Welcome to the Emerald Exposition's First Quarter 2017 Earnings Conference Call. During today's presentation, all lines will be in listen only mode. Following the presentation, the conference will be opened 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 Q1 2017 earnings call. With me here in San Juan Capistrano, California is David Lachner, Chief Executive Officer. As a reminder, a replay of this call will be available on the Investors section of our website through noon Eastern Time on June 1, 2017. 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 financial perspective dated April 27, 2017, and we do not undertake any duty to update such forward looking statements. Additionally, during today's call, we'll discuss certain 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 comparable GAAP measure can be found in our earnings release. So this morning, I'll turn the call over to David.
Thank you, Phil, and good morning, everybody. Before I get started, I'd like to take a moment to thank all those people who helped us through our initial public offering, which culminated on the 1st day of trading on the New York Stock Exchange on April 28, but was a result of many months of effort. The hard work of our employees and advisors and the loyal support of our customers and partners contributed to the success of our offering. And as a consequence, we were able to raise $159,000,000 in net proceeds for the company. This capital injection allowed us to further reduce our leverage and gives an even more flexibility to continue to pursue our M and A strategy.
Turning to today's call, I'd like to start by briefly reviewing the highlights of our Q1 performance. As we've already released initial first quarter results ahead of our debt refinancing earlier this month, I will spend the majority of my time reviewing the overall Emerald Exposition story, reiterating our growth strategy and providing some additional color on the full year guidance that we communicated in our press release earlier today. After that, Bill will review our Q1 financial results in more detail, and then we'll open up the call for questions. So let me start by saying that I'm pleased with our Q1 results where we delivered total revenue growth of 6% compared to Q1 twenty sixteen, approximately half organic and half from acquisitions. Our adjusted EBITDA growth of just under 2% reflected this revenue growth, partially offset by higher sponsorship costs, new show launches, which are typically low or no margin in the 1st year and slightly higher SG and A expenses, partly incurred in preparation for our IPO and ongoing future obligations as a public company.
Our best performing shows in the quarter by revenues were the Kitchen and Bath Industry Show, International Pizza Expo, ISS Long Beach and the Sports Licensing and Tailgate Show. The winter editions of our largest shows, ASD and New York NOW, both in our Gift Home and General Merchandise sector, were flat in revenues, and this is in line with our expectations. The financial performance of our GlobalShop trade show in the design and construction sector was below expectations despite being well supported and with attendance modestly higher than the prior year show. GlobalShop is moving in 2018 to Chicago, where we have successfully hosted the show many times in the past. Across the portfolio, our renewal rate for Trade Show Boo Space was in line with historic levels and slightly higher than the Q1 of 2016.
We believe this metric reflects the strength of our portfolio of events and the important role they play in the exhibitors' businesses. We also launched 2 new shows in the period, an East Coast Active Collective event and a hybrid B2BB2C event, both held in New York City. The former event, the larger of the 2, was really very successful, and we expect to deliver further growth in 2018. The smaller show was not as successful, and we do not plan to repeat this show again next year. Several of our 2016 acquired shows staged in the Q1, most notably the National Pavement Expo, the American Craft Retailers Expo and the West Coast Swim and Active Collective shows.
We are very pleased with the results and expect to build on the success of these first shows under our ownership as we get to know these properties even better. Importantly, all of these recently acquired shows grew revenues in 2017 relative to the levels they achieved prior to our purchase. At this point, I'd like to spend a few minutes reviewing Emerald Exposition's story in more detail for those of you who are new to our company and did not have the opportunity to see our roadshow presentation. So first, let me talk about the size of the market we operate in. The U.
S. B2B trade show market was estimated to be in excess of $13,000,000,000 in revenue in 2016 with a projected compound annual growth rate of 4% to 5% from 2016 through 2020. Importantly, trade shows are a critical form for both exhibiting businesses and attendees as these events bring efficiency to the buying and selling activities in a given market. For exhibitors, trade shows represent an important venue to introduce new products, sell their products, generate sales leads and build brand mindshare. Additionally, exhibitors incorporate their industry trade shows into their annual marketing plans, resulting in a high rate of repeat participation year after year.
For attendees, trade shows allow them to meet existing new suppliers, to buy products and services, to learn more about current trends and generally network within their industry. Of note, more than 80% of attendees that come to events are decision makers with buying power. Within this large and important industry, Emerald Expositions is the largest B2B trade show company in the U. S. With a diverse portfolio of leading shows.
