SEC Filing Summary
Registrant discrepancy: The supplied filing is Viad Corp’s Form 10-Q, not a filing identified as Pursuit Attractions & Hospitality, Inc. It covers the quarter ended September 30, 2014.
Business context and reporting period
Viad operates Marketing & Events U.S., Marketing & Events International, and Travel & Recreation businesses. Its activities include live-event services, attractions, hospitality, tours, and transportation. Results are seasonal: event timing varies, while Travel & Recreation activity peaks in summer.
Financial performance
Amounts below are in millions of dollars except per-share data. Comparisons are with the corresponding 2013 period.
| Metric | Three months ended September 30, 2014 | Nine months ended September 30, 2014 |
|---|---|---|
| Revenue | $299.8; up 36.2% from $220.2 | $841.8; up 12.0% from $751.5 |
| Operating income | $29.5, versus $16.7 | $53.0, versus $39.8 |
| Segment operating income | $33.0, versus $18.7 | $60.5, versus $43.8 |
| Net income attributable to Viad | $29.6, versus $11.9 | $58.2, versus $26.2 |
| Diluted EPS attributable to Viad | $1.48, versus $0.58 | $2.88, versus $1.29 |
| Adjusted EBITDA | $35.9, versus $22.3 | $72.1, versus $58.5 |
| Operating cash flow | Quarterly amount not separately stated | $82.0, versus $27.3 |
Third-quarter revenue growth reflected favorable show rotation, same-show growth and new business in Marketing & Events, plus higher Travel & Recreation revenue. Segment operating income improved in all three segments. The filing does not provide a clear consolidated gross-margin figure.
Liquidity, debt, and capital allocation
- Cash and cash equivalents were $56.9 million at September 30, 2014, up from $45.8 million at December 31, 2013.
- Total debt, including capital leases, was $24.0 million, compared with $11.7 million at year-end 2013. Debt-to-capital was 0.062 to 1. The company reported compliance with credit-facility covenants.
- At September 30, $106.2 million of capacity remained under the $130 million revolving facility, after $22.5 million of revolver borrowings and $1.3 million of letters of credit. An October 10 amendment increased facility capacity to $180 million.
- Nine-month investing cash use was $34.2 million, including $40.8 million for acquisitions and $21.9 million of capital expenditures, partly offset by $28.0 million of proceeds from Glacier Park assets.
- Nine-month financing cash use was $35.0 million. Viad paid $36.4 million in dividends, including a $1.50-per-share special dividend, and repurchased $10.6 million of shares on the open market.
Management said existing liquidity should be sufficient for operations and capital commitments for at least the next 12 months. Operating cash flow benefited from higher earnings and timing-related working-capital movements, including increases in accounts payable and customer deposits; receivables and inventories also used cash.
Material changes and unusual items
- Third-quarter diluted continuing-operations EPS was $1.53, up from $0.44. The quarter included a $10.1 million tax benefit from releasing a valuation allowance on foreign tax credit carryforwards; management cited this as approximately $0.50 per diluted share.
- Glacier Park’s National Park Service concession contract expired at the end of 2013 and is reported as discontinued operations. The company received $25.0 million for its possessory interest in January 2014 and $3.0 million for personal property in September. Nine-month discontinued-operations income included a $13.3 million after-tax gain on sale; the third quarter showed a $1.0 million loss, primarily reflecting tax allocation and other discontinued-operation items.
- Viad acquired West Glacier for approximately $16.9 million including a working-capital adjustment, and Blitz for approximately $24.4 million, during 2014. Blitz contributed $1.9 million of revenue and $0.4 million of operating income from acquisition through September 30; West Glacier contributed $4.5 million of revenue and $2.0 million of operating income.
- After quarter-end, Viad acquired event-housing providers onPeak and Travel Planners for $43.1 million and $33.9 million, respectively. Purchase accounting was not finalized in the filing.
- Foreign-currency translation reduced other comprehensive income by $9.8 million in the third quarter and $10.0 million for the nine-month period. Management said it did not hedge translation or operating-earnings exposure.
Outlook, commentary, and risks
- For full-year 2014, management expected U.S. base same-show revenue growth in the low-to-mid-single digits and a net positive show-rotation effect of approximately $60 million for Marketing & Events. Foreign exchange was expected to add about $6 million to that group’s revenue, with no meaningful operating-income impact.
- Management expected the recently acquired event-services businesses to contribute about $20 million of fourth-quarter 2014 revenue and an approximately $1.6 million operating loss, primarily due to integration costs. For 2015, management anticipated $80–$85 million of revenue and a 15%–20% EBITDA margin from these acquisitions, with operating-margin accretion beginning in 2015.
- Management expected foreign exchange to reduce Travel & Recreation’s 2014 revenue by about $5 million and operating income by about $1 million. It also expected five acquisitions completed since 2011 to generate approximately $30 million of 2014 revenue at an average Adjusted EBITDA margin above 30%.
- Risks include event rotation and economic or customer demand changes, labor costs and potential union disruption, exposure to Canadian-dollar and other currency movements, tourism and weather impacts, and uncertainties around underfunded multi-employer pension plans. The filing reports up to approximately $7.9 million of potential payments under subsidiary lease guarantees, $4.9 million of environmental remediation liabilities, and $2.4 million of uncertain-tax-position liabilities.
- Legal and environmental matters were described as not expected to have a material effect after considering recorded amounts and insurance. Management cautioned that future realization of deferred tax assets depends on taxable income and could change its valuation allowance.
Most important facts for investors to verify
- Confirm the filing belongs to Viad Corp; the request metadata names a different company.
- Assess earnings excluding the $10.1 million tax benefit and gains or losses from discontinued operations.
- Review whether event rotation, labor-cost improvements, and acquisition integration support the stated revenue and margin outlook.
- Track acquisition financing and integration following the October purchases, alongside debt, liquidity, and covenant headroom.
- Monitor foreign-exchange exposure, seasonal tourism performance, labor negotiations, and pension, environmental, and guarantee contingencies.