Emerald Expositions Events Inc. on Thursday announced revenue declines of 21.2 percent for the fourth quarter and 5.2 percent for the full-year of 2019 driven by event cancellations, including Surf Expo, and event consolidations, including wrapping Outdoor Retailer Winter Market into the recent Snow Show.

Emerald, the owner and operator of Outdoor Retailer, Surf Expo and dozens of other trade shows, also recently announced it was rebranding as Emerald Holding Inc.

The company reported revenues decreased 5.2 percent to $360.9 million for full-year 2019, compared to $380.7 million for full-year 2018. The cancellation of Surf Expo and ISS Orlando shows due to Hurricane Dorian reduced anticipated 2019 revenues by $7.1 million. The financial impact, net of costs saved, offset by $6.1 million in event cancellation insurance proceeds recognized as other income.

Organic revenues, a non-GAAP measure, decreased 3 percent to $357.8 million for full-year 2019, compared to $369 million for full-year 2018.

The company reported a net loss of $50 million for full-year 2019, compared to a net loss of $25.1 million for full-year 2018.

Adjusted EBITDA, a non-GAAP measure, decreased 21.5 percent to $127.8 million for full-year 2019, compared to $162.9 million for full-year 2018. Adjusted Net Income, a non-GAAP measure, decreased 32.8 percent to $67.3 million for full-year 2019, compared to $100.2 million for full-year 2018.

Brian Field, Emerald’s interim president and CEO said, “The strategic plan we articulated during our last earnings call is well underway and our organic growth initiatives are taking root. As discussed previously, in 2020 we plan to implement these initiatives with a goal of returning to organic revenue and adjusted EBITDA growth in 2021. Our team is energized to deliver outstanding experiences and value to our customers, while also driving improved future financial performance. I have not seen anything in my first eight months at Emerald that has changed my view regarding our ability to solve Emerald’s existing operational challenges.”

Emerald’s incoming CFO, David Doft added, “Since arriving at Emerald last month, I have confirmed what made me so excited about joining the company in the first place — Emerald is a compelling business with a combination of strong brands, a motivated leadership team and unique positioning within a growing segment of the marketing industry. I am looking forward to helping drive our team’s execution as we continue to aggressively implement our strategic initiatives designed to return our portfolio to growth. As I quickly get up to speed on the company’s finances and operations, I expect to provide full-year guidance on our first-quarter earnings call when our expenses and investment spending come into better view.”

Financial And Operational Results, Q4
For the fourth quarter of 2019, Emerald reported revenues of $44.9 million compared to revenues of $57 million for the fourth quarter of 2018, a decrease of $12.1 million, or 21.2 percent. The decrease partly reflected a net $6 million reduction from several show scheduling differences in the fourth quarter of 2019, most notably the International Fastener Expo and Digital Dealer Fall, both of which staged in the fourth quarter of 2018 versus the third quarter of 2019.

Further, a decrease from discontinued events of $6.2 million was primarily related to the decision to cancel the 2019 Outdoor Retailer Winter Market (ORWM), which staged in the fourth quarter of 2018 and combine it with the January 2020 Outdoor Retailer Snow Show (OR Snow Show), resulting in a decline of $5.5 million compared to the fourth quarter of 2018. The G3 Communications (G3) acquisition, which closed on November 1, 2019, contributed $1.2 million of revenue in the fourth quarter of 2019. Organic revenues for the fourth quarter of 2019 declined $1.1 million, or 2.5 percent, as compared to the prior-year quarter.

The company incurred a net loss of $68.2 million for the fourth quarter of 2019 compared to a net loss of $90 million for the fourth quarter of 2018. In the fourth quarter of 2019, in connection with the re-evaluation of its operating segments and reporting units due to changes in management’s internal financial reporting, the company performed its annual goodwill impairment assessment and recorded a $59.8 million non-cash charge related to the impairment of goodwill. In the fourth quarter of 2018, in connection with the company’s annual testing of intangibles for impairment, the company recorded a $104.3 million non-cash charge related to certain trade names and customer-relationship intangible assets.

For the fourth quarter of 2019, Adjusted EBITDA was a negative $1.5 million, compared to positive $4.7 million for the fourth quarter of 2018, adjusted for show scheduling differences. The decrease in Adjusted EBITDA of $6.2 million was mainly driven by the combined effect of lower organic revenues, the discontinuance of ORWM, incremental investments in the events that took place in the quarter and increased marketing costs incurred for 2020 events.

