Emerald Reports Second Quarter 2023 Financial Results
Revenue Growth of 21% Year-over-Year
NEW YORK, N.Y. - August 2, 2023 - Emerald Holding, Inc. (NYSE: EEX) ("Emerald" or the "Company"), America's largest producer of trade shows and their associated conferences, content and commerce, today reported financial results for the second quarter ended June 30, 2023.
Financial Highlights
Operational Highlights
Hervé Sedky, Emerald's President and Chief Executive Officer, said, "The strong recovery in live events is continuing to drive double-digit growth at Emerald, with highly positive trends in both attendees and pricing. The work we've done to drive scale and efficiency by centralizing key functions and investing in our technological capabilities has made Emerald a powerful platform for both internal and external growth. By leveraging the investments we've already made, we expect to continue to drive both substantial revenue growth as well as meaningful margin improvement in this year and next. Our recent expansion into consumer live events, including NBA Con and the popular Overland Expo series, is helping to unlock new audiences for Emerald that will complement our core B2B portfolio. In addition, our investment into value-add products like our Elastic e-commerce software suite is driving ever greater value for our customers, which we expect to become a meaningful contributor to our strong cash flow generation over time."
David Doft, Emerald's Chief Financial Officer, added, "Our outlook this year implies a more than 20% year-over-year increase in revenue and a 76% year-over-year increase in Adjusted EBITDA, reflecting both the strength of the recovery and our significant operating leverage. As we continue to closely monitor the current economic environment, we are pre-booking shows into the third quarter of 2024, giving us visibility into future revenues and confidence in the continued positive trends in attendance and pricing. In addition to the organic growth benefits, our investments into technology and centralizing key functions also contribute to our advantage in the M&A market, where the scale and operational efficiencies of Emerald's platform make us a highly compelling consolidator in a fragmented market."
Second Quarter 2023 Financial Performance and Highlights
Three Months Ended |
Six Months Ended | |||||||||||||||||||||
2023 | 2022 | Change | % Change | 2023 | 2022 | Change | % Change | |||||||||||||||
(unaudited, dollars in millions, except percentages and per share data) | ||||||||||||||||||||||
Revenues | $ | 86.5 | $ | 71.4 | $ | 15.1 | 21.1 | % | $ | 208.8 | $ | 169.9 | $ | 38.9 | 22.9 | % | ||||||
Net (loss) income | $ | (8.1 | ) | $ | (0.7 | ) | $ | (7.4 | ) | (1,057.1 | %) | $ | (1.0 | ) | $ | 15.4 | $ | (16.4 | ) | NM | ||
Net cash provided by | $ | 7.3 | $ | 12.2 | $ | (4.9 | ) | (40.2 | %) | $ | 16.2 | $ | 45.2 | $ | (29.0 | ) | (64.2 | %) | ||||
Diluted loss per share | $ | (0.29 | ) | $ | (0.15 | ) | $ | (0.14 | ) | (93.3 | %) | $ | (0.33 | ) | $ | (0.05 | ) | $ | (0.28 | ) | (560.0 | %) |
Non-GAAP measures: | ||||||||||||||||||||||
Adjusted EBITDA | $ | 14.6 | $ | 15.6 | $ | (1.0 | ) | (6.4 | %) | $ | 51.1 | $ | 64.9 | $ | (13.8 | ) | (21.3 | %) | ||||
Adjusted EBITDA excluding event cancellation insurance proceeds | $ | 14.6 | $ | 7.5 | $ | 7.1 | 94.7 | % | $ | 51.1 | $ | 33.1 | $ | 18.0 | 54.4 | % | ||||||
Free Cash Flow | $ | 4.6 | $ | 10.5 | $ | (5.9 | ) | (56.2 | %) | $ | 9.8 | $ | 40.3 | $ | (30.5 | ) | (75.7 | %) | ||||
Free Cash Flow excluding event cancellation insurance proceeds, net | $ | 4.6 | $ | 2.4 | $ | 2.2 | 91.7 | % | $ | 9.8 | $ | 8.5 | $ | 1.3 | 15.3 | % |
For a discussion of the Company's presentation of Organic revenues and Adjusted EBITDA, which are non-GAAP measures, see below under the heading "Non-GAAP Financial Information." Refer to Schedule 1 for a reconciliation of Organic revenues to revenues (discussed in the first paragraph of this section), the most directly comparable GAAP measure, and refer to Schedule 3 for a reconciliation of Adjusted EBITDA to net (loss) income (discussed in the second paragraph of this section), the most directly comparable GAAP measure.
