Viad Corp (VVI) 2011 Q4 法說會逐字稿

Good morning and thank you all for holding.

At this time I would like to inform all parties that your lines will be on a listen-only mode until the question-and-answer segment of today's call.

(Operator Instructions)

I would now like to turn the call over to Melinda Keels, Director, Investor Relations for Viad Corp.

Ma'am, you may begin.

Good morning and thank you for attending our 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 Tables 1 and 2 in the press release.

Our press release is available on our website at www.Viad.com.

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 our Marketing and Events Group, and Michael Hannan, President of our Travel and Recreation Group, will be available for comment during the question and answer session at the end of the call.

And now I will turn it over to Ellen Ingersoll to discuss financial results.

Good morning everyone.

Thank you for being with us today.

As I cover our fourth-quarter and full-year results you may want to refer to Tables 1 and 2 of our earnings press release.

Viad's fourth-quarter loss before other items was $0.27 per share as compared to a loss before other items of $0.20 per share during the 2010 fourth quarter and in line with our prior guidance.

By definition, income before other items excludes restructuring charges of $0.08 per share related to lease facility consolidations and optimization of the Marketing & Events Group's US service delivery network.

A reconciliation of income before other items to income from continuing operations can be found in Table 2 of our earnings press release.

Viad's revenues for the fourth quarter improved by $10.4 million or 5.6% from 2010 fourth-quarter revenues of $187 million.

Our fourth-quarter segment operating loss was $7.2 million.

For the full-year, income before other items was $0.55 per share up $0.36 per share from 2010.

Full-year income before other items excludes restructuring charges of $0.12 per share primarily related to lease facility consolidations and the optimization of the Marketing & Events Group's US service delivery network.

Full-year revenues were $942.4 million up $97.6 million or 11.6% from 2010.

Our full-year segment operating income was $25.4 million up $10.6 million or 72% over 2010.

Now let me discuss results for the Marketing & Events Group.

Our Marketing & Events Group's fourth quarter met our prior guidance with an operating loss of $3.2 million on revenues of $189.8 million.

Full-year revenues were $840.6 million up $84.1 million or 11.1% over 2010.

And full-year segment operating results $10.3 million to income of $5.2 million.

The Marketing & Events Group's US segments fourth-quarter revenue was $132.7 million up $687,000 from the 2010 quarter, reflecting base same-show revenue growth of 11.8% and greater exhibitor spending partially offset by lower retail holiday decor revenues and negative share rotation of $4 million.

Base same-shows represented 28.2% of fourth-quarter Marketing & Events US revenue.

As a reminder base same-shows occur in the same quarter and same city each year.

The US fourth-quarter segment operating loss was $7.3 million versus a loss of $3.3 million in the 2010 quarter.

The lower operating results on relatively flat revenues is primarily related to higher accruals for performance-based incentives and a shift in business mix from higher margins, custom holiday installations to lower margin venue-services business.

In addition we incurred approximately $800,000 related to facility move cost in the Chicago and San Francisco markets during the 2011 quarter.

For the full-year US segment revenue increased $60.4 million or 10.6% to $631.4 million, primarily reflecting increased exhibitor spending, new business wins and positive share rotation of approximately $11 million.

Full-year base same-show revenue grew 11.2% and represented 36.6% of US segment revenues in 2011.

US segment full-year operating results improved by $8.9 million to a loss of $6.3 million, reflecting higher revenues, partially offset by higher accruals for performance-based incentives.

Fourth quarter International segment revenue increased $6 million or 11.2% to $59.2 million and operating income increased $1.2 million or 39.5% to $4.1 million from the 2010 quarter.

The improved revenues primarily reflect growth from new business wins.

Foreign exchange rate variances did not have a material impact on revenue or operating income versus the 2010 quarter.

Full-year International segment revenue increased $20.9 million or 10.5% to $218.6 million.

Foreign exchange rate variances favorably impacted revenue by approximately $9.8 million.

