Pursuit Attractions and Hospitality, Inc. (PRSU) Q4 2011 Earnings Report, Transcript and Summary

Good morning, and thank you, all, for holding. [Operator Instructions] Today's call is being recorded. If you have any objections, please disconnect at this time. I would now like to turn the call over to Melinda Keels, Director of Investor Relations for Viad Corp. Ma'am, you may begin.

Good morning, and thank you for attending our conference call. I'd 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'll 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 & Events Group; and Michael Hannan, President of our Travel & Recreation Group, will be available for comments during the question-and-answer session at the end of the call. And now I'll 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 leased facility consolidations and optimization of the Marketing & Events Group's U.S. 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 U.S. 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 and 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 improved $10.3 million to income of $5.2 million. Marketing & Events Group's U.S. segment's fourth quarter revenue was $132.7 million, up $687,000 from the 2010 quarter reflecting base same-show 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 U.S. revenue. As a reminder, base same-shows occur in the same quarter and same city each year. The U.S. 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 margin, custom holiday installations to lower margin venue services business. In addition, we incurred approximately $800,000 related to a facility move cost in the Chicago and San Francisco markets during the 2011 quarter. For the full year, U.S. 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 U.S. segment revenues in 2011. U.S. 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 reflects 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 increasing 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'll 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's 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 & Resort and Grouse Mountain Lodge, as well as our 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'll cover some cash flow and balance sheet items before turning the call over to Paul. Fourth quarter free cash flow was an outflow of $5.4 million in 2011 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 to 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, Viad's 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'll 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'm happy to report that our U.S. 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, U.S. base same-show growth was 11.2%. In addition, the realignment of our U.S. 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 U.S. to identify and execute actions that will improve our cost structure, produce 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 set us apart from the competition. In 2011, GES launched its new 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, check 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. The organizers like the fact 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 multiyear contract with the American Wind Energy Association to produce its annual show, WINDPOWER, 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 Servicenter. In total, the U.S. segment signed approximately $120 million in new and renewal trade show contracts during the quarter, including the Association of Equipment Manufacturers' triennial show at 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 U.S. 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 trade show 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 Dell's Field Readiness Seminar. In addition, Bell Helicopter's International division awarded all of its international programs and shows to GES. On past calls, we've 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 & Producers Association. In addition, GES' National Servicenter was recognized for call center customer satisfaction excellence for our fourth consecutive year under the J.D. 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' 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 win 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, Marion, United Business Media, as well as the Abu Dhabi National Exhibition Centre. Melville won WorldSkills London 2011, which is one of the largest shows that is 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 biannual Paris Airshow, 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 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's 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 & 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 Rocky 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 2 strategic properties near Glacier Park. The acquisitions of St. Mary Lodge & 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 experience of 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 3 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 U.S. 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 trade show 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 its 2012 planned revenues under contract and our total trade show 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 Columbia Icefield Center to drive an enhance guest experience and increase spending at these attractions. From a build perspective, Brewster is currently seeking regulatory approvals to construct an exciting new attraction called the Glacier Discovery Walk, which would be located directly off the Icefield's 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 floor observation platform. Visitors will be led on a guided tour along the platform's edge to an unprecedented view of the Athabasca Glacier and the Sunwapta Valley. Subject to regulatory and other approvals, Brewster anticipates the construction of the Glacier Discovery walk would 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'll 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's full year revenues are expected to grow at a single-digit rates compared to 2011. U.S. 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's segment operating income is expected to improve by $6 million to $11 million driven primarily by a continued improvement in U.S. segment profitability. Travel & Recreation Group's 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 & 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 activities 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 fair share results of 4 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 a negative share rotation of approximately $40 million in revenue and seasonal operating losses at Denali Backcountry Lodge and Denali Cabins and St. Mary Lodge & Resort, partially offset by expected increases in trade show 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.

Tammy, can you open it up for questions, please?

[Operator Instructions] Our first question comes from John Healy, Northcoast Research.

I have a couple of questions, I guess, on the Travel & Rec side to start. Paul, I think you mentioned that you're going to be refreshing some properties again in 2012. Will that disrupt any of the operations in terms of having, I guess, the full portfolio of rooms or services open to travelers in 2012? Is there any headwind associated with some of the things you're going to be refreshing?

Really no, John. We're 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're doing some work at Grouse Mountain Lodge. That is a year-round property, but the -- we're doing it right now, which is kind of the slow season. Michael, would you add anything to that?

