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Viad Corp. (NYSE:VVI)

Q4 2008 Earnings Call

February 06, 2009; 09:00 am ET

Executives

Paul Dykstra - Chairman, President & Chief Executive Officer

Kevin Rabbitt - President of GES Exposition Services

John Jastrem - President of Exhibitgroup/Giltspur

Ellen Ingersoll - Chief Financial Officer

Carrie Long - Director of Investor Relations,

Analysts

John Healy - FTN Equity Capital Markets

Karl Brown - Revis Partners

Operator

Good morning everyone and thank you for standing by. At this time all participants are in a listen-only mode. After the conference call we’ll have a question-and-answer session. (Operator Instructions)

I’d now like to turn the call over to your first speaker Ms. Carrie Long, Director of Investor Relations, and you may begin ma’am.

Carrie Long

Thank you. Good morning and thank you for attending our conference call. Before we begin I’d like to remind everyone that certain statements made during this 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 actual results to materially differ from those in the forward-looking statements can be found in Viad’s annual and quarterly reports filed with the SEC. This conference call may not be recorded or reproduced in transcript without the expressed written permission of Viad. During today’s call we’ll refer to tables 1 and 2 in our earnings press release, which can be found on our website at www.viad.com.

With that said, I’ll introduce Paul Dykstra, Chairman, President and CEO of Viad Corp.

Paul Dykstra

Good morning everyone. Thanks very much for being with us today. On today’s call you’ll heard 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 2008 results, you may want to refer to tables one and two in the earnings press release.

We had a very strong year in 2008. All of our businesses performed well and for that I’d like to thank all of Viad’s employees for their dedication and extraordinary contributions throughout the year. Exhibitgroup/Giltspur produced its second straight year of double digit revenue growth; GES successfully executed a record revenue year and the travel and recreation services businesses continued to produce strong operating income and margins.

Viad’s full year income before other items per share grew by 21.3% to $2.28, which is at the high end of the guidance we set forth at the beginning of 2008. We reached $1.1 billion in revenues, up 11.7% from 2007, and segment operating income grew 19.3% to $82 million. This growth was driven primarily by positive show ration and strong penetration into exhibitor discretionary spending at GES and a 15.8% increase in revenue at Exhibitgroup/Giltspur.

For the 2008 fourth quarter, income before other items was $0.16 per share, up from $0.02 per share in the 2007 quarter. Our substantial improvement in fourth quarter results was driven primarily by higher segment operating income from the acquisition of the Becker Group.

As a reminder, income before other items is a non-GAAP measure that we defined as income from continuing operations before the favorable resolution of tax matters and impairment charges and recoveries.

For 2008, the favorable resolution of tax matters added $.28 per share to our income from continuing operations, versus $0.15 per share in 2007 and we recorded impairment charges of $0.46 per share in 2008, versus impairment recoveries of $0.01 per share in 2007. Our 2008 income from continuing operations which includes these other items was $2.10 per share. The 2008 impairment charges relate to the Becker Group and Melville acquisitions, and Ellen will discuss them in more detail late.

While these impairments are disappointing, I can assure you that all of the fundamentals reasons we acquired Becker Group and Melville remain intact. They are both terrific businesses with strong brands and customer relationships and they are a great strategic fit for GES and the Exhibitgroup/Giltspur. Unfortunately like nearly all other businesses, they are being negatively impact by broader economic issues.

Now let’s move on to the individual operating segment results. You may want to refer to table one of the press release, which provides revenues and operating income for each of the operating segments. First I’ll turn it over to Kevin Rabbitt to talk about GES, Kevin.

Kevin Rabbitt

Thanks Paul. Despite this deteriorating economy, we had a very strong year with record revenues of $808.8 million, up 8.3% from 2007. Full year operating income increased 14.3% to $58.1 million. Our growth in 2008 was driven by positive show rotation of $63 million, versus 2007.

Along with strong penetration in to exhibitor discretionary spending, partially offset by a 3.2% decline in base of the same show revenue. As a reminder base same show growth is a measure of growth in our US shows that occur in the same city and same quarter every year. Base same shows represent 34% of our full year revenues.