In fact, 31 of Emerald's trade shows were ranked in the top 250 U. S. Shows in 2016, and almost all of our shows are number 1 in their category. This is important because industry leading shows enjoy a strong network effect that attracts the greatest number and the best quality of exhibitors and attendees in the marketplace. The must attend nature of our portfolio of shows is evidenced by our strong annual renewal rate for Boost Base, which has consistently been in the low to mid-eighty percent range above the industry average.
The trade show model the trade show's business model also has attractive financial characteristics, including strong forward revenue visibility due to Boost Base, which is comprises approximately 3 quarters of our revenue. And this Boost Base is sold in advance of when a given event stages. EBITDA margins that have been consistently in the mid-forty percent range negative working capital and low CapEx requirements consistently less than 1%. Our strong free cash flow conversion provides us with opportunities for expansion through M and A, for debt pay down and for returns of capital to our stakeholders. I'd now like to make a few comments on our growth strategy, which consists of both organic and acquisition based growth opportunities.
Our organic growth strategy is focused on 3 simple prongs. 1st, we'll grow our existing industry leading shows through a combination of moderate price increases over time and modest volume growth. Volume growth will come from improving the ROI for exhibitors, adding new categories to our existing shows, cross leveraging customer relationships across our current portfolio and attracting more international exhibitors to our shows. 2nd, we plan to launch new shows each year, primarily in our existing sectors. In 2016, we launched 4 shows, and all 4 of those shows are repeating again in 2017.
As I noted earlier, we've launched 2 shows so far in 2017, and we plan to launch 2 or 3 more over the course of this year. A third organic growth component over the medium to longer term will be to explore international expansion opportunities where those make good sense for our portfolio. The other key avenue for growth is utilizing our leading position and strong reputation in the U. S. To continue to consolidate what's an extremely fragmented trade show industry through M and A.
We believe this is a significant and important long term growth driver for our company, and I'd like to take the time to highlight a few key points of our M and A strategy. Currently, there's over 9,000 B2B trade shows held annual in the U. S. With relatively few natural buyers. Of note, more than 2 thirds of the shows that we purchased over the last 3 years, we were the only bidder.
We believe this is largely a consequence of our relationships and our reputation in the market as a strong and respected operator and trusted stewards of the events post acquisition. Within this large market, we look for trade shows that are well established and important in their industry sectors. We want businesses with good margins that present the opportunity for growth enhancement and operational improvement under Emerald's ownership. We're generally not looking for fixer uppers here. Of the 9,000 or more trade shows that take place in the U.
S. Annually, we believe there are 100 that match our acquisition criteria. In March, we brought on board within Emerald an experienced EVP of Corporate Development to build our internal capacity and capabilities and to help us pursue this M and A growth strategy. So far this year, we've closed 3 acquisitions: the Custom Electronics Design and Installation Association's Annual CEDIA Expo, InterDrone and the Snow Sports Industries Association's Annual SIA Snow Show, which was announced last evening. CD Expo is the leading show for the residential home technology industry, while Interdrone is the leading commercial drone show in the U.
S. The total purchase consideration of these three acquisitions was approximately $60,000,000 and the average purchase price multiple was consistent with what we've achieved in prior acquisitions. All three transactions were structured as asset purchase deals and 2 of the 3 shows were acquired from trade associations and in all three cases were private sales and not public auctions. Please note that only the first two acquired shows will take place in 20 17 under our ownership and their expected performance is reflected in our guidance for the year. Looking forward, we have an active pipeline of acquisition opportunities in various stages of discussion, including both independently owned and trade association owned shows that we will continue to pursue aggressively.
Before I hand over the call to Phil, I'd like to make a few remarks concerning the full year organic revenue growth guidance we provided in our Q1 results press release this morning. Our estimated range for full year organic revenue growth of 0% to 2% reflects good growth in many of our brands, some relative flatness in some other brands and several very specific issues related to a few of our shows that are constraining this year's overall organic growth. For 3 shows in particular Outdoor Retailer Summer, New York NOW Summer and Interbike, there are unique issues affecting 2017 shows that are almost entirely unrelated to the underlying strength of the shows, and unfortunately all 3 are impacting the performance in a single year. Just to put these effects into context, if these three shows, which have been steady growers in aggregate, were projected to even be flat in revenues in 2017, our guidance range for 2017 organic growth would be 2% to 4%. While normally we don't plan on giving individual show guidance or metrics on this occasion, I'd like to briefly explain the issues affecting these major shows.
