VIAD CORP, 10-Q filed on 8/9/2021
Quarterly Report
v3.21.2
Document and Entity Information - shares
6 Months Ended
Jun. 30, 2021
Aug. 02, 2021
Document Information [Line Items]    
Entity Registrant Name Viad Corp  
Entity Central Index Key 0000884219  
Document Type 10-Q  
Document Period End Date Jun. 30, 2021  
Amendment Flag false  
Document Fiscal Year Focus 2021  
Document Fiscal Period Focus Q2  
Current Fiscal Year End Date --12-31  
Entity Incorporation, State or Country Code DE  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Accelerated Filer  
Entity Shell Company false  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity File Number 001-11015  
Entity Tax Identification Number 36-1169950  
Entity Address, Address Line One 7000 East 1st Avenue  
Entity Address, City or Town Scottsdale  
Entity Address, State or Province AZ  
Entity Address, Postal Zip Code 85251-4304  
City Area Code 602  
Local Phone Number 207-1000  
Entity Common Stock, Shares Outstanding   20,493,380
Document Quarterly Report true  
Document Transition Report false  
Common Stock    
Document Information [Line Items]    
Trading Symbol VVI  
Title of 12(b) Security Common Stock, $1.50 Par Value  
Security Exchange Name NYSE  
Junior Participating Preferred Stock    
Document Information [Line Items]    
No Trading Symbol Flag true  
Title of 12(b) Security Preferred Stock Purchase Rights  
v3.21.2
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)
$ in Thousands
Jun. 30, 2021
Dec. 31, 2020
Current assets    
Cash and cash equivalents $ 37,037 $ 39,545
Accounts receivable, net of allowances for doubtful accounts of $1,710 and $5,310, respectively 24,696 17,837
Inventories 11,424 8,727
Current contract costs 12,331 7,923
Other current assets 22,822 17,225
Total current assets 108,310 91,257
Property and equipment, net 551,114 492,154
Other investments and assets 16,090 15,492
Operating lease right-of-use assets 84,175 82,739
Deferred income taxes   563
Goodwill 114,566 99,847
Other intangible assets, net 70,221 71,172
Total Assets 944,476 853,224
Current liabilities    
Accounts payable 31,763 21,037
Contract liabilities 46,472 18,595
Accrued compensation 15,534 7,030
Operating lease obligations 11,422 15,697
Other current liabilities 26,779 27,039
Current portion of debt and finance lease obligations 3,349 8,335
Total current liabilities 135,319 97,733
Long-term debt and finance lease obligations 393,964 285,356
Pension and postretirement benefits 26,911 27,264
Long-term operating lease obligations 81,727 70,150
Other deferred items and liabilities 66,072 64,628
Total liabilities 703,993 545,131
Commitments and contingencies
Redeemable noncontrolling interest 5,325 5,225
Viad Corp stockholders’ equity:    
Common stock, $1.50 par value, 200,000,000 shares authorized, 24,934,981 shares issued and outstanding 37,402 37,402
Additional capital 566,658 568,100
Accumulated deficit (338,343) (253,164)
Accumulated other comprehensive loss (22,865) (30,641)
Common stock in treasury, at cost, 4,445,057 and 4,475,489 shares, respectively (224,101) (225,742)
Total Viad stockholders’ equity 18,751 95,955
Non-redeemable noncontrolling interest 83,816 78,144
Total stockholders’ equity 102,567 174,099
Total Liabilities, Mezzanine Equity, and Stockholders’ Equity 944,476 853,224
Convertible Series A Preferred Stock    
Current liabilities    
Convertible Series A Preferred Stock, $0.01 par value, 180,000 shares authorized, 135,000 shares issued and outstanding $ 132,591 $ 128,769
v3.21.2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (Unaudited) - USD ($)
$ in Thousands
Jun. 30, 2021
Dec. 31, 2020
Allowance for doubtful accounts $ 1,710 $ 5,310
Common stock, par value $ 1.50 $ 1.50
Common stock, shares authorized 200,000,000 200,000,000
Common stock, shares issued 24,934,981 24,934,981
Common stock, shares outstanding 24,934,981 24,934,981
Treasury stock, shares 4,445,057 4,475,489
Convertible Series A Preferred Stock    
Preferred Stock, Par value $ 0.01 $ 0.01
Preferred Stock, Shares Authorized 180,000 180,000
Preferred Stock, Shares Issued 135,000 135,000
Preferred Stock, Shares Outstanding 135,000 135,000
v3.21.2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)
shares in Thousands, $ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2021
Jun. 30, 2020
Jun. 30, 2021
Jun. 30, 2020
Revenue:        
Total revenue $ 61,233 $ 30,067 $ 90,168 $ 324,725
Costs and expenses:        
Corporate activities 3,006 2,468 5,011 3,257
Interest income (22) (176) (55) (255)
Interest expense 5,587 5,186 10,705 9,204
Multi-employer pension plan withdrawal 57 462 57 462
Other expense, net 680 265 1,040 684
Restructuring charges 787 260 3,613 1,111
Impairment charges   114,020   202,400
Total costs and expenses 106,304 202,288 183,723 600,724
Loss from continuing operations before income taxes (45,071) (172,221) (93,555) (275,999)
Income tax expense (benefit) (2,166) 35,516 (5,211) 19,719
Loss from continuing operations (42,905) (207,737) (88,344) (295,718)
Income (loss) from discontinued operations (62) (379) 286 (833)
Net loss (42,967) (208,116) (88,058) (296,551)
Net loss attributable to non-redeemable noncontrolling interest 510 1,634 1,955 2,967
Net loss attributable to redeemable noncontrolling interest 431 204 925 721
Net loss attributable to Viad $ (42,026) $ (206,278) $ (85,178) $ (292,863)
Diluted loss per common share:        
Continuing operations attributable to Viad common stockholders $ (2.18) $ (10.17) $ (4.41) $ (14.44)
Discontinued operations attributable to Viad common stockholders   (0.02) 0.01 (0.05)
Net loss attributable to Viad common stockholders [1] $ (2.18) $ (10.19) $ (4.40) $ (14.49)
Weighted-average outstanding and potentially dilutive common shares 20,397 20,282 20,384 20,249
Basic loss per common share:        
Continuing operations attributable to Viad common stockholders $ (2.18) $ (10.17) $ (4.41) $ (14.44)
Discontinued operations attributable to Viad common stockholders   (0.02) 0.01 (0.05)
Net loss attributable to Viad common stockholders $ (2.18) $ (10.19) $ (4.40) $ (14.49)
Weighted-average outstanding common shares 20,397 20,282 20,384 20,249
Dividends declared per common share       $ 0.10
Amounts attributable to Viad common stockholders        
Loss from continuing operations $ (41,964) $ (205,899) $ (85,464) $ (292,030)
Income (loss) from discontinued operations (62) (379) 286 (833)
Services        
Revenue:        
Total revenue 46,306 25,409 71,206 289,615
Costs and expenses:        
Costs and expenses 76,052 68,584 132,420 341,636
Products        
Revenue:        
Total revenue 14,927 4,658 18,962 35,110
Costs and expenses:        
Costs and expenses $ 20,157 $ 11,219 $ 30,932 $ 42,225
[1]

