Emerald Holding Inc (EEX) 2018 Q2 法說會逐字稿

Greetings, and welcome to the 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 Investors section of our website through 11:59 p.m.

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 U.S. GAAP.

A reconciliation of these non-GAAP measures to the most comparable GAAP measure can be found in our earnings release.

Now I'll turn the call over to 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 2 successful events in the quarter.

Organic revenue growth for the trade show 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 2 largest 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, 3 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 challenged 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're excited to have announced that next year, we will co-locate IRCE, GlobalShop in the category of our RFID show to deliver a combined event we have name RetailX.

Taking place in late June 2019 in Chicago, RetailX will bring together these 3 distinct shows to create an intersection of e-commerce, store design and innovation.

The initial market reaction has been encouraging, and we're excited about the prospects for this combined event.

Rounding out the largest shows in the quarter, the International Contemporary Furniture Fair, or ICFF, continued to build on its strong momentum and increased revenue by a mid-single-digit percentage.

This show has established itself as the centerpiece of New York Design Week, and we're confident of the show's prospects for continued growth in future editions.

That covers the second quarter business performance at a high level.

And before I hand the call over to Phil to go through the financials in more detail, let me provide some thoughts on the outlook for the major shows over 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 first January show there.

The industry reaction to the recent show in its new venue was extremely positive, and we expect to report revenue growth for the show in the mid-single-digit percentages.

Additionally, we have sold more than 2/3 of the projected booth space for the new November show and remain confident that we'll reach our revenue goal for that show with a strong tailwind coming out of last week's show.

The largest expo in the third quarter is our ASD show, which actually finished yesterday.

Revenues for the show are 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 & Variety, is estimated to have grown by low single-digit percentage.

However, this is expected to be offset by continuing 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 show are expected to decrease by a 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're encouraged by the stability of the handmade and lifestyle categories within the show.

Our pacing early in the show's 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're working to rebuild market confidence in the show's more challenged home category and to drive stronger performances from the categories that have more immediate 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.

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 reestablish the show's orientation to 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 underway 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've seen a nice increase in buyer preregistration for the show versus last year's show, which suggests that our expanded attendee marketing efforts are beginning to have a positive effect.

In addition to the specific actions that we are 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 latest show cycles of both New York NOW and ASD, as we've 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 1 show cycle 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 1 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 6 more event launches scheduled for the rest of the year: 2 in the third quarter and 4 in the fourth quarter.

In total, that will amount to 7 for the year or 8 if we include the addition of the third Outdoor Retailer show, which compares to 6 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'd 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, it 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.

Trade show 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 nontrade show/other events portfolio, revenue increased by 42% over the second quarter of 2017.

This growth included 2 CPMG-hosted buyer events held for the first time since we acquired the business last November.

We were 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 in hotel construction design and engineering; and build point, 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've since changed the event's management team, and we're refocusing our strategies, investments and efforts on delivering a stronger outcome next May when we return to Chicago.

Lastly, on the quarter's revenues.

Other -- our other marketing services revenue decreased by almost 9%, as expected.

The decline was largely concentrated in 3 of our publications and mainly reflected a few larger advertisers 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 was largely driven by the incremental cost attributable to CPMG, plus higher spending in several of the trade shows that grew in the quarter, most notably ICFF and COUTURE.

Selling, general, and 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 nonrecurrence of the $8.5 million contract termination cost 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 show 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 repricing transactions last year.

The decrease in our income tax expense reflected the benefit of the favorable change in the headline U.S. federal income tax rate from 35% to 21% that became effective at the beginning of the year.

Free cash flow, which, you'll 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 nonrecurrence of last year's $8.5 million contract termination costs.

Our last 12 months free cash flow through the end of June was $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 payments.

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'd 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, continued 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 2 largest third quarter shows, ASD and New York NOW, with 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 the 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 compromise 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'll now hand back to David for his 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.

While 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 have described some of the key initiatives we are 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'm 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.

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 on that front is, should we expect to see similar year-over-year decline in marketing services, I guess, in 3Q?

And when do you start -- when do you believe that, that line item will begin to stabilize?

I think we're taking it on a case-by-case basis.

Advertisers make closer indecisions.

We're not expecting a meaningful rebound on the publication side in 3Q.

It -- this is Phil.

Pete, we did say it was 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 fourth quarter, but as David says, people make decisions a little bit closer out on those things.

Okay.

And then, Phil, can you remind us what your total liquidity is right now?

And I guess, as the lack of M&A, I guess, in recent quarter, should we expect continued, if it is the case, continued voluntary debt payments?

I really don't think you should read anything into the paydown.

We had more than $55 million of cash, and we just took the opportunity to get some benefits on the interest expense going forward for just -- for paying down $20 million.

We have more cash than that now.

We have a $150 million of unused revolver.

So -- and in the second half of the year, we expect free cash flow of close to $60 million.

So we have plenty of fire path to do what we expect to do on a -- from an acquisitions perspective.

