# Pursuit Attractions & Hospitality, Inc.: Form 10-Q for the period ended Mar 31, 2022

- Company: [Pursuit Attractions & Hospitality, Inc.](/companies/prsu.md) (CIK 884219)
- Form: 10-Q
- Filed: 2022-05-06
- Accepted by EDGAR: May 6, 2022, 20:14 ET
- Period: 2022-03-31
- Accession: 0000950170-22-008139
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/884219/000095017022008139/vvi-20220331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/884219/000095017022008139/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2022-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2022-01-01 to 2022-03-31 | $177.4m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Interest expense | 3 months, 2022-01-01 to 2022-03-31 | $5.9m | us-gaap:InterestExpense |
| Income tax | 3 months, 2022-01-01 to 2022-03-31 | −$2.6m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2022-01-01 to 2022-03-31 | −$29.0m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2022-01-01 to 2022-03-31 | −$1.53 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2022-01-01 to 2022-03-31 | −$1.53 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2022-01-01 to 2022-03-31 | 20,518 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2022-01-01 to 2022-03-31 | $17.9m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2022-01-01 to 2022-03-31 | $12.6m | us-gaap:PaymentsToAcquireProductiveAssets |
| Cash and equivalents | at 2022-03-31 | $57.9m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2022-03-31 | $205.7m | us-gaap:AssetsCurrent |
| Total assets | at 2022-03-31 | $1.06bn | us-gaap:Assets |
| Current liabilities | at 2022-03-31 | $214.3m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2022-03-31 | $854.3m | us-gaap:Liabilities |
| Long-term debt | at 2022-03-31 | $389.7m | us-gaap:LongTermDebt |
| Shareholders' equity | at 2022-03-31 | −$18.2m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 31,480 characters.

### Forward-Looking Statements

This Quarterly Report on Form 10-Q (this “Form 10-Q”) contains a number of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words, and variations of words, such as “will,” “may,” “expect,” “would,” “could,” “might,” “intend,” “plan,” “believe,” “estimate,” “anticipate,” “deliver,” “seek,” “aim,” “potential,” “target,” “outlook,” and similar expressions are intended to identify our forward-looking statements. Similarly, statements that describe our business strategy, outlook, objectives, plans, initiatives, intentions, or goals also are forward-looking statements. These forward-looking statements are not historical facts and are subject to a host of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those in the forward-looking statements contained in this Quarterly Report on Form 10-Q. Such risks, uncertainties and other important factors include, among others: the factors set forth under “Risk Factors” (Part I, Item 1A) and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (Part II, Item 7) in our 2021 Form 10-K filed with the SEC, as may be updated elsewhere in this report; and the information set forth in other Quarterly Reports on Form 10-Q and Current Reports on Form 8-K that we have filed or will file with the SEC. Such risks, uncertainties, and other important factors include, among others: the short- and longer-term effects of the COVID-19 pandemic, including the demand for travel, event business and travel experiences, and levels of consumer confidence; actions that governments, businesses, and individuals take in response to the COVID-19 pandemic or any future resurgence, including limiting or banning travel; the impact of the COVID-19 pandemic, or any future resurgence, on global and regional economies, travel, and economic activity, including the duration and magnitude of its impact on unemployment rates and consumer discretionary spending; and the pace of recovery following the COVID-19 pandemic or any future resurgence.

Important factors that could cause actual results to differ materially from those described in our forward-looking statements include, but are not limited to, the following:

