Emerald Holding, Inc. (NYSE:EEX) (“Emerald” or the “Company”), a
leading U.S. business-to-business platform producer of trade shows,
events, conferences and marketing solutions, today reported
financial results for the third quarter ended September 30,
2020.
Highlights
- Third quarter results negatively impacted by event
cancellations due to the COVID-19 pandemic
- Impact of revenue declines on operating income partially offset
by claim payments received under Emerald’s event cancellation
insurance policy
- To date, Emerald has submitted $146.2 million in claims, $133.2
million of which represents the net amount of budgeted gross
revenues less avoided costs for cancelled events previously
scheduled to take place in the first, second and third quarters of
2020
- Insurance claim payments received year to date total $64.3
million, of which $15.0 million was received in the second quarter,
$39.8 million was received in the third quarter and $9.5 million
was received in the fourth quarter
- Additional $15.8 million in insurance claim payments recently
approved and pending receipt
- Emerald expects to submit incremental event cancellation
insurance claims for additional events that were originally
scheduled to take place in the second half of 2020, but have been
cancelled
- Net loss of $15.3 million for the third quarter of 2020,
compared to net loss of $19.7 million for the third quarter of
2019
- Adjusted EBITDA, a non-GAAP measure, of negative $3.2 million
for the third quarter of 2020, compared to $28.7 million for the
third quarter of 2019 (Refer to Schedule 2 for a reconciliation to
net income, the most directly comparable GAAP measure)
- Adjusted Net Loss, a non-GAAP measure, of $5.5 million for the
third quarter of 2020, compared to Adjusted Net Income of $12.6
million for the third quarter of 2019 (Refer to Schedule 3 for a
reconciliation to net income, the most directly comparable GAAP
measure)
- Emerald completed the sale of its 7% Series A Convertible
Participating Preferred Stock (the “Preferred Stock”) in the third
quarter, generating net proceeds of approximately $130 million, in
addition to the $252 million in net proceeds generated during the
second quarter
- Emerald ended the third quarter of 2020 with $326.7 million in
cash and full availability of its $150 million revolving credit
facility
Third Quarter 2020 Financial
Performance
Three MonthsEnded September 30, Nine MonthsEnded
September 30,
2020
2019
Change
% Change
2020
2019
Change
% Change
(unaudited, dollars in millions, except percentages and per
share data) Revenues
$
8.5
$
75.6
$
(67.1
)
(88.8
%)
$
115.2
$
316.0
$
(200.8
)
(63.5
%)
Net (loss) income
$
(15.3
)
$
(19.7
)
$
4.4
(22.3
%)
$
(575.5
)
$
18.2
$
(593.7
)
NM
Net cash (used in) provided by operating activities
$
(20.1
)
$
11.6
$
(31.7
)
NM
$
(42.7
)
$
51.6
$
(94.3
)
NM
Diluted (loss) income per share
$
(0.31
)
$
(0.27
)
$
(0.04
)
(14.8
%)
$
(8.16
)
$
0.25
$
(8.41
)
NM
Non-GAAP measures: Adjusted EBITDA
$
(3.2
)
$
28.7
$
(31.9
)
NM
$
53.6
$
129.3
$
(75.7
)
(58.5
%)
Adjusted Net (Loss) Income
$
(5.5
)
$
12.6
$
(18.1
)
NM
$
42.0
$
74.2
$
(32.2
)
(43.4
%)
Adjusted Diluted EPS
$
(0.08
)
$
0.17
$
(0.25
)
NM
$
0.59
$
1.02
$
(0.43
)
(42.2
%)
Free Cash Flow
$
(20.9
)
$
10.7
$
(31.6
)
NM
$
(45.8
)
$
49.8
$
(95.6
)
NM
Brian Field, Emerald’s Interim President and Chief Executive
Officer, said, “As we work towards a return to live events, we
continue to implement our growth strategies designed to improve the
efficiency of our operations, accelerate organic sales growth and
improve our profitability. Our team is focused on using this time
to launch new digital product offerings and revenue models designed
to complement our live events, as we engage our current customers,
drive new customers and enhance Emerald’s growth profile. During
the third quarter, we hosted over 90 digitally-delivered virtual
events across a variety of formats and form factors. While these
have been successful and provide new, high-margin revenue streams,
the consistent feedback from our customers is that the face-to-face
format of our events provides a critical value to our customers’
success. A good example of this, and pent-up demand of our
customers’ desire to return to our face-to-face shows, can be seen
in IGES which is set to stage on November 4 in the heart of the
Smoky Mountains of Tennessee. Demand has been very strong with
attendee registrations up over 36% versus last year, which also
confirms our own exhibitor and attendee research that continues to
point to our customers’ preference for live events.”
