Q1

2018

Q1

2017

y-o-y

Change

$ in millions, except per share data

Revenue

$

277.4

$

325.8

(14.8

)%

Organic Revenue*

271.2

325.8

-16.7

%

Net Income (Loss) Attributable to Viad

$

(9.4

)

$

6.8

**

Income (Loss) Before Other Items*

(9.9

)

6.7

**

Income (Loss) Before Other Items per Share*

(0.49

)

0.33

**

Adjusted Segment Operating Income (Loss)*

$

(10.5

)

$

13.5

**

Adjusted Segment EBITDA*

2.5

25.6

-90.3

%

•

Revenue of $277.4 million decreased 14.8% ($48.4 million) year-over-year, or 16.7% ($54.6 million) on an organic basis (which excludes the impact of exchange rate variances).  

o

The organic revenue decline primarily reflects negative show rotation.

o

Exchange rate variances had a favorable impact on revenue of $6.2 million.

•

Adjusted segment operating results, adjusted segment EBITDA and income before other items declined compared to the prior year quarter primarily due to the decrease in revenue.  

Q1

2018

Q1

2017

y-o-y

Change

$ in millions

Revenue

$

267.7

$

317.9

-15.8

%

U.S. Organic Revenue*

203.9

257.2

-20.7

%

International Organic Revenue*

61.4

63.9

-3.9

%

Adjusted Segment Operating Income*

$

0.6

$

23.5

-97.3

%

Adjusted Segment Operating Margin*

0.2

%

7.4

%

-720 bps

Adjusted Segment EBITDA*

$

10.4

$

32.6

-68.1

%

Adjusted Segment EBITDA Margin*

3.9

%

10.2

%

-630 bps

Key Performance Indicators:

U.S. Base Same-Show Revenue Growth⁽¹⁾

3.7

%

U.S. Show Rotation Revenue Change (approx.)⁽²⁾

$

(52

)

International Show Rotation Revenue Change (approx.)⁽²⁾

$

(4

)

(1)

Base same-shows are defined as shows produced by GES out of the same city during the same quarter in both the current year and prior year.  Base same-shows represented 46.5% of GES’ U.S. organic revenue during the 2018 first quarter.

(2)

Show rotation refers to shows that take place once every two, three or four years, as well as annual shows that change quarters from one year to the next.

•

GES revenue of $267.7 million decreased 15.8% ($50.2 million) year-over-year.  On an organic basis, which excludes the impact of exchange rate variances, revenue decreased 17.6% ($56.0 million).

o

U.S. organic revenue decreased 20.7% ($53.3 million) primarily due to negative show rotation of $52 million and certain non-recurring business, partially offset by U.S. base same-show growth of 3.7%.

o

International organic revenue decreased 3.9% ($2.5 million) primarily due to negative show rotation of approximately $4 million, partially offset by new business wins.

•

GES adjusted segment operating income of $0.6 million* decreased $22.9 million year-over-year, and $22.8 million on an organic basis.

o

U.S. organic adjusted segment operating results decreased by $23.0 million to a loss of $1.5 million* primarily due to the lower revenue.

o

International organic adjusted segment operating income of $2.2 million* increased $0.1 million.

Q1

2018

Q1

2017

y-o-y

Change

$ in millions

Revenue

$

9.7

$

7.9

22.5

%

Organic Revenue*

9.3

7.9

17.7

%

Adjusted Segment Operating Loss*

$

(11.2

)

$

(10.0

)

11.5

%

Adjusted Segment Operating Margin*

**

**

**

Adjusted Segment EBITDA*

$

(7.9

)

$

(7.0

)

13.4

%

Adjusted Segment EBITDA Margin*

-81.4

%

-87.9

%

650 bps

Key Performance Indicators:

Same-Store RevPAR⁽¹⁾

$

55

$

49

12.2

%

Same-Store Room Nights Available⁽¹⁾

27,810

27,720

0.3

%

Same-Store Passengers⁽²⁾

158,472

150,397

5.4

%

Same-Store Revenue per Passenger⁽²⁾

$

28

$

25

12.0

%

(1)

Same-store RevPAR is calculated as total rooms revenue divided by the total number of room nights available for all comparable Pursuit properties during the periods presented, expressed on a constant currency basis.  Comparable properties are defined as those owned by Viad and operating for the entirety of both periods.

