Show Companies See Continued Growth Ahead
By Margo McCall -- Tradeshow Week, 5/9/2005
Viad subsidiaries GES Exposition Services and Exhibitgroup/Giltspur were helped by an improving industry climate in the first quarter, although Advanstar Communications saw sales dip due to negative show rotation.
General services contractor GES generated revenue of $198.4 million in the first three months of the year, up 21 percent from $163.6 million in the year-ago quarter. The company's operating income of $26.8 million was up 30 percent from $20.6 million in the first quarter of 2004.
Exhibit design firm E/G's $46.4 million revenue rose 16 percent from the $40.1 million generated in the first quarter of 2004. However, due to an intellectual property suit, the unit suffered a $1.8 million loss, compared with the year-ago quarter's $3 million loss.
"We began 2005 with increased optimism about improvement in the tradeshow industry, and that's what we're seeing," Viad CEO Robert Bohannon told investors during the company's conference call. "GES had a record quarter, and E/G's results reflect substantial year-over-year improvements."
Bohannon said first-quarter shows were larger and drew more attendees. Although exhibitor spending appeared to be picking up, companies were still leery of ordering new booths and were paying close attention to shipping weights.
Paul Dykstra, GES president and CEO, said first-quarter shows held in the same city each year showed a 7.5-percent revenue growth rate, according to his company's analysis. "This was larger than any quarter we had prior to 9/11, including our peak revenue year of 2000," he told analysts.
One sign of the new market conditions: GES is expanding its management team with the promotion of Kevin Rabbitt to executive vice president and COO. Rabbitt will be primarily responsible for deploying resources and planning for capacity fluctuations. For example, resources had to be juggled to accommodate Intl. CES, MAGIC Marketplace and the triennial CONEXPO-CON/AGGin the space of several weeks.
"Because of the lumpiness and variability of our show schedule, we need to be able to flex up and down at different times of the year and across various cities without losing efficiencies," Dykstra said.
Kim Fracalossi, president and CEO of E/G, said the large numbers of decision-makers at The Exhibitor Show this year was a sign the industry is recovering. "We continue to see signs of improved market conditions," she said.
Venue operator Gaylord Entertainment reported that revenue increased by 38 percent to $219.3 million from $158.9 million in the same period last year. Total revenue for its hospitality segment grew 49.6 percent to $142.5 million compared to the prior-year period, due to the inclusion of the Gaylord Texan Resort & Convention Center and strong performances from both the Gaylord Palms Resort & Convention Center and the Gaylord Opryland Resort & Convention Center.
Four Advanstar shows held in last year's first quarter shifted to the second quarter this year, and a fifth show moved from the second quarter last year to the first quarter this year. The timing changes caused tradeshow revenue to dip to $62.1 million from $68.2 million in the year-ago quarter.
However, Advanstar said revenue increased by $4.8 million for the first quarter's MAGIC, Dealernews Intl. Powersports Dealer Expo and IVT pharmaceutical conferences. The company also launched its inaugural Off-Road Impact Tradeshow & Conference, which generated $400,000 in revenue.
"Our performance for the quarter was in line with expectations," CEO Joe Loggia told analysts.
Both Advanstar and Viad have been mulling potential acquisitions. Bohannon said Viad was considering an acquisition last quarter, but dropped out of the bidding process because the price seemed too high. "We think there are some good opportunities out there. It's just an issue of acquiring them at a price we're willing to pay."
Loggia said Advanstar, which recently sold five of its divisions to a new company called Questex Media, isn't planning any additional divestitures, but is considering several potential acquisitions.
