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

- Company: [Pursuit Attractions & Hospitality, Inc.](/companies/prsu.md) (CIK 884219)
- Form: 10-Q/A
- Filed: 2023-02-28
- Accepted by EDGAR: Feb 28, 2023, 20:12 ET
- Period: 2022-09-30
- Accession: 0000950170-23-005019
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/884219/000095017023005019/vvi-20220930.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/884219/000095017023005019/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2022-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2022-07-01 to 2022-09-30 | $382.7m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2022-01-01 to 2022-09-30 | $879.3m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Interest expense | 3 months, 2022-07-01 to 2022-09-30 | $10.3m | us-gaap:InterestExpense |
| Interest expense | 9 months, 2022-01-01 to 2022-09-30 | $23.9m | us-gaap:InterestExpense |
| Net income | 3 months, 2022-07-01 to 2022-09-30 | $38.1m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2022-01-01 to 2022-09-30 | $29.0m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2022-07-01 to 2022-09-30 | $1.29 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2022-01-01 to 2022-09-30 | $0.79 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2022-07-01 to 2022-09-30 | $1.30 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2022-01-01 to 2022-09-30 | $0.80 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2022-07-01 to 2022-09-30 | 20,889 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2022-01-01 to 2022-09-30 | 20,781 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Capital expenditure | 3 months, 2022-07-01 to 2022-09-30 | $23.1m | us-gaap:PaymentsToAcquireProductiveAssets |
| Capital expenditure | 9 months, 2022-01-01 to 2022-09-30 | $54.8m | us-gaap:PaymentsToAcquireProductiveAssets |
| Cash and equivalents | at 2022-09-30 | $79.2m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Long-term debt | at 2022-09-30 | $399.7m | us-gaap:LongTermDebt |

## Management's discussion and analysis

As filed, 36,048 characters.

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/A and the section entitled “Risk Factors” (Part I, Item 1). The MD&A is intended to assist in understanding our financial condition and results of operations.

### Restatement of Previously Issued Financial Statements

As discussed in Note 1 – *Overview and Basis of Presentation* of the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q/A), we have restated our previously issued condensed consolidated financial statements for the quarter ended September 30, 2022. Accordingly, the following MD&A has been restated.

### Forward-Looking Statements

This Quarterly Report on Form 10-Q/A (this “Form 10-Q/A”) 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 “aim,” “anticipate,” “believe,” “could,” “deliver,” “estimate,” “expect,” “intend,” “may,” “might,” “outlook,” “plan,” “potential,” “seek,” “target,” “will,” 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 Form 10-Q/A. Such risks, uncertainties and other important factors include, among others: the factors set forth under “*Risk Factors”* (Part I, Item 1A) of this Form 10-Q/A 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 will file with the SEC. Such risks, uncertainties, and other important factors include, among others: the rising inflation and resulting interest rate increases; 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. We disclaim and do not undertake any obligation to update or revise any forward-looking statement except as required by applicable law or regulation.

### 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 and Macroeconomic Factors

The COVID-19 pandemic continues to impact the economies of countries in which we operate, including supply chain and labor challenges, and the ability of guests to travel from certain countries. However, during 2022 international tourism and live event activity have continued to improve and demand for our products and services remained strong. It is not currently possible to estimate the duration and severity of the COVID-19 pandemic or the adverse economic impact resulting from the preventative measures taken to contain or mitigate its outbreak, therefore no assurance can be given that an extended period of global economic disruption would not have a material adverse impact on our business, financial condition and results of operations in future periods. For a discussion of COVID-19 related risks and uncertainties that may affect our business, refer to “*Risk Factors”* (Part I, Item 1A of this Form 10-Q/A).

During 2022, changes in macroeconomic facts and circumstances, particularly high inflation and the resulting rise in interest rates has increased our interest expense. The additional impacts of these macroeconomic developments on our operations cannot be predicted with certainty, but could have adverse effects on our business, financial condition, and results of operations in future periods.

### 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 2022, we are seeing 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 September 30, 2022 | 2021 | % Change | Nine Months Ended September 30, 2022 | 2021 | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | --- |
| Total revenue | $382,721 | $233,599 | 63.8% | $879,284 | $323,767 | \*\* |
| Net income (loss) attributable to Viad | $38,121 | $15,067 | \*\* | $28,959 | $(70,111) | \*\* |
| Segment operating income (loss)(1) | $66,339 | $40,102 | 65.4% | $80,238 | $(33,117) | \*\* |
| Diluted income (loss) per common share from continuing operations attributable to Viad common stockholders | $1.29 | $0.45 | \*\* | $0.78 | $(3.80) | \*\* |

\*\* 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/A) for a reconciliation of the non-GAAP financial measure, segment operating income (loss), to the most directly comparable GAAP measure.

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

- **Total revenue** increased $149.1 million during the three months ended September 30, 2022 due to continued growth at GES and Pursuit. Live event activity at GES improved with the resumption of in-person and large-scale events that began in the third quarter of 2021. Pursuit experienced stronger leisure travel demand as international tourism continued to recover.
- **Net income attributable to Viad** increased $23.1 million during the three months ended September 30, 2022, primarily reflecting higher revenue during the 2022 period.
- **Total segment operating income** increased $26.2 million during the three months ended September 30, 2022, primarily due to higher revenue at GES and Pursuit, offset in part by a non-cash foreign currency unrealized loss of $5.0 million related to a finance lease remeasurement during 2022.

