Viad Corp Reports 2018 Fourth Quarter and Full Year Results

Pursuit Delivers Full Year Revenue Growth of 6.6%
GES
Continues to Drive Same-Show Growth
Viad Board
Authorizes Repurchase of Additional 500,000 Shares

PHOENIX–(BUSINESS WIRE)–Viad Corp (NYSE: VVI) today announced fourth quarter and full year 2018
results. Our year-over-year results reflect negative show rotation at
GES, partially offset by strong organic growth at Pursuit. Both business
groups continued to make progress toward our strategic goals and focused
on expanding and enhancing our offerings to accelerate our growth and
profitability.

				Q4 2018						Q4 2017						Read moreSeoul Dragon City Hotel Creates Dazzling Lighting Displays with HARMAN Professional Solutions y-o-y Change					Full Year 2018					Full Year 2017					y-o-y Change
$ in millions, except per share data
Revenue				$	296.9					$	277.3					7.1	%				$	1,296.2				$	1,307.0				-0.8	%
Organic Revenue*					299.4						277.3					8.0	%					1,290.3					1,307.0				-1.3	%
Net Income (Loss) Attributable to Viad				$	(2.3	)				$	(21.7	)				89.3	%				$	49.2				$	57.7				-14.8	%
Income (Loss) Before Other Items*					(1.8	)					(5.3	)				65.7	%					47.7					53.5				-10.8	%
Income (Loss) Before Other Items per Share*					(0.09	)					(0.26	)				65.4	%					2.34					2.62				-10.7	%
Adjusted Segment Operating Income (Loss)*				$	4.1					$	(3.3	)				**					$	89.7				$	99.3				-9.7	%
Adjusted Segment EBITDA*					16.5						9.3					77.9	%					146.3					154.2				-5.1	%

Full Year

• Full year revenue of $1.3 billion decreased $10.8 million (0.8%)
  year-over-year, or $16.6 million (1.3%) on an organic basis (which
  excludes the impact of exchange rate variances).
  • The decrease in organic revenue is primarily due to negative show
    rotation of about $35 million at GES, partially offset by high
    single-digit growth at Pursuit.
  • Exchange rate variances had a favorable impact on revenue of $5.8
    million versus 2017.
• Adjusted segment operating income, adjusted segment EBITDA and income
  before other items declined year-over-year, primarily due to lower
  revenue and investments to support continued growth in both business
  units, partially offset by lower performance-based incentives.

Fourth Quarter

• Revenue of $296.9 million increased $19.6 million (7.1%)
  year-over-year, or $22.1 million (8.0%) on an organic basis (which
  excludes the impact of exchange rate variances).
  • The organic revenue increase primarily reflects strong underlying
    revenue growth and positive show rotation at GES. Pursuit also
    experienced strong organic revenue growth during its seasonally
    slow fourth quarter.
  • Exchange rate variances had an unfavorable impact of $2.4 million.
• Adjusted segment operating income, adjusted segment EBITDA and income
  before other items improved compared to the prior year quarter
  primarily due to higher revenue and lower performance-based incentives.

Steve Moster, president and chief executive officer, commented, “During
2018, we continued to make good progress toward our strategic goals. At
GES, our efforts to become the global full-service provider for live
events are creating new growth opportunities for our business while
driving innovation and enhanced experiences for our clients. At Pursuit,
we continue to find unique opportunities to scale the business and we
are leveraging revenue management to accelerate growth and
profitability. I am encouraged by the actions we are taking to
capitalize on key opportunities and position our business for future
success.”

