Viad Corp 2015 Results Better Than Guidance

04/02/2016 14:05

PHOENIX, Feb. 4, 2016 /PRNewswire/ -- Viad Corp (NYSE:VVI) today announced 2015 full year and fourth quarter results that were better than guidance, driven by continued strength in its Marketing & Events Group (M&E).


	Q4 2015	Q4 2014	y-o-y Change	Full Year 2015	Full Year 2014	y-o-y Change
$ in millions, except per share data
Revenue	$ 251.7	$223.2	12.8%	$1,089.0	$1,065.0	2.3%
Organic Revenue⁽¹⁾	248.8	216.6	14.9%	1,058.3	1,043.6	1.4%

Segment Operating Income (Loss)	$ 4.9	$ (0.6)	**	$ 54.6	$ 59.9	-8.8%
Adjusted Segment Operating Income⁽¹⁾	4.8	0.1	**	55.5	60.6	-8.5%
Adjusted Segment EBITDA⁽¹⁾	12.9	9.0	44.0%	90.6	91.3	-0.8%

Income (Loss) from Continuing Operations	$ (0.8)	$ (7.3)	89.0%	$ 27.0	$ 40.8	-33.8%
Income (Loss) Before Other Items⁽¹⁾	0.3	(3.5)	**	29.3	35.2	-16.8%

Income (Loss) from Continuing Operations per Share	$(0.04)	$(0.37)	89.2%	$1.34	$2.02	-33.7%
Income (Loss) Before Other Items per Share⁽¹⁾	0.01	(0.18)	**	1.46	1.75	-16.6%

(1)	Refer to Table Two of this press release for a reconciliation of this non-GAAP financial measure to its nearest GAAP financial measure. Organic measures (as defined in Table Two) exclude the impact of exchange rate variances and acquisitions, if any, until such acquisitions are included in the entirety of both periods being compared.

**	Change is greater than +/- 100 percent.

Full Year

Full year revenue increased 2.3% ($24.1 million) year-over-year, or 1.4% ($14.7 million) on an organic basis (which excludes the impact of acquisitions and unfavorable exchange rate variances).
- Year-over-year revenue growth from acquisitions was $49.1 million.
- Exchange rate variances had an unfavorable impact on revenue of $39.7 million.
- The timing of non-annual events, or show rotation, resulted in a revenue decline of approximately $71 million, which was more than offset by growth in the underlying business.
The slight decrease in adjusted segment EBITDA was driven largely by higher performance-based incentives. The decreases in segment operating income and income before other items primarily reflect additional non-cash depreciation and amortization of $7.3 million from acquisitions completed during the second half of 2014.

Fourth Quarter

Fourth quarter revenue increased 12.8% ($28.5 million) year-over-year, or 14.9% ($32.2 million) on an organic basis (which excludes the impact of acquisitions and unfavorable exchange rate variances).
- Year-over-year revenue growth from acquisitions was $3.2 million.
- Exchange rate variances had an unfavorable impact on revenue of $6.9 million.
- The timing of events, or show rotation, resulted in a revenue increase of approximately $9 million.
The increases in segment operating income, segment EBITDA and income before other items primarily reflect stronger revenue and operating margins in M&E.

Steve Moster, president and chief executive officer, said, "We delivered solid results for 2015 and achieved the financial targets we set out at the beginning of the year. Despite various headwinds, some anticipated and some unanticipated, both business groups performed very well during 2015. We also continued to make progress against our strategic growth initiatives during the year with the successful integration of GES' acquisitions and the commencement of a major renovation of our leading T&R attraction, the Banff Gondola."

M&E (or GES) Results

Moster said, "GES had a strong finish to the year with 14.6% revenue growth that put us near the high end of our prior guidance range for the fourth quarter. The more modest full year revenue growth reflects solid performance from the acquisitions we completed during 2014, strong same-show growth and new wins that helped to offset significant negative show rotation and unfavorable exchange rates. We continue to see good sales traction in both our new service offerings and in corporate and consumer events, as well as favorable industry conditions. Looking ahead, those factors, combined with positive show rotation, should result in substantial year-over-year growth in 2016."


