UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended SeptemberJune 30, 20172023
or
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ____________ to
Commission file number: 001-11015
Viad Corp
(Exact name of registrant as specified in its charter)
Delaware | 36-1169950 | |
(State or other jurisdiction of incorporation or | (I.R.S. Employer Identification No.) | |
|
| |
(Address of principal executive offices) | (Zip Code) |
(602) (602) 207-1000
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common Stock, $1.50 Par Value | VVI | New York Stock Exchange |
Indicate by check mark whether the registrantregistrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.) files). Yes☒ No ☐
Indicate by check mark whether registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☒ | |||||||
Non-accelerated filer | ☐ | Smaller reporting company | ☐ | |||||||
Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of October 27, 2017,August 2, 2023, there were 20,411,48020,879,009 shares of Common Stock ($1.50 par value) outstanding.
INDEX
Page | ||
1 | ||
Condensed Consolidated Balance Sheets as of | 1 | |
2 | ||
3 | ||
4 | ||
| ||
| ||
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
| |
| ||
| ||
| ||
| ||
| ||
| ||
| ||
|
In this report, for periods presented, “we,” “us,” “our,” “the Company,” and “Viad Corp” refer to Viad Corp and its subsidiaries.
PART I - FINANCIALFINANCIAL INFORMATION
VIAD CORP
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
| September 30, |
|
| December 31, |
|
| June 30, |
| December 31, |
| |||||
(in thousands, except share data) |
| 2017 |
|
| 2016 |
|
| 2023 |
|
| 2022 |
| ||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 53,481 |
|
| $ | 20,900 |
|
| $ | 53,179 |
|
| $ | 59,719 |
|
Accounts receivable, net of allowances for doubtful accounts of $1,897 and $1,342, respectively |
|
| 129,105 |
|
|
| 104,648 |
| ||||||||
Accounts receivable, net of allowances for doubtful accounts of $3,097 and $2,174, |
|
| 146,157 |
|
|
| 122,373 |
| ||||||||
Inventories |
|
| 39,753 |
|
|
| 31,420 |
|
|
| 15,844 |
|
|
| 10,785 |
|
Current contract costs |
|
| 18,313 |
|
|
| 14,331 |
| ||||||||
Prepaid insurance |
|
| 8,641 |
|
|
| 13,370 |
| ||||||||
Other current assets |
|
| 23,973 |
|
|
| 18,449 |
|
|
| 27,058 |
|
|
| 18,977 |
|
Total current assets |
|
| 246,312 |
|
|
| 175,417 |
|
|
| 269,192 |
|
|
| 239,555 |
|
Property and equipment, net |
|
| 295,757 |
|
|
| 279,858 |
|
|
| 567,117 |
|
|
| 549,578 |
|
Other investments and assets |
|
| 46,745 |
|
|
| 44,297 |
|
|
| 19,321 |
|
|
| 17,457 |
|
Operating lease right-of-use assets |
|
| 112,263 |
|
|
| 102,777 |
| ||||||||
Deferred income taxes |
|
| 34,391 |
|
|
| 42,549 |
|
|
| 2,718 |
|
|
| 565 |
|
Goodwill |
|
| 263,919 |
|
|
| 254,022 |
|
|
| 123,899 |
|
|
| 121,429 |
|
Other intangible assets, net |
|
| 65,672 |
|
|
| 73,673 |
|
|
| 58,257 |
|
|
| 58,985 |
|
Total Assets |
| $ | 952,796 |
|
| $ | 869,816 |
|
| $ | 1,152,767 |
|
| $ | 1,090,346 |
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
| ||||||||
Liabilities, Mezzanine Equity, and Stockholders’ Equity |
|
|
|
|
| |||||||||||
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Accounts payable |
| $ | 88,510 |
|
| $ | 67,596 |
|
| $ | 106,059 |
|
| $ | 73,020 |
|
Customer deposits |
|
| 53,093 |
|
|
| 42,723 |
| ||||||||
Contract liabilities |
|
| 67,020 |
|
|
| 43,950 |
| ||||||||
Accrued compensation |
|
| 28,094 |
|
|
| 29,913 |
|
|
| 22,750 |
|
|
| 25,839 |
|
Operating lease obligations |
|
| 15,087 |
|
|
| 13,463 |
| ||||||||
Other current liabilities |
|
| 52,318 |
|
|
| 30,390 |
|
|
| 37,788 |
|
|
| 41,653 |
|
Current portion of debt and capital lease obligations |
|
| 124,574 |
|
|
| 174,968 |
| ||||||||
Current portion of debt and finance obligations |
|
| 8,382 |
|
|
| 13,192 |
| ||||||||
Total current liabilities |
|
| 346,589 |
|
|
| 345,590 |
|
|
| 257,086 |
|
|
| 211,117 |
|
Long-term debt and capital lease obligations |
|
| 60,627 |
|
|
| 74,243 |
| ||||||||
Long-term debt and finance obligations |
|
| 459,482 |
|
|
| 456,752 |
| ||||||||
Pension and postretirement benefits |
|
| 26,826 |
|
|
| 28,611 |
|
|
| 16,399 |
|
|
| 16,769 |
|
Long-term operating lease obligations |
|
| 109,143 |
|
|
| 101,297 |
| ||||||||
Other deferred items and liabilities |
|
| 50,260 |
|
|
| 50,734 |
|
|
| 73,363 |
|
|
| 70,024 |
|
Total liabilities |
|
| 484,302 |
|
|
| 499,178 |
|
|
| 915,473 |
|
|
| 855,959 |
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Convertible Series A Preferred Stock, $0.01 par value, 180,000 shares authorized, |
|
| 132,591 |
|
|
| 132,591 |
| ||||||||
Redeemable noncontrolling interest |
|
| 4,727 |
|
|
| 4,956 |
| ||||||||
Stockholders’ equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Viad Corp stockholders’ equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Common stock, $1.50 par value, 200,000,000 shares authorized, 24,934,981 shares issued and outstanding |
|
| 37,402 |
|
|
| 37,402 |
| ||||||||
Common stock, $1.50 par value, 200,000,000 shares authorized, 24,934,981 shares |
|
| 37,402 |
|
|
| 37,402 |
| ||||||||
Additional capital |
|
| 573,660 |
|
|
| 573,841 |
|
|
| 569,733 |
|
|
| 570,271 |
|
Retained earnings |
|
| 89,552 |
|
|
| 16,291 |
| ||||||||
Unearned employee benefits and other |
|
| 239 |
|
|
| 172 |
| ||||||||
Accumulated other comprehensive income (loss): |
|
|
|
|
|
|
|
| ||||||||
Unrealized gain on investments |
|
| 564 |
|
|
| 421 |
| ||||||||
Cumulative foreign currency translation adjustments |
|
| (10,264 | ) |
|
| (29,084 | ) | ||||||||
Unrecognized net actuarial loss and prior service credit, net |
|
| (10,544 | ) |
|
| (10,728 | ) | ||||||||
Common stock in treasury, at cost, 4,519,023 and 4,613,520 shares, respectively |
|
| (226,145 | ) |
|
| (230,960 | ) | ||||||||
Total Viad Corp stockholders’ equity |
|
| 454,464 |
|
|
| 357,355 |
| ||||||||
Noncontrolling interest |
|
| 14,030 |
|
|
| 13,283 |
| ||||||||
Accumulated deficit |
|
| (348,109 | ) |
|
| (334,301 | ) | ||||||||
Accumulated other comprehensive loss |
|
| (38,770 | ) |
|
| (47,185 | ) | ||||||||
Common stock in treasury, at cost, 4,068,448 and 4,216,044 shares, respectively |
|
| (203,769 | ) |
|
| (211,657 | ) | ||||||||
Total Viad stockholders’ equity |
|
| 16,487 |
|
|
| 14,530 |
| ||||||||
Non-redeemable noncontrolling interest |
|
| 83,489 |
|
|
| 82,310 |
| ||||||||
Total stockholders’ equity |
|
| 468,494 |
|
|
| 370,638 |
|
|
| 99,976 |
|
|
| 96,840 |
|
Total Liabilities and Stockholders’ Equity |
| $ | 952,796 |
|
| $ | 869,816 |
| ||||||||
Total Liabilities, Mezzanine Equity, and Stockholders’ Equity |
| $ | 1,152,767 |
|
| $ | 1,090,346 |
|
Refer to Notes to Condensed Consolidated Financial Statements.
VIAD CORP
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
| Three Months Ended |
|
| Nine Months Ended |
| ||||||||||
|
| September 30, |
|
| September 30, |
| ||||||||||
(in thousands, except per share data) |
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibition and event services |
| $ | 198,868 |
|
| $ | 240,278 |
|
| $ | 750,111 |
|
| $ | 681,592 |
|
Exhibits and environments |
|
| 33,251 |
|
|
| 44,785 |
|
|
| 119,988 |
|
|
| 123,871 |
|
Pursuit services |
|
| 106,980 |
|
|
| 97,402 |
|
|
| 159,581 |
|
|
| 143,111 |
|
Total revenue |
|
| 339,099 |
|
|
| 382,465 |
|
|
| 1,029,680 |
|
|
| 948,574 |
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of services |
|
| 254,963 |
|
|
| 278,764 |
|
|
| 813,456 |
|
|
| 743,032 |
|
Costs of products sold |
|
| 37,070 |
|
|
| 44,784 |
|
|
| 117,072 |
|
|
| 118,891 |
|
Business interruption gain |
|
| (1,091 | ) |
|
| — |
|
|
| (2,231 | ) |
|
| — |
|
Corporate activities |
|
| 4,474 |
|
|
| 2,772 |
|
|
| 10,092 |
|
|
| 7,390 |
|
Interest income |
|
| (74 | ) |
|
| (44 | ) |
|
| (174 | ) |
|
| (138 | ) |
Interest expense |
|
| 2,117 |
|
|
| 1,489 |
|
|
| 6,281 |
|
|
| 4,109 |
|
Restructuring charges |
|
| 255 |
|
|
| 1,697 |
|
|
| 817 |
|
|
| 3,664 |
|
Impairment charges (recoveries) |
|
| (24,467 | ) |
|
| 120 |
|
|
| (29,098 | ) |
|
| 120 |
|
Total costs and expenses |
|
| 273,247 |
|
|
| 329,582 |
|
|
| 916,215 |
|
|
| 877,068 |
|
Income from continuing operations before income taxes |
|
| 65,852 |
|
|
| 52,883 |
|
|
| 113,465 |
|
|
| 71,506 |
|
Income tax expense |
|
| 20,010 |
|
|
| 17,878 |
|
|
| 32,929 |
|
|
| 23,652 |
|
Income from continuing operations |
|
| 45,842 |
|
|
| 35,005 |
|
|
| 80,536 |
|
|
| 47,854 |
|
Loss from discontinued operations |
|
| (101 | ) |
|
| (221 | ) |
|
| (408 | ) |
|
| (771 | ) |
Net income |
|
| 45,741 |
|
|
| 34,784 |
|
|
| 80,128 |
|
|
| 47,083 |
|
Net income attributable to noncontrolling interest |
|
| (1,084 | ) |
|
| (992 | ) |
|
| (747 | ) |
|
| (765 | ) |
Net income attributable to Viad |
| $ | 44,657 |
|
| $ | 33,792 |
|
| $ | 79,381 |
|
| $ | 46,318 |
|
Diluted income per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations attributable to Viad common stockholders |
| $ | 2.19 |
|
| $ | 1.68 |
|
| $ | 3.91 |
|
| $ | 2.33 |
|
Discontinued operations attributable to Viad common stockholders |
|
| — |
|
|
| (0.01 | ) |
|
| (0.02 | ) |
|
| (0.04 | ) |
Net income attributable to Viad common stockholders |
| $ | 2.19 |
|
| $ | 1.67 |
|
| $ | 3.89 |
|
| $ | 2.29 |
|
Weighted-average outstanding and potentially dilutive common shares |
|
| 20,436 |
|
|
| 20,207 |
|
|
| 20,382 |
|
|
| 20,150 |
|
Basic income per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations attributable to Viad common stockholders |
| $ | 2.19 |
|
| $ | 1.68 |
|
| $ | 3.91 |
|
| $ | 2.33 |
|
Discontinued operations attributable to Viad common stockholders |
|
| — |
|
|
| (0.01 | ) |
|
| (0.02 | ) |
|
| (0.04 | ) |
Net income attributable to Viad common stockholders |
| $ | 2.19 |
|
| $ | 1.67 |
|
| $ | 3.89 |
|
| $ | 2.29 |
|
Weighted-average outstanding common shares |
|
| 20,166 |
|
|
| 20,017 |
|
|
| 20,130 |
|
|
| 19,972 |
|
Dividends declared per common share |
| $ | 0.10 |
|
| $ | 0.10 |
|
| $ | 0.30 |
|
| $ | 0.30 |
|
Amounts attributable to Viad common stockholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations |
| $ | 44,758 |
|
| $ | 34,013 |
|
| $ | 79,789 |
|
| $ | 47,089 |
|
Loss from discontinued operations |
|
| (101 | ) |
|
| (221 | ) |
|
| (408 | ) |
|
| (771 | ) |
Net income |
| $ | 44,657 |
|
| $ | 33,792 |
|
| $ | 79,381 |
|
| $ | 46,318 |
|
|
| Three Months Ended |
|
| Six Months Ended |
| ||||||||||
|
| June 30, |
|
| June 30, |
| ||||||||||
(in thousands, except per share data) |
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Services |
| $ | 262,339 |
|
| $ | 254,132 |
|
| $ | 480,479 |
|
| $ | 405,269 |
|
Products |
|
| 57,972 |
|
|
| 65,071 |
|
|
| 100,623 |
|
|
| 91,294 |
|
Total revenue |
|
| 320,311 |
|
|
| 319,203 |
|
|
| 581,102 |
|
|
| 496,563 |
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Costs of services |
|
| 232,412 |
|
|
| 223,177 |
|
|
| 458,615 |
|
|
| 395,131 |
|
Costs of products |
|
| 54,439 |
|
|
| 59,318 |
|
|
| 94,539 |
|
|
| 87,499 |
|
Corporate activities |
|
| 3,511 |
|
|
| 3,440 |
|
|
| 6,676 |
|
|
| 6,113 |
|
ON Services sale purchase price adjustment |
|
| 204 |
|
|
| — |
|
|
| 204 |
|
|
| — |
|
Interest expense, net |
|
| 12,356 |
|
|
| 7,761 |
|
|
| 24,605 |
|
|
| 13,638 |
|
Other expense, net |
|
| 448 |
|
|
| 612 |
|
|
| 979 |
|
|
| 1,250 |
|
Restructuring charges |
|
| 192 |
|
|
| 1,426 |
|
|
| 645 |
|
|
| 2,080 |
|
Impairment charges |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 583 |
|
Total costs and expenses |
|
| 303,562 |
|
|
| 295,734 |
|
|
| 586,263 |
|
|
| 506,294 |
|
Income (loss) from continuing operations before income taxes |
|
| 16,749 |
|
|
| 23,469 |
|
|
| (5,161 | ) |
|
| (9,731 | ) |
Income tax expense |
|
| 5,028 |
|
|
| 3,359 |
|
|
| 4,450 |
|
|
| 777 |
|
Income (loss) from continuing operations |
|
| 11,721 |
|
|
| 20,110 |
|
|
| (9,611 | ) |
|
| (10,508 | ) |
Income (loss) from discontinued operations |
|
| (143 | ) |
|
| 52 |
|
|
| (201 | ) |
|
| 327 |
|
Net income (loss) |
|
| 11,578 |
|
|
| 20,162 |
|
|
| (9,812 | ) |
|
| (10,181 | ) |
Net (income) loss attributable to non-redeemable noncontrolling |
|
| (903 | ) |
|
| (451 | ) |
|
| (505 | ) |
|
| 753 |
|
Net loss attributable to redeemable noncontrolling interest |
|
| 286 |
|
|
| 128 |
|
|
| 409 |
|
|
| 266 |
|
Net income (loss) attributable to Viad |
| $ | 10,961 |
|
| $ | 19,839 |
|
| $ | (9,908 | ) |
| $ | (9,162 | ) |
Diluted income (loss) per common share: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Continuing operations attributable to Viad common stockholders |
| $ | 0.34 |
|
| $ | 0.64 |
|
| $ | (0.65 | ) |
| $ | (0.69 | ) |
Discontinued operations attributable to Viad common stockholders |
|
| (0.01 | ) |
|
| — |
|
|
| (0.01 | ) |
|
| 0.02 |
|
Net income (loss) attributable to Viad common stockholders |
| $ | 0.33 |
|
| $ | 0.64 |
|
| $ | (0.66 | ) |
| $ | (0.67 | ) |
Weighted-average outstanding and potentially dilutive common |
|
| 20,975 |
|
|
| 20,731 |
|
|
| 20,796 |
|
|
| 20,544 |
|
Basic income (loss) per common share: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Continuing operations attributable to Viad common stockholders |
| $ | 0.34 |
|
| $ | 0.64 |
|
| $ | (0.65 | ) |
| $ | (0.69 | ) |
Discontinued operations attributable to Viad common stockholders |
|
| (0.01 | ) |
|
| — |
|
|
| (0.01 | ) |
|
| 0.02 |
|
Net income (loss) attributable to Viad common stockholders |
| $ | 0.33 |
|
| $ | 0.64 |
|
| $ | (0.66 | ) |
| $ | (0.67 | ) |
Weighted-average outstanding common shares |
|
| 20,840 |
|
|
| 20,571 |
|
|
| 20,796 |
|
|
| 20,544 |
|
Amounts attributable to Viad |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Income (loss) from continuing operations |
| $ | 11,104 |
|
| $ | 19,787 |
|
| $ | (9,707 | ) |
| $ | (9,489 | ) |
Income (loss) from discontinued operations |
|
| (143 | ) |
|
| 52 |
|
|
| (201 | ) |
|
| 327 |
|
Net income (loss) |
| $ | 10,961 |
|
| $ | 19,839 |
|
| $ | (9,908 | ) |
| $ | (9,162 | ) |
Refer to Notes to Condensed Consolidated Financial Statements.
VIAD CORP
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
|
| Three Months Ended |
|
| Nine Months Ended |
| ||||||||||
|
| September 30, |
|
| September 30, |
| ||||||||||
(in thousands) |
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
Net income |
| $ | 45,741 |
|
| $ | 34,784 |
|
| $ | 80,128 |
|
| $ | 47,083 |
|
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gains on investments, net of tax(1) |
|
| 48 |
|
|
| 42 |
|
|
| 143 |
|
|
| 62 |
|
Unrealized foreign currency translation adjustments, net of tax(1) |
|
| 9,115 |
|
|
| (3,849 | ) |
|
| 18,820 |
|
|
| 723 |
|
Change in net actuarial gain, net of tax(1) |
|
| 103 |
|
|
| 93 |
|
|
| 385 |
|
|
| 334 |
|
Change in prior service cost, net of tax(1) |
|
| (67 | ) |
|
| (78 | ) |
|
| (201 | ) |
|
| (234 | ) |
Comprehensive income |
|
| 54,940 |
|
|
| 30,992 |
|
|
| 99,275 |
|
|
| 47,968 |
|
Comprehensive income attributable to noncontrolling interest |
|
| (1,084 | ) |
|
| (992 | ) |
|
| (747 | ) |
|
| (765 | ) |
Comprehensive income attributable to Viad |
| $ | 53,856 |
|
| $ | 30,000 |
|
| $ | 98,528 |
|
| $ | 47,203 |
|
|
| Three Months Ended |
|
| Six Months Ended |
| ||||||||||
|
| June 30, |
|
| June 30, |
| ||||||||||
(in thousands) |
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
Net income (loss) |
| $ | 11,578 |
|
| $ | 20,162 |
|
| $ | (9,812 | ) |
| $ | (10,181 | ) |
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Unrealized foreign currency translation adjustments |
|
| 6,755 |
|
|
| (11,543 | ) |
|
| 7,950 |
|
|
| (8,131 | ) |
Change in fair value of interest rate cap |
|
| 1,238 |
|
|
| — |
|
|
| 438 |
|
|
| — |
|
Change in net actuarial loss, net of tax (1) |
|
| 33 |
|
|
| 59 |
|
|
| (12 | ) |
|
| 466 |
|
Change in prior service cost, net of tax (1) |
|
| 4 |
|
|
| — |
|
|
| 39 |
|
|
| — |
|
Comprehensive income (loss) |
|
| 19,608 |
|
|
| 8,678 |
|
|
| (1,397 | ) |
|
| (17,846 | ) |
Non-redeemable noncontrolling interest: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Comprehensive income (loss) attributable to non-redeemable noncontrolling interest |
|
| (903 | ) |
|
| (451 | ) |
|
| (505 | ) |
|
| 753 |
|
Unrealized foreign currency translation adjustments |
|
| 1,235 |
|
|
| (2,014 | ) |
|
| 1,800 |
|
|
| (1,277 | ) |
Redeemable noncontrolling interest: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Comprehensive loss attributable to redeemable noncontrolling interest |
|
| 286 |
|
|
| 128 |
|
|
| 409 |
|
|
| 266 |
|
Comprehensive income (loss) attributable to Viad |
| $ | 20,226 |
|
| $ | 6,341 |
|
| $ | 307 |
|
| $ | (18,104 | ) |
|
|
(1) The tax effect on other comprehensive income (loss) is not significant.
Refer to Notes to Condensed Consolidated Financial Statements.
VIAD CORP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSSTOCKHOLDERS’ EQUITY AND MEZZANINE EQUITY
(Unaudited)
|
| Nine Months Ended |
| |||||
|
| September 30, |
| |||||
(in thousands) |
| 2017 |
|
| 2016 |
| ||
Cash flows from operating activities |
|
|
|
|
|
|
|
|
Net income |
| $ | 80,128 |
|
| $ | 47,083 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
| 42,499 |
|
|
| 31,206 |
|
Deferred income taxes |
|
| 318 |
|
|
| (3,549 | ) |
Loss from discontinued operations |
|
| 408 |
|
|
| 771 |
|
Restructuring charges |
|
| 817 |
|
|
| 3,664 |
|
Impairment charges (recoveries) |
|
| (29,098 | ) |
|
| 120 |
|
Gains on dispositions of property and other assets |
|
| 465 |
|
|
| 126 |
|
Share-based compensation expense |
|
| 9,484 |
|
|
| 4,709 |
|
Excess tax benefit from share-based compensation arrangements |
|
| — |
|
|
| (60 | ) |
Other non-cash items, net |
|
| 3,603 |
|
|
| 4,644 |
|
Change in operating assets and liabilities (excluding the impact of acquisitions): |
|
|
|
|
|
|
|
|
Receivables |
|
| (25,966 | ) |
|
| (41,510 | ) |
Inventories |
|
| (6,839 | ) |
|
| (12,903 | ) |
Accounts payable |
|
| 18,998 |
|
|
| 38,522 |
|
Restructuring liabilities |
|
| (1,748 | ) |
|
| (2,518 | ) |
Accrued compensation |
|
| (7,455 | ) |
|
| (620 | ) |
Customer deposits |
|
| 9,076 |
|
|
| 26,954 |
|
Income taxes payable |
|
| 16,058 |
|
|
| 5,280 |
|
Other assets and liabilities, net |
|
| 3,895 |
|
|
| 13,503 |
|
Net cash provided by operating activities |
|
| 114,643 |
|
|
| 115,422 |
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
Capital expenditures |
|
| (39,493 | ) |
|
| (32,582 | ) |
Proceeds from insurance |
|
| 31,570 |
|
|
| — |
|
Cash paid for acquired businesses, net |
|
| (1,661 | ) |
|
| (145,735 | ) |
Proceeds from dispositions of property and other assets |
|
| 734 |
|
|
| 774 |
|
Net cash used in investing activities |
|
| (8,850 | ) |
|
| (177,543 | ) |
Cash flows from financing activities |
|
|
|
|
|
|
|
|
Proceeds from borrowings |
|
| 60,574 |
|
|
| 153,000 |
|
Payments on debt and capital lease obligations |
|
| (128,808 | ) |
|
| (86,989 | ) |
Dividends paid on common stock |
|
| (6,119 | ) |
|
| (6,079 | ) |
Debt issuance costs |
|
| (5 | ) |
|
| (340 | ) |
Common stock purchased for treasury |
|
| (1,272 | ) |
|
| (679 | ) |
Excess tax benefit from share-based compensation arrangements |
|
| — |
|
|
| 60 |
|
Net cash provided by (used in) financing activities |
|
| (75,630 | ) |
|
| 58,973 |
|
Effect of exchange rate changes on cash and cash equivalents |
|
| 2,418 |
|
|
| (702 | ) |
Net change in cash and cash equivalents |
|
| 32,581 |
|
|
| (3,850 | ) |
Cash and cash equivalents, beginning of year |
|
| 20,900 |
|
|
| 56,531 |
|
Cash and cash equivalents, end of period |
| $ | 53,481 |
|
| $ | 52,681 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Mezzanine Equity |
| |||||||||||||
(in thousands) |
| Common |
|
| Additional |
|
| Accumulated |
|
| Accumulated |
|
| Common |
|
| Total |
|
| Non-Redeemable |
|
| Total |
|
|
| Redeemable |
|
| Convertible |
| ||||||||||
Balance, December 31, 2022 |
| $ | 37,402 |
|
| $ | 570,271 |
|
| $ | (334,301 | ) |
| $ | (47,185 | ) | $ | (211,657 | ) | $ | 14,530 |
| $ | 82,310 |
| $ | 96,840 |
|
|
| $ | 4,956 |
|
| $ | 132,591 |
| ||||
Net loss |
|
| — |
|
|
| — |
|
|
| (20,869 | ) |
|
| — |
|
|
| — |
|
|
| (20,869 | ) |
|
| (398 | ) |
|
| (21,267 | ) |
|
|
| (123 | ) |
|
| — |
|
Dividends on convertible preferred stock |
|
| — |
|
|
| — |
|
|
| (1,950 | ) |
|
| — |
|
|
| — |
|
|
| (1,950 | ) |
|
| — |
|
|
| (1,950 | ) |
|
|
| — |
|
|
| — |
|
Change in fair value of interest rate cap |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (800 | ) |
|
| — |
|
|
| (800 | ) |
|
| — |
|
|
| (800 | ) |
|
|
| — |
|
|
| — |
|
Payment of payroll taxes on stock-based compensation through shares withheld |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (204 | ) |
|
| (204 | ) |
|
| — |
|
|
| (204 | ) |
|
|
| — |
|
|
| — |
|
Employee benefit plans |
|
| — |
|
|
| (4,677 | ) |
|
| — |
|
|
| — |
|
|
| 5,468 |
|
|
| 791 |
|
|
| — |
|
|
| 791 |
|
|
|
| — |
|
|
| — |
|
Share-based compensation - equity awards |
|
| — |
|
|
| 3,064 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 3,064 |
|
|
| — |
|
|
| 3,064 |
|
|
|
| — |
|
|
| — |
|
Unrealized foreign currency translation adjustment |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1,195 |
|
|
| — |
|
|
| 1,195 |
|
|
| 565 |
|
|
| 1,760 |
|
|
|
| 142 |
|
|
| — |
|
Amortization of net actuarial loss, net of tax |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (45 | ) |
|
| — |
|
|
| (45 | ) |
|
| — |
|
|
| (45 | ) |
|
|
| — |
|
|
| — |
|
Amortization of prior service cost, net of tax |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 35 |
|
|
|
|
|
| 35 |
|
|
|
|
|
| 35 |
|
|
|
|
|
|
|
| ||||
Other, net |
|
| — |
|
|
| 3 |
|
|
| — |
|
|
| — |
|
|
| 2 |
|
|
| 5 |
|
|
| — |
|
|
| 5 |
|
|
|
| — |
|
|
| — |
|
Balance, March 31, 2023 |
| $ | 37,402 |
|
| $ | 568,661 |
|
| $ | (357,120 | ) |
| $ | (46,800 | ) |
| $ | (206,391 | ) |
| $ | (4,248 | ) |
| $ | 82,477 |
|
| $ | 78,229 |
|
|
| $ | 4,975 |
|
| $ | 132,591 |
|
Net income (loss) |
|
| — |
|
|
| — |
|
|
| 10,961 |
|
|
| — |
|
|
| — |
|
|
| 10,961 |
|
|
| 903 |
|
|
| 11,864 |
|
|
|
| (286 | ) |
|
| — |
|
Dividends on convertible preferred stock |
|
| — |
|
|
| — |
|
|
| (1,950 | ) |
|
| — |
|
|
| — |
|
|
| (1,950 | ) |
|
| — |
|
|
| (1,950 | ) |
|
|
| — |
|
|
| — |
|
Distributions to noncontrolling interest |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1,126 | ) |
|
| (1,126 | ) |
|
|
| — |
|
|
| — |
|
Change in fair value of interest rate cap |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1,238 |
|
|
| — |
|
|
| 1,238 |
|
|
| — |
|
|
| 1,238 |
|
|
|
| — |
|
|
| — |
|
Payment of payroll taxes on stock-based compensation through shares withheld |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (4 | ) |
|
| (4 | ) |
|
| — |
|
|
| (4 | ) |
|
|
| — |
|
|
| — |
|
Employee benefit plans |
|
| — |
|
|
| (1,773 | ) |
|
| — |
|
|
| — |
|
|
| 2,628 |
|
|
| 855 |
|
|
| — |
|
|
| 855 |
|
|
|
| — |
|
|
| — |
|
Share-based compensation - equity awards |
|
| — |
|
|
| 2,830 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 2,830 |
|
|
| — |
|
|
| 2,830 |
|
|
|
| — |
|
|
| — |
|
Unrealized foreign currency translation adjustment |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 6,755 |
|
|
| — |
|
|
| 6,755 |
|
|
| 1,235 |
|
|
| 7,990 |
|
|
|
| 38 |
|
|
| — |
|
Amortization of net actuarial loss, net of tax |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 33 |
|
|
| — |
|
|
| 33 |
|
|
| — |
|
|
| 33 |
|
|
|
| — |
|
|
| — |
|
Amortization of prior service cost, net of tax |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 4 |
|
|
| — |
|
|
| 4 |
|
|
| — |
|
|
| 4 |
|
|
|
| — |
|
|
| — |
|
Other, net |
|
| — |
|
|
| 15 |
|
|
| — |
|
|
| — |
|
|
| (2 | ) |
|
| 13 |
|
|
| — |
|
|
| 13 |
|
|
|
| — |
|
|
| — |
|
Balance, June 30, 2023 |
| $ | 37,402 |
|
| $ | 569,733 |
|
| $ | (348,109 | ) |
| $ | (38,770 | ) |
| $ | (203,769 | ) |
| $ | 16,487 |
|
| $ | 83,489 |
|
| $ | 99,976 |
|
|
| $ | 4,727 |
|
| $ | 132,591 |
|
Refer to Notes to Condensed Consolidated Financial Statements.
