Emerald Holding, Inc. (EEX) Q2 2018 Earnings Report, Transcript and Summary

Greetings, and welcome to Emerald Expositions Events Second Quarter 2018 Earnings Conference Call. [Operator Instructions] As a reminder this conference is being recorded. It is now my pleasure 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 second quarter 2018 earnings call. With me here in San Juan Capistrano, California is David Loechner, our President and CEO. As a reminder, a replay of this call will be available on the Investor section of our website through 11:59 PM. Eastern Time on August 9, 2018. 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 our Annual Report on Form 10-K for the year ended December 31, 2017 which was filed with the SEC on February 22, 2018. 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 US 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 David.

Thanks Phil. The results for our second quarter were very much in line with our expectations and the outlook we gave on our last earnings call. Revenue for the second quarter increased by almost 6% over the same quarter of 2017 driven by CPMG which staged two successful events in the quarter. Organic revenue growth for the tradeshow portfolio was approximately 3% versus the same quarter last year, while organic revenue in other events and other marketing services products declined this quarter versus prior year. Overall, the quarter's total organic growth was flat; as we indicated would be the case on our first quarter call. Adjusted EBITDA for the second quarter decreased very slightly versus the second quarter of 2017 while free cash flow increased by almost 8% over the same quarter last year. Turning to our trade shows, the two larger shows to stage in the second quarter were Hospitality Design or HD Expo and Couture which both grew revenues by mid-single digit percentages as expected. The Hospitality sector remains robust and our HD Expo show which is the seventh largest show in our portfolio is well-positioned to continue to grow in the future. In fact, three months into our sales cycle bookings for the 2019 show are pacing towards a similar level of growth as we saw this year. While the overall jewelry market has been quite challenge for several years, our luxury event Couture once again significantly outperformed the industry, with the show's strong momentum driven partly by the team's success in expanding the luxury watch category. Our third largest show in the quarter, Internet Retailer Conference and Expo or IRCE increased revenues by low single-digit percentage. Importantly, in response to market trends and increasing interconnections between bricks-and -mortar retail, e-commerce, interactive in-store retail experiences and supply chain logistics, we are excited to have announced that next year we will co-locate IRCE Global Shop in the category of our RFID show to deliver a combined event we have named RetailX. Taking place in late June in 2019 in Chicago RetailX will bring together these three distinct shows to create an intersection of e-commerce store design and innovation. The initial market reaction has been encouraging and we are excited about the prospects for this combined event. Rounding out the larger shows in the quarter, the International Contemporary Furniture Fair or ICFF continue to build on a strong momentum and increased revenue by a mid single-digit percentage. The show has established itself as the centerpiece of New York design week, and we are confident of the shows prospects for continued growth in future additions. That covers the second quarter business performance at a high-level. And before I hand the call over to Phil to go to the financials in more detail, let me provide some thoughts on the outlook for the major shows of the rest of the year. Our first Outdoor Retailer Summer Show to stage in Denver took place last week, and repeated the success of our January 1 show there. The industry reaction to the recent show in its new venue was extremely positive, and we expect to report revenue growth of the show in the mid single-digit percentages. Additionally, we have sold more than two thirds of the projected booth space for the new November show and remain confident that we will reach our revenue goal for that show with a strong tailwind coming out of last week show. The largest expo in the third quarter is our ASD show which actually finished yesterday. Revenues for the show were estimated to have declined by low single-digit percentage