	Q4 2015	Q4 2014	y-o-y Change	Full Year 2015	Full Year 2014	y-o-y Change
$ in millions
Revenue	$ 244.5	$ 213.4	14.6%	$ 976.9	$ 944.5	3.4%
U.S. Organic Revenue⁽¹⁾	163.9	146.4	12.0%	690.0	704.7	-2.1%
International Organic Revenue⁽¹⁾	79.8	62.9	26.8%	264.6	239.1	10.7%

Segment Operating Income	$ 7.8	$ 2.2	**	$ 26.8	$ 31.7	-15.6%
Adjusted Segment Operating Income⁽¹⁾	7.7	2.9	**	27.7	32.5	-14.9%
Adjusted Segment Operating Margin⁽¹⁾	3.2%	1.4%	180 bps	2.8%	3.4%	-60 bps

Adjusted Segment EBITDA⁽¹⁾	$ 14.4	$ 10.1	42.8%	$ 54.8	$ 54.9	-0.2%
Adjusted Segment EBITDA Margin⁽¹⁾	5.9%	4.7%	120 bps	5.6%	5.8%	-20 bps

Key Performance Indicators:
U.S. Base Same-Show Revenue Growth⁽²⁾			13.4%			8.0%
U.S. Show Rotation Revenue Change (approx.)⁽³⁾			$5			$(75)
International Show Rotation Revenue Change (approx.)⁽³⁾			$4			$ 4

(1)	Refer to Table Two of this press release for a reconciliation of this non-GAAP financial measure to its nearest GAAP financial measure. Organic measures (as defined in Table Two) exclude the impact of exchange rate variances and acquisitions, until such acquisitions are included in the entirety of both comparable periods. Accordingly, the full year comparisons exclude onPeak (acquired October 2014) for the U.S. segment and Blitz (acquired September 2014) and N200 (acquired November 2014) for the International segment; whereas Blitz is included in the fourth quarter comparisons.

(2)	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 40.0% and 44.7% of GES' U.S. organic revenue during the 2015 fourth quarter and full year, respectively.

(3)	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.

**	Change is greater than +/- 100 percent.

M&E Full Year

Full year M&E revenue increased 3.4% ($32.4 million) year-over-year. On an organic basis (which excludes the impact of acquisitions and unfavorable exchange rate variances), the increase was 1.1% ($10.1 million).
- U.S. organic revenue decreased 2.1% ($14.7 million) driven by negative show rotation revenue of approximately $75 million, largely offset by base same-show revenue growth of 8.0%, new business wins and increased sales to corporate clients.
- International organic revenue increased 10.7% ($25.5 million) driven primarily by new business wins and positive show rotation revenue of approximately $4 million.
Full year M&E segment operating income decreased 15.6% ($5.0 million), or 36.3% ($11.5 million) on an organic basis.
- U.S. organic segment operating income decreased $13.5 million, primarily reflecting lower revenue and increased compensation expense, including higher performance-based incentives.
- International organic segment operating results increased $2.0 million, primarily reflecting higher revenue partially offset by higher performance-based incentives.
The acquisitions of Blitz (September 2014), onPeak (October 2014) and N200 (November 2014) contributed revenue of $65.0 million, adjusted segment operating income of $8.5 million and adjusted segment EBITDA of $18.1 million during the 2015 full year. During 2014, those businesses contributed revenue of $16.7 million, adjusted segment operating income of $0.7 million and adjusted segment EBITDA of $3.3 million.

M&E Fourth Quarter

Fourth quarter M&E revenue increased 14.6% ($31.1 million) year-over-year, or 16.3% ($33.7 million) on an organic basis (which excludes the impact of acquisitions and unfavorable exchange rate variances).
- U.S. organic revenue increased 12.0% ($17.5 million) driven by base same-show revenue growth of 13.4%, positive show rotation revenue of approximately $5 million, new business wins and increased sales to corporate clients.
- International organic revenue increased 26.8% ($16.9 million) driven primarily by new business wins and positive show rotation revenue of approximately $4 million.
Fourth quarter M&E segment operating income increased $5.6 million, or $4.2 million on an organic basis. U.S. organic segment operating income increased $1.8 million and International organic segment operating income increased $2.4 million, primarily reflecting higher revenue, partially offset by higher performance-based incentives.