Cash Flow
For a review of the Company's presentation of Free Cash Flow, which is a non-GAAP measure, see below under the heading "Non-GAAP Financial Information." Refer to Schedule 4 for a reconciliation of Free Cash Flow to net cash provided by operating activities (discussed in the first paragraph of this section), the most directly comparable GAAP measure.
Conference Call Webcast Details
As previously announced, the Company's leadership will hold a conference call to discuss its second quarter 2023 results at 8:30 am EDT on Wednesday, August 2, 2023.
The conference call can be accessed by dialing 1-888-886-7786 (domestic) or 1-416-764-8658 (international). A telephonic replay will be available approximately two hours after the call by dialing 1-844-512-2921, or for international callers, 1-412-317-6671. The passcode for the replay is 86030577. The replay will be available until 11:59 pm (Eastern Time) on August 9, 2023.
Interested investors and other parties can access the webcast of the live conference call by visiting the Investors section of Emerald's website at http://investor.emeraldx.com. An online replay will be available on the same website immediately following the call.
About Emerald
Emerald's talented and experienced team grows our customers' businesses 365 days a year through connections, content, and commerce. We expand connections that drive new business opportunities, product discovery, and relationships with over 140 annual events, matchmaking, and lead-gen services. We create content to ensure that our customers are on the cutting edge of their industries and are continually developing their skills. And we power commerce through efficient year-round buying and selling. We do all this by seamlessly integrating in-person and digital platforms and channels. Emerald is immersed in the industries we serve and committed to supporting the communities in which we operate. As true partners, we create experiences that inspire, amaze, and deliver breakthrough results. For more: http://www.emeraldx.com/.
Non-GAAP Financial Information
This press release presents certain "non-GAAP" financial measures. The components of these non-GAAP measures are computed by using amounts that are determined in accordance with accounting principles generally accepted in the United States of America ("GAAP"). A reconciliation of non-GAAP financial measures used in this press release to their nearest comparable GAAP financial measures is included in the schedules attached hereto.
Organic Revenue
We define "Organic revenue growth" and "Organic revenue decline" as the growth or decline, respectively, in our revenue from one period to the next, adjusted for the revenue impact of: (i) acquisitions and dispositions, (ii) discontinued events and (iii) material show scheduling adjustments. We disclose changes in Organic revenue because we believe it assists investors and analysts in comparing Emerald's operating performance across reporting periods on a consistent basis by excluding items that we do not believe provide a fair comparison of the trends underlying our existing event portfolio given changes in timing or strategy. Management and Emerald's board of directors evaluate changes in Organic revenue to evaluate our historical and prospective financial performance and understand underlying revenue trends of our events.
Adjusted EBITDA
We use Adjusted EBITDA because we believe it assists investors and analysts in comparing Emerald's operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. Management and Emerald's board of directors use Adjusted EBITDA to assess our financial performance and believe it is helpful in highlighting trends because it excludes the results of decisions that are outside the control of management, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which we operate, and capital investments. Adjusted EBITDA should not be considered as an alternative to net income as a measure of financial performance or to cash flows from operations as a liquidity measure.
We define Adjusted EBITDA as net (loss) income before (i) interest expense, (ii) income tax benefit, (iii) depreciation and amortization, (iv) stock-based compensation, (v) deferred revenue adjustment, (vi) goodwill and other intangible asset impairment charges, and (vii) other items that management believes are not part of our core operations.
We have also presented Adjusted EBITDA excluding event cancellation insurance proceeds in order to illustrate the amount of Adjusted EBITDA from continuing operations.
Note: Schedule 3 provides reconciliations for 2023 and 2022 Adjusted EBITDA to net loss, however, it is not possible, without unreasonable efforts, to estimate the impacts of show scheduling adjustments, acquisitions and the amount and timing of receipt of event cancellation insurance proceeds and certain other special items that may occur in 2023 as these items are inherently uncertain and difficult to predict. As a result, the Company is unable to quantify certain amounts that would be included in a reconciliation of 2023 projected Adjusted EBITDA to projected net income without unreasonable efforts and has not provided reconciliations for these forward-looking non-GAAP financial measures.
Free Cash Flow
We present Free Cash Flow because we believe it is a useful indicator of liquidity that provides information to management and investors about the amount of cash generated from our core operations that, after capital expenditures, can be used to maintain and grow our business, for the repayment of indebtedness, payment of dividends and to fund strategic opportunities. Free Cash Flow is a supplemental non-GAAP measure of liquidity and is not based on any standardized methodology prescribed by GAAP. Free Cash Flow should not be considered in isolation or as an alternative to cash flows from operating activities or other measures determined in accordance with GAAP.
