Sparks Exhibits Warns of Continued Sales Declines

Firm laid off workers, trimmed executive pay in effort to cut bottom line

By Margo McCall -- Tradeshow Week, 4/26/2004

Sparks Exhibits & Environments, one of the industry's largest exhibit design houses, generated less tradeshow revenue in 2003 than in 2002, and expects a further decline this year due to continued pressure on corporate marketing budgets.

Marlton Technologies, Sparks' Philadelphia-based parent, reported 2003 tradeshow revenue of $40.5 million, compared with $44.7 million in 2002. The company blamed its $2.2-million net loss in 2003 on falling sales, the closure of a San Diego office and the $300,000 expense associated with the majority shareholders' failed attempt to take the company private. The loss was much smaller, however, than Marlton's $19.8-million loss in 2002.

In its annual filing with the Securities and Exchange Commission, Marlton said it cut executive salaries and laid off some employees in the fourth quarter of last year, in response to shrinking revenue. The company said its Fortune 1000 customers are expected to continue to closely manage their trade-show budgets this year. Sparks produces booths for 400 customers and 1,500 tradeshows per year. "The company is negotiating better pricing and terms with its suppliers and pursuing staff and cost reduction initiatives to mitigate the impact of this industry trend," Marlton stated in its filing.

CEO Robert Ginsburg said the company has shed 20 percent of its staff over the past year. It now employs 236 people. Despite the language in the SEC filing, Ginsburg denied any further layoffs are planned. "We're trying to consolidate as many things as we can, to create as much efficiency as we can to lower the cost to customers. We're always pursuing ways to consolidate costs."

The continuing challenges of Sparks – the only publicly traded exhibit design firm besides Viad's Exhibitgroup/Giltspur – come on the heels of Exhibit Dynamics filing for bankruptcy and Contempo Design undergoing restructuring. Contempo closed some offices, but sold its San Diego operation to a company called Llewellen & Best. "They're dropping like flies," Ginsburg said.

Viad, owner of Exhibitgroup/Giltspur and GES Exposition Services, said earlier this year that it expects higher revenue and profits from its convention and events business this year.

Last August, Marlton spent $694,000 to buy the assets of Exhibit Crafts, a Los Angeles-area exhibit manufacturer, and a 20-percent stake in Intl. Exposition Services, a tradeshow shipping and installation provider. The purchase allowed Marlton to move its San Diego office to Los Angeles, but cost it $1.1 million in employee relocation and termination expenses.

Ginsburg didn't rule out another acquisition. And despite the caution expressed in the company's annual report, he said sales are starting to pick up. "We're seeing a bit of an upswing, but I wouldn't call it monumental," he said. "The position we're in today is a lot better than the position we were in a year ago. We're going to be around for a long time."