Viad Corp 2016 First Quarter Results in Line with Guidance

Q1

2016

Q1

2015

y-o-y
Change

$ in millions, except per share data

Revenue

$ 241.4

$  264.4

-8.7%

Organic Revenue⁽¹⁾

245.3

264.4

-7.2%

Segment Operating Loss

$   (6.3)

$   (1.1)

**

Adjusted Segment Operating Loss⁽¹⁾

(6.2)

(0.7)

**

Adjusted Segment EBITDA⁽¹⁾

2.1

7.9

-73.8%

Loss from Continuing Operations

$  (6.8)

$    (1.9)

**

Loss Before Other Items⁽¹⁾

(6.0)

(2.4)

**

Loss from Continuing Operations per Share

$(0.34)

$(0.10)

**

Loss Before Other Items per Share⁽¹⁾

(0.30)

(0.12)

**

Q1

2016

Q1

2015

y-o-y

Change

$ in millions

Revenue

$236.1

$256.9

-8.1%

U.S. Organic Revenue⁽¹⁾

183.7

192.9

-4.8%

International Organic Revenue⁽¹⁾

57.7

65.2

-11.6%

Segment Operating Income

$    0.3

$    3.7

-92.0%

Adjusted Segment Operating Income⁽¹⁾

0.3

4.1

-92.8%

Adjusted Segment Operating Margin⁽¹⁾

0.1%

1.6%

-150 bps

Adjusted Segment EBITDA⁽¹⁾

$    6.9

$  11.1

-38.0%

Adjusted Segment EBITDA Margin⁽¹⁾

2.9%

4.3%

-140 bps

Key Performance Indicators:

U.S. Base Same-Show Revenue Growth⁽²⁾

5.3%

U.S. Show Rotation Revenue Change (approx.)⁽³⁾

$(7)

International Show Rotation Revenue Change (approx.)⁽³⁾

$(4)

Q1

2016

Q1

2015

y-o-y

Change

$ in millions

Revenue

$   5.2

$   7.5

-30.0%

Organic Revenue⁽¹⁾

5.6

7.5

-25.4%

Segment Operating Loss

$ (6.6)

$ (4.8)

-36.7%

Adjusted Segment Operating Loss⁽¹⁾

(6.5)

(4.8)

-35.7%

Adjusted Segment Operating Margin⁽¹⁾

**

-64.4%

**

Adjusted Segment EBITDA⁽¹⁾

$ (4.8)

$ (3.2)

-52.1%

Adjusted Segment EBITDA Margin⁽¹⁾

-91.9%

-42.3%

**

Key Performance Indicators:

Same-Store RevPAR⁽²⁾

$43

$40

7.5%

Same-Store Room Nights Available⁽²⁾

40,131

39,690

1.1%

Same-Store Passengers⁽³⁾

-

47,775

-100%

Same-Store Revenue per Passenger⁽³⁾

-

$36

-100%

M&E

T&R⁽²⁾

$ in millions

Revenue

Up high-single digits

from 2015 ($976.9)

Up 20% to 25%

from 2015 ($112.2)

Adjusted Segment EBITDA⁽¹⁾

$77 to $80 (vs. $54.8 in 2015)

$42 to $46 (vs. $35.8 in 2015)

Depreciation & Amortization

$25 to $27

$13 to $14

Adjusted Operating Income⁽¹⁾

$51 to $54 (vs. $27.7 in 2015)

$28.5 to $32.5 (vs. $27.8 in 2015)

Capital Expenditures

$23 to $25

$25 to $27

Q1 Actual

Q2 Est.

Q3 Est.

Q4 Est.

FY Est.

