Emerald Holding, Inc.
Q2 2021 Earnings Call Transcript

Published: 1 Aug 2021

[Operator:]

Good morning and welcome to the Emerald Holding, Inc. Second Quarter 2021 Earnings Conference Call. Before we begin, let me remind everyone that this call may contain certain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include remarks about future expectations, beliefs, estimates, plans and prospects. Such statements are subject to a variety of risks, uncertainties and other factors that could cause actual results to differ materially from those indicated or implied by such statements. Such risks and other factors are set forth in the company’s most recently filed periodic reports on Form 10-K and 10-Q and subsequent filings. The company does not undertake any duty to update such forward-looking statements.

[Herve Sedky:]

Thank you, Melissa and good morning everyone. I have to say, it’s great to be back to business. On today’s call, I will provide an update on our event schedule as our team has been preparing for what is expected to be the largest number of shows staged in the second half of the year in Emerald’s history due to the numerous events being moved from earlier in the year to the second half and which we began staging over the last few weeks. David Doft, Emerald’s CFO, will review our second quarter results and we will then open the call for questions. To start, our second quarter results continue to be impacted by the COVID-19 pandemic as we canceled or postponed all of our live events, except for our hosting a regional ASD Market Week Southeast in Orlando in April and Digital Dealer in Tampa in June. While these are two of our smaller shows, our customers’ clear enthusiasm for returning to live events was evident. The more recent Digital Dealer show, which brings together automotive dealers, OEMs and thought leaders over 3 days, demonstrated the vital role that face-to-face events continue to play in driving connections, commerce and growth for our customers and communities. Attendance reached 65% of the pre-COVID edition impacted by supply chain issues in the auto industry combined with international travel restrictions. However, we experienced a significant increase in the shows Net Promoter Score based upon the quality and value of the events to attendees, leading to much stronger pacing for the next iteration later this year. Providing valuable events to our customers is critical to our long-term success and the focus of our team as we are set to stage 86 live events through the second half of this year. The rollout of the COVID vaccine has created the confidence that we can move forward with in-person events as all the states where we host events have reopened and approved the allowance for large in-person indoor events. In fact, Emerald events are the first or among the first large-scale events to stage post-reopening in New York, Chicago and Las Vegas, among other locations.

[David Doft:]

Thank you, Herve, and good morning. For the second quarter, we reported revenues of $15 million, which compares to $7 million in the year ago quarter. Organic revenues for the second quarter were $11.6 million, an increase of $5.3 million as compared to the second quarter of 2020 organic revenues of $6.3 million. The increase was due to several small live events that staged, which Herve touched on, as well as higher print and digital advertising revenues, combined with several new virtual offerings. Our adjusted EBITDA for the second quarter was negative $13.6 million as compared to a positive $33.2 million in the same period last year. The decrease in adjusted EBITDA of $46.8 million was mainly due to the lower confirmed or received event cancellation insurance claim proceeds in the second quarter of 2021. We recorded $2.3 million of other income during the second quarter of 2021 as a result of event cancellation insurance claims proceeds related to events canceled in the second half of 2020, which compares to $48.2 million of other income recorded during the year ago second quarter as a result of event cancellation insurance claims proceeds related to events canceled in the first half of 2020. Looking at our event cancellation insurance in more detail, we had submitted $242 million in claims to-date. We also continue to work on finalizing claims submissions for several more canceled, postponed and otherwise impacted 2021 events. These claims represent the net amount of budgeted gross revenues less avoided costs were impacted or canceled events previously scheduled to take place in 2020 and 2021. Through June of 2021, we have received insurance claim payments totaling $123.4 million, of which $89.1 million was received in 2020, $29.6 million has been received in the first quarter of 2021 and $4.7 million was received in the second quarter of 2021. We have also received or expect to receive an additional $1.3 million in insurance payments in July. We are actively pursuing collection of the remaining unpaid amounts of filed insurance claims for our canceled 2020 events in addition to claims for our canceled 2021 events that currently totals an incremental $120 million. As part of these collection efforts, this past February, we commenced litigation against the insurers. We, supported by the views of our outside counsel, have strong conviction in our position and believe the insurers have improperly failed to timely pay amounts due and owing on submitted claims as covered losses, and we intend to vigorously pursue full collection on these insurance claims.

[Herve Sedky:]

Thank you, David. To conclude, the return to live event this summer is an important inflection point for Emerald as we reengage with our customers and remind them of the value that our shows provides. And while near-term show attendance continues to be impacted by COVID-19 concerns, timing issues, travel bans and other pandemic related items, those that do attend have so far enthusiastically done so with increased satisfaction. As I said last quarter, we have built a strong foundation which will allow us to expand the value we offer to our customers, engage with them year-round and ultimately better monetize the value that we’re providing. We are building new digital businesses that are expected to provide high-margin subscription revenue streams to complement our live events, and we believe this will allow us to greatly expand our addressable market and position Emerald to deliver accelerating organic revenue growth with improved profitability over time. Thank you again for your time today. And Melissa, now please open the meeting for questions.

[Operator:]

[Herve Sedky:]

Very good. Thank you, Melissa and thank you all for your participation today. Have a very Good Friday and a good weekend. Goodbye.

[Operator:]

Thank you. This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.