# Pursuit Attractions & Hospitality, Inc.: Form 10-Q for the period ended Jun 30, 2022

- Company: [Pursuit Attractions & Hospitality, Inc.](/companies/prsu.md) (CIK 884219)
- Form: 10-Q
- Filed: 2022-08-05
- Accepted by EDGAR: Aug 5, 2022, 18:57 ET
- Period: 2022-06-30
- Accession: 0000950170-22-015083
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/884219/000095017022015083/vvi-20220630.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/884219/000095017022015083/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2022-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2022-04-01 to 2022-06-30 | $319.2m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 6 months, 2022-01-01 to 2022-06-30 | $496.6m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Interest expense | 3 months, 2022-04-01 to 2022-06-30 | $7.8m | us-gaap:InterestExpense |
| Interest expense | 6 months, 2022-01-01 to 2022-06-30 | $13.6m | us-gaap:InterestExpense |
| Income tax | 3 months, 2022-04-01 to 2022-06-30 | $3.4m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2022-01-01 to 2022-06-30 | $777.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2022-04-01 to 2022-06-30 | $19.8m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2022-01-01 to 2022-06-30 | −$9.2m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2022-04-01 to 2022-06-30 | $0.64 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2022-01-01 to 2022-06-30 | −$0.67 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2022-04-01 to 2022-06-30 | $0.64 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2022-01-01 to 2022-06-30 | −$0.67 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2022-04-01 to 2022-06-30 | 20,731 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2022-01-01 to 2022-06-30 | 20,544 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2022-01-01 to 2022-06-30 | $44.0m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2022-04-01 to 2022-06-30 | $19.1m | us-gaap:PaymentsToAcquireProductiveAssets |
| Capital expenditure | 6 months, 2022-01-01 to 2022-06-30 | $31.6m | us-gaap:PaymentsToAcquireProductiveAssets |
| Cash and equivalents | at 2022-06-30 | $54.5m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2022-06-30 | $274.1m | us-gaap:AssetsCurrent |
| Total assets | at 2022-06-30 | $1.14bn | us-gaap:Assets |
| Current liabilities | at 2022-06-30 | $268.0m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2022-06-30 | $927.4m | us-gaap:Liabilities |
| Long-term debt | at 2022-06-30 | $412.6m | us-gaap:LongTermDebt |
| Shareholders' equity | at 2022-06-30 | −$7.6m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 35,472 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 businesses, 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 the scope and magnitude of variants, infections and hospitalization rates, and any related government restrictions on travel or in-person events. 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.

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 half 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 June 30, 2022 | 2021 | % Change | Six Months Ended June 30, 2022 | 2021 | % Change |
| --- | ---: | ---: | --- | ---: | ---: | ---: |
| Total revenue | $319,203 | $61,233 | \*\* | $496,563 | $90,168 | \*\* |
| Net income (loss) attributable to Viad | $19,839 | $(42,026) | \*\* | $(9,162) | $(85,178) | 89.2% |
| Segment operating income (loss)(1) | $36,691 | $(34,994) | \*\* | $13,899 | $(73,219) | \*\* |
| Diluted income (loss) per common share from continuing operations attributable to Viad common stockholders | $0.64 | $(2.18) | \*\* | $(0.69) | $(4.41) | 84.4% |

\*\* 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 income (loss), to the most directly comparable GAAP measure.

### Three months ended June 30, 2022 compared with the three months ended June 30, 2021

- **Total revenue** increased $258.0 million during the three months ended June 30, 2022 as COVID-19 pandemic-related restrictions lessened and people felt more comfortable traveling and gathering in larger groups. Live event activity at GES improved with the resumption of in-person and large-scale events. Pursuit resumed seasonal operations during the second quarter of 2022 and experienced strong leisure demand as long-haul international tourism continued to recover.
- **Net income attributable to Viad** improved $61.9 million during the three months ended June 30, 2022, primarily reflecting higher revenue during the 2022 period.
- **Total segment operating income** improved $71.7 million during the three months ended June 30, 2022, primarily due to higher revenue at GES and Pursuit.

