Viad Corp (VVI) 2009 Q1 法說會逐字稿

Welcome and thank you for joining the Viad Corp.

2009 first quarter earnings release conference call.

(Operator Instructions) I would now like to turn the meeting over to your first speaker today, Carrie Long, Director, Customer Relations.

You may begin.

Good morning, and thank you for attending our conference call.

Before we begin, I would like to remind everyone that certain statements made during the call which are not historical facts may constitute forward-looking statements.

Actual results may differ materially from those projected in the forward-looking statements.

Additional information concerning business and other risk factors that could cause results to materially differ from those in the forward-looking statements can be found in our annual and quarterly reports filed with the SEC.

This conference call may not be recorded or reproduced in transcript without the express written permission of Viad.

During today's call, we be referring to tables one and two of our earnings press release which can be found on our website at www.viad.com.

And now, I will turn it over to Paul Dykstra, Chairman, President and CEO of Viad.

Good morning, everyone.

I thank you for being with us today.

On today's call, you will also hear from Kevin Rabbitt, President of GES Exposition Services, John Jastrem, President of Exhibitgroup/Giltspur and Ellen Ingersoll, Viad's Chief Financial Officer.

As I discuss our 2009 first quarter results, you may want to refer to tables one and two in the earnings press release.

Our first quarter income for share was $0.07 in 2009, as compared to $0.81in 2008, and below our prior guidance of $0.18 to $0.33.

We faced considerable headwinds during the quarter.

The combination of the broader economic recession, negative show rotation of $31 million in revenue and unfavorable currency translation of roughly $15 million resulted in an overall revenue decline of $94.5 million or 28% versus the 2008 quarter.

Segment operating income declined by $21.9 million to $6.7 million for the 2009 first quarter.

The sharp fall from guidance was driven mainly by an abrupt contraction in the trade show industry that caused a larger-than-expected same-show revenue decline at GES as well as additional restructuring charges arising from the integration of Exhibitgroup and Becker group.

As I discussed on the last call, we began the formal integration of Exhibitgroup and Becker group during the 2008 fourth quarter in order to best leverage the creative talent, customer relationships and the capital of the two businesses under the leadership of John Jastrem.

As a result of the integration and in light of lower revenue expectations resulting from the economic downturn, we took actions during the 2009 first quarter to eliminate certain positions within the two companies, trim redundant head count and consolidate certain leased office space.

These actions resulted in a restructuring charge of $0.08 per share and will provide annualized cost savings of about $3 million.

We have taken aggressive actions to reduce costs at every level of the Company, including head count reductions across all of our reportable segments and at the corporate office.

In total, we expect to realize enterprise-wide overhead cost savings of roughly $30 million this year.

Times are tough right now, but we have strong businesses and a strong balance sheet.

We have endured past recessions and industry downturns by finding the opportunities that lie within the turbulence.

We view downturn this as an opportunity to re-examine the way we operate and to re-invent our processes in order to become more efficient and to deliver better value to our customers.

We are focused not only on reducing costs but also on capturing additional marketshare and positioning the Company to deliver substantial shareholder value in the years to come.

I would like to thank all of Viad's outstanding employees for their hard work and continued client focus during those uncertain times.

Thanks to their professionalism, dedication, and willingness to go the extra mile, we are navigating through the difficulties presented by the recession.

Now let's move on to the individual operating segment results.

First, I will turn it over to Kevin Rabbitt to discuss GES.

Kevin?

Thanks, Paul.

As discussed last quarter, our visibility over future revenues is more challenging than ever in this environment.

Although our strong backlog of shows under contract continues to provide us with good visibility in this specific shows we will produce, exhibitors have been delaying decisions regarding their participation and making it difficult to accurately forecast the size of shows.

Additionally, exhibitors under pressure to cut marketing, travel and discretionary budgets are further reducing their spend within shows in areas such as product, marketing giveaways and exhibitory which affects GES's material handling and shipping revenues and creates both revenue and mix-of-business challenges that impact margins.