Diluted loss per share amount cannot exceed basic loss per share.

v3.21.2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2021
Jun. 30, 2020
Jun. 30, 2021
Jun. 30, 2020
Statement Of Income And Comprehensive Income [Abstract]        
Net loss $ (42,967) $ (208,116) $ (88,058) $ (296,551)
Other comprehensive income (loss):        
Unrealized foreign currency translation adjustments 3,677 9,784 7,654 (18,374)
Change in net actuarial loss, net of tax [1] 1 25 178 366
Change in prior service cost, net of tax [1]   (28) (56) (55)
Comprehensive loss (39,289) (198,335) (80,282) (314,614)
Non-redeemable noncontrolling interest:        
Net loss attributable to non-redeemable noncontrolling interest 510 1,634 1,955 2,967
Unrealized foreign currency translation adjustments 1,069 1,933 1,819 (3,786)
Redeemable noncontrolling interest:        
Comprehensive loss attributable to redeemable noncontrolling interest 431 204 925 721
Comprehensive loss attributable to Viad $ (37,279) $ (194,564) $ (75,583) $ (314,712)
[1] The tax effect on other comprehensive income (loss) is not significant.
v3.21.2
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND MEZZANINE EQUITY (Unaudited) - USD ($)
$ in Thousands
Total
Mountain Park Lodges
Common Stock
Additional Capital
Retained earnings (Deflicit)
Accumulated Other Comprehensive Income (Loss)
Common Stock in Treasury
Total Viad Equity
Non-Redeemable Non-Controlling Interest
Non-Redeemable Non-Controlling Interest
Mountain Park Lodges
Mezzanine Equity Redeemable Non Controlling Interest
Convertible Series A Preferred Stock
Beginning Balance at Dec. 31, 2019 $ 547,229   $ 37,402 $ 574,473 $ 122,971 $ (35,699) $ (231,649) $ 467,498 $ 79,731   $ 6,172  
Increase Decrease In Stockholders' Equity Roll Forward                        
Net loss (87,918)       (86,585)     (86,585) (1,333)   (517)  
Dividends on common stock (2,038)       (2,038)     (2,038)        
Capital contribution (distributions) to noncontrolling interest (1,526)               (1,526)      
Payment of payroll taxes on stock-based compensation through shares withheld (1,059)           (1,059) (1,059)        
Common stock purchased for treasury (2,785)           (2,785) (2,785)        
Employee benefit plans 1,912     (3,810)     5,722 1,912        
Share-based compensation - equity awards 276     276       276        
Unrealized foreign currency translation adjustment (33,877)         (28,158)   (28,158) (5,719)   (873)  
Amortization of net actuarial loss, net of tax 341         341   341        
Amortization of prior service cost, net of tax (27)         (27)   (27)        
Other, net (80)     (80) (1)   1 (80)     126  
Ending Balance at Mar. 31, 2020 420,448   37,402 570,859 34,347 (63,543) (229,770) 349,295 71,153   4,908  
Beginning Balance at Dec. 31, 2019 547,229   37,402 574,473 122,971 (35,699) (231,649) 467,498 79,731   6,172  
Increase Decrease In Stockholders' Equity Roll Forward                        
Dividends on convertible preferred stock                      
Amortization of net actuarial loss, net of tax [1] 366                      
Amortization of prior service cost, net of tax [1] (55)                      
Ending Balance at Jun. 30, 2020 225,224   37,402 571,555 (171,931) (53,762) (229,492) 153,772 71,452   5,138  
Beginning Balance at Mar. 31, 2020 420,448   37,402 570,859 34,347 (63,543) (229,770) 349,295 71,153   4,908  
Increase Decrease In Stockholders' Equity Roll Forward                        
Net loss (207,912)       (206,278)     (206,278) (1,634)   (204)  
Dividends on convertible preferred stock                      
Payment of payroll taxes on stock-based compensation through shares withheld (3)           (3) (3)        
Employee benefit plans 330     48     282 330        
Share-based compensation - equity awards 602     602       602        
Unrealized foreign currency translation adjustment 11,717         9,784   9,784 1,933   102  
Amortization of net actuarial loss, net of tax 25 [1]         25   25        
Amortization of prior service cost, net of tax (28) [1]         (28)   (28)        
Other, net 45     46     (1) 45     332  
Ending Balance at Jun. 30, 2020 225,224   37,402 571,555 (171,931) (53,762) (229,492) 153,772 71,452   5,138  
Beginning Balance at Dec. 31, 2020 174,099   37,402 568,100 (253,164) (30,641) (225,742) 95,955 78,144   5,225 $ 128,769
Increase Decrease In Stockholders' Equity Roll Forward                        
Net loss (44,597)       (43,152)     (43,152) (1,445)   (494)  
Dividends on convertible preferred stock (1,898)     (1,898)       (1,898)       1,898
Capital contribution (distributions) to noncontrolling interest (951)               (951)   142  
Payment of payroll taxes on stock-based compensation through shares withheld (519)           (519) (519)        
Employee benefit plans 380     (1,198)     1,578 380        