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 2 for a reconciliation of Adjusted EBITDA to net income (discussed in the second paragraph of this section), the most directly comparable GAAP measure.

Financial And Operational Results, 2019
For fiscal 2019, Emerald reported revenues of $360.9 million compared to revenues of $380.7 million for fiscal 2018, a decrease of $19.8 million, or 5.2 percent. Lower revenues reflected a decrease from discontinued events of $11.7 million, which was primarily related to the decision to cancel the 2019 ORWM and combine it with the January 2020 OR Snow Show, as well as the decision not to stage Interbike in 2019. In addition, revenues were further reduced by $7.1 million, as a result of the cancellation of Surf Expo and ISS Orlando due to Hurricane Dorian. The company recorded the associated $6.1 million insurance settlement, under Emerald’s event cancellation insurance policy, as Other income during the year. These declines were partially offset by incremental revenues of $10.2 million from the company’s 2018 and 2019 acquisitions. Organic revenues for fiscal 2019 declined $11.2 million, or 3 percent, as compared to the prior year.

The company incurred a net loss of $50 million for fiscal 2019 compared to a net loss of $25.1 million for fiscal 2018. During fiscal 2019, in connection with the re-evaluation of its operating segments and reporting units due to changes in management’s internal financial reporting, the company performed its annual goodwill impairment assessment and recorded a $59.8 million non-cash charge related to the impairment of goodwill. In addition, as a result of a triggering event caused by reduced performance expectations in the current year, the company recorded a $26.3 million non-cash charge related to the impairment of certain trade names, customer relationship intangible assets and goodwill. In 2018, in connection with the company’s annual testing of intangibles for impairment, the company recorded a $104.3 million non-cash charge related to certain trade names and customer relationship intangible assets.

For fiscal 2019, Adjusted EBITDA was $127.8 million, compared to $162.9 million for fiscal 2018. The decrease in Adjusted EBITDA of $35.1 million, was mainly driven by the combined effect of lower organic revenues, the discontinuance of ORWM and Interbike, new senior management costs and incremental investments in 2019 and future events.

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 2 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
Net cash provided by operating activities decreased by $19.2 million to $16.2 million in the fourth quarter of 2019, compared to $35.4 million in the fourth quarter of 2018, largely reflecting the company’s operating performance in the quarter, changes in show timing and the decision to cancel ORWM.

Capital expenditures were $2.1 million for the fourth quarter of 2019, compared to $0.3 million for the fourth quarter of 2018.

Free Cash Flow, which the company defines as net cash provided by operating activities less capital expenditures, was $14.1 million in the fourth quarter of 2019, compared to $35.1 million in the fourth quarter of 2018.

Net cash provided by operating activities decreased by $36.1 million to $67.8 million in 2019, compared to $103.9 million in 2018, largely reflecting the company’s operating performance in the year and a modest outflow of working capital.

Capital expenditures were $3.9 million for 2019, compared to $3.5 million for 2018.

Free Cash Flow, which the company defines as net cash provided by operating activities less capital expenditures, was $63.9 million in 2019, compared to $100.4 million in 2018.

For a discussion 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.

Dividend
On February 7, 2020, the Board of Directors approved the payment of a cash dividend of $0.0750 per share for the quarter ending March 31, 2020 to holders of the company’s common stock. The dividend is expected to be paid on or about March 6, 2020 to stockholders of record on February 21, 2020.

Share Repurchase Program
In the third quarter of 2019, the company’s Board of Directors authorized and approved a new $30 million share repurchase program. Under the terms of the share repurchase program, the company has the ability to repurchase shares through a variety of methods through July 31, 2020. The share repurchase program does not require the company to acquire any specific number of shares and may be suspended or discontinued at any time without notice. The company settled the repurchase of 404,966 and 853,557 shares of common stock for $3.9 million and $8.3 million during the quarter and year ended December 31, 2019, respectively, bringing the aggregate amount of common stock repurchased under both the previous $20 million 2018 share repurchase program and the new share repurchase program to 2,480,805 shares for aggregate consideration of $27.8 million. As of December 31, 2019, approximately $22.2 million remained available to repurchase shares pursuant to the new share repurchase program. During each of the quarter and year ended December 31, 2018, there were 1,627,248 shares repurchased for $19.4 million.

Photo courtesy Emerald