Q3 2019 Earnings Call

Good morning, ladies and gentlemen, and welcome to Emerald Expositions third quarter 2019 earnings a conference call. During today's presentation, all parties will be in a listen only mode.

Following the presentation the conference will be open for questions with instructions to follow at that time.

As a reminder, this conference is being recorded.

Oh now like to turn.

The call over to Mr. Philip Evans, Chief Financial Officer. Thank you Sir Please go ahead.

Thank you operator, good morning, everyone.

Appreciate your participation today and also it quotes a 2019 and he's cool I'm very pleased to have Sally Shankland, Emeralds, President and Chief Executive Officer, Brian Field, well, Chief operating officer with me here today.

A reminder, replay of this cold would be available on the investors section of the company's website through 11 59, P.M. you spend time on November the 12 2019.

Also posted a supplemental presentation to accompany today's discussion.

Website, I'd invest a dot emerald expositions dot com.

Before we begin let me remind everyone to this coal may contain certain statements constitute forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995. These include remarks about future expectations beliefs estimates plans and prospects but.

Such statements a subject to a variety of risks uncertainties and other factors that could cause actual results from different materially from those indicated or implied by such statements.

Such risks another fact as a set forth in the company's most recent files periodic reports from phone 10, K. and phone 10, Q. and subsequent filings do not undertake any to teach update such forward looking statements.

Additionally, during today's coleville discussed known GAAP measures , we believe can be useful in evaluating all performance presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with U.S. cat.

Reconciliation of these known got measures to the most compatible gap measure can be found in <unk> earnings release.

How to Nicole over to Sally.

Thank you fell on today's call I'll spend the majority of my time, reviewing our strategic plan.

We didn't design to improve alright <expletive> across all facets of the business.

<unk> alright, okay <unk> well.

Riots P.L.R.C.O.O. is here with that kind of call today.

Why it is overseen to Shiver plan and it's critical to its success, but I couldn't get for five can additional car I'm several of the English. It is that we have we put into action.

Finally, so if you are a third quarter results in more detail.

<unk> update our expectations for this all year.

<unk> open up the call for a question and answer session.

That's before we start let me provide an update on my L.S.N. treatment.

As we announced at the beginning of October recently diagnosed with cancer and have the data regimen of regular chemotherapy.

I remain engaged in the strategic management as a business and then key decision.

The same time relying on my leadership team and drive in particular, you continue to support execution on a day to day basis.

I sincerely appreciate to support and encouragement I received from my team or employees customers and vendors.

Through the challenging time.

But that's sad, let's turn the page five though she was three earnings called presentation.

On the left hand side of the chart I've outlined my view of Amarillo key strength.

I believe passionately.

Face to face interaction remains a highly valued element of commerce.

Education.

And market development.

Importantly, m. old has it portfolio strong and respected brands, but.

The opportunity to return to some levels of gross and success with experienced in the past.

The challenge has been execution and accountability.

Which has led to perform incentives and lack of the industry and more importantly, our expectation.

With more than 25 years experience in this industry I.

I can tell you that there is nothing that I've encountered it and rolled over the last five months.

And I haven't seen or addressed before in my career.

This is why I'm, a highly confident that our challenges can be solved right team right investment right strategy.

The right culture.

Flipping to page six our transmission has been gone and I'm very pleased with the progress we've made in such a relatively short time.

Farm management, and our entire employee base enthusiastic and confident.

Moving in a better direction.

Over the next few pages.

We will we use several of the initiative silly implemented and the changes that were driving.

To address animals challenges as well as to drive and cultural change across the company we needed to strengthen our team to ensure that we have the experience it's skills to address the company's issues.

On page seven I've listed the most senior hires and I have made since joining animal back and show.

This is a tremendous scruples leader.

More than 120 here isn't relevant industry experience.

And I could not be prouder, they've chosen to hitch their wet in the city M. old Star.

It's also worth pointing out that we have made and continue to make important changes.

As well as adding new skills that.

Paper any organization as we work to strengthen an upgrade our capabilities at all levels of the company in order to improve our execution across the entire organization.

According to page eight and T. to our success is our redefine vision and mission.

We must be focused on directing our products and services toward fueling our customers success.

<unk> also that therapy water industry.

We will do this by listening to them and working with them throughout the year not just for a few days or a few weeks each year.

We will improve the quality and value of what we produce.

I support the broader and markets in communities in which we operate.

Our vision and mission plus our customers at the center of our organization and what we do every day.

As our customers succeed.

Oh, we'll wait.

Turning to slide nine yep for T. strategies decide to improve our execution.

And our business and return animal to sustainable organic growth.

As we center, our our organization on our customers. It's imperative that we work to increase their satisfaction with their m. old experience.

And to their satisfaction grows so our business.

Second we see tremendous opportunities to diversify our revenue.

Mainly my growling already existing nine booth revenues at an accelerated pace.

Sure we recognize the importance of the operating efficiently and being a cost leader in our industry, Let me see opportunities to improve in these areas.

And finally, we expect to selectively pursue attractive talking acquisition.

The G. three communications acquisition, we announced yesterday.

Add to our capabilities and drive incremental financial returns.

As we successfully implement our initiative and improve our execution expecting them live our long term organic revenue growth at or above industry level.

And to generate consistent year over year of gross and ingested eat.

So, let's drop down a level and to some of the detail around her individual strategies.

I'm page 10, I've set out some of the tactics related to our focus on customer satisfaction.

There are many initiatives here that range from simply delivering better events experiences reestablishing at performance oriented culture ties are teams compensation to our success and improving client satisfaction.

At this point I'd like to ask Brian to outlined some of the specific things and he is a leading and then we expect school contributed to improve customer satisfaction.

Ryan.

Thank you Sally and good morning.

Turning to page 11.

Process, we are putting in place because a rigorous concept planning framework.

This is a standardized diagnostic and forecasting instrument for building up.

Evaluating the health of an event.

Belly and I have successfully implemented in use this kind of process in the past with great success.

Foundational component of this framework is rooted to get an outside and approach.

Analyzing the dynamics in the market sectors, which each show operates understanding our customers needs with their district.

With a holistic understanding of our customers, they're paying points and motivations.

Then build up the approach and how we target our sales and marketing strategies.

Kinds of opportunities and content that will resonate that'd be optimal channels to reach them.

Using this event planning framework of several deficits.

It focuses us on our customers needs. So that everything we do it designed around what is important to them.

<unk>.

Second.

Reinforces data led decision, making by testing the effectiveness of every marketing now every partnership every investment we make.

Third since this kind of plan of requires input should participation from across symbols organization from brand of management's to sales marketing operations and finance it creates a unified understanding the purpose of transparency across or two.

From an overall management perspective, the event Clam framework also provides us greater confidence to the outcome silver.

Due to the rigorous sinking invest it during the process and provide the dashboard of flags should any particular metrics fall below established benchmarks.

Recycled progressive.

So for instance, some of the issues that drove the disappointing performances of R.I.C.S.S. and retail X. shows and the second quarter could've surface much earlier in the show cycle, which would have allowed us to take urgent remedial actions to get things back on track.

Finally, that's we implemented sent plants across all the Emerald shows over the course of 2020.

This will also become a tool for most of your planning improving the budgeting process and our forecasting accuracy.

We've been to page 12.

Implement value based pricing across several shows.

Broadly speaking this is research and analysis of live event pricing promotion based on customers perceived value is available locations and packages.

You use an example, most of us are familiar with.

We all generally understand the variations of price and that one function airlines cheating with different seating types classes amenities expectations, we have around though.

When we pay more we expect more for the first class seats in the basic economy, one and there's transparency around.

The same thinking can be applied to locations on a trade show floor, where high values locations in the front of a hall, you're definitely traffic points desirable locations.

Greater value in command higher price, and then locations and less traffic areas.

That said or location is only one of many variables, which also includes ooze configuration timing of sailing just counting and bundled non booths related promotional products.

We partnered with some specialty consulting firms, one of which algorithmically assesses dozens of commercial data points to evaluate the effects of time again pricing U.S. disodium the development of our value based pricing.

We've begun this process with six shows outdoor retailer to P.S.D., New York now <unk> Expo surf Expo and retail X.

