8-K: Viad Corp Investor Presentation Highlights Growth Strategy and Strong Market Positions

Viad Corp's investor presentation outlines its strategy for growth, focusing on its Pursuit and GES segments, and emphasizes its strong market positions and potential for shareholder value creation.

Summary

• Viad Corp is focused on delivering extraordinary experiences through its two main segments: Pursuit, a bucket list attractions and hospitality company, and GES, an exhibition management and experiential marketing company.
• Pursuit aims to scale its iconic locations through a 'Refresh, Build, Buy' strategy, targeting a minimum 15% internal rate of return (IRR) on growth investments.
• GES is focused on improving profitability through cost structure transformation and growth in its Spiro experiential marketing division.
• The company anticipates significant year-over-year growth, with a consolidated FY24 Adjusted EBITDA outlook of $171-191 million.
• Pursuit's Adjusted EBITDA is expected to be between $105-115 million in 2024, with a margin expansion to approximately 30%.
• GES is expected to achieve an Adjusted EBITDA margin improvement to approximately 8.5% in 2024, with a target of maintaining or exceeding 8% beyond 2024.
• Viad's capital allocation strategy prioritizes strong free cash flow generation at GES and growth investments at Pursuit, while maintaining a target net leverage ratio of 2.5x-3.5x.
• The company had $160.7 million in liquidity and a 2.6x net leverage ratio as of December 31, 2023.
• Viad's mission is to drive significant and sustainable growth by delivering extraordinary experiences for its teams, clients, and guests.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong growth projections, margin expansion, and a clear strategy. The company's focus on high-return investments and shareholder value creation is also encouraging. However, there are some risks and seasonality issues to consider.

Positives

• Viad has a strong market position in both the attractions and hospitality sector with Pursuit and in the exhibition management and experiential marketing sector with GES.
• Pursuit has a proven growth strategy with a focus on high-return investments and a minimum 15% IRR hurdle rate.
• GES has successfully transformed its cost structure, leading to improved profitability and margin expansion.
• The company has a strong balance sheet with significant liquidity and a manageable leverage ratio.
• Both Pursuit and GES are experiencing strong demand and have significant growth opportunities.
• Viad's executive compensation is strongly aligned with driving shareholder value.
• The company has a clear mission to deliver extraordinary experiences for its teams, clients, and guests.

Negatives

• The company's businesses are subject to seasonality, with Pursuit experiencing peak activity during the summer months.
• The company is exposed to various risks, including economic uncertainty, travel industry disruptions, and cybersecurity threats.
• The company's multi-employer pension plan funding obligations could impact financial flexibility.
• GES's revenue can vary significantly from quarter to quarter due to the timing of shows.

Risks

• The company is exposed to general economic uncertainty in key global markets and a worsening of global economic conditions.
• Travel industry disruptions could negatively impact the Pursuit segment.
• The company faces the risk of cybersecurity attacks and threats.
• Viad is dependent on large exhibition event clients.
• The company is exposed to labor cost increases and work stoppages related to unionized employees.
• Multi-employer pension plan funding obligations could impact financial flexibility.
• The company is exposed to currency exchange rate fluctuations.
• Natural disasters, weather conditions, accidents, and other catastrophic events could disrupt operations.
• Adverse effects of show rotation on periodic results and operating margins could occur.

Future Outlook

Viad anticipates significant year-over-year growth in 2024, driven by strong demand for its experiences and services, margin expansion, and the opening of new attractions. The company expects to maintain or exceed an 8% Adjusted EBITDA margin for GES beyond 2024.

Management Comments

• Viad's mission is to drive significant and sustainable growth by delivering extraordinary experiences for our teams, clients, and guests.
• The company prioritizes being strong stewards of capital to maximize shareholder value.
• Management believes that collecting memories is far more important than collecting things.

Industry Context

Viad operates in the growing experiential travel and events industries. The company's focus on unique, high-quality experiences aligns with the trend of consumers seeking memorable and authentic travel and event opportunities. The exhibition industry is recovering from the pandemic, and Viad is positioned to benefit from this recovery.

Comparison to Industry Standards

• Viad's Pursuit segment competes with other experiential travel companies such as Vail Resorts and Disney Parks, Experiences and Products, but differentiates itself with its focus on iconic, bucket-list destinations and vertically integrated hospitality experiences.
• GES competes with other event management companies such as Freeman and George P. Johnson, but has a strong market share in the US and UK and a focus on recurring revenue.
• Viad's target of a 15%+ IRR for growth investments is a high benchmark, indicating a focus on high-return projects.
• The company's target net leverage ratio of 2.5x-3.5x is within a reasonable range for companies in the hospitality and event management industries.

Stakeholder Impact

• Shareholders are expected to benefit from the company's growth strategy and focus on shareholder value creation.
• Employees may benefit from the company's commitment to creating extraordinary experiences and a positive work environment.
• Customers and guests are expected to benefit from the company's focus on delivering high-quality and memorable experiences.
• Suppliers and creditors may benefit from the company's strong financial position and growth prospects.

Next Steps

• Pursuit will continue to scale its iconic locations using the 'Refresh, Build, Buy' strategy.
• GES will focus on improving profitability and growing its Spiro experiential marketing division.
• The company will continue to evaluate options to maximize shareholder value.
• Viad will continue to invest in high-return growth opportunities.

Key Dates

Keywords

Viad Corp, Pursuit, GES, Adjusted EBITDA, Exhibition Management, Experiential Marketing, Attractions, Hospitality, Growth Strategy, Shareholder Value, Free Cash Flow, Capital Allocation, Spiro, FlyOver, Non-GAAP