Emerald Holding, Inc. (EEX) Q1 2017 Earnings Report, Transcript and Summary

Good morning, ladies and gentlemen, and welcome to the Emerald Expositions First Quarter 2017 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the call over to Mr. Philip Evans, Chief Financial Officer. Please go ahead, sir.

Thank you, operator, and good morning, everyone. We appreciate your participation today in our first quarter 2017 earnings call. With me here in San Juan Capistrano, California, is David Loechner, Chief Executive Officer. As a reminder, a replay of this call will be available on the Investors section of our website through noon Eastern Time on June 1, 2017. 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 -- in our financial prospectus dated April 27, 2017, and we do not undertake any duty to update such forward-looking statements. Additionally, during today's call, we'll discuss certain 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 comparable GAAP measure can be found in our earnings release. At this point, I'll turn the call over to David.

Thank you, Phil, and good morning, everybody. Before I get started, I'd like to take a moment to thank all those people who helped us through our initial public offering, which culminated on the first day of trading on the New York Stock Exchange on April 28. That was result of many months of effort. The hard work of our employees and advisers and the loyal support of our customers and partners contributed to the success of our offering. And as a consequence, we were able to raise $159 million in net proceeds for the company. This capital injection allowed us to further reduce our leverage and gives us an even more flexibility to continue to pursue our M&A strategy. Turning to today's call, I'd like to start by briefly reviewing the highlights of our first quarter performance. As we've already released initial first quarter results ahead of our debt refinancing earlier this month, I'll spend the majority of my time revealing the overall Emerald Expositions story, reiterating our growth strategy and providing some additional color on the full year guidance that we communicated in our press release earlier today. After that, Phil will review our Q1 financial results in more detail, and then we'll open up the call for questions. So let me start by saying that I'm pleased with our first quarter results, where we delivered total revenue growth of 6% compared to Q1 2016, approximately half organic and half from acquisitions. Our adjusted EBITDA growth of just under 2% reflected this revenue growth, partially offset by higher sponsorship costs, new show launches, which are typically low or no margin in the first year, and slightly higher SG&A expenses, partly incurred in preparation for our IPO and ongoing future obligations as a public company. Our best-performing shows in the quarter by revenues were the Kitchen & Bath Industry Show, International Pizza Expo, ISS Long Beach and the Sports Licensing and Tailgate Show. The winter additions of our largest shows, ASD and New York Now, both in our gift, home and general merchandise sector, were flat in revenues, and this is in line with our expectations. The financial performance of our GlobalShop trade show in the design and construction sector was below expectations despite being well supported and with attendance modestly higher than the prior year show. GlobalShop is moving in 2018 to Chicago, where we have successfully hosted the show many times in the past. Across the portfolio, our renewal rate for trade show booth space was in line with historic levels and slightly higher than the first quarter of 2016. We believe this metric reflects the strength of our portfolio of events and the important role they play in the exhibitors' businesses. We also launched 2 new shows in the period, an East Coast Active Collective event and a hybrid B2B, B2C event, both held in New York City. The former event, the larger of the 2, was really very successful, and we expect to deliver further growth in 2018. The smaller show was not as successful. And we do not plan to repeat the show again next year. Several of our 2016 acquired shows staged in the first quarter, most notably the National Pavement Expo, the American Craft Retailers Expo and the West Coast Swim and Active Collective shows, we are very pleased with the results and expect to build on the success of these first shows under our ownership as we get to know these properties even better. Importantly, all of these recently acquired shows grew revenues in 2017 relative to the levels they achieved prior to our purchase. At this point, I'd like to spend a few minutes reviewing Emerald Expositions’ story in more detail for those of you who are new to our company and did not have the opportunity to see our road show presentation. So first let me talk about the size of the market we operate in. The U.S. B2B trade show market was estimated to be in excess of $13 billion in revenue in 2016, with a projected compound annual growth rate of 4% to 5% from 2016 through 2020. Importantly, trade shows are a critical forum for both exhibiting businesses and attendees, as these events bring efficiency to the buying and selling activities in a given market. For exhibitors, trade shows represent an important venue to introduce new products, sell their products, generate sales leads and build brand mindshare. Additionally, exhibitors incorporate their industry trade shows into their annual marketing plans, resulting in a high rate of repeat participation year-after-year. For