Elexis AG (EEX) Q1 2019 Earnings Call Transcript

Elexis AG (EEX)
Q1 2019 Earnings Call
May. 02, 2019, 11:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good morning, ladies and gentlemen, and welcome to the Emerald Expositions first-quarter 2019 earnings conference call. [Operator instructions] As a reminder, this conference is being recorded. I would now like to turn the call over to Mr. David Gosling, senior vice president, general counsel, and secretary.

Please go ahead.

David Gosling -- Senior Vice President, General Counsel, and Secretary

Thank you, operator, and good morning everyone. We appreciate your participation today in our first-quarter 2019 earnings call. With me here today is Phil Evans, Emerald's interim president and CEO and the company's chief financial officer. As a reminder, a replay of this call will be available on the Investors section of the company's website through 11:59 PM Eastern Time on May 9th.

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, 2018, which was filed with the SEC on February 19, 2019.

We do not undertake any duty to update such forward-looking statements. Additionally, during today's call we will discuss non-GAAP measures, which we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with U.S. GAAP.

A reconciliation of these non-GAAP measures to the most comparable GAAP measure can be found in our earnings release. Now, I'll turn the call over to Phil.

Phil Evans -- Interim President and Chief Executive Officer and Chief Financial Officer

Thank you, David, and good morning, everyone. I'll begin with a review of our first-quarter results and then move to the outlook for the second quarter and the rest of the year, including the latest indicators for the summer additions of ASD and New York NOW. I'll then provide a short financial review of the first quarter, briefly touch on capital allocation, and finish with an update on the CEO hiring process. At that point, I'll open up the call for any questions.

Before jumping into the numbers, I want to reinforce that the business and our loyal leaders and employees continue to execute on a wide range of initiatives to strengthen our business. We're starting to see some positive indicators with a few of our larger events and we're optimistic about the long-term future and opportunity that's available for Emerald. Now to our first-quarter performance. Revenues of $137.4 million were 3.4% lower than the first quarter of 2018 as they were affected by a few show scheduling differences compared with the prior-year same quarter.

After adjusting for these timing differences, adjusted EBITDA of $59.4 million decreased by $9 million or 13.2% compared to the first quarter of 2018. Importantly, this financial performance was in line with our expectations for the quarter. We experienced solid revenue growth in several of our first-quarter trade shows including the Kitchen & Bath Industry show, Sports Licensing & Tailgate show, National Pavement Expo, Imprinted Sportswear Events, and the International Pizza Expo. The Kitchen & Bath Industry show or KBIS continues to be one of our strongest trade shows.

The show successfully rotated into Las Vegas this year and will be there again next year. The remodeling and custom build sectors of the residential construction market remain robust and our co-location with the National Association of Home Builders International Builders show continues to benefit both events. Another large event in the quarter ASD March was virtually flat in revenues and would have grown modestly as compared to the year-ago show if we hadn't experienced a decline in our sourcing section due to the ongoing trade dispute between the United States and China as we discussed in on our prior earnings call. We're pleased with our progress improving the show's execution, which led to the March show's better overall performance.

Looking forward, we have approximately three months of the sales cycle left before the next ASD show, which stages in the third quarter. Our sourcing section has traditionally been modestly larger in the summer show than in the March show and we're seeing a similar adverse impact from the Chinese trade tensions in the coming summer edition. Excluding this section, the rest of ASD is pacing to be broadly flat in revenues versus last year's equivalent edition, which points to a stabilization in this important Emerald franchise. You will recall that we implemented a number of sales and marketing initiatives over the past two years and it's good to see those working through to improve performance a few editions out as we expected.

Turning to New York Now and as I discussed in detail on our fourth-quarter call, we staged a much improved show at the beginning of February, which was confirmed by increased exhibitor and attendee satisfaction scores collected in our post-show surveys. To accomplish this, we implemented a wide range of initiatives, which included the co-location of the National Stationery show and SURTEX shows previously staged in May in order to add high quality products and attendees alongside the New York NOW show. While necessitating a deliberate reduction in the size of these two shows, these moves helped to drive an approximate 20% increase in attendance for New York NOW with many exhibitors remarking on the improved quality and quantity of attendees. We also increased our investments in various show features, which we believe have enhanced the show experience for both attendees and exhibitors.

