Organic Revenue Growth of 17%
Year-over-Year
Repurchased 5.1 Million Shares in First
Quarter
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 first quarter ended March 31, 2023.
Financial Highlights
- Revenues of $122.3 million for the first quarter 2023, an
increase of $23.8 million, or 24.2%, primarily on growth in events
that staged in both Q1 2023 and Q1 2022
- Organic Revenues, a non-GAAP measure, which takes into account
the impact of acquisitions and scheduling adjustments, of $122.1
million for the first quarter 2023, an increase of $17.7 million,
or 17.0%, from $104.4 million for the first quarter 2022 (Refer to
Schedule 1 for a reconciliation to revenues, the most directly
comparable GAAP measure)
- Net income of $7.1 million for the first quarter 2023, compared
to $16.1 million for the first quarter 2022
- Adjusted EBITDA, a non-GAAP measure, of $36.5 million for the
first quarter of 2023, compared to $49.3 million for the first
quarter 2022; Adjusted EBITDA excluding insurance proceeds, a
non-GAAP measure, of $36.5 million for the first quarter 2023,
compared to $25.6 million for the first quarter 2022 (Refer to
Schedule 3 for a reconciliation to net income, the most directly
comparable GAAP measure)
- Bought back 5.1 million shares, or 7.5% of common stock
outstanding, at an average price of $3.34 per share during the
first quarter 2023
- Ended the quarter with $217.3 million in cash and full
availability of its $110.0 million revolving credit facility
- For the full year 2023, the Company continues to expect to
generate in excess of $400 million of revenue and $100 million of
Adjusted EBITDA
Operational Highlights
- Post-COVID recovery cycle driving continued growth in exhibitor
and attendee counts
- Successfully staged 35 in-person trade shows, conferences and
other events in the first quarter as the Company builds back from
the COVID-19 pandemic and customers eagerly returned to in-person
events
- Acquired Lodestone Events, producer of the successful Overland
Expo series of vehicle-based, adventure travel consumer shows, in
January 2023 for initial cash consideration of $9.5 million
Hervé Sedky, Emerald’s President and Chief Executive Officer,
said, “Emerald is off to an excellent start in 2023, with strong
demand from exhibitors and attendees, contributing to the ongoing
rebound in live events. The business continues to benefit from
strong post-COVID-19 tailwinds across our business that we expect
to persist well beyond 2023. In addition, the work we’ve done to
grow the business through strategic acquisitions, operational
efficiencies, and product enhancements have made us both a larger
and more dynamic organization. Notably, we have an exciting
pipeline of new event launches that leverage our scale and
expertise in must attend live events and further our strategy of
targeting new audiences in high-growth industries. Moving forward,
we expect that our customers and shareholders alike will benefit
from the new and improved Emerald as we continue to deliver premium
marketing value to customers and attractive cash flow growth to
investors.”
David Doft, Emerald’s Chief Financial Officer, added, “As we
cycle past the prior-year COVID-19 impacts, we believe that our
results are beginning to reflect the true embedded growth potential
of the Emerald platform. This quarter, we delivered 17%
year-over-year growth in Organic Revenue and 30% Adjusted EBITDA
margins. Looking ahead, we have multiple levers to drive
substantial revenue growth as well as margin improvement through
higher attendee counts, increased demand for exhibitor space,
enhancements to Emerald’s product offering, and strategic
acquisitions. During the first quarter, we took advantage of a
dislocation in the share price to repurchase 5.1 million shares of
common stock. Along with acquisitions and continued investments
into our business, this is yet another example of where we are
deploying capital in areas where it can most effectively drive
value for shareholders.”
First Quarter 2023 Financial
Performance and Highlights
Three Months Ended March
31,
2023
2022
Change
% Change
(unaudited, dollars in
millions, except percentages and per share data)
Revenues
$
122.3
$
98.5
$
23.8
24.2
%
Net income
$
7.1
$
16.1
$
(9.0
)
(55.9
%)
Net cash provided by operating
activities
$
8.9
$
33.0
$
(24.1
)
(73.0
%)
Diluted (loss) income per share
$
(0.04
)
$
0.04
$
(0.08
)
NM
Non-GAAP measures:
Adjusted EBITDA
$
36.5
$
49.3
$
(12.8
)
(26.0
%)
Adjusted EBITDA excluding event
cancellation insurance proceeds
$
36.5
$
25.6
$
10.9
42.6
%
Free Cash Flow
$
5.2
$
29.8
$
(24.6
)
(82.6
%)
Free Cash Flow excluding event
cancellation insurance proceeds, net
$
5.2
$
6.1
$
(0.9
)
(14.8
%)
- First quarter 2023 revenues were $122.3 million, an increase of
$23.8 million or 24.2% versus the first quarter 2022, driven by
revenue growth in events that staged in both periods as well a
revenue from three events that staged in the first quarter of 2023
but staged later in the prior year.
