8-K
Emerald Holding, Inc. (EEX)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 8, 2022 (August 3, 2022)
Emerald Holding, Inc.
(Exact name of Registrant as Specified in Its Charter)
| Delaware | 001-38076 | 42-1775077 |
|---|---|---|
| (State or other jurisdiction<br><br><br>of incorporation) | (Commission<br><br><br>File Number) | (I.R.S. Employer<br><br><br>Identification No.) |
| 100 Broadway, 14th Floor<br><br><br>New York, NY | 10005 | |
| --- | --- | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (949) 226-5700
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br><br><br>Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, par value $0.01 per share | EEX | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging Growth Company ☒
| If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒ |
|---|
Item 1.01. Entry Into a Material Definitive Agreement.
Insurance Litigation Settlement Term Sheet
On August 3, 2022, Emerald Holding, Inc. (the “Company”) entered into a settlement term sheet (the “Settlement Term Sheet”) with respect to outstanding litigation brought by the Company against certain underwriters of its 2020 and 2021 event cancellation insurance policies. The Settlement Term Sheet is governed by, and intended to constitute a binding agreement under, California law. Pursuant to the Settlement Term Sheet, the Company and the other parties thereto have agreed to prepare and enter into a definitive settlement agreement (the “Settlement Agreement”), which will supersede the Settlement Term Sheet and substantially incorporate the terms thereof. Following the execution of the Settlement Agreement, the other parties have agreed to pay to the Company a settlement payment of $149,250,000, and the Company has agreed to file a dismissal with prejudice of the litigation proceedings. The parties have also agreed to a mutual release of all claims arising out of or relating to the relevant cancellation insurance policies. The Company expects to receive the settlement payment during the third quarter of 2022.
Item 2.02. Results of Operations and Financial Condition.
On August 8, 2022, Emerald Holding, Inc. (the “Company”) issued a press release announcing the financial results of the Company for the second quarter ended June 30, 2022. In addition, on August 8, 2022, the Company also made available on its website a presentation detailing results for the second quarter ended June 30, 2022. Copies of the press release and presentation are being furnished as Exhibit 99.1 and 99.2, respectively, attached hereto and are incorporated by reference herein.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibit.
| Exhibit No. | Description |
|---|---|
| 99.1<br><br><br>99.2<br><br><br>104 | Press Release of the Company, dated August 8, 2022.<br><br><br>Second Quarter 2022 Financial Results Presentation.<br><br><br>Cover Page Interactive Data File (embedded within the inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: August 8, 2022 | EMERALD HOLDING, INC. | |
|---|---|---|
| By: | /s/ Stacey Sayetta | |
| Stacey Sayetta | ||
| General Counsel and Corporate Secretary |
eex-ex991_6.htm
Exhibit 99.1
Emerald Reports Second Quarter 2022 Financial Results
Company Announces Settlement of Insurance Litigation; Recovery Momentum Continues
NEW YORK, N.Y. – August 8, 2022 – Emerald Holding, Inc. (NYSE:EEX) (“Emerald” or the “Company”), a leading U.S. business-to-business platform producer of trade shows, events, conferences, marketing and B2B software solutions, today reported financial results for the second quarter ended June 30, 2022.
Highlights
| • | Company reaches agreement to settle outstanding insurance litigation for proceeds of $149.25 million; upon expected receipt in the third quarter, total insurance proceeds from 2020 and 2021 cancelled and impacted events are expected to equal approximately $372.9 million |
|---|---|
| • | In the second quarter of 2022, Emerald successfully traded 29 in-person trade shows, conferences and other events, serving more than 62,000 attendees and 3,600 exhibiting companies |
| --- | --- |
| • | Revenues of $71.4 million for the second quarter 2022 reflect an increase of $56.4 million, or 376.0%, from $15.0 million in revenue for the second quarter of 2021 |
| --- | --- |
| • | Net loss of $0.7 million for the second quarter 2022, compared to net loss of $46.5 million for the same quarter in 2021 |
| --- | --- |
| • | Adjusted EBITDA, a non-GAAP measure, of $15.6 million for the second quarter 2022, compared to negative $13.6 million for the second quarter 2021 (Refer to Schedule 3 for a reconciliation to net income, the most directly comparable GAAP measure) |
| --- | --- |
| • | Continuing positive cash generation as bookings for returning events accelerate |
| --- | --- |
| • | Cash provided by operations of $12.2 million for the second quarter 2022, compared to $25.1 million for the second quarter 2021 as last year’s quarter was aided by the significant ramp in customer deposits as pandemic-related restrictions eased |
| --- | --- |
| • | Emerald generated free cash flow, a non-GAAP measure, of $10.5 million for the second quarter 2022 as compared to $23.8 million for the second quarter 2021 (Refer to Schedule 4 for a reconciliation to net cash provided by operations, the most directly comparable GAAP measure) |