Excluding exchange rate variances, International segment revenues increased $11.1 million or 5.6%.

The increase in revenues was primarily due to positive share rotation of approximately $4 million, new show wins and same-show growth which more than offset 2010 first-quarter revenues from a major project for the 2010 Winter Olympic and Paralympic Games in Canada.

International segment operating income increased $1.4 million to $11.4 million.

Foreign-exchange rate variances favorably impacted operating income by approximately $379,000 versus 2010.

Excluding exchange rate variances, International segment operating income improved $982,000 from 2010.

This improvement reflects higher revenues partially offset by higher compensation expenses, including merit increases and the reinstatement of full wages after a temporary reduction in 2010.

Now, I will cover results for the Travel & Recreation Group before moving on to cash flows and the balance sheet.

The Travel & Recreation Group's operating results were in line with our prior guidance for the seasonally slow fourth quarter with $7.6 million in revenue and an operating loss of $4 million.

Foreign exchange rate variances did not significantly impact 2011 fourth quarter revenues or operating income.

For the full year, Travel & Recreation Group revenues were $101.8 million, up $13.5 million or 15.3% from 2010.

Operating income was $20.2 million, up $311,000 from 2010.

Foreign exchange rate variances favorably impacted full-year revenue by approximately $4.3 million and operating income by approximately $1.3 million versus 2010.

Excluding foreign exchange rate variances, the full-year revenue increase was $9.2 million or 10.5% due to the additions of St.

Mary Lodge and Resort and Grouse Mountain Lodge as well as organic revenue growth at Brewster.

All of Brewster's lines of business realized growth with the exception of its transportation business which had higher revenue in 2010 resulting from charter contracts related to the Winter Olympic and Paralympic Games.

Excluding foreign exchange rate variances, segment operating income decreased $1 million primarily due to lower revenues at Many Glacier Hotel, half of which was under renovation during the 2011 season, lower visitation to Glacier National Park during July and August and the seasonal fourth quarter operating loss at Denali Backcountry Lodge and Denali Cabins.

Now, I will cover some cash flow and balance sheet items before turning the call over to Paul.

Fourth quarter free cash flow with an outflow of $5.4 million in 2001 versus an outflow of $8.2 million in 2010.

For the full year, free cash flow was positive $10 million versus $23 million in 2010.

The decrease in full-year free cash flow was driven primarily by changes in working capital and increased capital expenditures versus 2010.

Capital expenditures were $4.3 million in the fourth quarter versus $5.4 million in the 2010 quarter.

Fourth quarter depreciation and amortization expense was $7.2 million in 2011 versus $6.9 million in 2010.

Payments on our restructuring reserves were approximately $850,000 for the quarter versus $526,000 in the 2010 quarter.

Our balance sheet remains strong.

At December 31, 2011, we have cash and cash equivalents totaled $100.4 million.

And our total debt at the end of the year was $3.2 million with a debt-to-capital ratio of 0.8%.

Now I will turn the call over to Paul.

Thanks Ellen, and good morning everyone and thank you for being with us.

2011 was a year of growth for Viad, and as Ellen mentioned, we realized significant income per share growth and all of our business segments achieved double-digit revenue growth.

The Marketing & Events Group returned to profitability with a $10 million improvement in operating results.

Our Travel & Rec Group's revenues topped $100 million with strong operating margins despite a slow start due to inclement weather and late opening of the Going-to-the-Sun Road at Glacier Park.

2011 revenue increases were the result of the acquisition of great properties and organic growth driven by strong sales and marketing programs.

I'd like to recognize and thank Viad's talented and dedicated employees for their great efforts and contributions throughout the year.

Our ability to work as one team to deliver enhanced value and service to our customers is key to our success.

Our Marketing & Events Group made great strides in 2011 with increased revenues and profits.

I am happy to report that our US segment posted base same-show revenue growth of 11.8% in the fourth quarter which is the sixth consecutive growth - quarter of growth and our full-year US-base same-show growth was 11.2%.

