Business context and reporting period
This is Viad Corp’s unaudited Form 10-Q for the quarter and nine months ended September 30, 2023. Viad reports three segments: Pursuit, a travel attractions and hospitality business; Spiro; and GES Exhibitions. The filing is by Viad Corp, not a registrant named Pursuit Attractions & Hospitality, Inc.; investors should confirm the intended issuer.
Results are seasonal: Pursuit’s peak activity is in summer, while GES results can vary with event timing and show rotation. Management reported improving tourism and live-event demand, with little to no COVID-19-related disruption during the first nine months of 2023.
Financial performance
Amounts below are in millions of U.S. dollars unless stated otherwise. Comparisons are with the corresponding 2022 period.
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Revenue | $365.9 | $382.7 | $947.0 | $879.3 |
| Income attributable to Viad | $41.3 | $38.1 | $31.4 | $29.0 |
| Diluted EPS from continuing operations attributable to Viad common stockholders | $1.44 | $1.29 | $0.96 | $0.78 |
| Segment operating income | $76.0 | $66.3 | $103.9 | $80.2 |
| Net cash from operating activities | — | $116.6 | $105.5 | |
| Capital expenditures | — | $54.7 | $54.8 |
Segment operating income is a non-GAAP measure. Q3 revenue declined 4.4%, while income attributable to Viad rose 8.3%. For the nine-month period, revenue increased 7.7% and income attributable to Viad increased 8.3%. The filing does not provide a consolidated gross-margin figure.
Segments: Q3 Pursuit revenue rose 14.1% to $186.9 million and segment operating income increased to $81.4 million from $59.7 million. GES revenue fell 18.3% to $179.0 million and reported a $5.4 million segment operating loss, compared with $6.6 million of segment operating income. For the nine months, Pursuit revenue increased 16.2% to $308.1 million; GES revenue increased 4.0% to $638.9 million.
Debt, liquidity and balance sheet
At September 30, 2023, cash and cash equivalents were $106.3 million, total debt and finance obligations were $468.4 million (including $63.5 million of finance lease obligations), and total debt was $404.9 million. Long-term debt and finance obligations were $460.2 million. Available liquidity was $201.3 million, comprising cash and $95.0 million of unused revolving capacity. Nine-month operating cash flow was $116.6 million; investing activities used $53.5 million and financing activities used $12.9 million.
Interest expense, net, increased to $37.1 million for the nine months from $23.9 million, primarily due to higher interest rates. The Term Loan B rate was 10.8% at quarter-end. Viad reported compliance with its revolving-credit covenants: total net leverage ratio of 2.54x versus a 4.00x maximum, and interest coverage of 2.97x versus a 2.00x minimum.
After quarter-end, on October 6, Viad increased revolving-credit capacity by $70 million to $170 million and prepaid $70 million of Term Loan B debt, funded with $60 million of revolver borrowings and $10 million of cash.
Outlook, risks and unusual items
- Management said existing liquidity was expected to fund operations and projected capital needs for at least the next 12 months and longer term. Planned capital expenditures for the next 12 months were approximately $80–$90 million, including about $30 million for selected growth projects, such as FlyOver Chicago. The filing provides no formal earnings or revenue guidance.
- Pursuit growth reflected stronger international visitation, higher attraction revenue per visitor, improved hotel RevPAR, and the addition of Forest Park Alpine Hotel. GES’s Q3 comparison was affected by approximately $50 million of negative rotation from major non-annual shows and the prior-year contribution from the ON Services business, sold in December 2022.
- Key stated risks include economic and travel disruption, seasonality and show rotation, higher interest rates and indebtedness, labor shortages and union work stoppages, capital-project delays or cost overruns, foreign exchange exposure, cybersecurity, and legal or environmental claims.
- Viad continues to manage claims arising from a 2020 Ice Explorer accident that resulted in three deaths and other serious injuries. It resolved Canadian workplace-safety charges in 2023 with fines and related payments of approximately $0.3 million; it said reserves and insurance were believed sufficient, subject to customary deductibles. Environmental remediation liabilities were $2.2 million.
- Other notable items include $1.1 million of restructuring charges for the first nine months, no impairment charges in 2023, and $5.9 million of cash dividends declared on convertible preferred stock during the nine-month period. The preferred stock carries a 5.5% cumulative dividend.
- The filing’s forward-looking risk discussion refers to an identified material weakness in internal control over financial reporting, while management concluded disclosure controls were effective as of September 30, 2023. The supplied text does not explain the apparent distinction; investors should review the related risk disclosure and prior filings.
Investor verification priorities
- Confirm the issuer identity: this filing is for Viad Corp, with Pursuit reported as a segment.
- Review the October 6 refinancing amendment and its effect on debt, borrowing costs, liquidity, and covenant headroom.
- Assess whether Pursuit’s visitation and RevPAR gains persist outside the summer peak season and how planned growth spending converts to returns.
- Evaluate GES’s exposure to show rotation, event timing, client concentration, and the impact of the ON Services sale on comparisons.
- Verify the status and implications of the identified internal-control material weakness, the Ice Explorer claims, and other contingencies.