- the impact of the COVID-19 pandemic on our financial condition, liquidity, and cash flow;
- our ability to anticipate and adjust for the impact of the COVID-19 pandemic on our businesses;
- general economic uncertainty in key global markets and a worsening of global economic conditions;
- travel industry disruptions;
- seasonality of our businesses;
- unanticipated delays and cost overruns of our capital projects, and our ability to achieve established financial and strategic goals for such projects;
- our exposure to labor shortages, turnover, and labor cost increases;
- the importance of key members of our account teams to our business relationships;
- the competitive nature of the industries in which we operate;
- our dependence on large exhibition event clients;
- adverse effects of show rotation on our periodic results and operating margins;
- transportation disruptions and increases in transportation costs;
- natural disasters, weather conditions, accidents, and other catastrophic events;
- our exposure to labor cost increases and work stoppages related to unionized employees;
- our multi-employer pension plan funding obligations;
- our ability to successfully integrate and achieve established financial and strategic goals from acquisitions;
- our exposure to cybersecurity attacks and threats;
- our exposure to currency exchange rate fluctuations;
- liabilities relating to prior and discontinued operations; and
- compliance with laws governing the storage, collection, handling, and transfer of personal data and our exposure to legal claims and fines for data breaches or improper handling of such data.

For a more complete discussion of the risks and uncertainties that may affect our business or financial results, refer to “Risk Factors” (Part I, Item 1A) of our 2021 Form 10-K. We disclaim and do not undertake any obligation to update or revise any forward-looking statement except as required by applicable law or regulation.

The following Management’s Discussion and Analysis (“MD&A”) should be read in conjunction with our 2021 Form 10-K and the condensed consolidated financial statements and related notes included in this Form 10-Q. The MD&A is intended to assist in understanding our financial condition and results of operations.

### Overview

We are a leading global provider of extraordinary experiences, including hospitality and leisure activities, experiential marketing, and live events. During the first quarter of 2022, we rebranded GES’ brand experiences business and introduced Spiro to the market to accelerate our growth by servicing the changing needs of today’s brand marketers across a broader spectrum of their experiential marketing needs.

We operate through three reportable segments: Pursuit, Spiro, and GES Exhibitions. The Spiro and GES Exhibitions reportable segments are both live event companies, and are collectively referred to as “GES.”

### COVID-19 Pandemic

Starting in mid-March 2020, the COVID-19 pandemic created severe disruptions in the live event and tourism industries and those disruptions had a significant and negative impact on our operations and financial performance. We are not able to fully estimate the future impact of the pandemic on our business due to the evolving and uncertain nature of COVID-19, including ongoing vaccination and other mitigation efforts as well as the scope and magnitude of variants, infections, and hospitalizations. We will continue to evaluate and implement additional actions necessary to mitigate the negative financial and operational impact of COVID-19 on our business. For a discussion of COVID-19 related risks and uncertainties that may affect our business, refer to “Risk Factors” (Part I, Item 1A) of our 2021 Form 10-K.

### Seasonality

Pursuit’s peak activity occurs during the summer months. During 2021, 82% of Pursuit’s revenue was earned in the second and third quarters. We seasonally closed Pursuit’s non-year-round properties during the first quarter of 2022.

GES’ live event activity can vary significantly from quarter to quarter and year to year depending on the frequency and timing of shows. Some shows are not held annually and some shift between quarters. 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. During the first quarter of 2022, we saw an acceleration in the recovery of in-person trade shows as event organizers began to hold larger-scale face-to-face live events amid the COVID-19 pandemic.

### Results of Operations

### Financial Highlights

*(in thousands, except per share data)*

|  | Three Months Ended March 31, 2022 | 2021 | Change vs. 2021 |
| --- | ---: | ---: | ---: |
| Total revenue | $177,360 | $28,935 | \*\* |
| Net loss attributable to Viad | $(29,001) | $(43,152) | 32.8% |
| Segment operating loss(1) | $(22,792) | $(38,225) | 40.4% |
| Diluted loss per common share from continuing operations attributable to Viad common stockholders | $(1.54) | $(2.23) | 30.9% |

\*\* Change is greater than +/- 100%

(1) Refer to Note 23 – Segment Information of the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for a reconciliation of the non-GAAP financial measure, segment operating loss, to the most directly comparable GAAP measure.

