Emerald Holding, Inc.

Good morning and welcome to the Emerald Holding Incorporated Third Quarter 2021 Earnings Conference Call. During today's call, all parties will be in a listen-only mode. Following the prepared remarks, this call will be open for questions with instructions to follow at that time. 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. The company does not undertake any duty to update such forward-looking statements. Additionally, today's call management will discuss non-GAAP measures, which it believes can be useful in evaluating the company's performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with U.S. GAAP. A reconciliation of these non-GAAP measures to the most comparable GAAP measure can be found on the company's earnings release. As a reminder, this conference is being recorded and replay of this call will be available on the investor section of the company's website through 1159 p.m. Eastern Time on November 8th, 2021. I would now like to turn the call over to your host, Mr. Uwe Sibke, President and Chief Executive Officer. Please go ahead, sir.

Thank you, Rob, and good morning, everyone. This is a very busy time here at Emerald, and I'm excited to be here today to provide an update on our recently staged shows through the third quarter, as well as our expectations for the continued recovery of our business as we look to the year ahead. David Doft, our CFO, will review our third quarter results in detail, and we will then open the call for your questions. I'd like to start by thanking our employees for their hard work and tireless efforts as we executed one of the busiest calendars in Emerald's history through the third quarter. Our team staged 33 live events serving more than 92,000 attendees and 5,200 exhibiting companies. Key brands that staged include ASD, Outdoor Retailer, New York Now, Surf Expo, Couture, and Hospitality Design. Our best performing events during the quarter had attendance levels approaching pre-COVID levels, while other events serving more adversely impacted industries remain challenged in the current environment. Overall, the execution was superb. Our exhibitor satisfaction was very high with strong attendee turnouts. the ratio of attendees to exhibitors increased by more than 22% as compared to the 2019 levels on average across all of our events during the quarter. This has led to a significant increase in average exhibitor net promoter scores compared to the same events when they staged in 2019 and has accelerated our forward sales bookings looking to the year ahead. While our third quarter was successful in that we were finally able to stage a meaningful number of events again, we were, of course, not operating at our full potential. Nonetheless, many of the headwinds that impacted attendance for our third quarter shows, such as the international travel bans and the rising infection rates caused by the Delta variant look to be improving. Of note, the Biden administration announced that beginning November 8, 2021, foreign travelers will be permitted to enter the United States with proof of vaccination. Historically, we have generated approximately 10% of our exhibitor revenues from international exhibitors, so this is a meaningful development in the recovery of our business. Additionally, rising vaccination rates are leading to a decline in new Delta variant cases. While supply chain issues in many industries remains a very real challenge, the overall environment for live events continues to improve, which enhances our visibility for future events and a full recovery in the fundamentals of our business. We're also seeing enthusiasm from across the industry as our peers in the trade show sector are having success staging large in-person events. Asia has been a good leading indicator through the pandemic as the region has typically led the U.S. by several months. Along those lines, we are seeing very encouraging signs of the enthusiasm that exists by both exhibitors and participants to get back to business. The China Beauty Expo is one such example that we found encouraging. The show staged from July 9 to 11 in Shanghai, China, and covered approximately 754,000 square feet and drew 479,000 visitors, according to data released by the organizers. That compares well to the 2019 China Beauty Expo show that covered approximately 853,000 square feet and drew over 521,000 professionals. Another example is CBME. which is leading platform for a baby and maternity industry that staged from July 14th to July 16th also in Shanghai. The show covered approximately 872,000 square feet and drew over 95,000 visitors, comparing to its 19 edition that covered approximately 951,000 square feet and drew 108,000 visitors. As you can see, these shows are approaching their pre-pandemic levels and provide optimism on a continued recovery of our industry here in the United States and into the future. Overall, Emerald's third quarter show attendance was about half of pre-pandemic levels, while exhibitor satisfaction markedly increased. Some events came within 10% of pre-pandemic attendance levels, while others were more impacted. We believe this demonstrates a clear path to recovery and supports our expectation that our portfolio of industry-leading shows will begin to return to its pre-pandemic levels looking out to 2023. As I said on last quarter's call, our focus has been on delivering the highest quality events that exceed our customers' expectations as we focus on our shows, brands, and the value that our customers achieve by attending. We delivered on that goal in the third quarter and believe that if we continue to maintain the quality of our shows and the value that we deliver to our customers, we should continue to build towards pre-pandemic attendance environment as we look out towards the second half of next year. We expect more fulsome recovery to emerge through 2023 and expect our revenues will recover to pre-pandemic levels as long as we maintain the quality of our shows and the value that we deliver to our customers. We remain confident in our ability of our events to deliver a strong return on our customers' marketing investments and are pleased to see this confirmed in the very strong satisfaction levels that we have seen in our third quarter post-event surveys. This is also being confirmed in the strong acceleration that we continue to see in our forward bookings calendar. Looking to the fourth quarter, we have another strong slate of events to stage, though seasonally fewer than last quarter, including EdSpaces, which we acquired last year, JA New York, Fall ICFF, and DDNY, amongst others. At this point, exhibitor pacings for fourth quarter events are moderately better than what we saw in Q3 when compared against their pre-pandemic additions. More importantly, we're not standing still. We are aggressively transforming Emerald through the implementation of our stated strategic initiatives centered around customer centricity, delivering 365-day customer engagements, and portfolio optimization. Our initiatives are designed to improve our customer satisfaction with our products, accelerate organic growth, and expand our margins. While the investment community is focused on when the exhibition industry will return to 2019 revenues and earnings, we see 2019 as a starting point. Our aspirations are far greater as we strive to transform our business. Three immediate goals I'd like to emphasize. Firstly, Our customer centricity initiative includes post-show surveys for all events, continued efforts to streamline customer interactions with MLs, experimentation with new pricing models and bundles, and the rollout of matchmaking at all of our large events. Our experience shows that adding matchmaking which helps bring together buyers and exhibitors in their specific areas of interest, is a meaningful driver of customer loyalty, as more scheduled introductions is a strong catalyst for trade show return on investment. Secondly, our 365-day customer engagement strategy continues to deliver solid progress. We have, for example, hired a new Pan-Emerald content lead with significant experience in building modern digital media businesses to optimize our planning and execution across all of our content assets. We have also stepped up investments in the elastic B2B e-commerce platform development to add key drivers of value for our customers and have developed a plan for better integration of our trade show and content online presences with new web templates expected to be rolled out over the coming months. Elastic, which is the go-to-market brand of our recent Plum River Technologies acquisition and the online marketplace platform with which we're supplementing our live events, is building a momentum with an accelerating number of new clients' wins relative to last year and is in the early days of extending into new industry categories. Lastly, our portfolio optimization efforts include numerous new event launches planned for 2022 as we accelerate organic show growth, as well as continue efforts to strategically grow the portfolio via acquisition. We maintain ample liquidity as we ended the third quarter with more than $300 million of cash on our balance sheets and are starting to see the positive dynamics of our business model play out as forward bookings accelerate, driving cash generation through negative working capital. Importantly, our business requires little in the way of CapEx investments and generates strong free cash flows. As we begin to book customers for our upcoming shows, we are receiving deposits in advance, which can be seen in our strong positive free cash generation this quarter. We are beginning to build cash on our balance sheet, which should have a long tail as we gradually return to pre-COVID levels. This places us in a flexible and opportunistic position where we can strategically allocate capital to attractive acquisitions, organic growth initiatives, and share repurchases when we see our stock trading well below what we view as intrinsic value, such as where it has traded through the third quarter, despite the improving fundamentals that we continue to experience. Now, let me turn the call over to David to review our third quarter results.

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