Q2 2019 Earnings Call
Good morning, ladies and gentlemen, and welcome to the Emerald acquisition second quarter 2019 earnings Conference call.
During todays 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 would now like to turn the call over to Mr. Phillips Chief Financial Officer. Thank you. Sir. Please go ahead.
Thank you operator, and good morning, everyone. We appreciate your participation today in our second quarter 2019 earnings call.
I'm very pleased to have Saudi Shankland, Emerald, <unk>, President and Chief Executive Officer with me here today.
As a reminder, a replay of this call will be available on the Investor section of the company's website through 11 59 PM Eastern time on August eight 2019.
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 of 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 are set forth in the company's most recently 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, we'll discuss non-GAAP measures, which we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with U.S. GAAP.
A 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 I'm very excited to be here today, and the leading animal given the significant opportunity that I see for our company our customers our employees and our shareholders.
On today's call I'll briefly introduce myself discuss what attracted me to involved give my high level perspective on the challenges and opportunities within our portfolio and detailed certain initiatives. We have begun to implement during my first 60 days.
I'll, then hand, the call back to fill to review our second quarter results and to provide an update on our larger third quarter show.
He will then outline our latest expectations for full year 29 <unk> performance.
Before turning the call back to me for concluding comments.
We will then open up the call for your question.
Before I go any further however, let me acknowledge my disappointment with our second quarter financial results and the updated full year guidance.
I will talk today about some of the immediate actions, we have taken and others that we plan to take to address the problems I see in the business.
Well it may take some time to see the benefit of these actions reflected in improved financial performance.
I'm confident that we are already out a path.
That will return the business to profitable growth.
With that said, let me introduce myself I've spent the majority of my career you'd be up which is now part of informal a UK based multinational events academic publishing and business intelligence company.
In the course of my 27 year tenure at you'll be I held a variety of senior leadership roles, including serving as Chief Executive Officer of UBI EM Americas from 2012 to 2015.
Well, you'll be EM Americas, I ran a portfolio that was somewhat larger than enrolled and successfully executed on an M&A strategy, resulting in four acquisitions, including two in Mexico and one in Brazil.
I love to be a mid Twentys 15 to join Mcgraw Hill as the president of its higher Education Division, where I led the transformation of the business model from a legacy print textbook publisher to a provider of adaptive learning software and services.
In April of this year I joined <unk> Board of directors.
I was drawn to our most unique mix of market, leading brands and believes that I could let my perspective to help the business addressed its challenges and transition back to organic growth.
I came away from my first board meeting realizing that I needed to be involved on a day to day basis to effectively drive this change and consequently express my interest in the CEO role to the board.
I have faced similar challenges before in my career and I'm confident that we'll be able to overcome them again here at Emerald.
Since starting as CEO on June 1st I visited our offices across the country conducted town Hall meetings attended Cios and spoken to our customers our people and our community.
Based on my observations. Despite the fact that Emerald has significant room for improvement and a number of areas I'm confident that we have a strong portfolio and dedicated employees, which together provide the foundation for future success.
Well I'm still finalizing my detailed strategic plan to return Emerald to profitable growth, which I expect to discuss our third quarter call at the beginning of November I would like to preview a few of my focus points for enroll today.
First execution and investment.
We can and will simply execute better with a more capable and effective organization that is motivated inspired and makes better use of data and technology to increase sales marketing and operating effectiveness.
A key step to achieving this goal was the recruitment as COO, Brian field, with whom I had worked at you'll be yeah.
Brian has a successful track record of increasing customer satisfaction and driving revenue growth largely through the application of data and technology best practices.
In its first two months here, Brian has already kicked off several initiatives focused on nurturing our customer.
Expanding our revenues and are taking a more strategic approach to pricing.
And improving our planning and decision, making through the use of data and tools.
For instance, under Brian's leadership, we've launched a standardized of that plan framework. The events plan is a diagnostic forecasting and measurement instruments for evaluating the health of an event.
Facilitating cross functional planning and capturing and tracking key performance targets for more multiple show metrics, including customer experience.
