Viad Corp. Form 10-Q Summary
Entity note: The request identifies Pursuit Attractions & Hospitality, Inc., but the supplied filing is for Viad Corp. This summary reflects the filing provided, not a filing under the requested company name.
Business context and reporting period
Unaudited results cover the three months ended March 31, 2012, compared with the same 2011 period. Viad operates Marketing & Events businesses in the U.S. and internationally, and a Travel & Recreation Group with tourism and lodging operations. The company filed as an accelerated filer and reported 20,254,029 common shares outstanding as of April 30, 2012.
Key financial metrics
| Metric | Q1 2012 | Q1 2011 / comparison |
|---|---|---|
| Revenue | $268.8 million | $290.1 million; down 7.4% |
| Income before tax | $1.3 million | $15.5 million |
| Net income attributable to Viad | $1.0 million | $9.8 million |
| Diluted EPS | $0.05 | $0.48 |
| Adjusted EBITDA (non-GAAP) | $8.9 million | $23.1 million |
| Operating cash flow | $2.8 million | $20.3 million |
| Capital expenditures | $7.5 million | $7.7 million |
| Cash and cash equivalents | $71.6 million at March 31 | $100.4 million at December 31, 2011 |
| Total debt | $2.9 million | $3.2 million at December 31, 2011 |
Current assets were $233.2 million and current liabilities were $162.7 million at March 31. Stockholders’ equity totaled $391.0 million. The company reported $125.4 million of remaining revolving-credit capacity, net of letters of credit. Cash declined by $28.8 million during the quarter, principally reflecting the Banff hotel purchase and capital spending. The filing reports no variable-rate debt outstanding.
Material changes and segment performance
- Marketing & Events U.S.: Revenue fell 10.7% to $206.9 million; segment operating income declined to $7.2 million from $17.9 million. Management attributed the decrease chiefly to approximately $45 million of negative show-rotation revenue. Base same-show revenue rose 9.3%.
- Marketing & Events International: Revenue increased 7.1% to $57.8 million; operating income rose 1.9% to $3.9 million. Excluding currency effects, revenue increased 8.9%, supported by demand and new show wins, partly offset by negative show rotation.
- Travel & Recreation: Revenue grew 16.8% to $6.7 million, but its operating loss widened to $5.6 million from $4.5 million. Acquisitions and Brewster organic growth supported revenue; seasonal losses at acquired Alaska and St. Mary properties weighed on results.
Foreign exchange reduced Q1 revenue by approximately $1.1 million and segment operating income by $53,000 versus the prior-year quarter. Restructuring charges were $2.2 million, primarily for Marketing & Events facility consolidation and position eliminations, compared with $269,000 in reported charges in Q1 2011 (including a $187,000 reserve reversal).
Outlook, risks and unusual items
- Management forecast mid-single-digit growth in 2012 U.S. same-show revenue and expected non-annual show rotation to have no meaningful full-year revenue effect. It anticipated unfavorable 2012 currency impacts of about $7 million on Marketing & Events revenue and $370,000 on its segment operating income, and about $2 million and $600,000, respectively, for Travel & Recreation.
- Management expected four acquisitions completed since 2011 to generate approximately $24 million of 2012 revenue, with average Adjusted EBITDA margin above 30%. It projected high-single-digit annual revenue growth from 2012 to 2015 for this acquired revenue base, with expanding Adjusted EBITDA margins.
- Viad expected to spend approximately $15 million in 2012 developing the Glacier Discovery Walk in Alberta. Management said available liquidity should fund operations and capital commitments for at least the next 12 months.
- The $130 million revolving facility expires May 18, 2016. Viad was in covenant compliance at quarter-end; fixed-charge coverage was 2.44x against a 2.25x minimum, and leverage was 0.39x against a 2.50x maximum. A minimum cash balance of $50 million is required. The fixed-charge minimum rises to 2.50x after the quarter ending September 30, 2012.
- Glacier Park’s National Park Service concession contract was due to expire December 31, 2012, subject to possible one-year extensions. The concession generated about 45% of Glacier Park’s 2011 revenue; loss of the contract would be material to that business.
- Other exposures include $26.8 million of maximum potential payments under subsidiary lease guarantees, $5.6 million of environmental remediation liabilities, and possible additional multi-employer pension funding that management said was not ascertainable. Management believed litigation and environmental matters would not have a material effect after recorded provisions and insurance.
- Foreign cash totaled $39.2 million; repatriating all foreign cash was estimated to create approximately $1.2 million of incremental tax expense. The filing also identifies foreign-exchange, consumer-discretionary-spending, labor, show demand, acquisition, capital-project execution, and goodwill-impairment risks.
Important facts for investors to verify
- Confirm the issuer identity: the supplied filing is Viad Corp’s, despite the request naming Pursuit Attractions & Hospitality, Inc.
- Assess whether the sharp decline in U.S. segment income is primarily temporary show rotation or reflects more persistent demand and cost pressures.
- Track seasonal Travel & Recreation losses, acquisition performance, and the return on the planned Glacier Discovery Walk investment.
- Monitor liquidity against the $50 million minimum-cash requirement and the tightening fixed-charge covenant threshold.
- Verify the outcome and terms of the Glacier National Park concession after its stated 2012 expiry, and developments in guarantee, environmental, and multi-employer pension exposures.