Market Overview

Viad Corp Delivers Solid 2018 Second Quarter Results

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Income per Share Exceeds Prior Guidance
Strong
Execution at both GES and Pursuit

Viad Corp (NYSE:VVI) today announced second quarter 2018 results that
were stronger than prior guidance. Continued underlying growth at GES
and Pursuit largely offset negative show rotation from non-annual events
that occurred during the 2017 second quarter.

Steve Moster, president and chief executive officer, commented, "We
delivered solid second quarter results with continued same-show growth
at GES and same-store growth at Pursuit. Our team executed well during
the quarter and remains focused on our strategy to bolster GES'
competitive position and to scale our high margin Pursuit business. I
remain confident in our ability to continue driving shareholder value
through disciplined capital allocation and execution against our
strategic goals."

     

Q2
2018

     

Q2
2017

     

y-o-y
Change

$ in millions, except per share data            
Revenue $ 363.7 $ 364.8 -0.3 %
Organic Revenue* 358.2 364.8 -1.8 %
 
Net Income Attributable to Viad $ 23.5 $ 27.9 -15.9 %
Income Before Other Items* 24.5 24.9 -1.6 %
Income Before Other Items per Share* 1.20 1.22 -1.6 %
 
Adjusted Segment Operating Income* $ 39.1 $ 40.7 -3.8 %
Adjusted Segment EBITDA* 54.2 55.1 -1.8 %
 
  • Revenue of $363.7 million decreased 0.3% ($1.1 million)
    year-over-year, or 1.8% ($6.6 million) on an organic basis (which
    excludes the impact of exchange rate variances).
    • The organic revenue decline primarily reflects negative show
      rotation of $15 million, partially offset by continued underlying
      growth at both GES and Pursuit.
  • Adjusted segment operating income, adjusted segment EBITDA and income
    before other items declined compared to the prior year quarter
    primarily due to the decrease in revenue.
  • The decline in net income attributable to Viad primarily reflects
    impairment recoveries of $1.6 million after-tax and favorable tax
    matters of $1.2 million, which were recorded in the 2017 second
    quarter.

GES Results

Moster said, "GES' second quarter revenue came in at the high end of our
prior guidance range, as continued base same-show growth, new client
wins, and favorable exchange rate variances helped to offset negative
show rotation. Operating income exceeded our prior expectations
primarily due to strong execution and cost management by the GES team."

     

Q2
2018

     

Q2
2017

     

y-o-y
Change

$ in millions            
Revenue $ 315.3 $ 320.1 -1.5 %
U.S. Organic Revenue* 241.2 242.0 -0.3 %
International Organic Revenue* 76.0 85.3 -10.9 %
 
Adjusted Segment Operating Income* $ 29.1 $ 30.6 -5.1 %
Adjusted Segment Operating Margin* 9.2 % 9.6 % (40) bps
 
Adjusted Segment EBITDA* $ 38.7 $ 40.1 -3.3 %
Adjusted Segment EBITDA Margin* 12.3 % 12.5 % (20) bps
 

Key Performance Indicators:

U.S. Base Same-Show Revenue Growth(1) 1.2 %
U.S. Show Rotation Revenue Change (approx.)(2) $ (5 )
International Show Rotation Revenue Change (approx.)(2) $ (10 )
 
(1)     Base same-shows are defined as shows produced by GES out of the same
city during the same quarter in both the current year and prior
year. Base same-shows represented 30.2% of GES' U.S. organic revenue
during the 2018 second quarter.
(2) Show rotation refers to shows that take place once every two, three
or four years, as well as annual shows that change quarters from one
year to the next.
  • GES revenue of $315.3 million decreased 1.5% ($4.8 million)
    year-over-year. On an organic basis, which excludes the impact of
    exchange rate variances, revenue decreased 2.9% ($9.3 million).
    • U.S. organic revenue decreased 0.3% ($0.8 million) primarily due
      to negative show rotation of $5 million, partially offset by U.S.
      base same-show growth of 1.2% and new business wins.
    • International organic revenue decreased 10.9% ($9.3 million)
      primarily due to negative show rotation of approximately $10
      million, partially offset by new business wins.
  • GES adjusted segment operating income of $29.1 million* decreased $1.6
    million year-over-year, and $1.9 million on an organic basis.
    • U.S. organic adjusted segment operating income decreased by $0.4
      million to $20.9 million* primarily due to lower revenue.
    • International organic adjusted segment operating income decreased
      by $1.6 million to $7.8 million* primarily due to lower revenue.

Pursuit Results

Moster said, "Pursuit delivered healthy second quarter revenue growth of
8.3%, which was slightly lower than our prior guidance due to less
favorable exchange rates as well as poor weather conditions that
affected passenger counts at some of our attractions. Through the team's
strong focus on cost management, Pursuit's operating income remained in
line with our prior guidance for the quarter."