T&R Results

Moster said, "Our Travel & Recreation Group delivered in-line results for its seasonally slow fourth quarter. As expected, revenue was down year-over-year due to the renovation closures at the gondola attraction and unfavorable exchange rates. For the full year, organic revenue growth was 3.9 percent with a $4.3 million increase in organic segment operating income. These are very solid results given the revenue pressures we faced from forest fire activity at Glacier Park during the peak season and the gondola closure during the fourth quarter. The resiliency of our business is a testament to the great experiences that we deliver for our guests and the iconic nature of the locations in which we operate."


	Q4 2015	Q4 2014	y-o-y Change	Full Year 2015	Full Year 2014	y-o-y Change
$ in millions
Revenue	$ 7.2	$ 9.8	-26.7%	$ 112.2	$ 120.5	-6.9%
Organic Revenue⁽¹⁾	8.3	9.8	-15.2%	120.4	115.9	3.9%

Segment Operating Income (Loss)	$ (2.9)	$ (2.8)	-4.1%	$ 27.8	$ 28.1	-1.1%
Segment Operating Margin	-41.2%	-29.0%	**	24.8%	23.3%	150 bps

Adjusted Segment EBITDA⁽¹⁾	$ (1.5)	$ (1.1)	-32.6%	$ 35.8	$ 36.4	-1.6%
Adjusted Segment EBITDA Margin⁽¹⁾	-20.3%	-11.2%	**	31.9%	30.2%	170 bps

Key Performance Indicators:
Same-Store RevPAR⁽²⁾	$39	$37	5.4%	$96	$95	1.1%
Same-Store Room Nights Available⁽²⁾	41,116	41,088	0.1%	218,915	218,913	-
Same-Store Passengers⁽³⁾	75,131	117,118	-35.9%	1,340,175	1,353,314	-1.0%
Same-Store Revenue per Passenger⁽³⁾	$31	$30	3.3%	$32	$28	14.3%

(1)	Refer to Table Two of this press release for a reconciliation of this non-GAAP financial measure to its nearest GAAP financial measure. Organic measures (as defined in Table Two) exclude the impact of exchange rate variances and acquisitions, until such acquisitions are included in the entirety of both comparable periods. Accordingly, the full year comparisons exclude the West Glacier Properties (acquired July 2014), whereas the fourth quarter comparisons include the West Glacier Properties.

(2)	Same-store RevPAR is calculated as total rooms revenue divided by the total number of room nights available for all comparable T&R properties during the periods presented, expressed on a constant currency basis. Comparable properties are defined as those owned by Viad for the entirety of both periods. Accordingly, the full year comparisons exclude the West Glacier Properties (acquired July 2014), whereas the fourth quarter comparisons include the West Glacier Properties.

(3)	Same-store revenue per passenger is calculated as total attractions revenue divided by the total number of passengers for all comparable T&R attractions, expressed on a constant currency basis. Comparable attractions are defined as those owned by Viad for the entirety of both periods. The year-over-year decrease in same-store passengers during the fourth quarter and full year was due to the closure of the Banff Gondola attraction on October 26, 2015 for renovations during the off-peak season. When adjusting to exclude fourth quarter gondola passengers from all periods presented (for a more comparable measure), the growth in attractions passengers was 5.2% for the fourth quarter and 2.4% for the full year.

**	Change is greater than +/- 200 basis points.

T&R Full Year

Full year T&R revenue decreased 6.9% ($8.3 million) year-over-year due to unfavorable exchange rate variances. On an organic basis (which excludes the impact of unfavorable exchange rate variances and acquisitions), revenue increased 3.9% ($4.5 million) driven primarily by higher revenue from attractions.
Full year T&R segment operating income decreased $0.3 million, also due to unfavorable exchange rate variances. On an organic basis, it increased 16.1% ($4.3 million) primarily reflecting strong flow-through on attractions revenue growth.
The acquisition of the West Glacier Properties (July 2014) contributed full year revenue of $5.5 million, segment operating income of $1.5 million and adjusted segment EBITDA of $2.0 million during the 2015 full year. During 2014, that business contributed revenue of $4.6 million, segment operating income of $1.5 million and adjusted segment EBITDA of $1.7 million.

T&R Fourth Quarter

Fourth quarter T&R revenue decreased $2.6 million with a $0.1 million decrease in operating results. On an organic basis (which excludes the impact of exchange rate variances), revenue decreased $1.5 million and operating results decreased $0.3 million primarily due to the closure of the Banff Gondola for renovation work. The gondola is expected to re-open in May 2016, ahead of the peak season.