| --- | --- |
| • | Emerald bought back 1.0 million shares of common stock at an average price of $3.38 per share during the second quarter 2022 |
| --- | --- |
| • | Emerald ended the quarter with $231.7 million in cash and marketable securities and full availability of its $110 million revolving credit facility |
| --- | --- |
| • | During the second quarter 2022, Emerald acquired substantially all the assets of Advertising Week, a global event and thought leadership platform focused on marketing, media, technology and culture. |
| --- | --- |
Second Quarter 2022 Financial Performance
| Three Months<br><br><br>Ended June 30, | Six Months Ended<br><br><br>June 30, | ||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | Change | % Change | 2022 | 2021 | Change | % Change | ||||||||||||||||
| (unaudited, dollars in millions, except percentages and per share data) | |||||||||||||||||||||||
| Revenues | $ | 71.4 | $ | 15.0 | $ | 56.4 | 376.0 | % | $ | 169.9 | $ | 27.9 | $ | 142.0 | 509.0 | % | |||||||
| Net (loss) income | $ | (0.7 | ) | $ | (46.5 | ) | $ | 45.8 | NM | $ | 15.4 | $ | (61.8 | ) | $ | 77.2 | 124.9 | % | |||||
| Net cash provided by<br><br><br>operating activities | $ | 12.2 | $ | 25.1 | $ | (12.9 | ) | (51.4 | %) | $ | 45.2 | $ | 26.7 | $ | 18.5 | NM | |||||||
| Diluted loss per share | $ | (0.15 | ) | $ | (0.77 | ) | $ | 0.62 | NM | $ | (0.05 | ) | $ | (1.10 | ) | $ | 1.05 | 95.5 | % | ||||
| Non-GAAP measures: | |||||||||||||||||||||||
| Adjusted EBITDA | $ | 15.6 | $ | (13.6 | ) | $ | 29.2 | NM | $ | 64.9 | $ | (16.1 | ) | $ | 81.0 | (503.1 | %) | ||||||
| Adjusted EBITDA excluding event cancellation insurance proceeds | $ | 7.5 | $ | (15.9 | ) | $ | 23.4 | NM | $ | 33.1 | $ | (32.5 | ) | $ | 65.6 | 201.8 | % | ||||||
| Free Cash Flow | $ | 10.5 | $ | 23.8 | $ | (13.3 | ) | (55.9 | %) | $ | 40.3 | $ | 24.4 | $ | 15.9 | NM |
Hervé Sedky, Emerald’s President and Chief Executive Officer, said, “We continue to see clear evidence of ongoing recovery in in-person events as qualified attendee and exhibitor counts track towards pre-pandemic levels. Importantly, our pricing power remains strong, further validating the unique value that our trade shows offer our customers. We believe that almost one quarter of our shows this year should exceed pre-pandemic revenues, keeping us on track to meet our FY 2022 financial guidance. We not only benefit from operating in a durable industry that has proven its value throughout numerous economic cycles, but also from strong liquidity which supports our strategic growth investments. We plan to further invest in our business as we continue to build Emerald through our three-pronged growth strategy focused on portfolio optimization, 365-day engagement and customer centricity. The recent acquisitions of Advertising Week and Bulletin (which were acquired in early June and July 2022, respectively), are prime examples of the ways in which we’re adding services and technology solutions available year-round that strategically complement Emerald’s existing offering and deliver connected, best-in-class experiences through seamlessly integrating in-person connections, content and commerce. Overall, our high-growth SaaS platform, powerful first-party data, and entry into high-growth industries provides us with a robust model to deliver profitable and sustained growth as we look to the future.”
David Doft, Emerald’s Chief Financial Officer, added, “Our business continues to generate significant free cash flow, supported by our low capital intensity and the favorable working capital dynamics of the events industry, and targeted investments in our technology stack and M&A pipeline. Of note, we ended the second quarter with over $231 million of cash and marketable securities on our balance sheet, having generated $10.5 million in free cash flow in the quarter. We expect to further bolster our balance sheet in the third quarter with the anticipated receipt of an additional $149.25 million in payments relating to the settlement of our insurance litigation. We are particularly pleased with the increasing diversification and durability of our revenue streams, which is the result of extensive efforts to add to our capabilities across content, B2B commerce technology, and advertising and sponsorship offerings in existing and new verticals. Our liquidity and balance sheet flexibility support our efforts to balance our capital allocation between acquisitions, investments in the business, managing our leverage and share buybacks, through which we have retired 3.7 million shares since the beginning of 2021. We have also been successful in managing our cost structure even in the current inflationary environment, and believe we are well positioned to protect and grow our margins over time. As we look to the future, we are on track to generate in excess of $300 million of revenues, more than $50 million of Adjusted EBITDA excluding insurance proceeds, and $70 million of free cash flow excluding insurance proceeds in FY 2022, and the company continues to progress toward its objective of over $100 million of Adjusted EBITDA in 2023.”