We have also standardized the process listing tool, we use to design and deploy customer surveys and research.
This algorithm provides us with actionable data and a precise measure of customer experience and customer specific opportunities and concerns.
Which in turn allows us to build better events plans and generate better outcome.
[noise] being highly disciplined in our processes and using data to plan and track customer experience and other performance metrics allows us to plan accurately.
Measure, how we're doing and to identify trends and issues early when there is time to take action and course correct.
I believe that some of Emerald current problems would've been avoided if these approaches have been deployed in the past.
Additional investments already in motion include research and analysis of value based show pricing opportunities enrichment of our exhibitor, an attendee data and driving increased value for customers by creating integrated solution beyond pure booth or conference program.
Based on prior experience.
I believe that the thoughtful implementation of value based pricing can drive meaningful both yield increases as well as improve exhibitor satisfaction level.
All this is to say that I believe we are taking critical initial steps and making the necessary investments to improve our efficiency and effectiveness and to identify future growth opportunities.
We have begun to develop a series of key metrics some of which are the leading indicators to measure the trajectory of our business and I plan to start sharing some of those externally and 2020 . So that we are as transparent as possible on our progress.
My second area of focus is having the right team a little over a week ago, We announced the addition of three seasoned executives to our senior team together with a major restructuring of Emerald to better align brands.
And shared service teams within our portfolio.
In addition to the benefit of bringing in talented leaders with fresh perspectives, our new structure will encourage greater accountability better execution.
Better cross selling.
More collaboration and accelerated development of new products and services.
In addition in the course of the restructuring I promoted and expanded the responsibilities of several members of the existing management team and also created two new senior positions, whose entire roles are to identify and realize growth opportunities.
Having the right team and organizational structure in place is an important building blocks for our future growth and success and success.
My third area of focus is creating greater value for our customers, we will be laser focused on getting to know our customers better.
And on improving their satisfaction and experience through more tailored interaction.
For this purpose I think broadly of our exhibitors attendees conference delegates sponsors and advertisers as all being our customers.
Our initiatives here will involve the use of data and technology to gain deeper insights into their individual needs and interests.
So that we can provide more valuable products and experiences that deliver to monster ball and measurable returns on their time and investment.
For example, we will take a more detailed and comprehensive approach to analyzing how our customers interact with both our content and with each other.
These include measuring what our customers read click on and share online to the interactions they have in our live environments, which boobs, they visit which conference tracks, they attend and where and with whom they scan their badges.
Over time, we will leverage these robust and powerful behavioral profiles to build new and enhanced products and services that strengthen and expand our relationships with our customers driving revenue growth.
Finally, my fourth area of focus is our employees.
I firmly believe that we need to provide an employee value proposition that allows us to recruit retain and motivate the most capable and dedicated group of employees in our industry.
Our investments here will include a new internet to facilitate communication and sharing of best practices, which we have already begun new training development and career planning programs and offering market, leading employee benefits and physical work environment.
The various investments I have just described and those we have previously initiated are having some impact on our margin, we aspire to market leading profit margins.
And our margins have been historically above industry average.
We will do our best to mitigate the financial impact of our investments with strong expense discipline and the benefits of a more accountable and effective leadership team.
We will also re evaluate our overall cost structure as well as determine whether we are achieving the appropriate returns on our new investments.
We believe the new investments and other changes, we are making well and enable us to resume organic top line revenue and EBITDA growth.
To enhance this growth and as part of our overall growth strategy, we can and should be more active on launches and category additions in our existing and adjacent market sectors.
Over the last 60 days, we've already identified several new opportunities and I will continue to encourage a more aggressive attitude to launch it.
Well I'm also interested in continuing with our M&A strategy, where it makes most sense to strengthen our existing portfolios and capabilities.
We have a lot of work to do on our base business and so we will continue to be selective when it comes to our M&A activities.
Now I will turn the call over to Phil to discuss our second quarter results and full year outlook.
