8-K: Viad Corp Exceeds Expectations with Strong 2023 Results and Optimistic 2024 Outlook

Viad Corp reports strong fourth quarter and full year 2023 results, exceeding guidance with significant revenue growth and margin expansion in both its Pursuit and GES segments, and anticipates continued growth in 2024.

Summary

• Viad Corp announced its fourth quarter and full year results for 2023, demonstrating strong performance across its business segments.
• Consolidated revenue for the full year reached $1.238 billion, a 9.9% increase compared to 2022.
• Pursuit's full year revenue grew by 17% to $350.3 million, driven by increased international tourism and effective revenue management.
• GES revenue for the full year increased by 7.3% to $888.4 million, with strong demand for exhibition management and experiential marketing services.
• Consolidated adjusted EBITDA for the full year was $147 million, a 26.6% increase year-over-year.
• The company expects a 16% to 30% year-over-year growth in consolidated adjusted EBITDA for 2024.
• Viad's net income attributable to Viad for the full year was $16 million, a decrease of $7.2 million from 2022, primarily due to a gain on the sale of a non-core business in the prior year.
• The company's total liquidity at the end of the year was $160.7 million, with a net leverage ratio of 2.6.
• Capital expenditures for the full year totaled $78.3 million, with $64.6 million allocated to Pursuit and $13.6 million to GES.

Sentiment

Score: 9

Explanation: The document conveys a very positive sentiment due to strong financial results, exceeding expectations, and optimistic future guidance. The company's focus on growth and margin expansion, combined with positive management commentary, contributes to a high sentiment score.

Positives

• Both Pursuit and GES segments showed strong revenue growth and margin expansion.
• Pursuit experienced a significant increase in visitation and revenue per guest.
• GES saw increased corporate client spending on high-margin experiential marketing services.
• The company exceeded the high-end of its guidance for consolidated revenue and adjusted EBITDA.
• Viad anticipates continued strong demand for its experiences in 2024.
• The company expects strong free cash flow in 2024.
• Pursuit's attractions ticket revenue grew 34% in Q4 2023.
• GES's Spiro revenue grew ~23% in Q4 2023.
• The company has a strong liquidity position with $160.7 million available.
• The company is forecasting strong growth in 2024.

Negatives

• Net income attributable to Viad decreased by $7.2 million for the full year due to a gain on the sale of a non-core business in 2022 and higher interest and tax expenses.
• The company reported a net loss attributable to Viad of $15.3 million for the fourth quarter.
• Pursuit reported a negative adjusted EBITDA of $8.3 million for the fourth quarter, although this was an improvement year-over-year.
• The company's effective tax rate was 43.6% for the year ended December 31, 2023, and negative 48.3% for the three months ended December 31, 2023.

Risks

• The company is exposed to general economic uncertainty in key global markets.
• Travel industry disruptions could negatively impact the business.
• The company's level of indebtedness and financial covenants could affect operational and financial flexibility.
• Seasonality of the businesses could impact results.
• The company is exposed to labor shortages, turnover, and labor cost increases.
• The company is dependent on large exhibition event clients.
• Adverse effects of show rotation could impact periodic results and operating margins.
• The company is exposed to transportation disruptions and increases in transportation costs.
• Natural disasters, weather conditions, accidents, and other catastrophic events could impact the business.
• The company is exposed to cybersecurity attacks and threats.
• The company is exposed to currency exchange rate fluctuations.
• The company has identified material weaknesses in its internal control over financial reporting.

Future Outlook

Viad expects strong growth in 2024, with consolidated adjusted EBITDA projected to increase by approximately 16% to 30%. The company anticipates continued strong demand for its experiences and expects to generate strong free cash flow. FlyOver Chicago is expected to open in March 2024.

Management Comments

• Steve Moster, Viad's President and Chief Executive Officer, stated that the company delivered strong fourth quarter and full year results, exceeding the high-end of their guidance.
• Moster noted that GES results significantly surpassed expectations due to increased corporate client spending on high-margin experiential marketing services.
• Moster also mentioned that Pursuit posted record revenue and benefited from increased demand for their attractions and hotels.
• Moster stated that they are entering 2024 with great momentum and see robust demand for their extraordinary experiences at both Pursuit and GES.

Industry Context

Viad's strong performance reflects a broader recovery in the travel and events industries, with increased demand for both leisure and business experiences. The company's focus on unique attractions and experiential marketing positions it well to capitalize on these trends. The growth in experiential marketing aligns with industry forecasts, indicating a positive outlook for GES's Spiro segment.

Comparison to Industry Standards

• Viad's 17% revenue growth in Pursuit is strong compared to other attraction and hospitality companies, particularly given the recovery of international tourism.
• The 7.3% revenue growth in GES is solid, especially considering the sale of a non-core business in 2022. Competitors in the exhibition management space include Informa and RX Global, which have also seen recovery but may not have the same level of growth in experiential marketing.
• The 26.6% increase in consolidated adjusted EBITDA is a strong indicator of operational efficiency and profitability, outperforming many in the broader events and experiences sector.
• The company's focus on margin expansion is a key differentiator, with Pursuit targeting a 30% adjusted EBITDA margin and GES aiming to surpass 8%.

Legal Proceedings

• The loss from discontinued operations during the year ended 2023 was primarily due to legal matters related to previously sold operations.

Stakeholder Impact

• Shareholders are expected to benefit from the company's strong financial performance and positive outlook.
• Employees may experience increased opportunities due to the company's growth.
• Customers and guests are expected to benefit from the company's focus on delivering extraordinary experiences.
• Suppliers and creditors may benefit from the company's strong financial position.

Next Steps

• The company will continue to focus on delivering extraordinary experiences for its teams, clients, and guests.
• Viad will continue to pursue significant and sustainable growth and above-market returns for its shareholders.
• The company will open FlyOver Chicago in March 2024.
• Management will host a conference call to review the results on February 8, 2024.

Key Dates

Keywords

Viad Corp, Pursuit, GES, exhibition management, experiential marketing, attractions, hospitality, adjusted EBITDA, revenue growth, financial results