     

Q2
2018

     

Q2
2017

     

y-o-y
Change

$ in millions            
Revenue $ 48.4 $ 44.7 8.3 %
Organic Revenue* 47.4 44.7 6.0 %
 
Adjusted Segment Operating Income* $ 10.0 $ 10.0 -
Adjusted Segment Operating Margin* 20.7 % 22.4 % (170) bps
 
Adjusted Segment EBITDA* $ 15.4 $ 15.1 2.4 %
Adjusted Segment EBITDA Margin* 31.9 % 33.7 % (180) bps
 
Key Performance Indicators:
Same-Store RevPAR(1) $ 123 $ 116 6.0 %
Same-Store Room Nights Available(1) 66,181 66,259 -0.1 %
Same-Store Passengers(2) 671,920 674,342 -0.4 %
Same-Store Revenue per Passenger(2) $ 43 $ 40 7.5 %
 
(1)     Same-store RevPAR is calculated as total rooms revenue divided by
the total number of room nights available for all comparable Pursuit
properties during the periods presented, expressed on a constant
currency basis. Comparable properties are defined as those owned by
Viad and operating for the entirety of both periods.
(2) Same-store revenue per passenger is calculated as total attractions
revenue divided by the total number of passengers for all comparable
Pursuit attractions, expressed on a constant currency basis.
Comparable attractions are defined as those owned by Viad for the
entirety of both periods.

  • Pursuit revenue of $48.4 million increased 8.3% ($3.7 million)
    year-over-year. On an organic basis, which excludes the impact of
    exchange rate variances and acquisitions, revenue increased 6.0% ($2.7
    million) primarily driven by our revenue management efforts across our
    attractions and hospitality assets.
  • Pursuit adjusted segment operating income of $10.0 million* was
    unchanged year-over-year. Organic adjusted segment operating income of
    $9.8 million decreased $0.2 million primarily due to additional costs
    to support continued growth of the business.

Cash Flow / Capital Structure

  • Our cash flow from operations was $34.9 million for the 2018 second
    quarter.
  • Our capital expenditures for the quarter totaled $21.5 million,
    comprised of $17.4 million for Pursuit, and $4.1 million for GES.
  • Our return of capital totaled $11.1 million for the quarter, including:
    • Our repurchase of 175,091 shares of our common stock for $9.1
      million. As of June 30, 2018, we had 265,449 shares remaining
      under our current repurchase authorization.
    • Our regular quarterly dividend of $0.10 per share, totaling $2.0
      million.
  • Our debt payments (net) totaled $7.8 million for the quarter.
  • Our cash and cash equivalents totaled $49.4 million, our debt totaled
    $240.2 million and our debt-to-capital ratio was 35.5% at June 30,
    2018.

Business Outlook

Our guidance is subject to change as a variety of factors, identified in
the safe harbor language at the end of this press release, can affect
actual results.

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.

2018 Full Year Guidance

Our full year outlook remains largely unchanged with the exception of
revised expectations for exchange rates and tax rates.

Moster said, "Overall, our businesses are performing well and I remain
encouraged by the opportunities that lie ahead of us. We expect GES to
benefit from positive show rotation and continued same-show growth
during the second half of 2018. Pursuit is just entering its peak season
and we're expecting another year of strong visitation and organic
growth. Additionally, we successfully re-opened our Mount Royal Hotel
and are seeing great demand and guest feedback on the upgrades we made
to that property. However, with the devaluing of the Canadian Dollar
versus the U.S. Dollar over recent months, we believe it is prudent to
lower our guidance for Pursuit to reflect unfavorable currency
translation. Additionally, we have updated our tax rate guidance to
reflect a more favorable view regarding the impact of Tax Reform."

  • We expect consolidated revenue to increase at a low single-digit rate
    from 2017 full year revenue, driven primarily by continued growth in
    the underlying business, partially offset by negative show rotation of
    about $40 million at GES.
  • We expect consolidated adjusted segment EBITDA to be in the range of
    $154.5 million to $158.5 million, as compared to $154.2 million* in
    2017. This guidance range reflects a reduction from our prior guidance
    of $156.5 million to $160.5 million due to revised exchange rate
    assumptions and the expected impact on the translation of Pursuit's
    Canadian results.
  • Our guidance assumes that exchange rates during the rest of 2018 will
    approximate $0.76 U.S. Dollars per Canadian Dollar (versus prior
    guidance of $0.79) and $1.33 U.S. Dollars per British Pound (versus
    prior guidance of $1.41). As compared to 2017, we expect exchange rate
    variances to impact 2018 full year results as follows:
                          Viad Total       GES       Pursuit
$ in millions, except per share data
Revenue $

