|Shares Out. (in M):||27||P/E||N/A||N/A|
|Market Cap (in $M):||1,305||P/FCF||N/A||N/A|
|Net Debt (in $M):||333||EBIT||-125||-57|
|TEV (in $M):||1,744||TEV/EBIT||N/A||N/A|
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“Clearly we'll be better off. We've seen -- we believe there's margin opportunity within the GES business on kind of the existing base of revenue, just based on a lot of the transformation work that we did over the last 12 months. And the Pursuit team has brought on new attractions over the last 12 months, and we believe those will continue to add strength to the earning power at Pursuit. So we're very bullish and optimistic about what this business looks like when there's a full recovery, but clearly, better off than where we were in 2019. I can't give you specifics around what that looks like entirely, but we're very optimistic and bullish about our future.” – Steve Moster, CEO of Viad; May 2021
We believe Viad has significantly enhanced its earnings power above 2019 levels and see several upcoming catalysts over the next few months that we believe could drive shares higher. We see 75% upside to shares on based on CY 2023 earnings that are 50% above expectations.
Viad has been written up a few times on VIC, so I point you to the previous posts for an in depth description of the business. Briefly, VVI is a combination of two distinct businesses: 1) Pursuit – an attractions and hotel business focused on iconic destinations and 2) GES – the second largest event services provider for large conferences and exhibitions. Both Pursuit and GES were impacted by COVID to various degrees: impact to Pursuit solely from restrictions and GES impact from restrictions and questions about the future of large exhibitions and conferences.
Evidence of strong near-term recovery and long-term tailwinds for Pursuit's attractions and properties
Economies of scale and scope advantage Pursuit as a consolidator in market with a long runway for capital deployment that has been enhanced by COVID
Reopening of large events in key markets has set the stage for recovery at GES
Given many other indoor activities (Casinos, Restaurants, Airports etc.) and outdoor events (Kentucky Derby, Sports games, etc.) have been able to safely operate with large crowds, we expect conventions to safely reopen.
Exhibitions will cascade across the US with states such as Texas, Georgia, and Florida already supporting large events. States that have been perceived to be more cautious like IL are allowing events to return with Chicago Auto running on 7/19. Viad expects a very strong second half with more large events than usual, but expects them to come at a smaller size.
GES event tracker: https://www.ges.com/event-tracker
Figures included in the VVI investor presentation indicate 20% more events contracted in H2 2021 than 2019
Shutdown has allowed management to transform GES into a better business with higher margins, increased market share, improved end-market exposure, and better competitive positioning
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