Good morning, ladies and gentlemen and welcome to the Emerald Expositions' Fourth Quarter 2018 Earnings Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be opened 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. David Gosling, SVP General Counsel and Secretary. Please go ahead, sir.

Thank you, operator, and good morning, everyone. We appreciate your participation today in our fourth quarter 2018 earnings call. With me here today is Phil Evans, Emerald's Interim President and CEO, and the company's Chief Financial Officer; and also Kevin O'Keefe, Executive Vice President. As a reminder, a replay of this call will be available on the Investors section of the company's website through 11:59 PM Eastern Time on February 21, 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, Form 10-Q and subsequent filings. We do not undertake any duty to update such forward-looking statements. Additionally, during today's call we will 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 filed this morning on Form 8-K. Now, I'll turn the call over to Phil.

Thanks, David. I'll start by reviewing our fourth quarter and full year 2018 results. I will then turn to our strategy for 2019 and the outlook for the year. At that point, we'll open up the line for your questions. As David just noted, with me here today is Kevin O'Keefe, who took over the leadership of our New York NOW, National Stationery Show and SURTEX shows in 2018; and has been the leader of our ICFF event for many years. Kevin will join me in answering any questions you may have relating to New York NOW. Beginning with our fourth quarter financial performance, revenues increased by $25.5 million or 81% over the fourth quarter of 2017 benefiting from strong organic growth and the contributions of several recent acquisitions. Organic revenue growth for the quarter, adjusting for the timing difference related to our Digital Dealer fall event was approximately 19%, which strongly benefited from the new Outdoor Retailer Winter Market show and two other fourth quarter event launches. Our adjusted EBITDA for the fourth quarter increased by $5.5 million to $8.5 million as compared to $3.0 million in the year-ago quarter, reflecting the contributions of acquisitions and our fourth quarter launches. Acquisitions contributed $17.1 million of revenue in the fourth quarter. In mid-November we staged the Boutique Design New York or BDNY show, which is the flagship asset in the portfolio we acquired from ST Media in October, and it increased revenue over the prior year's show by a low-double-digit percentage. Overall, we were satisfied with the performance of our newly acquired events, which was in line with our pre-acquisition expectations. To conclude my comments on the fourth quarter, we booked a non-cash impairment charge of $104.3 million on our trade name and customer-related intangible assets, in connection with the…

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Seth Weber with RBC Capital Markets. Please proceed with your question.

Good morning. This is Emily McLaughlin on for Seth today. Just a question on the comment about lower cash receipts for future shows received in the fourth quarter. Is there anything to read into there? Are renewal rates meaningfully lower than they were a year ago?

Now, this is just - hi, Emily.

Hi.

This is Phil. As we talked about the Q1 shows, we have a decline in the New York NOW and NSS show, and it really is entirely related to that. If we actually look at renewal rates for 2018, they were slightly improved over 2017. So I think it's specifically related to one or two shows.

Okay. And then on the marketing side, are you starting to see any stabilization there? And is any of the digital knowledge that EH Media brought to the table having any impact on the legacy business yet?

The other marketing services piece is obviously - it's a challenge, because it's largely print advertising. And we - as you pointed out, we're in the process of using the skills and products and techniques that the EH Media brands brought with them. And I've seen several, recently, of the initiatives being adopted in some of our other brands. I saw Healthcare Design the other day doing some of that. So we're optimistic that we can benefit from that. It really is going to take some time to do that, but we're definitely optimistic.

Okay. And one last one, if I may, just any update on the pricing environment? I think you guys have talked about 3% to 4% a year in the past, does that still hold?

Broadly that still holds. I mean, as I have explained in the past, we make those decisions at a show-level, based on all the other factors relating to a show. And it's kind of - it blends out to be in the range that you just said. And that's pretty much the same thing. We're very mindful of the individual conditions, the individual markets of each of the shows and that's what we take into account when we're doing the pricing.

Understood. That's all from me. Thanks for the time.

Thanks, Emily.

Thank you. Our next question comes from the line of Jeff Meuler with Robert W. Baird & Company. Please proceed with your question.

Yeah, good morning, Nick Nikitas on for Jeff. So just looking at the adjusted EBITDA decline and the incremental investments in sales and marketing, Phil, that you kind of called out, are these things you guys would view more as onetime investments for 2019 or potentially more of a structural change to your events or maybe you need to require a higher level investment or an enhanced offering for attendees going forward?