4
VIAD CORP
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND MEZZANINE EQUITY (Continued)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Mezzanine Equity |
| |||||||||||||
(in thousands) |
| Common |
|
| Additional |
|
| Accumulated |
|
| Accumulated |
|
| Common |
|
| Total |
|
| Non-Redeemable |
|
| Total |
|
|
| Redeemable |
|
| Convertible |
| ||||||||||
Balance, December 31, 2021 |
| $ | 37,402 |
|
| $ | 566,741 |
|
| $ | (349,720 | ) |
| $ | (27,429 | ) | $ | (220,712 | ) | $ | 6,282 |
| $ | 85,556 |
| $ | 91,838 |
|
|
| $ | 5,444 |
|
| $ | 132,591 |
| ||||
Net loss |
|
| — |
|
|
| — |
|
|
| (29,001 | ) |
|
| — |
|
|
| — |
|
|
| (29,001 | ) |
|
| (1,204 | ) |
|
| (30,205 | ) |
|
|
| (138 | ) |
|
| — |
|
Dividends on convertible preferred stock |
|
| — |
|
|
| — |
|
|
| (1,950 | ) |
|
| — |
|
|
| — |
|
|
| (1,950 | ) |
|
| — |
|
|
| (1,950 | ) |
|
|
| — |
|
|
| — |
|
Payment of payroll taxes on stock-based compensation through shares withheld |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (349 | ) |
|
| (349 | ) |
|
| — |
|
|
| (349 | ) |
|
|
| — |
|
|
| — |
|
Employee benefit plans |
|
| — |
|
|
| (1,286 | ) |
|
| — |
|
|
| — |
|
|
| 1,972 |
|
|
| 686 |
|
|
| — |
|
|
| 686 |
|
|
|
| — |
|
|
| — |
|
Share-based compensation - equity awards |
|
| — |
|
|
| 2,385 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 2,385 |
|
|
| — |
|
|
| 2,385 |
|
|
|
| — |
|
|
| — |
|
Unrealized foreign currency translation adjustment |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 3,412 |
|
|
| — |
|
|
| 3,412 |
|
|
| 737 |
|
|
| 4,149 |
|
|
|
| 49 |
|
|
| — |
|
Amortization of net actuarial loss, net of tax |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 407 |
|
|
| — |
|
|
| 407 |
|
|
| — |
|
|
| 407 |
|
|
|
| — |
|
|
| — |
|
Other, net |
|
| — |
|
|
| (41 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (41 | ) |
|
| — |
|
|
| (41 | ) |
|
|
| 351 |
|
|
| — |
|
Balance, March 31, 2022 |
| $ | 37,402 |
|
| $ | 567,799 |
|
| $ | (380,671 | ) |
| $ | (23,610 | ) |
| $ | (219,089 | ) |
| $ | (18,169 | ) |
| $ | 85,089 |
|
| $ | 66,920 |
|
|
| $ | 5,706 |
|
| $ | 132,591 |
|
Net income (loss) |
|
| — |
|
|
| — |
|
|
| 19,839 |
|
|
| — |
|
|
| — |
|
|
| 19,839 |
|
|
| 451 |
|
|
| 20,290 |
|
|
|
| (128 | ) |
|
| — |
|
Dividends on convertible preferred stock |
|
| — |
|
|
| — |
|
|
| (1,950 | ) |
|
| — |
|
|
| — |
|
|
| (1,950 | ) |
|
| — |
|
|
| (1,950 | ) |
|
|
| — |
|
|
| — |
|
Distributions from noncontrolling interest |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (570 | ) |
|
| (570 | ) |
|
|
| — |
|
|
| — |
|
Payment of payroll taxes on stock-based compensation through shares withheld |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (5 | ) |
|
| (5 | ) |
|
| — |
|
|
| (5 | ) |
|
|
| — |
|
|
| — |
|
Employee benefit plans |
|
| — |
|
|
| (648 | ) |
|
| — |
|
|
| — |
|
|
| 1,481 |
|
|
| 833 |
|
|
| — |
|
|
| 833 |
|
|
|
| — |
|
|
| — |
|
Share-based compensation - equity awards |
|
| — |
|
|
| 3,370 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 3,370 |
|
|
| — |
|
|
| 3,370 |
|
|
|
| — |
|
|
| — |
|
Unrealized foreign currency translation adjustment |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (11,543 | ) |
|
| — |
|
|
| (11,543 | ) |
|
| (2,014 | ) |
|
| (13,557 | ) |
|
|
| (167 | ) |
|
| — |
|
Amortization of net actuarial loss, net of tax |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 59 |
|
|
| — |
|
|
| 59 |
|
|
| — |
|
|
| 59 |
|
|
|
| — |
|
|
| — |
|
Other, net |
|
| — |
|
|
| (25 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (25 | ) |
|
| — |
|
|
| (25 | ) |
|
|
| 412 |
|
|
| — |
|
Balance, June 30, 2022 |
| $ | 37,402 |
|
| $ | 570,496 |
|
| $ | (362,782 | ) |
| $ | (35,094 | ) |
| $ | (217,613 | ) |
| $ | (7,591 | ) |
| $ | 82,956 |
|
| $ | 75,365 |
|
|
| $ | 5,823 |
|
| $ | 132,591 |
|
Refer to Notes to Condensed Consolidated Financial Statements.
5
VIAD CORP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
| Six Months Ended |
| |||||
|
| June 30, |
| |||||
(in thousands) |
| 2023 |
|
| 2022 |
| ||
Cash flows from operating activities |
|
|
|
|
|
| ||
Net loss |
| $ | (9,812 | ) |
| $ | (10,181 | ) |
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
|
| ||
Depreciation and amortization |
|
| 25,279 |
|
|
| 26,486 |
|
Deferred income taxes |
|
| (961 | ) |
|
| (962 | ) |
(Income) loss from discontinued operations |
|
| 201 |
|
|
| (327 | ) |
Restructuring charges |
|
| 645 |
|
|
| 2,080 |
|
Impairment charges |
|
| — |
|
|
| 583 |
|
Gains on dispositions of property and other assets |
|
| (73 | ) |
|
| (154 | ) |
Share-based compensation expense |
|
| 5,912 |
|
|
| 5,469 |
|
Other non-cash items, net |
|
| 2,496 |
|
|
| 5,384 |
|
Change in operating assets and liabilities: |
|
|
|
|
|
| ||
Receivables |
|
| (22,832 | ) |
|
| (67,166 | ) |
Inventories |
|
| (4,883 | ) |
|
| (6,461 | ) |
Current contract costs |
|
| (3,595 | ) |
|
| (11,946 | ) |
Accounts payable |
|
| 33,627 |
|
|
| 32,942 |
|
Restructuring liabilities |
|
| (798 | ) |
|
| (1,894 | ) |
Accrued compensation |
|
| (4,518 | ) |
|
| 12,586 |
|
Contract liabilities |
|
| 22,165 |
|
|
| 27,167 |
|
Income taxes payable |
|
| (6,322 | ) |
|
| (193 | ) |
Other assets and liabilities, net |
|
| 2,269 |
|
|
| 30,605 |
|
Net cash provided by operating activities |
|
| 38,800 |
|
|
| 44,018 |
|
Cash flows from investing activities |
|
|
|
|
|
| ||
Capital expenditures |
|
| (32,193 | ) |
|
| (31,639 | ) |
Cash paid for acquisitions, net |
|
| (41 | ) |
|
| (25,494 | ) |
Proceeds from dispositions of property and other assets |
|
| 82 |
|
|
| 161 |
|
Net cash used in investing activities |
|
| (32,152 | ) |
|
| (56,972 | ) |
Cash flows from financing activities |
|
|
|
|
|
| ||
Proceeds from borrowings |
|
| 21,806 |
|
|
| 54,668 |
|
Payments on debt and finance obligations |
|
| (27,157 | ) |
|
| (38,728 | ) |
Dividends paid on preferred stock |
|
| (3,900 | ) |
|
| (3,900 | ) |
Distributions to noncontrolling interest, net of contributions from noncontrolling interest |
|
| (1,126 | ) |
|
| (570 | ) |
Payments of debt issuance costs |
|
| (226 | ) |
|
| (418 | ) |
Payment of payroll taxes on stock-based compensation through shares withheld or repurchased |
|
| (505 | ) |
|
| (537 | ) |
Net cash (used in) provided by financing activities |
|
| (11,108 | ) |
|
| 10,515 |
|
Effect of exchange rate changes on cash, cash equivalents, and restricted cash |
|
| 956 |
|
|
| (1,924 | ) |
Net change in cash, cash equivalents, and restricted cash |
|
| (3,504 | ) |
|
| (4,363 | ) |
Cash, cash equivalents, and restricted cash, beginning of year |
|
| 64,564 |
|
|
| 64,303 |
|
Cash, cash equivalents, and restricted cash, end of period |
| $ | 61,060 |
|
| $ | 59,940 |
|
Refer to Notes to Condensed Consolidated Financial Statements.
6
VIAD CORP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Overview and Basis of Presentation and Principles
Basis of ConsolidationPresentation
The accompanying unaudited condensed consolidated financial statements of Viad Corp (“Viad” or the “Company”) have beenwere prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and with the instructions to Form 10-Q and Article 10 of Regulation S-X for interim financial information. Accordingly, these financial statements do not include all of the information required by GAAP or United States Securities and Exchange Commission (“SEC”) rules and regulations for complete financial statements. In the opinion of management, theseThese financial statements reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with Viad’sour Annual Report on Form 10-K for the year ended December 31, 2016,2022, filed with the SEC on March 6, 2017.February 28, 2023 (“2022 Form 10-K”).
The condensed consolidated financial statements include the accounts of Viad and its subsidiaries. AllWe have eliminated all significant intercompany account balances and transactions have been eliminated in consolidation.
Nature of Business
We are a leading global provider of extraordinary experiences, including hospitality and leisure activities, experiential marketing, and live events.
We operate through three reportable segments: Pursuit, Spiro, and GES Exhibitions. Spiro and GES Exhibitions are both live event businesses and are collectively referred to as “GES.”
Pursuit
Pursuit is a collection of inspiring and unforgettable travel experiences that includes recreational attractions, unique hotels and lodges, food and beverage, retail, sightseeing, and ground transportation services. Pursuit comprises the Banff Jasper Collection, the Alaska Collection, the Glacier Park Collection, FlyOver, and Sky Lagoon.
Spiro
Spiro is an experiential marketing agency that partners with leading brands around the world to manage and elevate their global experiential marketing activities. Spiro builds immersive experiences with its clients starting with the strategic plan, creating the content and design, and finishing with the delivery and execution. Spiro delivers a broad range of unique and impactful experiences for its clients, including meetings and events, exhibition and program management, environments and permanent installations, brand and product activations, and marketing and measurement.
GES Exhibitions
GES Exhibitions is a global exhibition services company with a legacy spanning over 90 years and teams throughout North America, Europe, and the Middle East. GES Exhibitions partners with leading exhibition and conference organizers as a full-service provider of strategic and logistics solutions to manage the complexity of their shows, including strategy, creative & design, registration & engagement, accommodations, logistics & management, material handling, overhead sign hanging, graphics and other rental and labor services. GES Exhibitions also serves as an in-house or preferred provider of electrical and other event services within event venues, including convention centers and conference hotels.
7
Impact of Recent Accounting Pronouncements
The following table provides a brief description of recent accounting pronouncements:
Standard | Description | Date of adoption | Effect on the financial statements | |||
Standards Recently Adopted | ||||||
Accounting Standards Update (“ASU”) 2021-08, Business Combinations (Topic 805) Accounting for Contract Assets and Contract Liabilities | Amendment relates to the application of Topic 805, Business Combinations, to contracts with a customer acquired in a business combination after the acquirer has adopted Topic 606. ASU 2021-08 requires contract assets and contract liabilities to be accounted for as if they (the acquirer) entered into the original contract at the same time and same date as the acquiree. | 1/1/2023 | The adoption of this new standard did not have a material impact on our consolidated financial statements. | |||
ASU 2022-04, Liabilities- Supplier Finance Programs (Subtopic 405-50) Disclosure of Supplier Finance Program Obligations | Amendment requires that a buyer in a supplier finance program disclose key terms about the program in connection with the purchase of goods and services along with information about their obligations under these programs, including a rollforward of those obligations. | 1/1/2023 | We provide disclosure about supplier finance programs in Note 12 - Debt and Finance Obligations under the heading “Financing arrangements.” The required rollforward requirement is effective in the first quarter of 2024. The adoption of this new standard on January 1, 2023 did not otherwise have a material impact on our related disclosures. |
Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. Estimates and assumptions are used in accounting for, among other things, the fair value of Viad’s reporting units used to perform annualthings: impairment testing of recorded goodwill;goodwill and intangible assets and long-lived assets; allowances for uncollectible accounts receivable; sales reserve allowances; provisions for income taxes, including uncertain tax positions; valuation allowances related to deferred tax assets; liabilities for losses related to self-insured liability claims; liabilities for losses related to environmental remediation obligations; sublease income associated with restructuring liabilities; assumptions used to measure pension and postretirement benefit costs and obligations; assumptionsshare-based compensation costs; the discount rates used to determine share-based compensation costs undervalue lease obligations; the fairredemption value method;of redeemable noncontrolling interests; and the allocation of purchase price of acquired businesses. These estimates and assumptions may change as a result of the impact of global economic conditions, global inflationary pressures, and volatility in foreign exchange rates. Actual results could differ from these and other estimates.
Cash, Cash Equivalents, and Restricted Cash
Insurance RecoveriesCash equivalents are highly-liquid investments with remaining maturities when purchased of three months or less. Cash and cash equivalents consist of cash and bank demand deposits. Restricted cash represents collateral required for surety bonds, bank guarantees, letters of credit, and corporate credit cards.
Cash, cash equivalents, and restricted cash balances presented in the Condensed Consolidated Statements of Cash Flows consisted of the following:
Receipts from insurance up to the
|
| June 30, |
|
| December 31, |
| ||
(in thousands) |
| 2023 |
|
| 2022 |
| ||
Cash and cash equivalents |
| $ | 53,179 |
|
| $ | 59,719 |
|
Restricted cash included in other current assets |
|
| 7,881 |
|
|
| 4,845 |
|
Cash, cash equivalents, and restricted cash shown in the statement of cash flows |
| $ | 61,060 |
|
| $ | 64,564 |
|
Revenue Recognition
Revenue is measured based on a specified amount of consideration in a contract with a customer, net of commissions paid to customers and amounts collected on behalf of third parties. We recognize revenue when a performance obligation is satisfied by transferring control of a product or delivering the service to a customer.
Pursuit’s service revenue is derived through its admissions, accommodations, and transportation services. Product revenue is derived through food and beverage and retail sales. Revenue is recognized lossesat the time services are considered recoveries and are accounted for when they are probable of receipt. Anticipated proceeds in excessperformed or upon delivery of the product.
8
Pursuit’s service revenue is recognized loss are considered a gain contingency. A contingency gain for anticipated insurance proceeds in excess of losses already recognized is not recognized until all contingencies relating to the insurance claim have been resolved.
On December 29, 2016, the Mount Royal Hotel was damaged by a fire and closed. During the fourth quarter of 2016, the Company recorded an asset impairment loss of $2.2 million and an offsetting impairment recovery (and related insurance receivable)over time as the losses related tocustomer simultaneously receives and consumes the fire were covered by Viad’s propertybenefits, and business interruption insurance. During July 2017, Viad resolvedproduct revenue is recognized at a point in time.
GES’ service revenue is primarily derived through its property and business interruption insurance claims for a total of $36.3 million, of which $9.0 million was received during the first six months of 2017 with the remainder received during the third quarter. The Company allocated $2.2 million to an insurance receivable, $29.3 million was recorded as an impairment recovery (partially offset by impairment charges of $0.2 million) related to construction costs to re-open the hotel, $2.2 million was recorded as a business interruption gain for the recovery of lost profits, $1.1 million was recorded as contra-expense to offset non-capitalizable costs incurred by the Company, and the remaining $1.5 million was recorded as deferred revenue, which will be recognized over the periods when the business interruption losses are actually incurred.
Nature of Business
Viad is an international experiential services company with operations in the United States, Canada, the United Kingdom, continental Europe, the United Arab Emirates, and Hong Kong. Viad is committed to providing unforgettable experiences to its clients and guests. Viad operates through three reportable business segments: GES U.S., GES International (collectively, “GES”), and Pursuit.
GES
GES is a global, full-service provider for live events that produces exhibitions, conferences, corporate events, and consumer events. GES offers a comprehensive range of livemarketing, event production, and other related services and a full suite of audio-visual services from creative and technology to content and design, along with online tools powered by next generation technologies that help clients easily manage the complexities of their events.
GES’ clients include event organizers and corporate brand marketers. Corporate brand marketers include exhibitorsGES’ service revenue is earned over time over the duration of the live event, which generally lasts one to three days. Revenue for goods and domesticservices provided for which we do not have control of the goods or services before that good or service is transferred to a customer is recorded on a net basis to reflect only the fees received for arranging these services. GES’ product revenue is derived from the build of exhibits, environments, and international corporationsgraphics and is recognized at a point in time upon delivery of the product.
Noncontrolling Interests – Non-redeemable and Redeemable
Non-redeemable noncontrolling interest represents the portion of equity in a subsidiary that wantis not attributable, directly or indirectly, to promoteus. We report non-redeemable noncontrolling interest within stockholders’ equity in the Condensed Consolidated Balance Sheets. The amount of consolidated net income or loss attributable to Viad and the non-redeemable noncontrolling interest is presented in the Condensed Consolidated Statements of Operations.
We consider noncontrolling interests with redemption features that are not solely within our control to be redeemable noncontrolling interests. Our redeemable noncontrolling interest relates to our 56.4% equity ownership interest in Esja Attractions ehf. (“Esja”), which owns the FlyOver Iceland attraction. The Esja shareholders agreement contains a put option that gives the minority Esja shareholders the right to sell (or “put”) their brands, servicesEsja shares to us based on a calculated formula within a predefined term. This redeemable noncontrolling interest is considered mezzanine equity and innovations, feature new products,we report it between liabilities and build business relationships.stockholders’ equity in the Condensed Consolidated Balance Sheets. The amount of the net income or loss attributable to redeemable noncontrolling interests is recorded in the Condensed Consolidated Statements of Operations and the accretion of the redemption value is recorded as an adjustment to accumulated deficit and is included in our income (loss) per share. Refer to Note 23 – Noncontrolling Interests – Redeemable and Non-redeemable for additional information.
Convertible Preferred Stock
We record shares of convertible preferred stock based on proceeds received net of costs on the date of issuance. Dividends paid-in-kind increase the redemption value of the preferred stock. Redeemable preferred stock (including preferred stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) is classified as mezzanine equity and is reported between liabilities and stockholders’ equity in the Condensed Consolidated Balance Sheets.
Leases
We recognize a right-of-use (“ROU”) asset and lease liability on the balance sheet and classify leases as either finance or operating leases. The classification of the lease determines whether we recognize the lease expense on an effective interest method basis (finance lease) or on a straight-line basis (operating lease) over the lease term. In determining whether an agreement contains a lease, we consider if we have a right to control the use of the underlying asset during the lease term in exchange for an obligation to make lease payments arising from the lease. We recognize ROU assets and lease liabilities at commencement date, which is when the underlying asset is available for use to a lessee, based on the present value of lease payments over the lease term.
Our operating and finance leases are primarily facility, equipment, and land leases. Our facility leases comprise mainly manufacturing facilities, sales and design facilities, offices, storage and/or warehouses, and truck marshaling yards for our GES serves corporate brand marketers when they exhibit at showsbusiness. These facility leases have lease terms ranging up to 29 years. Our equipment leases comprise mainly vehicles, hardware, and when GES is engaged to manage their global exhibit program or produce their proprietary corporate events.
Pursuit
Pursuit is a collection of iconic natural and cultural destination travel experiences that enjoy perennial demand. Pursuit offers guests distinctive and world renowned experiences through its collection of unique hotels, lodges, recreational attractions, and transportation services. Pursuit is composed of four lines of business: (i) Hospitality; (ii) Attractions; (iii) Transportation, and (iv) Travel Planning. These four lines of business work together, driving economies of scope and meaningful scale in and around the iconic destinations of Banff, Jasper, and Waterton Lakes National Parks and Vancouveroffice equipment, each with various lease terms. Our land leases comprise mainly leases in Canada and Glacier, Denali,Iceland on which our Pursuit hotels or attractions are located and Kenai Fjords National Parkshave lease terms ranging up to 46 years.
If a lease contains a renewal option that is reasonably certain to be exercised, then the lease term includes the optional periods in measuring a ROU asset and lease liability. We evaluate the reasonably certain threshold at lease commencement, and it is typically met if we identify substantial economic incentives or termination penalties. We do not include variable leases and variable non-lease components in the United States. calculation of the ROU asset and corresponding lease liability. For facility leases, variable lease costs include the costs of common area maintenance, taxes, and insurance for which we pay our lessors an estimate that is adjusted to actual expense on a quarterly or annual basis depending on the underlying contract terms. We expense these variable lease payments as incurred. Our lease agreements do not contain any significant residual value guarantees or restrictive covenants.
Substantially all of our lease agreements do not specify an implicit borrowing rate, and as such, we utilize an incremental borrowing rate based on lease term and country in order to calculate the present value of our future lease payments. The incremental borrowing
9
rate represents a risk-adjusted rate on a collateralized basis and is the expected rate at which we would borrow funds to satisfy the scheduled lease liability payment streams commensurate with the lease term and the country.
We are also a lessor to third party tenants who either lease certain portions of facilities that we own or sublease certain portions of facilities that we lease. We record lease income from owned facilities as rental income and we record sublease income from leased facilities as an offset to lease expense in the Condensed Consolidated Statements of Operations. We classify all of our leases for which we are the lessor as operating leases.
Note 2. Revenue and Related Contract Costs and Contract Liabilities
Pursuit’s performance obligations are short-term in nature. They include the provision of a hotel room, an attraction admission, a chartered or ticketed bus or van ride, and/or the sale of food, beverage, or retail products. We recognize revenue when the service has been provided or the product has been delivered. When we extend credit, payment terms are generally within 30 days and contain no significant financing components.
GES’ performance obligations consist of services or product(s) outlined in a contract. While we often sign multi-year contracts for recurring events, the obligations for each occurrence are well defined and conclude upon the occurrence of each event. The obligations are typically the provision of services and/or sale of a product in connection with a live event. Revenue for goods and services provided for which we do not have control of the goods or services before that good or service is transferred to a customer is recorded on a net basis to reflect only the fees received for arranging these services. We recognize revenue for services generally at the close of the live event. We recognize revenue for products either upon delivery to the customer’s location, upon delivery to an event that we are serving, or when we have the right to invoice. In circumstances where a customer cancels a contract, we generally have the right to bill the customer for costs incurred to date. Payment terms are generally within 30-60 days and contain no significant financing components.
Contract Liabilities
Pursuit is composedand GES typically receive customer deposits prior to transferring the related product or service to the customer. We record these deposits as a contract liability, which are recognized as revenue upon satisfaction of Brewster Travel Canada, the Alaska Collection, Glacier Park, Inc.,related contract performance obligation(s). GES also provides customer rebates and FlyOver Canada.volume discounts to certain event organizers that we recognize as a reduction of revenue. We include customer deposits in “Contract liabilities” and “Other deferred items and liabilities” in the Condensed Consolidated Balance Sheets.
Changes to contract liabilities are as follows:
(in thousands) |
|
|
| |
Balance at December 31, 2022 |
| $ | 44,757 |
|
Cash additions |
|
| 94,495 |
|
Revenue recognized |
|
| (65,082 | ) |
Foreign exchange translation adjustment |
|
| (6,376 | ) |
Balance at June 30, 2023 |
| $ | 67,794 |
|
Contract Costs
GES capitalizes certain incremental costs incurred in obtaining and fulfilling contracts. Capitalized costs principally relate to direct costs of materials and services incurred in fulfilling services of future live events, and also include up-front incentives and commissions incurred upon contract signing. We expense costs associated with preliminary contract activities (i.e. proposal activities) as incurred. Capitalized contract costs are expensed upon the transfer of the related goods or services and are included in “Costs of services” or “Costs of products” as applicable. We include the deferred incremental costs of obtaining and fulfilling contracts in “Current contract costs” and “Other investments and assets” in the Condensed Consolidated Balance Sheets.
Changes to contract costs are as follows:
(in thousands) |
|
|
| |
Balance at December 31, 2022 |
| $ | 16,568 |
|
Additions |
|
| 30,443 |
|
Expenses |
|
| (26,216 | ) |
Foreign exchange translation adjustment |
|
| 312 |
|
Balance at June 30, 2023 |
| $ | 21,107 |
|
ImpactAs of Recent Accounting PronouncementsJune 30, 2023, capitalized contract costs consisted of $0.1 million to obtain contracts and $21.0 million to fulfill contracts. We did not recognize an impairment loss with respect to capitalized contract costs during the three and six months ended June 30, 2023 or 2022.
10
Disaggregation of Revenue
The following table providestables disaggregate Pursuit and GES revenue by major service and product lines, timing of revenue recognition, and markets served:
Pursuit
|
| Three Months Ended |
|
| Six Months Ended |
| ||||||||||
|
| June 30, |
|
| June 30, |
| ||||||||||
(in thousands) |
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
Services: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Ticket revenue |
| $ | 36,543 |
|
| $ | 29,337 |
|
| $ | 50,804 |
|
| $ | 38,539 |
|
Rooms revenue |
|
| 22,106 |
|
|
| 20,559 |
|
|
| 29,696 |
|
|
| 27,462 |
|
Transportation |
|
| 3,689 |
|
|
| 3,755 |
|
|
| 5,634 |
|
|
| 4,934 |
|
Other |
|
| 3,333 |
|
|
| 3,017 |
|
|
| 4,700 |
|
|
| 4,387 |
|
Total services revenue |
|
| 65,671 |
|
|
| 56,668 |
|
|
| 90,834 |
|
|
| 75,322 |
|
Products: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Food and beverage |
|
| 13,628 |
|
|
| 12,171 |
|
|
| 19,503 |
|
|
| 16,264 |
|
Retail operations |
|
| 9,175 |
|
|
| 8,760 |
|
|
| 10,800 |
|
|
| 9,797 |
|
Total products revenue |
|
| 22,803 |
|
|
| 20,931 |
|
|
| 30,303 |
|
|
| 26,061 |
|
Total revenue |
| $ | 88,474 |
|
| $ | 77,599 |
|
| $ | 121,137 |
|
| $ | 101,383 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Timing of revenue recognition: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Services transferred over time |
| $ | 65,671 |
|
| $ | 56,668 |
|
| $ | 90,834 |
|
| $ | 75,322 |
|
Products transferred at a point in time |
|
| 22,803 |
|
|
| 20,931 |
|
|
| 30,303 |
|
|
| 26,061 |
|
Total revenue |
| $ | 88,474 |
|
| $ | 77,599 |
|
| $ | 121,137 |
|
| $ | 101,383 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Markets: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Banff Jasper Collection |
| $ | 46,905 |
|
| $ | 38,962 |
|
| $ | 64,519 |
|
| $ | 53,292 |
|
Alaska Collection |
|
| 12,701 |
|
|
| 13,319 |
|
|
| 13,154 |
|
|
| 13,816 |
|
Glacier Park Collection |
|
| 13,730 |
|
|
| 13,581 |
|
|
| 15,185 |
|
|
| 14,590 |
|
FlyOver |
|
| 7,020 |
|
|
| 5,870 |
|
|
| 12,875 |
|
|
| 10,009 |
|
Sky Lagoon |
|
| 8,118 |
|
|
| 5,867 |
|
|
| 15,404 |
|
|
| 9,676 |
|
Total revenue |
| $ | 88,474 |
|
| $ | 77,599 |
|
| $ | 121,137 |
|
| $ | 101,383 |
|
GES
|
| Three Months Ended |
|
| Six Months Ended |
| ||||||||||
|
| June 30, |
|
| June 30, |
| ||||||||||
(in thousands) |
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
Service lines: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Spiro |
| $ | 80,368 |
|
| $ | 89,425 |
|
| $ | 140,730 |
|
| $ | 132,241 |
|
GES Exhibitions |
|
| 154,534 |
|
|
| 154,600 |
|
|
| 324,031 |
|
|
| 266,431 |
|
Intersegment eliminations |
|
| (3,065 | ) |
|
| (2,421 | ) |
|
| (4,796 | ) |
|
| (3,492 | ) |
Total revenue |
| $ | 231,837 |
|
| $ | 241,604 |
|
| $ | 459,965 |
|
| $ | 395,180 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Timing of revenue recognition: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Services transferred over time |
| $ | 196,668 |
|
| $ | 197,464 |
|
| $ | 389,645 |
|
| $ | 329,947 |
|
Products transferred over time(1) |
|
| 16,038 |
|
|
| 16,025 |
|
|
| 28,979 |
|
|
| 23,963 |
|
Products transferred at a point in time |
|
| 19,131 |
|
|
| 28,115 |
|
|
| 41,341 |
|
|
| 41,270 |
|
Total revenue |
| $ | 231,837 |
|
| $ | 241,604 |
|
| $ | 459,965 |
|
| $ | 395,180 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Geographical markets: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
North America |
| $ | 177,408 |
|
| $ | 189,670 |
|
| $ | 358,247 |
|
| $ | 318,697 |
|
EMEA |
|
| 62,644 |
|
|
| 58,534 |
|
|
| 112,181 |
|
|
| 84,347 |
|
Intersegment eliminations |
|
| (8,215 | ) |
|
| (6,600 | ) |
|
| (10,463 | ) |
|
| (7,864 | ) |
Total revenue |
| $ | 231,837 |
|
| $ | 241,604 |
|
| $ | 459,965 |
|
| $ | 395,180 |
|
11
|
|
|
| |||
| ||||||
|
|
|
| |||
|
|
|
| |||
|
|
|
| |||
|
|
|
|
|
|
| ||||
| ||||||
|
|
|
| |||
|
|
|
| |||
|
|
|
| |||
|
|
|
| |||
| ||||||
|
|
|
| |||
|
|
|
|
Note 2. 3. Share-Based Compensation
The following table summarizesWe grant share-based compensation expense:
|
| Three Months Ended |
|
| Nine Months Ended |
| ||||||||||
|
| September 30, |
|
| September 30, |
| ||||||||||
(in thousands) |
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
Performance unit incentive plan (“PUP”) |
| $ | 3,941 |
|
| $ | 1,601 |
|
| $ | 7,184 |
|
| $ | 2,952 |
|
Restricted stock |
|
| 672 |
|
|
| 523 |
|
|
| 2,069 |
|
|
| 1,597 |
|
Restricted stock units |
|
| 124 |
|
|
| 86 |
|
|
| 231 |
|
|
| 160 |
|
Share-based compensation before income tax benefit |
|
| 4,737 |
|
|
| 2,210 |
|
|
| 9,484 |
|
|
| 4,709 |
|
Income tax benefit |
|
| (1,752 | ) |
|
| (812 | ) |
|
| (3,524 | ) |
|
| (1,750 | ) |
Share-based compensation, net of income tax benefit |
| $ | 2,985 |
|
| $ | 1,398 |
|
| $ | 5,960 |
|
| $ | 2,959 |
|
Viad did not record any share-based compensation expense through restructuring expense duringawards to our officers, directors, and certain key employees pursuant to the three months ended September 30, 2017 or 2016, and recorded zero and $0.2 million for the nine months ended September 30, 2017 and 2016, respectively.
The following table summarizes the activity of the outstanding share-based compensation awards:
|
| PUP Awards |
|
| Restricted Stock |
|
| Restricted Stock Units |
| |||||||||||||||
|
| Shares |
|
| Weighted-Average Grant Date Fair Value |
|
| Shares |
|
| Weighted-Average Grant Date Fair Value |
|
| Shares |
|
| Weighted-Average Grant Date Fair Value |
| ||||||
Balance at December 31, 2016 |
|
| 255,505 |
|
| $ | 26.11 |
|
|
| 267,051 |
|
| $ | 25.96 |
|
|
| 15,982 |
|
| $ | 25.58 |
|
Granted |
|
| 73,557 |
|
| $ | 47.44 |
|
|
| 64,648 |
|
| $ | 46.64 |
|
|
| 2,950 |
|
| $ | 47.45 |
|
Vested |
|
| (76,082 | ) |
| $ | 23.66 |
|
|
| (79,104 | ) |
| $ | 24.01 |
|
|
| (6,182 | ) |
| $ | 25.05 |
|
Forfeited |
|
| (5,911 | ) |
| $ | 30.64 |
|
|
| (9,807 | ) |
| $ | 33.84 |
|
|
| — |
|
| $ | — |
|
Balance at September 30, 2017 |
|
| 247,069 |
|
| $ | 33.10 |
|
|
| 242,788 |
|
| $ | 31.79 |
|
|
| 12,750 |
|
| $ | 30.90 |
|
Viad Corp Omnibus Incentive Plan
The 2017 Viad Corp Omnibus Incentive Plan, as amended (the “2017 Plan”) was approved by Viad stockholders and was effective May 18, 2017. The 2017 Plan replaced the Company’s 2007 Viad Corp Omnibus Stock Plan (the “2007 Plan”). No further awards may be made under the 2007 Plan, although awards previously granted under the 2007 Plan will remain outstanding in accordance with their respective terms. The 2017 Plan has a 10-year life term and provides for the following types of awards: (a) incentive and non-qualified stock options,options; (b) restricted stock awards and restricted stock units,units; (c) performance units or performance shares,shares; (d) stock appreciation rights,rights; (e) cash-based awards,awards; and (f) certain other stock-based awards. In June 2017, Viad registered we reserved 1,750,000 shares of common stock issuablefor issuance under the 2017 Plan. On May 24, 2022, we amended and restated the 2017 Plan, which among other things, increased the number of shares reserved for issuance under the 2017 Plan by 840,000 shares, bringing the total number of reserved shares to 2,590,000. As of SeptemberJune 30, 2017,2023, there were 1,746,927880,838 shares available for future grant under the 2017 Plan.