Based on my previous experience the implementation of value based pricing models can deliver an upside of between 4% to 8%. It's on show revenue, which would equate to a potential five to 10 million incremental revenue on these six shows alone based on 2019 brothers.

Due to the timing of show cycles, and the value based pricing implementation you don't expect to start seeing the financial benefits at this effort until the 2021 show additions.

In the meantime reader identifying additional show candidates to undergo this process over the course of 2020.

Rely on the page 13, as part of our focus on data led decision making.

Third point of folks I'd like to discuss involves post event research.

We've now begun to implemented standardized processing tools, such design deployed and measured customer service coupled with in depth customer insights.

This past July .

We began to work with exploring.

And events Pacific Research and analysis firm to ensure consistency in the design and deployment of our post show surveys and support our cycle of research to access.

Exploring currently collects data from over 2700 trade shows, allowing us to measure emerald customers sentiment across not only our own historical benchmarks, but other competitive shows as well.

Exploring has also established an overall show score, which is a robust customer sentiment metric combining <unk> promoters score satisfaction loyalty unimportant metrics.

The scoring demonstrates how any specific show ranks against all other shows and Explorys universe, and it'll be a customer led measure emeralds improvements against your peers.

This will also be a key metric our teams will be accountable to improve them from addition to edition.

You currently have 27 events integrated into the explore replatform, which would be fully adopted across emerald by the end of 22.

Printed page 14.

The next focal point for us as we go into 2020 and one on <unk> secular excited about.

It's a round data enrichment.

Meant in our customer information through a fusion data sources, along with behavioral tracking.

The results of this will provide us data led insights and enhanced customer led product offerings.

The day Emerald uses basic demographic and affirmative graphic information in our marketing practices such as name title company information size company revenues.

Well. This information is helpful for broad segmentation its limits what customers explicitly tell us and can create incomplete views and mismatched marketing messages.

Emerald has access to information on customer activities that as on linked and hundred utilized this kind of information includes data such as subscribing kissed reason online concept behaviors for example.

Bringing these types of data together allows for a refinement and messaging segmentation strategy and customer insights.

This is truly an exciting initiative.

Based on my experience of implementing these kinds of enhancements in the past. This approach can have a transformational impact on how we can understand communicate with and nurture our customers.

<unk> currently designing the integration path for these data sets today and plan to start rolling out in rich data to our marketing teams over the course of 2020.

Okay fine.

Let me pick up on page 15, we set out of seven those strategies, which is to give a more concerted effort. So it just source of time rather than a shame.

Yeah that should be clear just doesn't mean, we plan to pay any less attention.

Core they faced rather than a string.

Wow that at least see <unk> opportunity and Jason revenues chains.

With the right attention and resources applied to that would deliver more value to our market and drive across opportunities for.

We now have a senior executive.

So I'm tall biased responsibility for sponsorship and advertising revenue.

Since rabbit.

Posted by or rather.

Across the entire animals so.

Working but no individual brand yeah hardly drive adoption of best practices.

Any development of new opportunities.

Started several programs you the number of friends and one's called out.

Believes it will be significant opportunity to just to drive.

<unk> incremental revenue over the next several neither.

That'd be hand over to Brian again to outline our initiatives in the area integrated customer solution.

Thanks Sally.

So one of the ways word diversifying our revenue is through a focus on integrated customer solutions.

<unk> increased value for customers by creating integrated packages that go beyond a pure booth or conference programs.

These were planning on site sponsorship programs with digital and print solutions to reach desired customer outcome.

For our customers. This is a more holistic approach it delivering value that extends beyond present days two year round opportunities.

Examples of this or <unk> at shows sponsorship options around show guys content tracks and speed dating pavilions, which year round opportunities such as the sponsorship of curated topical series on our website extending customers content just part of a webinars race, even extends into a more traditional meat.

Offerings Sanchez relevant section takeovers of display ads and digital wallpaper on our website and sponsored belly bands on our printmaker Cincinnati.

As we're designing these integrated solutions are focus will be on standardization scale versus one off the spoke efforts maximize opportunity for new profitable revenue growth.

Okay fine.

On page 17 sit out on terror to throw strategy is to operate more efficiently and cost effectively.

And important component of this strategy strengthening the culture and discipline in the organization that there's more financial <unk> around decision, making.

Cutting forecasting and procurement.

Well also struck Sydney organization and across the holiday out to the efficient and optimize profitability.

Well the thing to page 18, you plan to continue to pursue any opportunities that makes sense for us.

Which means where they meaningfully strengthen the existing business that we already Oh.

Or where we bring considerable value to the acquisition dramatically enhances the acquisition trajectory.

It will apply and even higher level of discipline in regard to this process then we have an attack.

Mmm page 19, I've set out on most recent acquisition, namely that sounds G., three communications, which we announced yesterday.

This is a perfect example of a talking acquisition it isn't great business and it's all right.

Just to edit attractive price that's also strengthens the animals business considerably.

Piece rate has expertise in content it'd be it'd be a marketing and the ongoing retail transformation.

Oh this acquisition, we see opportunities to expand the services and solution. We provide arises visitors and also to create and Monetizer education Wow.

Attendees across our retail with that.

According to page 20, as I noted earlier.

Financial objectives are quite straightforward.

And to be a growth isn't it.

Top line in bottom line.

Oh Boy capital response to play and then a balanced way that drives shareholder value.

What that means is that we will continue to invest in our core business.

A little bit trajectory and at the same time looks like how can acquisitions that sit are very specific criteria.

Plan on using I remain free cash flow after a regular quarterly dividend payments to pay down debt.

Oh sharing purchases are not a corporate part of our capital allocation strategy.

May continue to buy back shares as we believe that accompanies meaningfully more valuable and is reflected in the share price.

On page 21.

Set out and and indicative time huh.

Killing some of the key milestones in the past two brothers.

I believe that much of access will be driven by new processes discipline and accountability throughout the organization.

Better use of data in technology.

Translate this is simply driving better data informed and intuition.

While I returned as both will take time, given the need to drive change across many shows cycles, you're considering what key performance indicators. We can provide the investment community you can track of success.

We'll have more to say N.S.N. February when we release a fourth quarter in school year 2019, alright.

Slipping into page 22.

Told her employees in the first day that I enjoyed ammo there for important constituencies that need to be addressed weird to be successful.

Starting with our customer is fairly obvious.

Well, we also need to value or employees and make EM on a great place to work.

Including two expanded training and development opportunities.

Next week to put more effort into our community.

Industry communities in which we operate and the local communities, where we have offices and we'll be able to it.

And if we do all this right they expect to have a highly valuable unsustainable business.

Well benefit all I stay in college.

Yeah, Oh trying to call over themselves to discuss after in Florida result.

Thank you Sally and good morning, again, I'll pick up on page 20 for the game with a brief preview about food court to shows.

Starting with the S.D. shows revenues for flat, but it's just the equivalent show last year.

When excluding the sorting cats agreed that was adversely affected by the ongoing U.S. trying to trade dispute revenues group, 4%, which is a great results.

Well changes to the sales structure of now taken hold together with other execution improvements in the third the implementation of the initiatives to Brian discussed earlier, we feel confident that the franchise to stabilized and is poised for growth in 2020 in fact revenues for the next really much are already pacey well.

Oh second largest show in the courts. It was the summer edition of New York now as expected revenues declined by a low double digit percentage was around 40% of the declined attributable to all to ration of the gift section in the lifestyle category to both improve the overall quality of the show and to allow for the J. sound Michelle to call, Okay with New York.

No.

Well the home category continued to be the most challenging there was some clear positive momentum in the show.

Based on our posts show research. The overall show school that Brian mentioned earlier increased by approximately 30% over the previous some a show for New York now exhibited by just less than 10% for New York now attendees.

Looking forward, we continue to see an opportunity to improve New York now I've taken extra time to assess the enhanced post show research and analysis before opening the sales process for the next show in February 2020.

Well this is impacted short too.

Racing and revenues, we remain focused in the long term health the brand the confident that we can return New York now to growth longer to.

22, all third largest showing the coolness of Expo, we announced in early September that we were cancelling the show and also the Colocated I.S.S. Orlando show due to Hurricane Dorian, which was threatening to imminently strike, Florida.

