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 June 30, 2020March 31, 2021
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 organization |
| (I.R.S. Employer Identification No.) |
|
| |
1850 North Central Avenue, Suite 1900 Phoenix, Arizona |
| 85004-4565 |
(Address of principal executive offices) |
| (Zip Code) |
(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 |
|
|
-- |
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|
Indicate by check mark whether the registrant (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 every Interactive Data File required to be submitted 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 such 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 |
|
|
|
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|
|
|
|
|
Non-accelerated filer |
| ☐ |
| Smaller reporting company |
| ☐ |
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|
Emerging growth company |
| ☐ |
|
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|
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 AugustMay 3, 2020,2021, there were 20,394,74620,483,915 shares of Common Stock ($1.50 par value) outstanding.
INDEX
|
| Page |
1 | ||
| Condensed Consolidated Balance Sheets as of | 1 |
| 2 | |
| 3 | |
| 4 | |
| 6 | |
| 7 | |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
| |
| ||
| ||
| ||
| ||
| ||
| ||
Items 3-5 | Not applicable |
|
|
|
|
|
In this report, for periods presented, “we,” “us,” “our,” “the Company,” and “Viad Corp” refer to Viad Corp and its subsidiaries.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
VIAD CORP
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
| June 30, |
|
| December 31, |
|
| March 31, |
|
| December 31, |
| |||||
(in thousands, except share data) |
| 2020 |
|
| 2019 |
|
| 2021 |
|
| 2020 |
| |||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Cash and cash equivalents |
| $ | 154,216 |
|
| $ | 61,999 |
|
| $ | 34,714 |
|
| $ | 39,545 |
| |
Accounts receivable, net of allowances for doubtful accounts of $11,296 and $1,200, respectively |
|
| 29,475 |
|
|
| 126,246 |
| |||||||||
Accounts receivable, net of allowances for doubtful accounts of $2,791 and $5,310, respectively |
|
| 18,472 |
|
|
| 17,837 |
| |||||||||
Inventories |
|
| 19,101 |
|
|
| 17,269 |
|
|
| 8,406 |
|
|
| 8,727 |
| |
Current contract costs |
|
| 7,786 |
|
|
| 24,535 |
|
|
| 8,781 |
|
|
| 7,923 |
| |
Other current assets |
|
| 24,474 |
|
|
| 30,854 |
|
|
| 18,448 |
|
|
| 17,225 |
| |
Total current assets |
|
| 235,052 |
|
|
| 260,903 |
|
|
| 88,821 |
|
|
| 91,257 |
| |
Property and equipment, net |
|
| 482,585 |
|
|
| 500,901 |
|
|
| 533,614 |
|
|
| 492,154 |
| |
Other investments and assets |
|
| 20,876 |
|
|
| 45,119 |
|
|
| 15,709 |
|
|
| 15,492 |
| |
Operating lease right-of-use assets |
|
| 95,229 |
|
|
| 103,314 |
|
|
| 81,488 |
|
|
| 82,739 |
| |
Deferred income taxes |
|
| — |
|
|
| 26,163 |
|
|
| 1,445 |
|
|
| 563 |
| |
Goodwill |
|
| 95,159 |
|
|
| 287,983 |
|
|
| 112,947 |
|
|
| 99,847 |
| |
Other intangible assets, net |
|
| 69,563 |
|
|
| 94,308 |
|
|
| 70,631 |
|
|
| 71,172 |
| |
Total Assets |
| $ | 998,464 |
|
| $ | 1,318,691 |
|
| $ | 904,655 |
|
| $ | 853,224 |
| |
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
| |||||||||
Liabilities, Mezzanine Equity, and Stockholders’ Equity |
|
|
|
|
|
|
|
| |||||||||
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Accounts payable |
| $ | 31,927 |
|
| $ | 86,660 |
|
| $ | 20,559 |
|
| $ | 21,037 |
| |
Contract liabilities |
|
| 26,960 |
|
|
| 50,671 |
|
|
| 26,797 |
|
|
| 18,595 |
| |
Accrued compensation |
|
| 10,198 |
|
|
| 32,658 |
|
|
| 9,507 |
|
|
| 7,030 |
| |
Operating lease obligations |
|
| 20,140 |
|
|
| 22,180 |
|
|
| 14,684 |
|
|
| 15,697 |
| |
Other current liabilities |
|
| 26,371 |
|
|
| 39,824 |
|
|
| 25,000 |
|
|
| 27,039 |
| |
Current portion of debt and finance lease obligations |
|
| 3,671 |
|
|
| 5,330 |
|
|
| 2,800 |
|
|
| 8,335 |
| |
Total current liabilities |
|
| 119,267 |
|
|
| 237,323 |
|
|
| 99,347 |
|
|
| 97,733 |
| |
Long-term debt and finance lease obligations |
|
| 469,828 |
|
|
| 335,162 |
|
|
| 367,418 |
|
|
| 285,356 |
| |
Pension and postretirement benefits |
|
| 26,016 |
|
|
| 26,247 |
|
|
| 27,113 |
|
|
| 27,264 |
| |
Long-term operating lease obligations |
|
| 77,743 |
|
|
| 82,851 |
|
|
| 72,878 |
|
|
| 70,150 |
| |
Other deferred items and liabilities |
|
| 75,248 |
|
|
| 83,707 |
|
|
| 62,467 |
|
|
| 64,628 |
| |
Total liabilities |
|
| 768,102 |
|
|
| 765,290 |
|
|
| 629,223 |
|
|
| 545,131 |
| |
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Convertible Series A Preferred Stock, $0.01 par value, 180,000 shares authorized, 135,000 shares issued and outstanding |
|
| 130,667 |
|
|
| 128,769 |
| |||||||||
Redeemable noncontrolling interest |
|
| 5,138 |
|
|
| 6,172 |
|
|
| 5,006 |
|
|
| 5,225 |
| |
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 |
|
|
| 37,402 |
|
|
| 37,402 |
| |
Additional capital |
|
| 571,555 |
|
|
| 574,473 |
|
|
| 566,643 |
|
|
| 568,100 |
| |
Retained earnings (deficit) |
|
| (171,931 | ) |
|
| 122,971 |
| |||||||||
Accumulated deficit |
|
| (296,317 | ) |
|
| (253,164 | ) | |||||||||
Accumulated other comprehensive loss |
|
| (53,762 | ) |
|
| (35,699 | ) |
|
| (26,543 | ) |
|
| (30,641 | ) | |
Common stock in treasury, at cost, 4,538,028 and 4,588,084 shares, respectively |
|
| (229,492 | ) |
|
| (231,649 | ) | |||||||||
Common stock in treasury, at cost, 4,456,261 and 4,475,489 shares, respectively |
|
| (224,683 | ) |
|
| (225,742 | ) | |||||||||
Total Viad stockholders’ equity |
|
| 153,772 |
|
|
| 467,498 |
|
|
| 56,502 |
|
|
| 95,955 |
| |
Non-redeemable noncontrolling interest |
|
| 71,452 |
|
|
| 79,731 |
|
|
| 83,257 |
|
|
| 78,144 |
| |
Total stockholders’ equity |
|
| 225,224 |
|
|
| 547,229 |
|
|
| 139,759 |
|
|
| 174,099 |
| |
Total Liabilities and Stockholders’ Equity |
| $ | 998,464 |
|
| $ | 1,318,691 |
| |||||||||
Total Liabilities, Mezzanine Equity, and Stockholders’ Equity |
| $ | 904,655 |
|
| $ | 853,224 |
|
Refer to Notes to Condensed Consolidated Financial Statements.
VIAD CORP
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
| Three Months Ended |
|
| Six Months Ended |
|
| Three Months Ended |
| |||||||||||||||
|
| June 30, |
|
| June 30, |
|
| March 31, |
| |||||||||||||||
(in thousands, except per share data) |
| 2020 |
|
| 2019 |
|
| 2020 |
|
| 2019 |
|
| 2021 |
|
| 2020 |
| ||||||
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services |
| $ | 26,205 |
|
| $ | 347,659 |
|
| $ | 301,761 |
|
| $ | 598,300 |
|
| $ | 24,900 |
|
| $ | 264,206 |
|
Products |
|
| 4,658 |
|
|
| 54,620 |
|
|
| 35,110 |
|
|
| 89,573 |
|
|
| 4,035 |
|
|
| 30,452 |
|
Total revenue |
|
| 30,863 |
|
|
| 402,279 |
|
|
| 336,871 |
|
|
| 687,873 |
|
|
| 28,935 |
|
|
| 294,658 |
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of services |
|
| 69,380 |
|
|
| 306,154 |
|
|
| 353,782 |
|
|
| 569,510 |
|
|
| 56,368 |
|
|
| 273,052 |
|
Costs of products |
|
| 11,219 |
|
|
| 49,683 |
|
|
| 42,225 |
|
|
| 83,157 |
|
|
| 10,775 |
|
|
| 31,006 |
|
Business interruption gain |
|
| — |
|
|
| (141 | ) |
|
| — |
|
|
| (141 | ) | ||||||||
Corporate activities |
|
| 2,468 |
|
|
| 3,282 |
|
|
| 3,257 |
|
|
| 5,115 |
|
|
| 2,005 |
|
|
| 789 |
|
Interest income |
|
| (176 | ) |
|
| (83 | ) |
|
| (255 | ) |
|
| (181 | ) |
|
| (33 | ) |
|
| (79 | ) |
Interest expense |
|
| 5,186 |
|
|
| 2,957 |
|
|
| 9,204 |
|
|
| 5,872 |
|
|
| 5,118 |
|
|
| 4,018 |
|
Multi-employer pension plan withdrawal |
|
| 462 |
|
|
| 15,508 |
|
|
| 462 |
|
|
| 15,508 |
| ||||||||
Other expense |
|
| 265 |
|
|
| 456 |
|
|
| 684 |
|
|
| 911 |
| ||||||||
Other expense, net |
|
| 360 |
|
|
| 419 |
| ||||||||||||||||
Restructuring charges |
|
| 260 |
|
|
| 4,455 |
|
|
| 1,111 |
|
|
| 5,143 |
|
|
| 2,826 |
|
|
| 851 |
|
Legal settlement |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 8,500 |
| ||||||||
Impairment charges |
|
| 114,020 |
|
|
| — |
|
|
| 202,400 |
|
|
| — |
|
|
| — |
|
|
| 88,380 |
|
Total costs and expenses |
|
| 203,084 |
|
|
| 382,271 |
|
|
| 612,870 |
|
|
| 693,394 |
|
|
| 77,419 |
|
|
| 398,436 |
|
Income (loss) from continuing operations before income taxes |
|
| (172,221 | ) |
|
| 20,008 |
|
|
| (275,999 | ) |
|
| (5,521 | ) | ||||||||
Income tax expense (benefit) |
|
| 35,516 |
|
|
| 6,565 |
|
|
| 19,719 |
|
|
| (1,030 | ) | ||||||||
Income (loss) from continuing operations |
|
| (207,737 | ) |
|
| 13,443 |
|
|
| (295,718 | ) |
|
| (4,491 | ) | ||||||||
Loss from continuing operations before income taxes |
|
| (48,484 | ) |
|
| (103,778 | ) | ||||||||||||||||
Income tax benefit |
|
| (3,045 | ) |
|
| (15,797 | ) | ||||||||||||||||
Loss from continuing operations |
|
| (45,439 | ) |
|
| (87,981 | ) | ||||||||||||||||
Income (loss) from discontinued operations |
|
| (379 | ) |
|
| 460 |
|
|
| (833 | ) |
|
| 173 |
|
|
| 348 |
|
|
| (454 | ) |
Net income (loss) |
|
| (208,116 | ) |
|
| 13,903 |
|
|
| (296,551 | ) |
|
| (4,318 | ) | ||||||||
Net (income) loss attributable to non-redeemable noncontrolling interest |
|
| 1,634 |
|
|
| (331 | ) |
|
| 2,967 |
|
|
| 89 |
| ||||||||
Net loss |
|
| (45,091 | ) |
|
| (88,435 | ) | ||||||||||||||||
Net loss attributable to non-redeemable noncontrolling interest |
|
| 1,445 |
|
|
| 1,333 |
| ||||||||||||||||
Net loss attributable to redeemable noncontrolling interest |
|
| 204 |
|
|
| 252 |
|
|
| 721 |
|
|
| 276 |
|
|
| 494 |
|
|
| 517 |
|
Net income (loss) attributable to Viad |
| $ | (206,278 | ) |
| $ | 13,824 |
|
| $ | (292,863 | ) |
| $ | (3,953 | ) | ||||||||
Diluted income (loss) per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Net loss attributable to Viad |
| $ | (43,152 | ) |
| $ | (86,585 | ) | ||||||||||||||||
Diluted loss per common share: |
|
|
|
|
|
|
|
| ||||||||||||||||
Continuing operations attributable to Viad common stockholders |
| $ | (10.17 | ) |
| $ | 0.65 |
|
| $ | (14.44 | ) |
| $ | (0.22 | ) |
| $ | (2.23 | ) |
| $ | (4.27 | ) |
Discontinued operations attributable to Viad common stockholders |
|
| (0.02 | ) |
|
| 0.02 |
|
|
| (0.05 | ) |
|
| 0.01 |
|
|
| 0.02 |
|
|
| (0.02 | ) |
Net income (loss) attributable to Viad common stockholders |
| $ | (10.19 | ) |
| $ | 0.67 |
|
| $ | (14.49 | ) |
| $ | (0.21 | ) | ||||||||
Net loss attributable to Viad common stockholders |
| $ | (2.21 | ) |
| $ | (4.29 | ) | ||||||||||||||||
Weighted-average outstanding and potentially dilutive common shares |
|
| 20,282 |
|
|
| 20,266 |
|
|
| 20,249 |
|
|
| 20,110 |
|
|
| 20,370 |
|
|
| 20,215 |
|
Basic income (loss) per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Basic loss per common share: |
|
|
|
|
|
|
|
| ||||||||||||||||
Continuing operations attributable to Viad common stockholders |
| $ | (10.17 | ) |
| $ | 0.65 |
|
| $ | (14.44 | ) |
| $ | (0.22 | ) |
| $ | (2.23 | ) |
| $ | (4.27 | ) |
Discontinued operations attributable to Viad common stockholders |
|
| (0.02 | ) |
|
| 0.02 |
|
|
| (0.05 | ) |
|
| 0.01 |
|
|
| 0.02 |
|
|
| (0.02 | ) |
Net income (loss) attributable to Viad common stockholders |
| $ | (10.19 | ) |
| $ | 0.67 |
|
| $ | (14.49 | ) |
| $ | (0.21 | ) | ||||||||
Net loss attributable to Viad common stockholders |
| $ | (2.21 | ) |
| $ | (4.29 | ) | ||||||||||||||||
Weighted-average outstanding common shares |
|
| 20,282 |
|
|
| 20,143 |
|
|
| 20,249 |
|
|
| 20,110 |
|
|
| 20,370 |
|
|
| 20,215 |
|
Dividends declared per common share |
| $ | — |
|
| $ | 0.10 |
|
| $ | 0.10 |
|
| $ | 0.20 |
|
| $ | — |
|
| $ | 0.10 |
|
Amounts attributable to Viad common stockholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations |
| $ | (205,899 | ) |
| $ | 13,364 |
|
| $ | (292,030 | ) |
| $ | (4,126 | ) | ||||||||
Loss from continuing operations |
| $ | (43,500 | ) |
| $ | (86,131 | ) | ||||||||||||||||
Income (loss) from discontinued operations |
|
| (379 | ) |
|
| 460 |
|
|
| (833 | ) |
|
| 173 |
|
|
| 348 |
|
|
| (454 | ) |
Net income (loss) |
| $ | (206,278 | ) |
| $ | 13,824 |
|
| $ | (292,863 | ) |
| $ | (3,953 | ) | ||||||||
Net loss |
| $ | (43,152 | ) |
| $ | (86,585 | ) |
Refer to Notes to Condensed Consolidated Financial Statements.
VIAD CORP
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)LOSS
(Unaudited)
|
| Three Months Ended |
|
| Six Months Ended |
|
| Three Months Ended |
| |||||||||||||||
|
| June 30, |
|
| June 30, |
|
| March 31, |
| |||||||||||||||
(in thousands) |
| 2020 |
|
| 2019 |
|
| 2020 |
|
| 2019 |
|
| 2021 |
|
| 2020 |
| ||||||
Net income (loss) |
| $ | (208,116 | ) |
| $ | 13,903 |
|
| $ | (296,551 | ) |
| $ | (4,318 | ) | ||||||||
Net loss |
| $ | (45,091 | ) |
| $ | (88,435 | ) | ||||||||||||||||
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized foreign currency translation adjustments |
|
| 9,784 |
|
|
| 4,317 |
|
|
| (18,374 | ) |
|
| 9,097 |
|
|
| 3,977 |
|
|
| (28,158 | ) |
Change in net actuarial loss, net of tax (1) |
|
| 25 |
|
|
| 99 |
|
|
| 366 |
|
|
| 219 |
|
|
| 177 |
|
|
| 341 |
|
Change in prior service cost, net of tax (1) |
|
| (28 | ) |
|
| (36 | ) |
|
| (55 | ) |
|
| (71 | ) |
|
| (56 | ) |
|
| (27 | ) |
Comprehensive income (loss) |
|
| (198,335 | ) |
|
| 18,283 |
|
|
| (314,614 | ) |
|
| 4,927 |
| ||||||||
Comprehensive loss |
|
| (40,993 | ) |
|
| (116,279 | ) | ||||||||||||||||
Non-redeemable noncontrolling interest: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive (income) loss attributable to non-redeemable noncontrolling interest |
|
| 1,634 |
|
|
| (331 | ) |
|
| 2,967 |
|
|
| 89 |
| ||||||||
Comprehensive loss attributable to non-redeemable noncontrolling interest |
|
| 1,445 |
|
|
| 1,333 |
| ||||||||||||||||
Unrealized foreign currency translation adjustments |
|
| 1,933 |
|
|
| 776 |
|
|
| (3,786 | ) |
|
| 776 |
|
|
| 750 |
|
|
| (5,719 | ) |
Redeemable noncontrolling interest: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss attributable to redeemable noncontrolling interest |
|
| 204 |
|
|
| 252 |
|
|
| 721 |
|
|
| 276 |
|
|
| 494 |
|
|
| 517 |
|
Comprehensive income (loss) attributable to Viad |
| $ | (194,564 | ) |
| $ | 18,980 |
|
| $ | (314,712 | ) |
| $ | 6,068 |
| ||||||||
Comprehensive loss attributable to Viad |
| $ | (38,304 | ) |
| $ | (120,148 | ) |
(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 STOCKHOLDERS’ EQUITY AND MEZZANINE EQUITY
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Mezzanine Equity |
| |||||||||||||||||||||||||||||||||||||
(in thousands) |
| Common Stock |
|
| Additional Capital |
|
| Retained Earnings (Deficit) |
|
| Accumulated Other Comprehensive Income (Loss) |
|
| Common Stock in Treasury |
|
| Total Viad Equity |
|
| Non-Redeemable Non-Controlling Interest |
|
| Total Stockholders’ Equity |
|
| Common Stock |
|
| Additional Capital |
|
| Accumulated Deficit |
|
| Accumulated Other Comprehensive Income (Loss) |
|
| Common Stock in Treasury |
|
| Total Viad Equity |
|
| Non-Redeemable Non-Controlling Interest |
|
| Total Stockholders’ Equity |
|
|
|
|
| Redeemable Non-Controlling Interest |
|
| Convertible Series A Preferred Stock |
| ||||||||||||||||||
Balance, December 31, 2019 |
| $ | 37,402 |
|
| $ | 574,473 |
|
| $ | 122,971 |
|
| $ | (35,699 | ) |
| $ | (231,649 | ) |
| $ | 467,498 |
|
| $ | 79,731 |
|
| $ | 547,229 |
| |||||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2020 |
| $ | 37,402 |
|
| $ | 568,100 |
|
| $ | (253,164 | ) |
| $ | (30,641 | ) |
| $ | (225,742 | ) |
| $ | 95,955 |
|
| $ | 78,144 |
|
| $ | 174,099 |
|
|
|
|
| $ | 5,225 |
|
| $ | 128,769 |
| ||||||||||||||||||||||||||||||||
Net loss |
|
| — |
|
|
| — |
|
|
| (86,585 | ) |
|
| — |
|
|
| — |
|
|
| (86,585 | ) |
|
| (1,333 | ) |
|
| (87,918 | ) |
|
| — |
|
|
| — |
|
|
| (43,152 | ) |
|
| — |
|
|
| — |
|
|
| (43,152 | ) |
|
| (1,445 | ) |
|
| (44,597 | ) |
|
|
|
|
| (494 | ) |
|
| — |
|
Dividends on common stock ($0.10 per share) |
|
| — |
|
|
| — |
|
|
| (2,038 | ) |
|
| — |
|
|
| — |
|
|
| (2,038 | ) |
|
| — |
|
|
| (2,038 | ) | |||||||||||||||||||||||||||||||||||||||||||
Distributions to noncontrolling interest |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1,526 | ) |
|
| (1,526 | ) | |||||||||||||||||||||||||||||||||||||||||||
Dividends on convertible preferred stock |
|
| — |
|
|
| (1,898 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1,898 | ) |
|
| — |
|
|
| (1,898 | ) |
|
|
|
|
| — |
|
|
| 1,898 |
| ||||||||||||||||||||||||||||||||
Capital contribution and distributions to noncontrolling interest |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (951 | ) |
|
| (951 | ) |
|
|
|
|
| 142 |
|
|
| — |
| ||||||||||||||||||||||||||||||||
Payment of payroll taxes on stock-based compensation through shares withheld |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1,059 | ) |
|
| (1,059 | ) |
|
| — |
|
|
| (1,059 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (519 | ) |
|
| (519 | ) |
|
| — |
|
|
| (519 | ) |
|
|
|
|
| — |
|
|
| — |
|
Common stock purchased for treasury |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (2,785 | ) |
|
| (2,785 | ) |
|
| — |
|
|
| (2,785 | ) | |||||||||||||||||||||||||||||||||||||||||||
Employee benefit plans |
|
| — |
|
|
| (3,810 | ) |
|
| — |
|
|
| — |
|
|
| 5,722 |
|
|
| 1,912 |
|
|
| — |
|
|
| 1,912 |
|
|
| — |
|
|
| (1,198 | ) |
|
| — |
|
|
| — |
|
|
| 1,578 |
|
|
| 380 |
|
|
| — |
|
|
| 380 |
|
|
|
|
|
| — |
|
|
| — |
|
Share-based compensation - equity awards |
|
| — |
|
|
| 276 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 276 |
|
|
| — |
|
|
| 276 |
|
|
| — |
|
|
| 1,626 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1,626 |
|
|
| — |
|
|
| 1,626 |
|
|
|
|
|
| — |
|
|
| — |
|
Unrealized foreign currency translation adjustment |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (28,158 | ) |
|
| — |
|
|
| (28,158 | ) |
|
| (5,719 | ) |
|
| (33,877 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 3,977 |
|
|
| — |
|
|
| 3,977 |
|
|
| 750 |
|
|
| 4,727 |
|
|
|
|
|
| 77 |
|
|
| — |
|
Amortization of net actuarial loss, net of tax |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 341 |
|
|
| — |
|
|
| 341 |
|
|
| — |
|
|
| 341 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 177 |
|
|
| — |
|
|
| 177 |
|
|
| — |
|
|
| 177 |
|
|
|
|
|
| — |
|
|
| — |
|
Amortization of prior service cost, net of tax |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (27 | ) |
|
| — |
|
|
| (27 | ) |
|
| — |
|
|
| (27 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (56 | ) |
|
| — |
|
|
| (56 | ) |
|
| — |
|
|
| (56 | ) |
|
|
|
|
| — |
|
|
| — |
|
Acquisitions |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 6,759 |
|
|
| 6,759 |
|
|
|
|
|
| — |
|
|
| — | �� | ||||||||||||||||||||||||||||||||
Other, net |
|
| — |
|
|
| (80 | ) |
|
| (1 | ) |
|
| — |
|
|
| 1 |
|
|
| (80 | ) |
|
| — |
|
|
| (80 | ) |
|
| — |
|
|
| 13 |
|
|
| (1 | ) |
|
| — |
|
|
| — |
|
|
| 12 |
|
|
| — |
|
|
| 12 |
|
|
|
|
|
| 56 |
|
|
| — |
|
Balance, March 31, 2020 |
| $ | 37,402 |
|
| $ | 570,859 |
|
| $ | 34,347 |
|
| $ | (63,543 | ) |
| $ | (229,770 | ) |
| $ | 349,295 |
|
| $ | 71,153 |
|
| $ | 420,448 |
| |||||||||||||||||||||||||||||||||||||||||||
Net loss |
|
| — |
|
|
| — |
|
|
| (206,278 | ) |
|
| — |
|
|
| — |
|
|
| (206,278 | ) |
|
| (1,634 | ) |
|
| (207,912 | ) | |||||||||||||||||||||||||||||||||||||||||||
Payment of payroll taxes on stock-based compensation through shares withheld |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (3 | ) |
|
| (3 | ) |
|
| — |
|
|
| (3 | ) | |||||||||||||||||||||||||||||||||||||||||||
Common stock purchased for treasury |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
| |||||||||||||||||||||||||||||||||||||||||||
Employee benefit plans |
|
| — |
|
|
| 48 |
|
|
| — |
|
|
| — |
|
|
| 282 |
|
|
| 330 |
|
|
| — |
|
|
| 330 |
| |||||||||||||||||||||||||||||||||||||||||||
Share-based compensation - equity awards |
|
| — |
|
|
| 602 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 602 |
|
|
| — |
|
|
| 602 |
| |||||||||||||||||||||||||||||||||||||||||||
Unrealized foreign currency translation adjustment |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 9,784 |
|
|
| — |
|
|
| 9,784 |
|
|
| 1,933 |
|
|
| 11,717 |
| |||||||||||||||||||||||||||||||||||||||||||
Amortization of net actuarial loss, net of tax |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 25 |
|
|
| — |
|
|
| 25 |
|
|
| — |
|
|
| 25 |
| |||||||||||||||||||||||||||||||||||||||||||
Amortization of prior service cost, net of tax |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (28 | ) |
|
| — |
|
|
| (28 | ) |
|
| — |
|
|
| (28 | ) | |||||||||||||||||||||||||||||||||||||||||||
Other, net |
|
| — |
|
|
| 46 |
|
|
| — |
|
|
| — |
|
|
| (1 | ) |
|
| 45 |
|
|
| — |
|
|
| 45 |
| |||||||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2020 |
| $ | 37,402 |
|
| $ | 571,555 |
|
| $ | (171,931 | ) |
| $ | (53,762 | ) |
| $ | (229,492 | ) |
| $ | 153,772 |
|
| $ | 71,452 |
|
| $ | 225,224 |
| |||||||||||||||||||||||||||||||||||||||||||
Balance, March 31, 2021 |
| $ | 37,402 |
|
| $ | 566,643 |
|
| $ | (296,317 | ) |
| $ | (26,543 | ) |
| $ | (224,683 | ) |
| $ | 56,502 |
|
| $ | 83,257 |
|
| $ | 139,759 |
|
|
|
|
| $ | 5,006 |
|
| $ | 130,667 |
|
Refer to Notes to Condensed Consolidated Financial Statements.
VIAD CORP
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND MEZZANINE EQUITY (Continued)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Mezzanine Equity |
| |||||||||||||||||||||||||||||||||||||||||
(in thousands) |
| Common Stock |
|
| Additional Capital |
|
| Retained Earnings |
|
| Unearned Employee Benefits and Other |
|
| Accumulated Other Comprehensive Income (Loss) |
|
| Common Stock in Treasury |
|
| Total Viad Equity |
|
| Non-Redeemable Non-Controlling Interest |
|
| Total Stockholders’ Equity |
|
| Common Stock |
|
| Additional Capital |
|
| Retained Earnings |
|
| Accumulated Other Comprehensive Income (Loss) |
|
| Common Stock in Treasury |
|
| Total Viad Equity |
|
| Non-Redeemable Non-Controlling Interest |
|
| Total Stockholders’ Equity |
|
|
|
|
| Redeemable Non-Controlling Interest |
|
| Convertible Series A Preferred Stock |
| |||||||||||||||||||
Balance, December 31, 2018 |
| $ | 37,402 |
|
| $ | 575,339 |
|
| $ | 109,032 |
|
| $ | 199 |
|
| $ | (47,975 | ) |
| $ | (237,790 | ) |
| $ | 436,207 |
|
| $ | 14,348 |
|
| $ | 450,555 |
| |||||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2019 |
| $ | 37,402 |
|
| $ | 574,473 |
|
| $ | 122,971 |
|
| $ | (35,699 | ) |
| $ | (231,649 | ) |
| $ | 467,498 |
|
| $ | 79,731 |
|
| $ | 547,229 |
|
|
|
|
| $ | 6,172 |
|
| $ | — |
| ||||||||||||||||||||||||||||||||||||
Net loss |
|
| — |
|
|
| — |
|
|
| (17,777 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (17,777 | ) |
|
| (420 | ) |
|
| (18,197 | ) |
|
| — |
|
|
| — |
|
|
| (86,585 | ) |
|
| — |
|
|
| — |
|
|
| (86,585 | ) |
|
| (1,333 | ) |
|
| (87,918 | ) |
|
|
|
|
| (517 | ) |
|
| — |
|
Dividends on common stock ($0.10 per share) |
|
| — |
|
|
| — |
|
|
| (2,028 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (2,028 | ) |
|
| — |
|
|
| (2,028 | ) |
|
| — |
|
|
| — |
|
|
| (2,038 | ) |
|
| — |
|
|
| — |
|
|
| (2,038 | ) |
|
| — |
|
|
| (2,038 | ) |
|
|
|
|
| — |
|
|
| — |
|
Distributions to noncontrolling interest |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1,526 | ) |
|
| (1,526 | ) |
|
|
|
|
| — |
|
|
| — |
| ||||||||||||||||||||||||||||||||||||
Payment of payroll taxes on stock-based compensation through shares withheld |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (2,905 | ) |
|
| (2,905 | ) |
|
| — |
|
|
| (2,905 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1,059 | ) |
|
| (1,059 | ) |
|
| — |
|
|
| (1,059 | ) |
|
|
|
|
| — |
|
|
| — |
|
Common stock purchased for treasury |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (2,785 | ) |
|
| (2,785 | ) |
|
| — |
|
|
| (2,785 | ) |
|
|
|
|
| — |
|
|
| — |
| ||||||||||||||||||||||||||||||||||||
Employee benefit plans |
|
| — |
|
|
| (4,302 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 5,522 |
|
|
| 1,220 |
|
|
| — |
|
|
| 1,220 |
|
|
| — |
|
|
| (3,810 | ) |
|
| — |
|
|
| — |
|
|
| 5,722 |
|
|
| 1,912 |
|
|
| — |
|
|
| 1,912 |
|
|
|
|
|
| — |
|
|
| — |
|
Share-based compensation - equity awards |
|
| — |
|
|
| 780 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 780 |
|
|
| — |
|
|
| 780 |
|
|
| — |
|
|
| 276 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 276 |
|
|
| — |
|
|
| 276 |
|
|
|
|
|
| — |
|
|
| — |
|
Unrealized foreign currency translation adjustment |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 4,780 |
|
|
| — |
|
|
| 4,780 |
|
|
| — |
|
|
| 4,780 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (28,158 | ) |
|
| — |
|
|
| (28,158 | ) |
|
| (5,719 | ) |
|
| (33,877 | ) |
|
|
|
|
| (873 | ) |
|
| — |
|
Amortization of net actuarial loss, net of tax |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 120 |
|
|
| — |
|
|
| 120 |
|
|
| — |
|
|
| 120 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 341 |
|
|
| — |
|
|
| 341 |
|
|
| — |
|
|
| 341 |
|
|
|
|
|
| — |
|
|
| — |
|
Amortization of prior service cost, net of tax |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (35 | ) |
|
| — |
|
|
| (35 | ) |
|
| — |
|
|
| (35 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (27 | ) |
|
| — |
|
|
| (27 | ) |
|
| — |
|
|
| (27 | ) |
|
|
|
|
| — |
|
|
| — |
|
Other, net |
|
| — |
|
|
| 16 |
|
|
| — |
|
|
| 24 |
|
|
| — |
|
|
| 1 |
|
|
| 41 |
|
|
| — |
|
|
| 41 |
|
|
| — |
|
|
| (80 | ) |
|
| (1 | ) |
|
| — |
|
|
| 1 |
|
|
| (80 | ) |
|
| — |
|
|
| (80 | ) |
|
|
|
|
| 126 |
|
|
| — |
|
Balance, March 31, 2019 |
| $ | 37,402 |
|
| $ | 571,833 |
|
| $ | 89,227 |
|
| $ | 223 |
|
| $ | (43,110 | ) |
| $ | (235,172 | ) |
| $ | 420,403 |
|
| $ | 13,928 |
|
| $ | 434,331 |
| |||||||||||||||||||||||||||||||||||||||||||
Net income |
|
| — |
|
|
| — |
|
|
| 13,824 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 13,824 |
|
|
| 331 |
|
|
| 14,155 |
| |||||||||||||||||||||||||||||||||||||||||||
Dividends on common stock ($0.10 per share) |
|
| — |
|
|
| — |
|
|
| (2,006 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (2,006 | ) |
|
| — |
|
|
| (2,006 | ) | |||||||||||||||||||||||||||||||||||||||||||
Payment of payroll taxes on stock-based compensation through shares withheld |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (89 | ) |
|
| (89 | ) |
|
| — |
|
|
| (89 | ) | |||||||||||||||||||||||||||||||||||||||||||
Employee benefit plans |
|
| — |
|
|
| 301 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1,301 |
|
|
| 1,602 |
|
|
| — |
|
|
| 1,602 |
| |||||||||||||||||||||||||||||||||||||||||||
Share-based compensation - equity awards |
|
| — |
|
|
| 781 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 781 |
|
|
| — |
|
|
| 781 |
| |||||||||||||||||||||||||||||||||||||||||||
Unrealized foreign currency translation adjustment |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 4,317 |
|
|
| — |
|
|
| 4,317 |
|
|
| 776 |
|
|
| 5,093 |
| |||||||||||||||||||||||||||||||||||||||||||
Amortization of net actuarial loss, net of tax |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 99 |
|
|
| — |
|
|
| 99 |
|
|
| — |
|
|
| 99 |
| |||||||||||||||||||||||||||||||||||||||||||
Amortization of prior service cost, net of tax |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (36 | ) |
|
| — |
|
|
| (36 | ) |
|
| — |
|
|
| (36 | ) | |||||||||||||||||||||||||||||||||||||||||||
Acquisition of Mountain Park Lodges |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 49,711 |
|
|
| 49,711 |
| |||||||||||||||||||||||||||||||||||||||||||
Other, net |
|
| — |
|
|
| 16 |
|
|
| — |
|
|
| (223 | ) |
|
| — |
|
|
| 221 |
|
|
| 14 |
|
|
| — |
|
|
| 14 |
| |||||||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2019 |
| $ | 37,402 |
|
| $ | 572,931 |
|
| $ | 101,045 |
|
| $ | — |
|
| $ | (38,730 | ) |
| $ | (233,739 | ) |
| $ | 438,909 |
|
| $ | 64,746 |
|
| $ | 503,655 |
| |||||||||||||||||||||||||||||||||||||||||||
Balance, March 31, 2020 |
| $ | 37,402 |
|
| $ | 570,859 |
|
| $ | 34,347 |
|
| $ | (63,543 | ) |
| $ | (229,770 | ) |
| $ | 349,295 |
|
| $ | 71,153 |
|
| $ | 420,448 |
|
|
|
|
| $ | 4,908 |
|
| $ | — |
|
Refer to Notes to Condensed Consolidated Financial Statements.