No, I think that covers it, Paul. We don't expect any revenue impacts from close of any rooms this year as we refresh properties.

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 trade show business in the U.S., I wanted to get your thoughts on where you think the margins could get potentially once you finish up with the restructuring and you kind of, I guess, 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 kind of be lackluster there a bit?

Yes, I mean I think -- and I'll 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's where we're trying to get back to. We had a pretty severe decrease in revenue in the '09 time frame. And there has been a lot of work done over the last 2 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've 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 a 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?

Yes. I'll also add to that the growth that we've seen within the industry within 2011. We saw far more gainers than kind of detractors for our shows and 63% of our base shows actually grew in 2011. So in addition to things that Paul mentioned, I think, some of the industry growth that we're experiencing will help us get it back.

I guess along with the shows, is it an issue that, I guess, the profitability per show is just not there? Or do you have shows that you entered into, what you said, multiyear contracts with that are -- that you're losing the substantial amount of money on? Is it, I guess, the margins 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?

Well, 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 continue -- 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 [indiscernible] 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's not profitable.

Got you. And then a couple of questions on I didn't hear if you said it, but do you have any sort of 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 very full and you're looking at some things and I was curious to know if they are weighted more towards the Travel directly, what you did in 2011, or if you are looking at some things that might make sense in the trade show business as well?

Okay, John. Yes, let me comment on the acquisition front and then I'll ask Ellen to comment on CapEx. On the acquisition front, we do have some things teed up, again, primarily in the Travel & Rec side in and around the national parks that we operate in, some exciting opportunities to continue to add scale to very high ROIC, high-margin business and we're 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 & 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 terms 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 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 on the Gondola, renovations at St. Mary's and Grouse, so it's about split half and half for '12.

Our next question comes from Barry Haimes, Sage Asset Management.

I 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 levers do you get? Because some of your cost presumably are fixed and don't have to ramp up as you add the additional properties. Any feel for that would be great.

Barry, 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've added properties, a little bit depends on where they are. So the properties we've added, 2 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. So the more volume we put through, if it's a new attraction or a new hotel, it's very high margin after we have the set up. I don't know if Michael, you wanted to comment any further on that?

Yes, I think it's true. I think the more we can drive incremental revenues, very high flow-through, what we've got, we've got an experienced team in the sales marketing side and we've got a very, very good sales and marketing machine. So if we can add more product to that as we're attending international trade shows and with some of our international sales folks, to the extent we can drive more volume into a property, that property becomes much more valuable to us and it would be to another owner and we can make it perform at higher levels. So I'm quite excited about some of the opportunities we have in front of us.

Just one quick follow up, are reservation centralized or is that still decentralized?

Well we have -- primarily decentralized, and I think that's important because we finally 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 where there is some sale over capabilities 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.

Carter Newbold of Rutabaga Capital.

I wanted to reiterate the question about the profitability structure of the U.S. trade show 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're talking about, on that level of contrition margins, I think you'd need something on the order of $400 million in incremental revenues, which is an awful lot of top line. Is there something -- could you just kind of go through the factors again that the company delevered from '08 to 2010 at about a 22% or 23% negative decremental margin? I guess 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 pre tax line?

Yes. I think the flow-through for 2012 was below where we would normally expect it. A number of factors were in there, we had some onetime 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 revenues should drive 20-plus percent incremental bottom line and we're constantly working on improving that number because you're right, we've got to continue to look at every opportunity to move that needle a lot faster.

Two more questions, one, I know it's just maybe 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 opened 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 still got a few months left where we can get dumped on snow specially 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?

Yes. 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 a bit of snowfall in the February, March time frame. And I would say the Canadian Rockies have actually had more snow than other parts like the U.S. Rockies in Colorado, et cetera. So that's actually been good from a ski perspective, but as Paul said, that's a relatively small part of our business.

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 kind of how you continue to think about that as an opportunity and use of capital?

Yes, let me get that in front of me here. So we purchased about 250,000 shares in the third quarter 2011. We did not purchase any shares in the fourth quarter, so our total for the year is about 250,000 shares. The allocation of our capital continues to be the same as we've 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 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 don't -- 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 kind of ideal? Or would you say over sort of a 3 to 5 year planning horizon, you would seek to change that?

No. I think that is -- 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.

[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 & Rec, we're 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 3 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 on 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 & 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're 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'll talk in April. Thank you.

This concludes today's conference call. Thank you for participating. You may disconnect at the time.