As I’ve discussed on prior earnings calls, the weakness in base same show revenue in 2008 was driven primarily by two major biannual retail shows. Excluding these shows, full year base same show revenue grew by about 1%, reflecting the stronger growth in the first half of the year and declines in the second half.

For the fourth quarter, our total revenue was $132.2 million, down $25.2 million or 16% over the 2007 quarter. This decrease was driven by negative show rotation revenue of $9 million, unfavorable currency translation of $8.8 million, lower exhibitor discretionary revenue and a 6% decline in base same show growth. Base same shows represented 29% or fourth quarter revenues.

Although fourth quarter revenue was down, we drove $1 million improvement in operating results for the proactive cost reductions and tight control over discretionary spending. Our accruals for performance based incentives were also lower than the 2007 fourth quarter.

During the fourth quarter we signed more than $84 million in future books. Our show revenue backlog for 2009 and beyond stands at $1.3 billion, and we have nearly 70% of our 2009 forecasted revenue under contract.

While our long term show contracts provide us with high revenue visibility relative to most businesses, that visibility is becoming more challenging in the current environment. Exhibitors are delaying decisions and making it difficult to accurately forecast the size of shows. Additionally, exhibitors are focused on reducing their costs, by using lighter weight exhibitory and less product, which affects our shipping and grade revenues.

As I mentioned earlier, we saw our base same show growth deteriorate as 2008 progressed, ending the year with a decline of 6% in the fourth quarter. Many of the space commitments for 2008 shows were made in 2007, before the economic issues came to the forefront.

In contrast, space commitments for 2009 shows were made or are being made within the context of an economic recession and during a time when most companies are looking for every opportunity to cut costs, which might include trade show marketing budgets. We have said many times, the trade show industry represents every sector of the broader economy and that shows go as their industries go.

We are working very closely with our show organizer clients to gauge exhibitor participation of future shows. Based on recent client feedback and performance of January shows, we are planning for a 10% decline in same show revenue in 2009.

In addition to the economic head winds, we are also expecting unfavorable currency translations to negatively impact revenues by about $25 million and as I’ve mentioned on past earnings call, we’ll face significant negative show rotation this year as 2009 will bring only a small number of non-annual shows compared to 2008, which had several major non-annual shows, including CONEXPO, Con Agg and FB, IMTS, Mine Expo and the International Woodworking Machinery and Furniture Supply Fair.

In total, we expect show rotation to have a net negative impact of about $85 million on our 2009 revenues, compared to 2008. The large revenue swings caused by show rotation will make our year-over-year financial comparisons especially difficult.

Overall, we expect full year 2009 revenue to decrease by 15% to 20%, from 2008. This drop can be attributed to a 10% decline from show ration, 3% from foreign exchange, with the remaining 2% to 7% reflecting expected same show declines, partially offset by new shows, market share gains and pricing.

We expect 2009 full year operating margins to approximate 6%, reflecting our ability to flex variable and semi-variable costs, while ensuring we deliver high levels of customer service and maintain our strong sales actions to win market share.

For the first quarter we expect revenue to be in the range of $215 million to $225 million. This range reflects a decrease of about $60 million to $70 million from the 2008 quarter, driven by negative show rotation of $30 million, unfavorable currency translation of $11 million and same show declines.

First quarter operating income is expected to be in the range of $20 million to $23 million, reflecting an operating margin of about 10%, which is inline with the 2008 quarter. Cost control will be an important focus for us in 2009. As we demonstrated in the fourth quarter of 2008, the cost reduction measures we have already put in place are working.

We are diligently monitoring and managing our direct labor costs, which are highly variable and represent roughly about one third of our total cost structure. Nearly two-thirds of our costs are truly variable and roughly 30% of the remaining cost structure is semi-variable in nature and we have been aggressively attacking these costs or reducing budgets wherever we can. As we do so, we are being careful not to cut too deep and ensure the changes we make to our cost structure will help us emerge from the recession as an even stronger and more efficient organization.