This is a difficult decision, but we work closely with various stakeholders to ensure that we put the safety of our customers staff enough supplies pissed.

Well, we were disappointed to cancel the shows a financial loss was covered by event cancellation insurance and we recorded the agreed nets insurance proceeds as other income in the quota.

As a result of this insurance coverage profitability in cash flow is we're not adversely affected by these show cancellations.

As opposed to note with pleased to see the about booth revenues for the for the next to it affects both show in January pacing very nicely.

Finally, let me give a brief update on a C.D. Expos show, which took place in September .

Well the community seemed to really enjoying moving to the shows late to spend you in Denver the home Tech industry has to be particularly affected by the recent U.S. trying to trade dispute.

This can be seen in the shows revenues, which would down by a mid single digit percentage.

Looking forward, we'd expect the trade tensions to remain a modest overhang on the shows performance next year.

No need to all third quarter results on page 25 in the interests of time I'll just touch on a few of these items well detail is available in a in its release issued this morning.

Revenues decreased by 27.5 million Oh, 26.7%.

85.6 million compared to the year ago quota.

The decline reflected the nets 13.3 million reduction you to several shows scheduling differences in the third quarter of 2009 team, most notably outdoor retailer some of the market, which stage from the second quarter. This year, but it's just third quarter of 2018.

Oh revenues. This cool till we're also adversely affected by shows discontinued in 2018, but did not repeat in 2019.

<unk> into bike.

And also by the 7.1 million of anticipated revenues of the syntax, though an I.S.S. Atlanta shows that we weren't able to book due to the cancellation of those shows which I noted a moment to go.

Organic revenues declined like 3.7 million Oh, 4.4% after adjusting for the aforementioned items and excluding the 1.9 million up incrementally revenues in the third quota and the two acquisitions. We completed your second half of last year.

Adjusted even for the third quarter of 2019 28.7 million compared with 40.9 million for the equivalent 2018 period adjusted for the impact of show timing differences.

Decrease of 12.2 million or 29.8% was mainly driven by the flow through about short folding organic revenues by are operating cost mainly due to a planned incremental event and organization investments and the loss contribution on I'll just continued events.

Free cash flow, which we defined his neck cash provided by operating activities less capital expenditures.

It was 10.7 million in the third quarter of 2019 compared to 13.6 million and the third quarter of 2018, a decrease of 2.9 million or 21.3% just reduction <unk> largely reflected the operating proponents of the business in the quota.

Well paid 26 I set out of the uses of cash in the quota.

Most notably we repurchased over 400000 shares about common stock then average price of $9 in 43 cents during the quota.

That's the end of the quota we've acquired approximately 250000 additional chest, leaving the company with approximately 24 million up the approved programs still available.

At the end of September Alright, standing Tim loan balance was 532.3 million, we have 6 million outstanding under revolving credit facility.

Cash on hand of 13.6 million. This resulted in a net deck of 524.7 million and a net leverage ratio of approximately 3.9 times out last 12 months adjusted EBITDA.

No need for the full quota and our full year guidance.

The largest shows in Q4 a pacey well.

Oh, D.D.M.Y., which we have <unk> acquired last year and healthcare design take place in the next couple of weeks and are expected to grow nicely against their respective previous year event.

Back in August we announced it falling considerable coming from <unk> outdoor community, we decided to combine our plan outdoor retailer winter market trade show that stage. The first week of November with outdoor plus snow show, which day just at the end of January next year.

This decision represented a financial setback for 2019 as and when to market show I'd revenues over $5 million last year was solidly profitable.

But it was the right decision for our customers and the industry.

Ultimately, we believe a single went to season show will be most successful for outdoor retailer and just customers.

Staging to went to season shows.

So far we've been successful in converting around 80% of the exhibitors, who had signed up just for the winter 2019 show into the January 2020 show and the number of those executives who was signed up for both went to shows up now upsize the January presents.

Overall, the outdoor plus snow show 2020, as pacey well ahead of the 2019 edition.

I'm pleased to know that we've been able to absorb the 2019 impact within our guidance not adjusted dog guidance ranges for the full year 2019.

That said the cancellation of so Expo and I assess the land, though to to hurricane Dorian reduced anticipated third quarter revenues by approximately $7 million and consequently, we currently expect total revenue to full modestly below the low end up that guidance range.

However, as a result of our events cancellation coverage for these shows management doesn't expect the show cancellations impact any of the other measures.

<unk> final remarks.

So thanks to everyone on the call for your time today.

I hope that you have taken away from this call is it we have we said the table.

On a path to improve our execution engines are better financial results I appreciate that it will take time for us to prove that to you and do we gain your trust in Compton.

I believe the animals business is fundamentally sound.

I understand what we need to do to be successful and while it may take time to see food farming.

You're doing the right thing, we're trying to business too so.

Cheese, our financial objective.

Thank you again operator, please open to call for question.

At this time will be conducting a question and answer session. If you'd like to ask the question. Please press start one on your telephone keypad. It confirmation tono indicate your line isn't the question Q. you may Prestart too if you like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing.

Sarkies when moment, please while we polled for questions.

Your first question comes from the line of Jeff Mueller with Baird. Please proceed with your question.

Yes. Thank you Sallie just first best wishes on those the personal challenges here you're fighting through.

On the the business so I get that it's kind of early and you're going to lead to February to give us the K P eyes to to track and measure your progress against.

Just from the changes that you've made thus far any early indicators that you can kind of share or is it just too soon.

I think it's a little soon Jeff I mean, we certainly there are some green shoots that we're seeing in terms of improvement and.

Customer experience score I said at a New York now some early thoughts 30% improvement among a seven or.

So some of those things that weren't doing in the measurement for putting in place are starting to show some positives effect, but it's really going to be 2021, before we've got everything implemented and really rolling out into its full impact and.

You've heard as we've gone through the list of various.

Initiates that where we're undertaking.

Got it and then Phil I guess Im a little confused by just the.

The cancellation, the hurricane cancellation math and insurance. So I know that you ensure for loss profitability in business disruption I guess I'm just surprised that there would be a 6 million dollar insurance benefit on 7 million of loss revenue that sounds high so is that right and there was something in the Q.

About.

You know maybe the eating at some point to reimburse exhibitors for out of pocket expenses. So what I'm wondering is is the 6 million dollar benefit all recognize this quarter, but theres some future expense against that that's not a crew just trying to help understand why the 6 million insurance proceeds would be so high in southern.

I have lost revenue.

Sure I mean the.

The the anticipated revenue, we didnt, though because the 7.1 million, we saved a million dollars in running the show.

We didnt that show didn't take place, but obviously most of the the cost were in could beforehand. So we saved a million dollars. This is the lost revenue and Thats why that's how the event cancellation works, it's the net financial impact to us so you'll see in the commentary around cost of revenues that it says you know one of the the.

Sums affecting the quarter versus the previous quarter was the savings in.

In the show so that's how we get to.

We got to 6.1 that the.

The reimbursement to exhibitors as we had two.

Insurance.

Policies, we had one which was for us to reimburse us for having to give refunds to customers and then we purchased a secondary policy.

And that's the long that we will receive cash.

In Q full and we will pay out exhibit this fall the cost they had that were incremental to the booth cost. So the primary pays that booth costs back to them and sponsorship costs.

What what they paid US and then we had a secondary won which is what is referenced in the in the Q.

Okay, and then just last from me.

Any kind of rough sizing of you've obviously are in flight with implementing lots of initiatives like how much of the expense related to them is recognized in year end 2019 versus how much will be incremental for initiative expense in 2020.

So we have.

Approximately 2 million all the costs of the new team on the initiatives. This started to be kicked off if we annualize that it's probably another.

Threemillion next year. So you know with 5 million as a run rate subject to other initiatives our investments that become you could start to be implemented next year. We we've talked about a lot of the things that we are.

Already kicked off you know, but there are other things in the pipeline that maybe we'll have an impact in 2020 as well.

Got it thank you.

Welcome.

Your next question comes from line of Manav Patnaik with Barclays. Please proceed with your question.

Yeah. This is Ryan Leonard on for model and also wishing you a the best Sally.