### Six months ended June 30, 2022 compared with the six months ended June 30, 2021

- **Total revenue** increased $406.4 million during the six months ended June 30, 2022 as in-person event activity at GES continued to improve and as certain previously cancelled shows in 2021 took place during the first half of 2022, although at reduced capacities from pre-COVID-19 levels. Pursuit experienced increased visitation at our Canadian attractions during the six months ended June 30, 2022, which were impacted in 2021 by border restrictions.
- **Net loss attributable to Viad** decreased $76.0 million during the six months ended June 30, 2022, primarily reflecting higher revenue during the 2022 period.
- **Total segment operating income** improved $87.1 million during the six months ended June 30, 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 the 2021 period.

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

### Pursuit

The following table presents a comparison of Pursuit’s reported revenue and segment operating income (loss) for the three and six months ended June 30, 2022 and 2021:

*(in thousands)*

| Revenue(1): Pursuit: | Three Months Ended June 30, 2022 | 2021 | % Change | Six Months Ended June 30, 2022 | 2021 | % Change |
| --- | ---: | ---: | --- | ---: | ---: | ---: |
| Attractions | $39,096 | $12,929 | \*\* | $51,597 | $15,185 | \*\* |
| Hospitality | 34,101 | 21,879 | 55.9% | 43,516 | 28,820 | 51.0% |
| Transportation | 3,837 | 974 | \*\* | 5,125 | 1,507 | \*\* |
| Other | 565 | 531 | 6.4% | 1,145 | 591 | 93.7% |
| Total Pursuit | $77,599 | $36,313 | \*\* | $101,383 | $46,103 | \*\* |
| **Segment operating income (loss)(2):** |  |  |  |  |  |  |
| Total Pursuit | $5,571 | $(8,097) | \*\* | $(15,627) | $(26,418) | 40.8% |

\*\* 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 income (loss), to the most directly comparable GAAP measure.

### Three months ended June 30, 2022 compared with the three months ended June 30, 2021

**Pursuit revenue** increased $41.3 million from the prior year period primarily due to favorable visitation at our Canadian attractions, which were impacted in 2021 by border restrictions, and temporary government mandated closures at FlyOver Canada and reduced hours at FlyOver Iceland. Pursuit’s new attractions that were opened or acquired after January 1, 2021, including the Sky Lagoon, FlyOver Las Vegas, the Glacier Raft Company, and the Golden Skybridge, contributed incremental revenue of $5.8 million during the three months ended June 30, 2022.

**Pursuit segment operating income** improved $13.7 million from the prior year period primarily due to the increase in revenue, offset in part by increased operating costs as all of Pursuit’s properties operated at full capacity during the second quarter of 2022 and due to a $3.6 million prior year benefit from the Canadian government’s emergency wage subsidy program that did not exist in 2022.

### Six months ended June 30, 2022 compared with the six months ended June 30, 2021

**Pursuit revenue** increased $55.3 million from the prior year period, which reflects the continued strengthening of leisure travel demand as long-haul visitation volume continued to recover. The growth in revenue was largely the result of stronger visitation at our Canadian attractions, which were impacted in 2021 by border restrictions, and temporary government mandated closures at FlyOver Canada and FlyOver Iceland. Pursuit’s new attractions, the Sky Lagoon, FlyOver Las Vegas, the Glacier Raft Company, and the Golden Skybridge contributed incremental revenue of $10.9 million during the six months ended June 30, 2022.

**Pursuit segment operating loss** improved $10.8 million from the prior year period primarily due to the increase in revenue offset in part by the increase in operating costs as all of Pursuit’s year-round and seasonal properties operated at full capacity during the first half of 2022 and due to a $6.5 million prior year benefit from the Canadian government’s emergency wage subsidy program that did not exist in 2022.

