Carrie Long – Executive Director-Finance and Investor Relations Steve Moster – President and Chief Executive Officer Ellen Ingersoll – Chief Financial Officer.

Ian Corydon – B. Riley Michael Conti – Sidoti Marco Rodriguez – Stonegate Capital Markets.

Welcome to the Viad Corp Third Quarter Earnings Conference Call. At this time, all lines are in listen-only mode. This call is being recorded. If you have objections you may disconnect at this time. We will conduct a question-and-answer session at the end of today’s call.

[Operator Instructions] I would now like to introduce your host Carrie Long, Executive Director of Finance and Investor Relations. You may begin..

Thank you and good afternoon all of you on the call. Thank you for joining us for our third quarter earnings conference call. During the call, you will hear from Steve Moster, Viad’s President and CEO; and Ellen Ingersoll, our CFO. 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 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. We’ll also be referring to certain non-GAAP measures during the call today.

Important information regarding these measures can be found in Table 2 of our earnings press release, which is available on the Viad’s website at www.viad.com. Now, I’ll turn it over to Steve..

Discover Pandora. And it sets a premier in Taipei, Taiwan in December with additional global markets to follow. This exhibition is a state-of-the-art interactive attraction that is inspired by and filled with the extraordinary creatures, breathe taking environments and inspirational cultures of the James Cameron film.

As we drive growth in higher margin areas like AV, event technology, corporate events and consumer events, we continue to review the probability of our existing client base to ensure our resources are focused on the most profitable opportunities.

Accordingly, we made a decision to seek a meaningful price increase on a $20 million revenue contract renewal for 2017. That would bring pricing on that contract more inline with the market.

While this was a difficult decision that ultimately resulted in the loss of that business, it was absolutely the right decision for us given the low profitability of that contract and the amount of GES resources it consumed.

Despite the loss of revenue, we expect this decision to result in improved profitability for GES as we continue to reallocate resources to higher margin growth areas.

Overall, I'm happy with the progress we're making to drive stronger margins, pursue new growth opportunities and position GES as the preferred global full service provider for live events.

Now let me switch gears to our Travel and Recreation Group, the Travel and Recreation team delivered an outstanding quarter that’s far surpassed our expectations with a revenue increase of about 45% versus the prior year quarter.

Importantly, the revenue growth came from our higher margin attractions in hospitality assets resulting in flow through of nearly 50% to the operating income line.

Our first quarter acquisitions, which include two attractions and three hospitality assets in and around the national parts of Jasper, Kenai Fjords and Denali were significant contributors to this year-over-year growth. These acquisitions outperformed our expectations posting revenue of $23.4 million with an EBITDA margin of 54%.

We also benefited from very strong peak season visitation to our markets and successful revenue management initiatives resulting in organic revenue growth of 10.4% versus the prior year quarter. Same-store RevPAR for our hospitality properties grew by 11.2% versus 2015 with increases across every property.

Overall same-store occupancy for the quarter increased to 94.2% versus 90.9% in the prior year quarter and we realized a 7.3% growth in ADR. At our attractions same-store passenger accounts were up 14.4% in total year-over-year.

Every attraction posted strong double-digit growth in passengers, but the Glacier Skywalk is a standout revenue management success story. We introduced a new combo ticket that pairs the Skywalk with our highly popular Glacier Adventure tour.

This pairing of two adjacent attractions helped drive a 27% year-over-year increase in visitors to the Skywalk and substantial growth in overall attractions revenue. I’m also happy to report that the renovation work at our leading attraction the Banff Gondola is now complete and the results are fantastic.

We opened the upgraded mountain top dining retail and interpretive experiences in phases during August and September and we're receiving very positive feedback from our visitors. We realized strong year-over-year growth in passengers of about 11% versus the prior year quarter and revenue was up nearly as much.

Despite having limited service during the renovation work. I'm confident that our investment to upgrade the Gondola experience will deliver strong returns for years to come. And now I’ll turn it over to Ellen to provide some more color on our financials.

Ellen?.

Thanks Steve. As Steve mentioned earlier we delivered another quarter of strong earnings that came in significantly higher than prior guidance. Our income before other items was $1.74 per share and revenue of $382.5 million and adjusted segment operating income is $59.4 million.