(2)

Same-store revenue per passenger is calculated as total attractions revenue divided by the total number of passengers for all comparable Pursuit attractions, expressed on a constant currency basis.  Comparable attractions are defined as those owned by Viad for the entirety of both periods.  

•

Pursuit revenue of $9.7 million increased 22.5% ($1.8 million) year-over-year. On an organic basis, which excludes the impact of exchange rate variances, revenue increased 17.7% ($1.4 million) primarily due to better than expected growth at our Banff Jasper Collection.

•

Pursuit adjusted segment operating loss of $11.2 million* increased 11.5% ($1.2 million) year-over-year. On an organic basis, the operating loss of $10.9 million increased $0.9 million primarily due to additional costs to support continued growth initiatives, as well as the timing of certain other expenses.

•

Cash flow from operations was an outflow of $3.4 million for the 2018 first quarter.

•

Capital expenditures for the quarter totaled $26.6 million, comprised of $16.0 million for Pursuit, $10.5 million for GES, and $0.1 million for the corporate office.

•

Return of capital totaled $2.0 million for the quarter (which represented quarterly dividends of $0.10 per share).  Viad had 440,540 shares remaining under its current repurchase authorization at March 31, 2018.

•

Debt payments (net) totaled $20.7 million for the quarter.

•

Cash and cash equivalents were $42.3 million, debt was $232.2 million and the debt-to-capital ratio was 35.1% at March 31, 2018.

•

We expect consolidated revenue to increase at a low single-digit rate from 2017 full year revenue, driven primarily by continued growth in the underlying business and favorable exchange rate variances, partially offset by negative show rotation of about $40 million at GES.

•

We expect consolidated adjusted segment EBITDA to be in the range of $156.5 million to $160.5 million, as compared to $154.5 million* in 2017.

•

Our guidance assumes that exchange rates will approximate $0.79 U.S. Dollars per Canadian Dollar and $1.41 U.S. Dollars per British Pound during the rest of 2018.  Accordingly, we expect exchange rate variances to impact 2018 full year results as follows:

Viad Total

GES

Pursuit

$ in millions, except per share data

Revenue

$

21

$

19

$

2

Adjusted Segment Operating Income

$

0.5

$

0.5

—

Income per Share Before Other Items

$

0.03

•

The outlook for our business units is as follows:

GES

Pursuit

$ in millions

Revenue

Up slightly from $1,133 in 2017

Up high-single to low-double digits

(from $174 in 2017)

Adjusted Segment EBITDA

$85 to $88 (vs. $88.4* in 2017)

$71 to $73 (vs. $66.0* in 2017)

Depreciation & Amortization

$40 to $41

$20 to $21

Adjusted Operating Income

$44.5 to $47.5 (vs. $51.2* in 2017)

$50.5 to $52.5 (vs. $48.4* in 2017)

Capital Expenditures

$33 to $35

$59 to $63

o

We expect GES show rotation to have a net negative impact on full year revenue of about $40 million versus 2017.  Show rotation refers to shows that occur less frequently than annually, as well as annual shows that shift quarters from one year to the next.

Q1 Actual

Q2 Est.

Q3 Est.

Q4 Est.

FY Est.

Show Rotation Revenue ($ in millions)

$

(56

)

$

(15

)

$

25

$

5

$

(40

)

o

We expect GES U.S. base same-show revenue to increase at a low to mid-single digit rate.

o

During 2017, GES adjusted segment EBITDA and adjusted segment operating income included income of $2.8 million related to a contract settlement, which will not recur in 2018.

o

We expect Pursuit revenue to be favorably impacted by approximately $5 million from the planned re-opening of the Mount Royal Hotel in July 2018, as well as continued focus on revenue management and refresh efforts across our attraction and hospitality portfolio.

o

We expect start-up costs related to development of Pursuit’s FlyOver Iceland attraction, which is expected to open in 2019, to approximate $1 million during 2018 ($0.2 million of which was incurred during the first quarter).  These costs are not included in the adjusted segment EBITDA or adjusted segment operating income guidance ranges above.

o

Our capital expenditure guidance for Pursuit includes approximately $19 million to complete the restoration and renovation of the Mount Royal Hotel and approximately $10 million to begin development of the FlyOver Iceland attraction. The Mount Royal Hotel expenditures will be funded primarily by the property insurance proceeds received during 2017.  The FlyOver Iceland expenditures will be funded out of our 2017 capital contribution to acquire the controlling interest in Esja Attractions ehf., the Icelandic entity that is developing the FlyOver Iceland attraction.