David Doft, Emerald’s Chief Financial Officer, added, “The key
priorities for our team are to streamline our operations in order
to improve collaboration across the company and find opportunities
to consolidate our expense structure and become more nimble as the
environment eventually normalizes. Historically, Emerald has worked
as a collection of business units focused on delivering individual
shows. This stifled innovation as well as the ability to cross-sell
the full suite of Emerald’s offerings to our customers, while also
adding to our expense structure which we have been laser-focused on
optimizing. Along those lines, I am pleased to report that we have
permanently reduced our annual fixed cost run rate by over $15-20
million through the end of the third quarter. We have also been
successful in collecting payments for our submitted insurance
claims, having received an additional $39.8 million of payments in
the third quarter and $9.5 million thus far in the fourth quarter,
with an additional $15.8 million recently approved and pending
receipt. Our insurance payments combined with our recent preferred
stock offering puts us in an enviable balance sheet position. We
exited the third quarter with $327 million of cash and another $150
million in availability on our revolver which provides us with the
flexibility to invest for future growth as well as take advantage
of any dislocations in the trade show and exhibition market.”
COVID-19 Operational and Expected
Insurance Recovery Update
Emerald remains focused on the health and safety of its
employees and customers given this ongoing, unprecedented
environment. Substantially all employees continue to work in a
remote environment and Emerald is actively engaging the Company’s
communities with new on-line offerings while planning for future
events.
The rapid spread of COVID-19 and the resulting limitations
placed on travel and gatherings have had a material impact on
Emerald’s ability to deliver large, in-person experiences which has
necessitated substantial changes to the Company’s show calendar. To
date, Emerald has cancelled 94 events, and has not staged an
in-person event since the middle of March. In total, these
cancelled events accounted for approximately $236 million of 2019
revenues.
Emerald maintains event cancellation insurance to protect
against losses due to the unavoidable cancellation, postponement,
relocation and enforced reduced attendance at events due to certain
covered causes. Specifically, these causes include event
cancellation caused by the outbreak of communicable diseases,
including COVID-19. Emerald’s policy provides coverage for the
budgeted amount of gross revenues (less avoided costs, plus certain
costs relating to the taking of remedial action) for each of the
Company’s individual events and conferences occurring within a
calendar year. The aggregate limit under this event cancellation
insurance policy is approximately $191.1 million in 2020 and $191.4
million in 2021, if losses arise for reasons within the scope of
this policy.
In addition to this primary policy, Emerald maintains a separate
event cancellation insurance policy for the Surf Expo Summer 2020
and Surf Expo Winter 2021 shows, with respective coverage limits of
$6 million and $7.7 million. While there is no assurance that the
insurance carriers will agree that all of Emerald’s claims are
covered under these policies, the Company believes that all shows
that have been cancelled or postponed due to COVID-19 to date
should qualify as covered losses with respect to these event
cancellation insurance policies.
The Company has been preparing and submitting insurance claims
for each of its cancelled shows. For events previously scheduled to
take place in the first, second and third quarters, Emerald has
submitted approximately $133.2 million in claims, which represents
the net amount of expected gross revenues less avoided costs for
cancelled events. Insurance claim payments received to date total
$64.3 million, of which $15 million was received in the second
quarter, $39.8 million received in the third quarter and $9.5
million has been received so far in the fourth quarter, with an
additional $15.8 million recently approved and pending receipt.