Share-based compensation - equity awards 1,626     1,626       1,626        
Unrealized foreign currency translation adjustment 4,727         3,977   3,977 750   77  
Amortization of net actuarial loss, net of tax 177         177   177        
Amortization of prior service cost, net of tax (56)         (56)   (56)        
Acquisitions   $ 6,759               $ 6,759    
Other, net 12     13 (1)     12     56  
Ending Balance at Mar. 31, 2021 139,759   37,402 566,643 (296,317) (26,543) (224,683) 56,502 83,257   5,006 130,667
Beginning Balance at Dec. 31, 2020 174,099   37,402 568,100 (253,164) (30,641) (225,742) 95,955 78,144   5,225 128,769
Increase Decrease In Stockholders' Equity Roll Forward                        
Dividends on convertible preferred stock (3,821)                      
Amortization of net actuarial loss, net of tax [1] 178                      
Amortization of prior service cost, net of tax [1] (56)                      
Acquisitions 6,759                      
Ending Balance at Jun. 30, 2021 102,567   37,402 566,658 (338,343) (22,865) (224,101) 18,751 83,816   5,325 132,591
Beginning Balance at Mar. 31, 2021 139,759   37,402 566,643 (296,317) (26,543) (224,683) 56,502 83,257   5,006 130,667
Increase Decrease In Stockholders' Equity Roll Forward                        
Net loss (42,536)       (42,026)     (42,026) (510)   (431)  
Dividends on convertible preferred stock (1,923)     (1,923)       (1,923)       1,923
Capital contribution (distributions) to noncontrolling interest 7               7   124  
Payment of payroll taxes on stock-based compensation through shares withheld (82)           (82) (82)        
Employee benefit plans 498     (143)     641 498        
Share-based compensation - equity awards 2,071     2,071       2,071        
Unrealized foreign currency translation adjustment 4,746         3,677   3,677 1,069   79  
Amortization of net actuarial loss, net of tax 1 [1]         1   1        
Other, net 26     10     23 33 (7)   547 1
Ending Balance at Jun. 30, 2021 $ 102,567   $ 37,402 $ 566,658 $ (338,343) $ (22,865) $ (224,101) $ 18,751 $ 83,816   $ 5,325 $ 132,591
[1] The tax effect on other comprehensive income (loss) is not significant.
v3.21.2
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND MEZZANINE EQUITY (Parenthetical) (Unaudited)
3 Months Ended
Mar. 31, 2020
$ / shares
Statement Of Stockholders Equity [Abstract]  
Dividends on common stock per share $ 0.10
v3.21.2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2021
Jun. 30, 2020
Cash flows from operating activities    
Net loss $ (88,058) $ (296,551)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation and amortization 26,510 29,135
Deferred income taxes (4,253) 19,514
(Income) loss from discontinued operations (286) 833
Restructuring charges 3,613 1,111
Impairment charges   202,400
Gains on dispositions of property and other assets (9,360) (1,373)
Share-based compensation expense (benefit) 4,216 (1,288)
Multi-employer pension plan withdrawal 57 462
Other non-cash items, net (33) 11,470
Change in operating assets and liabilities:    
Receivables (7,056) 97,979
Inventories (2,602) (2,120)
Current contract costs (4,372) 16,185
Accounts payable 6,456 (59,887)
Restructuring liabilities (3,106) (2,359)
Accrued compensation 7,145 (22,562)
Contract liabilities 27,770 (22,499)
Income taxes payable 160 489
Other assets and liabilities, net 3,650 (2,104)
Net cash used in operating activities (39,549) (31,165)
Cash flows from investing activities    
Capital expenditures (24,763) (32,516)
Cash surrender value of life insurance policies   24,767
Cash paid for acquisitions, net (7,606)  
Proceeds from dispositions of property and other assets 14,227 4,654
Net cash used in investing activities (18,142) (3,095)
Cash flows from financing activities    
Proceeds from borrowings 65,608 192,111
Payments on debt and finance lease obligations (9,027) (56,078)
Dividends paid on common stock   (4,064)
Distributions to noncontrolling interest, net of contributions from noncontrolling interest (678) (1,526)
Payments of debt issuance costs (128)  
Payment of payroll taxes on stock-based compensation through shares withheld or repurchased (601) (1,062)
Common stock purchased for treasury   (2,785)
Proceeds from exercise of stock options   2,077
Net cash provided by financing activities 55,174 128,673
Effect of exchange rate changes on cash, cash equivalents, and restricted cash 538 (2,196)
Net change in cash, cash equivalents, and restricted cash (1,979) 92,217
Cash, cash equivalents, and restricted cash, beginning of year 41,971 62,004
Cash, cash equivalents, and restricted cash, end of period $ 39,992 $ 154,221
v3.21.2
Overview and Basis of Presentation
6 Months Ended
Jun. 30, 2021
Organization Consolidation And Presentation Of Financial Statements [Abstract]  
Overview and Basis of Presentation