Consistent with what we discussed on the prior call, while revenues declined by a high-teens percentage in the winter edition as we more tightly curated space to make room for the National Stationery show and SURTEX, I remain confident that we're on a path to improve performance over the next several editions. Looking forward to the next New York NOW show in August, we're introducing a number of new features that we believe will continue our positive momentum. These initiatives include adding a new Epicurean Kitchen area that will attract high-end kitchenware exhibitors, additional health and wellness and upscale fashion jewelry areas, and the launch of a second edition of the co-located National Stationery show. We've also actively curated areas of the lifestyle section to allow space for our JA summer jewelry show to be co-located with New York NOW, again with the goal of elevating the show and increasing the size and quality of the attendees.

With three and a half months of the sales cycle to go, we're currently pacing toward a low double-digit revenue decline, which is a modestly slower recovery than we were hoping for, but would still represent a marked improvement in the shows revenue trajectory. Our objective for New York NOW is to not only stabilize it, but have it eventually contribute to Emerald's growth over time. It serves enormous and highly fragmented market, stages in the design center of North America, and has all the characteristics of an event that when run creatively and aggressively can deliver substantial value to its audience. Returning to our Q1 performance.

At the end of January, we staged the outdoor retailer + snow show in Denver, which was the second of our two outdoor retailer shows for the 2018-2019 winter buying season. As I noted on the fourth-quarter earnings call in February, our aggregate revenue for this winter season's two shows versus last winter season's one show was up by more than 40%. We're pleased with the industry reaction to the show and are seeing exhibitors and attendees continue to adapt to the three show annual cycle. Turning next to the second quarter of the year.

We expect significant growth in all reported financial measures compared to the 2018 second quarter as our outdoor retailer summer market show is moving up from July to June and our GlobalShop show moved from March of last year to late June this year. To give you an indication of the financial impact of these and other smaller scheduling differences, our second-quarter revenues and adjusted EBITDA last year would have been approximately 25 and $20 million higher respectively had last year's show timing mirrored this year's timing. Our three largest shows in the second quarter; outdoor retailer summer market, hospitality design expo, and COUTURE; are expected to show low to mid single-digit revenue growth over their respective prior-year events. Our mid-size ICFF Design show, which has demonstrated strong growth over several years, is expected to decline in revenue this year partly reflecting modest downsizing from certain European exhibitors including some U.K.

exhibitors affected by Brexit and also the unusual proximity of dates with our own hospitality design expo show. We also suffered from resource issues, which we have a plan to address in order to continue the robust growth in this brand, which we believe continues to have considerable upside potential. As I've noted previously, we have co-located our GlobalShop and IRCE events and added an RFID retail component under the umbrella brand of RetailX. The concept for this combined event, which takes place in Chicago at the end of June, is that these three separate shows together help retailers address the ongoing transformation in their industry whereby in-store design and experience, innovation, and e-commerce are converging.

Both GlobalShop and IRCE are currently pacing behind their previous editions. However, we are optimistic that June's event, which will be the first under the RetailX umbrella, will demonstrate the value and the logic of this combination and lead to opportunities to grow this concept in the future. In addition to the RFID retail launch in the second quarter, we also have a jewelry launch called Premier in Las Vegas during jewelry week and we just staged a new CPMG event for the convenience store market called C-StorePoint. We are optimistic about the future of all three of these new events.

Since I've already provided some thoughts on the ASD and New York NOW shows in the third quarter and it's too early to provide much additional color on the other shows stating later in the year; at this point let me put on my CFO hat and provide a brief financial review of the first-quarter performance. Revenues of $137.4 million for the first quarter declined $4.8 million or 3.4% versus the first quarter of 2018, largely the result of $7.4 million of show scheduling differences, the largest of these being GlobalShop's timing change from Q1 2018 to Q2 2019. 2018 acquisitions contributed $3.6 million of incremental revenues in the quarter while organic revenues on a like-for-like basis adjusting for timing differences declined by $3 million or 2.2% for the reasons outlined earlier on this call. Excluding New York NOW, which is being repositioned, organic revenues would have been slightly positive versus the first quarter of 2018.

Adjusted EBITDA for the first quarter of 2019 of $59.4 million, compared with $68.4 million for the equivalent 2018 period adjusted for the impact of show timing differences. This 13.2% decline in adjusted EBITDA was particularly affected by the financial impact of the New York NOW repositioning and related incremental investments, which contributed approximately 60% of the year-over-year decrease. Other notable factors driving the decline were our increase in show investments and higher expenses than revenue in the brands we acquired in 2018 as their larger revenue-generating activities are in subsequent quarters. As noted earlier, our first-quarter performance was in line with our expectations at the start of the year.

