Viad Corp Management Discusses Q4 2013 Results - Earnings Call Transcript

| About: Viad Corp (VVI)

Viad Corp (NYSE:VVI)

Q4 2013 Earnings Call

February 07, 2014 9:00 am ET


Joe Diaz

Paul B. Dykstra - Chairman, Chief Executive Officer, President and Member of Innovation & Marketing Strategy Committee

Ellen M. Ingersoll - Chief Financial Officer


Luisa Lau - Singular Research

Stephen Altebrando - Sidoti & Company, LLC


Welcome to the Viad Corp Fourth Quarter Earnings Conference Call. [Operator Instructions] This conference is being recorded. If you have any objections, you may disconnect at this time.

I would now like to turn the conference over to Mr. Joe Diaz. Sir, you may begin.

Joe Diaz

Thank you. Good morning, and thank all of you for participating in the Viad Corp year end 2013 earnings conference call. I would like to remind everyone that certain statements made during this call, which are not historical facts, may constitute 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.

During today's call, we will refer to the earnings press release, which is available on the Viad website at

Today, you will hear from Paul Dykstra, Viad's Chairman, President and CEO; and Ellen Ingersoll, Viad's Chief Financial Officer. Additionally, Steve Moster, President of Viad's Marketing & Events Group, will be available for comment during the question-and-answer session at the end of the call.

With that, I'd like to turn the call over to Paul Dykstra. Paul?

Paul B. Dykstra

Thanks, Joe, and I extend my appreciation to all of you for your continued interest in Viad and for participating on today's call. I'm happy to report that we realized meaningful growth in bottom line results in 2013 despite revenue headwinds faced by the Marketing & Events Group. Although Viad's total full year revenue of $972.8 million, was 5.1% less than in 2012, operating income increased by 9.6% to $45.9 million, and consolidated operating margins increased by 60 basis points to 4.7%.

Income before other items increased by 15.6% to $1.26 per share. All told, 2013 was a solid year for Viad as we continue to grow our business, develop innovative products and service enhancements and operate in a more cost efficient manner.

The Marketing & Events Group turned in 12.2% growth in full year operating income, which is especially impressive given the $64 million revenue headwind we faced as a result of negative show rotation in the 2012 Summer Olympics.

Heading into 2013, we set very aggressive targets for the Marketing & Events Group to deliver operating margin improvement despite lower revenues. The 2013 full year operating margin came in at 2.4% up from 2% in 2012, and just shy of our 2.5% goal for the year. I'd like to thank Steve Moster and the rest of the GES team for maintaining a sharp focus on driving operation, efficiencies and delivering exceptional customer service to retain existing accounts and win new business.

Our diligent focus on enhancing operating efficiencies and improving our cost structure continues to serve us well. Our U.S. segment realized a 100 basis point improvement in operating margin and operating income was $11 million, nearly double the $5.6 million generated in 2012.

Throughout the year, we continued to make progress in optimizing our U.S. service delivery network, consolidating warehouse operations in the Eastern U.S. and establishing Atlanta as our East region depot. We will continue to make incremental improvements in the East region, but our primary focus has now shifted to the Western U.S. We have already optimized a substantial portion of the West region over the past few years. However, our Las Vegas facility lease will expire in about a year, which provides an opportunity to gain additional efficiencies in that market and across the West region. We are actively evaluating facility options in the Las Vegas Market.

We also made measurable progress with our labor management initiative and we're successful in more effectively managing variable labor across the broad spectrum of the events that GES managed in 2013.

As part of our achieving our margin improvement goals, we set a target to reduce our labor-to-revenue ratio by 50 basis points on U.S. base same-shows. I'm pleased to report that we exceeded this goal with a 70-basis point improvement. This followed a 50-basis point improvement achieved in 2012.

Our continued focus on business development is also paying off with a number of key contract renewals and competitive takeaways during the year. A few recent examples include Bristol-Myers Squibb, a leading bio-pharmaceutical company and longtime GES customer, renewed its contract to manage more than 300 global projects annually through 2015. We are dedicated to provide Bristol-Myers Squib, the highest level of service, which they have come to expect.

We also renewed Novartis, one of the world's leading pharmaceutical companies and another long-term client. Our relationship has steadily grown across a wider platform of Novartis businesses over the course of recent years. With strong team chemistry and providing exceptional service, our contract has been extended through 2015.