VIAD CORP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
| Six Months Ended |
|
| Three Months Ended |
| ||||||||||
|
| June 30, |
|
| March 31, |
| ||||||||||
(in thousands) |
| 2020 |
|
| 2019 |
|
| 2021 |
|
| 2020 |
| ||||
Cash flows from operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
| $ | (296,551 | ) |
| $ | (4,318 | ) |
| $ | (45,091 | ) |
| $ | (88,435 | ) |
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
|
|
|
| ||||||||
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
| ||||||||
Depreciation and amortization |
|
| 29,135 |
|
|
| 27,715 |
|
|
| 13,177 |
|
|
| 15,285 |
|
Deferred income taxes |
|
| 19,514 |
|
|
| 6,215 |
|
|
| (3,019 | ) |
|
| (15,799 | ) |
(Income) loss from discontinued operations |
|
| 833 |
|
|
| (173 | ) |
|
| (348 | ) |
|
| 454 |
|
Restructuring charges |
|
| 1,111 |
|
|
| 5,143 |
|
|
| 2,826 |
|
|
| 851 |
|
Legal settlement |
|
| — |
|
|
| 8,500 |
| ||||||||
Impairment charges |
|
| 202,400 |
|
|
| — |
|
|
| — |
|
|
| 88,380 |
|
Gains on dispositions of property and other assets |
|
| (1,373 | ) |
|
| (731 | ) |
|
| (9,250 | ) |
|
| (85 | ) |
Share-based compensation (benefit) expense |
|
| (1,288 | ) |
|
| 4,617 |
| ||||||||
Multi-employer pension plan withdrawal |
|
| 462 |
|
|
| 15,508 |
| ||||||||
Share-based compensation expense (benefit) |
|
| 1,763 |
|
|
| (2,145 | ) | ||||||||
Other non-cash items, net |
|
| 11,470 |
|
|
| 2,227 |
|
|
| (171 | ) |
|
| 9,342 |
|
Change in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivables |
|
| 97,979 |
|
|
| (51,293 | ) |
|
| (1,284 | ) |
|
| 15,651 |
|
Inventories |
|
| (2,120 | ) |
|
| (4,518 | ) |
|
| 351 |
|
|
| (711 | ) |
Current contract costs |
|
| 16,185 |
|
|
| (2,000 | ) |
|
| (828 | ) |
|
| 8,970 |
|
Accounts payable |
|
| (59,887 | ) |
|
| 31,303 |
|
|
| (8,440 | ) |
|
| (1,109 | ) |
Restructuring liabilities |
|
| (2,359 | ) |
|
| (4,034 | ) |
|
| (2,250 | ) |
|
| (1,293 | ) |
Accrued compensation |
|
| (22,562 | ) |
|
| 3,647 |
|
|
| 1,364 |
|
|
| (20,551 | ) |
Contract liabilities |
|
| (22,499 | ) |
|
| 17,259 |
|
|
| 8,148 |
|
|
| (12,602 | ) |
Payments on operating lease obligations |
|
| (12,624 | ) |
|
| (13,603 | ) | ||||||||
Income taxes payable |
|
| 489 |
|
|
| (4,060 | ) |
|
| (19 | ) |
|
| 17,753 |
|
Other assets and liabilities, net |
|
| 10,520 |
|
|
| 2,133 |
|
|
| 10,352 |
|
|
| (18,675 | ) |
Net cash (used in) provided by operating activities |
|
| (31,165 | ) |
|
| 39,537 |
| ||||||||
Net cash used in operating activities |
|
| (32,719 | ) |
|
| (4,719 | ) | ||||||||
Cash flows from investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
| (32,516 | ) |
|
| (46,517 | ) |
|
| (9,371 | ) |
|
| (23,246 | ) |
Cash surrender value of life insurance policies |
|
| 24,767 |
|
|
| — |
| ||||||||
Cash paid for acquisitions, net |
|
| — |
|
|
| (72,918 | ) |
|
| (7,415 | ) |
|
| — |
|
Proceeds from dispositions of property and other assets |
|
| 4,654 |
|
|
| 768 |
|
|
| 14,106 |
|
|
| 85 |
|
Net cash used in investing activities |
|
| (3,095 | ) |
|
| (118,667 | ) |
|
| (2,680 | ) |
|
| (23,161 | ) |
Cash flows from financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from borrowings |
|
| 192,111 |
|
|
| 133,827 |
|
|
| 40,860 |
|
|
| 160,755 |
|
Payments on debt and finance lease obligations |
|
| (56,078 | ) |
|
| (47,862 | ) |
|
| (8,310 | ) |
|
| (56,077 | ) |
Dividends paid on common stock |
|
| (4,064 | ) |
|
| (4,034 | ) |
|
| — |
|
|
| (2,038 | ) |
Distributions to noncontrolling interest |
|
| (1,526 | ) |
|
| — |
| ||||||||
Distributions to noncontrolling interest, net of contributions from noncontrolling interest |
|
| (809 | ) |
|
| (1,526 | ) | ||||||||
Payment of payroll taxes on stock-based compensation through shares withheld or repurchased |
|
| (1,062 | ) |
|
| (2,994 | ) |
|
| (519 | ) |
|
| (1,059 | ) |
Common stock purchased for treasury |
|
| (2,785 | ) |
|
| — |
|
|
| — |
|
|
| (2,785 | ) |
Proceeds from exercise of stock options |
|
| 2,077 |
|
|
| 92 |
|
|
| — |
|
|
| 2,077 |
|
Net cash provided by financing activities |
|
| 128,673 |
|
|
| 79,029 |
|
|
| 31,222 |
|
|
| 99,347 |
|
Effect of exchange rate changes on cash and cash equivalents |
|
| (2,196 | ) |
|
| 786 |
| ||||||||
Net change in cash and cash equivalents |
|
| 92,217 |
|
|
| 685 |
| ||||||||
Cash and cash equivalents, beginning of year |
|
| 61,999 |
|
|
| 44,893 |
| ||||||||
Cash and cash equivalents, end of period |
| $ | 154,216 |
|
| $ | 45,578 |
| ||||||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash |
|
| 151 |
|
|
| (2,938 | ) | ||||||||
Net change in cash, cash equivalents, and restricted cash |
|
| (4,026 | ) |
|
| 68,529 |
| ||||||||
Cash, cash equivalents, and restricted cash, beginning of year |
|
| 41,971 |
|
|
| 62,004 |
| ||||||||
Cash, cash equivalents, and restricted cash, end of period |
| $ | 37,945 |
|
| $ | 130,533 |
|
Refer to Notes to Condensed Consolidated Financial Statements.
VIAD CORP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Overview and Basis of Presentation
Nature of Business
We are an international experiential services company with operations in the United States, Canada, the United Kingdom, continental Europe, the United Arab Emirates, and Iceland. We are committed to providing unforgettable experiences to our clients and guests. We operate through 3 reportable business segments: GES North America, GES EMEA (collectively, “GES”), and Pursuit.
GES
GES is a global, full-service live events company offering a comprehensive range of services to event organizers and corporate brand marketers. Event organizers schedule and run events from start to finish. Corporate brand marketers include exhibitors and domestic and international corporations that want to promote their brands, services and innovations, feature new products, and build business relationships. GES serves corporate brand marketers when they exhibit at shows and when GES is engaged to manage their global exhibit program or produce their proprietary corporate events.
Pursuit
Pursuit is a collection of inspiring and unforgettable travel experiences that include 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, and FlyOver.
Impact of COVID-19
On March 11, 2020, the World Health Organization declared COVID-19 a “pandemic.” COVID-19 has spread rapidly, with a high concentration of confirmed cases in the U.S. and other countries in which we operate. The rapid spread has resulted in authorities around the world implementing numerous measures to contain the virus, such as travel bans and restrictions, quarantines, shelter-in-place orders, and business shutdowns. The COVID-19 pandemic and these containment measures have had, and are expected to continue to have, a substantial negative impact on businesses around the world and on global, regional, and national economies.
The COVID-19 pandemic is having and will likely continue to have a significant and negative impact on our operations and financial performance, with live events largely shut down and tourism activity disruptions. As a result, we have taken the following measures to improve our liquidity position due to COVID-19:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As previously disclosed in our quarterly report on Form 10-Q for the three months ended March 31, 2020, the shut-down of live event and tourism activities resulting in substantial net losses and operating cash outflows and the expected inability to maintain compliance with debt covenants raised substantial doubt about our ability to continue as a going concern for a period through one year from the issuance of the financial statements. Accordingly, the entire balances outstanding under the 2018 Credit Facility as of March 31, 2020, had been classified as current liabilities. On August 5, 2020, we entered into an investment agreement with funds managed by private equity firm Crestview Partners (the “Investment Agreement”) who made an initial investment of $135 million, net of approximately $9 million in fees, in newly issued perpetual convertible preferred stock that carries a 5.5% dividend, which is payable in cash or in-kind at Viad’s option (the “Convertible Preferred Stock”). The Convertible Preferred Stock is convertible into shares of our common stock at a conversion price of $21.25 per share. The Investment Agreement also includes a delayed draw commitment of up to $45 million in additional Convertible Preferred Stock, which we may access during the next 12 months on the same terms and conditions as the initial investment (subject to shareholder approval). The proceeds from Crestview’s initial investment will be used to repay a portion of our 2018 Credit Facility, provide additional short-term liquidity, fund capital expenditures, and support general corporate purposes. Pursuant to the Investment Agreement, two Crestview Partners’ designees joined our Board of Directors, increasing the size of our board from seven to nine directors. On August 5, 2020 we entered into an amendment to our Second Amended and Restated Credit Agreement (the “2018 Credit Agreement”), which, among other things, (i) waives our financial covenants until the end of the third quarter of 2022 (the “Covenant Waiver Period”) and (ii) requires us to maintain minimum liquidity of $125 million with a step down to $100 million at December 31, 2020. The interest rate on the borrowings is equal to the London Interbank Offered Rate (“LIBOR”) plus 350 basis points, with a LIBOR floor of one percent during the Covenant Waiver Period. The LIBOR floor continues until the end of the 2018 Credit Agreement. Additionally, we are precluded from paying cash dividends, from issuing unsecured debt, and from accessing the $250 million expansion feature during the Covenant Waiver Period. The amendment also allows us to make acquisitions under certain conditions. Viad pledged 100% of the capital stock of its top-tier foreign subsidiaries (other than Esja Attractions ehf.). Fees related to the amendment were approximately $1.6 million. Management anticipates that the forgoing cash proceeds from Crestview Partners, existing cash and cash equivalents, and the amendment to waive financial covenants within the 2018 Credit Agreement until the end of the third quarter of 2022 will be sufficient to fund operations for at least the next 12 months and alleviate the conditions that raised substantial doubt about our ability to continue as a going concern. As a result, outstanding balances under the 2018 Credit Facility as of June 30, 2020, have again been classified as long-term liabilities.
Due to the deteriorating macroeconomic environment, disruptions to our operations, and the sustained decline in our stock price caused by COVID-19, we determined an interim triggering event had occurred in the first quarter of 2020, which required us to assess the carrying values of goodwill and intangible assets in accordance with Accounting Standards Codification (“ASC”) No. 350, Intangibles – Goodwill and Other. Based on this assessment, we recorded a non-cash goodwill impairment charge of $72.7 million during the three months ended March 31, 2020 associated with the GES U.S., GES EMEA, and Pursuit’s Glacier Park Collection reporting units. Additionally, during the three months ended March 31, 2020, we recorded a non-cash impairment charge to other intangible assets of $15.7 million related to our U.S. audio-visual production business.
During the second quarter of 2020 and into July, GES continued to experience event postponements and cancellations and we experienced further declines in our stock price. There has also been an increased spread of the COVID-19 virus throughout the United States, which resulted in further closures and governor orders that we believe have increased the uncertainty regarding when the live event industry will re-commence and how long it will take to get back to similar pre-COVID-19 business levels. The uncertainty regarding the duration of the current domestic and global economic conditions and whether further deterioration in the macroeconomic environment will continue as a result of the COVID-19 pandemic was factored into our second quarter goodwill impairment analysis. As a result, we recorded a full impairment charge to the remaining GES goodwill balance of $113.1 million during the three months ended June 30, 2020. Our remaining goodwill balance as of June 30, 2020 of $95.2 million pertains to our Pursuit business, which phased in most of its attractions and lodging operations in June and July of 2020. The duration and impact of COVID-19 may result in additional future impairment charges as facts and circumstances evolve. Refer to Note 9 – Goodwill and Other Intangible Assets for additional information.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements were 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 SEC rules and regulations for complete financial statements. These 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 our Annual Report on Form 10-K for the year ended December 31, 2019,2020, filed with the SEC on February 26, March 2, 2021 (“2020
(“2019 Form 10-K”). We corrected the classification of debt as of December 31, 2019. Refer to Note 12 – Debt and Finance Lease Obligations.
The condensed consolidated financial statements include the accounts of Viad and its subsidiaries. We have eliminated all significant intercompany account balances and transactions in consolidation.
Nature of Business
We are a leading provider of experiential leisure travel and live events and marketing experiences with operations in the United States, Canada, the United Kingdom, continental Europe, the United Arab Emirates, and Iceland. We are committed to providing unforgettable experiences to our clients and guests. We operate through 2 reportable business segments: GES and Pursuit.
GES
GES is a global, full-service provider for live events that partners with show organizers, exhibitors, and brand marketers to create high-value, live events. GES offers a comprehensive range of live event services, from the design and production of compelling, immersive experiences that engage audiences and build brand awareness, to material handling, rigging, electrical, and other on-site event services. In addition, GES offers clients a full suite of audio-visual services from creative and technology to content and design, along with registration, data analytics, engagement, and online tools powered by next generation technologies that help clients easily manage the complexities of their event.
Pursuit
Pursuit is a collection of inspiring and unforgettable travel experiences that include 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, and FlyOver.
Impact of COVID-19
Starting in mid-March 2020 and extending through the first quarter of 2021, the COVID-19 pandemic had a significant and negative impact on our operations and financial performance, with live events largely shut down and severe tourism activity disruptions. In response to the COVID-19 pandemic, we implemented aggressive cost reduction measures in 2020 to preserve cash, including furloughs, layoffs, mandatory unpaid time off or salary reductions for all employees, and the reduction of discretionary spending. We also suspended future dividend payments and share repurchases, and we availed ourselves of governmental assistance programs for wages and tax relief.
In August 2020, we secured additional capital to strengthen our liquidity position by entering into an investment agreement with funds managed by private equity firm Crestview Partners who made an initial investment of $135 million, offset in part by $9.2 million in fees, in newly issued perpetual convertible preferred stock. Refer to Note 15 – Common and Preferred Stock for further information. In August 2020, we also amended our Second Amended and Restated Credit Agreement (the “2018 Credit Agreement”) to provide financial flexibility, which, among other things waives our financial covenants until September 30, 2022. Refer to Note 12 – Debt and Finance Lease Obligations for further information. During the three months ended March 31, 2021, we continued to preserve cash and closely managed our costs. In connection with the acceleration of COVID-19 vaccination programs in certain of our geographic territories, we began to see early signs of recovery in the travel and hospitality and live event sectors during the first quarter of 2021, with more live event markets opening, smaller scale live events taking place, and an uptick in bookings. Event organizers continue to assess when it will be possible to safely hold larger scale face-to-face live events.
Reclassifications
During the first quarter of 2021, we reorganized GES’ operating segments to represent the changes in how our chief operating decision maker (“CODM”) reviews the financial performance of GES and makes decisions regarding the allocation of resources. As a result, we changed the presentation of certain items in GES’ disaggregation of revenue and reportable segments. Refer to Note 2 – Revenue and Related Contract Costs and Contract Liabilities and Note 23 – Segment Information for additional information. We reclassed certain prior-year amounts to conform to current-period presentation. Such reclassifications had no impact on our results of operations or cash flows.
Correction to Prior Period Financial Statements
As previously disclosed in our 2020 Form 10-K, we identified prior period errors related to the recognition of revenue of GES’ third-party services. Revenue from these services should have been recorded on a net basis to reflect only the fees received for arranging these services, whereas previously, we recorded this revenue on a gross basis, thus overstating revenue and cost of services by the same amount. As a result, we corrected the accompanying Condensed Consolidated Statements of Operations for the three months ended March 31, 2020 related to this gross-to-net adjustment. We determined that these errors were not material to the previously issued financial statements. Note 2 – Revenue and Related Contract Costs and Contract Liabilities and Note 23 – Segment Information reflect this correction.
|
| Three Months Ended March 31, 2020 |
| |||||
(in thousands) |
| Services Revenue |
|
| Cost of Services |
| ||
As previously reported |
| $ | 275,556 |
|
| $ | 284,402 |
|
Gross to net correction for GES |
|
| (11,350 | ) |
|
| (11,350 | ) |
Total as corrected |
| $ | 264,206 |
|
| $ | 273,052 |
|
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 Not Yet Adopted | ||||||
ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) | The amendment simplifies the accounting for convertible instruments by reducing the number of accounting models available for convertible debt instruments and convertible preferred stock. The amendment also requires expanded disclosures about the terms and features of convertible instruments. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. | 1/1/2022 | We are currently evaluating the potential impact of the adoption of this new guidance on our consolidated financial statements and if there are applicable provisions that will simplify our accounting or reporting we will likely pursue early adoption. | |||
Standard | Description | Date of adoption | Effect on the financial statements | |||
Standards Recently Adopted | ||||||
ASU 2019-12,Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes |
| The amendment enhances and simplifies various aspects of the income tax accounting guidance, including requirements such as ownership changes in investments, and interim-period accounting for enacted changes in tax law. |
| 1/1/2021 |
|
|
|
|
|
| |||
| ||||||
|
|
|
| |||
|
|
|
|
Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with U.S. 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: impairment testing of recorded 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; pension and postretirement benefit costs and obligations; share-based compensation costs; the discount rates used to value lease obligations; the redemption value of redeemable noncontrolling interests; and the allocation of purchase price of acquired businesses. Actual results could differ from these and other estimates.
Cash, Cash Equivalents, and Restricted Cash
Cash 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 and money market funds. Investments in money market funds are classified as available-for-sale and carried at fair value. Restricted cash represents collateral required for surety bonds, bank guarantees, and letters of credit.
Cash, cash equivalents, and restricted cash balances presented in the Condensed Consolidated Statements of Cash Flows consisted of the following:
|
|
|
|
|
|
|
|
|
|
| March 31, |
|
| December 31, |
| ||
(in thousands) |
| 2021 |
|
| 2020 |
| ||
Cash and cash equivalents |
| $ | 34,714 |
|
| $ | 39,545 |
|
Restricted cash included in other current assets |
|
| 3,231 |
|
|
| 2,426 |
|
Cash, cash equivalents, and restricted cash shown in the statement of cash flows |
| $ | 37,945 |
|
| $ | 41,971 |
|
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.
GES’ service revenue is primarily derived through its comprehensive range of marketing, event production, and other related services to event organizers and corporate brand marketers including Core Services, Event Technology, and Audio-Visual. GES’ service revenue is earned over time over the duration
of the exhibition, conference, or corporatelive event, which generally lasts one to three days. 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. GES’ product revenue is derived from the build of exhibits and environments and graphics. GES’ product revenue is recognized at a point in time upon delivery of the product.
Pursuit’s service revenue is derived through its admissions, accommodations, transportation, and travel planning services. Pursuit’s product revenue is derived through food and beverage and retail sales. Pursuit’s revenue is recognized at the time services are performed or upon delivery of the product. Pursuit’s service revenue is recognized over time as the customer simultaneously receives and consumes the benefits. Pursuit’s product revenue is recognized at a point in time.
Noncontrolling Interests – Non-redeemable and Redeemable
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 20% equity ownership interest that we do not own in Glacier Park, Inc., the 40% equity interest that we do not own in the Mountain Park Lodges, and the 49% equity interest that we do not own in the new entity that will operate the Pursuit Sky Lagoon attraction. 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 54.5% 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 Esja shares to us based on a calculated formula within a predefined term. This redeemable noncontrolling interest is considered temporarymezzanine equity and we report it between liabilities and 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 retained earningsaccumulated deficit and is included in our incomeloss per share.
Refer to Note 2122 – Noncontrolling Interest – Redeemable Noncontrolling Interestand 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. 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. These facility leases generally have lease terms ranging up to 2524 years. Our equipment leases comprise mainly vehicles, hardware, and office equipment, each with various lease terms. Our land leases comprise mainly leases in Canada and Iceland on which our hotels or attractions are located and have lease terms ranging up to 4246 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 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 we adjust 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 discount 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 against 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
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 an exhibition, conference, or othera live event. GES’ revenue is earned over time over the durationRevenue for goods and services provided for which we do not have control of the event, but asgoods or services before that good or service is transferred to a practical expedient wecustomer is recorded on a net basis to reflect only the fees received for arranging these services. We recognize revenue when we have a right to invoicefor services generally at the close of the exhibition, conference, or corporate event, which typically lasts one to three days or when a customer cancels a contract. We recognize revenue for consumer events over the duration of thelive 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, generally at the close of the exhibition, conference, or corporate event, or when a customer cancels a contract. Ifinvoice. In circumstances where a customer cancels a contract, then GES iswe generally contractually ablehave the right to invoicebill the customer for contract costs that have been incurred by GES in preparing for the exhibition, conference, or corporate event.to date. Payment terms are generally within 30-60 days and contain no significant financing components.
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, the fulfillment of travel planning itineraries, 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.
Contract Liabilities
GES and Pursuit 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 the related contract performance obligation(s). GES also provides customer rebates and volume discounts to certain event organizers that we recognize as a reduction of revenue. We include these amounts in the Condensed Consolidated Balance Sheets under the captions “Contract liabilities” and “Other deferred items and liabilities.”
Changes to contract liabilities are as follows:
(in thousands) |
|
|
|
|
|
|
|
|
Balance at December 31, 2019 |
| $ | 50,796 |
| ||||
Balance at December 31, 2020 |
| $ | 18,618 |
| ||||
Cash additions |
|
| 95,966 |
|
|
| 14,338 |
|
Revenue recognized |
|
| (117,844 | ) |
|
| (5,647 | ) |
Foreign exchange translation adjustment |
|
| (1,194 | ) |
|
| (453 | ) |
Balance at June 30, 2020 |
| $ | 27,724 |
| ||||
Balance at March 31, 2021 |
| $ | 26,856 |
|
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 exhibitions, conferences, and 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 cost of services or cost of products, as applicable. We include the deferred incremental costs of obtaining and fulfilling contracts in the Condensed Consolidated Balance Sheets under the captions “Current contract costs” and “Other investments and assets.”
Changes to contract costs are as follows:
(in thousands) |
|
|
|
|
|
|
|
|
Balance at December 31, 2019 |
| $ | 28,496 |
| ||||
Balance at December 31, 2020 |
| $ | 10,835 |
| ||||
Additions |
|
| 13,988 |
|
|
| 4,394 |
|
Expenses |
|
| (21,299 | ) |
|
| (3,237 | ) |
Cancelled |
|
| (8,022 | ) |
|
| (432 | ) |
Foreign exchange translation adjustment |
|
| (604 | ) |
|
| 34 |
|
Balance at June 30, 2020 |
| $ | 12,559 |
| ||||
Balance at March 31, 2021 |
| $ | 11,594 |
|
As of June 30, 2020,March 31, 2021, capitalized contract costs consisted of $1.4$0.8 million to obtain contracts and $11.2$10.8 million to fulfill contracts. We did 0t recognize an impairment loss with respect to capitalized contract costs during the three and six months ended June 30, 2020March 31, 2021 or 2019.2020.
Disaggregation of Revenue
During the first quarter of 2021, we changed GES’ presentation of certain items in the following disaggregation of revenue table to depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. All prior periods have been reclassified to conform to this new reporting structure.