Net income of $26.5 million decreased by $11.6 million or 30.4% versus the first quarter of 2018 while adjusted net income, which reflects the impact of show scheduling changes among other items, declined by $8 million or 17.2% versus the prior-year period. Adjusted diluted earnings per share was $0.53 for the quarter, compared with $0.61 for the equivalent quarter in 2018 representing a decline of 13.1%. As expected, our free cash flow for the quarter was affected by the quarter's financial performance. We generated free cash flow of $11.3 million during the quarter, which was $8.8 million less than the first quarter of 2018.

At March 31, 2019, we had net debt of $549.2 million, which represented a net debt leverage ratio of 3.5 times of last 12 months adjusted EBITDA, which was slightly higher than at the end of 2018. Turning to our guidance for the full year. We're maintaining the guidance provided on our 2018 fourth-quarter earnings call at the beginning of February although we expect to be in the lower half of that range. While our first-quarter results were solidly in line with our expectations, we're tracking modestly behind our original projections in our other marketing services products and in a few of our upcoming shows, including ICFF and RetailX, which I previously reviewed.

It's also worth noting that we estimate that the ongoing trade dispute between the U.S. and China is costing us between $3 million and $4 million in revenue this year largely related to Chinese exhibitor participation across a few of our events. However, I continue to believe we're taking the right steps to return the portfolio to sustainable organic growth. While it takes several show cycles to deliver improved performance, I remain confident we will deliver on our full-year 2019 financial commitment as we work to restore the growth profiles of our largest brands.

Turning to our capital allocation. The Emerald board has approved a 3.4% increase in our regular quarterly dividend from $0.0725 a share to $0.075 a share effective for the second-quarter dividend that we expect to pay at the end of this month. On the M&A front, our internal activities have continued over the last few months and we have several smaller potential deals at various stages of the acquisition process. As I noted on the last earnings call, while we remain opportunistic in our acquisition activities, we have to some extent slowed down our outreach in order to ensure that our team is appropriately focused on addressing the challenges and opportunities in certain of our existing brands.

We currently have $25 million outstanding on our revolving credit facility and I anticipate that we will seek to pay this down opportunistically this year plus make our normal quarterly principal payments of $1.4 million per quarter on our outstanding term loan facility. Aside from these debt payments, we currently have no plans to pay down any more of our outstanding long-term debt. We're comfortable with our capital structure and expect further deleveraging over the coming years. You will recall that we put in place a $20 million share repurchase program back in November and we have approximately $500,000 of remaining approved capacity on that program.

Overall, we'll continue to be disciplined in our capital allocation strategy and remain focused on enhancing shareholder value. Finally, let me provide a brief update on the ongoing CEO search. The board is highly engaged with broad participation in the process and is being very deliberate in its approach to the search to ensure that the individual that is ultimately hired is well suited for the role and the great opportunity it presents them. Pipeline of candidates has been and continues to be very strong, which we feel good about, and we look forward to updating everyone when the process wraps up.

Let me also note that we recently added a new director to the Emerald board namely Sally Shankland. Amongst Sally's many career accomplishments was leading the UBM Americas business as its CEO. She brings considerable expertise and experience in the events industry to the board. To conclude, we're confident we're on the right path with our strategy for New York NOW and we are very encouraged that our ASD show has effectively stabilized.

Additionally, we've taken steps to return ICFF to growth and are optimistic that the market will react favorably to our new RetailX concept. Importantly, we are aggressively addressing those challenges which exist in our portfolio and we're confident that are setting the stage for improved execution and organic growth looking to the year ahead. With that, operator, please open up the call for questions.

Questions & Answers:

Operator

[Operator instructions] Our first question is from Seth Weber from RBC Capital Markets. Please go ahead.

Gunnar Hansen -- RBC Capital Markets -- Analyst

Hey. This is Gunnar Hansen on for Seth. I appreciate all the commentary about the broader portfolio of events. I guess just to dig in, it seems like you guys have made some progress with ASD, which is great to see.

I guess the recent softness you cited with ICFF and RetailX, I mean can we just dig into that a little bit more? It seems like RetailX might be a co-location near-term impact, but long term has good growth potential and ICFF has some external issue. Can we just dig back into that? We just want to make sure that we understand what's going on there.

Phil Evans -- Interim President and Chief Executive Officer and Chief Financial Officer

Sure. And I think you captured it well. RetailX, it's a really kind of bold concept that we've been working on for a while, two shows. The GlobalShop show has suffered over a few years because its primary -- primary market there was fixtures and bricks and mortar fitting out of stores, etc.

