Viad Corp Reports Results for the 2020 Second Quarter

Strengthens Liquidity Position and Enhances Financial Flexibility

• Secured up to $180 million investment from Crestview Partners and amended credit facility to provide financial covenant relief until September 30, 2022
• GES continues to minimize costs while supporting clients with virtual events and plans for future event activity
• Pursuit experiences are open and welcoming guests with focus on local and regional visitors

PHOENIX–(BUSINESS WIRE)–Viad Corp (NYSE: VVI) today reported financial results for the second quarter of 2020, as well as provided updates regarding the business and actions taken to bolster liquidity and secure financial flexibility.

Business Update

Steve Moster, president and chief executive officer, commented, “The second quarter was unlike any other quarter we have experienced. I want to thank our teams for their actions to support our businesses during this unprecedented time. As the COVID pandemic and government actions halted services across our business, we made swift and difficult decisions with an immediate focus on cash flows and the health and safety of our team members, clients, guests, and communities. We essentially placed our business into a state of hibernation and took a host of other actions to preserve liquidity, including securing additional capital of $180 million and amending our credit facility for longer-term covenant relief.”

“With the lifting of government mandated closures and stay-at-home orders, Pursuit got back to business with a phased re-opening of our attractions and lodging operations starting in May and continuing into July,” continued Moster. “Most experiences are currently open and welcoming guests primarily from our local and regional markets in North America and international visitors in Iceland. Despite ongoing border closures and other restrictions, we are seeing continued demand for Pursuit’s attractions and hotels as the summer tourism season progresses.”

“At GES, the live event market remains largely closed and our primary focus remains on minimizing the cash burn. We continue to operate at near hibernation levels, supporting clients with virtual events and planning for future events. Given the uncertainty we continue to see around event activity and industry recovery, we have a sharp focus on our transformation efforts to ensure GES emerges as a leaner and more profitable business. We will continue controlling the things that we can control, and we stand ready to re-activate areas of GES as it is prudent to do so,” concluded Moster.

Second Quarter 2020 Results

Revenue was $30.9 million, down 92.3% from the 2019 second quarter reflecting the acute impact of the COVID-19 pandemic that halted event activity and forced closures across Pursuit’s collection of experiences. Net loss attributable to Viad was $206.3 million, versus income of $13.8 million in the 2019 second quarter. The 2020 net loss included non-cash impairment charges of $114.0 million and unfavorable tax matters of $37.9 million, which includes a valuation allowance of $25.5 million against deferred tax assets and a reversal of the $12.4 million tax benefit recorded on impairment charges during the first quarter. Adjusted segment operating loss* was $48.9 million, versus income of $47.3 million in the prior year quarter, and adjusted segment EBITDA* was negative $35.1 million, versus positive $61.8 million in the 2019 second quarter.

* Refer to Table 2 of this press release for a discussion and reconciliation of this non-GAAP financial measure to its most directly comparable GAAP financial measure.

Cash was $154.2 million and debt totaled $475.1 million at June 30, 2020. Cash flow from operations was an outflow of $26.5 million, which included favorable changes in working capital of approximately $17 million. Cash flow from investing activities was an inflow of $20.1 million, with proceeds from insurance policies and the sale of assets of $29.3 million offsetting capital expenditures of $9.3 million. Return of capital during the quarter was $2.0 million, representing the regular quarterly dividend declared in February. Future dividend payments have since been suspended.

Moster said, “I am very proud of our team for responding rapidly to the challenges of the COVID pandemic. After fully drawing on our revolver at the beginning of April, we entered the second quarter with $162 million of cash. And we limited our subsequent cash outflow during the quarter to about $8 million through aggressive cost reductions, diligent working capital management, the monetization of certain non-operating assets, and the phased re-opening of Pursuit’s experiences.”

Moster concluded, “Given the evolving, uncertain nature of COVID-19, it is impossible to predict how the pandemic and government reactions will continue to impact the events industry and the broader travel market. Accordingly, we will not be re-issuing financial guidance at this time.”

Liquidity Update and Response to COVID-19 Pandemic

On August 5, 2020, the Company announced that Crestview Partners made an initial investment of $135 million in newly issued perpetual convertible preferred stock, with a delayed draw commitment of up to an additional $45 million. We also announced an amendment to our credit facility that provides for the waiver of existing leverage ratio and interest coverage tests until the third quarter of 2022. That press release can be accessed on our website at www.viad.com.

On a pro forma basis, our liquidity position at June 30, 2020 would have been approximately $340 million when factoring in the total $180 million investment commitment from Crestview, $17 million of proceeds received in July from our sale of a GES warehouse, and fees and expenses related to the equity raise and credit facility amendment.

“We believe the investment from Crestview and the extended waiver period for our financial covenants provide us ample financial flexibility and strength to not only endure what may be a slow recovery within the event industry and a gradual return to normal levels of leisure travel, but also to continue making important investments to fuel the growth of Pursuit,” said Moster. “We remain committed to closely managing cash flows and our businesses to maximize value for our shareholders.”

In addition to our recent actions to secure additional liquidity and obtain longer-term financial covenant relief under our credit facility, we have taken various other measures including, but not limited to the following:

• We implemented aggressive cost reduction actions, including furloughs, layoffs, mandatory unpaid time off, and salary reductions for all employees across the company.
• We raised a total of $46 million in cash proceeds from the disposition of certain assets, including $25 million in May related to the cash surrender value of life insurance policies and $17 million in July from the sale of a GES warehouse that we plan to vacate in connection with our facility downsizing efforts.
• We eliminated discretionary spending, reduced maintenance capital expenditures to essential levels, and paused spending on the majority of growth projects.
• We suspended future dividend payments and share repurchases.
• We took advantage of available governmental assistance programs for wage and tax relief.