The following tables disaggregate GES and Pursuit revenue by major service and product line,lines, timing of revenue recognition, and markets served:
GES
|
| Three Months Ended June 30, 2020 |
| |||||||||||||
(in thousands) |
| GES North America |
|
| GES EMEA |
|
| Intersegment Eliminations |
|
| Total |
| ||||
Services: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core services |
| $ | 16,122 |
|
| $ | 6,046 |
|
| $ | — |
|
| $ | 22,168 |
|
Audio-visual |
|
| 298 |
|
|
| 132 |
|
|
| — |
|
|
| 430 |
|
Event technology |
|
| 1,109 |
|
|
| 274 |
|
|
| — |
|
|
| 1,383 |
|
Intersegment eliminations |
|
| — |
|
|
| — |
|
|
| (985 | ) |
|
| (985 | ) |
Total services |
|
| 17,529 |
|
|
| 6,452 |
|
|
| (985 | ) |
|
| 22,996 |
|
Products: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core products |
|
| 1,247 |
|
|
| 1,356 |
|
|
| — |
|
|
| 2,603 |
|
Total revenue |
| $ | 18,776 |
|
| $ | 7,808 |
|
| $ | (985 | ) |
| $ | 25,599 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timing of revenue recognition: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services transferred over time |
| $ | 17,529 |
|
| $ | 6,452 |
|
| $ | (985 | ) |
| $ | 22,996 |
|
Products transferred over time(1) |
|
| 226 |
|
|
| (58 | ) |
|
| — |
|
|
| 168 |
|
Products transferred at a point in time |
|
| 1,021 |
|
|
| 1,414 |
|
|
| — |
|
|
| 2,435 |
|
Total revenue |
| $ | 18,776 |
|
| $ | 7,808 |
|
| $ | (985 | ) |
| $ | 25,599 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Markets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibitions |
| $ | 11,404 |
|
| $ | 4,775 |
|
| $ | — |
|
| $ | 16,179 |
|
Conferences |
|
| 7,798 |
|
|
| 2,835 |
|
|
| — |
|
|
| 10,633 |
|
Corporate events |
|
| (310 | ) |
|
| 254 |
|
|
| — |
|
|
| (56 | ) |
Consumer events |
|
| (116 | ) |
|
| (56 | ) |
|
| — |
|
|
| (172 | ) |
Intersegment eliminations |
|
| — |
|
|
| — |
|
|
| (985 | ) |
|
| (985 | ) |
Total revenue |
| $ | 18,776 |
|
| $ | 7,808 |
|
| $ | (985 | ) |
| $ | 25,599 |
|
|
|
|
| Six Months Ended June 30, 2020 |
| |||||||||||||
(in thousands) |
| GES North America |
|
| GES EMEA |
|
| Intersegment Eliminations |
|
| Total |
| ||||
Services: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core services |
| $ | 226,305 |
|
| $ | 32,549 |
|
| $ | — |
|
| $ | 258,854 |
|
Audio-visual |
|
| 17,728 |
|
|
| 4,166 |
|
|
| — |
|
|
| 21,894 |
|
Event technology |
|
| 6,663 |
|
|
| 3,135 |
|
|
| — |
|
|
| 9,798 |
|
Intersegment eliminations |
|
| — |
|
|
| — |
|
|
| (2,974 | ) |
|
| (2,974 | ) |
Total services |
|
| 250,696 |
|
|
| 39,850 |
|
|
| (2,974 | ) |
|
| 287,572 |
|
Products: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core products |
|
| 19,838 |
|
|
| 10,674 |
|
|
| — |
|
|
| 30,512 |
|
Total revenue |
| $ | 270,534 |
|
| $ | 50,524 |
|
| $ | (2,974 | ) |
| $ | 318,084 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timing of revenue recognition: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services transferred over time |
| $ | 250,696 |
|
| $ | 39,850 |
|
| $ | (2,974 | ) |
| $ | 287,572 |
|
Products transferred over time(1) |
|
| 10,803 |
|
|
| 2,392 |
|
|
| — |
|
|
| 13,195 |
|
Products transferred at a point in time |
|
| 9,035 |
|
|
| 8,282 |
|
|
| — |
|
|
| 17,317 |
|
Total revenue |
| $ | 270,534 |
|
| $ | 50,524 |
|
| $ | (2,974 | ) |
| $ | 318,084 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Markets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibitions |
| $ | 195,762 |
|
| $ | 37,322 |
|
| $ | — |
|
| $ | 233,084 |
|
Conferences |
|
| 43,688 |
|
|
| 7,642 |
|
|
| — |
|
|
| 51,330 |
|
Corporate events |
|
| 26,654 |
|
|
| 5,408 |
|
|
| — |
|
|
| 32,062 |
|
Consumer events |
|
| 4,430 |
|
|
| 152 |
|
|
| — |
|
|
| 4,582 |
|
Intersegment eliminations |
|
| — |
|
|
| — |
|
|
| (2,974 | ) |
|
| (2,974 | ) |
Total revenue |
| $ | 270,534 |
|
| $ | 50,524 |
|
| $ | (2,974 | ) |
| $ | 318,084 |
|
|
| Three Months Ended |
| |||||
|
| March 31, |
| |||||
(in thousands) |
| 2021 |
|
| 2020 |
| ||
Service lines: |
|
|
|
|
|
|
|
|
Exhibitions and Conferences |
| $ | 5,835 |
|
| $ | 201,159 |
|
Brand experiences |
|
| 11,704 |
|
|
| 68,995 |
|
Venue services |
|
| 1,606 |
|
|
| 10,981 |
|
Total revenue |
| $ | 19,145 |
|
| $ | 281,135 |
|
|
|
|
|
|
|
|
|
|
Timing of revenue recognition: |
|
|
|
|
|
|
|
|
Services transferred over time |
| $ | 17,015 |
|
| $ | 253,226 |
|
Products transferred over time(1) |
|
| 417 |
|
|
| 13,027 |
|
Products transferred at a point in time |
|
| 1,713 |
|
|
| 14,882 |
|
Total revenue |
| $ | 19,145 |
|
| $ | 281,135 |
|
|
|
|
|
|
|
|
|
|
Geographical markets: |
|
|
|
|
|
|
|
|
North America |
| $ | 15,858 |
|
| $ | 242,440 |
|
EMEA |
|
| 3,903 |
|
|
| 40,684 |
|
Intersegment eliminations |
|
| (616 | ) |
|
| (1,989 | ) |
Total revenue |
| $ | 19,145 |
|
| $ | 281,135 |
|
|
|
|
| Three Months Ended June 30, 2019 |
| |||||||||||||
(in thousands) |
| GES North America |
|
| GES EMEA |
|
| Intersegment Eliminations |
|
| Total |
| ||||
Services: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core services |
| $ | 228,112 |
|
| $ | 41,821 |
|
| $ | — |
|
| $ | 269,933 |
|
Audio-visual |
|
| 24,175 |
|
|
| 6,881 |
|
|
| — |
|
|
| 31,056 |
|
Event technology |
|
| 9,845 |
|
|
| 2,134 |
|
|
| — |
|
|
| 11,979 |
|
Intersegment eliminations |
|
| — |
|
|
| — |
|
|
| (6,317 | ) |
|
| (6,317 | ) |
Total services |
|
| 262,132 |
|
|
| 50,836 |
|
|
| (6,317 | ) |
|
| 306,651 |
|
Products: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core products |
|
| 21,550 |
|
|
| 18,669 |
|
|
| — |
|
|
| 40,219 |
|
Total revenue |
| $ | 283,682 |
|
| $ | 69,505 |
|
| $ | (6,317 | ) |
| $ | 346,870 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timing of revenue recognition: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services transferred over time |
| $ | 262,132 |
|
| $ | 50,836 |
|
| $ | (6,317 | ) |
| $ | 306,651 |
|
Products transferred over time(1) |
|
| 11,774 |
|
|
| 4,811 |
|
|
| — |
|
|
| 16,585 |
|
Products transferred at a point in time |
|
| 9,776 |
|
|
| 13,858 |
|
|
| — |
|
|
| 23,634 |
|
Total revenue |
| $ | 283,682 |
|
| $ | 69,505 |
|
| $ | (6,317 | ) |
| $ | 346,870 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Markets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibitions |
| $ | 138,887 |
|
| $ | 49,293 |
|
| $ | — |
|
| $ | 188,180 |
|
Conferences |
|
| 105,455 |
|
|
| 10,870 |
|
|
| — |
|
|
| 116,325 |
|
Corporate events |
|
| 29,868 |
|
|
| 8,772 |
|
|
| — |
|
|
| 38,640 |
|
Consumer events |
|
| 9,472 |
|
|
| 570 |
|
|
| — |
|
|
| 10,042 |
|
Intersegment eliminations |
|
| — |
|
|
| — |
|
|
| (6,317 | ) |
|
| (6,317 | ) |
Total revenue |
| $ | 283,682 |
|
| $ | 69,505 |
|
| $ | (6,317 | ) |
| $ | 346,870 |
|
| GES’ graphics product revenue is earned over time over the duration of an event as it is considered a part of the single performance obligation satisfied over time. |
|
| Six Months Ended June 30, 2019 |
| |||||||||||||
(in thousands) |
| GES North America |
|
| GES EMEA |
|
| Intersegment Eliminations |
|
| Total |
| ||||
Services: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core services |
| $ | 407,985 |
|
| $ | 72,884 |
|
| $ | — |
|
| $ | 480,869 |
|
Audio-visual |
|
| 42,581 |
|
|
| 10,769 |
|
|
| — |
|
|
| 53,350 |
|
Event technology |
|
| 18,608 |
|
|
| 5,087 |
|
|
| — |
|
|
| 23,695 |
|
Intersegment eliminations |
|
| — |
|
|
| — |
|
|
| (9,007 | ) |
|
| (9,007 | ) |
Total services |
|
| 469,174 |
|
|
| 88,740 |
|
|
| (9,007 | ) |
|
| 548,907 |
|
Products: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core products |
|
| 37,749 |
|
|
| 35,141 |
|
|
| — |
|
|
| 72,890 |
|
Total revenue |
| $ | 506,923 |
|
| $ | 123,881 |
|
| $ | (9,007 | ) |
| $ | 621,797 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timing of revenue recognition: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services transferred over time |
| $ | 469,174 |
|
| $ | 88,740 |
|
| $ | (9,007 | ) |
| $ | 548,907 |
|
Products transferred over time(1) |
|
| 23,043 |
|
|
| 8,290 |
|
|
| — |
|
|
| 31,333 |
|
Products transferred at a point in time |
|
| 14,706 |
|
|
| 26,851 |
|
|
| — |
|
|
| 41,557 |
|
Total revenue |
| $ | 506,923 |
|
| $ | 123,881 |
|
| $ | (9,007 | ) |
| $ | 621,797 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Markets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibitions |
| $ | 275,316 |
|
| $ | 94,948 |
|
| $ | — |
|
| $ | 370,264 |
|
Conferences |
|
| 153,317 |
|
|
| 13,852 |
|
|
| — |
|
|
| 167,169 |
|
Corporate events |
|
| 62,655 |
|
|
| 14,317 |
|
|
| — |
|
|
| 76,972 |
|
Consumer events |
|
| 15,635 |
|
|
| 764 |
|
|
| — |
|
|
| 16,399 |
|
Intersegment eliminations |
|
| — |
|
|
| — |
|
|
| (9,007 | ) |
|
| (9,007 | ) |
Total revenue |
| $ | 506,923 |
|
| $ | 123,881 |
|
| $ | (9,007 | ) |
| $ | 621,797 |
|
|
|
Pursuit
|
| Three Months Ended |
|
| Six Months Ended |
|
| Three Months Ended |
| |||||||||||||||
|
| June 30, |
|
| June 30, |
|
| March 31, |
| |||||||||||||||
(in thousands) |
| 2020 |
|
| 2019 |
|
| 2020 |
|
| 2019 |
|
| 2021 |
|
| 2020 |
| ||||||
Services: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Admissions |
| $ | 1,534 |
|
| $ | 23,156 |
|
| $ | 5,636 |
|
| $ | 26,681 |
|
| $ | 1,484 |
|
| $ | 4,102 |
|
Accommodations |
|
| 1,456 |
|
|
| 12,926 |
|
|
| 5,973 |
|
|
| 15,344 |
|
|
| 5,150 |
|
|
| 4,517 |
|
Transportation |
|
| 12 |
|
|
| 3,954 |
|
|
| 2,068 |
|
|
| 5,949 |
|
|
| 537 |
|
|
| 2,056 |
|
Travel planning |
|
| 213 |
|
|
| 1,471 |
|
|
| 629 |
|
|
| 2,103 |
|
|
| 714 |
|
|
| 416 |
|
Intersegment eliminations |
|
| (6 | ) |
|
| (499 | ) |
|
| (117 | ) |
|
| (684 | ) |
|
| — |
|
|
| (111 | ) |
Total services revenue |
|
| 3,209 |
|
|
| 41,008 |
|
|
| 14,189 |
|
|
| 49,393 |
|
|
| 7,885 |
|
|
| 10,980 |
|
Products: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Food and beverage |
|
| 615 |
|
|
| 8,206 |
|
|
| 2,264 |
|
|
| 9,570 |
|
|
| 1,224 |
|
|
| 1,649 |
|
Retail operations |
|
| 1,440 |
|
|
| 6,195 |
|
|
| 2,334 |
|
|
| 7,113 |
|
|
| 681 |
|
|
| 894 |
|
Total products revenue |
|
| 2,055 |
|
|
| 14,401 |
|
|
| 4,598 |
|
|
| 16,683 |
|
|
| 1,905 |
|
|
| 2,543 |
|
Total revenue |
| $ | 5,264 |
|
| $ | 55,409 |
|
| $ | 18,787 |
|
| $ | 66,076 |
|
| $ | 9,790 |
|
| $ | 13,523 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timing of revenue recognition: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services transferred over time |
| $ | 3,209 |
|
| $ | 41,008 |
|
| $ | 14,189 |
|
| $ | 49,393 |
|
| $ | 7,885 |
|
| $ | 10,980 |
|
Products transferred at a point in time |
|
| 2,055 |
|
|
| 14,401 |
|
|
| 4,598 |
|
|
| 16,683 |
|
|
| 1,905 |
|
|
| 2,543 |
|
Total revenue |
| $ | 5,264 |
|
| $ | 55,409 |
|
| $ | 18,787 |
|
| $ | 66,076 |
|
| $ | 9,790 |
|
| $ | 13,523 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Markets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Banff Jasper Collection |
| $ | 3,040 |
|
| $ | 33,226 |
|
| $ | 12,839 |
|
| $ | 41,096 |
|
| $ | 8,460 |
|
| $ | 9,799 |
|
Alaska Collection |
|
| 580 |
|
|
| 12,198 |
|
|
| 731 |
|
|
| 12,378 |
|
|
| 289 |
|
|
| 151 |
|
Glacier Park Collection |
|
| 1,161 |
|
|
| 7,375 |
|
|
| 1,884 |
|
|
| 8,198 |
|
|
| 578 |
|
|
| 723 |
|
FlyOver |
|
| 483 |
|
|
| 2,610 |
|
|
| 3,333 |
|
|
| 4,404 |
|
|
| 463 |
|
|
| 2,850 |
|
Total revenue |
| $ | 5,264 |
|
| $ | 55,409 |
|
| $ | 18,787 |
|
| $ | 66,076 |
|
| $ | 9,790 |
|
| $ | 13,523 |
|
Note 3. Share-Based Compensation
The following table summarizes share-based compensation (income) expense:
|
| Three Months Ended |
|
| Six Months Ended |
| ||||||||||
|
| June 30, |
|
| June 30, |
| ||||||||||
(in thousands) |
| 2020 |
|
| 2019 |
|
| 2020 |
|
| 2019 |
| ||||
Performance unit incentive plan (“PUP”)(1) |
| $ | (110 | ) |
| $ | 1,557 |
|
| $ | (2,745 | ) |
| $ | 2,980 |
|
Restricted stock |
|
| 602 |
|
|
| 783 |
|
|
| 1,252 |
|
|
| 1,476 |
|
Restricted stock units |
|
| 365 |
|
|
| 71 |
|
|
| 205 |
|
|
| 161 |
|
Share-based compensation (income) expense before income tax |
|
| 857 |
|
|
| 2,411 |
|
|
| (1,288 | ) |
|
| 4,617 |
|
Income tax expense (benefit)(2) |
|
| 109 |
|
|
| (607 | ) |
|
| — |
|
|
| (1,165 | ) |
Share-based compensation (income) expense, net of income tax |
| $ | 966 |
|
| $ | 1,804 |
|
| $ | (1,288 | ) |
| $ | 3,452 |
|
|
|
|
|
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, 2019 |
|
| 214,904 |
|
| $ | 52.53 |
|
|
| 136,123 |
|
| $ | 52.66 |
|
|
| 11,623 |
|
| $ | 52.17 |
|
Granted |
|
| 84,898 |
|
| $ | 56.15 |
|
|
| 49,847 |
|
| $ | 54.45 |
|
|
| 3,952 |
|
| $ | 50.43 |
|
Vested |
|
| (67,866 | ) |
| $ | 47.43 |
|
|
| (64,429 | ) |
| $ | 49.83 |
|
|
| (2,815 | ) |
| $ | 47.45 |
|
Forfeited |
|
| (18,370 | ) |
| $ | 56.40 |
|
|
| (12,865 | ) |
| $ | 56.58 |
|
|
| (1,634 | ) |
| $ | 56.59 |
|
Balance at June 30, 2020 |
|
| 213,566 |
|
| $ | 55.26 |
|
|
| 108,676 |
|
| $ | 54.69 |
|
|
| 11,126 |
|
| $ | 52.10 |
|
Viad Corp Omnibus Incentive Plan
We grant share-based compensation awards to our officers, directors, and certain key employees pursuant to the 2017 Viad Corp Omnibus Incentive Plan (the “2017 Plan”). The 2017 Plan has a 10-year term and provides for the following types of awards: (a) incentive and non-qualified stock options; (b) restricted stock awards and restricted stock units; (c) performance units or performance shares; (d) stock appreciation rights; (e) cash-based awards; and (f) certain other stock-based awards. In June 2017, we registered 1,750,000 shares of common stock issuable under the 2017 Plan. As of June 30, 2020,March 31, 2021, there were 1,514,596759,578 shares available for future grant under the 2017 Plan.
PUP AwardsThe following table summarizes share-based compensation (income) expense:
|
| Three Months Ended |
| |||||
|
| March 31, |
| |||||
(in thousands) |
| 2021 |
|
| 2020 |
| ||
Performance-based restricted stock units |
| $ | 140 |
|
| $ | (2,635 | ) |
Restricted stock awards and restricted stock units |
|
| 1,244 |
|
|
| 490 |
|
Stock options |
|
| 379 |
|
|
| — |
|
Share-based compensation (income) expense before income tax |
|
| 1,763 |
|
|
| (2,145 | ) |
Income tax benefit(1) |
|
| (27 | ) |
|
| (109 | ) |
Share-based compensation (income) expense, net of income tax |
| $ | 1,736 |
|
| $ | (2,254 | ) |
(1) | The 2021 income tax benefit amount primarily reflects the tax benefit associated with our Canadian-based employees. There was no income tax benefit associated with our employees in the United States and the United Kingdom due to a valuation allowance on our deferred tax assets within these jurisdictions. Refer to Note 17 – Income Taxes. |
Performance-based Restricted Stock Units
Performance-based restricted stock units (“PRSU”) are tied to our stock price and the expected achievement of certain performance-based criteria. The vesting of PUP awardPRSU shares is based upon the achievement of certainthe performance-based criteria over a three-yearthree to four-year period. We account for PRSU awards that will be settled in shares of our common stock as equity-based awards. We measure share-based compensation expense of equity-based awards at fair value on the grant date on a straight-line basis over the vesting period. The estimated number of shares to be achieved is updated each reporting period. We account for PRSU awards that will be settled in cash as liability-based awards. We measure share-based compensation expense of liability-based awards at fair value at each reporting date until the date of settlement. Forfeitures are accounted for as they occur.
During the sixthree months ended June 30, 2020,March 31, 2021, we granted PUPPRSU awards with a grant date fair value of $4.8$3.2 million, all of which $1.8 million are payable in shares. Liabilities related to PUP
In 2021, PRSU awards granted in 2018 vested; however, as performance metrics were not achieved, 0 awards were $0.3 million as of June 30, 2020 and $5.3 million as of December 31, 2019.paid in cash or in shares. In 2020, PUPPRSU awards granted in 2017 vested and we paid $2.6 million in cash. NaN PUPPRSU awards were paid in shares in 2020. In 2019, PUP awards granted in 2016 vested and we paid $5.6 million in cash and $3.4 million in shares. In 2019, we withheld 25,771 shares for $1.5 million related to tax withholding requirements on vested PUP awards paid in shares.
Restricted Stock
As of June 30, 2020,March 31, 2021, the unamortized cost of outstanding restricted stockequity-based PRSU awards was $3.2$3.1 million, which we expect to recognize over a weighted-average period of approximately 1.52.8 years. Liabilities related to liability-based PRSU awards were $0.9 million as of March 31, 2021 and $0.8 million as of December 31, 2020.
The following table summarizes the activity of the outstanding PRSU awards:
|
| Equity-Based PRSU Awards |
|
| Liability-Based PRSU Awards |
| ||||||||||
|
| Shares |
|
| Weighted-Average Grant Date Fair Value |
|
| Shares |
|
| Weighted-Average Grant Date Fair Value |
| ||||
Balance at December 31, 2020 |
|
| 61,208 |
|
| $ | 57.18 |
|
|
| 121,485 |
|
| $ | 56.34 |
|
Granted |
|
| 101,785 |
|
| $ | 31.28 |
|
|
| — |
|
| $ | — |
|
Vested |
|
| — |
|
| $ | — |
|
|
| (42,698 | ) |
| $ | 51.96 |
|
Forfeited |
|
| — |
|
| $ | — |
|
|
| (703 | ) |
| $ | 56.97 |
|
Balance at March 31, 2021 |
|
| 162,993 |
|
| $ | 41.01 |
|
|
| 78,084 |
|
| $ | 57.12 |
|
Service-based Restricted Stock Awards and Restricted Stock Units
Restricted stock awards and restricted stock units are service-based awards. We account for restricted stock awards and restricted stock units that will be settled in shares of our common stock as equity-based awards. We measure share-based compensation expense of equity-based awards at fair value on the grant date on a straight-line basis over the vesting period.
We account for restricted stock units that will be settled in cash as liability-based awards. We measure share-based compensation expense of liability-based awards at fair value at each reporting date until the date of settlement. Forfeitures are recorded when they occur.
As of March 31, 2021, the unamortized cost of outstanding equity-based restricted stock awards and restricted stock units was $6.8 million, which we expect to recognize over a weighted-average period of approximately 1.3 years. We repurchased 17,88112,055 shares for $0.5 million during the three months ended March 31, 2021 and 17,674 shares for $1.1 million during the sixthree months ended June 30,March 31, 2020 and 24,217 shares for $1.4 million during the six months ended June 30, 2019 related to tax withholding requirements on vested share-based awards.
Restricted Stock Units
Aggregate liabilities related to liability-based restricted stock units were $0.5$0.2 million as of June 30, 2020March 31, 2021 and $0.4$0.2 million as of December 31, 2019.2020. During the sixthree months ended June 30,March 31, 2021, 3,174 restricted stock units vested, and we paid $0.1 million in cash. During the three months ended March 31, 2020, 2,815 restricted stock units vested, and we paid $0.2 million in cash. During
The following table summarizes the six months ended June 30, 2019,activity of the outstanding restricted stock units vestedawards and we paid $0.3 million in cash and $0.2 million in shares.restricted stock units:
|
| Equity-Based Restricted Stock Awards |
|
| Equity-Based Restricted Stock Units |
|
| Liability-Based 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, 2020 |
|
| 107,107 |
|
| $ | 53.23 |
|
|
| 151,261 |
|
| $ | 19.51 |
|
|
| 10,459 |
|
| $ | 51.91 |
|
Granted |
|
| 22,320 |
|
| $ | 44.80 |
|
|
| 62,919 |
|
| $ | 44.79 |
|
|
| — |
|
| $ | — |
|
Vested |
|
| (37,170 | ) |
| $ | 53.86 |
|
|
| — |
|
| $ | — |
|
|
| (3,174 | ) |
| $ | 52.24 |
|
Forfeited |
|
| (1,030 | ) |
| $ | 56.94 |
|
|
| (2,026 | ) |
| $ | 19.75 |
|
|
| — |
|
| $ | — |
|
Balance at March 31, 2021 |
|
| 91,227 |
|
| $ | 50.87 |
|
|
| 212,154 |
|
| $ | 27.00 |
|
|
| 7,285 |
|
| $ | 53.34 |
|
Stock Options
We grant non-qualified stock options that are performance-based, as well as non-qualified options that are service-based. The performance-based awards are recognized on a straight-line basis over the performance period ranging from 1.0 to 3.4 years, and the underlying shares expected to be settled are adjusted each reporting period based on estimated future achievement of the respective performance metrics. The service-based awards are recognized on a straight-line basis over the requisite service period on a graded-vesting schedule over two years.
The following table summarizes stock option activity:
|
| Shares |
|
| Weighted-Average Exercise Price |
| ||
Options outstanding and exercisable at December 31, 2019 |
|
| 41,143 |
|
| $ | 16.62 |
|
Exercised |
|
| (41,143 | ) |
| $ | 16.62 |
|
Options outstanding and exercisable at June 30, 2020 |
|
| — |
|
| $ | — |
|
|
| Shares |
|
| Weighted-Average Exercise Price |
|
| Aggregate Intrinsic Value(1) |
| |||
Options outstanding at December 31, 2020 |
|
| 204,150 |
|
| $ | 19.98 |
|
|
|
|
|
Granted |
|
| 137,858 |
|
| $ | 44.80 |
|
|
|
|
|
Exercised |
|
| — |
|
| $ | — |
|
|
|
|
|
Options outstanding at March 31, 2021 |
|
| 342,008 |
|
| $ | 29.98 |
|
| $ | 4,445,085 |
|
Options exercisable at March 31, 2021 |
|
| — |
|
| $ | — |
|
| $ | — |
|
(1) | The aggregate intrinsic value of stock options outstanding represents the difference between our closing stock price at the end of the reporting period and the exercise price, multiplied by the number of in-the-money stock options. |
The following table summarizes stock options outstanding and exercisable as of March 31, 2021:
|
|
|
| Options Outstanding |
|
| Options Exercisable |
| ||||||||||||||
Range of exercise prices |
|
| Shares |
|
| Weighted-Average Remaining Contractual Life (in years) |
|
| Weighted-Average Exercise Price |
|
| Shares |
|
| Weighted-Average Exercise Price |
| ||||||
$ | 19.30 |
|
|
| 150,000 |
|
|
| 7.75 |
|
| $ | 19.30 |
|
|
| — |
|
| $ | — |
|
$ | 21.85 |
|
|
| 54,150 |
|
|
| 6.41 |
|
| $ | 21.85 |
|
|
| — |
|
| $ | — |
|
$ | 44.80 |
|
|
| 137,858 |
|
|
| 6.90 |
|
| $ | 44.80 |
|
|
| — |
|
| $ | — |
|
$19.30 - $44.80 |
|
|
| 342,008 |
|
|
| 7.20 |
|
| $ | 29.98 |
|
|
| — |
|
| $ | — |
|
The fair value of stock options granted in 2021 was estimated on the date of grant using the Black-Scholes option pricing model.
Following is additional information on stock options granted during the three months ended March 31, 2021 and the underlying assumptions used in assessing fair value:
|
| Three Months Ended |
| |
|
| March 31, 2021 |
| |
Assumptions used to estimate fair value of stock options granted: |
|
|
|
|
Risk-free interest rate |
| 0.50% |
| |
Expected term (in years) |
|
| 4.5 |
|
Expected volatility |
| 55.8% |
| |
Expected dividend yield |
|
| — |
|
Weighted average grant-date fair value per share of options granted |
| $ | 20.26 |
|
As of March 31, 2021, the total unrecognized compensation cost related to non-vested stock option awards was $3.8 million. We expect to recognize such costs over a weighted-average period of approximately 1.9 years.
Note 4. Acquisitions
20192021 Acquisitions
Belton ChaletGolden Skybridge
On May 16, 2019,March 18, 2021, we acquired a 60% controlling interest in the Belton Chalet in Glacier National ParkGolden Skybridge attraction for total cash consideration of $3.2 million. Transaction costs associated with$15 million Canadian dollars (approximately $12 million U.S. dollars), of which $6 million Canadian dollars (approximately $4.8 million U.S. dollars) will be used to fund remaining development and start-up costs. The Golden Skybridge is expected to open in June 2021.
The preliminary recording of the fair value of net assets acquired as of the acquisition were $0.3date included $2.2 million during 2019, which arein property and equipment and $6.8 million in noncontrolling interest. Under the acquisition method of accounting, the purchase price 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 of $11.8 million was recorded as “Goodwill.” Goodwill is included in “Cost of services”the Pursuit business group. The primary factor that contributed to the purchase price resulting in the Consolidated Statementsrecognition of Operations. goodwill related to future growth opportunities when combined with our other businesses. Goodwill is not deductible for tax purposes. We included these assets in the consolidated financial statements from the date of acquisition.
Mountain Park Lodges
On June 8, 2019, we acquired a 60% equity interest in Mountain Park Lodges’ group of 7 hotels and an undeveloped land parcel located in Jasper National Park for total consideration of $100.6 million Canadian dollars (approximately $76 million U.S. dollars).
The seven Mountain Park Lodges properties include: Sawridge Inn and Conference Centre (152 guest rooms); Pyramid Lake Resort (62 guest rooms); The Crimson Hotel (99 guest rooms); Chateau Jasper (119 guest rooms); Pocahontas Cabins (57 guest rooms); Marmot Lodge (107 guest rooms); and Lobstick Lodge (139 guest rooms).
AsDue to the majority owner of these properties, we consolidate 100%recent timing of the resultsacquisition, the purchase price allocation is not yet finalized and is subject to change within the measurement period (up to one year from the acquisition date) as the assessment of operations in our consolidated financial statements and record the 40% owners’ share of the income or loss attributable to non-redeemable noncontrolling interest.acquired assets is finalized.
Transaction costs associated with the Mountain Park Lodgesacquisition were $0.9$0.2 million in 2019,during 2021, which are included in “Corporate activities”“Cost of services” in the Condensed Consolidated Statements of Operations. We included these assets and results of operations in the consolidated financial statements from the date of acquisition. During the three months ended June 30, 2020, revenue and operating loss related to the Mountain Park Lodges were $1.1 million and $1.8 million, respectively. During the six months ended June 30, 2020, revenue and operating loss related to the Mountain Park Lodges were $4.0 million and $4.2 million, respectively.
Identifiable intangible assets acquired in the Mountain Park Lodges acquisition were $20.2 million and consist primarily of in-place leases, customer relationships, and trade names. The weighted average amortization period related to the intangible assets was approximately 30.8 years.
Pursuit – Sky Lagoon Attraction
On July 25, 2019, we announced plans for a new geothermal lagoon attraction that will be located on an oceanfront lot just outside downtown Reykjavik, Iceland. We acquired a 51% controlling interest for $13.2 million in the new entity that will manage the Pursuit Sky Lagoon attraction, which we will operate in partnership with Geothermal Lagoon ehf., the Icelandic entity that owns the lagoon assets. The noncontrolling interest’s carrying value was 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. The amortization of the resulting operating contract intangible is not deductible for tax purposes. We expect to open our new attraction in 2021.
Supplementary pro forma financial information
The following table summarizes the unaudited pro forma results of operations attributable to Viad, assuming the completion of the Mountain Park Lodges acquisition was on January 1, 2019. We do not consider the Pursuit Sky Lagoon attraction or the Belton Chalet significant acquisitions and accordingly, they are not included in the following pro forma results of operations:
|
| Three Months Ended |
|
| Six Months Ended |
| ||
(in thousands, except per share data) |
| June 30, 2019 |
|
| June 30, 2019 |
| ||
Revenue |
| $ | 406,658 |
|
| $ | 696,134 |
|
Depreciation and amortization |
| $ | 15,840 |
|
| $ | 30,348 |
|
Income (loss) from continuing operations |
| $ | 12,862 |
|
| $ | (5,898 | ) |
Net income (loss) attributable to Viad |
| $ | 13,577 |
|
| $ | (4,651 | ) |
Diluted income (loss) per share(1) |
| $ | 0.66 |
|
| $ | (0.24 | ) |
Basic income (loss) per share |
| $ | 0.66 |
|
| $ | (0.24 | ) |
|
|
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.
The components of inventories consisted of the following:
|
| June 30, |
|
| December 31, |
|
| March 31, |
|
| December 31, |
| ||||
(in thousands) |
| 2020 |
|
| 2019 |
|
| 2021 |
|
| 2020 |
| ||||
Raw materials |
| $ | 11,207 |
|
| $ | 11,788 |
|
| $ | 2,737 |
|
| $ | 3,362 |
|
Finished goods |
|
| 7,894 |
|
|
| 5,481 |
|
|
| 5,669 |
|
|
| 5,365 |
|
Inventories |
| $ | 19,101 |
|
| $ | 17,269 |
|
| $ | 8,406 |
|
| $ | 8,727 |
|
Note 6. Other Current Assets
Other current assets consisted of the following:
|
| June 30, |
|
| December 31, |
|
| March 31, |
|
| December 31, |
| ||||
(in thousands) |
| 2020 |
|
| 2019 |
|
| 2021 |
|
| 2020 |
| ||||
Income tax receivable |
| $ | 7,311 |
|
| $ | 13,250 |
| ||||||||
Prepaid insurance |
| $ | 4,109 |
|
| $ | 4,297 |
| ||||||||
Restricted cash |
|
| 3,231 |
|
|
| 2,426 |
| ||||||||
Prepaid software maintenance |
|
| 5,596 |
|
|
| 3,875 |
|
|
| 3,179 |
|
|
| 3,058 |
|
Prepaid vendor payments |
|
| 2,814 |
|
|
| 4,698 |
|
|
| 1,275 |
|
|
| 1,835 |
|
Prepaid insurance |
|
| 2,524 |
|
|
| 5,573 |
| ||||||||
Income tax receivable |
|
| 905 |
|
|
| 337 |
| ||||||||
Prepaid taxes |
|
| 295 |
|
|
| 917 |
|
|
| 307 |
|
|
| 345 |
|
Prepaid other |
|
| 2,673 |
|
|
| 1,904 |
|
|
| 1,423 |
|
|
| 1,296 |
|
Other |
|
| 3,261 |
|
|
| 637 |
|
|
| 4,019 |
|
|
| 3,631 |
|
Other current assets |
| $ | 24,474 |
|
| $ | 30,854 |
|
| $ | 18,448 |
|
| $ | 17,225 |
|
Note 7. Property and Equipment
Property and equipment consisted of the following:
|
| June 30, |
|
| December 31, |
|
| March 31, |
|
| December 31, |
| ||||
(in thousands) |
| 2020 |
|
| 2019 |
|
| 2021 |
|
| 2020 |
| ||||
Land and land interests |
| $ | 34,501 |
|
| $ | 34,532 |
|
| $ | 30,583 |
|
| $ | 32,849 |
|
Buildings and leasehold improvements |
|
| 372,453 |
|
|
| 377,754 |
|
|
| 382,387 |
|
|
| 386,751 |
|
Equipment and other |
|
| 418,948 |
|
|
| 417,239 |
|
|
| 411,030 |
|
|
| 401,288 |
|
Gross property and equipment |
|
| 825,902 |
|
|
| 829,525 |
|
|
| 824,000 |
|
|
| 820,888 |
|
Accumulated depreciation |
|
| (366,803 | ) |
|
| (353,974 | ) |
|
| (354,320 | ) |
|
| (352,100 | ) |
Property and equipment, net (excluding finance leases) |
|
| 459,099 |
|
|
| 475,551 |
|
|
| 469,680 |
|
|
| 468,788 |
|
Finance lease right-of-use assets, net |
|
| 23,486 |
|
|
| 25,350 |
| ||||||||
Finance lease ROU assets, net (1) |
|
| 63,934 |
|
|
| 23,366 |
| ||||||||
Property and equipment, net |
| $ | 482,585 |
|
| $ | 500,901 |
|
| $ | 533,614 |
|
| $ | 492,154 |
|
(1) | The increase in finance lease ROU assets is primarily due to the commencement of Pursuit’s new Sky Lagoon attraction in Iceland during the first quarter of 2021. |
Depreciation expense was $11.5$10.9 million for the three months ended June 30, 2020March 31, 2021 and $23.7 million for the six months ended June 30, 2020. Depreciation expense was $11.2$12.2 million for the three months ended June 30, 2019 and $21.3 million for the six months ended June 30, 2019.
Amortization expense on finance lease assets was $0.9 million for the three months ended June 30, 2020 and $1.8 million for the six months ended June 30,March 31, 2020. Amortization expense on finance lease assets was $0.6 million for the three months ended June 30, 2019 and $1.2 million for the six months ended June 30, 2019.
Property and equipment purchased through accounts payable and accrued liabilities decreased $7.1$0.5 million during the sixthree months ended June 30, 2020March 31, 2021 and increased $3.2decreased $4.6 million during the sixthree months ended June 30, 2019.March 31, 2020.
Note 8. Other Investments and Assets
Other investments and assets consisted of the following:
|
| June 30, |
|
| December 31, |
|
| March 31, |
|
| December 31, |
| ||||
(in thousands) |
| 2020 |
|
| 2019 |
|
| 2021 |
|
| 2020 |
| ||||
Self-insured liability receivable |
| $ | 9,982 |
|
| $ | 9,982 |
|
| $ | 6,358 |
|
| $ | 6,358 |
|
Other mutual funds |
|
| 3,778 |
|
|
| 3,457 |
| ||||||||
Contract costs |
|
| 4,773 |
|
|
| 3,961 |
|
|
| 2,813 |
|
|
| 2,912 |
|
Other mutual funds |
|
| 2,992 |
|
|
| 3,107 |
| ||||||||
Cash surrender value of life insurance |
|
| 176 |
|
|
| 24,873 |
| ||||||||
Other |
|
| 2,953 |
|
|
| 3,196 |
|
|
| 2,760 |
|
|
| 2,765 |
|
Other investments and assets |
| $ | 20,876 |
|
| $ | 45,119 |
|
| $ | 15,709 |
|
| $ | 15,492 |
|
Note 9. Goodwill and Other Intangible Assets
The changes in the carrying amount of goodwill are as follows:
(in thousands) |
| GES North America |
|
| GES EMEA |
|
| Pursuit |
|
| Total |
| ||||
Balance at December 31, 2019 |
| $ | 155,276 |
|
| $ | 30,829 |
|
| $ | 101,878 |
|
| $ | 287,983 |
|
Goodwill impairment |
|
| (155,276 | ) |
|
| (29,042 | ) |
|
| (1,757 | ) |
|
| (186,075 | ) |
Foreign currency translation adjustments |
|
| — |
|
|
| (1,787 | ) |
|
| (4,962 | ) |
|
| (6,749 | ) |
Balance at June 30, 2020 |
| $ | — |
|
| $ | — |
|
| $ | 95,159 |
|
| $ | 95,159 |
|
(in thousands) |
| Pursuit |
| |
Balance at December 31, 2020 |
| $ | 99,847 |
|
Business acquisition |
|
| 11,776 |
|
Foreign currency translation adjustments |
|
| 1,324 |
|
Balance at March 31, 2021 |
| $ | 112,947 |
|
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) in order to estimate the fair value of our reporting units for purposes of goodwill impairment testing.