And IRCE, I think we haven't leveraged that show as much as we -- as we should have done in terms of content and the ability to talk to the transformation. And we have put these things together, which is a little disruptive certainly because from a location perspective when you're talking about exhibitors, you have to -- when they're used to a certain place, you have to kind of reconfigure how you put things together and we've added a bunch of new content. And so, I think it is a transition issue that -- we believe in the concept. We've been getting some traction, but just not at the pace that we would have liked or that frankly we expected.

So, I think the proof will be when we put this together, put it on at the end of June and the team's very excited and we're hopeful that it will just be a transitional issue and will move to a kind of a platform for growth once we get into 2020 and beyond. ICFF, it's very different. It's a show that's coming up in a few weeks. It has had some -- it's about 60% international exhibitors so there's a lot of issues at play in terms of the international geopolitical situation in trade and frankly, we've had some issues -- resource issues on the team and in terms of priorities.

Kevin, for instance, has obviously spent a lot of time on New York NOW and has had less time to spend on ICFF. So, those are things that we think are totally within our control. We're still going to have a good show -- a really good show and we expect to come back -- bounce back well next year and continue what's been quite remarkable growth in that show over the last three or four years. So, there's still lots more to do in that shown and we're optimistic.

Gunnar Hansen -- RBC Capital Markets -- Analyst

OK. Thanks for that. And I guess with ASD, obviously it's faced some challenges with some of the trade impact with U.S. and China.

Assuming we do get a resolution at some point in the near future, are you going to see a benefit I guess from that or have you guys fundamentally kind of moved away strategically from some of the source direct exposure to limit yourself from them?

Phil Evans -- Interim President and Chief Executive Officer and Chief Financial Officer

No, I -- it's a good question. I think that once things settle down, we will be back on a good path. It's been again a growth section over several shows and it's kind of an important need in the marketplace. So, we're still committed to it.

For 2019 even if tomorrow there was a resolution and everybody was happy, commitments -- commitments need to be made longer out than that for goods to be delivered and people to come to the show. So, it won't help us for 2019. But certainly if there's a resolution that kind of makes sense and that is good for international trade, then we expect to see some benefits from that in 2020.

Gunnar Hansen -- RBC Capital Markets -- Analyst

OK. And I guess just lastly on the guidance obviously targeting the lower half of the prior ranges. If you were to kind of handicap how the growth would be impacted, I mean obviously the big shows have their own issues that are well understood. Where within that range -- like what will be a surprise out of the upside or the downside? Is it some of these larger show still or do you see maybe some of these mid-tier events in the second half of the year having a disproportionate impact? Thanks.

Phil Evans -- Interim President and Chief Executive Officer and Chief Financial Officer

Yeah. The things that we talked about pretty much what's of course moved our view. The -- we talked about ICFF, RetailX. Other marketing services, it's a relatively smaller part of the business, but we were optimistic that we do a little better than we've been tracking and we're anticipating that it's going to kind of continue on a similar path for the rest of the year, which has kind of reduced our expectations.

New York NOW, we were probably a little optimistic on New York NOW for the summer edition. We have some tremendous things going on and Kevin is doing a great job and we've seen -- we're seeing the turn in terms of the market kind of starting to buy into what it is we're doing and I think the trajectory will be -- will be improved over the last couple of editions. But it's going to take a little bit longer than we thought. So, we have a little bit of kind of leakage there.

But fundamentally, ASD is doing a little better than we thought and we're very kind of increasingly optimistic that the initiatives we put in place, the team, the execution is coming through now in terms of performance and we're starting to be more optimistic about 2020 from that -- from that perspective. So I think the guidance, our range is not that big so to move slightly within the range is nothing fundamental, it's just a few things here and there where maybe we were a little bit optimistic and it's not looking that that will play out.

Gunnar Hansen -- RBC Capital Markets -- Analyst

OK. Thanks.

Operator

Our next question is from Kevin McVeigh from Credit Suisse. Please go ahead.

Kevin McVeigh -- Credit Suisse -- Analyst

Great, thanks. Hey, Phil.

Phil Evans -- Interim President and Chief Executive Officer and Chief Financial Officer

Hey, Kevin.

Kevin McVeigh -- Credit Suisse -- Analyst

Any thoughts -- just obviously without getting too specific on the CEO search. Are you looking for someone within the industry, external, just any thoughts at a high level of what type attributes you folks are really focusing in on as you kind of narrow that search down?

Phil Evans -- Interim President and Chief Executive Officer and Chief Financial Officer

Sure. I mean, I think we've met a lot of really good candidates both from inside and outside the industry and I think it's helped us focus on what kind of attributes we're looking for even more finally than we -- kind of when we started off. The list is leadership qualities, growth orientation, someone who's innovative, uses technology, used to capturing the power of technology to strengthen the business, uses data. And we've seen that in people who are inside the industry and outside the industry.

