GES, E/G Report Mixed Financial Results

By Margo McCall -- Tradeshow Week, 2/14/2005

Viad, parent company of GES Exposition Services and Exhibitgroup/Giltspur, reported higher overall revenue, but traded in a slight profit in 2003 for a $4.5 million net loss last year.

Within Viad, GES reported 2004 revenue of $540.1 million, up from $498.7 million recorded in 2003. GES was helped by positive show rotation in the form of big biennial customers like MINExpo Intl. and the Intl. Baking Industry Exposition, but part of the increase can also be chalked up to growth in its products and services group.

GES President Paul Dykstra told analysts during the company's conference call that products and services revenue increased by nearly 15 percent, accounting for nearly one-third of GES' 2004 revenue. The products and services group was launched in late 2003 as a means of providing exhibitors with everything from furniture rentals and I&D to transportation services. "We are serving clients' exhibitors and making sure they have everything they need to have a successful tradeshow experience," Dykstra said.

Although Dykstra warned analysts that GES will experience negative show rotation in 2005 due to some shows not being scheduled, he said the year is off to a strong start.

"One month doesn't make the year, but January seems to have been a good month for all the tradeshow stakeholders," Dykstra said. "I have better confidence in the tradeshow industry than I did at the same time last year."

E/G, however, is still experiencing a challenging environment for new construction orders. The exhibit design and production firm reported $178 million in 2004 revenue, down from $218.6 million in 2003, and a $9.2 million operating loss that compared with $1.1 million in net income for 2003.

E/G President Kim Fracalossi said that, after several years, irrational pricing is starting to abate. The company recently completed several large new builds, including an 18,000 square foot booth for LG Electronics at Intl. CES. "LG was a huge win for us," Fracalossi told analysts. "The exhibit attracted a lot of attention on the showfloor. We're hoping this will encourage a lot of companies to choose new for their next show."

Fracalossi said customers appear to be stepping up their tradeshow participation. However, that hasn't yet translated into demand for new booths. Consequently, she plans to strip another $5 million in costs from the organization this year. E/G has already reduced its manufacturing facilities from 16 to five and slashed $40 million from its budget.

Viad CEO Robert Bohannon said he's surprised the exhibit design industry remains challenged. "I have just been shocked at this industry. We've had five or six companies close their doors. I would have thought some of this irrationality would have ended a long, long time ago, but we haven't seen the end of it yet," he said.