In early March 2020, as a result of COVID-19 concerns, we began to see event postponements and cancellations at GES, as well as some cancelled bookings at Pursuit. This quickly escalated into the shut-down of event activity and tourism as government mandated closures and stay-at-home orders went more broadly into effect around the world. As demand halted, we essentially placed our businesses into a state of hibernation to preserve cash. As government mandated closures and stay-at-home orders started to be lifted, we began to restart our business with enhanced health and safety protocols in place. We phased in most ofAlthough Pursuit’s attractions and lodging operations starting in May and continuing into July. However, exhibition and event activity remain largely closed. For GES, we believe that as governmentsreporting units continue to lift restrictions, events in certain geographies will gradually increase and we stand ready to reactivate areas of that business when it makes sense to do so.
During the three months ended March 31, 2020, we determined that an interim triggering event had occurredoperate at a loss due to the deteriorating macroeconomic environment, disruptions to our operations,seasonally closed properties and the sustained decline in our stock price caused by COVID-19. As such, we performed an interim evaluation of goodwill as of March 31, 2020. As a result, we recorded non-cash goodwill impairment charges of $41.9 million associated with GES U.S., $29.0 million associated with GES EMEA, and $1.8 million associated with Pursuit’s Glacier Park Collection. We recorded an income tax benefit of $12.4 million during the three months ended March 31, 2020 related to these goodwill impairment charges. This income tax benefit was reversed during the second quarter of 2020 due to the recording of a valuation allowance. Refer to Note 16 – Income Taxes.
During the second quarter of 2020 and into July, GES continued to experience event postponements and cancellations and we experienced further declines in our stock price. There has also been an increased spread of the COVID-19 virus throughout the United States, which resulted in further closures and governor orders that we believe have increased the uncertainty regarding when the live event industry will re-commence and how long it will take to get back to similar pre-COVID-19 business levels. The uncertainty regarding the duration of the current domestic and global economic conditions and whether further deterioration in the macroeconomic environment will continuetravel restrictions as a result of the COVID-19 pandemic, was factored into our second quarter goodwillwe did not record any impairment analysis. As a result, we recorded a full impairment charge to the remaining GES goodwill balance of $113.1 millioncharges during the three months ended June 30, 2020. Our remaining goodwill balancefirst quarter of 2021 as of June 30, 2020 of $95.2 million pertainsthere were no significant changes to our Pursuit business.outlook for the future years and the risk profile of the reporting units had not changed.
Given the evolving uncertain nature of COVID-19, and the uncertain government and consumer reactions, the estimates and assumptions regarding expected future cash flows, discount rates, and terminal values used in our goodwill impairment analysis require considerable judgment and are based on our current estimates of market conditions, financial forecasts, and industry trends.
These estimates, however, have inherent uncertainties and different assumptions could lead to materially different results including additional impairment charges in the future.
Other intangible assets consisted of the following:
|
|
|
| June 30, 2020 |
|
| December 31, 2019 |
|
|
|
| March 31, 2021 |
|
| December 31, 2020 |
| ||||||||||||||||||||||||||||||||||||
(in thousands) |
| Useful Life (Years) |
| Gross Carrying Value |
|
| Accumulated Amortization |
|
| Net Carrying Value |
|
| Gross Carrying Value |
|
| Accumulated Amortization |
|
| Net Carrying Value |
|
| Useful Life (Years) |
| Gross Carrying Value |
|
| Accumulated Amortization |
|
| Net Carrying Value |
|
| Gross Carrying Value |
|
| Accumulated Amortization |
|
| Net Carrying Value |
| ||||||||||||
Intangible assets subject to amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer contracts and relationships |
| 6.5 |
| $ | 39,661 |
|
| $ | (26,172 | ) |
| $ | 13,489 |
|
| $ | 72,219 |
|
| $ | (40,866 | ) |
| $ | 31,353 |
|
| 6.3 |
| $ | 37,821 |
|
| $ | (26,676 | ) |
| $ | 11,145 |
|
| $ | 38,214 |
|
| $ | (26,288 | ) |
| $ | 11,926 |
|
Operating contracts and licenses |
| 37 |
|
| 38,959 |
|
|
| (2,029 | ) |
|
| 36,930 |
|
|
| 43,329 |
|
|
| (1,881 | ) |
|
| 41,448 |
|
| 36.4 |
|
| 42,402 |
|
|
| (2,469 | ) |
|
| 39,933 |
|
|
| 42,012 |
|
|
| (2,405 | ) |
|
| 39,607 |
|
In-place lease |
| 13.7 |
|
| 14,399 |
|
|
| (384 | ) |
|
| 14,015 |
|
|
| 15,044 |
|
|
| (231 | ) |
|
| 14,813 |
|
| 13.1 |
|
| 15,558 |
|
|
| (778 | ) |
|
| 14,780 |
|
|
| 15,347 |
|
|
| (656 | ) |
|
| 14,691 |
|
Tradenames |
| 5.7 |
|
| 5,585 |
|
|
| (1,927 | ) |
|
| 3,658 |
|
|
| 9,423 |
|
|
| (4,338 | ) |
|
| 5,085 |
|
| 5.0 |
|
| 5,659 |
|
|
| (2,294 | ) |
|
| 3,365 |
|
|
| 5,940 |
|
|
| (2,435 | ) |
|
| 3,505 |
|
Non-compete agreements |
| 1.5 |
|
| 722 |
|
|
| (505 | ) |
|
| 217 |
|
|
| 2,077 |
|
|
| (1,775 | ) |
|
| 302 |
|
| 0.8 |
|
| 780 |
|
|
| (663 | ) |
|
| 117 |
|
|
| 770 |
|
|
| (616 | ) |
|
| 154 |
|
Other |
| 7.7 |
|
| 768 |
|
|
| (80 | ) |
|
| 688 |
|
|
| 802 |
|
|
| (66 | ) |
|
| 736 |
|
| 6.9 |
|
| 829 |
|
|
| (113 | ) |
|
| 716 |
|
|
| 818 |
|
|
| (102 | ) |
|
| 716 |
|
Total amortized intangible assets |
|
|
|
| 100,094 |
|
|
| (31,097 | ) |
|
| 68,997 |
|
|
| 142,894 |
|
|
| (49,157 | ) |
|
| 93,737 |
|
|
|
|
| 103,049 |
|
|
| (32,993 | ) |
|
| 70,056 |
|
|
| 103,101 |
|
|
| (32,502 | ) |
|
| 70,599 |
|
Indefinite-lived intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business licenses |
|
|
|
| 566 |
|
|
| — |
|
|
| 566 |
|
|
| 571 |
|
|
| — |
|
|
| 571 |
|
|
|
|
| 575 |
|
|
| — |
|
|
| 575 |
|
|
| 573 |
|
|
| — |
|
|
| 573 |
|
Other intangible assets |
|
|
| $ | 100,660 |
|
| $ | (31,097 | ) |
| $ | 69,563 |
|
| $ | 143,465 |
|
| $ | (49,157 | ) |
| $ | 94,308 |
|
|
|
| $ | 103,624 |
|
| $ | (32,993 | ) |
| $ | 70,631 |
|
| $ | 103,674 |
|
| $ | (32,502 | ) |
| $ | 71,172 |
|
Intangible asset amortization expense was $1.4$1.2 million for the three months ended June 30, 2020March 31, 2021 and $3.6 million for the six months ended June 30, 2020. Intangible asset amortization expense was $2.8$2.2 million for the three months ended June 30, 2019 and $5.2 million for the six months ended June 30, 2019.March 31, 2020. We recorded ana non-cash impairment charge to intangible assets of $15.7 million during the sixthree months ended June 30,March 31, 2020 related to our U.S.United States audio-visual production business. The duration and impact of COVID-19 may result in additional future impairment charges as facts and circumstances evolve.
At June 30, 2020,March 31, 2021, the estimated future amortization expense related to intangible assets subject to amortization is as follows:
(in thousands) |
|
|
|
|
|
|
|
|
Year ending December 31, |
|
|
|
|
|
|
|
|
Remainder of 2020 |
| $ | 2,753 |
| ||||
2021 |
|
| 5,033 |
| ||||
Remainder of 2021 |
| $ | 4,039 |
| ||||
2022 |
|
| 4,919 |
|
|
| 5,164 |
|
2023 |
|
| 4,285 |
|
|
| 4,500 |
|
2024 |
|
| 3,353 |
|
|
| 3,539 |
|
2025 |
|
| 2,244 |
| ||||
Thereafter |
|
| 48,654 |
|
|
| 50,570 |
|
Total |
| $ | 68,997 |
|
| $ | 70,056 |
|
Note 10. Other Current Liabilities
Other current liabilities consisted of the following:
|
| June 30, |
|
| December 31, |
|
| March 31, |
|
| December 31, |
| ||||
(in thousands) |
| 2020 |
|
| 2019 |
|
| 2021 |
|
| 2020 |
| ||||
Continuing operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Self-insured liability |
| $ | 6,058 |
|
| $ | 5,668 |
|
| $ | 5,450 |
|
| $ | 5,715 |
|
Accrued employee benefit costs |
|
| 2,879 |
|
|
| 2,363 |
| ||||||||
Accrued sales and use taxes |
|
| 3,539 |
|
|
| 5,451 |
|
|
| 1,857 |
|
|
| 1,547 |
|
Accrued employee benefit costs |
|
| 3,029 |
|
|
| 3,564 |
| ||||||||
Accrued interest payable |
|
| 1,809 |
|
|
| 3,042 |
| ||||||||
Accrued professional fees |
|
| 1,635 |
|
|
| 1,691 |
| ||||||||
Current portion of pension and postretirement liabilities |
|
| 1,618 |
|
|
| 1,805 |
| ||||||||
Commissions payable |
|
| 2,735 |
|
|
| 8,274 |
|
|
| 1,352 |
|
|
| 903 |
|
Current portion of pension and postretirement liabilities |
|
| 1,722 |
|
|
| 1,899 |
| ||||||||
Accrued professional fees |
|
| 1,198 |
|
|
| 1,248 |
| ||||||||
Accommodation services deposits |
|
| 452 |
|
|
| 959 |
| ||||||||
Accrued restructuring |
|
| 1,071 |
|
|
| 2,130 |
|
|
| 1,224 |
|
|
| 2,479 |
|
Accrued legal settlement |
|
| — |
|
|
| 2,500 |
| ||||||||
Accrued dividends |
|
| — |
|
|
| 2,019 |
| ||||||||
Other taxes |
|
| 920 |
|
|
| 278 |
|
|
| 1,824 |
|
|
| 1,872 |
|
Other |
|
| 5,104 |
|
|
| 5,187 |
|
|
| 4,974 |
|
|
| 5,123 |
|
Total continuing operations |
|
| 25,828 |
|
|
| 39,177 |
|
|
| 24,622 |
|
|
| 26,540 |
|
Discontinued operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Self-insured liability |
|
| 402 |
|
|
| 260 |
|
|
| 226 |
|
|
| 347 |
|
Environmental remediation liabilities |
|
| 75 |
|
|
| 311 |
|
|
| 61 |
|
|
| 61 |
|
Other |
|
| 66 |
|
|
| 76 |
|
|
| 91 |
|
|
| 91 |
|
Total discontinued operations |
|
| 543 |
|
|
| 647 |
|
|
| 378 |
|
|
| 499 |
|
Total other current liabilities |
| $ | 26,371 |
|
| $ | 39,824 |
|
| $ | 25,000 |
|
| $ | 27,039 |
|
Note 11. Other Deferred Items and Liabilities
Other deferred items and liabilities consisted of the following:
|
| June 30, |
|
| December 31, |
|
| March 31, |
|
| December 31, |
| ||||
(in thousands) |
| 2020 |
|
| 2019 |
|
| 2021 |
|
| 2020 |
| ||||
Continuing operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign deferred tax liability |
| $ | 24,898 |
|
| $ | 32,570 |
|
| $ | 19,492 |
|
| $ | 21,336 |
|
Multi-employer pension plan withdrawal liability |
|
| 15,970 |
|
|
| 15,693 |
|
|
| 15,849 |
|
|
| 15,864 |
|
Self-insured liability |
|
| 7,168 |
|
|
| 6,662 |
| ||||||||
Self-insured excess liability |
|
| 9,982 |
|
|
| 9,982 |
|
|
| 6,358 |
|
|
| 6,358 |
|
Self-insured liability |
|
| 8,455 |
|
|
| 8,682 |
| ||||||||
Accrued compensation |
|
| 4,863 |
|
|
| 7,485 |
|
|
| 5,309 |
|
|
| 5,821 |
|
Accrued restructuring |
|
| 2,076 |
|
|
| 2,383 |
|
|
| 2,680 |
|
|
| 2,751 |
|
Contract liabilities |
|
| 764 |
|
|
| 125 |
| ||||||||
Other |
|
| 3,845 |
|
|
| 2,423 |
|
|
| 1,464 |
|
|
| 1,479 |
|
Total continuing operations |
|
| 70,853 |
|
|
| 79,343 |
|
|
| 58,320 |
|
|
| 60,271 |
|
Discontinued operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Environmental remediation liabilities |
|
| 2,165 |
|
|
| 1,964 |
|
|
| 2,177 |
|
|
| 2,179 |
|
Self-insured liability |
|
| 1,838 |
|
|
| 2,018 |
|
|
| 1,707 |
|
|
| 1,639 |
|
Other |
|
| 392 |
|
|
| 382 |
|
|
| 263 |
|
|
| 539 |
|
Total discontinued operations |
|
| 4,395 |
|
|
| 4,364 |
|
|
| 4,147 |
|
|
| 4,357 |
|
Total other deferred items and liabilities |
| $ | 75,248 |
|
| $ | 83,707 |
|
| $ | 62,467 |
|
| $ | 64,628 |
|
Note 12. Debt and Finance Lease Obligations
The components of long-term debt and finance lease obligations consisted of the following:
|
| June 30, |
|
| December 31, |
| |||
(in thousands, except interest rates) |
| 2020 |
|
| 2019 |
| |||
2018 Credit Facility, 4.6% weighted-average interest rate at June 30, 2020 and 3.9% at December 31, 2019, due through 2023(1) |
| $ | 446,251 |
|
| $ | 311,464 |
| |
FlyOver Iceland Credit Facility, 4.9% weighted-average interest rate at June 30, 2020 and December 31, 2019, due through 2022(1) |
|
| 5,350 |
|
|
| 5,607 |
| |
Less unamortized debt issuance costs |
|
| (1,578 | ) |
|
| (1,836 | ) | |
Total debt (2) |
|
| 450,023 |
|
|
| 315,235 |
| |
Finance lease obligations, 7.8% weighted-average interest rate at June 30, 2020 and 7.7% at December 31, 2019, due through 2039 |
|
| 23,476 |
|
|
| 25,257 |
| |
Total debt and finance lease obligations (3) |
|
| 473,499 |
|
|
| 340,492 |
| |
Current portion (4) |
|
| (3,671 | ) |
|
| (5,330 | ) | |
Long-term debt and finance lease obligations |
| $ | 469,828 |
|
| $ | 335,162 |
|
|
| March 31, |
|
| December 31, |
| ||
(in thousands, except interest rates) |
| 2021 |
|
| 2020 |
| ||
2018 Credit Facility, 4.5% weighted-average interest rate at March 31, 2021 and 4.5% at December 31, 2020, due through 2023(1) |
| $ | 301,094 |
|
| $ | 266,762 |
|
FlyOver Iceland Credit Facility, 4.9% weighted-average interest rate at March 31, 2021 and December 31, 2020, due through 2023(1) |
|
| 5,695 |
|
|
| 5,820 |
|
FlyOver Iceland Term Loans, 3.8% weighted-average interest rate at March 31, 2021 and December 31, 2020, due through 2024(1) |
|
| 710 |
|
|
| 705 |
|
Less unamortized debt issuance costs |
|
| (2,481 | ) |
|
| (2,737 | ) |
Total debt(2) |
|
| 305,018 |
|
|
| 270,550 |
|
Finance lease obligations, 9.0% weighted-average interest rate at March 31, 2021 and 8.0% at December 31, 2020, due through 2067(3) |
|
| 65,200 |
|
|
| 23,141 |
|
Total debt and finance lease obligations(4) |
|
| 370,218 |
|
|
| 293,691 |
|
Current portion |
|
| (2,800 | ) |
|
| (8,335 | ) |
Long-term debt and finance lease obligations |
| $ | 367,418 |
|
| $ | 285,356 |
|
(1) | Represents the weighted-average interest rate in effect at the respective periods, including any applicable margin. The interest rates do not include amortization of debt issuance costs or commitment fees. |
(2) | The estimated fair value of total debt and finance leases was |
(3) | The increase in finance lease obligations is primarily due to the commencement of Pursuit’s new Sky Lagoon attraction in Iceland during the first quarter of 2021, which has a 46-year lease term. |
( | Cash paid for interest on debt was |
|
|
2018 Credit Agreement
Effective October 24, 2018, we entered into a Second Amended and Restatedthe 2018 Credit Agreement (the “2018 Credit Agreement”).Agreement. The 2018 Credit Agreement has a maturity date of October 24, 2023 and provides for a $450 million revolving credit facility (“2018 Credit Facility”). Proceeds from the 2018 Credit Facility were used to refinance certain of our outstanding debt and provide us with additional funds for our operations, growth initiatives, acquisitions, and other general corporate purposes in the ordinary course of business. The 2018 Credit Facility may be increased up to an additional $250 million under certain circumstances and has a $20 million sublimit for letters of credit. Borrowings and letters of credit can be denominated in U.S. dollars, Euros, Canadian dollars, or British pounds. Our lenders under the 2018 Credit FacilityAgreement have a first perfected security interest in all of our personal property including GES, GES Event Intelligence Services, Inc., CATC Alaska Tourism Corporation (“CATC”), ON Event Services, LLC (“ON Services”), and 65% of the capital stock of our top-tier foreign subsidiaries (other than Esja). Financial covenants include an interest coverage ratio of not less than 3.00 to 1.00 and a leverage ratio of not greater than 3.50 to 1.00, with a step-up to 4.00 to 1.00 for four quarters following a material acquisition of $50 million or more. Dividends are permitted up to $15 million in any calendar year. In addition, we can declare and pay dividends or repurchase our common stock up to $20 million per calendar year. Dividends and repurchases above those thresholds are permitted as long as our pro forma leverage ratio is less than or equal to 2.75 to 1.00. Unsecured debt is allowed provided we are in compliance with the leverage ratio. In addition, the unsecured debt must mature after the expiration of the 2018 Credit Facility, cannot have scheduled principal payments while the 2018 Credit Facility is in place, and any covenants for unsecured debt cannot be more restrictive than the 2018 Credit Facility. Significant other covenants include limitations on investments, additional indebtedness, sales and dispositions of assets, and liens on property. As of June 30, 2020, we were not in compliance with the interest coverage ratio or the leverage ratio, however, as discussed below the financial covenants were waived for the quarter ended June 30, 2020.
Effective July 23, 2019, we entered into an amendment (“Amendment No. 1”) to the 2018 Credit Agreement. Amendment No.1 modified the terms related to the withdrawal liabilities of single and multi-employer ERISA plans.
Effective May 8, 2020, we entered into an amendment (“Amendment No. 2”) to the 2018 Credit Agreement. Amendment No. 2, which, among other things, waived our financial covenants for the quarter ending June 30, 2020 under the 2018 Credit Agreement and added a new minimum liquidity requirement. Effective August 5, 2020, we entered into an amendment (“Amendment No. 3”) to the 2018 Credit Agreement. Amendment No. 3,Agreement, which, among other things, (i) waives our financial covenants until the end of the third quarter ofSeptember 30, 2022 (the “Covenant Waiver Period”) and (ii) requires us to maintain minimum liquidity of $125$100 million, with liquidity defined as unrestricted cash and available capacity on our 2018 Credit Facility. The Covenant Waiver Period will be in effect until the earlier of September 30, 2022 or the fiscal quarter when our leverage ratio is less than or equal to 4.00 to 1.00. Post Covenant Waiver Period, the maximum leverage ratio will be less than or equal to 4.50 to 1.00 at September 30, 2022 with a step down to $100 millionless than or equal to 4.00 to 1.00 at December 31, 2020.2022 and thereafter until the maturity date. The minimum interest coverage ratio will be greater than or equal to 2.00 to 1.00 post Covenant Waiver Period and until maturity of the facility. The interest rate on the borrowings is equal to LIBORthe London Inter-bank Offered Rate (“LIBOR”) plus 350 basis points, with a LIBOR floor of one percent during the Covenant Waiver Period. The LIBOR floor continues until the end of the 2018 Credit Agreement. A revised pricing grid goes into effect after the Covenant Waiver Period ends. Additionally, we are precluded from paying cash dividends, from issuing unsecured debt, and from accessing the $250 million expansion feature during the Covenant Waiver Period. The amendment allows us to make acquisitions under certain conditions. In connection with the amendment, Viad pledged 100% of the capital stock of its wholly-owned domestic subsidiaries and it top-tier foreign subsidiaries (other andthan Esja). Fees related to Amendment No. 3the amendment were approximately $1.6$1.7 million. Refer to Note 1 – Overview and BasisAs of Presentation (ImpactMarch 31, 2021, we were in compliance with the amendment.
As of COVID-19) and Note 24 – Subsequent Events for additional information.
We borrowed theMarch 31, 2021, capacity remaining available capacity under the 2018 Credit Facility at the beginningwas $139.4 million, reflecting borrowings of April 2020 as a proactive measure to increase our cash position$301.1 million and preserve financial flexibility due to uncertainty$9.5 million in the global markets resulting from the COVID-19 outbreak.outstanding letters of credit.
We index borrowings under the 2018 Credit Facility (of which GES, GES Event Intelligence Services, Inc., CATC, and ON Services are guarantors) to the prime rate or the LIBOR, plus appropriate spreads tied to our leverage ratio. As LIBOR will begin to be phased out in 2021, our 2018 Credit Facility includes a method for determining an alternative or successor rate of interest that considersgives consideration to the new prevailing market convention. The vast majority of our borrowings under
the 2018 Credit Facility are indexed to LIBOR. Commitment fees and letters of credit fees are also tied to our leverage ratio. The fees on the unused portion of the 2018 Credit Facility were 0.50%0.50% annually as of June 30, 2020. We index onlyMarch 31, 2021. Only our borrowings under the 2018 Credit Facility and the discount rates we use to account for some leases are indexed to LIBOR. We do not expect the alternative or successor rate to LIBOR to have a material impact on either our 2018 Credit Facility or the accounting for our leases.
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 a maturity date of March 1, 2022. We used theThe loan proceeds were used to complete the development of the FlyOver Iceland attraction. In response to the COVID-19 pandemic, we entered into an addendum to the FlyOver Iceland Credit Facility effective May 14, 2020January 8, 2021 wherein the principal and interest payments were deferred for sixtwelve months beginning JuneDecember 1, 2020, with the first payment due December 1, 2020.2021. The addendum also extended the maturity date to September 1, 2022.2023. There were no other changes to the terms of the FlyOver Iceland Credit Facility. Effective July 31, 2020, weDuring the first quarter of 2021, we obtained a waiver of certain covenants to the FlyOver Iceland Credit Facility through 2021.December 2021.
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 with a maturity date of April 1, 2023 and bears interest on a seven-day term deposit 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 a maturity date of February 1, 2023 and bears interest at one-month Reykjavik InterBank Offered Rate (“REIBOR”) plus 4.99%. 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 ISK 30.0 million term loans and 70% of the principal amount on the ISK 50.0 million term loan. Loan proceeds will be used to fund operations.
Note 13. Fair Value Measurements
The fair value of an asset or liability is defined as the price that would be received by selling an asset or paying 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.
Money market mutual funds and certain other mutual fund investments are measured at fair value on a recurring basis using Level 1 inputs. The fair value information related to these assets is summarized in the following tables:
|
|
|
|
|
| Fair Value Measurements at Reporting Date Using |
|
|
|
|
|
| Fair Value Measurements at Reporting Date Using |
| ||||||||||||||||||
(in thousands) |
| June 30, 2020 |
|
| Quoted Prices in Active Markets (Level 1) |
|
| Significant Other Observable Inputs (Level 2) |
|
| Significant Unobservable Inputs (Level 3) |
|
| March 31, 2021 |
|
| Quoted Prices in Active Markets (Level 1) |
|
| Significant Other Observable Inputs (Level 2) |
|
| Significant Unobservable Inputs (Level 3) |
| ||||||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds (1) |
| $ | 102,699 |
|
| $ | 102,699 |
|
| $ | — |
|
| $ | — |
|
| $ | 2 |
|
| $ | 2 |
|
| $ | — |
|
| $ | — |
|
Other mutual funds (2) |
|
| 2,992 |
|
|
| 2,992 |
|
|
| — |
|
|
| — |
|
|
| 3,778 |
|
|
| 3,778 |
|
|
| — |
|
|
| — |
|
Total assets at fair value on a recurring basis |
| $ | 105,691 |
|
| $ | 105,691 |
|
| $ | — |
|
| $ | — |
|
| $ | 3,780 |
|
| $ | 3,780 |
|
| $ | — |
|
| $ | — |
|
|
|
|
|
|
| Fair Value Measurements at Reporting Date Using |
|
|
|
|
|
| Fair Value Measurements at Reporting Date Using |
| ||||||||||||||||||
(in thousands) |
| December 31, 2019 |
|
| Quoted Prices in Active Markets (Level 1) |
|
| Significant Other Observable Inputs (Level 2) |
|
| Significant Unobservable Inputs (Level 3) |
|
| December 31, 2020 |
|
| Quoted Prices in Active Markets (Level 1) |
|
| Significant Other Observable Inputs (Level 2) |
|
| Significant Unobservable Inputs (Level 3) |
| ||||||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds (1) |
| $ | 123 |
|
| $ | 123 |
|
| $ | — |
|
| $ | — |
|
| $ | 2 |
|
| $ | 2 |
|
| $ | — |
|
| $ | — |
|
Other mutual funds (2) |
|
| 3,107 |
|
|
| 3,107 |
|
|
| — |
|
|
| — |
|
|
| 3,457 |
|
|
| 3,457 |
|
|
| — |
|
|
| — |
|
Total assets at fair value on a recurring basis |
| $ | 3,230 |
|
| $ | 3,230 |
|
| $ | — |
|
| $ | — |
|
| $ | 3,459 |
|
| $ | 3,459 |
|
| $ | — |
|
| $ | — |
|
(1) | We include money market funds in “Cash and cash equivalents” in the Condensed Consolidated Balance Sheets. We classify these investments as available-for-sale and record them at fair value. There have been 0 realized gains or losses related to these investments and we have not experienced any redemption restrictions with respect to any of the money market mutual funds. |
(2) | We include other mutual funds in “Other investments and assets” in the Condensed Consolidated Balance Sheets. |
The carrying values of cash and cash equivalents, receivables, and accounts payable approximate fair value due to the short-term nature of these instruments. Refer to Note 12 – Debt and Finance Lease Obligations for the estimated fair value of debt obligations.
Note 14. Loss Per Share
The components of basic and diluted loss per share are as follows:
|
| Three Months Ended |
| |||||
|
| March 31, |
| |||||
(in thousands, except per share data) |
| 2021 |
|
| 2020 |
| ||
Net loss attributable to Viad (diluted) |
| $ | (43,152 | ) |
| $ | (86,585 | ) |
Convertible preferred stock dividends |
|
| (1,898 | ) |
|
| — |
|
Adjustment to the redemption value of redeemable noncontrolling interest |
|
| (56 | ) |
|
| (126 | ) |
Net loss allocated to Viad common stockholders (basic) |
| $ | (45,106 | ) |
| $ | (86,711 | ) |
Basic weighted-average outstanding common shares |
|
| 20,370 |
|
|
| 20,215 |
|
Diluted weighted-average outstanding shares |
|
| 20,370 |
|
|
| 20,215 |
|
Loss per share: |
|
|
|
|
|
|
|
|
Basic loss attributable to Viad common stockholders |
| $ | (2.21 | ) |
| $ | (4.29 | ) |
Diluted loss attributable to Viad common stockholders(1) |
| $ | (2.21 | ) |
| $ | (4.29 | ) |
(1) | Diluted loss per share amount cannot exceed basic loss per share. |
Diluted loss per common share is calculated using the more dilutive of the two-class method or as-converted method. The two-class method uses net loss available to common stockholders and assumes conversion of all potential shares other than the participating securities. The as-converted method uses net loss 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 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 loss per share. The adjustment to the carrying value of the redeemable noncontrolling interest is reflected in 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 |
| ||||
|
| March 31, |
| ||||
(in thousands) |
| 2021 |
| 2020 |
| ||
Convertible preferred stock (as converted to common stock) |
|
| 6,494 |
|
| — |
|
Unvested restricted share-based awards |
|
| 38 |
|
| 84 |
|
Stock options |
|
| 57 |
|
| 16 |
|
Note 14.15. 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, relating to the issuance of 135,000 shares of newly issued Convertible Series A Preferred Stock, par value $0.01 per share, 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. The Investment Agreement also includes a delayed draw commitment of up to $45 million in additional Convertible Series A Preferred Stock, which we may access during the 12 months following the August 5, 2020 closing date on the same terms and conditions as the initial investment. We have classified the convertible preferred stock as mezzanine equity in our 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. Upon the occurrence of a change in control event, the holders have a right to require Viad to repurchase such preferred stock. During the three months ended March 31, 2021, $1.9 million of dividends were deemed declared and paid in-kind.
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 for the foreseeable future. Prior to the suspension, we repurchased 53,784 shares on the open market for $2.8 million during the three months ended March 31, 2020. As of March 31, 2021, 546,283 shares remain available for repurchase. Additionally, we repurchase shares related to tax withholding requirements on vested restricted stock awards. Refer to Note 3 – Share-Based Compensation.
Note 16. Accumulated Other Comprehensive Income (Loss)
Changes in accumulated other comprehensive income (loss) (“AOCI”) by component are as follows:
(in thousands) |
| Cumulative Foreign Currency Translation Adjustments |
|
| Unrecognized Net Actuarial Loss and Prior Service Credit, Net |
|
| Accumulated Other Comprehensive Income (Loss) |
| |||
Balance at December 31, 2019 |
| $ | (23,799 | ) |
| $ | (11,900 | ) |
| $ | (35,699 | ) |
Other comprehensive loss before reclassifications |
|
| (18,374 | ) |
|
| — |
|
|
| (18,374 | ) |
Amounts reclassified from AOCI, net of tax |
|
| — |
|
|
| 311 |
|
|
| 311 |
|
Net other comprehensive income (loss) |
|
| (18,374 | ) |
|
| 311 |
|
|
| (18,063 | ) |
Balance at June 30, 2020 |
| $ | (42,173 | ) |
| $ | (11,589 | ) |
| $ | (53,762 | ) |
(in thousands) |
| Cumulative Foreign Currency Translation Adjustments |
|
| Unrecognized Net Actuarial Loss and Prior Service Credit, Net |
|
| Accumulated Other Comprehensive Income (Loss) |
| |||
Balance at December 31, 2020 |
| $ | (16,686 | ) |
| $ | (13,955 | ) |
| $ | (30,641 | ) |
Other comprehensive income before reclassifications |
|
| 3,977 |
|
|
| — |
|
|
| 3,977 |
|
Amounts reclassified from AOCI, net of tax |
|
| — |
|
|
| 121 |
|
|
| 121 |
|
Net other comprehensive income |
|
| 3,977 |
|
|
| 121 |
|
|
| 4,098 |
|
Balance at March 31, 2021 |
| $ | (12,709 | ) |
| $ | (13,834 | ) |
| $ | (26,543 | ) |
(in thousands) |
| Cumulative Foreign Currency Translation Adjustments |
|
| Unrecognized Net Actuarial Loss and Prior Service Credit, Net |
|
| Accumulated Other Comprehensive Income (Loss) |
| |||
Balance at December 31, 2018 |
| $ | (36,332 | ) |
| $ | (11,643 | ) |
| $ | (47,975 | ) |
Other comprehensive income before reclassifications |
|
| 9,097 |
|
|
| — |
|
|
| 9,097 |
|
Amounts reclassified from AOCI, net of tax |
|
| — |
|
|
| 148 |
|
|
| 148 |
|
Net other comprehensive income |
|
| 9,097 |
|
|
| 148 |
|
|
| 9,245 |
|
Balance at June 30, 2019 |
| $ | (27,235 | ) |
| $ | (11,495 | ) |
| $ | (38,730 | ) |
(in thousands) |
| Cumulative Foreign Currency Translation Adjustments |
|
| Unrecognized Net Actuarial Loss and Prior Service Credit, Net |
|
| Accumulated Other Comprehensive Income (Loss) |
| |||
Balance at December 31, 2019 |
| $ | (23,799 | ) |
| $ | (11,900 | ) |
| $ | (35,699 | ) |
Other comprehensive loss before reclassifications |
|
| (28,158 | ) |
|
| — |
|
|
| (28,158 | ) |
Amounts reclassified from AOCI, net of tax |
|
| — |
|
|
| 314 |
|
|
| 314 |
|
Net other comprehensive income (loss) |
|
| (28,158 | ) |
|
| 314 |
|
|
| (27,844 | ) |
Balance at March 31, 2020 |
| $ | (51,957 | ) |
| $ | (11,586 | ) |
| $ | (63,543 | ) |
Amounts reclassified that relate to our defined benefit pension and postretirement plans include the amortization of prior service costs and actuarial net losses recognized during each period presented. We recorded these costs as components of net periodic cost for each period presented. Refer to Note 1718 – Pension and Postretirement Benefits for additional information.