Show Rotation Revenue ($ in millions)

$(11)

$(10)

$80 - $85

$(10) - $(15)

$50

Viad Total

M&E

T&R

$ in millions, except per share data

Revenue

$   (19)

$   (16)

$    (3)

Adjusted Segment Operating Income⁽¹⁾

$  (1.5)

$     (1)

$ (0.5)

Income per Share Before Other Items⁽¹⁾

$(0.04)

2016 Guidance

Low End

High End

FX Impact⁽²⁾

$ in millions, except per share data

Revenue:

M&E

$286.6

$265

to

$275

$(5)

T&R

30.5

35

to

38

(1.5)

Adjusted Operating Income⁽¹⁾:

M&E

$ 30.4

$23

to

$26

$(0.5)

T&R

6.2

3

to

4.5

(0.5)

Income per Share Before Other Items⁽¹⁾

$1.18

$0.73

to

$0.86

$(0.02)

VIAD CORP AND SUBSIDIARIES

TABLE ONE - QUARTERLY RESULTS

(UNAUDITED)

Three months ended March 31,

($ in thousands, except per share data)

2016

2015

$ Change

% Change

Revenue:

Marketing & Events Group:

U.S.

$  183,737

$  192,943

$   (9,206)

-4.8%

International

54,081

65,236

(11,155)

-17.1%

Intersegment eliminations

(1,682)

(1,251)

(431)

-34.5%

Total Marketing & Events Group

236,136

256,928

(20,792)

-8.1%

Travel & Recreation Group

5,226

7,468

(2,242)

-30.0%

Total revenue

$  241,362

$  264,396

$ (23,034)

-8.7%

Segment operating income (loss):

Marketing & Events Group:

U.S.

$          862

$      2,637

$   (1,775)

-67.3%

International

(569)

1,047

(1,616)

**

Total Marketing & Events Group

293

3,684

(3,391)

-92.0%

Travel & Recreation Group

(6,573)

(4,809)

(1,764)

-36.7%

Segment operating loss

(6,280)

(1,125)

(5,155)

Corporate activities (Note A)

(1,911)

(2,810)

899

32.0%

Restructuring charges (Note B)

(992)

(216)

(776)

**

Net interest expense

(1,228)

(1,088)

(140)

-12.9%

Loss from continuing operations before income taxes

(10,411)

(5,239)

(5,172)

Income tax benefit (Note C)

3,452

3,267

185

5.7%

Loss from continuing operations

(6,959)

(1,972)

(4,987)

**

Loss from discontinued operations

(186)

(148)

(38)

-25.7%

Net loss

(7,145)

(2,120)

(5,025)

**

Net loss attributable to noncontrolling interest

162

64

98

**

Net loss attributable to Viad

$    (6,983)

$    (2,056)

$   (4,927)

**

Amounts Attributable to Viad Common Stockholders:

Loss from continuing operations

$    (6,797)

$    (1,908)

$   (4,889)

**

Loss from discontinued operations

(186)

(148)

(38)

-25.7%

Net loss

$    (6,983)

$    (2,056)

$   (4,927)

**

Diluted loss per common share:

Loss from continuing operations attributable to Viad common shareholders

$      (0.34)

$      (0.10)

$      (0.24)

**

Loss from discontinued operations attributable to Viad common shareholders

(0.01)

-

(0.01)

**

Net loss attributable to Viad common shareholders

$      (0.35)

$      (0.10)

$      (0.25)

**

Basic loss per common share:

Loss from continuing operations attributable to Viad common shareholders

$      (0.34)

$      (0.10)

$      (0.24)

**

Loss from discontinued operations attributable to Viad common shareholders

(0.01)

-

(0.01)

**

Net loss attributable to Viad common shareholders (Note D)

$      (0.35)

$      (0.10)

$      (0.25)

**

Common shares treated as outstanding for

Loss per share calculations:

Weighted-average outstanding common shares

19,914

19,736

178

Weighted-average outstanding and potentially dilutive common shares

19,914

19,736

178

0.9%

** Change is greater than +/- 100 percent

VIAD CORP AND SUBSIDIARIES

TABLE ONE - NOTES TO QUARTERLY RESULTS

(UNAUDITED)

(A)

Corporate Activities — The decrease in corporate activities expense for the three months ended March 31, 2016 was primarily due to 2015 costs related to a shareholder nomination and settlement agreement and higher consulting and other transaction-related costs associated with acquisitions in the 2015 quarter.