In addition the realignment of our US sales force enabled us to capture additional exhibitor spend and new business throughout the year.

We continue to evaluate the way we deliver our services throughout the US to identify and then execute actions that will improve our cost structure, reduce invested capital and enhance service levels for our customers.

During 2011, we consolidated several overlapping facilities.

The largest of these consolidations was in Chicago.

This project was started in the fourth quarter and recently completed and we now have all of our Chicago-based operations in one high-efficiency facility.

At GES we create unique and innovative experiences that result in engaging events that drive greater show attendance and increased exhibitor satisfaction.

We continue to leverage our outstanding creative and brand marketing capabilities to offer value-added services that have set - set us apart from the competition.

In 2011, GES launched its (dual) online exhibit planning, ordering and management tool called Expresso.

The new tool makes it easy for exhibitors to order products and services, view show information, track their order history, and download important show dates to their electronic calendar, all from a single site.

The application is designed to be a one-stop shop that is easy to navigate on all browsers including tablet computers such as iPads.

Expresso continues to receive great reviews from show organizers and exhibitors alike.

Show organizers like the fact that the Expresso tool can be customized to match their show's look and feel making the online ordering site seem like an extension of their show's website.

The result is a virtually seamless experience that exhibitors value for its ease and efficiency.

Since launching Expresso last fall, more than 550 GES shows have used the Expresso tool.

Our compelling value proposition and focus on the customer is translating into new business wins.

During the fourth quarter, GES signed a multi-year contract with the American Wind Energy Association to produce its annual show, Wind Power, which was previously produced by a major competitor.

We won the show based on our design capabilities, distinguished account team and the breadth of our comprehensive exhibitor services supported by Expresso and the GES National Service Center.

In total, the US segment signed approximately $120 million in new and renewal trade show contracts during the quarter, including the Association of Equipment Manufacturers triennial show, CONEXPO-CON/AGG and IFPE 2014.

GES won the renewal based on its success producing AEM's previous shows and GES' high level of services before, during and after show execution.

We are honored that AEM has selected us to once again produce the largest US trade show.

During the quarter, GES won Neutrogena's North American dermatology exhibit program.

We won the business due to our understanding of Neutrogena's brand and our ability to translate the Neutrogena brand into a compelling experience on the tradeshow floor.

Moving forward GES, will create an integrated exhibit program including booth design and fabrication and marketing campaigns for all of the North American industry shows Neutrogena attends.

Other notable wins throughout the year included the World Trade Center marketing center project and Dells Field Readiness seminar.

In addition Bell Helicopter's international division awarded all of its international programs and shows to GES.

On past calls we have talked about the strength of GES' creative, design, show site and call center capabilities and during 2011 we were recognized by several prestigious groups including Exhibitor Magazine, Event Marketer Magazine, the Promotion Marketing Association, Ad Age and the Exhibit Designers and Producers Association.

In addition, GES's National Service Center was recognized for call center customer satisfaction excellence for our fourth consecutive year under the JD Power and Associates call center certification program.

During 2011 we extended our branded entertainment offerings into new international markets.

Harry Potter, The Exhibition opened in Sydney, Australia at the Powerhouse Museum on November 19 which marks GES's first touring exhibition in the Asia-Pacific market.

This was then followed by the Asian debut of the Chronicles of Narnia, the Exhibition at the Marina Bay Sands in Singapore.

Our Marketing & Events Group, International segment, also had success during the year leveraging our leading market positions and the strength of our worldwide network to win new business in the Middle East, Asia, the United Kingdom, Germany, and Canada.

During the fourth quarter, Melville Middle East won a contract with Informa Exhibitions to produce 14 UAE-based shows in 2012, including Power and Water Middle East and Cityscape Abu Dhabi.

This one is significant for Melville Middle East and it reflects the success of our efforts to become the recognized leader in this region.

Informa will join a number of major organizers in the Middle East currently working with Melville including DMG, Clarion, United Business Media, as well as the Abu Dhabi National Exhibition Center.