1st, as you have may seen reported widely in the press, certain conservation groups and outdoor industry companies are in serious conflict with the Utah Governor concerning the designation of certain federal lands in the state. Unfortunately, our Outdoor Retailer Summer Show that stages in Salt Lake City, Utah has been affected by this controversy and a number of high profile exhibitors and attendees have decided to boycott the show in protest the Utah Governor's position. This is important to note that the protest has nothing to do with the event itself, which is being used as a visible medium for protesting companies to exhibit their displeasure with the state's environmental policies. Although we have enjoyed a good relationship with Salt Lake City and it having been an attractive venue for the show for many years, we're finalizing plans to relocate the shows another host city in a different state. Despite efforts made by our Outdoor Retailer team to mitigate the effect of the political situation, over recent weeks, it has become clear that the adverse impact on the revenues of the summer 2017 show will likely be more than we originally anticipated, with revenues of our Outdoor Retailer Summer event now projected to decline by high single digit percentage versus last year.
This entire issue is transitional and unrelated to the underlying strength of the show itself and we expect to bounce back in 2018 when the show moves out of Utah and evolves into a 3 show model helped by the acquisition of the SI show as the outdoor industry consolidates around the 3 show format all owned by Emerald. 2nd, while we expect to have a strong sold out show of all available space for our New York NOW home and gift show in the summer, it's become evident over the last several weeks as our New York NOW team has been working to maximize the saleable space that actual available capacity will be modestly lower than we had originally planned due to the construction activity of the Javits Convention Center. That said, there should be no further adverse capacity impact over the remainder of the construction cycle, and we expect the renovation of the Javits Center will deliver benefits to us longer term. 3rd, I'd like to talk about our Interbike Show, which is the leading show for the North American bicycle show. We saw some early signs of softness in the show cycle and also an express desire from some exhibitors and attendees to move away from Las Vegas.
As a result, we conducted an RFP process to move the show and soon we'll announce a new venue starting in 2018. In the meantime, the outlook for the 2017 show has continued to weaken due to an extremely poor sell through trends in the bicycle end market. Industry data for the 1st calendar quarter showed bike shipments down 15% in units, reflecting an oversupply of bikes in the channel. This is due unusually wet and cold first quarter across the U. S.
We're seeing an impact of these industry factors on the show and now expect its revenues to decline in the double digits this year. EnerByte continues to be the key event for this industry and its performance is primarily driven by demand trends for products in the end market it serves. With the benefit of a new venue next year combined with improved industry sales, we expect the show to strengthen going forward. There's one other show in the portfolio I'd like to specifically mention, and that's ASD Show, our largest franchise with 2 shows a year, each comprising 9 individual major categories at each event, serving a variety of value priced merchandise end markets. Over the last 2 years, we've invested in marketing spending to increase buyer attendance and also added resources to our sales team, including senior leadership.
We have recently introduced the Salesforce CRM and marketing automation tools to enhance our sales team's productivity, and there are many things about the show that improved over time. Attendance has increased year over year in each of the last five shows, and importantly, we've seen consistent increases in the number of exhibiting companies. Our ASD Winter Show, which is included in our Q1 financials, was flat in revenues, and we were expecting to see mid single digit percentage growth from the summer show. However, given our pacing as of the end of May, now projecting the summer event to be broadly flat to slightly up versus 2016. We plan to reallocate and shift some of the internal resources towards faster new exhibitor acquisition and new category expansion to drive improved growth in 2018.
On the other side of the ledger this year, we will see strong year over year revenue growth in a large number of our shows as well as every single one of the tuck in shows that we've completed over the last 3 years. I'd like to now turn the call back over to Phil for a review of our financial results. Phil?
Thank you, David, and good morning, everyone. For the Q1 of 2017 and consistent with our expectations, we reported revenues of $135,700,000 compared to revenues of $127,800,000 for the Q1 of 2016, which is an increase of approximately $7,900,000 or 6.1 percent. The increase in revenues reflected organic growth of 2.9% and growth from acquisitions of 3.3%. As you will appreciate, our business is quite seasonal, depending as it does on which events take place in which quarters. The 1st and third calendar quarters are disproportionately higher than the second and fourth, which is typical of the trade show industry as a whole.
Cost of revenues of 36,600,000 for the Q1 of 2017 increased by 14.9 percent or approximately $4,800,000 from $31,800,000 for the Q1 2016. This increase was mainly attributable to $1,400,000 of incremental costs associated with acquisitions, $1,600,000 in higher sponsorship costs, largely related to the growth in the Kitchen and Bath Industry Show, with the remaining $1,800,000 attributable to our 2 show launches and modest other cost growth. Selling, general and administrative expense of $32,000,000 for the Q1 of 2017 increased by 21.1 percent or approximately $5,600,000 from $26,400,000 for the Q1 of 20 16. Acquisitions contributed $1,200,000 of incremental costs, while transaction and transition costs of $1,900,000 was $700,000 higher than the Q1 of 2016. During the 1st calendar quarter, we also incurred $2,600,000 of costs related to the IPO and sale related activities.