Note 1. Overview and Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and with the instructions to Form 10-Q and Article 10 of Regulation S-X for interim financial information. Accordingly, these financial statements do not include all of the information required by GAAP or SEC rules and regulations for complete financial statements. These financial statements reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on March 2, 2021 (“2020 Form 10-K”).

The condensed consolidated financial statements include the accounts of Viad and its subsidiaries. We have eliminated all significant intercompany account balances and transactions in consolidation.

Nature of Business

We are a leading provider of experiential leisure travel and live events and marketing experiences with operations in the United States, Canada, the United Kingdom, continental Europe, the United Arab Emirates, and Iceland. We are committed to providing unforgettable experiences to our clients and guests. We operate through two reportable business segments: GES and Pursuit.

GES

GES is a global, full-service provider for live events that partners with show organizers, exhibitors, and brand marketers to create high-value, live events. GES offers a comprehensive range of live event services, from the design and production of compelling, immersive experiences that engage audiences and build brand awareness, to material handling, rigging, electrical, and other on-site event services. In addition, GES offers clients a full suite of audio-visual services from creative and technology to content and design, along with registration, data analytics, engagement, and online tools powered by next generation technologies that help clients easily manage the complexities of their event.

Pursuit

Pursuit is a collection of inspiring and unforgettable travel experiences that include recreational attractions, unique hotels and lodges, food and beverage, retail, sightseeing, and ground transportation services. Pursuit comprises the Banff Jasper Collection, the Alaska Collection, the Glacier Park Collection, FlyOver, and the Sky Lagoon.

Impact of COVID-19

Starting in mid-March 2020 and extending into the second quarter of 2021, the COVID-19 pandemic had a significant and negative impact on our operations and financial performance, with live events largely shut down and severe disruptions in tourism activity. In response to the COVID-19 pandemic, we implemented aggressive cost reduction measures in 2020 to preserve cash, including furloughs, layoffs, mandatory unpaid time off or salary reductions for all employees, and the reduction of discretionary spending. We also suspended future dividend payments and share repurchases, and we availed ourselves of governmental assistance programs for wages and other expense relief.

In August 2020, we secured additional capital to strengthen our liquidity position by entering into an investment agreement with funds managed by private equity firm Crestview Partners who made an initial investment of $135 million, offset in part by $9.2 million in fees, in newly issued perpetual convertible preferred stock. Refer to Note 15 – Common and Preferred Stock for further information. In August 2020, we also amended our Second Amended and Restated Credit Agreement (the “2018 Credit Agreement”) to provide financial flexibility, which, among other things waived our financial covenants until September 30, 2022.