After an extensive competitive review, we secured a multi-year contract to continue producing the Los Angeles Auto Show. The LA Auto Show covers more than 870,000 square feet and features the who's who of the auto industry. The show's 3 industry trade days draw more than 16,000 auto industry decision makers and influencers, including more than 4,000 media from 58 countries. Once the trade days end, the following 10 days became one of the best attended auto shows in the world. GES will continue to provide excellent operational execution and innovative award-winning customer service for this exciting and influential annual event. In addition, this new contract adds cutting-edge audiovisual services to the list of solutions we will provide at the show.

Also during the year, the Professional Beauty Association extended its contract with GES to produce its flagship events through 2018. Key to this renewal was GES's new product development team and is focused on designing innovative, eco-friendly structures and trade show elements that also provide efficiencies in assembly and handling. The PBA will also benefit through GES's easy-to-use technologies, including GES Connect, a fully-integrated online planning tool for event organizers; and Expresso, which combines the art of a customized show experience, with the science of exhibitor surveys and usage data. Our focus is to continually upgrade the look and feel of the association's events and we are pleased that the PBA recognizes with a multi-year extension.

In addition to be these most recent transactions, during the year, we extended contracts with industry leaders including Avanstar, ICSC, Penton Media and Boehringer Ingelheim, to name a few. These are representative examples of the great work done by our sales, marketing and service teams to extend our relationships with current customers, and to win new business that bolsters our market share.

Our intense business development efforts, coupled with superior customer service and leading-edge technology are the catalysts that are attracting new business, both domestically and internationally.

During the fourth quarter, we announced the launch of an in-house full-service audiovisual services business. Audiovisual is a natural complement to our existing suite of convention and event solutions, and gives us a more compelling overall service offering. We estimate the total market for U.S. trade show AV spending is over $1 billion.

Operating margins for AV businesses can be in the range of 6% to 12%, which will be nicely accretive to GES's margins. We believe that AV Services will play an important role in GES's future growth and we are excited to already have some nice wins under our belt, including the LA Auto Show.

In regards to our exhibition and an event production around the rest of the world, we continue to maintain a strong focus on developing our International business. Although the pricing environment remains relatively tight in Europe, we continue to make progress in building out the necessary infrastructure to better position ourselves to capture greater market share in the coming years.

Our office in Amsterdam continued to gain measurable traction by winning and producing an extensive portfolio of events for UBM Live, a leading business-to-business event organizer.

During the year, the team also generated strong sales momentum that we expect will drive improved revenue and margins in 2014.

During the third quarter, GES was chosen by PennWell Corporation, a leading international exhibitions organizer, to produce contracting services for all of its events in the Middle East in 2014 and 2015, including internationally prestigious events like Avionics International and the Offshore Middle East 2015 Expo. The PennWell relationship provides GES, a broad platform to expand its considerable existing presence in the rapidly growing Middle East, and now brings to 50, the number of shows GES will deliver in the United Arab Emirates.

We also had some important wins in the U.K., that helped to reinforce our position as the market leader. We secured a new 4-year contract with i2i Events, a leading global events group. This agreement expands the scope of our services and is likely to be the largest exhibition services contract ever signed in the U.K. And we signed a 10-year agreement to be the preferred exhibition services supplier for London ExCel, a leading international exhibition and convention center in the Metro London area.

We're pleased with the progress in our international business.

Overall, our Marketing & Events Group made a lot of progress in a challenging year, with improved operating income and margins. And we expect that 2014 will yield even better results as we benefit from significant positive show rotation and we continue to aggressively manage our operating cost structure.

Before I move on to Travel & Recreation, I'd like to update you on the labor situation in the Chicago market. Our show site and warehouse agreements with the Chicago Teamsters Local 727 expired on December 31, 2013. Although we have entered into new agreements, we continue to work through some wage and pension issues and the new agreements contain reopeners that are effective February 28, 2014. We are working diligently with the Teamsters to resolve the outstanding issues in a manner that will be reasonable and equitable to our employees, customers and shareholders.

Now let's move on the Travel & Recreation. Our Travel & Recreation Group delivered very strong results in 2013, with growth -- revenue growth of 3.8%, a 7.7% increase in segment operating income and a 70-basis point improvement in operating margins.

Brewster, Glacier Park and Alaska Denali Travel, all posted higher revenue and operating income as compared to 2012. These business units experienced greater visitation to our attractions and higher occupancy rates at most of our lodges and hotels during 2013.