Resumption of Live Events and Insurance Litigation Settlement
Emerald actively returned to staging in-person events beginning in July 2021 and continues to do so to date. During the second quarter of 2022, Emerald successfully traded 29 in-person trade shows, conferences and other events, serving more than 62,000 attendees and 3,600 exhibiting companies. Emerald continues to plan for a full slate of events in 2022.
On August 3, 2022, the Company reached an agreement with the underwriters to settle outstanding litigation relating to 2020 and 2021 coverage under those policies. As a result, the Company expects to receive a total settlement of $149.25 million, of which, $148.54 million is expected to be recognized as Other income, net during the third quarter of 2022.
In total, Emerald has submitted insurance claims of approximately $348.4 million, which represents the net amount of expected gross revenues less avoided costs for cancelled events scheduled to take place during the two years. Insurance claim payments received to date total $223.6 million, which includes $2.4 million received in July, subsequent to the quarter end, but excludes payments expected
to be received in the third quarter in connection with the litigation settlement. Including the litigation settlement amount, total payments will total $372.9 million. Other income, net recognized to date totals $216.1 million. Including the litigation settlement amount as well as proceeds received in July, Other income, net will total $367.l million.
Financial & Operational Results, Quarter Ended June 30, 2022
For the second quarter of 2022, Emerald reported revenues of $71.4 million compared to revenues of $15.0 million for the first quarter of 2021, an increase of $56.4 million or 376.0%. The primary driver of the increase was $45.6 million in revenues related to events that typically stage in the second quarter but had to be moved to dates later in 2021 due to COVID-19. When compared to their 2021 edition, revenue for these events increased $18.9 million or 70.8%. In addition, events that staged in the second quarter of 2022 but had been cancelled in the prior year due to COVID-19 generated incremental revenues of $9.2 million. When compared to their last in-person edition, revenue for these events was down $2.1 million, or 16.4%. Organic revenues for the second quarter of 2022 were $15.7 million, representing organic revenue growth of $0.8 million, or 5.4%, as compared to the prior year second quarter organic revenues of $14.9 million due primarily to a $0.7 million increase in revenues from subscription software as well as several small events that staged in the second quarter of 2022 as well as the second quarter of 2021 offset by softness in other marketing services. Acquisitions that closed after the second quarter of 2021 generated incremental revenues of $0.9 million.
The Company recognized net loss of $0.7 million for the second quarter of 2022 compared to net loss of $46.5 million for the second quarter of 2021. The improvement in net loss was primarily attributable to the increase in revenues related to the continued return of live events in the second quarter of 2022 and higher event cancellation insurance claims proceeds being received during the second quarter of 2022 compared to the second quarter of 2021. The Company recorded $8.1 million of Other Income, net during the second quarter of 2022 as a result of the receipt of event cancellation insurance claims proceeds compared to $2.3 million of Other Income, net recorded during the second quarter of 2021 as a result of the receipt or confirmation of event cancellation insurance claims proceeds.
For the second quarter of 2022, Adjusted EBITDA was $15.6 million, compared to negative $13.6 million for the second quarter of 2021. The increase in Adjusted EBITDA of $29.2 million was mainly due to profits generated by the higher number of live events that staged during the quarter compared to the second quarter of 2021 and the higher confirmed or received event cancellation insurance claims proceeds described above. The Company’s Adjusted EBITDA for the second quarter of 2022 has been 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, including Adjusted EBITDA excluding event cancellation insurance proceeds, 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 and Adjusted EBITDA excluding event cancellation insurance proceeds to net loss (discussed in the second and third paragraphs of this section), the most directly comparable GAAP measure.
Cash Flow
Net cash provided by operating activities was $12.2 million in the second quarter of 2022, compared to $25.1 million in the comparable period of the prior year. This decrease is a consequence of a non-recurring but significant ramp in sales that occurred in the second quarter of 2021 from near zero due to the lifting of pandemic-related restrictions as live events prepared to begin staging without the offsetting impact of revenue recognized for events that staged during the quarter. Due to the attractive working capital features of the events business, cash is collected in advance of the events staging (and expenses being incurred) which resulted in significant cash inflows in the second quarter of 2021 when we resumed selling space at our events after an over one-year hiatus due to COVID-19.
Capital expenditures were $1.7 million for the second quarter of 2022, compared to $1.3 million for the second quarter of 2021.
Free Cash Flow, which the Company defines as net cash provided by operating activities less capital expenditures, was $10.5 million in the second quarter of 2022, compared to $23.8 million in the second quarter of 2021.
The Company bought back 1.0 million shares of common stock at an average price of $3.38 per share during the second quarter 2022. Since the beginning of 2021, the Company has bought back 3.7 million shares of common stock.