The following table summarizes share-based compensation expense:
PUP Awards
|
| Three Months Ended |
|
| Six Months Ended |
| ||||||||||
|
| June 30, |
|
| June 30, |
| ||||||||||
(in thousands) |
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
Performance-based restricted stock units |
| $ | 819 |
|
| $ | 705 |
|
| $ | 1,641 |
|
| $ | 719 |
|
Restricted stock awards and restricted stock units |
|
| 1,681 |
|
|
| 1,787 |
|
|
| 3,324 |
|
|
| 3,349 |
|
Stock options |
|
| 347 |
|
|
| 811 |
|
|
| 947 |
|
|
| 1,401 |
|
Share-based compensation expense before income tax |
|
| 2,847 |
|
|
| 3,303 |
|
|
| 5,912 |
|
|
| 5,469 |
|
Income tax benefit(1) |
|
| (44 | ) |
|
| (30 | ) |
|
| (66 | ) |
|
| (47 | ) |
Share-based compensation expense, net of income tax |
| $ | 2,803 |
|
| $ | 3,273 |
|
| $ | 5,846 |
|
| $ | 5,422 |
|
Note 4. Acquisition and Disposition
In February 2016, the PUP Plan was amended to provide that PUP awards earned under the 2007 Plan may be payable in the form of cash or in shares of Viad common stock (or a combination of both). Previously, payouts could only be made in cash. The vesting of shares is based upon achievement of certain performance-based criteria. The performance period of the shares is three years.2022 Acquisition
During the nine months ended September 30, 2017, Viad granted $3.5 million of PUP awards of which $1.4 million are payable in shares. As of September 30, 2017 and December 31, 2016, Viad had recorded liabilities of $10.3 million and $7.6 million, respectively, related to PUP awards. In March 2017, the PUP awards granted in 2014 vested and cash payouts of $3.7 million were distributed. In March 2016, the PUP awards granted in 2013 vested and cash payouts of $0.2 million were distributed.Glacier Raft Company
Restricted Stock
As of September 30, 2017, the unamortized cost of all outstanding restricted stock awards was $3.1 million, which Viad expects to recognize in the consolidated financial statements over a weighted-average period of approximately 1.2 years. During the nine months ended September 30, 2017 and 2016, the Company repurchased 26,916 shares for $1.3 million and 24,432 shares for $0.7 million, respectively, related to tax withholding requirements on vested share-based awards.
As of both September 30, 2017 and December 31, 2016, Viad had aggregate liabilities recorded of $0.4 million related to restricted stock units. In February 2017, portions of the 2012 and 2014 restricted stock units vested and cash payouts of $0.3 million were distributed. In February 2016, portions of the 2011, 2012, and 2013 restricted stock units vested and cash payouts of $0.2 million were distributed.
Stock Options
During the three and nine months ended September 30, 2017, there was no stock option activity. As of both September 30, 2017 and December 31, 2016, there were 63,773 stock options outstanding and exercisable with a weighted-average exercise price of $16.62. As of September 30, 2017, there were no unrecognized costs related to non-vested stock option awards.
Note 3. Acquisition of Businesses
FlyOver Canada
On December 29, 2016, the CompanyApril 6, 2022, we acquired the assetsGlacier Raft Company, which provides guided river rafting trips operating in Pursuit’s West Glacier, Montana operations. The Glacier Raft Company also owns 13 log cabins, a lodge, and operations of FlyOver Canada, a recreational attraction that provides a virtual flight ride experiencewedding venue located on 50 acres with a combination of motion seating, spectacular media, and visual effects including wind, scents, and mist.views into Glacier National Park. The purchase price was $68.8$26.5 million Canadian dollars (approximately $50.9in cash. This acquisition was funded via cash on hand of approximately $11.5 million U.S. dollars) in cash, subject to certain adjustments.and borrowings under our revolving credit facility of $15.0 million.
The following table summarizes the final allocation of the aggregate purchase price paid and the amounts of assets acquired and liabilities assumed based onupon the estimated fair value asat the date of acquisition. During the acquisition date. The allocationfirst quarter of 2023, we made a purchase accounting measurement period adjustment of approximately $41,000 to working capital based on refinements to assumptions used in the purchase price was completed as of March 31, 2017. preliminary valuation.
12
(in thousands) |
|
|
|
|
|
|
|
|
Purchase price paid as: |
|
|
|
|
|
|
|
|
Cash |
|
|
|
|
| $ | 50,920 |
|
Cash acquired |
|
|
|
|
|
| (6 | ) |
Purchase price, net of cash acquired |
|
|
|
|
|
| 50,914 |
|
|
|
|
|
|
|
|
|
|
Fair value of net assets acquired: |
|
|
|
|
|
|
|
|
Inventories |
| $ | 11 |
|
|
|
|
|
Prepaid expenses |
|
| 37 |
|
|
|
|
|
Property and equipment |
|
| 10,867 |
|
|
|
|
|
Intangible assets |
|
| 6,028 |
|
|
|
|
|
Total assets acquired |
|
| 16,943 |
|
|
|
|
|
Accrued liabilities |
|
| 118 |
|
|
|
|
|
Total liabilities assumed |
|
| 118 |
|
|
|
|
|
Total fair value of net assets acquired |
|
|
|
|
|
| 16,825 |
|
Excess purchase price over fair value of net assets acquired (“goodwill”) |
|
|
|
|
| $ | 34,089 |
|
(in thousands) |
|
|
| |
Purchase price paid as: |
|
|
| |
Cash |
| $ | 26,507 |
|
Working capital adjustment |
|
| (920 | ) |
Purchase price adjustment |
|
| 125 |
|
Cash acquired |
|
| (177 | ) |
Purchase price, net of cash acquired |
|
| 25,535 |
|
|
|
|
| |
Fair value of net assets acquired: |
|
|
| |
Inventory |
|
| 370 |
|
Prepaid expenses and other |
|
| 57 |
|
Property and equipment |
|
| 6,487 |
|
Intangible assets |
|
| 3,400 |
|
Total assets acquired |
|
| 10,314 |
|
Customer deposits |
|
| 1,575 |
|
Other current liabilities |
|
| 32 |
|
Total liabilities assumed |
|
| 1,607 |
|
Total fair value of net assets acquired |
|
| 8,707 |
|
Excess purchase price over fair value of net assets acquired (“goodwill”) |
| $ | 16,828 |
|
Under the acquisition method of accounting, the purchase price as shown in the table above is allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values. The excess purchase price over the fair value of net assets acquired was recorded as goodwill.“Goodwill.” Goodwill of FlyOver Canadarelating to the Glacier Raft Company acquisition is included in the Pursuit business group and is a separate reporting unit.reportable segment. The primary factor that contributed to the purchase price resulting in the recognition of goodwill relatesrelated to future growth opportunities and the expansion of the FlyOver concept.when combined with our other businesses. Goodwill is expected to be deductible for tax purposes pursuant to Canadian tax regulations. The estimated values of currentpurposes. We included these assets and liabilities were based upon their historical costs onin the Condensed Consolidated Balance Sheets from the date of acquisition due to their short-term nature. Transaction costs associated withacquisition.
Following are details of the acquisition of FlyOver Canada were $0.1 million in 2017 and $0.5 million in 2016 and are included in cost of services in Viad’s condensed consolidated statements of operations.
Identified intangible assets acquired in the FlyOver Canada acquisition totaled $6.0 million and consisted of trade names of $3.7 million, customer relationships of $1.6 million, and non-compete agreements of $0.7 million. The weighted-average amortization period relatedpurchase price allocated to the intangible assets is 9.4 years.acquired for the Glacier Raft Company:
(in thousands) |
| Amount |
|
| Weighted Average Life | |
Customer relationships |
| $ | 1,800 |
|
| 12 years |
Operating licenses |
|
| 1,300 |
|
| 17 years |
Trade name |
|
| 300 |
|
| 8 years |
Total |
| $ | 3,400 |
|
| 14 years |
The results of operations of FlyOver Canadathe Glacier Raft Company have been included in Viad’s condensedthe consolidated financial statements from the date of acquisition. During the three and nine months ended September 30, 2017, revenue related to FlyOver Canada was $4.2 million and $8.0 million, respectively, and operating income was $2.2 million and $2.5 million, respectively.
In March 2017, the Company2022 Disposition
ON Services
On December 15, 2022, we completed the acquisitionsale of substantially all of the Poken event engagement technologyassets of GES’ United States audio-visual production business, ON Services – AV Specialists, Inc. (“ON Services”), for total cash consideration of $1.7approximately $30.0 million, subject to certaincustomary working capital adjustments. TheseWe recognized a gain on sale of $19.6 million. During the second quarter of 2023, we made a sale purchase price adjustment of approximately $0.2 million. ON Services had a net carrying value of $10.4 million, which included $4.9 million of net working capital and net non-current assets have been includedof $5.5 million. Working capital consisted primarily of accounts receivable of $8.2 million and other current assets of $0.7 million, offset in Viad’s condensed consolidated financial statements from the datepart by current liabilities of acquisition.
Supplementary pro forma financial information
$4.0 million. Net non-current assets consisted primarily of property and equipment of $6.0 million, offset in part by other liabilities of $0.5 million. The following table summarizes the unaudited pro forma results of operations attributable to Viad, assuming the 2016 acquisitions of CATC Alaska Tourism Corporation (“CATC”) (acquired March 2016), thestaging business of ON Event Services LLC (“was included in the Spiro reportable segment and the venue services business in the United States was included in the GES Exhibitions reportable segment.
13
The ON Services”) (acquired August 2016),Services sale did not represent a strategic shift that has or will have a major effect on our operations and FlyOver Canada (acquired December 2016) had been completed on January 1, 2016:financial results, and therefore was not classified as a discontinued operation for any of the periods presented.
Note 5. Inventories
We state inventories, which consist primarily of exhibit design and construction materials and supplies, as well as retail inventory, at the lower of cost (first-in, first-out and specific identification methods) or net realizable value.
|
| Three Months Ended |
|
| Nine Months Ended |
| ||
(in thousands, except per share data) |
| September 30, 2016 |
|
| September 30, 2016 |
| ||
Revenue |
| $ | 389,877 |
|
| $ | 991,818 |
|
Depreciation and amortization |
| $ | 14,427 |
|
| $ | 39,565 |
|
Income from continuing operations |
| $ | 35,047 |
|
| $ | 47,734 |
|
Net income attributable to Viad |
| $ | 33,834 |
|
| $ | 46,198 |
|
Diluted income per share |
| $ | 1.67 |
|
| $ | 2.28 |
|
Basic income per share |
| $ | 1.67 |
|
| $ | 2.28 |
|
Note 4. Inventories
The components of inventories consisted of the following:
|
| June 30, |
|
| December 31, |
| ||
(in thousands) |
| 2023 |
|
| 2022 |
| ||
Raw materials |
| $ | 1,153 |
|
| $ | 1,403 |
|
Finished goods |
|
| 14,691 |
|
|
| 9,382 |
|
Inventories |
| $ | 15,844 |
|
| $ | 10,785 |
|
|
| September 30, |
|
| December 31, |
| ||
(in thousands) |
| 2017 |
|
| 2016 |
| ||
Raw materials |
| $ | 18,455 |
|
| $ | 16,846 |
|
Work in process |
|
| 21,298 |
|
|
| 14,574 |
|
Inventories |
| $ | 39,753 |
|
| $ | 31,420 |
|
Note 5. 6. Other Current Assets
Other current assets consisted of the following:
|
| June 30, |
|
| December 31, |
| ||
(in thousands) |
| 2023 |
|
| 2022 |
| ||
Restricted cash |
| $ | 7,881 |
|
| $ | 4,845 |
|
Prepaid software maintenance |
|
| 5,848 |
|
|
| 4,650 |
|
Prepaid project deposit |
|
| 3,699 |
|
|
| 3,615 |
|
Prepaid vendor payments |
|
| 2,805 |
|
|
| 2,084 |
|
Income tax receivable |
|
| 1,498 |
|
|
| 322 |
|
Prepaid taxes |
|
| 1,036 |
|
|
| 142 |
|
Prepaid other |
|
| 2,055 |
|
|
| 1,836 |
|
Other |
|
| 2,236 |
|
|
| 1,483 |
|
Other current assets |
| $ | 27,058 |
|
| $ | 18,977 |
|
|
| September 30, |
|
| December 31, |
| ||
(in thousands) |
| 2017 |
|
| 2016 |
| ||
Prepaid vendor payments |
| $ | 6,407 |
|
| $ | 3,633 |
|
Income tax receivable |
|
| 4,282 |
|
|
| 3,614 |
|
Prepaid software maintenance |
|
| 3,435 |
|
|
| 2,804 |
|
Prepaid insurance |
|
| 3,030 |
|
|
| 2,479 |
|
Prepaid taxes |
|
| 1,038 |
|
|
| 850 |
|
Prepaid rent |
|
| 769 |
|
|
| 327 |
|
Prepaid other |
|
| 3,273 |
|
|
| 731 |
|
Other |
|
| 1,739 |
|
|
| 4,011 |
|
Other current assets |
| $ | 23,973 |
|
| $ | 18,449 |
|
Note 6. 7. Property and Equipment, Net
Property and equipment consisted of the following:
|
| September 30, |
|
| December 31, |
|
| June 30, |
|
| December 31, |
| ||||
(in thousands) |
| 2017 |
|
| 2016 |
|
| 2023 |
|
| 2022 |
| ||||
Land and land interests |
| $ | 32,599 |
|
| $ | 31,670 |
|
| $ | 31,083 |
|
| $ | 30,902 |
|
Buildings and leasehold improvements |
|
| 214,844 |
|
|
| 185,987 |
|
|
| 434,398 |
|
|
| 409,852 |
|
Equipment and other |
|
| 347,461 |
|
|
| 326,868 |
|
|
| 429,987 |
|
|
| 413,485 |
|
Gross property and equipment |
|
| 594,904 |
|
|
| 544,525 |
|
|
| 895,468 |
|
|
| 854,239 |
|
Accumulated depreciation |
|
| (299,147 | ) |
|
| (264,667 | ) |
|
| (386,083 | ) |
|
| (362,195 | ) |
Property and equipment, net (excluding finance leases) |
|
| 509,385 |
|
|
| 492,044 |
| ||||||||
Finance lease ROU assets, net |
|
| 57,732 |
|
|
| 57,534 |
| ||||||||
Property and equipment, net |
| $ | 295,757 |
|
| $ | 279,858 |
|
| $ | 567,117 |
|
| $ | 549,578 |
|
Depreciation expense was $12.5$10.5 million and $10.0 million forduring the three months ended SeptemberJune 30, 20172023 and 2016, respectively, and $32.9$20.9 million and $25.1 million forduring the ninesix months ended SeptemberJune 30, 20172023. Depreciation expense was $10.8 million during the three months ended June 30, 2022 and 2016, respectively.$21.8 million during the six months ended June 30, 2022.
Non-cash increases to propertyProperty and equipment related to assets acquired under capital leases were $1.1 million and $1.0 million for the nine months ended September 30, 2017 and 2016, respectively. Non-cash increases to property and equipment purchases inpurchased through accounts payable and accrued liabilities were $0.8decreased $1.3 million and $5.6 million forduring the ninesix months ended SeptemberJune 30, 20172023 and 2016, respectively.decreased $0.4 million during the six months ended June 30, 2022. Capitalized interest was $0.5 million during the three months ended June 30, 2023 and $0.7 million during the six months ended June 30, 2023. Capitalized interest was $0.7 million during the three months ended June 30, 2022 and $2.6 million during the six months ended June 30, 2022, which was primarily related to the development of Pursuit’s FlyOver attractions.
14
Note 7. 8. Other Investments and Assets
Other investments and assets consisted of the following:
|
| June 30, |
|
| December 31, |
| ||
(in thousands) |
| 2023 |
|
| 2022 |
| ||
Self-insured liability receivable |
| $ | 8,211 |
|
| $ | 8,211 |
|
Other mutual funds |
|
| 4,049 |
|
|
| 3,490 |
|
Contract costs |
|
| 2,794 |
|
|
| 2,237 |
|
Other |
|
| 4,267 |
|
|
| 3,519 |
|
Other investments and assets |
| $ | 19,321 |
|
| $ | 17,457 |
|
|
| September 30, |
|
| December 31, |
| ||
(in thousands) |
| 2017 |
|
| 2016 |
| ||
Cash surrender value of life insurance |
| $ | 23,167 |
|
| $ | 23,197 |
|
Self-insured liability receivable |
|
| 10,463 |
|
|
| 10,463 |
|
Workers’ compensation insurance security deposits |
|
| 3,550 |
|
|
| 4,050 |
|
Other mutual funds |
|
| 2,560 |
|
|
| 2,062 |
|
Other |
|
| 7,005 |
|
|
| 4,525 |
|
Other investments and assets |
| $ | 46,745 |
|
| $ | 44,297 |
|
Note 8. 9. Goodwill and Other Intangible Assets
The changes in the carrying amount of goodwill wereare as follows:
(in thousands) |
|
|
| |
Balance at December 31, 2022 |
| $ | 121,429 |
|
Foreign currency translation adjustments |
|
| 2,429 |
|
Other(1) |
|
| 41 |
|
Balance at June 30, 2023 |
| $ | 123,899 |
|
(in thousands) |
| GES U.S. |
|
| GES International |
|
| Pursuit |
|
| Total |
| ||||
Balance at December 31, 2016 |
| $ | 148,277 |
|
| $ | 34,460 |
|
| $ | 71,285 |
|
| $ | 254,022 |
|
Business acquisitions |
|
| — |
|
|
| 1,060 |
|
|
| — |
|
|
| 1,060 |
|
Foreign currency translation adjustments |
|
| — |
|
|
| 3,084 |
|
|
| 5,753 |
|
|
| 8,837 |
|
Balance at September 30, 2017 |
| $ | 148,277 |
|
| $ | 38,604 |
|
| $ | 77,038 |
|
| $ | 263,919 |
|
Goodwill is tested for impairment at the reporting unit level on an annual basis as of October 31, and between annual tests if an event occurs or circumstances change that would more-likely-than-not reduce the fair value of a reporting unit below its carrying value. We use a discounted expected future cash flow methodology (income approach) to estimate the fair value of our reporting units for purposes of goodwill impairment testing.
Other intangible assets consisted of the following:
|
| September 30, 2017 |
|
| December 31, 2016 |
|
| June 30, 2023 |
|
| December 31, 2022 |
| ||||||||||||||||||||||||||||||||||||||
(in thousands) |
| Gross Carrying Value |
|
| Accumulated Amortization |
|
| Net Carrying Value |
|
| Gross Carrying Value |
|
| Accumulated Amortization |
|
| Net Carrying Value |
|
| Useful Life |
| Gross |
|
| Accumulated |
|
| Net |
|
| Gross |
|
| Accumulated |
|
| Net |
| ||||||||||||
Amortized intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||
Intangible assets subject to amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||
Customer contracts and relationships |
| $ | 68,739 |
|
| $ | (21,505 | ) |
| $ | 47,234 |
|
| $ | 67,762 |
|
| $ | (14,345 | ) |
| $ | 53,417 |
|
| 7.6 |
| $ | 34,701 |
|
| $ | (28,798 | ) |
| $ | 5,903 |
|
| $ | 37,194 |
|
| $ | (30,109 | ) |
| $ | 7,085 |
|
Operating contracts and licenses |
|
| 10,038 |
|
|
| (1,083 | ) |
|
| 8,955 |
|
|
| 9,315 |
|
|
| (652 | ) |
|
| 8,663 |
|
| 33.8 |
|
| 40,285 |
|
|
| (4,145 | ) |
|
| 36,140 |
|
|
| 38,993 |
|
|
| (3,504 | ) |
|
| 35,489 |
|
In-place lease |
| 33.3 |
|
| 14,755 |
|
|
| (1,618 | ) |
|
| 13,137 |
|
|
| 14,420 |
|
|
| (1,404 | ) |
|
| 13,016 |
| ||||||||||||||||||||||||
Tradenames |
|
| 8,665 |
|
|
| (2,613 | ) |
|
| 6,052 |
|
|
| 8,324 |
|
|
| (1,440 | ) |
|
| 6,884 |
|
| 3.6 |
|
| 5,667 |
|
|
| (3,760 | ) |
|
| 1,907 |
|
|
| 5,546 |
|
|
| (3,324 | ) |
|
| 2,222 |
|
Non-compete agreements |
|
| 5,358 |
|
|
| (2,682 | ) |
|
| 2,676 |
|
|
| 5,190 |
|
|
| (1,369 | ) |
|
| 3,821 |
| ||||||||||||||||||||||||||
Other |
|
| 896 |
|
|
| (601 | ) |
|
| 295 |
|
|
| 886 |
|
|
| (458 | ) |
|
| 428 |
|
| 4.7 |
|
| 787 |
|
|
| (186 | ) |
|
| 601 |
|
|
| 770 |
|
|
| (163 | ) |
|
| 607 |
|
Total amortized intangible assets |
|
| 93,696 |
|
|
| (28,484 | ) |
|
| 65,212 |
|
|
| 91,477 |
|
|
| (18,264 | ) |
|
| 73,213 |
|
|
|
|
| 96,195 |
|
|
| (38,507 | ) |
|
| 57,688 |
|
|
| 96,923 |
|
|
| (38,504 | ) |
|
| 58,419 |
|
Unamortized intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||
Indefinite-lived intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||
Business licenses |
|
| 460 |
|
|
| — |
|
|
| 460 |
|
|
| 460 |
|
|
| — |
|
|
| 460 |
|
|
|
|
| 569 |
|
|
| — |
|
|
| 569 |
|
|
| 566 |
|
|
| — |
|
|
| 566 |
|
Other intangible assets |
| $ | 94,156 |
|
| $ | (28,484 | ) |
| $ | 65,672 |
|
| $ | 91,937 |
|
| $ | (18,264 | ) |
| $ | 73,673 |
| ||||||||||||||||||||||||||
Other intangible assets, net |
|
|
| $ | 96,764 |
|
| $ | (38,507 | ) |
| $ | 58,257 |
|
| $ | 97,489 |
|
| $ | (38,504 | ) |
| $ | 58,985 |
|
15
Intangible asset amortization expense (excluding amortization expense of ROU assets) was $1.2 million during the three months ended June 30, 2023 and $2.3 million during the six months ended June 30, 2023. Intangible asset amortization expense was $3.3$1.4 million and $2.7 million forduring the three months ended SeptemberJune 30, 20172022 and 2016, respectively, and $9.6$2.6 million and $6.1 million forduring the ninesix months ended SeptemberJune 30, 2017 and 2016, respectively. The weighted-average amortization period of customer contracts and relationships is approximately 8.8 years, operating contracts and licenses is approximately 26.5 years, tradenames is approximately 7.2 years, non-compete agreements is approximately 2.5 years, and other amortizable intangible assets is approximately 2.6 years. The2022.
At June 30, 2023, the estimated future amortization expense related to amortized intangible assets held at September 30, 2017subject to amortization is as follows:
(in thousands) |
|
|
| |
Year ending December 31, |
|
|
| |
Remainder of 2023 |
| $ | 2,276 |
|
2024 |
|
| 3,679 |
|
2025 |
|
| 2,378 |
|
2026 |
|
| 2,344 |
|
2027 |
|
| 1,938 |
|
Thereafter |
|
| 45,073 |
|
Total |
| $ | 57,688 |
|
(in thousands) |
|
|
|
|
Year ending December 31, |
|
|
|
|
Remainder of 2017 |
| $ | 2,812 |
|
2018 |
|
| 11,014 |
|
2019 |
|
| 9,946 |
|
2020 |
|
| 8,446 |
|
2021 |
|
| 7,450 |
|
Thereafter |
|
| 25,544 |
|
Total |
| $ | 65,212 |
|
Note 9. 10. Other Current Liabilities
Other current liabilities consisted of the following:
|
| June 30, |
|
| December 31, |
| ||
(in thousands) |
| 2023 |
|
| 2022 |
| ||
Continuing operations: |
|
|
|
|
|
| ||
Accrued sales and use taxes and personal property taxes |
| $ | 7,901 |
|
| $ | 4,082 |
|
Commissions payable |
|
| 4,978 |
|
|
| 5,059 |
|
Accrued employee benefit costs |
|
| 4,779 |
|
|
| 4,920 |
|
Self-insured liability |
|
| 4,572 |
|
|
| 4,909 |
|
Accrued concession fees |
|
| 3,609 |
|
|
| 4,297 |
|
Foreign income taxes payable |
|
| 2,143 |
|
|
| 8,354 |
|
Accommodation service deposits |
|
| 1,502 |
|
|
| 2,208 |
|
Current portion of pension and postretirement liabilities |
|
| 1,258 |
|
|
| 1,426 |
|
Accrued professional fees |
|
| 1,201 |
|
|
| 898 |
|
Other |
|
| 5,633 |
|
|
| 4,958 |
|
Total continuing operations |
|
| 37,576 |
|
|
| 41,111 |
|
Discontinued operations: |
|
|
|
|
|
| ||
Self-insured liability |
|
| 149 |
|
|
| 458 |
|
Environmental remediation liabilities |
|
| 25 |
|
|
| 46 |
|
Other |
|
| 38 |
|
|
| 38 |
|
Total discontinued operations |
|
| 212 |
|
|
| 542 |
|
Total other current liabilities |
| $ | 37,788 |
|
| $ | 41,653 |
|
16
|
| September 30, |
|
| December 31, |
| ||
(in thousands) |
| 2017 |
|
| 2016 |
| ||
Continuing operations: |
|
|
|
|
|
|
|
|
Accrued income tax payable |
| $ | 16,673 |
|
| $ | 758 |
|
Accrued employee benefit costs |
|
| 5,935 |
|
|
| 2,624 |
|
Self-insured liability accrual |
|
| 5,690 |
|
|
| 5,941 |
|
Commissions payable |
|
| 3,777 |
|
|
| 639 |
|
Accrued sales and use taxes |
|
| 2,623 |
|
|
| 4,279 |
|
Accrued dividends |
|
| 2,116 |
|
|
| 2,119 |
|
Current portion of pension liability |
|
| 1,793 |
|
|
| 1,963 |
|
Deferred rent |
|
| 1,656 |
|
|
| 1,535 |
|
Accrued rebates |
|
| 1,061 |
|
|
| 1,078 |
|
Accrued professional fees |
|
| 924 |
|
|
| 794 |
|
Accrued restructuring |
|
| 750 |
|
|
| 1,924 |
|
Other taxes |
|
| 3,315 |
|
|
| 4,210 |
|
Other |
|
| 4,909 |
|
|
| 1,774 |
|
Total continuing operations |
|
| 51,222 |
|
|
| 29,638 |
|
Discontinued operations: |
|
|
|
|
|
|
|
|
Environmental remediation liabilities |
|
| 661 |
|
|
| 492 |
|
Self-insured liability accrual |
|
| 332 |
|
|
| 162 |
|
Other |
|
| 103 |
|
|
| 98 |
|
Total discontinued operations |
|
| 1,096 |
|
|
| 752 |
|
Total other current liabilities |
| $ | 52,318 |
|
| $ | 30,390 |
|
Note 10. 11. Other Deferred Items and Liabilities
Other deferred items and liabilities consisted of the following:
|
| June 30, |
|
| December 31, |
| ||
(in thousands) |
| 2023 |
|
| 2022 |
| ||
Continuing operations: |
|
|
|
|
|
| ||
Foreign deferred tax liability |
| $ | 29,526 |
|
| $ | 27,564 |
|
Multi-employer pension plan withdrawal liability |
|
| 13,582 |
|
|
| 13,815 |
|
Self-insured excess liability |
|
| 8,211 |
|
|
| 8,211 |
|
Self-insured liability |
|
| 6,445 |
|
|
| 5,028 |
|
Accrued compensation |
|
| 5,235 |
|
|
| 4,977 |
|
Accrued restructuring |
|
| 2,985 |
|
|
| 3,245 |
|
Other |
|
| 3,032 |
|
|
| 3,071 |
|
Total continuing operations |
|
| 69,016 |
|
|
| 65,911 |
|
Discontinued operations: |
|
|
|
|
|
| ||
Environmental remediation liabilities |
|
| 2,165 |
|
|
| 2,177 |
|
Self-insured liability |
|
| 1,877 |
|
|
| 1,631 |
|
Other |
|
| 305 |
|
|
| 305 |
|
Total discontinued operations |
|
| 4,347 |
|
|
| 4,113 |
|
Total other deferred items and liabilities |
| $ | 73,363 |
|
| $ | 70,024 |
|
|
| September 30, |
|
| December 31, |
| ||
(in thousands) |
| 2017 |
|
| 2016 |
| ||
Continuing operations: |
|
|
|
|
|
|
|
|
Self-insured liability |
| $ | 14,644 |
|
| $ | 12,981 |
|
Self-insured excess liability |
|
| 10,463 |
|
|
| 10,463 |
|
Accrued compensation |
|
| 9,402 |
|
|
| 8,514 |
|
Deferred rent |
|
| 4,076 |
|
|
| 5,271 |
|
Foreign deferred tax liability |
|
| 2,264 |
|
|
| 2,264 |
|
Accrued restructuring |
|
| 1,903 |
|
|
| 1,858 |
|
Other |
|
| 2,655 |
|
|
| 1,300 |
|
Total continuing operations |
|
| 45,407 |
|
|
| 42,651 |
|
Discontinued operations: |
|
|
|
|
|
|
|
|
Self-insured liability |
|
| 3,011 |
|
|
| 3,748 |
|
Environmental remediation liabilities |
|
| 1,716 |
|
|
| 3,091 |
|
Accrued income taxes |
|
| — |
|
|
| 1,045 |
|
Other |
|
| 126 |
|
|
| 199 |
|
Total discontinued operations |
|
| 4,853 |
|
|
| 8,083 |
|
Total other deferred items and liabilities |
| $ | 50,260 |
|
| $ | 50,734 |
|
Note 11. 12. Debt and Capital LeaseFinance Obligations
The components of long-term debt and capital leasefinance obligations consisted of the following:
|
| June 30, |
|
| December 31, |
| ||
(in thousands, except interest rates) |
| 2023 |
|
| 2022 |
| ||
2021 Credit Facility - Term Loan B, 10.2% interest rate at June 30, 2023 and 9.4% at December 31, 2022, due through 2028(1) |
| $ | 393,000 |
|
| $ | 395,000 |
|
Jasper Term Loan, 6.5% interest rate at June 30, 2023, due through 2028(1) |
|
| 12,655 |
|
|
| — |
|
Jasper Revolving Credit Facility, 9.2% weighted-average interest rate at June 30, 2023, due through 2028(1) |
|
| 3,020 |
|
|
| — |
|
Forest Park Hotel Construction Loan, 8.8% interest rate at December 31, 2022(1) |
|
| — |
|
|
| 11,491 |
|
FlyOver Iceland Credit Facility, 8.4% interest rate at June 30, 2023 and 6.9% at December 31, 2022, due through 2027(1) |
|
| 4,528 |
|
|
| 4,965 |
|
FlyOver Iceland Term Loans, 13.1% weighted-average interest rate at June 30, 2023 and 10.1% at December 31, 2022, due through 2024(1) |
|
| 535 |
|
|
| 594 |
|
Less unamortized debt issuance costs |
|
| (10,012 | ) |
|
| (11,848 | ) |
Total debt |
|
| 403,726 |
|
|
| 400,202 |
|
Finance lease obligations, 9.1% weighted-average interest rate at June 30, 2023 and December 31, 2022, due through 2067 |
|
| 63,961 |
|
|
| 64,729 |
|
Financing arrangements |
|
| 177 |
|
|
| 5,013 |
|
Total debt and finance obligations (2)(3) |
|
| 467,864 |
|
|
| 469,944 |
|
Current portion |
|
| (8,382 | ) |
|
| (13,192 | ) |
Long-term debt and finance obligations |
| $ | 459,482 |
|
| $ | 456,752 |
|
|
| September 30, |
|
| December 31, |
| ||
(in thousands, except interest rates) |
| 2017 |
|
| 2016 |
| ||
Revolving credit facility and term loan 3.3% and 2.6% weighted-average interest rate at September 30, 2017 and December 31, 2016, respectively, due through 2019 (1) |
| $ | 184,688 |
|
| $ | 212,750 |
|
Brewster Inc. revolving credit facility 2.7% weighted-average interest rate at December 31, 2016 (1) |
|
| — |
|
|
| 36,456 |
|
Less unamortized debt issuance costs |
|
| (1,071 | ) |
|
| (1,464 | ) |
Total debt |
|
| 183,617 |
|
|
| 247,742 |
|
Capital lease obligations 4.2% and 4.9% weighted-average interest rate at September 30, 2017 and December 31, 2016, respectively, due through 2021 |
|
| 1,584 |
|
|
| 1,469 |
|
Total debt and capital lease obligations |
|
| 185,201 |
|
|
| 249,211 |
|
Current portion (2) |
|
| (124,574 | ) |
|
| (174,968 | ) |
Long-term debt and capital lease obligations |
| $ | 60,627 |
|
| $ | 74,243 |
|
|
|
|
|
Effective December 22, 2014, Viad entered into a $300 million Amended and Restated Credit Agreement (the “Credit Agreement”). The Credit Agreement provides for a senior credit facility in the aggregate amount of $300 million, which consists of a $175 million revolving credit facility (the “Revolving Credit Facility”) and a $125 million term loan (the “Term Loan”). Loans under the Credit Agreement have a maturity date of December 22, 2019. Proceeds from the loans made under the Credit Agreement were used to refinance certain outstanding debt of the Company and will be used for the Company’s general corporate purposes in the ordinary course of its business. Under the Credit Agreement, the Revolving Credit Facility and/or the Term Loan may be increased up to an additional $100 million under certain circumstances. If such circumstances are met, the Company may obtain the additional borrowings under the Revolving Credit Facility, the Term Loan, or a combination of the two. The Revolving Credit Facility has a $40 million sublimit for letters of credit. Borrowings and letters of credit can be denominated in U.S. dollars, Euros, Canadian dollars, or British pounds. Viad’s lenders under the Credit Agreement have a first perfected security interest in all of the personal property of Viad, GES, GES Event Intelligence Services, Inc., CATC, and ON Services including 65 percent of the capital stock of top-tier foreign subsidiaries.