7.5

      $

10.0

      $ (2.5 )
Adjusted Segment Operating Income $ (1.5 ) $ 0.5 $ (2.0 )
Income per Share Before Other Items $ (0.05 )
 
  • The outlook for our business units is as follows:
                    GES       Pursuit
$ in millions
Revenue Comparable to $1,133 in 2017      

Up high-single digits
(from $174 in 2017)

Adjusted Segment EBITDA $85 to $88 (vs. $88.2* in 2017) $69 to $71 (vs. $66.0* in 2017)
Depreciation & Amortization $40 to $41 $19 to $20
Adjusted Operating Income $44.5 to $47.5 (vs. $50.9* in 2017) $49.5 to $51.5 (vs. $48.4* in 2017)
 
Capital Expenditures $33 to $35

$59 to $63
(inclusive of $19 for the Mount
Royal Hotel
and $10 for FlyOver
Iceland)

 
  • We expect GES show rotation to have a net negative impact on full year
    revenue of about $40 million versus 2017. 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.
                          Q1 Act.    

 

Q2 Act.       Q3 Est.       Q4 Est.       FY Est.
Show Rotation Revenue ($ in millions) $ (56 )     $ (15 )       $ 25       $ 5       $ (40 )
 
  • We expect GES U.S. base same-show revenue to increase at
    a low single digit rate.
  • During the 2017 third quarter, GES adjusted segment EBITDA and
    adjusted segment operating income included income of $2.8 million
    related to a contract settlement, which will not recur in 2018.
  • We expect Pursuit revenue to be favorably impacted by approximately $5
    million from 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.
  • We expect start-up costs related to the development of Pursuit's
    FlyOver Iceland attraction, which is expected to open in 2019, to
    approximate $1 million during 2018 ($0.4 million of which was incurred
    during the first half of 2018). These costs are not included in the
    adjusted segment EBITDA or adjusted segment operating income guidance
    ranges above.
  • Our capital expenditure guidance for Pursuit includes approximately
    $19 million to complete the restoration and renovation of the Mount
    Royal Hotel and approximately $10 million to begin development of the
    FlyOver Iceland attraction. The Mount Royal Hotel expenditures are
    being funded primarily by the property insurance proceeds received
    during 2017. The FlyOver Iceland expenditures are being funded
    primarily out of our 2017 capital contribution relating to the FlyOver
    Iceland attraction.
  • We expect corporate activities expense to approximate $10 million to
    $11 million.
  • We expect our effective tax rate on income before other items to
    approximate 28% to 29%, which is based on our current best estimates
    regarding the impact of Tax Reform. This reduction from our prior
    guidance of 30% is based on additional research and interpretation of
    the Tax Cuts and Jobs Act. More specifically, we have determined that
    the additional GILTI tax will be fully offset by foreign tax credits
    generated. The higher rate relative to the 21% U.S. federal corporate
    tax rate is due to our foreign earnings in higher rate jurisdictions,
    the increase in non-deductible expenses, and an increase in our
    effective state tax rate.

2018 Third Quarter Guidance

      2018 Guidance
2017       Low End       High End       FX Impact(1)
$ in millions, except per share data
Revenue:                        
GES $ 232.1 $ 262 to $ 272 $ -
Pursuit 107.0 112 to 117 (3.0 )
Adjusted Operating Income(Loss):
GES $(5.5)* $ - to $ 3.0 $ -
Pursuit 53.9* 57.0 to 59.5 (2.0 )
 
Income per Share Before Other Items $1.33* $ 1.77 to $ 1.92 $

(0.07

)
(1)     FX Impact represents the expected effect of year-over-year changes
in exchange rates that is incorporated in the low end and high end
guidance ranges presented.
  • We expect GES third quarter results to increase primarily due to
    positive show rotation revenue of approximately $25 million, continued
    same-show growth and new business wins.
  • We expect Pursuit third quarter results to increase primarily due to
    continued focus on revenue management and refresh efforts across our
    attraction and hospitality portfolio.

Conference Call and Web Cast

We will hold a conference call with investors and analysts for a review
of second quarter 2018 results on Thursday, July 26, 2018 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 (800) 685-6061 (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, Glacier
National Park, Banff, Jasper 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.

* 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.

