VIAD CORP, 10-Q filed on 11/5/2021
Quarterly Report
v3.21.2
Document and Entity Information - shares
9 Months Ended
Sep. 30, 2021
Nov. 02, 2021
Document Information [Line Items]    
Entity Registrant Name Viad Corp  
Entity Central Index Key 0000884219  
Document Type 10-Q  
Document Period End Date Sep. 30, 2021  
Amendment Flag false  
Document Fiscal Year Focus 2021  
Document Fiscal Period Focus Q3  
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   20,530,294
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
Sep. 30, 2021
Dec. 31, 2020
Current assets    
Cash and cash equivalents $ 110,756 $ 39,545
Accounts receivable, net of allowances for doubtful accounts of $2,714 and $5,310, respectively 72,005 17,837
Inventories 8,751 8,727
Current contract costs 17,961 7,923
Other current assets 20,380 17,225
Total current assets 229,853 91,257
Property and equipment, net 545,280 492,154
Other investments and assets 15,513 15,492
Operating lease right-of-use assets 87,935 82,739
Deferred income taxes 1,035 563
Goodwill 111,703 99,847
Other intangible assets, net 66,244 71,172
Total Assets 1,057,563 853,224
Current liabilities    
Accounts payable 59,543 21,037
Contract liabilities 44,646 18,595
Accrued compensation 16,203 7,030
Operating lease obligations 11,058 15,697
Other current liabilities 36,861 27,039
Current portion of debt and finance lease obligations 8,218 8,335
Total current liabilities 176,529 97,733
Long-term debt and finance lease obligations 446,162 285,356
Pension and postretirement benefits 26,700 27,264
Long-term operating lease obligations 86,165 70,150
Other deferred items and liabilities 71,906 64,628
Total liabilities 807,462 545,131
Commitments and contingencies
Redeemable noncontrolling interest 5,251 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 567,051 568,100
Accumulated deficit (325,226) (253,164)
Accumulated other comprehensive loss (31,416) (30,641)
Common stock in treasury, at cost, 4,411,560 and 4,475,489 shares, respectively (222,203) (225,742)
Total Viad stockholders’ equity 25,608 95,955
Non-redeemable noncontrolling interest 86,651 78,144
Total stockholders’ equity 112,259 174,099
Total Liabilities, Mezzanine Equity, and Stockholders’ Equity 1,057,563 853,224
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
Sep. 30, 2021
Dec. 31, 2020
Allowance for doubtful accounts $ 2,714 $ 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 4,411,560 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 ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
Revenue:        
Total revenue $ 233,599 $ 62,807 $ 323,767 $ 387,532
Costs and expenses:        
Corporate activities 3,093 2,645 8,104 5,902
Interest expense, net 9,518 5,450 20,168 14,399
Multi-employer pension plan withdrawal     57 462
Other expense, net 466 210 1,506 894
Restructuring charges 2,186 11,259 5,799 12,370
Impairment charges   676   203,076
Total costs and expenses 208,743 89,812 392,466 690,536
Income (loss) from continuing operations before income taxes 24,856 (27,005) (68,699) (303,004)
Income tax expense 5,329 735 118 20,454
Income (loss) from continuing operations 19,527 (27,740) (68,817) (323,458)
Income (loss) from discontinued operations 248 (989) 534 (1,822)
Net income (loss) 19,775 (28,729) (68,283) (325,280)
Net (income) loss attributable to non-redeemable noncontrolling interest (5,004) (2,331) (3,049) 636
Net loss attributable to redeemable noncontrolling interest 296 302 1,221 1,023
Net income (loss) attributable to Viad $ 15,067 $ (30,758) $ (70,111) $ (323,621)
Diluted income (loss) per common share:        
Continuing operations attributable to Viad common stockholders $ 0.45 $ (1.54) $ (3.80) $ (15.98)
Discontinued operations attributable to Viad common stockholders 0.01 (0.05) 0.03 (0.09)
Net income (loss) attributable to Viad common stockholders [1] $ 0.46 $ (1.59) $ (3.77) $ (16.07)
Weighted-average outstanding and potentially dilutive common shares 20,742 20,293 20,396 20,263
Basic income (loss) per common share:        
Continuing operations attributable to Viad common stockholders $ 0.45 $ (1.54) $ (3.80) $ (15.98)
Discontinued operations attributable to Viad common stockholders 0.01 (0.05) 0.03 (0.09)
Net income (loss) attributable to Viad common stockholders $ 0.46 $ (1.59) $ (3.77) $ (16.07)
Weighted-average outstanding common shares 20,420 20,293 20,396 20,263
Dividends declared per common share $ 0.10
Amounts attributable to Viad        