### 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 June 30, 2022 As Reported | New Experiences(1) | Same-Store(2) | Three Months Ended June 30, 2021 As Reported | New Experiences(1) | FX Impact(3) | Same-Store(2) | % Change As Reported | Same-Store(2) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Number of visitors | 742,920 | 168,910 | 574,010 | 204,286 | 49,078 | — | 155,208 | \*\* | \*\* |
| Ticket revenue (in thousands) | $29,337 | $7,090 | $22,247 | $10,105 | $2,405 | $276 | $7,424 | \*\* | \*\* |
| Effective ticket price | $39.49 | $41.98 | $38.77 | $49.46 | $49.00 | $— | $47.83 | (20.2)% | (19.0)% |
| Attractions revenue (in thousands) | $39,096 | $8,936 | $30,160 | $12,929 | $3,127 | $381 | $9,421 | \*\* | \*\* |
| Revenue per attraction visitor | $52.62 | $52.90 | $52.54 | $63.29 | $63.71 | $— | $60.70 | (16.8)% | (13.4)% |
| **Hospitality Key Performance Indicators:** |  |  |  |  |  |  |  |  |  |
| Room nights available | 156,306 | 1,403 | 154,903 | 151,159 | — | $— | 151,159 | 3.4% | 2.5% |
| Rooms revenue (in thousands) | $20,559 | $317 | $20,242 | $11,370 | $— | $177 | $11,193 | 80.8% | 80.8% |
| RevPAR | $131.53 | $225.94 | $130.69 | $75.22 | $— | $— | $74.05 | 74.9% | 76.5% |
| Occupancy | 67.9% | 61.6% | 68.0% | 40.7% | — | — | 40.7% | 66.8% | 67.1% |
| ADR | $193.70 | $366.89 | $192.33 | $184.63 | — | $— | $181.75 | 4.9% | 5.8% |
| Hospitality revenue (in thousands) | $34,101 | $429 | $33,672 | $21,879 | $— | $230 | $21,649 | 55.9% | 55.5% |

34

| Attractions Key Performance Indicators: | Six Months Ended June 30, 2022 As Reported | New Experiences(1) | Same-Store(2) | Six Months Ended June 30, 2021 As Reported | New Experiences(1) | FX Impact(3) | Same-Store(2) | % Change As Reported | Same-Store(2) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Number of visitors | 1,034,498 | 275,539 | 758,959 | 261,772 | 49,078 | — | 212,694 | \*\* | \*\* |
| Ticket revenue (in thousands) | $38,539 | $11,244 | $27,295 | $11,589 | $2,405 | $272 | $8,912 | \*\* | \*\* |
| Effective ticket price | $37.25 | $40.81 | $35.96 | $44.27 | $49.00 | $— | $41.90 | (15.9)% | (14.2)% |
| Attractions revenue (in thousands) | $51,597 | $14,059 | $37,538 | $15,185 | $3,127 | $386 | $11,672 | \*\* | \*\* |
| Revenue per attraction visitor | $49.88 | $51.02 | $49.46 | $58.01 | $63.71 | $— | $54.88 | (14.0)% | (9.9)% |
| **Hospitality Key Performance Indicators:** |  |  |  |  |  |  |  |  |  |
| Room nights available | 268,242 | 1,403 | 266,839 | 261,068 | — | $— | 261,068 | 2.7% | 2.2% |
| Rooms revenue (in thousands) | $27,462 | $317 | $27,145 | $16,139 | $— | $182 | $15,957 | 70.2% | 70.1% |
| RevPAR | $102.38 | $225.94 | $101.73 | $61.82 | $— | $— | $61.12 | 65.6% | 66.4% |
| Occupancy | 61.9% | 61.6% | 62.0% | 41.5% | — |  | 41.5% | 49.2% | 49.4% |
| ADR | $165.28 | $366.89 | $164.20 | $148.90 | — | $— | $147.21 | 11.0% | 11.5% |
| Hospitality revenue (in thousands) | $43,516 | $429 | $43,087 | $28,820 | $— | $237 | $28,583 | 51.0% | 50.7% |

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

(1) New Experiences comprises the following attractions that were opened or acquired after January 1, 2021: Sky Lagoon (opened April 2021), the Golden Skybridge (opened June 2021), FlyOver Las Vegas (opened September 2021) and the Glacier Raft Company (acquired April 2022).

(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 half of 2022, which was impacted in 2021 by border closures and travel restrictions 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 decreased due to increased visitation to attractions with lower ticket prices, which caused our weighted-average effective ticket price to go down.

