EXHIBIT 99
Viad Corp Announces Second Quarter Results;
Income from Continuing Operations of $0.86 per Share;
Viad Completes Repurchase of 1 Million Shares and Announces
Its Intent to Repurchase Up to 1 Million Additional Shares
PHOENIX--(BUSINESS WIRE)--July 28, 2006--Viad Corp (NYSE:VVI)
today announced second quarter 2006 revenue of $237.4 million, segment
operating income of $25.8 million, and income from continuing
operations of $18.6 million, or $0.86 per diluted share. This compares
to the company's prior guidance of $0.52 to $0.60 per diluted share
and 2005 second quarter income from continuing operations of $0.50 per
diluted share. Viad's 2006 second quarter results included favorable
tax settlements of $3.2 million, or $0.15 per diluted share.
Paul B. Dykstra, president and chief executive officer said, "We
had a very good second quarter. Segment operating income increased
15.7 percent, reflecting improved results at all of our operating
segments. Income from continuing operations increased 67.6 percent as
a result of the segment operating income growth, increased interest
income and favorable tax settlements."
Viad's second quarter net income was $28.3 million, or $1.30 per
diluted share, including income from discontinued operations of $9.7
million, or $0.44 per diluted share. Income from discontinued
operations included $7.4 million, after-tax, of income related to the
expiration of product warranty liabilities associated with a
previously sold manufacturing operation and $2.3 million primarily
related to tax matters associated with previously sold operations.
Viad Corp also announced its intent, pursuant to a recent
authorization by its board of directors, to repurchase an additional
one million shares of common stock of the corporation from time to
time at prevailing market prices. This repurchase is in addition to
one million shares repurchased during the first half of 2006 and an
existing authorization to repurchase common stock for the purpose of
replacing common stock issued upon exercise of stock options and in
connection with other stock compensation plans.
Second Quarter 2006 Financial Highlights
Highlights of the 2006 second quarter and year-to-date results,
compared to the 2005 second quarter and year-to-date results, are
presented below.
Q2 2006 Q2 2005 Change
----------- ----------- ---------
($ in millions)
Revenue $237.4 $227.0 4.6%
Segment operating income $25.8 $22.3 15.7%
Operating margins (Note A) 10.9% 9.8% 110 bps
Income from continuing operations $18.6 $11.1 67.6%
Net income (Note C) $28.3 $11.1 (a)
Adjusted EBITDA (Note B) $30.2 $25.5 18.4%
Net cash provided by (used in)
operating activities $28.0 $(1.1) (a)
Free cash flow (outflow) (Note B) $22.8 $(9.1) (a)
YTD 2006 YTD 2005 Change
---------- ---------- --------
($ in millions)
Revenue $471.2 $476.5 -1.1%
Segment operating income $43.5 $45.1 -3.4%
Operating margins (Note A) 9.2% 9.5% -30 bps
Income before impairment recoveries
(Note B) $31.8 $23.5 35.4%
Income from continuing operations $32.3 $23.5 37.6%
Net income (Note C) $41.9 $23.3 79.4%
Adjusted EBITDA (Note B) $56.3 $52.6 6.9%
Net cash provided by operating
activities $33.7 $9.6 (a)
Free cash flow (outflow) (Note B) $21.6 $(2.8) (a)
(a) Change is greater than +/- 100 percent.
(A) For operating margins, the change from the prior year period is
presented in basis points.
(B) Income before impairment losses/recoveries is defined by Viad as
income from continuing operations before the after-tax effects of
impairment losses/recoveries. Adjusted EBITDA is defined by Viad
as net income before interest expense, income taxes, depreciation
and amortization, impairment losses/recoveries, 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.
Income before impairment losses/recoveries, 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 trending,
analyzing and benchmarking 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 income from continuing operations to income
before impairment losses/recoveries, of net income to Adjusted
EBITDA, and of net cash provided by operating activities to free
cash flow.
(C) Net income in the 2006 second quarter and year-to-date includes
after-tax income from discontinued operations of $7.4 million
relating to the expiration of product warranty liabilities
associated with a previously sold manufacturing operation. Net
income also includes the following results of discontinued
operations primarily relating to tax matters associated with
previously sold operations: income of $2.3 million in the 2006
second quarter; income of $59,000 in the 2005 second quarter;
income of $2.2 million in 2006 year-to-date; and a loss of
$168,000 in 2005 year-to-date. Net income also includes
after-tax impairment recoveries of $508,000 in the 2006 first
quarter and year-to-date relating to insurance proceeds received
for assets damaged as a result of Hurricane Katrina.