Thanks, Nick. They really aren't onetime in nature I would say. Of the $9 million we call out, about half of that is experiential and attendee related. So that would be things like design spaces and lounges, and education and refreshments, and those are things that - what we've really learned a lot through the New York NOW exercise of investment and changing the view of that show in the market is, that these things actually make a difference. The people appreciate them. We got an email from, unsolicited from one of the exhibitors, tabletop exhibitors at New York NOW, who mentioned a bunch of these things and noticed that we'd introduced them at the shows and said, what a refreshing difference it was and what a revert of the show it was. And so about half of what we're doing is experiential. And obviously, we could change those things over time, but we think those things are important. And then the other piece is around about a third of the total relates to marketing and sales heads largely, because we see the opportunity to grow faster and to kind of fuel the growth over time. And so, those things will continue and that will drive growth going forward. And then the other piece math-wise is a 6, that's around attendee initiatives to attract better or more attendees. So there's nothing specific that isn't going to be kind of something we do and continue to do as we go forward.

Okay. That's helpful. And just on the other side or the flipside of things, do you think you can drive any incremental revenues from the investments in 2019 or are these really multi-year revenue enhancements that you're feeling kind of the build-out of the cost in 2019 specifically?

We're really not anticipating that we'll get much of a pickup in 2019. As you can imagine, particularly on ASD and New York NOW, which is probably a third of the investment, we're already selling the summer shows. And by the time we've continued our program of investments, we'll really be selling the 2020 events. And so, I think that's when we expect to start to see the pickup and we're being pretty cautious about the impact on 2019.

Okay. Shifting to New York NOW, nice to see the attendance uplift. Now, it's a pretty big number. Is that something that is in the early stages of benefiting the exhibitor trends, but it's been more than offset by the show changes you're implementing? Or is the exhibitor improvement is something that will likely take until 2020 given how early bookings are?

This is Kevin. Well, I guess, the best way to describe what happened in New York NOW is that Super Bowl Sunday, we get 10,000 people show up in the first two hours. So the shock, a positive experience to exhibitors was quiet strong. And so, the reaction by exhibitors who expected a different result, not quite as - so positive result was exuberance, and so - and also on the part of attendees. So I think that we will see that attendance again will help us to bring the summer show in flash to previous year. And then it really gives us the momentum to, as we move into 2020, create an entirely new and much more vibrant event.

Okay. And just given the second year kind of somewhat substantial declines and some more near-term improvement in ASD, is it just a product mix difference between the two shows or you saw a quicker rebound in ASD or is there something from the sales changes you've implemented with ASD that could potentially be leveraged at New York NOW going forward?

So this is Phil, in case you can't tell difference between Kevin and Phil. The issues at ASD and New York NOW are very different. They're in different markets and the declines - modest declines that we saw at ASD were kind of much less in 2018 than what we saw in the summer at New York NOW. I do think there are similarities with sales and marketing approaches, and some of the initiatives we've taken, and some of the experiential things that are going on. So those are somewhat parallels, but the end markets are quite different and the issues are quite different.

Okay. And then just last one from me. The trade tensions comment impacting ASD was something that necessarily wouldn't have jumped out. Initially so, is that being felt in any other events throughout the portfolio? And, I guess, similar question for government-related shows and the recent shutdown?

So, I mean, the nature of kind of the world we live in and we have a lot of shows with products, is a lot of products are made in China. And so, there is more broadly an impact on cost potentially for some of our exhibitors. The place where - in ASD, we have a particular sourcing category, which is a single-digit percentage of the revenue of that show. And so that's more directly affected. But there are modest effects and at least concerns at some of the other shows, but it really isn't translating into anything from a revenue perspective at this time. It's really more kind of a conversation and slight concerns that if it continues, and if it ramps up and if it gets ugly, then it'll affect the input costs for exhibitors. But we're not really seeing it other than in the ASD event kind of translating into revenue at this point. And on the shutdown, pretty much we have some military shows, but those are kind of excluded pretty much from the impacts of the shutdown. And we haven't really seen any impact anywhere else of any real note.

Okay. Thank you.

Okay. You're welcome.

Thank you. Our next question comes from the line of Ashish Sabadra with Deutsche Bank. Please proceed with your question.

Thanks. I'll just follow up on the New York NOW show itself. So the turnaround expected in 2020, are you expecting - is it going to be - maybe you expect a revenue growth improvement, are your expectation is you'll see more exhibitors come in or your existing exhibitors start spending more money, how do you think about the turnaround or is it both of those?

So I'll let Kevin do kind of the second bit. The first bit is really - from a guidance perspective, you might think that our guidance is fairly wide and that's really because there are a number of second-half shows, where we feel like we've seen the inflection point on New York NOW and ASD. But we're cautious on where that will be. And so, we definitely think that we're on the right trajectory and things will get better, but we're not pointing to growth specifically in 2020 at this point. Hopefully, we'll get to that point and be able to talk about that later in the year. But, Kevin, what else you want to add?