Note 15. Income (Loss) Per Share
The components of basic and diluted income per share are as follows:
|
| Three Months Ended |
|
| Six Months Ended |
| ||||||||||
|
| June 30, |
|
| June 30, |
| ||||||||||
(in thousands, except per share data) |
| 2020 |
|
| 2019 |
|
| 2020 |
|
| 2019 |
| ||||
Net income (loss) attributable to Viad (diluted) |
| $ | (206,278 | ) |
| $ | 13,824 |
|
| $ | (292,863 | ) |
| $ | (3,953 | ) |
Less: Allocation to non-vested shares |
|
| — |
|
|
| (102 | ) |
|
| — |
|
|
| — |
|
Adjustment to the redemption value of redeemable noncontrolling interest |
|
| (332 | ) |
|
| (179 | ) |
|
| (458 | ) |
|
| (266 | ) |
Net income (loss) allocated to Viad common stockholders (basic) |
| $ | (206,610 | ) |
| $ | 13,543 |
|
| $ | (293,321 | ) |
| $ | (4,219 | ) |
Basic weighted-average outstanding common shares |
|
| 20,282 |
|
|
| 20,143 |
|
|
| 20,249 |
|
|
| 20,110 |
|
Additional dilutive shares related to share-based compensation |
|
| — |
|
|
| 123 |
|
|
| — |
|
|
| — |
|
Diluted weighted-average outstanding shares |
|
| 20,282 |
|
|
| 20,266 |
|
|
| 20,249 |
|
|
| 20,110 |
|
Income (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income (loss) attributable to Viad common stockholders |
| $ | (10.19 | ) |
| $ | 0.67 |
|
| $ | (14.49 | ) |
| $ | (0.21 | ) |
Diluted income (loss) attributable to Viad common stockholders(1) |
| $ | (10.19 | ) |
| $ | 0.67 |
|
| $ | (14.49 | ) |
| $ | (0.21 | ) |
|
|
Note 16.17. Income Taxes
The effective tax rate was a negative 20.6%6.3% for the three months ended June 30, 2020March 31, 2021 and 32.8%15.2% for the three months ended June 30, 2019.March 31, 2020.
The income tax provision was computed based on our estimated annualized effective tax rate and the full-year forecasted income or loss plus the tax impact of unusual, infrequent, or nonrecurring significant items during the period. The effective tax rate was a negative 7.1% for the six months ended June 30, 2020 and 18.7% for the six months ended June 30, 2019.
The negative effective tax rates for the three and six months ended June 30, 2020 were due toMarch 31, 2021 was less than the recordingfederal statutory rate of 21% primarily as a valuation allowanceresult of $25.5 millionexcluding the tax benefits on losses recognized in the second quarter of 2020 against our remaining U.S.,United States, United Kingdom, and other European net deferredcountries where we have a valuation allowance. The effective tax
assets as of June 30, 2020, as well as no tax benefits on non-deductible goodwill impairments and losses recognized in those jurisdictions. We recorded the valuation allowance based upon the level of historical losses and the uncertainty and timing of future income. At this time, we believe it is more likely than not that we will not realize the benefits of these deductible differences.
In response to the COVID-19 pandemic, many governments have enacted or are contemplating measures to provide aid and economic stimulus. These measures may include deferring the due dates of tax payments or other changes to income and non-income-based tax laws. The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which was enacted on March 27, 2020 in the U.S., includes measures to assist companies. For the three and six months ended June 30, 2020, there were no material tax impacts to our condensed consolidated financial statements as they relate to COVID-19 measures.
We received $11.2 million and $7.9 million of tax refunds in excess of payments for the three and six months ended June 30, 2020, respectively. Net cash paid for income taxes was $4.6 million and $8.0 million for the three and six months ended June 30, 2019, respectively.
Note 17. Pension and Postretirement Benefits
The components of net periodic benefit cost of our pension and postretirement benefit plans rate for the three months ended June 30,March 31, 2020 and 2019 consistwas less than the federal statutory rate of 21% primarily due to no tax benefit recognized on some of the following:goodwill impairments.
|
| Domestic Plans |
|
|
|
|
|
|
|
|
| |||||||||||||
|
| Pension Plans |
|
| Postretirement Benefit Plans |
|
| Foreign Pension Plans |
| |||||||||||||||
(in thousands) |
| 2020 |
|
| 2019 |
|
| 2020 |
|
| 2019 |
|
| 2020 |
|
| 2019 |
| ||||||
Service cost |
| $ | — |
|
| $ | 16 |
|
| $ | 16 |
|
| $ | 15 |
|
| $ | 108 |
|
| $ | 101 |
|
Interest cost |
|
| 168 |
|
|
| 223 |
|
|
| 70 |
|
|
| 126 |
|
|
| 83 |
|
|
| 93 |
|
Expected return on plan assets |
|
| (34 | ) |
|
| (5 | ) |
|
| — |
|
|
| — |
|
|
| (129 | ) |
|
| (121 | ) |
Amortization of prior service credit |
|
| — |
|
|
| — |
|
|
| (37 | ) |
|
| (47 | ) |
|
| — |
|
|
| — |
|
Recognized net actuarial loss |
|
| 130 |
|
|
| 100 |
|
|
| (43 | ) |
|
| 50 |
|
|
| 44 |
|
|
| 37 |
|
Net periodic benefit cost |
| $ | 264 |
|
| $ | 334 |
|
| $ | 6 |
|
| $ | 144 |
|
| $ | 106 |
|
| $ | 110 |
|
The componentsWe paid cash for income taxes of net periodic benefit cost of our pension and postretirement benefit plans for$0.7 million during the sixthree months ended June 30, 2020March 31, 2021 and 2019 consist of $3.3 million during the following:
|
| Domestic Plans |
|
|
|
|
|
|
|
|
| |||||||||||||
|
| Pension Plans |
|
| Postretirement Benefit Plans |
|
| Foreign Pension Plans |
| |||||||||||||||
(in thousands) |
| 2020 |
|
| 2019 |
|
| 2020 |
|
| 2019 |
|
| 2020 |
|
| 2019 |
| ||||||
Service cost |
| $ | — |
|
| $ | 31 |
|
| $ | 31 |
|
| $ | 35 |
|
| $ | 218 |
|
| $ | 202 |
|
Interest cost |
|
| 328 |
|
|
| 437 |
|
|
| 158 |
|
|
| 250 |
|
|
| 167 |
|
|
| 188 |
|
Expected return on plan assets |
|
| (35 | ) |
|
| (39 | ) |
|
| — |
|
|
| — |
|
|
| (260 | ) |
|
| (243 | ) |
Amortization of prior service credit |
|
| — |
|
|
| — |
|
|
| (73 | ) |
|
| (94 | ) |
|
| — |
|
|
| — |
|
Recognized net actuarial loss |
|
| 265 |
|
|
| 206 |
|
|
| 39 |
|
|
| 127 |
|
|
| 90 |
|
|
| 73 |
|
Net periodic benefit cost |
| $ | 558 |
|
| $ | 635 |
|
| $ | 155 |
|
| $ | 318 |
|
| $ | 215 |
|
| $ | 220 |
|
We expect to contribute $1.4 million to our funded pension plans, $0.9 million to our unfunded pension plans, and $1.0 million to our postretirement benefit plans in 2020. During the sixthree months ended June 30, 2020, we contributed $0.2 million to our funded pension plans, $0.4 million to our unfunded pension plans, and $0.4 million to our postretirement benefit plans.March 31, 2020.
Note 18.Pension and Postretirement Benefits
The components of net periodic benefit cost of our pension and postretirement benefit plans for the three months ended March 31, 2021 and 2020 consist of the following:
|
| Domestic Plans |
|
|
|
|
|
|
|
|
| |||||||||||||
|
| Pension Plans |
|
| Postretirement Benefit Plans |
|
| Foreign Pension Plans |
| |||||||||||||||
(in thousands) |
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||||
Service cost |
| $ | — |
|
| $ | — |
|
| $ | 13 |
|
| $ | 15 |
|
| $ | 113 |
|
| $ | 110 |
|
Interest cost |
|
| 114 |
|
|
| 160 |
|
|
| 55 |
|
|
| 88 |
|
|
| 76 |
|
|
| 84 |
|
Expected return on plan assets |
|
| (27 | ) |
|
| (1 | ) |
|
| — |
|
|
| — |
|
|
| (125 | ) |
|
| (131 | ) |
Amortization of prior service credit |
|
| — |
|
|
| — |
|
|
| (1 | ) |
|
| (36 | ) |
|
| — |
|
|
| — |
|
Recognized net actuarial loss |
|
| 151 |
|
|
| 135 |
|
|
| 56 |
|
|
| 82 |
|
|
| 49 |
|
|
| 46 |
|
Net periodic benefit cost |
| $ | 238 |
|
| $ | 294 |
|
| $ | 123 |
|
| $ | 149 |
|
| $ | 113 |
|
| $ | 109 |
|
We expect to contribute $0.8 million to our funded pension plans, $0.9 million to our unfunded pension plans, and $0.9 million to our postretirement benefit plans in 2021. During the three months ended March 31, 2021, we contributed $0.2 million to our funded pension plans, $0.2 million to our unfunded pension plans, and $0.2 million to our postretirement benefit plans.
Note 19. Restructuring Charges
GES
As part of our efforts to drive efficiencies and simplify our business operations, we took certain restructuring actions designed to simplify and transform GES for greater profitability. In response to the COVID-19 pandemic in 2020, we accelerated our transformation and streamlining efforts at GES to significantly reduce costs and create a lower and more flexible cost structure focused on servicing our more profitable market segments. These initiatives resulted in restructuring charges related to the elimination of certain positions and continuing to reduce our cost structure primarily within GES. Asfacility footprint at GES, as well as charges related to the closure and liquidation of GES’ United Kingdom-based audio-visual services business. In the fourth quarter of 2020, we entered into an agreement with a resultthird-party to outsource the management, cleaning, and storage of COVID-19,the aisle carpeting we implemented aggressive cost reduction initiatives in 2020use at live events and recorded certain restructuring charges.consequently vacated a facility during the first quarter of 2021.
Other Restructurings
We recorded restructuring charges in connection with the consolidation of certain support functions at our corporate headquarters.headquarters and certain reorganization activities within Pursuit. These charges primarily consist of severance and related benefits due to headcount reductions and charges related to the downsizing of facilities.
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 & Employee Benefits |
|
| Facilities |
|
| Severance & Employee Benefits |
|
| Total |
| ||||||||
Balance at December 31, 2019 |
| $ | 2,935 |
|
| $ | 1,339 |
|
| $ | 239 |
|
| $ | 4,513 |
| ||||||||||||||||
Balance at December 31, 2020 |
| $ | 2,440 |
|
| $ | 2,766 |
|
| $ | 24 |
|
| $ | 5,230 |
| ||||||||||||||||
Restructuring charges |
|
| 746 |
|
|
| (61 | ) |
|
| 426 |
|
|
| 1,111 |
|
|
| 64 |
|
|
| 2,719 |
|
|
| 43 |
|
|
| 2,826 |
|
Cash payments |
|
| (1,534 | ) |
|
| (442 | ) |
|
| (383 | ) |
|
| (2,359 | ) |
|
| (419 | ) |
|
| (1,747 | ) |
|
| (60 | ) |
|
| (2,226 | ) |
Non-cash items(1) |
|
| — |
|
|
| (1,913 | ) |
|
| — |
|
|
| (1,913 | ) | ||||||||||||||||
Adjustment to liability |
|
| (53 | ) |
|
| (27 | ) |
|
| (38 | ) |
|
| (118 | ) |
|
| (10 | ) |
|
| (18 | ) |
|
| 15 |
|
|
| (13 | ) |
Balance at June 30, 2020 |
| $ | 2,094 |
|
| $ | 809 |
|
| $ | 244 |
|
| $ | 3,147 |
| ||||||||||||||||
Balance at March 31, 2021 |
| $ | 2,075 |
|
| $ | 1,807 |
|
| $ | 22 |
|
| $ | 3,904 |
|
(1) | Represents non-cash adjustments related to a write down of certain ROU assets as a result of vacating certain facilities prior to the lease term and the closure and liquidation of GES’ United Kingdom-based audio-visual services business. |
As of June 30, 2020, we expect to pay all butMarch 31, 2021, $1.5 million of the liabilities related to severance and employee benefits will remain unpaid by the end of 2020.2021. The liability related to future lease payments will be paid over the remaining lease terms. Refer to Note 2223 – Segment Information for information regarding restructuring charges by segment.
Note 19. 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 |
| 2020 |
|
| 2019 |
| ||
Assets: |
|
|
|
|
|
|
|
|
|
|
Operating lease assets |
| Operating lease right-of-use assets |
| $ | 95,229 |
|
| $ | 103,314 |
|
Finance lease assets |
| Property and equipment, net |
|
| 23,486 |
|
|
| 25,350 |
|
Total lease assets |
|
|
| $ | 118,715 |
|
| $ | 128,664 |
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
Current: |
|
|
|
|
|
|
|
|
|
|
Operating lease obligations |
| Operating lease obligations |
| $ | 20,140 |
|
| $ | 22,180 |
|
Finance lease obligations |
| Current portion of debt and finance lease obligations |
|
| 2,982 |
|
|
| 3,386 |
|
Noncurrent: |
|
|
|
|
|
|
|
|
|
|
Operating lease obligations |
| Long-term operating lease obligations |
|
| 77,743 |
|
|
| 82,851 |
|
Finance lease obligations |
| Long-term debt and finance lease obligations |
|
| 20,494 |
|
|
| 21,871 |
|
Total lease liabilities |
|
|
| $ | 121,359 |
|
| $ | 130,288 |
|
The components of lease expense consisted of the following:
|
| Three Months Ended |
|
| Six Months Ended |
| ||||||||||
|
| June 30, |
|
| June 30, |
| ||||||||||
(in thousands) |
| 2020 |
|
| 2019 |
|
| 2020 |
|
| 2019 |
| ||||
Finance lease cost: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of right-of-use assets |
| $ | 923 |
|
| $ | 609 |
|
| $ | 1,841 |
|
| $ | 1,198 |
|
Interest on lease liabilities |
|
| 412 |
|
|
| 182 |
|
|
| 829 |
|
|
| 249 |
|
Operating lease cost |
|
| 6,912 |
|
|
| 6,839 |
|
|
| 13,639 |
|
|
| 12,831 |
|
Short-term lease cost |
|
| 32 |
|
|
| 562 |
|
|
| 342 |
|
|
| 777 |
|
Variable lease cost |
|
| 1,359 |
|
|
| 1,402 |
|
|
| 3,058 |
|
|
| 3,217 |
|
Sublease income(1) |
|
| — |
|
|
| (54 | ) |
|
| — |
|
|
| (226 | ) |
Total lease cost, net |
| $ | 9,638 |
|
| $ | 9,540 |
|
| $ | 19,709 |
|
| $ | 18,046 |
|
(1)Sublease income excludes rental income from owned assets, which is recorded in revenue.
Other information related to operating and finance leases are as follows:
|
| Three Months Ended |
|
| Six Months Ended |
| ||||||||||
|
| June 30, |
|
| June 30, |
| ||||||||||
(in thousands) |
| 2020 |
|
| 2019 |
|
| 2020 |
|
| 2019 |
| ||||
Cash paid for amounts included in the measurement of lease liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating cash flows from operating leases |
| $ | 6,095 |
|
| $ | 7,405 |
|
| $ | 12,624 |
|
| $ | 13,603 |
|
Operating cash flows from finance leases |
| $ | 706 |
|
| $ | 182 |
|
| $ | 866 |
|
| $ | 249 |
|
Financing cash flows from finance leases |
| $ | 793 |
|
| $ | 490 |
|
| $ | 1,570 |
|
| $ | 1,012 |
|
Right-of-use assets obtained in exchange for lease obligations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating leases |
| $ | 3,298 |
|
| $ | 1,813 |
|
| $ | 4,077 |
|
| $ | 13,252 |
|
Finance leases |
| $ | 1,038 |
|
| $ | 19,769 |
|
| $ | 1,768 |
|
| $ | 20,951 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| June 30, |
|
| December 31, |
| ||
|
|
|
|
|
|
|
|
|
| 2020 |
|
| 2019 |
| ||
Weighted-average remaining lease term (years): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating leases |
|
|
|
|
|
|
|
|
|
| 8.34 |
|
|
| 8.17 |
|
Finance leases |
|
|
|
|
|
|
|
|
|
| 13.52 |
|
|
| 14.01 |
|
Weighted-average discount rate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating leases |
|
|
|
|
|
|
|
|
|
| 5.76 | % |
|
| 5.77 | % |
Finance leases |
|
|
|
|
|
|
|
|
|
| 7.84 | % |
|
| 7.73 | % |
As of June 30, 2020, 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 2020 |
| $ | 12,609 |
|
| $ | 2,514 |
|
| $ | 15,123 |
|
2021 |
|
| 20,372 |
|
|
| 4,202 |
|
|
| 24,574 |
|
2022 |
|
| 16,380 |
|
|
| 3,708 |
|
|
| 20,088 |
|
2023 |
|
| 13,356 |
|
|
| 3,184 |
|
|
| 16,540 |
|
2024 |
|
| 10,148 |
|
|
| 2,486 |
|
|
| 12,634 |
|
Thereafter |
|
| 54,717 |
|
|
| 23,185 |
|
|
| 77,902 |
|
Total future lease payments |
|
| 127,582 |
|
|
| 39,279 |
|
|
| 166,861 |
|
Less: Amount representing interest |
|
| (29,699 | ) |
|
| (15,803 | ) |
|
| (45,502 | ) |
Present value of minimum lease payments |
|
| 97,883 |
|
|
| 23,476 |
|
|
| 121,359 |
|
Current portion |
|
| 20,140 |
|
|
| 2,982 |
|
|
| 23,122 |
|
Long-term portion |
| $ | 77,743 |
|
| $ | 20,494 |
|
| $ | 98,237 |
|
As of June 30, 2020, the estimated future minimum rentals under non-cancellable leases, which includes rental income from facilities that we own, are as follows:
(in thousands) |
|
|
|
|
Remainder of 2020 |
| $ | 1,033 |
|
2021 |
|
| 1,839 |
|
2022 |
|
| 1,516 |
|
2023 |
|
| 1,329 |
|
2024 |
|
| 1,091 |
|
Thereafter |
|
| 4,789 |
|
Total minimum rents |
| $ | 11,597 |
|
Leases Not Yet Commenced
As of June 30, 2020, we had executed certain facility and land leases for which we did not have control of the underlying assets. Accordingly, we did not record the lease liabilities and right-of-use assets on our Condensed Consolidated Balance Sheets. These leases include future planned attractions for Pursuit that are currently in the planning or development phase and that we expect the lease commencement dates to begin between fiscal years 2021 and 2022 with lease terms of 15 to 47 years.
Note 20.Leases and Other
The balance sheet presentation of our operating and finance leases is as follows:
|
|
|
| March 31, |
|
| December 31, |
| ||
(in thousands) |
| Classification on the Condensed Consolidated Balance Sheet |
| 2021 |
|
| 2020 |
| ||
Assets: |
|
|
|
|
|
|
|
|
|
|
Operating lease assets |
| Operating lease ROU assets |
| $ | 81,488 |
|
| $ | 82,739 |
|
Finance lease assets (1) |
| Property and equipment, net |
|
| 63,934 |
|
|
| 23,366 |
|
Total lease assets |
|
|
| $ | 145,422 |
|
| $ | 106,105 |
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
Current: |
|
|
|
|
|
|
|
|
|
|
Operating lease obligations |
| Operating lease obligations |
| $ | 14,684 |
|
| $ | 15,697 |
|
Finance lease obligations |
| Current portion of debt and finance lease obligations |
|
| 2,519 |
|
|
| 2,514 |
|
Noncurrent: |
|
|
|
|
|
|
|
|
|
|
Operating lease obligations |
| Long-term operating lease obligations |
|
| 72,878 |
|
|
| 70,150 |
|
Finance lease obligations (1) |
| Long-term debt and finance lease obligations |
|
| 62,681 |
|
|
| 20,627 |
|
Total lease liabilities |
|
|
| $ | 152,762 |
|
| $ | 108,988 |
|
(1) | The increase in finance lease assets and obligations is primarily due to the commencement of Pursuit’s new Sky Lagoon attraction in Iceland during the first quarter of 2021, which has a 46-year lease term. |
During the three months ended March 31, 2021, we recorded a write down of certain ROU assets as a result of vacating certain facilities prior to the lease term.
The components of lease expense consisted of the following:
|
| Three Months Ended |
| |||||
|
| March 31, |
| |||||
(in thousands) |
| 2021 |
|
| 2020 |
| ||
Finance lease cost: |
|
|
|
|
|
|
|
|
Amortization of ROU assets |
| $ | 1,070 |
|
| $ | 918 |
|
Interest on lease liabilities |
|
| 1,315 |
|
|
| 417 |
|
Operating lease cost |
|
| 6,270 |
|
|
| 6,727 |
|
Short-term lease cost |
|
| 261 |
|
|
| 310 |
|
Variable lease cost |
|
| 942 |
|
|
| 1,699 |
|
Total lease cost, net |
| $ | 9,858 |
|
| $ | 10,071 |
|
Other information related to operating and finance leases are as follows:
|
| Three Months Ended |
| |||||
|
| March 31, |
| |||||
(in thousands) |
| 2021 |
|
| 2020 |
| ||
Cash paid for amounts included in the measurement of lease liabilities: |
|
|
|
|
|
|
|
|
Operating cash flows from operating leases |
| $ | 6,153 |
|
| $ | 6,529 |
|
Operating cash flows from finance leases |
| $ | 274 |
|
| $ | 160 |
|
Financing cash flows from finance leases |
| $ | 710 |
|
| $ | 777 |
|
ROU assets obtained in exchange for lease obligations: |
|
|
|
|
|
|
|
|
Operating leases |
| $ | 6,299 |
|
| $ | 779 |
|
Finance leases |
|
| 42,907 |
|
| $ | 730 |
|
|
|
|
|
|
|
|
|
|
|
| March 31, |
|
| December 31, |
| ||
|
| 2021 |
|
| 2020 |
| ||
Weighted-average remaining lease term (years): |
|
|
|
|
|
|
|
|
Operating leases |
|
| 8.21 |
|
|
| 8.39 |
|
Finance leases |
|
| 35.44 |
|
|
| 13.97 |
|
Weighted-average discount rate: |
|
|
|
|
|
|
|
|
Operating leases |
|
| 7.02 | % |
|
| 6.93 | % |
Finance leases |
|
| 9.04 | % |
|
| 7.99 | % |
As of March 31, 2021, 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 2021 |
| $ | 16,616 |
|
| $ | 5,948 |
|
| $ | 22,564 |
|
2022 |
|
| 16,932 |
|
|
| 7,927 |
|
|
| 24,859 |
|
2023 |
|
| 13,847 |
|
|
| 7,407 |
|
|
| 21,254 |
|
2024 |
|
| 11,982 |
|
|
| 6,735 |
|
|
| 18,717 |
|
2025 |
|
| 10,689 |
|
|
| 6,204 |
|
|
| 16,893 |
|
Thereafter |
|
| 52,037 |
|
|
| 189,245 |
|
|
| 241,282 |
|
Total future lease payments |
|
| 122,103 |
|
|
| 223,466 |
|
|
| 345,569 |
|
Less: Amount representing interest |
|
| (34,541 | ) |
|
| (158,266 | ) |
|
| (192,807 | ) |
Present value of minimum lease payments |
|
| 87,562 |
|
|
| 65,200 |
|
|
| 152,762 |
|
Current portion |
|
| 14,684 |
|
|
| 2,519 |
|
|
| 17,203 |
|
Long-term portion |
| $ | 72,878 |
|
| $ | 62,681 |
|
| $ | 135,559 |
|
As of March 31, 2021, 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 2021 |
| $ | 1,180 |
|
2022 |
|
| 1,088 |
|
2023 |
|
| 869 |
|
2024 |
|
| 646 |
|
2025 |
|
| 493 |
|
Thereafter |
|
| 1,333 |
|
Total minimum rents |
| $ | 5,609 |
|
Lease Not Yet Commenced
As of March 31, 2021, 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 the new FlyOver Attraction, FlyOver Canada Toronto. We expect the lease commencement date to begin in fiscal year 2022 with a lease term of 22 years.
Note 21. Litigation, Claims, Contingencies, and Other
We are plaintiffs or defendants to 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 us. During the three months ended March 31, 2019, we recorded an $8.5 million charge to resolve a legal dispute at GES involving a former industry contractor. Although the amount of liability as of June 30, 2020March 31, 2021 with respect to unresolved legal matters is not ascertainable, we believe that any resulting liability, after taking into consideration amounts already provided for and insurance coverage, will not have a material effect on our business, financial position, or results of operations.
On July 18, 2020, an off-road Ice Explorer operated by our Pursuit business was involved in an accident while enroute with 27 people to the Athabasca Glacier, resulting in three fatalities and multiple other serious injuries. We are making every effortcontinue to actively support the victims and their families, and we are fully cooperating with the applicable regulatory authorities to investigate this incident.accident. We immediately reported the accident to our relevant insurance carriers, who are also supporting the investigation.investigation and subsequent claims. Subject to customary deductibles, we believe that our insurance coverage is sufficient to cover potential lossesclaims related to this accident.Refer to Note 24 – Subsequent Events.
We are subject to various U.S. federal, state, and foreign laws and regulations governing the prevention of pollution and the protection of the environment in the jurisdictions in which we have or had operations. If we fail to comply with these environmental laws and regulations, civil and criminal penalties could be imposed, and we could become subject to regulatory enforcement actions in the form of injunctions and cease and desist orders. As is the case with many companies, we also face exposure to actual or potential claims and lawsuits involving environmental matters relating to our past operations. As of June 30, 2020,March 31, 2021, we had recorded environmental remediation liabilities of $2.2 million related to previously sold operations. Although we are a party to certain environmental disputes, we believe that any resulting liabilities, after taking into consideration amounts already provided for and insurance coverage, will not have a material effect on our financial position or results of operations.
As of June 30, 2020,March 31, 2021, on behalf of our 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 our subsidiary operations. We 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 we would be required to make under all guarantees existing as of June 30, 2020March 31, 2021 would be $76.2$90.0 million. These guarantees relate to our leased equipment and facilities through January 2040. There are 0 recourse provisions that would enable us to recover from third parties any payments made under the guarantees. Furthermore, there are no collateral or similar arrangements pursuant to which we could recover payments.
A significant number of our employees are unionized and we are a party to approximately 100 collective-bargaining agreements, with approximately one-third requiring renegotiation each year. If we are unable to reach an agreement with a union during the collective-bargaining process, the union may call for a strike or work stoppage, which may, under certain circumstances, adversely impact our business and results of operations. We believe that relations with our employees are satisfactory and that collective-bargaining agreements expiring in 20202021 will be renegotiated in the ordinary course of business. Although our labor relations are currently stable, disruptions could occur, with the possibility of an adverse impact on the operating results of GES. During the three months ended June 30, 2019, we finalized the terms of a new collective-bargaining agreement with the Teamsters Local 727 union. The terms included a withdrawal from the underfunded Central States Pension Plan. Accordingly, we recorded a charge of $15.5 million, which represents the estimated present value of future contributions we will be required to make to the plan as a result of this withdrawal and $0.2 million of other withdrawal costs.
We are self-insured up to certain limits for workers’ compensation and general liabilities, which includes automobile, product general liability, and client property loss claims. The aggregate amount of insurance liabilities (up to our retention limit) related to our continuing operations was $14.5$12.6 million as of June 30, 2020,March 31, 2021, which includes $10.1$7.9 million related to workers’ compensation liabilities, and $4.4$4.7 million related to general liability claims. We have also retained and provided for certain workers’ compensation insurance liabilities in conjunction with previously sold businesses of $2.2$1.9 million as of June 30, 2020.March 31, 2021. 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, 2020.March 31, 2021. Provisions for losses for claims incurred, including actuarially derived estimated claims incurred but not yet reported, are made based on our historical experience, claims frequency, and other factors. A change in the assumptions used could result in an adjustment to recorded liabilities. We have purchased insurance for amounts in excess of the self-insured levels, which generally range from $0.2 million to $0.5 million on a per claim basis. We do not maintain a self-insured retention pool fund as claims are paid from current cash resources at the time of settlement. Our net cash payments in connection with these insurance liabilities were $1.2$0.2 million for the three months ended June 30, 2020 and $2.7 million for the six months ended June 30, 2020March 31, 2021 and $1.5 million for the three months ended June 30, 2019 and $3.3 million for the six months ended June 30, 2019.March 31, 2020.
In addition, as of June 30, 2020,March 31, 2021, we have recorded insurance liabilities of $10.0$6.4 million related to continuing operations, which represents the amount for which we remain the primary obligor after self-insured insurance limits, without taking into consideration the above-referenced insurance coverage. Of this total, $6.5The $6.4 million is related to workers’ compensation liabilities, and $3.5 million related to general/auto liability claims, which areis recorded in other deferred items and liabilities in the Condensed Consolidated Balance Sheets with a corresponding receivable in other investments.
Note 21.22. Redeemable Noncontrolling Interest – 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. Through Esja and its wholly-owned subsidiary, we are operating a new 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 36 months of business operation (the “Reference Date”) and if 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 after 72 months, the FlyOver Iceland attraction has not achieved the Put Option Condition, the put option expires. 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 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, rather than to current earnings.
Changes in the redeemable noncontrolling interest are as follows:
(in thousands) |
|
|
|
|
|
|
|
|
Balance at December 31, 2019 |
| $ | 6,172 |
| ||||
Balance at December 31, 2020 |
| $ | 5,225 |
| ||||
Net loss attributable to redeemable noncontrolling interest |
|
| (721 | ) |
|
| (494 | ) |
Adjustment to the redemption value |
|
| 458 |
|
|
| 56 |
|
Capital contribution |
|
| 142 |
| ||||
Foreign currency translation adjustment |
|
| (771 | ) |
|
| 77 |
|
Balance at June 30, 2020 |
| $ | 5,138 |
| ||||
Balance at March 31, 2021 |
| $ | 5,006 |
|
Note 22. Segment InformationNon-redeemable noncontrolling interest
We measureNon-redeemable noncontrolling interest represents the profit and performanceportion of our operations onequity in a subsidiary that is not attributable, directly or indirectly, to us. Our non-redeemable noncontrolling interest relates to the basis of segment operating income (loss), which excludes restructuring charges and recoveries and impairment charges. Intersegment sales are eliminatedequity ownership interest that we do not own.
Changes 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.
