Philip Evans – Chief Financial Officer David Loechner – Chief Executive Officer and President.

David Chu – Bank of America Corporation Ryan Leonard – Barclays Katherine Tait – Goldman Sachs.

Good morning, ladies and gentlemen, and welcome to Emerald Expositions' First Quarter 2018 Earnings Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions with instructions to follow at that time. As a reminder, this conference is being recorded.

I would now like to turn the call over to Mr. Philip Evans, Chief Financial Officer. Please go ahead, sir..

Thank you, Operator, and good morning everyone. We appreciate your participation today in our first 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 Investor section of our Web site through 11:59 p.m.

Eastern Time on May 10, 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 more comparable GAAP measure can be found in our earnings release. Now, I'll turn the call over to David..

Thanks, Phil. Revenue for the first quarter increased by almost 5% over the same quarter of 2017, benefiting from the first time contribution from Connecting Point Marketing Group or CPMG, which we acquired at the end of November last year. Adjusted EBITDA for the quarter increased by almost 2% over the first quarter of 2017.

Organic revenues were flat with solid growth in many of our trade shows, offset by declines in a few of our larger shows which I will discuss.

Starting with K-Bizz [ph], which is amongst our largest five shows, revenues grew at a high single digit rate driven by continued strong momentum in the housing market as leading brands continue to view our show as a key marketing vehicle and increase their investments. Sign-ups for the January 2019 event are pacing well.

And we have already reached 2018's booth revenue with eight more months of the 2019 show cycle still to go. Our Outdoor Retailer + Snow Show, which staged at the end of January, was very successful [indiscernible] event in Denver.

The show was approximately 25% larger in net square feet than last year's Outdoor Retailer Winter Market, and attendance was approximately 60% greater than last year which bodes well for future shows.

From the revenue perspective, this year's event was down by high single-digit percentage reflecting the transitional lower booth pricing for the show that was agreed as part of last year's acquisition of the SIA Snow Show. Over time we expect pricing to increase commensurate with the strength and market acceptance of the show.

Looking forward, our pacing for the two remaining Outdoor Retailer shows this year is in line with our expectations as the summer event is over 90% sold, while the November event is approximately two-thirds sold.

For the full-year we expect the revenues of the three Outdoor Retailer shows to exceed those of the two shows we held in 2017 by approximately 20%. Another successful show that's staged in the first quarter was our International Pizza Expo. The show grew revenues by mid to high single-digit percentage versus last year's show.

And this year's show was 25% larger than the show we acquired in 2015. The new regional spin-off event we launched last year in Atlantic City is also pacing to grow nicely this year.

Turning to New York Now, revenues for the February show were down by mid single-digit percentage as the home section continued to be soft, while the lifestyle and handmade sections were probably flat.

As we noted in our fourth quarter earnings call, we've implemented a new go-to-market sales and marketing strategy to improve the show's sales performance. We've also made several senior management changes at New York Now and announced a broad program of investment and innovation that is designed to improve the show's performance over time.

Though the summer show is currently pacing behind our expectations, we remain optimistic that the steps we have taken to attract more new company participation and improve returning exhibitor ROI will improve sales pacing for the summer show.

Our other significant show in the quarter was ASD Market Week, which declined in revenues by a mid single-digit percentage. As I noted in our call in February, the core category and largest section of this show, value and variety, continued to show solid growth in the March edition.

However this category's growth was more than offset by softness in style and beauty and jewelry and gift which remained challenging categories. As with New York Now, we see an opportunity to improve ASD's performance, and have just begun to execute our new go-to-market sales and marketing approach.

While I would reiterate that it is too early to track any meaningful benefits to the shows performance, we are currently placing slightly ahead of our forecast. Looking forward, we remain optimistic about our team's ability to improve the performance of ASD in subsequent editions.

Excluding the shows I have mentioned, the balance of our first quarter trade show portfolio, which includes Global Shop and Surf Expo, grew revenues by 4% over the first quarter of 2017, which was in line with our expectations.