Further complicating visibility is an overall reduction in the number of smaller events such as corporate events and user conferences that are typically up for bid each year.

We hoped to capture incremental revenues from this in-the-year business to partially offset same-show declines.

As we entered 2009, we expected a same-show revenue decline of 10%.

We believe this was a realistic expectation based on shows we produced in January and the feedback we had received from our show organizer clients.

However, a significant and abrupt pullback in trade show spending led to a same-show revenue drop of 20% in the 2009 first quarter.

The current economic recession is having a much greater impact than we experienced in prior downturns.

The same-show revenue declines combined with negative show rotation revenue of $31 million and unfavorable currency translation of approximately $12 million in revenue resulted in a year-over-year revenue decline of $80 million or 28% from the 2008 first quarter.

Because of the larger than expected first-quarter same-show decline, we're reducing our revenue outlook for the rest of the year.

We currently expect full year revenues to decrease by 23% to 27% versus 2008.

In addition to the revised same-show revenue expectation, this guidance reflects negative annual show rotation of about $85 million and unfavorable currency translation of approximately $27 million, which remain in line with prior guidance.

We have seized the opportunity that lies in this economic turbulence to drive value for our clients and shareholders by undertaking a multipronged approach to improving service and driving costs from the business.

First, we have maintained our client service focus, supporting organizers and exhibitors through delivery of best-in-class customer service.

During the first quarter, we continue to grow our exhibitor satisfaction scores in spite of the difficult economy.

Next, we have taken aggressive actions to reduce overhead costs.

During early 2008 with signs of future slowing in the industry and an anticipation of negative show rotation during 2009, we began implementing overhead reductions, including a reduction in force and additional budget reductions.

These actions continued throughout 2008 and into 2009.

To date, more than 200 positions have been eliminated.

As a result of the reduction in force, lower performance-based incentives, reduced discretionary spending and wage freezes, we expect to drive a reduction in overhead costs of over $25 million this year as compared to 2008.

We're also focused on our variable costs which represent nearly two-thirds of our total cost structure.

We continue to diligently manage these costs and find new forms of productivity to keep them in line with revenues.

During the 2009 first quarter, we hired a top tier management consulting tomorrow to help us further examine our service delivery processes.

Through this process, we identified a number of opportunities based on Lean and Six Sigma tools that will enable us to increase operational efficiencies, drive productivity improvements, decrease costs and further improve service levels.

Our focus is on further transforming our best-in-class operations to become a even leaner, more performance driven Company.

We're aggressively pursuing these opportunities and expect to begin realizing meaningful savings in 2010 that are anticipated to exceed $10 million as a result.

Finally, we continue to maintain focus on aggressive sales efforts.

While the recession is creating substantial headwinds, we anticipate they will also provide an opportunity for us to gain market share through new show wins in 2009 as some of our competitors begin to struggle.

GES's financial strength and transparency, industry-leading capabilities and high levels of customer service and safety are key advantages for us and they are strong selling points as we go out to win new business.

Our products and services sales team is working closely with our trade show sales team to provide cost-effective exhibit rental solutions to gain greater share of the show floor.

Additionally, we're able to offer organizer clients the high-end creative and branding capabilities of our sister's companies Exhibitgroup/Giltspur and Becker group.

During the first quarter, we signed more than $70 million in future bookings.

Our show revenue backlog for the rest of 2009 and beyond stands at more than $1 billion and we have roughly 70% of our remaining 2009 forecasted revenue under contract.

For the second quarter, we expect revenue to be in the range of $135 million to $145 million.

This range reflects a decrease of about $43 million to $53 million from the 2008 quarter driven by negative show rotation of about $10 million, unfavorable currency translation of $9 million and same-show declines.

Second quarter operating income is expected in the range of $4 million to $7 million.

While we anticipate the trade show industry will continue to see declines in 2009, the industry has a long history of steady growth.

It has always emerged from recessions and resumed its upward trajectory.