Melville won World Skills London 2011, which is one of the largest shows it has produced to date and GES Germany won United Business Media's show World Routes Berlin 2011.

GES Canada also won Sibos, the annual banking, operations and technology conference.

Sibos was the largest event ever produced by the GES Canada team.

Additionally our SDD Exhibitions unit represented many large exhibitors at the biennial Paris Air Show which covered more than 3 million square feet of exhibit space.

The show consisted of 2,000 international exhibitors, 140 aircraft and 338,000 visitors.

The Marketing & Events Group had a successful year and I want to thank Steve Moster and the entire Marketing & Events team for their client focus, hard work and dedication.

Moving on to our Travel & Recreation Group, we've got another story of growth.

In 2011, our revenues increased 15% topping $100 million with group operating margins of approximately 20%.

We've been focused on an aggressive growth strategy for our Travel & Recreation Group based on a theme of refresh, build and buy.

And let me give you - let me give some color on what I mean by this.

First we have been actively refreshing many of our assets as well as our marketing, branding and sales activities.

As an example, we refreshed the lower terminal at the Banff Gondola by revamping our ticketing, photography and gift shop.

In addition, we added a Starbucks to enhance the guest experience.

This has helped drive increased passenger volumes and per passenger spend at this attraction.

In late 2011 we began the refreshing of the upper terminal of the Gondola to enhance our guest dining and shopping experience.

Brewster also refreshed its marketing programs for the Alberta regional market.

Brewster partnered with other tourism companies to execute a campaign titled Unplug and Explore with the goal of increasing visitation to the Canadian Rockies and Brewster's properties.

The family-focused campaign successfully boosted regional attendance to Brewster's attractions during the summer as families unplugged from the day-to-day hustle and bustle to explore Banff and Jasper National Parks.

In addition, Brewster refreshed its strategy to capture additional spend from visitors to Banff and Jasper by increasing the number of Explore Rockies centers which are sales kiosks located in Banff at the Calgary airport and at each of Brewster's properties.

These kiosks are designed to provide a high-touch and convenient experience for visitors to discover the area and of course purchase tickets to Brewster's attractions and other services.

The second growth focus is to build new assets to provide rich experiences for our guests.

I will discuss a key build opportunity in a moment.

And finally we have been successful in buying strategic assets in and around national parks in western North America.

In 2011 we acquired two strategic properties near Glacier Park.

The acquisitions of St.

Mary Lodge and Resort and Grouse Mountain Lodge expand our offerings in this high demand market.

The addition of Denali Backcountry Lodge and Denali Cabins, which was our third acquisition during 2011, complements our existing businesses by extending our experiential leisure travel services to include a property in the heart of the Alaska wilderness which is a must-see destination for many travelers from around the world.

The acquired assets combined with our other offerings form an integrated hospitality growth platform for us in the Alaska market.

In summary, the Travel & Recreation Group had a great year achieving double-digit revenue growth while refreshing key assets, integrating three acquisitions and maintaining strong margins.

I want to thank Michael Hannan and the entire Travel & Recreation Team for their outstanding work.

Overall 2011 was a successful year for all of Viad's businesses and we expect 2012 to be another year of strong growth with double-digit revenue increases for our Travel & Recreation Group and substantial profit improvement from our Marketing & Events Group.

With that, let me switch gears and talk a bit about 2012.

The exhibition and event industry continues to improve with the forecasted industry growth rate of about 3% for the US according to the Center for Exhibition Industry Research.

We expect to do better than this as a result of our continued focus on gaining share of the show floor and capturing modest price increases.

The year got off to a great start with the International Consumer Electronics Show.

This show is considered to be a bellwether event for the tradeshow industry and it was exciting to see the show set new records for net square footage, exhibitors and attendees.

For the rest of the year we feel pretty good about our revenue outlook thanks to our long-term show contracts and our new sales success.

