Emerald Holding, Inc. reported a sales decline of 18.4 percent due to the shift in the timing of events in the current year versus the year-ago period.

Emerald hosts over 140 yearly venues across multiple industries. The active outdoor events include Outdoor Retailer, Surf Expo, The Sports Licensing & Tailgate Show, Impressions, Swim Collective, and Active Collective.

Highlights

  • In the third quarter of 2022, Emerald successfully traded 25 in-person trade shows, conferences and other events, serving more than 79,000 attendees and 3,900 exhibiting companies;
  • Revenues of $62.4 million for the third quarter 2022, a decrease of $14.1 million, or 18.4 percent, from $76.5 million in revenue for the third quarter of 2021, reflecting the impact of the temporarily increased number of events that staged in the third quarter of 2021 having been postponed from their typical dates earlier in the year due to COVID-19;
  • Organic Revenues, a non-GAAP measure that takes into account the impact of COVID-19-related postponements and cancellations as well as acquisitions, of $56.6 million for the third quarter of 2022, an increase of $14.2 million, or 33.5 percent, from $42.4 million for the third quarter of 2021 (Refer to Schedule 1 for a reconciliation to revenues, the most directly comparable GAAP measure);
  • Net income of $93.0 million for the third quarter 2022, compared to net loss of $9.0 million for the same quarter in 2021
  • Adjusted EBITDA, a non-GAAP measure, of $149.7 million for the third quarter 2022, compared to $8.6 million for the third quarter 2021. Adjusted EBITDA excluding insurance proceeds, a non-GAAP measure, of ($1.3) million for the third quarter 2022, compared to $7.5 million for the third quarter 2021;
  • Adjusted EBITDA for the third quarter 2021, which included $13.3 million from events that had been postponed from their typical dates earlier in the year due to COVID-19, would have been ($4.7) million on a normalized basis;
  • Continuing positive cash generation as bookings for returning events accelerate and insurance litigation settlement received
  • Cash provided by operations of $153.5 million for the third quarter 2022, compared to $9.6 million for the third quarter 2021;
  • Emerald generated free cash flow excluding event cancellation insurance proceeds and other items, a non-GAAP measure, of $6.2 million for the third quarter 2022 as compared to $8.2 million for the third quarter 2021;
  • The company received insurance litigation settlement proceeds of $149.3 million; bringing the total insurance proceeds from 2020 and 2021 canceled and impacted events to $372.9 million;
  • Emerald bought back 1.6 million shares of common stock at an average price of $3.74 per share during the third quarter 2022;
  • Emerald’s Board of Directors approved an extension and expansion of the company’s share repurchase program which allows for the repurchase of $20.0 million of the company’s common stock through December 31, 2023; and
  • Emerald ended the quarter with $366.1 million in cash and full availability of its $110 million revolving credit facility.

Hervé Sedky, Emerald’s president and chief executive officer, said, “The continued strong fundamentals in B2B trade shows provide clear evidence of the strength of the post-COVID recovery taking place in our industry. Exhibitor and attendee counts, as well as space rates are all on the rise across the vast majority of our shows, reflecting the irreplaceable value that in-person events offer our customers in the form of high-quality lead generation and return on investment for marketing budgets. Emerald is exceptionally well-positioned to take advantage of the recovery given the investments we’ve made in our technology stack and our unparalleled first-party data advantages. We remain focused on our three strategic priorities of portfolio optimization, customer centricity, and 365-day engagement as we continue to scale the Emerald platform using all available internal and external growth levers. We believe the attractive cash flow-generating features of our business, portfolio of must-attend events, and balance sheet position Emerald to outpace the industry’s growth trajectory and put us on course to be the leading consolidator of trade shows. On a personal level, I never lose sight of our customers and their needs, especially those of small businesses that often get overlooked.”

David Doft, Emerald’s CFO, added, “Our strong balance sheet and liquidity position, supported by significant free cash flow generation, give us the foundational elements to continue investing in Emerald through M&A and organic growth. Over the past two years, we have substantially added to our portfolio through strategic acquisitions in e-commerce and high-growth brands while also investing in our in-house resources to drive the incremental value our customers get from the Emerald platform including both our core trade show business and our complementary data, content, and marketplace offerings. As we progress into next quarter and beyond, we expect to see less variability in our comparable period results as the timing of events impacted by COVID has normalized. Notably, Q3 2022 had fewer shows than the prior year period as several events typically held in the first half of 2021 shifted to Q3 2021, as COVID restrictions began to be lifted across the country. Excluding the proceeds received from event cancellation insurance as well as the litigation settlement, we remain on track to generate in excess of $300 million of revenue, and $50 million of Adjusted EBITDA, while the impact of higher interest rates are expected to affect free cash flow, which we now expect to fall between $60 million and $70 million in 2022. We also continue to track towards $100 million or more of Adjusted EBITDA in 2023, where we are already selling events into the third quarter.”