Thank you Sally Sally as outlined earlier in the midst of implementing a broad strategy designed to improve our execution or effectively utilize data and technology recruit experienced industry executives focus the organization on creating value for our customers unimproved emeralds culture to the benefit of our employees.
Having more involved in the operational side of the business over the last nine months as we conducted our CEO search I. So first hand, how some of our larger shows a handling the various issues. We've discussed on prior calls I'm confident the salaries initiatives will directly address the core issues that have led to that underperformance and which are impacting our results and our full year guidance.
I'm also confident that our challenges are well within our control to solve and the strong competitive positioning of our shows is still intact.
This morning, I'm going to briefly review our financial results and spend the majority of my time reviewing our larger shows in the context of the steps we are quickly taking to stabilize that performance.
Turning to our second quarter results revenue increased by 24.6 million or 31.4% to 103.0 million compared to the year ago quarter.
This growth reflected a net 23.7 million addition from several show scheduling differences in the second quarter of 2019, most notably outdoor retailers some of markets and global shelf, which boats staged in the second quarter. This year. This is the third and first quarters of 2018, respectively.
As a result, the second quarter is now our second largest quarter of the year by revenue with the first quarter still being the largest.
The two acquisitions that we completed in the second half of last year contributed 3.6 million of revenues in the second quarter, while our organic revenues adjusted to reflect scheduling differences declined by 3.6%.
Adjusted EBITDA for the second quarter of 2019 of 41.2 million compared with 48.9 million for the equivalent 2018 period adjusted for the impact of show timing differences.
The decrease of 7.7 million or 15.7% was mainly driven by the flow through of our shortfall in organic revenues together with higher operating costs, partly due to the planned incremental events and organizational investments.
Free cash flow, which we define as net cash provided by operating activities less capital expenditures was 27.8 million for the second quarter of 2019 compared to 31.6 million in the second quarter of 2018, a decrease of 12%.
At the end of June our outstanding term loan balance was 533.7 million and we had 5 million outstanding on the revolving credit facility with cash on hand of 12.4 million. This resulted in a net debt of 526.3 million net leverage ratio of 3.6 times, our last 12 months adjusted EBITDA.
Now, let me turn to our second quarter shows.
Outdoor retailer some end market our largest show in the quarter was flat in revenues with slight growth in both revenues offset by lower commissions and other non dues revenue streams.
[noise] HD Expo and could tool next two largest shows by revenue increased their respective revenues by low to mid single digit percentages, which we were pleased with.
All three of these shows a clear and just leaders in their markets and all in all view capable of stronger growth rates than we experienced this quarter with a more active data and technology enabled nurturing of exhibitor, an attendee relationships on a deeper understanding of the drivers of customer satisfaction within these markets.
The new skills and approaches with starting to deploy should help us accelerate the growth of these shows.
We experienced a double digit percentage revenue decline that I'll see driven by lower conference revenues on some moderate softness in the global shelf show, which co located with IR see for the first time this year under the retail X brand.
The initial post show research indicates that the new combined retail elect show gain traction with crossover attendees. However, the market reaction was not universally positive.
We are conducting further research and at a minimum we need to improve the integration of the experience and execution of the show next year.
If we had used a robust event timeframe look for this co location like the one we've recently introduced its likely that many of these problems we experienced would have been avoided.
The retail ex performance accounted for a significant portion of the modest shortfall in the second quarter relative to expectations as of the last call.
Alright, CFS show, which has grown strongly over the last five years experienced a double digit percentage revenue decline. This year, primarily due to softness from European exhibitors, partly attributable to Brexit uncertainty and also a day conflict with our own HD Expo that led some exhibitors to Miss the CFS show.
As I noted on our first quarter call. We also suffered from resource conflicts in issues that we plan to address in order to continue this brand's robust historical growth rates in the future.
Turning to our expectations for the largest emerald events in the second half of the year, Let me start with HST, which opened last Saturday and closed yesterday.
Overall, we are satisfied with the show's financial performance, which we expect to be slightly favorable to our earlier expectations.