The Marketing & Events Group has nearly 60% of it's 2012 planned revenues under contract and our total tradeshow revenue backlog for 2012 and beyond stands at more than $1.2 billion.

We are committed to providing compelling solutions to our clients' needs, to leveraging our network and international presence as one global team and to performing at the highest levels of excellence at all times.

We will continue looking for additional growth and cost savings opportunities in every aspect of the business.

Growth in our Travel & Recreation Group during 2012 will be fueled by the continued focus of our refresh, build and buy strategy.

First, the renovation of Many Glacier Hotel is complete and all rooms and a refreshed dining room will be back online for the 2012 season.

Also, we will be making investments to enhance the guest experience and drive higher volumes by refreshing other key assets.

As I mentioned earlier, we will complete the remodeling of the upper terminal of our Banff Gondola and we will also refresh the Colombia Icefield Centre to drive and enhance guest experience and increase spending at this attraction.

From a build perspective Brewster is currently seeking regulatory approvals to construct an exciting new attraction called the Glacier Discovery Lot which would be located directly off the Icefields Parkway in Jasper National Park adjacent to our Ice Explorer attraction.

The proposed project includes the construction of a 400 meter boardwalk with a 30 meter glass-floored observation platform.

Visitors will be led on a guided tour along the platform's edge to an unprecedented of view of the Athabasca glacier in the Sunwapta Valley.

Subject to regulatory and other approvals Brewster anticipates the construction of the Glacier Discovery Walk could begin sometime this year and if approved the attraction could be open for the 2013 season.

Finally, we continue to have an active acquisition pipeline including some deals that could be completed during 2012.

As I look ahead, I believe we have a lot to look forward to from both our Travel & Recreation Group and Marketing & Events Group.

We're focused on continuing to build scale in our high-margin, high-ROIC Travel & Recreation Group and on maintaining a solid upward trajectory in Marketing & Events Group profits.

And we're steadfast on our ultimate objective of maximizing long-term shareholder value.

Now, I will ask Ellen to provide some more specific guidance for the 2012 full-year and first-quarter.

Ellen?

Thanks Paul.

Our current guidance reflects our best estimates based on information available at this time.

Marketing & Events Group full-year revenues are expected to grow at a single-digit rate compared to 2011.

US same-show revenues are expected to grow at a mid-single digit rate and share rotation is not expected to have a meaningful impact on full-year revenue.

Marketing & Events Group segment operating income is expected to improve by $6 million to $11 million, driven primarily by continued improvements in US segment profitability.

Travel & Recreation Group full-year revenues are expected to increase by approximately 15% versus 2011, reflecting the full-year ownership of Denali Backcountry Lodge and Denali Cabins acquired in September and St.

Mary Lodge and Resort acquired in June, the availability of all rooms at Many Glacier Hotel following construction closures in 2011 and organic growth.

Operating margins are expected to be relatively flat to 2011.

Corporate activity's expense is expected to approximate $8 million.

Our full-year cash flow from operations is expected to approximate $40 million.

We expect full-year capital expenditures of approximately $30 million and this CapEx guidance does not include potential funding for the Glacier Discovery Walk as this project is subject to regulatory and other approvals.

And depreciation and amortization expense is expected to approximate $30 million.

For the first quarter we expect per share results before other items to be in the range of a loss of $0.01 to income of $0.11 as compared to the 2011 first-quarter income before other items of $0.49 per share.

Revenue is expected to be in the range of $250 million to $266 million as compared to $290.1 million in the 2011 quarter.

We expect segment operating income to be in the range of $2 million to $6 million as compared to $17.3 million in the 2011 quarter.

The decreases from 2011 are expected to be driven primarily by negative share rotation of approximately $40 million in revenue and seasonal operating losses at Denali Backcountry Lodge and Denali Cabins and St.

Mary Lodge and Resort, partially offset by expected increases in tradeshow marketing spend including continued same-show growth.

Additional details regarding our 2012 outlook can be found in the earnings press release.

And with that, let's open the call for questions.

[Gabbi] can you open it up for questions, please.