Well, I think relative to New York NOW, the section that was most impacted over time in terms of exhibitor content was Home. And what we had done with the introduction of wrapping New York NOW around Retail Renaissance is a new sweet big trend in the marketplace, and bringing in Transcend and experiential spaces on the floor designed by the top material designers in New York and Transcend Talks. I mean, the reworking of the show was so dramatic that those many hundreds of returning exhibitors who came to look at was very positive. And so, not only that but we engaged all of the top showrooms here in New York and so people like [Groschba] [ph], and B&B Italia, Rene Lalique and [Christofo] [ph], people who have never been involved with New York NOW before are very interested in it. So the nature of that Home event is changing dramatically. And so I think that it's big change this time. And I think 20% lift in attendance was significant. As we look forward to summer, it's going to be much stronger in terms of stronger attendance. And so, I think that it's a big show and the momentum is going to push us into 2020 as we evolve into a different, much better event that's all based on it being, New York NOW being the indispensable resource for the independent retail in United States. So I'm very positive about the view towards 2020.

Okay, now, that's helpful. And maybe just a follow-up question. So one of the concerns investors have is the fact that even if the attendees go up, the challenge is more around on exhibitors side, where a lot of the exhibitors might be struggling or maybe - may have changed the way their marketing budgets are allocated. Have you seen any of those trends in the marketplace or any color on that front? Thanks.

No, not at all. I mean, the trade show model is one which is extremely effective when done well. As a sales person and been in sales for such a long time, really the face to face is the most effective way to sell. The e-mail no longer works. I mean, you really can't call people, because they won't take the calls. So if you don't meet them face to face. You really can't get it done. So when you can put the right content together on the exhibition side, all of those attendees will come and it works extremely well for both parties. And so, if anything, exhibitors and companies will invest more in trade shows, because it is a model that works. But you must always be cognizant of best content to deliver best attendance. And while you do that, you have a very successful model that can do nothing but grow.

That's helpful. Thanks again.

Thank you. [Operator Instructions] Our next question comes from the line of David Chu with Bank of America Corporation. Please proceed with your question.

Hi. Thanks for taking my question. So just overall like what growth assumptions are embedded to guidance for each of the segment?

That's a difficult question. I'm not sure I'm actually capable of answering that easily. And when you say segments, do you mean trade shows and other marketing services and other events? What do you mean, David, in that…?

Yeah, yeah, exactly, just what you just mentioned, Phil.

Okay. It's tough to say other than let me kind of characterize where we are. The trade show kind of piece of the business, which obviously is the bulk of the business, that really is dependent on how the show is going in the middle of the year. As I said in the prepared remarks, we have ASD, we have New York NOW, we have the Outdoor Retailer shows and launches. Those will really kind of determine the level of growth in the trade show part. We know first quarter New York NOW is down. We know KBIS is up. We know Outdoor Retailer is down slightly. So we've given you kind of a lot of the pieces in the first quarter. And our full year is fairly broad in terms of the guidance from probably a small decline to fairly reasonable low-single-digit growth. On the other marketing services, we're fairly I wouldn't say pessimistic, but we're fairly realistic about the likely trajectory of that. So we certainly have that as an expectation of decline, modest decline. We do have - as I was telling, I think it was Emily earlier on - we're working through some things that hopefully will give us some better opportunities there. And then, the other events piece, the CPMG acquisition that we did. It's a great business. They're growing nicely. They are launching one event certainly in 2019 that they've already pretty much sold out. So we're optimistic that there'll be some decent growth in the other events part of the portfolio, which is also a part that Johanna, who I mentioned in the prepared remarks, is helping us kind of grow that part of the portfolio as well. So I think the tradeshow portfolio, we're optimistic, we're cautiously optimistic. But in the guidance we've looked as you'd expect, that kind of the range of the potential outcomes.

Okay, great. That's helpful. And then, you highlighted the recent ASD Winter was flat and then expected it to be down in 2019. Was that just purely on the China trade tension? So maybe you can speak to kind of underlying, would you have expected it to be up?

So I said it was flat, if you exclude the SourceDirect section. So the expectation is it will be slightly down overall. We would have expected it to be flat. And actually the SourceDirect category has been a growth category in the past. So if that had grown at the rate at which it had been doing over several years, then we could have seen - we could have eeked out a little bit of growth. We think that the things that we have implemented there in the sales and marketing areas, and the stability of the team, and the quality of the team that we have now is getting us to a point where we can have more confidence in the results of those shows.

Okay, great. That's very helpful. Thank you.

Thank you. We have reached the end of our question-and-answer session. I would like to turn the call over back to Mr. Evans for any closing remarks.

Thank you, Michelle, and thanks to everyone for joining the call today. And thanks, Kevin, for joining me here. Clearly, 2018 was a challenging year and we still have work to do in 2019. But as you probably heard, we're cautiously optimistic that we've reached the inflection point for New York NOW and ASD. And we feel really good about the investments we're making to drive improved growth going forward. So personally, I feel more optimistic about our situation than I probably have done for a while. And I'm really excited about the state of the business that the new CEO will inherit and I'm really looking forward to the next stage of the company's growth and the company's success. So, thanks again for joining us, and I'll hand back to the operator.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.