or missing. Just talk a little bit more and quantify for folks the organic same-store revenue growth in the quarter, zero in a little bit more on the Banff Jasper numbers a little bit in terms of the growth rates year-over-year and just articulate as well how you're able to grow revenue so quickly in the backdrop that I think broadly is pretty mixed out there.

Yes, I'll start, and I am convinced my colleagues will have something to add. But I think fundamentally, if you go back in time, there were many tails of low coming out of the industry. Was travel going to slow down? Were people not going to spend? And there was an awful lot of media speculation, concerns about travel tariffs, all kinds of different things. We performed as expected internally. And all of the measurement systems internally in the business and everything we were looking at were pointing to positivity. And so one, I think our -- the power of perennial demand, the power of iconic locations, the power of barriers to entry and the constant focus on improving experiences enables us to really perform well when it comes to hosting guests from around the world and then driving performance within the particular businesses. Flow-through on the attraction side obviously had a major contribution to that. And just, I think, a relentless focus on the part of the team. And we feel tailwinds. We feel tailwinds in terms of how people are spending time and energy. We view that the business is well prepared to take advantage of those tailwinds. And we're excited about what's to come in '25, and we're very optimistic about the future.

Yes. I think that's all right, David. And when you peel us back a little bit to your -- some of your questions around that, Tyler. I mean, if you think about our U.S. operations, we've talked about in the past that a lot of that is really that drive to or broader U.S. visitation that comes there. So there is, I think, less sensitivity when you think about the international dynamics around that. And I think you saw that just in broad industry data when you look at park visitation across Glacier, Denali, [indiscernible] for Q2, it was up high single digits from a visitation perspective. And yes, I think we were able to drive strong results in our business as well with that. On the Canada side, we've been alluding to it, right, when you have the FX setup where history would say that a lot of U.S. individuals would go to Canada for tourism, international or even Canadians staying local around that behavior, the geopolitical piece amplifying that, some of the parks free admission this summer and another piece within there. And so with all of that setup, also seeing broadly in visitation in our Canadian national parks that we operate in up on a year-over- year basis. And within there, because of what David was describing in terms of how we operate the experiences we're delivering, that really showed quite well in this business. I mean in Banff, really strong season in Q2. Banff Gondola, I would say, was definitely a call out within there of particular strength. But when you look at our lodging portfolio, really the RevPAR gains were pretty broad, widespread across operations. Jasper looked particularly strong on that front. But I'd say it was broad trends that we were seeing throughout geographies.

Okay. Okay. Great. And then a follow-up on the Costa Rica acquisition. You gave some very helpful detail in the prepared remarks. I'm interested if you could speak to perhaps how long this deal was in the pipeline before you got it across the finish line. Talk a little bit more about why Costa Rica overall is so attractive to you in terms of building out another collection. And then when we think about some of the potential opportunities in terms of future acquisitions down there, interested if you could talk about the opportunity set and how it might complement what you just bought.

So Costa Rica for us is a place that truly fits the criteria. And again, thinking back, we've articulated the criteria a lot, but I'll do it again. And it's iconic, unforgettable inspiring. Does it tick that box? Does it have perennial demand? And it does from all over the world. Is it a leader in terms of its guest experience delivery? It is. Does it enjoy in our particular case with the acquisition of Tabacon? Are there barriers to entry, meaning is it something that's hard to replicate? It definitely is. And so from our perspective, that, combined with counter seasonal, obviously, a very strong add to pursue, and we're really pleased. It also has a terrific management team, and that's one of the things that's quite important as we think about the future because we view it as a foundational acquisition upon which we will build a collection around that. And if you go back, Tyler, you've been a part of our history, but if you go back to 2016 and you look at what's been done since 2016 as we've tripled the size of the company, founders talk to founders. And if they look at an asset that they spent their whole life creating and then they've sold it to us because maybe they don't have someone in their family that's ready to step in, how we then lead that business and the support that we have for the team, that leads the doors opening across the geography. And that's what's happened to us in Banff. That's what's happened to us in Montana and Alaska. And we know that the same thing will happen in Costa Rica. So Costa Rica to us is a long-term view. It's -- we're going to be very careful in terms of how we grow, but we are going to grow definitely. And we're going to look to be expanding and building a collection there. into the future. As for how long we worked on it, conversations take time. And sometimes you're in a situation where it takes a little longer to get somewhere. But definitely, we're quite excited to be in a position where in the first 6 months, actually, right to the day, on July 1 that we're able to announce a real game-changing transaction in a new country. This is our fourth country, so the United States, Canada, Iceland and now Costa Rica. So we think there will be great things to come.

Your next question comes from the line of Alex Fuhrman with Lucid Capital Markets.

