Emerald Holding, Inc.

Good morning. Welcome to the Emerald First Quarter 25 earnings call. Before we begin, let me remind everyone that this call will include certain statements that constitute forward-looking statements within the meaning of Private Securities Litigation Reform Act of 1995. This includes remarks about future expectations, beliefs, estimates, plans, and prospects. In particular, the company's statements about projected results for 2025 are forward-looking statements. 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. For a discussion of these risks, uncertainties, and other factors, please refer to the company's SEC filings, including its most recently filed periodic reports on Form 10-K and Form 10-Q, as well as the company's earnings release, all of which can be found on the company's investor relations website. The company does not undertake any duty to update such forward-looking statements. Additionally, during 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. The reconciliation of these non-GAAP measures to their most comparable GAAP measures can be found in the company's earnings release, which is available on the company's investor relations website. As a reminder, this conference is being recorded, and a replay of this call will be available on the company's investor relations website through 1159 p.m. Eastern Time on May 8, 2025. I would now like to turn the call over to Mr. Ereve Sedki, President and Chief Executive Officer. Please go ahead.

Thank you, Erica. Good morning, everyone, and thank you very much for joining us today. I'll begin the call with an overview of our first quarter results. and key strategic initiatives. Then I'll turn things over to our CFO, David Doft, for a more detailed review of the financials. We began 2025 with strong momentum. Our first quarter performance reflects meaningful progress in executing our strategy with strong traction across key initiatives that deliver value for our customers and for our shareholders. We reported double digit growth in revenue and adjusted EBITDA, building on the strong portfolio optimization initiatives we accelerated in 2024. Emerald's refined portfolio now spans an increasingly broad range of high growth sectors, reducing reliance on slower growth verticals and enhancing resilience across market cycles. Our success this quarter was supported by some of the standout events across our portfolio that reflect the breadth and depth of our industry reach. These include KBiz, a cornerstone in the design and construction vertical, the Prosper Show, a leading in e-commerce seller engagement, and the International Pizza Expo, a critical event in the food service space. Positive feedback from attendees consistently reinforced the high quality and value that these events deliver, affirming their role as key opportunities for industry leaders to connect, to engage, and transact. Given our performance in the first quarter and current sales pacing, we remain on track to achieve our full year 2025 guidance while remaining vigilant in monitoring external factors that could influence our trajectory from here. Building on this momentum, we're seeing increasing rebook rates for Q1 2026, clearly reflecting the trust our customers place in our platforms and the ongoing ROI delivered by our events. Early commitments not only enhances our forward visibility, but also underscores the resilience of our business model. Even as we maintain strong forward progress, we are mindful of navigating nuanced challenges from shifting consumer sentiment to global economic pressures. We are proactively monitoring pacing data and customer behavior, both domestically and internationally, to ensure we're well prepared to meet potential shifts in market dynamics. To date, we have sold over 90% of our full-year target for revenue from international exhibitors. while we're seeing some pressure on sales efforts with customers in China and Canada, we're also seeing strength from countries like Turkey, Brazil, and the United Arab Emirates. Companies in these markets are actively stepping in to capture opportunities created by the current tariff environment, helping to drive sales growth. This is particularly meaningful as it reflects early returns from the expanded global sales agent network we've built over the last 18 months. Our belief is that once the global trade environment becomes more normalized, Emerald is well positioned to benefit from this increased presence. As we've shared previously, our international exposure remains limited. At present, approximately 10% of our total revenue is generated from international exhibitors, specifically exhibitors from China, account for approximately 2%, Canada contributes another approximately 2%, and Mexico represents less than 1% of our revenue from companies offering products or services. This limited exposure provides a layer of insulation from global trade disruptions and shifting geopolitical dynamics. Additionally, software, services, and travel are not currently subject to tariffs, so our events associated with those exhibitors and sponsors should be less impacted, if at all. More importantly, in today's environment defined by policy shifts, digital fatigue, and economic uncertainty, we believe the value of face-to-face interaction remains more critical than ever. Business and professional events offer trusted environments for decision-making, connection, and commerce. According to McKinsey, Three-quarters of CMOs say in-person events deliver stronger brand recall than digital campaigns, underscoring their strategic role in today's marketing mix. We also view periods of economic complexity as windows of opportunity, times when face-to-face events become even more essential given the return on investment that they deliver. In high-stakes environments where decisions are must be made with confidence. In-person events offer a critical platform for real-time collaboration and in-depth discussions, enabling companies to align and adapt quickly to market changes. A strategic focus on face-to-face engagement aligns with our ongoing portfolio optimization efforts, which have helped to reduce our exposure to more economically sensitive sectors. This ensures greater insulation from volatility, positioning Emerald as a more resilient business. At the same time, we've deepened our presence in higher growth, durable industries, such as design and construction, food, technology, and luxury travel, positioning us for more stable and sustainable performance across cycles. Speaking of portfolio diversity, We received regulatory approval yesterday to move forward with a previously announced acquisition of This Is Beyond, and we plan to close the acquisition in the coming days. This Is Beyond is a collection of high-end experiential events that complements our portfolio and align with consumer trends around premium, purpose-driven experiences. Its first two events of the year stage in May with We Are Africa and LE Miami. We expect both events to exhibit strong growth year over year. We're also in early days of the integration of InsureTech Insights, which we also acquired and closed this past March. The team recently hosted its European event in London in March with strong attendee and sponsor turnout. We are pleased with the addition of both InsurTech Insights and This is Beyond and continue to actively evaluate strategic M&A opportunities that align with our focus on high growth, future-oriented sectors. Our M&A strategy is centered on expanding into high growth, resilient sectors while diversifying our portfolio to drive long-term shareholder value. This strategy complements our broader goals of optimizing our event offerings and entering new markets with strong demand potential. As we look ahead, our strategy remains focused on our three pillars of value creation, customer centricity, 365-day engagement, and portfolio optimization. We see opportunities to build upon our diverse portfolio and our confidence in our strategy. In closing, the strength and diversity of Emerald's portfolio continue to be key drivers of our success. With a broad range of events across high growth industries, we believe we are well positioned to capitalize on both established and emerging market opportunities. While we're confident in our strategy and the strength of our portfolio, we remain focused on staying adaptable in this dynamic environment. By balancing flexibility with precision, we are committed to delivering sustainable growth and long-term success for Emerald. With that, Let me turn things over to David for a review of our financials. David.