We anticipate the economic downturn will provide an opportunity for us to gain market share and new show wins in 2009 as some of our competitors begin to struggle. GES’s financial strength and transparency, industry leading capability and high levels of customer service and safety are key advantages for us and they will be strong selling points as we go out to win new business.

Our products and services sales team are working closely with our trade show sales team to provide cost effective, exhibit rental solutions to gain greater share of the show for us. Additionally, we are able to offer our organizer clients the high end creative and branding capabilities of our sister companies, exhibit through Giltspur and Becker Group, which our competitors cannot match.

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 been negatively impacted by prior recessions and has always emerged from these periods and resumed its upward trajectory. We do not expect this recession to be any different. Trade shows are still a vital and cost effective means of transacting business, launching new products and connecting with customers.

As we endure this recession, we plan to look for every opportunity to strengthen our business through market share gain, increase productivity and selective investments, to remain focused on delivering solid results and positioning the company for continued success.

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 steak holders and for that I want to thank the hard working, dedicated employees of GES.

Paul Dykstra

Thanks Kevin. Now, let’s move on to the experiential marketing services segment. As a reminder, this segment is comprised of Exhibitgroup/Giltspur and Becker Group. Since our acquisition of Becker Group, the Exhibit Group and Becker Group have worked successfully together on several notable projects including, production of the Chronicles of Narnia touring exhibition and Norad Holiday Environment.

During the fourth quarter, we began the formal integration of Exhibit Group and Becker Group, in order to best leverage the creative talent, customer relationships and capital of these 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 eliminated certain positions within the two companies and trimmed redundant headcount during January 2009. This action will result in a pretax restructuring charge of approximately $1 million and will provide annual pretax cost savings in the range of $2 million to $3 million.

Now I’ll turn it over to John to discuss the segments results and the outlook. John.

John Jastrem

Thanks Paul. For the fourth quarter, revenue for the segment was $67.2 million, up $17.1 million from the 2007 quarter and operating income increased $6.2 million to $7.7 million. These increases were due to the acquisition of Becker Group, which generated revenue of $21.4 million, and operating income of $6.9 million in the fourth quarter.

Partially offsetting the benefit from Becker Group were declines at Exhibitgroup/Giltspur, driven primarily by some non-repeating business in the 2007 fourth quarter. As compared to the 2007 fourth quarter, EG’s revenue declined by $4.2 million or 8.4%, with a corresponding decline in operating results of $659,000.

On a full year basis, the experiential marketing services segment, earned revenues of $225.4 million, with an operating profit of $1.9 million. Full year results for the segment include revenues of $25.4 million and an operating loss of $677,000 at the Becker Group; which includes $1.8 million of amortization expense, related to acquired and intangible assets.

Excluding this non-cash amortization expense, Becker Group turned an operating profit of $1.1 million. Although Becker Group’s results fell short of initial expectations, due to reduced client spending on holiday programs, driven by the weak economy and the credit market issues, Becker Group still realized record revenues in 2008 and substantial growth over 2007.

Exhibitgroup/Giltspur, also realized strong revenue growth in 2008, despite the economic downturn. Full year revenues increased $27.3 million or 15.8% to $200 million and full year operating results improved by $7.4 million, driven primarily by continued success in winning new clients and strong client retention.

EG’s success in 2008 was fueled by our client centric approach and the hard work creativity and the dedication that EG employees provide to our clients each and every day. During the past two years we invested significant time and energy to reposition EG as an experienced marketing agency, by elevating customer service, and increasing the quality and quantity of our creative and strategic thinkers, transforming EG from a design and build shop to a true strategic marketing partner to our clients.

The recent integration of EG and Becker Group, will further strengthen our capabilities and client relationships. EG and Becker Group are both well established brands, with reputations for providing innovative, experience for marketing solutions to clients. By, focusing on client needs and leveraging the collective resources of both teams, we have the opportunity to strengthen each brand independently, while simultaneously establishing a cohesive product offering that is unmatched by the competition.

