Emerald Holding(US:EEX)2024-11-01 09:06Financial Data and Key Metrics Changes - For Q3 2024, total revenue was $72.6 million, slightly up from $72.5 million in the prior year, driven by $4.2 million from acquisitions and scheduling adjustments, offset by $5 million from discontinued events and a $3.3 million organic decline [14][15] - Organic revenue declined 5.3% to $58.7 million compared to $62 million in the prior year quarter, while year-to-date organic revenue was up 4.8% [15] - Adjusted EBITDA grew 56.3% to $12.5 million, resulting in an adjusted EBITDA margin of approximately 17.2% [16] Business Line Data and Key Metrics Changes - The company discontinued 20 unprofitable events totaling $20 million in historic run rate revenue, which is expected to positively impact growth and margin in 2025 [5][11] - The Content business, accounting for about 5% of total revenue, is experiencing softness, with a projected year-over-year decline in 2024 revenue [9][10] Market Data and Key Metrics Changes - The company is seeing strong growth in its existing show portfolio, with positive pacing into 2025, indicating a stronger and more broad-based growth compared to the previous year [8][29] - The advertising environment remains challenging, impacting the Content business, which has seen a low-to-mid single-digit million-dollar shortfall versus expectations for 2024 [9][24] Company Strategy and Development Direction - The company is focused on portfolio optimization, which includes discontinuing underperforming events and investing in more profitable assets [4][7] - Future growth is expected to be supported by a strong collection of events and a shift towards in-person marketing strategies, as companies are reallocating budgets towards effective channels like live events [12][13] Management Comments on Operating Environment and Future Outlook - Management anticipates that the performance in the second half of 2024 will not meet expectations due to macroeconomic factors and operational impacts, leading to a reduction in full-year guidance [4][21] - The company remains confident in the long-term trends for in-person events and believes that the recent decisions will strengthen growth prospects for 2025 and beyond [13][41] Other Important Information - The company has a healthy cash balance of $188.9 million and total liquidity of $298.9 million, with a net debt of $221.2 million [18] - A quarterly dividend of $0.015 per share was declared, implying an annualized cash dividend amount of $12 million [20] Q&A Session Summary Question: Why is the EBITDA outlook reduced despite canceling unprofitable shows? - Management explained that the cancellation of events resulted in already incurred SG&A expenses that were not offset by revenue, leading to a timing difference in financial impact [23] Question: What is the profile of the discontinued events? - The discontinued events were largely extensions of existing brands that did not meet performance expectations, with the exception of NBA Con, which was a significant event [33] Question: How is the business tracking relative to pre-pandemic levels? - Management noted that while some brands have exceeded pre-pandemic levels, several underperforming events have not recovered, and the business has evolved significantly since then [34] Question: How is the company progressing with international expansion? - The company has invested in an international sales team and is beginning to see activity from various countries, although full impact will take time [35] Question: What is the status of the hosted buyer event affected by the hurricane? - The event has been canceled for this year [37] Question: How is the company integrating AI across the business? - AI initiatives are in progress, primarily for internal use in marketing, with plans to scale successful tests [38]