### Three months ended March 31, 2022 compared with the three months ended March 31, 2021

- **Total revenue** increased $148.4 million during the three months ended March 31, 2022 as the COVID-19 pandemic-related restrictions lessened and people felt more comfortable traveling and gathering in larger groups. Live events at GES increased as certain previously cancelled shows in 2021 and 2020 took place during the first quarter of 2022, although at reduced capacities from pre-COVID-19 levels. All of Pursuit’s year-round properties were open during the first quarter of 2022.
- **Net loss attributable to Viad** improved $14.2 million during the three months ended March 31, 2022, primarily reflecting higher revenue during 2022 and a $2.2 million decrease in restructuring charges for the three months ended March 31, 2022.
- **Total segment operating loss** improved $15.4 million during the three months ended March 31, 2022, primarily due to higher revenue at GES and Pursuit, offset in part by a $9.1 million gain on sale of a GES warehouse in Orlando in 2021.

### Analysis of Revenue and Operating Results by Reportable Segment

### Pursuit

The following table presents a comparison of Pursuit’s reported revenue and segment operating loss for the three months ended March 31, 2022 and 2021:

*(in thousands)*

| Revenue(1): Pursuit: | Three Months Ended March 31, 2022 | 2021 | Change vs. 2021 |
| --- | ---: | ---: | --- |
| Attractions | $12,501 | $2,256 | \*\* |
| Hospitality | 9,415 | 6,941 | 35.6% |
| Transportation | 1,288 | 533 | \*\* |
| Other | 580 | 60 | \*\* |
| Total Pursuit | $23,784 | $9,790 | \*\* |
| **Segment operating loss(2):** |  |  |  |
| Total Pursuit | $(21,198) | $(18,321) | (15.7)% |

\*\* Change is greater than +/- 100%

(1) Revenue by line of business does not agree to Note 2 – Revenue and Related Contract Costs and Contract Liabilities of the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) as the amounts in the above table include product revenue from food and beverage and retail operations within each line of business.

(2) Refer to Note 23 – Segment Information of the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for a reconciliation of the non-GAAP financial measure, segment operating loss, to the most directly comparable GAAP measure.

### Three months ended March 31, 2022 compared with the three months ended March 31, 2021

**Pursuit revenue** increased $14.0 million, which reflects the continued strengthening of leisure travel demand as pandemic-related restrictions eased and as people started to feel more comfortable traveling. Pursuit’s new year-round attractions, the Sky Lagoon and FlyOver Las Vegas, contributed $5.1 million during the three months ended March 31, 2022. All of Pursuit’s year-round attractions and properties were open during the first quarter of 2022. Although most of Pursuit’s year-round attractions and properties were open during the first quarter of 2021, there was lower visitation due in part to pandemic-related capacity restrictions in addition to temporary government mandated closures at FlyOver Canada and FlyOver Iceland.

**Pursuit segment operating loss** increased $2.9 million primarily due to the increase in operating costs as all of Pursuit’s year-round properties operated at full capacity during the first quarter of 2022 and due to a $2.8 million prior year benefit from the Canadian government’s emergency wage subsidy program, offset in part by higher revenue.

### Performance Measures

We use the following key business metrics to evaluate the performance of Pursuit’s attractions business:

- **Number of visitors**. The number of visitors allows us to assess the volume of tickets sold at each attraction during the period.
- **Revenue per attraction visitor**. Revenue per attraction visitor is calculated as total attractions revenue divided by the total number of visitors at all Pursuit attractions during the period. Total attractions revenue includes ticket sales and ancillary revenue generated by attractions, such as food and beverage and retail revenue. Total attractions revenue per visitor measures the total spend per visitor that attraction properties are able to capture, which is important to the profitability of the attractions business.
- **Effective ticket price**. Effective ticket price is calculated as revenue from the sale of attraction tickets divided by the total number of visitors at all comparable Pursuit attractions during the period.

