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Premier Exhibitions, Inc. (PRXI)
F2Q 2014 Earnings Conference Call
October 9, 2013 17:30 ET
Sam Weiser - President and Chief Executive Officer
Michael Little - Chief Financial Officer and Chief Operating Officer
Andrew Shapiro - Lawndale Capital
Bill Vlahos - Odyssey Partners
Stuart Fishman - Private Investor
Scott Shonborn - Private Investor
Ethan Starr - Private Investor
Don Whitaker Sr. - Private Investor
Larry Burke - Private Investor
Joshua Kramme - Private Investor
Good afternoon. Welcome to the Premier Exhibitions’ Q2 Fiscal Year 2014 Earnings Call. Today’s conference is being recorded.
Previous Statements by PRXI
» Premier Exhibitions' CEO Discusses F1Q 2014 Results - Earnings Call Transcript
» Premier Exhibitions' CEO Discusses F4Q2013 Results - Earnings Call Transcript
» Premier Exhibitions' CEO Discusses F3Q13 Results - Earnings Call Transcript
And now I’d like to turn the conference over to Mr. Sam Weiser, Chief Executive Officer and President of Premier Exhibitions. Please go ahead, sir.
Thank you, operator and good afternoon everyone. Before we begin, I would like to remind you that on today’s call, we will discuss adjusted EBITDA, which is a non-GAAP financial measure that our company uses as a key metric for evaluating performance internally. Adjusted EBITDA also provides investors with additional information to facilitate the comparison of past and present performance and an explanation and reconciliation table to the nearest GAAP measure can be found in our earnings release.
I want to begin the call by saying that despite some positive momentum, Premier is facing challenges as we work to grow the operating segment of our business. Overall, our results are disappointing. However, there are some positive developments. Although, we did not capture a full quarter of exhibition revenue at Buena Park due to its August opening, our initial ticket sales including group sales have exceeded our expectations. That trend has continued and we are trying to maintain the momentum through our third fiscal quarter and into the important holiday season.
We are pleased with these early results for Buena Park and we remain positive that this location will prove to be a successful addition to our portfolio of permanent locations. We will introduce Pompeii at the Franklin Institute in Philadelphia November and complete the three city tour which stops in Los Angeles at the California Science Center and Seattle at the Pacific Science Center. Following that tour, the artifacts under Italian law are required to return to Italy. However, if the three cities prove successful, we believe we could secure the opportunity to develop subsequent tours for the exhibition.
Despite the positives of a successful opening of our Buena Park location in launching Pompeii, our top line revenue fell sharply compared to the same period last year. As the revenue comparison was impacted primarily by a strong showing for Titanic at the Henry Ford in fiscal 2013 and with the loss of our Seaport location in New York City. Last year’s revenue lift from the 100th anniversary of Titanic coupled with the closure of our Seaport location and our inability to secure our replacement location that meets the company’s risk reward parameters will remain hurdles for us in the third and fourth quarters in terms of both absolute performance and year-over-year comparisons. Our lower revenues in the second quarter also negatively impacted our year-over-year P&L comparison and Mike will review all the specifics in more detail during his segment of the call.
Over the past year, we have worked diligently to place new content in the market. Unfortunately, we lost a large opportunity earlier this year when we were unable to come to agreement with a major international broadcasting company on an exhibition we had in development. After expending significant management time and financial resources in an attempt to obtain an agreement that was fair and that would have met our financial requirements for new projects, we were unable to close the deal.
In addition, our initial attempt to negotiate for a space in New York’s Times Square did not result in a signed lease. Finding space in this location is a long-term proposition and the company will live with the economic terms of this arrangement for a number of years. So while we would like to be back in the New York market, we will not enter into a lease unless it makes good economic sense for the company over the long-term. Both of these setbacks have had a significant impact on current year results and our forecast for the remainder of the year.
I want to stress that I am confident about the future of our exhibition business. We are intently focused on launching new content and securing new permanent locations for our existing brands. In addition to Pompeii, we have a number of opportunities in the pipeline and anticipate a number of announcements related to our continued efforts to bring new content to the market over the remainder of the fiscal year that will positively impact our performance for fiscal ‘15 and years beyond.
I also want to announce that effective today we are terminating the law non-binding LOI with the Hampton Roads group due to a lack of progress on their part in obtaining requisite financing to consummate a sale of the Titanic assets on agreed upon terms. We believe we have given this group more than sufficient time to demonstrate their ability to raise the required capital. We have always believed that the Hampton Roads region was an ideal location for the permanent home of the collection. The consortium has indicated its intent to continue its efforts to secure financing to acquire the assets and we remain open to reengaging with this group or reconstitute a group representing the interest of the Hampton Roads area.