You know just in terms of the long term targets I was wondering if you just help us out I mean, we've you know there's mid single digit has been thrown out there before so I'm. Just wondering you can break that down at all in terms of or is that from volume growth as it from pricing is it expects new show launches can you just help help us think about how we get there.

Just in terms of some buckets.

I mean, I'll I'll start and then you can you can add I mean in terms of where does mid single digit growth come from I think we talked about the opportunities within value based pricing over time, you know the initiatives all all focused on improving the show so we would.

Expect volume growth.

Within shows over the longer term and we have.

A number of.

New show ideas you show launches that are being considered so I think it's a combination of all those things not one no more than.

On the than the others at this point was the diversification of the rather than a strain, which Brian discussed earlier, we believe it's going to also lead to growth.

Got it and just on that diversification.

Is that really focused on existing shows that exist today or do you think there is a need to diversify the current portfolio of shows.

The current the outlook right now is we're looking at how we can diversify revenue in all of our existing shows wherever those opportunities arise and then as we contemplate new launches that may happen in the future of course will be looking too.

Contemplate how those those types of bundles are.

Our built into them from the day one.

Yeah.

Got it and then finally from me just on the you know the the cost management side in the the growing at a you know a profitable margin is it safe to say that you know if revenue growth is mid single digit EBITDA growth should be in line with that if not better.

So I think that's a good question because ultimately what matter is.

EBITDA growth.

That's our primary focus.

And I think obviously revenue growth is key.

Margin plays a role, but when you're looking at revenue.

EBITDA growth over time.

Getting the growth rates I would suggest it's probably slightly more important been pushing for the highest possible margin because of growing business at a slightly lower margin, it's worth more than a contracting business at a very high margin.

Got it thank you.

Your next question comes from the line of David Chu with Bank of America. Please proceed with your question.

Alright. Thank you so based on this value based pricing I mean, how should we think about price increases for like the total show portfolio in 20, and 21 I know that it's not really being implemented fell 2021, but just thoughts over the next two years would be helpful.

Yes, so the overall effect you're right.

Really going to bear out until 2021 based upon the cyclicality of the.

The way the shows Ron.

Where as I mentioned earlier, introducing the value based pricing modeling.

Across a handful of our shows at this very moment.

I can't do everything at once.

So we're doing this in batches, we'll be moving forward into additional shows and how valuable pricing roles onto them.

Over the course of next year, which will.

Have effect forward.

As those shows stage too.

So we're looking you know those will be 2021 to 2022.

And David data to sell the.

The current pricing.

Yield growth is it into 2% to 3%, which is pretty typical and pretty you know what we've seen over the last couple of years. So I think that's sort of our expectation.

Going into 2020, and then you know a little bit of a boost in potentially in 2021.

From the introduction of value based pricing in a bunch of the shows.

Okay, Great. That's helpful. And then just given the current assessment of the portfolio just any update on potentially discontinuing any shows.

We're always looking at what makes no sense for our portfolio at this point, we don't see anything that makes sense to discontinue.

At the same time, it's always an open question as we continue to analyze and go.

And it continues for a proof points about the effectiveness of the tactics, where I'm flying that may change, but at this point no.

Got it okay. Thanks, and just last last one just a quick housekeeping what was organic growth for the three segments.

I don't have the supplemental materials.

Right in front of me right now, but it's on the web sites.

The the breakdown between.

Trade shows other events and.

On the marketing services.

Okay. So you can find it is online okay got it thanks, yes.

Your next question comes from the line of Kevin Mcveigh with Credit Suisse. Please. Please proceed with your question.

Great and Sally best wishes on the road to recovery in terms of.

The revenue Kinda then on both revenue and accelerated rate eight salary Sally any sense of what's been your experience there and then within the context of that what is the revenue look like kinda nonbelievers versus booths and does it change this seasonality that business and where the predictability as you start as that becomes a bigger.

Were sent into the contribution.

So we're in the process of running pilot right now and in 2020, those pilots will help help us some I see opportunity and help us see which of the various things we could pursue.

We'll be most effective at what shows because there will be some variability.

So.

I think is that the opportunity is considerable over time.

Because or enrolled overall, it's a smaller percentage of our revenue then it is for many tradeshow producer.

Our booth revenue pure abuse Booth revenues are about two thirds of all revenues and then some of the non booth includes commissions and other things related to to really the trade show. So the the third or a little bit less than the third is what we have to.

We have to work with in terms of.

Kind of numbers.

And what would be a more traditional mix.

[noise].

Hard to say because I'm not privy to the exact details, but certainly my model for what it should look like in future years would be that we continue to grow our booth ravenel, but decreased our dependence on it.

So I could see us in a place where our booth revenue is 50%.

And of our total revenue and the other Huh Congress from conference system Education sponsorship.

I'm content marketing a from a whole list.

The thing that we can be doing given the fact that we have additional pricing that were not offering today.

Got it and then would you tell you theoretically would there be similar.

Revenue growth contribution would you expect to non boots, obviously, we'd go faster.

Hi, it's really hard to predict at this point until our pilots are done.

So a if you know if we do it right. There's obviously, we're in change in markets, where things like education matter.

And it's hard to predict how much gross well see where but we're confident that it's there and that we can gather it overtime.

Thank you.

Yeah.

Your next question comes from line of Ashish Sabadra with Deutsche Bank. Please proceed with your question.

[laughter]. Thanks for taking my question, it's probably best wishes, let's speak only as well.

Just a question on New York now just.

If you can provide some color on expectations, Florida revenues, how much has been declining I thought the fact show and when should we start to see that going around for the New York now or is something like 20%, even you construct and she's done around that thanks.

Hi, Phil I'll try this and then so you can you can come in I mean, we have we haven't you a leader all over the show so and as we said.

In the in the prepared remarks, we're really taking some time to look at what we've gotten well what we need to do we believe in in the long term growth opportunities.

All of this franchise, it's really difficult to say when that will come through.

Certainly 2020, maybe a little bit soon for to see that flow through.

But you know there's a lot of initiatives going into the first show in February new things happening, we're responding to the research and really detailed research and analysis and so you know it's a we're playing the long game on New York, now and and we'll continue to.

We'll continue to move forward, but you know I think I think 2020 make and some of the 2020, which was your question maybe a little soon to expected to stabilize.

In general because it feels good about retail as we've seen with asked the which is now oh returning to growth.

So I want to be clear that we think on New York now issues are not related to retail as a category, but more to the fact that we haven't executed in as customer southwest away as we could have.

[noise] definitely helpful. Charlie and me again, thanks for providing the details from the strategic initiatives.

My question was somewhat.

Ladies and gentlemen, and welcome to Emerald Expositions third quarter 2019 earnings conference call.

During today's presentation, all parties will be in a listen only mode. Following the presentation. The conference will be open for questions with instructions to follow at that time.

As a reminder, this conference is being recorded.

I'll now like to turn.

The call over to Mr., Philip Evans, Chief Financial Officer. Thank you Sir Please go ahead.

Thank you operator, and good morning, everyone. We appreciate your participation today and our third quarter 2019 earnings call I'm very pleased to have Saudi Shankland, Emeralds, President and Chief Executive Officer, Brian Field, Our Chief operating Officer with me here today as a reminder, a replay of this call will be available on the investor.

This section of the company's website through 11 59 PM Eastern time on November 12, 2019, we've also posted a supplemental presentation to accompany today's discussion on our web site at Investor Dot Emerald Expositions dotcom.

Before we begin let me remind everyone that this call may contain certain statements that constitute forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995. These include remarks about future expectations beliefs estimates plans and prospects such statements are subject to a variety.

You have risks uncertainties and other factors that could cause actual results to differ materially from those indicated or implied by such statements.

Such risks and other factors as set forth in the company's most recent filed periodic reports on Form 10-K , and Form 10-Q , and subsequent filings we do not undertake any duty to update such forward looking statements.

Additionally, during today's call will discuss non-GAAP measures, which we believe can be useful in evaluating outperformance presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with us GAAP.

Reconciliation of these non-GAAP measures to the most comparable GAAP measure can be found in our earnings release.

Now I'll turn the call over to Sally.