Through October 31, 2020, the Company has submitted total claims of
$146.2 million for events which were originally scheduled to take
place in 2020. The Company expects to submit further claims over
the next several weeks representing events cancelled through the
end of the year.
Financial & Operational Results,
Quarter Ended September 30, 2020
For the third quarter of 2020, Emerald reported revenues of $8.5
million compared to revenues of $75.6 million for the third quarter
of 2019, a decrease of $67.1 million, or 88.8%. The decrease
primarily reflected a $68.0 million reduction from the cancellation
of substantially all third quarter events due to the COVID-19
crisis, most notably ASD August, NY NOW August, CEDIA Expo and
Modern Day Marine. Discontinued events representing $0.2 million of
third quarter 2019 revenues also impacted third quarter 2020
results. The G3 Communications (“G3”) acquisition, which closed in
the fourth quarter of 2019, contributed $1.5 million of revenue in
the third quarter of 2020. Organic revenues for the third quarter
of 2020, which exclude cancelled events, declined $0.5 million, or
6.7%, as compared to the prior year third quarter due to lower
print and digital advertising revenues, partially offset by new
virtual event launches.
The Company recognized a net loss of $15.3 million for the third
quarter of 2020 compared to a net loss of $19.7 million for the
third quarter of 2019. The Company recorded $16.1 million of Other
Income during the third quarter as a result of the confirmation of
event cancellation insurance claims related to events cancelled in
the first, second and third quarters. In the third quarter of 2019,
the Company recorded Other Income of $6.1 million from cancellation
insurance proceeds related to the forced cancellation of Surf Expo
and ISS Orlando due to Hurricane Dorian. In the third quarter of
2019, in connection with a triggering event caused by reduced
performance expectations for the year, the Company recorded a $26.3
million non-cash charge related to the impairment of certain trade
names, customer-related intangible assets and goodwill.
For the third quarter of 2020, Adjusted EBITDA was negative $3.2
million, compared to $28.7 million for the third quarter of 2019.
The decrease in Adjusted EBITDA of $31.9 million was mainly due to
the COVID-19 related cancellation of 29 third quarter events,
representing prior year third quarter Adjusted EBITDA of $42.0
million, offset by the recognition of $10.0 million more in Other
Income related to event cancellation insurance claims confirmed in
the third quarter of 2020 versus the comparable period in the prior
year. Third quarter 2020 Adjusted EBITDA also reflected the
combined effect of lower Organic revenues, offset by the cost
savings measures implemented throughout the year. The Company’s
Adjusted EBITDA throughout 2020 has been and will continue to be
heavily impacted by the timing and receipt of approved claim
payments under the Company’s event cancellation insurance
policy.
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 2 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
Net cash used in operating activities was $20.1 million in the
third quarter of 2020, compared to cash provided by operating
activities of $11.6 million in the third quarter of 2019, largely
reflecting $37.5 million in refunds paid during the third quarter
and the decline in cash receipts due to the cancellation of
upcoming events, partially offset by the receipt of $39.8 million
in event cancellation insurance proceeds and the Company’s close
management of operating cash flows given the challenging
circumstances presented by the COVID-19 pandemic. As a result of
refunds paid as well as additional event cancellations during the
third quarter, as of September 30, 2020, cancelled event
liabilities were $24.9 million as compared to $45.6 million at June
30, 2020.
Capital expenditures were $0.8 million for the third quarter of
2020, compared to $0.9 million for the third quarter of 2019.
Free Cash Flow, which the Company defines as net cash used in or
provided by operating activities less capital expenditures, was an
outflow of $20.9 million in the third quarter of 2020, compared to
an inflow of $10.7 million in the third quarter of 2019.
For a discussion 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 will hold a conference call
to discuss its third quarter 2020 results at 5:00pm EDT on Monday,
November 2, 2020.
The conference call can be accessed by dialing 1-877-407-9039
(domestic) or 1-201-689-8470 (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 13711827. The replay will be available
until 11:59 pm (Eastern Time) on November 9, 2020.