- First quarter 2023 Organic Revenues were $122.1 million, an
increase of $17.7 million or 17.0% versus the first quarter 2022,
due primarily to a $17.4 million increase in revenues from events
that traded in both periods, $1.2 million from increased
subscription software revenues and $0.3 million from newly launched
events and partially offset by softness in other marketing
services.
- First quarter 2023 net income was $7.1 million, compared to
$16.1 million for the first quarter 2022.
- First quarter 2023 Adjusted EBITDA was $36.5 million, compared
to $49.3 million for the first quarter 2022. Excluding event
cancellation insurance proceeds, first quarter 2023 Adjusted EBITDA
was $36.5 million, compared to Adjusted EBITDA ex-insurance of
$25.6 million for the first quarter 2022.
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 income (discussed in the
second paragraph of this section), the most directly comparable
GAAP measure.
Cash Flow
- First quarter 2023 net cash provided by operating activities
was $8.9 million, compared to $33.0 million in the first quarter
2022.
- First quarter 2023 capital expenditures were $3.7 million,
compared to $3.2 million in the first quarter 2022.
- First quarter 2023 Free Cash Flow excluding event cancellation
insurance proceeds, net, which the Company defines as net cash
provided by operating activities less capital expenditures, event
cancellation insurance proceeds and taxes paid on event
cancellation insurance proceeds, was $5.2 million, compared to $6.1
million in the first quarter 2022. The calculation of first quarter
2023 Free Cash Flow excluding event cancellation insurance
proceeds, net, includes acquisition related transaction costs of
$0.7 million, acquisition integration and restructuring-related
transition costs of $1.7 million, and non-recurring legal, audit
and consulting fees of $1.8 million. The calculation of first
quarter 2022 Free Cash Flow excluding event cancellation insurance
proceeds, net, includes acquisition related transaction costs of
$0.8 million, integration-related transition costs of $0.1 million,
and non-recurring legal and consulting fees of $0.4 million. The
total of these items is $4.2 million and $1.3 million for the
quarters ended March 31, 2023 and 2022, respectively.
- During the first quarter 2023, the Company made common stock
repurchases of $16.9 million and acquired Lodestone Events for an
aggregate amount of $9.5 million, which represented the initial
cash payment. Given the cash outflow for the common stock
repurchases and the Lodestone Events acquisition, Emerald ended the
first quarter 2023 with $217.3 million of cash as compared to the
fiscal year 2022 ending cash balance of $239.1 million.
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.
Emerald Share Repurchase
Program
The Company bought back 5.1 million shares of common stock, or
7.5% of common stock outstanding, for $16.9 million during the
first quarter 2023, equating to an average price of $3.34 per
share. Since the beginning of 2021, the Company has bought back
10.5 million shares of common stock.
Conference Call Webcast
Details
As previously announced, the Company’s leadership will hold a
conference call to discuss its first quarter 2023 results at 8:30
am EDT on Wednesday, May 3, 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 31699661. The replay will be available
until 11:59 pm (Eastern Time) on May 10, 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 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 income, 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.
Emerald Holding, Inc.
Condensed Consolidated
Statements of Income and Comprehensive Income
(unaudited, dollars in
millions, share data in thousands, except loss per share
data)
Three Months Ended March 31,
2023
Three Months Ended March 31,
2022
Revenues
$
122.3
$
98.5
Other income, net
—
23.7
Cost of revenues
43.2
34.2
Selling, general and administrative
expense
48.8
46.6
Depreciation and amortization expense
13.5
14.3
Goodwill impairment charge
—
6.3
Intangible asset impairment charge
—
1.6
Operating income
16.8
19.2
Interest expense
8.0
3.9
Interest income
1.1
—
Other expense
0.1
—
Income before income taxes
9.8
15.3
Provision for (benefit from) income
taxes
2.7
(0.8
)
Net income and comprehensive income
attributable to Emerald Holding, Inc.
