Emerald Holding(EEX) - 2022 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported revenues of $98.5 million for Q1 2022, a significant increase from $12.9 million in Q1 2021, primarily due to $62.7 million in revenues from live events that were canceled in the prior year due to COVID [15] - Adjusted EBITDA for Q1 2022 was $54.4 million, compared to a loss of $2.5 million in the same period last year, with a notable increase attributed to profits from live events and $28.8 million in insurance claim proceeds [16] - Free cash flow for Q1 2022 was $29.8 million, up from $0.6 million in the previous year, benefiting from insurance claims and improved cash inflows from the underlying business [17] Business Line Data and Key Metrics Changes - The company staged 31 in-person trade shows in Q1 2022, serving over 141,000 attendees and 5,700 exhibiting companies, translating into over $98 million in revenue [6] - Organic revenues for Q1 2022 were $21.5 million, an increase from $13.8 million in the prior year, driven by growth in content and e-commerce subscription software businesses [15] Market Data and Key Metrics Changes - The company noted that show participation is steadily improving, closing the gap to pre-pandemic levels by 7% to 10% compared to Q4 2021 [7] - Customer net promoter scores have improved, indicating stronger rebooking momentum and revenue visibility for future events [8] Company Strategy and Development Direction - The company is focused on a three-pronged strategy: portfolio optimization, 365-day engagements, and customer centricity, aiming to launch four new shows in 2022 and three in 2023 [9][10] - The company is actively pursuing acquisitions in high-growth industries, with a robust M&A pipeline supported by a favorable balance sheet [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving fiscal year 2022 revenues in excess of $300 million and adjusted EBITDA exceeding $50 million, with expectations for 2023 adjusted EBITDA in excess of $100 million [8][22] - The company highlighted the importance of demonstrating value to customers and investors as a catalyst for growth in 2022 [24] Other Important Information - The company ended Q1 2022 with $254.4 million in cash and full availability of a $110 million revolving credit facility, providing significant liquidity for investments [18] - The company has renewed its event cancellation insurance policy for 2022 and 2023, although it no longer covers pandemics [38] Q&A Session Summary Question: Can you provide an indication of price levels or upgrades for rebooking? - The company has maintained pricing power, achieving mid-single-digit price increases or more depending on the event, effectively managing against inflation [26] Question: Which sectors are expected to exceed pre-pandemic levels? - High-growth industries are recovering faster, while those more impacted by pandemic issues, such as supply chain, are slower to recover [27] Question: How has visibility changed since the start of the year? - Visibility has improved significantly due to the rollout of on-site rebooking across all events, leading to stronger forward bookings [28] Question: What are the average recovery rates for shows with pre-pandemic versions? - The average recovery rate is between 25% and 30% off pre-pandemic levels, with some shows performing better than others [32] Question: How is inflation impacting costs? - Venue costs have remained reasonable, but labor-based costs have increased, which the company has managed through pricing strategies [33] Question: What is the current state of M&A? - Sellers are valuing shows based on pre-pandemic metrics, leading to more earnout deals to ensure satisfaction for both parties [34] Question: What are the company's ESG initiatives? - The company is taking ESG seriously, mapping carbon emissions for live events and developing an annual sustainability report [36][37] Question: Has the company renewed its business interruption insurance? - The company has renewed its event cancellation insurance for 2022 and 2023, but it no longer covers pandemics [38]