Congratulations on a strong start to the key season here and on the Tabacon acquisition. I wanted to follow up a little bit more on Tabacon. Can you give us a sense of what is the mix there in terms of lodging versus attractions and retail and dining and other services? And David, I think you alluded to some investments you're going to be making in the near term that are going to help get that effective EBITDA multiple down under 9x. Can you tell us what some of those investments are going to be?

So firstly, let me just articulate where we are. So with the close on July 1 and obviously, in our busy season, our focus right now with the team in Costa Rica is we're listening, we're learning, we're building relationships and focused on beginning to plan out what we think might be the next step. So I really -- I am not in a position to share what would be some of the first investments we would do to grow the business. But I will share that we have a pretty incredible opportunity in terms of growth. There's 570 acres total. There's ample room to accelerate the attraction business. So there's 2 geothermal river attractions that are quite spectacular. And I would say, historically, they've been viewed more as a hotel amenity and something that we think there's great opportunity to grow a high-quality visitor in those environments. Secondly, the hotel operation has ample opportunity to expand. And then the property itself is quite beautiful and lends itself to a lot of the very interesting things that we do. And it's not a huge jump to go and think of Golden Skybridge and what you might be able to do in Costa Rica in terms of attraction and other things that connect and create experiences for guests that are more than simply a bed to sleep in and something to do during the day.

And I think, Alex, I would add just on some of the specifics of your question. I think it's important to note that for this getting below 9x from a multiple perspective, that does not require any major growth CapEx investments. I think that was part of the attraction and ability to pay what we paid for this. I'd say there are 2 main operational levers that we're looking at in the near term. One is, as David alluded to, the Tabacon Thermal River experience is more of an amenity to the hotel at this point. And there's a lot of capacity in that experience, particularly in the daytime when hotel guests aren't utilizing it in the same level. And so that's something that we're -- we'll be continuing to look at with levers that we feel we can pull based on our experiences around that. And the other is this Choyin River experience. I think it's important to note that this is a capital investment that was done and a new attraction that came online in March of 2024. So it's a little over a year old. It's still very much in the ramp of that business from a volume perspective as word gets out and not a ton of investment in the marketing side at this point, but a lot that will continue to build even if not much is done at that point, but we do feel like that's something that we're partnering with the local team on to figure out how we can accelerate the growth on that further. But I think those are 2 really tangible levers that we looked at in terms of the near-term opportunity without too much incremental investment.

Okay. That's really helpful. And then switching gears to Canada. It strikes me that this is really the first year since 2019 that you're having a full season of the group travel business given the relatively late opening of the Canadian border and the Jasper wildfire last year. How is the group travel business looking compared to 5 years ago when it was last full strength? And I imagine your business with Chinese travelers is probably well below what it was in 2019. Are other countries replacing those visitors? And where might they be coming from?

So what's interesting is if you look at the return to tour and travel visitation, it's really not in the framework of the lights were strong in 2019, they went out and then all of a sudden, they mysteriously come back on in 2025. It's been building. And so if you think of '22 and '23 and '24, each of those years subsequently building. So we have growth across that segment and a return to more normal and tour and travel partners that are performing really well. I think Canada's level of demand is really helpful. So the Canadian currency exchange situation that we're in, in terms of Canada being on sale to the world, very positive. Canada is perceived very positively internationally. So that also helps, very welcoming as a country to visitors from all over the world. So that adds energy. But we're also seeing strong performance in Alaska, strong performance in Montana. So I would say all the -- back to the naysayers comment earlier on the call, where there was a view that perhaps people would not be out and join themselves this summer. We saw the opposite from the beginning. This has continued to deliver on what our expectations are, and we have a strong level of performance from our tour and travel business and view that as continuing. Countries themselves go up and down. Sometimes you have a country that's catching up. Example would be China as airlift increases to North America, and there's a variety of other things. But travelers find their way. So our visitation from Japan, our visitation from South Korea and other markets is very strong. And we continue to have, gosh, I think, 80 different countries coming to us from all over the world and view the tour travel market as positive. The other real benefit, Alex, that's important to remember is that it's not just travel in our peak season, but these are operators that are also booking inventory throughout our shoulder seasons as well. So generally, tours will start sometime in March, carry their way through all the way through the end of October. So it's a solid foundation of business, and it's just a very positive driver for us as we welcome visitors from around the world.

Your next question comes from the line of Eric Des Lauriers with Craig-Hallum.

Congrats on the strong quarter here. First one for me. You cited a favorable mix of attractions revenue as a contributor to the strong EBITDA in the quarter. In terms of overall longer-term strategies to increase margins, as you look at your buy-and-build strategies, is there any goal to increase the mix of attractions? Or does the long-term margin expansion really come from adding scale and depth within markets and not necessarily mix of attractions or lodging or restaurants or what have you?