At the end of the second quarter 2006:
-- Cash and cash equivalents were $160.8 million.
-- Debt totaled $15.6 million, with a debt-to-capital ratio of
3.5 percent.
Also relating to the second quarter 2006:
-- Viad repurchased 585,600 shares of common stock at an
aggregate cost of $18.5 million.
-- Viad recorded favorable tax settlements of $3.2 million
included in income from continuing operations.
-- In June 2006, Viad amended and restated its $150 million
revolving credit agreement at lower borrowing spreads and fees
than the previous agreement. The facility is for a term of
five years and may be increased up to an additional $75
million under certain circumstances.
GES Exposition Services (GES)
For the second quarter of 2006, GES' revenue was $169.3 million,
up $18.9 million or 12.6 percent from $150.4 million in the second
quarter of 2005. Second quarter segment operating income was $18.4
million, up $2.2 million or 13.7 percent from $16.1 million in 2005.
The improved results were due primarily to very strong same-show
growth and growth in exhibitor discretionary revenue driven by the
Products and Services group.
Dykstra said, "GES continues to produce great results in 2006.
Through GES' focus on being a value-added provider of products and
services to both show organizers and exhibitors, as well as continued
growth in the overall industry, GES was able to realize base same-show
growth of 11.4 percent in the second quarter. This was the second
straight quarter of same-show growth in excess of 10 percent."
Exhibitgroup/Giltspur (Exhibitgroup)
Exhibitgroup's second quarter revenue was $46.9 million, down
$11.6 million or 19.9 percent from $58.5 million in the second quarter
of 2005. Segment operating income was $2.7 million, up $692,000 or
34.9 percent from $2.0 million in the 2005 second quarter. The revenue
decline was due primarily to the rotation of a major European air
show, which occurred in the 2005 second quarter and occurs in the
third quarter in 2006. The improved segment operating income reflects
continued reduction of fixed and other costs, including legal fees,
and an improvement in gross margin.
Dykstra said, "Exhibitgroup's revenue was in line with our prior
guidance, while operating income was better than guidance. In response
to lower year-to-date revenues at Exhibitgroup along with poor
visibility over future revenues, the Exhibitgroup team is taking
additional measures to reduce controllable costs while they continue
to aggressively pursue profitable revenue opportunities."
Travel and Recreation Services
Travel and Recreation Services segment revenue for the 2006 second
quarter was $21.2 million, up $3.1 million or 17.0 percent from $18.1
million in the second quarter of 2005. Second quarter segment
operating income was $4.8 million, up $609,000 or 14.6 percent from
$4.2 million in the 2005 second quarter.
Dykstra said, "The Travel and Recreation Services segment got off
to a good start for its peak season. As compared to 2005, Brewster saw
growth in passenger volume at its gondola and an increase in occupancy
at its Mount Royal Hotel. Glacier Park, Inc. realized an increase in
the number of rooms occupied over the 2005 second quarter."
2006 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 2006
Viad's guidance for 2006 full year income before impairment
recoveries (which excludes income from discontinued operations) has
been increased by $0.26 per share to $1.96 to $2.07 per share. The
increase reflects Viad's stronger than expected second quarter
performance, including favorable tax settlements of $0.15 per share,
as well as the full year effect of Viad's second quarter share
repurchases of $0.03 per share. Partially offsetting these increases
is a decreased outlook for Exhibitgroup due to reduced revenue
expectations. The revised guidance compares to prior guidance of $1.70
to $1.81 per share and 2005 income before impairment losses of $1.66
per share (which included $0.21 per share of favorable tax
settlements). The guidance range for 2006 assumes an effective tax
rate of 39 percent for the remainder of the year and does not include
the effect of any future share repurchases.
Revenue is expected to increase by a mid-single digit rate from
the 2005 amount of $826.3 million. Segment operating income is
expected to increase by a mid to high-single digit rate from $64.2
million in 2005 due to improved results at all of Viad's operating
companies.
Show rotation is not expected to have a meaningful impact on full
year 2006 revenues but is expected to positively impact Viad's third
quarter revenues by about $35 million due to positive rotation at both
GES and Exhibitgroup. Fourth quarter show rotation is expected to be
relatively neutral.