VIAD CORP AND SUBSIDIARIES
TABLE ONE - QUARTERLY RESULTS
(UNAUDITED)
                                                 
 
Three months ended June 30, Six months ended June 30,
($ in thousands, except per share data)

2018

2017

$ Change

% Change

2018

2017

$ Change

% Change

Revenue:
GES:
U.S. $ 241,239 $ 242,031 $ (792 ) -0.3 % $ 445,107 $ 499,242 $ (54,135 ) -10.8 %
International 80,429 85,283 (4,854 ) -5.7 % 147,615 149,182 (1,567 ) -1.1 %
Intersegment eliminations   (6,346 )   (7,205 )   859   11.9 %   (9,694 )   (10,444 )   750   7.2 %
Total GES 315,322 320,109 (4,787 ) -1.5 % 583,028 637,980 (54,952 ) -8.6 %
Pursuit   48,355     44,665     3,690   8.3 %   58,077     52,601     5,476   10.4 %
Total revenue $ 363,677   $ 364,774   $ (1,097 ) -0.3 % $ 641,105   $ 690,581   $ (49,476 ) -7.2 %
 
Segment operating income (loss):
GES:
U.S. $ 20,838 $ 21,320 $ (482 ) -2.3 % $ 19,282 $ 42,666 $ (23,384 ) -54.8 %
International   8,167     9,349     (1,182 ) -12.6 %   10,303     11,382     (1,079 ) -9.5 %
Total GES 29,005 30,669 (1,664 ) -5.4 % 29,585 54,048 (24,463 ) -45.3 %
Pursuit   9,757     9,938     (181 ) -1.8 %   (1,638 )   (337 )   (1,301 ) **
Segment operating income 38,762 40,607 (1,845 ) -4.5 % 27,947 53,711 (25,764 ) -48.0 %
Corporate eliminations 17 16 1 6.3 % 33 32 1 3.1 %

Corporate activities (Note A)

(2,535 ) (2,920 ) 385 13.2 % (4,752 ) (5,461 ) 709 13.0 %

Restructuring charges (Note B)

(662 ) (168 ) (494 ) ** (824 ) (562 ) (262 ) -46.6 %
Impairment recoveries (Note C) 35 2,247 (2,212 ) -98.4 % 35 4,631 (4,596 ) -99.2 %
Other expense (Note D) (543 ) (222 ) (321 ) ** (781 ) (674 ) (107 ) -15.9 %

Net interest expense

  (2,301 )   (2,017 )   (284 ) -14.1 %   (4,286 )   (4,064 )   (222 ) -5.5 %
Income from continuing operations before
income taxes 32,773 37,543 (4,770 ) -12.7 % 17,372 47,613 (30,241 ) -63.5 %
Income tax expense   (9,114 )   (10,178 )   1,064   10.5 %   (4,476 )   (12,919 )   8,443   65.4 %
Income from continuing operations 23,659 27,365 (3,706 ) -13.5 % 12,896 34,694 (21,798 ) -62.8 %
Income (loss) from discontinued operations (Note E)   (279 )   509     (788 ) **   649     (307 )   956   **
Net income 23,380 27,874 (4,494 ) -16.1 % 13,545 34,387 (20,842 ) -60.6 %
Net loss attributable to noncontrolling interest 33 73 (40 ) -54.8 % 397 337 60 17.8 %
Net loss attributable to redeemable noncontrolling interest   77     -     77   **   161     -     161   **
Net income attributable to Viad $ 23,490   $ 27,947   $ (4,457 ) -15.9 % $ 14,103   $ 34,724   $ (20,621 ) -59.4 %
 
Amounts Attributable to Viad Common Stockholders:
Income from continuing operations $ 23,769 $ 27,438 $ (3,669 ) -13.4 % $ 13,454 $ 35,031 $ (21,577 ) -61.6 %
Income (loss) from discontinued operations (Note E)   (279 )   509     (788 ) **   649     (307 )   956   **
Net income $ 23,490   $ 27,947   $ (4,457 ) -15.9 % $ 14,103   $ 34,724   $ (20,621 ) -59.4 %
 
Diluted income per common share:
Income from continuing operations
attributable to Viad common shareholders $ 1.16 $ 1.35 $ (0.19 ) -14.1 % $ 0.65 $ 1.72 $ (1.07 ) -62.2 %
Income (loss) from discontinued operations
attributable to Viad common shareholders   (0.01 )   0.02     (0.03 ) **   0.04     (0.02 )   0.06   **
Net income attributable to Viad common
shareholders $ 1.15   $ 1.37   $ (0.22 ) -16.1 % $ 0.69   $ 1.70   $ (1.01 ) -59.4 %
 
Basic income per common share:
Income from continuing operations
attributable to Viad common shareholders $ 1.16 $ 1.35 $ (0.19 ) -14.1 % $ 0.65 $ 1.72 $ (1.07 ) -62.2 %
Income (loss) from discontinued operations
attributable to Viad common shareholders   (0.01 )   0.02     (0.03 ) **   0.04     (0.02 )   0.06   **
Net income attributable to Viad common
shareholders (Note F) $ 1.15   $ 1.37   $ (0.22 ) -16.1 % $ 0.69   $ 1.70   $ (1.01 ) -59.4 %
 
Common shares treated as outstanding for
income per share calculations:
Weighted-average outstanding common shares   20,209     20,140     69   0.3 %   20,208     20,112     96   0.5 %
 
Weighted-average outstanding and potentially
dilutive common shares   20,436     20,364     72   0.4 %   20,446     20,355     91   0.4 %
 
** Change is greater than +/- 100 percent
 
VIAD CORP AND SUBSIDIARIES
TABLE ONE - NOTES TO QUARTERLY RESULTS
(UNAUDITED)
 
(A) Corporate Activities — The decrease in corporate activities expense
for the three and six months ended June 30, 2018 relative to 2017
was primarily due to a decrease in performance-based compensation
expense.
 