During the first half of 2021, we continued to preserve cash and closely managed our costs. In connection with the acceleration of COVID-19 vaccination programs in certain of our geographic territories and as pandemic-related restrictions lessened, we began to see early signs of recovery in the travel and hospitality and live event sectors as people started to feel more comfortable traveling and gathering in larger groups. Canada announced it will reopen its border with the United States in early August 2021 to fully vaccinated travelers and anticipates reopening its borders with other countries beginning in September 2021, which we are hopeful will accelerate

bookings from long-haul travelers to our Pursuit operations in Canada. The live event markets began to open in 2021 with smaller scale live events taking place. Event organizers began to hold larger scale face-to-face live events in June 2021, and during the second quarter of 2021, we began to see early signs of acceleration in the recovery of in-person trade shows as states continue to reopen.

Effective July 30, 2021, we refinanced our current $450 million revolving credit facility (the “2018 Credit Facility”), which was scheduled to mature on October 24, 2023, with a new $500 million senior secured credit facility (the “2021 Credit Facility”) to provide for financial flexibility to support our growth initiatives. The 2021 Credit Facility provides for a $400 million term loan with a maturity date of July 30, 2028 (“Term Loan B”) and a $100 million revolving credit facility with a maturity date of July 30, 2026. The proceeds from the Term Loan B will be used to repay the 2018 Credit Facility, for future acquisitions and growth initiatives, and for general corporate purposes. Refer to Note 12 – Debt and Finance Lease Obligations and Note 24 – Subsequent Event for further information.

Although we are optimistic about the recent acceleration in demand and bookings and signs of a recovery for travel and in-person live events, we remain cautious as variants of COVID-19, including the Delta variant, have caused an increase in infections across the United States and globally. Due to the evolving and uncertain nature of COVID-19, and depending on the success of ongoing vaccination efforts as well as the scope and magnitude of these increasing infections, we are not able at this time to fully estimate the effect of these factors on our business; however, the adverse impact on our business, results of operations, and cash flows has been significant. We will continue to evaluate and implement additional actions necessary to mitigate the negative financial and operational impact of COVID-19 on our business.

Reclassifications

During the first quarter of 2021, we reorganized GES’ operating segments to represent the changes in how our chief operating decision maker (“CODM”) reviews the financial performance of GES and makes decisions regarding the allocation of resources. As a result, we changed the presentation of certain items in GES’ disaggregation of revenue and reportable segments. Refer to Note 2 – Revenue and Related Contract Costs and Contract Liabilities and Note 23 – Segment Information for additional information. We reclassified certain prior-year amounts to conform to current-period presentation. Such reclassifications had no impact on our results of operations or cash flows.

Correction to Prior Period Financial Statements

As previously disclosed in our 2020 Form 10-K, and subsequent to the issuance of the Condensed Consolidated Financial Statements for the quarter ended June 30, 2020, we identified prior period errors related to the recognition of revenue of GES’ third-party services. Revenue from these services should have been recorded on a net basis to reflect only the fees received for arranging these services, whereas previously, we recorded this revenue on a gross basis, thus overstating revenue and cost of services by the same amount. As a result, we corrected the accompanying Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2020 related to this gross-to-net adjustment. We determined that these errors were not material to the previously issued financial statements. Note 2 – Revenue and Related Contract Costs and Contract Liabilities and Note 23 – Segment Information reflect this correction.

 

 

 

Three Months Ended June 30, 2020

 

 

Six Months Ended June 30, 2020

 

(in thousands)

 

Services Revenue

 

 

Cost of Services

 

 

Services Revenue

 

 

Cost of Services

 

As previously reported

 

$

26,205

 

 

$

69,380

 

 

$

301,761

 

 

$

353,782

 

Gross to net correction for GES

 

 

(796

)

 

 

(796

)

 

 

(12,146

)

 

 

(12,146

)

Total as corrected

 

$

25,409

 

 

$

68,584

 

 

$

289,615

 

 

$

341,636

 

 

 

Impact of Recent Accounting Pronouncements

The following table provides a brief description of recent accounting pronouncements:

 

Standard

 

Description

 

Date of adoption

 

Effect on the financial statements

Standards Not Yet Adopted

ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40)

 

The amendment simplifies the accounting for convertible instruments by reducing the number of accounting models available for convertible debt instruments and convertible preferred stock. The amendment also requires expanded disclosures about the terms and features of convertible instruments. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020.

 

1/1/2022

 

We are currently evaluating the potential impact of the adoption of this new guidance on our consolidated financial statements and if there are applicable provisions that will simplify our accounting or reporting we will likely pursue early adoption.

 

 

 

 

 

 

 

 

Standard

 

Description

 

Date of adoption

 

Effect on the financial statements

Standards Recently Adopted

ASU 2019-12, Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes

 

The amendment enhances and simplifies various aspects of the income tax accounting guidance, including requirements such as ownership changes in investments, and interim-period accounting for enacted changes in tax law.

 

1/1/2021

 

The adoption of this new standard on January 1, 2021 did not have a material impact on our consolidated financial statements.