**Hospitality**. Room nights available increased as pandemic-related capacity restrictions were lifted in 2022. 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 income (loss) for the three and six months ended June 30, 2022 and 2021:

*(in thousands)*

| Revenue: GES: | Three Months Ended June 30, 2022 | 2021 | % Change | Six Months Ended June 30, 2022 | 2021 | % Change |
| --- | ---: | ---: | --- | ---: | ---: | --- |
| Spiro | $89,425 | $11,944 | \*\* | $132,241 | $24,003 | \*\* |
| GES Exhibitions | 154,600 | 13,057 | \*\* | 266,431 | 20,209 | \*\* |
| Intersegment eliminations | (2,421) | (81) | \*\* | (3,492) | (147) | \*\* |
| Total GES | $241,604 | $24,920 | \*\* | $395,180 | $44,065 | \*\* |
| **Segment operating income (loss)(1):** |  |  |  |  |  |  |
| GES: |  |  |  |  |  |  |
| Spiro | $14,847 | $(7,211) | \*\* | $14,608 | $(14,380) | \*\* |
| GES Exhibitions | 16,273 | (19,686) | \*\* | 14,918 | (32,421) | \*\* |
| Total GES | $31,120 | $(26,897) | \*\* | $29,526 | $(46,801) | \*\* |

\*\* 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 income (loss), to the most directly comparable GAAP measure.

### Three months ended June 30, 2022 compared with the three months ended June 30, 2021

**Spiro and GES Exhibitions revenue** increased $77.5 million and $141.5 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 continued to win new clients and benefit from increased client spend, and GES Exhibitions’ same-show revenue continued to improve.

**Spiro and GES Exhibitions segment operating income** improved $22.1 million and $36.0 million, respectively, primarily due to higher revenue and the continued focus on managing discretionary costs.

### Six months ended June 30, 2022 compared with the six months ended June 30, 2021

**Spiro and GES Exhibitions revenue** increased $108.2 million and $246.2 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 income** improved $29.0 million and $47.3 million, respectively, primarily due to higher revenue and the continued focus on managing discretionary costs. GES Exhibitions’ segment operating loss during the six months ended June 30, 2021 included a $9.1 million gain on sale of a GES warehouse in Orlando.

### Other Expenses

*(in thousands)*

|  | Three Months Ended June 30, 2022 | 2021 | % Change | Six Months Ended June 30, 2022 | 2021 | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Corporate activities | $3,440 | $3,006 | 14.4% | $6,113 | $5,011 | 22.0% |
| Interest expense, net | $7,761 | $5,565 | 39.5% | $13,638 | $10,650 | 28.1% |
| Other expense, net | $612 | $680 | (10.0)% | $1,250 | $1,040 | 20.2% |
| Restructuring charges | $1,426 | $787 | 81.2% | $2,080 | $3,613 | (42.4)% |
| Impairment charges | $— | $— | \*\* | $583 | $— | \*\* |
| Income tax expense (benefit) | $3,359 | $(2,166) | \*\* | $777 | $(5,211) | \*\* |
| Income (loss) from discontinued operations | $52 | $(62) | \*\* | $327 | $286 | 14.3% |

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

**Corporate Activities –** The increase in corporate activities expense during the three and six months ended June 30, 2022 was primarily due to higher performance-based compensation expense.

**Interest Expense, net –** The increase in interest expense during the three and six months ended June 30, 2022 was primarily due to higher interest rates and higher debt balances in 2022, offset in part by $0.7 million in capitalized interest recorded during the three months ended June 30, 2022 and $2.6 million during the six months ended June 30, 2022.

**Restructuring Charges –** Restructuring charges during the three and six months ended June 30, 2022 and 2021 were primarily related to facility closures and severance 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.

**Income Tax Expense (Benefit) –** The effective tax rate was 14.3% for the three months ended June 30, 2022 and 4.8% for the three months ended June 30, 2021. The effective tax rate was a negative 8.0% for the six months ended June 30, 2022 and 5.6% for six months ended June 30, 2021. The effective tax rates 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. The six months ended June 30, 2022 was also impacted by a change in income or loss between jurisdictions.

