Release Date: October 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Emerald Holding Inc (EEX, Financial) has taken aggressive steps towards portfolio optimization by discontinuing 20 unprofitable events, which is expected to positively impact growth and margins in 2025.
- The company reported a 56.3% increase in adjusted EBITDA for the third quarter, indicating improved profitability.
- Emerald Holding Inc (EEX) has a strong cash position with $188.9 million in cash and a total liquidity of $298.9 million, providing a solid foundation for future investments.
- The company has seen strong pacing into 2025, with more broad-based growth across its event portfolio compared to the previous year.
- Emerald Holding Inc (EEX) has been upgraded by S&P from a B rating to B+, reflecting the strength of its business model and liquidity position.
Negative Points
- Emerald Holding Inc (EEX) has reduced its full-year 2024 revenue and adjusted EBITDA guidance due to portfolio optimization and macroeconomic challenges.
- The company experienced a low to mid single-digit million-dollar shortfall in its content business, which has been performing below expectations.
- A hosted buyer event was canceled due to Hurricane Milton, impacting revenue by approximately $1 million, although insurance claims are expected.
- Emerald Holding Inc (EEX) faces challenges in its small content business, which continues to underperform due to a difficult advertising environment.
- The company has noted that some of its events have not returned to pre-pandemic levels, indicating ongoing recovery challenges in certain segments.
Q & A Highlights
Q: Can you explain why the EBITDA outlook is reduced if the cancellations are tied to unprofitable shows?
A: David Doft, Chief Financial Officer, explained that the reduction is due to three factors: the timing of event cancellations and related SG&A expenses, softness in the content business, and the impact of a hurricane-canceled event. The SG&A costs were already incurred before the decision to cancel events, affecting the bottom line for this year. The content business faced a low to mid-single-digit million-dollar shortfall, and the hurricane event's revenue impact is expected to be recovered through insurance, though the timing is uncertain.
Q: How does the current pacing for 2025 compare to what you saw at the start of 2024?
A: David Doft noted that the pacing for the first half of 2025 is stronger and more broad-based compared to the same time last year. More events are outperforming in their pacing, and the company is eliminating underperforming events to focus resources on stronger brands, which should drive better financial performance.
Q: Can you provide more details on the discontinued events and why they were underperforming?
A: Herve Sedky, President and CEO, stated that most discontinued events were geo-extensions or adjacent to existing brands that did not meet expectations. They were not delivering the expected returns to customers or the company. The largest discontinued event was NBA Con, which did not fit the typical profile of underperforming events.
Q: How is the business tracking relative to pre-pandemic levels, and what steps are being taken to return to full performance?
A: David Doft explained that the business has changed significantly since pre-pandemic times, with many brands exceeding pre-pandemic levels. However, some events that were underperformers before the pandemic remain so. The company is focusing on driving growth from stronger assets.
Q: How is Emerald progressing with integrating and using AI across the business?
A: Herve Sedky mentioned that AI is being used internally, particularly in marketing for tasks like email copy and landing page optimization. AI is expected to help scale personalization efforts and improve conversion rates. The company is testing various AI initiatives and plans to scale them based on outcomes.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