attendees, trade shows allow them to meet existing new suppliers, to buy products and services, to learn more about current trends and generally network within their industry. Of note, more than 80% of attendees that come to events are decision makers with buying power. Within this large and important industry, Emerald Expositions is the largest B2B trade show company in the U.S., with a diverse portfolio of leading shows. In fact, 31 of Emerald's trade shows were ranked in the top 250 U.S. shows in 2016, and almost all of our shows are #1 in their category. This is important because industry-leading shows enjoy a strong network effect that attracts the greatest number and the best quality of exhibitors and attendees in the marketplace. The must-attend nature of our portfolio of shows is evidenced by our strong annual renewal rate for booth space, which has consistently been in the low to mid-80% range, above the industry average. The trade show model -- the trade show's business model also has attractive financial characteristics, including strong forward revenue visibility due to booth space, which is comprises approximately 3/4 of our revenue. And this booth space sold in advance of when a given event stages. EBITDA margins that have been consistently in the mid-40% range. Negative working capital and low CapEx requirements consistently less than 1%. Our strong free cash flow conversion provides us with opportunities for expansion through M&A, for debt paydown and for returns of capital to our stakeholders. I'd now like to make a few comments on our growth strategy, which consist of both organic and acquisition-based growth opportunities. Our organic growth strategy is focused on 3 simple prongs. First, we'll grow our existing industry-leading shows through a combination of moderate price increases over time and modest volume growth. Volume growth will come from improving the ROI for exhibitors, adding new categories to our existing shows, cross-leveraging customer relationships across our current portfolio and attracting more international exhibitors to our shows. Second, we plan to launch new shows each year, primarily in our existing sectors. In 2016, we launched 4 shows, and all 4 of those shows are repeating again in 2017. As I noted earlier, we've launched 2 shows so far in '17, and we plan to launch 2 or 3 more over the course of this year. A third organic growth component over the medium to longer term will be to explore international expansion opportunities where those make good sense for our portfolio. The other key avenue for growth is utilizing our leading position and strong reputation in the U.S. to continue to consolidate what's an extremely fragmented trade show industry through M&A. We believe this is a significant important long-term growth driver for our company, and I'd like to take the time to highlight a few key points of our M&A strategy. Currently, there is over 9,000 B2B trade shows held annually in the U.S., with relatively few natural buyers. Of note, more than 2/3 of the shows that we purchased over the last 3 years, we were the only bidder. We believe this is largely a consequence of our relationships and our reputation in the market as a strong and respected operator and trusted stewards of the events post acquisition. Within this large market, we look for trade shows that are well established and important in their industry sectors. We want businesses with good margins that present the opportunity for growth enhancement and operational improvement under Emerald's ownership. We're generally not looking for fixer-uppers here. Of the 9,000 or more trade shows that take place in the U.S. annually, we believe there are hundreds that match our acquisition criteria. In March, we brought on board within Emerald an experienced EVP of Corporate Development to build our internal capacity and capabilities and to help us pursue this M&A growth strategy. So far this year, we've closed 3 acquisitions: the Custom Electronics Design & Installation Association's annual CEDIA Expo, InterDrone and the SnowSports Industries Association's Annual SIA Snow, which was announced last evening. CEDIA Expo is the leading show for the residential home technology industry, while InterDrone is the leading commercial drone show in the U.S. The total purchase consideration of these 3 acquisitions was approximately $60 million, and the average purchase price multiple was consistent with what we've achieved in prior acquisitions. All 3 transactions were structured as asset-purchase deals, and 2 of the 3 shows were acquired from trade associations and in all 3 cases were private sales and not public auctions. Please note that only the first 2 acquired shows will take place in 2017 under our ownership, and their expected performance is reflected in our guidance for the year. Looking forward, we have an active pipeline of acquisition opportunities in various stages of discussion, including both independently owned and trade association-owned shows that we will continue to pursue aggressively. Before I hand over the call to Phil, I'd like to make a few remarks concerning the full year organic revenue growth guidance we provided on our first quarter results press release this morning. Our estimated range for full year organic revenue growth of 0% to 2% reflects good growth in many of our brands, some relative flatness in some other brands and several very specific issues related to a few of our shows that are constraining this year's overall organic growth. For 3 shows in particular, Outdoor