### Liquidity and Capital Resources

Cash, cash equivalents, and restricted cash were $59.9 million as of June 30, 2022, as compared to $64.3 million as of December 31, 2021. Our total available liquidity was $126.8 million, including the available capacity on our revolving credit facility of $72.3 million ($100.0 million total facility size, less $15.0 million of borrowings and $12.7 million in outstanding letters of credit) and unrestricted cash of $54.5 million. During the six months ended June 30, 2022, net cash provided by operating activities was $44.0 million.

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 June 30, 2022, we held approximately $52.2 million of our cash and cash equivalents outside of the United States, consisting of $26.7 million in Canada, $7.6 million in the United Kingdom, $6.7 million in the Netherlands, $5.8 million in Iceland, $3.1 million in the United Arab Emirates, and $2.3 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 for at least the next 12 months.

### Cash Flows

### Operating Activities

*(in thousands)*

|  | Six Months Ended June 30, 2022 | 2021 |
| --- | ---: | ---: |
| Net loss | $(10,181) | $(88,058) |
| Depreciation and amortization | 26,486 | 26,510 |
| Deferred income taxes | (962) | (4,253) |
| Income from discontinued operations | (327) | (286) |
| Restructuring charges | 2,080 | 3,613 |
| Impairment charges | 583 | — |
| Gains on dispositions of property and other assets | (154) | (9,360) |
| Share-based compensation expense | 5,469 | 4,216 |
| Multi-employer pension plan withdrawal | — | 57 |
| Other non-cash items, net | 5,384 | (33) |
| Changes in operating assets and liabilities | 15,640 | 28,045 |
| **Net cash provided by (used in) operating activities** | $44,018 | $(39,549) |

The change in net cash provided by (used in) operating activities of $83.6 million was primarily due to improved operating results at GES and Pursuit, offset in part by a decrease to working capital.

### Investing Activities

*(in thousands)*

|  | Six Months Ended June 30, 2022 | 2021 |
| --- | ---: | ---: |
| Capital expenditures | $(31,639) | $(24,763) |
| Cash paid for acquisitions, net | (25,494) | (7,606) |
| Proceeds from dispositions of property and other assets | 161 | 14,227 |
| **Net cash used in investing activities** | $(56,972) | $(18,142) |

The increase in net cash used in investing activities of $38.8 million was primarily due to the Glacier Raft Company acquisition and an 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 cash paid for the acquisition of the Golden Skybridge in 2021.

### Financing Activities

*(in thousands)*

|  | Six Months Ended June 30, 2022 | 2021 |
| --- | ---: | ---: |
| Proceeds from borrowings | $54,668 | $65,608 |
| Payments on debt and finance obligations | (38,728) | (9,027) |
| Dividends paid on preferred stock | (3,900) | — |
| Distributions to noncontrolling interest, net of contributions from noncontrolling interest | (570) | (678) |
| Payments of debt issuance costs | (418) | (128) |
| Payment of payroll taxes on stock-based compensation through shares withheld or repurchased | (537) | (601) |
| **Net cash provided by financing activities** | $10,515 | $55,174 |

The decrease in net cash provided by financing activities of $44.7 million was primarily due to net debt proceeds of $15.9 million during the six months ended June 30, 2022 compared to $56.6 million during the six months ended June 30, 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 June 30, 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 Measure

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, multi-employer pension plan withdrawal, and certain other corporate expenses that are not allocated to the reportable segments 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, 2,964 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 $24.3 million as of June 30, 2022 and $16.2 million as of December 31, 2021. We recorded unrealized foreign currency translation losses in other comprehensive income (loss) of $8.1 million during the six months ended June 30, 2022 and gains of $7.7 million during the six months ended June 30, 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 June 30, 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, 1,061 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, 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 June 30, 2022. Based on this evaluation, the CEO and CFO concluded that our disclosure controls and procedures were effective as of June 30, 2022.

There were no changes in our internal control over financial reporting during the three months ended June 30, 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 Aug 5, 2022.
Source: SEC EDGAR, the filing index for accession 0000950170-22-015083. Last ingested by Listed: Oct 24, 2026, 14:58 ET. No prices; not investment advice.