(B) Restructuring Charges — During the three months ended June 30, 2018,
Viad recorded restructuring charges primarily related to the
elimination of certain positions at GES. During the six months ended
June 30, 2018, Viad recorded restructuring charges primarily related
to the elimination of certain positions at GES and Pursuit. During
the three and six months ended June 30, 2017, Viad recorded
restructuring charges primarily related to the elimination of
certain positions and facility consolidations at GES, as well as the
elimination of certain positions at Viad's corporate office.
 
(C) Impairment Recoveries — The impairment recoveries recorded during
the three and six months ended June 30, 2017 were related to
insurance proceeds received as a partial settlement for fire damage
to our Mount Royal Hotel.
 
(D) Other Expense — On January 1, 2018, we adopted ASU 2017-07, which
requires retrospective adoption. As a result, we recorded the
nonservice cost component of net periodic benefit cost within other
expense for the three and six months ended June 30, 2018, and we
reclassified $0.2 million and $0.7 million from operating expenses
to other expense for the three and six months ended June 30, 2017,
respectively, to conform to current period presentation.
 
(E) Income (Loss) from Discontinued Operations — The income from
discontinued operations for the six months ended June 30, 2018 was
primarily related to a favorable legal settlement related to
previously sold operations. The loss from discontinued operations
for the six months ended June 30, 2017 was primarily related to an
increase in reserves to resolve certain environmental matters
related to previously sold operations, offset in part by a reduction
in an uncertain tax position due to the lapse of statute during the
2017 second quarter.
 
(F) Income per Common Share — Following is a reconciliation of net
income attributable to Viad to net income allocated to Viad common
shareholders:
 
Three months ended June 30, Six months ended June 30,

($ in thousands, except per share data)

2018

2017

$ Change

% Change

2018

2017

$ Change

% Change

 
Net income attributable to Viad $ 23,490 $ 27,947 $ (4,457 ) -15.9 % $ 14,103 $ 34,724 $ (20,621 ) -59.4 %
Less: Allocation to nonvested shares (222 ) (345 ) 123 35.7 % (139 ) (442 ) 303 68.6 %
Adjustment to the redemption value of redeemable
noncontrolling interest   (52 )   -     (52 ) **   (90 )   -     (90 ) **
Net income allocated to Viad common
shareholders $ 23,216   $ 27,602   $ (4,386 ) -15.9 % $ 13,874   $ 34,282   $ (20,408 ) -59.5 %
 
Weighted-average outstanding common shares 20,209 20,140 69 0.3 % 20,208 20,112 96 0.5 %
 
Basic income per common share attributable
to Viad common shareholders $ 1.15   $ 1.37   $ (0.22 ) -16.1 % $ 0.69   $ 1.70   $ (1.01 ) -59.4 %
 

** Change is greater than +/- 100 percent

 
VIAD CORP AND SUBSIDIARIES
TABLE TWO - NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
                                                 
IMPORTANT DISCLOSURES REGARDING NON-GAAP FINANCIAL MEASURES
 
This document includes the presentation of "Income/(Loss) Before
Other Items", "Adjusted EBITDA", "Adjusted Segment EBITDA" and
"Adjusted Segment Operating Income/(Loss)", which 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 utilized by management to facilitate
period-to-period comparisons and analysis of Viad's operating
performance and should be considered in addition to, but not as
substitutes for, other similar measures reported in accordance with
GAAP. The use of these non-GAAP financial measures is limited,
compared to the GAAP measure of net income attributable to Viad,
because they do not consider a variety of items affecting Viad's
consolidated financial performance as reconciled below. Because
these non-GAAP measures do not consider all items affecting Viad's
consolidated financial performance, a user of Viad's financial
information should consider net income attributable to Viad as an
important measure of financial performance because it provides a
more complete measure of the Company's performance.
 
