# Pursuit Attractions & Hospitality, Inc.: Form 10-Q for the period ended Mar 31, 2023

- Company: [Pursuit Attractions & Hospitality, Inc.](/companies/prsu.md) (CIK 884219)
- Form: 10-Q
- Filed: 2023-05-05
- Accepted by EDGAR: May 5, 2023, 20:45 ET
- Period: 2023-03-31
- Accession: 0000950170-23-018369
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/884219/000095017023018369/vvi-20230331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/884219/000095017023018369/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-01-01 to 2023-03-31 | $260.8m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Interest expense | 3 months, 2023-01-01 to 2023-03-31 | $12.2m | us-gaap:InterestExpense |
| Income tax | 3 months, 2023-01-01 to 2023-03-31 | −$578.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-01-01 to 2023-03-31 | −$20.9m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-01-01 to 2023-03-31 | −$1.10 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-01-01 to 2023-03-31 | −$1.10 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-01-01 to 2023-03-31 | 20,751,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2023-01-01 to 2023-03-31 | $10.1m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2023-01-01 to 2023-03-31 | $11.4m | us-gaap:PaymentsToAcquireProductiveAssets |
| Cash and equivalents | at 2023-03-31 | $50.8m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2023-03-31 | $249.4m | us-gaap:AssetsCurrent |
| Total assets | at 2023-03-31 | $1.10bn | us-gaap:Assets |
| Current liabilities | at 2023-03-31 | $245.8m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2023-03-31 | $888.5m | us-gaap:Liabilities |
| Long-term debt | at 2023-03-31 | $400.9m | us-gaap:LongTermDebt |
| Shareholders' equity | at 2023-03-31 | −$4.2m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 28,825 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 “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.

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:

- general economic uncertainty in key global markets and a worsening of global economic conditions;
- travel industry disruptions;
- the impact of our overall level of indebtedness, as well as our financial covenants, on our operational and financial flexibility;
- identified material weakness in our internal control over financial reporting;
- seasonality of our businesses;
- the impact of the COVID-19 pandemic on our financial condition, liquidity, and cash flow;
- our ability to anticipate and adjust for new and emerging challenges presented by the ramifications of the COVID-19 pandemic on 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;
- our ability to manage our business and continue our growth if we lose any of our key personnel;
- 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 Item 1A, “*Risk Factors,”* of our 2022 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 of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with our 2022 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. We operate through three reportable segments: Pursuit, Spiro, and GES Exhibitions. Spiro and GES Exhibitions are both live event businesses, and are collectively referred to as “GES.”

### Current Macroeconomic Factors

During the three months ended March 31, 2023, international tourism and live event activity continued to improve and demand for our products and services remained strong despite ongoing macroeconomic volatility. We operated with little to no COVID-19 related disruptions during the first quarter of 2023, and supply chain and labor challenges improved. Changes in macroeconomic facts and circumstances, particularly high inflation and the resulting rise in interest rates, have increased our interest expense. The additional impacts of these and other 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 2022, 81% 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.

### Results of Operations

### Financial Highlights

*(in thousands, except per share data)*

|  | Three Months Ended March 31, 2023 | 2022 | % Change |
| --- | ---: | ---: | ---: |
| Total revenue | $260,791 | $177,360 | 47.0% |
| Net loss attributable to Viad | $(20,869) | $(29,001) | 28.0% |
| Segment operating loss(1) | $(5,528) | $(22,792) | 75.7% |
| Diluted loss per common share from continuing operations attributable to Viad common stockholders | $(1.10) | $(1.54) | 28.6% |

(1) Refer to Note 24 – *Segment Information* of the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for a reconciliation of the non-GAAP financial measure, segment operating loss, to the most directly comparable GAAP measure.

### Three months ended March 31, 2023 compared with the three months ended March 31, 2022

- **Total revenue** increased $83.4 million during the three months ended March 31, 2023 as live event activity at GES continued to improve. Pursuit experienced stronger leisure travel as international visitation volume continued to recover during the three months ended March 31, 2023.
- **Net loss attributable to Viad** improved $8.1 million during the three months ended March 31, 2023, primarily reflecting higher revenue, offset in part by higher interest expense during the 2023 period.
- **Segment operating loss** improved $17.3 million during the three months ended March 31, 2023, primarily due to higher revenue at GES and Pursuit.