As we move forward together, the talent of the staff at EG and Becker Group, will enhance our product and service offerings. We have a combined worldwide network of 28 client care centers, 600 professionals worldwide, more than 100 outstanding creators and designers, production and installation and dismantle capabilities and a first rate team of sales, marketing and branded entertainment specialists throughout the world.

While we have a lot of positives going for us, we are facing an increasingly challenging economic environment. We have stayed close to our clients through the 2009 budgeting season and are expecting many of them to cut back on their trade show and marketing spend in 2009. To help offset the impact of reduced client budgets, we are taking steps to capitalize on the momentum we gained during the past two years and on the combined talents and resources of EG and Becker Group to continue winning new clients and gaining market share.

Many of our competitors are suffering financially in the current recessionary environment, affording us the opportunity to capitalize on our recent successes and be at a strong financial position. We will leverage this opportunity by continuing to serve as a strategic partner to our clients, focusing on their needs, to find innovative ways to maximize the value of their marketing spend during this difficult time.

We have significant new business goals for 2009 and we are well positioned to achieve those goals from a position of strength and forward momentum. Our international divisions [STD] and [Boblo] have been key differentiators and contributors to our success and we expect them to continue to provide valuable service to our international clients.

However the rapid strengthening of the US dollar during the last quarter fore shadows negative foreign exchange head wins for 2009. As a result of these factors and with limited visibility, we are guiding for 2009 full year segment revenues to decline by $25 million to $35 million or 11% to 6%, including roughly $9 million from unfavorable currency translation.

Full year operating income is expected to decrease by $6 million to $9 million, due to the decline in revenue partially offset by proactive, over head cost reductions. For the first quarter we expect segment revenues to be in the range of $32 million to $38 million, with an operating loss of $6.5 million to $8.5 million; reflecting the expectation of lower trade show marketing spend.

Going forward we remain focused on strengthening our client relationships by providing compelling value added programs, that help clients achieve marketing goals within budgets. At the same time we will continue to identify and to implement initiatives to improve efficiencies and capacity utilization across our network.

Our team is committed to our mission of positioning EG and Becker Group as the leading brand in face-to-face and experiential marketing services and growing our business by delivering the highest level of value and innovation to our clients. While the current economic climate is challenging, I remain excited and optimistic about the future of our business and confident in the talented and energetic team that comes to work for our clients every day. Paul.

Paul Dykstra

Thanks John. Now I will cover highlights for the travel and recreation services segment. Revenue during the segment seasonally slowed fourth quarter, with $6.4 million as compared to $8 million in the fourth quarter of 2007. Fourth quarter operating segment loss was $1.7 million as compared to a loss of $1.5 million in the 2007 quarter.

For the full year, revenues were $86.6 million, up 2.8% from 2007. Segment operating income was $22 million, down slightly from 2007, with operating margins at 25.4%. Overall the travel and recreation services segment had another very solid year. Despite a soft economy and higher travel costs, Glacier Park realized strong occupancy in lodges and an increase in room revenue over 2007.

Brewster saw lower tourist volumes due to reduced international travel, but the team did a great job managing the business to maintain revenues and control cost. Recent feedback from Brewster’s tour operator clients in various international markets, suggest that group tour volume will decline 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 recent decline in oil prices has slowed the Western Canadian economy and as a result we’re not expecting this market to be as strong in 2009.

Overall, we expect full year revenues to decrease by 15% to 20% from 2008, including $8 million or 9% from unfavorable currency translations, with the remaining 6% to 11% driven by the weaker economy. Full year operating margins are expected to approximate 23%. For the seasonally slow first quarter, expect revenue to be in the range of $4.5 million to $5.5 million, with an operating loss in the range of $3 million to $2 million.

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

Ellen Ingersoll

Thanks Paul. In the four quarter of 2008, we recorded non-cash impairment charges totaling $11.2 million pretax, and $9.4 million after tax. Of the total pretax amount $8.6 million related primarily to the write down of good will and other intangible assets at Becker Group and $2.6 million related to the write down of certain intangible assets at Melville.