Thank you Phil on today's call I'll spend the majority of my time, reviewing our strategic plan, which is designed to improve our execution across all facets of the business.

And return analog to sustainable organic growth.

Brian field, our COO is here with us on the call today.

Brian is overseeing the a two shares our plan and is critical to and success.

I have asked him to provide some additional color on several of the initiatives that we have we put into action.

Finally, Phil will review, our third quarter results in more detail and provide an update on our expectations for the full year.

We will then open up the call for our question and answer session.

But before we start let me provide an update on my own listen treatment.

As we announced at the beginning of October I was recently diagnosed with cancer have began a regimen of regular chemotherapy.

I remain engaged in the strategic management of the business.

In key decision.

The same time relying on my leadership team and Brian in particular, you continue to support execution on a day to day basis.

Hey, sincerely appreciate the support and encouragement I received from my team our employees customers and vendors as I worked through this challenging target.

With that said, let's turn to page five the Q3 earnings call presentation.

On the left hand side of the chart I've outlined my view of our most key strength.

I believe passionately that face to face interaction remains a highly valued element of commerce.

Occasion.

End market development.

Importantly enrolled has a portfolio of strong and respected brands.

With the opportunity to return to some levels of growth and success that we've experienced in the past.

The challenge has been execution and accountability.

Which has led to performance that as a lag if the industry and more importantly, our expectation.

With more than 25 years of experience in this industry I can tell you that there is nothing that I've encountered enrolled over the last five months.

I haven't seen or addressed before in my career.

This is why I'm highly confident that our challenges can be solved the right team right investments device strategy and the right culture.

Flipping to page six our transition has begun and I'm very pleased with the progress we've made in such a relatively short time.

Our management and our entire employee base enthusiastic and confident.

Moving in a better direction.

Over the next few pages.

We will review several of the initiatives that we implemented and the changes that were driving.

To address animals challenges as well as to drive a cultural change across the company.

We needed to strengthen our team to ensure that we have the experience and skills to address the company's issue.

On page seven I've listed the most senior hires that have made since joining ammo back in June .

This is a tremendous group of leaders with more than 120 years of relevant industry experience.

I could not be prouder, they've chosen to hedge their wagons city and most star.

It's also worth pointing out that we have made and continue to make important changes.

Well as adding new skill set.

Deeper in the organization as we work to strengthen an upgrade our capabilities at all levels of the company in order to improve our execution across the entire organization.

Turning to page eight and key to our success is our redefine vision and mission.

We must be focused on directing our products and services towards fueling our customer success.

And also that of their broader industry.

We will do this by listening to them and working with them throughout the year not just for a few days or a few weeks each year.

We will improve the quality and value of what we produce.

And support the broader end markets and communities in which we operate.

Our vision and mission puts our customers at the center of our organization and what we do every day.

As our customers succeed.

So we'll wait.

Turning to slide nine you have four key strategies designed to improve our execution.

And our business and return animal to sustainable organic growth.

As we center our organization on our customers, it's imperative that we work to increase their satisfaction with our mold experience.

As their satisfaction growth so our business.

Second we see tremendous opportunities to diversify our revenue.

Mainly by growing our existing non booth revenues at an accelerated place.

Third we recognize the importance of the operating efficiently and being a cost later in our industry and we see opportunities to improve in these areas.

And finally, we expect to selectively pursue attractive tuck in acquisitions.

Like the G Suite Communications acquisition, we announced yesterday.

Add to our capabilities and drive incremental financial returns.

As we successfully implement our initiatives and improve our execution, we expect to them live our long term organic revenue growth at or above industry level.

And to generate consistent year over year growth in adjusted EBITDA.

So, let's drop down a level and to some of the detail around for individual strategies.

On page 10, I've set out some of the tactics related to our focus on customer satisfaction.

Our many initiatives here that range from simply delivering better offensive experiences to reestablishing a performance oriented culture that ties our teams compensation to our success and improving client satisfaction.

At this point I'd like to ask Brian to outline some of the specific things and he is a leading and we expect will contribute to improved customer satisfaction.

Brian .

Thank you Sally and good morning.

Turning to page 11, a key process, we're putting in place as a rigorous event planning framework.

This is a standardized diagnostic and forecasting instrument for building up planning and evaluating the health of an event.

Selling and I have successfully implemented and use this kind of process in the past with great success.

A foundational components of this framework is rooted in an outside and approach.

Analyzing the dynamics in the markets in sectors in which each show operates understanding our customers' needs with their industry.

With a holistic understanding of our customers their pain points motivations. You then build up the approach and how we target our sales and marketing strategies, the kinds of opportunities and content that will resonate and the optimal channels to reach them.

Using this event plans framework has several benefits first it focuses us on our customers' needs. So that everything we do is designed around what is important to them the outcomes the seats.

Second it reinforces data led decision, making by testing the effectiveness of every marketing channel every partnership every investment we made.

Third since this kind of platinum requires inputs and participation from a cross criminals organization from brand of management's to sales marketing operations and finance the creates a unified understanding of purpose and transparency across our teams.

From an overall management perspective, the event plan framework also provides us greater confidence the outcomes over that's due to the rigor and thinking invested during the process and provides a dashboard of flags should any particular metrics fall below established benchmarks as the show cycle progresses.

So for instance, some of the issues that drove the disappointing performances of our eyes CFS and retail ex shows in the second quarter could have surfaced much earlier in the show cycle, which would have allowed us to take urgent remedial actions to get things back on track.

Finally, as we implement has been plans across all of Emerald shows over the course of 2020. This will also become a tool for multiyear planning.

Moving the budgeting process and our forecasting accuracy.

Moving to page 12, we are beginning to implement value based pricing across several shows.

Broadly speaking this is research and analysis of live event pricing and promotion based on customers proceeds values of available locations and packages.

We use an example, most of us are familiar with.

Well generally I understand the variations of price in that one science and airline seating with different seeding types classes amenities and the expectations we have around them.

When we pay more we expect more for the first class seats and the basic economy, one and theres transparency around that.

This same thinking can be applied to locations on a trade show floor, where high values locations in the front of a hollander densely traffic points desirable locations have greater value and command higher pricing than locations and less traffic areas.

That said location is only one of many variables, which also include booth configuration, the timing of sale and discounting and bundled non booth related promotional products.

We partnered with some specialty consulting firms, one of which algorithmically assesses dozens of commercial data points to evaluate the effects of timing and pricing elasticity in the development of our value based pricing model.

We have begun this process with six shows outdoor retailer PSD New York now.

Expo service Expo and retail FX.

Based on my previous experience the implementation of value based pricing models can deliver an upside of between 4% to 8% on show revenue, which would equate to a potential five to 10 million incremental revenue on these six shows alone based on 2019 revenues.

Due to the timing of show cycles, and the value based pricing implementation, we don't expect to start seeing the financial benefits of this effort until the 2021 show additions.

In the meantime, we're identifying additional show candidates to undergo this process over the course of 2020.

Moving onto page 13, as part of our focus on data led decision, making third point of folks I'd like to discuss involves post event research.

We have now begun to implement a standardized process and toolsets to design deployed and measure customer surveys coupled with in depth customer insights.

This past July .

We began to work with exploring.

Event specific research and analysis from to ensure consistency in the design and deployment of our post show surveys and support our cycle of research to action.

Exploring currently collects data from over 2700 trade shows, allowing us to measure emerald customer sentiment across not only our own historical benchmarks, but other competitive shows as well.

Exploring has also established an overall show score, which is a robust customer sentiment metric combining net promoter score satisfaction loyalty an important metrics.

The scoring demonstrates how any specific show ranks against all other shows and explorers universe and will be a customer led measure of Emirates improvements against our peers.

This will also be a key metric our teams will be accountable to improving from addition to addition.

We currently have 27 events integrated into the exploring platform, which will be fully adopted across enrolled by the end of 22.

Turning to page 14, the next focal point for US as we go into 2020, and one I'm, particularly excited about it's around data enrichment.

Segmenting, our customer information through a fusion the data sources, along with behavioral tracking.

The results of this will provide us datalert insights and enhanced customer led product offerings.

Good day Emerald uses basic demographic and from a graphic information in our marketing practices such as name title company information in size and company revenues.