We use the following key business metrics, common in the hospitality industry, to evaluate Pursuit’s hospitality business:

- **Revenue per Available Room.** RevPAR is calculated as total rooms revenue divided by the total number of room nights available for all comparable Pursuit hospitality properties during the period. Total rooms revenue does not include non-rooms revenue, which consists of ancillary revenue generated by hospitality properties, such as food and beverage and retail revenue. RevPAR measures the period-over-period change in rooms revenue per available room for comparable hospitality properties. RevPAR is affected by average daily rate and occupancy, which have different implications on profitability.
- **Average Daily Rate.** ADR is calculated as total rooms revenue divided by the total number of room nights sold for all comparable Pursuit hospitality properties during the period. ADR is used to assess the pricing levels that the hospitality properties are able to realize. Increases in ADR lead to increases in rooms revenue with no substantial effect on variable costs, therefore having a greater impact on margins than increases in occupancy.
- **Occupancy.** Occupancy is calculated as the total number of room nights sold divided by the total number of room nights available for all comparable Pursuit hospitality properties during the period. Occupancy measures the utilization of the available capacity at the hospitality properties. Increases in occupancy result in increases in rooms revenue and additional variable operating costs (including housekeeping services, utilities, and room amenity costs), as well as increases in ancillary non-rooms revenue (including food and beverage and retail revenue).

The following table provides Pursuit’s key performance indicators.

| Attractions Key Performance Indicators: | Three Months Ended March 31, 2022 As Reported | New Experiences(1) | Same-Store(2) | Three Months Ended March 31, 2021 As Reported | New Experiences(1) | FX Impact(3) | Same-Store(2) | Change vs. 2021 As Reported | Same-Store(2) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Number of visitors | 291,578 | 106,629 | 184,949 | 57,486 | — | — | 57,486 | \*\* | \*\* |
| Ticket revenue (in thousands) | $9,202 | $4,154 | $5,048 | $1,484 | $— | $3 | $1,481 | \*\* | \*\* |
| Effective ticket price | $31.56 | $38.96 | $27.30 | $25.82 | $— | $— | $25.77 | 22.2% | 6.0% |
| Attractions revenue (in thousands) | $12,501 | $5,123 | $7,378 | $2,256 | $— | $5 | $2,250 | \*\* | \*\* |
| Revenue per attraction visitor | $42.88 | $48.05 | $39.89 | $39.24 | $— | $— | $39.15 | 9.3% | 1.9% |
| **Hospitality Key Performance Indicators:** |  |  |  |  |  |  |  |  |  |
| Room nights available | 119,049 | — | 119,049 | 109,909 | — | $— | 109,909 | 8.3% | 8.3% |
| Rooms revenue (in thousands) | $6,903 | $— | $6,903 | $4,769 | $— | $5 | $4,764 | 44.7% | 44.9% |
| RevPAR | $57.99 | $— | $57.99 | $43.39 | $— | $— | $43.35 | 33.6% | 33.8% |
| Occupancy | 50.4% | 0.0% | 50.4% | 42.6% | — |  | 42.6% | 18.4% | 18.4% |
| ADR | $115.03 | $— | $115.03 | $101.89 | — | $— | $101.77 | 12.9% | 13.0% |
| Hospitality revenue (in thousands) | $9,415 | $— | $9,415 | $6,941 | $— | $7 | $6,934 | 35.6% | 35.8% |

\*\* Change is greater than +/- 100%

(1) New Experiences comprises the following attractions and/or lodging properties that were opened or acquired after January 1, 2021: Sky Lagoon (opened April 2021), the Golden Skybridge (opened June 2021), and FlyOver Las Vegas (opened September 2021).

(2) Same-Store metrics include only attractions and lodging properties that Pursuit operated at full capacity, considering seasonal closures, for the entirety of both periods presented. For experiences located outside the United States, financial metric comparisons to the prior year are expressed on a constant U.S. dollar basis.

(3) Foreign exchange rate variance effects (or “FX Impact”) represents the adjustments necessary to express prior financial metrics on a constant U.S. dollar basis, using the current year quarterly average exchange rates for previous periods to eliminate the impact of changes in exchange rates for same-store Pursuit experiences located outside of the United States.

