Viad Corp 10-Q Summary — Quarter Ended March 31, 2021
Entity note: The filing is for Viad Corp (NYSE: VVI), which operates Pursuit as one of two reportable segments alongside GES. It is not a standalone Pursuit Attractions & Hospitality filing.
Business context and reporting period
Viad provides live-event services through GES and experiential travel, attractions, and hospitality through Pursuit. The first quarter remained heavily affected by COVID-19: live events were largely shut down, while travel restrictions, border closures, capacity limits, seasonal closures, and temporary government-mandated closures constrained Pursuit. Interim results are not necessarily indicative of full-year results.
Financial results and liquidity
| Metric | Q1 2021 | Q1 2020 |
|---|---|---|
| Revenue | $28.9 million | $294.7 million |
| Operating loss | $40.2 million | $10.2 million |
| Net loss attributable to Viad | $43.2 million | $86.6 million |
| Diluted loss per share | $2.21 | $4.29 |
| Cash used in operating activities | $32.7 million | $4.7 million |
- Revenue fell 90.2%. Consolidated operating loss was approximately 139% of revenue; the filing does not present a conventional positive operating margin for the quarter.
- GES revenue was $19.1 million versus $281.1 million; its segment operating loss was $19.9 million, compared with $10.9 million of income. Management attributed the deterioration mainly to event cancellations and postponements.
- Pursuit revenue was $9.8 million versus $13.5 million. Its segment operating loss improved to $18.3 million from $20.3 million, supported by cost reductions and Canadian wage subsidies.
- Net loss improved year over year largely because Q1 2020 included $88.4 million of impairment charges. Q1 2021 included a $9.1 million gain on sale of a GES warehouse.
- Cash and cash equivalents were $34.7 million at quarter end; cash, cash equivalents, and restricted cash totaled $37.9 million. Total stated available liquidity was $219.1 million, including $139.4 million of revolver capacity and a $45.0 million preferred-stock delayed-draw commitment.
- Debt was $305.0 million, excluding finance leases; debt and finance lease obligations totaled $370.2 million. Interest expense rose 27.4% to $5.1 million, primarily due to higher debt balances.
- Capital expenditures were $9.4 million. The company declared no common dividend, compared with $0.10 per share in Q1 2020.
Material changes and unusual items
- GES revenue fell 93.2%, as Q1 2021 activity was mainly virtual and hybrid events. Pursuit revenue fell 27.6%; same-store attraction visitors declined 64.9%.
- Management reported early signs of recovery during the quarter, including more live-event markets reopening, smaller events taking place, and increased bookings, while organizers continued to assess the timing of larger in-person events.
- Viad acquired a 60% controlling interest in the Golden Skybridge attraction in March for approximately $12 million, including funds for remaining development and start-up costs. It was expected to open in June 2021. Sky Lagoon opened on April 30, after quarter end.
- The company corrected Q1 2020 GES third-party-services revenue and cost of services to net presentation, reducing each by $11.35 million; management said the prior-period error was not material.
- In August 2020, Crestview invested $135 million in convertible preferred stock, net of $9.2 million in fees. The preferred stock carries a 5.5% cumulative dividend, payable in cash or in kind, and is convertible at $21.25 per common share. Q1 2021 dividends of $1.9 million were paid in kind.
Outlook, risks, and contingencies
- Management said existing liquidity should fund operations and commitments for at least 12 months, including approximately $60 million of planned maintenance and growth capital expenditures. This is management’s assessment, not a guarantee.
- The credit agreement waives financial covenants through September 30, 2022, subject to earlier termination if the specified leverage condition is met, and requires at least $100 million of liquidity. Viad reported compliance at March 31, 2021. Cash dividends and unsecured debt issuance are restricted during the waiver period.
- Management said the pandemic’s effects on demand, operations, liquidity, and cash flow remain uncertain and could be material. Other risks include seasonality, event cancellations and show rotation, travel disruption, acquisitions and capital-project execution, foreign exchange, labor and pension obligations, and changing interest rates.
- A July 2020 Pursuit vehicle accident resulted in three fatalities and serious injuries. Viad is cooperating with investigations and believes insurance is sufficient, subject to customary deductibles. The filing says liabilities for unresolved legal matters are not ascertainable, but management does not expect them to materially affect results or financial position.
- Other exposures include up to $90.0 million of potential payments under guarantees of subsidiary lease obligations, environmental remediation liabilities of $2.2 million, and self-insured claims. Goodwill impairment remains a risk if pandemic-related assumptions worsen.
Important facts for investors to verify
- Whether event bookings and travel demand translate into sustained revenue recovery, and the timing and scale of larger live events.
- Liquidity availability and covenant compliance, including the conditions and timing for accessing the $45.0 million preferred-stock commitment.
- Cash burn, planned capital expenditures, debt and lease obligations, and the cost of the preferred-stock dividend.
- Golden Skybridge opening, remaining development spending, and the performance of Sky Lagoon and other growth projects.
- Potential effects of the Pursuit accident claims, guarantees, and future goodwill or asset impairments.