Effective February 24, 2016, Viad executed an amendment (the “Credit Agreement Amendment”) to the Credit Agreement. The Credit Agreement Amendment modified the terms of the financial covenants and the negative covenants related to acquisitions, restricted payments, and indebtedness. The overall maximum leverage ratio and minimum fixed charge coverage ratio are 3.50 to 1.00 and 1.75 to 1.00, respectively, and will remain at those levels for the entire remaining term of the Credit Agreement. Acquisitions in substantially the same or related lines of business are permitted under the Credit Agreement Amendment, as long as the pro forma leverage ratio is less than or equal to 3.00 to 1.00. Viad can make dividends, distributions, and repurchases of its common stock up to $20 million per calendar year. Stock dividends, distributions, and repurchases above the $20 million limit are not subject to a liquidity covenant, and are permitted as long as the Company’s pro forma leverage ratio is less than or equal to 2.50 to 1.00 and there is no default or unmatured default, as defined in the Credit Agreement. Unsecured debt is allowed as long as the Company’s pro forma leverage ratio is less than or equal to 3.00 to 1.00. Significant other covenants under the Credit Agreement that remain unchanged by the Credit Agreement Amendment include limitations on investments, sales/leases of assets, consolidations or mergers, and liens on property. As of September 30, 2017, the fixed charge coverage ratio was 3.18 to 1.00, the leverage ratio was 1.26 to 1.00, and Viad was in compliance with all covenants under the Credit Agreement.
Effective December 28, 2016, Brewster Inc., part of Pursuit, entered into a credit agreement (the “Brewster Credit Agreement”) with a $38 million revolving credit facility (the “Brewster Revolving Credit Facility”). The Brewster Credit Agreement was used in connection with the Company’s acquisition of FlyOver Canada and has a maturity date of December 28, 2017. The Company intends to amend and extend the Brewster Revolving Credit Facility for one year. Additional loan proceeds will be used for potential future acquisitions in Canada and other general corporate purposes of Brewster Inc. Brewster Inc.’s lender has a first perfected security interest in all of the personal property of Brewster Inc. under the Brewster Revolving Credit Facility and a guaranty from Brewster Travel Canada Inc., the immediate parent of Brewster Inc., (secured by its present and future personal property), Viad, and all current or future subsidiaries of Viad that are required to be guarantors under Viad’s Credit Agreement.
As of September 30, 2017, Viad’s total debt and capital lease obligations were $185.2 million, consisting of outstanding borrowings under the Term Loan of $79.7 million, the Revolving Credit Facility of $105.0 million, and capital lease obligations of $1.6 million, offset in part by unamortized debt issuance costs of $1.1 million. As of September 30, 2017, Viad had $68.7 million of capacity remaining under the Revolving Credit Facility, reflecting borrowings of $105.0 million and $1.3 million in outstanding letters of credit. As of September 30, 2017, Brewster Inc. had $38.0 million of capacity remaining under the Brewster Revolving Credit Facility.
Borrowings under the Revolving Credit Facility (of which GES, GES Event Intelligence Services, Inc., CATC, and ON Services are guarantors) are indexed to the prime rate or the London Interbank Offered Rate, plus appropriate spreads tied to Viad’s leverage ratio. Commitment fees and letters of credit fees are also tied to Viad’s leverage ratio. The fees on the unused portion of the Credit Facility are currently 0.35 percent annually.
As of September 30, 2017, Viad, on behalf of its subsidiaries, had certain obligations under guarantees to third parties. These guarantees are not subject to liability recognition in the condensed consolidated financial statements and relate to leased facilities entered into by Viad’s subsidiary operations. The Company would generally be required to make payments to the respective third parties under these guarantees in the event that the related subsidiary could not meet its own payment obligations. The maximum potential amount of future payments that Viad would be required to make under all guarantees existing as of September 30, 2017 would be $7.5 million. These guarantees relate to facilities leased by the Company through September 2021. There are no recourse provisions that would enable Viad to recover from third parties any payments made under the guarantees. Furthermore, there are no collateral or similar arrangements whereby Viad could recover payments.
commitment fees.
maturity, which is a Level 2 measurement. Refer to Note 14 –
Fair Value Measurements for additional information.2021 Credit Facility
Effective July 30, 2021, we entered into a $500 million credit facility (the “2021 Credit Facility”). The 2021 Credit Facility provides for a $400 million term loan (“Term Loan B”) and a $100 million revolving credit facility (“Revolving Credit Facility”). The proceeds of
17
the Term Loan B, net of $14.8 million in related fees, were used to repay the $327 million outstanding balance under our then $450 million revolving credit facility and to provide for financial flexibility to fund future acquisitions and growth initiatives and for general corporate purposes.
LIBOR Transition Amendment
On February 6, 2023, we entered into the LIBOR Transition Amendment to the 2021 Credit Facility to replace the London Interbank Offered Rate (“LIBOR”) with the Secured Overnight Financing Rate (“SOFR”). In accordance with the LIBOR replacement provisions outlined in the 2021 Credit Facility, additional credit spread adjustments apply to SOFR ranging from 0.11448% (for a one-month duration) up to 0.71513% (for a 12-month duration).
Term Loan B
The Term Loan B has a maturity date of July 30, 2028 and is subject to quarterly amortization of principal of $1.0 million. Interest rates are based on SOFR (plus additional credit spread adjustments as detailed above under “LIBOR Transition Amendment”) plus a 5.00% credit spread, with a SOFR floor of 0.50%. The Term Loan B carries no financial covenants.
As discussed in Note 13 – Derivative, we entered into an interest rate cap agreement that manages our exposure to interest rate increases on $300 million of borrowings under the Term Loan B and provides us with the right to receive payment if the one-month SOFR exceeds 5.0% (“strike rate”).
Revolving Credit Facility
The Revolving Credit Facility has a maturity date of July 30, 2026. As of June 30, 2023, capacity remaining under the Revolving Credit Facility was $95.0 million, reflecting $100.0 million total facility size, less $5.0 million in outstanding letters of credit.
In addition to borrowing based on one, three, six, or twelve month SOFR tenors (plus additional credit spread adjustments as detailed above under “LIBOR Transition Amendment”), we also have the option to borrow based on the “Base Rate”, which for any day is a fluctuating rate equal to the highest of the Fed Funds Rate plus 0.50%, Bank of America’s publicly announced “prime rate”, and SOFR plus 1.00%. Credit spreads for SOFR and Base Rate borrowings are based on Viad’s total net leverage ratio and range from 2.50% to 3.50% for SOFR borrowings and from 1.50% to 3.50% for Base Rate borrowings. Additionally, a 1.00% floor applies to the Bate Rate.
The Revolving Credit Facility includes an undrawn fee ranging from 0.30% to 0.50% that is based on Viad’s total net leverage ratio.
The Revolving Credit Facility carries financial covenants. On March 23, 2022, we entered into the First Amendment to the 2021 Credit Facility and on March 28, 2023, we entered into the Second Amendment to the 2021 Credit Facility. The amendments modified the financial covenants to the following:
As of June 30, 2023, our total net leverage ratio was 2.91 to 1.00, the interest coverage ratio was 3.02 to 1.00, and we were in compliance with all covenants under the Revolving Credit Facility.
In addition to U.S. dollar borrowings, we may borrow funds on the Revolving Credit Facility in Canadian Dollars based on the Canadian Dollar Offered Rate, Pound Sterling based on the Sterling Overnight Index Average, and Euros based on the Euro Interbank Offered Rate, plus applicable credit spreads. No such borrowings had been made as of June 30, 2023.
Forest Park Hotel Construction Loan Facility
Effective May 17, 2022, Pursuit, through a 60% owned subsidiary, entered into a construction loan facility for borrowings up to $17.0 million Canadian dollars (approximately $13.3 million U.S. dollars) for the development and construction of the Forest Park Hotel in Jasper National Park. Construction of the hotel was completed in August 2022. During January 2023, we completed our final borrowing under the construction loan facility bringing the total amount borrowed to approximately $16.8 million Canadian dollars.
The construction loan facility required interest only payments at Canada Prime plus 2.35% through January 31, 2023, at which time it was converted to a 6.5% fixed rate term loan. On May 16, 2023, Pursuit entered into an amendment to the Forest Park Hotel Construction Loan Facility wherein the loan was converted into a $27.0 million Canadian dollars (approximately $20.0 million U.S. dollars) credit facility (the “Jasper Credit Facility”). See below for additional details.
Jasper Credit Facility
The Jasper Credit Facility provides for a $17.0 million Canadian dollars term loan (“Jasper Term Loan”) and a $10.0 million Canadian dollars revolving credit facility (“Jasper Revolving Credit Facility”). The Jasper Credit Facility matures on January 31, 2028.
18
The Jasper Revolving Credit Facility carries financial covenants as follows:
As of June 30, 2023, the pre-compensation and post-compensation fixed-charge coverage ratio was 1.94 to 1.00, and Pursuit was in compliance with all covenants under the Jasper Credit Facility.
Jasper Term Loan
The proceeds of the Jasper Term Loan reflect the outstanding balance of the Forest Park Construction Loan Facility at the time it was converted to the Jasper Term Loan of $16.8 million Canadian dollars. The Jasper Term Loan bears interest at a 6.5% fixed rate.
Jasper Revolving Credit Facility
The proceeds of the Jasper Revolving Credit Facility will be used to fund capital improvements. As of June 30, 2023, capacity remaining under the Jasper Revolving Credit Facility was $6.0 million Canadian dollars. The Jasper Revolving Credit Facility bears interest at the Canadian Prime Rate plus 2.25%.
FlyOver Iceland Credit Facility
Effective February 15, 2019, FlyOver Iceland ehf., (“FlyOver Iceland”) a wholly-owned subsidiary of Esja, entered into a credit agreement with a €5.0 million (approximately $5.6 million U.S. dollars) credit facility (the “FlyOver Iceland Credit Facility”) with an original maturity date of March 1, 2022. The loan proceeds were used to complete the development of the FlyOver Iceland attraction. The loan bears interest at the three month Euro Interbank Offered Rate plus 4.9%.
FlyOver Iceland entered into an addendum effective December 1, 2021 wherein the principal payments were deferred for twelve months beginning December 1, 2021, with the first payment due December 1, 2022. The addendum extended the maturity date to March 1, 2025, which was further extended to September 1, 2027 by way of an option as permitted in the addendum, and provided for a semi-annual waiver of certain covenants through June 30, 2022 with the first testing date as of December 31, 2022. Conditions to the addendum included securing additional capital of ISK 75.0 million (approximately $0.6 million) in January 2022, which was completed, in order to strengthen FlyOver Iceland’s liquidity position. There were no other changes to the terms of the FlyOver Iceland Credit Facility. Effective November 2, 2022, FlyOver Iceland received a financial covenant waiver for the 2022 through 2023 testing periods.
FlyOver Iceland Term Loans
During 2020, FlyOver Iceland entered into three term loans totaling ISK 90.0 million (approximately $0.7 million U.S. dollars) (the “FlyOver Iceland Term Loans”). The first term loan for ISK 10.0 million was entered into effective October 15, 2020 and matured on April 1, 2023. It bore interest on a seven-day term deposit rate at the Central Bank of Iceland. The second term loan for ISK 30.0 million was entered into effective October 15, 2020 with a maturity date of October 1, 2024 and bears interest on a seven-day term deposit at the Central Bank of Iceland plus 3.07%. The third term loan for ISK 50.0 million was entered into effective December 29, 2020 with an original maturity date of February 1, 2023 and bears interest at one-month Reykjavik InterBank Offered Rate (“REIBOR”) plus 4.99%. Effective November 23, 2022, FlyOver Iceland entered into an amendment to the ISK 50.0 million term loan wherein the maturity date was extended to February 1, 2024. The Icelandic State Treasury guarantees supplemental loans provided by credit institutions to companies impacted by the COVID-19 pandemic. Accordingly, the Icelandic State Treasury guaranteed the repayment of up to 85% of the principal and interest on the ISK 10.0 million and $3.7ISK 30.0 million term loans and 70% of the principal amount on the ISK 50.0 million term loan. Loan proceeds were used to fund FlyOver Iceland operations.
Financing arrangements
We entered into insurance premium financing arrangements with two financial intermediaries in order to finance certain of our insurance premium payments. The financing arrangements are payable within the next 12 months and bear a weighted average interest rate of 5.8%. The aggregate amount of premiums financed was $9.5 million with a remaining principal balance of $0.2 million as of June 30, 2023.
Note 13. Derivative
Interest Rate Cap
On January 4, 2023, we entered into an interest rate cap agreement with an effective date of January 31, 2023. The interest rate cap manages our exposure to interest rate increases on $300 million in borrowings under the Term Loan B and provides us with the right to receive payment if the one-month SOFR exceeds 5.0% (“strike rate”). Beginning on February 28, 2023, we pay a fixed monthly deferred premium based on an annual rate of 0.3335% for the nineinterest rate cap, which matures on January 31, 2025.
19
We designated the interest rate cap as a cash flow hedge designed to hedge the variability of the SOFR-based interest payments on the Term Loan B. Changes in the fair value of the interest rate cap are recorded in “Accumulated other comprehensive income (loss)” (“AOCI”) in the Condensed Consolidated Balance Sheets. Amounts accumulated in AOCI are reclassified to “Interest expense, net” in the Condensed Consolidated Statements of Operations when the hedged item affects earnings. We recognized $1.2 million of unrealized gains in AOCI during the three months ended SeptemberJune 30, 20172023 and 2016, respectively.unrealized gains of $0.4 million during the six months ended June 30, 2023, and approximately $0.2 million was reclassified to Interest expense, net, during the three and six months ended June 30, 2023. We estimate that $1.2 million will be reclassified to earnings within the next 12 months.
The fair value of the interest rate cap is as follows:
|
|
|
| June 30, |
|
| December 31, |
| ||
(in thousands) |
| Classification |
| 2023 |
|
| 2022 |
| ||
Derivatives designated as hedging instruments |
|
|
|
|
|
|
|
| ||
Interest rate cap - short-term |
| Other current assets |
| $ | 480 |
|
| $ | — |
|
Interest rate cap - long-term |
| Other investments and assets |
|
| 201 |
|
|
| — |
|
Total derivatives designated as hedging instruments |
|
|
| $ | 681 |
|
| $ | — |
|
The fair value of the interest rate cap is determined using widely accepted valuation techniques and reflects the contractual terms of the interest rate cap including the period to maturity. While there are no quoted prices in active markets, our calculation uses observable market-based inputs, including interest rate curves. The interest rate cap is classified as Level 2 within the fair value hierarchy. Refer to Note 14 – Fair Value Measurements for related fair value disclosures.
Note 12. 14. Fair Value Measurements
The fair value of an asset or liability is defined as the price that would be received to sellby selling an asset or paidpaying to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value guidance requires an entity to maximize the use of quoted prices and other observable inputs and minimize the use of unobservable inputs when measuring fair value, and also establishes a fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value as follows:
Level 1 - Quoted prices in active markets for identical assets or liabilities.
Level 2 - Observable inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3 - Unobservable inputs to the valuation methodology that are significant to the measurement of fair value.
Viad measures its money market mutual fundsThe fair value of assets and certain other mutual fund investmentsliabilities measured at fair value on a recurring basis using Level 1 inputs. The fair value information related to these assets is summarizedare as follows:
|
|
|
|
| Fair Value Measurements at Reporting Date Using |
| ||||||||||
(in thousands) |
| June 30, 2023 |
|
| Quoted Prices |
|
| Significant |
|
| Significant |
| ||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Other mutual funds (1) |
| $ | 4,049 |
|
| $ | 4,049 |
|
| $ | — |
|
| $ | — |
|
Interest rate cap (2) |
|
| 681 |
|
|
| — |
|
|
| 681 |
|
|
| — |
|
Total assets at fair value on a recurring basis |
| $ | 4,730 |
|
| $ | 4,049 |
|
| $ | 681 |
|
| $ | — |
|
|
|
|
|
| Fair Value Measurements at Reporting Date Using |
| ||||||||||
(in thousands) |
| December 31, 2022 |
|
| Quoted Prices |
|
| Significant |
|
| Significant |
| ||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Other mutual funds (1) |
| $ | 3,490 |
|
| $ | 3,490 |
|
| $ | — |
|
| $ | — |
|
Total assets at fair value on a recurring basis |
| $ | 3,490 |
|
| $ | 3,490 |
|
| $ | — |
|
| $ | — |
|
20
|
|
|
|
|
| Fair Value Measurements at Reporting Date Using |
| |||||||||
(in thousands) |
| September 30, 2017 |
|
| Quoted Prices in Active Markets (Level 1) |
|
| Significant Other Observable Inputs (Level 2) |
|
| Significant Unobservable Inputs (Level 3) |
| ||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds(1) |
| $ | 119 |
|
| $ | 119 |
|
| $ | — |
|
| $ | — |
|
Other mutual funds(2) |
|
| 2,560 |
|
|
| 2,560 |
|
|
| — |
|
|
| — |
|
Total assets at fair value on a recurring basis |
| $ | 2,679 |
|
| $ | 2,679 |
|
| $ | — |
|
| $ | — |
|
|
|
|
|
|
| Fair Value Measurements at Reporting Date Using |
| |||||||||
(in thousands) |
| December 31, 2016 |
|
| Quoted Prices in Active Markets (Level 1) |
|
| Significant Other Observable Inputs (Level 2) |
|
| Significant Unobservable Inputs (Level 3) |
| ||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds(1) |
| $ | 118 |
|
| $ | 118 |
|
| $ | — |
|
| $ | — |
|
Other mutual funds(2) |
|
| 2,062 |
|
|
| 2,062 |
|
|
| — |
|
|
| — |
|
Total assets at fair value on a recurring basis |
| $ | 2,180 |
|
| $ | 2,180 |
|
| $ | — |
|
| $ | — |
|
|
|
|
|
The carrying values of cash and cash equivalents, accounts receivables, and accounts payable approximate fair value due to the short-term maturitiesnature of these instruments. Refer to Note 11 12 – Debt and Capital LeaseFinance Obligations for the estimated fair value of debt obligations.
Note 15. Income (Loss) Per Share
The components of basic and diluted income (loss) per share are as follows:
Note 13. Stockholders’ Equity
|
| Three Months Ended |
|
| Six Months Ended |
| ||||||||||
|
| June 30, |
|
| June 30, |
| ||||||||||
(in thousands, except per share data) |
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
Net income (loss) attributable to Viad |
| $ | 10,961 |
|
| $ | 19,839 |
|
| $ | (9,908 | ) |
| $ | (9,162 | ) |
Less: Allocation to participating securities |
|
| (2,186 | ) |
|
| (4,293 | ) |
|
| — |
|
|
| — |
|
Convertible preferred stock dividends paid in cash |
|
| (1,950 | ) |
|
| (1,950 | ) |
|
| (3,900 | ) |
|
| (3,900 | ) |
Adjustment to the redemption value of redeemable noncontrolling interest |
|
| — |
|
|
| (412 | ) |
|
| — |
|
|
| (763 | ) |
Net income (loss) allocated to Viad common stockholders (basic) |
| $ | 6,825 |
|
| $ | 13,184 |
|
| $ | (13,808 | ) |
| $ | (13,825 | ) |
Add: Allocation to participating securities |
|
| 11 |
|
|
| 25 |
|
|
| — |
|
|
| — |
|
Net income (loss) allocated to Viad common stockholders (diluted) |
| $ | 6,836 |
|
| $ | 13,209 |
|
| $ | (13,808 | ) |
| $ | (13,825 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Basic weighted-average outstanding common shares |
|
| 20,840 |
|
|
| 20,571 |
|
|
| 20,796 |
|
|
| 20,544 |
|
Additional dilutive shares related to share-based compensation |
|
| 135 |
|
|
| 160 |
|
|
| — |
|
|
| — |
|
Diluted weighted-average outstanding shares |
|
| 20,975 |
|
|
| 20,731 |
|
|
| 20,796 |
|
|
| 20,544 |
|
Income (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Basic income (loss) attributable to Viad common stockholders |
| $ | 0.33 |
|
| $ | 0.64 |
|
| $ | (0.66 | ) |
| $ | (0.67 | ) |
Diluted income (loss) attributable to Viad common stockholders(1) |
| $ | 0.33 |
|
| $ | 0.64 |
|
| $ | (0.66 | ) |
| $ | (0.67 | ) |
The following represents a reconciliation
Diluted income (loss) per common share is calculated using the more dilutive of the two-class method or if-converted method. The two-class method uses net income (loss) available to common stockholders and assumes conversion of all potential shares other than the participating securities. The if-converted method uses net income (loss) available to common stockholders and assumes conversion of all potential shares including the participating securities. Dilutive potential common shares include outstanding stock options, unvested restricted share units and convertible preferred stock. We apply the two-class method in calculating income (loss) per common share as unvested share-based payment awards that contain nonforfeitable rights to dividends and preferred stock are considered participating securities. Accordingly, such securities are included in the earnings allocation in calculating income (loss) per share. The adjustment to the carrying amountsvalue of stockholders’ equity attributable to Viad and the redeemable noncontrolling interest is reflected in income (loss) per common share.
We excluded the following weighted-average potential common shares from the calculations of diluted net loss per common share during the applicable periods because their inclusion would have been anti-dilutive:
|
| Three Months Ended |
|
| Six Months Ended |
| |||||||||
|
| June 30, |
|
| June 30, |
| |||||||||
(in thousands) |
| 2023 |
|
| 2022 |
|
| 2023 |
| 2022 |
| ||||
Convertible preferred stock |
|
| — |
|
|
| — |
|
|
| 6,674 |
|
| 6,674 |
|
Unvested restricted share-based awards |
|
| 17 |
|
|
| 17 |
|
|
| 163 |
|
| 168 |
|
Unvested performance share-based awards |
|
| 159 |
|
|
| 33 |
|
|
| 155 |
|
| 51 |
|
Stock options |
|
| 372 |
|
|
| 372 |
|
|
| 376 |
|
| 277 |
|
21
Note 16. Common and Preferred Stock
Convertible Series A Preferred Stock
On August 5, 2020, we entered into an investment agreement with funds managed by private equity firm Crestview Partners (the “Investment Agreement”), relating to the issuance of 135,000 shares of newly issued Convertible Series A Preferred Stock, par value $0.01 per share (the “Convertible Preferred Stock”), for an aggregate purchase price of $135 million or $1,000 per share. The $135 million issuance was offset in part by $9.2 million of expenses related to the capital raise. We have classified the Convertible Preferred Stock as mezzanine equity in the Condensed Consolidated Balance Sheet due to the existence of certain change in control provisions that are not solely within our control.
The Convertible Series A Preferred Stock carries a 5.5% cumulative quarterly dividend, which is payable in cash or in-kind at Viad’s option and is convertible at the option of the holders into shares of our common stock at a conversion price of $21.25 per share. Dividends paid-in-kind increase the redemption value of the preferred stock. The redemption value of the preferred stock was $141.8 million as of June 30, 2023 and December 31, 2022. Upon the occurrence of a change in control event, the holders have a right to require Viad to repurchase such preferred stock. During the six months ended June 30, 2023, $3.9 million of dividends were declared, all of which were paid in cash. We intend to pay preferred stock dividends in cash for the nine months ended Septemberforeseeable future.
Holders of the Convertible Series A Preferred Stock are entitled to vote with holders of Viad’s common stock on an as-converted basis.
Common Stock Repurchases
Our Board of Directors previously authorized us to repurchase shares of our common stock from time to time at prevailing market prices. Effective February 7, 2019, our Board of Directors authorized the repurchase of an additional 500,000 shares. In March 2020, our Board of Directors suspended our share repurchase program. As of June 30, 2017 and 2016:2023, 546,283 shares remain available for repurchase under all prior authorizations.
Note 17. Accumulated Other Comprehensive Income (Loss)
(in thousands) |
| Total Viad Stockholders’ Equity |
|
| Noncontrolling Interest |
|
| Total Stockholders’ Equity |
| |||
Balance at December 31, 2016 |
| $ | 357,355 |
|
| $ | 13,283 |
|
| $ | 370,638 |
|
Net income |
|
| 79,381 |
|
|
| 747 |
|
|
| 80,128 |
|
Dividends on common stock ($0.30 per share) |
|
| (6,119 | ) |
|
| — |
|
|
| (6,119 | ) |
Common stock purchased for treasury |
|
| (1,272 | ) |
|
| — |
|
|
| (1,272 | ) |
Employee benefit plans |
|
| 5,916 |
|
|
| — |
|
|
| 5,916 |
|
Unrealized foreign currency translation adjustment |
|
| 18,820 |
|
|
| — |
|
|
| 18,820 |
|
Other changes to AOCI |
|
| 327 |
|
|
|
|
|
|
| 327 |
|
Other |
|
| 56 |
|
|
| — |
|
|
| 56 |
|
Balance at September 30, 2017 |
| $ | 454,464 |
|
| $ | 14,030 |
|
| $ | 468,494 |
|
| Total Viad Stockholders’ Equity |
|
| Noncontrolling Interest |
|
| Total Stockholders’ Equity |
| ||||
Balance at December 31, 2015 |
| $ | 322,581 |
|
| $ | 12,757 |
|
| $ | 335,338 |
|
Net income |
|
| 46,318 |
|
|
| 765 |
|
|
| 47,083 |
|
Dividends on common stock ($0.30 per share) |
|
| (6,079 | ) |
|
| — |
|
|
| (6,079 | ) |
Common stock purchased for treasury |
|
| (679 | ) |
|
| — |
|
|
| (679 | ) |
Employee benefit plans |
|
| 4,693 |
|
|
| — |
|
|
| 4,693 |
|
Unrealized foreign currency translation adjustment |
|
| 723 |
|
|
| — |
|
|
| 723 |
|
Tax benefits from share-based compensation |
|
| 60 |
|
|
| — |
|
|
| 60 |
|
Other changes to AOCI |
|
| 162 |
|
|
| — |
|
|
| 162 |
|
Other |
|
| 28 |
|
|
| — |
|
|
| 28 |
|
Balance at September 30, 2016 |
| $ | 367,807 |
|
| $ | 13,522 |
|
| $ | 381,329 |
|
Changes in AOCI by component are as follows:
(in thousands) |
| Unrealized Gains on Investments |
|
| Cumulative Foreign Currency Translation Adjustments |
|
| Unrecognized Net Actuarial Loss and Prior Service Credit, Net |
|
| Accumulated Other Comprehensive Income (Loss) |
|
| Cumulative |
|
| Unrecognized Net Actuarial Loss and Prior Service Credit, Net |
|
| Unrealized Gain on Interest Rate Cap |
|
| Accumulated |
| ||||||||
Balance at December 31, 2016 |
| $ | 421 |
|
| $ | (29,084 | ) |
| $ | (10,728 | ) |
| $ | (39,391 | ) | ||||||||||||||||
Balance at December 31, 2022 |
| $ | (42,983 | ) |
| $ | (4,202 | ) |
| $ | — |
|
| $ | (47,185 | ) | ||||||||||||||||
Other comprehensive income before reclassifications |
|
| 188 |
|
|
| 18,820 |
|
|
| — |
|
|
| 19,008 |
|
|
| 7,950 |
|
|
| — |
|
|
| 681 |
|
|
| 8,631 |
|
Amounts reclassified from AOCI, net of tax |
|
| (45 | ) |
|
| — |
|
|
| 184 |
|
|
| 139 |
|
|
| — |
|
|
| 27 |
|
|
| (243 | ) |
|
| (216 | ) |
Net other comprehensive income |
|
| 143 |
|
|
| 18,820 |
|
|
| 184 |
|
|
| 19,147 |
|
|
| 7,950 |
|
|
| 27 |
|
|
| 438 |
|
|
| 8,415 |
|
Balance at September 30, 2017 |
| $ | 564 |
|
| $ | (10,264 | ) |
| $ | (10,544 | ) |
| $ | (20,244 | ) | ||||||||||||||||
Balance at June 30, 2023 |
| $ | (35,033 | ) |
| $ | (4,175 | ) |
| $ | 438 |
|
| $ | (38,770 | ) |
(in thousands) |
| Cumulative |
|
| Unrecognized Net Actuarial Loss and Prior Service Credit, Net |
|
| Accumulated |
| |||
Balance at December 31, 2021 |
| $ | (16,162 | ) |
| $ | (11,267 | ) |
| $ | (27,429 | ) |
Other comprehensive loss before reclassifications |
|
| (8,131 | ) |
|
| — |
|
|
| (8,131 | ) |
Amounts reclassified from AOCI, net of tax |
|
| — |
|
|
| 466 |
|
|
| 466 |
|
Net other comprehensive income (loss) |
|
| (8,131 | ) |
|
| 466 |
|
|
| (7,665 | ) |
Balance at June 30, 2022 |
| $ | (24,293 | ) |
| $ | (10,801 | ) |
| $ | (35,094 | ) |
The following table presents information about reclassification adjustments outAmounts reclassified from AOCI that relate to our defined benefit pension and postretirement plans include the amortization of AOCI:
|
| Nine Months Ended September 30, |
|
| Affected Line Item in the Statement Where Net Income is Presented | |||||
(in thousands) |
| 2017 |
|
| 2016 |
|
|
| ||
Unrealized gains on investments |
| $ | (72 | ) |
| $ | (67 | ) |
| Interest income |
Tax effect |
|
| 27 |
|
|
| 25 |
|
| Income taxes |
|
| $ | (45 | ) |
| $ | (42 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Recognized net actuarial loss(1) |
| $ | 596 |
|
| $ | 538 |
|
|
|
Amortization of prior service credit(1) |
|
| (323 | ) |
|
| (377 | ) |
|
|
Tax effect |
|
| (89 | ) |
|
| (61 | ) |
| Income taxes |
|
| $ | 184 |
|
| $ | 100 |
|
|
|
|
|
Theprior service costs and actuarial net losses recognized during each period presented. We recorded these costs as components of basicnet periodic cost for each period presented. Refer to Note 19 – Pension and diluted income per share are as follows:Postretirement Benefits for additional information.
|
| Three Months Ended |
|
| Nine Months Ended |
| ||||||||||
|
| September 30, |
|
| September 30, |
| ||||||||||
(in thousands, except per share data) |
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
Net income attributable to Viad (diluted) |
| $ | 44,657 |
|
| $ | 33,792 |
|
| $ | 79,381 |
|
| $ | 46,318 |
|
Less: Allocation to non-vested shares |
|
| (539 | ) |
|
| (454 | ) |
|
| (993 | ) |
|
| (629 | ) |
Net income allocated to Viad common stockholders (basic) |
| $ | 44,118 |
|
| $ | 33,338 |
|
| $ | 78,388 |
|
| $ | 45,689 |
|
Basic weighted-average outstanding common shares |
|
| 20,166 |
|
|
| 20,017 |
|
|
| 20,130 |
|
|
| 19,972 |
|
Additional dilutive shares related to share-based compensation |
|
| 270 |
|
|
| 190 |
|
|
| 252 |
|
|
| 178 |
|
Diluted weighted-average outstanding shares |
|
| 20,436 |
|
|
| 20,207 |
|
|
| 20,382 |
|
|
| 20,150 |
|
Income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income attributable to Viad common stockholders |
| $ | 2.19 |
|
| $ | 1.67 |
|
| $ | 3.89 |
|
| $ | 2.29 |
|
Diluted income attributable to Viad common stockholders |
| $ | 2.19 |
|
| $ | 1.67 |
|
| $ | 3.89 |
|
| $ | 2.29 |
|
During the nine months ended September 30, 2017, 11,000 shares of share-based awards were not included in the computation of dilutive shares outstanding because the effect would be anti-dilutive.