**Attractions**. The increase in same-store visitors during 2022 was driven by higher visitation during the first quarter of 2022 due to border closures and travel restrictions during 2021 as a result of the COVID-19 pandemic in addition to the temporary government mandated closures at FlyOver Canada and FlyOver Iceland. Revenue per attraction increased due to higher effective ticket prices and ancillary revenue.

**Hospitality**. Room nights available increased as all of Pursuit’s year-round properties were open during the first quarter of 2022. Although most of Pursuit year-round properties were open during the first quarter of 2021, there was lower visitation due in part to pandemic-related capacity restrictions. The increase in RevPAR and ADR was primarily driven by revenue management efforts.

### GES

During the first quarter of 2022, we changed our segment reporting as a result of operational changes and how our CODM reviews the financial performance of GES and makes decisions regarding the allocation of resources. Accordingly, GES’ new reportable segments are Spiro and GES Exhibitions. We reclassified prior periods to conform to the current-period presentation.

The following table presents a comparison of GES’ reported revenue and segment operating loss for the three months ended March 31, 2022 and 2021:

*(in thousands)*

| Revenue: GES: | Three Months Ended March 31, 2022 | 2021 | Change vs. 2021 |
| --- | ---: | ---: | --- |
| Spiro | $42,816 | $12,059 | \*\* |
| GES Exhibitions | 111,831 | 7,152 | \*\* |
| Intersegment eliminations | (1,071) | (66) | \*\* |
| Total GES | $153,576 | $19,145 | \*\* |
| **Segment operating loss(1):** |  |  |  |
| GES: |  |  |  |
| Spiro | $(239) | $(7,169) | 96.7% |
| GES Exhibitions | (1,355) | (12,735) | 89.4% |
| Total GES | $(1,594) | $(19,904) | 92.0% |

\*\* Change is greater than +/- 100%

(1) Refer to Note 23 – Segment Information of the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for a reconciliation of the non-GAAP financial measure, segment operating loss, to the most directly comparable GAAP measure.

### Three months ended March 31, 2022 compared with the three months ended March 31, 2021

**Spiro and GES Exhibitions revenue** increased $30.8 million and $104.7 million, respectively, as in-person event activity continued to improve due to the resumption of live event activity and the return of large-scale events that were canceled or postponed into the first half of 2021.

**Spiro and GES Exhibitions segment operating loss** improved $6.9 million and $11.4 million, respectively, primarily due to higher revenue and the continued focus on managing discretionary costs. GES Exhibitions’ operating loss improvement in 2022 was offset in part by a $9.1 million gain on sale of a GES warehouse in Orlando in 2021.

### Other Expenses

*(in thousands)*

|  | Three Months Ended March 31, 2022 | 2021 | Change vs. 2021 |
| --- | ---: | ---: | ---: |
| Corporate activities | $2,673 | $2,005 | 33.3% |
| Interest expense, net | $5,877 | $5,085 | 15.6% |
| Other expense, net | $638 | $360 | 77.2% |
| Restructuring charges | $654 | $2,826 | (76.9)% |
| Impairment charges | $583 | $— | \*\* |
| Income tax benefit | $(2,582) | $(3,045) | (15.2)% |
| Income from discontinued operations | $275 | $348 | (21.0)% |

\*\* Change is greater than +/- 100%

**Corporate Activities –** The increase in corporate activities expense during the three months ended March 31, 2022 was primarily due to higher performance-based compensation expense.

**Interest Expense, net –** The increase in interest expense during the three months ended March 31, 2022 was primarily due to higher interest rates and higher debt balances in 2022, offset in part by $1.9 million in capitalized interest recorded during the three months ended March 31,2022.