We anticipate that revenues will be broadly flat. This is the 2018 equivalent show a significant improvement versus last year's trajectory. Despite international sourcing section continuing to feel the effects of the ongoing trade tensions with China.
This is a solid performance and supports our view that this franchise is stabilized.
The next largest show staging I have to ask these New York now, which opens on August nine as I discussed in detail on our first quarter earnings call. We're introducing numerous new features at the show that we believe will continue the brand's positive momentum towards stability and ultimately to growth.
Building on the retail Renaissance theme. These new initiatives include adding an epicurean kitchen area to attract high end kitchenware exhibitors additional health and wellness and upscale jewelry areas.
Several design of features multiple experientially elements and the launch of a second edition of the co located national stationary show.
As we did with the February show earlier this year, we've actively curated areas of the lifestyle section to allow space for R.J.. Some a jewelry show to be co located with New York now.
Based on current pacing, we expect a revenue percentage decline in the low teens, which reflects the slightly lower recovery than we expected, but would still represent a notable improvement in the show's revenue trajectory versus our winter show.
The new tools and approaches the Sally described earlier should be additive to the efforts of the team has made on the last few shows to improve the show experience for exhibitors and attendees were excited to see the impact of these efforts for the winter 2020 show.
In the first half of September we'll stage offset Expo summer and CD Expo shows both of these are pacing below our previous expectations.
In the case of surf Expo is winter show earlier. This year was flatten revenues were seeing the effects of a challenging both sports category with consolidation in the paddle sector and a shrinking wakeboard market. We're also experiencing some continued hesitation caused by the hurricane that shortened to show two years ago. No overall, we're expecting a mid single digit percentage revenue decline.
At this year's show will be launching a new visual brand identity rebranding and repositioning our demo day, adding mill more show floor features and expanding our education programs. We expect to have a successful show that will provide a basis for future growth.
[noise] CEDIA Expo takes place the following week in December and is expected to be broadly flat in revenues after numerous years of growth.
The show has been adversely affected by shifting exhibit to buying behavior is tied to the prolonged trade disputes with China as well as some supplier consolidation in the channel that said, we will introduce several new pavilions and categories at the show, including Wellness security solutions on a new product pavilion, and we strongly believe in the attractiveness of this market sector and the long term growth opportunities. It provides.
In the first week of November we'll stage, our second the outdoor retailer winter market in Denver, which as you may recall is the third all show added last year to compliment the longstanding and successful January and some are additions.
The outdoor industry is taking some time to adapt to the three show cadence. Despite the original request from key industry influence and strong industry support for the show to be held at the start of the winter buying season.
We continue to consult with the industry. However, we've moderated our expectations for this year's show based on current pacing trends.
Finally, let me talk about boutique design, New York, Obedient, why which stages at the Javits Center the second week of November .
Well show is continuing on its strong growth trajectory and is pacing to grow its boost revenues by a high single digit percentage as expected.
We're excited to have the acquired this excellent franchise last year.
But approximately 95% of our anticipated revenues for the year already sold we believe we have good visibility into the likely outlook for the full year.
Relative to what we conveyed last quarter, we've reduced our revenue guidance for the year at the midpoint by approximately 15 million of which approximately 3 million is related to underperformance in the second quarter predominantly in the retail like shows I CFS and in our other marketing services portfolio.
The remaining approximately $12 million of this reduction is due to lower forecasted revenue in the second half of the year across a number of our shows including surf Expo CEDIA Expo outdoor retailer winter market and also across other marketing services portfolio.
We've reduced our adjusted EBITDA guidance by approximately $20 million of which approximately 3 million reflected the flow through of our second quarter revenue shortfall.
Approximately 14 million of the reduction is attributable to the projected 12 million second half revenue shortfall expectations, partly reflecting a slightly unfavorable show mix with the remaining 3 million due to the forecasted incremental costs of the new management team and several new corporate level initiatives.
We've continued to execute against our brand investment plan as we believe it is an important component of our efforts to stabilize performance and position us for future growth.