versus last year's summer show, though notably, this would be a marked improvement from the trajectory of our March show earlier this year. The show's largest category Value and Variety is estimated to have grown by a low single-digit percentage; however, this is expected to be offset by continued softness in some parts of the style and beauty category of the show. The second largest show in the third quarter is New York NOW, which stages in a couple of weeks. Revenues for the shower are expected to decrease by low double-digit percentage, which is slightly worse than we had expected after the February show. The weakness we've seen in the home category over the last several shows has continued, although we are encouraged by the stability of the handmade and lifestyle categories within the show. Our pacing early in the show sales cycle actually started worse, but with the immediate management changes we implemented following our winter event, and with the new sales, marketing and show experience initiatives, we've been pursuing since then, we've seen solid improvements in the pacing especially over the last month as these actions have started to take hold. We are working to rebuild market confidence in the show's amore challenged home category and to drive strong performances from the categories that have more media growth opportunities. Make no mistake; this is a still a strong show that delivers considerable value to the market. In fact, we expect more than 2,000 exhibiting companies at the coming show, approximately 500 of which will be completely new and in excess of 20,000 attendees. With that said, the total cost of participating in New York NOW simply outpaced the returns for some exhibitors over the last few shows, and we have renewed our commitment to help rebalance that equation. As a result, we are working hard to re-establish the show's orientation, a high-end design and have also begun to introduce a number of investment initiatives that we believe will both noticeably improve the exhibitor's return on investment and also the attendees' experience over the next several shows. Initiatives under way range from enhanced VIP hosted buyer programs to expanded show features and services. With a little over a week to go until the show starts, we have seen a nice increase in buyer pre-registration for the show versus last year show which suggests that our expanded attending marketing efforts are beginning to have a positive effect. In addition to the specific actions that we're taking to improve the ROI of exhibitors at New York NOW, we started to implement a series of new sales and marketing initiatives for the later show cycles at both New York NOW and ASD as we previously discussed. We can see that these initiatives are adding to the efficiency of the sales process, but, as we have previously commented it will take more than one show cycles to see the improved productivity translate into better revenue growth. That said, taking into account the improved trajectory at ASD, we remain optimistic that we should see further benefits in the next show cycles and more broadly across the portfolio as we extend these initiatives to our other shows. Switching gears to show launches; we launched one new show in the second quarter namely a Regional Imprinted Sportswear show in Houston. The show was well received and the financial performance was in line with our expectations. Looking forward, we have six more of that launches scheduled for the rest of the year, two in the third quarter and four in the fourth quarter. In total, that will amount to seven for the year or eight if we include the addition of the third outdoor retailer show which compares to six launches for the whole of last year. The outlook for the launches remains good and their aggregate contribution is broadly on track with our expectations. Finally, let me comment briefly on our M&A strategy and confirm that we have continued to be active in assessing potential transactions. Right now, we have acquisition targets at various stages of the process, and, while the timing of deals is always unpredictable, we remain optimistic that our persistence and efforts will pay off during the remainder of the year and we will be able to deploy much of our free cash flow on attractive deals over the coming quarters. Our overall pipeline continues to be solid, and our M&A strategy is unchanged. I would like to now turn the call over to Phil for his review of our financial results. Phil?