### Nine months ended September 30, 2022 compared with the nine months ended September 30, 2021

- **Total revenue** increased $555.5 million during the nine months ended September 30, 2022 as in-person event activity at GES continued to improve and as certain previously cancelled shows in 2021 took place during 2022, although at reduced capacities from pre-COVID-19 levels. Pursuit experienced increased visitation at our Canadian attractions during the nine months ended September 30, 2022, which were adversely impacted in 2021 by border restrictions.
- **Net income attributable to Viad** improved $99.1 million during the nine months ended September 30, 2022 from a net loss in the prior year period, primarily reflecting higher revenue during the 2022 period.
- **Total segment operating income** improved $113.4 million during the nine months ended September 30, 2022 from a operating loss in the prior year period, 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 and a non-cash foreign currency unrealized loss of $5.0 million related to a finance lease remeasurement during 2022.

### 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 nine months ended September 30, 2022 and 2021:

*(in thousands)*

| Revenue(1): Pursuit: | Three Months Ended September 30, 2022 | 2021 | % Change | Nine Months Ended September 30, 2022 | 2021 | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Attractions | $81,330 | $49,614 | 63.9% | $132,927 | $64,799 | \*\* |
| Hospitality | 75,327 | 63,151 | 19.3% | 118,843 | 91,971 | 29.2% |
| Transportation | 6,173 | 3,468 | 78.0% | 11,298 | 4,975 | \*\* |
| Other | 966 | 1,322 | (26.9)% | 2,111 | 1,913 | 10.4% |
| Total Pursuit | $163,796 | $117,555 | 39.3% | $265,179 | $163,658 | 62.0% |
| **Segment operating income (loss)(2):** |  |  |  |  |  |  |
| Total Pursuit | $59,749 | $49,601 | 20.5% | $44,122 | $23,183 | 90.3% |

\*\* 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/A) 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/A) for a reconciliation of the non-GAAP financial measure, segment operating income (loss), to the most directly comparable GAAP measure.

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

**Pursuit revenue** increased $46.2 million from the prior year period primarily due to favorable visitation at our Canadian attractions. Pursuit’s new experiences that were opened or acquired after January 1, 2021, including the Sky Lagoon, the Glacier Raft Company, the Golden Skybridge, FlyOver Las Vegas, and the Forest Park Hotel, contributed revenue of $18.7 million during the three months ended September 30, 2022 as compared to $7.4 million during the three months ended September 30, 2021.

**Pursuit segment operating income** increased $10.1 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 were operating but at less than full capacity during the third quarter of 2022, a non-cash foreign currency unrealized loss of $5.0 million related to a finance lease remeasurement during 2022, and due to a $4.3 million prior year benefit from the Canadian government’s emergency wage subsidy program that did not exist in 2022.

### Nine months ended September 30, 2022 compared with the nine months ended September 30, 2021

**Pursuit revenue** increased $101.5 million from the prior year period, which reflects the continued strengthening of leisure travel demand as international 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 experiences that were opened or acquired after January 1, 2021, including the Sky Lagoon, the Glacier Raft Company, FlyOver Las Vegas, the Golden Skybridge, and the Forest Park Hotel, contributed revenue of $33.2 million during the nine months ended September 30, 2022 as compared to $10.5 million during the nine months ended September 30, 2021.

**Pursuit segment operating income** increased $20.9 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 were operating but at less than full capacity during the nine months ended September 30, 2022, a non-cash foreign currency unrealized loss of $5.0 million related to a finance lease remeasurement during 2022, and a $10.8 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 revenue per attraction 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 September 30, 2022 As Reported | New Experiences(1) | Same-Store(2) | Three Months Ended September 30, 2021 As Reported | New Experiences(1) | FX Impact(3) | Same-Store(2) | % Change As Reported | Same-Store(2) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Number of visitors | 1,450,559 | 295,632 | 1,154,927 | 935,616 | 163,097 | — | 772,519 | 55.0% | 49.5% |
| Ticket revenue (in thousands) | $60,825 | $12,868 | $47,957 | $39,480 | $5,897 | $838 | $32,745 | 54.1% | 46.5% |
| Effective ticket price | $41.93 | $43.53 | $41.53 | $42.20 | $36.16 | $— | $42.39 | (0.6)% | (2.0)% |
| Attractions revenue (in thousands) | $81,330 | $17,275 | $64,055 | $49,614 | $7,377 | $1,145 | $41,092 | 63.9% | 55.9% |
| Revenue per attraction visitor | $56.07 | $58.43 | $55.46 | $53.03 | $45.23 | $— | $53.19 | 5.7% | 4.3% |
| **Hospitality Key Performance Indicators:** |  |  |  |  |  |  |  |  |  |
| Room nights available | 197,065 | 7,484 | 189,581 | 195,903 | — | — | 195,903 | 0.6% | (3.2)% |
| Rooms revenue (in thousands) | $42,453 | $1,152 | $41,301 | $35,413 | $— | $553 | $34,860 | 19.9% | 18.5% |
| RevPAR | $215.43 | $153.93 | $217.86 | $180.77 | $— | $— | $177.95 | 19.2% | 22.4% |
| Occupancy | 85.3% | 39.5% | 87.1% | 74.9% | — | — | 74.9% | 13.9% | 16.3% |
| ADR | $252.62 | $389.38 | $250.21 | $241.27 | $— | $— | $237.50 | 4.7% | 5.4% |
| Hospitality revenue (in thousands) | $75,327 | $1,456 | $73,871 | $63,151 | $— | $683 | $62,468 | 19.3% | 18.3% |