Income (loss) from continuing operations $ 14,819 $ (29,769) $ (70,645) $ (321,799)
Income (loss) from discontinued operations 248 (989) 534 (1,822)
Services        
Revenue:        
Total revenue 182,964 43,437 254,170 333,052
Costs and expenses:        
Costs and expenses 150,983 51,465 283,403 393,101
Products        
Revenue:        
Total revenue 50,635 19,370 69,597 54,480
Costs and expenses:        
Costs and expenses $ 42,497 $ 18,107 $ 73,429 $ 60,332
[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 9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
Statement Of Income And Comprehensive Income [Abstract]        
Net income (loss) $ 19,775 $ (28,729) $ (68,283) $ (325,280)
Other comprehensive income (loss):        
Unrealized foreign currency translation adjustments (8,634) 11,032 (980) (7,342)
Change in net actuarial loss, net of tax [1] 83 70 261 436
Change in prior service cost, net of tax [1]   (27) (56) (82)
Comprehensive income (loss) 11,224 (17,654) (69,058) (332,268)
Non-redeemable noncontrolling interest:        
Net (income) loss attributable to non-redeemable noncontrolling interest (5,004) (2,331) (3,049) 636
Unrealized foreign currency translation adjustments (1,960) 1,837 (141) (1,949)
Redeemable noncontrolling interest:        
Comprehensive loss attributable to redeemable noncontrolling interest 296 302 1,221 1,023
Comprehensive income (loss) attributable to Viad $ 4,556 $ (17,846) $ (71,027) $ (332,558)
[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 ($)
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 $ 547,229,000   $ 37,402,000 $ 574,473,000 $ 122,971,000 $ (35,699,000) $ (231,649,000) $ 467,498,000 $ 79,731,000   $ 6,172,000  
Increase Decrease In Stockholders' Equity [Roll Forward]                        
Net Income (loss) (87,918,000)       (86,585,000)     (86,585,000) (1,333,000)   (517,000)  
Dividends on common stock (2,038,000)       (2,038,000)     (2,038,000)        
Capital contribution (distributions) to (from) noncontrolling interest 1,526,000               1,526,000      
Payment of payroll taxes on stock-based compensation through shares withheld (1,059,000)           (1,059,000) (1,059,000)        
Common stock purchased for treasury (2,785,000)           (2,785,000) (2,785,000)        
Employee benefit plans 1,912,000     (3,810,000)     5,722,000 1,912,000        
Share-based compensation - equity awards 276,000     276,000       276,000        
Unrealized foreign currency translation adjustment (33,877,000)         (28,158,000)   (28,158,000) (5,719,000)   (873,000)  
Amortization of net actuarial loss, net of tax 341,000         341,000   341,000        
Amortization of prior service cost, net of tax (27,000)         (27,000)   (27,000)        
Other, net (80,000)     (80,000) 1,000   (1,000) (80,000)     (126,000)  
Ending Balance at Mar. 31, 2020 420,448,000   37,402,000 570,859,000 34,347,000 (63,543,000) (229,770,000) 349,295,000 71,153,000   4,908,000  
Beginning Balance at Dec. 31, 2019 547,229,000   37,402,000 574,473,000 122,971,000 (35,699,000) (231,649,000) 467,498,000 79,731,000   6,172,000  
Increase Decrease In Stockholders' Equity [Roll Forward]                        
Amortization of net actuarial loss, net of tax [1] 436,000                      
Amortization of prior service cost, net of tax [1] (82,000)                      
Ending Balance at Sep. 30, 2020 210,468,000   37,402,000 570,447,000 (202,691,000) (42,687,000) (227,623,000) 134,848,000 75,620,000   5,271,000 $ 126,897,000
Beginning Balance at Mar. 31, 2020 420,448,000   37,402,000 570,859,000 34,347,000 (63,543,000) (229,770,000) 349,295,000 71,153,000   4,908,000  
Increase Decrease In Stockholders' Equity [Roll Forward]                        
Net Income (loss) (207,912,000)       (206,278,000)     (206,278,000) (1,634,000)   (204,000)  
Payment of payroll taxes on stock-based compensation through shares withheld (3,000)           (3,000) (3,000)        
Employee benefit plans 330,000     48,000     282,000 330,000        
Share-based compensation - equity awards 602,000     602,000       602,000        
Unrealized foreign currency translation adjustment 11,717,000         9,784,000   9,784,000 1,933,000   102,000  
Amortization of net actuarial loss, net of tax 25,000         25,000   25,000        
Amortization of prior service cost, net of tax (28,000)         (28,000)   (28,000)        
