Viad Corp Reports 2018 Fourth Quarter and Full Year Results

Thursday February 7, 2019. 10:15 PM , from Digital Pro Sound

Pursuit Delivers Full Year Revenue Growth of 6.6%GES
Continues to Drive Same-Show GrowthViad 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

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

%

** Change is greater than +/- 100 percent.

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

Q4

2018

Q4

2017

y-o-y

Change

Full Year

2018

Full Year

2017

y-o-y

Change

$ in millions

Revenue

$

281.8

$

263.0

7.1

%

$

1,110.9

$

1,133.1

-2.0

%

U.S. Organic Revenue*

210.4

188.2

11.8

%

847.2

872.2

-2.9

%

International Organic Revenue*

78.5

79.5

-1.2

%

273.4

282.7

-3.3

%

Adjusted Segment Operating Income*

$

8.9

$

2.3

**

$

39.8

$

50.9

-21.9

%

Adjusted Segment Operating Margin*

3.1

%

0.9

%

220 bps

3.6

%

4.5

%

(90) bps

Adjusted Segment EBITDA*

$

17.9

$

11.6

54.5

%

$

77.7

$

88.2

-11.9

%

Adjusted Segment EBITDA Margin*

6.4

%

4.4

%

200 bps

7.0

%

7.8

%

(80) bps

Key Performance Indicators:

U.S. Base Same-Show Revenue Growth(1)

1.0

%

2.8

%

U.S. Show Rotation Revenue Change (approx.)(2)

$

10

$

(27

)

International Show Rotation Revenue Change (approx.)(2)

$

(2

)

$

(8

)

**

Change is greater than +/- 100 percent.

(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 29.8% and 33.8% of GES’ U.S.
organic revenue during the 2018 fourth quarter and full year,
respectively.

(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 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

Q4

2018

Q4

2017

y-o-y

Change

Full Year

2018

Full Year

2017

y-o-y

Change

$ in millions

Revenue

$

15.2

$

14.3

6.1

%

$

185.3

$

173.9

6.6

%

Organic Revenue*

15.7

14.3

10.0

%

187.2

173.9

7.6

%

Adjusted Segment Operating Income (Loss)*

$

(4.7

)

$

(5.5

)

14.0

%

$

49.9

$

48.4

3.2

%

Adjusted Segment Operating Margin*

-31.3

%

-38.6

%

730 bps

26.9

%

27.8

%

(90) bps

Adjusted Segment EBITDA*

$

(1.4

)

$

(2.3

)

40.0

%

$

68.6

$

66.0

3.9

%

Adjusted Segment EBITDA Margin*

-9.1

%

-16.1

%

700 bps

37.0

%

38.0

%

(100) bps

Key Performance Indicators:

Same-Store RevPAR(1)

$

46

$

48

-4.2

%

$

142

$

138

2.9

%

Same-Store Room Nights Available(1)

29,023

29,036

0.0

%

230,710

231,030

-0.1

%

Same-Store Passengers(2)

280,028

296,473

-5.5

%

2,443,624

2,483,146

-1.6

%

Same-Store Revenue per Passenger(2)

$

36

$

31

16.1

%

$

42

$

39

7.7

%

Same-Store Effective Ticket Price(2)

$

27

$

24

12.5

%

$

34

$

32

6.3

%

(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. Accordingly,
the measures shown above do not include the Mount Royal Hotel, which
was closed during 2017 and through June 2018 due to fire damage.

(2)

Same-store revenue per passenger is calculated as total attractions
revenue, which includes ticket sales as well as ancillary retail and
food and beverage revenue, divided by the total number of passengers
for all comparable Pursuit attractions, expressed on a constant
currency basis. Same-store effective ticket price is a similar
measure but only takes into consideration revenue from the sale of
attraction tickets. Comparable attractions are defined as those
owned by Viad and operating for the entirety of both periods.

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:

Viad Total

GES

Pursuit

$ in millions, except per share data

Revenue

$

(5.0

)

$

(5.5

)

$

0.5

Adjusted Segment Operating Income

$

0.5

$

–

$

0.5

Income per Share Before Other Items

$

0.01

The outlook for our business units is as follows:

GES

Pursuit

$ in millions

Revenue

Up low-single digits

(from $1,111 in 2018)

Up 15% to 17%

(from $185 in 2018)

Adjusted Segment EBITDA

$76 to $80

(vs. $77.7* in 2018)

$76 to $79

(vs. $68.6* in 2018)

Depreciation & Amortization

$37 to $39

$22 to $23

Adjusted Segment Operating Income

$38 to $42

(vs. $39.8* in 2018)

$53.5 to $56.5

(vs. $49.9* in 2018)

Capital Expenditures

$30 to $33

(inclusive of about $10 for

growth projects)

$44 to $48

(inclusive of about $30

for growth projects)

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.

Q1 Est.