So, we don't have a particular preference there. It's really kind of a strong leader who brings all those different pieces to the table and we think Emerald will benefit from all of those. And so, we'll continue to be in a process. People tell me it always takes a long time to get the right person so I'm -- we're sticking with it and it will take as long as it takes.

Kevin McVeigh -- Credit Suisse -- Analyst

No, I get that. And then it seems like you're being kind of -- there's been a lot of kind of more refreshes and kind of moves within cities of some of the shows than what's occurred in the past. Is that fair and if it is, what's driving that? I mean historically it seemed like there was a lot more stability show to show, seems like you're refreshing a lot more. Just any thoughts around that.

Phil Evans -- Interim President and Chief Executive Officer and Chief Financial Officer

I'm trying to think where we've been -- other than Outdoor Retail and the Kitchen & Bath Industry show has always rotated between Orlando and Las Vegas. When we picked up CEDIA, CEDIA has rotated city to city over its history. So, the smaller events tend to -- especially if you're connected with an association, the association would like to put it in -- to move it around so that it's close to different members of the association. So, we've tended to kind of do that with some of our design shows and so I don't think it's anything that's new particularly.

Maybe we talk about it a little bit more than we used to talked about it.

Kevin McVeigh -- Credit Suisse -- Analyst

Yeah. Thank you.

Phil Evans -- Interim President and Chief Executive Officer and Chief Financial Officer

OK.

Operator

Our next question is from David Chu from Bank of America. Please go ahead.

David Chu -- Bank of America Merrill Lynch -- Analyst

Hi. Thank you. So, your sentiment around the economy was quite bearish in December and into early this year. Did that have an impact on any of the trade shows or commitments made early enough so there's just no real impact?

Phil Evans -- Interim President and Chief Executive Officer and Chief Financial Officer

To the general question of the economy, we haven't seen any softening or any real change in sentiment. Trade shows obviously, there tends to be a lag because people are booking ahead of time and we haven't seen people change their behavior in terms of bookings or pacings subject to the scheduling changes that we have on shows are very much in line with where they have been before. And really the only topic of conversation and it's not in every show, but in some of the shows, is the kind of uncertainties around China and Europe which obviously for a lot of stuff that's made, it's made in China. And so it really is more about the uncertainty than whatever decision comes out.

As soon as we get decisions, people will plan accordingly and will be -- we'll be fine. It's really more about that uncertainty.

David Chu -- Bank of America Merrill Lynch -- Analyst

Got it. OK. And then it sounds like the first half is -- there's a lot of timing oriented kind of changes or just the timing of shows seems to be having an impact on the first half of the year, Can you help us think about the second half as well?

Phil Evans -- Interim President and Chief Executive Officer and Chief Financial Officer

Well, the third quarter becomes a slightly less sizable quarter just because we -- in the way that we have timed the three OR events, the Summer show is moving earlier into Q2. But aside from that, I don't think there's anything really timing related so it will be the large shows ASD and New York NOW. And in the fourth quarter we have the outdoor retailer Winter show, which is a big show and we're feeling good about outdoor retailer. It takes some time to get the industry really working to the cadence of the shows and really changing their behavior, but we're making good progress there.

And second half of the year I think is -- looks pretty decent.

David Chu -- Bank of America Merrill Lynch -- Analyst

OK. And then just lastly, I know it's early but thinking about like 2020, should we expect the additional step up in spend for ASD and New York NOW to get it back to its historical growth trajectory?

Phil Evans -- Interim President and Chief Executive Officer and Chief Financial Officer

I think we're on a pretty good trajectory for ASD. If you think about last year, we were probably -- probably declined in the mid-single digits -- low to mid single digits in terms of revenue. We're probably doing much better than that, still declining slightly overall in the two shows I would anticipate, but I think we're on a, we're on a good trajectory. And we've invested somewhat in the ASD shows, but it's -- it doesn't -- I think we're on a good trajectory with the kind of level of investment that we have.

New York NOW, in the first quarter we had a step-up of investment that was more than $1 million in terms of incremental investment. We put that amount of investment in into the Summer show last year and started to see some turn and that the kind of similar level of efforts and investment took place in the show earlier this year. But once you get to the Summer show, we already have a good amount of investment that we put in place last year so it's not necessarily incremental and we'll see. I mean I think the ROI on some of these investments is medium term, it's not incredibly easy to put a number on what did you get for it.