**Restructuring Charges –** Restructuring charges during the three months ended March 31, 2022 were primarily related to severance and facility closures at GES. Restructuring charges during the three months ended March 31, 2021 were primarily related to facility closures and the elimination of certain positions at GES. In response to the COVID-19 pandemic, we accelerated our transformation and streamlining efforts at GES to significantly reduce costs and create a lower and more flexible cost structure focused on servicing our more profitable market segments.

**Impairment Charges –** Impairment charges during the three months ended March 31, 2022 were related to certain software development costs that are no longer being utilized at GES.

**Income Tax Benefit –** The effective tax rate was 7.8% for the three months ended March 31, 2022 and 6.3% for the three months ended March 31, 2021. The effective tax rates for both the three months ended March 31, 2022 and 2021 were lower than the blended statutory rate primarily as a result of excluding the tax benefit on losses recognized in the United States, the United Kingdom, and other European countries where we have a valuation allowance.

**Income from Discontinued Operations –** Income from discontinued operations during the three months ended March 31, 2022 and 2021 was primarily attributable to insurance recoveries related to previously sold operations, offset in part by legal expenses.

### Liquidity and Capital Resources

Cash, cash equivalents, and restricted cash were $62.9 million as of March 31, 2022, as compared to $64.3 million as of December 31, 2021. Our total available liquidity was $145.3 million, including the available capacity on our revolving credit facility of $87.4 million ($100 million total facility size, less $12.6 million in outstanding letters of credit) and unrestricted cash of $57.9 million. During the three months ended March 31, 2022, net cash provided by operating activities was $17.9 million.

On August 5, 2020, we entered into an investment agreement with funds managed by private equity firm Crestview Partners (the “Investment Agreement”) who made an investment of $135 million, offset in part by $9.2 million in fees, in newly issued perpetual convertible preferred stock that carries a 5.5% cumulative quarterly dividend, which is payable in cash or in-kind at Viad’s option (the “Convertible Preferred Stock”). The Convertible Preferred Stock is convertible into shares of our common stock at a conversion price of $21.25 per share. The proceeds from Crestview’s investment were used to repay a portion of our then outstanding $450 million revolving credit facility, which we subsequently refinanced in July 2021, and provided us additional short-term liquidity to fund capital expenditures and supported general corporate purposes.

Effective July 30, 2021, we entered into the new $500 million 2021 Credit Facility. The 2021 Credit Facility provides for a $400 million Term Loan B with a maturity date of July 30, 2028 and a $100 million revolving credit facility with a maturity date of July 30, 2026. The $400 million in Term Loan B proceeds were offset in part by $14.8 million in related fees. The proceeds from the Term Loan B were used to repay the $327 million outstanding balance under our then $450 million revolving credit facility. The $100 million revolving credit facility and the remaining proceeds from the Term Loan B have been and will be used to provide for financial flexibility to fund future acquisitions and growth initiatives and for general corporate purposes. On March 23, 2022, we entered into an amendment to the 2021 Credit Facility, which modified the revolving credit facility’s financial covenants. The amended 2021 Credit Facility requires us to maintain liquidity of $75 million under the revolving credit facility until financials and a compliance certificate for the quarter ended September 30, 2022 are provided to the banks, with liquidity defined as unrestricted cash and available capacity on our revolving credit facility, and other financial covenants that began January 1, 2022. Refer to Note 12 – Debt and Finance Obligations of the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for additional information.

As of March 31, 2022, we held approximately $41.4 million of our cash and cash equivalents outside of the United States, consisting of $19.3 million in Canada, $8.8 million in the United Kingdom, $5.7 million in the Netherlands, $4.5 million in Iceland, and $3.1 million in certain other countries.

We believe that our existing sources of liquidity will be sufficient to fund operations and projected capital outlays, including approximately $100 million in capital expenditures and $26.5 million for the Glacier Raft Company acquisition, for at least the next 12 months.