Well. This information is helpful for broad segmentation its limits what customers explicitly tell us and can creates incomplete views and mismatched marketing messages.

Emerald has access to information on customer activity that as Unlinked underutilized. This kind of information includes data such as subscribing histories and online content behaviors for example.

Bringing these types of data together allows for a refinement and messaging segmentation strategy and customer insights.

This is truly an exciting initiatives.

Based on my experience with implementing these kinds of enhancements in the past. So approach can have a transformational impact on how we understand communicate with and nurture our customers.

We're currently designed into integration path for these data sets today and plan to start rolling out in rich data to our marketing teams over the course of 2020.

Thanks, Brian .

So let me pick up on page 15, when we set out our second both strategy, which is to give a more concerted effort, so and diversify our revenue stream.

Just to be clear this doesn't mean, we plan to pay any less attention to our core space based revenue stream.

Got it wrong, there that we see untapped opportunity is.

Jason revenue streams.

With the right attention and resources applied to that.

To deliver more value to our market and drive growth opportunities for us.

We now have senior executives with horizontal box responsibilities.

Sponsorship and advertising revenues from France revenues.

Uhhuh supplier revenues across the entire ammo portfolio.

Working with our individual brands, there hopefully drive adoption of best practices.

And the development of new opportunities.

We started several pilot programs, we have a number of brands.

Once for all down I believe it will be significant opportunity today is to drive substantial incremental revenue over the next several years.

Let me hand over to Brian again to outline our initiatives in the area of integrated customer solutions.

Thanks Kelly.

So one of the ways, we're diversifying our revenue is through a focus on integrated customer solutions.

Driving increased value for customers by creating integrated packages that go beyond pure booth or conference programs.

These will blend onsite sponsorship programs with digital and print solutions to reach desired customer outcome.

Through our customers. This is a more holistic approach at delivering value that extends beyond present days two year round opportunities.

Examples of this our bundle and at shows sponsorship options around show guys content tracks and speed dating pavilions with year round opportunities such as the sponsorship of curated topical series on our web sites extending customers content as part of a webinar series even extends into more traditional meet.

The offerings, such as relevant section takeovers of display ads and digital wallpaper on our web sites and sponsored belly bands on our print magazines and AD pages.

As we're designing these integrated solutions, our focus will be on standardization scale versus one off bespoke efforts maximize opportunity for new profitable revenue growth.

Thanks, Brian .

On page 17, and sit out our third growth strategy, which is to operate more efficiently and cost effectively.

An important component of the strategy is strengthening the culture and discipline in the organization because if there is more financial rigor around decision making.

Getting forecasting and procurement.

We will also structure the organization and the portfolio to be efficient.

An optimized profitability.

Flipping to page 18, we plan to continue to pursue M&A opportunities that make sense for us.

Which means where they meaningfully strengths in the existing business that we already.

Or where we bring considerable value to the acquisition and dramatically enhances the acquisitions growth trajectory.

We will apply an even higher level of discipline and rigor to this process than we have in the past.

On page 19, I've set out our most recent acquisition, namely that of cheap three communications, which we announced yesterday.

This is a perfect example of a tuck in acquisition that is a great business and its own right.

Purchased at an attractive price.

Also strengthens the animal business considerably.

These ray has expertise and content.

B to B marketing and the ongoing retail transformation.

Through this acquisition, we see opportunities to expand the services and solutions, we provide our exhibitors.

Also to create and monetize education model for the attendees across our retail event.

Turning to page 20, as I noted earlier, our financial objectives are quite straightforward.

And to be a growth business.

Both topline and bottom line.

Deployed capital Responsibly, and then a balanced way that drives shareholder value.

What that means is that we will continue to invest in our core business to improve its trajectory and at the same time look for tuck in acquisitions that fit our very specific criteria.

You plan on using our remain free cash flow after regular quarterly dividend payments to pay down debt.

I'll share repurchases are not a core part of our capital allocation strategy.

They continue to buy back shares as we believe this accompanies meaningfully more valuable and is reflected in the share price.

On page 21, as set out in and indicative timeline showing some of the key milestones in the past two brothers.

I believe that much of that success will be driven by new processes, new discipline and accountability throughout the organization.

Better use of data and technology.

Frankly, this is simply driving better data informed execution.

While our return this growth will take time, given the need to drive change across many show cycles Europe , considering what key performance indicators. We can provide the investment community you can track our success and I will have more sand is on Feb, when we release our fourth quarter.

Full year 2019 earnings results.

Flipping to page 22 have told our employees in the first day that I joined ammo, therefore important constituencies that need to be addressed.

We are six to be successful.

Starting with our customer is fairly obvious.

Well, we also need the value our employees and make among other great place to work.

Moving to expanded training and development opportunities.

Next we need to put more effort into our communities.

The industry communities in which we operate.

And the local communities, where we have offices and where we live.

And if we do all this right they expect to have a highly valuable and sustainable business.

I will benefit all of our stakeholders.

Now I'll turn the call over to sell to discuss our third quarter results.

Thank you Sally and good morning, again, I'll pick up on page 24, and began with a brief review of our third quarter shows.

Starting with SD shows revenues were flat versus the equivalent show last year.

When excluding the sourcing category that was adversely affected by the ongoing us China trade dispute revenues grew 4%, which is a great result.

No changes to the sales structure of now taken hold together with other execution improvements in the further implementation of the initiatives that Brian discussed earlier, we feel confident that the franchise has stabilized and is poised for growth in 2020 in fact, our revenues for the next showing much already pacing well.

Our second largest showing the quarter was this summer addition of New York now as expected revenues declined by a low double digit percentage was around 40% of the decline attributable to accumulation of the gift section in the lifestyle category to both improved the overall quality of the show and to allow for the J Summer show to co located with New York now.

While the home category continued to be the most challenging there was some clear positive momentum in the show.

Based on our post show research. The overall show school that Brian mentioned earlier increased by approximately 30% over the previous summer show for New York now exhibitors and by just less than 10% for New York now attendees.

Looking forward, we continue to see an opportunity to improve New York now and have taken extra time to assess the enhanced post show research and analysis before opening the sales process for the next show in February 2020.

While this has impacted shortened boots pacing and revenues we remain focused on the long term health of the brand and the confident we can return Europe now to growth longer term.

Turning to our third largest show in the quarter serve Expo, we announced in early September that we were canceling the sheer show and also the co located ISS Orlando show due to Hurricane Dorian, which was threatening to imminently strike, Florida.

This is a difficult decision, but we work closely with various stakeholders to ensure that we put the safety of our customers our staff and our suppliers first.

While we were disappointed to cancel the shows a financial loss was covered by event cancellation insurance and Weve recorded the agreed net insurance proceeds as other income in the quarter.

As a result of this insurance coverage of profitability and cash flows were not adversely affected by these show cancellations.

On a positive note we're pleased to see that our booth revenues for this for the next set of Expo show in January of pacing very nicely.

Finally, let me give a brief update on a CD Expo show, which took place in September .

While the community seem to really enjoying moving to the shows latest venue in Denver. The home Tech industry has been particularly affected by the recent us China trade dispute.

This can be seen in the shows revenues, which were down by a mid single digit percentage.

Looking forward, we'd expect the trade sanctions to remain a modest overhang on the shows performance next year.

Turning to our third quarter results on page 25 in the interests of time I'll just touch on a few of these items will detail is available in our earnings release issued this morning.

Revenues decreased by 27.5 million or 26.7% to 75.6 million compared to the year ago quarter.

The decline reflected a net 13.3 million reduction due to several show scheduling differences in the third quarter 2019, most notably outdoor retailer similar market, which states in the second quarter this year versus the third quarter of 2018.

Our revenues this quarter were also adversely affected by shows discontinued in 2018 that did not repeat in 2019, particularly interbike.

And also by the 7.1 million of anticipated revenues of the surface Expo an ISS Orlando shows that we weren't able to book due to the cancellation of those shows which I noted a moment ago.

Organic revenues declined by 3.7 million or 4.4% after adjusting for the aforementioned items and excluding the 1.9 million of incremental revenues in the third quarter and the two acquisitions, we completed the second half of last year.

