by Michael J. Shapiro | June 01, 2008

The 2008 Consumer Electronics Show was a big one for GES.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 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 count.”

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.”