Brewster recovered nicely from the flooding that occurred in late June and delivered solid growth for the full year across nearly all of its lines of business. Passenger counts were up at all of Brewster's high-margin attractions. We also benefited from a concerted effort to better utilize Brewster's transportation assets during the slower winter season. In that regard, Brewster generated incremental transportation revenue through increased charter business and a new contract with the Lake Louise Ski Resort to transport skiers in and around the Banff area.

Glacier Park delivered a record year, with RevPAR increases across essentially all of its properties, both in-park and out-of-park. The renovations we completed in early 2013 at Grouse Mountain Lodge, combined with our sales and marketing efforts are paying off with strong growth in revenue and profit margins at that property. St. Mary Lodge also continued to show strong year-over-year improvements.

With a solid finish to a successful 2013, the Travel & Recreation Group team is preparing for an exciting 2014. Cynthia Ognjanov is working closely with the teams at Glacier Park and Alaska Denali Travel, to ensure a smooth and efficient opening of our seasonal property this spring, and to set us up for a successful operating season.

Dave McKenna and the rest of the Brewster team are busy preparing for the grand opening of the Glacier Skywalk in May. This project is a great example of innovation within our business and is already won a number of architectural and engineering awards.

We are seeing great interest in the media and travel industry, and I firmly believe that this Glacier Skywalk will become one of the must-see iconic natural attractions in North America. We're excited to unveil this amazing experience to our guests.

Let me now turn the call over to Ellen Ingersoll, Viad's Chief Financial Officer for a more detailed review of our financial results. Ellen?

Ellen M. Ingersoll

Thanks, Paul, and thanks to all of you for joining our call this morning.

As I cover our financial results, you may want to refer to Tables 1 and 2 in the Business Group Highlights section of our earnings press release.

As Paul mentioned, we delivered solid operating results in 2013. Full year segment operating income grew to $45.9 million, which is up $4 million from 2012, despite a $52.4 million year-over-year revenue decline driven by negative show rotation and revenues earned in connection with the 2012 Summer Olympics. Full year revenue was $972.8 million versus $1 billion in 2012. Segment operating margin increased by 60 basis points to 4.7%.

From a revenue and operating income perspective, we finished 2013 in line with prior guidance. Fourth quarter revenue of $201.8 million was in line with 2012 fourth quarter revenue of $202.6 million and operating results include -- improved by $5.9 million to a loss of $2.4 million, as compared to the 2012 loss of $8.4 million. This improvement primarily reflects lower performance-based incentives and continued cost structure improvements within our Marketing & Events U.S. segment.

Our fourth quarter loss before other items was $0.20 per share, which is improved from the 2012 fourth quarter loss of $0.34 per share, and within our prior guidance range of a loss of $0.25 to $0.16 per share.

For the full year, our income before other items was $1.26 per share, up from $1.09 per share in 2012. By definition, our 2013 income before other items excluded restructuring charges of $0.06 per share and $0.13 per share in the fourth quarter and full year, respectively. These charges primarily related to facility consolidations in the Marketing & Events Group and the elimination of certain positions to more efficiently serve the business.

Full year income before other items also excluded a non-cash impairment charge of $0.14 per share taken during the third quarter of 2013, and favorable tax matters of $0.02 per share recorded in the fourth quarter. A reconciliation income before other items to income from continuing operations can be found in Table 2 of our earnings press release.

Now I'll discuss results for the Marketing & Events Group, which were in line with our prior guidance. The Marketing & Events Group U.S. segment's fourth quarter revenue was $134.5 million, which is in line with 2012 fourth quarter revenues of $136 million. Revenue from base same-shows increased 3.4% for the quarter with base same-shows representing approximately 30% of U.S. segment fourth quarter revenue. As expected, this increase was offset by some non-recurring business in the 2012 fourth quarter, including a large holiday program rollout for retail client and a low-margin that we produced in 2012 but not in 2013.

U.S. segment operating results improved $4.7 million from the 2012 quarter to a loss of $2 million. This improvement was primarily the result of lower performance-based incentives and our continued focus on driving margin improvement.

For the full year, Marketing & Events U.S. segment revenue was $628.9 million, down $47.9 million from 2012, primarily as a result of negative show rotation revenue of $54 million, partially offset by base same-show growth of 3.1%. As a reminder, we use the term show rotation to refer to shows that occur less frequently than annually, as well as shows that shift quarters from 1 year to the next.