(Operator Instructions) John Healy, Northcoast Research.

Good morning.

Had a couple of questions on the Travel & Rec side to start.

Paul, I think you mentioned that you are going to be refreshing some properties again in 2012.

Will that disrupt any of the operations, in terms of having the full portfolio of rooms or services open to travelers in 2012?

Is there any headwind associated with some of the things you are going to be refreshing?

Really, no, John.

We are doing some work at St.

Mary Lodge, and that's currently closed, and that work will be done in time for the opening of the Lodge.

Similar, we are doing some work at Grouse Mountain Lodge.

That is a year-round property, but we are doing it right now, which is kind of the slow season.

Michael, would you add anything to that?

I think that covers it, Paul.

We don't expect any revenue impacts from close of any rooms this year as we refresh properties.

Okay, great, and then --.

Definitely not like the Many Glacier where we had rooms down for part of the season last year.

Okay, makes sense.

And then on the tradeshow business in the US.

Wanted to get your thoughts on where you think the margins could get potentially once you finish up with the restructuring and you see some more continued growth in the business, where the margins could return to over time?

And really what are the big things behind the scenes that have caused the margins to be lackluster there a bit?

I think -- and I will ask Steve Moster to comment on this, as well.

We have, at one point, enjoyed 6%, 7% operating margins in this business, and certainly that is what we are trying to get back to.

We had a pretty severe decrease in revenue in the '09 timeframe.

And there's been a lot of work done over the last two years to take fixed costs out of the business.

We're continuing to consolidate our facilities.

In my comments, I talked about Chicago, so we have decreased our footprint substantially in the Chicago market.

During the '09 and '10 timeframe, really the compression in margins came from rising labor rates during a time where it was very difficult pricing environment.

We are starting to see that ease now; we've gotten much better results of our labor contracts in 2011, which should be better going forward.

It's still a pretty tough pricing environment out there, but we are seeing that get better as well, and we are achieving some price increases which will -- should help the margins.

Steve, would you comment on that, please?

I would also add to that, the growth that we have seen within the industry within 2011.

We saw far more gainers than detractors for our shows, and 63% of our base shows actually grew in 2011.

In addition to the things that Paul mentioned, I think some of the industry growth that we are experiencing will help us get it back.

I guess, along with the shows, is it an issue that the profitability per show is just not there, or do you have shows that you entered into, what you said multi-year contracts with, that you will lose any substantial amount of money on.

Is the margin spread across the portfolio, or are there big shows that you're not making profit on that you could maybe take out of the portfolio over time?

One of the things we are always doing is looking at our profitability on a show-by-show basis, and an account-by-account basis.

We made a lot of improvements by doing that during the year, and that exercise will continue aggressively in 2012.

It's got to come from a lot of different areas.

Part of the change in margins was the mix that we saw, too, so Braithwaite being our highest margin product was down again in that timeframe.

We are starting to see that come back with square footage.

Some of our new revenue has been coming in other lines of business that are a little bit lower margin.

But we do look at it regularly on an account-by-account basis, and make adjustments, and we will exit business occasionally when it is not profitable.

Got you.

And then a couple of questions on -- I didn't hear it if you said it, but do you have any preliminary view of what CapEx will be for 2012?

And then also on the acquisition front, Paul, I think you mentioned that the pipeline was sort of full, and you are looking at some things.

And was curious to know if they are weighted more towards the Travel & Rec like what you did in 2011, or if you are looking at some things that might make sense in the tradeshow business as well.

Thanks.

Let me comment on the acquisition front, and then I will ask Ellen to comment on CapEx.

On the acquisition front, we do have some things teed up, again, primarily in the Travel and Rec side in and around the national parks that we operate in.

Some exciting opportunities to continue to add scale to a very high-ROIC, high-margin business.

And we are very excited about some of the opportunities that we see.

It's good to have a full pipeline because we know some of them won't come through and others will.

And of course, we've got to have a good cultural fit and a good economic fit, meaning we've got to pay the right price for these things.