That said, we are working with our new management team to reevaluate our entire cost base in the context of our more progressive and data driven operating model in order to balance continued base spend against spending on the new strategic initiatives discussed by Sallie today.
We're also assessing the ROI on our current investments to ensure that they are generating tangible returns.
Revenue for the year is now expected to range between 362 million and $369 million the aggregate impact of the prolonged trade tensions with China and Brexit factors is projected to constitute approximately one third of our year over year revenue declined slightly more than we anticipated at the time of our last call.
The main factors determining the scale of our revenue guidance range are the uncertainties related to rest of the year conference revenues commissions and print and digital advertising revenues all of which are less easily projected revenue streams.
Adjusted EBITDA is expected to finish within the range of 118 million and $125 million, while free cash flow is expected to fall within the range of 60 million and 65 million.
The full list of updated guidance metrics is set out in our earnings release.
Looking at both our projected performance for the full year 2019 versus 2018 and the change in our guidance ranges since our last earnings call, we've clearly not being effective in reducing our costs as quickly as revenues have softened.
As just noted we plan to rigorously and thoroughly review our costs and investments to identify profit improvement opportunities.
Turning to capital allocation. Our approach has not changed we will continue to be disciplined and remain focused on enhancing shareholder value.
Our regular dividend commitment is well established and Weve settled most of the revolving credit facility balance that we had entering the year.
A Saudi has indicated we expect to be opportunistic in selective with our M&A program in the short term.
We're also announcing today the approval of a new share repurchase program whereby the company is authorized to buy shares of its common stock up to the aggregate value of $30 million.
The company anticipates funding any share repurchases from its cash on hand, and permitted borrowings under the company's credit facilities.
I'll now hand, the call back to Sallie for her concluding remarks.
Thank you Phil.
Our second quarter results and updated full year guidance on downwardly disappointing and reflect the challenges that we currently face.
That said I am confident that through improved execution, new leadership and a renewed focus on our customers and our employees. We can return enrolled to sustained organic growth.
The U.S. trade show industry is expected to grow by low single digit percentage in 2019, according to industry researcher and the National retail Federation has forecast 2019 retail sales will increase around 4%. So the market conditions are in place for us to grow if we can execute effectively.
I feel very positively about the impact of the new hires that we were able to attract to the company and the new organizational structure that we've recently put into place.
It will inevitably take time to see the effects of our initiatives and investments follow through into improved customer satisfaction and ROI, increasing attendance increased renewal rate growth and new revenue streams and overall organic revenue growth.
Directionally I expect 2020 to be a year of operating improvement and increased customer satisfaction that will be rewarded and 2021 with a notable change in our organic revenue trajectory.
Thank you again for your time today.
Let me finish by saying that Emerald has a portfolio of industry, leading brands strong financial characteristics and in my view, a clear path to sustainable organic growth in the future.
Operator, please open the call for questions.
Thank you at this time, we'll be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad a confirmation. So indicate your line is in the question queue.
You May proceed or two if you will like to remove your question from Q.
For participants using speaker equipment, it may be necessary to pick up your handset before person snarky one moment. Please while we poll for questions.
Our first question comes from the line overseas Shubra with Deutsche Bank. Please proceed with your question.
[noise] Oh, sorry, congratulations on the CEO position.
My question was just on that on our own. So thanks for providing a lot of details on the call.
And that's some color on what to expect for 2020 2021.
Just wondering if you plan to put out an up like a mix.
Guidance and how quickly should we see the organic improvement and margin expansion.
So we have already begun the activities that will lead to improvement in our organic growth in our performance.
As you know this is a.
A business, where righting the ship is time consuming because of the way the.
You know you have a disappointing show it takes time to return that portfolio to growth very difficult for me to say right now that we know we will see the turnaround at X point in time in the future. What I can tell you is that we have a huge amount already in motion and our first 60 days in my first 60 days in terms of improving the way we operate the business improving the way, we plan and forecast the business.
Understanding our customers' perspective, and understanding what levers we need to pull in order to increase their satisfaction and their their ROI.
