Q4 2019 Earnings Call

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Thursday

Good day everyone and welcome to Hudson's fourth-quarter and full-year 2019 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero after today's presentation. There will be an opportunity to ask questions to ask a question. You may press * then one on your telephone keypad to withdraw your question, please press * then two, please also note that today's event is being recorded at this time. I'd like to turn the call over to Cindy Buckwalter vice president of investor relations and corporate Communications for Hudson is Buckwalter. You may begin

Thank you operator and good afternoon everyone. Thanks for joining us this afternoon. We released our fourth-quarter results. You can find a copy of our press release and the presentation on our website at Hudson along with our year-end report on today's call. We have Rodger Fordyce our CEO and Adrian our CFO, please note that management may make forward-looking statements regarding their beliefs and expectations as to the company's future business prospects and results. These statements are subject to risks and uncertainties that could cause actual results to differ materially from the statements. Although we believe the expectations reflected in our forward-looking statements are reasonable. We can give no assurance that such expectations will be realized we urge everyone to review the Safe Harbor statement provided in our earnings release as well as the risk factors contained in our 2019 annual report on form 20-f, which is available on our website during today's call log.

We'll refer to both IFRS and non-ifrs financial measures of the companies operating and financial results for information regarding our non-ifrs financial measures and Reconciliation to the most directly comparable. I RFS measures. Please refer to our earnings release and with that. I'll turn the call over to Rodger.

Thank you, Cindy and good afternoon everyone. Thank you for joining us to review our fourth-quarter and full-year 2019 results as I conclude my first year as Hudson's CEO incredibly proud of our outstanding team. Whereas executed our strategic initiatives with discipline in 2019. I remained excited about the future as we stay focused on building on this progress off Route 2019. We continue to win new rfps edit exciting new brands to our portfolio including Joe in the Jews and enter new markets including Indianapolis and Saint Pete Clearwater. We also launched Hudson's new corporate identity and Logo which showcases our strategy to become the all-encompassing travel partner and grow are four key pillars off travel convenience specialty duty-free and food and beverage.

building upon these pillars

During this past year. We announced two major Acquisitions that strengthen our food and beverage and Specialty retail portfolios. Oh, hm concession group and Brookstone.

2019 was a transformative year for Hudson and we're pleased to have concluded the year with demonstrated progress against our strategic priorities. Although we faced several challenges them outside of our control throughout the year. We still encouraging top-line performance in the fourth quarter for the year organic growth was 1.4% and 0.8% for the quarter Thursday. We're also pleased to see an improvement in like-for-like sales driven by some recovery and duty-free and rebound and Duty paid results like-for-like and constant currency grew 1.1% for the year. And for the fourth quarter in addition. We have some exciting new business activity during the fourth quarter that positions us well for the future on the retail side of our business, we're pleased to offer secured several new wins and extensions.

In the second half of 2019 we entered into Indianapolis a new market for Hudson. We've been able to quickly build a strong relationship with our landlord Partners in this airport. And in the fourth quarter, we were successful in winning another contract in this market exemplifying Hudson's strong reputation as a quality operator and partner of choice for our airport landlords during the quarter. We're also pleased extended our contract at the world's busiest airport Atlanta Hartsfield with a 3-year extension. We also strengthened our partnership with Toronto Pearson International Airport to an eight-year Duty Free Roam contract extension. This is a key extension and expansion pricing as it continues to strengthen our duty free presence in North America.

And food and beverage we're very excited to have recently announced an agreement with DFW to open up Plum Market as part of the agreement Hudson license and operate the new 24 hundred square foot home market location and American Airlines whole room space in terminal be the space highlights are combination Concepts strategy as this food and beverage location also includes a retail selection convenience items along with natural organic and sustainable resource snacks and beverages while Market is another exciting example of how we're adding relevant brand offerings to our portfolio skater to the ever-changing tastes and preferences of our customers.

We also had some notable store openings in the fourth quarter that demonstrate our ability to create customized local Concepts.