•

We expect corporate activities expense to approximate $10 million to $11 million.

•

We expect our effective tax rate on income before other items to approximate 30%, which is based on our current best estimates regarding the impact of Tax Reform. The higher rate relative to the 21% U.S. federal corporate tax rate is due to our foreign earnings in higher rate jurisdictions, the increase in non-deductible expenses, the GILTI tax, and an increase in our effective state tax rate.

2018 Guidance

2017

Low End

High End

FX Impact⁽¹⁾

$ in millions, except per share data

Revenue:

GES

$

320.1

$

300

to

$

315

$

7

Pursuit

44.7

49

to

52

2

Adjusted Operating Income:

GES

$

30.7

*

$

24

to

$

27

$

0.5

Pursuit

10.0

*

9.5

to

12

0.5

Income per Share Before Other Items

$

1.22

*

$

1.00

to

$

1.15

$

0.04

(1)

FX Impact represents the expected effect of year-over-year changes in exchange rates that is incorporated in the low end and high end guidance ranges presented.

•

We expect GES second quarter results to decrease primarily due to negative show rotation revenue of approximately $15 million.

•

We expect Pursuit second quarter revenue to increase primarily due to continued focus on revenue management and refresh efforts across our attraction and hospitality portfolio.  Our operating income guidance reflects additional costs to support continued growth initiatives.

Three months ended March 31,

($ in thousands, except per share data)

2018

2017

$ Change

% Change

Revenue:

GES:

U.S.

$

203,868

$

257,211

$

(53,343

)

-20.7%

International

67,186

63,899

3,287

5.1%

Intersegment eliminations

(3,348

)

(3,239

)

(109

)

-3.4%

Total GES

267,706

317,871

(50,165

)

-15.8%

Pursuit

9,722

7,936

1,786

22.5%

Total revenue

$

277,428

$

325,807

$

(48,379

)

-14.8%

Segment operating income (loss):

GES:

U.S.

$

(1,556

)

$

21,346

$

(22,902

)

**

International

2,136

2,033

103

5.1%

Total GES

580

23,379

(22,799

)

-97.5%

Pursuit

(11,395

)

(10,275

)

(1,120

)

-10.9%

Segment operating income (loss)

(10,815

)

13,104

(23,919

)

**

Corporate eliminations

16

16

—

0.0%

Corporate activities

(2,217

)

(2,541

)

324

12.8%

Restructuring charges

(162

)

(394

)

232

58.9%

Impairment recoveries (Note A)

—

2,384

(2,384

)

-100.0%

Other expense (Note B)

(238

)

(452

)

214

47.3%

Net interest expense

(1,985

)

(2,047

)

62

3.0%

Income (loss) from continuing operations before income taxes

(15,401

)

10,070

(25,471

)

**

Income tax (expense) benefit (Note C)

4,638

(2,741

)

7,379

**

Income (loss) from continuing operations

(10,763

)

7,329

(18,092

)

**

Income (loss) from discontinued operations (Note D)

928

(816

)

1,744

**

Net income (loss)

(9,835

)

6,513

(16,348

)

**

Net loss attributable to noncontrolling interest

364

264

100

37.9%

Net loss attributable to redeemable noncontrolling interest

84

—

84

**

Net income (loss) attributable to Viad

$

(9,387

)

$

6,777

$

(16,164

)

**

Amounts Attributable to Viad Common Stockholders:

Income (loss) from continuing operations

$

(10,315

)

$

7,593

$

(17,908

)

**

Icome (loss) from discontinued operations (Note D)

928

(816

)

1,744

**

Net income (loss)

$

(9,387

)

$

6,777

$

(16,164

)

**

Diluted income (loss) per common share:

Income (loss) from continuing operations attributable to Viad common shareholders

$

(0.51

)

$

0.37

$

(0.88

)

**

Income (loss) from discontinued operations attributable to Viad common shareholders

0.04

(0.04

)

0.08

**

Net income (loss) attributable to Viad common shareholders

$

(0.47

)

