Advanstar's '03 Show Revenue Down Some

Like many of its competitors, Advanstar Communications saw its tradeshow revenue slip last year, largely as a result of sluggish spending in the technology sector.

The $136-million acquisition of Thomson Healthcare, a deal that included one tradeshow, enabled Advanstar to increase 2003 revenue to $323.7 million, up from $307.2 million in 2002. Tradeshow and conference revenue accounted for $155.5 million of that, down from $159.1 million in 2002. If technology shows had not been factored in, last year's tradeshow revenue would have been up by 5.8 percent.

"We are pleased with the results of 2003," Joe Loggia, newly named president and CEO, told analysts during a conference call. He declined to provide specific financial guidance for 2004, but said first-quarter tradeshows are off to a brisk start. "Business conditions over the past few years have been extremely difficult in the B-to-B industry. We believe we have weathered the conditions very nicely," Loggia said.

Indeed, Advanstar's 2003 operating cash flow nearly doubled, reaching $82.7 million, up from $44.1 million in 2002. Overall tradeshow square footage rose 6.3 percent to 407 million, driven by strong performances by fashion, beauty, home entertainment, licensing and power sports events. The average price per square foot increased by 4.5 percent over 2002.

Despite technology shows' 27-percent, or $9-million, revenue decline last year, Advanstar has no major changes planned in that realm. Loggia stressed that its niche technology shows – like all Advanstar properties – are currently profitable.

Together, the two MAGIC Marketplace apparel shows – both Tradeshow Week 200 events – contributed $2.6 million more revenue last year than in 2002, even though square footage declined by 4.7 percent. After pushing through "some fairly aggressive price increases over the past two years," Loggia said Advanstar held the line on increases at MAGIC this year.

The strategic decision appears to be paying off. Loggia said space sales and revenue from this month's MAGIC show rose by about 4 percent, while attendance, according to preliminary figures, increased by 3 to 4 percent.

In order to buy Thomson Healthcare, Advanstar took on an additional $68.4 million debt; financial backers DLJ Merchant Banking Partners kicked in $60 million. Advanstar's debt load is now $626 million. CFO Dave Montgomery said Advanstar is "highly confident" it will meet all of its debt covenants this year.

Montgomery said Advanstar might increase its holdings this year, provided that strategically important acquisitions can be found. "We continue to look at opportunities in the markets we play in," he said. "If the right opportunity comes along within our markets, we'll look at it certainly, subject to financing limitations."

Conversely, he added, "If there's nothing that looks appropriate throughout the year, we won't buy anything."