This past holiday season, we collaborated with jfkiat to create a one-of-a-kind holiday shopping experience in JFK terminal 4 retail Lounge this publication holidays by Hudson was inspired by a well-known Bryant Bryant Park Holiday Village in New York City. I was brought together a locally-sourced product assortment including gift items during the quarter. We also opened up a local travel convenience store 49 Mi market in San Francisco's terminal one which features local Brands and products that travel would find on the iconic 49 Mile Drive in San Francisco.

holidays by Hudson

And 49 Mi Market highlight our ability to combine invaluable convenience with distinctive and memorable experiences to create an unparalleled service for our Travelers.

Looking ahead the twenty-twenty pipeline continues to look robust and More in line with the pipeline of opportunities. We saw in 2018. In fact, just barely three months into the year. We've already bought some exciting early wins and the New York market. We've secured a new win for three locations in JFK terminal 5, which is a new terminal for Hudson are winning package includes to track convenience stores and one specialty store Herschel, which sells high-quality backpacks travel goods and accessories. We're also strengthening our partnership with LaGuardia Airport with a contract with them to travel convenience locations. We've also expanded our footprint at Atlantic City International Airport who are an RFP win for four locations, including a new Hudson Duncan food and beverage location our first food and beverage concept at this Airport.

Lastly we've signed a contract for a prime convenience package in LAX. LAX is new Midfield Concourse. This contract includes four locations to travel convenience package and to specialty stores All Saints are British fashion retailer that features men and women's ready-to-wear and new Beauty a health and beauty store would be the first retail location for new Beauty and we'll provide Travelers at LAX with top rated products in the health and beauty space based on the brand successful luxury samples program called test app.

As we continue to grow our business organically and integrate our recent acquisitions. We feel well positioned to compete for the robust pipeline of our packages and capture additional white Space Opera cities airports continue to invest in infrastructure projects.

I also wanted to provide a quick update on our recent acquisitions and October. We announced the acquisition of food and beverage operator. Oh, hm concession Group which accelerates our expansion into food and beverage service off with the weight Jim. We've added new food and beverage capabilities to our business including full service fast casual Sports restaurants and fine dining locations with notable Brands like Chick-fil-A Wolfgang Puck Einstein Bagels and Jamba Juice. Oh, hm has a long track record as a successful restaurant Opera tour operator and perfectly complements our Quick Service Restaurant and Lounge and go expertise. We expect the acquisition to close in the next few weeks and the interim Hudson has been partnering closely with the oh hm team on various new business opportunities, and we look forward to working closely together to integrate the two companies upon the close of the acquisition.

During the fourth quarter. We also announced the deal to acquire the airport assets of Brookstone adding a strong well known and trusted brand or a specialty retail portfolio addition to the acquired locations. We have signed agreements for six new stores, including a brand new location. We just recently opened up in San Francisco during the first quarter of 2020.

We are also currently in to go.

Association for 7 additional locations as part of the agreement. We acquire the right to be the exclusive airport retailer for the brand which gives us the opportunity to add exclusive Brookstone product of our travel convenience stores. We're excited to roll out Brookstone branded travel electronics and everyday gadgets the Hudson stores in the second quarter. We look forward to sharing more on this later in a year overall. We're very pleased with the integration to date.

Looking ahead. We will continue to look for opportunistic Acquisitions particularly on the food and beverage side that will further enhance our brand portfolio.

Before I dive into our 2020 strategic initiatives. I wanted to take a moment to address the coronavirus issue.

First and foremost we express our deep concerns for all of those that have been impacted by the virus around the world. Although we do not have direct operations in China Chinese Travelers and tourists Chevy duty-free and Duty paid locations every day as we have previously reported roughly 20% of our total sales are generated from our duty free business and our duty free business with our duty free business a significant portion of those cells come from Chinese passengers with the notable drop in air travel to and from China. We have seen a subsequent reduction in traffic and sales fax important to note. However that our duty paid business is primarily generated through domestic passengers and while International passengers do make up a portion of our duty paid sales. It's much more difficult for us to quantify that said we are seeing an impact although to our lesser extent on our duty pay business. We believe this is due in part to an increasing number of company travel rates.

Restrictions and event cancellations as well as an overall concern about the Corona virus outbreak if these conditions persist and extend more prominently to met to domestic travel we could be further impact on sales.