We have also presented Free Cash Flow excluding event cancellation insurance proceeds, net in order to illustrate the amount of Free Cash Flow from continuing operations.
Other companies may compute these measures differently. No non-GAAP metric should be considered as an alternative to any other measure derived in accordance with GAAP.
Cautionary Statement Concerning Forward-Looking Statements
This press release contains and our earnings call will contain certain forward-looking statements, including, but not limited to, our ability to return our business to pre-COVID levels; our guidance with respect to estimated revenues and Adjusted EBITDA; our ability or inability to obtain insurance coverage relating to event cancellations or interruptions; and our ability to successfully identify and acquire acquisition targets; our expectations arising from the ongoing impact of COVID-19 on our business; and how we integrate and grow acquired businesses. These statements involve risks and uncertainties, including, but not limited to, economic, competitive, governmental and technological factors outside of the Company's control that may cause its business, industry, strategy, financing activities or actual results to differ materially. See "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements" in the Company's most recently filed periodic reports on Form 10-K and Form 10-Q and subsequent filings. The Company undertakes no obligation to update or revise any of the forward-looking statements contained herein, whether as a result of new information, future events or otherwise.
Contact
Emerald Holding, Inc.
Investor Relations
investor.relations@emeraldx.com
1-866-339-4688 (866EEXINVT)
Emerald Holding, Inc.
Condensed Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income
(unaudited, dollars in millions, share data in thousands, except loss per share data)
Three Months Ended |
Three Months Ended |
Six Months Ended |
Six Months Ended | |||||||||
Revenues | $ | 86.5 | $ | 71.4 | $ | 208.8 | $ | 169.9 | ||||
Other income, net | - | 8.1 | - | 31.8 | ||||||||
Cost of revenues | 32.8 | 26.4 | 76.0 | 60.6 | ||||||||
Selling, general and administrative expense | 41.8 | 32.3 | 90.6 | 78.9 | ||||||||
Depreciation and amortization expense | 12.9 | 14.0 | 26.4 | 28.3 | ||||||||
Goodwill impairment charge | - | - | - | 6.3 | ||||||||
Intangible asset impairment charge | - | - | - | 1.6 | ||||||||
Operating (loss) income | (1.0 | ) | 6.8 | 15.8 | 26.0 | |||||||
Interest expense | 11.4 | 4.8 | 19.4 | 8.7 | ||||||||
Interest income | 2.3 | 0.2 | 3.4 | 0.2 | ||||||||
Loss on extinguishment of debt | 2.3 | - | 2.3 | - | ||||||||
Other expense | 0.1 | - | 0.2 | - | ||||||||
(Loss) income before income taxes | (12.5 | ) | 2.2 | (2.7 | ) | 17.5 | ||||||
(Benefit from) provision for income taxes | (4.4 | ) | 2.9 | (1.7 | ) | 2.1 | ||||||
Net (loss) income and comprehensive (loss) income attributable to Emerald Holding, Inc. | $ | (8.1 | ) | $ | (0.7 | ) | $ | (1.0 | ) | $ | 15.4 | |
Accretion to redemption value of redeemable convertible preferred stock | (10.4 | ) | (9.6 | ) | (20.5 | ) | (18.8 | ) | ||||
Net loss and comprehensive loss attributable to Emerald Holding, Inc. common stockholders | $ | (18.5 | ) | $ | (10.3 | ) | $ | (21.5 | ) | $ | (3.4 | ) |
Basic loss per share | (0.29 | ) | (0.15 | ) | (0.33 | ) | (0.05 | ) | ||||
Diluted loss per share | (0.29 | ) | (0.15 | ) | (0.33 | ) | (0.05 | ) | ||||
Basic weighted average common shares outstanding | 62,868 | 69,816 | 65,048 | 70,007 | ||||||||
Diluted weighted average common shares outstanding | 62,868 | 69,816 | 65,048 | 70,007 | ||||||||
Emerald Holding, Inc.