Adjusted EBITDA for the third quarter 2019 of 28.7 million compared with 40.9 million for the equivalent 2018 period adjusted for the impact of show timing differences.

The decrease of 12.2 million or 29.8% was mainly driven by the flow through of our shortfall in organic revenues higher operating costs, mainly due to our planned incremental event and organizational investments and the loss contribution on our discontinued events.

Free cash flow, which we defined as net cash provided by operating activities less capital expenditures.

It was 10.7 million in the third quarter 2019, compared to 13.6 million in the third quarter 2018, a decrease of $2.9 million or 21.3%. This reduction largely reflected the operating performance of the business in the quarter.

On page 26, I set out the uses of cash in the quarter, most notably we repurchased over 400000 shares of our common stock than average price of $9.43 during the quarter.

See ended the quarter, we've acquired approximately 250000 additional shares leaving the company with approximately 24 million up the approved program still available.

At the end of September our outstanding term loan balance was 532.3 million, we had 6 million outstanding on the revolving credit facility.

The cash on hand of 13.6 million. This resulted in a net debt of 524.7 million and the net leverage ratio of approximately 3.9 times, our last 12 months adjusted EBITDA.

Turning to the fourth quarter and our full year guidance, our largest shows in Q4 pacing well.

Both BBM, why which we acquired acquired last year and health care design take place in the next couple of weeks and are expected to grow nicely against their respective previous year event.

Back in August , we announced that falling considerable consultation with the outdoor community, we decided to combine our planned outdoor retailer winter market trade show.

At this stage the first week of November with outdoor plus snow show, which stages at the end of January next year.

This decision represented a financial setback for 2019 as and when to market show had revenues over $5 million last year, and we're solidly profitable.

But it was the right decision for our customers and the industry.

Ultimately, we believe a single winter season show will be more successful for outdoor retailer and its customers. This is staging to winter season shows.

So far we've been successful in converting around 80% of the exhibitors who have signed up just for the winter 2019 show into the January 2020 show and the number of those exhibitors who was signed up for both went to shows have now upsize the January presence.

Overall, the outdoor plus no show 2020 is pacing well ahead of the 2019 addition.

I'm pleased to note that we've been able to absorb the 2019 impact within our guidance and have not adjusted our guidance ranges for the full year 2019.

That said the cancellation of Sir Expo and ISS Orlando due to hurricane Dorian reduced anticipated third quarter revenues by approximately $7 million and consequently, we currently expect total revenue to full modestly below the low end of that guidance range.

However, as a result about events cancellation coverage for the shows management doesn't expect to show cancellations to impact any of the other measures.

At this point I'll hand back to Sally for final remarks.

Thanks, Phil and thanks to everyone on the call for your time today.

The what you have taken away from this call is that we have reset the table and on a path to improve our execution and deliver better financial results.

Appreciate that it will take time for us to prove that to you and to regain your trust and confidence I.

I believe the among businesses fundamentally sound.

I understand what we need to do to be successful and while it may take time to see through to performance.

You are doing the right thing to return the business to grow.

To achieve our financial objectives.

Thank you again operator, please open the call for questions.

At this time will be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad a confirmation total indicate you line is in the question Q.

Hey press star to if you'd like to remove your question from the Q.

Participants using speaker equipment, it may be necessary to pick up your handset before pressing the star Keith one moment, please while we pull for questions.

Your first question comes from the line of Jeff Mueller with Baird. Please proceed with your question.

Yes. Thank you Sallie just first best wishes on those the personal challenges here you're fighting through.

On the business, so I get that it's kind of early and you're going away to February to give us the cpis to to track and measure your progress against.

Just from the changes that you've made thus far any early indicators that you can kind of share Tom or is it just too soon.

I think it's a little soon Jeff I mean, certainly there are some.

Green shoots that we're seeing in terms of improvement in.

Customer experience score is set at.

The New York now summer, we saw 30% improvement.

Hey exhibitors.

So some of those.

Things that we're doing in the measurements were putting in place are starting to show some positives effect, but it's really going to be 2021, before we've got everything implemented and really rolling out.

Until its full impact as you've heard as we've gone through the.

A list of various.

Initiative that we're we're undertaking.

Got it and then Phil I guess Im a little confused by just a.

The cancellation, the hurricane cancellation mass and insurance, so I know that you ensure floor.

Loss profitability and business disruption I guess I'm, just surprised that there would be a 6 million dollar insurance benefit on 7 million of loss revenue that sounds high. So is that right. Then there was something in that you about.

Maybe the eating at some point to reimburse exhibitors for out of pocket expenses. So what I'm wondering as is the 6 million dollar benefit all recognize this quarter, but there are some future expense against that that's not accrued just trying to help understand why the 6 million.

Sure as proceeds would be so high and 7 million of lost revenue.

Sure I mean the.

The the anticipated revenue, we didnt vocals of 7.1 million, we saved a million dollars in running the show.

We Didnt show didn't take place, but obviously most of this to cost were incurred beforehand. So we saved a million dollars versus.

The loss revenue and Thats why that's how the event cancellation works, it's the net financial impact to us so you'll see in the commentary around cost of revenues study says you know one of the items.

Acting the quarter versus the previous quarter was the savings in.

In the show so that's how we get too.

We got to 6.1 that the.

The reimbursement to exhibitors as we had two.

Concerns.

Policies, we had one which was for us to reimburse us for having to give refunds to customers and then we purchased a secondary policy.

And that's the ones that we will receive cash.

In Q4, and we will pay out exhibitors for the cost they had that were incremental to the booth cost. So the primary pays that booth costs back to them and sponsorship costs.

What what they paid US and then we had a secondary one which is what is referenced in the in the Q.

Okay, and then just last from me.

Any kind of rough sizing of you've obviously are in flight with implementing lots of initiatives like how much of the expense related to them is recognized in year end 2019 versus how much will be incremental for initiative expense in 2020 [laughter].

So we have approximately 2 million of the costs of the new team on the initiatives. This started to be kicked off if we annualize that it's probably another.

3 million next year. So you know with 5 million as a run rate subject to other initiatives our investments the become.

To start to be implemented next year, we've we've talked about a lot of the things that we are.

Already kicked off but there are other things in the pipeline that that maybe we'll have an impact in 2020 as well.

Got it thank you.

Welcome.

Your next question comes from the line of Manav Patnaik with Barclays. Please proceed with your question.

Yeah. This is Ryan Leonard on for model and also wishing you are the best Sally.

You know just in terms of the long term targets I was wondering just help us out I mean, we've had this mid single digit has been thrown out there before so there is one of you can break that down at all in terms of or is that from volume growth as it from pricing is it expect new show watches and just help help us think about how we get there.

Yes in terms of some buckets.

I mean I'll start and then you can you can add I mean in terms of where does mid single digit growth come from I think we've talked about the opportunities within value based pricing over time.

The the initiatives are are focused on improving the show so we would expect volume growth.

Within shows over the longer term.

And we have.

A number of.

New show ideas you show launches that are being considered so I think it's a combination of all those things not one no more than.

Then the than the others at this point was the diversification of the revenue stream, which Brian discussed earlier, we believe it's going to also lead to growth.

Got it and just on that diversification is that is that really focused on existing shows that exist today or do you think there is a need to diversify the current portfolio of shows.

The current the outlook right now is we're looking at how we can diversify revenue and all of our existing shows wherever those opportunities arise and then as we contemplate new launches that may happen in the future of course will be looking to.

Contemplate how those those types of bundles are.

Our built into them from the day one.

Yes.

Got it and then finally from me just on the you know the the cost management side and the growing at a profitable margin.

Is it safe to say that if revenue growth as mid single digit EBITDA growth should be in line with that if not better.

So I think that's a good question because ultimately what matter.

With.

EBITDA growth.

That's our primary focus.

And I think obviously revenue growth is key.

Margin plays a role, but when you're looking at revenue.

EBITDA growth over time.

Getting the growth rates I would suggest is probably slightly more important than pushing for the highest possible margin because of growing business at a slightly lower margin, it's worth more than a contracting business at a very high margin.

Got it thank you.

Your next question comes from the line of David Chu with Bank of America. Please proceed with your question.