I would like to take this opportunity to point out that the travel retail industry is very resilient historically the industry has been able to rebound stronger than ever from major impacts in the past including the events of nine-eleven SARS and the 2009 recession. We're confident that the demand for travel will rebound once again from the impact of the virus.

We want to take this opportunity to sincerely thank our employees. We're stepping up during this time and remaining committed to providing unparalleled travel experiences for our customers. We will continue to monitor the situation closely and will update you as we have more visibility.

Looking ahead to 2020 and despite the challenges. We remain focused on a number of strategic initiatives. Here are the highlights of just a few.

First expanding our food and beverage will continue to seek opportunities to add new capabilities and enhance our food and beverage team. We are fortunate to have Tom Waldron our senior vice president of food and beverage who joined in June and Milan Patel president and CEO of oh, hm. We also recently hired Liz took over as vice-president Concepts and Brands own newly created position on our food and beverage team list comes to Hudson with nearly two decades of experience in airport concessions food and beverage operations and business development and a strong track record of Building Bridges and most recently Liz oversaw the development of the Minneapolis Saint Paul International Airport Building out 90 units and three years.

her background and expertise

This will be a great asset the Hudson helping to strengthen our overall food and beverage brand development and our RFP submissions with a strong team in place whose focus is accelerating our food and beverage strategy. Look forward to pursuing more food and beverage rfps in 2020 and Beyond.

We've also seen great success with our combination store formats, which we partner one of our travel convenience or Specialty Concepts with a quick service food and beverage concept such as our Hudson Duncan, most stores will continue to explore opportunities to open additional combinations Concepts such as our Hudson Joe & The Juice location and Vancouver are Plum Market convenience store concept that will open were open up in DFW in mid 2020. We are also in negotiating opportunities to roll out an ink by Hudson our bookstore concept combined with a wine bar.

Our next focus is to continue to grow brand Partnerships with added some exciting new brands to our portfolio over the last few years like Joe & the juice on market and Brookstone in 2020. We will look to add life Partnerships and expand upon our existing ones such as Apple. We currently carry a limited number of Apple products in our Hudson and check on the ghost stories. I'm excited to share that we recently reached an agreement to expand the number of Apple scuse we offer as well as ADD Apple products to our ink by Hudson our duty free and Brookstone locations. We expect the full rollout of this to be completed in the second quarter.

We're also excited about the announcement late last year regarding the rollout of our next-gen Hudson store. We will be implementing the latest digital technology to enhance both the experiential as well as transactional capabilities, including self-checkout Mobile Wallet options as well as tap-and-go technology that will allow our stores to provide the broadest range of service package options. We are also adding digital signage that can be customized by location to support seasonal and local events or promotions combined with a more flexible store model that will equip merchandising and operational changes. We are prepared to evolve as the changes in needs of our as our customers evolve.

We also are progressing our plans to launch our customer-facing app Hudson blue this year this new app will allow our loyal travelers to connect with their Hudson store from the mobile device need to gather Insight on products and promotions at any time.

We look forward to providing updates later in the year as you can see there is much to be excited about for Hudson in 2020. We are in attractive and growing industry with significant space driven by opportunities and food and beverage.

We have a proven track record of growing existing business and expanding our concession portfolio.

Despite headwinds that impact the industry from time to time you're confident in the travel industry's long-term passenger growth forecasts more importantly. We are confident that are strong business office mentals coupled with our exciting growth initiatives and robust twenty-twenty pipeline will position Hudson well for the future,

I'll turn it over to Adrian to review our fourth-quarter and full-year results in more detail.

Thank you Rodger. Now turning the results for the quarter. We are pleased with our financial performance during the first quarter as we reported notable Improvement across many table metrics wage organic growth significantly improved compared to the third quarter and our net says was slightly up over last year during primary by the recovering both. I would duty-free and dissipate businesses.

In the fourth quarter turnover increased 8.9% 475.8 million compared to the fourth quarter of 2018.

Regarding the third growth which is a combination of like for like sales and then your business was up open 8% during the first quarter compared to a tougher competition of 4.1 per phone number in the fourth quarter of 2018 like-for-like size on a constant currency basis Rose 1.1% compared to an increase of 2.5% in Q4 2018.