Note 15. 18. Income Taxes
The effective tax ratesrate was 30.0% for the three months ended SeptemberJune 30, 20172023 and 2016 were 30.4 percent and 33.8 percent, respectively.a negative 86.2% for the six months ended June 30, 2023. The effective tax ratesrate was 14.3% for the ninethree months ended SeptemberJune 30, 20172022 and 2016 were 29.0 percent and 33.1 percent, respectively.a negative 8.0% for the six months ended June 30, 2022.
22
The income tax provision was computed based on the Company’sour estimated annualized effective tax rate and the full-year forecasted income by jurisdiction expected foror loss plus the full year, including thetax impact of any unusual, infrequent, or non-recurring items.nonrecurring significant items during the period. The rate was higher than the 21% federal rate for the three months ended June 30, 2023 as we did not recognize the tax benefits on losses recognized in the United States, United Kingdom, and other European Countries while recognizing a tax expense primarily in Canada and Iceland. The effective tax rate was lower for the ninesix months ended SeptemberJune 30, 20172023 and the three and six months ended June 30, 2022 due the amount of change in pre-tax income and loss recognized between those jurisdictions where we recognize a tax expense or benefit and those jurisdictions where there is a valuation allowance. The six month effective tax rate ended on June 30, 2023 was less than the federal statutory rate of 35.0 percent primarily due to foreign income taxed at lower rates,further impacted by the release of the$2.1 million of our valuation allowance againstduring the first quarter on the deferred tax assets recorded on certain foreignUS separate state filings.
We paid net operating losses, and the adoption of new accounting guidance, which requires the excess tax benefit on share-based compensation to be recorded to income tax expense rather than equity. The effective tax rate for the nine months ended September 30, 2016 was less than the federal statutory rate primarily due to foreign income taxed at lower rates.
During the nine months ended September 30, 2017 and 2016, cash paid for income taxes of $4.6 million during the three months ended June 30, 2023 and $12.7 million during the six months ended June 30, 2023, of which $9.6 million of the $12.7 million was $10.9paid to Canadian tax authorities. We received net cash refunds of $0.6 million during the three months ended June 30, 2022 and $8.4paid net cash for income taxes of $0.8 million respectively.during the six months ended June 30, 2022.
Note 16. 19. Pension and Postretirement Benefits
The components of net periodic benefit cost of Viad’sour pension and postretirement benefit plans for the three months ended SeptemberJune 30, 20172023 and 2016 included2022 consist of the following:
|
| Domestic Plans |
|
|
|
|
|
|
|
|
|
| Domestic Plans |
|
|
|
|
|
|
| ||||||||||||||||||||||||||||
|
| Pension Plans |
|
| Postretirement Benefit Plans |
|
| Foreign Pension Plans |
|
| Pension Plans |
|
| Postretirement Benefit Plans |
|
| Foreign Pension Plans |
| ||||||||||||||||||||||||||||||
(in thousands) |
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||||||||||
Service cost |
| $ | 8 |
|
| $ | 54 |
|
| $ | 22 |
|
| $ | 5 |
|
| $ | 138 |
|
| $ | 123 |
|
| $ | — |
|
| $ | — |
|
| $ | 6 |
|
| $ | 10 |
|
| $ | 44 |
|
| $ | 76 |
|
Interest cost |
|
| 197 |
|
|
| 257 |
|
|
| 92 |
|
|
| 126 |
|
|
| 120 |
|
|
| 124 |
|
|
| 211 |
|
|
| 125 |
|
|
| 93 |
|
|
| 54 |
|
|
| 91 |
|
|
| 79 |
|
Expected return on plan assets |
|
| (55 | ) |
|
| (62 | ) |
|
| — |
|
|
| — |
|
|
| (156 | ) |
|
| (142 | ) |
|
| (40 | ) |
|
| 51 |
|
|
| — |
|
|
| — |
|
|
| (86 | ) |
|
| (98 | ) |
Amortization of prior service credit |
|
| — |
|
|
| — |
|
|
| (107 | ) |
|
| (125 | ) |
|
| — |
|
|
| — |
|
|
| (8 | ) |
|
| — |
|
|
| 29 |
|
|
| 22 |
|
|
| — |
|
|
| — |
|
Recognized net actuarial loss |
|
| 106 |
|
|
| 105 |
|
|
| 3 |
|
|
| 46 |
|
|
| 48 |
|
|
| 1 |
| ||||||||||||||||||||||||
Net periodic benefit cost |
| $ | 256 |
|
| $ | 354 |
|
| $ | 10 |
|
| $ | 52 |
|
| $ | 150 |
|
| $ | 106 |
| ||||||||||||||||||||||||
Recognized net actuarial loss (gain) |
|
| 71 |
|
|
| 134 |
|
|
| (44 | ) |
|
| 23 |
|
|
| 34 |
|
|
| 36 |
| ||||||||||||||||||||||||
Net periodic benefit cost (income) |
| $ | 234 |
|
| $ | 310 |
|
| $ | 84 |
|
| $ | 109 |
|
| $ | 83 |
|
| $ | 93 |
| ||||||||||||||||||||||||
Settlement cost |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
| ||||||||||||||||||||||||
Total expenses (income) |
| $ | 234 |
|
| $ | 310 |
|
| $ | 84 |
|
| $ | 109 |
|
| $ | 83 |
|
| $ | 93 |
|
The components of net periodic benefit cost of Viad’sour pension and postretirement benefit plans for the ninesix months ended SeptemberJune 30, 20172023 and 2016 included2022 consist of the following:
|
| Domestic Plans |
|
|
|
|
|
|
|
|
|
| Domestic Plans |
|
|
|
|
|
|
| ||||||||||||||||||||||||||||
|
| Pension Plans |
|
| Postretirement Benefit Plans |
|
| Foreign Pension Plans |
|
| Pension Plans |
|
| Postretirement Benefit Plans |
|
| Foreign Pension Plans |
| ||||||||||||||||||||||||||||||
(in thousands) |
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||||||||||
Service cost |
| $ | 56 |
|
| $ | 74 |
|
| $ | 69 |
|
| $ | 74 |
|
| $ | 396 |
|
| $ | 368 |
|
| $ | — |
|
| $ | — |
|
| $ | 12 |
|
| $ | 20 |
|
| $ | 88 |
|
| $ | 161 |
|
Interest cost |
|
| 604 |
|
|
| 774 |
|
|
| 311 |
|
|
| 429 |
|
|
| 348 |
|
|
| 368 |
|
|
| 422 |
|
|
| 250 |
|
|
| 186 |
|
|
| 108 |
|
|
| 183 |
|
|
| 167 |
|
Expected return on plan assets |
|
| (162 | ) |
|
| (192 | ) |
|
| — |
|
|
| — |
|
|
| (450 | ) |
|
| (421 | ) |
|
| (80 | ) |
|
| 49 |
|
|
| — |
|
|
| — |
|
|
| (172 | ) |
|
| (223 | ) |
Amortization of prior service credit |
|
| — |
|
|
| — |
|
|
| (323 | ) |
|
| (377 | ) |
|
| — |
|
|
| — |
|
|
| (16 | ) |
|
| — |
|
|
| 58 |
|
|
| 44 |
|
|
| — |
|
|
| — |
|
Recognized net actuarial loss |
|
| 336 |
|
|
| 318 |
|
|
| 123 |
|
|
| 221 |
|
|
| 137 |
|
|
| 2 |
| ||||||||||||||||||||||||
Recognized net actuarial (gain) loss |
|
| 142 |
|
|
| 268 |
|
|
| (88 | ) |
|
| 46 |
|
|
| 67 |
|
|
| 71 |
| ||||||||||||||||||||||||
Net periodic benefit cost |
| $ | 834 |
|
| $ | 974 |
|
| $ | 180 |
|
| $ | 347 |
|
| $ | 431 |
|
| $ | 317 |
|
| $ | 468 |
|
| $ | 567 |
|
| $ | 168 |
|
| $ | 218 |
|
| $ | 166 |
|
| $ | 176 |
|
Settlement cost |
|
| — |
|
|
| 115 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 533 |
| ||||||||||||||||||||||||
Total expenses |
| $ | 468 |
|
| $ | 682 |
|
| $ | 168 |
|
| $ | 218 |
|
| $ | 166 |
|
| $ | 709 |
|
Viad expectsWe expect to contribute $1.6$0.6 million to itsour funded pension plans, $0.9$0.8 million to itsour unfunded pension plans, and $1.1$0.7 million to itsour postretirement benefit plans in 2017.2023. During the ninesix months ended SeptemberJune 30, 2017, Viad2023, we contributed $1.4$0.3 million to itsour funded pension plans, $0.5$0.4 million to itsour unfunded pension plans, and $1.1$0.3 million to itsour postretirement benefit plans.
23
Note 17. 20. Restructuring Charges
The Company has takenGES
As part of our efforts to drive efficiencies and simplify our business operations, we took certain restructuring actions designed to reduce the Company’s cost structure primarily withinsimplify and transform GES U.S. and GES International, as well asfor greater profitability. These initiatives resulted in restructuring charges related to the elimination of certain positions and continuing to reduce our facility footprint at the corporate office. As a result, the CompanyGES.
Other Restructurings
We recorded restructuring charges in connection with certain reorganization activities within Pursuit. These charges primarily consistingconsist of severance and related benefits as a result of workforce reductions and charges relateddue to the consolidation and downsizing of facilities representing the remaining operating lease obligations (net of estimated sublease income) and related costs.headcount reductions.
Changes to the restructuring liability by major restructuring activity are as follows:
|
| GES |
|
| Other Restructurings |
|
|
|
|
|
| GES |
|
| Other Restructurings |
|
|
|
| |||||||||||||
(in thousands) |
| Severance & Employee Benefits |
|
| Facilities |
|
| Severance & Employee Benefits |
|
| Total |
|
| Severance & |
|
| Facilities |
|
| Severance & |
|
| Total |
| ||||||||
Balance at December 31, 2016 |
| $ | 2,274 |
|
| $ | 1,092 |
|
| $ | 416 |
|
| $ | 3,782 |
| ||||||||||||||||
Balance at December 31, 2022 |
| $ | 1,609 |
|
| $ | 1,818 |
|
| $ | 12 |
|
| $ | 3,439 |
| ||||||||||||||||
Restructuring charges |
|
| 442 |
|
|
| 237 |
|
|
| 138 |
|
|
| 817 |
|
|
| 227 |
|
|
| 409 |
|
|
| 9 |
|
|
| 645 |
|
Cash payments |
|
| (1,048 | ) |
|
| (449 | ) |
|
| (451 | ) |
|
| (1,948 | ) |
|
| (297 | ) |
|
| (481 | ) |
|
| (14 | ) |
|
| (792 | ) |
Adjustment to liability |
|
| — |
|
|
| — |
|
|
| 2 |
|
|
| 2 |
|
|
| — |
|
|
| 46 |
|
|
| (7 | ) |
|
| 39 |
|
Balance at September 30, 2017 |
| $ | 1,668 |
|
| $ | 880 |
|
| $ | 105 |
|
| $ | 2,653 |
| ||||||||||||||||
Balance at June 30, 2023 |
| $ | 1,539 |
|
| $ | 1,792 |
|
| $ | — |
|
| $ | 3,331 |
|
As of SeptemberJune 30, 2017,2023, $1.5 million of the liabilities related to severance and employee benefits are expectedand $1.5 million of liabilities related to be paidfacilities will remain unpaid by the end of 2018. Additionally, the liability2023. The liabilities related to future lease paymentsfacilities primarily include dilapidations and non-lease expenses that will be paid over the remaining lease terms for GES.terms. Refer to Note 19 24 – Segment Information for information regarding restructuring charges by segment.
Note 21. Leases and Other
The balance sheet presentation of our operating and finance leases is as follows:
|
|
|
| June 30, |
|
| December 31, |
| ||
(in thousands) |
| Classification on the Condensed Consolidated Balance Sheet |
| 2023 |
|
| 2022 |
| ||
Assets: |
|
|
|
|
|
|
|
| ||
Operating lease ROU assets |
| Operating lease ROU assets |
| $ | 112,263 |
|
| $ | 102,777 |
|
Finance lease ROU assets |
| Property and equipment, net |
|
| 57,732 |
|
|
| 57,534 |
|
Total lease ROU assets |
|
|
| $ | 169,995 |
|
| $ | 160,311 |
|
|
|
|
|
|
|
|
|
| ||
Liabilities: |
|
|
|
|
|
|
|
| ||
Current: |
|
|
|
|
|
|
|
| ||
Operating lease obligations |
| Operating lease obligations |
| $ | 15,087 |
|
| $ | 13,463 |
|
Finance lease obligations |
| Current portion of debt and finance obligations |
|
| 2,650 |
|
|
| 2,978 |
|
Noncurrent: |
|
|
|
|
|
|
|
| ||
Operating lease obligations |
| Long-term operating lease obligations |
|
| 109,143 |
|
|
| 101,297 |
|
Finance lease obligations |
| Long-term debt and finance obligations |
|
| 61,311 |
|
|
| 61,751 |
|
Total lease liabilities |
|
|
| $ | 188,191 |
|
| $ | 179,489 |
|
24
The components of lease expense consisted of the following:
|
| Three Months Ended |
|
| Six Months Ended |
| ||||||||||
|
| June 30, |
|
| June 30, |
| ||||||||||
(in thousands) |
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
Finance lease cost: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Amortization of ROU assets |
| $ | 1,048 |
|
| $ | 1,045 |
|
| $ | 2,104 |
|
| $ | 2,096 |
|
Interest on lease liabilities |
|
| 1,427 |
|
|
| 1,467 |
|
|
| 2,837 |
|
|
| 2,902 |
|
Operating lease cost |
|
| 6,586 |
|
|
| 6,204 |
|
|
| 12,793 |
|
|
| 12,026 |
|
Short-term lease cost |
|
| 950 |
|
|
| 749 |
|
|
| 1,385 |
|
|
| 1,113 |
|
Variable lease cost |
|
| 1,510 |
|
|
| 1,532 |
|
|
| 2,738 |
|
|
| 2,546 |
|
Total lease cost, net |
| $ | 11,521 |
|
| $ | 10,997 |
|
| $ | 21,857 |
|
| $ | 20,683 |
|
Other information related to operating and finance leases are as follows:
|
| Three Months Ended |
|
| Six Months Ended |
| ||||||||||
|
| June 30, |
|
| June 30, |
| ||||||||||
(in thousands) |
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
Cash paid for amounts included in the measurement of lease liabilities: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Operating cash flows from operating leases |
| $ | 6,669 |
|
| $ | 6,069 |
|
| $ | 13,321 |
|
| $ | 11,867 |
|
Operating cash flows from finance leases |
| $ | 1,535 |
|
| $ | 1,499 |
|
| $ | 3,052 |
|
| $ | 2,966 |
|
Financing cash flows from finance leases |
| $ | 572 |
|
| $ | 873 |
|
| $ | 1,177 |
|
| $ | 1,597 |
|
ROU assets obtained in exchange for lease obligations: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Operating leases |
| $ | 14,571 |
|
| $ | 1,380 |
|
| $ | 17,587 |
|
| $ | 10,711 |
|
Finance leases(1) |
| $ | 376 |
|
| $ | 1,217 |
|
| $ | 363 |
|
| $ | 4,324 |
|
|
|
|
|
|
| June 30, |
|
| December 31, |
| ||
|
|
|
|
|
| 2023 |
|
| 2022 |
| ||
Weighted-average remaining lease term (years): |
|
|
|
|
|
|
|
|
|
| ||
Operating leases |
|
|
|
|
|
| 7.98 |
|
|
| 8.51 |
|
Finance leases |
|
|
|
|
|
| 33.83 |
|
|
| 34.07 |
|
Weighted-average discount rate: |
|
|
|
|
|
|
|
|
|
| ||
Operating leases |
|
|
|
|
|
| 7.78 | % |
|
| 7.25 | % |
Finance leases |
|
|
|
|
|
| 9.14 | % |
|
| 9.12 | % |
As of June 30, 2023, the estimated future minimum lease payments under non-cancellable leases, excluding variable leases and variable non-lease components, are as follows:
(in thousands) |
| Operating Leases |
|
| Finance Leases |
|
| Total |
| |||
Remainder of 2023 |
| $ | 10,511 |
|
| $ | 4,163 |
|
| $ | 14,674 |
|
2024 |
|
| 25,910 |
|
|
| 7,919 |
|
|
| 33,829 |
|
2025 |
|
| 23,878 |
|
|
| 7,090 |
|
|
| 30,968 |
|
2026 |
|
| 22,931 |
|
|
| 6,487 |
|
|
| 29,418 |
|
2027 |
|
| 19,367 |
|
|
| 6,277 |
|
|
| 25,644 |
|
Thereafter |
|
| 69,059 |
|
|
| 180,986 |
|
|
| 250,045 |
|
Total future lease payments |
|
| 171,656 |
|
|
| 212,922 |
|
|
| 384,578 |
|
Less: Amount representing interest |
|
| (47,426 | ) |
|
| (148,961 | ) |
|
| (196,387 | ) |
Present value of minimum lease payments |
|
| 124,230 |
|
|
| 63,961 |
|
|
| 188,191 |
|
Current portion |
|
| (15,087 | ) |
|
| (2,650 | ) |
|
| (17,737 | ) |
Long-term portion |
| $ | 109,143 |
|
| $ | 61,311 |
|
| $ | 170,454 |
|
25
As of June 30, 2023, the estimated future minimum rental income under non-cancellable leases, which includes rental income from facilities that we own, are as follows:
(in thousands) |
|
|
| |
Remainder of 2023 |
| $ | 923 |
|
2024 |
|
| 1,591 |
|
2025 |
|
| 1,381 |
|
2026 |
|
| 1,136 |
|
2027 |
|
| 478 |
|
Thereafter |
|
| 611 |
|
Total minimum rents |
| $ | 6,120 |
|
Lease Not Yet Commenced
As of June 30, 2023, we had executed a facility lease for which we did not have control of the underlying assets. Accordingly, we did not record the lease liability and ROU asset on our Condensed Consolidated Balance Sheets. This lease is for a new FlyOver attraction, FlyOver Canada Toronto. The lease commencement date was originally planned for 2023, however, it has been postponed due to permitting and other related delays. Upon commencement date, it will have a lease term of 20 years.
Note 18. 22. Litigation, Claims, Contingencies, and Other
Viad and certain of its subsidiariesWe are plaintiffs or defendants toin various actions, proceedings, and pending claims, some of which involve, or may involve, compensatory, punitive, or other damages. Litigation is subject to many uncertainties and it is possible that some of the legal actions, proceedings, or claims could be decided against Viad.us. Although the amount of liability as of SeptemberJune 30, 20172023 with respect to theseunresolved legal matters is not ascertainable, Viad believeswe believe that any resulting liability, after taking into consideration amounts already provided for and insurance coverage, will not have a material effect on Viad’sour business, financial position, or results of operations.
ViadOn July 18, 2020, an off-road Ice Explorer operated by our Pursuit business was involved in an accident while enroute to the Athabasca Glacier, resulting in three fatalities and multiple other serious injuries. We immediately reported the accident to our relevant insurance carriers, who have supported our investigation and subsequent claims relating to the accident. In May 2023, we resolved charges from the Canadian office of Occupational Health and Safety in relation to this accident, resulting in fines and related payments in an aggregate amount of $0.5 million Canadian dollars (approximately $0.3 million U.S. dollars). We continue to manage our legal defense of various claims from the victims and their families. In addition, we believe that our reserves and, subject to customary deductibles, our insurance coverage is sufficient to cover potential claims related to this accident.
We are subject to various U.S.United States federal, state, and foreign laws and regulations governing the prevention of pollution and the protection of the environment in the jurisdictions in which Viad haswe have or had operations. If the Company failswe fail to comply with these environmental laws and regulations, civil and criminal penalties could be imposed, and Viadwe could become subject to regulatory enforcement actions in the form of injunctions and cease and desist orders. As is the case with many companies, Viadwe also facesface exposure to actual or potential claims and lawsuits involving environmental matters relating to itsour past operations. As of SeptemberJune 30, 2017, Viad2023, we had recorded environmental remediation liabilities of $2.4$2.2 million related to previously sold operations. Although it iswe are a party to certain environmental disputes, Viad believeswe believe that any resulting liabilities, after taking into consideration amounts already provided for and insurance coverage, will not have a material effect on the Company’sour financial position or results of operations.
As of SeptemberJune 30, 2017, Viad,2023, on behalf of itsour subsidiaries, we had certain obligations under guarantees to third parties. These guarantees are not subject to liability recognition in the condensed consolidated financial statements and relate to leased facilities and equipment leases entered into by Viad’sour subsidiary operations. The CompanyWe would generally be required to make payments to the respective third parties under these guarantees in the event that the related subsidiary could not meet its own payment obligations. The maximum potential amount of future payments that Viadwe would be required to make under all guarantees existing as of SeptemberJune 30, 20172023 would be $7.5approximately $89.0 million. These guarantees relate to our leased equipment and facilities leased by the Company through September 2021.January 2044. There are no recourse provisions that would enable Viadus to recover from third parties any payments made under the guarantees. Furthermore, there are no collateral or similar arrangements whereby Viadpursuant to which we could recover payments.
A significant portionnumber of Viad’sour employees are unionized and the Company iswe are a party to approximately 100 collective-bargaining collective bargaining agreements, with approximately one-third requiring renegotiation each year. If the Company waswe are unable to reach an agreement with a union during the collective-bargainingcollective bargaining process, the union may call for a strike or work stoppage, which may, under certain circumstances, adversely impact the Company’s businessesour business and results of operations. Viad believesWe believe that relations with itsour employees are satisfactory and that collective-bargainingcollective bargaining agreements expiring in 20172023 will be renegotiated in the ordinary course of business without having a material adverse effect on Viad’s operations. The Company entered into showsite and warehouse agreements with the Chicago Teamsters Local 727, effective January 1, 2014, and those agreements contain provisions that allow the parties to re-open negotiation of the agreements on pension-related issues. The Company is in informal discussions regarding those issues with all relevant parties to resolve those issues in a manner that will be reasonable and equitable to employees, customers, and stockholders.business. Although the Company’sour labor relations are currently stable, disruptions pending the outcome of the Chicago Teamsters Local 727 negotiations could occur, as they could with any collective-bargaining agreement negotiation, with the possibility of an adverse impact on the operating results of GES.
Viad’s businesses contribute to various multi-employer pension plans based on obligations arising under collective-bargaining agreements covering its union-represented employees. Based upon the information available to Viad from plan administrators, management believes that several of these multi-employer plans26
We are underfunded. The Pension Protection Act of 2006 requires pension plans underfunded at certain levels to reduce, over defined time periods, the underfunded status. In addition, under current laws, the termination of a plan, or a voluntary withdrawal from a plan by Viad, or a shrinking contribution base to a plan as a result of the insolvency or withdrawal of other contributing employers to such plan, would require Viad to make payments to such plan for its proportionate share of the plan’s unfunded vested liabilities. As of September 30, 2017, the amount of additional funding, if any, that Viad would be required to make related to multi-employer pension plans is not ascertainable.
Viad is self-insured up to certain limits for workers’ compensation employee health benefits,and general liabilities, which includes automobile, product and general liability, and client property loss claims. The aggregate amount of insurance liabilities (up to the Company’sour retention limit) related to Viad’sour continuing operations was $20.2$11.0 million as of SeptemberJune 30, 20172023, which includes $14.3$6.5 million related to workers’ compensation liabilities, and $5.9$4.5 million related to general/autogeneral liability claims. Viad hasWe have also retained and provided for certain workers’ compensation insurance liabilities in conjunction with previously sold businesses of $3.3$2.0 million as of SeptemberJune 30, 2017, related to workers’ compensation liabilities.2023. We are also self-insured for certain employee health benefits and the estimated employee health benefit claims incurred but not yet reported was $1.5 million as of June 30, 2023. Provisions for losses for claims incurred, including actuarially derived estimated claims incurred but not yet reported, are made based on Viad’sour historical experience, claims frequency, and other factors. A change in the assumptions used could result in an adjustment to recorded liabilities. Viad hasWe have purchased insurance for amounts in excess of the self-insured levels, which generally range from $0.2$0.2 million to $0.5$0.5 million on a per claim basis. Viad doesWe do not maintain a self-insured retention pool fund as claims are paid from current cash resources at the time of settlement. Viad’sOur net cash payments in connection with these insurance liabilities were $1.3 million and $1.5$0.7 million for the three months ended SeptemberJune 30, 20172023 and 2016, respectively, and $3.8 million and $3.9$2.2 million for the ninesix months ended SeptemberJune 30, 20172023 and 2016, respectively.$1.0 million for the three months ended June 30, 2022 and $2.6 million for the six months ended June 30, 2022.
In addition, as of SeptemberJune 30, 2017, Viad2023, we have recorded insurance liabilities of $10.5$8.2 million related to continuing operations, which represents the amount for which Viad remainswe remain the primary obligor after self-insured insurance limits, without taking into consideration the above-referenced insurance coverage. Of this total, $6.9$6.4 million is related to workers’ compensation liabilities and $3.6$1.8 million is related to general/auto liability claims, which areis recorded in other“Other deferred items and liabilitiesliabilities” in Viad’s condensed consolidated balance sheetsthe Condensed Consolidated Balance Sheets with a corresponding receivable in other investments.“Other investments and assets.”
Note 23. Noncontrolling Interests – Redeemable and Non-redeemable
Redeemable noncontrolling interest
On November 3, 2017, we acquired the controlling interest (54.5% of the common stock) in Esja, a private corporation in Reykjavik, Iceland. Subsequent to additional capital contributions, our equity ownership increased to 56.4% as of June 30, 2023. Through Esja and its wholly-owned subsidiary, we are operating the FlyOver Iceland attraction.
The minority Esja shareholders have the right to sell (or “put”) their Esja shares to us based on a multiple of 5.0x EBITDA as calculated on the trailing 12 months from the most recently completed quarter before the put option exercise. The put option is only exercisable after August 2022 (the “Reference Date”), and in the event the FlyOver Iceland attraction has earned a minimum of €3.25 million in unadjusted EBITDA during the most recent fiscal year and during the trailing 12-month period prior to exercise (the “Put Option Condition”). The put option is exercisable during a period of 12 months following the Reference Date (the “Option Period”) if the Put Option Condition has been met. If the Put Option Condition has not been met during the first Option Period, the Reference Date will be extended for an additional 12 months up to three times. If the Put Option Condition is met during any of the Option Periods, yet the shares are not exercised prior to the end of the 12-month Option Period, the put option will expire. The Put Option Condition has not been met as of June 30, 2023. If the FlyOver Iceland attraction has not achieved the Put Option Condition by December 31, 2024, the put option expires.
The noncontrolling interest’s carrying value is determined by the fair value of the noncontrolling interest as of the acquisition date and the noncontrolling interest’s share of the subsequent net income or loss. This value is benchmarked against the redemption value of the sellers’ put option. The carrying value is adjusted to the redemption value, provided that it does not fall below the initial carrying value, as determined by the purchase price allocation. We have made a policy election to reflect any changes caused by such an adjustment to retained earnings (accumulated deficit), rather than to current earnings (loss).
Changes in the redeemable noncontrolling interest are as follows:
(in thousands) |
|
|
| |
Balance at December 31, 2022 |
| $ | 4,956 |
|
Net loss attributable to redeemable noncontrolling interest |
|
| (409 | ) |
Foreign currency translation adjustment |
|
| 180 |
|
Balance at June 30, 2023 |
| $ | 4,727 |
|
Non-redeemable noncontrolling interest
Non-redeemable noncontrolling interest represents the portion of equity in a subsidiary that is not attributable, directly or indirectly, to us. Our non-redeemable noncontrolling interest relates to the equity ownership interest that we do not own.
27
Changes in the non-redeemable noncontrolling interest are as follows:
(in thousands) | Glacier Park Inc. |
|
| Brewster (1) |
|
| Sky Lagoon |
|
| Total |
| ||||
Balance at December 31, 2022 | $ | 16,690 |
|
| $ | 55,702 |
|
| $ | 9,918 |
|
| $ | 82,310 |
|
Net income (loss) attributable to non-redeemable noncontrolling interest |
| (783 | ) |
|
| (24 | ) |
|
| 1,312 |
|
|
| 505 |
|
Distributions to non-controlling interests |
| — |
|
|
| — |
|
|
| (1,126 | ) |
|
| (1,126 | ) |
Foreign currency translation adjustments |
| 6 |
|
|
| 1,279 |
|
|
| 515 |
|
|
| 1,800 |
|
Balance at June 30, 2023 | $ | 15,913 |
|
| $ | 56,957 |
|
| $ | 10,619 |
|
| $ | 83,489 |
|
Equity ownership interest that we do not own |
| 20 | % |
|
| 40 | % |
|
| 49 | % |
|
|
|
28
Note 19. 24. Segment Information
Viad measuresAn operating segment is defined as a component of an enterprise that engages in business activities for which discrete financial information is available and regularly reviewed by the chief operating decision maker (“CODM”) in deciding how to allocate resources and assess performance. Our CODM is our Chief Executive Officer.
We measure the profit and performance of itsour operations on the basis of segment operating income (loss) which excludes restructuring charges, and recoveries and impairment charges, and recoveries.certain other corporate expenses that are not allocated to the reportable segments. Intersegment sales are eliminated in consolidation and intersegment transfers are not significant. Corporate activities include expenses not allocated to operations. Depreciation and amortization and share-based compensation expense are the only significant non-cash items for the reportable segments.