Income/(Loss) Before Other Items and Adjusted Segment Operating
Income/(Loss) are considered useful operating metrics, in addition
to net income attributable to Viad, as potential variations arising
from non-operational expenses/income are eliminated, thus resulting
in additional measures considered to be indicative of Viad's
performance. Management believes that the presentation of Adjusted
EBITDA and Adjusted Segment EBITDA provide useful information to
investors regarding Viad's results of operations for trending,
analyzing and benchmarking the performance and value of Viad's
business. Management also believes that the presentation of Adjusted
Segment EBITDA for acquisitions and other major capital projects
enables investors to assess how effectively management is investing
capital into major corporate development projects, both from a
valuation and return perspective.
 
Three months ended June 30, Six months ended June 30,
($ in thousands) 2018 2017

$ Change

% Change 2018 2017

$ Change

% Change
Income before other items:
Net income attributable to Viad $ 23,490 $ 27,947 $ (4,457 ) -15.9 % $ 14,103 $ 34,724 $ (20,621 ) -59.4 %
(Income) loss from discontinued operations attributable to Viad   279     (509 )   788   **   (649 )   307     (956 ) **
Income from continuing operations attributable to Viad 23,769 27,438 (3,669 ) -13.4 % 13,454 35,031 (21,577 ) -61.6 %
Restructuring charges, pre-tax 662 168 494 ** 824 562 262 46.6 %
Impairment recoveries, pre-tax (35 ) (2,247 ) 2,212 98.4 % (35 ) (4,631 ) 4,596 99.2 %

Acquisition-related costs and other non-recurring expenses,
pre-tax (Note A)

381 83 298 ** 821 949 (128 ) -13.5 %
Tax expense (benefit) on above items (231 ) 616 (847 ) ** (364 ) 864 (1,228 ) **
Favorable tax matters - (1,198 ) 1,198 -100.0 % - (1,198 ) 1,198 -100.0 %
Net income attributable to FlyOver Iceland noncontrolling interest   (77 )   -     (77 ) **   (161 )   -     (161 ) **
Income before other items $ 24,469   $ 24,860   $ (391 ) -1.6 % $ 14,539   $ 31,577   $ (17,038 ) -54.0 %

 

 

(per diluted share)
Income before other items:
Net income attributable to Viad $ 1.15 $ 1.37 $ (0.22 ) -16.1 % $ 0.69 $ 1.70 $ (1.01 ) -59.4 %
(Income) loss from discontinued operations attributable to Viad   0.01     (0.02 )   0.03   **   (0.04 )   0.02     (0.06 ) **
Income from continuing operations attributable to Viad 1.16 1.35 (0.19 ) -14.1 % 0.65 1.72 (1.07 ) -62.2 %
Restructuring charges, pre-tax 0.03 0.01 0.02 ** 0.04 0.03 0.01 33.3 %
Impairment recoveries, pre-tax - (0.11 ) 0.11 -100.0 % - (0.23 ) 0.23 -100.0 %

Acquisition-related costs and other non-recurring expenses,
pre-tax (Note A)

0.02 - 0.02 ** 0.04 0.05 (0.01 ) -20.0 %
Tax expense (benefit) on above items (0.01 ) 0.03 (0.04 ) ** (0.01 ) 0.04 (0.05 ) **
Favorable tax matters - (0.06 ) 0.06 -100.0 % - (0.06 ) 0.06 -100.0 %
Net income attributable to FlyOver Iceland noncontrolling interest   -     -     -   **   (0.01 )   -     (0.01 ) **
Income before other items $ 1.20   $ 1.22   $ (0.02 ) -1.6 % $ 0.71   $ 1.55   $ (0.84 ) -54.2 %
 
($ in thousands)
Adjusted EBITDA:
Net income attributable to Viad $ 23,490 $ 27,947 $ (4,457 ) -15.9 % $ 14,103 $ 34,724 $ (20,621 ) -59.4 %
(Income) loss from discontinued operations attributable to Viad 279 (509 ) 788 ** (649 ) 307 (956 ) **
Impairment recoveries, pre-tax (35 ) (2,247 ) 2,212 98.4 % (35 ) (4,631 ) 4,596 99.2 %
Interest expense 2,354 2,059 295 14.3 % 4,423 4,164 259 6.2 %
Income tax expense 9,114 10,178 (1,064 ) -10.5 % 4,476 12,919 (8,443 ) -65.4 %
Depreciation and amortization 15,115 14,522 593 4.1 % 28,178 26,666 1,512 5.7 %
Other noncontrolling interest   (54 )   (41 )   (13 ) -31.7 %   18     42     (24 ) -57.1 %
Adjusted EBITDA $ 50,263   $ 51,909   $ (1,646 ) -3.2 % $ 50,514   $ 74,191   $ (23,677 ) -31.9 %
 
 
(A) Acquisition-related costs and other non-recurring expenses include:
Three months ended June 30, Six months ended June 30,
2018 2017