This is primarily driven by strong entity Pacers which were up 2.2% on a constant currency basis. They recover in Q4 dissipate like for Lexus was driven by strength know you put them beverage and electronic category.

Duty-free was down 2.1% on a constant currency basis significantly better than the 5th Quarter of down 8% and an improvement of a trend in the first part of the years as when you first started to slow down of the Chinese passenger span.

Regarding the second component of organic growth make new business total contribution of any business was down 0.3% If you're far as compared to up to .5% off in the fourth quarter of 2018 primary is the previously announced closure of nineteen locations in New Orleans. It took place in November 2019.

Gross margin was essentially flat during the fourth quarter at 64.2% in the quarter goes margin benefited from our side Mix Change towards higher-margin products, which was upset back into the markdowns and write-offs from our closure of an encore high in store in Las Vegas hotel excluding the one-time impact of the Las Vegas store closure gross. Margin proof by approximately 20 basis Points phone number here to 64.5%

Beginning January 1st 2019. We have implemented a new lease Accounting Standards IFRS 16, which requires the capitalization of fixed concession fees and other rent payments.

Excluding the impact of IFRS 16 in Q4 2019. We have experienced right lower lease expenses as a percentage of turnover at 22.3% compared to 22.5% in Q4 last year.

Personal expenses Rose 4.8% $225 million in the fourth quarter primarily driven by an increase in health benefit claims the brookson acquisition and separation charges month, excluding the one-time separation charges of nine hundred thousand personal expenses were hundred eleven point six million or 23.5% of turnover compared to 22.8% last year.

other

This is where fifty point five million in the fourth quarter. This includes nine point seven million of one-time items primary related to the acquisition cost from hm in Boston.

Excluding one-time items other expenses were forty point eight million in the fourth quarter compared to a 35.5. Mm in Q4 2018 is the percentage of turnover other expensive one-time items were 8.6% compared to 7.5% in Q4 2018.

Adjusted decreased 5.6 million of the Year 247.2 million if you for 2019 adjusted EPS attributable to equity holders of the parent was off for the first quarter, excluding the impact of the new lease accounting standard fs16. Our adjusted EPS was $0.09 for the fourth quarter.

Turning to the full year despite the macro challenges we faced we continue to drive top-line growth in 2019.

Turnover increased 1.5% to a record of 1.9 billion as compared to 2018 organic net sales growth was 1.4%

looking at the components of a guy and it said like-for-like sales were 1.1% in the constant currency driven by strength in our duty paid business particularly fueled by our growth and wage and beverage this compared to 3.7% like-for-like sales growth in 2018.

Let your business was up open 8% compared to 3.3% last year as a result of the timing of projects and closure of our stores in Newark early last year and usually ends in November 2019.

We are gross margin expanded fifty basis points to 64.2% primarily due to include vendor terms and seismic shift from lower-margin products to higher-margin products like food and beverage this extreme excluding the benefits related to capitalize right of views, which was introduced with the adoption of I for a 16 the quiz as a percentage of revenue from 22.3% in 2018 to 22.1% in 2019, but the year personal expenses increased 8.3% to 445.3 million primary situation croesus executive separation expenses new store openings and additional public company expenses, excluding one-time separation charges personal expenses were 22.3% of turnover compared to 21.4% in 2018 other expenses increased eight million or 5% to 166.9 million for 2019 as compared to the prior-year Dead.

You to a number of one-time items that the highlighted in the earnings release excluding one-time items other expenses increased to one hundred fifty six point five million in 2019 from / 148 million in 2018 and represented 8% of turnover compared to 7.7% in 2018.

What 2019 adjusted ebitda margin decrease sixty basis points to 11.8% adjusted EPS attributable to equity holders of the parent or 65% for 2019?

excluding the

Parts of the new lease accounting standard IFRS 16-hour adjusted profit to equity holders of the parent was 63.9 million or $0.69 per share for the year.

Billing for the balance sheet. You can see the line items that are impacted by the adoption of F-16 primary capitalizing the right of use assets and recording the lease obligation.

As of December 31st 2019. I will not depth which represents total borrowings excluding lease obligations minus cash was down $17 from last year to 231 million resulting in an adapter adjusted epidural average of 1 time compared down from one point three times a 2018 year end.