Third Quarter 2006
For the third quarter, Viad's income per diluted share is expected
to be in the range of $0.55 to $0.64. This compares to income before
impairment losses of $0.44 per share in the 2005 third quarter.
Revenue is expected to increase at a mid-teens to low-double digit
rate from the 2005 amount of $191.1 million. Segment operating income
is expected to be in the range of $22.5 million to $26.0 million, as
compared to $16.4 million in the 2005 third quarter.
Implicit within this guidance, are the following segment revenue
and operating income expectations.
Segment
Segment Operating Income
Revenue (Loss)
------------------ --------------------
low-end high-end low-end high-end
($ in millions)
GES $140 to $150 $7.0 to $9.0
Exhibitgroup $33 to $39 $(4.5) to $(3.0)
Travel & Recreation $43 to $48 $19.5 to $20.5
Dykstra said, "GES is realizing great results from its initiatives
to drive profitable revenue growth and productivity improvements. We
continue to be very encouraged by the strong same-show growth at GES.
At Exhibitgroup, we continue to expect growth in operating income over
2005 due to reduced fixed and other costs, including legal fees.
However, we are now a bit more cautious in our revenue outlook.
Although first quarter revenue was negatively impacted by the rotation
out of a major tradeshow and the loss of two significant clients, we
believed that we could replace this revenue with new wins and other
increases in client spending during 2006. To date, we have not seen
new revenue materialize to the extent we had initially expected and we
believe it is likely that full year revenues at Exhibitgroup will
decline as compared to 2005. The Exhibitgroup team is working hard to
drive more costs out of the business to maximize operating profits
while they aggressively pursue profitable revenue opportunities."
Dykstra concluded, "Overall, the first half of 2006 has been
successful for Viad and we are on track to deliver growth in revenue,
profits and free cash flow during 2006. Be assured that all of our
companies remain focused on profitable growth by providing quality
products and services to our customers at a good value, while
continuing to control our costs to maximize margins. We are committed
to winning for all of our stakeholders."
Conference Call and Webcast
Viad Corp will hold a conference call with investors and analysts
for a review of second quarter 2006 results on Friday, July 28, 2006
at 9 a.m. (ET). To join the live conference call, dial (800) 474-8920,
passcode 6800431, 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 6800431, or visit the Viad Web site and link to a
replay of the webcast.
Viad is an S&P SmallCap 600 company. Major operating companies
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, foreign exchange rates, and
the realization of restructuring cost savings. Actual results could
differ materially from those discussed in the forward-looking
statements. Viad's businesses can be affected by a host of risks and
uncertainties. Among other things, natural disasters, gains and losses
of customers, consumer demand patterns, labor relations, purchasing
decisions related to customer demand for exhibition and event
services, existing and new competition, industry alliances,
consolidation and growth patterns within the industries in which Viad
competes, adverse developments in liabilities associated with
discontinued operations 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 and international conditions,
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 RESULTS
(UNAUDITED)
Three months ended Six months ended
June 30, June 30,
------------------------- -------------------------
(000 omitted,
except per share
data) 2006 2005 % 2006 2005 %
--------- --------- ----- --------- --------- -----
Revenues (Note A) $237,409 $227,031 4.6% $471,179 $476,543 -1.1%
========= ========= ===== ========= ========= =====
Segment operating
income (Note A) $25,799 $22,289 15.7% $43,509 $45,056 -3.4%
Corporate
activities and
minority interests (3,312) (3,147) -5.2% (5,052) (5,766) 12.4%