A discounted cash flow methodology was used to test for impairment, which required various estimates and assumption. In light of the recession, our future revenue and cash flow projections were revised downward, resulting in the impairment charges.

Moving on as shown in table two of the earnings release, our adjusted EBITDA was $12.9 million during the quarter, versus $5.4 million in the fourth quarter of 2007. Also shown in table two are free cash flow of $5.5 million for the quarter versus $20.4 million in the 2007 fourth quarter.

We expect positive operating cash flow during the year to fund our capital expenditures and regular dividend payments, resulting in essentially breakeven free cash flow for 2009. At December 31, 2008, we had total cash and cash equivalence of $148 million, as compared to $152.9 million at September 30, 2008. Our total debt at the end of the quarter was $12.6 million, with a debt to capital ratio of 2.6%.

We repurchased shares in the fourth quarter totaling 253,119 at an aggregate cost of $5.7 million. Our net interest income for the quarter was $231,000 versus $1.1 million in the fourth quarter of 2007. Our depreciation and amortization expense for the quarter was $6.7 million; this compares to last year’s fourth quarter of $5.9 million. The full year 2009 forecast is approximately $28 million to $30 million.

Our capital expenditures were $7 million in the fourth quarter of 2008, compared to $9.9 million in the fourth quarter of 2007. The full year 2009 forecast is approximately $26 million to $28 million, as compared to full year 2008 actual amount of 39 million. Payments on our restructuring reserves were $788,000 during the fourth quarter of 2008, versus 536,000 in the fourth quarter of 2007. Full year 2009 restructuring payments are expected to approximate $3.5 million.

The 2008 income tax rate for the year was 32.2% versus 31% in 2007. 2008 and 2007 rates reflect aggregate favorable resolution of tax matters of $5.7 million and $3.1 million respectively. The 2008 and 2007 tax rates on income before other items, which excludes the favorable resolution of tax matters and the impairment charges were 37.4% and 35.9% respectively. Back to you Paul.

Paul Dykstra

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 first quarter.

For the full year, as you heard in our earlier remarks, we expect economic head wins to be a much larger factor for us in 2009. Corporate marketing budgets are being reduced as a part of overall cost reduction efforts and consumers are being affected by falling home prices and rising unemployment.

Trade show exhibitors are scaling back and based on early 2009 shows and input from organizer and exhibitor clients, we expect larger same show declines and lower exhibitor spending as compared to 2008.

On the travel and recreation side, we expect declines in tourism, especially from long haul groups. In addition to the weaker economy, our 2009 results will also be hampered by significant negative show rotation at GES and unfavorable currency translations, due to the rapid strengthening of the US dollar.

Overall we expect 2009 full year income to be in the range of $1.15 to $1.35 per share, as compared to 2008 income before other items of $2.28 per share. This guidance range reflects the expecting, that unfavorable currency translation will negatively impact income per share by approximately $0.18. It also includes lower interest income of approximately $0.06 per share and the first quarter restructuring charge of approximately $0.03 cents per share related to the integration of Becker Group and Exhibit Group that I discussed earlier.

We expect full year revenue to decrease by 15% to 20%, including roughly $40 million from unfavorable currency translation, and about $85 million from negative show rotation. Excluding those two factors, the decline in revenue is expected to be roughly 4% to 9%, reflecting the expectation that we will be success in winning new business and gaining market share to help offset the economic head wins.

Full year segment operating income is expected to decrease by 35% to 40%, driven by the decline in revenues, partially offset by cost reductions. For the first quarter we expect income per share to be in the range of $0.18 to $0.33, as compared to 2008 first quarter income before other items of $0.81 per share.

Revenues are expected to be in the range of $250 million to $270 million, with operating income in the range of $9 million to $14 million. We expect the declines from 2008 first quarter revenue of $335.4 million, and operating income of $28.6 million, reflect a negative show rotation of about $13 million in revenue at GES, a $14 million revenue decline due to unfavorable currency translation, and expected declines in trade show marketing spend. Additional details regarding our full year and first quarter outlook can be found in the earnings press release.