| Attractions Key Performance Indicators: | Nine Months Ended September 30, 2022 As Reported | New Experiences(1) | Same-Store(2) | Nine Months Ended September 30, 2021 As Reported | New Experiences(1) | FX Impact(3) | Same-Store(2) | % Change As Reported | Same-Store(2) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Number of visitors | 2,485,057 | 571,171 | 1,913,886 | 1,197,388 | 212,175 | — | 985,213 | \*\* | 94.3% |
| Ticket revenue (in thousands) | $99,364 | $24,112 | $75,252 | $51,069 | $8,302 | $984 | $41,783 | 94.6% | 80.1% |
| Effective ticket price | $39.98 | $42.22 | $39.32 | $42.65 | $39.13 | $— | $42.41 | (6.3)% | (7.3)% |
| Attractions revenue (in thousands) | $132,927 | $31,334 | $101,593 | $64,799 | $10,504 | $1,369 | $52,926 | \*\* | 92.0% |
| Revenue per attraction visitor | $53.49 | $54.86 | $53.08 | $54.12 | $49.51 | $— | $53.72 | (1.2)% | (1.2)% |
| **Hospitality Key Performance Indicators:** |  |  |  |  |  |  |  |  |  |
| Room nights available | 465,307 | 8,887 | 456,420 | 456,971 | — | — | 456,971 | 1.8% | (0.1)% |
| Rooms revenue (in thousands) | $69,915 | $1,469 | $68,446 | $51,552 | $— | $736 | $50,816 | 35.6% | 34.7% |
| RevPAR | $150.25 | $165.30 | $149.96 | $112.81 | $— | $— | $111.20 | 33.2% | 34.9% |
| Occupancy | 71.8% | 43.0% | 72.4% | 55.8% | — | — | 55.8% | 28.7% | 29.7% |
| ADR | $209.20 | $384.30 | $207.17 | $202.03 | $— | $— | $199.14 | 3.5% | 4.0% |
| Hospitality revenue (in thousands) | $118,843 | $1,885 | $116,958 | $91,971 | $— | $920 | $91,051 | 29.2% | 28.5% |

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

(1) New experiences comprises the following attractions that were opened or acquired after January 1, 2021: Sky Lagoon (opened May 2021), the Golden Skybridge (acquired March 2021 and opened June 2021), FlyOver Las Vegas (opened September 2021), the Glacier Raft Company (acquired April 2022), and Forest Park Hotel (opened August 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 2022, as visitation 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. The increase in same-store revenue per attraction visitor during the three months ended September 2022 was due to increased visitation to attractions with higher effective ticket prices. The decrease in same-store revenue per attraction visitor during the nine months ended September 30, 2022 was 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 primarily as a result of the addition of the Forest Park Hotel and Glacier Raft Company during 2022. The increase in RevPAR was primarily driven by higher occupancy and to a lesser extent by higher ADR 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 nine months ended September 30, 2022 and 2021:

*(in thousands)*

| Revenue: GES: | Three Months Ended September 30, 2022 | 2021 | % Change | Nine Months Ended September 30, 2022 | 2021 | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | --- |
| Spiro | $73,277 | $37,866 | 93.5% | $205,518 | $61,869 | \*\* |
| GES Exhibitions | 147,872 | 81,138 | 82.2% | 414,303 | 101,347 | \*\* |
| Intersegment eliminations | (2,224) | (2,960) | 24.9% | (5,716) | (3,107) | (84.0)% |
| Total GES | $218,925 | $116,044 | 88.7% | $614,105 | $160,109 | \*\* |
| **Segment operating income (loss)(1):** |  |  |  |  |  |  |
| GES: |  |  |  |  |  |  |
| Spiro | $3,720 | $(399) | \*\* | $18,328 | $(14,779) | \*\* |
| GES Exhibitions | 2,870 | (9,100) | \*\* | 17,788 | (41,521) | \*\* |
| Total GES | $6,590 | $(9,499) | \*\* | $36,116 | $(56,300) | \*\* |

\*\* 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/A) for a reconciliation of the non-GAAP financial measure, segment operating income (loss), to the most directly comparable GAAP measure.

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

**Spiro and GES Exhibitions revenue** increased $35.4 million and $66.7 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. 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 $4.1 million and $12.0 million, respectively, from operating losses in the prior year period primarily due to higher revenue and the continued focus on managing discretionary costs.

### Nine months ended September 30, 2022 compared with the nine months ended September 30, 2021

**Spiro and GES Exhibitions revenue** increased $143.6 million and $313.0 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 $33.1 million and $59.3 million, respectively, from operating losses in the prior year period primarily due to higher revenue and the continued focus on managing discretionary costs. GES Exhibitions segment operating loss during the nine months ended September 30, 2021 included a $9.1 million gain on sale of a GES warehouse in Orlando.

### Other Expenses

*(in thousands)*

|  | Three Months Ended September 30, 2022 | 2021 | % Change | Nine Months Ended September 30, 2022 | 2021 | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Corporate activities | $3,768 | $3,093 | 21.8% | $9,881 | $8,104 | 21.9% |
| Interest expense, net | $10,252 | $9,518 | 7.7% | $23,890 | $20,168 | 18.5% |
| Other expense, net | $280 | $466 | (39.9)% | $1,530 | $1,563 | (2.1)% |
| Restructuring charges | $1,387 | $2,186 | (36.6)% | $3,467 | $5,799 | (40.2)% |
| Impairment charges | $— | $— | \*\* | $583 | $— | \*\* |
| Income tax expense | $8,810 | $5,329 | 65.3% | $9,587 | $118 | \*\* |
| Income (loss) from discontinued operations | $(42) | $248 | \*\* | $285 | $534 | (46.6)% |

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

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

**Interest Expense, net –** The increase in interest expense during the three and nine months ended September 30, 2022 was primarily due to higher interest rates and higher debt balances in 2022, offset in part by $0.1 million in capitalized interest recorded during the three months ended September 30, 2022 and $2.7 million during the nine months ended September 30, 2022.