$ Change

% Change 2018 2017

$ Change

% Change
Acquisition integration costs - GES1 $ 69 $ (30 ) $ 99 ** $ 130 $ 95 $ 35 36.8 %
Acquisition integration costs - Pursuit1 - 79 (79 ) -100.0 % - 167 (167 ) -100.0 %
Acquisition transaction-related costs - Pursuit1 56 - 56 ** 68 188 (120 ) -63.8 %
Acquisition transaction-related costs - Corporate2 50 34 16 47.1 % 186 499 (313 ) -62.7 %
FlyOver Iceland start-up costs1   206     -     206   **   437     -     437   **
Acquisition-related and other non-recurring expenses, pre-tax $ 381   $ 83   $ 298   ** $ 821   $ 949   $ (128 ) -13.5 %
 
1 Included in segment operating income (loss)
2 Included in corporate activities

** Change is greater than +/- 100 percent

 
VIAD CORP AND SUBSIDIARIES
TABLE TWO - NON-GAAP FINANCIAL MEASURES (CONTINUED)
(UNAUDITED)
                                           
Organic - The term "organic" is used within this document to
refer to results 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 (or "FX Impact") 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. Management
believes that the presentation of "organic" results permits
investors to better understand Viad's performance without the
effects of exchange rate variances or acquisitions.
 
Three months ended June 30, 2018 Three months ended June 30, 2017
($ in thousands) As Reported

Acquisitions
(Note A)

FX Impact Organic As Reported

Acquisitions
(Note A)

Organic
 
Viad Consolidated:
Revenue $ 363,677   $ -   $ 5,469   $ 358,208   $ 364,774   $ -   $ 364,774  
 
Net income attributable to Viad $ 23,490 $ 27,947
Net loss attributable to noncontrolling interest (33 ) (73 )
Net loss attributable to redeemable noncontrolling interest (77 ) -
(Income) loss from discontinued operations 279 (509 )
Income tax expense 9,114 10,178
Net interest expense 2,301 2,017
Other expense 543 222
Impairment recoveries (35 ) (2,247 )
Restructuring charges 662 168
Corporate activities expense 2,535 2,920
Corporate eliminations   (17 )   (16 )
Segment operating income (loss) $ 38,762 $ (206 ) $ 534 $ 38,434 $ 40,607 $ - $ 40,607
FlyOver Iceland start-up costs 206 206 - - - - -
Integration costs 69 - - 69 49 - 49
Acquisition transaction-related costs   56     -     3     53     -     -     -  
Adjusted segment operating income 39,093 - 537 38,556 40,656 - 40,656
Segment depreciation 12,207 - 198 12,009 11,220 - 11,220
Segment amortization   2,852     -     33     2,819     3,253     -     3,253  
Adjusted Segment EBITDA $ 54,152   $ -   $ 768   $ 53,384   $ 55,129   $ -   $ 55,129  
 
Adjusted segment operating margin 10.7 % 9.8 % 10.8 % 11.1 % 11.1 %
Adjusted segment EBITDA margin 14.9 % 14.0 % 14.9 % 15.1 % 15.1 %
 
GES:
Revenue $ 315,322   $ -   $ 4,478   $ 310,844   $ 320,109   $ -   $ 320,109  
 
Segment operating income $ 29,005 $ - $ 364 $ 28,641 $ 30,669 $ - $ 30,669
Integration costs   69     -     -     69     (30 )   -     (30 )
Adjusted segment operating income 29,074 - 364 28,710 30,639 - 30,639
Depreciation 7,268 - 95 7,173 6,638 - 6,638
Amortization   2,400     -     18     2,382     2,799     -     2,799  
Adjusted Segment EBITDA $ 38,742   $ -   $ 477   $ 38,265   $ 40,076   $ -   $ 40,076  
 
Adjusted segment operating margin 9.2 % 8.1 % 9.2 % 9.6 % 9.6 %
Adjusted segment EBITDA margin 12.3 % 10.7 % 12.3 % 12.5 % 12.5 %
 
GES U.S.:
Revenue $ 241,239   $ -   $ -   $ 241,239   $ 242,031   $ -   $ 242,031  
 
Segment operating income $ 20,838 $ - $ - $ 20,838 $ 21,320 $ - $ 21,320
Integration costs   69     -     -     69     (59 )   -     (59 )
Adjusted segment operating income 20,907 - - 20,907 21,261 - 21,261
Depreciation 5,462 - - 5,462 4,987 - 4,987
Amortization   2,095     -     -     2,095     2,370     -     2,370  
Adjusted Segment EBITDA $ 28,464   $ -   $ -   $ 28,464   $ 28,618   $ -   $ 28,618  
 
Adjusted segment operating margin 8.7 % 8.7 % 8.8 % 8.8 %
Adjusted segment EBITDA margin 11.8 % 11.8 % 11.8 % 11.8 %
 