Hi, Thank you so based on this value based pricing I mean, how should we think about price increases for like the portal show portfolio and 20 and 21 I know that it's not really being implemented fell 20 to 21, but just thoughts over the next two years would be helpful.

Yes, so the overall effect, you're right are really going to bear out until 2021 based upon the cyclicality of the.

The way the shows Ron.

Where as I mentioned earlier, introducing the value based pricing modeling across a handful of our shows at this for a moment.

Can't do everything at once.

So we're doing this in batches, we'll be moving forward into additional shows and how value based pricing roles onto them.

Over the course of next year, which will.

I have effect forward.

As those shows stage too.

So we're looking you know those will be 2021, and this is 2022.

And David data to sell the.

The current pricing.

Yield growth is it's into 2% to 3%, which is pretty typical and pretty you know what we've seen over the last couple of years. So I think that's sort of our expectation.

Going into 2020, and then you know a little bit of a boost and potentially in 2021.

From the introduction of value based pricing in a bunch of shows.

Okay, Great. That's helpful. And then just given the current assessment of the portfolio just any update on potentially discontinuing any shows.

We're always looking at what makes the most sense for our portfolio.

This point, we don't see anything that makes sense to discontinue.

At the same time, it's always an open question as we continue to analyze and go.

And the continued for proof points about the effectiveness of the tactics, where I'm flying that may change, but at this point no.

Got it okay. Thanks, and just last last one just a quick housekeeping what was organic growth for the three segments.

I don't have the supplemental materials.

Right in front me right now, but it's on the web sites.

The the breakdown between.

Trade shows other events and.

On the marketing services.

Okay. So you can find it is online okay got it thanks, yes.

Your next question comes from the line of Kevin Mcveigh with Credit Suisse. Please. Please proceed with your question.

Okay, Great and Sally best wishes on the road to recovery in terms of.

The revenue Kinda then on both revenue and accelerated rate eight Sandler Sally any sense of what's been your experience there and then within the context of that.

What is the revenue look like on the non booth versus booths and does it change this seasonality that business and or the predictability as you start as that becomes a bigger percentage of the contribution.

So we're in the process of running pilot right now and then 2020 those pilots will tell our help us size the opportunity and help us see which of the various things we could pursue.

We'll be most effective at what show is because there will be some variability.

So I.

I think is that the opportunity is considerable overtime.

Because for enrolled overall, it's a smaller percentage of our revenue then it is for many tradeshow producer Yeah, our booth revenue pure abuse of booth revenues.

About two thirds of all revenues and then some of the non this includes commissions and other things related to to really the trade show. So the the third or a little bit less in the third is what we have to.

We have to work with in terms of.

Kind of numbers.

And what would be a more traditional mix.

[noise].

Hard to say because I'm not privy to the exact details, but certainly my model for what it should look like in future years wouldn't be that we continue to grow our booth ravenel, but decreased our dependence on it.

So I could see us in a place where our booth revenue is 50%.

And of our total revenue and the other half Congress from conferences from education from sponsorship.

I'm content marketing a from a whole list.

The thing that we can be doing given the fact that we have a digital presence that were not offering today.

Got it and then would you tell eat theoretically would there be similar.

Revenue growth contribution and would you expect to non boots, obviously would grow faster.

Hi, it's really hard to predict at this point until our pilots are done.

So.

If you know if we do it right Theres, obviously were and change in markets, where things like education matter and it's hard to predict how much growth well see where.

But we're confident that it's there and that we can gather at overtime.

Thank you.

Yeah.

Your next question comes from line of Ashish Sabadra with Deutsche Bank. Please proceed with your question.

[laughter]. Thanks for taking my question Saleen suspicious first media company as well.

Just a question on New York now just a.

If you're getting a select some color on expectations for revenues, how much revenue declining I thought the fact show and when should we start to see that going the wrong for the Nielsen now or is something like 2020, then we can start to see done around that thanks.

Hi, good Phil I'll try this and then tell you can you can come in I mean, we have we haven't you leader over the show so and as we said.

And then the prepared remarks, we're really taking some time to look at what we've gotten both what we need to do we believe in in the long term growth opportunities of this franchise, it's really difficult to say when that will come through.

Certainly 2020, maybe a little bit soon for to see that flow through.

But you know there's a lot of initiatives going into the first show in February .

New things happening, we're responding to the research and really detailed research and analysis and so it's we're playing the long game on New York, now and and we'll continue to.

We'll continue to move forward, but you know I think I think 2020 make and some of the 2020, which was your question maybe a little soon to expect it to stabilize.

Yes in general can feel good about retail as we've seen with asked the which is now returning to growth.

So I I want to be clear that we think our new York now issues are not related to retail as a category, but more to the fact that we havent executed in as customer self list away as we could have.

[noise] definitely helpful. Charlie and me again actually providing the details from the strategic initiatives. My question was somewhat even fueling value based pricing running today to customer solution.

And does that require.

Because of media clients, if it goes to spend more money and just yeah. Some thoughts around the time just propensity for makes it goes to spend more money, particularly in a lot of management businesses seem to me slowing down their spend so any thoughts on that.

So I'm going to ask Brian to address that my only remark I said, it's all about ROI.

Yeah and so.

It's really about again the value that the exhibitor gets.

In the the package that that company purchases.

We've seen in the past as Weve rolled this out before in a variety of different sectors that as long as theres transparency.

The expectation around what the customer will receive.

And the value for that.

You know, it's something that's you know is well welcome because there again theres transparency.

There's a set of packages not just in the space, but other types of things promotional opportunities that come along with that often times.

And that aggregate package and the value that it brings is something that customers.

Tend to find very attractive when they're considering made a value based pricing model.

Hi, Thanks, Thanks, Brian Thanks.

As a reminder, if you'd like to ask a question. Please press star one on your telephone keypad as a reminder, if you'd like to ask a question. Please press star one on your telephone keypad.

One moment, please as we pull for questions.

Your next question comes from line of Seth Weber with RBC capital markets. Please proceed with your question.

Hey, Good morning. This is gonna hands, and then for South and again best wishes to you Sally on your recovery.

Brian I guess, just with the value based pricing to follow on that.

Yes.

Are there certain sectors or categories or even show sizes that are best suited and positioned to benefit from value based pricing is it you know maybe give us some color on you know if the success you've had among different categories.

Or even sides of shows it it's it easier to implement this sort of strategy and I and various types of shows et cetera.

Or should it be fairly fairly you know beneficial across the portfolio.

It should be fairly beneficial across the portfolio that said.

There may be shows that are extremely small mostly ones that are conference led educational led where there isn't a large.

Trade show type of component to it where a value based pricing model wouldn't make a whole lot of sense. You know what we spent most of our time of the educational element, particularly and.

You know conference revenue.

The Expo floor plays a supportive role, but not a major role in the contribution of that kind of an event.

Okay Fair enough and I guess did this is this going to require you guys to kind of retrain kind of your you know sales staff and in some of the.

Commission.

Plans as you guys. It has in place I mean, how how easily or quickly can somebody.

Existing sales people kind of communicate a different more dynamic message regarding the value based pricing.

Yes, good question and that's part of the reason why it's not a light switch where you don't turn it on overnight right. There is.

Theres the cyclicality of the events piece of it which is one component. The other part is that the actual the design of the floor plan the messaging around how to communicate value to customers.

With that also takes time for the sales teams to be able to.

To be able to communicate effectively and so while we're designing this and looking at pricing elasticity models at the same time. The sales teams themselves are very involved in the process.

And so they're seeing the kinds of a packages and value delivery that these customers are going to receive so they're becoming tuned to at even as the the discussions are happening internally.

So that there then able to deliver that message much more effectively crisply and communicate that value to customers.

As the packages become available to them so.

Some bumps in the future.

Okay. Thanks.

Ladies and gentlemen, we have reached the end of the question and answer session and I'd like to turn the call back to management for closing remarks.

Thank you all for participating today, we know we've historically delivered unacceptable results and we're grateful for your patience.

We believe absolutely. This is a portfolio that can grow and that we've found the right path forward in order to get there, but we also want to be realistic about timeline.

This is a multi year a turnaround story is I think you've heard.

But excited about the thing we are achieving and where we're going so thank you again for your participation and have a good afternoon everyone.

This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.