**Restructuring Charges –** Restructuring charges during the three and nine months ended September 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 –** The effective tax rate was 17.4% for the three months ended September 30, 2022 and 21.4% for the three months ended September 30, 2021. The effective tax rate was 23.4% for the nine months ended September 30, 2022 and a negative 0.2% for nine months ended September 30, 2021. The effective tax rates differed from the blended statutory rate primarily as a result of excluding the tax expense or benefit in jurisdictions where we have a valuation allowance. The minimal tax expense recorded for the nine months ended September 30, 2021 on a pre-tax loss was due to the minimal pre-tax income earned in jurisdictions with no valuation allowance.

### Liquidity and Capital Resources

Cash, cash equivalents, and restricted cash were $84.2 million as of September 30, 2022, as compared to $64.3 million as of December 31, 2021. Our total available liquidity was $165.8 million, including the available capacity on our revolving credit facility of $86.6 million ($100.0 million total facility size less $13.4 million in outstanding letters of credit) and unrestricted cash of $79.2 million. During the nine months ended September 30, 2022, net cash provided by operating activities was $105.5 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. We were in compliance with all covenants under the revolving credit facility as of September 30, 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/A) for additional information.

As of September 30, 2022, we held approximately $52.6 million of our cash and cash equivalents outside of the United States, consisting of $27.2 million in Canada, $8.7 million in Iceland, $6.4 million in the Netherlands, $5.2 million in the United Kingdom, $3.0 million in Germany, and $2.1 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 for at least the next 12 months.

### Cash Flows

### Operating Activities

*(in thousands)*

|  | Nine Months Ended September 30, 2022 | 2021 |
| --- | ---: | ---: |
| Net income (loss) | $31,636 | $(68,283) |
| Depreciation and amortization | 39,442 | 39,986 |
| Deferred income taxes | (646) | (131) |
| Income from discontinued operations | (285) | (534) |
| Restructuring charges | 3,467 | 5,799 |
| Impairment charges | 583 | — |
| Gains on dispositions of property and other assets | (209) | (9,345) |
| Share-based compensation expense | 7,998 | 5,960 |
| Multi-employer pension plan withdrawal | — | 57 |
| Other non-cash items, net | 11,894 | 4,642 |
| Changes in operating assets and liabilities | 11,605 | 19,136 |
| **Net cash provided by (used in) operating activities** | $105,485 | $(2,713) |

The change in net cash provided by (used in) operating activities of $108.2 million was primarily due to improved operating results at GES and Pursuit, offset in part by an unfavorable change in working capital.

### Investing Activities

*(in thousands)*

|  | Nine Months Ended September 30, 2022 | 2021 |
| --- | ---: | ---: |
| Capital expenditures | $(54,770) | $(45,187) |
| Cash paid for acquisitions, net | (25,494) | (7,704) |
| Proceeds from dispositions of property and other assets | 237 | 14,292 |
| **Net cash used in investing activities** | $(80,027) | $(38,599) |

The increase in net cash used in investing activities of $41.4 million was primarily due to the Glacier Raft Company acquisition and an increase in capital expenditures in the 2022 period, whereas in the 2021 period we received proceeds of $14.3 million from the dispositions of property and other assets, 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)*

|  | Nine Months Ended September 30, 2022 | 2021 |
| --- | ---: | ---: |
| Proceeds from borrowings | $94,849 | $451,350 |
| Payments on debt and finance obligations | (86,643) | (335,665) |
| Dividends paid on preferred stock | (5,850) | (1,950) |
| Distributions to noncontrolling interest, net of contributions from noncontrolling interest | (570) | (798) |
| Payments of debt issuance costs | (418) | (1,767) |
| Payment of payroll taxes on stock-based compensation through shares withheld or repurchased | (940) | (1,119) |
| **Net cash provided by financing activities** | $428 | $110,051 |

The decrease in net cash provided by financing activities of $109.6 million was primarily due to net debt proceeds of $8.2 million during the nine months ended September 30, 2022 compared to $115.7 million during the nine months ended September 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/A) 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 September 30, 2022, 546,283 shares remained available for repurchase. The Board of Directors’ authorization does not have an expiration date.

During both the 2022 and 2021 periods, 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/A) 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, and certain other corporate expenses (including multi-employer pension plan withdrawal) 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/A) 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, 2,989 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 $51.1 million as of September 30, 2022 and $16.2 million as of December 31, 2021. We recorded unrealized foreign currency translation losses in other comprehensive income (loss) of $35.0 million during the nine months ended September 30, 2022 and a loss of $1.0 million during the nine months ended September 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 monetary assets and liabilities denominated in currencies other than the functional currency of the respective subsidiary. As of September 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, 3,186 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 September 30, 2022.

### Evaluation of Disclosure Controls and Procedures

Based on that evaluation, and as a result of the matters described in the Explanatory Note to this Form 10-Q/A, the CEO and CFO concluded that as of September 30, 2022, as a result of a material weakness in our internal control over financial reporting related to the accounting for the non-cash foreign currency remeasurement of a finance lease described below, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports that we file or submit under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms; and (ii) is accumulated and communicated to management, including our CEO and CFO, to allow timely decisions regarding required disclosures.

### Material Weakness

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. During our year-end close and review procedures for the year ended December 31, 2022, a material weakness was identified over the remeasurement of monetary liabilities in nonfunctional currencies as a result of the error identified in accounting for a finance lease at the Company’s Sky Lagoon attraction in Iceland, which impacted costs of services, long-term debt and finance obligations, and net income attributable to Viad after accounting for taxes and noncontrolling interests.

### Remediation Plan

We are in the process of designing and implementing an internal control to address the material weakness. The material weakness cannot be considered remediated until applicable controls have been designed, implemented, and operated for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. Accordingly, we will continue to monitor and evaluate the effectiveness of our internal control over financial reporting.

### Changes in Internal Control Over Financial Reporting

Except as noted above, there were no changes in our internal control over financial reporting during the three months ended September 30, 2022 that have materially affected, or were reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 32,031 characters.