We do not expect the recovery from this recession to be any different.

Trade shows are still a vital and cost-effective means of transacting business, launching new products and connecting customers.

As we manage through this recession, we plan to look for every opportunity to strengthen our business through marketshare gain, increased productivity and selective investments.

We will remain focused on delivering solid results and positioning the Company for continued success.

And we will continue to provide quality products and services along with best-in-class customer service at a great value to our customers.

As always, the GES team is committed to winning for all of our stakeholders.

And, for that I want to thank the hard-working, dedicated employees of GES.

Thanks, Kevin.

Now, I will ask John Jastrem to cover the experiential marketing services segment.

John?

Paul, we're also feeling the effects of the recessionary slowdown in the trade show industry.

As compared to the 2008 first quarter, our segment revenues were down $13.5 million our 30.7%.

About $5 million of the decline was due to client spending on non-annual shows during the first quarter of 2008 with the remainder being driven mainly by reduced client spend and some non-recurring project revenue.

Segment operating results declined by $3.2 million to a loss of $7.3 million.

As compared to a loss of $4.1 million in 2008 first quarter.

As expected, 2009 is shaping up to be a very challenging year and we're addressing it head-on.

We're working very hard to drive market share gains and reduce costs in order to mitigate some of the impact of reduced client budgets.

As Paul mentioned earlier, we combined the operations of Exhibitgroup/Giltspur and Becker Group during the 2008 fourth quarter in order to drive costs synergies and to enhance our go-to-market strategies and creative capabilities.

As a result of the combination of these two businesses, we were able to take out approximately $3 million in annualized overhead costs.

Driving cost savings is clearly important in this down economy and we'll continue looking for additional ways to reduce expenses and increase efficiencies so we can provide our clients and potential clients a better value in these difficult times.

Another key success factor for us right now is continuing to capture additional marketshare.

We set significant new business goals during our 2009 planning process.

And we are making very good progress against those goals.

We're winning business with market leaders and industries as diverse as manufacturing and sports entertainment.

We continue to win new business and take market share from weakening competitors.

Our new client wins during the first quarter included a high-profile project for a leading sports franchise for which we will fabricate and install a new sponsorship venue.

The project attests to the strength of our branded entertainment relationships and is illustrative of our ability to penetrate markets outside of the trade show set.

We have recently won accounts in health care and manufacturing, further contributing to our market share in key verticals that have traditionally been sources of strength for us.

And we have been selected to partner with a leading firm in the renewable energy sector demonstrating our ability to effectively penetrate market sectors beyond the scope of our traditional portfolio.

Clients increasingly view us as a broader brand and marketing partner as opposed to a traditional trade show exhibit producer.

While overall client spend is down from the 2008 quarter and overall show presence has decreased, clients are investing a greater portion of their budgets in our marketing services and metrics so that they can allocate their overall marketing spend more wisely.

We're leveraging our position as a strategic partner to our clients, doing all that we can to maintain existing business by working to improve their programs in these challenging times.

Right now, many of our clients are under tremendous pressure to do more with less.

And they are looking to us to deliver innovative ideas and be an extension of their team.

They're depending on us for cutting-edge programs, world-class customer service and innovative cost-savings solutions.

We have been actively working to identify effective ways for clients to achieve the highest ROI in their budgeted dollars, including custom rental solutions, targeting customers through pre-show marketing and shifting from a fixed to variable model by outsourcing their planning, coordination and program execution to us.

And through our proprietary property management network, our clients are realizing savings on shipping and handling of their properties, enabling them to focus their spending on targeted marketing activities that advance their market share goals.

Our financial strength, talented staff and new business wins in combination with our outstanding creative work and our global resources are attracting extremely talented people from competitors as well as agencies.

This influx of talent further enhances the breadth and depth of our in-house expertise and ultimately bolsters the strength of what is already a discernible difference for the experiential marketing segment.

Another discernible difference is our expertise in branded entertainment.