Retailer Summer, New York Now Summer and Interbike, there are unique issues affecting 2017 shows that are almost entirely unrelated to the underlying strength of the shows, and unfortunately, all 3 are impacting the performance in a single year. Just to put these effects into context, if these 3 shows, which have been steady growers in aggregate, were projected to even be flat in revenues in 2017, our guidance range for 2017 organic growth would be 2% to 4%. While normally we don't plan on giving individual show guidance or metrics, on this occasion, I'd like to briefly explain the issues affecting these major shows. First, as you have may seen reported widely in the press, certain conservation groups and outdoor industry companies are in serious conflict with the Utah Governor concerning the designation of certain federal lands in the state. Unfortunately, our Outdoor Retailer Summer Show that stages in Salt Lake City, Utah, has been affected by this controversy, and a number of high-profile exhibitors and attendees have decided to boycott the show in protest the Utah Governor's position. This is important to note that the protest has nothing to do with the event itself, which is being used as a visible medium for protesting companies for -- protesting companies to exhibit their displeasure with the state's environmental policies. Although we have enjoyed a good relationship with Salt Lake City and it having been an attractive venue for the show for many years, we're finalizing plans to relocate the shows to another host city in a different state. Despite efforts made by our Outdoor Retailer team to mitigate the effect of the political situation, over recent weeks, it has become clear that the adverse impact on the revenues of the summer 2017 show will likely be more than we originally anticipated, with revenues of our Outdoor Retailer Summer event now projected to decline by high single-digit percentage versus last year. This entire issue is transitional and unrelated to the underlying strength of the show itself, and we expense -- we expect to bounce back in 2018 when the show moves out of Utah and evolves into a 3-show model helped by the acquisition of the SIA show, as the outdoor industry consolidates around the 3-show format all owned by Emerald. Second, while we expect to have a strong sold-out show of all available space for our New York Now Home and Gift Show in the summer, it's become evident over the last several weeks, as our New York Now team has been working to maximize the salable space, that actual available capacity will be modestly lower than we had originally planned due to the construction activity at the Javits Convention Center. That said, there should be no further adverse capacity impact over the remainder of the construction cycle, and we expect the renovation of the Javits Center will deliver benefits to us longer term. Further, I'd like to talk about our Interbike show, which is the leading show for the North American bicycle show. We saw some early signs of softness in the show cycle and also an expressed desire from some exhibitors and attendees to move away from Las Vegas. As a result, we conducted an RFP process to move the show, and soon we'll announce a new venue starting in 2018. In the meantime, the outlook for the 2017 show has continued to weaken due to an extremely poor sell-through trends in the bicycle end market. Industry data for the first calendar quarter showed bike shipments down 15% in units, reflecting an oversupply of bikes in the channel. This is due unusually wet and cold first quarter across the U.S. We're seeing an impact of these industry factors on the show and now expect these revenues to decline in the double digits this year. Interbike continues to be the key event for this industry, and its performance is primarily driven by demand trends for products in the end market it serves. With the benefit of a new venue next year, combined with improved industry sales, we expect the show to strengthen going forward. There's one other show in the portfolio I'd like to specifically mention and that's ASD show, our largest franchise with 2 shows a year, each comprising 9 individual major categories at each event, serving a variety of value-priced merchandise end markets. Over the last 2 years, we've invested in marketing spending to increase buyer attendance and also added resources to our sales team, including senior leadership. We have recently introduced the Salesforce CRM and marketing automation tools to enhance our sales team's productivity. And there are many things about the show that improved over time. Attendance has increased year-over-year in each of the last 5 shows, and importantly, we've seen consistent increases in the number of exhibiting companies. Our ASD Winter show, which is included in our Q1 financials, was flat in revenues, and we were expecting to see mid-single-digit percentage growth from the summer show. However, given our pacing as of the end of May, we're now projecting the summer event to be broadly flat to slightly up versus 2016. We plan to reallocate and shift some of the internal resources towards faster, new exhibitor acquisition and new category expansion to drive improved growth in 2018. On the other side of the ledger this year, we will see strong year-over-year revenue growth in a large number of our shows as well as every single one of the tuck-in shows that we've completed over the last 3 years. I'd like to now turn the call back over to Phil for a review of our financial results. Phil?