Our non-tradeshow or Other Events category grew significantly this quarter, with four CPMG events staging for the first time under our ownership, together generating $8.2 million of first quarter revenues.

While we are still in the process of integrating the CPMG business and the team, we're pleased with our performance in the first quarter and remain very positive about the future organic growth potential of this business. That covers the first quarter review.

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 second quarter and the rest of the year.

For the second quarter, the three largest tradeshows are Hospitality Design Expo, COUTURE, and IRCE, all of which are currently pacing to grow by a mid single-digit percentage over last year.

Taken together with the previously indicated decline in our HOW Design Live event reported within our Other Events, we expect fairly flat organic revenue growth for the business as a whole in the second quarter. Our CPMG acquisition has two events staging in the second quarter with first-time revenues for Emerald up more than $4 million.

Consequently we expect to report robust total revenue growth for the second quarter. Looking forward to the rest of the year, we have ramped up our show launch activities and are planning eight or nine new events, including the new Outdoor Retailer Winter Market, which compares with six new events launched last year.

OR's November show is not a typical launch, and is expected to deliver revenues in the $6 million to $8 million range in its first staging, in line with our original expectations. Our other more traditional launches are pacing well for the remainder of the year.

In terms of their cadence, we have one new event planned in the second quarter, two in the third quarter, and four or five in the fourth quarter. In total, the revenues of these launches, excluding the Outdoor Retailer event, are expected to be between $2.5 million and $4 million assuming all the events take place.

Lastly, let me say a few words about our M&A strategy. While we did not close an acquisition in the first quarter of the year, we remain active in discussions with sellers and potential sellers. And we evaluated a number of deals in the quarter.

However, we continue to be discerning buyers, and are determined to wait for the right acquisition opportunities. While the timing of transactions is always uncertain, our pipeline is robust and our M&A strategy remains intact. I would like to turn the call over to Phil now for a review of our first quarter financial results..

Thank you, David, and good morning again. We reported first quarter revenues of $142.2 million, which compared to $135.7 million in the same quarter of last year, representing an increase of $6.5 million or 4.8%. Organic revenues were flat excluding the CPMG acquired revenues, discontinued events, and a small show scheduling difference.

As David explained earlier, the quarter’s organic growth was particularly affected by lower revenues from the first quarter editions of ASD Market Week, New York Now, and Outdoor Retailer which offsets an otherwise solid performance across the tradeshow portfolio.

Organic growth for all the other tradeshows staged in the quarter excluding these three shows, was 5.9%. Other events, which represented 9% of the quarter’s revenues, included $8.2 million of revenues from our fourth quarter 2017 acquisition CPMG, which is heavily weighted to the first quarter of the year.

Organic revenue growth for other events was 2.1%. Other marketing services which represented only 4% of the revenues in the first quarter declined $0.7 million or 11%. The first quarter decline was steeper than we expected to be the case for the full year.

Our adjusted EBITDA for the quarter of $73.6 million was $1.2 million or 1.7% ahead of the first quarter of 2017 after adjusting for small show scheduling difference.

This increase largely reflected a strong contribution from our CPMG acquisition offset by approximately $1 million of incremental public company cost and a modest reduction in adjusted EBITDA from the rest of our portfolio. Our adjusted diluted earnings per share for the quarter increased by 10% from $0.60 to $0.66.

This strong increase partly reflected the benefits of low interest and tax expenses. A $3.1 million decrease in interest expense was a result of our reduced outstanding debt balance and low interest rates due to the refinancing and re-pricing transactions last year. The $6.1 million decrease in income tax expense mainly reflected the change in U.S.

federal income tax rates from 35% to 21% starting at the beginning of the year. Free cash flow, which we define as net cash provided by operating activities less capital expenditures, was $20.1 million for the first quarter 2018 compared to $28.5 million in the first quarter of 2017.

