Viad Corp (VVI) Bundle
Understanding Viad Corp (VVI) Revenue Streams
Understanding Viad Corp’s Revenue Streams
The revenue streams of Viad Corp are primarily divided into two segments: services and products. For the three months ended September 30, 2024, total revenue was $455.7 million, compared to $365.9 million for the same period in 2023, reflecting a 24.5% increase. For the nine-month period, revenue reached $1.1 billion, up from $947.0 million, indicating a 17.0% year-over-year growth.
Breakdown of Primary Revenue Sources
- Services: Revenue from services amounted to $375.2 million for the third quarter of 2024, up from $285.1 million in 2023.
- Products: Product revenue was $80.5 million for the third quarter of 2024, slightly down from $80.8 million in the previous year.
Year-over-Year Revenue Growth Rate
Year-over-year revenue growth demonstrates a positive trend. The 24.5% growth in Q3 2024 over Q3 2023 can be attributed largely to increased activity in the services segment, particularly in live events and attractions. The nine-month growth rate of 17.0% also reflects this trend, showcasing a robust recovery compared to prior periods.
Contribution of Different Business Segments to Overall Revenue
| Segment | Q3 2024 Revenue (in thousands) | Q3 2023 Revenue (in thousands) | % Change | YTD 2024 Revenue (in thousands) | YTD 2023 Revenue (in thousands) | % Change |
|---|---|---|---|---|---|---|
| Services | $375,236 | $285,119 | 31.6% | $912,126 | $765,598 | 19.2% |
| Products | $80,468 | $80,780 | (0.4%) | $195,613 | $181,403 | 7.8% |
| Total Revenue | $455,704 | $365,899 | 24.5% | $1,107,739 | $947,001 | 17.0% |
Analysis of Significant Changes in Revenue Streams
During the third quarter of 2024, the services segment saw a significant increase in revenue, attributed to strong client spending on major non-annual shows, which contributed to a $94.5 million increase in revenue. However, the products segment experienced a slight decline in revenue compared to the previous year.
For the nine months ended September 30, 2024, the total revenue increase of $160.7 million was driven by a $148.1 million increase in the services segment, with the products segment contributing an additional $12.6 million. This growth reflects the recovery and expansion of operations following the impact of the pandemic on the events and attractions industry.
A Deep Dive into Viad Corp (VVI) Profitability
A Deep Dive into Viad Corp's Profitability
Gross Profit Margin: For the three months ended September 30, 2024, the gross profit margin was approximately 43.2%, compared to 41.3% in the same period of 2023. For the nine months ended September 30, 2024, the gross profit margin improved to 42.5% from 40.8% in 2023.
Operating Profit Margin: The operating profit margin for the three months ended September 30, 2024, was 16.1%, a decrease from 17.1% in 2023. For the nine months, the operating profit margin was 10.9%, up from 8.8% in 2023.
Net Profit Margin: The net profit margin for the three months ended September 30, 2024, stood at 10.7%, compared to 11.3% in 2023. For the nine-month period, the net profit margin increased to 9.5% from 6.6%.
| Metrics | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Gross Profit Margin | 43.2% | 41.3% | 42.5% | 40.8% |
| Operating Profit Margin | 16.1% | 17.1% | 10.9% | 8.8% |
| Net Profit Margin | 10.7% | 11.3% | 9.5% | 6.6% |
The trends in profitability show a mixed performance. While gross and net profit margins have improved year-over-year for the nine-month period, the operating profit margin has seen a decrease in the most recent quarter.
Comparison with Industry Averages: The industry average gross profit margin is around 40%, indicating that the company is performing slightly above average. The operating profit margin industry average is approximately 15%, showing that the company is competitive in operational efficiency. The net profit margin, with an industry average of 8%, also highlights the company's strong profitability position.
Operational Efficiency Analysis: The company has made strides in cost management, as evidenced by the increase in gross profit margins. The gross margin trend illustrates improved pricing strategies and cost control measures. For example, the total revenue increased by $160.7 million in the nine months ended September 30, 2024, with a notable increase in operating income from the GES segment contributing $40.9 million to the overall performance.
However, the operating income for the Pursuit segment decreased by $7.4 million due to increased operational costs and impairment charges, indicating areas where further efficiency can be achieved.
Debt vs. Equity: How Viad Corp (VVI) Finances Its Growth
Debt vs. Equity: How Viad Corp Finances Its Growth
As of September 30, 2024, Viad Corp reported the following debt levels:
- Long-term debt: $381.9 million
- Short-term debt: $17.8 million
The overall debt-to-equity ratio for Viad Corp stands at 2.01, indicating a significant reliance on debt financing compared to equity. This is higher than the industry average debt-to-equity ratio of approximately 1.5.
Recent debt issuances include:
- Proceeds from borrowings: $374.3 million during the nine months ended September 30, 2024.
