Exhibit 99.1
Viad Corp Announces Second Quarter Results;
Earnings per Share of $0.50
PHOENIX--(BUSINESS WIRE)--July 29, 2005--Viad Corp (NYSE:VVI)
today announced second quarter 2005 revenue of $227.0 million, segment
operating income of $22.3 million, and net income of $11.1 million, or
$0.50 per diluted share, in line with Viad's prior guidance.
Robert H. Bohannon, chairman, president and chief executive
officer said, "We had another terrific quarter of growth, with a 19.0
percent increase in earnings per share over the 2004 second quarter.
Revenue increased 9.5 percent, reflecting growth at all of our
operating segments. Total segment operating income increased 18.1
percent, led by GES and Exhibitgroup."
Second Quarter 2005 Financial Highlights
Highlights of the 2005 second quarter, compared to second quarter
2004 results, and year-to-date results are presented below.
Q2 2005 Q2 2004 Change
----------- --------- ---------
($ in millions)
Revenue $ 227.0 $207.4 9.5%
Segment operating income $ 22.3 $ 18.9 18.1%
Operating margins (a) 9.8% 9.1% 70 bps
Income from continuing operations $ 11.1 $ 9.2 20.7%
Net income (b) $ 11.1 $ 9.2 21.4%
Adjusted EBITDA (c) $ 25.5 $ 19.7 29.5%
Cash from (used in) operations $ (1.1) $ 15.6 NM
Free cash flow (outflow) (c) $ (9.1) $ 13.5 NM
YTD 2005 YTD 2004 Change
----------- --------- ---------
($ in millions)
Revenue $ 476.5 $ 414.9 14.8%
Segment operating income $ 45.1 $ 35.1 28.4%
Operating margins (a) 9.5% 8.5% 100 bps
Income from continuing operations $ 23.5 $ 16.7 40.4%
Net income (b) $ 23.3 $ 16.7 39.4%
Adjusted EBITDA (c) $ 52.6 $ 39.0 34.9%
Cash from operations $ 9.6 $ 22.4 -56.9%
Free cash flow (outflow) (c) $ (2.8) $ 16.4 NM
(a) For operating margins, the change from the prior year period is
presented in basis points.
(b) Net income in 2005 includes income from discontinued operations of
$59,000 in the second quarter and a year-to-date loss from
discontinued operations of $168,000, relating to tax matters
associated with previously sold operations.
(c) Adjusted EBITDA is defined by Viad as net income before interest
expense, income taxes, depreciation and amortization, goodwill and
intangible asset impairments, changes in accounting principles and
the effects of discontinued operations. Free cash flow is defined
by Viad as net cash provided by operating activities minus capital
expenditures and dividends. Adjusted EBITDA and free cash flow are
supplemental to results presented under accounting principles
generally accepted in the United States of America (GAAP) and may
not be comparable to similarly titled measures presented by other
companies.
These non-GAAP measures are used by management to facilitate
period-to-period comparisons and analysis of Viad's operating
performance and liquidity. Free cash flow is also used by management
to assess the company's ability to service debt, fund capital
expenditures and finance growth. Management believes these non-GAAP
measures are useful to investors in benchmarking and trending the
performance and value of Viad's business. These non-GAAP measures
should be considered in addition to, but not as a substitute for,
other similar measures reported in accordance with GAAP. See Table Two
for reconciliations of net income to Adjusted EBITDA, and of net cash
provided by operating activities to free cash flow.
At the end of the second quarter 2005:
-- Cash and cash equivalents were $120.0 million.
-- Debt totaled $17.9 million, with a debt-to-capital ratio of
4.5 percent.
Free cash flow for the second quarter was an outflow of $9.1
million, reflecting decreases in customer deposits and accounts
payable attributable to the timing of trade show activity. The timing
of income tax payments as well as the level of capital expenditures
during the quarter also contributed to the outflow. For the full year,
Viad expects free cash flow to approximate net income, plus
depreciation and amortization, minus restructuring payments, capital
expenditures and dividends, with a minimal impact from working
capital.
GES Exposition Services (GES)
GES' revenue for the second quarter of 2005 was $150.4 million, up
$13.0 million or 9.5 percent from $137.4 million in the second quarter
2004. Segment operating income was $16.1 million, up 14.4 percent from
$14.1 million in 2004 and operating margins were 10.7 percent as
compared to 10.3 percent in 2004.
Bohannon said, "As expected, GES had another strong quarter. The
improved results over the 2004 quarter were driven mainly by continued
success in capturing additional exhibitor discretionary spending
through the Products and Services group and continued growth in the
overall trade show industry. While the industry is clearly improving,
certain challenges, including high fuel costs and pricing pressures,
continue to impact GES' margins."