The remaining approximately $1,100,000 increase in SG and A costs mainly reflected higher compensation costs. Net income increased by approximately $100,000 to $28,300,000 from $28,200,000 in the Q1 of 2016. This largely reflected lower interest expense due to the refinancing during the Q4 of 2016 of our previously outstanding $200,000,000 in 9% senior notes with term loans bearing a lower interest rate. We also had a lower average debt balance in the Q1 of 2017 compared to the Q1 of 2016. These interest cost savings were offset by expenses associated with the company's IPO and sales related transaction costs.
For the Q1 of 2017, adjusted EBITDA was $72,900,000 compared to $71,700,000 for the Q1 of 2016, an increase of 1.7%. This performance reflected good revenue growth as previously described, partly offset by cost of revenue and SG and A expense increases, which were as expected at slightly higher rates than the increase in revenues. This is partly due to modest changes in show mix and additional compensation costs. Our business model requires little capital expenditure and our CapEx in the quarter was only $300,000 slightly down from $400,000 last year. Our free cash flow, which we define as net cash provided by operating activities less CapEx, was $28,500,000 for the quarter, which compared with 29 $500,000 for the Q1 of 2016.
Although approximately $1,000,000 lower in 2017, it's worth noting that there was a timing effect here relating to cash interest paid in the Q1 of this year versus last year. Our cash interest in Q1 was $2,400,000 higher this year due to the interest paid at the end of March on the incremental $200,000,000 term loan that replaced the senior notes in Q4, whereas last year there was no interest paid on the senior notes during the quarter as they were on a 6 month payment cycle. In addition, we paid cash taxes of $900,000 in Q1 this year compared to only $100,000 last year. As we indicated during the IPO process, the Emerald Board has declared a $0.07 a share dividend for the quarter. This dividend, totaling $5,100,000 will be paid in the second half of June.
Following the IPO and the resulting reduction in our leverage, we took the opportunity to refinance our credit facility to reduce the interest rate payable, significantly extend the maturity profile, achieve more favorable terms and increase the revolver commitments. I'm pleased to report that we closed the refinancing exercise earlier this week, issuing $565,000,000 of new 7 year term loan B of LIBOR plus 300 basis points, which is 75 basis points lower than our previous rate. There's also a step down to LIBOR plus 2.75 basis points upon achieving a 1st lien net leverage ratio of 2.75 times. We also put in place a new $150,000,000 5 year revolving credit facility, up from $100,000,000 under the previous facility. On a pro form a basis, the IPO proceeds reduced our annual interest expense by approximately $8,000,000 while the refinancing exercise reduced our annual interest costs by approximately $4,000,000 more.
Our leverage ratio with debt of approximately $550,000,000 and acquisition adjusted EBITDA of $162,000,000 for the 12 months ended March 31, 2017, which is a metric relevant to our debt facility, is currently approximately 3.4 times. As we outlined during the IPO roadshow, our target leverage range is 2 to 3 times adjusted EBITDA. We've operated at much higher levels in the past and we're comfortable operating modestly above this range in the future when it makes commercial sense to do so. Finally, let me reiterate the full year guidance set out in the Q1 results press release, namely $348,000,000 to $355,000,000 for total revenues or 7.5% to 9.5% growth over 2016, 0% to 2% for organic revenue growth and $154,000,000 to 100 and $60,000,000 for adjusted EBITDA. As David noted earlier, if our OR Summer, New York NOW and Interbike shows were now projected to be even flat, our organic growth guidance would be 2% to 4%.
Our adjusted EBITDA expectations continue to include approximately $3,000,000 of incremental 2017 costs associated with operating as a public company and also to expand our internal M and A capabilities. I'd like to acknowledge that the full year 2017 revenue and adjusted EBITDA guidance provided today is below sell side analyst consensus numbers. Our guidance reflects our current expectations based on detailed conversations we've had with our event managers over the last few weeks. While our booth revenues, which as David previously noted, account for about 3 quarters of our total revenues give us good visibility into how a year is trending, there can be modest variations up or down based on how the sales cycle for any given event develops as the show approaches. We also have a number of other revenue streams such as conference attendance revenues where the business is confirmed much closer to the event.