Thanks, David and good morning again. The second quarter is the third largest quarter of the year by revenue and last year contributed approximately 21% of the full year's revenue and around 19% of the full year's adjusted EBITDA. Revenue for the quarter of $78.4 million increased by $4.3 million, or 5.8% over the comparative quarter last year. Tradeshow revenue was up 2.5%, or a little over 3% when adjusted for scheduling differences and discontinued events. David has already provided some good color on the performance of the key shows in the quarter. Turning to our non-trade show and other events' portfolio, revenue increased by 42% over the second quarter of 2017. This growth included two CPMG Hosted -Buyer events held for the first time since we acquired the business last November. We are pleased with the solid mid-single digit revenue growth versus the prior year in these hosted buyer events, namely Hotel Point which is focused on innovation and hotel construction design and engineering, and Build Points which encourages innovation in the architectural design, construction and renovation of retail facilities. The balance of the other events, revenue decreased approximately 16% driven almost entirely by the performance of our annual HOW Design Live conference. We moved the conference from Chicago to Boston this year, and clearly our overall value proposition and the marketing plan didn't resonate appropriately with our target audience. We have since change the events management team and we are refocusing our strategies, investments and efforts on delivering a stronger outcome next May when we return to Chicago. Lastly on the quarter's revenue. Our other marketing services revenue decreased by almost 9% as expected. The decline was largely concentrated in three of our publications and mainly reflected a few larger advertises pulling back on their print advertising spend in certain categories. Our digital revenues decreased only slightly. Cost of revenues increased by 13% or $2.8 million to $24.4 million for the second quarter of 2018. This increase is largely driven by the incremental cost attributable to CPMG but higher spending in several of the trade shows grew in the quarter was notably ICSF and Couture. Selling, general & administrative expense decreased by 18.8% or $6.5 million to $28.0 million for the second quarter of 2018. The decrease was primarily driven by the non-recurrence of the $8.5 million contract determination costs incurred in the second quarter of 2017 relating to the relocation of the Outdoor Retailer Show to Denver. This quarter's SG&A included incremental costs from the CPMG acquisition and modest increases in stock-based compensation and public company costs. Our adjusted EBITDA for the quarter of $29.2 million was $0.4 million, or 1 .4% less than the second quarter of 2017, after adjusting for small shows scheduling difference. This decrease, despite the top-line growth, reflected a modest adverse product mix, additional public company costs and the impact of discontinued events partly offset by a solid contribution from our CPMG acquisition. Our adjusted diluted earnings per share for the second quarter increased $0.05 to $0.23, representing 27.8% growth over the same quarter last year. This quarter's increase was largely due to the benefits of lower interest and tax expenses than in the prior year's equivalent quarter. The decrease in our interest expense was a result of our reduced outstanding debt balance and lower interest rates following the refinancing and re-pricing transactions last year. The decrease in our income tax expense reflected the benefits of the favorable change in the headline US Federal Income Tax rate from 35% to 21% that became effective at the beginning of the year. Free cash flow, which you recall we defined as net cash provided by operating activities less capital expenditures was $31.6 million for the second quarter of 2018 compared to $29.3 million in the second quarter of 2017. The major items affecting the quarter's cash flow was $7.5 million in increased tax payments, more than offset by $4.8 million of lower cash interest and the non-recurrence of last year's $8.5 million contract termination costs. Our last 12 months' free cash flow through the end of June was a $101.7 million, which represents a free cash flow yield of a little over 7% on our current market capitalization. Additionally, in the second quarter we increased our dividend from $0.07 to $0.0725 per share and the total cash dividend paid was $5.3 million. Our Board has recently approved the third quarter dividend, also $0.0725 per share which will be paid towards the end of August. At the end of June, our outstanding term loan balance was $539.4 million and we had cash on hand of $34.5 million. Just before the end of the quarter, we made a $20 million voluntary prepayment of principal in addition to our regular quarterly payment. Our leverage ratio with net debt of $504.9 million based on the calculations in our credit agreement was 3.2x our last 12 months adjusted EBITDA which represents a slight improvement on the previous quarter's ratio. At this time, I would like to provide our latest expectations for 2018's full year financial outlook, and more specifically the expectations for our key financial performance metrics, which, in each case continue to be within the previously communicated guidance ranges as outlined in our second quarter earnings release. We expect our reported revenue, organic revenue, adjusted EBITDA and free cash flow to trend towards the lower end of their respective 2018 guidance ranges. Directionally, and as David discussed, we expect the headwinds in our two largest third quarter shows ASD and New York NOW for softness in some other areas of the portfolio to result in a low single-digit percentage decline in organic revenue growth in the third quarter, which we expect to translate into a modest decline in our quarter's adjusted EBITDA. With a new outdoor retailer show and several launches in the fourth quarter, we anticipate good growth in revenues and solid growth in adjusted EBITDA in that quarter. At this stage of the 2018 show cycles, in aggregate, we sold more than 95% of our 2018 forecast annual booth revenues which typically comprised approximately 70% of our total revenues, and hence, we have a good confidence in our projections for the full year. The main uncertainties left for the remainder of the year relate to the relative success of our new launch program, the performance of a few of our publications and the ultimate performance of our new November Outdoor Retailer show. I will now hand back to David for closing remarks.