Thank you, David, and good morning, everyone. For the first quarter of 2017 and consistent with our expectations, we reported revenues of $135.7 million compared to revenues of $127.8 million for the first quarter of 2016, which is an increase of approximately $7.9 million or 6.1%. The increase in revenues reflected organic growth of 2.9% and growth from acquisitions of 3.3%. As you'll appreciate, our business is quite seasonal depending as it does on which events take place in which quarters. The first and third calendar quarters are disproportionately higher than the second and fourth, which is typical of the trade show industry as a whole. Cost of revenues of $36.6 million for the first quarter of 2017 increased by 14.9% or approximately $4.8 million from $31.8 million for the first quarter of 2016. This increase is mainly attributable to $1.4 million of incremental costs associated with acquisitions, $1.6 million in higher sponsorship costs, largely related to the growth in the Kitchen & Bath Industry Show, with the remaining $1.8 million attributable to our 2 show launches and modest other cost growth. Selling, general and administrative expense of $32.0 million for the first quarter of 2017 increased by 21.1% or approximately $5.6 million from $26.4 million for the first quarter in -- of 2016. Acquisitions contributed $1.2 million of incremental costs, while transaction and transition costs of $1.9 million was $0.7 million higher than the first quarter of 2016. During the first calendar quarter, we also incurred $2.6 million of costs related to the IPO and sale-related activities. The remaining approximately $1.1 million increase in SG&A cost mainly reflected higher compensation costs. Net income increased by approximately $0.1 million to $28.3 million from $28.2 million in the first quarter of 2016. This largely reflected lower interest expense due to the refinancing during the fourth quarter of 2016 of our previously outstanding $200 million in 9% senior notes with term loans bearing a lower interest rate. We also had a lower average debt balance in the first quarter of 2017 compared to the first quarter of 2016. These interest-cost savings were offset by expenses associated with the company's IPO and sales-related transaction costs. For the first quarter of 2017, adjusted EBITDA was $72.9 million compared to $71.7 million for the first quarter of 2016, an increase of 1.7%. This performance reflected good revenue growth as previously described, partly offset by cost of revenue and SG&A expense increases, which were as expected at slightly higher rates than increase in revenues. This is partly due to modest changes in show mix and additional compensation costs. Our business model requires little capital expenditure, and our CapEx in the quarter was only $0.3 million, slightly down from $0.4 million last year. Our free cash flow, which we define as net cash provided by operating activities less CapEx, was $28.5 million for the quarter, which compared with $29.5 million for the first quarter of 2016. Although approximately $1.0 million lower in 2017, it’s worth noting that there was a timing effect here relating to cash interest paid in the first quarter of this year versus last year. Our cash interest in Q1 was $2.4 million higher this year due to the interest paid at the end of March on the incremental $200 million term loan that replaced the senior notes in Q4, whereas last year, there was no interest paid on the senior notes during the quarter as they were on the 6-month payment cycle. In addition, we paid cash taxes of $0.9 million in Q1 this year compared to only $0.1 million last year. As we indicated during the IPO process, the Emerald board has declared a $0.07 a share dividend for the quarter. This dividend, totaling $5.1 million, will be paid in the second half of June. Following the IPO and the resulting reduction in our leverage, we took the opportunity to refinance our credit facility to reduce the interest rate payable, significantly extend the maturity profile, achieve more favorable terms and increase the revolver commitments. I'm pleased to report that we closed the refinancing exercise earlier this week, issuing $565 million of new 7-year term loan B of LIBOR plus 300 basis points, which is 75 basis points lower than our previous rate. There is also a step down to LIBOR plus 275 basis points upon achieving a first lien net leverage ratio of 2.75x. We also put in place a new $150 million 5-year revolving credit facility, up from $100 million under the previous facility. On a pro forma basis, the IPO proceeds reduced our annual interest expense by approximately $8 million, while the refinancing exercise reduced our annual interest cost by approximately $4 million more. Our leverage ratio, with debt of approximately $550 million and acquisition-adjusted EBITDA of $162 million for the 12 months ended March 31, 2017, which is a metric relevant to our debt facility, is currently approximately 3.4x. As we outlined during the IPO road show, our target leverage range is 2 to 3x adjusted EBITDA. We've operated at much higher levels in the past and we're comfortable operating modestly above this range in the future when it makes commercial sense to do so. Finally, let me reiterate the full year guidance set out in the first quarter results press release, namely $348 million to $355 million for total revenues or 7.5% to 9% -- 9.5% growth over 2016, 0% to 2% for organic revenue growth and $154 million to $160 million for adjusted EBITDA. As David noted earlier, with our OR Summer, New York Now and Interbike shows we're now projected to be even flat, our organic growth guidance will be 2% to 4%. Our adjusted EBITDA expectations continue to include approximately $3 million of incremental 2017 costs associated with operating as a public company and also to expand our internal M&A capabilities. I'd like to acknowledge that the full year 2017 revenue and adjusted EBITDA guidance provided today is below sell-side analyst consensus numbers. Our guidance reflects our current expectations based on detailed conversations we’ve had with our event managers over the last few weeks. While our booth revenues, which as David previously noted, account for about 3/4 of our total revenues give us good visibility into how year is trending. There can be modest variations up or down based on how the sales cycle for any given event develops as the show approaches. We also have a number of other revenue streams such as conference attendance revenues, where the business is confirmed much closer to the event. As of the end of March, we booked approximately 85% of the then projected full year booth revenues, slightly behind our recent history, but in line with history when the known Outdoor Retailer and Interbike issues were taken into account based on our expectations at that time. Over the last month, we've seen some further deterioration in the outlooks for both of these shows, as their pace of sales did not keep up with our expectations, as well as reductions in our forecast for the New York Now and ASD Summer shows for the aforementioned reasons. Our current full year guidance reflects the several discrete issues that David discussed and also includes our latest assessment for conferences sponsorship revenues, which are revenue streams that get booked shortly before a given event. In particular, the registrations for the recently held HOW Design Live conference while ahead of 2016 were well below our previous projections. While we're not currently planning to provide guidance on free cash flow each quarter for this first call, I'd like to confirm that we expect free cash flow to be in excess of $100 million for the full year. I'll now turn the call back to David for his concluding remarks.

