Viad(VVI) - 2024 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements for Viad Corp as of March 31, 2024, and for the three months then ended Condensed Consolidated Financial Statements Viad Corp reported a 4.9% revenue increase to $273.5 million in Q1 2024, but net loss widened to $25.1 million, with a $7.5 million operating cash outflow Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total current assets | $283,520 | $235,777 | | Total Assets | $1,180,300 | $1,137,322 | | Total current liabilities | $292,271 | $229,796 | | Total liabilities | $944,195 | $867,377 | | Total stockholders' equity | $99,091 | $132,621 | | Total Liabilities, Mezzanine Equity, and Stockholders' Equity | $1,180,300 | $1,137,322 | Condensed Consolidated Statement of Operations (in thousands, except per share data) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Total revenue | $273,497 | $260,791 | | Loss from continuing operations | $(26,176) | $(21,332) | | Net loss | $(26,243) | $(21,390) | | Net loss attributable to Viad | $(25,117) | $(20,869) | | Diluted loss per common share | $(1.29) | $(1.10) | Condensed Consolidated Statement of Cash Flows Highlights (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $(7,543) | $10,069 | | Net cash used in investing activities | $(20,716) | $(11,359) | | Net cash provided by (used in) financing activities | $25,381 | $(6,492) | | Net change in cash, cash equivalents, and restricted cash | $(3,828) | $(7,378) | Notes to Condensed Consolidated Financial Statements This section details Viad's three operating segments, revenue policies, debt structure, including a recent credit facility amendment, and segment-level financial performance - Viad operates through three reportable segments[37][38][39] - Pursuit: A collection of travel experiences including attractions, hotels, and transportation services - Spiro: An experiential marketing agency for global brands - GES Exhibitions: A global full-service provider for exhibition and conference organizers Revenue by Segment (in thousands) | Segment | Q1 2024 Revenue | Q1 2023 Revenue | | :--- | :--- | :--- | | Pursuit | $37,231 | $32,663 | | Spiro | $61,248 | $60,362 | | GES Exhibitions | $175,840 | $169,497 | | Total Revenue | $273,497 | $260,791 | - The company's primary debt is the 2021 Credit Facility, which includes a Term Loan B due in 2028 and a $170 million Revolving Credit Facility due in 2026[81][82] In April 2024, an amendment reduced the interest rate on the Term Loan B by 0.75% to SOFR + 4.25%[144] Segment Operating Income (Loss) (in thousands) | Segment | Q1 2024 Operating Income (Loss) | Q1 2023 Operating Income (Loss) | | :--- | :--- | :--- | | Pursuit | $(23,831) | $(19,112) | | Spiro | $4,001 | $3,174 | | GES Exhibitions | $11,357 | $10,410 | | Total Segment Operating Loss | $(8,473) | $(5,528) | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2024 results, noting revenue growth from GES and Pursuit, but a wider net loss due to Pursuit's start-up costs, while maintaining $137.2 million in liquidity Results of Operations Total revenue increased 4.9% to $273.5 million, driven by Pursuit and GES, though Pursuit's operating loss widened due to start-up costs for new attractions Financial Highlights (in thousands) | Metric | Q1 2024 | Q1 2023 | % Change | | :--- | :--- | :--- | :--- | | Total revenue | $273,497 | $260,791 | 4.9% | | Net loss attributable to Viad | $(25,117) | $(20,869) | (20.4)% | | Segment operating loss | $(8,473) | $(5,528) | (53.3)% | - Pursuit's revenue increased by $4.6 million (14.0%), primarily from a $4.0 million rise in attractions revenue[153] This was driven by a 10.4% increase in visitors and a 9.5% increase in revenue per visitor, with strong demand at Sky Lagoon and the opening of FlyOver Chicago[154] The segment's operating loss widened by $4.7 million due to higher operating costs and start-up expenses[155] - GES revenue increased by $8.1 million (3.6%)[162] GES Exhibitions revenue grew $6.3 million due to larger show sizes and 6.1% same-show revenue growth[163] Spiro revenue increased $0.9 million from strong client spending[164] Total GES segment operating income rose by $1.8 million to $15.4 million[164] Liquidity and Capital Resources Viad maintained $137.2 million in liquidity as of March 31, 2024, with planned capital expenditures of $60-$70 million for growth, and experienced a $7.5 million operating cash outflow in Q1 2024 Available Liquidity (in thousands) | Component | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Unrestricted cash and cash equivalents | $48,799 | $52,704 | | Available capacity on Revolving Credit Facility | $88,432 | $108,040 | | Total available liquidity | $137,231 | $160,744 | - The company plans capital expenditures of approximately $60 million to $70 million for the next 12 months, including about $20 million for select growth projects, primarily to support Pursuit's growth strategy[175] - In April 2024, the company amended its 2021 Credit Agreement, reducing the applicable rate on its Term Loan B by 0.75% to SOFR + 4.25%[173] - Net cash used in operating activities was $7.5 million in Q1 2024, a $17.6 million decrease from the $10.1 million provided by operating activities in Q1 2023, primarily due to working capital changes and a higher operating loss at Pursuit[177] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company faces market risks from foreign exchange rate fluctuations across international operations and interest rate changes, which are partially hedged by an interest rate cap on $300 million of variable-rate debt - The company is exposed to foreign exchange risk from operations primarily in Canada, the United Kingdom, Iceland, the Netherlands, the Middle East, and Germany[189] This risk impacts the translation of foreign subsidiary financial statements into U.S. dollars[190] - To manage interest rate risk, the company entered into an interest rate cap agreement effective January 2023 to hedge cash flows on $300 million of its SOFR-based borrowings under the 2021 Credit Facility[193] Item 4. Controls and Procedures As of March 31, 2024, the CEO and CFO concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during Q1 2024 - Management, including the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures and concluded they were effective as of March 31, 2024[194] - There were no changes in internal control over financial reporting during the quarter ended March 31, 2024, that materially affected, or are reasonably likely to materially affect, internal controls[195] PART II - OTHER INFORMATION Item 1. Legal Proceedings The company is managing claims from a July 2020 Ice Explorer accident, believing its reserves and insurance coverage are sufficient for potential liabilities - The company continues to manage legal defense of claims from victims and families related to a July 2020 Ice Explorer accident at the Athabasca Glacier[128] - Management believes that its financial reserves and insurance coverage are sufficient to cover potential claims related to this accident, subject to customary deductibles[128] Item 1A. Risk Factors This section refers readers to the detailed risk factors outlined in the company's 2023 Form 10-K, as no new material risks are presented here - The report refers readers to the risk factors discussed in Part I, Item 1A of the 2023 Form 10-K for information on factors that could materially affect the company's business and financial condition[199] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Viad Corp did not repurchase any common stock in Q1 2024, with its share repurchase program remaining suspended since March 2020, leaving 546,283 shares available for future repurchase - No shares of common stock were repurchased during the three months ended March 31, 2024, under the company's publicly announced plans[202] - The Board of Directors suspended the share repurchase program in March 2020[114] As of March 31, 2024, 546,283 shares remain available for repurchase under prior authorizations[202] Item 5. Other Information No director or executive officer adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the first quarter of 2024 - During the three months ended March 31, 2024, no director or officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement"[203] Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including the Fourth Amendment to the 2021 Credit Agreement and CEO/CFO certifications - A key exhibit filed is the Fourth Amendment, dated April 26, 2024, to the Credit Agreement among Viad Corp and its lenders[205] - Other exhibits include CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[205]