GES Results

GES Full Year

• Full year GES revenue decreased $22.2 million (2.0%) year-over-year.
  On an organic basis (which excludes the impact of exchange rate
  variances), the decrease was $29.9 million, or 2.6%.
  • U.S. organic revenue decreased $24.9 million (2.9%) primarily due
    to negative show rotation of approximately $27 million and certain
    non-recurring business produced in 2017, partially offset by base
    same-show growth of 2.8%.
  • International organic revenue decreased $9.3 million (3.3%)
    primarily due to negative show rotation of approximately $8
    million and certain non-recurring business produced in 2017,
    partially offset by new business wins.
• Full year GES adjusted segment operating income decreased $11.1
  million (21.9%), and $11.6 million (22.7%) on an organic basis.
  • U.S. organic adjusted segment operating income decreased $9.4
    million, primarily due to lower revenue and selective investments
    in additional resources to capitalize on continued growth
    opportunities, partially offset by lower performance-based
    incentives.
  • International organic adjusted segment operating income decreased
    $2.2 million, primarily due to lower revenue, partially offset by
    lower performance-based incentives.
• Exchange rate variances had a favorable impact on full year revenue
  and adjusted segment operating income of $7.7 million and $0.4
  million, respectively.

GES Fourth Quarter

• GES revenue of $281.8 million increased $18.8 million (7.1%)
  year-over-year. On an organic basis, which excludes the impact of
  exchange rate variances, revenue increased $20.6 million (7.8%).
  • U.S. organic revenue increased $22.3 million (11.8%) primarily due
    to positive show rotation of approximately $10 million, increased
    revenue from our corporate clients and new business wins.
  • International organic revenue decreased $1.0 million (1.2%)
    primarily due to negative show rotation of approximately $2
    million, partially offset by growth in the underlying business.
• GES adjusted segment operating income of $8.9 million* increased $6.6
  million year-over-year, and $6.5 million on an organic basis.
  • U.S. organic adjusted segment operating income of $4.2 million*
    increased by $9.0 million primarily due to the increase in revenue
    and lower performance-based incentives.
  • International organic adjusted segment operating income of $4.5
    million* decreased by $2.5 million primarily due to the decline in
    revenue and increased personnel costs to support continued growth,
    partially offset by lower performance-based incentives.

• Exchange rate variances had an unfavorable impact on fourth quarter
  revenue of $1.9 million and a favorable impact on adjusted segment
  operating income of $0.1 million.

Moster said, “GES finished the year with strong revenue growth of 7.1%
during the fourth quarter. We continue to drive growth both on a
same-show basis as well as through new corporate event and other
business wins. As we strive to position GES as the preferred global,
full-service provider for live events, we are leveraging our audio
visual production and event technology services to strengthen existing
relationships and create new client opportunities. In addition, we are
focused on driving innovation and operational excellence across our
business to further strengthen our competitive position for long-term
value creation.”

Pursuit Results

Pursuit Full Year

• Full year Pursuit revenue increased $11.4 million (6.6%)
  year-over-year. On an organic basis (which excludes exchange rate
  variances), revenue increased $13.3 million (7.6%) driven primarily by
  revenue management and investments to refresh our attraction and
  hospitality portfolio, as well as the re-opening of our Mount Royal
  Hotel.
• Full year Pursuit adjusted segment operating income increased $1.5
  million (3.2%). On an organic basis, adjusted segment operating income
  increased $3.1 million (6.5%) primarily due to the increase in
  revenue, partially offset by additional depreciation expense related
  to the reconstruction of our Mount Royal Hotel and other costs to
  support the continued growth of the business.
• Exchange rate variances had an unfavorable impact on full year revenue
  and adjusted segment operating income of $1.9 million and $1.6
  million, respectively.

Pursuit Fourth Quarter

• Pursuit revenue of $15.2 million increased $0.9 million (6.1%)
  year-over-year. On an organic basis, revenue increased $1.4 million
  (10.0%) primarily driven by the re-opening of our Mount Royal Hotel
  and our revenue management and refresh efforts.
• Pursuit adjusted segment operating loss of $4.7 million* improved by
  $0.8 million (14.0%). Organic adjusted segment operating loss of $4.7
  million* improved by $0.8 million (15.0%) primarily due to the
  increase in revenue.

Moster said, “Pursuit delivered strong full year results, with organic
revenue growth of 7.6%. Our revenue management and refresh investments
throughout the year led to strong performance at our attractions and
hospitality assets, despite the impact of forest fires that hurt
visitation during our peak season. Revenue per passenger improved 7.7%
at our attractions and RevPAR was up 2.9% at our hospitality assets. In
addition, the investments we have made to enhance our food and beverage
offerings are driving enhanced guest satisfaction with strong financial
returns. Overall, our team delivered impressive financial results and
great progress against the various organic projects scheduled to come
online in 2019. With a strong pipeline of new additions to our portfolio
of unique experiences, we are excited about the year ahead.”