Our reportable segments, with reconciliations to consolidated totals,non-redeemable noncontrolling interest are as follows:
|
| Three Months Ended |
|
| Six Months Ended |
| ||||||||||
|
| June 30, |
|
| June 30, |
| ||||||||||
(in thousands) |
| 2020 |
|
| 2019 |
|
| 2020 |
|
| 2019 |
| ||||
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GES North America |
| $ | 18,776 |
|
| $ | 283,682 |
|
| $ | 270,534 |
|
| $ | 506,923 |
|
GES EMEA |
|
| 7,808 |
|
|
| 69,505 |
|
|
| 50,524 |
|
|
| 123,881 |
|
Intersegment eliminations |
|
| (985 | ) |
|
| (6,317 | ) |
|
| (2,974 | ) |
|
| (9,007 | ) |
Total GES |
|
| 25,599 |
|
|
| 346,870 |
|
|
| 318,084 |
|
|
| 621,797 |
|
Pursuit |
|
| 5,264 |
|
|
| 55,409 |
|
|
| 18,787 |
|
|
| 66,076 |
|
Total revenue |
| $ | 30,863 |
|
| $ | 402,279 |
|
| $ | 336,871 |
|
| $ | 687,873 |
|
Segment operating income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GES North America |
| $ | (29,174 | ) |
| $ | 30,589 |
|
| $ | (17,208 | ) |
| $ | 31,197 |
|
GES EMEA |
|
| (2,886 | ) |
|
| 4,664 |
|
|
| (3,994 | ) |
|
| 5,799 |
|
Total GES |
|
| (32,060 | ) |
|
| 35,253 |
|
|
| (21,202 | ) |
|
| 36,996 |
|
Pursuit |
|
| (17,692 | ) |
|
| 11,313 |
|
|
| (37,966 | ) |
|
| (1,682 | ) |
Segment operating loss |
|
| (49,752 | ) |
|
| 46,566 |
|
|
| (59,168 | ) |
|
| 35,314 |
|
Corporate eliminations (1) |
|
| 16 |
|
|
| 17 |
|
|
| 32 |
|
|
| 33 |
|
Corporate activities |
|
| (2,468 | ) |
|
| (3,282 | ) |
|
| (3,257 | ) |
|
| (5,115 | ) |
Operating loss |
|
| (52,204 | ) |
|
| 43,301 |
|
|
| (62,393 | ) |
|
| 30,232 |
|
Interest income |
|
| 176 |
|
|
| 83 |
|
|
| 255 |
|
|
| 181 |
|
Interest expense |
|
| (5,186 | ) |
|
| (2,957 | ) |
|
| (9,204 | ) |
|
| (5,872 | ) |
Multi-employer pension plan withdrawal |
|
| (462 | ) |
|
| (15,508 | ) |
|
| (462 | ) |
|
| (15,508 | ) |
Other expense |
|
| (265 | ) |
|
| (456 | ) |
|
| (684 | ) |
|
| (911 | ) |
Restructuring recoveries (charges): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GES North America |
|
| (46 | ) |
|
| (4,275 | ) |
|
| 33 |
|
|
| (4,258 | ) |
GES EMEA |
|
| 17 |
|
|
| (80 | ) |
|
| (718 | ) |
|
| (742 | ) |
Pursuit |
|
| (56 | ) |
|
| — |
|
|
| (57 | ) |
|
| — |
|
Corporate |
|
| (175 | ) |
|
| (100 | ) |
|
| (369 | ) |
|
| (143 | ) |
Impairment charges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GES North America |
|
| (113,513 | ) |
|
| — |
|
|
| (171,094 | ) |
|
| — |
|
GES EMEA |
|
| (507 | ) |
|
| — |
|
|
| (29,549 | ) |
|
| — |
|
Pursuit |
|
| — |
|
|
| — |
|
|
| (1,757 | ) |
|
| — |
|
Legal settlement: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GES |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (8,500 | ) |
Loss from continuing operations before income taxes |
| $ | (172,221 | ) |
| $ | 20,008 |
|
| $ | (275,999 | ) |
| $ | (5,521 | ) |
(in thousands) | Glacier Park Inc. |
|
| Brewster (1) |
|
| Sky Lagoon |
|
| Total |
| ||||
Balance at December 31, 2020 | $ | 13,953 |
|
| $ | 51,295 |
|
| $ | 12,896 |
|
| $ | 78,144 |
|
Net loss attributable to non-redeemable noncontrolling interest |
| (729 | ) |
|
| (87 | ) |
|
| (629 | ) |
|
| (1,445 | ) |
Acquisitions |
| — |
|
|
| 6,759 |
|
|
| — |
|
|
| 6,759 |
|
Dividends |
| — |
|
|
| (951 | ) |
|
| — |
|
|
| (951 | ) |
Foreign currency translation adjustments |
| 2 |
|
|
| 654 |
|
|
| 94 |
|
|
| 750 |
|
Balance at March 31, 2021 | $ | 13,226 |
|
| $ | 57,670 |
|
| $ | 12,361 |
|
| $ | 83,257 |
|
Equity ownership interest that we do not own |
| 20 | % |
|
| 40 | % |
|
| 49 | % |
|
|
|
|
(1) |
|
Note 23. Common and Preferred StockSegment Information
Common Stock Repurchases
We previously announced our Board of Directors’ authorization to repurchase sharesmeasure the profit and performance of our common stock from timeoperations on the basis of segment operating income or loss, which excludes restructuring charges and recoveries and impairment charges. Intersegment sales are eliminated in consolidation and intersegment transfers are not significant. Corporate activities include expenses not allocated to time at prevailing market prices. Effective February 7, 2019, our Board of Directors authorizedoperations. Depreciation and amortization and share-based compensation expense are the repurchase of an additional 500,000 shares.only significant non-cash items for the reportable segments.
During the six months ended June 30, 2020,first quarter of 2021, we repurchased 53,784 shares onreorganized GES’ operating segments to represent the open market for $2.8 million. Aschanges in how our CODM reviews the financial performance of June 30, 2020, 546,283 shares remain available for repurchase. NaN shares were purchased onGES and makes decisions regarding the open market duringallocation of resources. Accordingly, GES is now a single reportable segment. We made no changes to the six months ended June 30, 2019. Additionally, we repurchase shares relatedPursuit reportable segment.
Our reportable segments, with reconciliations to tax withholding requirements on vested restricted stock awards. Refer to Note 3 – Share-Based Compensation.consolidated totals, are as follows:
In March 2020, our Board of Directors suspended our share repurchase program for the foreseeable future.
Stockholder Rights Plan
On March 29, 2020, our Board of Directors adopted a short-term stockholder rights plan and declared a dividend payable to stockholders of record on April 13, 2020 of one preferred stock purchase right per each outstanding share of Viad common stock to purchase one one-hundredth of a share of Viad’s Junior Participating Preferred Stock at an exercise price of $115.00. Our Board of Directors will be able to redeem the rights at $0.01 per right at any time before a person or group acquired 10% (20% in the case of a passive institutional investor) or more of the outstanding common stock. The rights expire on February 28, 2021, subject to our right to extend the date, unless we redeem, exchange, or terminate the rights earlier.
Subject to limited exceptions, if a person or group acquires 10% (20% in the case of a passive institutional investor) or more of our common stock (including shares that are synthetically owned pursuant to derivative transactions or ownership of derivative securities) or announces a tender offer, and the consummation of that offer would result in such ownership (we refer to such a person or group as an “acquiring person”), each right will entitle its holder to purchase, at the right’s then-current exercise price, a number of shares of common stock having a market value at that time of twice the right’s exercise price. Rights held by the acquiring person will become void and will not be exercisable. If the Company is acquired in a merger or other business combination transaction that has not been approved by our Board of Directors after the rights become exercisable, each right will entitle its holder to purchase, at the right’s then-current exercise price, a number of shares of the acquiring company’s common stock having a market value at that time of twice the right’s exercise price.
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| Three Months Ended |
| |||||
|
| March 31, |
| |||||
(in thousands) |
| 2021 |
|
| 2020 |
| ||
Revenue: |
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|
|
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|
|
|
GES |
| $ | 19,145 |
|
| $ | 281,135 |
|
Pursuit |
|
| 9,790 |
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| 13,523 |
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Total revenue |
| $ | 28,935 |
|
| $ | 294,658 |
|
Segment operating income (loss): |
|
|
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GES |
| $ | (19,904 | ) |
| $ | 10,858 |
|
Pursuit |
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| (18,321 | ) |
|
| (20,274 | ) |
Segment operating loss |
|
| (38,225 | ) |
|
| (9,416 | ) |
Corporate eliminations (1) |
|
| 17 |
|
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| 16 |
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Corporate activities |
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| (2,005 | ) |
|
| (789 | ) |
Operating loss |
|
| (40,213 | ) |
|
| (10,189 | ) |
Interest income |
|
| 33 |
|
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| 79 |
|
Interest expense |
|
| (5,118 | ) |
|
| (4,018 | ) |
Other expense |
|
| (360 | ) |
|
| (419 | ) |
Restructuring charges: |
|
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|
|
|
|
|
GES |
|
| (2,783 | ) |
|
| (656 | ) |
Pursuit |
|
| (23 | ) |
|
| (1 | ) |
Corporate |
|
| (20 | ) |
|
| (194 | ) |
Impairment charges: |
|
|
|
|
|
|
|
|
GES |
|
| — |
|
|
| (86,623 | ) |
Pursuit |
|
| — |
|
|
| (1,757 | ) |
Loss from continuing operations before income taxes |
| $ | (48,484 | ) |
| $ | (103,778 | ) |
(1) | Corporate eliminations represent the elimination of depreciation expense recorded by Pursuit associated with previously eliminated intercompany profit realized by GES for renovations to Pursuit’s Banff Gondola. |
Note 24. Subsequent Events
Issuance of Convertible Preferred Stock
On August 5, 2020, we entered into an investment agreement with funds managed by private equity firm Crestview Partners (the “Investment Agreement”) who made an initial investment of $135 million, net of approximately $9 million in fees, in newly issued perpetual convertible preferred stock that carries a 5.5% dividend, which is payable in cash or in-kind at Viad’s option (the “Convertible Preferred Stock”). The Convertible Preferred Stock is convertible into shares of our common stock at a conversion price of $21.25 per share. The Investment Agreement also includes a delayed draw commitment of up to $45 million in additional Convertible Preferred Stock, which we may access during the next 12 months on the same terms and conditions as the initial investment (subject to shareholder approval). The proceeds from Crestview’s initial investment will be used to repay a portion of our 2018 Credit Facility, provide additional short-term liquidity, fund capital expenditures, and support general corporate purposes. Pursuant to the Investment Agreement, two Crestview Partners’ designees joined our Board of Directors, increasing the size of our board from seven to nine directors.
2018 Credit Agreement Amendment
On August 5, 2020 we entered into an amendment to our 2018 Credit Agreement, which, among other things, (i) waives our financial covenants until the end of the third quarter of 2022 (the “Covenant Waiver Period”) and (ii) requires us to maintain minimum liquidity of $125 million with a step down to $100 million at December 31, 2020. The interest rate on the borrowings is equal to LIBOR plus 350 basis points, with a LIBOR floor of one percent during the Covenant Waiver Period. The LIBOR floor continues until the end of the 2018 Credit Agreement. Additionally, we are precluded from paying cash dividends, from issuing unsecured debt, and from accessing the $250 million expansion feature during the Covenant Waiver Period. The amendment also allows us to make acquisitions under certain conditions. Viad pledged 100% of the capital stock of its top-tier foreign subsidiaries (other than Esja). Fees related to the amendment were approximately $1.6 million.
Sale of GES warehouse
On July 24, 2020, we sold a GES warehouse in San Diego and received cash proceeds of $17.0 million.
Icefield AccidentEvent
On July 18, 2020, an off-road Ice Explorer operated by our Pursuit business was involvedApril 30, 2021, we opened Pursuit’s new Sky Lagoon attraction in an accident enroute with 27 people to the Athabasca Glacier, resulting in three fatalities and multiple other serious injuries. We are making every effort to actively support the victims and their families, and we are fully cooperating with the applicable regulatory authorities to investigate this incident. We immediately reported the accident to our relevant insurance carriers, who are also supporting the investigation. Subject to customary deductibles, we believe that our insurance coverage is sufficient to cover potential losses related to this accident.
Reykjavik, Iceland.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
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 “will,” “may,” “expect,” “would,” “could,” “might,” “intend,” “plan,” “believe,” “estimate,” “anticipate,” “deliver,” “seek,” “aim,” “potential,” “target,” “outlook,” and similar expressions are intended to identify our forward-looking statements. Forward-lookingSimilarly, statements in this Form 10-Q include, among others, statements aboutthat describe our plans, business strategies,strategy, outlook, objectives, plans, initiatives, intentions, or goals also are forward-looking statements. These forward-looking statements are not historical facts and the outlook relatedare subject to the effects of the COVID-19 pandemic, including on the demand for travel, event business and travel experiences, the timing of event and attraction re-openings, financial performance, prospects or future events. There are a numberhost of risks uncertainties and other important factors,uncertainties, many of which are beyond our control, thatwhich could cause our actual results to differ materially from those in the forward-looking statements contained in this Quarterly Report on Form 10-Q. Such risks, uncertainties and other important factors include, among others: the factors set forth under “Risk Factors” (Part I, Item 1A) and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (Part II, Item 7) in our Annual Report on Form 10-K filed with the U.S.United States Securities and Exchange Commission (the “SEC”), as may be updated elsewhere in this report; and the information set forth in other Quarterly Reports on Form 10-Q and Current Reports on Form 8-K that we have filed or will file with the SEC;SEC. Such risks, uncertainties, and other important factors include, among others: the short- and longer-term effects of the COVID-19 pandemic, including on the demand for travel, event business and travel experiences, and levels of consumer confidence; actions that governments, businesses, and individuals take in response to the COVID-19 pandemic or any future resurgence, including limiting or banning travel; the impact of the COVID-19 pandemic, and actions taken in response to the COVID-19 pandemic or any future resurgence, on global and regional economies, travel, and economic activity, including the duration and magnitude of its impact on unemployment rates and consumer discretionary spending; and the pace of recovery following the COVID-19 pandemic or any future resurgence; COVID-19 may cause us to incur additional expenses. 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, whichresurgence.
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 forward-looking statements.following:
• | the impact of the COVID-19 pandemic on our financial condition, liquidity, and cash flow; |
• | our ability to anticipate and adjust for the impact of the COVID-19 pandemic on our businesses; |
• | general economic uncertainty in key global markets and a worsening of global economic conditions; |
• | travel industry disruptions; |
• | our ability to successfully integrate and achieve established financial and strategic goals from acquisitions; |
• | our dependence on large exhibition event clients; |
• | the importance of key members of our account teams to our business relationships; |
• | the competitive nature of the industries in which we operate; |
• | unanticipated delays and cost overruns of our capital projects, and our ability to achieve established financial and strategic goals for such projects; |
• | seasonality of our businesses; |
• | transportation disruptions and increases in transportation costs; |
• | natural disasters, weather conditions, and other catastrophic events; |
• | our multi-employer pension plan funding obligations; |
• | our exposure to labor cost increases and work stoppages related to unionized employees; |
• | liabilities relating to prior and discontinued operations; |
• | adverse effects of show rotation on our periodic results and operating margins; |
• | our exposure to currency exchange rate fluctuations; |
• | our exposure to cybersecurity attacks and threats; |
• | compliance with laws governing the storage, collection, handling, and transfer of personal data and our exposure to legal claims and fines for data breaches or improper handling of such data; and |
• | changes affecting the London Inter-bank Offered Rate (“LIBOR”) and the Canadian Dollar Offered Rate (“CDOR”). |
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 2020 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 (“MD&A”) should be read in conjunction with our 20192020 Form 10-K and the condensed consolidated financial statements and related notes included in this Form 10-Q. The MD&A is intended to assist in understanding our financial condition and results of operations.
Overview
We are an internationala leading provider of experiential services companyleisure travel and live events and marketing experiences with operations in the United States, Canada, the United Kingdom, continental Europe, the United Arab Emirates, and Iceland. We are committed to providing unforgettable experiences to our clients and guests.
We operate through threetwo reportable business segments: GES North America, GES EMEA, (collectively, “GES”), and Pursuit.Pursuit:
• | GES is a global, full-service live events company providing exhibition and conference services, brand experiences, and on-site venue services to the world’s leading brands and event organizers. |
• | Pursuit is an attractions and hospitality company that provides a collection of inspiring and unforgettable experiences in iconic destinations. |
COVID-19 Pandemic
GES
GES is a global, full-service live events company offering a comprehensive rangeStarting in mid-March 2020 and extending through the first quarter of services to event organizers and corporate brand marketers. Event organizers schedule and run events from start to finish. Corporate brand marketers include exhibitors and domestic and international corporations that want to promote their brands, services and innovation, feature new products and build business relationships. GES serves corporate brand marketers when they exhibit at shows and when GES is engaged to manage their global exhibit program or produce their proprietary corporate events.
Pursuit
Pursuit is a collection of inspiring and unforgettable travel experiences that include recreational attractions, unique hotels and lodges, food and beverage, retail, sightseeing, and ground transportation services.
Impact of COVID-19
On March 11, 2020,2021, the World Health Organization declared COVID-19 a “pandemic.” COVID-19 has spread rapidly, with a high concentration of confirmed cases in the U.S. and other countries in which we operate. The rapid spread has resulted in authorities around the world implementing numerous measures to contain the virus, such as travel bans and restrictions, quarantines, shelter-in-place orders, and business shutdowns. The COVID-19 pandemic and these containment measures have had and are expected to continue to have, a substantial negative impact on businesses around the world and on global, regional, and national economies.
The COVID-19 pandemic is having and will likely continue to have a significant and negative impact on our operations and financial performance, with live events largely shut down and severe tourism activity disruptions. As a result,In response to the COVID-19 pandemic, we have takenimplemented aggressive cost reduction measures in 2020 to preserve cash, including furloughs, layoffs, mandatory unpaid time off or salary reductions for all employees, and the following measuresreduction of discretionary spending. We also suspended future dividend payments and share repurchases, and we availed ourselves of governmental assistance programs for wages and tax relief.
In August 2020, we secured additional capital to improvestrengthen our liquidity position and mitigate the negative financial impacts due to COVID-19:
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On August 5, 2020, we enteredby entering into an investment agreement with funds managed by private equity firm Crestview Partners (the “Investment Agreement”) who made an initial investment of $135 million, net of approximately $9offset in part by $9.2 million in fees, in newly issued perpetual convertible preferred stock that carries a 5.5% dividend, which is payable in cash or in-kind at Viad’s option (the “Convertible Preferred Stock”). The Convertiblestock. Refer to Note 15 – Common and Preferred Stock is convertible into shares of our common stock at a conversion pricethe Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of $21.25 per share. The Investment Agreement also includes a delayed draw commitment of up to $45 million in additional Convertible Preferred Stock, which we may access during the next 12 months on the same terms and conditions as the initial investment (subject to shareholder approval). The proceeds from Crestview’s initial investment will be used to repay a portion of our 2018 Credit Facility, provide additional short-term liquidity, fund capital expenditures, and support general corporate purposes. Pursuant to the Investment Agreement, two Crestview Partners’ designees joined our Board of Directors, increasing the size of our board from seven to nine directors. Onthis Form 10-Q) for further information. In August 5, 2020, we entered into an amendment toalso amended our Second Amended and Restated Credit Agreement (the “2018 Credit Agreement”), for our $450 million revolving credit facility (the “2018 Credit Facility”) to provide financial flexibility, which, among other things (i) waives our financial covenants until the endSeptember 30, 2022. Refer to Note 12 – Debt and Finance Lease Obligations of the third quarterNotes to Condensed Consolidated Financial Statements (Part I, Item 1 of 2022 (the “Covenant Waiver Period”) and (ii) requires us to maintain minimum liquidity of $125 million with a step down to $100 million at December 31, 2020. this Form 10-Q) for further information.
The interest rate on the borrowings is equal to LIBOR plus 350 basis points, with a LIBOR floor of one percent during the Covenant Waiver Period. The LIBOR floor continues until the endextent of the 2018 Credit Agreement. Additionally, we are precluded from paying cash dividends, from issuing unsecured debt,COVID-19 pandemic’s effect on our operational and from accessingfinancial performance will depend on future developments including the $250 million expansion feature during the Covenant Waiver Period. The amendment also allows us to make acquisitions under certain conditions. Viad pledged 100%duration, spread, and intensity of the capital stockvirus as well as the success of its top-tier foreign subsidiaries (other than Esja). Fees relatedvaccination efforts, all of which are uncertain and difficult to the amendment were approximately $1.6 million.
predict. Due to the deteriorating macroeconomic environment, disruptionsevolving and uncertain nature of COVID-19, we are not able at this time to fully estimate the effect of these factors on our business; however, the adverse impact on our business, results of operations, and the sustained decline in our stock price caused by COVID-19, we determined an interim triggering event had occurred in the first quarter of 2020, which required us to assess the carrying values of goodwill and intangible assets. Based on this assessment, we recorded a non-cash goodwill impairment charge of $72.7 million during the three months ended March 31, 2020 associated with the GES U.S., GES EMEA, and Pursuit’s Glacier Park Collection reporting units. Additionally, during the three months ended March 31, 2020, we recorded a non-cash impairment charge to other intangible assets of $15.7 million related to our U.S. audio-visual production business.
During the second quarter of 2020 and into July, GES continued to experience event postponements and cancellations and we experienced further declines in our stock price. Therecash flows has also been an increased spread of the COVID-19 virus throughout the United States, which resulted in further closures and governor orders that we believe have increased the uncertainty regarding when the live event industry will re-commence and how long it will take to get back to similar pre-COVID-19 business levels. The uncertainty regarding the duration of the current domestic and global economic conditions and whether further deterioration in the macroeconomic environmentmaterial. We will continue to evaluate and implement additional cost-cutting measures as a result ofare necessary to mitigate the COVID-19 pandemic was factored into our second quarter goodwill impairment analysis. As a result, we recorded a full impairment charge to the remaining GES goodwill balance of $113.1 million during the three months ended June 30, 2020. Our remaining goodwill balance as of June 30, 2020 of $95.2 million pertains to our
Pursuit business, which phased in most of its attractionsnegative financial and lodging operations in June and July of 2020. The duration andoperational impact of COVID-19 may result in additional future impairment charges as facts and circumstances evolve.on our business.
Seasonality
GES’ exhibition andlive event activity can vary significantly from quarter to quarter and year to year depending on the frequency and timing of shows. Some shows are not held annually and some shift between quarters. During 2019, GES reported its highest revenue duringShow rotation refers to shows that occur less frequently than annually, as well as annual shows that shift quarters from one year to the secondnext. Live event activity was largely cancelled or postponed after mid-March 2020 and fourth quarters.continuing into 2021 due to the COVID-19 pandemic.
Pursuit experiences peak activity during the summer months. During 2019, 85% ofWe experienced lower visitation to Pursuit’s revenue was earnedproperties in 2020 due to the secondCOVID-19 pandemic as travel restrictions and third quarters.
As a result of COVID-19 concerns, we continue to see event postponements and cancellations at GES, as well as some cancelled bookings at Pursuit. To help reduceborder closures largely remained in place. We seasonally closed Pursuit’s non-year-round properties during the spread of COVID-19, Pursuit’s year-round attractions and lodging properties were closed temporarily starting in mid-March and remained closed during most of the secondfirst quarter of 2020. As2021; however, temporary government mandated closures occurred at FlyOver Canada and stay-at-home orders were lifted, we began to restart our business with enhanced health and safety protocols in place. We phased in most of Pursuit’s attractions and lodging operations starting in May and continuing into July. However, exhibition and event activity remain largely closed. For GES, we believe that, as governments continue to lift restrictions, events in certain geographies will gradually increase and we stand ready to reactivate areas of that business when it makes sense to do so. Additionally, inFlyOver Iceland during the event of a future resurgence of the virus, we may be required to re-close certain attractions or events based on local or governmental restrictions implemented.first quarter.
The extent of the COVID-19 pandemic’s effect on our operational and financial performance will depend on future developments including the duration, spread, and intensity of the virus, all of which are uncertain and difficult to predict. Due to the speed with which the situation is developing, we are not able at this time to fully estimate the effect of these factors on our business, however, the adverse impact on our business, results of operations, and cash flows has been material. We will continue to evaluate and implement additional cost-cutting measures as are necessary to mitigate the negative financial and operational impact of COVID-19 on our business. For a discussion of the risks and uncertainties that may affect our business or financial results, refer to “Risk Factors” (Part II, Item 1A of this Form 10-Q).
Results of Operations
Financial Highlights
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| Three Months Ended |
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| Six Months Ended |
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| June 30, |
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| June 30, |
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(in thousands, except per share data) |
| 2020 |
|
| 2019 |
|
| % Change |
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| 2020 |
|
| 2019 |
|
| % Change |
| ||||||
Total revenue |
| $ | 30,863 |
|
| $ | 402,279 |
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| (92.3 | )% |
| $ | 336,871 |
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| $ | 687,873 |
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| (51.0 | )% |
Net income (loss) attributable to Viad |
| $ | (206,278 | ) |
| $ | 13,824 |
|
| ** |
|
| $ | (292,863 | ) |
| $ | (3,953 | ) |
| ** |
| ||
Segment operating income (loss) (1) |
| $ | (49,752 | ) |
| $ | 46,566 |
|
| ** |
|
| $ | (59,168 | ) |
| $ | 35,314 |
|
| ** |
| ||
Diluted income (loss) per common share from continuing operations attributable to Viad common stockholders |
| $ | (10.17 | ) |
| $ | 0.65 |
|
| ** |
|
| $ | (14.44 | ) |
| $ | (0.22 | ) |
| ** |
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| Three Months Ended |
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| March 31, |
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(in thousands, except per share data) |
| 2021 |
|
| 2020 |
|
| % Change |
| |||
Total revenue (1) |
| $ | 28,935 |
|
| $ | 294,658 |
|
|
| (90.2 | )% |
Net loss attributable to Viad |
| $ | (43,152 | ) |
| $ | (86,585 | ) |
|
| 50.2 | % |
Segment operating loss (2) |
| $ | (38,225 | ) |
| $ | (9,416 | ) |
| ** |
| |
Diluted loss per common share from continuing operations attributable to Viad common stockholders |
| $ | (2.23 | ) |
| $ | (4.27 | ) |
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| 47.8 | % |
** Change is greater than +/- 100%
(1) | As previously disclosed in our 2020 Form 10-K, we identified prior period errors related to the recognition of revenue of GES’ third-party services. Revenue from these services should have been recorded on a net basis to reflect only the fees received for arranging these services, whereas previously, we recorded this revenue on a gross basis, thus overstating revenue and cost of services by the same amount. As a result, GES’ 2020 revenue has been corrected to reflect this immaterial gross-to-net adjustment. Refer to Note 1 – Overview and Basis of Presentation of the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for additional information. |
(2) | Refer to Note 23 – Segment Information of the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for a reconciliation of the non-GAAP financial measure, segment operating loss, to the most directly comparable GAAP measure. |
| • | Total revenue decreased |
| • | Net loss attributable to Viad |
| • | Total segment operating loss |
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Foreign Exchange Rate Variances
We conduct our foreign operations primarily in Canada, the United Kingdom, Iceland, the Netherlands, Germany, and to a lesser extent, in certain other countries.
The following table summarizes the foreign exchange rate variance effects (or “FX Impact”) on revenue and segment operating income (loss)loss from our significant international operations for the three and six months ended June 30, 2020March 31, 2021 and 2019:
Three months ended June 30, 2020 compared with the three months ended June 30, 20192020:
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| 2019 |
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GES North America: |
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Canada (CAD) |
| $ | 0.72 |
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| $ | 0.75 |
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| $ | (30 | ) |
| $ | 0.72 |
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| $ | 0.75 |
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| $ | 49 |
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GES EMEA: |
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United Kingdom (GBP) |
| $ | 1.24 |
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| $ | 1.28 |
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| $ | (305 | ) |
| $ | 1.24 |
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| $ | 1.28 |
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| $ | (44 | ) |
Europe (EUR) |
| $ | 1.10 |
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| $ | 1.12 |
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| (14 | ) |
| $ | 1.10 |
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| $ | 1.12 |
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| 22 |
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| (319 | ) |
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| (22 | ) |
Pursuit: |
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Canada (CAD) |
| $ | 0.73 |
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| $ | 0.75 |
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| (47 | ) |
| $ | 0.72 |
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| $ | 0.75 |
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| 288 |
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| $ | (396 | ) |
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| $ | 315 |
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Six months ended June 30, 2020 compared with the six months ended June 30, 2019
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| Segment Operating Income (Loss) |
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| FX Impact |
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| 2020 |
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| 2019 |
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GES North America: |
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GES: |
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Canada (CAD) |
| $ | 0.73 |
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| $ | 0.75 |
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| $ | (364 | ) |
| $ | 0.73 |
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| $ | 0.75 |
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| $ | (31 | ) |
| $ | 0.79 |
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| $ | 0.73 |
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| $ | 54 |
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| $ | 0.79 |
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| $ | 0.73 |
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| $ | (50 | ) |
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|
|
|
|
|
| ||||||||||||||||||||||||
GES EMEA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
United Kingdom (GBP) |
| $ | 1.27 |
|
| $ | 1.29 |
|
| $ | (812 | ) |
| $ | 1.26 |
|
| $ | 1.29 |
|
| $ | (90 | ) |
| $ | 1.38 |
|
| $ | 1.28 |
|
|
| 158 |
|
| $ | 1.38 |
|
| $ | 1.28 |
|
|
| (180 | ) |
Europe (EUR) |
| $ | 1.10 |
|
| $ | 1.13 |
|
|
| (195 | ) |
| $ | 1.10 |
|
| $ | 1.13 |
|
|
| 27 |
|
| $ | 1.20 |
|
| $ | 1.10 |
|
|
| 20 |
|
| $ | 1.20 |
|
| $ | 1.10 |
|
|
| (71 | ) |
|
|
|
|
|
|
|
|
|
|
| (1,007 | ) |
|
|
|
|
|
|
|
|
|
| (63 | ) |
|
|
|
|
|
|
|
|
|
| 232 |
|
|
|
|
|
|
|
|
|
|
| (301 | ) |
Pursuit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canada (CAD) |
| $ | 0.75 |
|
| $ | 0.75 |
|
|
| (85 | ) |
| $ | 0.73 |
|
| $ | 0.75 |
|
|
| 380 |
|
| $ | 0.79 |
|
| $ | 0.75 |
|
| $ | 541 |
|
| $ | 0.79 |
|
| $ | 0.74 |
|
| $ | (509 | ) |
Iceland (ISK) |
| $ | 0.01 |
|
| $ | 0.01 |
|
|
| 2 |
|
| $ | 0.01 |
|
| $ | 0.01 |
|
|
| (33 | ) | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| $ | (1,456 | ) |
|
|
|
|
|
|
|
|
| $ | 286 |
|
|
|
|
|
|
|
|
|
| $ | 543 |
|
|
|
|
|
|
|
|
|
| $ | (542 | ) |
|
|
|
|
|
|
|
|
|
| $ | 775 |
|
|
|
|
|
|
|
|
|
| $ | (843 | ) |
Revenue and segment operating income (loss)loss were primarily impacted by variances of the British pound, the Canadian dollar, the Euro, and the EuroIcelandic krona relative to the U.S. dollar. Future changes in exchange rates may impact overall expected profitability and historical period-to-period comparisons when revenue and segment operating income (loss)loss are translated into U.S. dollars.
Analysis of Revenue and Operating Results by Reportable Segment
GES
During the first quarter of 2021, we reorganized GES’ operating segments to represent the changes in how our chief operating decision maker (“CODM”) reviews the financial performance of GES and makes decisions regarding the allocation of resources. Accordingly, GES is now a single reportable segment.