Thanks, Phil. So thank you, again, for your time today everyone. Overall, I'm pleased with the positioning of our business and the industries we serve. While our 2017 organic growth rate will be constrained somewhat by some very specific issues that relate to few of our shows, we have a strong, capable management team. And I believe sincerely and passionately that we can deliver sustained revenue and adjusted EBITDA growth in the future. I'd like to reaffirm today our longer-term revenue growth target of 3% to 5% organic growth, supplemented by the contribution of acquisitions. I am particularly excited to have announced the acquisition yesterday of the SIA Snow Show, the leading national ski and snowboard B2B trade show, expanding and strengthening our position within the outdoor sports and recreation sector. Our thesis for acquiring shows from associations as well as from independent owners continues to be realized, and we expect to add more great brands to the Emerald portfolio over time. With that, I'd like to ask the operator to open up the line for questions.

[Operator Instructions] Our first question is from the line of Anj Singh with Crédit Suisse.

I appreciate all the color on what's moderating your outlook for the year. I guess, I'll focus on what's been happening in 2Q. I realize it's one of your lighter revenue quarters, but I think you guys have had 6 or 7 shows occur Q2 to date, so wondering if you can give us a sense of how much moderation there may have been for your 2Q shows versus your initial expectations, any high-level color on exhibitor and attendee attendance, and how those shows tracked versus your expectations.

Hi, Anj, it's Phil. I think relative to our expectations, the major factor would be the HOW Design Live conference, which as we just noted was earlier in the quarter, and the registration revenues were not what we expected to be. Aside from that, the shows that take place in the quarter, which as you say, it’s kind of our third-largest quarter, it's relative to the first and third quarters it’s smaller, have done just as we expected, pretty well. We have ICFF and HD Expo and really kind of -- they've achieved what we expected them to achieve. So we feel good about the portfolio absent the HOW situation.

Okay. Got it. And then on M&A, could you speak to your recent acquisition of Snow Show and the deals earlier this year, perhaps, the opportunity you see within these under your ownership and going forward? And any thoughts on what typically happens as you combine shows like you're doing here with Outdoor Retailer? Is there any revenue or exhibitor attrition? Just trying to get a sense of one-offs that we should anticipate in the first combined year of the show early next year.

This is David. Thanks for the question. The first -- let me start with the first CEDIA and InterDrone, we expect good performance on -- they're running slightly ahead of where they had been and in line with our expectations. Good solid shows. I think InterDrone still has some real solid upside future as it's an emerging show in its space and dominates in the commercial drone space. As far as the OR, SIA situation, we haven't acquired a show and integrated it with another business in the past. So let me just make a couple of points there. This really consolidates the market. It significantly strengthens our longer-term growth aspirations for outdoor. It's a fantastic outcome for exhibitors, for attendees. And we're really working on developing our plans on how that will look financially. Our original thesis was develop this 3-show format individually with just the Outdoor Retailer brand. And so we're going to have to work through some integration issues, bringing SIA into the business and it's probably going to take the first year, maybe the first 2 years to completely begin to see the benefits of bringing those 2 businesses together.

Okay, got it. And one final one from me. On your smaller show that you launched this year, any takeaways you'd share as to why that wasn't successful? I realize there is a much of a margin impact from these new show launches, but just wondering if you can share any lessons learned and what goes into your decision to discontinue the show going forward.

Sure. I mean this was a bit of an experiment for us. It was sort of a cross-platform closeout show that we invited the public into for 2 days at the piers that ran alongside our New York Now Show. It just wasn't received enough in the market to repeat on a second edition. It may have legs in the future, but we thought if we can look across our portfolio and find individual markets that had closed-out products, so it was more introduced as a pop-up show post holiday that we thought might have some legs and it just didn't. And as we've noted in the past, we don't expect a 100% hit rate on all new launches of shows. We'll have a fairly good hit rate, but not 100%.