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 2022 results at 4:30pm EDT on August 8, 2022.
The conference call can be accessed by dialing 1-800-952-1438 (domestic) or 1-312-281-1211 (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 22019682. The replay will be available until 11:59 pm (Eastern Time) on August 15, 2022.
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.
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, (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.
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, (vii) material show scheduling adjustments, where applicable, and (viii) 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 2022 and 2021 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 2022 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.
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 and related variants on our business; our ability to continue staging live events and return our business to pre-COVID levels; our guidance with respect to estimated revenues and Adjusted EBITDA, including Adjusted EBITDA excluding event cancellation insurance proceeds; our ability to recover insurance proceeds under current policies and the timing of any such recoveries; the timing for rescheduled trade show events; and our ability to successfully identify and acquire acquisition targets and 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@emeraldexpo.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<br><br><br>June 30,<br><br><br>2022 | Three Months Ended<br><br><br>June 30,<br><br><br>2021 | Six Months Ended<br><br><br>June 30,<br><br><br>2022 | Six Months Ended<br><br><br>June 30,<br><br><br>2021 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenues | $ | 71.4 | $ | 15.0 | 169.9 | $ | 27.9 | |||||
| Other income, net | 8.1 | 2.3 | 31.8 | 16.4 | ||||||||
| Cost of revenues | 26.4 | 3.6 | 60.6 | 7.6 | ||||||||
| Selling, general and administrative expense | 32.3 | 33.1 | 78.9 | 63.9 | ||||||||
| Depreciation and amortization expense | 14.0 | 12.1 | 28.3 | 23.9 | ||||||||
| Goodwill impairment charges | — | — | 6.3 | — | ||||||||
| Intangible asset impairment charges | — | — | 1.6 | — | ||||||||
| Operating income (loss) | 6.8 | (31.5 | ) | 26.0 | (51.1 | ) | ||||||
| Interest expense, net | 4.6 | 4.1 | 8.5 | 8.1 | ||||||||
| Income (loss) before income taxes | 2.2 | (35.6 | ) | 17.5 | (59.2 | ) | ||||||
| Provision for income taxes | 2.9 | 10.9 | 2.1 | 2.6 | ||||||||
| Net (loss) income and comprehensive (loss) income attributable to Emerald Holding, Inc. | $ | (0.7 | ) | $ | (46.5 | ) | $ | 15.4 | $ | (61.8 | ) | |
| Accretion to redemption value of redeemable convertible preferred stock | (9.6 | ) | (8.8 | ) | (18.8 | ) | $ | (17.3 | ) | |||
| Net loss and comprehensive loss attributable to Emerald Holding, Inc. common stockholders | $ | (10.3 | ) | $ | (55.3 | ) | $ | (3.4 | ) | $ | (79.1 | ) |
| Basic loss per share | (0.15 | ) | (0.77 | ) | (0.05 | ) | (1.10 | ) | ||||
| Diluted loss income per share | (0.15 | ) | (0.77 | ) | (0.05 | ) | (1.10 | ) | ||||
| Basic weighted average common shares outstanding | 69,816 | 71,938 | 70,007 | 72,091 | ||||||||
| Diluted weighted average common shares outstanding | 69,816 | 71,938 | 70,007 | 72,091 |
Emerald Holding, Inc.
Condensed Consolidated Balance Sheets
(dollars in millions, share data in thousands, except par value)
| December 31,<br><br><br>2021 | |||||
|---|---|---|---|---|---|
| Assets | |||||
| Current assets | |||||
| Cash and cash equivalents | 181.7 | $ | 231.2 | ||
| Marketable securities | 50.0 | - | |||
| Trade and other receivables, net of allowances of 1.4 million and<br>1.2 million, as of June 30, 2022 and December 31, 2021, respectively | 79.7 | 46.4 | |||
| Prepaid expenses | 17.7 | 12.5 | |||
| Total current assets | 329.1 | 290.1 | |||
| Noncurrent assets | |||||
| Property and equipment, net | 4.2 | 3.7 | |||