We're extremely excited about the debut of Harry Potter, The Exhibition which opened yesterday at the Museum of Science and Industry in Chicago.

Harry Potter fans finally have a chance to get a first-hand look inside the famous wizard's magical world through this exhibition, which was produced in partnership with Warner Bros.

Consumer Products.

The exhibition allows fans to step into vignettes inspired by Hogwarts film sets, complete with authentic film artifacts, including costumes, props, set dressings and magical creatures.

Harry Potter, The Exhibition is faithful to the spirit of the amazing world created by J.K.

Rowling, as captured by the films.

Producing and managing an exhibition based on one of the most iconic brands of our time is a tremendous honor and a testament to our ability to serve as a trusted steward to some of the world's most influential brands.

While the market conditions are difficult, we have a lot of positives going for us and we're maintaining our full-year guidance.

We continue to expect 2009 segment revenues to decline by $25 million to $35 million or 11% to 16%, including roughly $11 million from unfavorable currency translations.

Full-year operating income is expected to decrease by $6 million to $9 million due to the decline in revenues partially offset by proactive overhead cost reductions.

For the 2009 second quarter, we will benefit from approximately $11 million in revenue from the biannual Paris Air Show.

As a result of this positive show rotation, we expect second quarter results to be in line with the 2008 quarter despite the recessionary pressures and unfavorable currency translation of approximately $5 million in revenue.

Overall, we expect segment revenues to be in the range of $59 million to $65 million for the quarter with operating results in the range of a break-even to a profit of $2 million.

Going forward, we'll remain focused on strengthening our client relationships by providing compelling, value-added programs that help our clients achieve and exceed their marketing goals within budget.

Stability has always been a challenge in our business and it's no different in the current environment.

We are working hard to close business and to capture incremental revenue whenever possible.

Our CRM solutions enable our clients to develop a targeted, interactive relationship with their customers throughout the year.

This set, the set of marketing tools that we have developed, and the professionals we have added to the team enable us to accomplish these objectives in an integrated and targeted manner and utilize metrics to prove ROI, return on investment, and ROO, return on objectives.

At the same time, we will continue to identify and to implement initiatives to improve efficiencies and capacity utilization across our network in order to keep our costs in line with customer spending.

While the current economic client is challenging, I remain confident about the future of our business and in our talented, energetic team that comes to work for our clients every day.

Paul, back to you.

Thanks, John.

Now, I will cover highlights for the Travel and Recreation Services segment.

First quarter performance in the Travel and Recreation Services segment was in line with our guidance for this seasonally slow quarter.

Revenue was $4.9 million with an operating loss of $2.4 million.

This compares to 2008 first quarter revenue of $5.9 million an operating loss of $3.1 million.

Year-over-year results were impacted by foreign currency translation, which caused both revenue and the operating loss to decrease versus the 2008 quarter.

Due to its seasonal nature, the Travel and Recreation Services Segment generates less than 10% of its full-year revenues during the first quarter.

As a result, our main focus during this time is on preparing for the busy season and controlling costs.

The fourth quarter is similarly slow.

The third quarter is the Segment's strongest quarter, providing roughly 55% to 65% of full-year revenue and the second quarter provides about 20% to 30%.

Early indications from long-haul tour operator clients suggest that group tour volume will decrease markedly in 2009.

In 2008, Brewster was successful in offsetting declining long-haul group traffic with visitors from the local and regional markets.

This will once again be an area of focus in 2009.

However, the Canadian economy is also experiencing an economic slowdown and, as a result, we are not expecting this market to be as strong as it was in 2009.

We're maintaining our full-year guidance for this segment.

Overall, we expect full-year revenues to decrease by 15% to 20% from 2008, including $8 million or 9% from unfavorable currency translation with the remaining 6% to 11% being driven by a weaker economy.

Full-year operating margins are expected to approximate 23%.

For the 2009 second quarter, we expect revenues to be in the range of $17 million to $19 million as compared to $23.8 million in the 2008 second quarter.

