8-K: Viad Corp to Transform into Pure-Play Attractions and Hospitality Leader Through Sale of GES Business

Viad Corp will sell its GES business to Truelink Capital for $535 million, transforming into a pure-play attractions and hospitality company named Pursuit.

Summary

• Viad Corp has agreed to sell its GES business to Truelink Capital for $535 million in an all-cash transaction.
• The sale is expected to close by the end of 2024, pending regulatory approvals and customary closing conditions.
• Following the sale, Viad will change its corporate name to Pursuit and its stock ticker to PRSU, focusing solely on its attractions and hospitality business.
• Pursuit's 2023 revenue was $350 million with an Adjusted EBITDA margin of 26.4%, welcoming 3.5 million visitors and nearly 420,000 room nights.
• The transaction will allow Pursuit to operate as a standalone public company with a strong balance sheet and the ability to accelerate its growth strategy.
• The proceeds from the sale will be used to retire Viad's existing debt and fund Pursuit's growth initiatives.
• Pursuit has grown revenue at a 15% compound annual growth rate since 2015.
• Over the last 10 years, Pursuit has completed 13 major growth projects that contributed about $74 million of Adjusted EBITDA in 2023.
• Pursuit expects 2024 Adjusted EBITDA to be between $85 and $95 million.

Sentiment

Score: 8

Explanation: The document conveys a positive outlook with a clear strategic direction, strong financial metrics, and a focus on growth. The sale of GES is presented as a positive catalyst for Pursuit, and the management commentary is optimistic. However, there are some risks mentioned, which prevents a perfect score.

Positives

• The sale of GES allows Viad to focus on its high-growth Pursuit business.
• Pursuit will have a strong balance sheet with low leverage and excess cash.
• The transaction will eliminate Viad's higher-cost debt.
• Pursuit has a proven track record of growth and profitability.
• Pursuit operates in a high-demand market with strong tailwinds.
• The company has a clear strategy for future growth through its Refresh, Build, Buy approach.
• Pursuit has a robust pipeline of actionable investment opportunities.
• The company has a strong management team with a proven track record.

Negatives

• The transaction is subject to regulatory approvals and customary closing conditions, which could delay or prevent the sale.
• There are risks associated with the transition of GES to a standalone entity.
• The company is exposed to risks related to the travel industry, economic conditions, and seasonality.
• The company is exposed to risks related to cybersecurity attacks and threats.
• The company is exposed to risks related to currency exchange rate fluctuations.

Risks

• The GES transaction may not be completed on the anticipated terms or timing.
• Regulatory approvals may not be received or may include conditions that are not favorable.
• The anticipated tax treatment of the transaction may not be obtained.
• There could be potential litigation related to the transaction.
• The transaction could negatively impact business relationships.
• The company may face challenges in retaining key personnel.
• General economic uncertainty and travel industry disruptions could impact the business.
• The company is exposed to risks related to natural disasters and other catastrophic events.
• The company is exposed to risks related to labor cost increases and work stoppages.
• The company is exposed to risks related to cybersecurity attacks and threats.
• The company is exposed to risks related to currency exchange rate fluctuations.

Future Outlook

Pursuit is expected to operate as a standalone public company with a strong balance sheet, focusing on its Refresh, Build, Buy growth strategy. The company anticipates continued growth in the attractions and hospitality sector, driven by consumer demand for authentic and immersive travel experiences. Pursuit expects to recover from the Jasper National Park fire closures in 2025.

Management Comments

• Steve Moster, Viad's President and CEO, stated that now is the right time to separate GES and create a standalone publicly traded Pursuit.
• David Barry, President of Pursuit, said that the team has built a leadership position in an industry with high barriers to entry and strong demand.
• David Barry also stated that the transaction allows the company to reset its capital structure and accelerate Pursuits growth trajectory.

Industry Context

This announcement reflects a trend in the market towards companies focusing on core businesses and divesting non-core assets. The move allows Pursuit to capitalize on the growing demand for experiential travel and unique attractions, while GES will benefit from a new owner focused on maximizing its growth potential. The transaction also aligns with the broader trend of private equity firms acquiring established businesses to drive growth and value creation.

Comparison to Industry Standards

• Pursuit's 26.4% Adjusted EBITDA margin in 2023 is strong compared to other companies in the attractions and hospitality industry, such as Vail Resorts (which has a similar margin profile) and Cedar Fair (which has a slightly lower margin).
• The 15% compound annual growth rate since 2015 is also impressive, outpacing many of its peers in the sector.
• The company's focus on iconic destinations and unique experiences positions it well against competitors that offer more commoditized travel options.
• The Refresh, Build, Buy strategy is similar to that of other successful operators in the space, such as Disney and Merlin Entertainments, which focus on continuous improvement and expansion of their offerings.
• The $535 million sale price for GES is a significant transaction, reflecting the value of the business and the strategic importance of the divestiture for Viad.

Management Changes

Stakeholder Impact

• Shareholders are expected to benefit from the increased focus and growth potential of Pursuit.
• Employees of Pursuit will have opportunities for growth as the business expands.
• Customers will continue to experience unique and memorable travel experiences.
• Suppliers and partners will continue to work with Pursuit as a standalone company.
• Creditors will be repaid with the proceeds from the GES sale.

Next Steps

• The transaction is expected to close by the end of 2024.
• Viad will change its corporate name to Pursuit and its stock ticker to PRSU.
• Pursuit will focus on executing its Refresh, Build, Buy growth strategy.
• The company will continue to evaluate opportunities for expansion and acquisitions.

Key Dates

Keywords

Viad Corp, Pursuit, GES, Truelink Capital, attractions, hospitality, exhibition services, experiential marketing, acquisition, divestiture, travel, lodging, tourism, EBITDA, growth, balance sheet