Viad’sOur reportable segments, with reconciliations to consolidated totals, are as follows:
|
| Three Months Ended |
|
| Six Months Ended |
| ||||||||||
|
| June 30, |
|
| June 30, |
| ||||||||||
(in thousands) |
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Pursuit |
| $ | 88,474 |
|
| $ | 77,599 |
|
| $ | 121,137 |
|
| $ | 101,383 |
|
GES: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Spiro |
|
| 80,368 |
|
|
| 89,425 |
|
|
| 140,730 |
|
|
| 132,241 |
|
GES Exhibitions |
|
| 154,534 |
|
|
| 154,600 |
|
|
| 324,031 |
|
|
| 266,431 |
|
GES intersegment eliminations |
|
| (3,065 | ) |
|
| (2,421 | ) |
|
| (4,796 | ) |
|
| (3,492 | ) |
Total GES |
|
| 231,837 |
|
|
| 241,604 |
|
|
| 459,965 |
|
|
| 395,180 |
|
Total revenue |
| $ | 320,311 |
|
| $ | 319,203 |
|
| $ | 581,102 |
|
| $ | 496,563 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Segment operating income (loss): |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Pursuit |
| $ | 9,811 |
|
| $ | 5,571 |
|
| $ | (9,301 | ) |
| $ | (15,627 | ) |
GES: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Spiro |
|
| 8,279 |
|
|
| 14,847 |
|
|
| 11,453 |
|
|
| 14,608 |
|
GES Exhibitions |
|
| 15,354 |
|
|
| 16,273 |
|
|
| 25,764 |
|
|
| 14,918 |
|
Total GES |
|
| 23,633 |
|
|
| 31,120 |
|
|
| 37,217 |
|
|
| 29,526 |
|
Segment operating income |
|
| 33,444 |
|
|
| 36,691 |
|
|
| 27,916 |
|
|
| 13,899 |
|
Corporate eliminations (1) |
|
| 16 |
|
|
| 17 |
|
|
| 32 |
|
|
| 34 |
|
Corporate activities |
|
| (3,511 | ) |
|
| (3,440 | ) |
|
| (6,676 | ) |
|
| (6,113 | ) |
ON Services sale purchase price adjustment |
|
| (204 | ) |
|
| — |
|
|
| (204 | ) |
|
| — |
|
Interest expense, net |
|
| (12,356 | ) |
|
| (7,761 | ) |
|
| (24,605 | ) |
|
| (13,638 | ) |
Other expense, net |
|
| (448 | ) |
|
| (612 | ) |
|
| (979 | ) |
|
| (1,250 | ) |
Restructuring charges: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Pursuit |
|
| (2 | ) |
|
| — |
|
|
| (9 | ) |
|
| — |
|
Spiro |
|
| (39 | ) |
|
| (808 | ) |
|
| (176 | ) |
|
| (1,226 | ) |
GES Exhibitions |
|
| (151 | ) |
|
| (588 | ) |
|
| (460 | ) |
|
| (824 | ) |
Corporate |
|
| — |
|
|
| (30 | ) |
|
| — |
|
|
| (30 | ) |
Impairment charges: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
GES Exhibitions |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (583 | ) |
Income (loss) from continuing operations before income taxes |
| $ | 16,749 |
|
| $ | 23,469 |
|
| $ | (5,161 | ) |
| $ | (9,731 | ) |
|
| Three Months Ended |
|
| Nine Months Ended |
| ||||||||||
|
| September 30, |
|
| September 30, |
| ||||||||||
(in thousands) |
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
| $ | 184,761 |
|
| $ | 232,484 |
|
| $ | 684,003 |
|
| $ | 636,299 |
|
International |
|
| 54,040 |
|
|
| 60,926 |
|
|
| 203,222 |
|
|
| 187,689 |
|
Intersegment eliminations |
|
| (6,682 | ) |
|
| (6,425 | ) |
|
| (17,126 | ) |
|
| (15,439 | ) |
Total GES |
|
| 232,119 |
|
|
| 286,985 |
|
|
| 870,099 |
|
|
| 808,549 |
|
Pursuit |
|
| 106,980 |
|
|
| 97,402 |
|
|
| 159,581 |
|
|
| 143,111 |
|
Corporate eliminations (1) |
|
| — |
|
|
| (1,922 | ) |
|
| — |
|
|
| (3,086 | ) |
Total revenue |
| $ | 339,099 |
|
| $ | 382,465 |
|
| $ | 1,029,680 |
|
| $ | 948,574 |
|
Segment operating income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
| $ | (2,851 | ) |
| $ | 14,543 |
|
| $ | 39,319 |
|
| $ | 37,907 |
|
International |
|
| (2,870 | ) |
|
| 644 |
|
|
| 8,491 |
|
|
| 4,951 |
|
Total GES |
|
| (5,721 | ) |
|
| 15,187 |
|
|
| 47,810 |
|
|
| 42,858 |
|
Pursuit |
|
| 53,860 |
|
|
| 44,248 |
|
|
| 53,523 |
|
|
| 44,733 |
|
Segment operating income |
|
| 48,139 |
|
|
| 59,435 |
|
|
| 101,333 |
|
|
| 87,591 |
|
Corporate eliminations (1) |
|
| 18 |
|
|
| (518 | ) |
|
| 50 |
|
|
| (940 | ) |
Corporate activities |
|
| (4,474 | ) |
|
| (2,772 | ) |
|
| (10,092 | ) |
|
| (7,390 | ) |
Operating income |
|
| 43,683 |
|
|
| 56,145 |
|
|
| 91,291 |
|
|
| 79,261 |
|
Interest income |
|
| 74 |
|
|
| 44 |
|
|
| 174 |
|
|
| 138 |
|
Interest expense |
|
| (2,117 | ) |
|
| (1,489 | ) |
|
| (6,281 | ) |
|
| (4,109 | ) |
Restructuring charges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GES U.S. |
|
| 435 |
|
|
| (1,498 | ) |
|
| 364 |
|
|
| (1,791 | ) |
GES International |
|
| (689 | ) |
|
| (203 | ) |
|
| (1,043 | ) |
|
| (1,374 | ) |
Pursuit |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (93 | ) |
Corporate |
|
| (1 | ) |
|
| 4 |
|
|
| (138 | ) |
|
| (406 | ) |
Impairment recoveries (charges): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pursuit |
|
| 24,467 |
|
|
| (120 | ) |
|
| 29,098 |
|
|
| (120 | ) |
Income from continuing operations before income taxes |
| $ | 65,852 |
|
| $ | 52,883 |
|
| $ | 113,465 |
|
| $ | 71,506 |
|
29
|
|
Additional information of our reportable segments is as follows:
|
| Three Months Ended |
|
| Six Months Ended June 30, |
| ||||||||||
|
| June 30, |
|
| June 30, |
| ||||||||||
(in thousands) |
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
Depreciation: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Pursuit |
| $ | 8,279 |
|
| $ | 7,866 |
|
| $ | 16,413 |
|
| $ | 15,648 |
|
Spiro |
|
| 600 |
|
|
| 852 |
|
|
| 1,100 |
|
|
| 1,781 |
|
GES Exhibitions |
|
| 1,640 |
|
|
| 2,070 |
|
|
| 3,318 |
|
|
| 4,361 |
|
Corporate |
|
| 19 |
|
|
| 14 |
|
|
| 39 |
|
|
| 18 |
|
|
| $ | 10,538 |
|
| $ | 10,802 |
|
| $ | 20,870 |
|
| $ | 21,808 |
|
Amortization: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Pursuit |
| $ | 1,294 |
|
| $ | 1,316 |
|
| $ | 2,455 |
|
| $ | 2,495 |
|
Spiro |
|
| 62 |
|
|
| 51 |
|
|
| 125 |
|
|
| 103 |
|
GES Exhibitions |
|
| 910 |
|
|
| 1,038 |
|
|
| 1,829 |
|
|
| 2,080 |
|
|
| $ | 2,266 |
|
| $ | 2,405 |
|
| $ | 4,409 |
|
| $ | 4,678 |
|
Capital expenditures: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Pursuit |
| $ | 17,588 |
|
| $ | 17,219 |
|
| $ | 25,315 |
|
| $ | 28,710 |
|
Spiro |
|
| 618 |
|
|
| 442 |
|
|
| 1,265 |
|
|
| 586 |
|
GES Exhibitions |
|
| 2,590 |
|
|
| 1,383 |
|
|
| 5,598 |
|
|
| 2,248 |
|
Corporate and other |
|
| 13 |
|
|
| 25 |
|
|
| 15 |
|
|
| 95 |
|
|
| $ | 20,809 |
|
| $ | 19,069 |
|
| $ | 32,193 |
|
| $ | 31,639 |
|
We do not report total assets by segment because this is not a metric used to allocate resources or evaluate segment performance by our CODM.
Note 20. Discontinued Operations30
Discontinued operations in 2017 includes reserves to resolve certain environmental matters and legal fees related to previously sold operations. During 2016, Viad recorded liability reserve adjustments and legal fees related to previously sold operations.
Note 21. Subsequent Event
On November 3, 2017, the Company acquired the controlling interest (54.5% of the common stock) in Esja Attractions ehf. (“Esja”), for a purchase price of €8.2 million (approximately $9.5 million) in cash. Esja, a private corporation in Reykjavik, Iceland, is developing and will operate the new FlyOver Iceland attraction. The FlyOver Iceland attraction is expected to open in 2019.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
This Quarterly Report on Form 10-Q (this “Form 10-Q”) contains a number of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words, and variations of words, such as “aim,” “anticipate,” “believe,” “could,” “deliver,” “estimate,” “expect,” “intend,” “may,” “might,” “outlook,” “plan,” “potential,” “seek,” “target,” “will,” and similar expressions are intended to identify our forward-looking statements. Similarly, statements that describe our business strategy, outlook, objectives, plans, initiatives, intentions, or goals also are forward-looking statements. These forward-looking statements are not historical facts and are subject to a host of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those in the forward-looking statements.
Important factors that could cause actual results to differ materially from those described in our forward-looking statements include, but are not limited to, the following:
For a more complete discussion of the risks and uncertainties that may affect our business or financial results, refer to Item 1A, “Risk Factors,” of our 2022 Form 10-K. We disclaim and do not undertake any obligation to update or revise any forward-looking statement except as required by applicable law or regulation.
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with the Annual Report onour 2022 Form 10-K of Viad Corp (“Viad” or the “Company”) for the year ended December 31, 2016 and the condensed consolidated financial statements and accompanyingrelated notes included in this Form 10-Q. The MD&A is intended to assist in providing an understanding of the Company’sour financial condition and results of operations. This discussion contains forward-looking statements that involve risks
Overview
We are a leading global provider of extraordinary experiences, including hospitality and uncertainties. Viad’s actual results could differ materially from those anticipated due to various factors discussed under “Forward-Looking Statements”leisure activities, experiential marketing, and elsewhere in this Form 10-Q.
Overview
Viad operateslive events. We operate through three reportable business segments: Pursuit, Spiro, and GES U.S.,Exhibitions. Spiro and GES International (collectively, “GES”), and Pursuit.
GES
GES is a global, full-service provider for live events that produces exhibitions, conferences, corporate events, and consumer events. GES offers a comprehensive range ofExhibitions are both live event servicesbusinesses, and a full suite of audio-visual services from creativeare collectively referred to as “GES.”
31
Current Macroeconomic Factors
International tourism and technologylive event activity continues to contentimprove and design, along with online tools powered by next generation technologies that help clients easily manage the complexities of their events.
GES’ clients include event organizers and corporate brand marketers. Corporate brand marketers include exhibitors and domestic and international corporations that want to promote their brands, services and innovations, feature newdemand for our products and buildservices remains strong despite ongoing macroeconomic volatility. During the first half of 2023, we operated with little to no COVID-19 related disruptions, and supply chain and labor challenges continued to improve. Changes in macroeconomic facts and circumstances, particularly high inflation and the resulting rise in interest rates, have increased our interest expense. Any future impacts from these and other macroeconomic developments on our operations cannot be predicted with certainty, but could have adverse effects on our business, relationships. GES serves corporate brand marketers when they exhibit at showsfinancial condition, and when GES is engaged to manage their global exhibit program or produce their proprietary corporate events.results of operations.
Markets ServedSeasonality
GES U.S.Pursuit’s peak activity occurs during the summer months. During 2022, 81% of Pursuit’s revenue was earned in the second and GES International both offer a full suite of services for event organizers and corporate brand marketers across fourthird quarters.
GES’ live event markets: (i) Exhibitions; (ii) Conferences; (iii) Corporate Events, and (iv) Consumer Events (collectively, “Live Events”).
Services Offered
GES offers a comprehensive range of services and innovative technology to event organizers and corporate brand marketers including (i) Core Services; (ii) Event Technology, and (iii) Audio-Visual:
Core Services. GES provides official contracting services and products to event organizers and corporate brand marketers for Live Events. Contracting services and products are provided primarily to Exhibitions and to a lesser degree to Conferences, Corporate Events, and Consumer Events.
Event Technology. GES offers a comprehensive range of event technology services including event accommodation solutions, registration and data analytics, and event management tools.
|
|
|
|
|
|
Audio-Visual. GES U.S. and GES International offer a variety of audio-visual and digital services for Live Events and corporate brand marketers. GES combines the science of innovative digital solutions with the latest audio-visual technology and superior service to create award-winning attendee engagements. Services provided include digital design and content, media production, content testing, equipment rental, staging, and creative services.
Seasonality
GES U.S. and GES International exhibition and event activity can vary significantly from quarter to quarter and year to year depending on the frequency and timing of shows, as someshows. Some shows are not held each yearannually and some may shift between quarters. Show rotation refers to shows that occur less frequently than annually, as well as annual shows that shift quarters from one year to the next.
Results of Operations
Financial Highlights
|
| Three Months Ended |
|
|
|
| Six Months Ended |
|
|
|
| |||||||||||
|
| June 30, |
|
|
|
| June 30, |
|
|
|
| |||||||||||
(in thousands, except per share data) |
| 2023 |
|
| 2022 |
|
| % |
| 2023 |
|
| 2022 |
|
| % |
| |||||
Total revenue |
| $ | 320,311 |
|
| $ | 319,203 |
|
| 0.3% |
| $ | 581,102 |
|
| $ | 496,563 |
|
|
| 17.0 | % |
Net income (loss) attributable to Viad |
| $ | 10,961 |
|
| $ | 19,839 |
|
| (44.8)% |
| $ | (9,908 | ) |
| $ | (9,162 | ) |
|
| (8.1 | )% |
Segment operating income(1) |
| $ | 33,444 |
|
| $ | 36,691 |
|
| (8.8)% |
| $ | 27,916 |
|
| $ | 13,899 |
|
| ** |
| |
Diluted income (loss) per common share from continuing operations attributable to Viad common stockholders |
| $ | 0.34 |
|
| $ | 0.64 |
|
| (46.9)% |
| $ | (0.65 | ) |
| $ | (0.69 | ) |
|
| 5.8 | % |
** Change is greater than +/- 100%
Pursuit is a collection of iconic natural and cultural destination travel experiences that enjoy perennial demand. Pursuit offers guests distinctive and world renowned experiences through its collection of unique hotels, lodges, recreational attractions, and transportation services. Pursuit is composed(1)
Brewster Travel Canada isNotes to Condensed Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for a leading travel and tourism provider in the Canadian Rockies in Alberta, Canada with two lodging properties in Banff National Park, one lodging property in Jasper National Park, five world-class recreational attractions, food and beverage services, retail operations, sightseeing and transportation services.
Alaska Collection is a leading travel and tourism provider in Alaska with two lodging properties and a sightseeing excursion in Denali National Park and Preserve, a lodge in Talkeetna, Alaska’s top-rated wildlife and glacier cruise, and two lodging properties located near Kenai Fjords National Park. The Alaska Collection also provides food and beverage services and retail operations with respect to those properties.
Glacier Park, Inc. is an operator of seven lodging properties, 12 retail shops, and 11 dining outlets in and around Glacier National Park in Montana, onereconciliation of the non-GAAP financial measure, segment operating income, to the most visited national parks in the United States, and Waterton Lakes National Park in Alberta, Canada, with a leading share of rooms in that market. Glacier Park, Inc. is an 80 percent owned subsidiary of Viad.
FlyOver Canada is a recreational attraction that provides a virtual flight ride experience located in Vancouver, Canada that combines motion seating, spectacular media, and visual effects including wind, scents, and mist to give the unforgettable experience of flying across Canada.
Pursuit is composed of four lines of business: (i) Hospitality (including food and beverage services and retail operations); (ii) Attractions (including food and beverage services and retail operations); (iii) Transportation; and (iv) Travel Planning. These four lines of business work together, driving economies of scope and meaningful scale in and around the iconic destinations of Banff, Jasper, and Waterton Lakes National Parks and Vancouver in Canada, and Glacier, Denali, and Kenai Fjords National Parks in the United States.
Seasonality
Pursuit experiences peak activity during the summer months. During 2016, 90 percent of Pursuit’s revenue was earned in the second and third quarters.
Financial Highlights
|
| Three Months Ended |
|
|
|
|
|
| Nine Months Ended |
|
|
|
|
| ||||||||||
|
| September 30, |
|
|
|
|
|
| September 30, |
|
|
|
|
| ||||||||||
(in thousands, except per share data) |
| 2017 |
|
| 2016 |
|
| Percentage Change |
|
| 2017 |
|
| 2016 |
|
| Percentage Change |
| ||||||
Revenue |
| $ | 339,099 |
|
| $ | 382,465 |
|
|
| (11.3 | )% |
| $ | 1,029,680 |
|
| $ | 948,574 |
|
|
| 8.6 | % |
Net income attributable to Viad |
| $ | 44,657 |
|
| $ | 33,792 |
|
|
| 32.2 | % |
| $ | 79,381 |
|
| $ | 46,318 |
|
|
| 71.4 | % |
Segment operating income (1) |
| $ | 48,139 |
|
| $ | 59,435 |
|
|
| (19.0 | )% |
| $ | 101,333 |
|
| $ | 87,591 |
|
|
| 15.7 | % |
Diluted income per common share from continuing operations attributable to Viad common stockholders |
| $ | 2.19 |
|
| $ | 1.68 |
|
|
| 30.4 | % |
| $ | 3.91 |
|
| $ | 2.33 |
|
|
| 67.8 | % |
Three months ended SeptemberJune 30, 20172023 compared with the three months ended SeptemberJune 30, 20162022
Total revenue decreased $43.4increased $1.1 million or 11.3 percent,during the three months ended June 30, 2023 primarily due to negative show rotationincreased revenue at Pursuit of $10.9 million as Pursuit experienced higher international tourism in Western Canada and Iceland. GES revenue decreased $9.8 million due to the sale of substantially all of the assets of ON Services in December of 2022, which contributed revenue of $15.6 million during the three months ended June 30, 2022, and shifts in timing of events driven by pandemic-related disruptions in 2022 that resulted in shows that were postponed from the 2022 first quarter and into the 2022 second quarter that returned to their normal first quarter schedules in 2023 that impacted revenue of approximately $75$10.0 million, at GES. This decrease was offset in part by underlying growthincreased live event activity and positive show rotation at both GES and Pursuit, incremental revenue from the acquisitions of the business of ON Event Services, LLC (“ON Services”), FlyOver Canada, and the Poken event engagement technology (“Poken”) of $13.1 million, and a favorable foreign exchange impact of $3.4 million. Management defines base same-show revenue as revenue derived from shows that the Company produced out of the same city during the same quarter in each year.
Net income attributable to Viad increased $10.9decreased $8.9 million during the three months ended June 30, 2023, primarily due to impairment recoveries related toreflecting higher interest expense, net, of $4.6 million during the Mount Royal Hotel fire2023 period, higher income tax expense of $1.7 million, and higher segment operating income from Pursuit, offset in part by decreased segment operating income at GES primarily duecosts to negative show rotation.
|
|
Nine months ended September 30, 2017 compared with the nine months ended September 30, 2016
Total revenuesupport increased $81.1 million or 8.6 percent, primarily due to incremental revenue from the acquisitions of ON Services, FlyOver Canada, and Poken of $49.8 million and underlying growth at both GES and Pursuit. This increase was offset in part by an unfavorable foreign exchange impact of $10.6 million and negative show rotation of approximately $6 million.
Net income attributable to Viad increased $33.1 million, primarily due to impairment recoveries related to the Mount Royal Hotel fire, increased segment operating income at Pursuit and GES, and a decrease in restructuring charges,business activity, offset in part by higher corporate activities expense due to an increase in performance-based compensation driven by the Company’s stock price appreciation, and higher interest expense.
|
|
|
|
Foreign Exchange Rate Variances
Viad conducts its foreign operations primarily in Canada, the United Kingdom, the Netherlands, Germany, and to a lesser extent, in certain other countries.
The following tables summarize the effects of foreign exchange rate variances on revenue and segment operating results (or “FX Impact”) from Viad’s significant international operations for the three and nine months ended September 30, 2017 and 2016, excluding the effect of acquisitions completedincome
Three months ended September 30, 2017 compared with the three months ended SeptemberJune 30, 2016
|
| Revenue |
|
| Segment Operating Results |
| ||||||||||||||||||
|
| Weighted-Average Exchange Rates |
|
| FX Impact |
|
| Weighted-Average Exchange Rates |
|
| FX Impact |
| ||||||||||||
|
| 2017 |
|
| 2016 |
|
| (in thousands) |
|
| 2017 |
|
| 2016 |
|
| (in thousands) |
| ||||||
GES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canada (CAD) |
| $ | 0.80 |
|
| $ | 0.77 |
|
| $ | 680 |
|
| $ | 0.80 |
|
| $ | 0.77 |
|
| $ | 44 |
|
United Kingdom (GBP) |
| $ | 1.32 |
|
| $ | 1.31 |
|
|
| 235 |
|
| $ | 1.31 |
|
| $ | 1.32 |
|
|
| 115 |
|
Europe (EUR) |
| $ | 1.19 |
|
| $ | 1.12 |
|
|
| 382 |
|
| $ | 1.18 |
|
| $ | 1.14 |
|
|
| 13 |
|
|
|
|
|
|
|
|
|
|
|
| 1,297 |
|
|
|
|
|
|
|
|
|
|
| 172 |
|
Pursuit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canada (CAD) |
| $ | 0.80 |
|
| $ | 0.77 |
|
|
| 2,119 |
|
| $ | 0.80 |
|
| $ | 0.77 |
|
|
| 1,218 |
|
|
|
|
|
|
|
|
|
|
| $ | 3,416 |
|
|
|
|
|
|
|
|
|
| $ | 1,390 |
|
Nine32
Six months ended SeptemberJune 30, 20172023 compared with the ninesix months ended SeptemberJune 30, 20162022
|
| Revenue |
|
| Segment Operating Results |
| ||||||||||||||||||
|
| Weighted-Average Exchange Rates |
|
| FX Impact |
|
| Weighted-Average Exchange Rates |
|
| FX Impact |
| ||||||||||||
|
| 2017 |
|
| 2016 |
|
| (in thousands) |
|
| 2017 |
|
| 2016 |
|
| (in thousands) |
| ||||||
GES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canada (CAD) |
| $ | 0.76 |
|
| $ | 0.76 |
|
| $ | (202 | ) |
| $ | 0.76 |
|
| $ | 0.78 |
|
| $ | (221 | ) |
United Kingdom (GBP) |
| $ | 1.28 |
|
| $ | 1.38 |
|
|
| (11,395 | ) |
| $ | 1.28 |
|
| $ | 1.25 |
|
|
| (210 | ) |
Europe (EUR) |
| $ | 1.11 |
|
| $ | 1.12 |
|
|
| (100 | ) |
| $ | 1.12 |
|
| $ | 1.13 |
|
|
| (39 | ) |
|
|
|
|
|
|
|
|
|
|
| (11,697 | ) |
|
|
|
|
|
|
|
|
|
| (470 | ) |
Pursuit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canada (CAD) |
| $ | 0.78 |
|
| $ | 0.77 |
|
|
| 1,134 |
|
| $ | 0.78 |
|
| $ | 0.77 |
|
|
| 762 |
|
|
|
|
|
|
|
|
|
|
| $ | (10,563 | ) |
|
|
|
|
|
|
|
|
| $ | 292 |
|
Viad’s three•
Analysis of Revenue and Operating Results by Reportable Segment
GESPursuit
The following tables provide a comparison of GES’ reported revenue and segment operating results to organic revenue(3) and organic segment operating results(3) for the three and nine months ended September 30, 2017 and 2016 in order to better understand the underlying performance of the segment without the effects of acquisitions or FX Impact.
|
| Three Months Ended |
|
| Three Months Ended |
|
|
|
| |||||||||||||||||||||||||||
|
| September 30, 2017 |
|
| September 30, 2016 |
|
| Change |
| |||||||||||||||||||||||||||
(in thousands) |
| As Reported |
|
| Acquisitions(1) |
|
| FX Impact |
|
| Organic(3) |
|
| As Reported |
|
| Acquisitions(2) |
|
| Organic(3) |
|
| As Reported |
|
| Organic(3) |
| |||||||||
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
| $ | 184,761 |
|
| $ | 19,063 |
|
| $ | — |
|
| $ | 165,698 |
|
| $ | 232,484 |
|
| $ | 10,354 |
|
| $ | 222,130 |
|
|
| (20.5 | )% |
|
| (25.4 | )% |
International |
|
| 54,040 |
|
|
| 152 |
|
|
| 1,297 |
|
|
| 52,591 |
|
|
| 60,926 |
|
|
| — |
|
|
| 60,926 |
|
|
| (11.3 | )% |
|
| (13.7 | )% |
Intersegment eliminations |
|
| (6,682 | ) |
|
| — |
|
|
| — |
|
|
| (6,682 | ) |
|
| (6,425 | ) |
|
| — |
|
|
| (6,425 | ) |
|
| (4.0 | )% |
|
| (4.0 | )% |
Total GES |
| $ | 232,119 |
|
| $ | 19,215 |
|
| $ | 1,297 |
|
| $ | 211,607 |
|
| $ | 286,985 |
|
| $ | 10,354 |
|
| $ | 276,631 |
|
|
| (19.1 | )% |
|
| (23.5 | )% |
Segment operating income (loss) (4): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
| $ | (2,851 | ) |
| $ | (1,080 | ) |
| $ | — |
|
| $ | (1,771 | ) |
| $ | 14,543 |
|
| $ | 458 |
|
| $ | 14,085 |
|
| ** |
|
| ** |
| ||
International |
|
| (2,870 | ) |
|
| (269 | ) |
|
| 172 |
|
|
| (2,773 | ) |
|
| 644 |
|
|
| — |
|
|
| 644 |
|
| ** |
|
| ** |
| ||
Total GES |
| $ | (5,721 | ) |
| $ | (1,349 | ) |
| $ | 172 |
|
| $ | (4,544 | ) |
| $ | 15,187 |
|
| $ | 458 |
|
| $ | 14,729 |
|
| ** |
|
| ** |
|
|
| Nine Months Ended |
|
| Nine Months Ended |
|
|
|
| |||||||||||||||||||||||||||
|
| September 30, 2017 |
|
| September 30, 2016 |
|
| Change |
| |||||||||||||||||||||||||||
(in thousands) |
| As Reported |
|
| Acquisitions(1) |
|
| FX Impact |
|
| Organic(3) |
|
| As Reported |
|
| Acquisitions(2) |
|
| Organic(3) |
|
| As Reported |
|
| Organic(3) |
| |||||||||
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
| $ | 684,003 |
|
| $ | 56,544 |
|
| $ | — |
|
| $ | 627,459 |
|
| $ | 636,299 |
|
| $ | 15,398 |
|
| $ | 620,901 |
|
|
| 7.5 | % |
|
| 1.1 | % |
International |
|
| 203,222 |
|
|
| 738 |
|
|
| (11,697 | ) |
|
| 214,181 |
|
|
| 187,689 |
|
|
| — |
|
|
| 187,689 |
|
|
| 8.3 | % |
|
| 14.1 | % |
Intersegment eliminations |
|
| (17,126 | ) |
|
| — |
|
|
| — |
|
|
| (17,126 | ) |
|
| (15,439 | ) |
|
| — |
|
|
| (15,439 | ) |
|
| (10.9 | )% |
|
| (10.9 | )% |
Total GES |
| $ | 870,099 |
|
| $ | 57,282 |
|
| $ | (11,697 | ) |
| $ | 824,514 |
|
| $ | 808,549 |
|
| $ | 15,398 |
|
| $ | 793,151 |
|
|
| 7.6 | % |
|
| 4.0 | % |
Segment operating income (loss)(4): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
| $ | 39,319 |
|
| $ | (913 | ) |
| $ | — |
|
| $ | 40,232 |
|
| $ | 37,907 |
|
| $ | 543 |
|
| $ | 37,364 |
|
|
| 3.7 | % |
|
| 7.7 | % |
International |
|
| 8,491 |
|
|
| (463 | ) |
|
| (470 | ) |
|
| 9,424 |
|
|
| 4,951 |
|
|
| — |
|
|
| 4,951 |
|
|
| 71.5 | % |
|
| 90.3 | % |
Total GES |
| $ | 47,810 |
|
| $ | (1,376 | ) |
| $ | (470 | ) |
| $ | 49,656 |
|
| $ | 42,858 |
|
| $ | 543 |
|
| $ | 42,315 |
|
|
| 11.6 | % |
|
| 17.3 | % |
** Change is greater than +/- 100 percent
|
|
|
|
|
|
|
|
Three months ended September 30, 2017 compared with the three months ended September 30, 2016
GES U.S.
GES U.S. revenue decreased $47.7 million or 20.5 percent, primarily due to negative show rotation of approximately $63 million and other non-recurring business in the comparable prior period, offset in part by incremental revenue of $8.7 million from the acquisitions of ON Services and Poken, new business wins, and U.S. base same-show revenue growth of 1.6 percent. U.S. base same-show revenue growth was lower due to one event with a reduced scope of service as result of a venue change. Base same-shows represented 37.0 percent of GES’ U.S. organic revenue*. Organic revenue* decreased $56.4 million or 25.4 percent.
GES U.S. operating results decreased $17.4 million to an operating loss of $2.9 million. This decrease was primarily due to the decrease in revenue driven by negative show rotation, offset in part by lower performance-based compensation expense and income of $2.8 million from a contract settlement. Organic operating income* decreased $15.9 million.
GES International
GES International revenue decreased $6.9 million or 11.3 percent, primarily due to negative show rotation of approximately $12 million, offset in part by new business wins and a favorable FX Impact of $1.3 million. Organic revenue* decreased $8.3 million or 13.7 percent.
GES International operating results decreased $3.5 million to an operating loss of $2.9 million. This decrease was primarily due to the decrease in revenue driven by negative show rotation. Organic operating income* decreased $3.4 million.
Nine months ended September 30, 2017 compared with the nine months ended September 30, 2016
GES U.S.
GES U.S. revenue increased $47.7 million or 7.5 percent, primarily due to incremental revenue of $41.1 million from the acquisitions of ON Services and Poken and U.S. base same-show revenue growth of 4.4 percent, offset in part by negative show rotation of approximately $7 million. Base same-shows represented 35.4 percent of GES’ U.S. organic revenue*. Organic revenue* increased $6.6 million or 1.1 percent.
GES U.S. operating income increased $1.4 million or 3.7 percent, primarily due to higher revenue, offset in part by a $7.5 million increase in depreciation and amortization expense primarily due to the acquisition of ON Services. Organic operating income* increased $2.9 million or 7.7 percent.
GES International
GES International revenue increased $15.5 million or 8.3 percent, primarily due to new business wins, offset in part by an unfavorable FX Impact of $11.7 million. GES International had positive show rotation of approximately $1.0 million. Organic revenue* increased $26.5 million or 14.1 percent.
GES International operating income increased $3.5 million or 71.5 percent, primarily due to higher revenue. Organic operating income* increased $4.5 million or 90.3 percent.
* Refer to footnote (3) in the above tables for more information about the non-GAAP financial measures of organic revenue and organic segment operating results.
2017 Outlook
Although GES has a diversified revenue base and long-term contracts for future shows, its revenue is affected by general economic and industry-specific conditions. The prospects for individual shows tend to be driven by the success of the industry related to those shows. In general, the exhibition and event industry is experiencing modest growth.
For the 2017 full year, management expects GES’ revenue to increase 6 percent to 7 percent versus 2016. The August 2016 acquisition of ON Services and the March 2017 acquisition of Poken are expected to provide incremental revenue of $43 million to $45 million and incremental Adjusted Segment EBITDA of $5 million to $7 million. Show rotation is expected to have a net negative impact on GES’ revenue of approximately $10 million compared to 2016. GES U.S. base same-show revenue is expected to increase at a mid-single digit rate. Management anticipates an unfavorable FX Impact on GES’ 2017 full year revenue and segment operating income of approximately $7 million and $0.2 million, respectively. The expected FX Impact reflects the assumption that the U.S. dollar to the British pound exchange rate will be $1.31 and the U.S. dollar to the Canadian dollar exchange rate will be $0.81 during the fourth quarter of 2017. For more information about Adjusted Segment EBITDA and segment operating income, see the “Non-GAAP Measures” section of this MD&A.
Management is executing a strategic growth plan to position GES as the preferred global, full-service provider for Live Events, with further reach to corporate events, consumer events, conferences, and exhibitions. In support of this strategy, the Company has acquired two leading audio-visual production businesses and four leading event technology businesses since 2014 that complement, enhance, and expand the current business and offer higher-margin growth opportunities. Management continues to pursue additional opportunities to acquire businesses with proven products and services to create the most comprehensive suite of services for the Live Events industry. During 2017, management intends to make selective investments in additional resources to capitalize on continued growth opportunities in under-penetrated categories of Live Events, such as corporate events and consumer events, and in cross-selling new services.
Additionally, management remains focused on improving the profitability of GES through continued efforts to more effectively manage labor costs by driving productivity gains through rigorous and strategic pre-show planning that reduces the ratio of labor costs to revenue. Improving this metric is a top priority of management and the Company continues to develop and enhance tools to support and systematize show site labor planning, measurement, and benchmarking.