Included in this guidance range is the expectation the currency translation will negatively impact revenues by approximately $3 million.

We expect operating income to be in the range of $2.5 million to $3.5 million compared to $5.2 million in the 2008 quarter.

I will now ask Ellen Ingersoll to discuss some financial highlights for the quarter.

Ellen?

Thanks, Paul.

As shown in table two of the earnings release, our adjusted EBITDA was $9.2 million during the quarter, versus $34 million in the first quarter of 2008.

Also shown in table two, our free cash flow was an outflow of $27.5 million for the quarter, versus an outflow of $34 million in the 2008 first quarter.

We expect free cash flow to be an outflow of approximately $5 million to $10 million for the full-year 2009.

At March 31, 2009, we had total cash and cash equivalents of $118.2 million as compared to $148 million at December 31, 2008.

Our total debt at the end of the quarter was $14 million with a debt-to-capital ratio of 2.9%.

Our net interest expense for the quarter was $159,000 versus net interest income of $637,000 in the first quarter, 2008.

Our depreciation and amortization expense for the quarter was $6.4 million, compared to last year's first quarter of $6.6 million.

The full-year 2009 forecast is approximately $28 million to $30 million.

Capital expenditures were $10.6 million in the first quarter of 2009 and this compares to $12 million in the first quarter of 2008.

The full-year 2009 forecast is approximately $26 million to $28 million.

Payments on our restructuring reserves were $1.6 million during the first quarter, versus $478,000 in the first quarter of 2008.

Full-year 2009 restructuring payments are expected to approximate $3.6 million.

And the 2009 income tax rate for the first quarter was 39.6% versus 38% in the 2008 quarter.

We expect the 2009 full-year effective tax rate to be in the range of 38% to 39%.

And, back to you, Paul.

Thanks, Ellen.

Before wrapping up my comments and opening up the call to questions, let me discuss our outlook for the 2009 full-year and second quarter.

We previously expected full-year income per share to be in the range of $1.15 to $1.35, which assumed a same-show revenue decline of about 10% at GES.

As Kevin mentioned earlier, the severity of the economic recession on the exhibition and event industry is greater than we had previously anticipated and we're now forecasting a 20% same-show decline.

As a result of this change and the higher first quarter restructuring charges, we're now guiding for income per share to be in the range of $0.60 to $0.85.

We expect full-year revenue to decrease by 20% to 25% including roughly $45 million from unfavorable currency translation and about $85 million from negative annual show rotation.

Excluding those two factors, the decline in revenue is expected to be roughly 8.5% to 13.5%, reflecting reduced demand for marketing and tourism services due to the economic recession, partially offset by market share gains.

Full-year segment operating income is expected to decrease by 55% to 65% driven by the decline in revenues partially offset by cost reductions.

For the second quarter, we expect income per share to be in the range of $0.17 to $0.32 as compared to 2008 second quarter income before other items of $0.59 per share.

Revenue is expected to be in the range of $210 million to $230 million compared to $277.2 million in the 2008 quarter.

Operating income is expected in the range of $7 to $12 million compared to $21.1 million in the 2008 quarter.

The year-over-year declines are expected to be driven primarily by lower trade show marketing spend and a $17 million revenue decline due to the unfavorable currency translation.

Additional details regarding our full-year and first quarter outlook can be found in the earnings press release.

Overall, there is much uncertainty in the marketplace and our current guidance for 2009 reflects our best estimates based on information available at this time.

While we fully anticipated some weakness in the trade show industry this year, our experience in managing through past recessions did not suggest a decline of the magnitude we're currently experiencing.

In addition to the weaker economy, our 2009 results will also be hampered by significant negative show rotation at GES and unfavorable currency translation due to the stronger US dollar.

In anticipation of lower revenues this year, we began proactively reducing costs during 2008, including head count reductions across the Company.

In total, we expect to realize enterprise-wide overhead savings of roughly $30 million this year.

We view this downturn as an opportunity to re-examine the way we operate and to re-invent our processes in order to become more efficient and deliver better value to our customers.

As we progress through the year, we will continue to evaluate additional opportunities to reduce costs and improve efficiencies.

We're focused not only on reducing costs but also on capturing additional marketshare and positioning the Company to deliver substantial shareholder value in the years to come.

In this environment, our leading market positions, talented and hardworking employees, culture of innovation and integrity and strong balance sheet are key advantages for us relative to many of our competitors and we fully intend to capitalize on those advantages.

Cash is king in this market and as Ellen mentioned earlier, we have nearly $120 million on our balance sheet with very little debt.

Our financial strength and transparency will be an important differentiator for us in this market as both clients and employees are looking for a bigger boat in stormy seas.

Our capital will also enable us to continue making selective investments to further strengthen our businesses.

In addition, we are currently evaluating some interesting acquisition opportunities.

We will continue to be good stewards of our shareholders' capital and we will keep a tight leash on spending in 2009.

All of our Companies are focused not only on reducing costs but also on increasing service levels, winning new business and increasing market share.

The near-term will clearly be difficult but the underlying fundamentals of our business remain strong.

Our goal right now is simple -- do the best job possible to manage through the downturn while also positioning our businesses to emerge from this recession, even stronger.

We remain committed to driving long-term growth and shareholder value.

I would like to thank all of Viad's employees for dedication and their extraordinary contributions.

With that, we'll close and take your questions.

Julie, if you could open up the question line please.

Thank you.

(Operator Instructions) Your first question comes from John Healy, North Coast Research.

Good morning, guys.

Good morning, John.

Question for you just on the GES business.

The same-show revenue decline of 20% and the guidance of 15% to 20% for the rest of the year.

Is there something that you guys are seeing in the business today that makes you feel like maybe we have seen somewhat of the bottom in the trade show industry fundamentals or is this just we're hoping things stabilize from here?

A couple of things.

Clearly we expected more of a decline in the range of 10% and it's been bigger than we thought.

Going forward, we have a little less exposure to some consumer and auto shows that were in first quarter.

But we are still, I think, fairly cautious in what we think is going to happen in the rest of 2009.

Kevin, you want to add anything to that?

Sure.

John, I think you're getting at, if you back into it, you don't have a full 20% in the same-show decline moving forward.

A couple of things there as Paul mentioned a few of them.

One is Canada as part of our business, is not down as fast as some of the others -- other elements that other geographies are in as well as we some saw decline in late Q3 as well as Q4 that were bigger than we saw in the earlier part of last year and so that is -- that decline is already reflecting the numbers from last year's events.

Okay, that is hopeful to paint it that way.

I guess when you think of the economy, when you look at your business, the fundamentals in the economy were -- not that they better from going here -- but I guess I'd say maybe get less worse.

How long do you feel it would take the trade show industry to come around?

I feel like the industry's a little bit of a laggard relative to the economy.

I was hoping to get your thoughts on when you might begin to feel stabilization to recovery if the economy plateaued here.

Let me take a shot at that on, John, and I'll ask Kevin to comment as well.

We, the trade show side does typically lag the economy a little bit and it's really hard to say right now but we do think that exhibitors have been fairly fast and deep and we see it in our same-show numbers in making cuts.

It may bode well for maybe a little bit faster pickup when the economy does picks up, although that is very speculative on my part.

When we look at going through the rest of the year we're absolutely convinced though the actions we're taking, regardless of what happens in the economy, will make us much stronger in 2010 and going forward.

Kevin, do you want to add anything to that?

Sure.

I agree 100% there, Paul.

Too early to say when the bottom will be if we're at it now.

One thing that I'm very confident on is that we're making the right investments.

Some of the things I talked about in my comments, further strengthening our best-in-class operation and taking things that we had already been very good at -- best practices and regionalization to drive productivity and now turning that into using Lean and Six Sigma concepts to take that to the next level.