And also with developing the tools, we need to correctly identify what their pain points are and how we address them and then using those already in our planning for future shows. So we have much more data than Weve previously had and we're using that to take action to improve our execution and our rigor with respect to planning and delivery of events.
That's very helpful. Thanks.
And maybe just a question on the value based pricing that you mentioned.
Have you.
Had a chance to evaluate that with the exhibitors and what has been the reaction like any are you actually seeing and maybe any kind of color that you can provide how should we think about the value based pricing and does that help drive back or go up.
Better revenue per square feet any any color on that front.
Yes, I mean, the I Ain't first instituted it approximately five years ago. When I was it you'll be EM. It's in use across most of the major exhibitions companies. So exhibitor is by and large are not unfamiliar with this concept.
My experience in the industry experience in general is it that it leads to increases in revenue and increases in customer satisfaction and that is obviously, a very powerful combination and something that we will be implementing over the coming periods of time I mean, a lot of our pricing is set for 2020. So it will be second half 2020 that we can start to.
To Institute some of these programs, but both the quality of the data has improved the impact it has on on.
Revenue in yield.
And the impact on customer satisfaction, even for those who is pricing goes up is quite significant. So we usually see revenue growth I'm pretty standard in the industry in the mid single digits linked to.
A link to value based pricing and commensurate increases in customer satisfaction.
And when you think about most industries. Some version of this is in play and certainly was widely in play in within the trade show industry.
Okay. That's very helpful. Then maybe one final question, if I can sneak and they'll just around how do you plan to drive more exhibit those to the shore maybe all the data initiatives that you talked about will definitely help and I was wondering if you are also planning to reach out to more exhibitors are essentially drives more exhibitors and get them to starting with the show any color on that front. Thanks, yes, absolutely. So we're fortunate in that our renewal rate is actually quite good. So we have a.
Good renewal rate on existing exhibitors that challenge, we face is in attracting new exhibitors and the plan that we're already putting into place is a better use of the marketing tech stack and better use of the sales tax stack to identify and.
Convert.
Convert potential exhibitors.
So to generate leads and to then nurture those leads and convert them Brian field, the COO, whom we've just brought into the business. In June is a has a direct expertise and success in ventures of this nature across his career. So that's what is enabling us to move quickly on getting this done.
Thanks, Alan and congratulations once again.
Thank you.
Our next question comes the line of Manav cannot.
With Barclays. Please proceed with your question.
Yes. This is Ryan Leonard on for Matt just a question on the visibility in the business obviously at the time of the IPO.
The visibility was obviously one of the points that I think was brought up a lot.
On the first quarter call. It seemed like there was a higher expectation for the second quarter results. I was wondering could you just help us understand what changes in those 20. Some odd days that you know obviously went from low to mid single digit revenue growth expectations to what we saw in the quarter what falls through in that shorter amount of time for business that historically has had very high renewal rates and visibility into the following years of the forward quarters.
Thanks, Ron I'll I'll start off and then I'm sure soluble will add to it.
So as you know we've always maintained we have.
Pretty high visibility on on the Booth revenue component of all of our revenue which is.
70%, plus or minus about total revenues and particularly one or two quarters out to what we have is less visibility on the non booth revenues, particularly conferences and advertising and digital revenues.
And then kind of booth revenues further out in the year. So you know what what's happened.
This year.
Is that the second half booth revenues haven't developed as we expected.
And the outlook for for the non booth revenues, particularly the advertising and digital revenues.
It is quite a bit softer than we thought.
Most of this is.
The Q2 numbers were broadly in line with with what we were expecting a little softness in C.
But is the shows were earlier in the year we were.
Yeah, we're still fairly early in the pacing for those shows.
And once that I've talked about.
In the in the comments earlier on so fun CDN all went to markets.
Though those softens as we went through the year and.
And the publications and digital products, which we have much less visibility on those.
Those have certainly softened in the second half of the year. So I think we're where we do have generally good visibility, but there are certain revenue streams and certain shows further out that up kind of more difficult to.
To predict.
