Viad(US:VVI)2023-08-04 21:10PART I - FINANCIAL INFORMATION Item 1. Financial Statements This section presents Viad Corp's unaudited condensed consolidated financial statements, including balance sheets, statements of operations, and cash flows, with detailed accounting notes Condensed Consolidated Balance Sheets As of June 30, 2023, total assets increased to $1.15 billion and total liabilities rose to $915.5 million, with a slight increase in stockholders' equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total Assets | $1,152,767 | $1,090,346 | | Total current assets | $269,192 | $239,555 | | Property and equipment, net | $567,117 | $549,578 | | Goodwill | $123,899 | $121,429 | | Total Liabilities | $915,473 | $855,959 | | Total current liabilities | $257,086 | $211,117 | | Long-term debt and finance obligations | $459,482 | $456,752 | | Total Stockholders' Equity | $99,976 | $96,840 | Condensed Consolidated Statements of Operations Viad reported Q2 2023 revenue of $320.3 million with net income decreasing to $11.0 million, while six-month revenue grew to $581.1 million with a slight widening of net loss Key Operating Results (in thousands, except per share data) | Metric | Q2 2023 | Q2 2022 | Six Months 2023 | Six Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $320,311 | $319,203 | $581,102 | $496,563 | | Income (loss) from continuing operations | $11,721 | $20,110 | $(9,611) | $(10,508) | | Net income (loss) attributable to Viad | $10,961 | $19,839 | $(9,908) | $(9,162) | | Diluted EPS attributable to Viad | $0.33 | $0.64 | $(0.66) | $(0.67) | Condensed Consolidated Statements of Cash Flows Net cash from operations decreased to $38.8 million for the six months ended June 30, 2023, with significant cash used in investing and financing activities Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $38,800 | $44,018 | | Net cash used in investing activities | $(32,152) | $(56,972) | | Net cash (used in) provided by financing activities | $(11,108) | $10,515 | | Net change in cash, cash equivalents, and restricted cash | $(3,504) | $(4,363) | Notes to Condensed Consolidated Financial Statements Detailed notes cover Viad's accounting policies, segment operations including Pursuit, Spiro, and GES Exhibitions, and financial details on revenue, acquisitions, and debt - Viad Corp operates through three reportable segments: Pursuit (travel experiences), Spiro (experiential marketing), and GES Exhibitions (exhibition services)343536 Disaggregated Revenue by Segment - Six Months Ended June 30 (in thousands) | Segment | 2023 Revenue | 2022 Revenue | | :--- | :--- | :--- | | Pursuit | $121,137 | $101,383 | | Spiro | $140,730 | $132,241 | | GES Exhibitions | $324,031 | $266,431 | - On April 6, 2022, the company acquired Glacier Raft Company for a purchase price of $26.5 million in cash66 - On December 15, 2022, the company sold its ON Services audio-visual business for approximately $30.0 million, recognizing a gain of $19.6 million71 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance, noting Q2 2023 revenue growth with declining net income, while first-half revenue increased 17.0% driven by GES and Pursuit, supported by sufficient liquidity - For the six months ended June 30, 2023, total revenue increased 17.0% to $581.1 million, while segment operating income more than doubled to $27.9 million from $13.9 million in the prior year period151154 - The company plans capital expenditures of approximately $75 million to $85 million for the next 12 months, including about $35 million for growth projects like FlyOver Chicago178 - Total available liquidity as of June 30, 2023, was $148.2 million, consisting of $53.2 million in cash and $95.0 million available on the Revolving Credit Facility174 Results of Operations by Segment Q2 2023 saw Pursuit revenue grow 14.0% to $88.5 million with operating income up 76.1%, while GES revenue decreased 4.0% to $231.8 million with operating income down 24.1% Pursuit Segment Performance - Q2 2023 vs Q2 2022 | Metric | Q2 2023 | Q2 2022 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $88,474 | $77,599 | 14.0% | | Segment Operating Income | $9,811 | $5,571 | 76.1% | - Pursuit's Q2 2023 revenue growth was driven by stronger international visitation in Western Canada and Iceland, with visitor numbers at Golden Skybridge, Sky Lagoon, and Banff Gondola increasing 62%, 22%, and 17% respectively156 GES Segment Performance - Q2 2023 vs Q2 2022 | Metric | Q2 2023 | Q2 2022 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $231,837 | $241,604 | (4.0)% | | Segment Operating Income | $23,633 | $31,120 | (24.1)% | - GES Exhibitions' Q2 revenue was impacted by the sale of ON Services (which contributed $6.4 million in Q2 2022) and negative show rotation, offset by same-show revenue growth of approximately 18.9%166 Liquidity and Capital Resources The company maintains sufficient liquidity, with $53.2 million cash and $95.0 million available on its credit facility, to fund operations and planned capital expenditures of $75-$85 million - The company's primary source of liquidity is cash from operations, which provided $38.8 million in the first six months of 2023174181 - On January 4, 2023, the company entered into an interest rate cap agreement to manage interest rate exposure on $300 million of its Term Loan B borrowings176 - The company's share repurchase program remains suspended as of June 30, 2023185 Item 3. Quantitative and Qualitative Disclosures About Market Risk Viad faces market risks from foreign exchange rate fluctuations and interest rate changes, with variable-rate debt partially hedged by an interest rate cap agreement - The company's primary market risks are foreign exchange rate fluctuations and interest rate changes192 - As of June 30, 2023, the company had cumulative unrealized foreign currency translation losses of $35.0 million recorded in stockholders' equity194 - To mitigate interest rate risk, the company entered into an interest rate cap agreement effective January 31, 2023, to hedge cash flows on $300 million of its Term Loan B197 Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2023, with a previously reported material weakness now remediated - The CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2023198 - A material weakness identified as of December 31, 2022, related to accounting for a finance lease at the Sky Lagoon attraction in Iceland, has been remediated as of June 30, 2023199200 PART II - OTHER INFORMATION Item 1. Legal Proceedings The company is involved in various legal proceedings, including claims related to a 2020 Ice Explorer accident, with no material financial impact expected - The company refers to Note 22 for details on legal proceedings, which discusses the ongoing management of claims related to the July 2020 Ice Explorer accident203129 Item 1A. Risk Factors No material changes to risk factors were reported from the company's 2022 Annual Report on Form 10-K - The company states there are no material changes from the risk factors disclosed in its 2022 Form 10-K204 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company's share repurchase program remained suspended in Q2 2023, with only 257 shares acquired for tax withholding on vested awards - The company's share repurchase program remained suspended during the second quarter of 2023207 - A total of 257 shares were repurchased during Q2 2023, solely to cover tax withholding on vested share-based awards207 Item 5. Other Information No directors or officers adopted or terminated Rule 10b5-1 trading arrangements during Q2 2023 - No directors or officers adopted or terminated Rule 10b5-1 trading plans during the second quarter of 2023208 Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including CEO/CFO certifications and Inline XBRL data files - Exhibits filed include CEO/CFO certifications (31.1, 31.2, 32.1) and XBRL data files210 Signatures The Form 10-Q was signed on August 4, 2023, by Leslie S. Striedel, Chief Accounting Officer - The Form 10-Q was signed on August 4, 2023, by Leslie S. Striedel, Chief Accounting Officer214