The following table presents a comparison of GES’ reported revenue and segment operating income (loss) to organic revenue(1)(1) and organic segment operating income (loss)(1) for the three and six months ended June 30, 2020March 31, 2021 and 2019.2020.
|
| Three Months Ended |
|
| Three Months Ended |
|
|
|
| |||||||||||||||||||||||||||
|
| June 30, 2020 |
|
| June 30, 2019 |
|
| Change vs. 2019 |
| |||||||||||||||||||||||||||
(in thousands) |
| As Reported |
|
| Acquisitions |
|
| FX Impact |
|
| Organic(1) |
|
| As Reported |
|
| Acquisitions |
|
| Organic(1) |
|
| As Reported |
|
| Organic(1) |
| |||||||||
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America |
| $ | 18,776 |
|
| $ | — |
|
| $ | (30 | ) |
| $ | 18,806 |
|
| $ | 283,682 |
|
| $ | — |
|
| $ | 283,682 |
|
|
| (93.4 | )% |
|
| (93.4 | )% |
EMEA |
|
| 7,808 |
|
|
| — |
|
|
| (319 | ) |
|
| 8,127 |
|
|
| 69,505 |
|
|
| — |
|
|
| 69,505 |
|
|
| (88.8 | )% |
|
| (88.3 | )% |
Intersegment eliminations |
|
| (985 | ) |
|
| — |
|
|
| — |
|
|
| (985 | ) |
|
| (6,317 | ) |
|
| — |
|
|
| (6,317 | ) |
|
| 84.4 | % |
|
| 84.4 | % |
Total GES |
| $ | 25,599 |
|
| $ | — |
|
| $ | (349 | ) |
| $ | 25,948 |
|
| $ | 346,870 |
|
| $ | — |
|
| $ | 346,870 |
|
|
| (92.6 | )% |
|
| (92.5 | )% |
Segment operating income (loss)(2): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America |
| $ | (29,174 | ) |
| $ | — |
|
| $ | 49 |
|
| $ | (29,223 | ) |
| $ | 30,589 |
|
| $ | — |
|
| $ | 30,589 |
|
| ** |
|
| ** |
| ||
EMEA |
|
| (2,886 | ) |
|
| — |
|
|
| (22 | ) |
|
| (2,864 | ) |
|
| 4,664 |
|
|
| — |
|
|
| 4,664 |
|
| ** |
|
| ** |
| ||
Total GES |
| $ | (32,060 | ) |
| $ | — |
|
| $ | 27 |
|
| $ | (32,087 | ) |
| $ | 35,253 |
|
| $ | — |
|
| $ | 35,253 |
|
| ** |
|
| ** |
|
|
| Six Months Ended |
|
| Six Months Ended |
|
|
|
| |||||||||||||||||||||||||||
|
| June 30, 2020 |
|
| June 30, 2019 |
|
| Change vs. 2019 |
| |||||||||||||||||||||||||||
(in thousands) |
| As Reported |
|
| Acquisitions |
|
| FX Impact |
|
| Organic(1) |
|
| As Reported |
|
| Acquisitions |
|
| Organic(1) |
|
| As Reported |
|
| Organic(1) |
| |||||||||
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America |
| $ | 270,534 |
|
| $ | — |
|
| $ | (364 | ) |
| $ | 270,898 |
|
| $ | 506,923 |
|
| $ | — |
|
| $ | 506,923 |
|
|
| (46.6 | )% |
|
| (46.6 | )% |
EMEA |
|
| 50,524 |
|
|
| — |
|
|
| (1,007 | ) |
|
| 51,531 |
|
|
| 123,881 |
|
|
| — |
|
|
| 123,881 |
|
|
| (59.2 | )% |
|
| (58.4 | )% |
Intersegment eliminations |
|
| (2,974 | ) |
|
| — |
|
|
| — |
|
|
| (2,974 | ) |
|
| (9,007 | ) |
|
| — |
|
|
| (9,007 | ) |
|
| 67.0 | % |
|
| 67.0 | % |
Total GES |
| $ | 318,084 |
|
| $ | — |
|
| $ | (1,371 | ) |
| $ | 319,455 |
|
| $ | 621,797 |
|
| $ | — |
|
| $ | 621,797 |
|
|
| (48.8 | )% |
|
| (48.6 | )% |
Segment operating income (loss)(2): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America |
| $ | (17,208 | ) |
| $ | — |
|
| $ | (31 | ) |
| $ | (17,177 | ) |
| $ | 31,197 |
|
| $ | — |
|
| $ | 31,197 |
|
| ** |
|
| ** |
| ||
EMEA |
|
| (3,994 | ) |
|
| — |
|
|
| (63 | ) |
|
| (3,931 | ) |
|
| 5,799 |
|
|
| — |
|
|
| 5,799 |
|
| ** |
|
| ** |
| ||
Total GES |
| $ | (21,202 | ) |
| $ | — |
|
| $ | (94 | ) |
| $ | (21,108 | ) |
| $ | 36,996 |
|
| $ | — |
|
| $ | 36,996 |
|
| ** |
|
| ** |
|
|
| Three Months Ended |
|
| Three Months Ended |
|
|
|
| |||||||||||||||||||||||||||
|
| March 31, 2021 |
|
| March 31, 2020 |
|
| Change vs. 2020 |
| |||||||||||||||||||||||||||
(in thousands) |
| As Reported |
|
| Acquisitions |
|
| FX Impact |
|
| Organic(2) |
|
| As Reported |
|
| Acquisitions |
|
| Organic(2) |
|
| As Reported |
|
| Organic(2) |
| |||||||||
Total GES revenue(1) |
| $ | 19,145 |
|
| $ | — |
|
| $ | 232 |
|
| $ | 18,913 |
|
| $ | 281,135 |
|
| $ | — |
|
| $ | 281,135 |
|
|
| (93.2 | )% |
|
| (93.3 | )% |
Total GES segment operating income (loss)(3) |
| $ | (19,904 | ) |
| $ | — |
|
| $ | (301 | ) |
| $ | (19,603 | ) |
| $ | 10,858 |
|
| $ | — |
|
| $ | 10,858 |
|
| ** |
|
| ** |
|
** Change is greater than +/- 100%
(1) | As previously disclosed in our 2020 Form 10-K, we identified prior period errors related to the recognition of revenue of GES’ third-party services. Revenue from these services should have been recorded on a net basis to reflect only the fees received for arranging these services, whereas previously, we recorded this revenue on a gross basis, thus overstating revenue and cost of services by the same amount. As a result, GES’ 2020 revenue has been corrected to reflect this immaterial gross-to-net adjustment. Refer to Note 1 – Overview and Basis of Presentation of the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for additional information. |
(2) | Organic revenue and organic segment operating income (loss) are non-GAAP financial measures that adjust for the impacts of exchange rate variances and acquisitions, if any, until such acquisitions are included in the entirety of both comparable periods presented. For more information about organic revenue and organic segment operating income (loss), see the “Non-GAAP Measures” section of this MD&A. |
| Refer to Note |
GES North Americarevenue decreased
GES North America revenue decreased $264.9 $262.0 million, or 93.4% during the three months ended June 30, 2020 and $236.4 million or 46.6% during the six months ended June 30, 2020, primarily due to show postponements and cancellations due toas a result of the COVID-19 pandemic as well as negative show rotationpandemic. Live events remained largely shut down during the first quarter of approximately $31 million during the three months ended June 30, 2020. During the six months ended June 30, 2020, we had positive show rotation of approximately $30 million.2021. Revenue earned during the second quarter2021 was primarily driven by compensation for workvirtual and hybrid events completed on cancelled shows and the conversion of convention centers into temporary hospitals in early April. Organic revenue* decreased $264.9 million or 93.4% during the three months ended June 30, 2020 and $236.0 million or 46.6% during the six months ended June 30, 2020.
GES North America segment operating loss was $29.2 million during the three months ended June 30, 2020 as compared to incomefirst quarter of $30.6 million during the three months ended June 30, 2019. Segment operating loss was $17.2 million during the six months ended June 30, 2020 as compared to income of $31.2 million during the six months ended June 30, 2019. The 2020 losses are primarily due to the decrease in revenue and the elimination of performance-based incentives. Organic segment operating loss* was $29.2 million during the three months ended June 30, 2020 as compared to income of $30.6 million during the three months ended June 30, 2019. Organic segment operating loss* was $17.2 million during the six months ended June 30, 2020 as compared to income of $31.2 million during the six months ended June 30, 2019.
GES EMEA
GES EMEA revenue decreased $61.7 million or 88.8% during the three months ended June 30, 2020 and $73.4 million or 59.2% during the six months ended June 30, 2020, primarily due to show postponements and cancellations due to the COVID-19 pandemic as well as negative show rotation of approximately $20 million for the three months ended June 30, 2020 and $25 million for the six months ended June 30, 2020 and unfavorable FX Impacts of $0.3 million during the three months ended June 30, 2020 and $1.0 million during the six months ended June 30, 2020.2021. Revenue earned during the second quarter2020 was primarily driven by shows completed during Q1 2020 before the onset of the pandemic and compensation for work completed on cancelled shows. Organic revenue* decreased $61.4 million or 88.3% during the three months ended June 30, 2020 and $72.4 million or 58.4% during the six months ended June 30, 2020.$262.2 million.
GES EMEA segment operating loss was $2.9$19.9 million during the three months ended June 30, 2020March 31, 2021 as compared to income of $4.7$10.9 million during the three months ended June 30, 2019. Segment operatingMarch 31, 2020. The 2021 loss was $4.0 million during the six months ended June 30, 2020 as compared to income of $5.8 million during the six months ended June 30, 2019. The 2020 losses areis primarily due to the decrease in revenue.revenue, offset in part by the reduction in operating costs by reducing wages and discretionary costs and a $9.1 million gain on sale of a GES warehouse in Orlando. Organic segment operating loss* was $2.9$19.6 million during the three months ended June 30, 2020March 31, 2021 as compared to
income of $4.7$10.9 million during the three months ended June 30, 2019. Organic segment operating loss* was $3.9 million during the six months ended June 30, 2020 as compared to income of $5.8 million during the six months ended June 30, 2019.March 31, 2020.
* Refer to footnote (1)(2) in the above table for more information about the non-GAAP financial measures of organic revenue and organic segment operating income (loss).loss.
Pursuit
The following table presents a comparison of Pursuit’s reported revenue and segment operating income (loss)loss to organic revenue(3)(3) and organic segment operating loss(3) for the three and six months ended June 30, 2020March 31, 2021 and 2019.2020.
|
| Three Months Ended |
|
| Three Months Ended |
|
|
|
| |||||||||||||||||||||||||||
|
| June 30, 2020 |
|
| June 30, 2019 |
|
| Change vs. 2019 |
| |||||||||||||||||||||||||||
(in thousands) |
| As Reported |
|
| Acquisitions(2) |
|
| FX Impact |
|
| Organic(3) |
|
| As Reported |
|
| Acquisitions |
|
| Organic(3) |
|
| As Reported |
|
| Organic(3) |
| |||||||||
Revenue(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pursuit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attractions |
| $ | 2,164 |
|
| $ | — |
|
| $ | (30 | ) |
| $ | 2,194 |
|
| $ | 29,836 |
|
| $ | — |
|
| $ | 29,836 |
|
|
| (92.7 | )% |
|
| (92.6 | )% |
Hospitality |
|
| 2,998 |
|
|
| 1,104 |
|
|
| (17 | ) |
|
| 1,911 |
|
|
| 20,587 |
|
|
| 3,018 |
|
|
| 17,569 |
|
|
| (85.4 | )% |
|
| (89.1 | )% |
Transportation |
|
| 14 |
|
|
| — |
|
|
| 1 |
|
|
| 13 |
|
|
| 4,007 |
|
|
| — |
|
|
| 4,007 |
|
|
| (99.7 | )% |
|
| (99.7 | )% |
Travel Planning |
|
| 2 |
|
|
| — |
|
|
| — |
|
|
| 2 |
|
|
| 1,150 |
|
|
| — |
|
|
| 1,150 |
|
|
| (99.8 | )% |
|
| (99.8 | )% |
Intra-Segment Eliminations & Other |
|
| 86 |
|
|
| — |
|
|
| (1 | ) |
|
| 87 |
|
|
| (171 | ) |
|
| — |
|
|
| (171 | ) |
| ** |
|
| ** |
| ||
Total Pursuit |
| $ | 5,264 |
|
| $ | 1,104 |
|
| $ | (47 | ) |
| $ | 4,207 |
|
| $ | 55,409 |
|
| $ | 3,018 |
|
| $ | 52,391 |
|
|
| (90.5 | )% |
|
| (92.0 | )% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating income (loss)(4): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Pursuit |
| $ | (17,692 | ) |
| $ | (1,787 | ) |
| $ | 288 |
|
| $ | (16,193 | ) |
| $ | 11,313 |
|
| $ | — |
|
| $ | 11,313 |
|
| ** |
|
| ** |
|
|
| Six Months Ended |
|
| Six Months Ended |
|
|
|
|
| Three Months Ended |
|
| Three Months Ended |
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| June 30, 2020 |
|
| June 30, 2019 |
|
| Change vs. 2019 |
|
| March 31, 2021 |
|
| March 31, 2020 |
|
| Change vs. 2020 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
(in thousands) |
| As Reported |
|
| Acquisitions(2) |
|
| FX Impact |
|
| Organic(3) |
|
| As Reported |
|
| Acquisitions |
|
| Organic(3) |
|
| As Reported |
|
| Organic(3) |
|
| As Reported |
|
| Acquisitions(2) |
|
| FX Impact |
|
| Organic(3) |
|
| As Reported |
|
| Acquisitions(2) |
|
| Organic(3) |
|
| As Reported |
|
| Organic(3) |
| ||||||||||||||||||
Revenue(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||
Revenue(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||
Pursuit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attractions |
| $ | 7,442 |
|
| $ | — |
|
| $ | (44 | ) |
| $ | 7,486 |
|
| $ | 34,504 |
|
| $ | — |
|
| $ | 34,504 |
|
|
| (78.4 | )% |
|
| (78.3 | )% |
| $ | 2,256 |
|
| $ | — |
|
| $ | 127 |
|
| $ | 2,129 |
|
| $ | 5,278 |
|
| $ | — |
|
| $ | 5,278 |
|
|
| (57.3 | )% |
|
| (59.7 | )% |
Hospitality |
|
| 8,979 |
|
|
| 4,044 |
|
|
| (28 | ) |
|
| 4,963 |
|
|
| 24,251 |
|
|
| 3,018 |
|
|
| 21,233 |
|
|
| (63.0 | )% |
|
| (76.6 | )% |
|
| 6,941 |
|
|
| — |
|
|
| 393 |
|
|
| 6,548 |
|
|
| 5,981 |
|
|
| — |
|
|
| 5,981 |
|
|
| 16.1 | % |
|
| 9.5 | % |
Transportation |
|
| 2,160 |
|
|
| — |
|
|
| (11 | ) |
|
| 2,171 |
|
|
| 6,157 |
|
|
| — |
|
|
| 6,157 |
|
|
| (64.9 | )% |
|
| (64.7 | )% |
|
| 533 |
|
|
| — |
|
|
| 31 |
|
|
| 502 |
|
|
| 2,146 |
|
|
| — |
|
|
| 2,146 |
|
|
| (75.2 | )% |
|
| (76.6 | )% |
Travel Planning |
|
| 201 |
|
|
| — |
|
|
| (2 | ) |
|
| 203 |
|
|
| 1,597 |
|
|
| — |
|
|
| 1,597 |
|
|
| (87.4 | )% |
|
| (87.3 | )% |
|
| 60 |
|
|
| — |
|
|
| 4 |
|
|
| 56 |
|
|
| 199 |
|
|
| — |
|
|
| 199 |
|
|
| (69.8 | )% |
|
| (71.9 | )% |
Intra-Segment Eliminations & Other |
|
| 5 |
|
|
| — |
|
|
| — |
|
|
| 5 |
|
|
| (433 | ) |
|
| — |
|
|
| (433 | ) |
| ** |
|
| ** |
|
|
| — |
|
|
| — |
|
|
| (12 | ) |
|
| 12 |
|
|
| (81 | ) |
|
| — |
|
|
| (81 | ) |
|
| (100.0 | )% |
| ** |
| |||
Total Pursuit |
| $ | 18,787 |
|
| $ | 4,044 |
|
| $ | (85 | ) |
| $ | 14,828 |
|
| $ | 66,076 |
|
| $ | 3,018 |
|
| $ | 63,058 |
|
|
| (71.6 | )% |
|
| (76.5 | )% |
| $ | 9,790 |
|
| $ | — |
|
| $ | 543 |
|
| $ | 9,247 |
|
| $ | 13,523 |
|
| $ | — |
|
| $ | 13,523 |
|
|
| (27.6 | )% |
|
| (31.6 | )% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating loss(4): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
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|
| ||||||||||||||||||||||||||||||||||||
Segment operating loss(4): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||
Total Pursuit |
| $ | (37,966 | ) |
| $ | (4,254 | ) |
| $ | 380 |
|
| $ | (34,092 | ) |
| $ | (1,682 | ) |
| $ | — |
|
| $ | (1,682 | ) |
| ** |
|
| ** |
|
| $ | (18,321 | ) |
| $ | (75 | ) |
| $ | (542 | ) |
| $ | (17,704 | ) |
| $ | (20,274 | ) |
| $ | — |
|
| $ | (20,274 | ) |
|
| 9.6 | % |
|
| 12.7 | % |
(1) | Revenue by line of business does not agree to Note 2 – Revenue and Related Contract Costs and Contract Liabilities in the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) as the amounts in the above table include product revenue from food and beverage and retail operations within each line of business. |
(2) | Acquisitions include |
(3) | Organic revenue and organic segment operating |
(4) | Refer to Note |
Pursuit revenue decreased $50.1$3.7 million or 90.5%27.6%, primarily due to the impact of the COVID-19 pandemic as travel restrictions and border closures largely remained in place throughout the first quarter of 2021. Most of Pursuit’s year-round attractions and properties were open during the first quarter of 2021, although there was lower visitation due in part to capacity restrictions in addition to temporary government mandated closures at FlyOver Canada and FlyOver Iceland. In 2020, Pursuit temporarily closed its properties
in mid-March 2020 through the end of the first quarter of 2020. Organic revenue* decreased $4.3 million or 31.6% during the three months ended June 30, 2020 and $47.3 million or 71.6% during the six months ended June 30, 2020, primarily due to temporary closure of Pursuit’s properties due to the COVID-19 pandemic, offset in part by incremental revenue from the Mountain Park Lodges acquisition of $1.1 million and $4.0 million during the three and six months ended June 30, 2020, respectively. Organic revenue* decreased $48.2 million or 92.0% during the three months ended June 30, 2020 and $48.2 million or 76.5% during the six months ended June 30, 2020.March 31, 2021.
Pursuit segment operating loss was $17.7improved $2.0 million during the three months ended June 30, 2020 as compared to income of $11.3 million during the three months ended June 30, 2019. Segment operating loss increased $36.3 million during the six months ended June 30, 2020 as compared to the six months ended June 30, 2019. The 2020 losses areor 9.6%, primarily due to the decreasereduction in revenue.operating costs through efforts to maximize profitability in addition to wage subsidies granted by the Canadian government. Organic segment operating loss* was $16.2 million during the three months ended June 30, 2020 as compared to income of $11.3 million during the three months ended June 30, 2019. Organic segment operating loss* increased $32.4 million during the six months ended June 30, 2020 as compared to the six months ended June 30, 2019.decreased $2.6 million.
* Refer to footnote (3) in the above table for more information about the non-GAAP financial measures of organic revenue and organic segment operating loss.
Performance Measures
We use the following key business metrics to evaluate the performance of Pursuit’s attractions business:
| • | Number of visitors. The number of visitors allows us to assess the volume of tickets sold at each attraction during the period. |
| • | Revenue per attraction visitor. Revenue per attraction visitor is calculated as total attractions revenue divided by the total number of visitors 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 visitor measures the total spend per visitor that attraction properties are able to capture, which is important to the profitability of the attractions business. |
| • | Effective ticket price. Effective ticket price is calculated as revenue from the sale of attraction tickets divided by the total number of visitors at all comparable Pursuit attractions during the period. |
We use the following key business metrics, common in the hospitality industry, to evaluate Pursuit’s hospitality business:
| • | Revenue per Available Room. 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. 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 realize. Increases in ADR 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 increases in ancillary non-rooms revenue (including food and beverage and retail revenue). |
The following table provides Pursuit’s same-store key performance indicators. The same-store metrics indicate the performance of all Pursuit’s properties and attractions that we owned and operated at full capacity, considering seasonal closures, for the entirety of both periods presented. For Pursuit properties and attractions located outside of the U.S.,United States, comparisons to the prior year are on a constant U.S. dollar basis, using the current year quarterly average exchange rates for previous periods, to eliminate the FX Impact. We believe this same-store constant currency basis provides better comparability between reporting periods.
|
| Three Months Ended |
|
| Six Months Ended |
|
| Three Months Ended |
| |||||||||||||||||||||||||||
|
| June 30, |
|
| June 30, |
|
| March 31, |
| |||||||||||||||||||||||||||
|
| 2020 |
|
| 2019 |
|
| % Change |
|
| 2020 |
|
| 2019 |
|
| Change vs. 2019 |
|
| 2021 |
|
| 2020 |
|
| Change vs. 2020 |
| |||||||||
Same-Store Key Performance Indicators |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attractions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of visitors |
|
| 36,574 |
|
|
| 650,724 |
|
|
| (94.4 | )% |
|
| 144,785 |
|
|
| 801,890 |
|
|
| (81.9 | )% |
|
| 57,486 |
|
|
| 163,754 |
|
|
| (64.9 | )% |
Revenue per attraction visitor |
| $ | 48 |
|
| $ | 45 |
|
|
| 6.7 | % |
| $ | 37 |
|
| $ | 42 |
|
|
| (11.9 | )% |
| $ | 38 |
|
| $ | 33 |
|
|
| 15.2 | % |
Effective ticket price |
| $ | 32 |
|
| $ | 35 |
|
|
| (8.6 | )% |
| $ | 26 |
|
| $ | 33 |
|
|
| (21.2 | )% |
| $ | 27 |
|
| $ | 26 |
|
|
| 3.8 | % |
Hospitality: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Room nights available |
|
| 13,540 |
|
|
| 78,792 |
|
|
| (82.8 | )% |
|
| 49,305 |
|
|
| 118,572 |
|
|
| (58.4 | )% |
|
| 107,021 |
|
|
| 91,419 |
|
|
| 17.1 | % |
RevPAR |
| $ | 32 |
|
| $ | 125 |
|
|
| (74.4 | )% |
| $ | 50 |
|
| $ | 102 |
|
|
| (51.0 | )% |
| $ | 43 |
|
| $ | 50 |
|
|
| (14.0 | )% |
ADR |
| $ | 167 |
|
| $ | 200 |
|
|
| (16.5 | )% |
| $ | 109 |
|
| $ | 172 |
|
|
| (36.6 | )% |
| $ | 101 |
|
| $ | 102 |
|
|
| (1.0 | )% |
Occupancy |
|
| 18.9 | % |
|
| 62.5 | % |
|
| (43.6 | )% |
|
| 45.5 | % |
|
| 59.4 | % |
|
| (13.9 | )% |
|
| 43.1 | % |
|
| 48.4 | % |
|
| (5.3 | )% |
(1) |
|
| The rooms that were out of service as a result of property closures due to the COVID-19 pandemic were excluded from room nights available when calculating hospitality RevPAR and occupancy. |
For the health and well-being of our employees, guests, and community, Pursuit’s year-round attractions and lodging properties were closed temporarily starting in mid-March 2020 and remained closed during mostthe remainder of the secondfirst quarter of 2020. On May 8, 2020, we re-opened FlyOver Iceland, andWe seasonally closed Pursuit’s non-year-round properties during June and Julythe first quarter of 2020, the majority of Pursuit’s properties were re-opened. St. Mary Lodge and Glacier Park Lodge remain closed due to a government-imposed closure at the East Glacier entrance at Glacier National Park. In order to mitigate the negative financial and operational impacts, we have eliminated all non-essential capital expenditures. This has resulted in the delay of the opening of FlyOver Canada Toronto, which is now anticipated to open in 2023. FlyOver Las Vegas and the Sky Lagoon are still on track to open in 2021.
Attractions. The decrease in same-store visitors was driven by lower visitation due to the temporary closure of our attractions in March 2020continued border closures and travel restrictions as a result of COVID-19.the COVID-19 pandemic in addition to the temporary government mandated closures at FlyOver Canada and FlyOver Iceland during the first quarter of 2021. Revenue per attraction visitor increased during the three months ended June 30, 2020 primarily driven by product mix.due to higher effective ticket prices and ancillary revenue.
Hospitality. Room nights available increased as most of Pursuit’s year-round properties were open during the first quarter of 2021 whereas in 2020, Pursuit temporarily closed its properties in mid-March 2020 through the end of the first quarter of 2020. The decrease in RevPAR and ADR was primarily driven by lower demand at the Mount Royal Hotel and Elk + Avenue Hotel in Banff as a result of COVID-19.the COVID-19 pandemic.
During 2019, Pursuit derived approximately 66% of its revenue and 88% of its segment operating income from its Canadian operations, which areis largely dependent on foreign customer visitation. Accordingly,Travel restrictions and border closures due to the reopening of borders andCOVID-19 pandemic have negatively affected long-haul travelers to Canada. Additionally, the strengthening or weakening of the Canadian dollar, relative to other currencies could affect customer volumes and the results of operations.
Other Expenses
|
| Three Months Ended |
|
|
|
|
|
| Six Months Ended |
|
|
|
|
|
| Three Months Ended |
|
|
|
|
| |||||||||||||||
|
| June 30, |
|
|
|
|
|
| June 30, |
|
|
|
|
|
| March 31, |
|
|
|
|
| |||||||||||||||
(in thousands) |
| 2020 |
|
| 2019 |
|
| % Change |
|
| 2020 |
|
| 2019 |
|
| Change vs. 2019 |
|
| 2021 |
|
| 2020 |
|
| Change vs. 2020 |
| |||||||||
Corporate activities |
| $ | 2,468 |
|
| $ | 3,282 |
|
|
| (24.8 | )% |
| $ | 3,257 |
|
| $ | 5,115 |
|
|
| (36.3 | )% |
| $ | 2,005 |
|
| $ | 789 |
|
| ** |
| |
Interest expense |
| $ | 5,186 |
|
| $ | 2,957 |
|
|
| 75.4 | % |
| $ | 9,204 |
|
| $ | 5,872 |
|
|
| 56.7 | % |
| $ | 5,118 |
|
| $ | 4,018 |
|
|
| 27.4 | % |
Multi-employer pension plan withdrawal |
| $ | 462 |
|
| $ | 15,508 |
|
|
| (97.0 | )% |
| $ | 462 |
|
| $ | 15,508 |
|
|
| (97.0 | )% | ||||||||||||
Other expense, net |
| $ | 360 |
|
| $ | 419 |
|
|
| (14.1 | )% | ||||||||||||||||||||||||
Restructuring charges |
| $ | 260 |
|
| $ | 4,455 |
|
|
| (94.2 | )% |
| $ | 1,111 |
|
| $ | 5,143 |
|
|
| (78.4 | )% |
| $ | 2,826 |
|
| $ | 851 |
|
| ** |
| |
Legal settlement |
| $ | — |
|
| $ | — |
|
| ** |
|
| $ | — |
|
| $ | 8,500 |
|
|
| (100.0 | )% | |||||||||||||
Impairment charges |
| $ | 114,020 |
|
| $ | — |
|
| ** |
|
| $ | 202,400 |
|
| $ | — |
|
| ** |
|
| $ | — |
|
| $ | 88,380 |
|
|
| (100.0 | )% | ||
Income tax expense (benefit) |
| $ | 35,516 |
|
| $ | 6,565 |
|
| ** |
|
| $ | 19,719 |
|
| $ | (1,030 | ) |
| ** |
| ||||||||||||||
Income tax benefit |
| $ | (3,045 | ) |
| $ | (15,797 | ) |
|
| 80.7 | % | ||||||||||||||||||||||||
Income (loss) from discontinued operations |
| $ | (379 | ) |
| $ | 460 |
|
| ** |
|
| $ | (833 | ) |
| $ | 173 |
|
| ** |
|
| $ | 348 |
|
| $ | (454 | ) |
| ** |
|
** Change is greater than +/- 100%
Corporate Activities – The decreaseincrease in corporate activities expense during the three and six months ended June 30, 2020 relative to 2019March 31, 2021 was primarily due to lower headcount and lower performance-based compensation expense in 2020 as we reduced our estimated performance achievement to zero as a result of COVID-19.COVID-19, offset in part by lower headcount in 2021.
Interest Expense – The increase in interest expense during the three and six months ended June 30, 2020March 31, 2021 was primarily due to higher debt balances in 2020.
Multi-employer pension plan withdrawal – During 2019, we finalized the terms of a new collective-bargaining agreement with the Teamsters 727 union. The terms included a withdrawal from the under-funded Central States Pension Plan. Accordingly, we recorded a charge of $15.5 million, which represented the estimated present value of future contributions we will be required to make to the plan as a result of this withdrawal from the plan. Additionally, in 2020 we recorded $0.5 million related to the withdrawal from one of our multi-employer plans.2021.
Restructuring Charges – Restructuring charges during the three and six months ended June 30,March 31, 2021 were primarily related to facility closures at GES. In response to the COVID-19 pandemic in 2020, we accelerated our transformation and 2019streamlining efforts at GES to significantly reduce costs and create a lower and more flexible cost structure focused on servicing our more profitable market segments. Restructuring charges during the three months ended March 31, 2020 were primarily related to the elimination of certain positions at GES and Viad’sour corporate office.
Legal Settlement – Duringoffice in response to the six months ended June 30, 2019,COVID-19 pandemic. In the fourth quarter of 2020, we recordedentered into an agreement with a chargethird-party to resolveoutsource the management, cleaning, and storage of the aisle carpeting we use at live events and consequently vacated a legal dispute at GES involving a former industry contractor.facility during the first quarter of 2021.
Impairment Charges – Due to the impactdeteriorating macroeconomic environment related to the COVID-19 pandemic, resulting in disruptions to our operations and the decline in our stock price, we recorded non-cash goodwill impairment charges of COVID-19 on our business, we performed interim evaluations of goodwill as of$72.7 million during the three months ended March 31, 2020 related to GESand June 30, 2020. During the first quarter of 2020, we recorded a non-cash goodwill impairment charge of $72.7 million associated with GES U.S., GES EMEA, and Pursuit’s Glacier Park Collection reporting units and we recorded a non-cash impairment charge to other intangible assets of $15.7 million related to our U.S.GES’ United States audio-visual production business. During the second quarter of 2020, we recorded a full impairment charge to the remaining GES goodwill balance of $113.1 million in addition to a fixed asset impairment charge of $0.9 million.business.
Income Tax Benefit – The effective tax rate was a negative 20.6%6.3% for the three months ended June 30, 2020March 31, 2021 and 32.8%15.2% for the three months ended June 30, 2019. March 31, 2020. The effective tax rate was a negative 7.1% for the six months ended June 30, 2020 and 18.7% for the six months ended June 30, 2019. The negative effective tax rates for the three and six months ended June 30, 2020 were due toMarch 31, 2021 was lower than the recordingblended statutory rate primarily as a result of a valuation allowance this quarter against our remaining U.S., UK,excluding the tax benefit on losses recognized in the United States, the United Kingdom and other European net deferred tax assets of $25.5 million, as well ascountries where we have a valuation allowance. The rate for the three months ended March 31, 2020 was lower than the blended statutory rate due to no tax benefitsbenefit recognized on non-deductiblesome of the goodwill impairments and losses recognized in those jurisdictions.impairments.
LossIncome (Loss) from Discontinued Operations – Income from discontinued operations during the three months ended March 31, 2021 was primarily due to an insurance recovery related to a previously sold operation, offset in part by legal expenses. Loss from discontinued operations during the three months ended March 31, 2020 and 2019 was primarily relateddue to legal expenses related to previously sold operations.
Liquidity and Capital Resources
We borrowed the remaining available capacity under the 2018 Credit Facility at the beginning of April 2020. Cash, and cash equivalents, and restricted cash were $154.2$37.9 million as of June 30, 2020,March 31, 2021, as compared to $62.0$42.0 million as of December 31, 2019.2020. Our total available liquidity was $219.1 million, including the available capacity on our 2018 Credit Facility of $139.4 million, unrestricted cash of $34.7 million, and an additional $45.0 million available through the delayed draw commitment from Crestview Partners. During the sixthree months ended June 30, 2020,March 31, 2021, we used net cash infrom operating activities of $31.2$32.7 million. In May 2020, we terminatedWe believe that our legacy life insurance policies on former employeesexisting sources of liquidity will be sufficient to fund operations and received $24.8 million.capital commitments, including approximately $60 million in capital expenditures in select maintenance and growth investments, for at least the next 12 months.
On August 5, 2020, we entered into an investment agreement with funds managed by private equity firm Crestview Partners (the “Investment Agreement”) who made an initial investment of $135 million, net of approximately $9offset in part by $9.2 million in fees, in newly issued perpetual convertible preferred stock that carries a 5.5% cumulative quarterly dividend, which is payable in cash or in-kind at Viad’s option (the “Convertible Preferred Stock”). The Convertible Preferred Stock is convertible into shares of our common stock at a conversion price of $21.25 per share. The Investment Agreement also includes a delayed draw commitment of up to $45 million in additional Convertible Preferred Stock, which we may access during the next 12 months following the August 5, 2020 closing date on the same terms and conditions as the initial investment (subject to shareholder approval).investment. The proceeds from Crestview’s initial investment will bewere used to repay a portion of our 2018 Credit Facility, provideproviding us additional short-term liquidity to fund capital expenditures, and to support general corporate purposes. On August 5, 2020, we entered into an amendment to our 2018 Credit Agreement, which, among other things, (i) waives our financial covenants until the end of the third quarter ofSeptember 30, 2022 (the “Covenant Waiver Period”) and (ii) requires us to maintain minimum liquidity of $125$100 million, with a step down to $100 million at December 31, 2020.liquidity defined as unrestricted cash and available capacity on our 2018 Credit Facility. The interest rate on the borrowings is equal to LIBORthe London Interbank Offered Rate (“LIBOR”) plus 350 basis points, with a LIBOR floor of one percent during the Covenant Waiver Period. The LIBOR floor continues until the end of the 2018 Credit Agreement. Additionally, we are precluded from paying cash dividends, from issuing unsecured debt, and from accessing the $250 million expansion feature during the Covenant Waiver Period. The amendment also allows us to make acquisitions under certain conditions. Viad pledged 100% of the capital stock of its wholly-owned domestic subsidiaries and its top-tier foreign subsidiaries (other than Esja)Esja Attractions ehf.). Fees related to the amendment were approximately $1.6$1.7 million.
As of June 30, 2020,March 31, 2021, we held approximately $47.9$32.0 million of our cash and cash equivalents outside of the United States, consisting of $15.6$17.8 million in Canada, $12.3$6.1 million in the United Kingdom, $9.9 million in the United Arab Emirates, $8.6$3.8 million in the Netherlands, and $1.5$4.3 million in certain other countries.
Cash Flows
Operating Activities
|
| Six Months Ended |
|
| Three Months Ended |
| ||||||||||
|
| June 30, |
|
| March 31, |
| ||||||||||
(in thousands) |
| 2020 |
|
| 2019 |
|
| 2021 |
|
| 2020 |
| ||||
Net loss |
| $ | (296,551 | ) |
| $ | (4,318 | ) |
| $ | (45,091 | ) |
| $ | (88,435 | ) |
Depreciation and amortization |
|
| 29,135 |
|
|
| 27,715 |
|
|
| 13,177 |
|
|
| 15,285 |
|
Deferred income taxes |
|
| 19,514 |
|
|
| 6,215 |
|
|
| (3,019 | ) |
|
| (15,799 | ) |
(Income) loss from discontinued operations |
|
| 833 |
|
|
| (173 | ) |
|
| (348 | ) |
|
| 454 |
|
Restructuring charges |
|
| 1,111 |
|
|
| 5,143 |
|
|
| 2,826 |
|
|
| 851 |
|
Legal settlement |
|
| — |
|
|
| 8,500 |
| ||||||||
Impairment charges |
|
| 202,400 |
|
|
| — |
|
|
| — |
|
|
| 88,380 |
|
Multi-employer pension plan withdrawal |
|
| 462 |
|
|
| 15,508 |
| ||||||||
Gains on dispositions of property and other assets |
|
| (9,250 | ) |
|
| (85 | ) | ||||||||
Share-based compensation expense (benefit) |
|
| 1,763 |
|
|
| (2,145 | ) | ||||||||
Other non-cash items |
|
| 8,809 |
|
|
| 6,113 |
|
|
| (171 | ) |
|
| 9,342 |
|
Changes in assets and liabilities |
|
| 3,122 |
|
|
| (25,166 | ) |
|
| 7,394 |
|
|
| (12,567 | ) |
Net cash (used in) provided by operating activities |
| $ | (31,165 | ) |
| $ | 39,537 |
| ||||||||
Net cash used in operating activities |
| $ | (32,719 | ) |
| $ | (4,719 | ) |
The main factors driving the increase in net cash used in operating activities of $70.7$28.0 million were netwas due to losses at GES and Pursuit due toas a result of the COVID-19 pandemic, offset in part by a favorable changereduction in working capital.capital needed to support lower business volumes and active working capital management.