| Intangible assets, net | 226.6 | 236.7 | |||
| Goodwill | 537.5 | 514.2 | |||
| Right-of-use assets | 14.7 | 15.1 | |||
| Other noncurrent assets | 2.6 | 2.6 | |||
| Total assets | 1,114.7 | $ | 1,062.4 | ||
| Liabilities, Redeemable Convertible Preferred Stock and Stockholders’ Deficit | |||||
| Current liabilities | |||||
| Accounts payable and other current liabilities | 66.2 | $ | 48.3 | ||
| Cancelled event liabilities | 4.4 | 9.8 | |||
| Deferred revenues | 143.5 | 118.1 | |||
| Contingent consideration | 32.7 | 5.1 | |||
| Right-of-use liabilities, current portion | 4.7 | 4.7 | |||
| Term loan, current portion | 5.7 | 5.7 | |||
| Total current liabilities | 257.2 | 191.7 | |||
| Noncurrent liabilities | |||||
| Term loan, net of discount and deferred financing fees | 508.7 | 510.9 | |||
| Deferred tax liabilities, net | 1.7 | 1.5 | |||
| Right-of-use liabilities | 11.9 | 13.3 | |||
| Other noncurrent liabilities | 7.5 | 32.1 | |||
| Total liabilities | 787.0 | 749.5 | |||
| Commitments and contingencies | |||||
| Redeemable convertible preferred stock | |||||
| 7% Series A Convertible Participating Preferred stock, 0.01 par value; authorized<br> shares June 30, 2022 and December 31, 2021; 80,000; 71,417 and<br> 71,442 shares issued and outstanding; aggregate liquidation preference<br> 459.7 million and 444.1 million at June 30, 2022 and December 31, 2021,<br> respectively | 452.5 | 433.9 | |||
| Stockholders’ deficit | |||||
| Common stock, 0.01 par value; authorized shares at June 30, 2022 and<br> December 31, 2021: 800,000; 69,284 and 70,026 shares issued and outstanding<br> at June 30, 2022 and December 31, 2021, respectively | 0.7 | 0.7 | |||
| Additional paid-in capital | 634.0 | 653.2 | |||
| Accumulated deficit | (759.5 | ) | (774.9 | ) | |
| Total stockholders’ deficit | (124.8 | ) | (121.0 | ) | |
| Total liabilities, redeemable convertible preferred stock and stockholders’ deficit | 1,114.7 | $ | 1,062.4 |
All values are in US Dollars.
Schedule 1
Emerald Holding, Inc.
UNAUDITED RECONCILIATION OF REVENUES TO ORGANIC REVENUES
| Three Months<br><br><br>Ended June 30, | Change | Six Months<br><br><br>Ended June 30, | Change | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | % | 2022 | 2021 | % | ||||||||||||||
| (dollars in millions)<br><br><br>(unaudited) | |||||||||||||||||||
| Revenues | $ | 71.4 | $ | 15.0 | 376.0 | % | $ | 169.9 | $ | 27.9 | 509.0 | % | |||||||
| Add (deduct): | |||||||||||||||||||
| Acquisition revenues | (0.9 | ) | (2.1 | ) | |||||||||||||||
| COVID-19 prior year cancellations^(^^1)^ | (9.6 | ) | (72.3 | ) | |||||||||||||||
| COVID-19 prior year postponements^(^^2)^ | (45.2 | ) | (57.5 | ) | |||||||||||||||
| Scheduling adjustments | — | (0.1 | ) | — | 1.1 | ||||||||||||||
| Organic revenues | $ | 15.7 | $ | 14.9 | 5.4 | % | $ | 38.0 | $ | 29.0 | 31.0 | % |
All values are in US Dollars.
Notes:
| (1) | Represents the increase in 2022 revenues as a result of events that staged in the current year and were cancelled due to COVID-19 in the prior year. |
|---|---|
| (2) | Represents the increase in revenues from events that staged in the second quarter of 2022 but were also postponed and staged in the second half of 2021 due to COVID-19. |
| --- | --- |
Schedule 2
Emerald Holding, Inc.
UNAUDITED RECONCILIATION OF REVENUES TO DISAGGREGATED REVENUES
| Three Months Ended<br><br><br>June 30, | Six Months Ended<br><br><br>June 30, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |||||
| (dollars in millions)<br><br><br>(unaudited) | ||||||||
| Trade Shows | $ | 50.5 | $ | 2.0 | $ | 129.1 | $ | 5.6 |
| Other Events | 9.3 | 1.9 | 18.4 | 3.9 | ||||
| Subscription software and services | 4.3 | 3.4 | 8.5 | 5.7 | ||||
| Other marketing services | 7.3 | 7.7 | 13.9 | 12.7 | ||||
| Total Revenues | $ | 71.4 | $ | 15.0 | $ | 169.9 | $ | 27.9 |
Schedule 3
Emerald Holding, Inc.