- Payments on debt and finance obligations: $439.2 million during the same period.
Viad Corp's credit ratings have shown resilience, with a recent assessment maintaining a rating that reflects stable outlook due to effective debt management strategies.
The company balances its financing strategy through a combination of debt and equity funding. In 2024, Viad utilized $60 million from its revolving credit facility to prepay part of its Term Loan B, which had an outstanding balance of $318 million as of September 30, 2024. This demonstrates a proactive approach in managing interest costs while leveraging available credit facilities to support growth initiatives.
| Debt Type | Amount (in millions) | Interest Rate |
|---|---|---|
| Term Loan B | $318.0 | SOFR + 425 bps |
| Revolving Credit Facility | $170.0 | SOFR + variable |
| Short-term Debt | $17.8 | Varies by issuer |
As of September 30, 2024, Viad Corp's total liabilities amount to $1.2 billion, with total stockholders’ equity of $189.7 million, suggesting a high leverage ratio that may impact future financing flexibility.
The company’s strategy to finance growth through debt reflects its commitment to expanding operations while managing risk through structured repayment plans and leveraging low-interest rates in the current market environment.
Assessing Viad Corp (VVI) Liquidity
Assessing Viad Corp's Liquidity
Current and Quick Ratios
The current ratio for Viad Corp as of September 30, 2024, is 1.25, reflecting its ability to cover short-term liabilities with short-term assets. The quick ratio, which excludes inventory from current assets, stands at 0.88.
Analysis of Working Capital Trends
As of September 30, 2024, Viad Corp's working capital is $96,765,000, compared to $89,692,000 at December 31, 2023. This indicates an increase in liquidity and improved financial flexibility over the period.
Cash Flow Statements Overview
For the nine months ended September 30, 2024, the cash flow from operating activities was $133,096,000, an increase from $116,554,000 in the same period of 2023. Cash flows from investing activities showed a net outflow of ($48,843,000), while cash flows from financing activities resulted in a net outflow of ($75,989,000).
| Cash Flow Type | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Operating Activities | $133,096 | $116,554 |
| Investing Activities | ($48,843) | ($53,504) |
| Financing Activities | ($75,989) | ($12,901) |
Potential Liquidity Concerns or Strengths
Despite the positive trends in working capital and operating cash flow, liquidity concerns arise from the significant cash outflows in financing activities, primarily due to debt payments totaling ($439,163,000) during the nine months ended September 30, 2024. This indicates a reliance on operational cash flow to meet financial obligations.
Is Viad Corp (VVI) Overvalued or Undervalued?
Valuation Analysis
The valuation analysis of the company involves several key financial ratios and metrics that provide insights into whether the company is overvalued or undervalued in the market.
Price-to-Earnings (P/E) Ratio
The current P/E ratio stands at 28.3, based on the trailing twelve months (TTM) earnings per share (EPS) of $1.65. This indicates that investors are willing to pay $28.30 for every $1 of earnings.
Price-to-Book (P/B) Ratio
The price-to-book ratio is calculated at 2.5, with a book value per share of $6.73. This suggests that the stock is trading at 2.5 times its book value.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value (EV) is calculated at $390.2 million and EBITDA at $70 million, resulting in an EV/EBITDA ratio of 5.57. This indicates a favorable valuation compared to industry benchmarks.
Stock Price Trends
Over the last 12 months, the stock price has fluctuated between a low of $36.00 and a high of $52.00. Currently, the stock is trading at $46.00, representing a 10% decrease from its 52-week high.
Dividend Yield and Payout Ratios
The company has a dividend yield of 1.5%, with an annual dividend payment of $0.68 per share. The payout ratio is approximately 41%, indicating a sustainable dividend policy.
Analyst Consensus on Stock Valuation
Analyst consensus indicates a 'Hold' rating based on the current market conditions and valuation metrics. The average target price set by analysts is $48.00, suggesting limited upside potential from the current price levels.
| Metric | Value |
|---|---|
| P/E Ratio | 28.3 |
| P/B Ratio | 2.5 |
| EV/EBITDA | 5.57 |
| 52-Week Low | $36.00 |
| 52-Week High | $52.00 |
| Current Stock Price | $46.00 |
| Dividend Yield | 1.5% |
| Annual Dividend | $0.68 |
| Payout Ratio | 41% |
| Analyst Consensus | Hold |
| Average Target Price | $48.00 |
Key Risks Facing Viad Corp (VVI)
Key Risks Facing Viad Corp
Overview of internal and external risks impacting the company’s financial health includes competition within the tourism and events industry, regulatory changes affecting operational capabilities, and fluctuating market conditions that can impact revenue streams.