GES International:
Revenue $ 80,429   $ -   $ 4,478   $ 75,951   $ 85,283   $ -   $ 85,283  
 
Segment operating income $ 8,167 $ - $ 364 $ 7,803 $ 9,349 $ - $ 9,349
Integration costs   -     -     -     -     29     -     29  
Adjusted segment operating income 8,167 - 364 7,803 9,378 - 9,378
Depreciation 1,806 - 95 1,711 1,651 - 1,651
Amortization   305     -     18     287     429     -     429  
Adjusted Segment EBITDA $ 10,278   $ -   $ 477   $ 9,801   $ 11,458   $ -   $ 11,458  
 
Adjusted segment operating margin 10.2 % 8.1 % 10.3 % 11.0 % 11.0 %
Adjusted segment EBITDA margin 12.8 % 10.7 % 12.9 % 13.4 % 13.4 %
 
Pursuit:
Revenue $ 48,355   $ -   $ 991   $ 47,364   $ 44,665   $ -   $ 44,665  
 
Segment operating income (loss) $ 9,757 $ (206 ) $ 170 $ 9,793 $ 9,938 $ - $ 9,938
Integration costs - - - - 79 - 79
Acquisition transaction-related costs 56 - 3 53 - - -
FlyOver Iceland start-up costs   206     206     -     -     -     -     -  
Adjusted segment operating income 10,019 - 173 9,846 10,017 - 10,017
Depreciation 4,939 - 103 4,836 4,582 - 4,582
Amortization   452     -     15     437     454     -     454  
Adjusted Segment EBITDA $ 15,410   $ -   $ 291   $ 15,119   $ 15,053   $ -   $ 15,053  
 
Adjusted segment operating margin 20.7 % 17.5 % 20.8 % 22.4 % 22.4 %
Adjusted segment EBITDA margin 31.9 % 29.4 % 31.9 % 33.7 % 33.7 %
 
(A) Acquisitions include FlyOver Iceland (acquired November 2017)
for Pursuit.
 
VIAD CORP AND SUBSIDIARIES
TABLE TWO - NON-GAAP FINANCIAL MEASURES (CONTINUED)
(UNAUDITED)
                                             
ADDITIONAL NON-GAAP FINANCIAL MEASURES
 
(per diluted share) 2017
Income (loss) before other items: Q1 Q2 Q3 Q4 Full Year
Net income (loss) attributable to Viad $ 0.33 $ 1.37 $ 2.19 $ (1.07 ) $ 2.83
(Income) loss from discontinued operations attributable to Viad   0.04     (0.02 )   -     (0.01 )   0.01  
Income (loss) from continuing operations attributable to Viad 0.37 1.35 2.19 (1.08 ) 2.84
Restructuring charges, pre-tax 0.02 0.01 0.01 0.01 0.05
Impairment recoveries, pre-tax (0.12 ) (0.11 ) (1.20 ) - (1.43 )
Acquisition-related costs and other non-recurring expenses, pre-tax 0.04 - 0.01 0.01 0.06
Tax expense on above items 0.02 0.03 0.32 - 0.37
Charge related to Tax Reform - - - 0.80 0.79
Favorable tax matters   -     (0.06 )   -     -     (0.06 )
Income (loss) before other items $ 0.33   $ 1.22   $ 1.33   $ (0.26 ) $ 2.62  
 
 
 
Q3 2017 FY 2017
Adjusted segment operating income (loss) and adjusted segment
EBITDA:
GES Pursuit Viad GES Pursuit Viad
Net income attributable to Viad $ 44,657 $ 57,707
Net income attributable to noncontrolling interest 1,084 523
Net loss attributable to redeemable noncontrolling interest - (46 )

Loss from discontinued operations

101 268
Income tax expense 20,010 45,898
Net interest expense 2,043 7,985
Other expense, pre-tax 248 2,028
Impairment recoveries, pre-tax (24,467 ) (29,098 )
Restructuring charges, pre-tax 255 1,004
Corporate activities expense 4,425 12,396
Corporate eliminations   (18 )   (67 )
Segment operating income (loss) $ (5,522 ) $ 53,860 $ 48,338 $ 50,731 $ 47,867 $ 98,598
FlyOver Iceland start-up costs - - - - 125 125
Integration costs 20 5 25 161 174 335
Acquisition transaction-related costs   -     -     -     -     200   200  
Adjusted segment operating income (loss) (5,502 ) 53,865 48,363 50,892 48,366 99,258
Segment depreciation 6,691 5,794 12,485 26,444 16,065 42,509
Segment amortization   2,715     586     3,301     10,819     1,589   12,408  
Adjusted segment EBITDA $ 3,904   $ 60,245   $ 64,149   $ 88,155   $ 66,020 $ 154,175  
 

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