The key items affecting the quarter’s cash flow was $2.4 million of lower cash interest and $3.4 million of lower cash taxes which were offset by $16.1 million of timing difference in working capital that we expect to reverse during the remainder of the year. Our last 12 months free cash flow through the end of March was $100 million.

And we remain confident in our full-year guidance range. In the first quarter, we paid a dividend of $0.07 a share which totaled approximately $5.1 million. And our board has recently approved an increase of 3.6% in the second quarter dividend to $7.25 a share which will increase the cash dividend to approximately $5.3 million for the quarter.

At the end of March, our outstanding term loan balance was $560.8 million. And we had cash of hand of $27 million. Our leverage ratio with net debt of $533.8 million based on the calculations in our credit agreement was 3.4 times our last 12 months adjusted EBITDA which was unchanged from the previous quarter’s ratio.

Turning to the full-year outlook, our guidance is unchanged from our fourth quarter earnings call. Accordingly, we are projecting revenue growth between 7.4% and 9.7% with organic revenue growth between 1.5% and 3.5%.

Adjusted EBITDA in the range of $158 million to $162 million, adjusted earnings per share in the range of $1.20 to $1.30, and free cash flow between $110 million and $120 million. At this point in the year, we sold approximately 90% of our 2018 forecast annual booth revenues which typically comprised approximately 70% of our total revenues.

This year's pacing which is our full-year expectations is in line with our pacing as the same time last year relative to where we finished the year. Consequently, this gives us good visibility into the likely full-year revenue outcome.

The primary remaining uncertainties which is the key reasons for our guidance range are the same items that were built into our original thinking, namely, the performance of the summer ASD Market Week and New York Now shows, the outlook for our new Outdoor Retailer show in November, and the success of our fourth quarter launches.

These are all third and fourth quarter items. And we expect to provide more color and a tighter full-year guidance range when we announce our second quarter earnings at the beginning of August. I’ll now hand back to David for his closing remarks..

Thanks, Phil. There have really been very few surprises so far this year.

We knew coming into the year that our focus would be on delivering solid organic growth across the majority of our tradeshow portfolio, the move to a three show format for Outdoor Retailer, a more active launch program, and strengthening our execution in our two largest franchises, ASD Market Week and New York Now.

We have made good progress towards all of these initiatives. And I am particularly pleased with how the Outdoor Retailer move to Denver was executed and the favorable reaction of the industry. Lastly, we continue to see good M&A opportunities in the United States and even outside the United States.

And we will continue to seek to deploy our free cash flow on high quality acquisitions that will drive future shareholder value. We will now open up the call for any question.

Operator?.

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

Great. Thanks.

So based on what you are seeing today, just wanted to see if there are any new onetime disruptions we should expect for 2018?.

I don’t see anything on the horizon that we haven’t already discussed, David..

Okay, great. And then, you mentioned expectations for ASD and New York Now for the third quarter.

Just wanted to see if you can share that with us?.

I think we’re broadly seeing the same outcomes for the summer shows or we forecast kind of the same outcomes for the summer shows as we saw on the winter shows as we talked about, implanting kind of new go-to-market strategy is going.

Effort, we are just beginning it, so we’ll see it roll out over the next several editions and should see some lift in that overtime. But, we are confident the initiatives we are putting in the place will have some improvement.

I mean our real goal here to stabilize these shows while relying on the rest of the portfolio to drive the overall growth at Emerald..

Okay. That’s correct. And just lastly, I think the general outlook is that we are near late cycle in the economy at this point.

So, typically how would characterize your performance kind of when we get to late cycle and maybe in a recessionary environment?.

Other than the great recession that we saw, went through multiple recessions in my career and the portfolio really performs quite well in recession many times. I am not sure I can speak on what will happen in the future. But, we are setup nicely with important shows.

It’s a fragmented markets and that does not really change during recession many times..

Okay, great. Thank you very much..

Our next question is with Jeff Meuler from Robert W. Baird. Please proceed with your question..

Yes. Hey guys, thanks. This is [indiscernible] on for Jeff. Just going back to ASD in the quarter, can you talk about how that compared to your expectations? I think it was turning down low single digits last quarter.