On the CapEx side, we do have a little bit higher plan in our CapEx for Travel and Rec.

On the Marketing & Events side, we are continuing to try to reduce our invested capital to improve our ROIC in that business, although we do continue to invest in client-facing technology and things like that.

The opportunity to reduce capital is more in increasing turns of our assets and combining our warehouses and some of those things.

Ellen, do you want to comment?

Sure.

John, CapEx for the year is expected to be about $30 million, and that's split about half GES, half Travel & Rec.

Travel & Rec is quite a bit higher in 2012 than it normally is, but because of the projects that Paul talked about, so the upper terminal project at the Gondola, renovations at St.

Mary's and Grouse; it's about split half and half for '12.

Okay, great.

Thank you.

Thanks, John.

Barry Haimes, Sage Asset Management.

Thank you, had a question relating to Travel & Rec.

Could you describe the cost structure in terms of fixed versus variable?

And what I'm getting at is, as you add more properties to the segment, how much incremental operating leverage do you get because some of your costs presumably are fixed and don't have to ramp up as you add the additional properties.

Any feel for that would be great.

Thank you.

Thanks, Barry, good morning.

Let me try to take a shot at that, and then I'll have either Ellen or Michael comment on that, as well.

As we have added properties -- a little bit depends on where they are.

So, the properties we've added to acquisitions around Glacier Park, that gives us a good opportunity to leverage our laundry facilities, for example, and some other things.

Certainly the Alaska Park properties, physical assets are a little bit more difficult to leverage, but we still have our reservation systems, our sales and marketing programs, the trade shows we attend, and a number of those type things allow us to get good leverage.

These are pretty high-margin types of opportunities that we believe will continue to add to the high-margin high-ROIC business.

Ellen, would you add anything to that?

I would just agree with the high-margin aspect of it.

The more volume we put through, if it's a new attraction or a new hotel, it is very high margin after we have this set up.

Michael, do you want to comment any further on that?

Yes, I think it's true.

The more we can drive incremental revenue, it's very high flow-through.

But we've got an experienced team on the sales marketing side, and we've got a very good sales and marketing machine.

If we can add more product to that as we are attending international trade shows and with some of our international [civic] folks.

To the extent we can drive more volume into a property, that property becomes much more valuable to us than it would be to another owner, and we can make it perform at higher levels.

I'm quite excited about some of the opportunities we have in front of us.

Thanks.

One quick follow-up.

Are reservations centralized, or is that still decentralized?

We have primarily decentralized, and I think that's important because we find you get a much higher conversion rate on the calls when you actually have someone in-market that has knowledge of the destination, whether it's Glacier Park or Banff National Park or Alaska.

And while there is some fail-over capability for weekends and off-hour periods, so we can answer those calls, we really focus on --.

It costs us a lot of money to get those calls to come in from a marketing and sales perspective, and we want to make them as productive as possible with the highest conversion ratio.

Got it.

Makes sense, thank you.

Thanks, Barry.

Carter Newbold, Rutabaga Capital.

I wanted to revisit the question about the profitability structure of the US tradeshow business.

I think in the year we just ended, you had a contribution margin there of about 15% or so.

And to get back to the target margins of 6% or 7% that you are talking about on that level of contribution margins, I think you'd need something on the order of $400 million in incremental revenues, which is an awful lot of topline.

Is there something -- could you just go through the factors again that -- the Company delevered from '08 to 2010 at about a 22% or 23% negative or decremental margin.

My simple question would be, why are the contribution margins not currently higher?

Or what are the impediments to keeping you guys from getting more of the incremental dollar to the pretax line?

I think the flowthrough for 2012 was below where we would normally expect it.

A number of factors were in there.

We had some one-time move costs, definitely some higher compensation costs, higher incentive accruals, and some other things like that.

As we move forward into 2012 and beyond, we do anticipate that incremental revenue should drive 20%-plus incremental bottom line, and we are constantly working on improving that number because you are right, we've got to continue to look at every opportunity to move that needle a lot faster.