$

0.33

$

(0.80

)

**

Basic income (loss) per common share:

Income (loss) from continuing operations attributable to Viad common shareholders

$

(0.51

)

$

0.37

$

(0.88

)

**

Income (loss) from discontinued operations attributable to Viad common shareholders

0.04

(0.04

)

0.08

**

Net income (loss) attributable to Viad common shareholders (Note E)

$

(0.47

)

$

0.33

$

(0.80

)

**

Common shares treated as outstanding for income (loss) per share calculations:

Weighted-average outstanding common shares

20,207

20,083

124

0.6%

Weighted-average outstanding and potentially dilutive common shares

20,207

20,346

(139

)

-0.7%

(A)

Impairment Recoveries – The impairment recovery recorded during the three months ended March 31, 2017 was related to insurance proceeds received as a partial settlement for fire damage to the Company's Mount Royal Hotel.

(B)

Other Expense – On January 1, 2018, we adopted ASU 2017-07, which requires retrospective adoption. As a result, we recorded the nonservice cost component of net periodic benefit cost within other expense for the three months ended March 31, 2018, and we reclassified $0.5 million from operating expenses to other expense for the three months ended March 31, 2017 to conform to current period presentation.

(C)

Income Taxes – Income taxes went from an effective rate of 27% for the three months ended March 31, 2017 to an effective rate of 30% for the three months ended March 31, 2018. The increase in the effective rate for 2018 was primarily due to our mix of domestic versus foreign income, which is taxed at higher rates. Additionally, as a result of Tax Reform, we are now subject to the GILTI tax, increased non-deductible expenses and a higher effective state tax rate, which partially offset the reduction in the federal tax rate.

(D)

Income (Loss) from Discontinued Operations – The income from discontinued operations for the three months ended March 31, 2018 was primarily related to a favorable legal settlement related to previously sold operations. The loss from discontinued operations for the three months ended March 31, 2017 was primarily related to an increase in reserves to resolve certain environmental matters related to previously sold operations.

(E)

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

Three months ended March 31,

($ in thousands, except per share data)

2018

2017

$ Change

% Change

Net income (loss) attributable to Viad

$

(9,387

)

$

6,777

$

(16,164

)

**

Less: Allocation to nonvested shares

—

(89

)

89

-100.0%

Adjustment to the redemption value of redeemable noncontrolling interest

(38

)

—

(38

)

**

Net income (loss) allocated to Viad common shareholders

$

(9,425

)

$

6,688

$

(16,113

)

**

Weighted-average outstanding common shares

20,207

20,083

124

0.6%

Basic income (loss) per common share attributable to Viad common shareholders

$

(0.47

)

$

0.33

$

(0.80

)

**

Three months ended March 31,

($ in thousands)

2018

2017

$ Change

% Change

Income (loss) before other items:

Net income (loss) attributable to Viad

$

(9,387

)

$

6,777

$

(16,164

)

**

(Income) loss from discontinued operations attributable to Viad

(928

)

816

(1,744

)

**

Income (loss) from continuing operations attributable to Viad

(10,315

)

7,593

(17,908

)

**

Restructuring charges, pre-tax

162

394

(232

)

-58.9%

Impairment recoveries, pre-tax

—

(2,384

)

2,384

-100.0%

Acquisition-related costs and other non-recurring expenses, pre-tax (A)

440

866

(426

)

-49.2%

Tax expense (benefit) on above items

(133

)

248

(381

)

**

Net income attributable to FlyOver Iceland noncontrolling interest

(84

)

—

(84

)

**

Income (loss)  before other items

$

(9,930

)

$

6,717

$

(16,647

)

**

(per diluted share)

Income (loss) before other items:

Net income (loss) attributable to Viad

$

(0.47

)

$

0.33

$

(0.80

)

**

(Income) loss from discontinued operations attributable to Viad

(0.04

)

0.04

(0.08

)

**

Income (loss) from continuing operations attributable to Viad

(0.51

)

0.37

(0.88

)

**

Restructuring charges, pre-tax

0.01

0.02

(0.01

)

-50.0%

Impairment recoveries, pre-tax

—

(0.12

)

0.12

-100.0%

Acquisition-related costs and other non-recurring expenses, pre-tax (A)

0.02

0.04

(0.02

)