So, not too much of change, but just wondering if there was any further weakness there, or if it is just more so a continuation of what you are seeing and kind of limited time to implement some changes that you are expecting later in the year?.

Yes. So we didn’t have any of the new strategies implemented for first quarter show although like I said it’s going to be an ongoing effort as we see it. But let’s finish broadly in line with where our expectations were. There wasn’t anything material that changed from what we saw..

Okay.

And then with tradeshows roughly flat against up a little bit in Q1, do you still feel confident that kind of the 3% to 5% target growth for the full year for that product line is still achievable?.

Yes, this is Phil..

Hi, Phil..

Hey, Nick [ph]. We indicated that in the second quarter we will get some decent growth in the tradeshow portfolio. Q3 will be a little bit more challenging obviously because of the ASD and New York Now summer shows.

But, fourth quarter we have a big contribution from a new Outdoor Retailer show and we also have quite an active launch program in the fourth quarter. So, I think you’ll see quite lot of the growth come in the fourth quarter of this year..

Okay, that’s helpful, and then just one last one from me little bit higher level, now that you’ve had some time to integrate CPMG, can you just talk about any potential opportunities you’re seeing that leverage the brand and business model across your existing portfolio event?.

Sure. I mean they had quite busy first quarter, they did quite a few of their events in the first quarter and each one of events grew nicely in the first quarter. So we tried not to overburden them on the very first quarter that they were part of our company, however we found a number of actionable opportunities.

We’ve identified and really we’re hoping to start as soon as possible and may even be something coming about later this year but certainly we’ve identified opportunities to expand their portfolio both inside what MO currently operates in the industries in outside.

So we’re confident that is the great acquisition, it’s performing well and we’ve already seen some opportunities to expand it..

Okay, thanks for taking the questions..

Our next question is with Manav Patnaik with Barclays. Please proceed with your questions..

Hi, this is Ryan Leonard on for Manav.

I guess as you look out to the rest of the year at this point, you obviously have a lot of visibility, what do you think would need to happen for upside your expectations or risk, is it about executing on all of the new shows or is it about implementing some of these new strategies, you’ve talked about?.

Well, I think one of the things that we built in as a number of new launches and they’re going to be smaller towards the portfolio as a whole but at the end of the day, they’re still new.

We feel good about what we’ve got in terms of what we’ve launched and what we’re going to launch but there is a little bit of unknown there and the uncertainties around that.

And then now in ASP going around the hedges could come in plus or minus a little bit but the other part of the portfolio is still behaving very well and there are some strong products in there, so we’re not really at this point seeing any material surprises and we built in the uncertainties to our guidance, so we feel like we’re on track..

Yes, the only other thing I would add is retailers as obviously that shows in different time slogs and different type of show in some ways the November show and the shows we’ve done before and we’re getting a lot of interest but we would not have any track record against which to say where that will come out.

So that potentially could we’re hopeful that that we will get strong outcome there and as David said we built a number of these things into our guidance range and the things would get us to be this sort of outperform the mid-points there stronger ASP you can have and potentially currently facing a strong yield now and the launches really doing it and so that’s obviously what we’re looking on..

Understood.

And I guess, specifically on ASP in New York Now, are you hearing things from clients who are saying this is why we’re not coming back or is it the case where you just kind of you stop the communication kind of stops and it’s all about building the new sales pipeline?.

So I wouldn’t paint both shows more of the categories within the shows with the same paintbrush, we do construct each one of the shows, each one of the categories and we focus into that and there is really a couple of categories in each show that have some headwinds and they’re not even really the same between the two shows, there is a bit of an oversupply product, sorry an oversupply companies within the ASP market in a couple of distractions, the fashion, fashion accessories and jewelry sections but we’re focusing on the growth sections of ASP with our new sales resourcing and our new kind of go to market strategy.