Gain on sale of
corporate assets
(Note B) - - (a) 3,468 - (a)
Restructuring
recoveries
(Note C) 552 73 (a) 570 363 57.0%
Impairment
recoveries
(Note D) - - (a) 843 - (a)
Net interest
income (Note E) 1,521 262 (a) 2,958 412 (a)
--------- --------- ----- --------- --------- -----
Income before
income taxes 24,560 19,477 26.1% 46,296 40,065 15.6%
Income tax expense (5,977) (8,391) 28.8% (13,956) (16,554) 15.7%
--------- --------- ----- --------- --------- -----
Income from
continuing
operations 18,583 11,086 67.6% 32,340 23,511 37.6%
Income (loss) from
discontinued
operations
(Note F) 9,679 59 (a) 9,530 (168) (a)
--------- --------- ----- --------- --------- -----
Net income $28,262 $11,145 (a) $41,870 $23,343 79.4%
========= ========= ===== ========= ========= =====
Diluted income per
common share:
Income from
continuing
operations $0.86 $0.50 72.0% $1.47 $1.06 38.7%
Income (loss)
from
discontinued
operations 0.44 - (a) $0.44 (0.01) (a)
--------- --------- ----- --------- --------- -----
Net income per
share $1.30 $0.50 (a) $1.91 $1.05 81.9%
========= ========= ===== ========= ========= =====
Basic income per
common share:
Income from
continuing
operations $0.87 $0.51 70.6% $1.50 $1.07 40.2%
Income (loss)
from
discontinued
operations 0.45 - (a) 0.44 (0.01) (a)
--------- --------- ----- --------- --------- -----
Net income per
share $1.32 $0.51 (a) $1.94 $1.06 83.0%
========= ========= ===== ========= ========= =====
Common shares
treated as
outstanding for
net income per
share calculations:
Average
outstanding
shares 21,436 22,033 -2.7% 21,624 21,975 -1.6%
========= ========= ===== ========= ========= =====
Average
outstanding
and
potentially
dilutive
shares 21,718 22,191 -2.1% 21,964 22,142 -0.8%
========= ========= ===== ========= ========= =====
(a) Change is greater than +/- 100 percent.
VIAD CORP AND SUBSIDIARIES
TABLE ONE - NOTES TO QUARTERLY RESULTS
(UNAUDITED)
(A) Reportable Segments
Three months ended June 30,
---------------------------------
(000 omitted) 2006 2005 %
----------- ----------- ---------
Revenues:
GES Exposition Services $169,336 $150,420 12.6%
Exhibitgroup/Giltspur 46,898 58,517 -19.9%
Travel and Recreation Services 21,175 18,094 17.0%
----------- ----------- ---------
$237,409 $227,031 4.6%
=========== =========== =========
Segment operating income:
GES Exposition Services $18,353 $16,144 13.7%
Exhibitgroup/Giltspur 2,677 1,985 34.9%
Travel and Recreation Services 4,769 4,160 14.6%
----------- ----------- ---------
$25,799 $22,289 15.7%
=========== =========== =========
VIAD CORP AND SUBSIDIARIES
TABLE ONE - NOTES TO QUARTERLY RESULTS
(UNAUDITED)
(A) Reportable Segments
Six months ended June 30,
---------------------------------
(000 omitted) 2006 2005 %
----------- ----------- ---------
Revenues:
GES Exposition Services $363,463 $348,770 4.2%
Exhibitgroup/Giltspur 81,622 104,949 -22.2%
Travel and Recreation Services 26,094 22,824 14.3%
----------- ----------- ---------
$471,179 $476,543 -1.1%
=========== =========== =========
Segment operating income:
GES Exposition Services $40,773 $42,896 -4.9%
Exhibitgroup/Giltspur (350) 157 (a)
Travel and Recreation Services 3,086 2,003 54.1%
----------- ----------- ---------
$43,509 $45,056 -3.4%
=========== =========== =========
(a) Change is greater than +/- 100 percent.
(B) Gain on Sale of Corporate Assets -- In the first quarter of 2006,
Viad sold its remaining interest in its corporate aircraft along
with related equipment for $10.0 million, resulting in a gain of
$1.7 million ($1.1 million after-tax). Also in the first quarter
of 2006, Viad sold certain undeveloped land in Phoenix, Arizona
for $2.9 million, resulting in a gain of $1.7 million ($1.1
million after-tax).
(C) Restructuring Recoveries -- In the first and second quarters of
2006, $18,000 ($11,000 after-tax) and $552,000 ($333,000 after-
tax), respectively, of the reserves were reversed. Additionally,
in the first and second quarters of 2005, $290,000 ($175,000
after-tax) and $73,000 ($44,000 after-tax), respectively, were
also reversed.
