Filing summary
Entity note: The supplied filing is Viad Corp’s Form 10-Q, not a filing by Pursuit Attractions & Hospitality, Inc. It covers the quarter ended March 31, 2013, with comparable results for the first quarter of 2012.
Business context
Viad operated through Marketing & Events U.S., Marketing & Events International, and Travel & Recreation. Its businesses include event and exhibition services, branded experiences, tourism, lodging, transportation, and attractions.
Financial performance and liquidity
| Metric | Q1 2013 | Q1 2012 / comparison |
|---|---|---|
| Revenue | $285.2 million | $268.8 million; up 6.1% |
| Income before taxes | $11.1 million | $1.3 million |
| Net income attributable to Viad | $8.1 million | $1.0 million |
| Diluted earnings per share | $0.40 | $0.05 |
| Adjusted EBITDA | $18.7 million | $8.9 million |
| Operating cash flow | $(5.6) million | $2.8 million |
| Cash and cash equivalents | $95.7 million at March 31 | $114.2 million at December 31, 2012 |
| Total debt | $2.5 million | $2.2 million at December 31, 2012 |
Cash decline reflected operating cash outflow, capital spending, dividends, and other cash movements. Operating cash flow was pressured chiefly by working-capital changes, including receivables, accrued compensation, and customer deposits. Capital expenditures were $8.3 million. The company reported $128.2 million of remaining revolving-credit capacity, a $50 million minimum-cash covenant, and compliance with all covenants. Management said existing liquidity was sufficient for operations and capital commitments for at least 12 months.
Segment results improved at Marketing & Events: U.S. revenue was $218.3 million and operating income $14.1 million, versus $206.9 million and $7.2 million; International revenue was $60.0 million and operating income $4.4 million, versus $57.8 million and $3.9 million. Travel & Recreation revenue rose to $8.4 million from $6.7 million, while its operating loss widened slightly to $5.7 million from $5.6 million.
Material changes and management outlook
- Management attributed stronger consolidated results mainly to operating efficiencies, favorable show rotation and same-show growth at Marketing & Events, and higher Travel & Recreation revenue. Lower corporate costs and restructuring charges also helped.
- Marketing & Events U.S. benefited from about $7 million of positive show rotation and 2.4% same-show revenue growth. For full-year 2013, management expected U.S. base same-show revenue growth in the low-to-mid-single digits, but a net negative show-rotation impact of about $55–$60 million and a full-year operating margin of approximately 2.5%. Foreign exchange was expected to reduce Marketing & Events revenue by about $7 million versus 2012.
- Management expected four acquisitions completed since 2011 to generate about $25 million of 2013 revenue, with an average Adjusted EBITDA margin above 30%; it anticipated mid-single-digit annual revenue growth from 2013 to 2015 and expanding margins.
- Viad acquired U.K.-based Resource Creative Limited in February 2013 for $647,000 cash plus contingent consideration of up to approximately $278,000. The quarter included $720,000 of restructuring charges, primarily for Marketing & Events facility consolidation and position eliminations.
- The Glacier National Park concession contract, which generated about 49% of Glacier Park’s 2012 revenue, was due to expire December 31, 2013. Glacier Park submitted a bid for a new 16-year contract. If it lost, the company expected possessory-interest compensation of $25 million plus an estimated $5–$6 million for personal property; the filing does not establish the outcome.
Risks, contingencies, and unusual items
- Foreign exchange reduced Q1 revenue by about $1.4 million and segment operating results by $205,000 versus Q1 2012. Viad did not hedge translation exposure; foreign currency translation produced a $6.1 million other-comprehensive-income loss.
- The company disclosed $19.0 million of potential payments under lease guarantees, $5.3 million of environmental remediation liabilities related to previously sold operations, and possible additional multi-employer pension funding that was not ascertainable.
- Management said litigation and environmental matters were not expected to have a material impact after considering reserves and insurance. The filing also notes that the recoverability of deferred tax assets depends on future taxable income and that a higher valuation allowance could increase tax expense.
- Other risks include consumer demand and economic conditions, show and customer performance, labor negotiations, tourism spending, and the Glacier National Park concession award. Management noted that about one-third of Marketing & Events collective-bargaining agreements expire each year.
Important facts for investors to verify
- Confirm the issuer identity: this is Viad Corp’s filing, despite the request metadata naming Pursuit Attractions & Hospitality, Inc.
- Track operating cash flow and working-capital movements against reported earnings, and assess the planned $12–$14 million remaining spend to complete the Glacier Skywalk in 2013.
- Monitor Marketing & Events’ execution against its margin outlook and the forecast negative show-rotation and foreign-exchange effects.
- Verify the outcome and terms of the Glacier National Park concession award and related compensation, if applicable.
- Assess liquidity, credit-facility covenant headroom, and contingent exposures, including guarantees, environmental liabilities, and multi-employer pensions.