Thanks, Phil. With the full year outcome for 2018 now largely locked-in, we expect to deliver solid revenue growth including improved organic growth over 2017's result, reinforcing the benefits of our large and diverse portfolio of leading brands. But we still need to finish the year well; our thinking, planning and execution have begun to pivot towards 2019, and to ensuring that we continue to drive our organic growth rate higher and back towards our medium-term growth target. For the biggest shows, I've described some of the key initiatives we're executing to address recent performance issues, and we expect these initiatives to have a positive impact on the trends in those shows over the next few show cycles. I am optimistic that our recent sales and marketing initiatives will have noticeable benefits across the portfolio over time as we roll them out more broadly. Additionally, many of our brands including KBIS and Outdoor Retailer are setting up for further strong growth performances in 2019. Thank you for your time and attention this morning. Operator, please open the call for questions.

[Operator Instructions] Our first question today is coming from Pete Christiansen from Citi. Your line is now live.

Good morning. Thanks for taking my question. I guess first on some of the variability on the publication front, I mean you noted that there has been some advertisers that dropped out a while ago, so, my first question is on that front is-- should we expect to see a similar year-over-year decline in marketing services, I guess, in 3Q and-- when do you start-- when you believe that line item will begin to stabilize?

I think we are taking it on a case-by-case basis, advertisers make closer end decisions; we are not expecting a meaningful rebound on the publication side in 3Q.

I mean-- this is Phil. Good morning, Pete. We did say it was three-- to 3 publications. We saw growth and stability in a bunch of our other kind of publications. So it's difficult to say exactly, our expectations are-- it will be maybe a little bit better in the fourth quarter, but as David says, people make decisions, it's a little bit closer eyes on those things.

Okay. And then can you remind us what total liquidity is right now? And I guess the lack of M&A I guess in recent quarters, should we expect continued-- if it is the case of continued voluntary debt payment?

I really don't think you should read anything into pay down, we had more than $55 million of cash and we just took the opportunity to take to get some benefits on the interest expense going forward for just-- for paying down $20 million. We have more cash in that now. We have a $150 million of an unused revolver. So, and the second half of the year, we expect free cash flow close to $60 million. So, we have plenty of firepower to do, what we expect to do on it from an acquisition perspective and I wouldn't want you to read too much into just a little bit housekeeping on that side.

Thanks. That's helpful. And then I guess, finally, sort of a bump up in CapEx this quarter, I guess, versus normally. I know you have maintained free cash flow guide for the year, just wondering if you could just provide some context on what you are investing in. What are the-- and how do you see CapEx churning for the remainder of the year?

Sure. This was kind of a one-time acquisition of intangible assets we made, mainly customer lists in the e-commerce space, and that should support our event program in that area including some of the brand authority launch, and some other things that we plan to do in the e-commerce space. So I think the Q3 and Q4 CapEx will look much more like Q1 than Q2. So it doesn't indicate any change in trajectory or change in requirements.

Thank you. Our next question is coming from Manav Patnaik from Barclays. Your line is now live.

Yes, hi. This is Ryan filling in for Manav and-- I guess-- sorry to - didn't pick on it but - so the voluntary debt pay down, I mean can you walk us through some of the return math on that decision, and I guess what are you seeing in the market that would make a debt pay down more attractive than some of the tuck-in M&A that you have done in the past. Have multiples kind of runaway or is it the quality of assets?

I think you are totally over thinking this Ryan. As I think I just explained that no impact on our ability to do M&A from doing this. This is entirely housekeeping thing where we are paying-- whatever we are paying 5% and we are earning relatively little on the cash. So it's just entirely housekeeping thing. Don't even think about it is impinging on our M&A ability.

But I guess what are you seeing in the market that would make spending that on deals not as attractive?

Hi, this is David. We are not seeing any either/or scenario. Here we feel the pipeline is strong, our action in the pipeline and we still expect to deploy the same or similar amount of dollars to acquire the targets as we have historically.

Okay. Fair enough. And then I guess you talked about investments in shows like New York NOW and maybe some of the for the exhibitors not being there, I mean is it-- can you maybe help us understand what-- any margin impact that would come from that, and I guess how is was pricing kind of work in that show?

So, ASD and New York NOW have kind of different issues. Once is kind of the sales and marketing issue in terms of our call volume and our account alignment and close ratios, and the number of leads we can push through the system. For New York NOW, we are investing a little bit more in the audience marketing to drive up a greater audience. We are working hard the home category and specifically trying to attract them up back in greater numbers, and there will be some impact on that. But we hope that-- that-- some margin impact on that investment. But we hope to get that back in-- in both attendee volumes which will-- which will drive incremental pricing and drive retention and new business over time which will bring the volume back up. So, we think it's the right investment for the right return.

Thank you. Our next question today is coming from David Chu from Bank of America. Your line is now live.

Great. Thanks. So in highlighting 3Q expectations, you mentioned some softness outside of ASD and New York NOW, can you just discuss what you are seeing?

