2012 Annual Report Dear Fellow Shareholders
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2012 annual report Dear Fellow Shareholders Fiscal 2012 was a very solid year for Viad. Consolidated revenue for the year exceeded the $1 BILLION level, an important threshold as we continue to grow our business. With the benefi t of increased revenue and a focus on operating effi ciencies, income before other items per share nearly doubled to $1.09 compared to $0.55 in 2011. Marketing & Events Group Highlights the widest range of capabilities to produce and service large exhibitions, Melville GES Our Marketing & Events Group posted entered into a 10-year agreement with signifi cant year-on-year growth in 2012. ExCeL London to be its preferred exhibition Revenue increased 7.3 percent to $902 mil- Paul B. Dykstra services supplier. ExCeL is a leading inter- lion and operating income improved by national exhibition and convention center Chairman, President and $12.7 million to $17.9 million. These results Chief Executive Offi cer in the London metro area and home for refl ect continued improvement in industry many of Europe’s largest exhibitions, con- fundamentals as well as our initiatives to gresses and corporate events. This agree- drive top line growth and margin improve- ment provides us access to a new set of ment. U.S. base same show revenue for opportunities to expand our international the year grew by 6.5 percent and operat- business in the coming years. ing margins improved by 140 basis points. We also opened a new offi ce in Amsterdam GES produced some of the most iconic with the goal of extending our reach into trade shows and conferences in 2012, with continental Europe. Since the opening several notable new wins. We produced of that offi ce, we have been awarded an the fi rst event in a fi ve-year contract extensive portfolio of 30 events, by glob- for The WINDPOWER Conference and al business-to-business event organizer, Exhibition, the world’s largest wind energy UBM Live. event. Another key competitive win for us was a three-year contract to produce the We remained focused on operating more National Rifl e Association (NRA) Annual effi ciently in 2012. Through our initiatives Meetings and Exhibits commencing in to drive down overhead costs and improve 2013. In addition, we produced a number labor effi ciency, we realized a $2 million of new shows in 2012 including MODEX, reduction in U.S. facilities costs and a 50 which was awarded to us by longtime GES basis point improvement in labor-to-rev- client MHI. enue ratio on our U.S. base same-shows. Our Atlanta warehouse facility has been We gained signifi cant traction in expand- designated as our East Depot and will ing the scope of our worldwide business in support all other show locations in the 2012. We provided event services in more region. We also completed consolidations than 20 venues throughout metropolitan within the Chicago, Boston, Washington London during the 2012 London Summer DC and San Francisco markets. These Olympic and Paralympic Games. As the strategic actions provide us greater undisputed market leader in the UK, with fl exibility to adjust our cost structure GES helped bring Oprah’s O Magazine to life with a full-day event featur- ing speaker sessions by Oprah and her distin- guished experts, as well as entertaining Sponsor Zones where fans could discover new products from IKEA, Paul Mitchell, Sally Hansen and many other brands. We gained significant traction in expanding the scope of our worldwide business in 2012. to address the ebbs and fl ows of year as part of the the business. Travel & Recreation Group, posted improved GES was once again named as one results over 2011. The Many of the “World’s 50 Largest Agency Glacier Hotel provided a full Companies” by Advertising Age mag- revenue contribution in 2012 from azine. And, for the fi fth consecutive rooms that were under renovation year, J.D. Power and Associates recog- in 2011. sets the stage for more profi table nized GES for excellence in call cen- operations. Our international busi- ter customer satisfaction for 2012. Construction work on our new- ness continues to perform well and Consistently earning this recognition est attraction, the Glacier Skywalk we are expanding our capabilities is a concrete example of our dedica- in Jasper National Park in Alberta, to capitalize on growth opportuni- tion to provide exceptional service to Canada, continued in 2012. We ties in Europe and the Middle East. our customers. expect that it will become an excit- In our Travel & Recreation business, ing and iconic attraction featuring Travel & Recreation we will continue to benefi t from the the splendor of the amazing glaciol- Group Highlights perennial demand that our proper- ogy, geology and vistas at the park. ties in western North America enjoy. In our Travel & Recreation Group, And we look forward to its opening Breathtaking vistas and unique vaca- 2012 revenue increased 21 percent to either at the end of the 2013 season tion attractions will continue to draw $123.2 million and operating income or early in the 2014 season. visitors from all corners of the world. increased 18.6 percent to $24 million. 2013 Outlook Organic revenue growth was 10.2 As we move into 2013, the fi nancial percent as we continued to focus on We have much to look forward to in underpinnings of the Company are providing an excellent experience for the coming years. The market dynam- very strong and we carry very little our guests. Our attractions turned in ics in both the Marketing & Events debt. We maintain a values-based particularly strong performance with Group and the Travel & Recreation culture that successfully guides us increased passenger traffi c across Group are showing improvement. in everything that we do, and it truly the board. Domestically, the number of trade refl ects who we are. I am honored, show exhibitors is increasing, and and inspired, every day to work with 2012 hospitality revenue benefi tted their event spending is also on the the dedicated professionals that from the initial peak season contri- upswing. In addition, the progress make up the Viad team. We are com- butions from our recently acquired achieved in driving operating effi - mitted to run Viad in a manner that Alaska Denali Travel and Banff ciencies across the GES U.S. Service lives up to our “Always Honest” val- International Hotel properties. The Delivery Network, as well as our con- ues. I am also privileged to work with St. Mary Lodge & Resort and Grouse tinued focus on labor management, a Board of Directors that is sharply Mountain Lodge, both in their second The Grouse Mountain Lodge is considered one of Montana’s fi nest lodge resorts, off ering upscale comfort and an authentic As we move into Whitefi sh, Montana lodging experience. 2013, the financial underpinnings of the Company are very strong. To you, our loyal shareholders, we thank you for your continued support as we strive to enhance the value of your investment. Sincerely, focused on the advancement of the Company and the interests of its shareholders. The collective expertise and extensive experience of our Directors are valuable assets to all of us as we operate each day and pursue actions to enhance shareholder value. I am also grateful to our loyal customers for the opportunity to provide them with Paul B. Dykstra meaningful and memorable experiences year after year. Chairman, President and Chief Executive Offi cer Revenues Segment Operating Income Adjusted EBITDA1 Debt-to-Capital Ratio2 (in millions) (in millions) (in millions) $1,025.2 $58.2 2.3% $942.4 $41.9 $844.8 $43.3 $25.4 $32.3 0.8% $14.8 0.6% ‘12‘11‘10 ‘12‘11‘10 ‘12‘11‘10 ‘12‘11‘10 1 “Adjusted EBITDA” is defi ned by Viad as net income attributable to Viad before interest expense, income taxes, depreciation and amortization, impairment loss- es and recoveries, changes in accounting principles and the eff ects of discontinued operations. For further discussion and a reconciliation of Adjusted EBITDA to net income, refer to “Non-GAAP Measure” in Management’s Discussion and Analysis of Financial Condition and Results of Operations in the attached Form 10-K. 2 “Capital” is defi ned as total debt and capital lease obligations plus total stockholders’ equity. As filed with the Securities and Exchange Commission on March 11, 2013 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2012 or ‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-11015 Viad Corp (Exact name of registrant as specified in its charter) Delaware 36-1169950 State or other jurisdiction of (I.R.S. Employer incorporation or organization Identification No.) 1850 North Central Avenue, Suite 1900 Phoenix, Arizona 85004-4565 (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code: (602) 207-1000 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange Title of each class on which registered Common Stock, $1.50 par value New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act. Yes È No ‘ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.