Full year U.S. segment operating income of $11 million was nearly double 2012 operating income of $5.6 million. The improved operating results on the $47.9 million revenue drop are a result of lower performance-based incentives, the third quarter gain on sale of our facility in New Jersey and continued cost structure improvements.

Marketing & Events Group International segment revenue for the fourth quarter was $60.3 million, with operating income of $3.2 million, as compared to 2012 revenue of $59.9 million and operating income of $2.7 million.

Foreign exchange rate variances had an unfavorable impact on revenue and operating income of $516,000 and $51,000, respectively. Excluding foreign exchange rate variances, revenue increased by $934,000 and operating income increased by $614,000, primarily driven by positive show rotation of approximately $2 million.

Full year International segment revenue was $229.3 million, down $10.8 million from 2012, with full year operating income of $9.1 million, as compared to $12.3 million in 2012. The declines were primarily driven by $16 million in revenue earned in 2012 in support of the Summer Olympics in London, partially offset by positive show rotation revenue of approximately $6 million. Additionally, foreign exchange rate variances had an unfavorable impact on revenue and operating income of $4.3 million and $240,000, respectively as compared to 2012.

Results for our Travel & Recreation Group were also in line with our prior guidance for the quarter with $10 million in revenue and a seasonal operating loss of $3.7 million. This is improved from 2012 revenues of $9.8 million and an operating loss of $4.4 million. Foreign exchange rate variances had an unfavorable impact on revenues of $499,000, while favorably impacting operating income by $90,000.

For the full year, Travel & Recreation Group revenue increased 3.8% to $127.9 million and operating income increased 7.7% to $25.8 million. Foreign exchange rate variances had an unfavorable impact on revenue and operating income of $2.8 million and $790,000, respectively as compared to 2012.

Excluding unfavorable foreign exchange rate variances, revenue for the Travel & Recreation Group grew $7.5 million, or 6%, reflecting increases at Brewster, Glacier Park and Alaska Denali Travel.

Now I'll cover some cash flow and balance sheet items for the quarter before covering guidance for 2014. Fourth quarter free cash flow was an outflow of $30.5 million versus an outflow of $7.4 million in 2012. For the full year, free cash flow was an outflow of $30.1 million, as compared to 2012 free cash flow of $41.5 million. Please note that we have modified our definition free cash flow to exclude dividends, as we believe this provides a better measure of cash flow available for distribution to our shareholders.

Beginning this quarter and going forward, we're defining free cash flow as operating cash flow less capital expenditures. The decrease in full year free cash flow was driven by an increase in capital expenditures of $8.4 million and changes in working capital, primarily related to accounts payable, accrued compensation and customer deposits.

Capital expenditures were $9.2 million for the 2013 fourth quarter versus $7.8 million in the 2012 quarter.

Full year capital expenditures were $36.1 million versus $27.7 million in 2012 with the increase being driven primarily by construction of the Glacier Skywalk attraction.

Depreciation and amortization expense was $6.8 million for the 2013 fourth quarter, as compared to $7.2 million in 2012. Full year depreciation and amortization expense was $28.6 million in 2013 versus $30.7 million in 2012 and payments on our restructuring reserves were approximately $1.1 million in the 2013 fourth quarter versus $1.9 million in the 2012 quarter. Full year payments amounted to $4.8 million in 2013 versus $4.7 million in 2012.

Our balance sheet remains strong. At December 31, 2013, we have cash and cash equivalents totaled $45.8 million, compared to $120.1 million at the end of September. The decrease in cash and cash equivalents was primarily related to the special dividend that was paid in November totaling $50.8 million and the fourth quarter free cash outflow. Our total debt at the end of December was $11.7 million, with a debt-to-capital ratio of 3.2%.

Now I'll cover guidance for the full year and first quarter of 2014, which reflects our best estimates based on information available at this time.

Marketing & Events Group full year revenue is expected to increase at a high-single digit rate from 2013, primarily as a result of positive show rotation of approximately $55 million, same-show growth and new business wins, partially offset by the loss of CES as we have previously discussed.

U.S. base same-show revenue is expected to increase at a low- to mid-single-digit rate.

Marketing & Events Group segment operating margins are expected to reach approximately 4%, driven primarily by higher revenue and continued focus on margin improvement initiatives.

Travel & Recreation Group full year revenues is expected to decrease by 10% to 12% from 2013, driven primarily by the termination of our concession contract at Glacier National Park, partially offset by the grand opening of the Glacier Skywalk attraction in May 2014 and organic growth.