Really supporting clients with high service levels and making sure we're supporting clients through these tough times and making sure there's cost-effective solutions for exhibitors and then just actively working on the sales front, making sure we're demonstrating our best-in-class customer service and the strength of GES and Viad, the abilities that we have at Becker and E/G at which to take market share.

So, I feel very good about the actions that we have and the dedication of our employees to go execute on those actions.

Okay, that is helpful.

On the cost savings efforts.

I want to make sure that I understood things properly.

$30 million in cost savings is what -- beginning in '08 through '09 is what is imbedded in your guidance today.

You're planning on an incremental cost savings of $10 million dollars that you had realized in 2010.

And am I thinking about that the right way?

Yes, I think $30 million will be the actual year-over-year change that you will see going into 2010.

And this does not include any other items that we will continue to look at through the rest of this year, but I think Kevin mentioned attacking the variable cost structure and that is where we think we'll be able to get another $10 million out through the principles of Lean and Six Sigma.

A followup question with these new efforts to reduce costs -- how much of your cost structure today do you feel is fixed versus variable?

I know everyone defines variable differently but, in your context?

Kevin, do you have that number?

Yes, from a GES standpoint, we had talked about this in the last call.

About a third of our cost structure is direct labor, about 30% of the remaining cost structure is semi-variable and fixed -- somewhere around 10%.

Okay.

Great.

Thank you guys.

Thanks, John.

Your next question comes from [Tom Day, West Days Capital].

Good morning.

Could you talk a bit further.

You mentioned acquisitions.

Both strategically, what you had hoped to accomplish and secondarily valuation metrics?

I'm sorry.

The final question, how much are you spending on a consultant?

Let me get the second question first.

We expect a net -- small net benefit in 2009 -- and then the net benefit of $10 million is what we talked about for 2010 regarding the consultants.

As far as acquisitions go, Tom, we have always said that when we look at our capital -- our first call for capital is strategic acquisitions -- and our criteria, again, is, one, things that are fairly close to our core business and have to be a very, very good cultural fit and we spent a lot of time making sure that we have both of those.

Thirdly, of course, is getting these things done at the right valuations.

And one thing that we're definitely seeing in this marketplace is much more reasonable pricing on some of the things that we're seeing and I think the bargaining power that we have and the strength of our Company puts us in a very good situation, especially vis-a-vis, a year and a half, two years ago.

So, we have return on capital hurdles that we look for.

We do compare our deals to, again, share repurchases and other metrics and do a very, very rigorous look at all three of those metrics before we decide on whether or not to do a deal.

Could you just expand a little bit further on that given that you traded extraordinarily low multiple -- relative to your, call it, steady state, non-recessionary PPA -- would it not be extremely difficult to find a creative acquisition?

Even in a very distressed environment?

Well, it's something we definitely look at.

Right now, we're actually seeing some things that do look fairly attractive.

But again, there is a very, very rigorous process that we go through and we're very, very cautious with the allocation of precious capital.

Thank you.

Thank you.

(Operator Instructions) I would now like to turn the conference back over to Paul Dykstra for closing comments.

Thanks, Julie and thanks to everybody for being with us this morning.

Just let me make a few comments in closing.

Our base business remains sound despite the economic headwinds we currently face.

n an environment when many business models are spiraling downward, our revenues are expected to decline about 8.5% to 13.5% when you factor out negative show rotation and unfavorable currency translation.

Our balance sheet and fundamentals are strong and we believe we're well-positioned to build shareholder value over time.

We believe the current trends are basically cyclical in nature and not structural as they relate to our businesses or to Viad.

We're confident we'll manage through this challenging time and we'll emerge in an even stronger competitive position.

We are going to stay very focussed on our clients.

We're going to continue to take aggressive action on costs and we're going to work hard to capture share in this environment, and I am firm in my belief that we will emerge a stronger Company than ever when the economic winds start blowing at our back again.

So, again, thank you very much for being with us and we look forward to talking to you next quarter.

Thank you.

Thank you for participating in today's conference.

You may disconnect at this time.