 

 

 

Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. Estimates and assumptions are used in accounting for, among other things: impairment testing of recorded goodwill and intangible assets and long-lived assets; allowances for uncollectible accounts receivable; sales reserve allowances; provisions for income taxes, including uncertain tax positions; valuation allowances related to deferred tax assets; liabilities for losses related to self-insured liability claims; liabilities for losses related to environmental remediation obligations; sublease income associated with restructuring liabilities; pension and postretirement benefit costs and obligations; share-based compensation costs; the discount rates used to value lease obligations; the redemption value of redeemable noncontrolling interests; and the allocation of purchase price of acquired businesses. Actual results could differ from these and other estimates.

Cash, Cash Equivalents, and Restricted Cash

Cash equivalents are highly-liquid investments with remaining maturities when purchased of three months or less. Cash and cash equivalents consist of cash and bank demand deposits and money market funds. Investments in money market funds are classified as available-for-sale and carried at fair value. Restricted cash represents collateral required for surety bonds, bank guarantees, and letters of credit.

Cash, cash equivalents, and restricted cash balances presented in the Condensed Consolidated Statements of Cash Flows consisted of the following:

 

 

 

 

 

 

 

 

 

 

 

June 30,

 

 

December 31,

 

(in thousands)

 

2021

 

 

2020

 

Cash and cash equivalents

 

$

37,037

 

 

$

39,545

 

Restricted cash included in other current assets

 

 

2,955

 

 

 

2,426

 

Cash, cash equivalents, and restricted cash shown in the statement of cash flows

 

$

39,992

 

 

$

41,971

 

 

Revenue Recognition

Revenue is measured based on a specified amount of consideration in a contract with a customer, net of commissions paid to customers and amounts collected on behalf of third parties. We recognize revenue when a performance obligation is satisfied by transferring control of a product or delivering the service to a customer.

GES’ service revenue is primarily derived through its comprehensive range of marketing, event production, and other related services to event organizers and corporate brand marketers. GES’ service revenue is earned over time over the duration of the live event, which generally lasts one to three days. Revenue for goods and services provided for which we do not have control of the goods or services before that good or service is transferred to a customer is recorded on a net basis to reflect only the fees received for arranging these services. GES’ product revenue is derived from the build of exhibits and environments and graphics. GES’ product revenue is recognized at a point in time upon delivery of the product.

Pursuit’s service revenue is derived through its admissions, accommodations, transportation, and travel planning services. Pursuit’s product revenue is derived through food and beverage and retail sales. Pursuit’s revenue is recognized at the time services are performed or upon delivery of the product. Pursuit’s service revenue is recognized over time as the customer simultaneously receives and consumes the benefits. Pursuit’s product revenue is recognized at a point in time.

Noncontrolling Interests – Non-redeemable and Redeemable

Non-redeemable noncontrolling interest represents the portion of equity in a subsidiary that is not attributable, directly or indirectly, to us. We report non-redeemable noncontrolling interest within stockholders’ equity in the Condensed Consolidated Balance Sheets. The amount of consolidated net income or loss attributable to Viad and the non-redeemable noncontrolling interest is presented in the Condensed Consolidated Statements of Operations.

We consider noncontrolling interests with redemption features that are not solely within our control to be redeemable noncontrolling interests. Our redeemable noncontrolling interest relates to our 54.6% equity ownership interest in Esja Attractions ehf. (“Esja”), which owns the FlyOver Iceland attraction. The Esja shareholders agreement contains a put option that gives the minority Esja shareholders the right to sell (or “put”) their Esja shares to us based on a calculated formula within a predefined term. This redeemable noncontrolling interest is considered mezzanine equity and we report it between liabilities and stockholders’ equity in the Condensed Consolidated Balance Sheets. The amount of the net income or loss attributable to redeemable noncontrolling interests is recorded in the Condensed Consolidated Statements of Operations and the accretion of the redemption value is recorded as an adjustment to accumulated deficit and is included in our loss per share. 

Refer to Note 22 – Noncontrolling Interest – Redeemable and Non-redeemable for additional information.

Convertible Preferred Stock

We record shares of convertible preferred stock based on proceeds received net of costs on the date of issuance. Redeemable preferred stock (including preferred stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) is classified as mezzanine equity and is reported between liabilities and stockholders’ equity in the Condensed Consolidated Balance Sheets.

Leases

We recognize a right-of-use (“ROU”) asset and lease liability on the balance sheet and classify leases as either finance or operating leases. The classification of the lease determines whether we recognize the lease expense on an effective interest method basis (finance lease) or on a straight-line basis (operating lease) over the lease term. In determining whether an agreement contains a lease, we consider if we have a right to control the use of the underlying asset during the lease term in exchange for an obligation to make lease payments arising from the lease. We recognize ROU assets and lease liabilities at commencement date, which is when the underlying asset is available for use to a lessee, based on the present value of lease payments over the lease term.

Our operating and finance leases are primarily facility, equipment, and land leases. Our facility leases comprise mainly manufacturing facilities, sales and design facilities, offices, storage and/or warehouses, and truck marshaling yards. These facility leases generally have lease terms ranging up to 24 years. Our equipment leases comprise mainly vehicles, hardware, and office equipment, each with various lease terms. Our land leases comprise mainly leases in Canada and Iceland on which our hotels or attractions are located and have lease terms ranging up to 46 years.