It's a longer-term increased satisfaction, increased renewal rates, grow the businesses, grow the shows. And we think that we've put a good amount of investment to get that going. We'll have to judge over time whether there's an opportunity to accelerate the growth rates by investing more, but that'll be a judgment we'll make with the new CEO.

David Chu -- Bank of America Merrill Lynch -- Analyst

Great. OK. Thank you very much.

Operator

Our next question is from Manav Patnaik from Barclays. Please go ahead.

Ryan Leonard -- Barclays -- Analyst

Hey. This is Ryan Leonard on for Manav. Just a question on you've talked a lot about the co-location. It seems like more and more shows are co-locating different events under one kind of umbrella and obviously there's a near-term impact there and it's been negative.

Can you just discuss the strategy that goes into that? Is it the fact that you see some demand slackening in some of those shows so combining them under one roof will increase the demand or is there something you're hearing from attendees and exhibitors? Just why take the near-term hit, the strategy behind your decision making there?

Phil Evans -- Interim President and Chief Executive Officer and Chief Financial Officer

It's a good question. I would say that just because you co-locate doesn't mean that there's always going to be a negative impact. We co-located Kitchen & Bath Industry show with the International Builders' show and both shows got an uplift. I think it's really case by case.

In the case of New York NOW, we -- as part of the repositioning of the show to improve the quality of the content, as Kevin would call it, the exhibitors and the attendees; National Stationery show was a better show than some of the lifestyle exhibitors that we had and we've made the conscious decision to do that. In doing so, we moved the show three months earlier and not everybody in the stationery world was able to accommodate that based on the timing. But the plus side of this is we're going to launch a second Stationery show with our summer New York NOW. So, it was a little bit of having to kind of reposition things for the benefit -- long-term benefit of New York NOW.

In the case of RetailX, the Builder show was already on a less than favorable path and IRCE has varied. So, it would be a stretch to say that putting them together was -- has affected the performance. What we did -- what we tried to do in these situations is find the complementary events that make sense together and so there's crossover attendance because attendance -- quality of attendance is important. And so we try and kind of do it case by case and in some cases, you're right that we take a -- we take an initial hit because we have to downsize certain sections just to make it work.

But it isn't a conscious strategy to bring things together to make them smaller, it really is a strengthening strategy.

Ryan Leonard -- Barclays -- Analyst

Got it. And just on the international kind of exposure across-the-broader portfolio, I was under the impression that roughly 10% of attendees and exhibitors were from international markets, but your commentary on the China impact obviously implies that it's much bigger. I mean, can you help flesh out the sizing of that?

Phil Evans -- Interim President and Chief Executive Officer and Chief Financial Officer

The Chinese exhibitors is probably 3% or 4% of Emerald's revenue. Some of this is not necessarily Chinese exhibitors though because you can have brands that do their manufacturing in China and because of the uncertainty, they have to determine whether they're going to set up manufacturing in adjacent countries or take a different approach to manufacturing and so that leads them even though they're not directly Chinese exhibitors to take -- to step back and say OK, we need to kind of rethink what our strategy is going to be here and in the short term we're not going to advertise in one of the publications or we're not going to -- or we're going to downsize our booth till we know exactly what we're going to do. So China itself is relatively small, but the impact has been meaningful there; but it has a knock-on effect on other parts of the business.

Ryan Leonard -- Barclays -- Analyst

Got it. And just lastly on the guidance range, I mean I think when you initially laid out the range especially in other marketing services, you talked about being -- I think you said pessimistic or realistic about the performance and that's obviously gotten a little bit worse in like the last couple weeks and then you mentioned being somewhat optimistic on New York NOW. Just trying to a sense of what embedded in the guidance is kind of in hand and what is things that you are -- need to be optimistic about or kind of need to go after between now and the end of the year?

Phil Evans -- Interim President and Chief Executive Officer and Chief Financial Officer

We have pretty much 70% to 80% of the summer shows sold. So if we continue the same trajectory, I think we feel good about that. The things that are still we have -- we had to see happen around attendees at conferences, some advertising in publications; those are things -- decisions that are made closer to the event. From a pacing of booth sales, we feel pretty good about the visibility there and it's really the other pieces of the business.

which can move the numbers a million or so this way or that. So, that's really -- these are relatively small margins that we're talking about in terms of the differences.

Ryan Leonard -- Barclays -- Analyst

Got it. Thank you.

Phil Evans -- Interim President and Chief Executive Officer and Chief Financial Officer

Welcome.