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

### Pursuit

The following table presents a comparison of Pursuit’s reported revenue and segment operating loss for the three months ended March 31, 2023 and 2022:

*(in thousands)*

| Revenue(1): Pursuit: | Three Months Ended March 31, 2023 | 2022 | % Change |
| --- | ---: | ---: | ---: |
| Attractions | $19,004 | $12,501 | 52.0% |
| Hospitality | 11,203 | 9,415 | 19.0% |
| Transportation | 1,973 | 1,288 | 53.2% |
| Other | 483 | 580 | (16.7)% |
| Total Pursuit | $32,663 | $23,784 | 37.3% |
| **Segment operating loss(2):** |  |  |  |
| Total Pursuit | $(19,112) | $(21,198) | 9.8% |

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

### Three months ended March 31, 2023 compared with the three months ended March 31, 2022

**Pursuit revenue** increased $8.9 million driven by stronger leisure travel as international visitation volume continued to recover. Visitation at Pursuit’s Iceland attractions increased 74% at Sky Lagoon and 47% at FlyOver Iceland as compared to the prior year period, which reflects the lifting of travel restrictions that were in place during the first quarter of 2022.

**Pursuit segment operating loss** improved $2.1 million from the prior year period primarily due to the increase in revenue, offset in part by the increase in operating costs to support higher business volume during the three months ended March 31, 2023.

### Performance Measures

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

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

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

- **Revenue per Available Room.** RevPAR is calculated as total rooms revenue divided by the total number of room nights available for all comparable Pursuit hospitality properties during the period. Total rooms revenue does not include non-rooms revenue, which consists of ancillary revenue generated by hospitality properties, such as food and beverage and retail revenue. RevPAR measures the period-over-period change in rooms revenue per available room for comparable hospitality properties. RevPAR is affected by average daily rate and occupancy, which have different implications on profitability.
- **Average Daily Rate.** ADR is calculated as total rooms revenue divided by the total number of room nights sold for all comparable Pursuit hospitality properties during the period. ADR is used to assess the pricing levels that the hospitality

properties are able to realize. Increases in ADR lead to increases in rooms revenue with no substantial effect on variable costs, therefore having a greater impact on margins than increases in occupancy.

- **Occupancy.** Occupancy is calculated as the total number of room nights sold divided by the total number of room nights available for all comparable Pursuit hospitality properties during the period. Occupancy measures the utilization of the available capacity at the hospitality properties. Increases in occupancy result in increases in rooms revenue and additional variable operating costs (including housekeeping services, utilities, and room amenity costs), as well as increases in ancillary non-rooms revenue (including food and beverage and retail revenue).

The following table provides Pursuit’s key performance indicators:

| Attractions Key Performance Indicators: | Three Months Ended March 31, 2023 As Reported | New Experiences(1) | Same-Store(2) | Three Months Ended March 31, 2022 As Reported | New Experiences(1) | FX Impact(3) | Same-Store(2) | % Change As Reported | Same-Store(2) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Number of visitors | 409,136 | — | 409,136 | 291,578 | — | — | 291,578 | 40.3% | 40.3% |
| Ticket revenue (in thousands) | $14,261 | $— | $14,261 | $9,202 | $— | $625 | $8,577 | 55.0% | 66.3% |
| Effective ticket price | $34.86 | $— | $34.86 | $31.56 | $— | $— | $29.42 | 10.4% | 18.5% |
| Attractions revenue (in thousands) | $19,004 | $133 | $18,871 | $12,501 | $— | $877 | $11,624 | 52.0% | 62.3% |
| Revenue per attraction visitor | $46.45 | $— | $46.12 | $42.87 | $— | $— | $39.86 | 8.3% | 15.7% |
| **Hospitality Key Performance Indicators:** |  |  |  |  |  |  |  |  |  |
| Room nights available | 115,421 | 8,879 | 106,542 | 111,936 | — | — | 111,936 | 3.1% | (4.8)% |
| Rooms revenue (in thousands) | $7,590 | $574 | $7,016 | $6,903 | $— | $403 | $6,500 | 10.0% | 7.9% |
| RevPAR | $65.76 | $64.61 | $65.85 | $61.66 | $— | $— | $58.07 | 6.6% | 13.4% |
| Occupancy | 59.5% | 53.5% | 60.0% | 53.6% | — | — | 53.6% | 11.0% | 11.9% |
| ADR | $110.48 | $120.82 | $109.71 | $115.02 | $— | $— | $108.30 | (3.9)% | 1.3% |
| Hospitality revenue (in thousands) | $11,203 | $580 | $10,623 | $9,415 | $— | $510 | $8,905 | 19.0% | 19.3% |