Other, net 45,000     46,000     (1,000) 45,000     332,000  
Ending Balance at Jun. 30, 2020 225,224,000   37,402,000 571,555,000 (171,931,000) (53,762,000) (229,492,000) 153,772,000 71,452,000   5,138,000  
Increase Decrease In Stockholders' Equity [Roll Forward]                        
Net Income (loss) (28,427,000)       (30,758,000)     (30,758,000) 2,331,000   (302,000)  
Issuance of Series A convertible preferred stock                       125,763,000
Dividends on convertible preferred stock (1,134,000)     (1,134,000)       (1,134,000)       (1,134,000)
Employee benefit plans (253,000)     (2,123,000)     1,870,000 (253,000)        
Share-based compensation - equity awards 2,135,000     2,135,000       2,135,000        
Unrealized foreign currency translation adjustment 12,869,000         11,032,000   11,032,000 1,837,000   33,000  
Amortization of net actuarial loss, net of tax 70,000 [1]         70,000   70,000        
Amortization of prior service cost, net of tax (27,000) [1]         (27,000)   (27,000)        
Other, net 11,000     14,000 (2,000)   (1,000) 11,000     (468,000)  
Ending Balance at Sep. 30, 2020 210,468,000   37,402,000 570,447,000 (202,691,000) (42,687,000) (227,623,000) 134,848,000 75,620,000   5,271,000 126,897,000
Beginning Balance at Dec. 31, 2020 174,099,000   37,402,000 568,100,000 (253,164,000) (30,641,000) (225,742,000) 95,955,000 78,144,000   5,225,000 128,769,000
Increase Decrease In Stockholders' Equity [Roll Forward]                        
Net Income (loss) (44,597,000)       (43,152,000)     (43,152,000) (1,445,000)   (494,000)  
Dividends on convertible preferred stock (1,898,000)     (1,898,000)       (1,898,000)       (1,898,000)
Capital contribution (distributions) to (from) noncontrolling interest (951,000)               (951,000)   142,000  
Payment of payroll taxes on stock-based compensation through shares withheld (519,000)           (519,000) (519,000)        
Employee benefit plans 380,000     (1,198,000)     1,578,000 380,000        
Share-based compensation - equity awards 1,626,000     1,626,000       1,626,000        
Unrealized foreign currency translation adjustment 4,727,000         3,977,000   3,977,000 750,000   77,000  
Amortization of net actuarial loss, net of tax 177,000         177,000   177,000        
Amortization of prior service cost, net of tax (56,000)         (56,000)   (56,000)        
Acquisitions   $ 6,759,000               $ 6,759,000    
Other, net 12,000     13,000 (1,000)     12,000     56,000  
Ending Balance at Mar. 31, 2021 139,759,000   37,402,000 566,643,000 (296,317,000) (26,543,000) (224,683,000) 56,502,000 83,257,000   5,006,000 130,667,000
Beginning Balance at Dec. 31, 2020 174,099,000   37,402,000 568,100,000 (253,164,000) (30,641,000) (225,742,000) 95,955,000 78,144,000   5,225,000 128,769,000
Increase Decrease In Stockholders' Equity [Roll Forward]                        
Amortization of net actuarial loss, net of tax [1] 261,000                      
Amortization of prior service cost, net of tax [1] (56,000)                      
Acquisitions 6,759,000                      
Ending Balance at Sep. 30, 2021 112,259,000   37,402,000 567,051,000 (325,226,000) (31,416,000) (222,203,000) 25,608,000 86,651,000   5,251,000 132,591,000
Beginning Balance at Mar. 31, 2021 139,759,000   37,402,000 566,643,000 (296,317,000) (26,543,000) (224,683,000) 56,502,000 83,257,000   5,006,000 130,667,000
Increase Decrease In Stockholders' Equity [Roll Forward]                        
Net Income (loss) (42,536,000)       (42,026,000)     (42,026,000) (510,000)   (431,000)  
Dividends on convertible preferred stock (1,923,000)     (1,923,000)       (1,923,000)       (1,923,000)
Capital contribution (distributions) to (from) noncontrolling interest 7,000               7,000   124,000  
Payment of payroll taxes on stock-based compensation through shares withheld (82,000)           (82,000) (82,000)        
Employee benefit plans 498,000     (143,000)     641,000 498,000        
Share-based compensation - equity awards 2,071,000     2,071,000       2,071,000        
Unrealized foreign currency translation adjustment 4,746,000         3,677,000   3,677,000 1,069,000   79,000  
Amortization of net actuarial loss, net of tax 1,000         1,000   1,000        
Other, net 26,000     (10,000)     23,000 33,000 (7,000)   547,000 1,000
Ending Balance at Jun. 30, 2021 102,567,000   37,402,000 566,658,000 (338,343,000) (22,865,000) (224,101,000) 18,751,000 83,816,000   5,325,000 132,591,000
