Viad Corp. Form 10-Q — Quarter Ended September 30, 2021
Entity context: The supplied filing is for Viad Corp, not a standalone filing for Pursuit Attractions & Hospitality, Inc. Pursuit is one of Viad’s two reportable segments; the other is GES. Amounts below are in U.S. dollars and millions unless noted.
Business context and reporting period
This unaudited quarterly report covers the three and nine months ended September 30, 2021, compared with the corresponding 2020 periods. Viad operates experiential leisure travel and hospitality businesses through Pursuit, and live-events services through GES. Results remain affected by the COVID-19 recovery, seasonal activity, and reopening of travel and live events.
Financial performance and liquidity
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Revenue | $233.6 | $62.8 | $323.8 | $387.5 |
| Net income (loss) attributable to Viad | $15.1 | $(30.8) | $(70.1) | $(323.6) |
| Segment operating income (loss), a non-GAAP measure | $40.1 | $(6.8) | $(33.1) | $(65.9) |
| Net cash used in operating activities | Not stated separately | Not stated separately | $(2.7) | $(43.5) |
Q3 diluted earnings per common share were $0.46, including $0.45 from continuing operations. Nine-month diluted loss per share was $3.77. Nine-month capital expenditures were $45.2; operating cash flow less capital expenditures was approximately negative $47.9.
Q3 segment results: GES revenue was $116.0 and segment operating loss was $9.5; Pursuit revenue was $117.6 and segment operating income was $49.6. For the nine months, GES revenue was $160.1 with a $56.3 segment operating loss; Pursuit revenue was $163.7 with $23.2 segment operating income.
At September 30, cash and cash equivalents were $110.8, and cash, cash equivalents and restricted cash totaled $113.3. Total current assets were $229.9 and current liabilities $176.5. Debt and finance lease obligations totaled $454.4, including $390.8 of debt net of issuance costs and $63.6 of finance leases. Viad reported total liabilities of $807.5 and total assets of $1,057.6.
Material changes versus the prior comparable period
- Q3 revenue rose $170.8 year over year, reflecting the return of larger in-person events and stronger Pursuit visitation. GES revenue increased to $116.0 from $14.0; Pursuit revenue increased to $117.6 from $48.8.
- Q3 net results swung to income from a loss, principally on improved segment performance and lower restructuring charges. The 2020 quarter also included a $13.5 gain on sale of GES’s San Diego facility.
- Nine-month revenue declined 16.5%, largely because live events were shut down or postponed during much of 2020 and the first half of 2021. The nine-month loss narrowed substantially from 2020, which included $203.1 of impairment charges.
- Cash and cash equivalents increased from $39.5 at December 31, 2020, while debt and finance lease obligations increased from $293.7. The July refinancing and acquisition-related investment contributed to changes in financing and debt.
- Pursuit’s same-store Q3 indicators improved: attraction visitors rose to 768,294 from 382,005; hospitality RevPAR was $180 versus $110, and occupancy was 74.9% versus 59.8%. Comparisons reflect COVID-related closures and restrictions in 2020.
Outlook, commentary, risks and unusual items
- Management reported stronger bookings and early recovery in travel and face-to-face events, but cautioned that COVID-19 and variants, including Delta, made the pace and scale of recovery uncertain. No specific earnings or revenue guidance is provided in the supplied filing text.
- Management said existing liquidity should fund operations and commitments for at least 12 months, including approximately $75 million of expected maintenance and growth capital expenditures.
- Viad refinanced its former facility on July 30, 2021 with a $400 million term loan due in 2028 and a $100 million revolving facility due in 2026. The facility requires minimum liquidity of $75 million through the specified transition period; financial covenants are first tested for the quarter ending September 30, 2022. Revolver availability was $78.2 million after $21.8 million of letters of credit.
- FlyOver Iceland is expected to be unable to meet certain financial covenants for the six months ending December 31, 2021; Viad said it requested a waiver.
- Viad acquired a 60% interest in Golden Skybridge in March 2021; the attraction opened in June. Pursuit’s Sky Lagoon opened in April 2021. The Sky Lagoon project contributed to increased finance lease assets and obligations.
- Q3 interest expense included $2.1 million from writing off unamortized debt issuance costs on refinancing. Viad recorded $5.8 million of preferred-stock dividends during the first nine months; the Series A preferred stock carries a 5.5% cumulative quarterly dividend and is convertible at $21.25 per common share.
- Key exposures include the COVID-19 recovery, seasonality, event cancellations and show rotation, foreign exchange and interest rates, union negotiations, pension obligations, and acquisition and capital-project execution. Viad disclosed a 2020 Pursuit vehicle accident involving three fatalities and other serious injuries; it believes insurance is sufficient, subject to customary deductibles. It also disclosed maximum potential payments of $128.1 million under guarantees, and $2.3 million of environmental remediation liabilities.
Important facts for investors to verify
- Whether recovery in GES events and Pursuit travel demand persisted after Q3, and how much was driven by reopening comparisons versus sustained demand.
- Cash generation, capital spending, and available liquidity relative to the $75 million minimum-liquidity requirement and management’s stated 12-month outlook.
- Debt and lease obligations, borrowing costs, refinancing terms, covenant tests, and the status of the requested FlyOver Iceland waiver.
- The amount, timing, and insurance coverage of claims related to the Pursuit accident, along with other legal and guarantee exposures.
- The implications of the 5.5% preferred dividend, conversion terms, and potential dilution for common shareholders.
- The filing notes an immaterial correction to 2020 GES third-party services revenue and cost of services, which had previously been reported gross rather than net; verify comparable-period figures use the corrected presentation.