(B)

Restructuring Charges — During the three months ended March 31, 2016 and 2015, Viad recorded restructuring charges of $1.0 million ($0.7 million after-tax) and $0.2 million ($0.1 million after-tax), respectively, primarily related to the elimination of positions and facility consolidations in the Marketing & Events Group, as well as the elimination of certain positions at the Corporate office. 

(C)

Income Taxes – The three months ended March 31, 2015 included a $1.6 million non-cash tax benefit related to deferred taxes associated with certain foreign intangible assets.

(D)

Income per Common Share — Following is a reconciliation of net loss attributable to Viad to net loss allocated to Viad common shareholders:

Three months ended March 31,

($ in thousands, except per share data)

2016

2015

$ Change

% Change

Net loss attributable to Viad

$    (6,983)

$    (2,056)

$   (4,927)

**

Less: Allocation to nonvested shares

-

-

-

**

Net loss allocated to Viad common shareholders

$    (6,983)

$    (2,056)

$   (4,927)

**

Weighted-average outstanding common shares

19,914

19,736

178

0.9%

Basic loss per common share attributable to Viad common shareholders

$      (0.35)

$      (0.10)

$      (0.25)

**

** Change is greater than +/- 100 percent

VIAD CORP AND SUBSIDIARIES

TABLE TWO - NON-GAAP MEASURES (NOTE A)

(UNAUDITED)

Three months ended March 31,

($ in thousands)

2016

2015

$ Change

% Change

Loss before other items:

Loss from continuing operations attributable to Viad

$  (6,797)

$  (1,908)

$    (4,889)

**

Restructuring charges, net of tax

651

133

518

**

Acquisition-related costs and other non-recurring expenses, net of tax (B)

135

889

(754)

84.8%

Favorable tax matters

-

(1,563)

1,563

-100.0%

Loss before other items

$  (6,011)

$  (2,449)

$    (3,562)

**

(per diluted share)

Loss before other items:

Loss from continuing operations attributable to Viad

$     (0.34)

$     (0.10)

$      (0.24)

**

Restructuring charges, net of tax

0.03

0.01

0.02

**

Acquisition-related costs and other non-recurring expenses, net of tax (B)

0.01

0.05

(0.04)

80.0%

Favorable tax matters

-

(0.08)

0.08

-100.0%

Loss before other items

$     (0.30)

$     (0.12)

$      (0.18)

**

($ in thousands)

Adjusted EBITDA:

Net loss attributable to Viad

$  (6,983)

$  (2,056)

$    (4,927)

**

Loss from discontinued operations

186

148

38

-25.7%

Interest expense

1,284

1,151

133

-11.6%

Income tax benefit

(3,452)

(3,267)

(185)

5.7%

Depreciation and amortization

8,370

8,708

(338)

3.9%

Other non-controlling interest

1

(16)

17

**

Adjusted EBITDA

$      (594)

$     4,668

$    (5,262)

**

** Change is greater than +/- 100 percent

Income before other items and Adjusted EBITDA are supplemental to results presented under accounting principles generally accepted in the United States of America ("GAAP") and may not be comparable to similarly titled measures presented by other companies. These non-GAAP measures are used by management to facilitate period-to-period comparisons and analysis of Viad's operating performance and liquidity. Management believes these non-GAAP measures are useful to investors in trending, analyzing and benchmarking the performance and value of Viad's business. These non-GAAP measures should be considered in addition to, but not as a substitute for, other similar measures reported in accordance with GAAP.

