Viad Corp (NYSE: VVI) — 2023 Form 10-K
Entity and period: The supplied filing is Viad Corp’s annual report for the fiscal year ended December 31, 2023, not a standalone 2023 fourth-quarter report. Pursuit Attractions & Hospitality is one of Viad’s three reportable segments; the filing is for the parent company, including Spiro and GES Exhibitions.
Business context
Viad operates Pursuit, a portfolio of attractions, hotels, lodges and transportation experiences; Spiro, an experiential marketing agency; and GES Exhibitions, a live-events and exhibition services business. Pursuit is highly seasonal, earning 79% of its 2023 revenue in the second and third quarters. GES results also fluctuate with event timing and show rotation.
Financial performance
| Metric | 2023 | 2022 | Change |
|---|---|---|---|
| Revenue | $1,238.7 million | $1,127.3 million | +9.9% |
| Net income attributable to Viad | $16.0 million | $23.2 million | −31.0% |
| Continuing-operations income attributable to Viad | $16.8 million | $23.1 million | — |
| Diluted continuing-operations EPS attributable to common stockholders | $0.34 | $0.52 | −34.6% |
| Segment operating income (non-GAAP) | $108.4 million | $68.9 million | +57.3% |
| Cash from operating activities | $104.7 million | $73.4 million | +$31.2 million |
| Capital expenditures | $76.1 million | $67.2 million | +$8.9 million |
Segments: Pursuit revenue grew 17.0% to $350.3 million and segment operating income rose to $53.4 million from $24.0 million. Growth reflected stronger international visitation in Western Canada and Iceland, higher attraction spending per visitor, improved hotel revenue management and the addition of Forest Park Alpine. GES revenue increased 7.3% to $888.4 million and segment operating income rose 22.6% to $55.1 million. GES Exhibitions revenue increased 10.1%; Spiro revenue grew 2.0%.
Profit drivers and margins: Segment operating income improved, but net income attributable to Viad declined. The comparison was affected by a $19.6 million gain on the 2022 ON Services sale, $13.1 million higher net interest expense in 2023 and $8.8 million higher income tax expense. The effective tax rate rose to 43.6% from 28.8%. The filing presents segment operating income as a non-GAAP measure; it is not a substitute for GAAP net income.
Cash, liquidity and debt: Year-end unrestricted cash was $52.7 million, down from $59.7 million; available revolving-credit capacity was $108.0 million, resulting in reported total available liquidity of $160.7 million, versus $146.4 million in 2022. Operating cash flow less capital expenditures was approximately $28.6 million in 2023. The balance sheet reports $388.7 million of debt and $63.9 million of finance lease obligations, or $452.7 million combined. The Revolving Credit Facility had $57.0 million drawn and $5.0 million of letters of credit; Viad reported covenant compliance and a 2.55-to-1.00 total net leverage ratio at year-end. Debt interest rates were elevated, including 10.5% on Term Loan B and 8.5% on the main revolver at December 31, 2023. An interest-rate cap covers $300 million of borrowings through January 2025.
Other balance-sheet and capital items: Total assets were $1.14 billion; total stockholders’ equity was $132.6 million. The company has $132.6 million of Series A convertible preferred stock with a 5.5% cumulative dividend; $7.8 million of preferred dividends were paid in cash in 2023. Common dividends and the share-repurchase program remain suspended.
Material changes, outlook and notable items
- Revenue increased overall, despite the 2022 sale of ON Services, which had contributed $50.9 million of revenue in 2022, and negative GES show rotation. Management cited improved demand, new event wins and stronger Pursuit visitation.
- Cash provided by operations improved, mainly from stronger segment results and working capital. Investing cash outflow was $74.9 million, including $76.1 million of capital expenditures. Financing cash outflow was $36.2 million, with net debt repayments contributing to the increase.
- Management expects existing liquidity to fund operations and projected capital outlays for at least the next 12 months and longer term. Planned 2024 capital expenditures are approximately $65–$70 million, including about $20 million for growth projects such as FlyOver Chicago, scheduled to open in March 2024. FlyOver Canada Toronto was delayed by permitting and related issues.
- In February 2024, FlyOver Iceland amended and extended its credit facility, deferring principal payments for six months and extending maturity to September 2029. A separate Icelandic term loan was refinanced to mature in August 2024.
- Goodwill was $123.9 million, all attributed to Pursuit. The October 2023 impairment test found no impairment, but estimated fair value exceeded carrying value by only 3% for Glacier Park Collection and 5% for FlyOver. Management cautioned that weaker forecasts or higher discount rates could lead to future impairment.
- Material risks include economic weakness, travel and event disruptions, seasonal concentration, event rotation and customer concentration, labor costs and work stoppages, multi-employer pension obligations, high variable-rate debt costs, foreign-exchange exposure, capital-project delays, cybersecurity and data privacy, and catastrophic events or weather.
- Viad continues to defend claims related to the 2020 Ice Explorer accident that caused three fatalities and other serious injuries. It paid approximately $0.3 million in 2023 to resolve Canadian occupational-safety charges and stated that reserves and insurance are expected to cover potential claims, subject to deductibles. Environmental remediation liabilities for prior operations were $2.2 million.
- Deloitte issued an unqualified opinion on the consolidated financial statements. Management concluded internal control over financial reporting was effective; however, the supplied filing text contains conflicting descriptions of the auditor’s ICFR opinion. See verification items below.
Important facts for investors to verify
- Confirm the filing identity and period: this is Viad Corp’s FY2023 Form 10-K, with Pursuit as a segment—not a separate Pursuit Attractions & Hospitality filing or a quarterly report.
- Reconcile debt disclosures: the risk section cites $462.1 million of debt, while the debt note reports $452.7 million of debt and finance obligations at year-end. Confirm the definitions and components behind the difference.
- Review the original auditor’s ICFR report to resolve the inconsistency in the supplied text, which describes a qualified opinion in one passage and an effective-control opinion in another.
- Assess the sensitivity of FlyOver and Glacier Park goodwill valuations, and monitor the delayed Toronto project, planned 2024 capital spending and FlyOver Chicago opening.
- Track interest expense, covenant headroom, 2024 liquidity and capital needs, and the refinancing and repayment terms of FlyOver Iceland’s facilities.
- Evaluate the status and potential exposure of Ice Explorer litigation, insurance coverage, self-insurance reserves and multi-employer pension obligations.