I think we have got both pluses and minuses here. I think the intertwined trends have continued. We have yet to hold the show in the new location. That will be in September. So we will see how the venue and the value of that event works out and then there is some softness in our Surf Expo event with some consolidation in the stand-up paddle group and some hangover from last year's hurricane effect, but we're also seeing on the other hand some good momentum in our largest marine military show. So there's some puts and takes here.

Got it. And then on adjusted EBITDA, the margin was down 200 basis points in the quarter. I know maybe some of that or most of that is for CPMG. Can you just explain what else factored into the decline?

We had a little bit more in the public company cost to get to kind of full run rate. That had an impact and then this shows that the slightly higher growing shows Couture and ICFF are higher cost shows, and so we had some product, some product mix effect there. So but you're right there's a little bit of CPMG structurally that's a relatively lower margin business, but a great business will really --we're really pleased with what we saw in the quarter, and what it's giving us from a kind of future growth perspective including one launch that we've added in the fourth quarter on CPMG. And some really interesting things in the pipeline for 2019. So I think we're very pleased with adding that to the portfolio.

Okay. And just one last one if I may. I know it's early but based on these changes that you're making at ASD and in New York NOW, can you give us any sense of expectations for the winter shows?

So speaking broadly, I mean we're seeing some productivity gains especially with ASD because we've spent a little bit more time looking at that as the shows now occurred. New York NOW is still a couple of weeks away and we haven't gone through the analytics, but we're optimistic that we're receiving some benefit from taking ourselves through this cycle probably well for the first time really, but again we've got to get everything right and we think we've identified at all of each and every issue. Again, I think we talked about the account alignment between 14 and 15 staff. The close ratios, the call volumes; we think we've got a good track record now of understanding what all the issues are ,and how to divide up the issues and conquer them. So we're optimistic that this initiative and this effort will sequentially continue to improve on future shows. I'm not sure I'm being very specific on winter because we haven't really started that sales cycle yet. And we haven't fully analyzed the output or outcome of the data on this cycle. But we've seen some early signs of it being a positive driver.

Our next question is coming from Katherine Tait from Goldman Sachs. Your line is now live.

Hi, everyone. And three questions for me, please. Firstly, on the co-location next year of this new RetailX show. I just interested to get a sense from you what we should anticipate in terms of uplift versus potential cannibalization to the existing IRC show. Clearly and that shows only so growing low single digits already. So just an understanding of how we should and I suppose be modeling that overall segment going into next year. Secondly, on print advertising, can you just clarify and how much of your revenue is still linked to print advertising? And then finally, I think we've clearly been seeing some of noise on the news around impending trade wars. Can you comment at all about any impact you anticipate us to have on your trade shows and particularly any color around participation from Chinese exhibitors or attendees? Thank you very much.

Sure, Katherine. Hi, good morning. This is David. The co-location of these three independent shows, the show's still largely or do remain independent. They're just co-located. We feel that's a natural progression with what the retail environment is thinking and the issues they're working through. So although we believe it's an added value benefit for both attendees and exhibitors, I'm not willing or yet have put a dollar figure on the value enhancement. We certainly feel that there will be value enhanced which could drive pricing, and it could drive volume. But we haven't put a stake in the ground on that. It's the right thing to do for these markets as they deal with both brick-and-mortar, in-store issues as well as online issues. So strategically it's the right move for these businesses, and the right move for retail. But we haven't put a pin in it for quantifying the actual growth enhancement on that initiative.

Hi, Katherine. I'll just take number two, print advertising, well our other marketing services which does include some digital revenue and some contests and other bits and pieces, it's about 7% to 8% of our overall revenue. So it's relatively small and the softness that we talked about, as we said was concentrated in relatively small number of titles within that. So that's the scale of it.

The discussion on tariffs and trade wars, really to date we've not seen any impact from the tariff rhetoric or even the actual tariffs that have been put in place, trying to represent only a very, very small percentage of our exhibitor base. And so we really don't anticipate being material affected by any kind of additional tariffs or even, look, if it's an escalating trade war, I think we'll be in line with the general thinking around that. But we're not being affected in any way today on that.

Thank you. Our next question is coming from Zach Mueller from Baird. Your line is now live.