So working on the stronger categories for growth and bringing in more new companies. For ASP, it’s a bit of I’m sorry with New York Now, it’s a bit of the economics around the large kind of home or furniture companies and our job there is to better satisfy their ROI and bringing growing audience around that group.

But there is some strong categories within that show and I think that’s why our kind of increased emphasis on sales and new company participation is going to be important.

Some of those larger home categories are simply buying life square footage and so we’ll need to bring in more new companies to fill that in some of the better categories that we have within those shows..

Got it.

And one more if I could on the M&A front, we’ve seen I guess some private equity involved in the space are you seeing any increased competition for deals and maybe could you just talk about pricing that you're seeing out there relative to maybe year ago?.

I discovered that the pricing really we haven't what’s not seeing our conversations really on any different from a multiple perspectives than they have been in the past. On the private on Blackstone specifically obviously they've had a fairly aggressive kind of global strategy building on the client, in particular and then with ten well.

We don't talk about specific, deals in the market but as you might imagine anything that puts of any size we would see as well and so there are reasons why things may not work for us and on work for other people.

And so I think there is, they are more active but we're not necessarily looking at the same things and thinking about an M&A strategy in quite the same way..

I mean in the U.S. we're still focused on the potential tuck-ins either individually or association owned and those are we haven't seen anybody up against those as we've looked through those opportunities and are in discussions with those opportunities..

Great, thanks..

Our next question is with Katherine Tait with Goldman Sachs. Please proceed with your question..

Hi everyone, and just a couple questions for me and as the auto recurrent I think talked about attendance been 60% higher just came to understand is that new tenants coming from you sort of areas as sort of attendees or is that sort of existing companies are presented by attendees bringing more people.

Secondly, I think with New York Now you talked about new innovation investments just came get a little bit more insight into what those might include and then finally on the CPMG I talked about in discontinued events within that during the first quarter just came to understand if there are more events throughout the remaining quarters of the year which I like should be discontinued within that? Thanks very much..

I’ll just do the first one because if the first one sort of Matt question probably, so we're comparing to the retail show that we held in January of last year saying no Compared to that show that the attends to 60% higher obviously there were some people who went to the SIA show last year and so we picked up those people and we will be spreading due to the combined as a retailer and SIA kind of attendee base overall two winter shows themselves.

With our first combined show we got an uplift of additional retailers and buyers from the snow community that may not have all gone to the other retailer show previously that’s got the one of the reasons behind the attendance but also as a combined show they really attracted the attention of the entire outdoor winter market and so there were definitely people at the time being to either the shows before.

On the New York Now, I think there's a couple of things one of course we’re obviously investing in sales and attacking new customers and we have a couple of new resources around sales as well.

We're also putting some investment towards audience acquisition or audience market or attracting a bigger or more quality attendee base but then there is also the experiential part of the event for everybody and providing more of a better outcome for people as they go through the show and some of those include the lounges that networking, some of the content or seminar sessions that will be providing on the show floor and networking lounges we're going to have more food options, coffee service, beverage carts more mass for the buyers.

We're also going to be providing some increased shuttle service and better greeters and some matchmaking desks and we're really trying to ensure we've kind of covered as many of the experiential parts of the business that just improve the overall outcome will be putting out more social media posts and just kind of looking around the edges of things we can improve the experience of the customer.

What was the third question? I think the way that we wrote the release, it's kind of suggested that discontinued activities were related to CPMG, but they weren't related to the CPMG. So, CMPG was obviously a positive contribution in the quarter.

We had like three very small events, we were about 800,000 as revenue that would discontinue; nothing to do with CPMG. And then there was a small scheduling difference, the environments relating event was in Q1 last year and in Q2 this year. So that was the other adjustment that we left kind of qualifying when we talk about growth for the quarter..

Thanks very much..

Ladies and gentlemen, this concludes our question-and-answer session. And now I would like to turn the call back over to David Loechner for closing remarks..

All right. Thank you very much. Look, we are pleased with our results and our progress, and we look forward to speaking to everybody again soon. Thanks, everybody..

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation..