Emerald Holding, Inc.

Good afternoon, ladies and gentlemen, and welcome to the Emerald Holdings second quarter 2020 earnings conference call. During today's call, all parties will be in listen-only mode. Following the prepared remarks, the conference will be open for questions and instructions to follow at that time. As a reminder, this conference is being recorded. I would now like to turn the call over to Mr. David Dopp, Chief Financial Officer. Please go ahead, sir.

Thank you, operator. and good afternoon, everyone. We appreciate your participation today in our second quarter 2020 earnings call. I'm very pleased to have Brian Field, Emerald's Interim President and Chief Executive Officer with me here today. As a reminder, a replay of this call will be available on the investor's section of the company's website through 1159 p.m. Eastern Time on August 17, 2020. Before we begin, Let me remind everyone that this call may contain certain statements that constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include remarks about future expectations, beliefs, estimates, plans, and prospects. Such statements are subject to a variety of risks, uncertainties, and other factors that could cause actual results to differ materially from those indicated or implied by such statements. Such risks and other factors are set forth in the company's most recently filed periodic reports on Form 10-K and Form 10-Q and subsequent filings. We do not undertake any duty to update such forward-looking statements. Additionally, during today's call, we will discuss non-GAAP measures, which we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with US GAAP. A reconciliation of these non-GAAP measures to the most comparable GAAP measure can be found in our earnings release. Now, I'll turn the call over to Brian.