### Cash Flows

### Operating Activities

*(in thousands)*

|  | Three Months Ended March 31, 2022 | 2021 |
| --- | ---: | ---: |
| Net loss | $(30,343) | $(45,091) |
| Depreciation and amortization | 13,279 | 13,177 |
| Deferred income taxes | (3,104) | (3,019) |
| Income from discontinued operations | (275) | (348) |
| Restructuring charges | 654 | 2,826 |
| Impairment charges | 583 | — |
| Gains on dispositions of property and other assets | (74) | (9,250) |
| Share-based compensation expense | 2,166 | 1,763 |
| Other non-cash items, net | 2,836 | (171) |
| Changes in assets and liabilities | 32,201 | 7,394 |
| **Net cash provided by (used in) operating activities** | $17,923 | $(32,719) |

The change in net cash provided by (used in) operating activities of $50.6 million was primarily due to improved operating results at GES and an increase to working capital.

### Investing Activities

*(in thousands)*

|  | Three Months Ended March 31, 2022 | 2021 |
| --- | ---: | ---: |
| Capital expenditures | $(12,570) | $(9,371) |
| Cash paid for acquisitions, net | — | (7,415) |
| Proceeds from dispositions of property and other assets | 76 | 14,106 |
| **Net cash used in investing activities** | $(12,494) | $(2,680) |

The increase in net cash used in investing activities of $9.8 million was primarily due to the increase in capital expenditures whereas in the 2021 period we received proceeds of $14.1 million primarily from the sale of a GES warehouse in Orlando, offset in part by $7.4 million of cash paid for the acquisition of the Golden Skybridge.

### Financing Activities

*(in thousands)*

|  | Three Months Ended March 31, 2022 | 2021 |
| --- | ---: | ---: |
| Proceeds from borrowings | $1,013 | $40,860 |
| Payments on debt and finance obligations | (4,849) | (8,310) |
| Dividends paid on preferred stock | (1,950) | — |
| Distributions to noncontrolling interest, net of contributions from noncontrolling interest | — | (809) |
| Payments of debt issuance costs | (313) | — |
| Payment of payroll taxes on stock-based compensation through shares withheld or repurchased | (518) | (519) |
| **Net cash (used in) provided by financing activities** | $(6,617) | $31,222 |

The change in net cash provided by (used in) financing activities of $37.8 million was primarily due to net debt payments of $3.8 million during the three months ended March 31, 2022 compared to net debt proceeds of $32.6 million during the three months ended March 31, 2021.

### Debt and Finance Obligations

Refer to Note 12 – Debt and Finance Obligations of the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for further discussion, all of which is incorporated by reference herein.

### Share Repurchases

Our Board of Directors previously authorized us to repurchase shares of our common stock from time to time at prevailing market prices. Effective February 7, 2019, our Board of Directors authorized the repurchase of an additional 500,000 shares. In March 2020, our Board of Directors suspended our share repurchase program for the foreseeable future. As of March 31, 2022, 546,283 shares remained available for repurchase. The Board of Directors’ authorization does not have an expiration date.

Additionally, we repurchased shares related to tax withholding requirements on vested restricted share-based awards.

### Critical Accounting Policies and Estimates

Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (Part II, Item 7) of our 2021 Form 10-K for a discussion of our critical accounting policies and estimates.

### Impact of Recent Accounting Pronouncements

Refer to Note 1 – Overview and Basis of Presentation of the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for further information.

### Non-GAAP Measures

In addition to disclosing financial results that are determined in accordance with United States generally accepted accounting principles (“GAAP”), we also disclose segment operating income (loss). Our use of segment operating income (loss) is supplemental to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP. As not all companies use identical calculations, segment operating income (loss) may not be comparable to similarly titled measures used by other companies. We believe that our use of segment operating income (loss) provides useful information to investors regarding our results of operations for trending, analyzing, and benchmarking our performance and the value of our business.

**“Segment operating income (loss)”** is net income (loss) attributable to Viad before income (loss) from discontinued operations, corporate activities, interest expense and interest income, income taxes, restructuring charges, impairment charges, and the reduction for income (loss) attributable to noncontrolling interests. Segment operating income (loss) is used to measure the profit and performance of our operating segments to facilitate period-to-period comparisons. Refer to Note 23 – Segment Information of the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for a reconciliation of segment operating income (loss) to income (loss) from continuing operations before income taxes.