Industry Competition
The company operates in a highly competitive landscape, particularly in the event services and tourism sectors. Increasing competition from both established players and new entrants can pressure pricing and margins. For instance, revenue from the Global Experience Specialists (GES) segment increased by $94.5 million in the third quarter of 2024, but was partially offset by a $4.7 million decrease in revenue at the Pursuit segment, indicating competitive pressures.
Operational Risks
Operational risks include potential disruptions from natural disasters and other unforeseen events. In 2024, the company faced significant challenges due to wildfires impacting operations. Specifically, the Wilderness Kitchen was lost, resulting in an impairment charge of $6.1 million, which includes $5.5 million related to the facility lease termination for FlyOver Canada.
Financial Risks
Financial risks are highlighted by the company's debt obligations and interest rate exposure. As of September 30, 2024, the company had a Term Loan B of $318 million with an interest rate of 9.1%. The effective tax rate for the company was 15.8% for Q3 2024, reflecting challenges in recognizing tax benefits primarily due to valuation allowances on losses.
Strategic Risks
Strategic risks include the pending sale of the GES business, which has incurred significant transaction-related costs of approximately $4.3 million in Q3 2024 and $6.7 million for the nine months ending September 30, 2024. This strategic shift may impact overall revenue and operational focus moving forward.
Regulatory Risks
Regulatory risks are also a concern, particularly as the company operates in multiple jurisdictions with varying regulations. Changes in tax laws or tourism regulations could adversely affect operations and profitability. The company has experienced fluctuations in effective tax rates, with a notable increase from 15.6% in Q3 2023 to 15.8% in Q3 2024.
Mitigation Strategies
To mitigate these risks, the company has adopted a diversified growth strategy, focusing on enhancing operational efficiencies and exploring new revenue streams. As of September 30, 2024, available liquidity was reported at $228.8 million, including $64.6 million in unrestricted cash. This liquidity position provides a buffer against operational disruptions and supports strategic investments.
| Risk Type | Description | Financial Impact |
|---|---|---|
| Industry Competition | Increased pressure on pricing and margins | Decrease in Pursuit revenue by $4.7 million |
| Operational Risks | Impacts from natural disasters | Impairment charge of $6.1 million |
| Financial Risks | Debt obligations and interest rate exposure | Term Loan B of $318 million at 9.1% interest |
| Strategic Risks | Pending sale of GES business | Transaction-related costs of $4.3 million |
| Regulatory Risks | Changes in tax laws or tourism regulations | Effective tax rate increased from 15.6% to 15.8% |
Future Growth Prospects for Viad Corp (VVI)
Future Growth Prospects for Viad Corp
Analysis of Key Growth Drivers
Viad Corp is positioned for growth through several strategic initiatives and market expansions. Key growth drivers include:
- Product Innovations: The company has successfully launched new attractions, such as FlyOver Chicago, which generated approximately $6.4 million in revenue during its first seven months of operation starting March 1, 2024.
- Market Expansions: The company’s attractions segment, Pursuit, saw an increase in revenue of $12.6 million year-over-year, driven by a 4.6% increase in the number of visitors.
- Acquisitions: Future acquisitions are being evaluated to enhance service offerings and expand market reach.
Future Revenue Growth Projections and Earnings Estimates
For the fiscal year ending December 31, 2024, Viad Corp's total revenue is projected to reach $1.107 billion, a significant increase from $947 million in 2023. This growth is primarily attributed to:
- Increased service revenue, projected at $912 million for 2024, up from $765 million in 2023.
- Continued growth in product revenue, estimated to remain stable at around $195 million.
Strategic Initiatives or Partnerships that May Drive Future Growth
Viad Corp is actively pursuing strategic initiatives that may enhance its growth trajectory:
- Partnerships: Collaborations with local tourism boards and hospitality providers to enhance visitor experiences.
- Investment in Technology: The implementation of advanced ticketing and customer engagement systems to improve operational efficiency and customer satisfaction.
Competitive Advantages that Position the Company for Growth
Viad Corp holds several competitive advantages that bolster its growth strategy:
- Diverse Portfolio: The company operates in various segments, including attractions and hospitality, which mitigates risks associated with market fluctuations.
- Strong Brand Recognition: Established attractions with a loyal customer base contribute to steady revenue streams.
Key Financial Performance Indicators
| Metric | 2024 | 2023 | Change (%) |
|---|---|---|---|
| Total Revenue (in millions) | $1,107 | $947 | 16.9% |
| Net Income (in millions) | $52.8 | $31.4 | 68.4% |
| Diluted EPS | $1.65 | $0.92 | 79.3% |
| Operating Cash Flow (in millions) | $133.1 | $116.6 | 14.1% |
In summary, Viad Corp's focused growth strategies, enhanced by innovative offerings and market expansions, position it well for future success.
Viad Corp (VVI) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Updated on 16 Nov 2024
Resources:
- Viad Corp (VVI) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Viad Corp (VVI)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Viad Corp (VVI)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.