Cash Flow / Capital Structure

• Our cash flow from operations was an outflow of $14.7 million for the
  fourth quarter and an inflow of $87.0 million for the full year.
• Capital expenditures for the quarter totaled $15.9 million, comprising
  $6.1 million for GES and $9.9 million for Pursuit. For the full year,
  capital expenditures totaled $85.5 million, comprising $26.3 million
  for GES and $59.0 million for Pursuit, which includes approximately
  $20 million for the reconstruction and renovation of our Mount Royal
  Hotel and approximately $7 million for the development of our FlyOver
  Iceland attraction.
• Return of capital totaled $10.1 million for the quarter and $25.3
  million for the full year.
  • During the fourth quarter, we repurchased 165,382 shares for $8.1
    million. For the full year, we repurchased 340,473 shares at an
    average price of $50.44, totaling $17.2 million.
  • Viad’s Board of Directors authorized the repurchase of an
    additional 500,000 shares, bringing our total authorized shares
    remaining for repurchase to 600,067.
  • Our regular quarterly dividend payments of $0.10 per share,
    totaled $2.0 million for the quarter and $8.2 million for the full
    year.
• Debt proceeds (net) totaled $30.5 million for the quarter and $18.4
  million for the full year.
• Cash and cash equivalents were $44.9 million, debt was $232.4 million
  and our debt-to-capital ratio was 34.0% at December 31, 2018.

2019 Full Year Guidance

Moster said, “We are excited about our growth plans for 2019. At
Pursuit, we have many expansion projects underway that will be complete
for the 2019 peak tourism season. As with our past investments at
Pursuit, we expect these will deliver strong returns, revenue and
margins. At GES, we expect continued same-show growth and new business
wins as we continue to pursue share gains in the high-margin corporate
event market. We expect this growth to more than offset the impact of
negative show rotation. We remain committed to our growth strategies for
both business units and continue to identify new opportunities to drive
profitable growth and deliver strong returns on investment.”

• We expect consolidated revenue to increase at a mid-single digit rate
  from 2018 full year revenue, driven by growth at both GES and Pursuit.
• We expect consolidated adjusted segment EBITDA to be in the range of
  $152.5 million to $158.5 million, as compared to $146.3 million* in
  2018.

• Our guidance assumes that exchange rates during 2019 will approximate
  $0.77 U.S. Dollars per Canadian Dollar and $1.30 U.S. Dollars per
  British Pound. As compared to 2018, we expect exchange rate variances
  to impact 2019 full year results as follows:

• The outlook for our business units is as follows:

• We expect GES show rotation to have a net negative impact on full year
  revenue of about $25 million versus 2018. Show rotation refers to
  shows that occur less frequently than annually, as well as annual
  shows that shift quarters from one year to the next.

• We expect GES U.S. base same-show revenue to increase at
  a low single digit rate.
• We expect Pursuit’s 2019 growth to be fueled primarily by investments
  to support our Refresh, Build, Buy strategy, which are expected to
  contribute incremental revenue of approximately $15 million to $17
  million during 2019. On a same-store basis, we expect Pursuit’s
  revenue to increase at a mid-single digit rate, reflecting our revenue
  management efforts to maximize yields across our high-quality
  experiences.
• We expect start-up costs related to the development of Pursuit’s
  FlyOver Iceland attraction, which is expected to open in Summer 2019,
  to approximate $1 million during the first six months of 2019. These
  costs are not included in the adjusted segment EBITDA or adjusted
  segment operating income guidance ranges above.

• We expect corporate activities expense to approximate $11 million to
  $12 million.
• We expect our effective tax rate on income before other items to
  approximate 29%.