As of the end of March, we booked approximately 85% of the then projected full year booth revenues, slightly behind our recent history, but in line with history when the known outdoor retailer and Interbike issues were taken into account based on our expectations at that time. Over the last month, we've seen some further deterioration in the outlooks for both of these shows as their pace of sales did not keep up with our expectations, as well as reductions in our forecast for the New York NOW and AST summer shows for the aforementioned reasons. Our current full year guidance reflects the several discrete issues that David discussed and also includes our latest assessment for conference and sponsorship revenues, which are revenue streams that get booked shortly before a given event. In particular, the registrations for the recently held How Design Live conference, while ahead of 2016, were well below our previous projections. While we're not currently planning to provide guidance on free cash flow each quarter, for this first call, I'd like to confirm that we expect free cash flow to be in excess of $100,000,000 for the full year.
So now I'll turn the call back to David for his concluding remarks.
Thanks, Phil. So thank you again for your time today, everyone. Overall, I'm pleased with the positioning of our business in the industries we serve. While our 2017 organic growth rate will be constrained somewhat by some very specific issues that relate to a few of our shows. We have a strong and capable management team, and I believe sincerely and passionately that we can deliver sustained revenue and adjusted EBITDA growth in the future.
I'd like to reaffirm today our longer term revenue growth target of 3% to 5% organic growth, supplemented by the contribution of acquisitions. I am particularly excited to have announced the acquisition yesterday of the SIA Snow Show, the leading national ski and snowboard B2B trade show, expanding and strengthening our position within the outdoor sports and recreation sector. Our thesis for acquiring shows from associations as well as from independent owners continues to be realized, and we expect to add more great brands to the Emerald portfolio over time. With that, I'd like to ask the operator to open up the line for questions.
Thank you. We'll now be conducting a question and answer Thank you. Our first question is from the line of Ansh Singh with Credit Suisse. Please proceed with your question.
Hi, good morning. Thanks for taking my questions. Appreciate all the color on what's moderating your outlook for the year. I guess I'll focus on what's been happening in 2Q. I realize it's one of your lighter revenue quarters, but I think you guys have had 6 or 7 shows occur Q2 to date.
So wondering if you can give us a sense of how much moderation there may have been for your 2Q shows versus your initial expectations? Any high level color on exhibitor and attendee attendance and how those shows track versus your expectations? Thank you.
Hi, Angie. It's Phil. I think relative to our expectations, the kind of the major factor would be the How Design Live Conference, which as we just noted was earlier in the quarter and the registration revenues were not what we expected to be. Aside from that, the shows that take place in the quarter, which as you say, it's kind of it's our 3rd largest quarter. So it's relative to the first and third quarters, it's smaller, have done just as we expected pretty well.
We have ICFF and HD Expo and really kind of they've achieved what we expected them to achieve. So we feel good about the portfolio, absence the Howe situation.
Okay, got it. And then on M and A, could you speak to your recent acquisition of Snow Show and the deals earlier this year? Perhaps the opportunity you see within these under your ownership and going forward? And any thoughts on what typically happens as you combine shows like you're doing here with Outdoor Retailer? Is there any revenue or exhibitor attrition?
Just trying to get a sense one offs that we should anticipate in the 1st combined year of the show early next year.
So this is David. Thanks for the question. The first let me start with the first. CEDIA and Interdrone, we expect good performance on. They're running slightly ahead of where they had been and in line with our expectations.
Good solid shows. I think Interdrone still has some real solid upside future as it's an emerging show in its space and dominates in the commercial drone space. As far as the OR SIA situation, we haven't acquired a show and integrated it with another business in the past. Let me just make a couple of points there. This really consolidates the market.
It significantly strengthens our longer term growth aspirations for Outdoor. It's a fantastic outcome for exhibitors, for attendees, and we're really working on developing our plans on how that will look financially. Our original thesis was develop this 3 show format individually with just the Outdoor Retailer brand. And so we're going to have to work through some integration issues, bringing SIA into the business. And it's probably going to take the 1st year, maybe the 1st 2 years to completely begin to see the benefits of bringing those two businesses together.
Okay, got it. And one final one for me. On your smaller show that you launched this year, any takeaways you'd share as to why that wasn't successful? I realize there isn't much of a margin impact from these new show launches. But just wondering if you can share any lessons learned and what goes into your decision to discontinue the show going forward?
Thank you.
Sure. I mean, this was a bit of an experiment for us. It was a sort of a cross platform closeout show that we invited the public into for 2 days at the peers that ran alongside our New York NOW show. It just wasn't received enough in the market to repeat on a second edition. It may have legs in the future, but we thought if we can look across our portfolio and find individual markets that had closeout products.
So it was more introduced as a pop up show post holiday that we thought might have some legs and it just didn't. And as we've noted in the past, we don't expect 100% hit rate on all new launches of shows. We'll have a fairly good hit rate, but not 100%.
Understood. Thanks so much.
