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Viad Corp. (VVI)
Q3 2008 Earnings Call
October 24, 2008 9:00 am ET
Carrie Long - Director, IR
Paul Dykstra - Chairman, President and CEO
Kevin Rabbitt - President and CEO, GES Exposition Services
John Jastrem - President and CEO, Exhibitgroup/Giltspur
Ellen Ingersoll - CFO
John [Heely] – FTN Midwest Securities
Troy Mastin - William Blair & Company
Clint Fendley - Davenport & Company
Previous Statements by VVI
» Viad Corp. Q4 2008 Earnings Call Transcript
» Viad Corp. Q2 2008 Earnings Call Transcript
» Viad Corp Q1 2008 Earnings Call Transcript
I would now like to turn the conference over to your host, Ms. Carrie Long, Director of Investor Relations.
Good morning and thank you for attending our conference call. Before we begin I'd like to remind everyone that certain statements made during this call which are not historical facts may constitute forward-looking statements. Information concerning business and other risk factors that could cause results to materially differ from those in the forward-looking statements can be found in Viad's annual and quarterly reports filed with the SEC.
This conference call may not be recorded or reproduced in transcript without the expressed written permission of Viad. During today's call we'll refer to tables 1 and 2 in our earnings press release, which can be found on our website at www.viad.com.
Now I'll turn it over to Paul Dykstra, President and CEO of Viad Corp.
Good morning everyone. Thanks very much for being with us today. As usual on today’s call you will hear from Kevin Rabbitt, President and CEO of GES; John Jastrem, President of Exhibitgroup and Ellen Ingersoll, Viad’s Chief Financial Officer.
As we discuss our third quarter results you may want to refer to tables I and II in the earnings press release. We had a very strong third quarter and for that I would like to recognize and thank all of the dedicated people of Viad for delivering these results in a very busy time.
During the quarter we had solid execution and continued positive results from the repositioning efforts at Exhibitgroup/Giltspur. We also benefited from positive show rotations. As compared to the 2007 third quarter, revenue increased 32.1% to $302.4 million. Segment operating income nearly doubled to $26.1 million. Income from continuing operations was $16.8 million or $0.81 per diluted share. Income before other items which excludes income from the favorable resolution of tax matters was $14.4 million or $0.70 per share. These results are in line with our prior guidance of $0.64 to $0.74 per share and more than double 2007 third quarter income before other items of $0.32 per share.
We had very strong free cash flow of $51.7 million during the quarter of which we used $10.1 million to repurchase 328,000 shares of our common stock. This brings our total repurchases since the first quarter of 2006 to 2.6 million shares. At the end of the quarter our cash balances totaled $152.9 million.
Now lets move on to the individual operating segment results and again you may want to refer to table I of the press release which provides revenues and operating income for each of the operating segments. First I’d like to turn it over Kevin Rabbitt, President and CEO of GES.
GES had a record third quarter with revenue of $203.3 million, up $51.7 million from the 2007 third quarter. Operating income was $7.9 million as compared to an operating loss of $2.7 million in the 2007 quarter. The significant growth was driven mainly by very strong performance in some major rotating shows.
For the quarter show rotation added $53 million to our revenues. This number was considerably higher than the $45 million we had expected due to strong exhibitor participation and great execution by the GES team. Many of the major rotating shows during the quarter were industrial shows which is a sector that has continued to show strength. Positive show rotation along with continued growth in exhibitor discretionary spending helped offset negative based same show growth of 11.1%.
As a reminder same show growth is a measure of growth in the same city the same quarter every year. These same shows represent 31% of our total third quarter revenue. These shows were heavily weighted for the retail sector which has been a soft sector most of the year.
As we expected, the negative base same show growth was driven primarily by two major retail shows. Excluding these two shows base same-show growth was negative 3% for the quarter reflecting modest declines across all industry sectors as the result of the economic slow down. In general the declines we experienced are more the result of lower [inaudible] density as opposed to net square footage declines.
Rather than pulling out of a show altogether, exhibitors are seeking reduced costs by sending fewer people to staff their booths and by using lighter weight exhibitry and less product which lowers shipping and drayage costs.
In terms of the size of show and exhibitor participation we are not seeing an overall decline. It is a bit of a mixed bag right now. We are not seeing an increase in show cancellations but we are seeing fewer new launches and short-term bookings of smaller conferences and meetings.
During the third quarter we signed $185 million in future bookings including a multi-year extension with the Consumer Electronics Show. We currently have over 75% of our remaining 2008 forecast revenue under contract and our total revenue backlog for 2008 and beyond stands at $1.4 billion.