Cash flows from operating activities for the year with 532 million compared to 233 million in the prior year. The sharp increase in the cash flow line was mainly driven by the reclassification to lease payment from operating to financing cash flow as a result of IFRS 16.

Capital expenditures increased to 72.9 million in 2019 from 69.3 million in 2018 you to hire Information Technology expenditures

Looking forward 2020. We wanted to share with you what we have seen in traffic and sales Trend here today in the first weeks of January prior to the impact of the coronavirus wage is increased slightly year-over-year despite the loss of New Orleans store closes in November last year.

The second half of January of the coronavirus spread Beyond China will be gone to see lower traffic in our North American markets that extended into February with sales down approximately 10% off.

We believe the based on the trends. We currently seeing the net site in q1 2020 will decline by low to mid-teens your vehicle.

Even though I didn't spread of the Corona virus and its related impact on travel both business and personal we expect continued pressure on traffic and sales in new term as we can count them the duration of the future trajectory of travel disruption. We don't believe it's prudent to provide for your outlook at this time. We do however remained optimistic about the stronger pipeline average this year and our improved competitive position. We expect to close our or HM acquisition early if you too and to leverage the food and beverage business drive straight momentum in 2020 and Beyond a supported by the benefit of our books and acquisition

We feel great about our ability to execute against the things that are in our control including implementing efficiency initiatives to ensure the shipping cost Management in response to the sales Trends month.

In summary, we encouraged by the Improvement in organic growth in the fourth quarter and the first few weeks of January particular the strength of our duty paid operations, which offers an attractive revenues and margins profile. Why would why we currently have traffic and sales pressure related to the coronavirus. The travel industry is a resilient one and we are confident in a long-term nature of our model with strong growth prospects particular in food and beverage across our retail operations and food and beverage service concessions that help us further diversify our business and off position as to capture significant whitespace opportunity.

and we operating

From a position of financial strength with a strong balance sheet and healthy free cash flow generation.

I was just thinking operating advantages and industry-leading position enables us to continue to drive growth over the long term.

I will not turn back over to the operator to open it up to Q&A.

We will now begin the question-and-answer session to ask a question. You may press * then 1 on your touchtone phone. If you are using a speaker phone, please pick up your handset before pressing the keys to withdraw your question, please press * then two at this time. We will pause momentarily to assemble our roster.

Our first question is from Michael Lasser with UBS, please go ahead good evening. Thanks a lot for taking my question that was helpful commentary about the first quarter being downloaded with jeans. So have you factored in some of the capacity reductions that we're seeing from Airlines into that number and can you give us the sense for the earnings 6:30 to that type of top-line Decline and I it's obvious that, you know, there's a lot of variability in the cost structure, but we have not seen a decline like that. So it it's going to be difficult for us to to get a sense for how to model it. Thank you.

Hi Michael, it's a Detachment. So yes, so we have in our in our estimate for q1. We have accounted for or a recent development. And for the trend we've seen in the last last week. So technically most of the reductions in capacities by their line should be should be coming back to the second part of the question of the flow true. So I just had this is the decline. We we didn't see in the past month the floater between 30 to 50% on every level so way around $1 of state would translate in around 30 to 50 Cent's log in evidence.

Okay, and if we try and think about just the duration of this other things that the company can do to respond and long hair down the cost structure to preserve the the profitability and then are there any covenants or anything from from a capital structure? We should be mindful of you know, how long as you continue to navigate through this difficult time. Good afternoon Michael, it's Rodger. So I think you know one of the unique things about our organization. Is that a good majority of our Executives myself included we're here during you know, the nine-eleven and uh significant recession in 2008/2009 wage. And actually we're the team that actually put together the initiatives that helped to keep us as financially healthy as possible during those downturns in the business allow us to you know, be a healthy company job.

