Emerald Holding, Inc.
Q1 2021 Earnings Call Transcript

Published: 2 May 2021

[Operator:]

Good morning and welcome to Emerald Holding Incorporated First Quarter 2021 Earnings Conference Call. During today's call, all parties will be in a listen-only mode. Following the prepared remarks, the conference will be opened for questions with instructions to follow at that time. 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 , uncertainties and other factors that could cause actual results to differ materially from those indicated or implied by such statement. Such risks and other factors are set forth in the company's most recently filed periodic reports on Form 10-K and Form 10-Q and subsequent filings. The company does not undertake any duty to update such forward-looking statements.

[Hervé Sedky:]

Thank you and good morning everyone. On today’s call, I'll provide an update on our event schedule for the balance of the year, as well as our progress executing on our strategic initiatives designed to add value to our customers, while accelerating Emerald’s growth. David Doft, Emerald’s CFO will review our first quarter results in more detail, and we will then open the call for your questions. To start, our first quarter results continued to be impacted by the COVID-19 pandemic, as we cancelled or postponed all our live events except for Surf Expo in Orlando in January. That while in person was impacted by understandable travel and safety concerns. You may recall January was a time when we were in the midst of a frightening surge of COVID-19. It was in fact the deadliest month yet. So, it's no surprise that even though we still hosted several thousand people, we experienced a more than 50% decline in attendance. Yet our exhibitors were very pleased with the quality and the number of buyers that attended as the buyer to exhibitor ratio exceeded COVID levels. Importantly, the events stage safely with the industry's all secure protocols fully observed, and there were no reported COVID cases coming out of the events. The positive customer sentiments coming out of Surf Expo clearly demonstrates the vital role that face-to-face events continue to play in driving connections, commerce and growth for customers and communities. Looking ahead, our business is at an important inflection point as COVID-19 vaccines are now widely available in the U.S. and tens and millions of Americans have been vaccinated. Many states have scheduled their reopening dates for large in person events over the next two months, which is providing real optimism across our industry. Importantly, the governor of Nevada announced that the state is expected to fully open on June 1, California and events are expected to be allowed beginning on June 15. And just yesterday, the Mayor of New York City said, he plans to fully reopen the city on July 1.

[David Doft:]

Thank you, Hervé and good morning. For the first quarter, we reported revenues of $12.9 million, which compares to $99.7 million in the year ago quarter. The decrease was primarily due to the cancellation of almost all first quarter events due to COVID-19, including KBIS, New York Now Winter, Outdoor Retailer Snow Show, ISS Long and the Sports Licensing and Tailgate Show, which resulted in a reduction of $70.8 million of first quarter 2020 revenue. We have also rescheduled several shows to later in the year, comprising $12.2 million of first quarter 2020 revenue. During the first quarter, we were able to successfully stage Surf Expo Winter in Orlando, Florida, where we experienced a more than 50% decline in revenues. As Hervé mentioned, the number of buyers per exhibitor increased as compared to pre-COVID levels, which drove the strong rise in exhibitor satisfaction, our customer’s satisfaction with Surf Expo demonstrates the value of in-person face-to-face events, which is so important to our customers businesses. Our adjusted EBITDA for the first quarter was negative $2.7 million as compared to positive $23.6 million in the same period last year. Decrease in adjusted EBITDA of $26.3 million was mainly due to the COVID-related cancellation of 13 first quarter events representing prior year first quarter adjusted EBITDA of $39.7 million, and the postponement of 10 first quarter 2020 events, representing prior year first quarter adjusted EBITDA of $5.5 million. This was offset by the recognition of $14.1 million in other income related to event cancellation insurance claim proceeds received or confirmed. First quarter 2021 adjusted EBITDA also reflected the benefit of cost savings measures that we have implemented over the last 12 months. Looking at our event cancellation insurance in more detail, we have submitted $220 million in claims to date. We also continue to work on finalizing claim submission for several more cancelled 2021 events. These claims represent the net amount of budgeted gross revenues, less avoided costs for impacted or cancelled events previously scheduled to take place in 2020 and 2021.

[Hervé Sedky:]

To conclude, this is a very exciting time at Emerald as we prepare to return to live events. We have built a strong foundation over the past year, which will allow us to expand the value we offer our customers, engage with them year round and ultimately better monetize the value that we're providing. Additionally, we're building new digital businesses that are expected to provide high margin subscription revenue streams to complement our live events. Ultimately, we are greatly expanding our addressable market, which will position Emerald to deliver accelerating organic revenue growth with improved profitability over time. Thank you again for your time today. And operator, please open the meeting for questions.

[Operator:]

[Hervé Sedky:]

Great, thank you very much . Building on this strong foundation over the past year provides us with this exciting opportunity here at Emerald to return to live events. We feel very, very good about the position that we're in, excited about the near and long-term. And I want to thank you for your time today.

[Operator:]

This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation and have a great day.