Forward−Looking Non−GAAP Financial Measures
The Company has also provided the following forward−looking non−GAAP financial measures: Adjusted Segment EBITDA, Adjusted Segment EBITDA Margin, Adjusted Segment Operating Income, Adjusted Segment Operating Margin and Income Before Other Items.  The Company does not provide reconciliations of these forward−looking non−GAAP financial measures to the most directly comparable GAAP financial measures because, due to variability and difficulty in making accurate forecasts and projections and/or certain information not being ascertainable or accessible, not all of the information necessary for quantitative reconciliations of these forward−looking non−GAAP financial measures to the most directly comparable GAAP financial measures are available to the Company without unreasonable efforts.  Consequently, any attempt to disclose such reconciliations would imply a degree of precision that could be confusing or misleading to investors.  It is probable that the forward−looking non−GAAP financial measures provided without the directly comparable GAAP financial measures may be materially different from the corresponding non−GAAP financial measures.

(B)

Acquisition-related costs and other non-recurring expenses include:

Three months ended March 31,

2016

2015

$ Change

% Change

Acquisition integration costs¹

46

406

(360)

88.7%

Acquisition transaction-related costs²

170

458

(288)

62.9%

Shareholder nomination and settlement agreement costs²

-

494

(494)

100.0%

Tax benefit on above items

(81)

(469)

388

82.7%

Acquisition-related and other non-recurring expenses, net of tax

135

889

(754)

84.8%

¹Included in segment operating income (loss)

²Included in corporate activities

Additional Prior Year Non-GAAP Financial Measures:

Income before other items:

Q2 2015

Loss from continuing operations attributable to Viad

$       1.11

Restructuring charges, net of tax

0.04

Acquisition-related costs and other non-recurring expenses, net of tax

0.03

Loss before other items

$       1.18

Q2 2015

FY 2015

Adjusted segment operating income and EBITDA:

M&E

T&R

M&E

T&R

Segment operating income

30,083

6,203

26,774

27,810

Integration costs

338

-

910

-

Adjusted segment operating income

30,421

6,203

27,684

27,810

Segment depreciation

5,190

2,171

20,233

7,654

Segment amortization

1,673

86

6,860

320

Adjusted segment EBITDA

37,284

8,460

54,777

35,784

VIAD CORP AND SUBSIDIARIES

TABLE TWO - NON-GAAP MEASURES

(UNAUDITED)

Organic - The term "organic" is used within this document to refer to results without the impact of exchange rate variances and acquisitions, if any, until such acquisitions are included in the entirety of both comparable periods.  The impact of exchange rate variances (or "FX Impact") is calculated as the difference between current period activity translated at the current period's exchange rates and the comparable prior period's exchange rates.  Management believes that the presentation of "organic" results permits investors to better understand Viad's performance without the effects of exchange rate variances or acquisitions.

Adjusted segment operating income (loss) and Adjusted Segment EBITDA - Adjusted segment operating income (loss) is calculated as segment operating income (loss) excluding acquisition integration costs, if any.  Adjusted segment EBITDA is calculated as adjusted segment operating income (loss) plus depreciation and amortization.  Adjusted Segment Operating Income and Adjusted Segment EBITDA are supplemental to results presented under accounting principles generally accepted in the United States of America ("GAAP") and may not be comparable to similarly titled measures presented by other companies. Management believes these measures are useful information to investors regarding Viad's results of operations for trending, analyzing and benchmarking the performance and value of Viad's business.  Management also believes that the presentation of adjusted segment EBITDA for acquisitions enables investors to assess how effectively management is investing capital into major corporate development projects, both from a valuation and return perspective.

Three months ended March 31, 2016

Three months ended March 31, 2015

($ in thousands)

As Reported

Acquisitions(A)

FX Impact

Organic

As Reported

Acquisitions(A)

Organic

Viad Consolidated:

Revenue

$         241,362

$                           52

$     (3,987)

$   245,297

$         264,396

$                            -

$   264,396

Segment operating loss

$           (6,280)

$                      (784)

$           514

$      (6,010)

$           (1,125)

$                            -

$      (1,125)

Integration costs

46

46

-

-

406

-

406

Adjusted segment operating loss

(6,234)

(738)

514

(6,010)

(719)

-

(719)

Segment depreciation

6,659

243

(168)

6,584

6,669

-

6,669

Segment amortization

1,660

-

(48)

