Business context and reporting period
The supplied filing is Viad Corp’s unaudited Form 10-Q for the quarter ended June 30, 2015, filed August 7, 2015. This differs from the requested company name, Pursuit Attractions & Hospitality, Inc.; verify that this is the intended filing. Viad operated Marketing & Events U.S., Marketing & Events International, and Travel & Recreation businesses.
Financial results and liquidity
| Metric | Q2 2015 | Q2 2014 | Six months 2015 | Six months 2014 |
|---|---|---|---|---|
| Revenue | $317.0 million | $256.4 million | $581.4 million | $542.0 million |
| Operating income | $34.3 million | $12.1 million | $30.4 million | $23.5 million |
| Income from continuing operations | $22.2 million | $7.8 million | $20.2 million | $17.0 million |
| Net income attributable to Viad | $22.4 million | $6.7 million | $20.3 million | $28.6 million |
| Diluted EPS from continuing operations | $1.11 | $0.39 | $1.02 | $0.85 |
| Operating cash flow | Not presented separately | Not presented separately | $38.0 million | $28.2 million |
Q2 revenue grew 23.7% year over year; operating income was 10.8% of revenue versus 4.7% a year earlier. Six-month revenue rose 7.3%, while net income attributable to Viad fell 29.0%, mainly because the prior-year period included a large gain from discontinued operations. Six-month continuing-operations income increased 18.8%. The filing reports no separate gross-margin percentage.
At June 30, cash was $64.9 million, total debt and capital leases were $133.3 million, and shareholders’ equity was $351.6 million. Cash less total debt was negative $68.4 million. The company reported $162.4 million of remaining credit-facility capacity and compliance with its covenants. Current assets were $258.4 million versus current liabilities of $211.7 million. Six-month capital expenditures were $13.2 million; cash dividends paid were $4.0 million.
Material changes and management commentary
- Marketing & Events Group Q2 revenue was $286.6 million versus $226.6 million; segment operating income rose to $30.1 million from $9.0 million. Growth reflected acquisitions, positive show rotation, new business and same-show growth, partly offset by currency effects.
- Travel & Recreation Q2 revenue was $30.5 million versus $29.8 million; segment operating income increased to $6.2 million from $5.1 million. Organic revenue grew 9.8%, while reported results were pressured by foreign exchange.
- For the first six months, foreign exchange reduced revenue by $20.8 million and segment operating income by $2.0 million. Q2 effects were reductions of $13.2 million and $2.2 million, respectively.
- Q2 net income included a $1.3 million gain from exiting a U.K. venue-services agreement within International segment operating results. The first half included a $1.6 million non-cash tax benefit, or about $0.08 per share, associated with certain foreign intangible deferred taxes.
- The 2014 comparison included a $14.3 million after-tax discontinued-operations gain from the expiration of a Glacier National Park concession contract. 2015 discontinued operations were small liability-reserve and legal-cost adjustments.
Outlook, risks and contingencies
- Management expected full-year 2015 Marketing & Events revenue to be comparable to 2014, with underlying growth and acquisitions offset by about $70 million of negative show rotation and unfavorable currency translation. It expected U.S. base same-show revenue growth at a mid-single-digit rate.
- Management expected the 2014 acquisitions of Blitz, onPeak and N200 to contribute $61–$66 million of 2015 revenue and $16.5–$17.5 million of adjusted segment EBITDA, excluding about $1.5 million of integration costs.
- Travel & Recreation revenue was expected to be comparable to 2014. Management estimated currency would reduce full-year revenue and segment operating income by about $13 million and $4 million, respectively; it did not expect then-current Glacier National Park forest-fire activity to have a material 2015 impact.
- Management said existing liquidity would fund operations and capital commitments for at least 12 months. $45.9 million of cash was held outside the U.S.; estimated incremental tax on repatriation of certain Canadian earnings was about $0.6 million.
- Risks include show timing and rotation, economic and discretionary tourism demand, foreign-exchange movements, labor negotiations and potential work stoppages, and exposure to underfunded multi-employer pension plans. The company also cited litigation and environmental matters; it recorded $4.6 million of environmental remediation liabilities related to previously sold operations. Additional multi-employer pension funding, if any, was not ascertainable.
- Other exposures included $3.6 million of maximum potential payments under subsidiary lease guarantees and self-insured claims. Management stated that pending litigation and environmental matters were not expected to have a material effect, after considering recorded amounts and insurance. Disclosure controls were reported effective.
Important facts for investors to verify
- Confirm whether Viad Corp’s filing is the intended filing for Pursuit Attractions & Hospitality, Inc.; the registrant named in the supplied 10-Q is Viad Corp.
- Review the basis and sustainability of acquisition-driven growth, show rotation, same-show trends and the disclosed adjusted EBITDA outlook, which is a non-GAAP measure.
- Assess the sensitivity of reported results and equity to currency movements; Viad said it did not hedge translation or net-earnings exposure.
- Monitor debt covenant thresholds, facility availability, seasonal working-capital needs and the cash held outside the U.S.
- Track the N200 earnout, acquisition purchase-price allocations, labor negotiations, multi-employer pension exposure, and environmental and insurance liabilities.