(D) Impairment Recoveries -- In the third quarter of 2005, GES'
operations in New Orleans were severely impacted by Hurricane
Katrina and the related events that occurred. At that time,
management made an estimate of the damage to GES' New Orleans
property and recorded an asset impairment loss related to the net
book value of fixed assets and inventory of $843,000 ($508,000
after-tax). In the first quarter of 2006, Viad recorded insurance
recoveries of $843,000 ($508,000 after-tax) related to claims
associated with Hurricane Katrina. The final resolution of these
claims remains pending with Viad's insurance carriers, and the
amounts of additional recoveries, if any, remain uncertain.
(E) Net Interest Income -- Net interest income in the first and second
quarters of 2006, included interest recoveries of $441,000 and
$217,000, respectively, associated with income tax refunds.
(F) Income (Loss) from Discontinued Operations -- In the second
quarter of 2006, Viad recorded income from discontinued
operations of $7.4 million (after-tax) relating to the expiration
of product warranty liabilities associated with a previously sold
manufacturing operation. In the second quarter of 2006 and 2005,
Viad recorded income from discontinued operations of $2.3 million
and $59,000, respectively, primarily relating to tax matters from
previously sold operations. In the first quarter of 2006 and
2005, Viad recorded losses from discontinued operations of
$149,000 and $227,000, respectively, also related to tax matters
associated with previously sold operations.
VIAD CORP AND SUBSIDIARIES
TABLE TWO - INCOME BEFORE IMPAIRMENT RECOVERIES,
ADJUSTED EBITDA AND FREE CASH FLOW
(UNAUDITED)
Three months ended Six months ended
June 30, June 30,
----------------------- -----------------------
(000 omitted) 2006 2005 % 2006 2005 %
-------- -------- ----- -------- -------- -----
Income before
impairment recoveries:
Income from
continuing
operations $18,583 $11,086 67.6% $32,340 $23,511 37.6%
Impairment
recoveries, net of
tax - - (a) (508) - (a)
-------- -------- ----- -------- -------- -----
Income before
impairment
recoveries $18,583 $11,086 67.6% $31,832 $23,511 35.4%
======== ======== ===== ======== ======== =====
Three months ended Six months ended
June 30, June 30,
----------------------- -----------------------
(per diluted share) 2006 2005 % 2006 2005 %
-------- -------- ----- -------- -------- -----
Income before
impairment recoveries:
Income from
continuing
operations $0.86 $0.50 72.0% $1.47 $1.06 38.7%
Impairment
recoveries, net of
tax - - (a) (0.02) - (a)
-------- -------- ----- -------- -------- -----
Income before
impairment
recoveries $0.86 $0.50 72.0% $1.45 $1.06 36.8%
======== ======== ===== ======== ======== =====
Three months ended Six months ended
June 30, June 30,
----------------------- -----------------------
(000 omitted) 2006 2005 % 2006 2005 %
-------- -------- ----- -------- -------- -----
Adjusted EBITDA:
Net income $28,262 $11,145 (a) $41,870 $23,343 79.4%
Loss (income) from
discontinued
operations (9,679) (59) (a) (9,530) 168 (a)
-------- -------- ----- -------- -------- -----
Income from
continuing
operations 18,583 11,086 67.6% 32,340 23,511 37.6%
Impairment
recoveries - - (a) (843) - (a)
Interest expense 409 602 32.1% 775 1,159 33.1%
Income tax expense 5,977 8,391 28.8% 13,956 16,554 15.7%
Depreciation and
amortization 5,202 5,409 3.8% 10,025 11,403 12.1%
-------- -------- ----- -------- -------- -----
Adjusted EBITDA $30,171 $25,488 18.4% $56,253 $52,627 6.9%
======== ======== ===== ======== ======== =====
Three months ended Six months ended
June 30, June 30,
----------------------- -----------------------
(000 omitted) 2006 2005 % 2006 2005 %
-------- -------- ----- -------- -------- -----
Free Cash Flow:
Net cash provided by
(used in) operating
activities $27,956 $(1,060) (a) $33,741 $9,640 (a)
Less:
Capital
expenditures (4,306) (7,172) 40.0% (10,376) (10,646) 2.5%
Dividends paid (861) (882) 2.4% (1,742) (1,763) 1.2%
-------- -------- ----- -------- -------- -----
Free cash flow
(outflow) $22,789 $(9,114) (a) $21,623 $(2,769) (a)
======== ======== ===== ======== ======== =====
(a) Change is greater than +/- 100 percent.
CONTACT: Viad Corp, Phoenix
Carrie Long, 602-207-2681 (Investor Relations)
clong@viad.com