Condensed Consolidated Balance Sheets
(dollars in millions, share data in thousands, except par value)
June 30, |
December 31, | |||
(unaudited) | ||||
Assets | ||||
Current assets | ||||
Cash and cash equivalents | $ | 204.7 | $ | 239.1 |
Trade and other receivables, net of allowance of $1.5 million, as of June 30, 2023 and December 31, 2022 | 92.2 | 74.9 | ||
Prepaid expenses and other current assets | 17.6 | 17.8 | ||
Total current assets | 314.5 | 331.8 | ||
Noncurrent assets | ||||
Property and equipment, net | 1.9 | 2.2 | ||
Intangible assets, net | 188.1 | 204.8 | ||
Goodwill, net | 553.9 | 545.5 | ||
Right-of-use assets | 11.1 | 10.6 | ||
Other noncurrent assets | 3.4 | 3.5 | ||
Total assets | $ | 1,072.9 | $ | 1,098.4 |
Liabilities, Redeemable Convertible Preferred Stock and Stockholders' Deficit | ||||
Current liabilities | ||||
Accounts payable and other current liabilities | $ | 50.2 | $ | 58.1 |
Income taxes payable | 1.1 | 1.2 | ||
Canceled event liabilities | 2.7 | 3.3 | ||
Deferred revenues | 162.4 | 151.2 | ||
Contingent consideration | 0.5 | 3.5 | ||
Right-of-use liabilities, current portion | 4.4 | 4.9 | ||
Term loan, current portion | 4.2 | |||
Total current liabilities | 225.5 | 222.2 | ||
Noncurrent liabilities | ||||
Term loan, net of discount and deferred financing fees | 398.9 | 413.9 | ||
Deferred tax liabilities, net | 2.6 | 1.8 | ||
Right-of-use liabilities, noncurrent portion | 10.6 | 10.4 | ||
Other noncurrent liabilities | 10.0 | 10.8 | ||
Total liabilities | 647.6 | 659.1 | ||
Commitments and contingencies | ||||
Redeemable convertible preferred stock | ||||
7% Series A Redeemable Convertible Participating Preferred Stock, | 492.8 | 472.4 | ||
Stockholders' deficit | ||||
Common stock, $0.01 par value; authorized shares at June 30, 2023 | 0.6 | 0.7 | ||
Additional paid-in capital | 577.0 | 610.3 | ||
Accumulated deficit | (645.1 | ) | (644.1 | ) |
Total stockholders' deficit | (67.5 | ) | (33.1 | ) |
Total liabilities, redeemable convertible preferred stock and stockholders' deficit | $ | 1,072.9 | $ | 1,098.4 |
Schedule 1
Emerald Holding, Inc.
UNAUDITED RECONCILIATION OF REVENUES TO ORGANIC REVENUES
Three Months Ended | Change |
Six Months Ended | Change | |||||||||||||
2023 | 2022 | $ | % | 2023 | 2022 | $ | % | |||||||||
(dollars in millions) | ||||||||||||||||
Revenues | $ | 86.5 | $ | 71.4 | $ | 15.1 | 21.1 | % | $ | 208.8 | $ | 169.9 | $ | 38.9 | 22.9 | % |
Add (deduct): | ||||||||||||||||
Acquisition revenues | (7.3 | ) | (7.5 | ) | ||||||||||||
Discontinued events | (0.8 | ) | (0.8 | ) | ||||||||||||
Scheduling adjustments(1) | - | 0.7 | - | 3.5 | ||||||||||||
Organic revenues | $ | 79.2 | $ | 71.3 | $ | 7.9 | 11.1 | % | $ | 201.3 | $ | 172.6 | $ | 28.7 | 16.6 | % |
Notes:
Schedule 2
Emerald Holding, Inc.
UNAUDITED RECONCILIATION OF REVENUES TO DISAGGREGATED REVENUES
Three Months Ended |
Six Months Ended | |||||||
2023 | 2022 | 2023 | 2022 | |||||
(dollars in millions) | ||||||||
Trade shows | $ | 55.1 | $ | 50.5 | $ | 152.2 | $ | 129.1 |
Other events | 19.6 | 9.3 | 33.8 | 18.4 | ||||
Subscription software and services | 5.3 | 4.3 | 10.5 | 8.5 | ||||
Other marketing services | 6.5 | 7.3 | 12.3 | 13.9 | ||||
Total Revenues | $ | 86.5 | $ | 71.4 | $ | 208.8 | $ | 169.9 |
Schedule 3
Emerald Holding, Inc.