So what I would add to that and I think it's a very important question and I completely understand how that would be surprising and personally I, 100% agreed that the results are unacceptable.
I think there are a couple of factors here one is that the.
Past.
Many years the primary focus of the business has been on current year bottom line.
That has an inevitable lag effect on revenue.
That we see in any business right I mean, those tend to be businesses with really good short term success, but eventually those chickens come home to roost and I think that part of the reason the revenue for this year was down so disappointing in general and particularly disappointing now is the fact that we didnt expect this.
Depression in our revenue to occur.
And also there hasn't been the rigor around within the business there hasn't been the rigor around forecasting there's been a tendency to be optimistic and which then in turn I think leads to a lack of accountability and we're in the process of fixing that right now.
And finally, there was an effort to make some serious investments in the business and what we're seeing right now is declining revenue with some relatively fixed investments that's a short term problem.
And I do believe fully that more rigor around our investments are taking those things that have ROI investing in things that provide benefit across the portfolio.
Horizontally will allow us to drive more ROI from our investments and you will see both more accurate forecasting and better cost control and management of expenses and more measurement of and that of investments from us in the future.
Okay. Thank you for that.
And then on the outdoor retailer you know can you maybe provide more color. There I mean this is a show that at the time, you talked about theres such demand for it and how it seems like that has gone away or how exactly does something like that happen.
Are there ways to.
[noise] schedule may be smaller shows to start a I'm just surprised to see the demand has already kind of dried up that quickly.
Well I'll start and because I have some of the background and so im sure will will will contribute to so I mean, Oh was historically had two very strong kind of almost tribal shows in January in summer.
Well supported vibrant shows.
And we the industry strongly indicated a desire for an earlier winter winter season show.
And you know, we we listen to the industry.
And and that led to the to the introduction of our.
First went to show in November last year.
It Wasnt as well supported as we wanted and that doesn't help when you when you have launches and and you like to see some momentum.
That said you know some of the industry leaders showed such support for the second.
Event, which is this November .
But we're still seeing you know it seems to be taking time for the industry to adopt this new show into the into the cycle.
So we will continue to listen to the industry work with the industry associations and and.
Come up with the best solution, but we've been disappointed too.
And it it hasn't played out as we as we expected it to.
Got it and one more if I could sneak it in Sally you know coming in taking a fresh look does this portfolio of events. You know look right. As currently constituted are there areas. You think should be expanded on other areas that should be may be revisited and shrunk just your kind of initial take.
Yeah, it's hard to gauge that at this point because the things we're doing that impact how the business operates benefit horizontally across the entire business. In addition, as you know as you know we've brought in new talent and created a new structure, where for example, all of our retail shows are together and where all of our design shows her together and that structure in of itself is going to benefit the the all of the shows in that portfolio due to the opportunities that exist for.
Collaboration unless chairing.
Cross portfolio pricing models that are are.
Customer focus, but also drive additional revenue for us.
So.
I think we are generally in a good great industry with a solid portfolio and that every challenge. We have is something that's in our control to fix.
Okay. Thank you.
Our next question comes the line of Seth Weber with RBC capital markets. Please proceed with your question.
Hey, good morning.
I actually wanted to follow up on that last question Sallie I think I heard you say your you know your aim is to sort of accelerate.
New show launches and things like that I mean can you just talk about whether you're changing your kind of return thresholds or your the way you look at ROI on on introducing new shows or.
How we should think about the cadence of new shows kind of going forward relative to to past banks.
That's a great question Seth Thank you so.
My focus is really on saying where is the white space.
And if we look at our markets collectively with joint knowledge across retail with joint knowledge across design. It gives us an opportunity to identify the white spaces and the opportunities that are there. In addition, we are collecting a lot more data from both exhibitors and attendees that we can mine to know what they want that we neither we nor anyone else is delivering right now and with those two factors. It makes a lot easier for us to create opportunities and launches, which are often going to be a day in adjacent fees rather than in something completely new.