1,708

1,999

-

1,999

Adjusted Segment EBITDA

$             2,085

$                      (495)

$           298

$        2,282

$             7,949

$                            -

$        7,949

Adjusted segment operating margin

-2.6%

**

-12.9%

-2.5%

-0.3%

-0.3%

Adjusted segment EBITDA margin

0.9%

**

-7.5%

0.9%

3.0%

3.0%

Marketing & Events Group:

Revenue

$         236,136

$                            -

$     (3,589)

$   239,725

$         256,928

$                            -

$   256,928

Segment operating income

$                 293

$                            -

$           153

$            140

$             3,684

$                            -

$        3,684

Integration costs

-

-

-

-

406

-

406

Adjusted segment operating income

293

-

153

140

4,090

-

4,090

Depreciation

4,982

-

(104)

5,086

5,096

-

5,096

Amortization

1,611

-

(45)

1,656

1,919

-

1,919

Adjusted Segment EBITDA

$             6,886

$                            -

$                4

$        6,882

$           11,105

$                            -

$      11,105

Adjusted segment operating margin

0.1%

-4.3%

0.1%

1.6%

1.6%

Adjusted segment EBITDA margin

2.9%

-0.1%

2.9%

4.3%

4.3%

Marketing & Events Group - U.S.:

Revenue

$         183,737

$                            -

$               -

$   183,737

$         192,943

$                            -

$   192,943

Segment operating income

$                 862

$                            -

$               -

$            862

$             2,637

$                            -

$        2,637

Integration costs

-

-

-

-

129

-

129

Adjusted segment operating income

862

-

-

862

2,766

-

2,766

Depreciation

3,503

-

-

3,503

3,575

-

3,575

Amortization

958

-

-

958

1,113

-

1,113

Adjusted Segment EBITDA

$             5,323

$                            -

$               -

$        5,323

$             7,454

$                            -

$        7,454

Adjusted segment operating margin

0.5%

0.5%

1.4%

1.4%

Adjusted segment EBITDA margin

2.9%

2.9%

3.9%

3.9%

Marketing & Events Group - International:

Revenue

$           54,081

$                            -

$     (3,589)

$      57,670

$           65,236

$                            -

$      65,236

Segment operating income (loss)

$               (569)

$                            -

$           153

$         (722)

$             1,047

$                            -

$        1,047

Integration costs

-

-

-

-

277

-

277

Adjusted segment operating income (loss)

(569)

-

153

(722)

1,324

-

1,324

Depreciation

1,479

-

(104)

1,583

1,521

-

1,521

Amortization

653

-

(45)

698

806

-

806

Adjusted Segment EBITDA

$             1,563

$                            -

$                4

$        1,559

$             3,651

$                            -

$        3,651

Adjusted segment operating margin

-1.1%

-4.3%

-1.3%

2.0%

2.0%

Adjusted segment EBITDA margin

2.9%

-0.1%

2.7%

5.6%

5.6%

Travel & Recreation Group:

Revenue

$             5,226

$                           52

$         (398)

$        5,572

$             7,468

$                            -

$        7,468

Segment operating loss

$           (6,573)

$                      (784)

$           361

$      (6,150)

$           (4,809)

$                            -

$      (4,809)

Integration costs

46

46

-

-

-

-

-

Adjusted segment operating loss

(6,527)

(738)

361

(6,150)

(4,809)

-

(4,809)

Depreciation

1,677

243

(64)

1,498

1,573

-

1,573

Amortization

49

-

(3)

52

80

-

80

Adjusted Segment EBITDA

$           (4,801)

$                      (495)

$           294

$      (4,600)

$           (3,156)

$                            -

$      (3,156)

Adjusted segment operating margin

**

**

-90.7%

**

-64.4%

-64.4%

Adjusted segment EBITDA margin

-91.9%

**

-73.9%

-82.6%

-42.3%

-42.3%

(A) Acquisitions include Maligne Lake Tours (acquired January 2016) and CATC (acquired March 2016) for T&R.