Emerald Holding Inc. reported revenues of $8.5 million in the third quarter ended September 30 compared to revenues of $75.6 million for the third quarter of 2019, a decrease of 88.8 percent. The decrease primarily reflected a $68.0 million reduction from the cancellation of substantially all third-quarter events due to COVID-19 most notably ASD August, NY NOW August, CEDIA Expo, and Modern Day Marine.
In the active lifestyle space, Emerald Holding’s shows include Outdoor Retailer, SurfExpo and Sports Licensing & Tailgate Show, Impressions, Swim Collective and Active Collective.
Emerald said discontinued events representing $0.2 million of third-quarter 2019 revenues also impacted third quarter 2020 results. The G3 Communications (G3) acquisition, which closed in the fourth quarter of 2019, contributed $1.5 million of revenue in the third quarter of 2020. Organic revenues for the third quarter of 2020, which exclude canceled events, declined $0.5 million, or 6.7 percent, as compared to the prior-year third quarter due to lower print and digital advertising revenues, partially offset by new virtual event launches.
The company recognized a net loss of $15.3 million for the third quarter of 2020 compared to a net loss of $19.7 million for the third quarter of 2019. The company recorded $16.1 million of Other Income during the third quarter as a result of the confirmation of event cancellation insurance claims related to events canceled in the first, second and third quarters. In the third quarter of 2019, the Emerald recorded Other Income of $6.1 million from cancellation insurance proceeds related to the forced cancellation of the Surf Expo and ISS Orlando due to Hurricane Dorian. In the third quarter of 2019, in connection with a triggering event caused by reduced performance expectations for the year, the company recorded a $26.3 million non-cash charge related to the impairment of certain trade names, customer-related intangible assets and goodwill.
For the third quarter of 2020, Adjusted EBITDA was negative $3.2 million, compared to $28.7 million for the third quarter of 2019. The decrease in Adjusted EBITDA of $31.9 million was mainly due to COVID-19-related cancellation of 29 third quarter events, representing prior year third quarter Adjusted EBITDA of $42.0 million, offset by the recognition of $10.0 million more in Other Income related to event cancellation insurance claims confirmed in the third quarter of 2020 versus the comparable period in the prior year. Third-quarter 2020 Adjusted EBITDA also reflected the combined effect of lower Organic revenues, offset by the cost savings measures implemented throughout the year. The company’s Adjusted EBITDA throughout 2020 has been and will continue to be heavily impacted by the timing and receipt of approved claim payments under the company’s event cancellation insurance policy.
Emerald completed the sale of its 7 percent Series A Convertible Participating Preferred Stock (the “Preferred Stock”) in the third quarter, generating net proceeds of approximately $130 million, in addition to the $252 million in net proceeds generated during the second quarter
Emerald ended the third quarter of 2020 with $326.7 million in cash and full availability of its $150 million revolving credit facility
Brian Field, Emerald’s interim President and Chief Executive Officer, said, “As we work towards a return to live events, we continue to implement our growth strategies designed to improve the efficiency of our operations, accelerate organic sales growth and improve our profitability. Our team is focused on using this time to launch new digital product offerings and revenue models designed to complement our live events, as we engage our current customers, drive new customers and enhance Emerald’s growth profile.
“During the third quarter, we hosted over 90 digitally-delivered virtual events across a variety of formats and form factors. While these have been successful and provide new, high-margin revenue streams, the consistent feedback from our customers is that the face-to-face format of our events provides a critical value to our customers’ success. A good example of this, and pent-up demand of our customers’ desire to return to our face-to-face shows, can be seen in IGES which is set to stage on November 4 in the heart of the Smoky Mountains of Tennessee. Demand has been very strong with attendee registrations up over 36 percent versus last year, which also confirms our own exhibitor and attendee research that continues to point to our customers’ preference for live events.”
David Doft, Emerald’s Chief Financial Officer, added, “The key priorities for our team are to streamline our operations in order to improve collaboration across the company and find opportunities to consolidate our expense structure and become more nimble as the environment eventually normalizes. Historically, Emerald has worked as a collection of business units focused on delivering individual shows. This stifled innovation as well as the ability to cross-sell the full suite of Emerald’s offerings to our customers, while also adding to our expense structure which we have been laser-focused on optimizing.
“Along those lines, I am pleased to report that we have permanently reduced our annual fixed cost run rate by over $15-20 million through the end of the third quarter. We have also been successful in collecting payments for our submitted insurance claims, having received an additional $39.8 million of payments in the third quarter and $9.5 million thus far in the fourth quarter, with an additional $15.8 million recently approved and pending receipt. Our insurance payments combined with our recent preferred stock offering puts us in an enviable balance sheet position. We exited the third quarter with $327 million of cash and another $150 million in availability on our revolver which provides us with the flexibility to invest for future growth as well as take advantage of any dislocations in the trade show and exhibition market.”
Graphic courtesy Emerald Holding