Exhibitgroup/Giltspur (Exhibitgroup)
Exhibitgroup's second quarter revenue was $58.5 million, up $5.9
million or 11.1 percent from $52.7 million in the 2004 second quarter.
Segment operating income was $2.0 million, as compared to $96,000 in
the 2004 second quarter. The 2005 second quarter included $2.3 million
in legal fees incurred to defend against unfair competitive practices,
including violation of intellectual property rights, related to
Exhibitgroup's kiosk business.
Bohannon said, "Exhibitgroup delivered better than expected second
quarter results. Revenue growth was driven in large part by positive
revenue rotation of approximately $10 million from a European airshow
that did not occur in the 2004 second quarter. This benefit was
partially offset by reduced spending by certain clients in the
pharmaceutical industry. Exhibitgroup's operating profit, despite the
legal fees incurred, reflects significant improvement in gross margins
as the result of new revenue initiatives and improved efficiency."
Bohannon continued, "We have recently settled the kiosk litigation
by way of Consent Judgments that recognize the validity and value of
our intellectual property rights. The legal expenses we have incurred
are an unfortunate but necessary cost. Our intellectual property
rights protect our discernible differences and therefore the value of
our business. We will not allow a competitor to violate these rights."
Travel and Recreation Services
Travel and Recreation Services segment revenue for the 2005 second
quarter was $18.1 million, as compared to $17.3 million in the 2004
second quarter. Segment operating income was $4.2 million, as compared
to $4.7 million in the 2004 second quarter. Operating margins were
23.0 percent compared to 26.9 percent in 2004.
Bohannon said, "Results in the Travel and Recreation Services
segment were negatively impacted by excessive rainfall in Alberta,
Canada in the second quarter, which resulted in reduced passenger
volumes at Brewster's gondola and ice field tours. Despite lower
volumes at Brewster's high throughput attractions, operating margins
for this segment were still very strong."
2005 Outlook
Guidance provided by Viad is subject to change as a variety of
factors can affect actual operating results. Those factors are
identified in the safe harbor language at the end of this press
release.
Full Year 2005
Viad's guidance for the full year 2005 has changed slightly. Full
year income per diluted share is expected to be in the range of $1.23
to $1.34, versus prior guidance of $1.23 to $1.36, and compared to
income from continuing operations before impairment losses of $1.07
per share in 2004. Revenue is expected to increase by a low-single
digit rate from the 2004 amount of $785.7 million. Segment operating
income is expected to increase by a mid-single digit to mid-teens rate
from $53.4 million in 2004. This improvement is expected to be driven
mainly by cost reductions and improved margins at Exhibitgroup.
Despite negative show rotation of approximately $10 million, GES'
revenue is expected to be slightly better than 2004, driven mainly by
continued growth in the Products and Services group.
Third Quarter 2005
Consistent with Viad's prior guidance, income per share is
expected to be in the range of $0.27 to $0.33, as compared to income
before impairment losses per share of $0.57 in the 2004 third quarter.
Revenue is expected to decrease by 15 to 20 percent from the 2004
amount of $218.6 million. These decreases are expected to be driven
mainly by negative show rotation of approximately $34 million at GES
and $10 million at Exhibitgroup (from the European airshow that
occurred in the 2005 second quarter). Segment operating income is
expected to be in the range of $13.5 million to $15.5 million.
This guidance is based upon the following segment revenue and
operating income expectations.
Segment
Segment Operating Income
Revenue (Loss)
---------------------------------------------
low-end high-end low-end high-end
-------------------------- ------------------
($ in millions)
GES $ 105 to $ 115 $ 0 to $ 1.0
Exhibitgroup $ 28 to $ 33 $(6.0) to $(5.0)
Travel & Recreation $ 40 to $ 45 $19.0 to $20.0
Fourth Quarter 2005
Viad's guidance for the fourth quarter has been reduced slightly
based on the expectation that Exhibitgroup will continue to experience
reduced spending by certain of its clients in the pharmaceutical
industry. Viad's fourth quarter loss per share is now expected to be
in the range of $0.05 to $0.10, as compared to Viad's prior guidance
of a loss per share in the range of $0.04 to $0.08, and the 2004
fourth quarter loss from continuing operations before impairment
losses of $0.27 per share.
Bohannon said, "We've had a strong first half of 2005 and we
continue to be optimistic about the industries we serve. Certainly, we
have many challenges ahead of us, but we are well on our way toward
realizing meaningful earnings growth in 2005."
