8-K: Viad Corp Reports Strong Q3 2024 Results, On Track to Sell GES Business

Viad Corp announced strong third-quarter results for 2024, driven by growth in both Pursuit and GES, and confirmed the sale of GES is on track to close by the end of the year.

Summary

• Viad Corp reported a 24.5% increase in revenue to $455.7 million for the third quarter of 2024, compared to $365.9 million in the same period of 2023.
• Net income attributable to Viad rose by 17.8% to $48.6 million, up from $41.3 million in the prior year.
• Adjusted net income increased by 35.7% to $58.8 million.
• Consolidated adjusted EBITDA grew by 19.6% to $103.1 million.
• Pursuit's revenue decreased by 2.5% to $182.3 million due to the Jasper wildfire, but excluding Jasper, revenue increased by 13.1%.
• GES revenue increased significantly by 52.8% to $273.4 million, driven by major non-annual shows.
• The company's cash flow from operations was approximately $110 million for the quarter.
• Capital expenditures totaled around $15 million, with $9.7 million for Pursuit and $5.1 million for GES.
• Debt payments (net) were $93.7 million for the third quarter.
• Total liquidity stood at $228.8 million as of September 30, 2024, with $64.6 million in cash and $164.3 million available on the revolving credit facility.
• The sale of GES for $535 million is expected to close on December 31, 2024.
• Viad has revised its full-year guidance, expecting GES to achieve adjusted EBITDA of $90 million to $95 million and Pursuit's adjusted EBITDA to be between $87 million and $92 million.

Sentiment

Score: 8

Explanation: The document conveys a positive sentiment due to strong financial results, the successful sale of GES, and the strategic focus on Pursuit. The company's performance is better than expected, and the future outlook is optimistic. However, the negative impact of the Jasper wildfire and the risks associated with the GES sale prevent a perfect score.

Positives

• Strong revenue growth of 24.5% year-over-year.
• Significant increase in GES revenue by 52.8%.
• Pursuit's revenue grew 13.1% excluding the impact of the Jasper wildfire.
• Adjusted EBITDA increased by 19.6%.
• The sale of GES is on track to close by the end of the year.
• The company completed a tuck-in acquisition in Glacier National Park.
• Viad has revised its full-year guidance upwards for GES.
• Cash flow from operations was a positive $110 million for the quarter.

Negatives

• Pursuit's overall revenue decreased by 2.5% due to the Jasper wildfire.
• Pursuit's adjusted EBITDA decreased by $5.5 million year-over-year.
• The company incurred asset impairment charges and GES transaction-related expenses.
• The company recorded an impairment charge of $5.5 million related to site-specific engineering plans for a terminated FlyOver attraction lease.
• A wildfire in Jasper National Park resulted in an impairment charge of $0.6 million against intangible assets.

Risks

• The pending sale of the GES business may not be completed in the anticipated timeframe or on the expected terms.
• The company may not realize the full strategic, financial, and operational benefits from the sale of GES.
• General economic uncertainty and worsening global economic conditions could impact the business.
• Travel industry disruptions could negatively affect the company's performance.
• The company's level of indebtedness and financial covenants could impact operational and financial flexibility.
• Seasonality of the business could lead to fluctuations in results.
• Unanticipated delays and cost overruns of capital projects could impact financial performance.
• The company is dependent on key members of its account teams and could be impacted by the loss of key personnel.
• The company is exposed to cybersecurity attacks and threats.
• The company is exposed to currency exchange rate fluctuations.

Future Outlook

Viad has revised its full-year guidance, expecting GES to achieve adjusted EBITDA of $90 million to $95 million and Pursuit's adjusted EBITDA to be between $87 million and $92 million. The company anticipates strong growth in 2025 for Pursuit.

Management Comments

• Steve Moster, Viad's President and Chief Executive Officer, stated that they delivered another quarter of strong operational and financial results at both Pursuit and GES.
• Moster noted that Pursuit's revenue grew approximately 13% during the quarter outside of Jasper.
• Moster also mentioned that GES' outperformance was largely driven by successful execution at major non-annual shows and disciplined cost management.
• Moster expressed pleasure that the company recently completed the acquisition of a tuck-in experience for their Glacier Park Collection.
• Moster confirmed that they are on track to complete the transformative sale of GES by the end of the year.
• David Barry, Pursuit President, commented that Eddies has a long and successful history operating in Apgar and they are very proud to continue its success as part of their Glacier Park Collection.

Industry Context

The strong performance of GES is indicative of a rebound in the events and exhibitions industry, while Pursuit's growth, excluding the impact of the Jasper wildfire, highlights the continued demand for unique travel and hospitality experiences. The sale of GES and the focus on Pursuit as a standalone entity reflects a strategic shift towards high-growth, high-margin businesses in the attractions and hospitality sector.

Comparison to Industry Standards

• Viad's GES segment's 52.8% revenue growth significantly outpaces the broader exhibition services industry, which has been recovering from pandemic-related disruptions. Comparatively, companies like Freeman and Informa have also seen growth, but not at this magnitude, suggesting GES's strong execution in major non-annual shows.
• Pursuit's 13.1% revenue growth, excluding Jasper, is competitive within the attractions and hospitality sector. Companies like Vail Resorts and Disney Parks have also reported growth, but Pursuit's focus on unique, iconic destinations provides a differentiated offering.
• The adjusted EBITDA margin for GES at 7.4% shows a significant improvement year-over-year, indicating effective cost management. This is a positive sign compared to industry averages, where margins can be highly variable depending on the type of events and services provided.
• Pursuit's adjusted EBITDA margin of 47.4% is strong, reflecting the high-margin nature of its unique experiences. This is comparable to other high-end hospitality and attractions businesses, but the impact of the Jasper wildfire highlights the vulnerability to external events.
• The sale of GES for $535 million is a significant transaction in the exhibition services industry, and the focus on Pursuit as a standalone entity is a strategic move to capitalize on the growing demand for experiential travel. This is a trend seen across the industry, with companies focusing on core strengths and high-growth areas.

Stakeholder Impact

• Shareholders will benefit from the increased profitability and the strategic focus on Pursuit.
• Employees at Pursuit will have opportunities for growth as the company expands.
• Customers will continue to experience high-quality attractions and hospitality services.
• Suppliers will benefit from the company's continued operations and growth.
• Creditors will be repaid with the proceeds from the sale of GES.

Next Steps

• The company will complete the sale of GES by December 31, 2024.
• Viad will change its corporate name and relaunch as Pursuit (NYSE: PRSU) following the close of the GES sale.
• Pursuit will accelerate its growth through its Refresh, Build, Buy strategy.
• The company will continue to invest in organic and inorganic growth opportunities.
• The company will focus on optimizing price/volume and managing labor and expenses.

Key Dates

Keywords

Viad Corp, Pursuit, GES, EBITDA, Revenue, Acquisition, Divestiture, Exhibition Services, Hospitality, Experiential Marketing, Glacier National Park, Jasper Wildfire