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 is a leader in building dynamic, market-driven
business-to-business platforms that integrate live events with a
broad array of industry insights, digital tools, and data-focused
solutions to create uniquely rich experiences. As true partners, we
at Emerald strive to build our customers’ businesses by creating
opportunities that inspire, amaze, and deliver breakthrough
results. With over 140 events each year, our teams are creators and
connectors who are thoroughly immersed in the industries we serve
and committed to supporting the communities in which we
operate.
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.
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, (iii)
material show scheduling adjustments and (iv) event cancellations
for which the Company has received, or expects to receive, claim
proceeds from its event cancellation insurance policy. 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.
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 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
charge, (vii) material show scheduling adjustments, and (viii)
other items that management believes are not part of our core
operations.
In addition to net income presented in accordance with GAAP, we
present Adjusted Net Income because we believe it assists investors
and analysts in comparing our operating performance across
reporting periods on a consistent basis by excluding items that we
do not believe are indicative of our core operating performance.
Our presentation of Adjusted Net Income adjusts net income for (i)
stock-based compensation, (ii) deferred revenue, (iii) goodwill and
other intangible asset impairment charges, (iv) other items that
management believes are not part of our core operations, (v)
amortization of deferred financing fees and discount, (vi)
amortization of acquired intangible assets and (vii) tax
adjustments related to non-GAAP adjustments.
We use Adjusted Net Income as a supplemental metric to evaluate
our business’s performance in a way that also considers our ability
to generate profit without the impact of certain items.
For example, it is useful to exclude stock-based compensation
expenses because the amount of such expenses in any specific period
may not directly correlate to the underlying performance of our
business, and these expenses can vary significantly across periods
due to timing of new stock-based awards. We also exclude
professional fees associated with debt refinancing, the
amortization of acquired intangible assets and certain discrete
costs, including deferred revenue adjustments, impairment charges
and transaction costs (including professional fees and other
expenses associated with acquisition activity) in order to
facilitate a period-over-period comparison of our financial
performance. This measure also reflects an adjustment for the
difference between cash amounts paid in respect of taxes and the
amount of tax recorded in accordance with GAAP. Each of the normal
recurring adjustments and other adjustments described in this
paragraph help to provide management with a measure of our
operating performance over time by removing items that are not
related to day-to-day operations or are noncash expenses.
Adjusted Net Income is a supplemental non-GAAP financial measure
of operating performance and is not based on any standardized
methodology prescribed by GAAP. Adjusted Net Income should not be
considered in isolation or as an alternative to net income, cash
flows from operating activities or other measures determined in
accordance with GAAP. Also, Adjusted Net Income is not necessarily
comparable to similarly titled measures presented by other
companies.
Adjusted Diluted EPS is defined as Adjusted Net Income divided
by diluted weighted average common shares outstanding.
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.
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 expectations arising from the severe impact of COVID-19 on our
business; our ability to recover insurance proceeds under current
policies; the timing of any such recoveries and our ability to
obtain similar event cancellation insurance in the future; the
timing for rescheduled trade show events; and the benefits of our
cost reduction initiatives. 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.
Emerald Holding, Inc.
Condensed Consolidated
Statements of (Loss) Income and Comprehensive (Loss) Income
(unaudited, dollars in
millions, share data in thousands, except earnings per share
data)
Three Months EndedSeptember 30,2020 Three Months
EndedSeptember 30,2019 Nine MonthsEndedSeptember 30,2020
Nine MonthsEndedSeptember 30,2019 Revenues
$
8.5
$
75.6
$
115.2
$
316.0
Other income
16.1
6.1
64.3
6.1
Cost of revenues
4.3
24.6
47.1
102.8
Selling, general and administrative expense
25.6
33.7
88.8
101.9
Depreciation and amortization expense
12.2
12.9
37.2
39.3
Goodwill impairment charges
-
9.3
564.0
9.3
Intangible asset impairment charges
-
17.0
59.4
17.0
Operating (loss) income
(17.5
)
(15.8
)
(617.0
)
51.8
Interest expense, net
4.2
7.5
16.5
23.3
(Loss) income before income taxes
(21.7
)
(23.3
)
(633.5
)
28.5
(Benefit from) provision for income taxes
(6.4
)
(3.6
)
(58.0
)
10.3
Net (loss) income and comprehensive (loss) incomeattributable to
Emerald Holding, Inc.