Our next question comes from the line of Manav Patnaik with Barclays.

This is Ryan Leonard filling in for Manav here. So I guess, just on the changes in the organic growth. I guess, what kind of happened in the last month or so that kind of caused the new way you're looking at the business? Is that just softness in the market? Is that sales efforts weren't connecting? And just you talked about, I think, in the past kind of this year without all the moving pieces would be kind of close to more of a normalized 4.5% organic growth. Does that 2% to 4% you mentioned ex some of these issues, does that imply any overall softness? Or is that just because those -- you're looking at those events as if they were flat?

Let me start with the first. ASD -- let's start with Outdoor Retailer. Outdoor Retailer is not a show- or industry-related issue, so it's a political situation, that's a bit more of an unprecedented, harder to see coming the reactions of companies individually and their impact on affecting the political situation in Utah. So it's not a show or market-related. We're just seeing some additional companies kind of grab onto that and not supporting the outdoor show this summer. But as we said, as we see that show relocating to another state, we feel those companies are not show-related and it's -- and it will return. Let me address ASD. ASD, as you know, is held twice a year. So the sales cycle is a bit shorter. It's a 6-month sales cycle. This August show or actually it's held in late July, the sales cycle is a bit shorter than typically is. The March show is a bit later in the March -- month of March. And the summer show is a bit earlier in the cycle. So we underestimated the shorter selling cycle between shows affecting us. I think we took longer than usual for our retention and, in fact, our retention is running slightly ahead year-over-year, but we're just finding or seeing that we're going to drive less new companies with the time we have committed into this business. So again underestimating the sales cycle and seeing fewer new companies coming into the business. There is also a couple of categories that we expected to grow faster. So in reality, we didn't really start the sales cycle on this show until kind of mid to late March. And as we got into it, we saw some of the categories that have been growing well are still growing well, just not increasing at the capacity we thought. We have several categories that are good growing categories that are simply not growing as we expected. Then it's just going to take more time to develop some of the new categories. As you know, ASD has hundreds of subcategories below these 9 individual categories. So it's just a mix of the kind of the new company volume -- the returning company volume and the categories that we have in the show. We also anticipated that the recent audience growth that we'd had based on our marketing investments would have a larger impact faster on the retention, although retention is up slightly. It just taken us a bit longer to drive into the business. So I think between those 2, I think those -- Interbike was the other product that we should probably talk about. I mean there has been a lot of product in the channel for a while. And coupled with kind of a poor sell-through season, it just compounded the problem. And I think we're just seeing the effect of companies maybe pulling back on some of their spending, but the Interbike show remains a strong show. It's a dominant show in the space. It has achieved great support from the industry, just not the level we had originally anticipated.

Great. Thanks. And I guess, just more broadly then, what about a sales cycle can be impacted? I mean, are these things that you can't start marketing until the previous show has occurred? And I guess, just quickly on Interbike, I mean, what if anything would cause you to kind of say the end market here isn't under good enough footing for us to continue the show?

I don't think we're contemplating, anticipating or even thinking about it not being on good enough footing. I think this is a strong dominant show in the space. I worked in the space a long time. I've seen the bicycle market kind of cycle up and down over time, I guess, pun intended here, but I have seen it cycle up and down over time. Right now, I think we're just experience a period where there is just too much product in the channel. And as that product moves through the channel -- we are not seeing fewer participants in the bicycling space. So we don't think it's a end-market driver that's a long-term driver, but we do have to see the market kind of cycle through the oversupply of product in the space. And we believe we're going to begin to see the benefits of that in the future.

The next question is from the line of Peter Christiansen with Citi.

Firstly, congrats on the IPO, but some questions here. I just want to dig a little bit more into Outdoor Retailer. I just -- is there any way you can kind of or do you feel like you've accounted for the risk that you could have additional boycotts with the show? And I guess, as it relates to the Winter show, I guess, the contracts with Salt Lake is up -- Salt Lake City is up in 2018, does that include the winter show or when does that start?

Let me start with the last question. The Outdoor Retailer show and the SIA show will be combining and relocating in Denver in 2018 winter. So we expect a very, very strong show, having no political impact on the legacy issue that we're finding on the August show. But returning to the August show for a second, it takes companies quite some time to plan, prepare for these shows. So it's unlikely that we will see any more material changes between now and the show, and the show stages in a couple of months. So we feel like we have a strong connection with the market, we're close to the market, and we've identified what we think is the right kind of finish line for the show coming up in a couple of months.