UNAUDITED RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA
| Three Months<br><br><br>Ended June 30, | Six Months Ended<br><br><br>June 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |||||||||
| (dollars in millions)<br><br><br>(unaudited) | ||||||||||||
| Net (loss) income | $ | (0.7 | ) | $ | (46.5 | ) | $ | 15.4 | $ | (61.8 | ) | |
| Add (deduct): | ||||||||||||
| Interest expense | 4.6 | 4.1 | 8.5 | 8.1 | ||||||||
| Provision for income taxes | 2.9 | 10.9 | 2.1 | 2.6 | ||||||||
| Goodwill impairment charge^(^^1)^ | — | — | 6.3 | — | ||||||||
| Intangible asset impairment charge^(^^2)^ | — | — | 1.6 | — | ||||||||
| Depreciation and amortization | 14.0 | 12.1 | 28.3 | 23.9 | ||||||||
| Stock-based compensation | 1.6 | 2.8 | 3.7 | 5.8 | ||||||||
| Deferred revenue adjustment | 0.2 | 0.2 | 0.4 | 1.1 | ||||||||
| Other items^(^^3)^ | (7.0 | ) | 2.8 | (1.4 | ) | 4.0 | ||||||
| Scheduling adjustments | — | - | — | 0.2 | ||||||||
| Adjusted EBITDA | $ | 15.6 | $ | (13.6 | ) | $ | 64.9 | (16.1 | ) | |||
| Deduct: | ||||||||||||
| Event cancellation insurance proceeds | 8.1 | 2.3 | 31.8 | 16.4 | ||||||||
| Adjusted EBITDA excluding event cancellation insurance proceeds | $ | 7.5 | $ | (15.9 | ) | $ | 33.1 | $ | (32.5 | ) |
Notes:
| (1) | For the six months ended June 30, 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 June 30, 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 June 30, 2022 included: (i) $10.0 million in gains related to the remeasurement of contingent consideration; (ii) $2.0 million in transaction costs, primarily in connection with the MJBiz, Advertising Week and Bulletin acquisitions; (iii) $0.8 million in non-recurring legal, audit and consulting fees and (iv) $0.2 million in transition expenses. Other items for the three months ended June 30, 2021 included: (i) $1.1 million in expense related to the remeasurement of contingent consideration; (ii) $1.2 million in non-recurring legal, audit and consulting fees; (iii) $0.3 million in transition costs in connection with previous acquisitions and (iv) $0.2 million in transaction costs in connection with PlumRiver LLC and Sue Bryce Education acquisitions. Other items for the six months ended June 30, 2022 included: (i) $5.8 million in gains related to the remeasurement of contingent consideration; (ii) $2.9 million in transaction costs, primarily in connection with the MJBiz, Advertising Week and Bulletin acquisitions; (iii) $1.2 million in non-recurring legal, audit and consulting fees and (iv) $0.3 million in transition expenses. Other items for the six months ended June 30, 2021 included: (i) $1.5 million in expense related to the remeasurement of contingent consideration; (ii) $1.8 million in non-recurring legal, audit and consulting fees; (iii) $0.3 million in transition costs in connection with previous acquisitions and (iv) $0.4 million in transaction costs in connection with PlumRiver LLC, EDspaces and Sue Bryce Education acquisitions. |
| --- | --- |
Schedule 4
Emerald Holding, Inc.
UNAUDITED RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
| Three Months<br><br><br>Ended June 30, | Six Months<br><br><br>Ended June 30, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |||||
| (dollars in millions)<br><br><br>(unaudited) | ||||||||
| Net Cash Provided by Operating Activities | $ | 12.2 | $ | 25.1 | $ | 45.2 | $ | 26.7 |
| Less: | ||||||||
| Capital expenditures | 1.7 | 1.3 | 4.9 | 2.3 | ||||
| Free Cash Flow | $ | 10.5 | $ | 23.8 | $ | 40.3 | $ | 24.4 |
Schedule 5
Emerald Holding, Inc.
UNAUDITED RECONCILIATION OF REPORTABLE SEGMENTS RESULTS TO INCOME (LOSS) BEFORE TAXES
| Three Months<br><br><br>Ended June 30, | Six Months<br><br><br>Ended June 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |||||||||
| (dollars in millions)<br><br><br>(unaudited) | ||||||||||||
| Revenues | ||||||||||||
| Commerce | $ | 19.7 | $ | 3.8 | $ | 76.4 | $ | 9.5 | ||||
| Design, Creative, and Technology | 47.6 | 8.3 | 85.1 | 13.2 | ||||||||
| All Other | 4.1 | 2.9 | 8.4 | 5.2 | ||||||||
| Total revenues | $ | 71.4 | $ | 15.0 | $ | 169.9 | $ | 27.9 | ||||
| Other Income, net | ||||||||||||
| Commerce | $ | 4.5 | $ | — | $ | 5.6 | $ | 6.7 | ||||
| Design, Creative, and Technology | 3.4 | 2.3 | 25.3 | 9.2 | ||||||||
| All Other | 0.2 | — | 0.9 | 0.5 | ||||||||
| Total other income, net | $ | 8.1 | $ | 2.3 | $ | 31.8 | $ | 16.4 | ||||
| Adjusted EBITDA | ||||||||||||
| Commerce | $ | 10.0 | $ | (2.5 | ) | $ | 41.8 | $ | 2.7 | |||
| Design, Creative, and Technology | 21.9 | 0.8 | 54.5 | 3.0 | ||||||||
| All Other | (2.7 | ) | (0.3 | ) | (5.0 | ) | 0.3 | |||||
| Subtotal Adjusted EBITDA | $ | 29.2 | $ | (2.0 | ) | $ | 91.3 | $ | 6.0 | |||
| General corporate and other expenses | (13.6 | ) | (11.6 | ) | (26.4 | ) | (22.3 | ) | ||||
| Interest expense | (4.6 | ) | (4.1 | ) | (8.5 | ) | (8.1 | ) | ||||
| Goodwill impairment charges | — | — | (6.3 | ) | — | |||||||