As a reminder by definition, our income before other items excludes restructuring and impairment charges, as well acquisition transaction related and integration costs. And adjusted segment operating income excludes acquisition and integration costs.

A reconciliation of income before other items and adjusted segment operating income to net income can be found in table two of the earnings press release.

As compared to the 2015 third quarter, our income before other items increased by $1.35 per share, primarily due to an increase in adjusted segment operating income at both business groups partially offset by an increase in corporate expenses driven largely by higher performance based incentives.

Consolidated adjusted segment operating income increased $44.6 million on a revenue increase of $126.5 million or 49.4%. Now moving on to business group results. GES’s third quarter revenue was $287 million up $98.1 million or 52% from the 2015 quarter. Revenue from the U.S.

segment increased 56.8% or $84.2 million, primarily due to approximately $67 million from positive show rotation, $7.8 million from the ON Services acquisitions, new business wins and continued base same show growth.

Revenue from the International segment grew 35.8% or $16.1 million, primarily due to approximately $18 million from positive show rotations, new business wins and same-store growth partially offset by a reduction of $8 million due to currency translations.

GES’s third quarter adjusted segment operating income was $15.3 million up $29.8 million through 2015 third quarter. As expected, we realized flow through of about 30% on GES’s third quarter revenue growth. U.S.

adjusted segment operating income increased $23.6 million and international adjusted segment operating income increased $6.2 million, primarily due to higher revenue and strong operating leverage.

The Travel & Recreation Group posted stronger than expected third quarter results, revenue was $97.4 million, up 45.2% or $30.3 million from the prior year quarter. And adjusted segment operating income of $44.2 million, up $14.8 million or 50.5%.

The acquisitions of CATC and Maligne Lake Tours contributed revenue of $23.4 million and adjusted segment operating income of $10.3 million during the quarter, which exceeded our expectations.

On a organic basis, which excludes the impact of the acquisitions and slightly unfavorable exchange rate variances, revenue increased 10.4% or $7 million and adjusted segment operating income increased $4.6 million, compared to the prior year quarter.

As Steve mentioned earlier, we experienced very strong growth across our high margin attractions and hospitality assets, which realized organic revenue growth of 17.1% and 14.6% respectively, driven by both price and volume increases.

This strong growth was partially offset by $1 million decline in transportation revenue, resulting from our efforts to strategically downsize that lower margin line of business. Now I'll cover some cash flow and balance sheet items before discussing guidance.

GES [ph] consolidated cash flow from operations was $61 million for the quarter, up from $38.3 million in the 2015 quarter, primarily due to higher net income. Capital expenditures totaled $12 million including approximately $6 million for Gondola renovations.

At September 30, our cash and cash equivalents totaled $52.7 million, debt was $196 million and our debt to capital ratio was 34%. Now moving on to guidance. Given the stronger than expected third quarter performance of our Travel & Recreation Group in a leasing acquisition of ON Services, we have increased our full year outlook.

We now expect full-year consolidated adjusted segment EBITDA to be in the range of $129 million to $132 million, as compared to our prior guidance of $129 million to $126 million. Consolidated adjusted segment operating income is expected to be in the range of $86.5 million to $89.5 million.

The midpoint of this range reflects growth of nearly 60% relative to 2015. Revenue is expected to approximate $1.2 billion, reflecting a year-over-year increase of about 10%. And full-year income per share, before other items, is expected to be in the range of $2.29 to $2.39, as compared to $1.46 in 2015.

Viad’s full-year cash flow from operations is expected to be in the range of $90 million to $100 million. And capital expenditures are expected to be about $45 million to $49 million. For GES we now expect full-year adjusted segment EBITDA to be in range of $79.5 million to $81.5 million, versus our prior guidance of $76 million to $79 million.

This guidance reflects the expectation that ON Services will contribute adjusted EBITDA of $3.5 million to $4.5 million.We’ve also tightened the range on the high end to better reflect our current sales pipeline for the fourth quarter.

As compared to 2015, GES’ fiscal year revenue is expected to increase by approximately $72 million to $82 million, which is up high-single digits from 2015. And adjusted segment operating in income for GES is expected to increase by about $22 million to $24 million.

