Las Vegas-based exhibition and
event services provider GES Exposition Services said it will reduce
its work force and increase fuel surcharges, despite reporting a
record quarter in April, with $285.7 million in revenue -- a 16.7
percent increase over the same period in 2007.
The company benefited significantly
from its business with two huge trade shows, the Consumer
Electronics Show and the combined CONEXPO-CON/AGG and IFPE
(International Exposition for Power Transmission), both of which
set records for net square footage with their 2008 events.
GES reported these figures to investors
during an April 25 earnings call for parent company Viad Corp.
“We have made some organizational
changes that will enable us to continue increasing our customer
service and safety levels while also driving productivity gains,”
explained Kevin Rabbitt, president of GES, per a transcript of the
earnings call posted at www.seekingalpha.com. GES declined to provide
specific numbers regarding the layoffs.
Rabbitt said an analysis of GES
business for the remainder of 2008 points to a sluggish second
quarter: Projections call for as much as a 6.5 percent decrease in
revenue over last year and an operating income at about 60 percent
of 2007 levels. By the third quarter, however, revenue is expected
to exceed 2007 numbers by as much as $50 million.
“Our business is peaks and valleys,”
said Jeff Quade, GES executive vice president of sales and
marketing. “So we hire temporary or part-time individuals. When we
come off of one of those peaks and go into a valley, we reduce head
Another cost-saving measure announced
during the call was an increase in GES’s petroleum surcharge rates
from 2 percent to 3 percent -- a 50 percent increase -- which will
be passed on to clients beginning in September.
That charge hasn’t increased since gas
was selling for $2.25 a gallon, Quade pointed out, adding that the
cost of petroleum affects not only transportation but the cost of
basic goods, such as carpets, tape and plastic coverings. The
surcharge increase, Quade noted, will cover only
a portion of the company’s increased costs.
Quade said GES is “cautiously
optimistic” about third- and fourth-quarter business, and he
expects to see benefits from the cutbacks then. He declined to
provide specific estimates regarding those benefits; however,
according to Paul Dykstra, president, chairman and CEO of Viad
Corp., the work force changes made by GES will represent savings
“in the seven figures.”