| Intangible asset impairment charges | — | — | (1.6 | ) | — | |||||||
| Depreciation and amortization expense | (14.0 | ) | (12.1 | ) | (28.3 | ) | (23.9 | ) | ||||
| Stock-based compensation expense | (1.6 | ) | (2.8 | ) | (3.7 | ) | (5.8 | ) | ||||
| Deferred revenue adjustment | (0.2 | ) | (0.2 | ) | (0.4 | ) | (1.1 | ) | ||||
| Other items | 7.0 | (2.8 | ) | 1.4 | (4.0 | ) | ||||||
| Income (Loss) before taxes | $ | 2.2 | $ | (35.6 | ) | $ | 17.5 | $ | (59.2 | ) |
Emerald Holding, Inc. Second Quarter 2022 August 8, 2022 Exhibit 99.2
Notes Forward-Looking Statements This document contains certain forward-looking statements regarding Emerald Holding, Inc. (the “Company”), including, without limitation, the Company’s ability to continue staging live events and scale its business up to and beyond pre-COVID levels; the Company’s 2022 event revenue expectations; the Company’s 2022 and 2023 financial guidance expectations; and the Company’s ability to recover proceeds under its current event cancellation insurance policy and the timing and amount of any such insurance recoveries. These statements are based on management’s current expectations as well as estimates and assumptions prepared by management that, although they are believed to be reasonable, are inherently uncertain. These statements involve risks and uncertainties outside of the Company’s control that may cause actual results to differ materially. In particular, statements regarding the potential continuing impact of the pandemic outbreak of COVID-19 on the Company’s business and the expected return to organic growth; timing of receipt of proceeds relating to of the Company’s insurance litigation settlement and; projected recurring revenue from customer retention rates are each forward-looking statements. 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, or with respect to ongoing insurance recovery amounts. 2
Participants 3 Hervé Sedky President and Chief Executive Officer David Doft Chief Financial Officer
Key 2Q 2022 Takeaways 4 Emerald reaches agreement to settle outstanding insurance litigation for proceeds of $149.25 million; upon expected receipt in the third quarter, total insurance proceeds from 2020 and 2021 cancelled and impacted events will be approximately $372.8 million Event revenues are returning to, and in some cases exceeding, pre-pandemic levels, highlighting sustained demand for events; Emerald expects that approximately one quarter of planned 2022 trade shows will exceed pre-pandemic revenues Trajectory of recovery on pace with forecast and supports reaffirmation of 2022 guidance and preliminary 2023 expectations Emerald continues to launch and acquire new products and services that are complementary to core business to better support customers year-round – including the recent acquisitions of Advertising Week and Bulletin Continue to generate positive free cash flow, supported by low-CAPEX requirements and working capital dynamics of events business where cash is collected in advance of an events staging
Emerald is in the Connections Business A changing workforce and evolving work styles require a new approach Connections – B2B trade shows and conferences that bring together industry-specific communities Emerald’s Proprietary Building Blocks 150+ Events | 1.9MM Active Customers | 15MM Website Visitors Content – B2B websites and publications that provide industry specific business news and information Commerce – SAAS software enabling B2B buying and selling year round 5
Three Pillars of Value Creation Emerald’s focus is on maximizing value of operations and expanding offerings 365-Day Customer Engagement Scaled B2B Marketplace Increased Cadence of Online and Hybrid Events Emerald Xcelerator Targeted Accretive M&A 365-Day Engagement Holistic Consolidated Customer Database 3-year Brand Operating Plans Across Portfolio Value-Based Pricing Structure Customer Centricity 6 Portfolio Optimization
Acquisitions and New Event Launches Driving Portfolio Optimization Strategic expansion into high growth industries and categories Community platform for creating relationships across the mental health ecosystem Fosters connections between mental health innovators and corporate leaders seeking solutions for their organizations and employees New Event Launches Targeting high growth industries including mental health, decentralized finance, and cannabis Educational platform that bridges business and Web3 innovation Connects C-suite financial and technology executives with blue chip Web3 companies providing decentralized solutions Launching in 2023 Launching in October 2022 Food services event co-located with International Pizza Expo 176 exhibiting companies + 4,600 attendees Launched March 2022 7 Social 3rd Party Direct & Retail Digital Recent Acquisitions Leading B2B media company in the cannabis industry with portfolio of media brands + widely attended annual expo B2B e-commerce SaaS platform December 2021 December 2020 June 2022 Premier global B2B event and thought leadership platform with a global presence Leading product database and integrator service provider for commercial AV November 2021 December 2020 Leading national trade show focused on educational spaces and equipment April 2021 Subscription-based photography business education and e-learning service + conference July 2022 Wholesale online marketplace platform to be combined with Emerald’s iconic NY NOW brand