(1) New experiences comprise the following attractions that were opened or acquired after January 1, 2022: the Glacier Raft Company (acquired April 2022) and Forest Park Alpine 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 2023 was driven by higher international visitation to Iceland and at our year-round Canadian experiences during 2023 as international visitation volume continued to recover. The increase in same-store revenue per attraction visitor during the three months ended March 31, 2023 was due to increased visitation to attractions with higher effective ticket prices.

**Hospitality**. Room nights available increased primarily as a result of the addition of the Forest Park Hotel during 2022. The increase in RevPAR on a same-store basis was primarily driven by higher occupancy and to a lesser extent by higher ADR on a same-store basis driven by revenue management efforts.

### GES

The following table presents a comparison of GES’ reported revenue and segment operating income (loss) for the three months ended March 31, 2023 and 2022:

*(in thousands)*

| Revenue: GES: | Three Months Ended March 31, 2023 | 2022 | % Change |
| --- | ---: | ---: | ---: |
| Spiro | $60,362 | $42,816 | 41.0% |
| GES Exhibitions | 169,497 | 111,831 | 51.6% |
| Intersegment eliminations | (1,731) | (1,071) | (61.6)% |
| Total GES | $228,128 | $153,576 | 48.5% |
| **Segment operating income (loss)(1):** |  |  |  |
| GES: |  |  |  |
| Spiro | $3,174 | $(239) | \*\* |
| GES Exhibitions | 10,410 | (1,355) | \*\* |
| Total GES | $13,584 | $(1,594) | \*\* |

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

(1) Refer to Note 24 – *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 March 31, 2023 compared with the three months ended March 31, 2022

**Spiro and GES Exhibitions revenue** increased $17.5 million and $57.7 million, respectively, primarily driven by increased live event activity at both GES Exhibitions and Spiro and the return of large-scale events that were postponed during the first quarter of 2022 due to the COVID-19 pandemic. Major non-annual shows, which represent shows greater than $1.0 million, increased approximately $3.6 million at Spiro and approximately $4.6 million at GES Exhibitions during the three months ended March 31, 2023 as compared to the prior year period. Spiro continues to win new logos with seven new clients during the three months ended March 31, 2023 and increased spend from existing clients. GES Exhibitions same-show revenue from U.S. exhibitions grew 26.4% compared to the prior year period.

**Spiro and GES Exhibitions segment operating income** improved $3.4 million and $11.8 million, respectively, from operating losses in the prior year period primarily due to higher revenue, improved sales mix, and the continued focus on managing discretionary costs.

### Other Expenses

*(in thousands)*

|  | Three Months Ended March 31, 2023 | 2022 | % Change |
| --- | ---: | ---: | ---: |
| Corporate activities | $3,165 | $2,673 | 18.4% |
| Interest expense, net | $12,249 | $5,877 | \*\* |
| Other expense, net | $531 | $638 | (16.8)% |
| Restructuring charges | $453 | $654 | (30.7)% |
| Impairment charges | $— | $583 | (100.0)% |
| Income tax benefit | $(578) | $(2,582) | 77.6% |
| Income (loss) from discontinued operations | $(58) | $275 | \*\* |

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

**Corporate Activities –** The increase in corporate activities expense during the three months ended March 31, 2023 was primarily driven by higher insurance costs in the 2023 period due to a prior year refund and higher stock-based compensation expense.

**Interest Expense, net –** The increase in interest expense during the three months ended March 31, 2023 was primarily due to higher interest rates in 2023, and to a lesser extent lower capitalized interest recorded during the three months ended March 31, 2023 of $0.3 million as compared to $1.9 million during the three months ended March 31, 2022. On January 4, 2023, we entered into an interest rate cap agreement with an effective date of January 31, 2023 to manage our exposure to interest rate increases on $300 million in borrowings under the Term Loan B. On February 6, 2023, we entered into the LIBOR Transition Amendment to the 2021 Credit Facility to replace LIBOR with the SOFR. 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.

