8-K: Viad Corp Reports Solid Q1 2024 Results with Strong Growth in Pursuit and GES

Viad Corp's first quarter results show a 14% revenue increase for Pursuit and margin expansion for GES, maintaining a positive full-year outlook.

Summary

• Viad Corp reported its first quarter 2024 results, showing a 4.9% increase in revenue to $273.5 million compared to $260.8 million in the same period last year.
• Pursuit's revenue grew by 14% to $37.2 million, driven by strong performance at its attractions, including the launch of FlyOver Chicago on March 1.
• GES revenue increased by 3.6% to $236.3 million, with underlying growth offsetting a $4 million decline due to the timing of major non-annual shows.
• The company reported a net loss attributable to Viad of $25.1 million, which is an increase of $4.2 million from the first quarter of 2023.
• Adjusted net loss improved slightly by $0.3 million to $21.7 million, due to stronger consolidated Adjusted EBITDA and lower interest expense.
• Consolidated adjusted EBITDA increased by 27.1% to $4.3 million, with GES contributing $18.9 million and Pursuit reporting a negative $11.1 million.
• Viad's cash flow from operations was an outflow of $7.5 million for the quarter, with capital expenditures totaling $20.7 million.
• The company's total liquidity was $137.2 million at March 31, 2024, with a net leverage ratio of 2.7.
• Viad maintains its full-year outlook, expecting consolidated adjusted EBITDA growth of approximately 16% to 30% in 2024.

Sentiment

Score: 7

Explanation: The sentiment is positive due to strong revenue growth in Pursuit, margin expansion in GES, and a maintained positive full-year outlook. However, the net loss and negative cash flow temper the overall sentiment.

Positives

• Pursuit experienced strong revenue growth of 14%, driven by attractions and the successful launch of FlyOver Chicago.
• GES demonstrated margin expansion with a 70 basis point improvement in Adjusted EBITDA margin.
• The company's consolidated adjusted EBITDA increased by 27.1% year-over-year.
• Viad maintains a positive full-year outlook with expected adjusted EBITDA growth of 16% to 30%.
• Spiro is experiencing strong growth with new and existing clients.
• Exhibitions same-show metrics continue to improve, indicating a recovery in the sector.
• Viad has a strong liquidity position of $137.2 million.

Negatives

• Viad reported a net loss attributable to Viad of $25.1 million, an increase of $4.2 million from the same period last year.
• Pursuit's adjusted EBITDA was negative $11.1 million, a decrease of $0.8 million year-over-year due to increased operating costs.
• Cash flow from operations was an outflow of $7.5 million for the first quarter.
• The company's net leverage ratio was 2.7 at the end of the first quarter.

Risks

• General economic uncertainty in key global markets could negatively impact the company's performance.
• Travel industry disruptions could affect the demand for Viad's experiences.
• The company's level of indebtedness and financial covenants could limit operational and financial flexibility.
• Seasonality of the business could lead to fluctuations in revenue and profitability.
• Unanticipated delays and cost overruns of capital projects could impact financial results.
• The company is dependent on key members of its account teams and could be affected by their loss.
• The competitive nature of the industries in which Viad operates could impact its market share.
• Adverse effects of show rotation on periodic results and operating margins could occur.
• Exposure to labor cost increases and work stoppages related to unionized employees could impact profitability.
• Cybersecurity attacks and threats could disrupt operations and lead to financial losses.
• Currency exchange rate fluctuations could impact financial results.
• Compliance with laws governing the storage, collection, handling, and transfer of personal data could lead to legal claims and fines.

Future Outlook

Viad expects consolidated adjusted EBITDA growth of approximately 16% to 30% in 2024, with strong free cash flow. Second quarter revenue is expected to be between $352 to $377 million and adjusted EBITDA between $51 to $59 million. Full year revenue is expected to be up high-single to low-double digits and adjusted EBITDA between $171 to $191 million.

Management Comments

• Steve Moster, Viad's President and CEO, stated that the company delivered solid first quarter results that were in line with expectations.
• Moster noted that Pursuit's 14% revenue growth was driven by strong attractions performance, including the launch of FlyOver Chicago.
• Moster also highlighted that GES continues to deliver strong profitable growth, with a 70 basis point year-over-year improvement in its Adjusted EBITDA margin.
• Moster stated that the company's favorable full year outlook remains unchanged due to accelerating business activity and signs of robust demand.

Industry Context

Viad's performance reflects a broader trend of recovery in the travel and events industries, with strong demand for experiences and a rebound in exhibition activities. The company's focus on unique attractions and experiential marketing positions it well to capitalize on these trends.

Comparison to Industry Standards

• Viad's 14% revenue growth in Pursuit is strong compared to other attraction and hospitality companies, particularly given the seasonal nature of the first quarter.
• The 70 basis point margin improvement in GES is a positive sign, indicating effective cost management and operational efficiency, which is important in the competitive exhibition management sector.
• The company's overall adjusted EBITDA growth of 27.1% is a strong result compared to industry averages, which are still recovering from the pandemic.
• Comparable companies in the attractions space include Cedar Fair (FUN) and Six Flags (SIX), while in the exhibition management space, Informa (INF.L) and RX (RELX.L) are key competitors. Viad's growth rates are competitive with these companies.
• The launch of FlyOver Chicago is similar to other companies investing in new attractions to drive growth, such as Disney's (DIS) new theme park expansions.

Stakeholder Impact

• Shareholders can expect continued growth and potential for above-market returns.
• Employees will benefit from a stable and growing company with opportunities for career advancement.
• Customers will continue to receive high-quality experiences and services.
• Suppliers will benefit from a strong and reliable partner.
• Creditors will be reassured by the company's strong liquidity and positive outlook.

Next Steps

• Viad will continue to focus on delivering extraordinary experiences for its teams, clients, and guests.
• The company will continue to execute its business strategy to achieve significant and sustainable growth and above-market returns for shareholders.
• Viad will continue to monitor and manage its capital projects to ensure they are completed on time and within budget.
• The company will continue to focus on efficiency and productivity initiatives to improve margins.
• Viad will continue to expand its Spiro business by acquiring new clients and expanding services to existing clients.

Key Dates

Keywords

Viad Corp, Pursuit, GES, Adjusted EBITDA, Revenue Growth, Exhibition Management, Experiential Marketing, Attractions, Hospitality, FlyOver Chicago