Conference Call Details

Viad will host a conference call on Thursday, August 6, 2020, at 9:00 a.m. (Eastern Time) to review second quarter 2020 results, updates regarding the business, and actions taken to bolster liquidity and financial flexibility. To join the live teleconference, please call (833) 513-0557 and enter the passcode 5064298 or access the webcast through our website. A replay will be available for a limited time at (800) 585-8367 or (416) 621-4642 and enter the passcode 5064298 or visit our website and link to a replay of the webcast.

About Viad

Viad (NYSE: VVI) generates revenue and shareholder value through two businesses: Pursuit and GES. Pursuit is a collection of inspiring and unforgettable travel experiences in Alaska, Montana, the Canadian Rockies, Vancouver, and Reykjavik, as well as new experiences in development in Las Vegas and Toronto. Pursuit’s collection includes attractions, lodges and hotels, and sightseeing tours that connect guests with iconic places. GES is a global, full-service live events company offering a comprehensive range of services to the world’s leading brands and event organizers. Our business strategy focuses on providing superior experiential services to our customers and sustainable returns on invested capital to our shareholders. Viad is an S&P SmallCap 600 company. For more information, visit www.viad.com.

Forward-Looking Statements

This press release contains a number of forward-looking statements. Words, and variations of words, such as “will,” “may,” “expect,” “would,” “could,” “might,” “intend,” “plan,” “believe,” “estimate,” “anticipate,” “deliver,” “seek,” “aim,” “potential,” “target,” “outlook,” and similar expressions are intended to identify our forward-looking statements. Similarly, statements that describe our business strategy, outlook, objectives, plans, 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:

• the impact of the COVID-19 pandemic on our financial condition, liquidity, and cash flow;
• the extent to which the COVID-19 pandemic will affect our ongoing business and the duration of those effects;
• our ability to obtain shareholder approval of, and satisfy other conditions to, the delayed draw commitment, if applicable;
• our ability to successfully integrate and achieve established financial and strategic goals from acquisitions;
• general economic uncertainty in key global markets and a worsening of global economic conditions;
• our dependence on large exhibition event clients;
• the importance of key members of our account teams to our business relationships;
• the competitive nature of the industries in which we operate;
• travel industry disruptions;
• unanticipated delays and cost overruns of our capital projects, and our ability to achieve established financial and strategic goals for such projects;
• seasonality of our businesses;
• transportation disruptions and increases in transportation costs;
• natural disasters, weather conditions, and other catastrophic events;
• our multi-employer pension plan funding obligations;
• our exposure to labor cost increases and work stoppages related to unionized employees;
• liabilities relating to prior and discontinued operations;
• adverse effects of show rotation on our periodic results and operating margins;
• our exposure to currency exchange rate fluctuations;
• our exposure to cybersecurity attacks and threats;
• 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;
• the effects of the United Kingdom’s exit from the European Union; and
• changes affecting the London Inter-bank Offered Rate.

For a more complete discussion of the risks and uncertainties that may affect our business or financial results, please see Item 1A, “Risk Factors,” of our most recent annual report on Form 10-K filed with the SEC and Item 1A, “Risk Factors,” of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020. We disclaim and do not undertake any obligation to update or revise any forward-looking statement in this press release except as required by applicable law or regulation.

VIAD CORP AND SUBSIDIARIES

TABLE TWO – NON-GAAP FINANCIAL MEASURES

(UNAUDITED)

IMPORTANT DISCLOSURES REGARDING NON-GAAP FINANCIAL MEASURES

This document includes the presentation of “Income/(Loss) Before Other Items”, “Adjusted EBITDA”, “Adjusted Segment EBITDA” and “Adjusted Segment Operating Income/(Loss)”, which are supplemental to results presented under accounting principles generally accepted in the United States of America (“GAAP”) and may not be comparable to similarly titled measures presented by other companies. These non-GAAP measures are utilized by management to facilitate period-to-period comparisons and analysis of Viad’s operating performance and should be considered in addition to, but not as substitutes for, other similar measures reported in accordance with GAAP. The use of these non-GAAP financial measures is limited, compared to the GAAP measure of net income attributable to Viad, because they do not consider a variety of items affecting Viad’s consolidated financial performance as reconciled below. Because these non-GAAP measures do not consider all items affecting Viad’s consolidated financial performance, a user of Viad’s financial information should consider net income attributable to Viad as an important measure of financial performance because it provides a more complete measure of the Company’s performance.

Income/(Loss) Before Other Items and Adjusted Segment Operating Income/(Loss) are considered useful operating metrics, in addition to net income attributable to Viad, as potential variations arising from non-operational expenses/income are eliminated, thus resulting in additional measures considered to be indicative of Viad’s performance. Management believes that the presentation of Adjusted EBITDA and Adjusted Segment EBITDA provide useful information to investors regarding Viad’s results of operations for trending, analyzing and benchmarking the performance and value of Viad’s business. Management also believes that the presentation of Adjusted Segment EBITDA for acquisitions and other major capital projects enables investors to assess how effectively management is investing capital into major corporate development projects, both from a valuation and return perspective.

Contacts

Carrie Long

Investor Relations
(602) 207-2681

ir@viad.com

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