$
(15.3
)
$
(19.7
)
$
(575.5
)
$
18.2
Accretion on 7% Series A Convertible Participating Preferred stock
(7.0
)
-
(7.1
)
-
Net (loss) income and comprehensive (loss) income attributable to
Emerald Holding, Inc. common shareholders
$
(22.3
)
$
(19.7
)
$
(582.6
)
$
18.2
Basic (loss) earnings per share
$
(0.31
)
$
(0.27
)
$
(8.16
)
$
0.25
Diluted (loss) earnings per share
$
(0.31
)
$
(0.27
)
$
(8.16
)
$
0.25
Basic weighted average common shares outstanding
71,484
71,796
71,437
71,843
Diluted weighted average common shares outstanding
71,484
71,796
71,437
72,752
Emerald Holding, Inc.
Condensed Consolidated Balance
Sheets
(dollars in millions, share
data in thousands, except par value)
September 30,2020 December 31,2019 (unaudited)
Assets Current assets Cash and cash equivalents
$
326.7
$
9.6
Trade and other receivables, net of allowances of $0.6 million
and$1.1 million, as of September 30, 2020 and December 31, 2019,
respectively
40.4
60.1
Insurance receivables
9.5
-
Prepaid expenses
11.5
24.0
Total current assets
388.1
93.7
Noncurrent assets Property and equipment, net
4.1
4.2
Intangible assets, net
280.5
373.8
Goodwill
416.3
980.3
Right-of-use assets
16.8
18.3
Other noncurrent assets
1.5
1.4
Total assets
$
1,107.3
$
1,471.7
Liabilities and Shareholders’ Equity Current liabilities
Accounts payable and other current liabilities
$
21.4
$
22.2
Cancelled event liabilities
24.9
-
Deferred revenues
64.7
187.3
Revolving credit facility
-
10.0
Right-of-use liabilities, current portion
4.3
4.1
Term loan, current portion
5.7
5.7
Total current liabilities
121.0
229.3
Noncurrent liabilities Term loan, net of discount and deferred
financing fees
516.4
519.7
Deferred tax liabilities, net
2.4
60.0
Right-of-use liabilities
14.2
15.7
Other noncurrent liabilities
6.2
6.8
Total liabilities
660.2
831.5
Commitments and contingencies Shareholders’ equity 7% Series A
Convertible Participating Preferred stock, $0.01 par value; 80,000
authorized at September 30, 2020 and December 31, 2019; 71,446
issued and outstanding at September 30, 2020 and no shares issued
or outstanding at December 31, 2019
0.7
-
Common stock, $0.01 par value; authorized shares: 800,000; issued
andoutstanding shares: 71,500 and 71,352 at September 30, 2020 and
December 31, 2019,respectively
0.7
0.7
Additional paid-in capital
1,082.9
701.1
Accumulated deficit
(637.2
)
(61.6
)
Total shareholders’ equity
447.1
640.2
Total liabilities and shareholders’ equity
$
1,107.3
$
1,471.7
Schedule
1
Emerald Holding, Inc.
UNAUDITED RECONCILIATION OF
REVENUES TO ORGANIC REVENUES
Three MonthsEnded September 30, Change Nine
MonthsEnded September 30, Change
2020
2019
$ %
2020
2019
$ % (dollars in millions)(unaudited)
Revenues
$
8.5
$
75.6
$
(67.1
)
(88.8
%)
$
115.2
$
316.0
$
(200.8
)
(63.5
%)
Add (deduct): Acquisition revenues
(1.5
)
-
(7.0
)
-
Discontinued events
-
(0.2
)
-
(3.6
)
COVID-19 cancellations(1)
-
(67.9
)
-
(197.9
)
Organic revenues
$
7.0
$
7.5
$
(0.5
)
(6.7
%)
$
108.2
$
114.5
$
(6.3
)
(5.5
%)
Notes:
- Represents reduction in revenues as a result of the
cancellation of certain events in the first, second and third
quarters of 2020, compared to all events that staged in the first,
second and third quarters of 2019, due to COVID-19. The Company
believes the financial impact, net of costs saved, will be
partially offset by event cancellation insurance proceeds from
pending claims.