Investing Activities
|
| Six Months Ended |
|
| Three Months Ended |
| ||||||||||
|
| June 30, |
|
| March 31, |
| ||||||||||
(in thousands) |
| 2020 |
|
| 2019 |
|
| 2021 |
|
| 2020 |
| ||||
Capital expenditures |
| $ | (32,516 | ) |
| $ | (46,517 | ) |
| $ | (9,371 | ) |
| $ | (23,246 | ) |
Cash surrender value of life insurance policies |
|
| 24,767 |
|
|
| — |
| ||||||||
Cash paid for acquisitions, net |
|
| — |
|
|
| (72,918 | ) |
|
| (7,415 | ) |
|
| — |
|
Proceeds from dispositions of property and other assets |
|
| 4,654 |
|
|
| 768 |
|
|
| 14,106 |
|
|
| 85 |
|
Net cash used in investing activities |
| $ | (3,095 | ) |
| $ | (118,667 | ) |
| $ | (2,680 | ) |
| $ | (23,161 | ) |
NetThe decrease in net cash used in investing activities decreased $115.6of $20.5 million was primarily due to proceeds from the terminationsale of our life insurance policies,a GES warehouse in Orlando during the first quarter of 2021 and a decrease in capital expenditures in 2020, and cash paid for acquisitions in 2019.expenditures.
Financing Activities
|
| Six Months Ended |
|
| Three Months Ended |
| ||||||||||
|
| June 30, |
|
| March 31, |
| ||||||||||
(in thousands) |
| 2020 |
|
| 2019 |
|
| 2021 |
|
| 2020 |
| ||||
Proceeds from borrowings |
| $ | 192,111 |
|
| $ | 133,827 |
|
| $ | 40,860 |
|
| $ | 160,755 |
|
Payments on debt and finance lease obligations |
|
| (56,078 | ) |
|
| (47,862 | ) |
|
| (8,310 | ) |
|
| (56,077 | ) |
Dividends paid on common stock |
|
| (4,064 | ) |
|
| (4,034 | ) |
|
| — |
|
|
| (2,038 | ) |
Distributions to noncontrolling interest |
|
| (1,526 | ) |
|
| — |
| ||||||||
Distributions to noncontrolling interest, net of contributions from noncontrolling interest |
|
| (809 | ) |
|
| (1,526 | ) | ||||||||
Payment of payroll taxes on stock-based compensation through shares withheld or repurchased |
|
| (1,062 | ) |
|
| (2,994 | ) |
|
| (519 | ) |
|
| (1,059 | ) |
Common stock purchased for treasury |
|
| (2,785 | ) |
|
| — |
|
|
| — |
|
|
| (2,785 | ) |
Proceeds from exercise of stock options |
|
| 2,077 |
|
|
| 92 |
|
|
| — |
|
|
| 2,077 |
|
Net cash provided by financing activities |
| $ | 128,673 |
|
| $ | 79,029 |
|
| $ | 31,222 |
|
| $ | 99,347 |
|
CashThe decrease in net cash provided by financing activities increased $49.6of $68.1 million was primarily due to net debt proceeds of $32.6 million during the borrowingsthree months ended March 31, 2021 compared to net debt proceeds of $104.7 million during the three months ended March 31, 2020 under the 2018 Credit Facility as a proactive measure to increase our cash position and preserve financial flexibility in light of current uncertainty in the global markets resulting from COVID-19, offset in part by the repurchase of treasury shares on the open market in 2020.Facility.
Debt and Finance Lease Obligations
Refer to Note 12 – Debt and Finance Lease 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
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. DuringIn March 2020, our Board of Directors suspended our share repurchase program for the six months ended June 30, 2020,foreseeable future. Prior to the suspension, we repurchased 53,784 shares on the open market for $2.8 million. No shares were repurchased on the open marketmillion during the sixthree months ended June 30, 2019.March 31, 2020. As of June 30, 2020,March 31, 2021, 546,283 shares remained available for repurchase. The Board of Directors’ authorization does not have an expiration date.
Additionally, we repurchased shares related to tax withholding requirements on vested restricted share-based awards.
In March 2020, our Board of Directors suspended our share repurchase program for the foreseeable future.
Off-Balance Sheet Arrangements
We have not entered into any off-balance sheet arrangements with unconsolidated special-purpose or other entities that would materially affect our financial position, results of operations, liquidity, or capital resources. Furthermore, we do not have any relationships with special-purpose or other entities that provide off-balance sheet financing; liquidity, market risk, or credit risk support; or engage in leasing or other services that may expose us to liability or risks of loss that are not reflected in the condensed consolidated financial statements and related notes. Refer to Note 12 – Debt and Finance Lease Obligations, Note 19 – Leases and Other, and Note 20 – Litigation, Claims, Contingencies, and Other of the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this quarterly report on Form 10-Q) for further information, which information is incorporated by reference herein.
Critical Accounting Policies and Estimates
Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (Part II, Item 7) of our 20192020 Form 10-K, for a discussion of our critical accounting policies and estimates.
Impact of Recent Accounting Pronouncements
Refer to Note 1 – Overview and Basis of Presentation of the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for further information.
Non-GAAP Measures
In addition to disclosing financial results that are determined in accordance with U.S. generally accepted accounting principles (“GAAP”), we also disclose the following non-GAAP financial measures: Segment operating income (loss), organic revenue, and organic segment operating income (loss) (collectively, the “Non-GAAP Measures”). Our use of Non-GAAP Measures 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, our Non-GAAP Measures may not be comparable to similarly titled measures used by other companies. We believe that our use of Non-GAAP Measures provides useful information to investors regarding our results of operations for trending, analyzing, and benchmarking our performance and the value of our business.
| • | “Segment operating income (loss)” is net loss attributable to Viad before loss from discontinued operations, corporate activities, interest expense and interest income, income taxes, restructuring charges, impairment charges, and the reduction for income attributable to noncontrolling interest. Segment operating income (loss) is used to measure the profit and performance of our operating segments to facilitate period-to-period comparisons. Refer to Note |
| • | “Organic revenue” and “organic segment operating income (loss)” are revenue and segment operating income (loss) (as defined above), respectively, without the impact of exchange rate variances and acquisitions, if any, until such acquisitions are included in the entirety of both comparable periods. The impact of exchange rate variances is calculated as the difference between current period activity translated at the current period’s exchange rates and the comparable prior period’s exchange rates. We believe the presentation of “organic” results permits investors to better understand our performance without the effects of exchange rate variances or acquisitions and to facilitate period-to-period comparisons and analysis of our operating |
performance. Refer to the “Results of Operations” section of this MD&A for reconciliations of organic revenue and organic segment operating income (loss) to the most directly comparable GAAP measures. |
We believe non-GAAP Measures are useful operating metrics as they eliminate potential variations arising from taxes, debt service costs, impairment charges, and the effects of discontinued operations, resulting in additional measures considered to be indicative of our ongoing operations and segment performance. Although we use Non-GAAP Measures to assess the performance of our business, the use of these measures is limited because these measures do not consider material costs, expenses, and other items necessary to operate our business. These items include debt service costs, expenses related to U.S. federal, state, local and foreign income taxes, impairment charges, and the effects of discontinued operations. As the Non-GAAP Measures do not consider these items, you should consider net income attributable to Viad as an important measure of financial performance because it provides a more complete measure of our performance.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Our market risk exposure relates to fluctuations in foreign exchange rates and interest rates. Foreign exchange risk is the risk that fluctuating exchange rates will adversely affect our financial condition or results of operations. Interest rate risk is the risk that changing interest rates will adversely affect our financial position or results of operations.
Our foreign operations are primarily in Canada, the United Kingdom, Iceland, the Netherlands, and Germany. The functional currency of our foreign subsidiaries is their local currency. Accordingly, for purposes of consolidation, we translate the assets and liabilities of our 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 lossincome (loss) in the Condensed Consolidated Balance Sheets. As a result, significant fluctuations in foreign exchange rates relative to the U.S. dollar may result in material changes to our net equity position reported in the Condensed Consolidated Balance Sheets. We do not currently hedge our equity risk arising from the translation of foreign denominated assets and liabilities. We recorded cumulative unrealized foreign currency translation losses in stockholders’ equity of $42.2$12.7 million as of June 30, 2020March 31, 2021 and $23.8$16.7 million as of December 31, 2019.2020. We recorded unrealized foreign currency translation lossesgains in other comprehensive income of $18.4$4.0 million during the sixthree months ended June 30, 2020March 31, 2021 and unrealized foreign currency translation gainslosses of $9.1$28.2 million during the sixthree months ended June 30, 2019.March 31, 2020.
For purposes of consolidation, revenue, expenses, gains, and losses related to our foreign operations are translated into U.S. dollars at the average foreign exchange rates for the period. As a result, our consolidated results of operations are exposed to fluctuations in foreign exchange rates as revenue and segment operating income (loss) of our 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. We do not currently hedge our net earnings exposure arising from the translation of our foreign revenue and segment operating income (loss). Refer to “Foreign Exchange Rate Variances” section of this MD&A.
We are exposed to foreign exchange transaction risk, as our foreign subsidiaries have certain revenue transactions denominated in currencies other than the functional currency of the respective subsidiary. From time to time, we utilize forward contracts to mitigate the impact on earnings related to these transactions due to fluctuations in foreign exchange rates. As of June 30, 2020March 31, 2021 and December 31, 2019,2020, we did not have any outstanding foreign currency forward contracts.
We are exposed to short-term and long-term interest rate risk on certain of our debt obligations.
We do not currently use derivative financial instruments to hedge cash flows for such obligations.
Item 4. Controls and Procedures
We have established disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate to allow 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, 2020.March 31, 2021. Based on this evaluation, the CEO and CFO concluded that our disclosure controls and procedures were effective as of June 30, 2020.March 31, 2021.
There were no changes in our internal control over financial reporting during the three months ended June 30, 2020March 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Refer to Note 2021 – 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 our legal proceedings that is incorporated by reference herein.proceedings.
Item 1A. Risk Factors
Our operationsIn addition to other information set forth in this report, careful consideration should be given to the factors discussed in Part I, Item 1A – Risk Factors and financial results are subject to knownPart II, Item 7 – Management’s Discussion and unknown risks. As a result, past financial performanceAnalysis of Financial Condition and historical trends may not be reliable indicatorsResults of Operations of our future performance.
The recent COVID-19 pandemic and related responsive actions have adversely affected our financial condition, liquidity and cash flow, and may continue to do so in the future. The COVID-19 pandemic forced the cancellation of many of our events and the closure of substantially all of our attractions, hotels, and other operations. The substantial reduction in our operations will result in near-term losses and negative cash flow from operations. The full impact of the pandemic on our longer-term operational and financial performance is highly uncertain and will depend on future developments that we cannot predict, including the duration and spread of the pandemic, any future resurgence of COVID-19, and related social-distancing orders, travel restrictions, and/or government limitations on group gatherings. Our GES business depends on exhibitions, conferences, and other live events and the size of marketing expenditures relating to those events. The continuation of government orders prohibiting large group gatherings will continue to significantly and adversely affect our revenue and results of operations. Even if exhibitions or other live events do occur, we also2020 Form 10-K, which could suffer from reduced spending for our services because many exhibitors’ marketing budgets are partly discretionary and are frequently among the first expenditures reduced when economic conditions deteriorate, and people may be unwilling to attend large group events. In addition, the attractions and hospitality operations within our Pursuit business may be subject to government closure orders designed to limit the spread of COVID-19, which adversely affects our profitability and cash flow. Future revenue from our Pursuit operations will depend on any further spread of the pandemic, our ability to keep our operations open, the willingness of people to travel to our locations, and the amount of disposable income that consumers have available for travel and vacations, which decreases during periods of weak general economic conditions. Both our GES and Pursuit businesses may also experience increased costs in order to supply our customers or guests with personal protection equipment, conduct comprehensive cleaning regiments, and other measures that we determine are in the best interests of our employees, customers, guests, and/or event participants. As a result, any continuation or further deterioration in general economic conditions would materially and further adversely affect our business, financial condition, and results of operations.or future results.
Completed acquisitions may not perform as anticipated or be integrated as planned. We regularly evaluate and pursue opportunities to acquire businesses that complement, enhance, or expand our current business, or offer growth opportunities. Our acquired businesses might not meet our financial and non-financial expectations or yield anticipated benefits. Our success depends, in part, on our ability to conform controls, policies and procedures, and business cultures; consolidate and streamline operations and infrastructures; identify and eliminate redundant and underperforming operations and assets; manage inefficiencies associated with the integration of operations; and retain the acquired business’s key personnel and customers. Moreover, our acquisition activity may subject us to new regulatory requirements, distract our senior management and employees, and expose us to unknown liabilities or contingencies that we may fail to identify prior to closing. If we are forced to make changes to our business strategy or if external conditions adversely affect our business operations, including the duration and impact of COVID-19, we may be required to record additional future impairment charges, as we did in the first and second quarters of 2020. Additionally, we may borrow funds to finance strategic acquisitions. Debt leverage resulting from future acquisitions would reduce our debt capacity, increase our interest expense, and limit our ability to capitalize on future business opportunities. Suchborrowings may also be subject to fluctuations in interest rates. Any of these risks could materially and adversely affect our business, product and service sales, financial condition, and results of operations.
We are vulnerable to deterioration in general economic conditions. Our business is sensitive to fluctuations in general economic conditions in the U.S. and other global markets in which we operate. The recent decline in global and regional economic conditions, and consumers’ fears that economic conditions will further decline, has caused declining consumer confidence, unemployment, fluctuations in stock markets and interest rates, contraction of credit availability, and other dynamic factors affecting economic conditions generally. The success of our GES business largely depends on the number of exhibitions held, the size of exhibitors’ marketing expenditures, and on the strength of particular industries in which exhibitors operate. The number and size of exhibitions generally decrease when the economy weakens, which our business has experienced due to the COVID-19 pandemic. We also could suffer from reduced spending for our services because many exhibitors’ marketing budgets are partly discretionary and are frequently among the first expenditures reduced when economic conditions deteriorate. In addition, revenue from our Pursuit operations depends largely on the amount of disposable income that consumers have available for travel and vacations, which decreases during periods of weak general economic conditions. As a result, any deterioration in general economic conditions could further materially and adversely affect our business, product sales, financial condition, and results of operations.
We depend on our large exhibition event clients to renew their service contracts and on our exclusive right to provide those services. GES has a number of large exhibition event organizers and large customer accounts. If any of these large clients do not renew their service contracts, our results of operations could be materially and adversely affected.
Moreover, when event organizers hire GES as the official services contractor, they usually also grant GES an exclusive right to perform material handling, electrical, rigging, and other services at the exhibition facility. However, some exhibition facilities have taken certain steps to in-source certain event services (either by performing the services themselves or by hiring a separate service provider) as a result of conditions generally affecting their industry, such as an increased supply of exhibition space. If exhibition facilities choose to in-source certain event services, GES will lose the ability to provide certain event services, and our results of operations could be materially and adversely affected.
Our business is relationship driven. Our GES business is heavily focused on client relationships, and, specifically, on having close collaboration and interaction with our clients. To be successful, our account teams must be able to understand clients’ desires and expectations in order to provide top-quality service. If we are unable to maintain our client relationships, including due to the loss of key members of our account teams, we could also lose customers and our results of operations could be materially and adversely affected.
We operate in highly competitive and dynamic industries. Competition in the Live Events markets is driven by price and service quality, among other factors. To the extent competitors seek to gain or retain market presence through aggressive underpricing strategies, we may be required to lower our prices and rates to avoid the loss of related business. Moreover, customer consolidations and other actions have caused downward pricing pressure for our products and services and could affect our ability to negotiate favorable terms with our customers. If we are unable to anticipate and respond as effectively as our competitors to changing business conditions, including new technologies and business models, we could lose market share. Our inability to meet the challenges presented by the competitive and dynamic environment of our industry could materially and adversely affect our results of operations.
Travel industry disruptions, particularly those affecting the hotel and airline industries, could adversely affect our business. Our business depends largely on the ability and willingness of people, whether exhibitors, exhibition attendees, tourists, or others, to travel. Factors adversely affecting the travel industry, and particularly the airline and hotel industries, generally also adversely affect our business and results of operations. Factors that could adversely affect the travel industry include high or rising fuel prices, increased security and passport requirements, weather conditions, health epidemics and pandemics, airline accidents, acts of terrorism, and international political instability and hostilities. For example, the recent COVID-19 pandemic and social distancing orders resulted in severe global travel restrictions, mandatory shutdowns of show and event venues, hotels, attractions and other operations and limitations on large gatherings of people. These circumstances had severe effects on our businesses. The occurrence of additional disruptions, a prolonged recovery from the COVID-19 pandemic or a spike or resurgence in cases of COVID-19, or other unexpected events that affect the availability and pricing of air travel and accommodations, could further materially and adversely affect our business and results of operations.
New capital projects may not be commercially successful. From time to time, we pursue capital projects, such as our current construction of FlyOver Las Vegas, FlyOver Canada Toronto, the Sky Lagoon, and other efforts to upgrade some of our Pursuit offerings, in order to enhance and expand our business. Capital projects are subject to a number of risks, including unanticipated delays, cost overruns, and the failure to achieve established financial and strategic goals, as well as additional project-specific risks. A prolonged delay in these capital projects could prevent them from performing in accordance with our commercial expectations and could materially and adversely affect our future success, business, and results of operations.
The seasonality of our business makes us particularly sensitive to adverse events during peak periods. The peak activity for our Pursuit business is during the summer months, as 85% of Pursuit’s 2019 revenue was earned in the second and third quarters. Our GES exhibition and event activity varies significantly because it is based on the frequency and timing of shows, many of which are not held each year, and which may shift between quarters. If adverse events or conditions occur during these peak periods, our results of operations could be materially and adversely affected.
Transportation disruptions and increases in transportation costs could adversely affect our business and results of operations. GES relies on independent transportation carriers to send materials and exhibits to and from exhibition, warehouse, and customer facilities. If our customers and suppliers are unable to secure the services of those independent transportation carriers at favorable rates, it could materially and adversely affect our business and results of operations. In addition, disruption of transportation services due to weather-related problems, labor strikes, lockouts, or other events could adversely affect our ability to supply services to customers and could cause the cancellation of exhibitions, which could materially and adversely affect our business and results of operations.
Natural disasters, weather conditions, and other catastrophic events could negatively affect our business. The occurrence of catastrophic events ranging from natural disasters (such as hurricanes, fires, floods, and earthquakes), acts of war or terrorism, accidents involving our travel offerings or experiences, the effects of climate change, including any impact of global warming, or the prospect of these events could disrupt our business. Changes in climates may increase the frequency and intensity of adverse weather
patterns and make certain destinations less desirable. Such catastrophic events have, and could have, an adverse impact on Pursuit, which is heavily dependent on the ability and willingness of its guests to travel and/or visit our attractions. Pursuit guests tend to delay or postpone vacations if natural conditions differ from those that typically prevail at competing lodges, resorts, and attractions, and catastrophic events and heightened travel security measures instituted in response to such events could impede the guests’ ability to travel, and interrupt our business operations, including damaging our properties. Such catastrophic events could also have a negative impact on GES, causing a cancellation of exhibitions and other events held in public venues or disrupt the services we provide to our customers at convention centers, exhibition halls, hotels, and other public venues. Such events could also have a negative impact on GES’ production facilities, preventing us from timely completing exhibit fabrication and other projects for customers. In addition, unfavorable media attention, or negative publicity, in the wake of any catastrophic event or accident could damage our reputation or reduce the demand for our services. If the conditions arising from such events persist or worsen, they could materially and adversely affect our results of operations and financial condition.
Our participation in multi-employer pension plans could substantially increase our pension costs. We sponsor a number of defined benefit plans for our U.S. and Canada-based employees. In addition, we are obligated to contribute to multi-employer pension plans under collective bargaining agreements covering our union-represented employees. We contributed $27.3 million in 2019, $26.4 million in 2018, and $26.6 million in 2017 to those multi-employer pension plans. Third-party boards of trustees manage these multi-employer plans. Based upon the information we receive from plan administrators; we believe that several of those multi-employer plans are underfunded. The Pension Protection Act of 2006 requires us to reduce the underfunded status over defined time periods. Moreover, we would be required to make additional payments of our proportionate share of a plan’s unfunded vested liabilities if a plan terminates, or other contributing employers withdraw, due to insolvency or other reasons, or if we voluntarily withdraw from a plan. In 2019, we finalized the terms of a new collective bargaining agreement with the Teamsters Local 727 union. The terms included a withdrawal from the underfunded Central States Pension Plan. Accordingly, we recorded a charge of $15.5 million, which represents the estimated present value of future contributions we will be required to make as a result of the union’s withdrawal and $0.2 million of other withdrawal costs. At this time, we do not anticipate triggering any withdrawal from any other multi-employer pension plan to which we currently contribute. However, significant plan contribution increases could materially and adversely affect our consolidated financial condition, results of operations, and cash flows. Refer to Note 18 – Pension and Postretirement Benefits of the Notes to Consolidated Financial Statements (Part II, Item 8 of the 2019 Form 10-K) for further information.
Union-represented labor increases our risk of higher labor costs and work stoppages. Significant portions of our employees are unionized. We have approximately 100 collective bargaining agreements, and we are required to renegotiate approximately one-third of those each year. If we increase wages or benefits as a result of labor negotiations, either our operating margins will suffer, or we could increase the cost of our services to our customers, which could lead those customers to turn to other vendors with lower prices. Either event could materially and adversely affect our business and results of operations.
Additionally, if we are unable to reach an agreement with a union during the collective bargaining process, the union may strike or carry out other types of work stoppages. If that happens, we might be unable to find substitute workers with the necessary skills to perform many of the services, or we may incur additional costs to do so, both of which could materially and adversely affect our business and results of operations.
Liabilities relating to prior and discontinued operations may adversely affect our results of operations. We and our predecessors have a corporate history spanning decades and involving diverse businesses. Some of those businesses owned properties and used raw materials that have been, and may continue to be, subject to litigation. Moreover, some of the raw materials used and the waste produced by those businesses have been and are the subject of U.S. federal and state environmental regulations, including laws enacted under the Comprehensive Environmental Response, Compensation and Liability Act, or its state law counterparts. In addition, we may incur other liabilities resulting from indemnification claims involving previously sold properties and subsidiaries, or obligations under defined benefit plans or other employee plans, as well as claims from past operations of predecessors or their subsidiaries. Although we believe we have adequate reserves and sufficient insurance coverage to cover those future liabilities, future events or proceedings could render our reserves or insurance protections inadequate, any of which could materially and adversely affect our business and results of operations.
Show rotation affects our profitability and makes comparisons between periods difficult. GES results are largely dependent upon the frequency, timing, and location of exhibitions and events. Some large exhibitions are not held annually (they may be held once every two, three, or four years) or may be held at different times of the year from when they were previously held. In addition, the same exhibition may change locations from year to year resulting in lower margins if the exhibition shifts to a higher-cost location. Any of these factors could cause our results of operations to fluctuate significantly from quarter to quarter or from year to year, making periodic comparisons difficult.
We are subject to currency exchange rate fluctuations.We have operations outside of the U.S. primarily in Canada, the United Kingdom, Iceland, the Netherlands, and Germany. During 2019, GES EMEA, GES Canada, and Pursuit’s international operations accounted for approximately 33% of our consolidated revenue and 66% of our segment operating income. Consequently, a significant
portion of our business is exposed to currency exchange rate fluctuations. We do not currently hedge equity risk arising from the translation of non-U.S. denominated assets and liabilities. Our financial results and capital ratios are sensitive to movements in currency exchange rates because a large portion of our assets, liabilities, revenue, and expenses must be translated into U.S. dollars for reporting purposes. The unrealized gains or losses resulting from the currency translation are included as a component of accumulated other comprehensive income (loss) in our consolidated balance sheets. As a result, significant fluctuations in currency exchange rates could result in material changes to the net equity position we report in our consolidated balance sheets.
We are vulnerable to cybersecurity attacks and threats. We regularly collect and process credit, financial, and other personal and confidential information from individuals and entities who attend or participate in events and exhibitions that we produce, or who visit our attractions and other offerings. In addition, our devices, servers, computer systems, and business systems are vulnerable to cybersecurity risk, including cyberattacks, or we may be the target of email scams that attempt to acquire personal information and company assets. Despite our efforts to protect ourselves with insurance, and create security barriers to such threats, including regularly reviewing our systems for vulnerabilities and continually updating our protections, we might not be able to entirely mitigate these risks. Our failure to effectively prevent, detect, and recover from the increasing number and sophistication of information security threats could lead to business interruptions, delays or loss of critical data, misuse, modification, or destruction of information, including trade secrets and confidential business information, reputational damage, and third-party claims, any of which could materially and adversely affect our results of operations.
Laws and regulations relating to the handling of personal data are evolving and could result in increased costs, legal claims, or fines. We store and process the personally identifiable information of our customers, employees, and third parties with whom we have business relationships. The legal requirements restricting the way we store, collect, handle, and transfer personal data continue to evolve, and there are an increasing number of authorities issuing privacy laws and regulations. These data privacy laws and regulations are subject to differing interpretations, creating uncertainty and inconsistency across jurisdictions. Our compliance with these myriad requirements could involve making changes in our services, business practices, or internal systems, any of which could increase our costs, lower revenue, or reduce efficiency. Our failure to comply with existing or new rules could result in significant penalties or orders to stop the alleged noncompliant activity, litigation, adverse publicity, or could cause our customers to lose trust in our services. In addition, if the third parties we work with violate applicable laws, contractual obligations, or suffer a security breach, those violations could also put us in breach of our obligations under privacy laws and regulations. In addition, the costs of maintaining adequate protection, including insurance protection against such threats, as they develop in the future (or as legal requirements related to data security increase) are expected to increase and could be material. Any of these risks could materially and adversely affect our business and results of operations.
The United Kingdom’s exit from the European Union could adversely affect our business.We operate substantial parts of our EU businesses from U.K.-based entities. On January 31, 2020, the U.K. officially withdrew from the EU. The final terms of the withdrawal are being negotiated with the transition period ending on December 31, 2020. The withdrawal could disrupt the free movement of goods, services, and people between the U.K. and the EU. Moreover, the regulatory and legal environment that will govern our U.K. operations is uncertain. Any new arrangements may require us to make changes to our operations in Europe, which could result in a higher cost and less efficient operating model across our European business. These new arrangements could adversely affect our business and results of operations.
Changes affecting the availability of the London Inter-bank Offered Rate (“LIBOR”) or increases in interest rates may have consequences for us that cannot yet be reasonably predicted. Viad has outstanding debt with variable interest rates based on LIBOR. Borrowings under the 2018 Credit Facility are indexed to the prime rate or LIBOR, plus appropriate spreads tied to our leverage ratio. The LIBOR benchmark has been the subject of national, international, and other regulatory guidance and proposals to reform. In July 2017, the United Kingdom Financial Conduct Authority (the authority that regulates LIBOR) announced that it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. These reforms may cause LIBOR to perform differently than in the past and LIBOR may ultimately cease to exist after 2021. Our 2018 Credit Facility includes a method for determining an alternative or successor rate of interest that gives consideration to the new prevailing market convention. The alternative rate could affect the Company's debt and debt payments. At this time, it is not possible to predict the effect of any changes to LIBOR, any phase out of LIBOR or any establishment of alternative benchmark rates. Any new benchmark rate will likely not replicate LIBOR exactly, which could impact our contracts which terminate after 2021. There is uncertainty about how applicable law, the courts or the Company will address the replacement of LIBOR with alternative rates. If LIBOR ceases to exist after 2021, the interest rates under our revolving credit facility and the discount rates we apply to finance lease obligations will be based on the alternative rate, which may result in higher interest rates and debt obligations. In addition, any increases to our benchmark interest rates could have an uncertain impact on our cost of funds and our access to the capital markets, which could impact our results of operations and cash flows. Uncertainty as to the nature of such potential changes may also adversely affect the trading market for our securities.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table summarizes the total number of shares of our common stock that were repurchased during the three months ended June 30, 2020March 31, 2021 pursuant to publicly announced plans or programs, as well as certain previously owned shares of common stock that were surrendered by employees, former employees, and non-employee directors for 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 |
| ||||
April 1, 2020 - April 30, 2020 |
|
| — |
|
| $ | — |
|
|
| — |
|
|
| 546,283 |
|
May 1, 2020 - May 31, 2020 |
|
| 150 |
|
| $ | 14.65 |
|
|
| — |
|
|
| 546,283 |
|
June 1, 2020 - June 30, 2020 |
|
| 57 |
|
| $ | 21.02 |
|
|
| — |
|
|
| 546,283 |
|
Total |
|
| 207 |
|
| $ | 16.40 |
|
|
| — |
|
|
| 546,283 |
|
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 |
| ||||
January 1, 2021 - January 31, 2021 |
|
| — |
|
| $ | — |
|
|
| — |
|
|
| 546,283 |
|
February 1, 2021 - February 28, 2021 |
|
| 12,024 |
|
| $ | 43.05 |
|
|
| — |
|
|
| 546,283 |
|
March 1, 2021 - March 31, 2021 |
|
| 31 |
|
| $ | 41.84 |
|
|
| — |
|
|
| 546,283 |
|
Total |
|
| 12,055 |
|
| $ | 43.05 |
|
|
| — |
|
|
| 546,283 |
|
Pursuant to previously announced authorizations, our Board of Directors has 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 approvedauthorized the repurchase of an additional 500,000 shares to repurchase. During the six months ended June 30, 2020 we repurchased 53,784 shares on the open market for $2.8 million. The Board’s authorization has no expiration date.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 first quarter of 2021, certain previously owned shares of common stock were surrendered by employees, former employees, and non-employee directors for tax withholding requirements on vested share-based awards.
Item 6. Exhibits
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| Incorporated by Reference | ||||||
Exhibit Number |
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| Exhibit Description |
| Form |
| Period Ending |
| Exhibit |
| Filing Date |
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4.1 |
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| 8-K |
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| 4.1 |
| 3/30/2020 | |
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4.2 |
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| Amendment No. 2 to $450 million Second Amended and Restated Credit Agreement, dated May 8, 2020. |
| 8-K |
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| 4.A3 |
| 5/11/2020 |
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31.1 |
| * |
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31.2 |
| * |
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32.1 |
| ** |
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101.INS |
| *** |
| XBRL Instance Document |
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101.SCH |
| **** |
| XBRL Taxonomy Extension Schema Document. |
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101.CAL |
| **** |
| XBRL Taxonomy Extension Calculation Linkbase Document. |
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101.LAB |
| **** |
| XBRL Taxonomy Extension Label Linkbase Document. |
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101.PRE |
| **** |
| XBRL Taxonomy Extension Presentation Linkbase Document |
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101.DEF |
| **** |
| XBRL Taxonomy Extension Definition Linkbase Document. |
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104 |
| *** |
| Cover Page Interactive Data File |
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| Incorporated by Reference | ||||||
Exhibit Number |
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| Exhibit Description |
| Form |
| Period Ending |
| Exhibit |
| Filing Date |
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10.1 |
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| 8-K |
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| 10.1 |
| 2/17/2021 | |
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31.1 |
| * |
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31.2 |
| * |
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32.1 |
| ** |
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101.INS |
| *** |
| Inline XBRL Instance Document |
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101.SCH |
| **** |
| Inline XBRL Taxonomy Extension Schema Document. |
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101.CAL |
| **** |
| Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
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101.LAB |
| **** |
| Inline XBRL Taxonomy Extension Label Linkbase Document. |
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101.PRE |
| **** |
| Inline XBRL Taxonomy Extension Presentation Linkbase Document |
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101.DEF |
| **** |
| Inline XBRL Taxonomy Extension Definition Linkbase Document. |
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104 |
| *** |
| Cover Page Interactive Data File |
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* | 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. |
SIGNATURES
Pursuant to the requirements 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 | ||
|
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| (Registrant) | ||
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| By: |
| /s/ Leslie S. Striedel |
(Date) |
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| Leslie S. Striedel |
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| Chief Accounting Officer (Duly Authorized Officer) |
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5443