Our operations and financial results are subject to known and unknown risks. As a result, past financial performance and historical trends may not be reliable indicators of our future performance.

### Macroeconomic Risks

***We are vulnerable to deterioration in general economic conditions.*** Our business is particularly sensitive to fluctuations in general economic conditions in the United States and other global markets in which we operate. A decline in global or regional economic conditions, or consumers’ fears that economic conditions will decline due to COVID-19, the war in Ukraine, inflation, rising interest rates and other economic uncertainty could cause declining consumer confidence, unemployment, fluctuations in stock markets and interest rates, contraction of credit availability, or other dynamic factors affecting economic conditions generally. For example, in response to rising inflation, the United States Federal Reserve began to raise interest rates in March 2022 and continued to increase interest rates throughout 2022. This has increased our interest expense. The additional impacts of these macroeconomic developments on our operations cannot be predicted with certainty. The success of our GES business largely depends on the number of exhibitions or other live events held, the size of marketing expenditures at those events, and on the strength of particular industries that support those events. The number and size of exhibitions generally decrease when the economy weakens, which our business has experienced due to the economic impact of the COVID-19 pandemic. We also could suffer from reduced spending for our services because many live event marketing budgets are partly discretionary and are frequently among the first expenditures reduced when economic conditions deteriorate. In addition, revenue from our Pursuit operations depends largely on the amount of disposable income that consumers have available for travel and vacations, which decreases during periods of weak general economic conditions. As a result, any deterioration in general economic conditions could further materially and adversely affect our business, financial condition, and results of operations.

***Travel industry disruptions, particularly those affecting the hotel and airline industries, could adversely affect our business.*** Our business depends largely on the ability and willingness of people, whether exhibitors, event attendees, tourists, or others, to travel. Factors adversely affecting the travel industry, and particularly the airline and hotel industries, generally also adversely affect our business and results of operations. Factors that could adversely affect the travel industry include high or rising fuel prices, increased security and passport requirements, weather conditions, health epidemics, pandemics and endemics, airline accidents, acts of terrorism, and international political instability and hostilities. For example, the COVID-19 pandemic and social distancing orders resulted in severe global travel restrictions, reduction in capacity of event venues, hotels, attractions and other operations, and reluctance of customers to travel. These circumstances had severe effects on our businesses. The occurrence of additional disruptions, continued or new government restrictions on travel, or a spike or resurgence in cases of COVID-19 or other such illnesses, or other unexpected events that affect the availability and pricing of air travel and accommodations, could further materially and adversely affect our business and results of operations.

***The COVID-19 pandemic and related responsive actions have adversely affected our financial condition, liquidity, and cash flow, and may continue to do so in the future.*** The COVID-19 pandemic forced the cancellation of many of our events and the temporary closure of substantially all of our attractions, hotels, and other operations. The substantial reduction in our operations resulted in significant losses and negative cash flow from operations in 2020 and 2021.

The COVID-19 pandemic has been and continues to be a complex and evolving situation, with governments, public institutions, and other organizations imposing or recommending, and businesses and individuals implementing, at various times and to varying degrees, restrictions on various activities or other actions to combat its spread, such as restrictions and bans on travel or transportation; limitations on the size of in-person gatherings; closures of, or occupancy or other operating limitations on, work facilities, lodging facilities, food and beverage establishments, schools, public buildings, and businesses; cancellation of events, including exhibitions, sporting events, conferences and meetings; and quarantines and lock-downs. COVID-19 and its consequences also dramatically reduced travel and demand for travel related services, which has and may continue to impact our business, operations, and financial results. Although many of these restrictions, bans, limitations, closures and mandates have eased or been lifted, they have been reinstituted from time to time in varying degrees by various jurisdictions as resurgences and variants have emerged and then subsided. The extent to which COVID-19 impacts our business, operations, and financial results will depend on the factors described above and numerous other evolving factors that we may not be able to accurately predict or assess, including the duration and scope of COVID-19; COVID-19’s impact on global and regional economies and economic activity, its short and longer-term impact on the demand for travel, transient and group business, and levels of consumer confidence; and how quickly economies, travel activity, and demand for lodging recovers after the pandemic subsides.

Our GES business depends on exhibitions, conferences, and other live events and the size of marketing expenditures relating to those events. Existing or future government orders prohibiting large group gatherings would significantly and adversely affect our revenue and results of operations. Even though exhibitions and live events have increased as compared to 2020, we have experienced and continue to experience reduced spending for our services. Additionally, when exhibitions and live events have occurred, we have experienced reduced attendance as compared to exhibitions and live events that occurred pre-pandemic.

Further, the current circumstances are dynamic and the impacts of COVID-19 on our business operations, including the duration and impact on overall customer demand, are ongoing and uncertain (for example, since travel restrictions have been lifted, some guests have chosen to not travel or visit attractions and hospitality operations within our Pursuit business as a result of health concerns, which adversely affects our profitability and cash flow). Future revenue from our Pursuit operations will depend on any further spread of the virus, or variants of the virus, our ability to keep our operations open, the willingness of people to travel to our locations, and the amount of disposable income that consumers have available for travel and vacations, which decreases during periods of weak general economic conditions. Both our Pursuit and GES businesses have also experienced increased costs as a result of labor shortages and supply chain interruptions, as well as supplying our customers or guests with personal protection equipment, conducting comprehensive cleaning regimens, and in taking other measures that we have determined are in the best interests of our employees, customers, guests, and/or event participants. The potential adverse COVID-19 impacts to our businesses could have a correspondingly negative effect on our overall liquidity. Our senior secured credit facility has financial covenants that began September 30, 2022. If we are unable to maintain compliance with these covenants, our lenders may exercise remedies against us, including the acceleration of any outstanding indebtedness on our revolving credit facility. A resurgence in cases of COVID-19 or another pandemic could further materially and adversely affect our business, financial condition, and results of operations.