Schedule
2
Emerald Holding, Inc.
UNAUDITED RECONCILIATION OF
NET (LOSS) INCOME TO ADJUSTED EBITDA
Three MonthsEnded September 30 Nine MonthsEnded September
30
2020
2019
2020
2019
(dollars in millions)(unaudited) Net (loss) income
$
(15.3
)
$
(19.7
)
$
(575.5
)
$
18.2
Add (deduct): Interest expense
4.2
7.5
16.5
23.3
Provision for (benefit from) income taxes
(6.4
)
(3.6
)
(58.0
)
10.3
Goodwill impairment charges(1)
-
9.3
564.0
9.3
Intangible asset impairment charges(2)
-
17.0
59.4
17.0
Depreciation and amortization
12.2
12.9
37.2
39.3
Stock-based compensation
1.5
1.9
4.2
6.1
Deferred revenue adjustment
-
-
-
0.2
Other items(3)
0.6
3.4
5.8
5.6
Adjusted EBITDA
$
(3.2
)
$
28.7
$
53.6
$
129.3
Notes:
- For the nine months ended September 30, 2020, represents a
non-cash charge of $564.0 million for goodwill in connection with
the Company’s interim testing of goodwill for impairment.
- Intangible asset impairment charges for the nine months ended
September 30, 2020 represent non-cash charges of $46.2 million and
$13.2 million for certain indefinite-lived intangible assets and
definite-lived intangible assets, respectively, in connection with
the Company’s interim testing of intangibles for impairment.
- Other items for the three months ended September 30, 2020
included: (i) $0.7 million in non-recurring legal, audit and
consulting fees and (ii) $0.2 million in transition costs, offset
by (iii) a $0.3 million reduction to expense related to the
remeasurement of contingent consideration. Other items for the
three months ended September 30, 2019 included: (i) $1.6 million in
contract termination costs (ii) $0.2 million in transaction costs
in connection with certain acquisition transactions and (iii) $1.6
million in transition costs. Other items for the nine months ended
September 30, 2020 included: (i) $4.6 million in transition costs,
including one-time severance expense of $2.8 million, (ii) $1.5
million in non-recurring legal, audit and consulting fees and (iii)
$0.4 million in transaction costs in connection with certain
acquisition transactions offset by (iv) $0.7 million reduction to
expense related to the remeasurement of contingent consideration.
Other items for the nine months ended September 30, 2019 included:
(i) $1.4 million in contract termination costs, (ii) $0.8 million
in transaction costs in connection with certain acquisition
transactions, (iii) $3.2 million in transition costs and (iv) $0.2
million in non-recurring legal, audit and consulting fees.
Schedule
3
Emerald Holding, Inc.
UNAUDITED RECONCILIATION OF
NET (LOSS) INCOME TO ADJUSTED NET (LOSS) INCOME
Three MonthsEnded September 30, Nine MonthsEnded
September 30,
2020
2019
2020
2019
(dollars in millions)(share data in thousands, except per share
data)(unaudited) Net (loss) income
$
(15.3
)
$
(19.7
)
$
(575.5
)
$
18.2
Add (deduct): Stock-based compensation
1.5
1.9
4.2
6.1
Deferred revenue adjustment
-
-
-
0.2
Goodwill impairment charges(1)
-
9.3
564.0
9.3
Intangible asset impairment charges(2)
-
17.0
59.4
17.0
Other items(3)
0.6
3.4
5.8
5.6
Amortization of deferred financing fees and discount
0.4
0.4
1.1
1.1
Amortization of acquired intangible assets
11.4
12.4
35.0
37.5
Tax adjustments related to non-GAAP adjustments(4)
(4.1
)
(12.1
)
(52.0
)
(20.8
)
Adjusted Net (Loss) Income
$
(5.5
)
$
12.6
$
42.0
$
74.2
Adjusted basic (loss) earnings per share
$
(0.08
)
$
0.18
$
0.59
$
1.03
Adjusted diluted (loss) earnings per share
$
(0.08
)
$
0.17
$
0.59
$
1.02
Basic weighted average common shares outstanding
71,484
71,796
71,437
71,843
Diluted weighted average common shares outstanding
71,484
72,368
71,480
72,752
Notes:
- Represents non-cash goodwill impairment charges described in
Note 1 to Schedule 2 above.
