Viad Corp (VVI)

VVI 
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Viad Corp. (VVI)

Q4 2008 Earnings Call

February 06, 2009; 09:00 am ET

Executives

Paul Dykstra - Chairman, President & Chief Executive Officer

Kevin Rabbitt - President of GES Exposition Services

John Jastrem - President of Exhibitgroup/Giltspur

Ellen Ingersoll - Chief Financial Officer

Carrie Long - Director of Investor Relations,

Analysts

John Healy - FTN Equity Capital Markets

Karl Brown - Revis Partners

Presentation

Operator

Good morning everyone and thank you for standing by. At this time all participants are in a listen-only mode. After the conference call we’ll have a question-and-answer session. (Operator Instructions)

I’d now like to turn the call over to your first speaker Ms. Carrie Long, Director of Investor Relations, and you may begin ma’am.

Carrie Long

Thank you. 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. Actual results may differ materially from those projected in the forward-looking statements.

Additional information concerning business and other risk factors that could cause actual 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.

With that said, I’ll introduce Paul Dykstra, Chairman, President and CEO of Viad Corp.

Paul Dykstra

Good morning everyone. Thanks very much for being with us today. On today’s call you’ll heard from Kevin Rabbitt, President of GES Exposition Services; John Jastrem, President of Exhibitgroup/Giltspur; and Ellen Ingersoll, Viad’s Chief Financial Officer. As I discuss our 2008 results, you may want to refer to tables one and two in the earnings press release.

We had a very strong year in 2008. All of our businesses performed well and for that I’d like to thank all of Viad’s employees for their dedication and extraordinary contributions throughout the year. Exhibitgroup/Giltspur produced its second straight year of double digit revenue growth; GES successfully executed a record revenue year and the travel and recreation services businesses continued to produce strong operating income and margins.

Viad’s full year income before other items per share grew by 21.3% to $2.28, which is at the high end of the guidance we set forth at the beginning of 2008. We reached $1.1 billion in revenues, up 11.7% from 2007, and segment operating income grew 19.3% to $82 million. This growth was driven primarily by positive show ration and strong penetration into exhibitor discretionary spending at GES and a 15.8% increase in revenue at Exhibitgroup/Giltspur.

For the 2008 fourth quarter, income before other items was $0.16 per share, up from $0.02 per share in the 2007 quarter. Our substantial improvement in fourth quarter results was driven primarily by higher segment operating income from the acquisition of the Becker Group.

As a reminder, income before other items is a non-GAAP measure that we defined as income from continuing operations before the favorable resolution of tax matters and impairment charges and recoveries.

For 2008, the favorable resolution of tax matters added $.28 per share to our income from continuing operations, versus $0.15 per share in 2007 and we recorded impairment charges of $0.46 per share in 2008, versus impairment recoveries of $0.01 per share in 2007. Our 2008 income from continuing operations which includes these other items was $2.10 per share. The 2008 impairment charges relate to the Becker Group and Melville acquisitions, and Ellen will discuss them in more detail late.

While these impairments are disappointing, I can assure you that all of the fundamentals reasons we acquired Becker Group and Melville remain intact. They are both terrific businesses with strong brands and customer relationships and they are a great strategic fit for GES and the Exhibitgroup/Giltspur. Unfortunately like nearly all other businesses, they are being negatively impact by broader economic issues.

Now let’s move on to the individual operating segment results. You may want to refer to table one of the press release, which provides revenues and operating income for each of the operating segments. First I’ll turn it over to Kevin Rabbitt to talk about GES, Kevin.

Kevin Rabbitt

Thanks Paul. Despite this deteriorating economy, we had a very strong year with record revenues of $808.8 million, up 8.3% from 2007. Full year operating income increased 14.3% to $58.1 million. Our growth in 2008 was driven by positive show rotation of $63 million, versus 2007.

Along with strong penetration in to exhibitor discretionary spending, partially offset by a 3.2% decline in base of the same show revenue. As a reminder base same show growth is a measure of growth in our US shows that occur in the same city and same quarter every year. Base same shows represent 34% of our full year revenues.

As I’ve discussed on prior earnings calls, the weakness in base same show revenue in 2008 was driven primarily by two major biannual retail shows. Excluding these shows, full year base same show revenue grew by about 1%, reflecting the stronger growth in the first half of the year and declines in the second half.

For the fourth quarter, our total revenue was $132.2 million, down $25.2 million or 16% over the 2007 quarter. This decrease was driven by negative show rotation revenue of $9 million, unfavorable currency translation of $8.8 million, lower exhibitor discretionary revenue and a 6% decline in base same show growth. Base same shows represented 29% or fourth quarter revenues.

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