***Our businesses will face new challenges presented by the ramifications of the COVID-19 pandemic.*** In addition to the direct economic impacts of the COVID-19 pandemic, it is clear that as our businesses have begun to recover, they are operating in new environments in light of societal, regulatory, and industry changes that have occurred since March 2020. Our ability to continue to adjust to these changes and deliver expected business results may be hampered by ongoing uncertainty presented by the COVID-19 pandemic in terms of proper safety protocols, social norms, labor shortages, supply chain interruptions, and a potential of uneven demand for our services. In addition, our ability to deliver such services and otherwise execute against our recovery and growth strategies may be impacted by the extreme reduction of our workforce over the past two years and the resulting loss of knowledge of and experience in our businesses. Moreover, our go-forward strategy includes a heightened use of temporary employees in the delivery of our services, and while those employees will likely include those who were previously employed by us on a full-time basis, the level of execution may not be consistent with previous performance. Taken together, our ability to anticipate and adjust to these ongoing changes and new conditions may lead to additional costs, which may materially and adversely impact our business and results of operations.

***Transportation disruptions and increases in transportation costs could adversely affect our business and results of operations.*** GES relies on independent transportation carriers to send materials and exhibits to and from exhibition, warehouse, and customer facilities. If our customers and suppliers are unable to secure the services of those independent transportation carriers at favorable rates, it could materially and adversely affect our business and results of operations. In addition, disruption of transportation services due to shortage of supply chain labor, including CDL truck drivers; shipping capacity constraints, including shortages of related equipment; weather-related problems; labor strikes; lockouts; or other events could adversely affect our ability to supply services to customers and could cause the cancellation of exhibitions, which could materially and adversely affect our business and results of operations.

***Natural disasters, weather conditions, accidents, and other catastrophic events could negatively affect our business.*** The occurrence of catastrophic events ranging from natural disasters (such as hurricanes, fires, floods, and earthquakes), acts of war or terrorism, accidents involving our travel offerings or experiences, the effects of climate change, including any impact of global warming, or the prospect of these events could disrupt our business. Changes in climates may increase the frequency and intensity of adverse weather patterns and make certain destinations less desirable.

Such catastrophic events have, and could have, an adverse impact on Pursuit, which is heavily dependent on the ability and willingness of its guests to travel and/or visit our attractions. Pursuit guests tend to delay or postpone vacations if natural conditions differ from those that typically prevail at competing lodges, resorts, and attractions, and catastrophic events and heightened travel security measures instituted in response to such events could impede the guests’ ability to travel, and interrupt our business operations, including damaging our properties. For example, the accident on July 18, 2020, at Pursuit’s Glacier Adventure attraction, which involved one of our off-road Ice Explorers and resulted in three fatalities and other serious injuries, may have a negative impact on our reputation and traveler willingness to visit that attraction in the future.

Such catastrophic events could also have a negative impact on GES, causing a cancellation of exhibitions and other events held in public venues or disrupt the services we provide to our customers at convention centers, exhibition halls, hotels, and other public venues. Such events could also have a negative impact on GES’ production facilities, preventing us from timely completing exhibit fabrication and other projects for customers. In addition, unfavorable media attention, or negative publicity, in the wake of any catastrophic event or accident could damage our reputation or reduce the demand for our services. If the conditions arising from such events persist or worsen, they could materially and adversely affect our results of operations and financial condition.

### Strategic, Business, and Operational Risks

***We have identified a material weakness in our internal control over financial reporting. If we are unable to remediate this material weakness or maintain effective internal controls over financial reporting in the future, our ability to produce timely and accurate financial statements or comply with applicable laws and regulations could be impaired.*** We have identified a material weakness in our internal control over financial reporting and have restated our financial statements for the three and nine months ended September 30, 2022. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. The identified material weakness remained unremediated as of September 30, 2022. If we are unable to remediate the existing material weakness, experience additional material weaknesses or otherwise fail to maintain an effective system of internal controls in the future, we may not be able to accurately or timely report our financial condition or results of operations or prevent fraud, which may adversely affect investor confidence in us and, as a result, the value of our common stock.

***The seasonality of our business makes us particularly sensitive to adverse events during peak periods.*** The peak activity for our Pursuit business is during the summer months, as the vast majority of Pursuit’s revenue is earned in the second and third quarters. Our GES exhibition and event activity varies significantly because it is based on the frequency and timing of shows, many of which are not held each year, and which may shift between quarters. If adverse events or conditions occur during these peak periods, such as the COVID-19 pandemic or natural disasters such as forest fires, our results of operations could be materially and adversely affected.

***New capital projects may not be commercially successful.*** From time to time, we pursue capital projects in order to enhance and expand our business, such as FlyOver, which includes FlyOver Canada in Vancouver, FlyOver Iceland, FlyOver Las Vegas, and the current development of FlyOver Chicago and FlyOver Canada Toronto, as well as other efforts to upgrade some of our Pursuit offerings. Capital projects are subject to a number of risks, including the failure to achieve established financial and strategic goals. For example, our FlyOver attractions are all considered one reporting unit and goodwill is assigned to, and tested at, the reporting unit level. Significant reductions in FlyOver’s expected future revenue, operating income, or cash flow forecasts and projections, or changes in macroeconomic facts and circumstances, particularly high inflation and the resulting rise in interest rates, may result in impairment charges in the future. Capital projects are also subject to unanticipated delays and cost overruns as well as additional project-specific risks. For example, we had to delay FlyOver Canada Toronto due to poor market conditions as a result of the COVID-19 pandemic and a need to preserve capital. Although FlyOver Canada Toronto’s opening is planned for 2024, this attraction may be further delayed by market conditions as a result of the COVID-19 pandemic or other poor conditions. A prolonged delay in these capital projects, or our failure to accurately predict the revenue or profit that will be generated from these projects, could prevent them from performing in accordance with our commercial expectations and could materially and adversely affect our future success, business, and results of operations.