Pursuit
The following tables providetable presents a comparison of Pursuit’s reported revenue and segment operating results to organic revenue(2) and organic segment operating results(2)income (loss) for the three and ninesix months ended SeptemberJune 30, 20172023 and 2016 in order2022:
|
| Three Months Ended |
|
|
|
|
| Six Months Ended |
|
|
|
| ||||||||||||
|
| June 30, |
|
|
|
|
| June 30, |
|
|
|
| ||||||||||||
(in thousands) |
| 2023 |
|
| 2022 |
|
| % |
|
| 2023 |
|
| 2022 |
|
| % |
| ||||||
Revenue(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Pursuit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Attractions |
| $ | 48,026 |
|
| $ | 39,096 |
|
|
| 22.8 | % |
| $ | 67,030 |
|
| $ | 51,597 |
|
|
| 29.9 | % |
Hospitality |
|
| 36,436 |
|
|
| 34,101 |
|
|
| 6.8 | % |
|
| 47,639 |
|
|
| 43,516 |
|
|
| 9.5 | % |
Transportation |
|
| 3,441 |
|
|
| 3,837 |
|
|
| (10.3 | )% |
|
| 5,414 |
|
|
| 5,125 |
|
|
| 5.6 | % |
Other |
|
| 571 |
|
|
| 565 |
|
|
| 1.1 | % |
|
| 1,054 |
|
|
| 1,145 |
|
|
| (7.9 | )% |
Total Pursuit |
| $ | 88,474 |
|
| $ | 77,599 |
|
|
| 14.0 | % |
| $ | 121,137 |
|
| $ | 101,383 |
|
|
| 19.5 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Segment operating income (loss)(2): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Total Pursuit |
| $ | 9,811 |
|
| $ | 5,571 |
|
|
| 76.1 | % |
| $ | (9,301 | ) |
| $ | (15,627 | ) |
|
| 40.5 | % |
|
| Three Months Ended |
|
| Three Months Ended |
|
|
|
| |||||||||||||||||||||||||||
|
| September 30, 2017 |
|
| September 30, 2016 |
|
| Change |
| |||||||||||||||||||||||||||
(in thousands) |
| As Reported |
|
| Acquisitions(1) |
|
| FX Impact |
|
| Organic(2) |
|
| As Reported |
|
| Acquisitions |
|
| Organic(2) |
|
| As Reported |
|
| Organic(2) |
| |||||||||
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pursuit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hospitality |
| $ | 39,577 |
|
| $ | — |
|
| $ | 236 |
|
| $ | 39,341 |
|
| $ | 39,664 |
|
| $ | — |
|
| $ | 39,664 |
|
|
| (0.2 | )% |
|
| (0.8 | )% |
Attractions |
|
| 59,059 |
|
|
| 4,227 |
|
|
| 1,700 |
|
|
| 53,132 |
|
|
| 42,883 |
|
|
| — |
|
|
| 42,883 |
|
|
| 37.7 | % |
|
| 23.9 | % |
Transportation |
|
| 6,252 |
|
|
| — |
|
|
| 201 |
|
|
| 6,051 |
|
|
| 5,097 |
|
|
| — |
|
|
| 5,097 |
|
|
| 22.7 | % |
|
| 18.7 | % |
Travel Planning |
|
| 2,874 |
|
|
| — |
|
|
| 29 |
|
|
| 2,845 |
|
|
| 10,908 |
|
|
| — |
|
|
| 10,908 |
|
|
| (73.7 | )% |
|
| (73.9 | )% |
Intra-Segment Eliminations & Other |
|
| (782 | ) |
|
| — |
|
|
| (47 | ) |
|
| (735 | ) |
|
| (1,150 | ) |
|
| — |
|
|
| (1,150 | ) |
|
| 32.0 | % |
|
| 36.1 | % |
Total Pursuit |
| $ | 106,980 |
|
| $ | 4,227 |
|
| $ | 2,119 |
|
| $ | 100,634 |
|
| $ | 97,402 |
|
| $ | — |
|
| $ | 97,402 |
|
|
| 9.8 | % |
|
| 3.3 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating income (3): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Pursuit |
| $ | 53,860 |
|
| $ | 2,227 |
|
| $ | 1,218 |
|
| $ | 50,415 |
|
| $ | 44,248 |
|
| $ | — |
|
| $ | 44,248 |
|
|
| 21.7 | % |
|
| 13.9 | % |
|
| Nine Months Ended |
|
| Nine Months Ended |
|
|
|
| |||||||||||||||||||||||||||
|
| September 30, 2017 |
|
| September 30, 2016 |
|
| Change |
| |||||||||||||||||||||||||||
(in thousands) |
| As Reported |
|
| Acquisitions(1) |
|
| FX Impact |
|
| Organic(2) |
|
| As Reported |
|
| Acquisitions(1) |
|
| Organic(2) |
|
| As Reported |
|
| Organic(2) |
| |||||||||
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pursuit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hospitality |
| $ | 55,279 |
|
| $ | 13,440 |
|
| $ | 145 |
|
| $ | 41,694 |
|
| $ | 56,791 |
|
| $ | 12,935 |
|
| $ | 43,856 |
|
|
| (2.7 | )% |
|
| (4.9 | )% |
Attractions |
|
| 88,910 |
|
|
| 21,256 |
|
|
| 910 |
|
|
| 66,744 |
|
|
| 61,056 |
|
|
| 13,597 |
|
|
| 47,459 |
|
|
| 45.6 | % |
|
| 40.6 | % |
Transportation |
|
| 11,906 |
|
|
| — |
|
|
| 120 |
|
|
| 11,786 |
|
|
| 10,150 |
|
|
| — |
|
|
| 10,150 |
|
|
| 17.3 | % |
|
| 16.1 | % |
Travel Planning |
|
| 4,334 |
|
|
| 1,268 |
|
|
| 9 |
|
|
| 3,057 |
|
|
| 16,861 |
|
|
| 1,529 |
|
|
| 15,332 |
|
|
| (74.3 | )% |
|
| (80.1 | )% |
Intra-Segment Eliminations & Other |
|
| (848 | ) |
|
| — |
|
|
| (50 | ) |
|
| (798 | ) |
|
| (1,747 | ) |
|
| — |
|
|
| (1,747 | ) |
|
| 51.5 | % |
|
| 54.3 | % |
Total Pursuit |
| $ | 159,581 |
|
| $ | 35,964 |
|
| $ | 1,134 |
|
| $ | 122,483 |
|
| $ | 143,111 |
|
| $ | 28,061 |
|
| $ | 115,050 |
|
|
| 11.5 | % |
|
| 6.5 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating income (3): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Pursuit |
| $ | 53,523 |
|
| $ | 8,431 |
|
| $ | 762 |
|
| $ | 44,330 |
|
| $ | 44,733 |
|
| $ | 8,870 |
|
| $ | 35,863 |
|
|
| 19.6 | % |
|
| 23.6 | % |
|
|
|
|
|
|
Three months ended SeptemberJune 30, 20172023 compared with the three months ended SeptemberJune 30, 20162022
Pursuit revenue increased $9.6$10.9 million or 9.8 percent, due to strong growth from attractions, primarily thedriven by stronger international visitation in Western Canada and Iceland. Visitation at Pursuit’s Golden Skybridge, Sky Lagoon, and Banff Gondola attractions increased 62%, 22% and Columbia Icefield17%, respectively. Collectively, Pursuit’s new attractions that were opened or acquired after January 1, 2022, including the Glacier Adventure attractions,Raft Company and Forest Park Alpine Hotel, contributed incremental revenue of $1.3 million during the three months ended June 30, 2023.
Pursuit segment operating income increased $4.2 million from the acquisition of FlyOver Canada, and a favorable FX Impact of $2.1 million. This increase was offset in part by a reduction in travel planning as the Company completes the previously announced downsizing of Brewster Travel Canada’s package tours line of business and a revenue decline of $2.1 million due to the fire-related closure of the Mount Royal Hotel. Organic revenue* increased $3.2 million or 3.3 percent.
Pursuit operating income increased $9.6 million or 21.7 percent,prior year period primarily due to the increase in revenue, from high-margin attractions. Operating income included a $1.1 million business interruption gain for the recovery of lost profits from the Mount Royal Hotel. Organic operating income* increased $6.2 million or 13.9 percent.
Nine months ended September 30, 2017 compared with the nine months ended September 30, 2016
Pursuit revenue increased $16.5 million or 11.5 percent, due to strong growth from attractions primarily driven by the re-opening of the Banff Gondola (which was closed for renovations from October 2015 through April 2016), incremental revenue of $7.9 million from the acquisitions of FlyOver Canada and CATC, and a favorable FX Impact of $1.1 million. This increase was offset in part by a reductionthe increase in travel planning asoperating costs to support higher business volume during the three months ended June 30, 2023.
Six months ended June 30, 2023 compared with the six months ended June 30, 2022
Pursuit revenue increased $19.8 million driven by stronger international visitation. Visitation at Pursuit’s Golden Skybridge, Sky Lagoon and Banff Gondola attractions increased 62%, 43% and 20%, respectively. Collectively, Pursuit’s new attractions that were opened or acquired after January 1, 2022, including the Glacier Raft Company completesand Forest Park Alpine Hotel, contributed incremental revenue of $2.1 million during the previously announced downsizing of Brewster Travel Canada’s package tours line of business and a revenue decline of $4.6six months ended June 30, 2023.
33
Pursuit segment operating loss improved $6.3 million due tofrom the fire-related closure of the Mount Royal Hotel. Organic revenue* increased $7.4 million or 6.5 percent.
Pursuit operating income increased $8.8 million or 19.6 percent,prior year period primarily due to the increase in revenue, from high-margin attractions. Operating income included a $2.2 millionoffset in part by the increase in operating costs to support higher business interruption gain forvolume during the recovery of lost profits from the Mount Royal Hotel. Organic operating income* increased $8.5 million or 23.6 percent.six months ended June 30, 2023.
* Refer to footnote (2) in the above tables for more information about the non-GAAP financial measures of organic revenue and organic segment operating results.
Management usesWe use the following key business metrics to evaluate the performance of Pursuit’s hospitalityattractions business:
We use the following key business metrics, are commonly usedcommon in the hospitality industry, to measure performance.evaluate Pursuit’s hospitality business:
Revenue per Available Room.Room (“RevPAR”). RevPAR is calculated as total rooms revenue divided by the total number of room nights available for all comparable Pursuit hospitality properties during the period. Total rooms revenue does not include non-rooms revenue, which consists of ancillary revenue generated by hospitality properties, such as food and beverage and retail revenue. RevPAR measures the period-over-period change in rooms revenue per available room for comparable hospitality properties. RevPAR is affected by average daily rate and occupancy, which have different implications on profitability.
Average Daily Rate.Rate (“ADR”). ADR is calculated as total rooms revenue divided by the total number of room nights sold for all comparable Pursuit hospitality properties during the period. ADR is used to assess the pricing levels that the hospitality properties are able to generate.realize. Increases in ADR at hospitality properties lead to increases in rooms revenue with no substantial effect on variable costs, therefore having a greater impact on margins than increases in occupancy.
Occupancy. Occupancy is calculated as the total number of room nights sold divided by the total number of room nights available for all comparable Pursuit hospitality properties during the period. Occupancy measures the utilization of the available capacity at the hospitality properties. Increases in occupancy result in increases in rooms revenue and additional variable operating costs (including housekeeping services, utilities, and room amenity costs), as well as increasedincreases in ancillary non-rooms revenue (including food and beverage and retail revenue).
Management evaluates the performance of Pursuit’s attractions business utilizing the number of passengers and total attractions revenue per passenger. The number of passengers allows management to assess the volume of visitor activity at each attraction during the period. Total attractions revenue per passenger is calculated as total attractions revenue divided by the total number of passengers at all Pursuit attractions during the period. Total attractions revenue includes ticket sales and ancillary revenue generated by attractions, such as food and beverage and retail revenue. Total attractions revenue per passenger measures the total spend per visitor that attraction properties are able to capture, which is important to the profitability of the attractions business.
The following table provides Pursuit’s same-store key performance indicators forindicators:
|
| Three Months Ended |
|
| Three Months Ended |
|
|
|
|
|
|
| ||||||||||||||||||||||||
|
| June 30, 2023 |
|
| June 30, 2022 |
|
| % Change |
| |||||||||||||||||||||||||||
|
| As |
|
| New Experiences(1) |
|
| Same-Store(2) |
|
| As |
|
| New Experiences(1) |
|
| FX Impact(3) |
|
| Same-Store(2) |
|
| As |
|
| Same-Store(2) |
| |||||||||
Attractions Key Performance Indicators: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Number of visitors |
|
| 914,317 |
|
|
| 8,328 |
|
|
| 905,989 |
|
|
| 742,920 |
|
|
| 6,450 |
|
|
| — |
|
|
| 736,470 |
|
|
| 23.1 | % |
|
| 23.0 | % |
Ticket revenue (in thousands) |
| $ | 36,543 |
|
| $ | 626 |
|
| $ | 35,917 |
|
| $ | 29,337 |
|
| $ | 480 |
|
| $ | 1,041 |
|
| $ | 27,815 |
|
|
| 24.6 | % |
|
| 29.1 | % |
Effective ticket price |
| $ | 39.97 |
|
| $ | 75.18 |
|
| $ | 39.64 |
|
| $ | 39.49 |
|
| $ | 74.46 |
|
| $ | — |
|
| $ | 37.77 |
|
|
| 1.2 | % |
|
| 5.0 | % |
Attractions revenue (in thousands) |
| $ | 48,026 |
|
| $ | 1,070 |
|
| $ | 46,955 |
|
| $ | 39,096 |
|
| $ | 817 |
|
| $ | 1,429 |
|
| $ | 36,850 |
|
|
| 22.8 | % |
|
| 27.4 | % |
Revenue per attraction visitor |
| $ | 52.53 |
|
| $ | 128.51 |
|
| $ | 51.83 |
|
| $ | 52.62 |
|
| $ | 126.74 |
|
| $ | — |
|
| $ | 50.04 |
|
|
| (0.2 | )% |
|
| 3.6 | % |
Hospitality Key Performance Indicators: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Room nights available |
|
| 163,344 |
|
|
| 10,101 |
|
|
| 153,243 |
|
|
| 156,306 |
|
|
| 1,403 |
|
|
| — |
|
|
| 154,903 |
|
|
| 4.5 | % |
|
| (1.1 | )% |
Rooms revenue (in thousands) |
| $ | 22,106 |
|
| $ | 1,394 |
|
| $ | 20,712 |
|
| $ | 20,559 |
|
| $ | 317 |
|
| $ | 523 |
|
| $ | 19,719 |
|
|
| 7.5 | % |
|
| 5.0 | % |
RevPAR |
| $ | 135.33 |
|
| $ | 138.05 |
|
| $ | 135.16 |
|
| $ | 131.53 |
|
| $ | 225.94 |
|
| $ | — |
|
| $ | 127.30 |
|
|
| 2.9 | % |
|
| 6.2 | % |
Occupancy |
|
| 68.0 | % |
|
| 60.4 | % |
|
| 68.5 | % |
|
| 67.9 | % |
|
| 61.6 | % |
|
| — |
|
|
| 68.0 | % |
|
| 0.1 | % |
|
| 0.7 | % |
ADR |
| $ | 199.13 |
|
| $ | 228.41 |
|
| $ | 197.42 |
|
| $ | 193.70 |
|
| $ | 366.89 |
|
| $ | — |
|
| $ | 187.36 |
|
|
| 2.8 | % |
|
| 5.4 | % |
Hospitality revenue (in thousands) |
| $ | 36,436 |
|
| $ | 1,516 |
|
| $ | 34,920 |
|
| $ | 34,101 |
|
| $ | 429 |
|
| $ | 669 |
|
| $ | 33,003 |
|
|
| 6.8 | % |
|
| 5.8 | % |
34
|
| Six Months Ended |
|
| Six Months Ended |
|
|
|
|
|
|
| ||||||||||||||||||||||||
|
| June 30, 2023 |
|
| June 30, 2022 |
|
| % Change |
| |||||||||||||||||||||||||||
|
| As |
|
| New Experiences(1) |
|
| Same-Store(2) |
|
| As |
|
| New Experiences(1) |
|
| FX Impact(3) |
|
| Same-Store(2) |
|
| As |
|
| Same-Store(2) |
| |||||||||
Attractions Key Performance Indicators: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Number of visitors |
|
| 1,323,453 |
|
|
| 8,328 |
|
|
| 1,315,125 |
|
|
| 1,034,498 |
|
|
| 6,450 |
|
|
| — |
|
|
| 1,028,048 |
|
|
| 27.9 | % |
|
| 27.9 | % |
Ticket revenue (in thousands) |
| $ | 50,804 |
|
| $ | 626 |
|
| $ | 50,178 |
|
| $ | 38,539 |
|
| $ | 480 |
|
| $ | 1,674 |
|
| $ | 36,385 |
|
|
| 31.8 | % |
|
| 37.9 | % |
Effective ticket price |
| $ | 38.39 |
|
| $ | 75.18 |
|
| $ | 38.15 |
|
| $ | 37.25 |
|
| $ | 74.46 |
|
| $ | — |
|
| $ | 35.39 |
|
|
| 3.0 | % |
|
| 7.8 | % |
Attractions revenue (in thousands) |
| $ | 67,030 |
|
| $ | 1,203 |
|
| $ | 65,827 |
|
| $ | 51,597 |
|
| $ | 817 |
|
| $ | 2,308 |
|
| $ | 48,473 |
|
|
| 29.9 | % |
|
| 35.8 | % |
Revenue per attraction visitor |
| $ | 50.65 |
|
| $ | 144.49 |
|
| $ | 50.05 |
|
| $ | 49.88 |
|
| $ | 126.74 |
|
| $ | — |
|
| $ | 47.15 |
|
|
| 1.5 | % |
|
| 6.2 | % |
Hospitality Key Performance Indicators: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Room nights available |
|
| 278,765 |
|
|
| 18,980 |
|
|
| 259,785 |
|
|
| 268,242 |
|
|
| 1,403 |
|
|
| — |
|
|
| 266,839 |
|
|
| 3.9 | % |
|
| (2.6 | )% |
Rooms revenue (in thousands) |
| $ | 29,696 |
|
| $ | 1,968 |
|
| $ | 27,728 |
|
| $ | 27,462 |
|
| $ | 317 |
|
| $ | 916 |
|
| $ | 26,228 |
|
|
| 8.1 | % |
|
| 5.7 | % |
RevPAR |
| $ | 106.53 |
|
| $ | 103.69 |
|
| $ | 106.73 |
|
| $ | 102.38 |
|
| $ | 225.94 |
|
| $ | — |
|
| $ | 98.29 |
|
|
| 4.1 | % |
|
| 8.6 | % |
Occupancy |
|
| 64.5 | % |
|
| 57.2 | % |
|
| 65.0 | % |
|
| 61.9 | % |
|
| 61.6 | % |
|
| — |
|
|
| 62.0 | % |
|
| 4.1 | % |
|
| 4.9 | % |
ADR |
| $ | 165.24 |
|
| $ | 181.34 |
|
| $ | 164.21 |
|
| $ | 165.28 |
|
| $ | 366.89 |
|
| $ | — |
|
| $ | 158.66 |
|
|
| 0.0 | % |
|
| 3.5 | % |
Hospitality revenue (in thousands) |
| $ | 47,639 |
|
| $ | 2,096 |
|
| $ | 45,543 |
|
| $ | 43,516 |
|
| $ | 429 |
|
| $ | 1,179 |
|
| $ | 41,908 |
|
|
| 9.5 | % |
|
| 8.7 | % |
|
| Three Months Ended |
|
| Nine Months Ended |
| ||||||||||||||||||
|
| September 30, |
|
| September 30, |
| ||||||||||||||||||
|
| 2017 |
|
| 2016 |
|
| % Change |
|
| 2017 |
|
| 2016 |
|
| % Change |
| ||||||
Same-Store Key Performance Indicators (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hospitality: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Room nights available |
|
| 108,015 |
|
|
| 107,635 |
|
|
| 0.4 | % |
|
| 152,366 |
|
|
| 150,604 |
|
|
| 1.2 | % |
RevPAR |
| $ | 200 |
|
| $ | 192 |
|
|
| 4.2 | % |
| $ | 140 |
|
| $ | 133 |
|
|
| 5.3 | % |
ADR |
| $ | 227 |
|
| $ | 213 |
|
|
| 6.6 | % |
| $ | 187 |
|
| $ | 178 |
|
|
| 5.1 | % |
Occupancy |
|
| 87.9 | % |
|
| 90.1 | % |
|
| (2.2 | )% |
|
| 75.2 | % |
|
| 74.8 | % |
|
| 0.4 | % |
Attractions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Passengers |
|
| 1,139,516 |
|
|
| 1,092,356 |
|
|
| 4.3 | % |
|
| 1,626,121 |
|
|
| 1,453,899 |
|
|
| 11.8 | % |
Revenue per passenger |
| $ | 48 |
|
| $ | 40 |
|
|
| 20.0 | % |
| $ | 42 |
|
| $ | 33 |
|
|
| 27.3 | % |
|
|
Hospitality. Room nights available increased during the nine months ended September 30, 2017 primarily due to changes in exchange rates for same-store Pursuit experiences located outside of the opening dates for certain seasonal properties. RevPARUnited States.
Attractions. Attractions ticket revenue on a same-store basis increased $8.1 million on a 23.0% increase in visitors during the three months ended SeptemberJune 30, 2017 primarily due to an2023 and increased $13.8 million on a 27.9% increase in ADR driven by management’s focus on yield management, offset in part by lower occupancy primarily due to forest fires in the Glacier National Park area. RevPAR increasedvisitors during the ninesix months ended SeptemberJune 30, 20172023, driven primarily due to an increase in occupancyby higher international visitation and an increase in ADR driven by management’s focus on yield management, as well as an increase in occupancy reflecting strong park visitation during the first nine months of 2017.higher effective ticket prices.
AttractionsHospitality. The increase in the number of passengersRevPAR on a same-store basis during the three months ended SeptemberJune 30, 20172023 was primarily due to management’s efforts to enhance the guest experience and its focus on yieldhigher ADR driven by revenue management combined with strong park visitation in Canada.efforts. The increase in the number of passengersRevPAR on a same-store basis during the ninesix months ended SeptemberJune 30, 20172023 was primarily due to the Banff Gondola being closed for renovations during the first four months of 2016. Excluding the Banff Gondola passengers, total same-store attraction passengers for the nine month period would have increased 36,158 in 2017 driven by management’s efforts to enhance the guest experience and its focus on yield management, combined with strong park visitation in Canada.
Revenue per passenger increased during 2017 primarily due to higher effective ticket prices driven by management’s focus on yield management,occupancy and higher revenue from ancillary food and beverage and retail services primarily resulting from management’s recent renovationsADR.
GES
The following table presents a comparison of the retail and food and beverage operations at the Banff Gondola and the food and beverage operations at the Columbia Icefield Glacier Discovery Center.
During 2016, Pursuit derived approximately 59 percent of its revenue and 74 percent of its segment operating income from its Canadian operations, which are largely dependent on foreign customer visitation. Accordingly, the strengthening or weakening of the Canadian dollar, relative to other currencies, could affect customer volumes and the results of operations. Additionally, Pursuit is affected by consumer discretionary spending on tourism activities.
2017 Outlook
For the 2017 full year, management expects Pursuit’s revenue to increase 12 percent to 14 percent. The December 2016 acquisition of FlyOver Canada and the March 2016 acquisition of CATC, combined, are expected to provide incremental revenue of $10 million to $11 million and incremental Adjusted Segment EBITDA of $2 million to $3.5 million, which includes an incremental first quarter seasonal operating loss of approximately $2.3 million from CATC.
Additionally, management expects Pursuit’s revenue to be negatively impacted by approximately $13 million as the Company completes the previously announced downsizing of Brewster Travel Canada’s package tours line of business. The fire-related closure of the Mount Royal Hotel is expected to negatively impact revenue by approximately $5 million. Management anticipates a favorable FX Impact on Pursuit’s 2017 full yearGES’ reported revenue and segment operating income during the three and six months ended June 30, 2023 and 2022:
|
| Three Months Ended |
|
|
|
|
| Six Months Ended |
|
|
|
| ||||||||||||
|
| June 30, |
|
|
|
|
| June 30, |
|
|
|
| ||||||||||||
(in thousands) |
| 2023 |
|
| 2022 |
|
| % |
|
| 2023 |
|
| 2022 |
|
| % |
| ||||||
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
GES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Spiro |
| $ | 80,368 |
|
| $ | 89,425 |
|
|
| (10.1 | )% |
| $ | 140,730 |
|
| $ | 132,241 |
|
|
| 6.4 | % |
GES Exhibitions |
|
| 154,534 |
|
|
| 154,600 |
|
|
| — |
|
|
| 324,031 |
|
|
| 266,431 |
|
|
| 21.6 | % |
Intersegment eliminations |
|
| (3,065 | ) |
|
| (2,421 | ) |
|
| (26.6 | )% |
|
| (4,796 | ) |
|
| (3,492 | ) |
|
| (37.3 | )% |
Total GES |
| $ | 231,837 |
|
| $ | 241,604 |
|
|
| (4.0 | )% |
| $ | 459,965 |
|
| $ | 395,180 |
|
|
| 16.4 | % |
Segment operating income(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
GES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Spiro |
| $ | 8,279 |
|
| $ | 14,847 |
|
|
| (44.2 | )% |
| $ | 11,453 |
|
| $ | 14,608 |
|
|
| (21.6 | )% |
GES Exhibitions |
|
| 15,354 |
|
|
| 16,273 |
|
|
| (5.6 | )% |
|
| 25,764 |
|
|
| 14,918 |
|
|
| 72.7 | % |
Total GES |
| $ | 23,633 |
|
| $ | 31,120 |
|
|
| (24.1 | )% |
| $ | 37,217 |
|
| $ | 29,526 |
|
|
| 26.0 | % |
35
Three months ended June 30, 2023 compared with the three months ended June 30, 2022
Spiro revenue decreased $9.1 million primarily due to the sale of substantially all of the assets of ON Services in December of 2022, which contributed revenue of $9.2 million during the three months ended June 30, 2022, and shifts in timing of client spend, offset in part by positive show rotation from major non-annual shows of approximately $13 million, which represent shows greater than $1.0 million, and new client wins.
GES Exhibitions revenue remained relatively flat primarily due to same-show revenue growth of approximately 18.9%, offset in part by shifts in timing of events driven by pandemic-related disruptions in 2022 that resulted in shows that were postponed from the 2022 first quarter and into the 2022 second quarter that returned to their normal first quarter schedules in 2023 that impacted revenue of approximately $10.0 million, the sale of substantially all of the assets of ON Services in December of 2022, which contributed revenue of $6.4 million during the three months ended June 30, 2022, and negative show rotation from major non-annual shows of approximately $3 million.
Spiro segment operating income decreased $6.6 million primarily due to decreased revenue and the restaffing of the workforce from pandemic levels.
GES Exhibitions segment operating income decreased $0.9 million primarily due to the restaffing of the workforce from pandemic levels.
Six months ended June 30, 2023 compared with the six months ended June 30, 2022
Spiro revenue increased $8.5 million primarily due to positive show rotation from major non-annual shows of approximately $16 million and new client wins, offset in part by the sale of substantially all of the assets of ON Services in December of 2022, which contributed revenue of $14.2 million during the six months ended June 30, 2022, and shifts in timing of client spend.
GES Exhibitions revenue increased $57.6 million, primarily due to same-show revenue growth of approximately 23.8% and positive show rotation of approximately $2 million, and $0.7offset in part by the sale of substantially all of the assets of ON Services in December of 2022, which contributed revenue of $9.8 million respectively. Management expects these factors will be more than offset by organic growth across the rest of Pursuit’s lines of business.
In July 2017, Viad resolved its property and business interruption insurance claims related to the Mount Royal Hotel fire for a total of $36.3 million, inclusive of $9.0 million received during the first and second quarters of 2017. Viad recorded an additional impairment recovery of approximately $24.7 million related to construction costs to re-open the hotel, $1.1 million was recorded as a business interruption gain for the recovery of lost profits, and the remaining $1.5 million was recorded as deferred income that will be recognized over the periods the business interruption losses are actually incurred. Management anticipates recognizing approximately $0.5 million of the business interruption recovery during the remainder of 2017 with approximately $1 million being deferred to the first half of 2018.six months ended June 30, 2022.
The Pursuit guidance ranges include approximately $1 million in revenue and approximately $3 million in adjusted segment EBITDA related to the Mount Royal Hotel, which reflects the 2017 portion of business interruption insurance recoveries (including both business interruption gains for lost profits and contra-expense for on-going operating costs) and the re-opening of most of the property’s retail tenants and one of its dining operations. The hotel itself is expected to remain closed until mid-2018. For more information about Adjusted Segment EBITDA andSpiro segment operating income see the “Non-GAAP Measures” section of this MD&A.
Corporate Activities
|
| Three Months Ended |
|
|
|
|
|
| Nine Months Ended |
|
|
|
|
| ||||||||||
|
| September 30, |
|
|
|
|
|
| September 30, |
|
|
|
|
| ||||||||||
(in thousands) |
| 2017 |
|
| 2016 |
|
| Percentage Change 2017 vs. 2016 |
|
| 2017 |
|
| 2016 |
|
| Percentage Change 2017 vs. 2016 |
| ||||||
Corporate activities |
| $ | 4,474 |
|
| $ | 2,772 |
|
|
| 61.4 | % |
| $ | 10,092 |
|
| $ | 7,390 |
|
|
| 36.6 | % |
The increase in corporate activities expense for the three and nine months ended September 30, 2017 wasdecreased $3.2 million primarily due to an increasethe restaffing of the workforce from pandemic levels, offset in performance-based compensation expense drivenpart by Viad’s common stock price appreciation.higher revenue.
|
| Three Months Ended |
|
|
|
|
|
| Nine Months Ended |
|
|
|
|
| ||||||||||
|
| September 30, |
|
|
|
|
|
| September 30, |
|
|
|
|
| ||||||||||
(in thousands) |
| 2017 |
|
| 2016 |
|
| Percentage Change 2017 vs. 2016 |
|
| 2017 |
|
| 2016 |
|
| Percentage Change 2017 vs. 2016 |
| ||||||
Interest expense |
| $ | 2,117 |
|
| $ | 1,489 |
|
|
| 42.2 | % |
| $ | 6,281 |
|
| $ | 4,109 |
|
|
| 52.9 | % |
The increase in interest expense for the three and nine months ended September 30, 2017 wasGES Exhibitions segment operating income increased $10.8 million, primarily due to higher debt balancesthe increase in 2017 resultingrevenue, offset in part by the restaffing of the workforce from acquisitions completed during August and December of 2016.pandemic levels.
Restructuring Charges
|
| Three Months Ended |
|
|
|
|
|
| Nine Months Ended |
|
|
|
|
| ||||||||||
|
| September 30, |
|
|
|
|
|
| September 30, |
|
|
|
|
| ||||||||||
(in thousands) |
| 2017 |
|
| 2016 |
|
| Percentage Change 2017 vs. 2016 |
|
| 2017 |
|
| 2016 |
|
| Percentage Change 2017 vs. 2016 |
| ||||||
Restructuring charges |
| $ | 255 |
|
| $ | 1,697 |
|
|
| (85.0 | )% |
| $ | 817 |
|
| $ | 3,664 |
|
|
| (77.7 | )% |
Restructuring charges during the three and nine months ended September 30, 2017 and 2016 were primarily related to the elimination of certain positions and facility consolidations in GES.Other Expenses
Impairment Charges (Recoveries)
|
| Three Months Ended |
|
|
|
| Nine Months Ended |
|
|
|
| Three Months Ended |
|
|
|
| Six Months Ended |
|
|
|
| |||||||||||||||||||||||
|
| September 30, |
|
|
|
| September 30, |
|
|
|
| June 30, |
|
|
|
| June 30, |
|
|
|
| |||||||||||||||||||||||
(in thousands) |
| 2017 |
|
| 2016 |
|
| Percentage Change 2017 vs. 2016 |
| 2017 |
|
| 2016 |
|
| Percentage Change 2017 vs. 2016 |
| 2023 |
|
| 2022 |
|
| % Change |
|
| 2023 |
|
| 2022 |
|
| % Change |
| ||||||||||
Impairment charges (recoveries) |
| $ | (24,467 | ) |
| $ | 120 |
|
| ** |
| $ | (29,098 | ) |
| $ | 120 |
|
| ** | ||||||||||||||||||||||||
Corporate activities |
| $ | 3,511 |
|
| $ | 3,440 |
|
|
| 2.1 | % |
| $ | 6,676 |
|
| $ | 6,113 |
|
|
| 9.2 | % | ||||||||||||||||||||
ON Services sale purchase price adjustment |
| $ | 204 |
|
| $ | — |
|
| ** |
|
| $ | 204 |
|
| $ | — |
|
| ** |
| ||||||||||||||||||||||
Interest expense, net |
| $ | 12,356 |
|
| $ | 7,761 |
|
|
| 59.2 | % |
| $ | 24,605 |
|
| $ | 13,638 |
|
|
| 80.4 | % | ||||||||||||||||||||
Other expense, net |
| $ | 448 |
|
| $ | 612 |
|
|
| (26.8 | )% |
| $ | 979 |
|
| $ | 1,250 |
|
|
| (21.7 | )% | ||||||||||||||||||||
Restructuring charges |
| $ | 192 |
|
| $ | 1,426 |
|
|
| (86.5 | )% |
| $ | 645 |
|
| $ | 2,080 |
|
|
| (69.0 | )% | ||||||||||||||||||||
Impairment charges |
| $ | — |
|
| $ | — |
|
| ** |
|
| $ | — |
|
| $ | 583 |
|
|
| (100.0 | )% | |||||||||||||||||||||
Income tax expense |
| $ | 5,028 |
|
| $ | 3,359 |
|
|
| 49.7 | % |
| $ | 4,450 |
|
| $ | 777 |
|
| ** |
| |||||||||||||||||||||
Income (loss) from discontinued operations |
| $ | (143 | ) |
| $ | 52 |
|
| ** |
|
| $ | (201 | ) |
| $ | 327 |
|
| ** |
|
** Change is greater than +/- 100 percent100%
On December 29, 2016,Interest Expense, net – The increase in interest expense during the Mount Royal Hotelthree and six months ended June 30, 2023 was damaged byprimarily due to higher interest rates in 2023, and to a firelesser extent to a $1.9 million reduction in capitalized interest recorded during the six months ended June 30, 2023 as compared to the six months ended June 30, 2022.