-50.0%

Tax expense (benefit) on above items

(0.01

)

0.02

(0.03

)

**

Net income attributable to FlyOver Iceland noncontrolling interest

—

—

—

**

Income (loss) before other items

$

(0.49

)

$

0.33

$

(0.82

)

**

($ in thousands)

Adjusted EBITDA:

Net income (loss) attributable to Viad

$

(9,387

)

$

6,777

$

(16,164

)

**

(Income) loss from discontinued operations attributable to Viad

(928

)

816

(1,744

)

**

Impairment recoveries, pre-tax

—

(2,384

)

2,384

-100.0%

Interest expense

2,069

2,105

(36

)

-1.7%

Income tax expense (benefit)

(4,638

)

2,741

(7,379

)

**

Depreciation and amortization

13,063

12,144

919

7.6%

Other noncontrolling interest

72

83

(11

)

-13.3%

Adjusted EBITDA

$

251

$

22,282

$

(22,031

)

-98.9%

(A)

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

Three months ended March 31,

2018

2017

$ Change

% Change

Acquisition integration costs - GES¹

$

61

$

125

$

(64

)

-51.2%

Acquisition integration costs - Pursuit¹

—

88

(88

)

-100.0%

Acquisition transaction-related costs - Pursuit¹

12

188

(176

)

-93.6%

Acquisition transaction-related costs - Corporate²

136

465

(329

)

-70.8%

FlyOver Iceland start-up costs¹

231

—

231

**

Acquisition-related and other non-recurring expenses, pre-tax

$

440

$

866

$

(426

)

-49.2%

Three months ended March 31, 2018

Three months ended March 31, 2017

($ in thousands)

As Reported

Acquisitions(A)

FX Impact

Organic

As Reported

Acquisitions(A)

Organic

Viad Consolidated:

Revenue

$

277,428

$

—

$

6,184

$

271,244

$

325,807

$

—

$

325,807

Net income (loss) attributable to Viad

$

(9,387

)

$

6,777

Net loss attributable to noncontrolling interest

(364

)

(264

)

Net loss attributable to redeemable noncontrolling interest

(84

)

—

(Income) loss from discontinued operations

(928

)

816

Income tax expense (benefit)

(4,638

)

2,741

Net interest expense

1,985

2,047

Other expense

238

452

Impairment recoveries

—

(2,384

)

Restructuring charges

162

394

Corporate activities expense

2,217

2,541

Corporate eliminations

(16

)

(16

)

Segment operating income (loss)

$

(10,815

)

$

(231

)

$

(235

)

$

(10,349

)

$

13,104

—

$

13,104

FlyOver Iceland start-up costs

231

231

—

—

—

—

—

Integration costs

61

—

—

61

213

—

213

Acquisition transaction-related costs

12

—

—

12

188

—

188

Adjusted segment operating income (loss)

(10,511

)

—

(235

)

(10,276

)

13,505

—

13,505

Segment depreciation

10,319

—

237

10,082

9,036

—

9,036

Segment amortization

2,688

—

46

2,642

3,059

—

3,059

Adjusted Segment EBITDA

$

2,496

$

—

$

48

$

2,448

$

25,600

$

—

$

25,600

Adjusted segment operating margin

-3.8

%

-3.8

%

-3.8

%

4.1

%

4.1

%

Adjusted segment EBITDA margin

0.9

%

0.8

%

0.9

%

7.9

%

7.9

%

GES:

Revenue

$

267,706

$

—

$

5,802

$

261,904

$

317,871

$

—

$

317,871

Segment operating income

$

580

$

—

$

(22

)

$

602

$

23,379

$

—

$

23,379

Integration costs

61

—

—

61

125

—

125

Adjusted segment operating income

641

—

(22

)

663

23,504

—

23,504

Depreciation

7,352

—

169

7,183

6,285

—

6,285

Amortization

2,415

—

36

2,379

2,787

—

2,787

Adjusted Segment EBITDA

$

10,408

$

—

$

183

$

10,225

$

32,576

$

—

$

32,576

Adjusted segment operating margin

0.2

%

-0.4

%

0.3

%

7.4

%

7.4

%

Adjusted segment EBITDA margin

3.9

%

3.2

%

3.9

%

10.2

%

10.2

%

GES U.S.: