Exhibit 99
Viad Corp Announces Second Quarter Results
Income from Continuing Operations of $0.87 Per Share
PHOENIX--(BUSINESS WIRE)--July 27, 2007--Viad Corp (NYSE:VVI)
today announced second quarter 2007 revenue of $275.7 million, segment
operating income of $31.1 million and income from continuing
operations of $18.3 million, or $0.87 per diluted share. Included in
2007 second quarter results was $3.9 million ($2.4 million after-tax,
or $0.11 per share) related to the favorable resolution of a contract
dispute. The company's prior guidance was $0.68 to $0.77 per diluted
share for the second quarter. Viad's 2007 second quarter income before
other items, which excludes impairment recoveries of $61,000
after-tax, was $18.2 million, or $0.87 per share, and compares
favorably to 2006 second quarter income before other items of $15.4
million, or $0.71 per share.
Paul B. Dykstra, president and chief executive officer said,
"Overall, we had a very good second quarter. Income before other items
per share increased 22.5 percent as compared to the 2006 quarter,
reflecting positive show rotation at Exhibitgroup, the acquisition of
Melville and solid performance at all of our operating companies."
Net income was $18.5 million, or $0.88 per share, in the 2007
second quarter versus $28.3 million, or $1.30 per share, in the 2006
second quarter. The decline in net income was due to higher income
from discontinued operations in the 2006 quarter of $0.44 per share as
compared to $0.01 per share in the 2007 quarter. Net income for the
2006 second quarter also included favorable tax settlements from
continuing operations of $0.15 per share.
Second Quarter 2007 Financial Highlights
Highlights of the 2007 second quarter and year-to-date results,
compared to the 2006 second quarter and year-to-date results, are
presented below.
Q2 2007 Q2 2006 Change
------- ------- -------
($ in millions)
Revenue $275.7 $237.4 16.1%
Segment operating income $ 31.1 $ 25.8 20.6%
Operating margins (Note A) 11.3% 10.9% 40 bps
Income before other items (Note B) $ 18.2 $ 15.4 18.1%
Income from continuing operations $ 18.3 $ 18.6 -1.6%
Net income (Note C) $ 18.5 $ 28.3 -34.6%
Adjusted EBITDA (Note B) $ 35.6 $ 30.2 17.9%
Cash from operations $ 14.3 $ 28.0 -48.7%
Free cash flow (Note B) $ 7.0 $ 22.8 -69.2%
YTD 2007 YTD 2006 Change
-------- -------- ------
($ in millions)
Revenue $559.4 $471.2 18.7%
Segment operating income $ 56.2 $ 43.5 29.2%
Operating margins (Note A) 10.1% 9.2% 90 bps
Income before other items (Note B) $ 32.3 $ 25.5 26.6%
Income from continuing operations $ 32.3 $ 32.3 -
Net income (Note C) $ 32.4 $ 41.9 -22.5%
Adjusted EBITDA (Note B) $ 64.2 $ 56.3 14.1%
Cash from operations $ 15.0 $ 33.7 -55.5%
Free cash flow (outflow) (Note B) $(4.4) $ 21.6 **
** 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 other items is defined by Viad as income from
continuing operations before the after-tax effects of impairment
losses/recoveries, favorable resolution of tax matters and the after-
tax effects of gains on sale of corporate assets. 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
other items, 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 other items. Also see Table Two for reconciliations of
net income to adjusted EBITDA, and of net cash provided by operating
activities to free cash flow.
(C) Net income includes income from discontinued operations primarily
relating to tax and other matters associated with previously sold
operations of $196,000 in the 2007 second quarter, $2.3 million in
the 2006 second quarter, $102,000 in 2007 year-to-date, and $2.2
million in 2006 year-to-date. Net income in the 2006 second quarter
and year-to-date also 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.
At the end of the second quarter 2007:
-- Cash and cash equivalents were $131.9 million.
-- Debt totaled $14.4 million, with a debt-to-capital ratio of
3.0 percent.
Also relating to the second quarter 2007:
-- Viad recorded impairment recoveries of $100,000 ($61,000
after-tax) related to claims by Exhibitgroup/Giltspur
associated with Hurricane Katrina. In connection with the
final settlement of these claims during July 2007, Viad
received an additional $218,000, of which $146,000 related to
business interruption and will be included in Exhibitgroup's
third quarter 2007 operating income.
GES Exposition Services (GES)
For the second quarter of 2007, GES's revenue was $192.8 million,
up $23.5 million or 13.9 percent from $169.3 million in the second
quarter of 2006. Second quarter segment operating income was $22.0
million, up $3.7 million or 20.1 percent from $18.4 million in 2006.
Included in GES's results for the 2007 second quarter was $3.9 million
pre-tax related to the favorable resolution of a contract dispute,
which was partially offset by an increase in certain insurance-related
costs. The acquisition of Melville on February 1, 2007 and continued
base same-show growth more than offset negative show rotation revenue
of about $7 million.
Dykstra said, "GES continues to produce strong results in 2007.
Base same-show growth was 12.3 percent during the second quarter. We
are also realizing very good results from Melville, where we are in
the process of implementing the growth initiatives that were
identified during our diligence process."
Exhibitgroup/Giltspur (Exhibitgroup)
Exhibitgroup's 2007 second quarter revenue was $61.5 million, up
$14.6 million or 31.2 percent from $46.9 million in the second quarter
of 2006. Segment operating income was $4.6 million, up $1.9 million
from $2.7 million in the 2006 second quarter. The growth over 2006 was
due primarily to positive rotation from the International Paris Air
Show, which last occurred in the 2005 second quarter.
Dykstra said, "We are pleased with Exhibitgroup's results this
quarter, which were stronger than expected. Exhibitgroup realized
great results from servicing clients that participated in the Paris
Air Show and better strength in its domestic revenues during the
quarter."
Travel and Recreation Services
Travel and Recreation Services segment revenue for the 2007 second
quarter was $21.4 million, comparable to 2006 second quarter revenue
of $21.2 million. Segment operating income was $4.5 million,
comparable to $4.8 million in the 2006 second quarter.
Dykstra said, "The Travel and Recreation Services segment got off
to a good start for its peak season. Passenger volumes were up at
Brewster's gondola operation versus the 2006 second quarter and
Glacier Park realized strong occupancy."
2007 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 2007
Viad's 2007 full year income is expected to be in the range of
$1.72 to $1.80 per share, as compared to the company's prior guidance
of $1.72 to $1.82 per share and 2006 income before other items of
$1.75 per share. The change in guidance reflects a third quarter
restructuring charge, which is expected to approximate $0.02 per share
and relates to severance costs associated with personnel changes
during July 2007 that support the organizational realignment at
Exhibitgroup. The guidance range for 2007 assumes an effective tax
rate of 38 percent to 39 percent, as compared to the 2006 effective
tax rate on income before other items of 37.2 percent.
Excluding Melville, full year revenue and operating income are
expected to be comparable to 2006 revenue of $856.0 million and
operating income of $67.2 million. The acquisition of Melville is
expected to provide an additional $80 million to $90 million in
revenue and be accretive to Viad's 2007 earnings. Viad's growth in
2007 will be limited by significant negative show rotation at GES and
investments in initiatives to reposition Exhibitgroup for future
growth.
Show rotation is expected to negatively impact Viad's full year
revenues by about $32 million. In the first quarter, show rotation did
not have a meaningful impact on revenues. In the second quarter, show
rotation positively impacted revenues at Exhibitgroup by about $13
million and negatively impacted revenues at GES by about $7 million.
In the third quarter, show rotation is expected to negatively impact
revenues by about $10 million at Exhibitgroup and about $36 million at
GES. In the fourth quarter, show rotation is expected to positively
impact revenues at GES by about $8 million.
In 2008, show rotation is expected to have a positive impact on
revenues in excess of $45 million relative to 2007.
Melville is expected to have seasonally lower revenues with
operating losses in the third and fourth quarters. During the first
half of 2007, Melville generated an operating profit on seasonally
stronger revenues.
Viad's full year 2007 outlook for each operating segment is as
follows:
-- GES - On an organic basis, revenue is expected to increase at
a low single digit rate from $623.1 million in 2006. Negative
show rotation revenue of about $35 million is expected to be
more than offset by continued strong growth in exhibitor
discretionary revenue and same-show growth. The acquisition of
Melville is expected to provide an additional $80 million to
$90 million in revenue. GES's full year operating income
(including Melville) is expected to be in the range of $52.0
million to $54.0 million.
-- Exhibitgroup - Revenue is expected to be comparable to 2006
revenue of $153.7 million. Operating loss is expected to be in
the range of $5.0 million to $6.5 million as the result of
investments in initiatives to reposition the company for
growth. Management expects to begin realizing the benefit of
these initiatives in 2008.
-- Travel and Recreation Services - Revenue is expected to be
comparable to 2006 revenue of $79.3 million. Operating income
is expected to be in the range of $22.2 million to $23.2
million.
Third Quarter 2007
For the third quarter, Viad's income per diluted share is expected
to be in the range of $0.21 to $0.29. This compares to income before
other items of $0.77 per share in the 2006 third quarter. Revenue is
expected to be in the range of $206.0 million to $232.0 million, which
includes $15 million to $20 million from Melville. Excluding Melville,
organic revenue is expected to decrease by 8 percent to 17 percent
from the 2006 amount of $230.5 million, reflecting negative show
rotation at GES and Exhibitgroup of about $46 million in revenue.
Segment operating income is expected to be in the range of $11.0
million to $14.0 million, as compared to $27.6 million in the 2006
third quarter. The expected decline in operating income from the 2006
quarter reflects the decrease in organic revenue, due to negative show
rotation, as well as an expected operating loss at Melville in the
range of $1.5 million to $2.0 million.
Implicit within this guidance are the following segment revenue
and operating income expectations.
Segment Segment
Revenue Operating Income (Loss)
------------------ -----------------------
low-end high-end low-end high-end
($ in millions)
GES ** $ 140 to $155 $(3.5) to $(1.5)
Exhibitgroup $ 21 to $ 27 $(7.0) to $(6.0)
Travel & Recreation $ 45 to $ 50 $ 21.0 to $ 22.0
** Includes a revenue range of $15.0 million to $20.0 million and an
operating loss range of $2.0 million to $1.5 million for Melville.
Dykstra said, "We've had many successes during the first half of
2007, including two straight quarters of double-digit base same-show
growth at GES, positive results from our early efforts to reposition
Exhibitgroup, and the acquisition of Melville. While the pricing
environment remains challenging, the exhibition and event industry
continues to grow, and the teams at GES and Exhibitgroup are working
hard to drive profitable growth. The Travel and Recreation Services
businesses have just entered their peak season and we continue to
expect that 2007 will be another year of solid performance by both
Brewster and Glacier Park."
Dykstra continued, "While our growth in 2007 will be restricted
due to negative show rotation of $32 million in revenue and due to
investments to reposition Exhibitgroup, we expect to realize
significant growth in 2008. We expect positive show rotation in 2008
to add in excess of $45 million in revenue at GES relative to 2007. We
also expect improved results at Melville in 2008 as we will have
substantially completed our integration efforts, and our growth
initiatives continue to gain traction. Results at Exhibitgroup should
also be stronger as we begin to realize the benefits of our work to
reposition the company. Additionally, we are pursuing some attractive,
strategic acquisition opportunities that could bolster growth. We
remain committed to driving growth and enhancing shareholder value."
Conference Call and Webcast
Viad Corp will hold a conference call with investors and analysts
for a review of second quarter 2007 results on Friday, July 27, 2007
at 9 a.m. (ET). To join the live conference call, dial toll-free (800)
811-0667, passcode 4891123, 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 4891123, 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 Inc. 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) 2007 2006 % 2007 2006 %
--------- --------- ------ --------- --------- ------
Revenues (Note
A) $275,727 $237,409 16.1% $559,416 $471,179 18.7%
========= ========= ====== ========= ========= ======
Segment
operating
income (Note A) $ 31,108 $ 25,799 20.6% $ 56,226 $ 43,509 29.2%
Corporate
activities (2,714) (3,347) 18.9% (5,023) (5,199) 3.4%
Gain on sale of
corporate
assets (Note B) - - ** - 3,468 **
Restructuring
recoveries
(charges) (Note
C) - 552 ** (1,210) 570 **
Impairment
recoveries
(Note D) 100 - ** 100 843 -88.1%
Net interest
income 1,013 1,521 -33.4% 2,336 2,958 -21.0%
--------- --------- ------ --------- --------- ------
Income before
income taxes
and minority
interest 29,507 24,525 20.3% 52,429 46,149 13.6%
Income tax
expense (Note
E) (11,200) (5,977) -87.4% (20,129) (13,956) -44.2%
Minority
interest (20) 35 ** 37 147 -74.8%
--------- --------- ------ --------- --------- ------
Income from
continuing
operations 18,287 18,583 -1.6% 32,337 32,340 0.0%
Income from
discontinued
operations
(Note F) 196 9,679 -98.0% 102 9,530 -98.9%
--------- --------- ------ --------- --------- ------
Net income $ 18,483 $ 28,262 -34.6% $ 32,439 $ 41,870 -22.5%
========= ========= ====== ========= ========= ======
Diluted income
per common
share:
Income from
continuing
operations $ 0.87 $ 0.86 1.2% $ 1.53 $ 1.47 4.1%
Income from
discontinued
operations 0.01 0.44 -97.7% 0.01 0.44 -97.7%
--------- --------- ------ --------- --------- ------
Net income per
share $ 0.88 $ 1.30 -32.3% $ 1.54 $ 1.91 -19.4%
========= ========= ====== ========= ========= ======
Basic income per
common share:
Income from
continuing
operations $ 0.89 $ 0.87 2.3% $ 1.57 $ 1.50 4.7%
Income from
discontinued
operations 0.01 0.45 -97.8% - 0.44 **
--------- --------- ------ --------- --------- ------
Net income per
share $ 0.90 $ 1.32 -31.8% $ 1.57 $ 1.94 -19.1%
========= ========= ====== ========= ========= ======
Common shares
treated as
outstanding for
income per
share
calculations:
Average
outstanding
shares 20,567 21,436 -4.1% 20,609 21,624 -4.7%
========= ========= ====== ========= ========= ======
Average
outstanding
and
potentially
dilutive
shares 21,046 21,718 -3.1% 21,127 21,964 -3.8%
========= ========= ====== ========= ========= ======
** Change is greater than +/- 100 percent.
VIAD CORP AND SUBSIDIARIES
TABLE ONE - NOTES TO QUARTERLY RESULTS
(UNAUDITED)
(A) Reportable
Segments
Three months ended Six months ended
June 30, June 30,
----------------------- --------------------------
(000 omitted) 2007 2006 % 2007 2006 %
-------- -------- ----- --------- --------- ------
Revenues:
GES Exposition
Services $192,832 $169,336 13.9% $437,717 $363,463 20.4%
Exhibitgroup/
Giltspur 61,526 46,898 31.2% 95,868 81,622 17.5%
Travel and
Recreation
Services 21,369 21,175 0.9% 25,831 26,094 -1.0%
-------- -------- ----- --------- --------- ------
$275,727 $237,409 16.1% $559,416 $471,179 18.7%
======== ======== ===== ========= ========= ======
Segment operating
income:
GES Exposition
Services $ 22,033 $ 18,353 20.1% $ 54,239 $ 40,773 33.0%
Exhibitgroup/
Giltspur 4,579 2,677 71.0% (96) (350) 72.6%
Travel and
Recreation
Services 4,496 4,769 -5.7% 2,083 3,086 -32.5%
-------- -------- ----- --------- --------- ------
$ 31,108 $ 25,799 20.6% $ 56,226 $ 43,509 29.2%
======== ======== ===== ========= ========= ======
(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 Charges and Recoveries -- In the first quarter of
2007, Viad recorded a restructuring charge of $1.2 million
($737,000 after-tax) related to severance costs associated with an
organizational realignment at Exhibitgroup. In the first and
second quarters of 2006, Viad reversed restructuring reserves of
$18,000 ($11,000 after-tax) and $552,000 ($333,000 after-tax),
respectively.
(D)Impairment Recoveries -- In the second quarter of 2007 and the
first quarter of 2006, Viad recorded insurance recoveries of
$100,000 ($61,000 after-tax) and $843,000 ($508,000 after-tax),
respectively, related to claims associated with Hurricane Katrina.