This assumes positive show rotation of about $50 million and continued underlying growth at GES. And a revenue contribution of $20 million to $22 million from the acquisitions of ON Services, partially offset by unfavorable currency translation of approximately $25 million.

The Travel & Recreation Group we now expect full-year adjusted segment EBITDA to be in the range of $49.5 million to $50.5 million, versus our prior guidance of $44 million to $47 million. As compared to 2015, we expect Travel & Rec.

Group revenue to grow by 35% to 37%, from $112.2 million in 2015, versus our prior guidance for an increase of 30% to 32%. This reflects a revenue increase of about $39 million to $41 million. Adjusted segment operating income for the Travel & Recreation Group is expected to increase by about $9 million to $10 million.

This assumed a revenue contribution of $34 million to $35 million from the acquisitions of CATC and Maligne Lake Tours, strong tourism demand in revenue management, partially offset by a revenue reduction of about $3 million from the streamlining of Brewster's transportation line of business.

For the fourth quarter we’re expecting our loss before other items in the range of $0.19 to $0.9 per share, as compared to income of $0.01 per share in the 2015 quarter.

The decline primarily reflects a higher seasonal operating loss from Travel & Recreation Group and increased interest expense from additional debt incurred to find acquisitions during 2016.

GES’ fourth quarter revenue and operating results are expected to be relatively in line with the prior year quarter as continued underlying business growth and the acquisition of ON Services, help to offset the expected impact of negative show rotation of about $15 million and unfavorable currency translation of about $10 million.

Travel & Recreation Group’s fourth quarter revenue is expected to increase by about $1 million to $3 million, compared to the fourth quarter 2015, primarily due to the Banff Gondola being fully re-opened.

We are expecting a higher seasonal operating loss as compared to last year primarily due to the acquisitions of Maligne Lake Tours and CATC, which are seasonally closed during the fourth quarter, as well as the timing of certain expenses and higher performance-based incentives. Additional 2016 guidance can be found in the earnings press release.

And Steve, back to you..

Thanks, Ellen. In closing, we are on pace to deliver strong results for 2016 and excited about the momentum that we have on both sides of our business.

Our strategy to firmly position GES as the preferred global full service provider for live events and to more than double the size of our Travel & Recreation business is driving profitable growth, strong returns and increased shareholder value.

I want to thank the entire Viad team for all the effort that's gone into delivering strong financial results this year. Well, also driving meaningful progress against our strategic growth initiatives.

I'm proud of the team for embracing change enthusiastically pursuing profitable growth opportunities and continuing to elevate the experiences that we provide for our clients and guests. And with that, we will open the call up for questions.

Danica, can you open up the call please?.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] We have our first question from Ian Corydon of B. Riley. Your line is open..

Thank you. Couple of questions.

The guidance for mid single-digit sales growth in M&E and the revenue guidance there does that imply a significant increase and same-show revenue in the quarter versus what you have the last couple of quarters or am I reading that wrong?.

No. Our same-show growth for the quarter was about 3% and we believe that it's going forward for the full year would be mid single-digits..

Okay.

So Q4 not a significant increase from that 3% you had in the third quarter?.

No. We think it'll be similar in line with the 3%..

Okay. And the $20 million contract that you lost.

When is that – when was that event scheduled to occur what quarter?.

It was actually, Ian it was a portfolio of events, was a client that had multiple events and it's one that we worked with for quite a long time. The agreement that we had with them ended in 2016 and so it impacts us going into 2017..

But no one particular quarter or more throughout the year?.

No. No one particular quarter there are again there was a portfolio of multiple events in such spread out throughout the year..

Okay. And this may be in the press release. But Ellen do you have the dollar effect impact on Travel & Rec in the quarter..

During the third quarter or for the fourth quarter?.

During the third quarter..

Yes, just one sec. Very minimal. It’s the thing on the table it’s about $45,000 on operating income. And then about $60,000 on revenue, $45,000 on operating income for Travel & Rec..

Great. And then the last question is on the Gondola.

Steve did I hear right that attendance was up double-digits, despite the closure and renovation activity?.

Correct. During the third quarter it was up about 11% from the quarter-over-quarter. And that was even while we have construction going on. We’d say we open in August and September. So it performed well despite the construction that was happening..

Okay. And I'm not sure how you think about it – but how should we think about the available capacity of the Gondola. So what you know the upside in the future could be and then do you get the opportunity to raise price given all the work you've done there..