***We operate in highly competitive and dynamic industries.*** Competition in the live events markets is driven by price and service quality, among other factors. To the extent competitors seek to gain or retain market presence through aggressive underpricing strategies, we may be required to lower our prices and rates to avoid the loss of related business. Moreover, customer consolidations and other actions within the industry have caused downward pricing pressure for our products and services and could affect our ability to negotiate favorable terms with our customers. If we are unable to anticipate and respond as effectively as our competitors to changing business conditions, including new technologies and business models, we could lose market share. Our inability to meet the challenges presented by the competitive and dynamic environment of our industry could materially and adversely affect our results of operations.

***We depend on our large exhibition event clients to renew their service contracts and on our exclusive right to provide those services.*** GES has a number of large exhibition event organizers and large customer accounts. If any of these large clients do not renew their service contracts, our results of operations could be materially and adversely affected.

Moreover, when event organizers hire GES as the official services contractor, they usually also grant GES an exclusive right to perform material handling, electrical, rigging, and other services at the exhibition facility. However, some exhibition facilities have taken certain steps to in-source certain event services (either by performing the services themselves or by hiring a separate service provider) as a result of conditions generally affecting their industry, such as an increased supply of or reduced demand for exhibition space. If exhibition facilities choose to in-source certain event services, GES will lose the ability to provide certain event services, and our results of operations could be materially and adversely affected.

***Show rotation affects our profitability and makes comparisons between periods difficult.*** GES results are largely dependent upon the frequency, timing, and location of exhibitions and events. Some large exhibitions are not held annually (they may be held once every two, three, or four years) or may be held at different times of the year from when they were previously held. In addition, the same exhibition may change locations from year to year resulting in lower margins if the exhibition shifts to a higher-cost location. Any of these factors could cause our results of operations to fluctuate significantly from quarter to quarter or from year to year, making periodic comparisons difficult.

***Completed acquisitions may not perform as anticipated or be integrated as planned.*** We regularly evaluate and pursue opportunities to acquire businesses that complement, enhance, or expand our current business, or offer growth opportunities. Our acquired businesses might not meet our financial and non-financial expectations or yield anticipated benefits. Our success depends, in part, on our ability to conform controls, policies and procedures, and business cultures; consolidate and streamline operations and infrastructures; identify and eliminate redundant and underperforming operations and assets; manage inefficiencies associated with the integration of operations; and retain the acquired business’s key personnel and customers. Moreover, our acquisition activity may subject us to new regulatory requirements, distract our senior management and employees, and expose us to unknown liabilities or contingencies that we may fail to identify prior to closing. If we are forced to make changes to our business strategy or if external conditions adversely affect our business operations, such as unfavorable macroeconomic conditions (particularly high inflation and the resulting rise in interest rates) and the impact of COVID-19, it may be difficult for us to accurately forecast revenue, operating income, or cash flow, and we may be required to record impairment charges in the future. Additionally, we may borrow funds to finance strategic acquisitions. Debt leverage resulting from future acquisitions would reduce our debt capacity, increase our interest expense, and limit our ability to capitalize on future business opportunities. Such borrowings may also be subject to fluctuations in interest rates. Any of these risks could materially and adversely affect our business, product and service sales, financial condition, and results of operations.

***We are subject to currency exchange rate fluctuations.*** We have operations outside of the United States primarily in Canada, the United Kingdom, Iceland, the Netherlands, and Germany. During 2021 and 2020, our international operations accounted for approximately 38% and 30% of our consolidated revenue, respectively, and 19% and 36% of our segment operating loss, respectively. Consequently, a significant portion of our business is exposed to currency exchange rate fluctuations. We do not currently hedge equity risk arising from the translation of non-United States denominated assets and liabilities. Our financial results and capital ratios are sensitive to movements in currency exchange rates because a large portion of our assets, liabilities, revenue, and expenses must be translated into U.S. dollars for reporting purposes. The unrealized gains or losses resulting from the currency translation are included as a component of accumulated other comprehensive income (loss) in our Consolidated Balance Sheets. We also have certain monetary assets and liabilities in currencies other than the entity’s functional currency, which results in gains or losses as exchange rates fluctuate. As a result, significant fluctuations in currency exchange rates could result in material changes to the net equity position we report in our Consolidated Balance Sheets and could adversely affect our results of operations.

***Liabilities relating to prior and discontinued operations may adversely affect our results of operations.*** We and our predecessors have a corporate history spanning decades and involving diverse businesses. Some of those businesses owned properties and used raw materials that have been, and may continue to be, subject to litigation. Moreover, some of the raw materials used and the waste produced by those businesses have been and are the subject of United States federal and state environmental regulations, including laws enacted under the Comprehensive Environmental Response, Compensation and Liability Act, or its state law counterparts. In addition, we may incur other liabilities resulting from indemnification claims involving previously sold properties and subsidiaries, or obligations under defined benefit plans or other employee plans, as well as claims from past operations of predecessors or their subsidiaries. Although we believe we have adequate reserves and sufficient insurance coverage to cover those potential liabilities, future events or proceedings could render our reserves or insurance protections inadequate, any of which could materially and adversely affect our business and results of operations.