If a lease contains a renewal option that is reasonably certain to be exercised, then the lease term includes the optional periods in measuring a ROU asset and lease liability. We evaluate the reasonably certain threshold at lease commencement, and it is typically met if we identify substantial economic incentives or termination penalties. We do not include variable leases and variable non-lease components in the calculation of the ROU asset and corresponding lease liability. For facility leases, variable lease costs include the

costs of common area maintenance, taxes, and insurance for which we pay our lessors an estimate that we adjust to actual expense on a quarterly or annual basis depending on the underlying contract terms. We expense these variable lease payments as incurred. Our lease agreements do not contain any significant residual value guarantees or restrictive covenants.

Substantially all of our lease agreements do not specify an implicit borrowing rate, and as such, we utilize an incremental borrowing rate based on lease term and country, in order to calculate the present value of our future lease payments. The discount rate represents a risk-adjusted rate on a collateralized basis and is the expected rate at which we would borrow funds to satisfy the scheduled lease liability payment streams commensurate with the lease term and the country.

We are also a lessor to third party tenants who either lease certain portions of facilities that we own or sublease certain portions of facilities that we lease. We record lease income from owned facilities as rental income and we record sublease income from leased facilities as an offset to lease expense in the Condensed Consolidated Statements of Operations. We classify all of our leases for which we are the lessor as operating leases.

v3.21.2
Revenue and Related Contract Costs and Contract Liabilities
6 Months Ended
Jun. 30, 2021
Revenue From Contract With Customer [Abstract]  
Revenue and Related Contract Costs and Contract Liabilities

Note 2. Revenue and Related Contract Costs and Contract Liabilities

GES’ performance obligations consist of services or product(s) outlined in a contract. While we often sign multi-year contracts for recurring events, the obligations for each occurrence are well defined and conclude upon the occurrence of each event. The obligations are typically the provision of services and/or sale of a product in connection with a live event. Revenue for goods and services provided for which we do not have control of the goods or services before that good or service is transferred to a customer is recorded on a net basis to reflect only the fees received for arranging these services. We recognize revenue for services generally at the close of the live event. We recognize revenue for products either upon delivery to the customer’s location, upon delivery to an event that we are serving, or when we have the right to invoice. In circumstances where a customer cancels a contract, we generally have the right to bill the customer for costs incurred to date. Payment terms are generally within 30-60 days and contain no significant financing components.

Pursuit’s performance obligations are short-term in nature. They include the provision of a hotel room, an attraction admission, a chartered or ticketed bus or van ride, the fulfillment of travel planning itineraries, and/or the sale of food, beverage, or retail products. We recognize revenue when the service has been provided or the product has been delivered. When we extend credit, payment terms are generally within 30 days and contain no significant financing components.

Contract Liabilities

GES and Pursuit typically receive customer deposits prior to transferring the related product or service to the customer. We record these deposits as a contract liability, which are recognized as revenue upon satisfaction of the related contract performance obligation(s). GES also provides customer rebates and volume discounts to certain event organizers that we recognize as a reduction of revenue. We include these amounts in the Condensed Consolidated Balance Sheets under the captions “Contract liabilities” and “Other deferred items and liabilities.”

Changes to contract liabilities are as follows:

(in thousands)

 

 

 

 

Balance at December 31, 2020

 

$

18,618

 

Cash additions

 

 

62,549

 

Revenue recognized

 

 

(32,298

)

Foreign exchange translation adjustment

 

 

(1,906

)

Balance at June 30, 2021

 

$

46,963

 

Contract Costs

GES capitalizes certain incremental costs incurred in obtaining and fulfilling contracts. Capitalized costs principally relate to direct costs of materials and services incurred in fulfilling services of future exhibitions, conferences, and events, and also include up-front incentives and commissions incurred upon contract signing. We expense costs associated with preliminary contract activities (i.e. proposal activities) as incurred. Capitalized contract costs are expensed upon the transfer of the related goods or services and are included in cost of services or cost of products, as applicable. We include the deferred incremental costs of obtaining and fulfilling contracts in the Condensed Consolidated Balance Sheets under the captions “Current contract costs” and “Other investments and assets.”

Changes to contract costs are as follows:

(in thousands)

 

 

 

 

Balance at December 31, 2020

 

$

10,835

 

Additions

 

 

10,956

 

Expenses

 

 

(5,877

)

Cancelled

 

 

(580

)

Foreign exchange translation adjustment

 

 

50

 

Balance at June 30, 2021

 

$

15,384

 

As of June 30, 2021, capitalized contract costs consisted of $0.8 million to obtain contracts and $14.6 million to fulfill contracts. We did not recognize an impairment loss with respect to capitalized contract costs during the three and six months ended June 30, 2021 or 2020.

Disaggregation of Revenue

During the first quarter of 2021, we changed GES’ presentation of certain items in the following disaggregation of revenue table to depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. All prior periods have been reclassified to conform to this new reporting structure.