Increase Decrease In Stockholders' Equity [Roll Forward]                        
Net Income (loss) 20,071,000       15,067,000     15,067,000 5,004,000   (296,000)  
Dividends on convertible preferred stock (1,950,000)       (1,950,000)     (1,950,000)        
Capital contribution (distributions) to (from) noncontrolling interest (216,000)               (216,000)   (16,000)  
Payment of payroll taxes on stock-based compensation through shares withheld (29,000)           (29,000) (29,000)        
Employee benefit plans 199,000     (1,751,000)     1,950,000 199,000        
Share-based compensation - equity awards 2,163,000     2,163,000       2,163,000        
Unrealized foreign currency translation adjustment (10,594,000)         (8,634,000)   (8,634,000) (1,960,000)   (282,000)  
Amortization of net actuarial loss, net of tax 83,000 [1]         83,000   83,000        
Other, net (35,000)     (19,000) 0   (23,000) 42,000 7,000   488,000  
Ending Balance at Sep. 30, 2021 $ 112,259,000   $ 37,402,000 $ 567,051,000 $ (325,226,000) $ (31,416,000) $ (222,203,000) $ 25,608,000 $ 86,651,000   $ 5,251,000 $ 132,591,000
[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
9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Cash flows from operating activities    
Net loss $ (68,283) $ (325,280)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation and amortization 39,986 43,051
Deferred income taxes (131) 20,428
(Income) loss from discontinued operations (534) 1,822
Restructuring charges 5,799 12,370
Impairment charges 203,076
Gains on dispositions of property and other assets (9,345) (14,935)
Share-based compensation expense 5,960 649
Multi-employer pension plan withdrawal 57 462
Other non-cash items, net 4,642 10,371
Change in operating assets and liabilities:    
Receivables (53,998) 104,722
Inventories (68) 833
Current contract costs (10,123) 16,418
Accounts payable 39,204 (76,355)
Restructuring liabilities (4,413) (4,606)
Accrued compensation 7,611 (25,268)
Contract liabilities 26,386 (32,650)
Income taxes payable (181) 1,290
Other assets and liabilities, net 14,718 20,083
Net cash used in operating activities (2,713) (43,519)
Cash flows from investing activities    
Capital expenditures (45,187) (40,057)
Cash surrender value of life insurance policies   24,767
Cash paid for acquisitions, net (7,704)  
Proceeds from dispositions of property and other assets 14,292 21,788
Net cash (used in) provided by investing activities (38,599) 6,498
Cash flows from financing activities    
Proceeds from borrowings 451,350 191,733
Payments on debt and finance lease obligations (335,665) (273,663)
Dividends paid on common stock   (4,064)
Dividends paid on preferred stock (1,950)  
Distributions to noncontrolling interest, net of contributions from noncontrolling interest (798) (1,526)
Payments of debt issuance costs (1,767) (1,585)
Payment of payroll taxes on stock-based compensation through shares withheld or repurchased (1,119) (1,062)
Common stock purchased for treasury   (2,785)
Proceeds from issuance of Convertible Series A Preferred Stock, net of issuance costs   125,763
Proceeds from exercise of stock options   2,077
Net cash provided by financing activities 110,051 34,888
Effect of exchange rate changes on cash, cash equivalents, and restricted cash 2,551 (1,027)
Net change in cash, cash equivalents, and restricted cash 71,290 (3,160)
Cash, cash equivalents, and restricted cash, beginning of year 41,971 62,004
Cash, cash equivalents, and restricted cash, end of period $ 113,261 $ 58,844
v3.21.2
Overview and Basis of Presentation
9 Months Ended
Sep. 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, the COVID-19 pandemic had a significant and negative impact on our operations and financial performance, with severe disruptions in live event and tourism activity. In response, 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 common stock dividend payments and share repurchases, and we availed ourselves of governmental assistance programs for wages and other expense relief. Additionally, in May and August 2020, we obtained waivers of the financial covenants under our then $450 million revolving credit facility (“the 2018 Credit Facility”), which we subsequently refinanced in July 2021 as discussed below, and 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 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.