Operator

Our next question is from Ashish Sabadra from Deutsche Bank. Please go ahead.

Ashish Sabadra -- Deutsche Bank -- Analyst

Hi. Quick question on the other marketing services. Is the weakness also related to China or the trade issue?

Phil Evans -- Interim President and Chief Executive Officer and Chief Financial Officer

I would previously have said no. But certainly in some of the new publications that we acquired last year that are in the connected home and security industries, so much of that equipment is manufactured in China itself that we are seeing some impact on advertising decisions as brands are -- as I was just explaining to Ryan, as brands are trying to figure out whether they need to kind of save money to be able to set up manufacturing in different locations or kind of just have a level of uncertainty around the availability of their products, So, it is affecting the OMS piece of the business somewhat. Generally I think OMS is -- we have a large presence in design, which is less affected by it but -- and there it's really a continuation of some secular issues and we're working on trying to create more digital opportunities and it just is a slower process than we would like.

Ashish Sabadra -- Deutsche Bank -- Analyst

That's helpful. And then maybe just a follow-up question on co-locations. Looks like that's driving higher attendees. My question was is there opportunity for you to do more of these co-locations of shows or are you done with that whole strategic review process? But as you go forward, are there other opportunities where you could continue to co-locate shows.

So, that's one. And then on the co-location even if the number of attendees go up, is there a risk that the attendees also then get split the timing -- the time get split between the show so even if the number of attendees go up, the time that they spend at each show could potentially get affected? Any color on that front?

Phil Evans -- Interim President and Chief Executive Officer and Chief Financial Officer

Yeah. That's a good question. We -- I would say we are looking a little bit more actively at co-locations. shows tend to be in time windows that work for their industries and that has developed over time and it is impossible to just pick things up and change the timing very often.

If you even see GlobalShop moved back three months and Stationery show moved up a couple of months, those things are a little disruptive the first time you do them. So, you have to have a good strategic reason to do it and it has to be a long-term play. I would say we -- we're probably more actively looking at those from an efficiency perspective. It is true that you -- potentially at least in theory you dilute the attendees' time, but most of the attendees come for one of the events and then it's really you get a spillover benefit when they go to the second one rather than they would actively shop in both -- in both events equally.

So when we did the Stationery show, clearly stationery stores are interested in gifts and high level gifts and jewelry and some of the other things that are in New York NOW. So it's a little bit of good overlap there, but primarily they went to the Stationery show for all the products that traditionally were at the Stationery show. So, it really has to be done carefully, but we're being -- we're looking at it with kind of new interest.

Ashish Sabadra -- Deutsche Bank -- Analyst

That's helpful. Maybe a final question. So as you mentioned, your first-quarter results came in line with your expectations, but they obviously came below our estimates. And so just so that our sellside estimates are set up more appropriately, would it make sense to give more clarity on a quarterly guidance.

I know that's not your strategy to give lucky guidance, but maybe give us better color so that our models are set appropriately.

Phil Evans -- Interim President and Chief Executive Officer and Chief Financial Officer

Well, based on the Q1 outcome, I could see how you would get there because we were even modestly favorable to where we expected to be for Q1, but obviously out of line with consensus and I think that was really because the -- there was a lot of change on four shows, kind of scheduling differences, but it would be difficult for the outside world to really understand how that played through in the numbers. So, it's a good question. It's a topic of discussion. I think it will be one that we will -- we will raise with the CEO when he or she comes in and it certainly is not impossible that it would make sense for us to do that, but I'm not going to make a commitment today to it.

Ashish Sabadra -- Deutsche Bank -- Analyst

Sure. Thanks again for all your help.

Phil Evans -- Interim President and Chief Executive Officer and Chief Financial Officer

You're welcome.

Operator

[Operator instructions] Our next question here is from Jeff Meuler from Robert W Baird. Please go ahead.

Jeff Meuler -- Robert W. Baird and Company -- Analyst

Yeah. Thank you. Good morning. I've asked I guess variations of this question in the past, but I think it remains relevant just given the revenue trends so I guess the new batch of issues and then just the shading guidance lower again.

But I guess maybe if you could just speak to the point that this is largely temporal and execution driven because it seems like there's -- you're addressing issues, but then there's always something new that pops up. So it starts to feel as it drags out more structural either to the U.S. trade show industry or to the Emerald portfolio maybe because it's overweight the consumer and retail sector. So, maybe if you could just try to give us the detail that could give investors confidence that things are temporal and can be fixed or improved execution instead of something more structural?