Fundamentally, Eric, we're attractions first and then with vertically integrating hospitality, retail, food transportation underneath that. And we focus on the opportunity within attractions because we believe in the very compelling economic power of the attractions business. So stuff we've talked about today on the call, flow-through, et cetera.

Okay. Great. And I guess just kind of double-clicking on that. I mean, is there a goal to sort of increase this mix that you have now? Or is it kind of just dependent on market to market and the opportunity that you guys see that's not necessarily baked into that longer- term plan here?

The benefit of having a robust pipeline is that we do have some pretty compelling opportunities. And again, you've got to work a pipeline to see if you can turn those opportunities into something more real. How I tend to think about it going forward is we've got some growth levers. And we've identified 6 really strong growth levers as we go forward. one being, obviously, market tailwinds that guests from around the world are looking for authentic travel experiences, and we think that's going to continue far into the future. Number two is quality and guest satisfaction. Fundamentally, when you make things better, guests are more satisfied. They tell their friends, they're willing to spend more. They're excited about what they're doing, and that drives the business. Thirdly, then price and volume. So when you have made something more attractive, you're able to charge more for it. And so continuing that focus on filling white space, dynamic pricing, price and volume metrics, then creating sub experiences within an attraction experience for, say, food and beverage or retail, everything from coffee to what you might have for dinner. All of those things are all connected into the delivery when you think of price and volume. Fourthly, cost discipline, high operating leverage on a fixed cost structure. Attractions are essentially once you reach your point of stability and you've got a view, then everything additional to that really flows very, very directly. And so the flow-through is very strong. And I'll finish with the last 2, and we talk about these all the time, but it's organic growth investments within our existing businesses. And we're so lucky because across the world, 4,350 smart people delivering experiences in Pursuit. We have the leadership team, everyone's got a growth mindset. And growth might be how do we make this experience a little bit better. And therefore, they've got ideas. They're brainstorming on what to do that we can expand and improve our existing businesses. And those are all well-instrumented existing businesses with little integration risk, markets we know really well, and we selectively make investments that the teams work on great ideas and then we invest in them. And we've listed out some examples in the presentation of exactly those. And then there are things like build investments where we know coming forward, we've articulated on Jasper SkyTram. I mean, Jasper SkyTram is a phenomenal opportunity into the future, where we now own a fantastic aerial ropeway in Jasper National Park. And obviously, for decades to come, it won't operate the way that it does today, but we'll focus on improving it. We've got a long history of improving things within our businesses. And so our focus then is what can we build in the footprint of the Jasper SkyTram, and we're working closely with Parks Canada and others in terms of the planning of that. And as we have more news there, we're able to share it. And that's a really important thing because it's again something that's within our view. And the final growth lever is acquisitions. strategic tuck-ins with economies of scale and scope that fit our criteria for acquisitions in new geographies, increasing our total addressable market, greater diversification and economies of scale and scope as we create new collections and build. So yes, it's an exciting time for us.

Great. I appreciate that color there. My last question, kind of a follow-up on your last point there. Just in terms of M&A pipeline, obviously, great to see it continues to be very active. I understand timing is quite uncertain in this space. So I won't ask about that. But just curious about your appetite for larger acquisitions of premier assets in new markets, obviously, Tabacon being a clear example of that versus kind of smaller bolt-on acquisitions to improve scale and depth and perhaps margins in your existing markets. Just wondering if you have more of an appetite for one or the other or if it's just, hey, you kind of take whatever opportunity is in front of you and it's less about one or the other. Just kind of curious where your appetite or thinking is.

It truly is a balance. And so I wish that things presented themselves in a particular order on a particular day, but they never seem to. So again, we have a very interesting and compelling list of opportunities to invest in, both within the business in our existing business and things we can improve. And we have a robust pipeline of opportunities. So on the acquisition side, there will be smaller things that present themselves. And if we feel that they fit and they are the right decision at the time, then that's something that we'll be able to move forward on. Bo will speak in a second to our capacity and where we're sitting from a leverage perspective. And on larger acquisitions, again, if we feel confident that this is the right acquisition that will create the greatest amount of shareholder value, and we're well positioned to do that. But I think it's important for Bo to just speak to capacity and our abilities and leverage ratios and so on.

Sure. Yes. So currently, we're pro forma net leverage of 1.5x, which I'd say that with the sense of Q2 leverage plus the addition of Tabacon, which was purchased the day after. And we have a target net leverage of 2.5 to 3.5x roughly. And so within there, there's certainly capacity from a financial perspective on this. And I think that's important, right? Like to David's point, there's you have a dream scenario probably of how things could fall into place. But when you're this targeted on what makes sense for the business, you have to be ready to be opportunistic when the right things come available. And so we base our approach on our ability to move quickly and action on things that are going to be the right strategic investments for this business.

[Operator Instructions].

Well, thank you, everyone, for participating in our second quarter earnings call. We appreciate your interest and wish you a fantastic afternoon.