Emerald Holding, Inc.
Q4 2020 Earnings Call Transcript

Published: 18 Feb 2021

[Operator:]

Good morning ladies and gentlemen, and welcome to Emerald Holding’s Fourth Quarter 2020 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 a variety of risks, 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 10K and Form 10Q and subsequent filings. The company does not undertake any duty to update such forward-looking statements.

[Hervé Sedky:]

Thank you and good morning everyone. I'm very pleased to be here today and truly appreciate your participation in our fourth quarter and year-end 2020 earnings call. Four things I'd like to accomplish today. First, give you a bit of background on my journey including what attracted me to Emerald. Second, share my vision on how we will make this strong company an even better one by returning it to growth and improved profitability. Third, I'll turn it over to David Doft, our Chief Financial Officer for him to review our fourth quarter and year end 2020 results and close the meeting by sharing our key priorities that build on the accomplishments of the last 18 months; accomplishments that are critical in that they provide Emerald a strong foundation for the future. David and I will then open the meeting to answer any questions that you have. To start I'm very excited to be here today given the opportunity that I see ahead for Emerald and the exhibitions industry overall. Having spent my entire career in DW businesses starting with my 22 years at the American Express company including serving as Senior Vice President and General Manager of American Express Global Business Travel and more recently my six years at Relics Group as President of the Americas for REIT exhibitions I'm keenly aware of the importance of putting the customer first and obsessively focusing on adding value to them. In Emerald, I see a company with a portfolio of industry leading live events and content brands as well as the recent edition of incredibly powerful digital experiences. The company's strong capital position allows us to also expand into new digital mediums while taking advantage of opportunistic acquisitions. Our industry is going through unprecedented change as a result of COVID-19 pandemic that simply cannot and should not be ignored not only because of the impact on our revenue but because in unprecedented times we need to think out of the box and respond with unprecedented creativity, thoughtfulness and resourcefulness. I'm very confident in our ability to come back.

[David Doft:]

Thank you Hervé and good morning. Our fourth quarter and full year results mimic much of what we have reported all year since COVID-19 began to impact our business. For the fourth quarter, we reported revenues of $12.2 million which compares to $44.9 million in the year ago quarter. The decrease was primarily due to the cancellation of almost all fourth quarter events due to COVID-19 including Boutique Design New York, Healthcare Design Expo, Photoplus East and Medtrade among others. During the fourth quarter we were able to successfully stage IGES in Pigeon Forge, Tennessee where we experienced the 50% decline in revenues while the number of buyers per exhibitor increased by 15%. This increase drove a strong rise in exhibitor satisfaction given the increase in sales generated. Subsequent to end we staged Surf Expo in Orlando which experienced similar dynamics to IGES and further demonstrated the value of in-person face-to-face events which is so important to our customers businesses. Needless to say our customer communities are eager to get back to live events and business as usual.

[Hervé Sedky:]

Thank you, David. Looking ahead we've developed a growth focused framework that builds on the strong accomplishments that David outlines in hyper focused on three key imperatives. The first is customer centricity. Our customers must be at the center of everything that we do. To this end we will focus on identifying our customers’ needs and delivering against them to increase value which we expect will allow us to better retain customers and acquire new ones. Additionally, we'll have three-year operating plans for each brand establish customer advisory boards and optimize key relationships by providing pan-Emerald solutions to meet their business needs. We will also implement a value-based pricing structure that will give our customers the opportunity to choose how they want to do business with Emerald and in turn pricing will be developed specifically around the value that we deliver. The second key strategic imperative is delivering 365-day customer engagement. Central to this initiative are four strategies. One, scaling our B2B marketplace, which we acquired through PlumRiver to support year-round commerce and product discovery. This acquisition was a truly innovative move for Emerald because it demonstrates the insights that we have into our current customer needs and the foresight to secure resources that drive change. Through the elastic suite B2B e-commerce platform we expanded our digital commerce capabilities and accelerated Emerald's strategy to provide a 365 day per year engagement while delivering a new heightened degree of customer experience and value. The benefits of our acquisition of PlumRiver are twofold. First the new depth and breadth of resources available to our customers from both the brand and the buyer side will provide a full spectrum of bundled solutions from discovery, connection and lead generation to transaction across both in-person face-to-face events as well as year-round digital opportunities.

[Operator:]

Thank you. Our first question is from Kevin McVeigh with Credit Suisse. Please proceed.

[Kevin McVeigh:]

Great. Thank you. Thank you so much and very helpful context. What if you could talk a little bit more about the structural impact of the businesses you transition from more kind of physical to the digital experience and then within the context of the physical is, you're in a way to think about how much of the experience goes outside versus internal and just any way to maybe frame what we think the revenue contribution can be going forward as things normalize as opposed to maybe where they've been in the past?

[Hervé Sedky:]

Sure. So let me answer that question by helping define what business we're in. We're essentially in the B2B marketing solutions business. So if you really think about what we do and how we serve customers it's really about supplier discovery and lead generation and the tools that we've had in the past the live events, the trade publications those are the core tools, the core assets that allow us to deliver against our customers goals of supplier discovery and lead generation. What we now have is the ability to amplify and to add the transactional portion and that's really critical to see the entire process from beginning to end. The transactional piece which was not there allows us to see the entire cycle and to observe what customer behavior is across the process of identifying suppliers, getting leads and then transacting. That gives us enormous amount of insights that we can then turn around and see how we continuously add products and value to the customers that are engaged in that entire chain.

[David Doft:]

This is David. Thanks for the question I'll add and I'll reinforce what we've said the last couple of quarters are we very much believe that the live events are going to come back and come back strong. I think the timing is a question given the pandemic and the timing of vaccine rollout is crucial to that. But all the feedback we're getting from our customer base from independent studies are that trade shows will remain a crucial part of the marketing mix of our customers, but the Hervé's point it doesn't mean we can't do better and by adding in the 365 day year engagement, we can drive more value for our customers and more value for us. Historically about 10% of our revenue has been non-trade show related. Our media properties. We think that could be double or triple over the next few years in terms of our exposure based on continuing to build out these broader capabilities.

[Kevin McVeigh:]

Helpful. And then I think the numbers right we had about 191 million of event cancellation insurance for 2021 is that right David? Then just can you remind us how long do those policies stay in effect for and now in process on them, any thoughts on that.

[David Doft:]

Sure. So you're correct that is the limit of our policy for 2021 and the policy does expire at the end of 2021. Given the pandemic, the renewal cycle beyond 21 has been a little slower than usual and we continue to be in conversations with our insurance broker and various parties about extending it beyond 2021 though admittedly I would not expect pandemic coverage beyond 2021. It will likely be a more normal course event cancellation type policy that we'd be able to get.

[Kevin McVeigh:]

Makes sense but it's unless you've got bridge enough to adjust the business where you may not necessarily need that 21 is up there as well.

[David Doft:]

That's right.

[Kevin McVeigh:]

Thank you.

[Operator:]

We have reached the end of our question and answer session. I would like to turn the call back over to management for closing remarks.

[Hervé Sedky:]

Great. Well I just wanted to thank you all for your time for your participation on today's call and wish you a very good rest of your day. Thank you.

[Operator:]

Thank you. This does conclude today's conference. You may disconnect your lines at this time and thank you for your participation.