are here today, and we've actually gone back and of

With our team I've kind of dusted off a lot of the plans and initiatives that will put in place back then during those downturns and are implementing many of those today. We're very very different company today than we were back during those scenarios or much larger company more diverse with a much, you know, greater focus on duty free and obviously being a public company have you know certain structures that may not have the same flexibility but clearly could understand the implications of something of this magnitude as as we've gone through it before and are prepared to you know Implement. You know, what we need to do on both the whole personal side as well. As you know cost-savings. We're also looking at, you know, our Capital Investments as well to ensuring that the capital Investments are are wise ones that are going to stop line same or obviously if there's a new building or something going up. We're we're addressing those as well too. So, you know again, this is something that we've been through before we have a solid plan. We've implemented some initial

Steps in February, we're looking at additional things as a movement to March and we're seeing the kind of the evolution of this capacity change that you just mentioned if I could just clarify wage even those plans and and in response to your your making should we assume that the decremental margin that you talked about for the first quarter could be a little bit better moving forward as you look to present structure. That's correct. So the first quarter historical is the weakest one, so the fixed costs represent the biggest portion of the overall cost than in the second or third quarter of so as we move to to the following quarter's take into account the lower weight of the fixed cost structure and over cost and also all the extra initiatives Rogers mentioned wage should result in a lower impact on every day. And then we seen the first quarter. Okay. Good luck in in everyone. Be safe. Thank you. Thank you God.

Next question is from Kimberly greenberger with more Morgan Stanley, please go ahead.

Oh great. Thank you so much. And thanks for taking the question Adrian. I just want to confirm so q1. I think you said you expect Revenue to be down. And did you say February was down ten did I hear you correctly on that correct? February was down 10% And for the quarter we expect the states to be download. Okay, great. So, I don't know if you heard the United. I think it was a CEO yesterday spoke and and said that just need the last three to four days. This is extremely recent data and you may not have yet seen an impact on your business. But he's saying that domestic us net bookings are now down about 70% off that would be new bookings net of cancellations. And and so it you know, it's I would imagine because this is just how

In the last three to four days you would not yet have seen it in your business. And I don't know if there's a way to compare your expectation of low to mid-teens decline in revenue for q1 to what a net bookings number would look like for the airline. Do you have you looked at that historically? Is there a way for us to draw some sort of linkage there?

Yes.

Unfortunately, it's difficult for us Kimberly to to understand what a 70% dropping in bookings mean. How recent was that? How long how long are those bookings going out? How long does it mean that it doesn't mean that people wouldn't necessarily in three or four weeks from now if the situation starts to Abate in the fears start to ease that people of a sudden start to rebook or book those planes. They had not yet. I mean compared to what the bookings were last year and I'm assuming those that comparison was against last year. So it's really difficult for us to understand what the implication is, you know, both short-term and long-term and that's why you know, we continue to monitor the guidance that we provided is is really just based on what we have seen to date and and some forecasting of you know, what we are seeing from from Airlines starting to you know, predict, you know some, you know decline in in bookings and capacity. So we're doing our best to try to provide the guidance Beijing.

What we know but we will it'll take some time for us to really understand weeks for us to understand what the implication of the if that's specific, it means to us.

Okay, great. And then if we look out, you know, do you think we could sort of be back to business as usual as we get to the the middle part of the summer? I would imagine the the impact here would be fairly short in duration Rodger. But you know judging by past episodes that you've seen 911 maybe you can refer to to that period of time. You know, how quickly Iraq did your business bounce back? Was it a matter of you know, three months or or four quarters, you know, just any any sort of way reflecting on past incidents that we could think about when the bounce back my begin to happen. Thanks so much.

So the challenge is trying to compare this specific issue or ongoing incidents to to the Past, you know each both the nine-eleven as well as the recession a very very unique the the nine-eleven issue caused a very very quick and immediate drop off in flights and while they rebounded one of the few months, you know, it was from a passenger growth perspective as the airlines have reported it it took them I guess a year-and-a-half to two years to get back to the actual passenger numbers of 2001 but our business model changed as well during that period of time so we were able to rebound from a sales top-line sales perspective a lot quicker in the 2008/2009 recession. It was once again a relatively quick drop off but was very heavily driven by Financial situations and not so much fear and and other incidents that things could more quickly rebound again a big part of what we're seeing right? Yep.

