Viad Corp (NYSE:VVI) is a leading provider of extraordinary experiences, including hospitality and leisure activities, experiential marketing, and live events. The company operates through three reportable segments: Pursuit, Spiro, and GES Exhibitions. Viad has demonstrated impressive financial results, with annual revenue of $1,238,680,000 and annual net income of $16,017,000 in its most recent fiscal year. The company has also generated strong annual operating cash flow of $104,678,000 and annual free cash flow of $28,589,000.

Business Overview

Pursuit: Iconic Bucket List Attractions and Hospitality Experiences

Pursuit is a collection of inspiring and unforgettable travel experiences that includes recreational attractions, hotels and lodges, food and beverage, retail, sightseeing, and ground transportation services. In the first quarter of 2024, Pursuit's revenue increased by 14% year-over-year, driven by a 25% increase in attraction ticket revenue and a 3.4% increase in hospitality revenue. The segment's strong performance was led by robust demand for the Sky Lagoon attraction in Iceland and the successful launch of the new FlyOver Chicago attraction.

Pursuit's attractions business saw a 10.4% increase in the number of visitors during the first quarter, with a 9.5% increase in revenue per attraction visitor. The company's hospitality business experienced some softness early in the quarter due to unfavorable weather and ski conditions, but results rebounded in March with a 7% year-over-year increase in room revenue. Pursuit's advanced bookings for 2024 are ahead of the prior year, with strong improvements in average daily rates (ADRs) for both its Canadian and U.S. lodging properties.

For the full year 2024, Pursuit expects to deliver mid-single-digit revenue growth and achieve an adjusted EBITDA margin of approximately 30%, up from 26.4% in 2023. The segment's growth will be driven by continued strong demand for its iconic bucket list attractions and hospitality experiences, as well as the successful launch of FlyOver Chicago and other refresh investments in its existing portfolio.

Spiro: Experiential Marketing Agency Driving Growth

Spiro is Viad's experiential marketing agency, partnering with leading brands around the world to manage and elevate their global experiential marketing activities. In the first quarter of 2024, Spiro's revenue increased by 1.5% year-over-year, with the segment's adjusted EBITDA growing by 26.1%. Excluding the impact of major non-annual events, Spiro's revenue growth rate was approximately 7% compared to the prior year period, driven by strong spending from existing and new clients.

Spiro's growth strategy is focused on retaining, growing, and expanding its client base. The agency has now reached a total of 60 new client wins since its launch as a discrete business within GES in early 2022, demonstrating the strength of its capabilities and the importance of experiential marketing for brands. Spiro is well-positioned to capitalize on the growing demand for experiential marketing, with corporate marketing budgets exceeding 2019 levels.

GES Exhibitions: Transforming Margin Profile and Delivering Profitable Growth

GES Exhibitions is a global exhibition services company that partners with leading exhibition and conference organizers as a full-service provider of strategic and logistics solutions. In the first quarter of 2024, GES Exhibitions' revenue increased by 3.7% year-over-year, with the segment's adjusted EBITDA growing by 9.1%. Excluding the impact of major non-annual events, GES Exhibitions' revenue growth rate was approximately 5% compared to the prior year period, driven by same-show revenue growth.

GES Exhibitions' same-show revenue and same-show event sizes continue to improve year-over-year, with same-show revenue returning to pre-pandemic levels. The segment's flexible cost structure allows for high incremental margins as event sizes recover, which Viad expects to continue through 2025. GES Exhibitions is well-positioned to retain and grow events, with over 90% of its revenue already sold and under contract for 2024.

For the full year 2024, GES expects to deliver low double-digit revenue growth, including approximately $65 million of net incremental revenue from major non-annual shows. The segment's adjusted EBITDA margin is expected to expand to approximately 8.5%, up from 7.7% in 2023, driven by the company's transformed cost structure and ongoing efficiency initiatives.

Financials

Viad's consolidated first quarter 2024 revenue increased by 4.9% year-over-year to $273,497,000, with the company's adjusted EBITDA increasing by $0.9 million. The company's GAAP net loss attributable to Viad was $25,117,000 in the first quarter, which was $4.2 million higher than the prior year period, primarily due to increased non-operational items and income tax expense.

Liquidity

As of March 31, 2024, Viad had total liquidity of $137,231,000, comprising $48,799,000 in cash and $88,432,000 of available capacity on its revolving credit facility. The company's net leverage ratio was 2.7x, near the low end of its target range of 2.5x to 3.5x. Viad has been focused on lowering the cost of its debt and recently repriced its Term Loan B, reducing the borrowing rate by 75 basis points to SOFR plus 4.25%, which will result in annual interest cost savings of more than $2.5 million.

For the full year 2024, Viad expects to deliver approximately 16% to 30% year-over-year growth in its consolidated adjusted EBITDA, with Pursuit's adjusted EBITDA expected to be in the range of $105 million to $115 million and GES' adjusted EBITDA expected to be in the range of $80 million to $90 million. The company also anticipates strong operating cash flow, particularly in the third quarter, and plans for full-year capital expenditures of $65 million to $70 million, including $20 million of growth CapEx at Pursuit.

Geographical and Segment Breakdowns

Viad's operations span across North America, the United Kingdom, Iceland, the Netherlands, the Middle East, and Germany. In the first quarter of 2024, the company's North American operations accounted for approximately 66% of its total revenue, while its EMEA operations contributed 22% of revenue.

On a segmental basis, Pursuit generated 14% of Viad's total revenue in the first quarter, with the segment's revenue increasing by 14% year-over-year. Spiro and GES Exhibitions contributed 22% and 64% of Viad's total revenue, respectively, with Spiro's revenue increasing by 1.5% and GES Exhibitions' revenue increasing by 3.7% compared to the prior year period.

Risks and Challenges

Viad's business is subject to various risks, including global economic uncertainty, travel industry disruptions, the impact of its indebtedness, seasonality, and potential delays or cost overruns in its capital projects. The company also faces risks related to its dependence on key personnel, the competitive nature of its industries, and its exposure to labor cost increases and work stoppages.

Outlook

Despite these risks, Viad remains optimistic about its future prospects. The company is well-positioned to capitalize on the strong demand for its iconic bucket list attractions, hospitality experiences, and experiential marketing services. Viad's focus on delivering extraordinary experiences, executing its strategic initiatives, and maintaining a strong financial position positions the company for continued growth and value creation for its shareholders.

Conclusion

Viad Corp is a leading provider of extraordinary experiences, delivering robust financial performance and a promising outlook. The company's Pursuit segment is poised for continued growth, driven by strong demand for its iconic attractions and hospitality offerings, while Spiro and GES Exhibitions are transforming their margin profiles and delivering profitable growth. With a strong liquidity position, a focus on lowering its cost of debt, and a commitment to value-enhancing investments, Viad is well-equipped to navigate the challenges and capitalize on the opportunities in its dynamic industries.