Conference Call and Web Cast
Viad Corp will hold a conference call with investors and analysts
for a review of second quarter 2005 results on Friday, July 29, 2005
at 9 a.m. (EDT). To join the live conference call, dial 800-967-7134,
passcode 1467124, or access the webcast through Viad's Web site at
www.viad.com. A replay will be available for a limited time at
888-203-1112, passcode 1467124, or visit the Viad Web site and link to
a replay of the webcast.
Viad is an S&P SmallCap 600 company. Major subsidiaries include
GES Exposition Services of Las Vegas, Exhibitgroup/Giltspur of
Chicago, Brewster Transport Company Limited of Banff, Alberta, Canada,
and Glacier Park, Inc. of Phoenix. For more information, visit the
company's Web site at www.viad.com.
Forward-Looking Statements
As provided by the safe harbor provision under the "Private
Securities Litigation Reform Act of 1995," Viad cautions readers that,
in addition to historical information contained herein, this press
release includes certain information, assumptions and discussions that
may constitute forward-looking statements. These forward-looking
statements are not historical facts, but reflect current estimates,
projections, expectations, or trends concerning future growth,
operating cash flows, availability of short-term borrowings, consumer
demand, new business, investment policies, productivity improvements,
ongoing cost reduction efforts, efficiency, competitiveness, legal
expenses, tax rates and other tax matters, and the realization of
restructuring cost savings. Actual results could differ materially
from those projected in the forward-looking statements. Viad's
businesses can be affected by a host of risks and uncertainties. Among
other things natural disasters, gains and losses of customers,
consumer demand patterns, labor relations, purchasing decisions
related to customer demand for convention and event services, existing
and new competition, industry alliances, consolidation, and growth
patterns within the industries in which Viad competes and any
deterioration in the economy may individually or in combination impact
future results. In addition to factors mentioned elsewhere, economic,
competitive, governmental, technological, capital marketplace and
other factors, including further terrorist activities or war, could
affect the forward-looking statements in this press release.
Additional information concerning business and other risk factors that
could cause actual results to materially differ from those in the
forward-looking statements can be found in Viad's annual and quarterly
reports filed with the Securities and Exchange Commission.
Information about Viad Corp obtained from sources other than the
company may be out-of-date or incorrect. Please rely only on company
press releases, SEC filings and other information provided by the
company, keeping in mind that forward-looking statements speak only as
of the date made. Viad undertakes no obligation to update any
forward-looking statements, including prior forward-looking
statements, to reflect events or circumstances arising after the date
as of which the forward-looking statements were made.
VIAD CORP AND SUBSIDIARIES
TABLE ONE - QUARTERLY AND YEAR-TO-DATE RESULTS
(UNAUDITED)
Three months ended June 30, Six months ended June 30,
-------------------------- --------------------------
(000 omitted,
except per
share data) 2005 2004 % 2005 2004 %
-------- -------- ------ -------- -------- ------
Revenues
(Note A) $227,031 $207,378 9.5% $476,543 $414,933 14.8%
======== ======== ====== ======== ======== ======
Segment operating
income (Note A) $ 22,289 $ 18,878 18.1% $ 45,056 $ 35,084 28.4%
Corporate
activities and
minority
interests (3,147) (3,835) 17.9% (5,766) (6,357) 9.3%
Restructuring
recoveries
(charges) (Note B) 73 (853) NM 363 (853) NM
Net interest
income (expense) 262 (265) NM 412 (606) NM
-------- -------- ------ -------- -------- ------
Income before
income taxes 19,477 13,925 39.9% 40,065 27,268 46.9%
Income tax expense (8,391) (4,743) -76.9% (16,554) (10,527) -57.3%
-------- -------- ------ -------- -------- ------
Income from
continuing
operations 11,086 9,182 20.7% 23,511 16,741 40.4%
Income (loss)
from discontinued
operations (Note C) 59 - NM (168) - NM
-------- -------- ------ -------- -------- ------
Net income $ 11,145 $ 9,182 21.4% $ 23,343 $ 16,741 39.4%
======== ======== ====== ======== ======== ======
Diluted income
per common