We believe segment operating income (loss) is a useful operating metric as it eliminates potential variations arising from taxes, debt service costs, impairment charges, restructuring charges, the reduction of income (loss) attributable to non-controlling interests, and the effects of discontinued operations, resulting in an additional measure considered to be indicative of our ongoing operations and segment performance. Although we use segment operating income (loss) to assess the performance of our business, the use of this measure is limited because this measure does not consider material costs, expenses, and other items necessary to operate our business. As segment operating income (loss) does not consider these items, net income (loss) attributable to Viad should be considered as an important measure of financial performance because it provides a more complete measure of our performance.

## Market risk

As filed, 2,963 characters.

Our market risk exposure relates to fluctuations in foreign exchange rates and interest rates. Foreign exchange risk is the risk that fluctuating exchange rates will adversely affect our financial condition or results of operations. Interest rate risk is the risk that changing interest rates will adversely affect our financial position or results of operations.

Our foreign operations are primarily in Canada, the United Kingdom, Iceland, the Netherlands, and Germany. The functional currency of our foreign subsidiaries is their local currency. Accordingly, for purposes of consolidation, we translate the assets and liabilities of our foreign subsidiaries into U.S. dollars at the foreign exchange rates in effect at the balance sheet date. The unrealized gains or losses resulting from the translation of these foreign denominated assets and liabilities are included as a component of accumulated other comprehensive income (loss) in the Condensed Consolidated Balance Sheets. As a result, significant fluctuations in foreign exchange rates relative to the U.S. dollar may result in material changes to our net equity position reported in the Condensed Consolidated Balance

Sheets. We do not currently hedge our equity risk arising from the translation of foreign denominated assets and liabilities. We recorded cumulative unrealized foreign currency translation losses in stockholders’ equity of $12.8 million as of March 31, 2022 and $16.2 million as of December 31, 2021. We recorded unrealized foreign currency translation gains in other comprehensive income (loss) of $3.4 million during the three months ended March 31, 2022 and $4.0 million during the three months ended March 31, 2021.

For purposes of consolidation, revenue, expenses, gains, and losses related to our foreign operations are translated into U.S. dollars at the average foreign exchange rates for the period. As a result, our consolidated results of operations are exposed to fluctuations in foreign exchange rates as revenue and segment operating income (loss) of our foreign operations, when translated, may vary from period to period, even when the functional currency amounts have not changed. Such fluctuations may adversely impact overall expected profitability and historical period-to-period comparisons. We do not currently hedge our net earnings exposure arising from the translation of our foreign revenue and segment operating income (loss).

We are exposed to foreign exchange transaction risk, as our foreign subsidiaries have certain revenue transactions and loans denominated in currencies other than the functional currency of the respective subsidiary. As of March 31, 2022 and December 31, 2021, we did not have any outstanding foreign currency forward contracts.

We are exposed to short-term and long-term interest rate risk on certain of our debt obligations.

We do not currently use derivative financial instruments to hedge cash flows for such obligations.

## Controls and procedures

As filed, 1,083 characters.

We have established disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate to allow timely decisions regarding required disclosure. Management, together with our CEO and CFO, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2022. Based on this evaluation, the CEO and CFO concluded that our disclosure controls and procedures were effective as of March 31, 2022.

There were no changes in our internal control over financial reporting during the three months ended March 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 370 characters.

In addition to other information set forth in this report, careful consideration should be given to the factors discussed in Part I, Item 1A – Risk Factors and Part II, Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2021 Form 10-K, which could materially affect our business, financial condition, or future results.

Filed May 6, 2022.
Source: SEC EDGAR, the filing index for accession 0000950170-22-008139. Last ingested by Listed: Oct 24, 2026, 14:58 ET. No prices; not investment advice.