Emerald Holding, Inc., the operator of the Outdoor Retailer and other trade shows, reported sales grew 16.2 percent in the third quarter ended September 30 while underlying earnings improved excluding year-ago event cancellation insurance benefits. Strength in its core trade show segment offset weakness in its content business.

Financial Highlights

  • Revenues of $72.5 million for the third quarter 2023, an increase of $10.1 million, or 16.2 percent over Q3 2022, primarily due to growth in events that staged in both Q3 2023 and Q3 2022, new launches and acquisitions.
    • Organic Revenues, a non-GAAP measure, that takes into account the impact of acquisitions and scheduling adjustments, of $68.5 million for the third quarter 2023, an increase of $12.4 million, or 22.1 percent, from $56.1 million for the third quarter 2022.
  • Net income of $10.7 million for the third quarter 2023, compared to net income of $93.0 million for the third quarter 2022
  • Adjusted EBITDA, a non-GAAP measure, of $10.8 million for the third quarter of 2023, compared to $149.7 million for the third quarter 2022; Adjusted EBITDA excluding insurance proceeds, a non-GAAP measure, of $8.0 million for the third quarter 2023, compared to ($1.3) million for the third quarter 2022.
  • $200.3 million in cash at quarter end and full availability of its $110.0 million revolving credit facility
  • The company is adjusting its full-year 2023 guidance and now expects to generate revenue in the range of $385 million – $395 million and Adjusted EBITDA in the range of $95 million – $100 million, due to some softness in its content business. The company’s core trade show segment, which comprises the bulk of its operations, continues to experience strong performance. Previously, guidance called for sales of $400 million of revenue and $100 million of adjusted EBITDA.
  • Emerald’s Board of Directors approved an extension and expansion of the company’s share repurchase program which allows for the repurchase of $25.0 million of the company’s common stock through December 31, 2024

Operation Highlights
The company reported its core trade show business is strong as the post-COVID recovery cycle continues to drive growth in exhibitor and attendee counts. It launched the Cocina Sabrosa, a trade show focused on the Latin food and beverage industry, in September 2023.

Hervé Sedky, Emerald’s president and chief executive officer, said, “We are very pleased with the continued double-digit growth we’re seeing in our live events business. Trade shows remain a durable and high-return part of our customers’ marketing budgets, providing exhibitors with an unparalleled opportunity to access a large number of quality buyers at their industry’s must-attend event. Our focus on delivering increasing value to customers has translated to higher re-bookings along with sustained strength in pricing – trends which are reflected in our sales pacing data as we continue to book reservations for shows up to a year in advance. The performance of our content business was somewhat muted in the quarter, driven by cautious ad spending trends within the technology sector, where we have broad exposure. Nevertheless, we expect content to be a positive contributor to our results over time, offering not only opportunities for profitable growth but also synergies with our broader portfolio as we leverage the data and marketing resources of our media assets to grow our shows.”

David Doft, Emerald’s chief financial officer, added, “Revenue and profitability trends in our core trade show business remain strong, as customers continue to value the high return on investment of live events. Our strong performance drove year-to-date revenue growth of 21 percent year-over-year, while Adjusted EBITDA increased over 85 percent versus the prior year. Importantly, we believe that 2024 sales pacing indicates that we can sustain double-digit top-line growth into next year with strong operating leverage, a testament to the strength and durability of our business model and the importance of our brands in their respective end markets. In our content business, reduced ad spend in the tech sector put modest downward pressure on our top line and as a result, we anticipate our FY 2023 revenue guidance will now be in the range of $385 million to $395 million. Our core trade show segment, which comprises the bulk of our operations, continues to support a strong full year performance, with Emerald set to achieve Adjusted EBITDA in the range of $95 million to $100 million in 2023. Our focus continues to be on maximizing value for our customers, which ultimately leads to stronger, more sustainable growth in per-share value for Emerald’s stockholders.”

Third Quarter 2023 Financial Performance and Highlights

  • Third quarter 2023 revenues were $72.5 million, an increase of $10.1 million or 16.2 percent versus the third quarter 2022, driven primarily by organic revenue growth of $12.4 million as well as $4.0 million in revenue from acquisitions. This growth was offset by scheduling adjustments of $5.1 million and prior year discontinued event revenue of $1.2 million. The third quarter of 2023 benefited from $2.8 million of insurance proceeds related to events canceled or otherwise impacted by COVID-19 in prior periods.
  • Third quarter 2023 Organic Revenues were $68.5 million, an increase of $12.4 million or 22.1 percent versus the third quarter 2022, due primarily to a $8.6 million increase in revenues from events that traded in both periods, $3.2 million from newly launched events and $0.9 million from increased subscription software revenues.
  • Third quarter 2023 net income was $10.7 million, compared to net income of $93.0 million for the third quarter 2022 principally as a result of lower event cancellation insurance proceeds and higher interest expense.
  • Third quarter 2023 Adjusted EBITDA was $10.8 million, compared to $149.7 million for the third quarter 2022. Excluding event cancellation insurance proceeds, third quarter 2023 Adjusted EBITDA was $8.0 million, compared to Adjusted EBITDA ex-insurance of ($1.3) million for the third quarter 2022.

Cash Flow

  • Third quarter 2023 net cash provided by operating activities was $8.5 million, compared to $153.5 million in the third quarter 2022.
  • Third quarter 2023 capital expenditures were $3.0 million, compared to $2.6 million in the third quarter 2022.
  • Third quarter 2023 Free Cash Flow excluding event cancellation insurance proceeds, net, which the company defines as net cash provided by operating activities less capital expenditures, event cancellation insurance proceeds and taxes paid on event cancellation insurance proceeds, was $2.7 million, compared to ($0.1) million in the third quarter 2022. The calculation of third quarter 2023 Free Cash Flow excluding event cancellation insurance proceeds, net, includes non-recurring acquisition-related transaction costs of $0.9 million, acquisition integration, restructuring-related transition costs of $1.4 million, and non-recurring legal, audit and consulting fees of $0.8 million. The calculation of third quarter 2022 Free Cash Flow excluding event cancellation insurance proceeds, net, includes insurance settlement expenses of $7.0 million, contingent consideration paid in excess of the original estimate of $2.1 million, acquisition-related transaction costs of $0.6 million, integration-related transition costs of $1.6 million, and non-recurring legal and consulting fees of $0.8 million. The total of these items is $3.1 million and $12.1 million for the quarters ended September 30, 2023 and 2022, respectively.

Emerald Extends and Expands Share Repurchase Program
Emerald’s Board of Directors approved an extension and expansion of the company’s share repurchase program that allows for the repurchase of $25.0 million of our common stock through December 31, 2024. Since the beginning of 2022, the company has bought back 7.9 million shares of common stock. Prior to this expansion, Emerald had $3.0 million remaining available under its prior repurchase authorization.

Emerald traditionally has hosted over 140 yearly events in the outdoor lifestyle space, including Outdoor Retailer, Surf Expo, The Sports Licensing & Tailgate Show, Impressions, Swim Collective, and Active Collective.

Photo courtesy Emerald