During 2021, we continued to preserve cash and closely manage our costs as pandemic-related restrictions lessened. In connection with COVID-19 vaccination programs, we began to see signs of recovery in the travel and hospitality and live event sectors during early 2021 as people started to feel more comfortable traveling and gathering in larger groups. Pursuit’s operations in the United States experienced strong visitation primarily from domestic travelers, while tourism in Canada remained constrained by border closures. Canada reopened its border with the United States in early August 2021 to fully vaccinated travelers and to travelers from other countries

beginning in September 2021, which accelerated short-term bookings from long-haul travelers to our Pursuit operations in Canada. The live event markets also began to re-open in 2021 with smaller scale live events starting to take place during the first half of the year. Toward the end of the second quarter and into the third quarter, we began to see an acceleration in the recovery of in-person trade shows as event organizers began to hold larger scale face-to-face live events.

Effective July 30, 2021, we refinanced our 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 loan proceeds of $400 million were offset in part by $14.8 million in fees. The proceeds from the Term Loan B were used to repay the 2018 Credit Facility and the remaining proceeds will be used to fund future acquisitions and growth initiatives and for general corporate purposes. Refer to Note 12 – Debt and Finance Lease Obligations for further information.

Although we have seen a recent acceleration in demand and bookings and early signs of recovery for travel and in-person live events, we remain cautious as variants of COVID-19, including the predominant Delta variant, have caused an increase in infections and hospitalizations across the United States and globally. Due to the evolving and uncertain nature of COVID-19, and depending on the success of ongoing vaccination and other mitigation efforts as well as the scope and magnitude of infections and hospitalizations, 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 September 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 nine months ended September 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 September 30, 2020

 

 

Nine Months Ended September 30, 2020

 

(in thousands)

 

Services Revenue

 

 

Cost of Services

 

 

Services Revenue

 

 

Cost of Services

 

As previously reported

 

$

43,702

 

 

$

51,730

 

 

$

335,383

 

 

$

395,432

 

Gross to net correction for GES

 

 

(265

)

 

 

(265

)

 

 

(2,331

)

 

 

(2,331

)

Total as corrected

 

$

43,437

 

 

$

51,465

 

 

$

333,052

 

 

$

393,101

 

 

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.

 

1/1/2022

 

We are currently evaluating the potential impact of the adoption of this new guidance on our consolidated financial statements. We do not expect this new guidance will have a material impact on our consolidated financial statements.

