Cautious Optimism

Several companies say business picked up in the first quarter – typically the tradeshow industry's busiest – but others are still waiting for even a weak rebound to take hold.

On the positive side of the spectrum were Advanstar Communications and Jupitermedia, which both reported higher tradeshow revenue. While conditions were improving for Viad subsidiary GES Exposition Services, they remained dire for Viad's exhibit-design-and-construction arm, Exhibitgroup/Giltspur.

E/G President Kim Fracalossi told analysts during Viad's conference call that the firm's first-quarter revenue declined by 25 percent due to lost business from "highly competitive pricing situations." Noting that several competitors have recently fallen by the wayside, Fracalossi said the "survival strategy" of basement pricing can't be maintained. "When prices are too low, something has to give – either quality or the company itself," she said.

Although the competitive pricing situation did cause E/G's sales to decline, Fracalossi said turning down the low-paying work had little effect on the bottom line. "While we strive to price competitively, we will not price irrationally. We will not compete on price," she said.

Fracalossi added that she still senses pent-up demand for new booths, but is uncertain exactly when companies will begin placing orders again. "Until we see an increase in new construction orders, we will remain cautious."

GES President Paul Dykstra, meanwhile, took a slightly more optimistic stance on the heels of what he termed "another solid quarter" with strong showings from the Intl. CES and World Shoe Assn. shows. "As far as the industry is concerned, we're seeing some positive indicators; an increase in show sizes, an increase in new show launches," he told analysts. "But I think we need a couple more quarters of solid earnings before companies are comfortable enough to increase their tradeshow spending."

Dykstra said GES expects to suffer a 10-percent revenue decline in the second quarter due to negative show rotation. This year, the Intl. Manufacturing Technology Show, the Intl. Woodworking Machinery & Furniture Supply Fair USA and the Intl. Baking Industry Exposition will all be held during the third, instead of the second, quarter. In addition, the second-quarter Natl. Plastics Expo won't be held again until 2006. The change in rotation is expected to deliver a 40-percent increase in third-quarter sales, however.

Despite that, not everybody is content with the up-and-down revenue shifts as a result of changes in show scheduling. One analyst said the "jumping around" could become an issue once Viad spins off its Travelers Express unit, leaving GES and E/G as its primary businesses.

Show management companies seemed to voice more optimism. Advanstar, producer of 72 annual tradeshows, in the first quarter reported a nearly 20-percent jump in revenue and 22-percent hike in operating income overall. Increased square footage and attendance at MAGIC Marketplace and Dealernews Intl. Powersports Dealer Expo were credited with driving a 4-percent revenue gain from tradeshows, which account for more than half of the business-to-business company's overall sales. "We are off to a good start in 2004, both in results for the quarter and in progress on the initiatives that we have planned for the year," CEO Joe Loggia said during the company's conference call.

Jupitermedia also turned in solid results, with first-quarter revenue of $14.4 million that compared with $8.2 million in the year-ago quarter. The company, which produces e-newsletters and research in addition to two dozen shows per year, recorded first-quarter events revenue of $2.3 million, compared with $1.2 million in the first quarter of 2003.

B-to-B firm Primedia generated flat first-quarter revenue of $328.5 million, but did not break out figures for its dozen annual tradeshows.