### Labor and Employment Risks

***Our business has been and may continue to be adversely affected by labor shortages, turnover, and labor cost increases.*** We rely heavily on our global workforce, including many seasonal and temporary employees. Several factors, including factors related to the COVID-19 pandemic, have resulted and may continue to result in labor shortages, turnover, and increased labor costs, including high employment levels and demand for employees; unemployment subsidies; the freezing of visa programs; increased wages offered by other employers; vaccine mandates and other government regulations and our responses thereto. Any of these factors could materially and adversely affect our ability to hire qualified team members and, therefore negatively impact our business and results of operations.

***Our business is relationship driven.*** Our GES business is heavily focused on client relationships, and, specifically, on having close collaboration and interaction with our clients. To be successful, our account teams must be able to understand clients’ desires and expectations in order to provide top-quality service. If we are unable to maintain our client relationships, including due to the loss of key members of our account teams, we could also lose customers and our results of operations could be materially and adversely affected.

***If we lose any of our key personnel, our ability to manage our business and continue our growth could be negatively impacted.*** Our success, at least in part, depends on the continued contributions of our executive team and key personnel. If one or more of our key personnel were to resign or otherwise terminate employment with us, we could experience operational disruptions. In addition, we do not maintain key person insurance on any of our executive employees or key personnel.

As previously disclosed, David Barry, the President of Pursuit, recently began a medical leave of absence for surgical treatment of a medical condition. If Mr. Barry becomes unable to continue working due to health reasons, we could experience operational disruptions and/or our growth could be negatively impacted.

***Union-represented labor increases our risk of higher labor costs and work stoppages.*** Significant portions of our employees are unionized. We have approximately 100 collective bargaining agreements, and we are required to renegotiate approximately one-third of those each year. If we increase wages or benefits as a result of labor negotiations, either our operating margins will suffer, or we could increase the cost of our services to our customers, which could lead those customers to turn to other vendors with lower prices. Either event could materially and adversely affect our business and results of operations.

Additionally, if we are unable to reach an agreement with a union during the collective bargaining process, the union may strike or carry out other types of work stoppages. If this were to occur, we might be unable to find substitute workers with the necessary skills to perform many of the services, or we may incur additional costs to do so, both of which could materially and adversely affect our business and results of operations.

***Our participation in multi-employer pension plans could substantially increase our pension costs.*** We sponsor a number of defined benefit plans for our United States and Canada-based employees. In addition, we are obligated to contribute to multi-employer pension plans under collective bargaining agreements covering our union-represented employees. We contributed $7.1 million in 2021, $8.6 million in 2020, and $27.3 million in 2019 to those multi-employer pension plans. Third-party boards of trustees manage these multi-employer plans. Based upon the information we receive from plan administrators, we believe that several of those multi-employer plans are underfunded. The Pension Protection Act of 2006 requires us to reduce the underfunded status over defined time periods. Moreover, we would be required to make additional payments of our proportionate share of a plan’s unfunded vested liabilities if a plan terminates, or other contributing employers withdraw, due to insolvency or other reasons, or if we voluntarily withdraw from a plan. In 2019, we withdrew from the underfunded Central States Pension Plan and accordingly, we recorded a charge of $15.5 million, which represented the estimated present value of future contributions we will be required to make as a result of the union’s withdrawal. At this time, we do not anticipate triggering any significant withdrawal from any other multi-employer pension plan to which we currently contribute. However, significant plan contribution increases could materially and adversely affect our consolidated financial condition, results of operations, and cash flows. Refer to Note 18 – Pension and Postretirement Benefits of the Notes to Consolidated Financial Statements (Part II, Item 8 of our 2021 Form 10-K) for further information.

### Cybersecurity and Data Privacy Risks

***We are vulnerable to cybersecurity attacks and threats.*** Our devices, servers, cloud-based solutions, computer systems, and business systems are vulnerable to cybersecurity risk, including cyberattacks, or we may be the target of email scams that attempt to acquire personal information and company assets. As a result of the COVID-19 pandemic, many of our employees switched to working remotely, which magnifies the importance of integrity of our remote access security measures. Despite our efforts to protect ourselves with insurance, and create security barriers to such threats, including regularly reviewing our systems for vulnerabilities and continually updating our protections, we might not be able to entirely mitigate these risks. Our failure to effectively prevent, detect, and recover from the increasing number and sophistication of information security threats could lead to business interruptions, delays or loss of critical data, misuse, modification, or destruction of information, including trade secrets and confidential business information, reputational damage, and third-party claims, any of which could materially and adversely affect our results of operations. Moreover, the cost of protecting against cybersecurity attacks and threats is expensive and expected to increase going forward.

***Laws and regulations relating to the handling of personal data are evolving and could result in increased costs, legal claims, or fines.*** We store and process the personally identifiable information of our customers, employees, and third parties with whom we have business relationships. The legal requirements restricting the way we store, collect, handle, and transfer personal data continue to evolve, and there are an increasing number of authorities issuing privacy laws and regulations. These data privacy laws and regulations are subject to differing interpretations, creating uncertainty and inconsistency across jurisdictions. Our compliance with these myriad requirements could involve making changes in our services, business practices, or internal systems, any of which could increase our costs, lower revenue, or reduce efficiency. Our failure to comply with existing or new rules could result in significant penalties or orders to stop the alleged noncompliant activity, litigation, adverse publicity, or could cause our customers to lose trust in our services. In addition, if the third parties we work with violate applicable laws, contractual obligations, or suffer a security breach, those violations could also put us in breach of our obligations under privacy laws and regulations. In addition, the costs of maintaining adequate protection, including insurance protection against such threats, as they develop in the future (or as legal requirements related to data security increase) are expected to increase and could be material. Any of these risks could materially and adversely affect our business and results of operations.

Filed Feb 28, 2023.
Source: SEC EDGAR, the filing index for accession 0000950170-23-005019. Last ingested by Listed: Oct 24, 2026, 14:58 ET. No prices; not investment advice.