 

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 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:

 

 

 

September 30,

 

 

December 31,

 

(in thousands)

 

2021

 

 

2020

 

Cash and cash equivalents

 

$

110,756

 

 

$

39,545

 

Restricted cash included in other current assets

 

 

2,505

 

 

 

2,426

 

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

 

$

113,261

 

 

$

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 54.9% 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 income (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
9 Months Ended
Sep. 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

 

 

117,499

 

Revenue recognized

 

 

(90,638

)

Foreign exchange translation adjustment

 

 

(584

)

Balance at September 30, 2021

 

$

44,895

 

 

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 costs of services or costs 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

 

 

24,514

 

Expenses

 

 

(14,061

)

Cancelled

 

 

(709

)

Foreign exchange translation adjustment

 

 

(57

)

Balance at September 30, 2021

 

$

20,522

 

As of September 30, 2021, capitalized contract costs consisted of $0.6 million to obtain contracts and $19.9 million to fulfill contracts. We did not recognize an impairment loss with respect to capitalized contract costs during the three and nine months ended September 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

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(in thousands)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Service lines:

 

 

 

 

 

 

 

 

 

 

 

 

Exhibitions and Conferences

 

$

81,029

 

 

$

4,625

 

 

$

96,881

 

 

$

222,038

 

Brand experiences

 

 

31,009

 

 

 

8,895

 

 

 

55,194

 

 

 

85,831

 

Venue services

 

 

4,006

 

 

 

472

 

 

 

8,034

 

 

 

12,061

 

Total revenue

 

$

116,044

 

 

$

13,992

 

 

$

160,109

 

 

$

319,930

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Timing of revenue recognition:

 

 

 

 

 

 

 

 

 

 

 

 

Services transferred over time

 

$

100,865

 

 

$

12,031

 

 

$

139,241

 

 

$

287,457

 

Products transferred over time(1)

 

 

6,509

 

 

 

247

 

 

 

7,659

 

 

 

13,442

 

Products transferred at a point in time

 

 

8,670

 

 

 

1,714

 

 

 

13,209

 

 

 

19,031

 

Total revenue

 

$

116,044

 

 

$

13,992

 

 

$

160,109

 

 

$

319,930

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Geographical markets:

 

 

 

 

 

 

 

 

 

 

 

 

North America

 

$

92,648

 

 

$

11,686

 

 

$

127,978

 

 

$

272,391

 

EMEA

 

 

24,084

 

 

 

2,590

 

 

 

34,061

 

 

 

50,797

 

Intersegment eliminations

 

 

(688

)

 

 

(284

)

 

 

(1,930

)

 

 

(3,258

)

Total revenue

 

$

116,044

 

 

$

13,992

 

 

$

160,109

 

 

$

319,930

 

 

(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

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(in thousands)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Services:

 

 

 

 

 

 

 

 

 

 

 

 

Admissions

 

$

39,480

 

 

$

12,229

 

 

$

51,069

 

 

$

17,865

 

Accommodations

 

 

37,553

 

 

 

18,021

 

 

 

54,742

 

 

 

23,994

 

Transportation

 

 

3,453

 

 

 

445

 

 

 

4,913

 

 

 

2,513

 

Travel planning and other

 

 

2,019

 

 

 

855

 

 

 

4,668

 

 

 

1,484

 

Intersegment eliminations

 

 

(406

)

 

 

(144

)

 

 

(463

)

 

 

(261

)

Total services revenue

 

 

82,099

 

 

 

31,406

 

 

 

114,929

 

 

 

45,595

 

Products:

 

 

 

 

 

 

 

 

 

 

 

 

Food and beverage

 

 

18,029

 

 

 

6,783

 

 

 

25,152

 

 

 

9,047

 

Retail operations

 

 

17,427

 

 

 

10,626

 

 

 

23,577

 

 

 

12,960

 

Total products revenue

 

 

35,456

 

 

 

17,409

 

 

 

48,729

 

 

 

22,007

 

Total revenue

 

$

117,555

 

 

$

48,815

 

 

$

163,658

 

 

$

67,602

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Timing of revenue recognition:

 

 

 

 

 

 

 

 

 

 

 

 

Services transferred over time

 

$

82,099

 

 

$

31,406

 

 

$

114,929

 

 

$

45,595