Okay.

That's helpful, thanks.

Two more questions.

One, I know it's just the midpoint of the Winter in the Canadian Rockies, but is the absence of snow -- does that create either a problem or an opportunity as you guys start to open up?

Does it give you the possibility that you might get important roads and access open earlier in the season this year?

Yes.

That's a good question, but a hard one to answer.

We do depend on some ski business in our properties, although it's a relatively small piece of the overall business.

It really depends -- we've still got a few months left where we can get dumped on snow, especially at Glacier.

We opened very, very late last year, and it was very unusual, and we don't anticipate that happening again this year.

But a lot of that is dependent on Mother Nature.

Michael, would you comment on that?

I think the most important factor is really the opening of the Going-to-the-Sun Road in Glacier, and it is too early to tell because we do get quite of bit of snowfall in the February/March timeframe.

I would say the Canadian Rockies have actually had more snow than other parts, like the US Rockies in Colorado, et cetera.

That's actually been good from a ski perspective, but as Paul said, that's a relatively small part of our business.

Okay.

Last question for me would be -- I'm sorry if you gave it in the release and I read right past it, but could you talk about how much stock you repurchased during FY '11, and how you continue to think about that as an opportunity and use of capital?

Yes, let me get that in front of me here.

We purchased about 250,000 shares in the third quarter of 2011.

We did not purchase any shares in the fourth quarter, so our total for the year was about 250,000 shares.

The allocation of our capital continues to be the same as we have talked about in the past.

Continued selective investments in our business on an organic basis.

Second is strategic acquisitions, and then third is, from time to time we have been or could be a buyer of our own shares.

Currently we do believe that we have a very good pipeline of strategic acquisitions, and some very, very good projects that we believe will drive shareholder value and good return on capital.

However, that is something that we do look at on a regular basis.

Okay.

I'm not asking the question as a specific suggestion, but do you see the current capital structure holding the $100 million in cash as ideal, or would you say over a three- to five-year planning horizon you would seek to change that?

I think that is changing, and we've always wanted to have some cash cushion on our balance sheet.

But due to some of the projects that we do believe will get completed during 2012, I think that will come down, and we will see a little bit more optimization of our capital structure.

Good, thanks.

Thank you.

(Operator Instructions) At this time, we have no further questions.

Thanks, Tammy.

Let me just make a few closing comments to wrap up the call.

We had a very good year in 2011, I think on all fronts.

We had strong growth with double-digit increases in revenue from all of our business segments, and that was a very exciting sign.

Our Marketing & Events Group returned to profitability, and completed many initiatives that we expect will contribute towards continued significant profit growth in 2012.

We had some great new business wins throughout our worldwide network, and we look forward to building on that momentum.

At Travel and Rec, we are executing well on our refresh, build, and buy strategy, and again, we look forward to a much stronger 2012.

We have successfully refreshed several assets, as well as our marketing and branding.

We closed three lodging acquisitions during the year, and we have built a robust acquisition pipeline.

And if it's approved, the Glacier Discovery Walk presents a terrific opportunity to add to our outstanding portfolio of high-ROIC attractions.

I am very, very excited about our opportunities in this business.

As Ellen discussed, our first quarter will be down compared to 2011 due to negative show rotation and seasonal losses from our new properties, but I do want to emphasize that we expect our full year to show significant growth as we execute the busy travel and rec season in the second and third quarters, and as a result of our significant third quarter positive show rotation at GES.

As you know, a key strength of our Company is our strong balance sheet and cash flow, which allows us to prudently invest in growth opportunities.

And we are very, very fortunate to have talented and dedicated employees that are focused on driving value for our customers and shareholders.

We are in a great position to have a winning 2012, and we look forward to updating you on our progress in April.

Thanks again for being with us today.

We appreciate your support.

Goodbye, and we will talk in April.

Thank you.

This concludes today's conference call.

Thank you for participating.

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