UNAUDITED RECONCILIATION OF NET (LOSS) INCOME TO ADJUSTED EBITDA
Three Months Ended |
Six Months Ended | ||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||
(dollars in millions) | |||||||||||
Net (loss) income | $ | (8.1 | ) | $ | (0.7 | ) | $ | (1.0 | ) | $ | 15.4 |
Add (deduct): | |||||||||||
Interest expense, net | 9.1 | 4.6 | 16.0 | 8.5 | |||||||
Loss on extinguishment of debt | 2.3 | - | 2.3 | - | |||||||
Provision for (benefit from) income taxes | (4.4 | ) | 2.9 | (1.7 | ) | 2.1 | |||||
Goodwill impairment charge(1) | - | - | - | 6.3 | |||||||
Intangible asset impairment charge(2) | - | - | - | 1.6 | |||||||
Depreciation and amortization | 12.9 | 14.0 | 26.4 | 28.3 | |||||||
Stock-based compensation | 1.9 | 1.6 | 4.0 | 3.7 | |||||||
Deferred revenue adjustment | - | 0.2 | - | 0.4 | |||||||
Other items(3) | 0.9 | (7.0 | ) | 5.1 | (1.4 | ) | |||||
Adjusted EBITDA | $ | 14.6 | $ | 15.6 | $ | 51.1 | $ | 64.9 | |||
Deduct: | |||||||||||
Event cancellation insurance proceeds | - | 8.1 | - | 31.8 | |||||||
Adjusted EBITDA excluding event cancellation insurance proceeds | $ | 14.6 | $ | 7.5 | $ | 51.1 | $ | 33.1 |
Notes:
Schedule 4
Emerald Holding, Inc.
UNAUDITED RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
Three Months Ended |
Six Months Ended | |||||||
2023 | 2022 | 2023 | 2022 | |||||
(dollars in millions) | ||||||||
Net Cash Provided by Operating Activities | $ | 7.3 | $ | 12.2 | $ | 16.2 | $ | 45.2 |
Less: | ||||||||
Capital expenditures | 2.7 | 1.7 | 6.4 | 4.9 | ||||
Free Cash Flow | $ | 4.6 | $ | 10.5 | $ | 9.8 | $ | 40.3 |
Event cancellation insurance proceeds | - | (8.1 | ) | - | (31.8 | ) | ||
Free cash flow excluding event cancellation insurance proceeds, net | $ | 4.6 | $ | 2.4 | $ | 9.8 | $ | 8.5 |
Schedule 5
Emerald Holding, Inc.
UNAUDITED RECONCILIATION OF REPORTABLE SEGMENTS RESULTS TO (LOSS) INCOME BEFORE TAXES
Three Months Ended |
Six Months Ended | |||||||||
2023 | 2022 | 2023 | 2022 | |||||||
(dollars in millions) | ||||||||||
Revenues | ||||||||||
Commerce | $ | 21.1 | $ | 19.4 | $ | 91.2 | $ | 76.0 | ||
Design, Creative, and Technology | 59.5 | 47.6 | 106.1 | 85.1 | ||||||
All Other | 5.9 | 4.4 | 11.5 | 8.8 | ||||||
Total revenues | $ | 86.5 | $ | 71.4 | $ | 208.8 | $ | 169.9 | ||
Other income, net | ||||||||||
Commerce | $ | - | $ | 4.5 | $ | - | $ | 5.6 | ||
Design, Creative, and Technology | - | 3.4 | - | 25.3 | ||||||
All Other | - | 0.2 | - | 0.9 | ||||||
Total other income, net | $ | - | $ | 8.1 | $ | - | $ | 31.8 | ||
Adjusted EBITDA | ||||||||||
Commerce | $ | 6.5 | $ | 10.2 | $ | 45.9 | $ | 42.0 | ||
Design, Creative, and Technology | 23.0 | 21.9 | 36.1 | 54.5 | ||||||
All Other | (1.0 | ) | (2.9 | ) | (1.9 | ) | (5.2 | ) | ||
Subtotal Adjusted EBITDA | $ | 28.5 | $ | 29.2 | $ | 80.1 | $ | 91.3 | ||
General corporate and other expenses | (13.9 | ) | (13.6 | ) | (29.0 | ) | (26.4 | ) | ||
Interest expense, net | (9.1 | ) | (4.6 | ) | (16.0 | ) | (8.5 | ) | ||
Loss on extinguishment of debt | (2.3 | ) | - | (2.3 | ) | - | ||||
Goodwill impairment charges | - | - | - | (6.3 | ) | |||||
Intangible asset impairment charges | - | - | - | (1.6 | ) | |||||
Depreciation and amortization expense | (12.9 | ) | (14.0 | ) | (26.4 | ) | (28.3 | ) | ||
Stock-based compensation expense | (1.9 | ) | (1.6 | ) | (4.0 | ) | (3.7 | ) | ||
Deferred revenue adjustment | - | (0.2 | ) | - | (0.4 | ) | ||||
Other items | (0.9 | ) | 7.0 | (5.1 | ) | 1.4 | ||||
(Loss) income before taxes | $ | (12.5 | ) | $ | 2.2 | $ | (2.7 | ) | $ | 17.5 |
Attachments
- Original Link
- Original Document
- Permalink
Disclaimer
Emerald Holding Inc. published this content on 02 August 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 02 August 2023 10:20:10 UTC.