That's helpful. And then, as it relates to the Javits renovation, it seems like you've gotten incrementally a bit more conservative on that, should we take -- have that take through from what you were speaking about before?

So we haven't really taken any more conservative view. The Javits Convention Center is going under renovation, and there is a section of the show that's going to be unusable space. And so we're going to sell out the entire Javits Center that has the available space, but we've reassessed the salability of some of the usable ancillary spaces we haven't used in the past, some hallways and some meeting rooms and some foyers and lobby space that we haven't used. And we're just assessing what is ultimately the ability for us to sell some of those ancillary spaces to the customers that we’ll have in the queue once the show sells out.

Our next question is from the line of Gary Bisbee with RBC.

And congratulations on completing the IPO. I guess, let me just ask about these challenges in this way. Can you help us frame them from historical perspective? Are there typically 1 or 2 things like this that crop up in most years? Or is this really truly fairly unique that you have this 3 or 4 things that you called out as real drags this year?

Thanks, Gary. As you know, I've been here almost 30 years. I've never seen 3 kind of unmarket-related issues all happen at the same time in my experience. I think it's not uncommon for a show to experience something that's unique, but it's uncommon in my experience to see 3. And really probably short of Interbike really unmarket-related and even unshow-related experiences. So, look, we're working through them. We feel confident in the businesses and the brands that serve these markets are highly important to the markets. And once we cycle through these issues, we feel we're going to be on continued great footing as we were before these cycles.

And just when you’ve had them happen to single shows in the past in your history, what is the history of bouncing back in the next year? Is it sometimes take a couple of years? Or some of these things, Javits being totally understandable and it is what it is, but in the other ones, what's your confidence that everybody comes back to Outdoor Retailer in Denver or wherever you end up putting it, that Interbike getting a new location bounces back? Or is there some risk or potential that this is a couple of year rebuild to where you are?

So for Outdoor Retailer, let's start with that. We've never had a situation like this, where the political environment was causing the show to have a -- to see a negative impact. We've not only forecast, estimate these -- all these companies coming back, they told us they're coming back. This is a nonshow and nonmarket-related. And I can see their point of view, and we respect their point of view, and we'll certainly service their business as it comes back into winter in Denver, and as summer relocates to a new venue, they're returning as well. So I don't see that as any kind of a lingering effect. Javits is just simply a construction issue. When we get the -- recall that when the facility finishes renovation, we'll have a larger exhibit space, and as the only show in our portfolio that uses the entire exhibit space, we're going to benefit of that on the comeback. And in fact, we'll expect to sell this show out. We'll probably have a waiting list for the show, and we will sell more of this ancillary space over time, and we continue to have pricing opportunities in this sold-out show. So once we cycle through the construction, I don't see that being any kind of a lingering effect on the space. And Interbike, look, it's just going to take some time for the market to just cycle through the oversupply. And we feel as consumer participation in cycling and consumer confidence remains as strong as it is, we don't see a long-term lingering effect on this business.

Great. Thanks. And then just on one more -- sorry to keep beating on this, but you've talked in the past about occasionally moving shows. Is the history of that when you move a show sort of for some of these reasons we've discussed, that the uptake is good the next year? And should we think about as sort of a high confidence factor in terms of improving performance in some of the ones where you cited them just being sale in the market or an opportunity to upgrade the location?

So some show -- thanks, Gary. Some shows that moved, it's a freshened experience and some shows cycle in and out of certain cities over time, which means they have a history of being in that same city. And it's just a way that market has operated over time. The mere moving of a show is not necessarily a risk to organic growth. In fact, sometimes it's an opportunity. I think there is certain cases where shows do become stale in a certain city, and it's incumbent upon us to see that in advance and bring that show to a new city to freshen that experience. I think that was also partially a case with the Interbike show being in Vegas for a long period of time, and it feels like they're ready for a freshened experience. So I don't see the mere move of a show. There is a couple of shows -- CEDIA Expo has been historically a show that has moved around in terms of its location and it'll again be in San Diego this year. I think it was in Houston last year. So it's not uncommon for shows to move, but we don't really see that as a kind of positive or negative contributor unless, of course, specific to that show looking for a new home.

Okay, great. I appreciate all the color. Personally, I can't imagine demoing a bicycle in 100-degree heat in Vegas. So it strikes me to putting that in another market may well be a good positive for everybody.

Our next question is from the line of David Chu with Bank of America.

Just a few housekeeping questions. So what was trade show revenue for the quarter?

Good question. Ask your other question, and I’ll find -- see if we can look it up.