Key Highlights For the Quarter 8 Transaction closed June 2022 Premier global B2B event and thought leadership platform with a global presence Select 2Q 2022 Trade Shows Introduced new Emerald Xcelerator division in 2022 dedicated to launching dynamic brands that curate year-round communities through face-to-face and digital experiences Transaction closed July 2022 Leading wholesale marketplace connecting over 3,000 independent brands with over 26,000 retailers
9 Second Quarter 2022 Financial Highlights and Current Liquidity Position Adj. EBITDA(1) Free Cash Flow(2) Net Income (Loss) Diluted Income (Loss) Per Share ($ in Millions) ($ in Millions) ($ in Millions) (1) See slide 13 of this presentation for a reconciliation of Net Loss to Adjusted EBITDA (2) See slide 14 of this presentation for a reconciliation of Net Cash Provided by (Used In) Operating Activities to Free Cash Flow Emerald experienced year over year growth across all categories as recovery momentum continues ($ in Millions)
On average, revenue per event is returning toward normalized levels 29 trade shows staged in 2Q22, compared to 2 in 2Q21 Qualified attendees and exhibiting companies trending toward pre-COVID levels Several Q2 events have exceeded pre-COVID revenues 2021 marked a return to positive free cash flow 10 COVID Recovery Driving Significant Re-Acceleration of Business Revenue ($ in Millions) 2020 2021 Adjusted EBITDA(1) ($ in Millions) 2Q ‘21 2Q ‘22 2Q ‘21 2Q ‘22 (1) See slide 13 of this presentation for a reconciliation of Net Loss to Adjusted EBITDA 2022 YTD $300.0 (Guidance) $50.0 (Guidance – ex-insurance) ($35.1) $71.9 Dotted lines include insurance proceeds $45.7 ($31.7) Guidance (All Excluding Insurance Proceeds) FY 2022 Revenue to exceed $300 million FY 2022 Adjusted EBITDA to exceed $50 million FY 2022 Free Cash Flow to exceed $70 million FY 2023 Preliminary Expectations Adjusted EBITDA to exceed $100 million ($13.6) ($15.9) $15.6 $7.5
Capital Structure As of June 30, 2022 11 Convertible Preferred Shares Issued $400M of Convertible Preferred Stock in 2020 during COVID business disruption Shares have an accumulated accreting return of 7% per annum on liquidation preference paid in-kind Emerald can force conversion of preferred shares after June 29, 2023, if common stock price exceeds $6.16 for 20 consecutive trading days (1) Debt includes term loan outstanding balance plus current portion, unamortized discount of $1.1 million and unamortized deferred financing fees of $1.5 million.
Appendix
Adjusted EBITDA 13 UNAUDITED RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA (1) For the six months ended June 30, 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 June 30, 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 June 30, 2022 included: (i) $10.0 million in gains related to the remeasurement of contingent consideration; (ii) $2.0 million in transaction costs, primarily in connection with the MJBiz, Advertising Week and Bulletin acquisitions; (iii) $0.8 million in non-recurring legal, audit and consulting fees and (iv) $0.2 million in transition expenses. Other items for the three months ended June 30, 2021 included: (i) $1.1 million in expense related to the remeasurement of contingent consideration; (ii) $1.2 million in non-recurring legal, audit and consulting fees; (iii) $0.3 million in transition costs in connection with previous acquisitions and (iv) $0.2 million in transaction costs in connection with PlumRiver LLC and Sue Bryce Education acquisitions. Other items for the six months ended June 30, 2022 included: (i) $5.8 million in gains related to the remeasurement of contingent consideration; (ii) $2.9 million in transaction costs, primarily in connection with the MJBiz, Advertising Week and Bulletin acquisitions; (iii) $1.2 million in non-recurring legal, audit and consulting fees and (iv) $0.3 million in transition expenses. Other items for the six months ended June 30, 2021 included: (i) $1.5 million in expense related to the remeasurement of contingent consideration; (ii) $1.8 million in non-recurring legal, audit and consulting fees; (iii) $0.3 million in transition costs in connection with previous acquisitions and (iv) $0.4 million in transaction costs in connection with PlumRiver LLC, EDspaces and Sue Bryce Education acquisitions.
Free Cash Flow 14 UNAUDITED RECONCILIATION OF NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES TO FREE CASH FLOW