Always is the potential risk to the overall financial markets and the economy that we can't sit here today and understand what the short and long-term implications will be. Uh, but we do think I'm optimistic and and to your point I'm hoping that you know fear is the biggest factor that is driving this right now, obviously, you know, we want to be cognizant not just for ourselves, but for for the rest of the Travelling public and are employed as we want to be cognizant of you know health and and protecting health and ensuring that you know, we can do our best to continue to keep this virus from spreading, you know here in North America. But again, I could only be an optimist and say it is our expectations and hopes that you know business does moderate as we enter in the third quarter, which is our big summer month. What I can tell you is that you know, the divorce for travel is always been there and while people they step away from her for a while the demand for travel and the need and the wand for travel is always been there and has tended to rebound very very quickly dead.

Great. We really appreciate your thoughtful commentary today. Thank you so much.

Hey guys, good afternoon, and thanks for all the color. My first question is just around a pipeline and the winds and you guys talked about getting back to normal. Can you help size up the contribution to revenue growth from net new business growth in 2020, and then I'm just wondering the second part of that is the coronavirus. Does that impact the timing at all of the RFP process of contract wins in a store growth, just any more color on how that plays out. Thank you.

Hey, good afternoon Seth. It's Rodger. So to answer your second question for I mean as of right now, we have not seen any changes to kind of the anticipated RFP Pipeline and and the wage up on rfps. Um, in fact, you know, our team is right now working on a number of our fees we have our team attending interviews this week and next week for our fees already submitted so long, you know, as of right now what we see is no implication to to that a pipeline now that possibly could change if there was some sort of elongated slow down or diminishment and passenger growth for a long period of time airports Airlines could kind of revisit. You know, how they were addressing the timing of release of rfps, but we have not seen that to date. I'm sorry. What was the the first question is the phone number. The first part of the question was just how do we think about modeling out the contribution to revenue growth and that new business? Obviously, it's going to be more normal this year relative to last year to just any more color.

So before before the coronavirus appeared we were expecting to to see low to mid-single digit organic growth last a mid-single-digit wage positions over our expectations were very inspiring single digits for this year. So the net new business was expected to be slightly positive primary because of the oil pressure from New Orleans as you may remember we have closed in November 19th store in New Orleans and the pressure from New Orleans around expected to be around one hundred percent for the year. So but overall, I am talking to a slight positive in adding business this year before current and I also want to stress that you know, the timing is the timing of when these contracts come on online that we could actually benefit from the consolidation of the lifeline sales also does vary as we look at a lot of the winds that we've talked about that are coming about in the first quarter, you know, the timing of a lot of that would be the latter part of this year or early next year they're dead.

In some other actually actually start out in 2022. So the the timing of when these contracts come on board is also a factor in when we could actually add this to net new business, but the agents point we were anticipating, you know, positive net new business, you know for the for the year twenty-twenty. Okay, and then as we're thinking about what happens on the other side of the aftermath, I'm not sure what the balance sheets looks like some of your competitors but based on your experience in the industry. Is this something that drives sort of an accelerated pace of consolidation does this provide, you know, some longer-term growth opportunities for Hudson. Um, yeah, how do you think about that?

Absolutely.

Again, if we we look at history, you know some of the the Acquisitions and consolidations that occurred in the industry happened after some of these tumultuous events that you know, the some of the same car companies didn't survive or just felt that the timing wasn't right for them to be in the industry. So, you know, we see not only opportunities through through that but we also have an opportunity to offer, you know, continuously look at you know, RFP wins. We're as indicated in my comments earlier, we're continuing to to strengthen our capabilities and ensuring that we are are capable of competing very aggressively where others may not necessarily have the capital of the capabilities or the needs or the the wants to be able to pursue some rfps, uh, because they've you know, we can buy the economic impact. So I think the combination of our our strong balance sheet a combination of our focus and continued focus on developing our our skill-sets and our capabilities. Yep.

The next question is from Seth Sigmund with Credit Suisse, please go ahead.

Position as well for when this when the business returns to some normalization.

Okay. Thanks for all the color and best of luck ahead. Thank you. Thank you. This concludes our question-and-answer session. I would like to turn the conference back over to send for any closing remarks.

Thanks, Gary. Thanks everyone for joining us today. This concludes today's call. I'll just remind you that we will have a replay of the webcast on the investor relations section of our website. So thank you again and enjoy the rest of your day. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

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