And that we can then use to grow the business organically I don't think they are necessarily super high cost for the very reason that they are being serviced by teams and the data that we are currently collecting so that you know I don't think we're gonna go launch a show in artificial intelligence for example, but it is certainly possible that we will do things within the white spaces, we see in the markets. We already serve in a forward looking way so not just what's happening in the market today, but understanding through better listening tools and through better social presence and through better sharing of information and collaboration and accountability and a more rigorous and standardized planning process. We are in a much better position to identify where there are operative.
One of these for us to grow into Adjacencies than we were previously.
Okay. That's helpful. And then I guess on the flip side of that or would you be more.
More aggressive and you know exiting shows that.
You know our underperforming would you be more likely to act more quickly do you feel like going forward. Then the company has been historically to kind of just take shows out of the out of the rotation.
Yeah, I think Thats, an important question and one that I can't answer yet, but yes, as we developed our.
Sort of longer term strategic plan that well be absolutely one of the things were looking at and you know as I said today I think mostly we are in really good places and we're doing things that will make all ships rise with the rising tide, but that does not mean that we're ever going to hold on to everything we have that maybe doesn't fit with directions, we start moving in the future So still TBD.
Okay, and then I guess just a related question you know the other marketing business continues to be soft is there.
You know is that.
Core to the company going forward is that part of the go forward.
A framework for the company or is there some decisions to be made there.
So we really need to do a little bit more work about that I think around that I think it actually provides a huge.
The opportunity for us because the content that we create it has significant value to the rest of the shows where we're producing.
And.
The.
One of the new people that I'm, bringing in one of the senior execs that I'm, bringing in is someone who has direct experience and.
Growing for trade show companies, they're non booth non conference space.
So that I think provides a real opportunity to look.
With with rigor and how we harness these things better.
Where can we grow revenue and profits.
Be on Tradeshow Booth, and obviously on that plays a role in that so I'm I can give you a specific example from the business that I'm not going to name the customer or the part of the portfolio, but recently in one of our portfolios, where we have both Oh, a mass and to show we had a customer who is spending well oh in the oil and gas, but decided not to take a booth at the show.
And leveraging the market knowledge that we have through the Oh My math.
We put together a package of experiential things that were not a booth and did not include it but it was but that took place on the show floor.
And instead of just selling them a booth, we sold them a couple hundred thousand dollars worth of show experiences. So.
Things that occurred at the show that we're not a booth and the fact that we had on my math associated with that show enabled us to do that and that's exactly the kind of thing we want to do more off obviously, we still care about booth revenue right. It's our primary source of revenue, but in a changing world for us to be able to say Oh, you don't want to spend $30000 on a booth here spend a couple of hundred thousand dollars on this instead no that doesn't play obviously with all of our customers had only plays with our larger customers, but it's a really good way to leverage what we're doing and all that math and I think what hat, bringing in somebody who will own that responsibility.
And do careful analysis of the oil and gas portfolio and how we use those assets will help us both return the portfolio to growth and May include some re emphasis in some areas other than more than others, but gives us opportunity and that to me is a huge revenue stream available to us that were not tapping today.
Super I appreciate the thoughts thank you very much.
Ladies and gentlemen that was our final question and this does conclude today's question and answer session I would like to turn the floor back over to management for any closing remarks.
So I just wanted to say that as you know as I have acknowledged I fully agree that the results are unacceptable. However, everything is in our control that needs to be fixed to return this business to growth.
The industry is solid retail sales are solid we have a strong portfolio of shows we have dedicated employees with deep market knowledge and that gives us the foundation for success I personally have the experience and the knowledge to lead these sorts of changes as do people like Brian field, who has joined us and the other people who will be joining the team early in September .
So I believe with great confidence that we can write the ship.
We're focused as I said on execution and investment on having the right team and creating value for customers and in improving our employee value proposition because we believe that those things together provide us with the rigor discipline the data the tools the people and the strategy we need to turn this around so thank you all for listening today and I'm very excited about the future.
Ladies and gentlemen. This concludes today's teleconference. You may now disconnect. Your lines at this time. Thank you for your participation and have a wonderful day.