2019 First Quarter Guidance

• We expect GES first quarter revenue to be negatively impacted by about
  $8 million versus the 2018 first quarter due to show rotation and
  exchange rate variances, partially offset by low-single digit same
  show growth and new business wins. Our outlook for GES’ adjusted
  segment operating results reflects higher compensation expense,
  including performance-based incentives and additional resources to
  drive growth and profitability in high-value areas.
• We expect Pursuit first quarter revenue to increase primarily due to
  the re-opening of the Mount Royal Hotel in July 2018, as well as
  continued focus on revenue management and refresh efforts across our
  attraction and hospitality portfolio. Our outlook for Pursuit’s
  adjusted segment operating results reflects an increase in
  depreciation expense of approximately $2 million.

Conference Call and Web Cast

We will hold a conference call with investors and analysts for a review
of fourth quarter and full year 2018 results on Thursday, February 7,
2019 at 5:00 p.m. (ET). To join the live conference, call (877)
917-8933, passcode “Viad”, or access the webcast through Viad’s Web site
at www.viad.com.
A replay will be available for a limited time at (866) 513-4384 (no
passcode required) or visit the Viad Web site and link to a replay of
the webcast.

About Viad

Viad (NYSE: VVI) generates revenue and shareholder value through two
business units: GES and Pursuit. GES is a global, full-service live
events company offering a comprehensive range of services to the world’s
leading brands and event organizers. Pursuit is a collection of
inspiring and unforgettable travel experiences in Alaska, Montana, the
Canadian Rockies, and Vancouver that includes attractions, lodges and
hotels, and sightseeing tours that connect guests with iconic places.
Viad is an S&P SmallCap 600 company. For more information, visit www.viad.com.

Forward-Looking Statements

This press release contains a number of forward-looking statements.
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. Similarly, statements that describe our
business strategy, outlook, objectives, plans, intentions or goals also
are forward-looking statements. These forward-looking statements are not
historical facts and are subject to a host of risks and uncertainties,
many of which are beyond our control, which could cause actual results
to differ materially from those in the forward-looking statements.

Important factors that could cause actual results to differ materially
from those described in our forward-looking statements include, but are
not limited to, the following:

• 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;
• travel industry disruptions;
• transportation disruptions and increases in transportation costs;
• seasonality of our businesses;
• terrorist attacks, natural disasters and other catastrophic events;
• fluctuations in general economic conditions;
• the impact of recent U.S. tax legislation;
• our exposure to currency exchange rate fluctuations;
• our multi-employer pension plan funding obligations;
• our exposure to labor cost increases and work stoppages related to
  unionized employees;
• our exposure to cybersecurity attacks and threats;
• compliance with laws governing the collection, storage, handling and
  transfer of personal data and our exposure to legal claims and fines
  for data breaches or improper handling of such data;
• unanticipated delays and cost overruns of our capital projects, and
  our ability to achieve established financial and strategic goals of
  such projects;
• adverse effects of show rotation on our periodic results and operating
  margins;
• the effects of the United Kingdom’s exit from the European Union; and
• liabilities relating to prior and discontinued operations.

For a more complete discussion of the risks and uncertainties that may
affect our business or financial results, please see Item 1A, “Risk
Factors,” of our most recent annual report on Form 10-K filed with the
SEC. We disclaim and do not undertake any obligation to update or revise
any forward-looking statement in this press release except as required
by applicable law or regulation.

Forward-Looking Non-GAAP Measures

We have provided the following forward-looking non-GAAP financial
measures: Adjusted Segment EBITDA, Adjusted Segment Operating Income and
Income Before Other Items. We do not provide quantitative
reconciliations of these forward-looking non-GAAP financial measures to
their most directly comparable GAAP financial measures because, due to
variability and difficulty in developing accurate projections and/or
certain information not being ascertainable or accessible, not all of
the information necessary to do so is available to us without
unreasonable effort. Consequently, any attempt to disclose such
reconciliations would imply a degree of precision that could be
confusing or misleading to investors. It is probable that our
forward-looking non-GAAP financial measures may be materially different
from the corresponding GAAP financial measures.

* Refer to Table Two of this press release for a discussion and
reconciliation of this non-GAAP financial measure to its most directly
comparable GAAP financial measure.

Contacts

Sajid Daudi or Carrie Long
Investor Relations
(602)
207-2681
ir@viad.com

Read full story here