Thank you, David. This afternoon, I will provide an update on the current state of our business, as well as the significant progress that we have achieved implementing our strategic initiatives, despite the significant challenges that we continue to face due to the ongoing impact of COVID-19. David will review our second quarter results, and we will then open the call to your questions. On today's call, there are six main points I hope you take away. We remain confident in the quality and importance of our industry-leading events and have received consistent feedback from our customers through the pandemic as they wish to return to our live events as soon as they are able, given the importance of our marketplaces to their businesses. Second, we have made significant progress implementing our strategic initiatives, which we believe will drive improved execution and accountability across the company. Third, We are well underway in the process of building a centralized customer data hub, which will allow us to have a deep understanding of our customers' interests and behaviors across the landscape of our products and services. This will open the door to both cross-selling as well as new product development led by customer insights and data. Fourth, we continue to reduce our expense structure through the second quarter, which positions Emerald to conserve capital over the near term and is expected to improve our profitability over the longer term as the environment begins to normalize. Fifth, we have adapted to the current environment by delivering successful webinars and virtual trade shows, which open new revenue streams for Emerald, as well as the ability to engage with our customers year round. And lastly, We raised $400 million through the issuance of convertible preferred stock, the final portion of which is scheduled to close later this month. We believe this capital raise provides us with liquidity and flexibility to make the right decisions for the business during uncertain times. While we remain confident that the exhibition industry will return to its former health and vitality over time, we simply do not know how long that will take. This equity raise provides the capital bridge to when the events industry returns to a more normal state. Turning to our trade shows, we have canceled or rescheduled nearly all of our shows that were to stage through the end of the third quarter and several beyond that, given the rapid spread of COVID-19 across the country. In total, we have canceled 60 events that accounted for approximately $197 million of 2019 revenues. We have also postponed 14 events to the second half of this year, which accounted for approximately $8 million of 2019 revenues. We will continue to watch the environment very closely, especially given the recent surge of COVID-19 cases across much of the country, and we'll make decisions that are in the best interest of our customers and employees as their health and safety are of paramount importance to us. As you think about our shows, Atlanta, Denver, Las Vegas, New York City, and Orlando are the cities which are most relevant to our event schedule. As David will touch on in more detail, we continue to make claims against our event cancellation insurance policy, which includes coverage for communicable diseases. We have submitted $89.1 million in claims for canceled events previously scheduled to take place in the first half of the year, and are very pleased to report that we have already received $48.2 million in interim prepayments through July. While we work to finalize those claims, we are also processing the next wave of insurance submissions over the coming weeks. While we have not been able to stage shows through the second quarter, this has allowed our team to accelerate the implementation of our strategic initiatives, and I couldn't be more encouraged with the success that we're achieving. When I first joined Emerald a little over a year ago, it was clear to me that the company's challenges were largely the result of poor execution, a lack of accountability, and a siloed organizational structure, all of which we have aggressively addressed. As we execute upon our strategic initiatives, we are transforming the company and how we operate, building a foundation for future growth and improved profitability. One example of our progress can be seen in our approach to our marketing function, which, like many functions of Emerald, was previously handled individually at the brand level. As a result, we could not scale the benefits or best practices that clearly existed across portfolios, nor could we leverage customer insights and data across shows and products. To solve this, we have reorganized our brand marketing and marketing operations functions into central teams to deliver more impactful marketing plans, utilizing common processes, technology and data, while allowing us to deliver more quantifiable value out of our marketing spend with 25% less staff. We have also commenced the reorganization of our sales teams into pod structures focused on their specific end markets. These new structures include specific roles for lead development, account management and customer success. This structure moves us away from generalist selling to a structure designed to improve sales velocity on the front end of the process with greater upselling, product utilization, deeper customer satisfaction, and higher retention on the back end with our customer success roles. Central to both these initiatives is an improved, deeper understanding of our customers, their behaviors, and designing ways to provide them value and engage with them year-round. This is delivered through a holistic view of our customers' data footprint across our products and tying that into a cohesive sales and marketing technology stack. I'm very excited that the first phase of our unified technology initiative we are calling Smart Tech will be completed this August with the goal of being fully functional in the first quarter of next year. This will allow us to have all of our customer data information in one centralized customer data hub. allowing us to have a deep understanding of our customers' interests and behaviors, what events they attend, what they do at those events, who they interact with, the content they read online, the webinars they view, among many other touch points. We believe this will provide us with a greater insight to what our customers care about, their intent, so to speak, which will allow us to be more targeted in how we market and sell solutions to them and more effectively engage them year-round. As we continue to augment this customer data, it should drive continued product and service innovation informed by deep customer insight. Another area we are very excited by, one that has also grown out of the pandemic, is the acceleration of our digital solutions, including content-rich webinars and virtual events. Through the second quarter, we have hosted more than 140 webinars and built an internal library of over 300 podcasts, which offer valuable content for our customers. We also hosted a small number of successful virtual trade shows, with several more scheduled in the second half of the year. These virtual shows have many of the same features found at our live events, including keynote speakers, awards, and virtual booths, allowing our exhibitors to load their products and host virtual meetings with buyers. While the feedback we've received from our customers is enthusiastic, they also note that they do not replace the value found in face-to-face in traditional in-person shows and are outspoken in their desire to return to live events once the medium is safe. That said, we believe that there is an emerging hybrid model whereby virtual shows will complement live events over the year. While we project a modest revenue opportunity in the $5 to $10 million range, at a strong contribution margin. In the nearer term, the more important value of these events is our ability to engage with our exhibitors year-round and to provide them commercial solutions, particularly in today's environment. These platforms also serve as meaningful new customer acquisition vehicles as well. Over this past quarter, our webinar and virtual event products have generated over 50,000 new customer prospects. our team will continue to innovate in the digital space as well as explore new products and services as we continue to expand the value that we provide to our customers. Another key to our success was our recent capital raise, which provides management with the flexibility and confidence that we can weather a prolonged downturn in the events industry. While it is unclear when large U.S. trade shows might return to a more normalized level of business, Our top considerations are the health and safety of our customers and ensuring that we continue to provide value during this challenging time. Our capital raise provides us with liquidity to make the right decisions for our customers while continuing to invest in the company and take advantage of opportunities that may present themselves as a result of the dislocation caused by the pandemic. Before turning the call over to David, I would also like to highlight the additions of Linda Claricio and David Levin to our board of directors. Both Linda and David are accomplished executives with deep experience in the events sector and digital media ecosystem. Notably, Linda previously served as the president of US Media at Nielsen, and David formerly served as the CEO of UBM, where I had the pleasure of working with him for several years. Their industry knowledge and expertise is going to be of great value as we continue to strive to unleash the vast potential that exists within Emerald today. I am looking forward to working with each of them. Now, let me turn the call over to David.