Companies Report Improved Outlook
By Margo McCall -- Tradeshow Week, 8/8/2005
Companies detailing their second-quarter financial progress reported improving conditions in the tradeshow industry — even Exhibitgroup/Giltspur, market leader in the hard-hit exhibit design business.
E/G, a subsidiary of Viad, generated $58.5 million in revenue, up 11 percent from $52.7 million in the second quarter of 2004. Operating income increased to $2 million, up from less than $1 million in the year-ago quarter.
GES Exposition Services, Viad's service contractor business, produced $150.4 million in revenue, up from $137.4 million in the year-ago quarter. Operating income rose to $16.1 million, compared with $14.1 million in the year-ago quarter.
Viad CEO Robert Bohannon said he expects conditions in the exhibition industry to continue improving throughout the year. But, he cautioned analysts during the company's conference call: "As usual, our wild card is Exhibitgroup. All the signs are better, but we know that clients must pull the trigger on new exhibit construction. We're hopeful we'll see that sooner, rather than later."
E/G, which recently incurred a $2.3 million cost to settle a trademark infringement lawsuit with a kiosk vendor, anticipates a decline in pharmaceutical company booth orders later this year due to some regulatory changes.
GES, meanwhile, is stressing new products and services in a climate of exhibitors' continued cost concerns and rising prices of petroleum-based products such as carpet. Improvements in the second-quarter revenue picture were chalked up to sales of new products and services, in addition to industry growth.
GES President and CEO Paul Dykstra said same-show revenue growth in the quarter was 6.4 percent. "Overall, we've had a very strong first half of 2005," he told analysts.
Kim Fracalossi, president and CEO of E/G, said RFP activity is strong and backlog is greater than it's been in the past three years. "Looking ahead, we have increased optimism. We remain well positioned to take advantage of any market rebound," she said.
Reed Exhibitions, which like Tradeshow Week is owned by Reed Elsevier, saw a 4-percent increase in revenue and 3-percent increase in operating profit during the first half of 2005. If it weren't for negative show rotation, revenue for the exhibitions unit would have increased by 9 percent and operating profit by 13 percent, said Reed Elsevier CFO Mark Armour during a conference call.
Reed reported that exhibition markets are recovering in the United States and Japan, in contrast to Europe, which is experiencing anaemic economic growth. Reed Elsevier CEO Crispin Davis said that second-half growth in the exhibitions unit is expected to be "very good."
MGM Mirage, meanwhile, credited the $7.3 billion acquisition of Mandalay Resort Group for higher second-quarter revenue and earnings. Company officials said that all but 200 of Mandalay's 31,500 employees have stayed with the company post-merger.
John Redmond, president and CEO of MGM Grand Resorts, told analysts during a conference call that the number of convention room nights increased 33 percent year-over-year in the second quarter. A record 157,000 convention room nights were booked, with bookings of 213,000 room nights expected this quarter. Convention bookings, he said, are "very strong at this point."
Executives are looking to the 2-year-old Mandalay Bay Convention Center, with 1 million square feet of exhibit space, to help drive business at the combined company's 11 casinos offering nearly 37,000 hotel rooms.
Revenue and earnings were also up for Gaylord Entertainment, which operates a series of convention center hotels. The company reported second-quarter revenue of $219.3 million, compared with $158.9 million in the year-ago quarter. Its net loss narrowed to $8.9 million from $18.9 million in the second quarter of last year.