Yes, thank you. I want to just kind of go back to the M&A environment question. I'm not tying it to the voluntary debt pay down but it's been a little low in terms of deal activity from you and there was a comment about -in the release about wanting to be selective to deliver value to shareholders. We've seen a lot of transactions announced from private equity buyers. Can you just --is this natural variance in terms of lumpiness of deal flow or are you seeing something in terms of deal pricing or quality of shows available to the earlier question that it wasn't clear to me what the answer was?

So on latter, no, we're not feeling --seeing the pricing or quality of deal flow. It's always been lumpy. If you look at our history when we've made acquisitions in the past, they've vary year to year. Whether they occur in a specific quarter or multiple ones in one quarter has always been a bit lumpy. We feel like the strength of the pipeline and the strength of our activity and the funnel we put these through has remained unchanged. And again, we anticipate to remain confident that we'll be consistent with our behavior in the past and behavior that we've articulated we think we can do again this year.

Okay and then I think the language was total cost of participating companies outpacing returns. And I recognize that your fees are a relatively small percentage of the total cost. So just what are you getting at there? Like are you calling out I guess travel costs, hotel price inflation and that's causing less demand for trade show advertising as part of a marketing budget or what is going on?

So I think we're just simply calling out the economics of the large maybe furniture companies in the home sections. They have to pay probably a disproportionate amount of labor cost, electrical cost, freight costs and we have to continue to drive the audience. And the audience has to continue to buy from these exhibitors kind of at the same rate to keep their ROI strong. So it's-- everybody has to pay increased hotel rates when hotel rates go up, but I think the home category specifically has a disproportionate amount of that. We're working on trying to package as much as we can with those companies, and make the right value proposition for them to continue. But more importantly, it really speaks to the audience for them, and so we've worked very hard at bringing in additional architects, designers retail-- key retailers for that market because it's not really just about cost, it's about the total return for them. And the return is based on the audience that they get and that they buy from them. So we're really focusing on that actually for the show that's going to occur in a couple of weeks. We're up very nicely in our audience pre-registration or the attendee pre-registration, which is a very strong sign that we're making headway and improving their ROI.

And then just I guess big picture with guiding revenue to the lower end of the prior range. I guess you're going on your second year of low to no organic revenue growth and there have been issues at a lot of large shows. I guess just make the argument maybe again or your current thinking on what is the structural outlook for trade shows. Is there's something bigger going on in the industry in terms of industry maturity or retail exposure? Just anything you can say to give investors confidence that the trend of the last two years is not the new norm. Thank you.

Sure. Let me start with --look, we have lots of show. This is not a systemic issue as a tradeshow organizer. We have lots of shows that are doing very well with strong execution. Our goal is really stability across the two large brands, and again if these shows were even flat, we would be within that 3% to 5% range given the other puts and takes within the portfolio, which is which is logical and normal over a large diversified portfolio. So we're really focusing in on these but specifically New York NOW and intertwined publications has really caused us to kind of shift our thinking for this full year in terms of the range. But staying within the range and not having a strong of sales outcome for New York NOW that we would have liked has affected us.

I just want to say that overall we're pretty happy with the predictability of the business. If you think about the guidance we put out, the lower end, the range was really only 1% on either side of the midpoint. And at the EBITDA level, it was 1.25% on either side the midpoint. So I mean I think we said, we expect to still fall in these ranges and these ranges are pretty narrow. So I think overall that predictability is still very good.

Understood and my question was like just less on the predictability more on just if the underlying growth trend structurally has worsened for the industry or your portfolio, but thank you guys.

Thank you. We've reached end of our question-and-answer session. I like to turn the floor back over to Mr. Loechner for further closing comments.

Sure. Thanks Kevin. Look, as a reminder, these shows have really leading positions and our portfolio is a very diversified portfolio. We have strong growth across the portfolio. We still have strong and attractive financial characteristics. And I think free cash flow generation is a key of that. And there remains this long-run way of financially attractive M&A targets. So with the focus we have on some of the larger shows, we feel like we're making progress and the sequential improvement will continue in the future. So thank you everybody for joining the call this morning.

Thank you. That does conclude today's teleconference. You may disconnect your line at this time. And have a wonderful day. We thank you for your participation today.