Restructuring Charges – The decrease in restructuring changes during the three and closed. During July 2017, the Company resolved its property and business interruption insurance claimssix months ended June 30, 2023 was primarily related to the fire forour 2022 transformation and streamlining efforts at GES to significantly reduce costs and create a total of $36.3 million. During the three months ended September 30, 2017, the Company received insurance proceeds of $27.3 million, of which $24.7 million was recorded as an impairment recovery (partially offset by impairment charges of $0.2 million) related to construction costs to re-open the hotel, $1.1 million was recorded as a business interruption gain for the recovery of lost profits,lower and the remaining $1.5 million was recorded as deferred income, which will be recognized over the periods the business interruption losses are actually incurred. During the nine months ended September 30, 2017, the Company received $36.3 million in insurance proceeds, of which $2.2 million was allocated to an insurance receivable, $29.3 million was recorded as an impairment recovery (partially offset by impairment charges of $0.2 million) related to construction costs to re-open the hotel, $2.2 million was recorded as a business interruption gain for the recovery of lost profits, $1.1 million was recorded as contra-expense to offset non-capitalizable costs incurred by the Company, and the remaining $1.5 million was recorded as deferred income, which will be recognized over the periods the business interruption losses are actually incurred.more flexible cost structure focused on servicing our more profitable market segments.
36
Income Taxes
Tax Expense – The effective tax ratesrate was 30.0% for the three months ended SeptemberJune 30, 20172023 and 2016 were 30.4 percent and 33.8 percent, respectively. The effective tax rates for the nine months ended September 30, 2017 and 2016 were 29.0 percent and 33.1 percent, respectively. The decrease14.3% for the three months ended June 30, 2022. The effective tax rate was primarily due to higher foreign income taxed at lower rates. The decreasea negative 86.2% for the ninesix months was primarily due to higher foreign income taxed at lower rates,ended June 30, 2023 and a negative 8.0% for six months ended June 30, 2022. The effective tax rate differed from the release21% federal rate for the three months ended June 30, 2023 and June 30, 2022 as a result of excluding the tax benefit on jurisdictions where we have a valuation allowance related to foreign net operating losses, and the adoptionchange in income or loss in our jurisdictions. The effective tax rate differed from the federal rate for the six months ended June 30, 2023 and June 30, 2022 also as a result of new accounting guidance, effectiveexcluding tax benefits in certain jurisdictions, the mix of income or loss by jurisdiction, and the $2.1 million benefit taken in the first quarter of 2017, which requires the excess tax benefit2023 on share-based compensation to be recorded to income tax expense rather than equity.
|
| Three Months Ended |
|
|
|
|
|
| Nine Months Ended |
|
|
|
|
| ||||||||||
|
| September 30, |
|
|
|
|
|
| September 30, |
|
|
|
|
| ||||||||||
(in thousands) |
| 2017 |
|
| 2016 |
|
| Percentage Change 2017 vs. 2016 |
|
| 2017 |
|
| 2016 |
|
| Percentage Change 2017 vs. 2016 |
| ||||||
Loss from discontinued operations |
| $ | (101 | ) |
| $ | (221 | ) |
|
| 54.3 | % |
| $ | (408 | ) |
| $ | (771 | ) |
|
| 47.1 | % |
The loss from discontinued operations, during the three months ended September 30, 2017, was primarily related to legal expenses associated with previously sold operations. The loss from discontinued operations, during the nine months ended September 30, 2017, was primarily related to legal expenses associated with previously sold operations, offset in part by a reduction in an uncertain tax position due to the lapse of a statute.certain separate U.S. state jurisdictions.
Liquidity and Capital Resources
Cash and cash equivalents were $53.5 million as of September 30, 2017, as compared to $20.9 million as of December 31, 2016. During the nine months ended September 30, 2017, the Company generated net cash flow from operating activities of $114.6 million primarily from results of operations. Management believesWe believe that Viad’sour existing sources of liquidity will be sufficient to fund operations and projected capital commitmentsoutlays for at least the next 12 months.months and the longer term.
When assessing our current sources of liquidity, we include the following:
|
| June 30, |
|
| December 31, |
| ||
(in thousands) |
| 2023 |
|
| 2022 |
| ||
Unrestricted cash and cash equivalents(1) |
| $ | 53,179 |
|
| $ | 59,719 |
|
Available capacity on Revolving Credit Facility(2) |
|
| 95,041 |
|
|
| 86,670 |
|
Total available liquidity |
| $ | 148,220 |
|
| $ | 146,389 |
|
Cash provided by operating activities, supplemented by our existing cash and cash equivalents, is our primary source of liquidity for funding our strategic business requirements. During the Company’s Canadian and Netherlands operations that have historically been deemed permanently reinvested. As of Septembersix months ended June 30, 2017, the incremental tax associated with these earnings if the cash balances were repatriated to the United States would approximate $1.6 million.
Cash Flows
Operating Activities
|
| Nine Months Ended |
| |||||
|
| September 30, |
| |||||
(in thousands) |
| 2017 |
|
| 2016 |
| ||
Net income |
| $ | 80,128 |
|
| $ | 47,083 |
|
Depreciation and amortization |
|
| 42,499 |
|
|
| 31,206 |
|
Deferred income taxes |
|
| 318 |
|
|
| (3,549 | ) |
Loss from discontinued operations |
|
| 408 |
|
|
| 771 |
|
Impairment charges (recoveries) |
|
| (29,098 | ) |
|
| 120 |
|
Other non-cash items |
|
| 14,369 |
|
|
| 13,083 |
|
Changes in assets and liabilities |
|
| 6,019 |
|
|
| 26,708 |
|
Net cash provided by operating activities |
| $ | 114,643 |
|
| $ | 115,422 |
|
Net2023, net cash provided by operating activities decreased $0.8 million, primarily due towas $38.8 million.
Our short-term and long-term funding requirements include debt obligations, capital expenditures, working capital requirements, and potential acquisitions and strategic investments as we focus on scaling Pursuit with investments in high-return unforgettable, inspiring experiences through its Refresh, Build, Buy growth strategy. Our projected capital outlays can be adjusted for changes in working capital, offset in part by an increase in resultsthe operating environment.
Debt Obligations
Effective July 30, 2021, we entered into the $500 million 2021 Credit Facility. The 2021 Credit Facility provides for a $400 million Term Loan B and a $100 million Revolving Credit Facility. The proceeds of operations.
Investing Activities
|
| Nine Months Ended |
| |||||
|
| September 30, |
| |||||
(in thousands) |
| 2017 |
|
| 2016 |
| ||
Capital expenditures |
| $ | (39,493 | ) |
| $ | (32,582 | ) |
Proceeds from insurance |
|
| 31,570 |
|
|
| — |
|
Cash paid for acquired businesses, net |
|
| (1,661 | ) |
|
| (145,735 | ) |
Proceeds from dispositions of property and other assets |
|
| 734 |
|
|
| 774 |
|
Net cash used in investing activities |
| $ | (8,850 | ) |
| $ | (177,543 | ) |
Net cash used in investing activities decreased $168.7 million, primarily due to cash payments,the Term Loan B, net of cash acquired,$14.8 million in related fees, were used to repay the $327 million outstanding balance under our then $450 million revolving credit facility and to provide for financial flexibility to fund future acquisitions and growth initiatives and for general corporate purposes. On January 4, 2023, we entered into an interest rate cap agreement with an effective date of $145.7January 31, 2023. The interest rate cap manages our exposure to interest rate increases on $300 million forin borrowings under the 2016 acquisitions of ON Services, CATC, and the business of Maligne Lake Tours Ltd., and the Mount Royal Hotel fire-related insurance proceeds received in 2017, offset in part by an increase in capital expenditures.
|
| Nine Months Ended |
| |||||
|
| September 30, |
| |||||
(in thousands) |
| 2017 |
|
| 2016 |
| ||
Proceeds from borrowings |
| $ | 60,574 |
|
| $ | 153,000 |
|
Payments on debt and capital lease obligations |
|
| (128,808 | ) |
|
| (86,989 | ) |
Dividends paid on common stock |
|
| (6,119 | ) |
|
| (6,079 | ) |
Debt issuance costs |
|
| (5 | ) |
|
| (340 | ) |
Common stock purchased for treasury |
|
| (1,272 | ) |
|
| (679 | ) |
Other |
|
| — |
|
|
| 60 |
|
Net cash provided by (used in) financing activities |
| $ | (75,630 | ) |
| $ | 58,973 |
|
Net cash used in financing activities increased $134.6 million primarily due to net debt payments of $68.2 million during the nine months ended September 30, 2017 compared to net debt proceeds of $66.0 million during the nine months ended September 30, 2016.
Debt and Capital Lease Obligations
Term Loan B. Refer to Note 1113 – Debt and Capital Lease ObligationsDerivative of the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for additional information.
The Revolving Credit Facility carries financial covenants. On March 28, 2023, we entered into the Second Amendment to the 2021 Credit Facility, which modified the interest coverage financial covenant. As of June 30, 2023, we were in compliance with all covenants under the Revolving Credit Facility. Refer to Note 12 – Debt and Finance Obligations of the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for additional information.
Capital Expenditures
As of June 30, 2023, we have planned capital expenditures of approximately $75 million to $85 million for the next 12 months, including approximately $35 million on select growth projects, such as the development of FlyOver Chicago. We intend to continue making selective investments to advance Pursuit’s Refresh, Build, Buy growth strategy while maintaining a solid liquidity position.
Other Obligations
We have additional obligations as part of our ordinary course of business, beyond those committed for debt obligations and capital expenditures. Refer to Note 21 – Leases and Other and Note 19 – Pension and Postretirement Benefits of the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for further discussion.information. The expected timing of payments of our
37
obligations is estimated based on current information. Timing of payments and actual amounts paid may be different, depending on changes to agreed-upon amounts for certain obligations.
Cash Flows
Operating Activities
|
| Six Months Ended |
| |||||
|
| June 30, |
| |||||
(in thousands) |
| 2023 |
|
| 2022 |
| ||
Net loss |
| $ | (9,812 | ) |
| $ | (10,181 | ) |
Depreciation and amortization |
|
| 25,279 |
|
|
| 26,486 |
|
Deferred income taxes |
|
| (961 | ) |
|
| (962 | ) |
(Income) loss from discontinued operations |
|
| 201 |
|
|
| (327 | ) |
Restructuring charges |
|
| 645 |
|
|
| 2,080 |
|
Impairment charges |
|
| — |
|
|
| 583 |
|
Gains on dispositions of property and other assets |
|
| (73 | ) |
|
| (154 | ) |
Share-based compensation expense |
|
| 5,912 |
|
|
| 5,469 |
|
Other non-cash items, net |
|
| 2,496 |
|
|
| 5,384 |
|
Changes in operating assets and liabilities |
|
| 15,113 |
|
|
| 15,640 |
|
Net cash provided by operating activities |
| $ | 38,800 |
|
| $ | 44,018 |
|
Net cash provided by operating activities decreased $5.2 million primarily due to higher interest and tax payments, offset in part by improved operating results at GES and Pursuit.
Investing Activities
|
| Six Months Ended |
| |||||
|
| June 30, |
| |||||
(in thousands) |
| 2023 |
|
| 2022 |
| ||
Capital expenditures |
| $ | (32,193 | ) |
| $ | (31,639 | ) |
Cash paid for acquisitions, net |
|
| (41 | ) |
|
| (25,494 | ) |
Proceeds from dispositions of property and other assets |
|
| 82 |
|
|
| 161 |
|
Net cash used in investing activities |
| $ | (32,152 | ) |
| $ | (56,972 | ) |
Net cash used in investing activities decreased $24.8 million primarily due to cash paid for the Glacier Raft Company acquisition in April of 2022.
Financing Activities
|
| Six Months Ended |
| |||||
|
| June 30, |
| |||||
(in thousands) |
| 2023 |
|
| 2022 |
| ||
Proceeds from borrowings |
| $ | 21,806 |
|
| $ | 54,668 |
|
Payments on debt and finance obligations |
|
| (27,157 | ) |
|
| (38,728 | ) |
Dividends paid on preferred stock |
|
| (3,900 | ) |
|
| (3,900 | ) |
Distributions to noncontrolling interest, net of contributions from noncontrolling interest |
|
| (1,126 | ) |
|
| (570 | ) |
Payments of debt issuance costs |
|
| (226 | ) |
|
| (418 | ) |
Payment of payroll taxes on stock-based compensation through shares withheld or repurchased |
|
| (505 | ) |
|
| (537 | ) |
Net cash (used in) provided by financing activities |
| $ | (11,108 | ) |
| $ | 10,515 |
|
The change in net cash (used in) provided by financing activities of $21.6 million was primarily due to net debt payments of $5.4 million during the six months ended June 30, 2023 compared to net debt proceeds of $15.9 million during the six months ended June 30, 2022.
38
Debt and Finance Obligations
Refer to Note 12 – Debt and Finance Obligations of the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for further discussion, all of which is incorporated by reference herein.
Share Repurchases
TheOur Board of Directors previously authorized the Companyus to repurchase shares of itsour common stock from time to time at prevailing market prices. No open market repurchases were made duringEffective February 7, 2019, our Board of Directors authorized the nine months ended September 30, 2017 or 2016.repurchase of an additional 500,000 shares. As of SeptemberJune 30, 2017, 440,5402023, 546,283 shares remained available for repurchase. The authorization of therepurchase under all prior authorizations. In March 2020, our Board of Directors suspended our share repurchase program. The Board of Directors’ authorization does not have an expiration date. In addition, during
During both the nine months ended September 30, 20172023 and 2016, the Company2022 periods, we repurchased 26,916 shares for $1.3 million and 24,432 shares for $0.7 million, respectively, related to tax withholding requirements on vested restricted share-based awards.
Critical Accounting Policies and Estimates
Refer to “Management’sPart II, Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations” (Part II, Item 7)Operations of Viad’s Annual Report onour 2022 Form 10-K for the year ended December 31, 2016, for a discussion of our critical accounting policies and estimates.
Impact of Recent Accounting Pronouncements
Refer to Note 1 – Overview and Basis of Presentation and Principles of Consolidation of the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for further information.
As provided by the safe harbor provision under the Private Securities Litigation Reform Act of 1995, Viad cautions readers that, in addition to historical information contained herein, this quarterly report includes certain information, assumptions, and discussions that may constitute forward-looking statements. These forward-looking statements are not historical facts, but reflect current estimates, projections, expectations, or trends concerning future growth, operating cash flows, availability of short-term borrowings, consumer demand, new or renewal business, investment policies, productivity improvements, ongoing cost reduction efforts, efficiency, competitiveness, legal expenses, tax rates and other tax matters, foreign exchange rates, and the realization of restructuring cost savings. Actual results could differ materially from those discussed in the forward-looking statements. Viad’s businesses can be affected by a host of risks and uncertainties. Among other things, natural disasters, gains and losses of customers, consumer demand patterns, labor relations, purchasing decisions related to customer demand for exhibition and event services, existing and new competition, industry alliances, consolidation and growth patterns within the industries in which Viad competes, acquisitions, capital allocations, adverse developments in liabilities associated with discontinued operations, changes in the levels of interest rates, and any deterioration in the economy, may individually or in combination impact future results. In addition to factors mentioned elsewhere, economic, competitive, governmental, technological, capital marketplace, and other factors, including terrorist activities or war, a pandemic health crisis, and international conditions, could affect the forward-looking statements in this quarterly report. Additional information concerning business and other risk factors that could cause actual results to materially differ from those in the forward looking statements are discussed in the “Risk Factors” section in Viad’s 2016 Annual Report.Non-GAAP Measure
Information about Viad obtained from sources other than the Company may be out-of-date or incorrect. Please rely only on Company press releases, SEC filings, and other information provided by the Company, keeping in mind that forward-looking statements speak only as of the date made. Viad undertakes no obligation to update any forward-looking statements, including prior forward-looking statements, to reflect events or circumstances arising after the date as of which the forward-looking statements were made.
Non-GAAP Measures
In addition to disclosing financial results that are determined in accordance with U.S. generally accepted accounting principles (“GAAP”), the CompanyGAAP, we also discloses non-GAAP financial measures of Adjusted EBITDA, Segment operating income, Adjusted Segment EBITDA, organic revenue, and organicdisclose segment operating income (collectively, the “Non-GAAP Measures”). The presentation(loss) as a non-GAAP financial measure. Our use of the Non-GAAP Measuressegment operating income (loss) is supplemental to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP. As not all companies use identical calculations, the Non-GAAP Measuressegment operating income (loss) may not be comparable to similarly titled measures used by other companies. Management believesWe believe that the presentationour use of the Non-GAAP Measuressegment operating income (loss) provides useful information to investors regarding Viad’sour results of operations for trending, analyzing, and benchmarking theour performance and the value of Viad’sour business.
“Adjusted EBITDA” is defined by Viad as net income attributable to Viad before the Company’s portion of interest expense, income taxes, depreciation and amortization, impairment charges and recoveries, changes in accounting principles, and the effects of discontinued operations. Adjusted EBITDA is utilized by management to measure the profit and performance of Viad’s operations and to facilitate period-to-period comparisons. Refer to the table below for a reconciliation of Adjusted EBITDA to the most directly comparable GAAP measure.
“Segment operating income” income (loss)”is defined by Viad as net income (loss) attributable to Viad before income (loss) from discontinued operations, corporate activities, interest expense and interest income, income taxes, restructuring charges, impairment lossescharges, and recoveries,certain other corporate expenses that are not allocated to the reportable segments, and the reduction for income (loss) attributable to noncontrolling interest.interests. Segment operating income (loss) is utilized by managementused to measure the profit and performance of Viad’sour operating segments to facilitate period-to-period comparisons.
“Adjusted Refer to Note 24 – Segment EBITDA” is defined by Viad asInformation of the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for a reconciliation of segment operating income (as defined above)(loss) to income (loss) from continuing operations before non-cash depreciation and amortization and acquisition integration costs, if any. Adjusted Segment EBITDAincome taxes.
We believe segment operating income (loss) is utilized by management to measure the profit and performance of Viad’s operating segments and acquisitions to facilitate period-to-period comparisons. For a discussion of how this metric is used in connection with 2017 full year acquisition performance expectations, refer to the “Forward-Looking Non-GAAP Financial Measures” section of this MD&A. Management believes that Adjusted Segment EBITDA for acquisitions enables investors to assess how effectively management is investing capital into major corporate development projects, both from a valuation and return perspective.
|
The Non-GAAP Measures are considered useful operating metricsmetric as it eliminates potential variations arising from taxes, depreciation and amortization, debt service costs, impairment charges, and recoveries, changes in accounting principles,restructuring charges, the reduction of income (loss) attributable to non-controlling interests, and the effects of discontinued operations, are eliminated, thus resulting in an additional measuresmeasure considered to be indicative of Viad’sour ongoing operations and segment performance. Although the Non-GAAP Measures are used as financial measureswe use segment operating income (loss) to assess the performance of theour business, the use of these measuresthis measure is limited because these measures dothis measure does not consider material costs, expenses, and other items necessary to operate, theor resulting from, our business. These items include debt service costs, non-cash depreciation and amortization expense associated with long-lived assets, expenses related to U.S. federal, state, local and foreignAs segment operating income taxes, impairment charges or recoveries, and the effects of accounting changes and discontinued operations. Since the Non-GAAP Measures do(loss) does not consider the abovethese items, a user of Viad’s financial information should consider net income (loss) attributable to Viad should be considered as an important measure of financial performance because it provides a more complete measure of the Company’sour performance.
A reconciliation of net income attributable to Viad to Adjusted EBITDA is as follows:
|
| Three Months Ended |
|
| Nine Months Ended |
| ||||||||||
|
| September 30, |
|
| September 30, |
| ||||||||||
(in thousands) |
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
Net income attributable to Viad |
| $ | 44,657 |
|
| $ | 33,792 |
|
| $ | 79,381 |
|
| $ | 46,318 |
|
Depreciation and amortization |
|
| 15,833 |
|
|
| 12,649 |
|
|
| 42,499 |
|
|
| 31,206 |
|
Interest expense |
|
| 2,117 |
|
|
| 1,489 |
|
|
| 6,281 |
|
|
| 4,109 |
|
Income tax expense |
|
| 20,010 |
|
|
| 17,878 |
|
|
| 32,929 |
|
|
| 23,652 |
|
Impairment charges (recoveries) |
|
| (24,467 | ) |
|
| 120 |
|
|
| (29,098 | ) |
|
| 120 |
|
Loss from discontinued operations |
|
| 101 |
|
|
| 221 |
|
|
| 408 |
|
|
| 771 |
|
Other noncontrolling interest |
|
| (739 | ) |
|
| (661 | ) |
|
| (697 | ) |
|
| (691 | ) |
Adjusted EBITDA |
| $ | 57,512 |
|
| $ | 65,488 |
|
| $ | 131,703 |
|
| $ | 105,485 |
|
The decrease in Adjusted EBITDA for the three months ended September 30, 2017 was primarily due to lower segment operating income at GES. The increase in Adjusted EBITDA for the nine months ended September 30, 2017 was primarily due to higher segment operating income at GES and Pursuit. Refer to the “Results of Operations” section of this MD&A for a discussion of fluctuations.
Forward-Looking Non-GAAP Financial Measures
The Company has also provided Adjusted Segment EBITDA and segment operating income as forward-looking Non-GAAP Measures within the “Results of Operations” section of this MD&A. The Company does not provide reconciliations of these forward-looking Non-GAAP Measures to the most directly comparable GAAP financial measures because, due to variability and difficulty in making accurate forecasts and projections and/or certain information not being ascertainable or accessible, not all of the information necessary for quantitative reconciliations of these forward-looking Non-GAAP Measures to the most directly comparable GAAP financial measures is available to the Company without unreasonable efforts. Consequently, any attempt to disclose such reconciliations would imply a degree of precision that could be confusing or misleading to investors. It is probable that these forward-looking Non-GAAP Measures may be materially different from the corresponding GAAP Measures.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Viad’sOur market risk exposures relateexposure relates to fluctuations in foreign exchange rates and interest rates, and certain commodity prices.rates. Foreign exchange risk is the risk that fluctuating exchange rates will adversely affect Viad’sour financial condition or results of operations. The foreign exchange risk is composed of both potential losses from the translation of foreign currency financial information and the remeasurement of foreign currency transactions. Interest rate risk is the risk that changing interest rates will adversely affect the earnings of Viad. Commodity risk is the risk that changing prices will adversely affectour financial position or results of operations.
Viad conducts itsOur foreign operations are primarily in Canada, the United Kingdom, Iceland, the Netherlands, Germany,United Arab Emirates, and to a lesser extent, in certain other countries.Germany. The functional currency of Viad’sour foreign subsidiaries is their local currency. Accordingly, for purposes of consolidation, Viad translateswe translate the assets and liabilities of itsour foreign subsidiaries into U.S. dollars at the foreign exchange rates in effect at the balance sheet date. The unrealized gains or losses resulting from the translation of these foreign denominated assets and liabilities are included as a component of accumulated other comprehensive incomeAOCI in Viad’s condensed consolidated balance sheets.the Condensed Consolidated Balance Sheets. As a result, significant fluctuations in foreign exchange rates relative to the
39
U.S. dollar may result in material changes to Viad’sour net equity position reported in its condensed consolidated balance sheets. Viad doesthe Condensed Consolidated Balance Sheets. We do not currently hedge itsour equity risk
arising from the translation of foreign denominated assets and liabilities. Viad hadWe recorded cumulative unrealized foreign currency translation losses recorded in stockholders’ equity of $10.3 million and $29.1$35.0 million as of SeptemberJune 30, 20172023 and $43.0 million as of December 31, 2016, respectively. During the three and nine months ended September 30, 2017,2022. We recorded unrealized foreign currency translation gains of $9.1 million and $18.8 million, respectively, were recorded in other comprehensive income. Duringincome (loss) of $8.0 million during the three and ninesix months ended SeptemberJune 30, 2016 an2023 and unrealized foreign currency translation losslosses of $3.8$8.1 million and a gain of $0.7 million, respectively, were recorded in other comprehensive income.during the six months ended June 30, 2022.
For purposes of consolidation, revenue, expenses, gains, and losses related to Viad’sour foreign operations are translated into U.S. dollars at the average foreign exchange rates for the period. As a result, Viad’sour consolidated results of operations are exposed to fluctuations in foreign exchange rates as revenue and segment operating resultsincome (loss) of itsour foreign operations, when translated, may vary from period to period, even when the functional currency amounts have not changed. Such fluctuations may adversely impact overall expected profitability and historical period-to-period comparisons. Viad doesWe do not currently hedge its netour earnings exposure arising from the translation of itsour foreign revenue and segment operating results. Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a discussion on the “Foreign Exchange Rate Variances.”income (loss).
Viad isWe are exposed to foreign exchange transaction risk, as itsour foreign subsidiaries have certain revenue transactionsloans and leases denominated in currencies other than the functional currency of the respective subsidiary. From time to time, Viad utilizes forward contracts to mitigate the impact on earnings related to these transactions due to fluctuationsAs of June 30, 2023, we had long-term contractual liabilities that were denominated in nonfunctional currencies of $47.4 million. As foreign exchange rates.rates fluctuate, these liabilities are remeasured, and the corresponding adjustment is recorded in the Condensed Consolidated Statements of Operations. As of SeptemberJune 30, 2017, Viad2023 and December 31, 2022, we did not have any outstanding foreign currency forward contracts outstanding.contracts.
Viad isOn January 4, 2023, we entered into an interest rate cap agreement with an effective date of January 31, 2023 to hedge cash flows on $300 million of our Term Loan B. Refer to Note 13 – Derivative of the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for further information. We are exposed to short-term and long-term interest rate risk on certain of itsour other debt obligations. Viad currently does not use derivative financial instruments to hedge cash flows for such obligations.
Item 4. Controls and Procedures
Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer of Viad, the effectiveness of the design and operation ofWe have established disclosure controls and procedures has been evaluated as of September 30, 2017, and, based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective as of September 30, 2017. Disclosure controls and procedures are designed to ensure that information required to be disclosed in theour reports filed or submitted under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controlsforms, and procedures include, without limitation, controls and procedures designed to ensure thatsuch information required to be disclosed in such reports is accumulated and communicated to our management, including theour Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate to allow for timely decisions regarding required disclosure. Management, together with our CEO and CFO, evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2023. Based on this evaluation, the CEO and CFO concluded that our disclosure controls and procedures were effective as of June 30, 2023.
TherePreviously Reported Material Weakness in Controls over Financial Reporting
During our year-end close and review procedures for the year ended December 31, 2022, a material weakness was identified over the remeasurement of monetary liabilities in nonfunctional currencies as a result of the error identified in accounting for a finance lease at the Company’s Sky Lagoon attraction in Iceland, which impacted costs of services, long-term debt and finance obligations, and net income attributable to Viad after accounting for taxes and noncontrolling interests. This error was corrected in the Form 10-Q/A for the quarter ended September 30, 2022, which was filed on February 28, 2023.
Remediation of the Material Weakness
We designed and have tested the implementation and operation of an internal control as of June 30, 2023 to identify and account for monetary liabilities denominated in a foreign currency and the resulting transaction gains and losses from a change in exchange rates to address the above previously reported material weakness. We believe these measures remediated the previously reported material weakness.We remain committed to maintaining a strong internal control environment and implementing measures designed to ensure a strong control environment.
Changes in Internal Control over Financial Reporting
Other than the remediation of the material weakness described above, there were no changes in the Company’sour internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting during the three months ended SeptemberJune 30, 2017 that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting.2023.
PART II - OTHEROTHER INFORMATION
Refer to Note 1822 – Litigation, Claims, Contingencies, and Other of the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for information regarding legal proceedings involving the Company.in which we are involved, which information is incorporated by reference herein.
There were no material changesIn addition to other information set forth in this report, careful consideration should be given to the risk factors discloseddiscussed in Viad’s Annual Report onPart I, Item 1A – Risk Factors and Part II, Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2022 Form 10-K, for the year ended December 31, 2016,which could materially affect our business, financial condition, or in our Form 10-Q for the quarter ended March 31, 2017.future results.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table summarizes the total number of shares of Viad’sour common stock that were repurchased during the three months ended SeptemberJune 30, 2017 by Viad2023 pursuant to publicly announced plans or programs, as well as fromcertain previously owned shares of common stock that were surrendered by employees, former employees, and non-employee directors surrendering previously owned Viad common stock (outstanding shares) to pay the taxes in connection with the vesting of restricted stockfor tax withholding requirements on vested share-based awards.
ISSUER PURCHASES OF EQUITY SECURITIES
Period |
| Total Number of Shares Purchased |
|
| Average Price Paid Per Share |
|
| Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |
|
| Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs |
| ||||
July 1, 2017 - July 31, 2017 |
|
| — |
|
| $ | — |
|
|
| — |
|
|
| 440,540 |
|
August 1, 2017 - August 31, 2017 |
|
| 1,120 |
|
| $ | 52.80 |
|
|
| — |
|
|
| 440,540 |
|
September 1, 2017 - September 30, 2017 |
|
| 154 |
|
| $ | 56.05 |
|
|
| — |
|
|
| 440,540 |
|
Total |
|
| 1,274 |
|
| $ | 53.19 |
|
|
| — |
|
|
| 440,540 |
|
Period |
| Total Number of |
|
| Average Price |
|
| Total Number of |
|
| Maximum Number |
| ||||
April 1, 2023 - April 30, 2023 |
|
| 257 |
|
| $ | 17.38 |
|
|
| — |
|
|
| 546,283 |
|
May 1, 2023 - May 31, 2023 |
|
| — |
|
| $ | — |
|
|
| — |
|
|
| 546,283 |
|
June 1, 2023 - June 30, 2023 |
|
| — |
|
| $ | — |
|
|
| — |
|
|
| 546,283 |
|
Total |
|
| 257 |
|
| $ | 17.38 |
|
|
| — |
|
|
| 546,283 |
|
The
Pursuant to previously announced authorizations, our Board of Directors authorized the Companyus to repurchase shares of itsour common stock from time to time at prevailing market prices. No shares were repurchased on the open market during the three and nine months ended September 30, 2017. As of September 30, 2017, 440,540 shares remain available for repurchase. The authorization of theEffective February 7, 2019, our Board of Directors authorized the repurchase of an additional 500,000 shares. In March 2020, our Board of Directors suspended future dividend payments and our share repurchase program for the foreseeable future. The Board of Directors’ authorization does not have an expiration date. During the second quarter of 2023, certain previously owned shares of common stock were surrendered for tax withholding requirements on vested share-based awards.
Not applicable.Securities Trading Plans of Directors and Executive Officers
During the three months ended June 30, 2023, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
Incorporated by Reference | ||||||||||||
Exhibit Number | Exhibit Description | Form | Period Ending | Exhibit | Filing Date | |||||||
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31.1 | * | |||||||||||
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31.2 | * | |||||||||||
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32.1 | ** | |||||||||||
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| *** | Inline XBRL Instance Document | ||||||||||
101.SCH | **** | Inline XBRL Taxonomy Extension Schema | ||||||||||
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101.CAL | **** | Inline XBRL Taxonomy Extension Calculation Linkbase | ||||||||||
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101.LAB | **** | Inline XBRL Taxonomy Extension Label Linkbase | ||||||||||
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101.PRE | **** | Inline XBRL Taxonomy Extension Presentation Linkbase Document | ||||||||||
101.DEF | **** | Inline XBRL Taxonomy Extension Definition Linkbase Document. | ||||||||||
104 | *** | Cover Page Interactive Data File |
* | Filed herewith. | |
** | Furnished herewith. | |
*** | The Inline XBRL Instance Document and Cover Page Interactive Data File do not appear in the Interactive Data File because their XBRL tags are embedded within the Inline XBRL document. | |
**** | Submitted electronically herewith. |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
VIAD CORP | |||||
(Registrant) | |||||
| By: | /s/ Leslie S. Striedel | |||
(Date) | Leslie S. Striedel | ||||
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43
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