Viad Corp (including Pursuit) — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024; unaudited. The filing is by Viad Corp, whose reportable segments are Pursuit, Spiro, and GES Exhibitions. Spiro and GES Exhibitions are collectively called GES.
Financial performance
| Metric | Q1 2024 | Q1 2023 | Change |
|---|---|---|---|
| Revenue | $273.5 million | $260.8 million | Up 4.9% |
| Net loss attributable to Viad | $25.1 million | $20.9 million | Loss increased $4.2 million |
| Loss per common share | $1.29 | $1.10 | Greater loss per share |
| Segment operating loss | $8.5 million | $5.5 million | Loss increased $2.9 million |
| Net cash from operating activities | $(7.5) million | $10.1 million | Decreased $17.6 million |
| Capital expenditures | $20.7 million | $11.4 million | Increased $9.3 million |
Net loss was $26.2 million, compared with $21.4 million in the prior-year quarter. Net margin was approximately -9.6%, versus -8.2% (calculated as net loss divided by revenue). Net interest expense was $11.8 million, down from $12.2 million. Income tax expense was $0.9 million, compared with a $0.6 million benefit.
Segments and material changes
- Pursuit: Revenue rose 14.0% to $37.2 million, led by attractions, including stronger Sky Lagoon demand and FlyOver Chicago, which opened March 1 and contributed $0.8 million. Segment operating loss widened to $23.8 million from $19.1 million, reflecting higher costs and FlyOver Chicago start-up expenses.
- GES: Revenue increased 3.6% to $236.3 million and segment operating income rose 13.1% to $15.4 million. Spiro revenue was up 1.5%; GES Exhibitions revenue was up 3.7%. Higher revenue drove operating income growth in both businesses; event timing affected comparisons.
- Consolidated revenue growth did not translate into improved earnings, primarily because Pursuit’s operating loss increased and income taxes shifted to an expense. Corporate activities expense also rose 40.1%, principally due to consulting costs.
Seasonality is important: 79% of Pursuit’s 2023 revenue was earned in Q2 and Q3. GES results also fluctuate with the timing and frequency of shows. In Q1, Pursuit same-store attraction visitors increased 1.7% and revenue per attraction visitor increased 13.0%; hospitality RevPAR declined 1.7%, with lower Jasper occupancy associated with unfavorable weather and ski conditions.
Financial position, debt, and liquidity
- At March 31, cash and cash equivalents were $48.8 million, down from $52.7 million at year-end. Current assets were $283.5 million and current liabilities were $292.3 million.
- Total debt and finance obligations were $479.6 million, including $406.8 million of debt; the balance sheet reported $462.5 million long-term and $17.1 million current. Debt and finance obligations increased from $452.7 million at year-end. Debt interest rates included 10.4% on Term Loan B and 8.4% on Viad’s revolving borrowings.
- Available liquidity was $137.2 million: $48.8 million cash plus $88.4 million of revolving capacity. The company reported compliance with its revolving-credit covenants; total net leverage was 2.69x against a 4.00x maximum, and interest coverage was 3.30x against a 2.00x minimum.
- Operating cash use and higher capital spending were funded in part by net borrowing. Financing activities provided $25.4 million, including $154.2 million of borrowings and $128.0 million of debt and finance-obligation payments.
Outlook, risks, and unusual items
- Management said existing liquidity should fund operations and projected capital outlays for at least the next 12 months and longer term. Planned capital expenditures for the next 12 months are approximately $60–$70 million, including about $20 million for select growth projects. The filing provides no specific full-year revenue or earnings guidance.
- On April 26, 2024, after quarter-end, Viad amended its credit agreement to reduce the Term Loan B spread by 0.75 percentage points to SOFR + 4.25%, set its credit spread adjustments to 0%, and reset a 1% prepayment premium for six months.
- Risk factors include seasonality, travel disruptions, show timing and client concentration, indebtedness and interest rates, capital-project delays or cost overruns, weather and other catastrophic events, union labor and pension obligations, foreign-exchange exposure, cybersecurity, insurance sufficiency, and legal and environmental claims. Q1 foreign-currency translation reduced comprehensive income by $7.5 million.
- Viad continues to manage claims arising from a 2020 Pursuit vehicle accident that caused three fatalities and other serious injuries. The company says reserves and insurance are sufficient, subject to customary deductibles. It also reported $2.1 million of environmental remediation liabilities and up to $83.2 million of potential payments under subsidiary lease guarantees.
- FlyOver Iceland’s credit facility was amended in February 2024, deferring principal payments for six months and extending maturity to September 2029. The filing says the attraction had not met the earnings condition for minority shareholders’ put option and management did not anticipate meeting it before the option expires at year-end 2024.
Most important facts for investors to verify
- Whether Pursuit’s seasonal peak can offset its higher Q1 operating loss and FlyOver Chicago start-up costs.
- Whether operating cash flow improves as working capital changes normalize, given Q1 cash use and planned $60–$70 million capital expenditures.
- Debt-service capacity, interest-rate exposure, covenant headroom, and the effect of the April credit amendment.
- Actual performance and future investment needs for FlyOver Chicago and other Pursuit growth projects.
- Developments in the accident-related claims, insurance coverage, union negotiations, and other disclosed contingencies.