$
7.1
$
16.1
Accretion to redemption value of
redeemable convertible preferred stock
(10.1
)
(9.2
)
Participation rights on if-converted
basis
—
(4.4
)
Net (loss) income and comprehensive (loss)
income attributable to Emerald Holding, Inc. common
stockholders
$
(3.0
)
$
2.5
Basic (loss) income per share
(0.04
)
0.04
Diluted (loss) income per share
(0.04
)
0.04
Basic weighted average common shares
outstanding
67,280
70,171
Diluted weighted average common shares
outstanding
67,280
70,280
Emerald Holding, Inc.
Condensed Consolidated Balance
Sheets
(dollars in millions, share
data in thousands, except par value)
March 31, 2023
Year Ended December 31,
2022
(unaudited)
Assets
Current assets
Cash and cash equivalents
$
217.3
$
239.1
Trade and other receivables, net of
allowance of $1.5 million, as of March 31, 2023 and December 31,
2022
104.8
74.9
Prepaid expenses and other current
assets
10.8
17.8
Total current assets
332.9
331.8
Noncurrent assets
Property and equipment, net
2.0
2.2
Intangible assets, net
198.3
204.8
Goodwill, net
553.9
545.5
Right-of-use assets
10.0
10.6
Other noncurrent assets
3.4
3.5
Total assets
$
1,100.5
$
1,098.4
Liabilities, Redeemable Convertible
Preferred Stock and Stockholders’ Deficit
Current liabilities
Accounts payable and other current
liabilities
$
54.7
$
58.1
Income taxes payable
2.3
1.2
Canceled event liabilities
2.9
3.3
Deferred revenues
161.8
151.2
Contingent consideration
3.7
3.5
Right-of-use liabilities, current
portion
4.8
4.9
Total current liabilities
230.2
222.2
Noncurrent liabilities
Term loan, net of discount and deferred
financing fees
414.2
413.9
Deferred tax liabilities, net
2.8
1.8
Right-of-use liabilities, noncurrent
portion
9.4
10.4
Other noncurrent liabilities
12.3
10.8
Total liabilities
668.9
659.1
Commitments and contingencies
Redeemable convertible preferred stock
7% Series A Redeemable Convertible
Participating Preferred Stock, $0.01 par value; authorized shares
at March 31, 2023 and December 31, 2022: 80,000; 71,417 shares
issued and outstanding; aggregate liquidation preference of $484.2
million and $475.9 million at March 31, 2023 and December 31, 2022,
respectively
482.5
472.4
Stockholders’ deficit
Common stock, $0.01 par value; authorized
shares at March 31, 2023 and December 31, 2022: 800,000; 62,845 and
67,588 shares issued and outstanding at March 31, 2023 and December
31, 2022, respectively
0.6
0.7
Additional paid-in capital
585.5
610.3
Accumulated deficit
(637.0
)
(644.1
)
Total stockholders’ deficit
(50.9
)
(33.1
)
Total liabilities, redeemable convertible
preferred stock and stockholders’ deficit
$
1,100.5
$
1,098.4
Schedule
1
Emerald Holding, Inc.
UNAUDITED RECONCILIATION OF
REVENUES TO ORGANIC REVENUES
Three Months Ended March
31,
Change
2023
2022
$
%
(dollars in millions)
(unaudited)
Revenues
$
122.3
$
98.5
$
23.8
24.2
%
Add (deduct):
Acquisition revenues
(0.2
)
—
Scheduling adjustments(1)
5.9
Organic revenues
$
122.1
$
104.4
$
17.7
17.0
%
Notes:
(1)
For the three months ended March
31, 2023, represents revenues from three events that staged in the
first quarter of fiscal year 2023, but staged later in fiscal year
2022, offset by revenues from one event that staged in the first
quarter of fiscal year 2022, but is scheduled to stage later in
fiscal 2023.
Schedule
2
Emerald Holding, Inc.