In closing, we had a very successful 2008, thanks to the hard work and winning spirit of our talented employees. Income before other items per share grew by 21.3%, driven by double digit revenue growth at Exhibit Group, a record revenue year at GES, and solid performance by our travel and recreation services companies.

We have celebrated our 2008 successes and have quickly moved on to executing well in a challenging 2009. While we are expecting significant head wins, including difficulty year-over-year comparisons due to the significant positive show rotation in 2008, we also expect 2009 to bring many opportunities. In this environment, our leading market positions, talented and hard working 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 these advantages.

Cash is king in this market and as Ellen mentioned earlier, we have nearly $150 million on our balance sheet with very little debt. Over the past three years we have generated $121.3 million in free cash flow and we have returned $105 million to shareholders through share repurchases and regular quarterly dividend.

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. 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 be clearly be difficult, but the fundamentals of our business remain very strong. Our goal right now is simple, to do the best job possible to manage through the down turn, while also positioning our businesses to emerge from this recession even stronger. We remain committed to driving long term growth and shareholder value.

With that we’ll close and take your questions. Catherine if you can open up the question line please.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from John Healy – FTN Equity Capital Markets.

John Healy – FTN Equity Capital Markets

A question for you guys on the show rotation; you mentioned $85 million. I was looking back at my notes; I think that was a bit higher than I thought we had talked about in previous calls. I’m just trying to kind of reconcile those numbers and if it is higher, maybe you know where it’s coming from and maybe what your initial expectations are for 2010 type show rotations; how we should begin to think about things.

Paul Dykstra

Yes John, I think we are kind of fore setting the excess of 60 million and the non-annual shows we did in ‘08 turned out to be very, very strong events. IMTS, Mine Expo, ConExpo, all were very strong events. We are just now starting to look at 2010 and given the visibility issues we are having just in the near term in 2009, it’s a little bit challenging to look at ‘10, but we do expect that that should be a positive rotation here given some of the ever other year shows coming back into the mix. Kevin do you have anything to add to that?

Kevin Rabbitt

Yes, a little bit more. Yes, we had set an excess of $60 million; one thing I’ll remind you, these are net numbers. So, you got things coming in and things going out and Paul you’re right on; it’s that the 2008 shows were very high performing; we don’t expect that same kind of growth in the 2009 shows as well. So, that’s where the numbers shake out when the math is all done at that point in time.

John Healy – FTN Equity Capital Markets

Your comment about the operating margins for GE, despite the negative share rotation and the declines in same store revenue growth to still get to the 6% goal, can you walk us through on kind of if the same store revenue growth declines maybe 15%, where you can keep margins at and maybe in 2010 if we had a positive show rotation number, maybe where we can think about margins going back to what they did. Kind of get back to where they were this year.

Paul Dykstra

Yes, thanks John. If you remember in 2008, after the first quarter busy season, we started to recognize and decrease costs and then we did some more after the busy third quarter, in anticipation of down show rotation this year. Since then we’ve continued to be very aggressive in cutting costs.

Kevin and his team have been very proactive. The economic issues have continued to deteriorate during that time, so we are continuing to look at every possible thing that we can do, to manage our variable costs down as revenue comes down, but more importantly get at the semi variables and some of the fixed costs that can help us out short term and at the same time recognize that we do believe in the fundamentals of this business, the face-to-face marketing is something that’s going to come back, so we got to be careful not to lose our potential when that market does come back and we got a lot of very talented people that we rely on.

Kevin would you add anything to that?

Kevin Rabbitt

Sure John. I think I had outlined in my comments, a little bit about our cost structure. We’re seeing roughly two-thirds variable, about 30% semi variable remaining fixed. If you think about kind of where margins could be, if you look over the last several years and kind of see with revenue the margins went up a little bit more and when I go back to 2007 they’re a little bit lower.

