Viad Corp — Form 10-Q Summary
Issuer note: The filing identifies the registrant as Viad Corp, not Pursuit Attractions & Hospitality, Inc. This summary reflects the Viad Corp filing provided. Reporting period: three months ended March 31, 2014; comparative period: first quarter 2013. Dollar amounts below are in millions unless stated otherwise.
Business context and reporting period
Viad operates Marketing & Events U.S., Marketing & Events International, and Travel & Recreation. Its businesses include event and exhibition services, tourism attractions, transportation, and hospitality. Results are seasonal and the company cautions that first-quarter performance is not necessarily indicative of full-year results.
Key financial metrics
| Metric | Q1 2014 | Q1 2013 |
|---|---|---|
| Revenue | $285.6 | $285.2 |
| Income from continuing operations before tax | $10.9 | $11.9 |
| Income from continuing operations | $9.2 | $8.3 |
| Net income attributable to Viad | $21.9 | $8.1 |
| Diluted earnings per share | $1.08 | $0.40 |
| Adjusted EBITDA (non-GAAP) | $18.2 | $19.2 |
| Operating cash flow | $25.2 | $(5.6) |
| Cash and cash equivalents, March 31 | $47.3 | — |
- Marketing & Events revenue was $277.8, up 0.4%; Travel & Recreation revenue was $7.8, down 6.9%. Total segment operating income was $13.4, down 1.7%.
- The filing does not present a consolidated gross-margin figure. Segment operating income was approximately 4.7% of revenue, versus 4.8% in Q1 2013.
- Cash from operations improved chiefly because of working-capital movements, including higher accounts payable that largely offset higher receivables. Investing cash flow was $19.9, including $25.0 received for the Glacier Park concession possessory interest and $5.5 of capital expenditures.
- Financing cash outflow was $42.4, including $32.5 of dividends and $20.2 of debt and capital-lease payments, partly offset by $10.0 of borrowings. The company’s $1.50-per-share special dividend was paid in February.
- Debt and capital-lease obligations totaled $1.7 at March 31, versus $11.7 at year-end 2013; all quarter-end debt was capital-lease obligations. The $130.0 revolving facility had $128.7 of availability, including the effect of $1.3 of letters of credit. The company reported compliance with covenants.
- Current assets were $213.6 and current liabilities $169.7; total stockholders’ equity was $342.8.
Material changes versus the prior period
- Revenue was nearly flat. U.S. Marketing & Events grew 1.4%, supported by favorable show rotation and 3.9% growth in base same-show revenue; International revenue fell 2.2%, and its segment operating income declined 47.2%, primarily due to show rotation and business mix.
- Travel & Recreation revenue fell 6.9%, with lower Banff Gondola passenger volume attributed to weather and Easter timing, and lower transportation revenue attributed to reduced charter business. Same-store hospitality RevPAR rose 20.0%, while attractions passengers declined 15.9%.
- Net income increased substantially because discontinued operations included a $15.2 after-tax gain from the expired Glacier National Park concession contract. Excluding that item, continuing-operations income attributable to Viad was $9.3, compared with $8.5.
- Adjusted EBITDA declined $1.1, which management attributed primarily to higher corporate costs, partly offset by other factors.
Outlook, commentary, risks and unusual items
- Management expected 2014 U.S. base same-show revenue to grow at a low-to-mid-single-digit rate and show rotation to add approximately $60 of full-year revenue. It targeted a 30-basis-point improvement in the U.S. base same-show labor-to-revenue ratio.
- Management expected foreign-exchange movements to reduce Travel & Recreation 2014 revenue by approximately $6. It also expected four acquisitions completed since 2011 to generate approximately $27 of 2014 revenue at an average Adjusted EBITDA margin of about 34%.
- Glacier Park’s National Park Service concession expired December 31, 2013. Viad received $25.0 in January 2014 and recorded a $21.6 pretax gain, or $15.2 after tax. A further payment of approximately $5 for personal property was anticipated but remained subject to negotiation. The retained Glacier Park properties continued operating.
- Key risks include show rotation and event-industry conditions; consumer demand and weather affecting tourism; foreign-exchange exposure (not hedged); labor negotiations, including Chicago Teamsters Local 727 pension-related discussions; and potential underfunding exposure from multi-employer pension plans.
- The filing reports $5.0 of environmental remediation liabilities related to previously sold operations, approximately $11.8 maximum potential payments under leased-facility guarantees, and $21.4 of self-insured liabilities for continuing operations. Management did not expect litigation or environmental matters, after provisions and insurance, to materially affect results, but outcomes remain uncertain.
- Management said existing liquidity should fund operations and capital commitments for at least 12 months. Disclosure controls were assessed as effective, with no material first-quarter change in internal control over financial reporting.
Important facts for investors to verify
- Confirm that Viad Corp is the intended issuer; the request names Pursuit Attractions & Hospitality, Inc., which is not the registrant shown in this filing.
- Assess continuing-operations performance separately from the one-time Glacier Park gain when evaluating earnings and EPS.
- Track the unresolved personal-property payment, retained Glacier Park operations, and any further effects of the expired concession.
- Monitor International segment profitability, show rotation, labor negotiations, multi-employer pension exposure, and foreign-exchange impacts against management’s outlook.
- Review subsequent activity disclosed in the filing: Viad repurchased approximately 220,000 shares for $5.1 million from April 30 through May 8, 2014.