UNAUDITED RECONCILIATION OF
REVENUES TO DISAGGREGATED REVENUES
Three Months Ended March
31,
2023
2022
(dollars in millions)
(unaudited)
Trade shows
$
97.1
$
78.6
Other events
14.2
9.1
Subscription software and services
5.2
4.2
Other marketing services
5.8
6.6
Total Revenues
$
122.3
$
98.5
Schedule
3
Emerald Holding, Inc.
UNAUDITED RECONCILIATION OF
NET INCOME TO ADJUSTED EBITDA
Three Months Ended March
31,
2023
2022
(dollars in millions)
(unaudited)
Net income
$
7.1
$
16.1
Add (deduct):
Interest expense, net
6.9
3.9
Provision for (benefit from) income
taxes
2.7
(0.8
)
Goodwill impairment charge(1)
—
6.3
Intangible asset impairment charge(2)
—
1.6
Depreciation and amortization
13.5
14.3
Stock-based compensation
2.1
2.1
Deferred revenue adjustment
—
0.2
Other items(3)
4.2
5.6
Adjusted EBITDA
$
36.5
$
49.3
Deduct:
Event cancellation insurance proceeds
—
23.7
Adjusted EBITDA excluding event
cancellation insurance proceeds
$
36.5
$
25.6
Notes:
(1)
For the three months ended March
31, 2022, represents non-cash charges of $6.3 million for goodwill
in connection with the Company’s interim testing of goodwill for
impairment resulting from the change in operating segments and
reporting units that occurred in the first quarter of 2022.
(2)
Intangible asset impairment
charges for the three months ended March 31, 2022 represent
non-cash charges of $1.6 million for certain indefinite-lived
intangible assets in connection with the Company’s interim testing
of intangibles for impairment.
(3)
Other items for the three months
ended March 31, 2023 included: (i) $0.7 million in
acquisition-related transaction costs; (ii) $1.7 million in
acquisition integration and restructuring-related transition costs,
including one-time severance expense of $0.5 million and (iii) $1.8
million in non-recurring legal, audit and consulting fees. Other
items for the three months ended March 31, 2022 included: (i) $4.3
million in non-cash expense related to the remeasurement of
contingent consideration; (ii) $0.4 million in non-recurring legal,
audit and consulting fees; (iii) $0.8 million in
acquisition-related transaction costs and (iv) $0.1 million in
transition expenses.
Schedule
4
Emerald Holding, Inc.
UNAUDITED RECONCILIATION OF
NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
Three Months Ended March
31,
2023
2022
(dollars in millions)
(unaudited)
Net Cash Provided by Operating
Activities
$
8.9
$
33.0
Less:
Capital expenditures
3.7
3.2
Free Cash Flow
$
5.2
$
29.8
Event cancellation insurance proceeds
—
(23.7
)
Free cash flow excluding event
cancellation insurance proceeds net
$
5.2
$
6.1
Schedule
5
Emerald Holding, Inc.
UNAUDITED RECONCILIATION OF
REPORTABLE SEGMENTS RESULTS TO INCOME BEFORE TAXES
Three Months Ended March
31,
2023
2022
(dollars in millions)
(unaudited)
Revenues
Commerce
$
70.0
$
56.7
Design, Creative, and Technology
46.7
37.5
All Other
5.6
4.3
Total revenues
$
122.3
$
98.5
Other income, net
Commerce
$
—
$
1.1
Design, Creative, and Technology
—
21.9
All Other
—
0.7
Total other income, net
$
—
$
23.7
Adjusted EBITDA
Commerce
$
39.4
$
31.8
Design, Creative, and Technology
13.1
32.6
All Other
(0.9
)
(2.3
)
Subtotal Adjusted EBITDA
$
51.6
$
62.1
General corporate and other expenses
(15.1
)
(12.8
)
Interest expense, net
(6.9
)
(3.9
)
Goodwill impairment charges
—
(6.3
)
Intangible asset impairment charges
—
(1.6
)
Depreciation and amortization expense
(13.5
)
(14.3
)
Stock-based compensation expense
(2.1
)
(2.1
)
Deferred revenue adjustment
—
(0.2
)
Other items
(4.2
)
(5.6
)
Income before taxes
$
9.8
$
15.3
View source
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Emerald Holding, Inc. Investor Relations
investor.relations@emeraldx.com 1-866-339-4688 (866EEXINVT)
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