I want to highlight though that we are taking a real comprehensive approach here at 2009. So, there’s a big piece of it that’s around making sure that we’re cutting costs and we’re tightening spending and understanding kind of where our head count levels are at; but just as importantly we’re not cutting in some of the very specific areas that have enabled us to win market share.

We know we can deliver client value and cost effective exhibitor solutions; we know we can bring the value to organize our clients in helping them reduce their budgets and make sure their shows are healthy and we got some really strong momentum in our sales efforts that will enable us, that we believe would take some market share in this downturn and then coupled with that we’ll continue to do some selective investments that are going to help us in the long term with the Melville Middle East and Abu Dhabi being on of those that we will continue forward with.

So, I think that gives you some range if you look historically, where things are at and we’ll certainly variablize as all the variable costs and aggressively be on the semi variable side as well, while I’m not cutting in a way that doesn’t hurt us in the long term.

John Healy – FTN Equity Capital Markets

Okay and then just two quick financial related questions. When I looked at kind of the income statement, the restructuring charge of the $600,000, it looks like to me that’s included in the $0.16 non-GAAP number. I just wanted to make sure that was true and then just on the impairment charge at Becker, I was just a little bit surprised to just the magnitude of the decline, especially the businesses that’s pretty decent this year. I’m just trying to understand kind of what’s changed there or what’s kind of being looked at a little bit differently.

Ellen Ingersoll

Sure. The restructuring charge is included in the $0.16. It’s not considered in what we call other items; the only thing in there would be the favorable resolution tax matters and then the impairment charge. On Becker, basically what we did is, we reanalyzed the forecast going forward in light of the current economic environment, the retail clients that they have and we lowered their cash flow forecast going forward, which resulted in a goodwill write off and some intangible write off.

John Healy – FTN Equity Capital Markets

So, was there a change in kind of the big customers they had. Was there any significant customer loss?

Kevin Rabbitt

No it’s just decreased spending due to the retail environment that rapidly deteriorated in the end of the year here and its Becker’s biggest quarter and we see that continuing through 2009.

Operator

(Operator Instructions) Your next question comes from Karl Brown – [Revis Partners]

Karl Brown – Revis Partners

I was just wondering if you could walk through a little bit of the offsets to the same store rotation that you talked about; new wins, market share gains, pricing, I think you had 2% to 7% growth, so I guess you’re assuming that you can offset some of the negative same store rotation. Can you talk about maybe do you have any of that already in the queue or already actually won in terms of new share holders that we’re pricing and things like that.

Paul Dykstra

I’ll have Kevin comment on that. We’re certainly doing a lot of things to aggressively take market share in this environment, to continue to drive products and services, so there is some off set to that. Kevin can you put some color on that?

Kevin Rabbitt

Sure. Karl, I’m just thinking about the right way. We’re at negative 10%, we’re anticipating negative 10% same store declines and so that means that we do have the offset of somewhere around 2% to 7% if you look at where we had outlined. There is really several areas; one is around exhibitor discretionary winds.

So, we are confident we can provide a cost affective solution to exhibitors around transportation, some rental exhibits and even some events that are tied to trade shows. We also have had some recent new show wins; one is American Veterinary Med. and another is EH Events that we take on in 2009.

Then there is always short term bookings that are part of our business, that are traditionally hotel business in different geographies. We’ve got a very high win rate there and so we’re banking on being able to continue that win rate and offset that as well.

Operator

Thank you. That does conclude the question-and-answer session. I’d like to turn the call over to Mr. Paul Dykstra for closing comments.

Paul Dykstra

Thanks Catherine and thank everybody for being with us this morning. In closing, Viad’s base business remains sound despite the economic head wins we currently face. In an environment when many business models are spiraling downward, our revenues are expected to decline 4% to 9% when you factor out negative show rotation and unfavorable translation.

Our balance sheet and fundamentals are strong and we believe we are 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 industries or to Viad. We are confident that we’ll manage through this challenging time and that we emerge in an even stronger competitive position. So thank you again for being with us and we look forward to talking to you again in three months. Thank you.

Operator

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Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

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