share:
Income from
continuing
operations $ 0.50 $ 0.42 19.0% $ 1.06 $ 0.77 37.7%
Income (loss)
from discontinued
operations - - NM (0.01) - NM
-------- -------- ------ -------- -------- ------
Net income
per share $ 0.50 $ 0.42 19.0% $ 1.05 $ 0.77 36.4%
======== ======== ====== ======== ======== ======
Basic income per
common share:
Income from
continuing
operations $ 0.51 $ 0.42 21.4% $ 1.07 $ 0.77 39.0%
Income (loss)
from discontinued
operations - - NM (0.01) - NM
-------- -------- ------ -------- -------- ------
Net income
per share $ 0.51 $ 0.42 21.4% $ 1.06 $ 0.77 37.7%
======== ======== ====== ======== ======== ======
Common shares treated as
outstanding for net income per share
calculations:
Average
outstanding
shares 22,033 21,732 1.4% 21,975 21,705 1.2%
======== ======== ====== ======== ======== ======
Average
outstanding
and
potentially
dilutive
shares 22,191 21,839 1.6% 22,142 21,811 1.5%
======== ======== ====== ======== ======== ======
NM = not meaningful
VIAD CORP AND SUBSIDIARIES
TABLE ONE - NOTES TO QUARTERLY AND YEAR-TO-DATE RESULTS
(UNAUDITED)
(A) Reportable Segments
Three months ended June 30, Six months ended June 30,
-------------------------- --------------------------
(000 omitted) 2005 2004 % 2005 2004 %
-------- -------- ------ -------- -------- ------
Revenues:
GES
Exposition
Services $150,420 $137,392 9.5% $348,770 $300,955 15.9%
Exhibitgroup/
Giltspur 58,517 52,652 11.1% 104,949 92,705 13.2%
Travel and
Recreation
Services 18,094 17,334 4.4% 22,824 21,273 7.3%
-------- -------- ------ -------- -------- ------
$227,031 $207,378 9.5% $476,543 $414,933 14.8%
======== ======== ====== ======== ======== ======
Segment
operating
income
(loss):
GES
Exposition
Services $ 16,144 $ 14,113 14.4% $ 42,896 $ 34,671 23.7%
Exhibitgroup/
Giltspur 1,985 96 NM 157 (2,933) NM
Travel and
Recreation
Services 4,160 4,669 -10.9% 2,003 3,346 -40.1%
-------- -------- ------ -------- -------- ------
$ 22,289 $ 18,878 18.1% $ 45,056 $ 35,084 28.4%
======== ======== ====== ======== ======== ======
NM = not meaningful
(B) Restructuring Charges and Recoveries -- In the first quarter of
2005, $290,000 ($175,000 after-tax) of the reserve was reversed as
certain costs originally anticipated were not incurred.
Additionally, in the second quarter of 2005, $73,000 ($44,000
after-tax) related to certain facility closure and lease
termination costs that were less than original estimates, was also
reversed. In the second quarter of 2004, Viad recorded a
restructuring charge of $853,000 ($530,000 after-tax) primarily
related to planned employee reductions.
(C) Income (Loss) from Discontinued Operations -- In the second
quarter of 2005, Viad recorded income from discontinued operations
of $59,000 relating to tax matters associated with previously sold
operations. In the first quarter of 2005, Viad recorded a loss
from discontinued operations of $227,000, also related to tax
matters.
VIAD CORP AND SUBSIDIARIES
TABLE TWO - ADJUSTED EBITDA AND FREE CASH FLOW
(UNAUDITED)
Three months ended June 30, Six months ended June 30,
------------------------ -------------------------
(000 omitted) 2005 2004 % 2005 2004 %
------- ------- ------ -------- ------- ------
Adjusted EBITDA:
Net income $11,145 $ 9,182 21.4% $ 23,343 $16,741 39.4%
(Income) loss from
discontinued
operations (59) - NM 168 - NM
------- ------- ------ -------- ------- ------
Income from
continuing
operations 11,086 9,182 20.7% 23,511 16,741 40.4%
Interest expense 602 391 -54.0% 1,159 958 -21.0%
Income tax expense 8,391 4,743 -76.9% 16,554 10,527 -57.3%
Depreciation and
amortization 5,409 5,368 -0.8% 11,403 10,797 -5.6%
------- ------- ------ -------- ------- ------
Adjusted EBITDA $25,488 $19,684 29.5% $ 52,627 $39,023 34.9%
======= ======= ====== ======== ======= ======
Three months ended June 30, Six months ended June 30,
------------------------ -------------------------
(000 omitted) 2005 2004 % 2005 2004 %
------- ------- ------ -------- ------- ------
Free Cash Flow:
Net cash provided
by (used in)
operating
activities $(1,060) $15,587 NM $ 9,640 $22,363 -56.9%
Less:
Capital
expenditures (7,172) (2,112) NM (10,646) (5,974) -78.2%
Dividends paid (882) - NM (1,763) - NM
------- ------- ------ -------- ------- ------
Free cash flow
(outflow) $(9,114) $13,475 NM $ (2,769) $16,389 NM
======= ======= ====== ======== ======= ======
NM = not meaningful
CONTACT: Viad Corp
Carrie Long, 602-207-2681 (Investor Relations)
clong@viad.com