Viad Corp. 10-Q Summary — Quarter Ended March 31, 2022
Entity note: The filing is for Viad Corp., not a separate registrant named Pursuit Attractions & Hospitality, Inc. Pursuit is one of Viad’s three reportable segments; the others are Spiro and GES Exhibitions. Amounts below are in U.S. dollars.
Business context and reporting period
Viad operates travel attractions and hospitality, experiential marketing, and exhibition services businesses. The first quarter is seasonally weak for Pursuit, whose peak activity is in summer; in 2021, 82% of Pursuit revenue was earned in the second and third quarters. GES event results also vary with event timing and show rotation. Viad introduced the Spiro brand during the quarter and changed its GES segment reporting to Spiro and GES Exhibitions, reclassifying prior-period figures for comparison.
Financial results and liquidity
| Metric | Q1 2022 | Q1 2021 |
|---|---|---|
| Revenue | $177.4 million | $28.9 million |
| Loss from continuing operations | $30.6 million | $45.4 million |
| Net loss attributable to Viad | $29.0 million | $43.2 million |
| Diluted loss per common share | $1.53 | $2.21 |
| Operating cash flow | $17.9 million provided | $32.7 million used |
| Capital expenditures | $12.6 million | $9.4 million |
- Revenue rose substantially as travel demand strengthened and in-person events resumed. GES revenue was $153.6 million versus $19.1 million; Pursuit revenue was $23.8 million versus $9.8 million.
- Despite the improved consolidated loss, Pursuit’s segment operating loss widened to $21.2 million from $18.3 million. GES’s segment operating loss narrowed to $1.6 million from $19.9 million. Segment operating loss is a non-GAAP measure.
- Costs of services and products totaled $200.1 million, exceeding revenue. The filing does not present a consolidated gross margin measure.
- Cash, cash equivalents and restricted cash were $62.9 million at quarter-end, including $57.9 million unrestricted cash. Viad reported total available liquidity of $145.3 million, including $87.4 million of revolver capacity.
- Total debt and finance obligations were $459.4 million, including $389.7 million of debt net of issuance costs. The main credit facility’s weighted-average rate was 5.5%; net interest expense was $5.9 million.
- Total liabilities were $854.3 million. Current liabilities of $214.3 million exceeded current assets of $205.7 million.
Changes, outlook, and risks
- Management attributed the year-over-year improvement mainly to increased GES and Pursuit revenue as pandemic restrictions eased. GES operating loss improvement was partly offset by a $9.1 million prior-year gain on sale of a warehouse.
- Pursuit’s same-store hospitality RevPAR rose 33.8%, occupancy increased to 50.4% from 42.6%, and average daily rate rose 13.0%. Same-store attraction revenue per visitor increased 1.9%.
- Viad stated that existing liquidity should fund operations and projected capital outlays, including approximately $100 million of capital expenditures and the $26.5 million Glacier Raft Company acquisition, for at least the next 12 months. The acquisition closed April 6, 2022, after quarter-end, funded with about $11.5 million cash and $15.0 million revolver borrowings. No full-year revenue or earnings guidance is provided in the supplied filing text.
- The amended revolving facility requires at least $75 million of liquidity through receipt of the September 2022 quarter compliance materials. Financial covenant testing begins September 30, 2022, including leverage and interest coverage requirements; the facility also sets a minimum consolidated EBITDA threshold for the first half of 2022.
- Management cited continuing uncertainty from COVID-19, travel and event demand, seasonality, labor availability and costs, union negotiations, show rotation, capital-project execution, acquisitions, foreign exchange and interest rates. The company does not hedge its foreign-currency translation or earnings exposure.
- Unusual items included $0.7 million of restructuring charges and $0.6 million of impairment charges, the latter for GES software development costs no longer in use. The quarter also included $1.9 million of capitalized interest, primarily for FlyOver attractions.
- Viad disclosed litigation and insurance matters related to a 2020 Pursuit vehicle accident involving three fatalities and other serious injuries; it believes insurance is sufficient, subject to customary deductibles. It recorded $2.2 million of environmental remediation liabilities for previously sold operations and disclosed up to $99.8 million of potential payments under subsidiary lease guarantees.
- Viad’s 5.5% cumulative convertible preferred stock generated $2.0 million of cash dividends in the quarter. Its carrying value was $132.6 million; the filing reports a redemption value of $141.8 million at March 31, 2022.
Important facts for investors to verify
- Whether travel and live-event recovery continues, particularly given Pursuit seasonality and event cancellations, capacity, and show rotation.
- Whether Viad maintains the $75 million minimum liquidity requirement and meets the upcoming credit-facility covenants.
- The timing and returns of the planned capital spending and the post-quarter Glacier Raft Company acquisition.
- The cash requirements and potential exercise conditions for the FlyOver Iceland minority shareholders’ put option, which may become exercisable after August 2022 if specified EBITDA conditions are met.
- Potential outcomes and insurance coverage for the accident-related claims, environmental matters, self-insured liabilities, and lease guarantees.
- The extent to which first-quarter operating cash flow depended on working-capital movements, including higher contract liabilities and customer deposits.