- Represents non-cash intangible asset impairment charges
described in Note 2 to Schedule 2 above.
- Represents other items described in Note 3 to Schedule 2
above.
- Reflects application of U.S. federal and state enterprise tax
rate of 29.5% and 27.3% for the three months ended September 30,
2020 and 2019, respectively. For the nine months ended September
30, 2020, represents the application of U.S. Federal and state
enterprise tax rate of 27.1% to non-impairment related items and
the actual tax effect of non-cash impairment charges of $39.6
million. For the nine months ended September 30, 2019, represents
the application of U.S. Federal and state enterprise tax rate of
27.1%.
Schedule
4
Emerald Holding, Inc.
UNAUDITED RECONCILIATION OF
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES TO FREE CASH
FLOW
Three MonthsEnded September 30, Nine MonthsEnded
September 30,
2020
2019
2020
2019
(dollars in millions)(unaudited) Net Cash (Used in)
Provided by Operating Activities
$
(20.1
)
$
11.6
$
(42.7
)
$
51.6
Less: Capital expenditures
0.8
0.9
3.1
1.8
Free Cash Flow
$
(20.9
)
$
10.7
$
(45.8
)
$
49.8
Schedule
5
Emerald Holding, Inc.
UNAUDITED RECONCILIATION OF
REPORTABLE SEGMENTS RESULTS TO INCOME (LOSS) BEFORE TAXES
Three MonthsEnded September 30, Nine MonthsEnded
September 30,
2020
2019
2020
2019
(dollars in millions)(unaudited) Revenues Commerce
$
1.7
$
50.7
$
52.7
$
178.7
Design and Technology
5.0
20.6
45.7
109.2*
All Other
1.8
4.3
16.8
28.1
Total revenues
$
8.5
$
75.6
$
115.2
$
316.0
Other Income Commerce
10.7
6.1
$
45.3
6.1
Design and Technology
3.1
-
16.0
-
All Other
2.3
-
3.0
Total other income
$
16.1
$
6.1
$
64.3
$
6.1
Adjusted EBITDA Commerce
$
6.0
$
31.3
$
55.2
$
105.9
Design and Technology
1.4
6.6
24.0
43.5
All Other
0.2
(0.4
)
3.1
7.3
Subtotal Adjusted EBITDA
$
7.6
$
37.5
$
82.3
$
156.7
General corporate and other expenses
(10.8
)
(8.8
)
(28.7
)
(27.4
)
Interest expense
(4.2
)
(7.5
)
(16.5
)
(23.3
)
Goodwill impairment charges
-
(9.3
)
(564.0
)
(9.3
)
Intangible asset impairment charges
-
(17.0
)
(59.4
)
(17.0
)
Depreciation and amortization expense
(12.2
)
(12.9
)
(37.2
)
(39.3
)
Stock-based compensation expense
(1.5
)
(1.9
)
(4.2
)
(6.1
)
Deferred revenue adjustment
-
-
-
(0.2
)
Other items
(0.6
)
(3.4
)
(5.8
)
(5.6
)
(Loss) income before taxes
$
(21.7
)
$
(23.3
)
$
(633.5
)
$
28.5
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201102005928/en/
Emerald Holding, Inc. David Doft, 1-866-339-4688
(866EEXINVT)
Emerald (NYSE:EEX)
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