**Income Tax Benefit –** The effective tax rate was 2.6% for the three months ended March 31, 2023 and 7.8% for three months ended March 31, 2022. During the quarter ended March 31, 2023, we released the valuation allowance of $2.1 million that was recorded on deferred tax assets associated with certain separate states, which more than offset taxes due in jurisdictions without a valuation allowance. The rates for both periods were lower than the 21% federal rate as a result of excluding the tax benefit in jurisdictions with a valuation allowance.

### Liquidity and Capital Resources

We believe that our existing sources of liquidity will be sufficient to fund operations and projected capital outlays for at least the next 12 months and the longer term.

When assessing our current sources of liquidity, we include the following:

*(in thousands)*

|  | March 31, 2023 | December 31, 2022 |
| --- | ---: | ---: |
| Unrestricted cash and cash equivalents(1) | $50,818 | $59,719 |
| Available capacity on Revolving Credit Facility(2) | 89,073 | 86,670 |
| **Total available liquidity** | $139,891 | $146,389 |

(1) As of March 31, 2023, we held approximately $37.0 million of our cash and cash equivalents outside of the United States, consisting of $11.8 million in Canada, $10.9 million in Iceland, $6.5 million in the United Arab Emirates, $5.3 million in the Netherlands, $2.3 million in Germany, and $0.2 million in other countries.

(2) Includes our total Revolving Credit Facility of $100 million less outstanding letters of credit of $10.9 million as of March 31, 2023 and $13.3 million as of December 31, 2022.

Cash provided by operating activities, supplemented by our total cash and cash equivalents, is our primary source of liquidity for funding our strategic business requirements. During the three months ended March 31, 2023, net cash provided by operating activities was $10.1 million.

Our short-term and long-term funding requirements include debt obligations, capital expenditures, working capital requirements, and potential acquisitions and strategic investments as we focus on scaling Pursuit with investments in high-return unforgettable, inspiring experiences through its Refresh, Build, Buy growth strategy. Our projected capital outlays can be adjusted for changes in the operating environment.

### Debt Obligations

Effective July 30, 2021, we entered into the $500 million 2021 Credit Facility. The 2021 Credit Facility provides for a $400 million Term Loan B and a $100 million Revolving Credit Facility. The proceeds of the Term Loan B, net of $14.8 million in related fees, were used to repay the $327 million outstanding balance under our then $450 million revolving credit facility and to provide for financial flexibility to fund future acquisitions and growth initiatives and for general corporate purposes.

The Revolving Credit Facility carries financial covenants. On March 28, 2023, we entered into the Second Amendment to the 2021 Credit Facility, which modified the interest coverage financial covenant. As of March 31, 2023, we were in compliance with all covenants under the Revolving Credit Facility. 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.

### Capital Expenditures

As of March 31, 2023, we have planned capital expenditures of approximately $75 million to $85 million for the next 12 months, including approximately $45 million on select growth projects, such as the development of FlyOver Chicago. We intend to continue making selective investments to advance Pursuit’s Refresh, Build, Buy growth strategy while maintaining a solid liquidity position.

### Other Obligations

We have additional obligations as part of our ordinary course of business, beyond those committed for debt obligations and capital expenditures. Refer to Note 21 – *Leases and Other* and Note 19 – *Pension and Postretirement Benefits* of the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for further information. The expected timing of payments of our obligations is estimated based on current information. Timing of payments and actual amounts paid may be different, depending on changes to agreed-upon amounts for certain obligations.

### Cash Flows

### Operating Activities

*(in thousands)*

|  | Three Months Ended March 31, 2023 | 2022 |
| --- | ---: | ---: |
| Net loss | $(21,390) | $(30,343) |
| Depreciation and amortization | 12,475 | 13,279 |
| Deferred income taxes | (2,304) | (3,104) |
| (Income) loss from discontinued operations | 58 | (275) |
| Restructuring charges | 453 | 654 |
| Impairment charges | — | 583 |
| Gains on dispositions of property and other assets | (58) | (74) |
| Share-based compensation expense | 3,065 | 2,166 |
| Other non-cash items, net | 1,331 | 2,836 |
| Changes in operating assets and liabilities | 16,439 | 32,201 |
| **Net cash provided by operating activities** | $10,069 | $17,923 |

Net cash provided by operating activities decreased $7.9 million primarily due to a less favorable change in working capital, offset in part by improved operating results at GES and Pursuit.