Yes. So first off on capacity. We believed that we can do two things. One, we believe that there are areas where we can increase the capacity meeting, broad meeting or it’s lengthening the time that people spend at the attraction. So we can extend the hours of operation beyond where they are today.

We also believe that given the new experience that we have at the effort terminal that we can command a higher effective ticket price as well as garner stronger food & beverage and retail sales out of that operation..

Great, that's all I have thank you..

Yes. Thanks again..

Thank you. Our next question is from Michael Conti of Sidoti. Your line is open..

Yes. Thank you for the call and a great quarter. Actually calling in for in Steve. It’s Michael from Sidoti here.

In questions around how we should think about the margin profile the GS business going into a negative show rotation for 2017 and how some of the recent acquisitions can help this, and as a policy that if you can talk about the integration process with the recent acquisitions that would be great..

Sure. And we’ll give more guidance about 2017 when we talk about our full year earnings which will be in early next year. But I will say that next year we – our non-annual schedule or the non-shows, we will take a step down from where we were in 2016. We do have one of our largest events in 2017 which did not occur in 2016.

So there's a little bit of a step down but as you alluded to – the growth of some of our acquisitions both the ones we did in 2014 as well as what we just completed with ON Services. We believe that that can offset – partially offset the revenue decline from that an non-annual show perspective.

And then to your follow-on was to talk a little bit about the integration. So we've acquired ON Services on August 11, and it's been good an integration so far, we're finding lots of opportunities from across selling perspective as well as on operational opportunities that we have.

So we feel strong about the acquisition and we think there's a lot of – it allows us to play in a large market which is I alluded to earlier in my notes which is a $2 billion U.S. AV business. And so we're very confident that the integration is going well and it provides new opportunities for us..

Great. Thank you..

Yes. Thanks, Michael..

Thank you. [Operator Instructions] Our next question is from Marco Rodriguez of Stonegate Capital Markets. Your line is open..

Good afternoon. Thank you for taking my questions..

Hi, Marc..

Hi. I was wondering if you could maybe talk a little bit about the M&A landscape out there, the acquisition targets you might be taking a look at. Has the number been increasing and decreasing? And then also if you can maybe talk a little bit about the trends and the valuations you might be seeing..

Sure. I'll first start by saying we have activity acquisition pipelines for both businesses. I’m encouraged by the strength of the pipeline. We have the opportunity to choose the deals that fit right for us from a strategy perspective as well as from an economic perspective. So I see healthy pipeline on both sides of the business.

From a multiple’s perspective, the deals really depend on where they are and whether they're open or exclusive, meaning, if there's multiple bidders, you obviously tend to see things going for a higher multiple or slight premium.

There are opportunities like we did earlier in 2016 where we picked up a couple acquisitions for our Travel & Recreation business where we actually ended up paying below our stated multiple range.

So there are opportunities out there and we continue to look for high quality asset that we believe that we can grow in the future that’s fit into our portfolio and into our culture and that drives long-term shareholder value..

Got it. And on the GES side, can you maybe talk a little bit about the competitive environment you’re seeing out there? And I think there's a prior question regard to maybe pricing, but it’s on the T&R side.

Can you just talk about pricing and your ability to maybe add some additional increase from the pricing side on GES?.

Yes. We see the pricing I would say is stable in our core services, the general service contracting portion of GES. So that's a pretty stable pricing landscape. We do see opportunities to grow the business, specifically to GES deals that we've gotten into.

So market, the story that we've told before is our ability to leverage the strong client relationships and market share that we have by selling these new services into that customer base like audio-visual with ON Services or like the registration platform that will launch later in the quarter in the U.S. markets.

So I would say our growth prospects going forward, are more around capturing more share of wallet than they are from a pricing perspective. I do you think pricing is stable and I think it will continue to kind of go up like it hasn’t been in prior years..

Got it. Thanks a lot. I appreciate your time guys..

Thanks, Marco..

Thank you. [Operator Instructions] There are no more questions as of this time..

Thanks, Danica. Okay, thanks for your question and your interest in Viad. We look forward to speaking with you again next quarter and go cups..

That concludes today's conference. Thank you for your participation. You may now disconnect..