Emerald Holding, Inc. had a net loss of $46.5 million for the second quarter 2021 as it continues to be negatively impacted by event cancellations due to the COVID-19 pandemic.
Emerald traditionally has hosted over 140 events each year. Its shows include Outdoor Retailer, Surf Expo, The Sports Licensing & Tailgate Show, Impressions, Swim Collective, and Active Collective in the active lifestyle space.
For the second quarter of 2021, Emerald reported revenues of $15.0 million compared to revenues of $7.0 million for the second quarter of 2020, an increase of $8.0 million, or 114.3 percent. Organic revenues for the second quarter of 2021 of $11.6 million, increased $5.3 million, or 84.1 percent, as compared to the prior year second quarter organic revenues of $6.3 million, due to several small live events staging, higher print and digital advertising revenues as well as new virtual event launches. The PlumRiver, LLC (“PlumRiver”) and Sue Bryce Education (“Sue Bryce”) acquisitions, which closed in the fourth quarter of 2020 and second quarter of 2021, respectively, contributed $3.4 million of revenue in the second quarter of 2021. Discontinued Other Marketing Services business representing $0.7 million of second-quarter 2020 revenues also impacted second quarter 2021 results.
The company recognized a net loss of $46.5 million for the second quarter of 2021 compared to a net income of $9.9 million for the second quarter of 2020. The increase in net loss was primarily attributable to a $45.9 million decrease in Other Income related to lower event cancellation insurance claims being confirmed or received during the second quarter of 2021. Emerald recorded $2.3 million of Other Income during the second quarter of 2021 as a result of the receipt or confirmation of event cancellation insurance claims proceeds related to events canceled in the second half of 2020 compared to $48.2 million of Other Income recorded during the second quarter of 2020 as a result of the receipt or confirmation of event cancellation insurance claims proceeds related to events canceled in the first half of 2020. In addition, the increase in net loss was due to a $7.7 million increase in the provision for income taxes from the comparable period in the prior year.
For the second quarter of 2021, Adjusted EBITDA was negative $13.6 million, compared to positive $33.2 million for the second quarter of 2020. The decrease in Adjusted EBITDA of $46.8 million was mainly due to the lower confirmed or received event cancellation insurance claim proceeds described above. Emerald’s Adjusted EBITDA throughout 2021 has been and will continue to be heavily impacted by the timing and receipt of approved claim payments under its event cancellation insurance policy.
Other highlights of the quarter included:
- Impact of revenue declines on operating income partially offset by claim payments received under Emerald’s event cancellation insurance policy. Emerald is actively pursuing collection of the remaining unpaid amounts of filed insurance claims for its canceled and impacted 2020 events, in addition to claims for its canceled and impacted 2021 events;
- To date, Emerald has submitted $167 million in claims, which represents the net amount of budgeted gross revenues less avoided costs for impacted or canceled events previously scheduled to take place in 2020;
- Insurance claim payments received or expected to be received to date total $124.7 million, of which $89.1 million was received in 2020, $29.6 million was received in the first quarter of 2021 and $4.7 million was received in the second quarter of 2021.
- $1.3 million in insurance payments is expected to be received in July;
- Emerald has submitted $75 million in incremental event cancellation insurance claims to date for events that were originally scheduled to take place in the first half of 2021, but was canceled or otherwise impacted;
- Cash generation increased as bookings for returning events accelerate with Deferred Revenue increasing to $119.2 million as compared to $48.6 million at December 31, 2020;
- Emerald ended the second quarter with $302.8 million in cash as compared to the first quarter’s cash balance of $293.6 million;
- Emerald had full availability of its $110 million revolving credit facility at quarter-end;
- During the second quarter 2021, Emerald amended and restated its existing credit agreement to extend the maturity by 18 months to November 23, 2023, aggregate revolving commitments are $110 million; and
- During the second quarter 2021, Emerald acquired substantially all the assets of Sue Bryce Education, a member-based portrait photography education platform and its affiliate, The Portrait Masters, an online photo education destination and conference.
Hervé Sedky, Emerald’s president and CEO, commented, “There is not a day that goes by that I am not reminded of the extraordinary times we are living in. The COVID-19 pandemic has undoubtedly affected our business but it has also brought out the best in us – our creativity, our ingenuity, our resilience. While we will always put safety first, the rollout of the vaccine has allowed us to move forward with in-person events in all states where we host our shows. As a result, we are set to stage 86 live events through the second half of the year, representing the most active show schedule in Emerald’s history. Our clear goal is to deliver high-quality events that meet and exceed our customers’ expectations as we focus on our shows’ brands and the value that our customers achieve by attending. The early results have been mixed, with some positive trends. For example, we experienced a significant increase in our Digital Dealer event’s Net Promoter Score based upon the quality and value of the event to attendees following the show’s staging in June. Additionally, while near-term events are coming back at reduced attendance levels, our bookings for our 2022 first-quarter events are tracking much closer to pre-COVID-19 levels. We believe this key trend further demonstrates the vital role that face-to-face events continue to play in driving connections, commerce and growth for customers and communities alike and points to a meaningful recovery in our business as we look to the year ahead. At the same time, our recent acquisition of PlumRiver continues to deliver on our expectations with more than double the number of new client wins as compared to this point last year.”
David Doft, Emerald’s CFO, added, “As we prepare for a significant acceleration in our return to live events, we are also cognizant of the risks posed by the Delta variant, which we are monitoring closely. Safety remains a core priority and is a focus for all of our events as we work to provide a safe environment for all attendees. Importantly, we remain well-positioned financially as our event cancellation insurance policy provides almost $200 million of aggregate coverage for 2021. This additional 2021 insurance coverage, combined with our strong liquidity and balance sheet with more than $300 million of cash, provides us with the flexibility to be opportunistic in the current environment. We intend to continue to invest in our digital offerings to accelerate our growth and expand our margins, while also seeking accretive opportunities to further expand our portfolio. Recent transactions include our acquisitions of Sue Bryce Education and The Wedding School, and our announced partnership with Comexposium to launch SIAL America in March of next year in Las Vegas. We expect SIAL America to be the first large-scale, generalist food show focused on supporting the $1.5 trillion Food and Beverage market in the United States.”
Logo courtesy Emerald Holding, Inc.