Phil Evans -- Interim President and Chief Executive Officer and Chief Financial Officer

Yeah. Thanks, Jeff. I've been to a dozen shows so far this year and I come away from all of them, bar none, saying we do a really good job, we create good events. There's a demand, people are doing business.

And from our numbers you can see or from our comments you can see that there's a bunch of shows that are growing nicely, that are meeting the needs of the communities, and we're able to grow those. Where are we seeing issues? I do think that you're right that sometimes there's some kind of industry component to it, but more often than not it's an execution issue and that's something that we're seeking to address. We're not happy with some of the issues that we've had and I think we're making some progress. In ASD we've made some progress, on New York NOW we've made some progress.

There's some self-inflicted issues here including on ICFF. But fundamentally when I go to trade shows, trade shows are strong. The model is still strong and we're not a long way away from doing better and meeting kind of the kind of growth targets that we set out a couple of years ago. I think we're on a much better path and it's unfortunate when we have to talk about ICFF and RetailX, but those are addressable issues and I don't think that they are really related to anything underlying and certainly not the trade show industry, which is doing fine.

Jeff Meuler -- Robert W. Baird and Company -- Analyst

OK. And then maybe this is better conversation once the new CEO is in place, but recognize it is a large portfolio and some things are going to be doing better than others at different points in time and some are just structurally stronger shows or better positioned. But is the company's board considering anything more drastic around the show portfolio, more aggressive winddowns, potential divestitures of shows? Just anything more dramatic beyond the focus on executional improvement?

Phil Evans -- Interim President and Chief Executive Officer and Chief Financial Officer

The short answer is no, we haven't had discussions other than clearly we review the performance of individual shows and industries and we have a view on those. We're partway through a more detailed strategy exercise in anticipation of the CEO coming in to really explain the positions we have, the opportunities we see. And once we get through that process, the CEO joins, I couldn't say that we wouldn't choose to make some bets in certain areas and double down and not in other areas. But we certainly have no plan at the moment and as we kind of look across the portfolio, there are very few assets that we have that we don't think we could grow and you're right, relative growth.

So maybe it would make sense to do some things, but there's nothing that stands out as being something that we want to divest. And at this point, we're kind of moving forward to improve all the assets we have.

Jeff Meuler -- Robert W. Baird and Company -- Analyst

OK. Thank you. And then last one for me. Just maybe if you could talk to capital allocation and the current leverage and greater details obviously increasing the dividend.

There was a comment about slowing outreach for acquisitions. But just what is the leverage target for the company now? How does debt paydown factor into your capital allocation decisions, etc.?

Phil Evans -- Interim President and Chief Executive Officer and Chief Financial Officer

Right now, we're comfortable with where we are at three and a half times and longer term, we would expect to bring that down kind of below the three times is sort of our soft target. Where we are today? We're trying to maintain flexibility in order to give the CEO -- new CEO some opportunities to kind of use cash in ways that we all agree makes sense. So M&A is -- we will continue to be active on M&A. There's a few small deals that we're excited about that we're kind of pursuing, but we're not kind of reaching out for big deals at this point.

And we're in a little bit of a -- continue with small kind of focused acquisitions and we'll decide once we have a new CEO where do we go from here. But it's -- we're still generating lot of cash, the model is good, we have lots of options. So, I think we're in a pretty good spot.

Jeff Meuler -- Robert W. Baird and Company -- Analyst

Sure. Thank you, Phil. Appreciate you taking the questions head on.

Operator

This concludes the question-and-answer session. I'd like to turn the floor back to Mr. Evans for any closing comments.

Phil Evans -- Interim President and Chief Executive Officer and Chief Financial Officer

Thank you, Matt. Yes, thank you everyone for joining us today. I hope you can take from this that we're -- we feel good about where we are. ASD is stabilized, New York NOW is progressing and we feel good about where that's going.

We're investing in the business and overall we think we're on the right track. And we look forward to having the opportunity to talk to everyone again on the next quarter and hopefully continue to show progress. So, thanks everyone for your time.

Operator

[Operator signoff]

Duration: 57 minutes

Call participants:

David Gosling -- Senior Vice President, General Counsel, and Secretary

Phil Evans -- Interim President and Chief Executive Officer and Chief Financial Officer

Gunnar Hansen -- RBC Capital Markets -- Analyst

Kevin McVeigh -- Credit Suisse -- Analyst

David Chu -- Bank of America Merrill Lynch -- Analyst

Ryan Leonard -- Barclays -- Analyst

Ashish Sabadra -- Deutsche Bank -- Analyst

Jeff Meuler -- Robert W. Baird and Company -- Analyst

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