Travel & Recreation Group operating margins are expected to approximate 21% to 22%, up from 20.2% in 2003, and 19.5% in 2012. I think, I said '03, I meant 2013, excuse me.

I'll also provide some additional guidance regarding the Glacier Skywalk and Glacier National Park concession contract to help you better understand the effects, these 2 items will have on our year-over-year results. We anticipate the Glacier Skywalk will generate annual revenue in the range of $4.5 million to $5 million in its inaugural year, with operating margins up more than 50%.

The Skywalk will be opened seasonally from May through September with the peak season being July and August. As it relates to Glacier Park, we're expecting a full year revenue decline of approximately $19 million, driven by the expiration of the concession contract, partially offset by continued organic growth at our remaining 5 properties. Most of this revenue impact will be felt in the third quarter, with about $3 million hitting the second quarter. We expect to see a related reduction in full year operating income at Glacier Park in the range of $3.5 million to $4 million.

Because of the seasonal nature of the concession operations, we expect Glacier Park's third quarter operating income to be about $6 million lower than 2013, as this is when the concession properties run at full capacity. We will then see favorable operating results during the first, second and fourth quarters, primarily as a result of reduced overhead expenses and lower cost related to the opening and closing of the seasonal properties.

I'll make just one more quick comment on the Travel & Recreation Group. Beginning with our 2014 financial reporting, the historical results of the Glacier National Park concession operations will be classified as discontinued operations. As today's earnings announcement is focused on 2013 results, all figures provided on the call today and in our earnings press release, include the concession operations as continuing operations.

Corporate activities expense is expected to be approximately $9.5 million. Our full year cash flow from operations is expected to be between $60 million and $65 million. We expect full year capital expenditures of approximately $30 million to $35 million. Capital expenditures for our Travel & Recreation Group are expected to approximate $14 million to $16 million, as compared to $23.1 million in 2013. The decrease is primarily due to the completion of the Glacier Skywalk in 2013, partially offset by some planned refresh projects at Brewster.

Capital exposures for our Marketing & Events group are expected to approximate $16 million to $19 million, as compared to $12.6 million in 2013. The increase is primarily related to a higher level of growth capital as we increase our levels of investments in innovative event products that are in demand by our customers.

Depreciation and amortization expense is expected to be between $29 million and $31 million. For the first quarter, we expect Viad's income before other items per share to be in the range of $0.28 to $0.38, as compared to the 2013 first quarter income before other items of $0.42 per share. Revenue is expected to be in the range of $269 million to $286 million, as compared to $285.2 million in the 2013 quarter.

We expect segment operating income in the range of $10.5 million to $13.5 million, as compared to income of $12.8 million in the 2013 quarter.

Additional details regarding our 2014 outlook can be found in the earnings press release.

And back to you, Paul.

Paul B. Dykstra

Thanks, Ellen. Now I'd like to provide a brief update on our strategic review. On January 24, we announced the declaration of a special dividend in the amount of $1.50 per share, or approximately $30.5 million in the aggregate. This dividend is payable on February 14. This dividend follows a previous special dividend declared and paid in the 2013 fourth quarter in the amount of $2.50 per share.

As part of our strategic review process and enhancing shareholder value, the company will have returned $4 per share in cash to shareholders in the form of special dividends for a total return of capital of approximately $81.3 million during a 3-month period.

In addition, we continue to work diligently with our advisors and our Board of Directors to evaluate additional options to enhance shareholder values. We have been moving very carefully and thoughtfully through this process because we owe that to our employees, customers and shareholders. And we've been listening closely to feedback from our shareholders.

As much as I wish, I could provide a specific date to share our conclusions, I am not in a position to do so right now. With that said, I believe we are close to concluding the review and we will report back to you as soon as we can.

As Ellen indicated in her comments, looking ahead into 2014 for the Marketing & Events business, we expect continued growth fueled by higher revenue and margins driven by positive show rotation and new wins, both domestically and internationally.

That said, the loss of CES will affect first quarter 2014 financial results. We expect that with the combination of positive show rotation and new business, the operating margin for the Marketing & Events Group will reach our 2014 goal of 4%.

In the Travel & Recreation Group, we expect that revenue will be down because of the loss of the Glacier Park concession contract with the U.S. Park Service, but we expect that to be partially offset by the Glacier Skywalk coming online and our expectation of continued organic growth. We also expect higher operating margins in the range of 21% to 22%.

In closing, 2013 was a challenging but successful year and we're positioned for solid growth in 2014. We continue to generate new business, operate our businesses more efficiently and expect to generate consistent growth. Our team is excited and prepared to meet our commitments.

With that, let's open it up for questions. Mary Ann, if you can open up the lines, please?

Question-and-Answer Session


[Operator Instructions] Our first question comes from Luisa Lau of Singular Research.

Luisa Lau - Singular Research

Could you provide a little more specific detail in terms of the $0.02 unfavorable tax item that was reported in the 4Q? Then also, any guidance in terms of the modestly higher anticipated tax rate for 2014? And then, I have a question for Paul.

Ellen M. Ingersoll

Sure. The $0.02 was kind of a combination of 2 things. We had some reversal of our VA allowance, primarily related to the VA -- valuation allowance that we took last year at the end of the year. That was part of it. And then offsetting that to some extent, were some tax adjustments in the fourth quarter that we made, just related to our year end audit. And as far as the higher tax rate in 2014, we do expect more of a U.S -- more U.S. income in the mix versus Canadian, so that increases the tax rate a little bit.

Luisa Lau - Singular Research

And Paul, any more insight in terms of the leadership going forward for the T&R segment? I understand you're currently running it. Is that something that basically will be on hold until the strategic review is complete?

Paul B. Dykstra

We have very capable leaders with Dave McKenna running Brewster, and Cynthia Ognjanov, handling our U.S. Park's GPI and Alaska Denali Travel. So we have very solid leadership there, and we expect to continue on with our growth platform.

Luisa Lau - Singular Research

And what about weather conditions, so far, in 2014? Certain parts of the country have certainly experienced some extreme weather. Have you seen any sort of adverse or perhaps even positive impact from it at all?

Paul B. Dykstra

Yes. I think the extreme weather has been fortunately more in the Northeast and, well, less in Northwest, where we operate. So we have Grouse Mountain Lodge in Whitefish, Montana. I think weather conditions there have been pretty reasonable. Certainly up in Banff, the weather goes up and down. Our Gondola closes in January for a couple of weeks for our annual maintenance, so it's less of an impact from what we would normally see. But I think overall, I think the weather has been fine.


The next question comes from Steve Altebrando of Sidoti & Company.

Stephen Altebrando - Sidoti & Company, LLC

How do you guys foresee the Skywalk ramping up over -- something that'll take several years?

Paul B. Dykstra

No. We think we're positioned well to get off to a very good start in 2014. We did van tours that had a lot of the press and the tour groups in to, to see the Skywalk at the end of '13. So although, we didn't generate any revenue, we were able to definitely begin marketing the product and selling the product. So we're expecting a good year. I think, Ellen's comments mentioned $4.5 million to $5 million of revenue, and then expect to grow from there. So we're very, very excited about getting that online.

Stephen Altebrando - Sidoti & Company, LLC

And then, in the -- in GES segment, the 4% operating margin, is that -- do you view that more as guidance? Or as a target?

Paul B. Dykstra

That's our absolute target that we are shooting for in 2014. Again, we have the benefit of some positive show rotation, which will help our revenue, but also benefiting from our ongoing process to maximize our service delivery network and to continue on the labor initiatives that we've had. So it's a combination of both.

Stephen Altebrando - Sidoti & Company, LLC

And then in terms of the Glacier Park concessionaire gain, is there any -- can you provide any color on the tax implications of the gain?

Ellen M. Ingersoll

And you're talking about on the possessory interest?

Stephen Altebrando - Sidoti & Company, LLC

Exactly, yes.

Ellen M. Ingersoll

Right. The possessory interest will be offset by any tax basis that we have on the books for the in-park assets, and then taxed at our normal U.S. tax rate.

Stephen Altebrando - Sidoti & Company, LLC

Is there a meaningful cost basis on that asset?

Ellen M. Ingersoll

No. It's not significant.


[Operator Instructions] There are no other questions.

Paul B. Dykstra

Okay, thank you. I was jumping in there, too. As always, we appreciate your continued interest in Viad, and we are as dedicated as ever to growing our business, profits and enhancing shareholder value. Thanks, again, for being with us today, and we look forward to talking with you again at the conclusion of the current quarter. Thank you.


This does conclude today's conference call. You may disconnect your phones at this time.

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