### Investing Activities

*(in thousands)*

|  | Three Months Ended March 31, 2023 | 2022 |
| --- | ---: | ---: |
| Capital expenditures | $(11,384) | $(12,570) |
| Cash paid for acquisitions, net | (41) | — |
| Proceeds from dispositions of property and other assets | 66 | 76 |
| **Net cash used in investing activities** | $(11,359) | $(12,494) |

Net cash used in investing activities decreased $1.1 million primarily due to a decrease in capital expenditures in the 2023 period.

### Financing Activities

*(in thousands)*

|  | Three Months Ended March 31, 2023 | 2022 |
| --- | ---: | ---: |
| Proceeds from borrowings | $1,819 | $1,013 |
| Payments on debt and finance obligations | (5,749) | (4,849) |
| Dividends paid on preferred stock | (1,950) | (1,950) |
| Payments of debt issuance costs | (200) | (313) |
| Payment of payroll taxes on stock-based compensation through shares withheld or repurchased | (412) | (518) |
| **Net cash used in financing activities** | $(6,492) | $(6,617) |

Net cash used in financing activities remained relatively flat during the three months ended March 31, 2023 compared to the three months ended March 31, 2022.

### 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. As of March 31, 2023, 546,283 shares remained available for repurchase under all prior authorizations. In March 2020, our Board of Directors suspended our share repurchase program. The Board of Directors’ authorization does not have an expiration date.

During both the 2023 and 2022 periods, we repurchased shares related to tax withholding requirements on vested restricted share-based awards.

### Critical Accounting Estimates

Refer to Part II, Item 7 – “*Management’s Discussion and Analysis of Financial Condition and Results of Operations”* of our 2022 Form 10-K for a discussion of our critical accounting 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 GAAP, we also disclose segment operating income (loss) as a non-GAAP financial measure. 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 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 24 – *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, or resulting from, 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, 3,639 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. The foreign exchange risk is composed of both potential losses from the translation of foreign currency financial information and the remeasurement of foreign currency transactions. 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, United Arab Emirates, 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 AOCI 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 $41.8 million as of March 31, 2023 and $43.0 million as of December 31, 2022. We recorded unrealized foreign currency translation gains in other comprehensive income (loss) of $1.2 million during the three months ended March 31, 2023 and $3.4 million during the three months ended March 31, 2022.

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 loans and leases denominated in currencies other than the functional currency of the respective subsidiary. As of March 31, 2023, we had long-term contractual liabilities that were denominated in nonfunctional currencies of $47.6 million. As foreign exchange rates fluctuate, these liabilities are remeasured, and the corresponding adjustment is recorded in the Condensed Consolidated Statements of Operations. As of March 31, 2023 and December 31, 2022, we did not have any outstanding foreign currency forward contracts.

On January 4, 2023, we entered into an interest rate cap agreement with an effective date of January 31, 2023 to hedge cash flows on $300 million of our Term Loan B. Refer to Note 13 – *Derivative* of the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for further information. We are exposed to short-term and long-term interest rate risk on certain of our other debt obligations.

## Controls and procedures

As filed, 2,822 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 March 31, 2023.

Based on this evaluation, the CEO and CFO concluded that our disclosure controls and procedures were not effective as of March 31, 2023 due to a material weakness in internal control over financial reporting as described below. Notwithstanding the material weakness described below, based on the additional analysis and other post-closing procedures performed, the Company believes the Condensed Consolidated Financial Statements and other financial information included in this Quarterly Report on Form 10-Q, are fairly presented, in all material respects, in conformity with accounting principles generally accepted in the United States of America.

### Identification of Material Weakness in Controls over Financial Reporting

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. This error was corrected in the Form 10-Q/A for the quarter ended September 30, 2022, which was filed on February 28, 2023.

### Remediation Plan

We have designed and implemented an internal control to address the above material weakness. The material weakness cannot be considered remediated until applicable controls have operated for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. These remediation efforts are still in process and have not yet been completed.

### Changes in Internal Control over Financial Reporting

Other than the execution of the material weakness remediation activities described above, there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting during the three months ended March 31, 2023.

## Risk factors

As filed, 374 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 2022 Form 10-K, which could materially affect our business, financial condition, or future results.

Filed May 5, 2023.
Source: SEC EDGAR, the filing index for accession 0000950170-23-018369. Last ingested by Listed: Oct 24, 2026, 14:58 ET. No prices; not investment advice.