(E)Income Tax Expense -- Income tax expense includes favorable
resolution of tax matters of $1.0 million and $3.2 million in the
first and second quarters of 2006, respectively.
(F)Income from Discontinued Operations -- In the second quarters of
2007 and 2006, Viad recorded income from discontinued operations
of $196,000 and $2.3 million, respectively, primarily relating to
tax and other matters associated with previously sold operations.
In the first quarters of 2007 and 2006, Viad recorded losses from
discontinued operations of $94,000 and $149,000, respectively,
also related to tax matters associated with previously sold
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.
VIAD CORP AND SUBSIDIARIES
TABLE TWO - INCOME BEFORE OTHER ITEMS,
ADJUSTED EBITDA AND FREE CASH FLOW
(UNAUDITED)
Three months ended Six months ended
June 30, June 30,
------------------------ --------------------------
(000 omitted) 2007 2006 % 2007 2006 %
-------- -------- ------ --------- --------- ------
Income before other
items:
Income from
continuing
operations $18,287 $18,583 -1.6% $ 32,337 $ 32,340 0.0%
Impairment
recoveries, net
of tax (61) - ** (61) (508) -88.0%
Favorable
resolution of tax
matters - (3,154) ** - (4,172) **
Gain on sale of
corporate assets,
net of tax - - ** - (2,164) **
-------- -------- ------ --------- --------- ------
Income before
other items $18,226 $15,429 18.1% $ 32,276 $ 25,496 26.6%
======== ======== ====== ========= ========= ======
Three months ended Six months ended
June 30, June 30,
------------------------ --------------------------
(per diluted share) 2007 2006 % 2007 2006 %
-------- -------- ------ --------- --------- ------
Income before other
items:
Income from
continuing
operations $ 0.87 $ 0.86 1.2% $ 1.53 $ 1.47 4.1%
Impairment
recoveries, net
of tax - - ** - (0.02) **
Favorable
resolution of tax
matters - (0.15) ** - (0.19) **
Gain on sale of
corporate assets,
net of tax - - ** - (0.10) **
-------- -------- ------ --------- --------- ------
Income before
other items $ 0.87 $ 0.71 22.5% $ 1.53 $ 1.16 31.9%
======== ======== ====== ========= ========= ======
Three months ended Six months ended
June 30, June 30,
------------------------ --------------------------
(000 omitted) 2007 2006 % 2007 2006 %
-------- -------- ------ --------- --------- ------
Adjusted EBITDA:
Net income $18,483 $28,262 -34.6% $ 32,439 $ 41,870 -22.5%
Income from
discontinued
operations (196) (9,679) -98.0% (102) (9,530) -98.9%
-------- -------- ------ --------- --------- ------
Income from
continuing
operations 18,287 18,583 -1.6% 32,337 32,340 0.0%
Impairment
recoveries, net (100) - ** (100) (843) -88.1%
Interest expense 379 409 7.3% 845 775 -9.0%
Income tax expense 11,200 5,977 -87.4% 20,129 13,956 -44.2%
Depreciation and
amortization 5,800 5,202 -11.5% 10,996 10,025 -9.7%
-------- -------- ------ --------- --------- ------
Adjusted EBITDA $35,566 $30,171 17.9% $ 64,207 $ 56,253 14.1%
======== ======== ====== ========= ========= ======
Three months ended Six months ended
June 30, June 30,
------------------------ --------------------------
(000 omitted) 2007 2006 % 2007 2006 %
-------- -------- ------ --------- --------- ------
Free Cash Flow:
Net cash provided
by operating
activities $14,340 $27,956 -48.7% $ 15,025 $ 33,741 -55.5%
Less:
Capital
expenditures (6,477) (4,306) -50.4% (17,740) (10,376) -71.0%
Dividends paid (840) (861) 2.4% (1,680) (1,742) 3.6%
-------- -------- ------ --------- --------- ------
Free cash flow
(outflow) $ 7,023 $22,789 -69.2% $ (4,395) $ 21,623 **
======== ======== ====== ========= ========= ======
** Change is greater than +/- 100 percent.
CONTACT: Viad Corp, Phoenix
Carrie Long, 602-207-2681 (Investor Relations)
clong@viad.com