Thank you, Hervé, and good morning. Turning to our results for the first quarter, which is our seasonally largest quarter of the year, total revenue was $147.7 million compared to $133.4 million in the prior year quarter. Organic revenue in the first quarter increased 5.6% year-over-year to $139.2 million, driven by strong growth in organic revenues from our connection business, which improved 6.6% versus the prior year. First quarter adjusted EBITDA, excluding insurance proceeds, was $53.6 million compared to $39.8 million in the prior year period, an increase of 34.7%. The increase is attributed to continued cost management and operational efficiencies in the quarter and the benefit of the InsureTech Insights acquisition and its London event. This equates to an adjusted EBITDA margin of approximately 36.3% for the quarter. Turning to expenses. On a reported basis, SG&A was $54.1 million versus $55.5 million in the prior year quarter. The year-over-year decline is largely due to lower compensation and travel expenses in both our content and commerce businesses, offset by incremental expenses from acquisitions. In the first quarter, we generated $10.8 million in free cash flow, excluding event cancellation insurance as compared to $3.8 million in the prior year period due to the higher adjusted EBITDA in the quarter. Underlying free cash flow was even stronger than reported as some one-time fees related to our January refinancing were expensed through the P&L in the quarter, reducing reported free cash flow by $5.5 million. Additionally, because of the timing of the InsurTech Insights acquisition and its London event, cash for the event was collected prior to the close of the deal, while the associated revenue was recognized post-close. The cash value was received by Emerald through a working capital adjustment in the purchase price, rather than through typical deferred revenue. Had we owned the event throughout the full sales cycle, cash collections would have been $3.5 million higher. In total, free cash flow would have been $9 million higher if not for the financing fees and the timing of the InsurTech acquisition. Note that the timing of the This Is Beyond acquisition is expected to have the same impact, with the majority of the cash for its upcoming events collected prior to the transaction closing and the value flowing to Emerald through the purchase price adjustment rather than through the collection receivable. Turning to the balance sheet, we had a healthy $276.8 million in cash as of March 31st versus $194.8 million as of December 31, 2024. This is after funding the InsureTech Insights acquisition, but before funding the This Is Beyond deal. $139 million of this cash will be used for the anticipated closing of the This Is Beyond acquisition in May, offset by working capital that comes with the business. Our total liquidity is $386.8 million, including full availability on our $110 million credit facility. Boundsheet strength and cash flow generation support our ability to opportunistically invest in and grow our business and optimize the per share value of our stock. We expect to continue to balance capital allocation between acquisitions, investments in the business, managing debt leverage, and returns of capital. During the first quarter, we fought back roughly 2 million shares for $8.8 million at an average price of $4.33 per share under our existing buyback authorization. Since the end of the quarter, we have fought a further 0.8 million shares for $2.8 million. With that, we have successfully utilized the majority of our $25 million share repurchase authorization, reflecting management and the board's confidence in the long-term value of Emerald stock. In recognition of our continued financial strength, our board recently approved a reauthorization of our share buyback program with an additional $25 million allocated. The board also authorized the payment of our quarterly dividend of one and a half cents per share. This decision underscores our commitment to returning value to shareholders while maintaining a balanced approach to capital allocation. As we continue to execute on our strategic initiatives, we remain disciplined in our managing our capital structure. which is key to supporting our long-term objectives and navigating the current macro environment. First, it's important to highlight the strength and flexibility of our capital position. In January 2025, we executed a highly successful refinancing of our existing debt, which has significantly enhanced our financial flexibility. The timing of our January refinancing has set us up well. Debt maturities are well staggered with no significant maturity due until our revolving credit facility in 2030. providing ample runway to support our operations and growth strategies without immediate refinancing pressure. Refinancing was not only well-timed, but demonstrates our proactive approach to managing financial risk. We effectively extended our maturities and secured favorable terms, positioning us to navigate future opportunities with confidence. We also continue to operate well within our debt covenants, providing room to invest while maintaining a solid balance sheet. This proactive approach positions us for long-term success and supports our strategic initiatives. Turning to our outlook. As Hervé mentioned, we remain on track to deliver our full year 2025 guidance of a range of $450 million to $460 million in revenue and $120 million to $125 million in adjusted EBITDA. As a reminder, our outlook includes consideration of the potential impact of tariffs imposed and threatened by the U.S. government. Though we recognize there remain many unknowns on how this will fully play out. We continue to proactively manage the situation, both with aggressive sales efforts in new markets, as well as by maintaining a nimble organization that can adapt based on changes in the landscape. Now, let me open the call for questions. Operator?