Our next question comes from the line of Manav Patnaik with Barclays. Please proceed with your questions.
Hi, this is Ryan Leonard filling in for Manav here. So I guess just on the changes in the organic growth, I guess what kind of happened in the last month or so that kind of caused the new way you're looking at the business? Is that just softness in the markets? Is that sales efforts weren't connecting? And just you talked about, I think, in the past kind of this year without all the moving pieces would be kind of close to more of a normalized 4.5% organic growth.
Does that 2% to 4%, you mentioned ex some of these issues, does that imply any overall softness? Or is that just because those you're looking at those events as if they were flat?
So let me start with the first. ASD, let's start with Outdoor Retailer. Outdoor Retailer is not a show or industry related issue. So it's a political situation that's a bit more of a unprecedented and harder to see coming the reactions of companies individually and their impact on affecting the political situation in Utah. So it's not show or market related.
And we're just seeing some additional companies kind of grab on to that and not supporting the outdoor show this summer. But as we said, as we see that show relocating to another state that we feel those companies are not show related and it will return. Let me address ASD. ASD, as you know, is held twice a year. So the sales cycle is a bit shorter.
It's a 6 month sales cycle. This August show or actually it's held in late July, the sales cycle is a bit shorter than it typically is. The March show is a bit later in the March month of March and the summer show is a bit earlier in the cycle. So we underestimated the shorter selling cycle between shows affecting us. I think we took longer than usual for our retention.
In fact, our retention is running slightly ahead year over year, but we're just finding or seeing that we're going to drive less new companies with the time we have committed into this business. So again, underestimating the sales cycle and seeing fewer new companies coming into the business. There's also a couple of categories that we expected to grow faster. So in reality, we didn't really start the sales cycle on this show until kind of mid to late March. And as we got into it, we saw some of the categories that have been growing well are still growing well, just not increasing at the capacity we thought.
We had several categories that are good growing categories that are simply not growing as we expected. Then it's just going to take more time to develop some of the new categories. As you know, ASD is hundreds of subcategories below these 9 individual categories. So it's just a mix of the kind of the new company volume, the returning company volume and the categories that we have in the show. We also anticipated that the recent audience growth that we had had based on our marketing investments would have a larger impact faster on the retention, although retention is up slightly.
It's just taken us a bit longer to drive into the business. So I think between those 2, I think those Interbike was the other product that we should probably talk about. I mean, there's been a lot of product in the channel for a while, but coupled with kind of a poor sell through season, it just compounded the problem. And I think we're just seeing the effect of companies maybe pulling back on some of their spending. But the Interbike Show remains a strong show.
It's a dominant show in the space. It has achieved great support from the industry, just not at the level we had originally anticipated.
Great. Thanks. And I guess just more broadly then, what about a sales cycle can be impacted? I mean, are these things that you can't start marketing until the previous show has occurred? And I guess just quickly on Interbike, I mean, what if anything would cause you to kind of say the end market here isn't under good enough footing for us to continue a show?
I don't think we're contemplating, anticipating or even thinking about it not being on a good enough footing. I think this is a strong dominant show in the space. I've worked in the space a long time. I've seen the bicycle market kind of cycle up and down over time. No, I guess pun intended here, but I have seen it cycle up and down over time.
Right now, I think we're just experiencing a period where there's just too much product in the channel. And as that product moves through the channel, we are not seeing fewer participants in the bicycling space. So we don't think it's an end market driver that's a long term driver, but we do have to see the market kind of cycle through the oversupply of product in the space, and we believe we're going to begin to see the benefits of that in the future.
Got it. Thank you.
Our next question is from the line of Peter Christiansen with Citi. Please proceed with your questions.
Good morning. Thanks. Firstly, congrats on the IPO, but some questions here. I just want to dig a little bit more into Outdoor Retailer. Is there any way you can kind of or do you feel like you've accounted for the risk that you could have additional boycotts with this show?
And I guess as it relates to the winter show, I guess the contracts with Salt Lake is up, Salt Lake City is up in 2018. Does that include the winter show or when does that start or end actually?
Let me start
with the last question. The Outdoor Retailer Show and the SIA Show will be combining and relocating in Denver in 2018 winter. So we expect a very, very strong show having no political impact on the legacy issue that we're finding on the August show. But returning to the August show for a second, it takes companies quite some time to plan, prepare for these shows. So it's unlikely that we'll see any more material changes between now and the show and the show stages in a couple of months.
So we feel like we have a strong connection with the market. We're close to the market, and we've identified what we think is the right kind of finish line for the show coming up in a couple of months.
That's helpful. And then as it relates to the Javits renovation, it seems like you've gotten incrementally a bit more conservative on that. Should we take have that take through from what you were speaking about before?
