Earnings fall for parent of Vegas conventions contractor

By Richard N. Velotta

Friday, July 24, 2009 | 11:36 a.m.

+ GES Exposition Services, a key convention services contractor in Las Vegas, is a subsidiary of Viad.

- “Trade shows have decreased in overall size as exhibitors pull back on spending; exhibits are smaller and fewer materials are being sent to the show floor. The tourism industry has also contracted, with lower occupancy rates at hotels and fewer visitors at attractions.” – Viad CEO Paul Dykstra.

- The GES segment of Viad had revenue of $132.4 million, down 55.2 percent from the same quarter a year ago, and income of $4.8 million, down 65.5 percent from last year.

+ Viad paid a 4-cent-per-share dividend to shareholders on June 3.

+ July 23 stock price: $17.76 (52-week high: $34.50)

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Viad Corp, parent company of Las Vegas-based convention services contractor GES Exposition Services, had a 58.1 percent decline in earnings over last year as the economy continued to batter business travel industries.

Phoenix-based Viad reported $5.4 million in earnings, 26 cents a share, on revenue of $213.6 million for the quarter that ended June 30. That compared with earnings of $12.9 million, 62 cents a share, on revenue of $277.2 million in the same quarter a year earlier.

Earnings were in line with the company’s previous guidance for the quarter of 17-32 cents a share.

Viad last week announced a leadership shakeup and restructuring that will affect Las Vegas operations.

Kevin Rabbitt, who served as president and CEO of GES, will leave the company Sept. 30 and is being replaced by John Jastrem, who was president and CEO of another Viad subsidiary, Exhibitgroup/Giltspur.

Jastrem will head Viad’s newly formed Marketing and Events Group and will be CEO of GES. Prior to joining Viad in 2006, Jastrem was on the corporate staff of Diversified Agency Services, a division of Omnicom Group Inc. He also was CEO of Rapp Collins Worldwide, a subsidiary of Omnicom, since 1998.

Once he leaves the company, Rabbitt will remain as a consultant to GES through the end of the year.

Jastrem, who specialized in working to turn around underperforming companies with Omnicom, is expected to use the resources of the divisions he heads to diversify agency service and leverage company strengths to better serve clients.

Jastrem enters at a time when GES is getting pounded by a combination of the effects of the economic downturn, unfavorable currency translations involving the company’s exhibition business overseas and an unusually large negative show rotation for the third quarter.

Show rotation involves conventions and trade shows that don’t meet every year. There are a high number of shows not meeting in the third quarter compared with a high number that were on the calendar last year. Jastrem confirmed that shows are not canceling, but just not on the calendar this year. Revenue is expected to be affected by $73 million for the quarter.

The company did not say how the show rotations would specifically affect the Las Vegas market.

But guidance provided by the company in a conference call today indicated the company expects a loss of between 12 and 27 cents a share for the quarter.

For the year, revenue is expected to be down 25 percent to 30 percent from 2008’s $1.1 billion.

“The trade show industry has yet to show the bottoming out experienced in other sectors of the economy,” said Viad CEO Paul Dykstra in a release accompanying the company’s earnings announcement. “The near-term will clearly be difficult. But the long-term fundamentals of our businesses remain sound and our strong balance sheet affords us the strength to weather the uncertainties of this economic environment.”