Cash Flow / Capital Structure

Cash flow from operations was an outflow of $15.7 million for the 2015 fourth quarter and an inflow of $60.7 million for the full year.
Capital expenditures for the quarter totaled $10.8 million, comprising $5.7 million for M&E, $5.1 million for T&R and $0.1 million for Viad's corporate office. For the full year, capital expenditures totaled $29.8 million, comprising $16.4 million for M&E, $13.1 million for T&R and $0.3 million for the corporate office.
Return of capital totaled $2.0 million for the quarter and $11.9 million for the full year (which represented quarterly dividends of $0.10 per share and $3.8 million for share repurchases during the first quarter). Viad had 440,540 shares remaining under its current repurchase authorization at December 31, 2015.
Debt proceeds (net) totaled $11.0 million for the quarter and debt payments totaled $13.0 million for the full year.
Cash and cash equivalents were $56.5 million, debt was $129.0 million and the debt-to-capital ratio was 27.8% at December 31, 2015.

Business Outlook

Guidance provided by Viad is subject to change as a variety of factors can affect actual results. Those factors are identified in the safe harbor language at the end of this press release.

2016 Full Year Guidance

Consolidated revenue is expected to increase at a mid to high-single digit rate from 2015 full year revenue, driven by positive show rotation of $50 million to $55 million and continued underlying growth at M&E, partially offset by unfavorable currency translation of approximately $25 million.
Consolidated adjusted segment EBITDA⁽¹⁾ is expected to be in the range of $111 million to $116 million, as compared to $90.6 million in 2015.
The outlook for Viad's business units is as follows:


	M&E	T&R
$ in millions
Revenue	Up high-single digits from 2015 ($976.9)	Down low-single digits from 2015 ($112.2)
Adjusted Segment EBITDA⁽¹⁾	$77 to $80 (vs. $54.8 in 2015)	$34 to $36 (vs. $35.8 in 2015)
Depreciation & Amortization	$25 to $27	$9 to $10
Adjusted Operating Income^{(1, 2)}	$51 to $54 (vs. $27.7 in 2015)	$24.5 to $26.5 (vs. $27.8 in 2015)
Capital Expenditures	$23 to $25	$22 to $24

(1)	See Table Two of this press release for discussion of these non-GAAP measures.

(2)	The Company had previously guided for an increase in consolidated adjusted segment operating income of more than 40% versus 2015, which assumed only a modest impact from unfavorable exchange rate variances. The guidance ranges provided above reflect a more meaningful impact from exchange rate variances (quantified below).

M&E show rotation is expected to have a net positive impact on full year revenue of $50 million to $55 million versus 2015. 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 Est.	Q2 Est.	Q3 Est.	Q4 Est.	FY Est.
Show Rotation Revenue ($ in millions)	$(10)	$(5) - $(10)	$80	$(10)	$50 - $55

M&E U.S. base same-show revenue is expected to increase at a mid-single digit rate.
T&R revenue is expected to be negatively impacted by approximately $7 million to $9 million due to the previously announced rationalization of Brewster's transportation and package tours lines of business, and by approximately $1 million due to construction closures at the Banff Gondola.
The T&R acquisition of Maligne Tours (January 2016) is expected to provide approximately $5 million in revenue and adjusted segment EBITDA of approximately $2 million.

Exchange rates are assumed to approximate $0.70 U.S. Dollars per Canadian Dollar and $1.45 U.S. Dollars per British Pound during 2016. Exchange rate variances are expected to impact 2016 results as follows:

	Viad Total	M&E	T&R
	$ in millions, except per share data
Revenue	$ (25)	$ (17)	$ (8)
Adjusted Segment Operating Income⁽¹⁾	$ (3)	$ (1)	$ (2)
Income per Share Before Other Items⁽¹⁾	$(0.10)

(1)	See Table Two of this press release for discussion of these non-GAAP measures.

Corporate activities expense is expected to approximate $9 million.
The effective tax rate on income before other items is assumed to approximate 32%.

2016 First Quarter Guidance

		2016 Guidance
	2015	Low End	High End		FX Impact⁽²⁾
	$ in millions, except per share data
Revenue:
M&E	$256.9	$240	to	$250	$(5)
T&R	7.5	4	to	6	(0.5)
Adjusted Operating Income (Loss)⁽¹⁾:
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