So we haven't really taken any more conservative view. The Javits Convention Center is going under renovation, and there's a section of the show that's going to be unusable space. And so we're going to sell out the entire Javits Center that has the available space, but we've reassessed the salability of some of the usable ancillary spaces we haven't used in the past, some hallways and some meeting rooms and some foyers and lobby space that we haven't used. And we're just assessing what is ultimately the ability for us to sell some of those ancillary spaces to the customers that we'll have in the queue once this show sells out. Great.
Thanks for answering my questions.
Our next question is from the line of Gary Bisbee with RBC. Please proceed with your questions.
Yes. Hi, guys. Good morning. Congratulations on completing the IPO. I guess, let me just ask about these challenges in this way.
Can you help us frame them from a historical perspective? Are there typically 1 or 2 things like this that crop up in most years? Or is this really, truly fairly unique that you have this 3 or 4 things that you've called out as real drags this year?
Thanks, Gary. As you know, I've been here almost 30 years. I've never seen 3, kind of unmarket related issues all happen at the same time in my experience. I think, it's not uncommon for a show to experience something that's unique, but it's uncommon in my experience to see 3 and really probably short of Interbike, really unmarket related and even unshow related experiences. So look, we're working through them.
We feel confident in the businesses and the brands that serve these markets are highly important to the markets. And once we cycle through these issues, we feel we're going to be on continued great footing as we were before these cycles.
And just when you've had them happen to single shows in the past in your history, what is the history of bouncing back in the next year? Does it sometimes take a couple of years? Are some of these things, Jeff, it's being totally understandable and it is what it is. But in the other ones, what's your confidence that everybody comes back out to a retailer in Denver wherever you end up putting it, that there might get a new location bounces back or is there some risk or potential that this is a couple of year rebuild to where you were?
So for Outdoor Retailer, let's start with that. We've never had a situation like this where the political environment was causing the show to have a to see a negative impact. We've not only forecast, estimate these all these companies coming back, they've told us they're coming back. This is a non show, non market related, and I can see their point of view, and we respect their point of view, and we'll certainly service their business as it comes back into winter in Denver and as summer relocates to a new venue, they're returning as well. So I don't see that as any kind of a lingering effect.
The Javits is just simply a construction issue. When we get the recall that when the facility finishes renovation, it will have a larger exhibit space. And as the only show in our portfolio that uses the entire exhibit space, we're going to benefit of that on the comeback. And in fact, we'll expect to sell this show out. We will probably have a waiting list for the show, and we will sell more of this ancillary space over time, and we continue to have pricing opportunities in this sold out show.
So once we cycle through the construction, I don't see that being any kind of a lingering effect on the space. And Interbike, look, it's just going to take some time for the market to cycle through the oversupply. And we feel as consumer participation in cycling and consumer confidence remains as strong as it is, we don't see a long term lingering effect on this business.
Great. And then just on one more, sorry to keep beating on this, but you've talked in the past about occasionally moving shows. Is the history of that when you move a show for some of these reasons we've discussed that the uptake is good the next year? And should we think of that as sort of a high confidence factor in terms of improving performance in some of the ones where you cited them just being sale in a market or an opportunity to upgrade the location?
So some thanks, Gary. Some shows that moved, it's a freshened experience and some shows cycle in and out of certain cities over time, which means they have a history of being in that same city. And it's just the way that market has operated over time. The mere moving of a show is not necessarily a risk to organic growth. In fact, sometimes it's an opportunity.
I think there are certain cases where shows do become stale in a certain city, and it's incumbent upon us to see that in advance and bring that show to a new city to freshen that experience. And I think that was also partially a case with the Interbike show being in Vegas for a long period of time, and it feels like they're ready for a freshened experience. So I don't see the mere move of a show. There's a couple of shows. CEDIA EXPO has been historically a show that has moved around in terms of its location.
It will again be in San Diego this year. I think it was in Houston last year. So it's not uncommon for shows to move, but we don't really see that as a kind of positive or negative contributor unless, of course, it's specific to that show looking for a new home.
Okay, great. I appreciate all the color. And I personally, I can't imagine demoing a bicycle in a 100 degree heat in Vegas. So it strikes me that putting that in another market may well be a good positive for everybody.
You bet.
Our next question is from the line of David Hsu with Bank of America. Please proceed with your question.
Hi, thank you. Just a few housekeeping questions. So what was trade show revenue for the quarter?
Great question. Ask your other question and I'll find and
see if we can look it up.
Yes. I mean, adjusted net income as well. And then I guess lastly, I know you guys gave us the acquisition price for the snow show, but as a standalone, what level of revenue and adjusted EBITDA does this show generate?