And I wouldn't want you to read too much into just a little bit of housekeeping on the debt side.

That's helpful.

And then, I guess, finally, sort of bump-up in CapEx this quarter, I guess, versus normally.

I know you've maintained the free cash flow guide for the year.

Just wondering if you can provide some context on what you're investing in, or what are the -- and how do you see CapEx trending for the remainder of the year.

Sure.

This was kind of a onetime 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.

Our next question is coming from Manav Patnaik from Barclays.

This is Ryan, filling in for Manav.

And I guess, sorry to nitpick on it.

But -- so the voluntary debt paydown, 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 paydown more attractive than some of the tuck-in M&A you've done in the past?

Have multiples kind of run away?

Or is it the quality of assets?

I think you're totally overthinking this, Ryan.

It's -- as I think I just explained, there's no impact on our ability to do M&A from doing this.

It is entirely a housekeeping thing where we're paying whatever we're paying, 5%, and we're earning relatively little on the cash, so just entirely a housekeeping thing.

Don't even think about it as infringing 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?

This is David.

We're 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 a similar amount of dollars to acquire the targets as we have historically.

Okay, fair enough.

And then, I guess, I mean, you talked about investments and shows like New York NOW and maybe some of the return for the exhibitors not being there.

I mean, is -- can you maybe help us understand what -- any margin impact that would come from that?

And I guess, how is pricing kind of work in that show?

So ASD and New York NOW have kind of different issues.

One is kind of a sales and marketing issue in terms of our call volume and our account alignment in closed ratios and the number of leads we can push through the system.

For New York NOW, we're investing a little bit more in the audience marketing to drive a greater audience.

We're working hard on the home category in specifically trying to attract them back in greater numbers.

And there will be some impact on that.

But we hope that, that's some margin impact on that investment.

But we hope to get that back in both attendee volume, 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.

Our next question today is coming from David Chu from Bank of America.

So in highlighting 3Q expectations, you mentioned some softness outside of ASD and New York NOW.

Can you just discuss what you're seeing?

I think we've got both pluses and minuses here.

I think the Interbike trends have continued.

We have yet to hold the show in the new location.

That will be in September.

So we'll see how the venue and the value of that event works out.

And then there's 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 a kind of full run rate; that had an impact.

And then, the shows that -- the slightly higher growing shows, COUTURE and ICFF, are higher cost shows, and so we had some product mix effect there.

So -- but you're right, there's a little bit of CPMG, and structurally, that's a relatively lower-margin business but a great business.

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 1 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 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 spend a little bit more time looking at that as the show has 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 for -- well, for the first time, really.

But again, we've got to get everything right, and we think we've identified all of each and every issue.

Again, I think we talked about the account alignment between the 14 or 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.

(Operator Instructions) Our next question is coming from Katherine Tait from Goldman Sachs.

Three questions from me, please.

Firstly, on the co-location next year of this new RetailX show, just interested to get a sense from you what we should anticipate in terms of uplift versus potential cannibalization to the existing IRCE show.

Clearly, that show is only still growing low single digits already, so just an understanding of how we should, I suppose, be modeling that overall segment going into next year.

Secondly, on print advertising, can you just clarify how much of your revenue is still linked to print advertising?

And then, finally, I think we've clearly been seeing lots of noise on the news around impending trade wars.

Can you comment at all about any impact you anticipate this to have on your trade shows and particularly, any color around participation from Chinese exhibitors or attendees?

Sure, Katherine, this is David.

The co-location of these 3 independent shows -- the shows are 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 -- or quantifying the actual growth enhancement on that initiative.

Katherine, I'll just take #2, 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.

China represents only a very, very small percentage of our exhibitor base.

And so we really don't anticipate being materially 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.

Our next question is coming from Jeff Mueler from Baird.

I wanted just kind of go back to the M&A environment question.

I'm not tying it to the voluntary debt paydown, 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?

On the 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 of when we've made acquisitions in the past, they vary year-to-year, whether they occur in a specific quarter or multiple ones in 1 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 and 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.

I 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 costs, electrical costs, 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 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 preregistration or the attendee preregistration, which is a very strong sign that we're making headway at 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's 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.

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 2 years is not the new normal.

Sure.

Let me start with -- look, we have lots of shows.

This is not a systemic issue as a trade show organizer.

We have lots of shows that are doing very well with strong execution.

Our goal is really stability across the 2 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 logical and normal of our large diversified portfolio.

So we're really focusing in on these, but specifically, New York NOW and Interbike and these 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 as strong of a 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've 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 of the midpoint.

So I mean, I think, we've said we expect to still fall in these ranges, and these ranges are pretty narrow.

So I think, overall, the predictability is still very good.

Understood.

And my question was, I guess, less on the predictability, more on just if the underlying growth trend, structurally, has worsened for the industry or your portfolio.

We have reached the end of our question-and-answer session.

I'd like to turn the floor back over to Mr. Loechner for any further or 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 to that, and there remains this long runway 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 lines at this time, and have a wonderful day.

We thank you for participation today.