The following tables disaggregate GES and Pursuit revenue by major service and product lines, timing of revenue recognition, and markets served:

GES

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

(in thousands)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Service lines:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibitions and Conferences

 

$

10,017

 

 

$

16,254

 

 

$

15,852

 

 

$

217,413

 

Brand experiences

 

 

12,481

 

 

 

7,941

 

 

 

24,185

 

 

 

76,936

 

Venue services

 

 

2,422

 

 

 

608

 

 

 

4,028

 

 

 

11,589

 

Total revenue

 

$

24,920

 

 

$

24,803

 

 

$

44,065

 

 

$

305,938

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Timing of revenue recognition:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Services transferred over time

 

$

21,361

 

 

$

22,200

 

 

$

38,376

 

 

$

275,426

 

Products transferred over time(1)

 

 

733

 

 

 

168

 

 

 

1,150

 

 

 

13,195

 

Products transferred at a point in time

 

 

2,826

 

 

 

2,435

 

 

 

4,539

 

 

 

17,317

 

Total revenue

 

$

24,920

 

 

$

24,803

 

 

$

44,065

 

 

$

305,938

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Geographical markets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North America

 

$

19,472

 

 

$

18,265

 

 

$

35,330

 

 

$

260,705

 

EMEA

 

 

6,074

 

 

 

7,523

 

 

 

9,977

 

 

 

48,207

 

Intersegment eliminations

 

 

(626

)

 

 

(985

)

 

 

(1,242

)

 

 

(2,974

)

Total revenue

 

$

24,920

 

 

$

24,803

 

 

$

44,065

 

 

$

305,938

 

 

(1)

GES’ graphics product revenue is earned over time over the duration of an event as it is considered a part of the single performance obligation satisfied over time.

 

 

Pursuit

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

(in thousands)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Services:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Admissions

 

$

10,105

 

 

$

1,534

 

 

$

11,589

 

 

$

5,636

 

Accommodations

 

 

12,039

 

 

 

1,456

 

 

 

17,189

 

 

 

5,973

 

Transportation

 

 

923

 

 

 

12

 

 

 

1,460

 

 

 

2,068

 

Travel planning and other

 

 

1,935

 

 

 

213

 

 

 

2,649

 

 

 

629

 

Intersegment eliminations

 

 

(57

)

 

 

(6

)

 

 

(57

)

 

 

(117

)

Total services revenue

 

 

24,945

 

 

 

3,209

 

 

 

32,830

 

 

 

14,189

 

Products:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Food and beverage

 

 

5,899

 

 

 

615

 

 

 

7,123

 

 

 

2,264

 

Retail operations

 

 

5,469

 

 

 

1,440

 

 

 

6,150

 

 

 

2,334

 

Total products revenue

 

 

11,368

 

 

 

2,055

 

 

 

13,273

 

 

 

4,598

 

Total revenue

 

$

36,313

 

 

$

5,264

 

 

$

46,103

 

 

$

18,787

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Timing of revenue recognition:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Services transferred over time

 

$

24,945

 

 

$

3,209

 

 

$

32,830

 

 

$

14,189

 

Products transferred at a point in time

 

 

11,368

 

 

 

2,055

 

 

 

13,273

 

 

 

4,598

 

Total revenue

 

$

36,313

 

 

$

5,264

 

 

$

46,103

 

 

$

18,787

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Markets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Banff Jasper Collection

 

$

10,658

 

 

$

3,040

 

 

$

19,118

 

 

$

12,839

 

Alaska Collection

 

 

11,058

 

 

 

580

 

 

 

11,347

 

 

 

731

 

Glacier Park Collection

 

 

10,968

 

 

 

1,161

 

 

 

11,546

 

 

 

1,884

 

FlyOver

 

 

735

 

 

 

483

 

 

 

1,198

 

 

 

3,333

 

Sky Lagoon(1)

 

 

2,894

 

 

 

 

 

 

2,894

 

 

 

 

Total revenue

 

$

36,313

 

 

$

5,264

 

 

$

46,103

 

 

$

18,787

 

(1)

We opened Pursuit’s new Sky Lagoon attraction on April 30, 2021 in Reykjavik, Iceland.

v3.21.2
Share-Based Compensation
6 Months Ended
Jun. 30, 2021
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]  
Share-Based Compensation

Note 3. Share-Based Compensation

We grant share-based compensation awards to our officers, directors, and certain key employees pursuant to the 2017 Viad Corp Omnibus Incentive Plan (the “2017 Plan”). The 2017 Plan has a 10-year term and provides for the following types of awards: (a) incentive and non-qualified stock options; (b) restricted stock awards and restricted stock units; (c) performance units or performance shares; (d) stock appreciation rights; (e) cash-based awards; and (f) certain other stock-based awards. In June 2017, we registered 1,750,000 shares of common stock issuable under the 2017 Plan. As of June 30, 2021, there were 760,838 shares available for future grant under the 2017 Plan.

The following table summarizes share-based compensation (income) expense:

 

 

 

Three Months Ended

 

 

Six Months Ended