Yes, I mean, adjusted net income up as well? And then I guess, lastly, I know you guys gave us the acquisition price for this new show, but as a stand-alone, what level of revenue and adjusted EBITDA does this show generate?

Revenue, it's less than $5 million, and the EBITDA, I mean, the multiples that we paid are kind of in the same range, so you can look back to the adjusted EBITDA based on the purchase price. The 10-Q is going to come out later today, and the adjusted net income is $38.5 million for the 3 months. And I am just looking on the trade show revenue.

While you look for that, just lastly, which quarter will the third OR show be in?

It should be in the fourth quarter of 2018.

Got you. And it sounds like Snow Show will be part of all 3 shows, correct?

No, it probably won't be part of the summer show. And ultimately, the market will see a consolidated combined winter sports industry, and we'll find some customers that will be in the November show and some customers that will be in the January show. I don't think the market in the future will see them as separate independent shows. They're going to see one consolidated, strengthened industry operating based on the sales cycle of the products in that market.

And David, the trade show revenues in the quarter were $124 million. So the -- obviously the bulk of the revenue for the quarter.

Next question is from the line of Kevin McVeigh with Deutsche Bank.

Not to belabor the organic growth in '17, but is there any way to think about how much of the adjustment is trade show-related versus ancillary services? I obviously appreciating majority of the revenues that trade show, but was it outpaced on the other services that contributed more in the decline? Or was it consistent with historical trends?

Let me just start with that and you can fill in, Phil. Part of our -- part of this effect is, probably 1/3 of it being based on conferences. And conferences are very, very difficult to read in advance. They are the shows and that specifically the HOW show that Phil is referring to where attendees are paying to hear speakers and probably another 20% was the ancillary parts of our business. The remainder being the effects we talked about with Summer Market, New York Now and ASD expecting to increase and being largely flat or slightly up.

Okay. And then in terms of the guidance going out, do you have 2 or 3 additional shows already factored into that in addition to the 2 that you already opened this year or that be on the come based on when they open?

I'm not sure. I understand the question.

The new show launches that we planned for the rest of this year, are they included in the guidance that we have.

Yes, 2 of 3 of the shows are included in the guidance. We do have one or maybe -- probably one more that's not included in the guidance.

And in terms of just any visibility on additional acquisitions this year? Is there any way to handicap how many more we should expect to close?

I don't think we would handicap how many we close. We have a good track record of closing acquisitions throughout the year. We have a very strong pipeline. We're in various stages of discussions with acquisitions. So it's an important part of our strategy here. With this consolidated market, we feel like it's going to be kind of a regular part of our business.

Our next question is from the line of Jeff Meuler with Baird.

It’s Nick Nikitas on for Jeff. I’ll move off of the '17 organic growth, and I’ll preface this with that I realize it's probably very early for this, but given the visibility you guys have, and, Dave, as you mentioned, no change in kind of that 3% to 5% longer-term organic growth target, is there anything you could say about the near-term headwinds and how that might impact '18 or potentially being within that range or above it given the M&A you guys have this year?

I mean, we haven't gone through the process of rolling up 2018 forecast yet. Clearly, that something we tend to do later in the year. In terms of growth rates, I think that each of these shows is independent, meaning that the kind of issues we've highlighted here tend to be very show-specific and so kind of the rest of the portfolio we expect to continue to grow as we anticipated, and the majority of the portfolio is doing well. So I think once these issues cycle through, we feel very good about the 3% to 5% kind of growth -- organic growth guidance that we've put out there.

Okay. That's fair. And then just from an M&A pipeline perspective, are you guys -- are you seeing any change with the percentage of, I mean, you obviously had 2 recently, but the industry-owned events versus these other privately owned events in your pipeline? And just from a multiple perspective, is there any historic difference between those 2?

Well we now have a track record of 2 for association, so I'm not sure, I can call 2 a trend. But no, I mean, ultimately, I think, this is the market. It's an extremely fragmented market. And I think this is the range at which entrepreneurs and associations are willing to trade. Given that it's a large market, we're fairly particular about the businesses being important to the markets, being number one in their space, serving the many-to-many environment, being B2B. Once these shows have the qualities that would be additive to our high-quality portfolio at Emerald, we're going to be in this kind of mid- to upper single-digit trading multiple of EBITDA.

Thank you. At this time, I will turn the floor back to management for closing remarks.

Thank you. I'm not sure we have any closing remarks. We just want to thank everybody for their time today and look forward to talking to folks over the course of the next few weeks and then delivering on our promises as we go through the rest of the year. Thank you.

Thank you, everybody.

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