So the revenue is less than $5,000,000 and the EBITDA I mean the multiples that we paid are kind of in the same range. So you can work back to the adjusted EBITDA based on the purchase price. The 10 Q is going to come out later today and the adjusted net income is 38,500,000 dollars for the 3 months. And I'm just working on the trade show revenue.
While you look for that, just lastly, which quarter will the 3rd OR show be in?
It should be in the 4th quarter of 2018.
Got you. And it sounds like Snow Show will be part of all three shows, correct?
No, it probably won't be part of the summer show. And ultimately, the market will see a consolidated combined winter sports industry and we'll find some customers that will be in the November show and some customers that will be in the January show. I don't think the market in the future will see them as separate independent shows. They're going to see 1 consolidated, strengthened industry operating based on the sales cycle of the products in that market.
And David, the trade show revenues in the quarter were $124,000,000 so obviously the bulk of the revenue for the quarter. Perfect. Thank you, guys. Okay.
The next question is from the line of Kevin McVeigh with Deutsche Bank. Please proceed with your question.
Great, thanks. Not to belabor the organic growth in 2017, but is there any way to think about how much of the adjustment is trade show related versus ancillary services? Obviously appreciating majority of the revenues of the trade show, but was it outpaced on the other services that contributed more to the decline? Or was it consistent with historical trends?
So let me just start with that and you can fill in, Phil. Look, part of our part of this effect is probably a third of it being based on conferences. And conferences are very, very difficult to read in advance. They're the shows and specifically the How show that Phil is referring to where attendees are paying to hear speakers and probably another 20% was the ancillary parts of our business. The remainder being the effects we talked about with summer market, New York NOW and ASD expecting to increase and being largely flat or slightly up.
Okay. And then in terms of the guidance going out, do you have 2 or 3 additional shows already factored into that in addition to the 2 that you already opened this year or would that be on the comp based on when they open?
I'm not sure I understand that.
The new show launches that we planned for the rest of this year are included in the guidance that we have. Yes.
3 of the shows are included in the guidance. We do have 1 or maybe yes, probably one more that's not included in the guidance.
And in terms of just any visibility on additional acquisitions this year, is there any way to handicap how many more we should expect to close?
I don't think we would handicap how many we close. We have a good track record of closing acquisitions throughout the year. We have a very strong pipeline. We're in various stages of discussions with acquisitions. So it's an important part of our strategy here with this consolidated market.
We feel like it's going to be kind of a regular part of our
business. Okay. Thank you.
Our next question is from the line of Jeff Miller with Baird. Please go ahead with your question.
Hi, thanks. You've got Nick Nikitas on for Jeff. I'll move off of the 2017 organic growth and I'll preface this with that. Realize it's probably very early for this, but given the visibility you guys have and David, you mentioned no change in kind of that 3% to 5% longer term organic growth target. Is there anything you could say about the near term headwinds and how that might impact 2018 or potentially being within that range or above it given the M and A that you guys have this year?
I mean, we haven't gone through the process of rolling up a 2018 forecast yet. Clearly, that's something we tend to do later in the year. In terms of growth rates, I think that each of these shows is independent, meaning that kind of the issues that we've highlighted here tend to be very show specific. And so kind of the rest of the portfolio we expect to continue to grow as we anticipated. And the majority of the portfolio is doing well.
So I think once as Dave said, these issues cycle through, we feel very good about the 3% to 5% kind of growth organic growth guidance that we've put out there.
Okay. That's fair. And then just from an M and A pipeline perspective, are you guys are you seeing any change with the percentage of I mean, you've obviously had 2 recently, but the industry owned events versus just other privately owned events in your pipeline? And just from a multiple perspective, is there any historic difference between those 2?
Well, we now have a track record of 2 for association. So I'm not sure I can call 2 a trend. But no, I mean, ultimately, I think this is the market. It's an extremely fragmented market, and I think this is the range at which entrepreneurs and associations are willing to trade. Given that it's a large market, we're fairly particular about the businesses being important to their markets being number 1 in their space, serving the many to many environment, being B2B.
Once these shows have the qualities that would be additive to our high quality portfolio at Emerald, we're going to be in this kind of mid to upper single digit trading multiple of EBITDA.
Okay. Thanks, guys.
Thank you. At this time, I will turn the floor back to Manchur for closing remarks.
Thank you. I'm not sure we have any closing remarks. We just want to thank everybody for their time today and look forward to talking to folks over the course of the next few weeks and then delivering on our promises as we go through the rest of the year. Thank you. Thank you, everybody.
Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.